Page 1

Issue no: 1070/140

• JULY 31 - AUGUST 2, 2018

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Enterprise Georgia on Georgia’s Manufacturing Potential NEWS PAGE 2

FOCUS

Georgia Moves Up 11 Spots in the World Bank's Logistics Index BUSINESS PAGE 6

ON GREEN ECONOMY Georgia gets set to align with EU standards of green!

PAGE 2

Smoking Marijuana Legalized in Georgia BY SHAWN WAYNE

T

he Constitutional Court of Georgia has released a statement on the decision made today regarding the use of marijuana, effectively abolishing administrative punishment for the use of the drug. "According to the applicants (Zurab Japaridze and Vakhtang Megrelishvili), the consumption of marijuana is not an act of social threat. In particular, it can only harm the users’ health, making that user him/herself responsible for the outcome. The responsibility for such actions does not cause dangerous consequences for the public." The Constitutional Court of Georgia noted that permission to consume marijuana is an act of protection of the person's right to free development, and while prohibition of consumption of marijuana is an action directed against its turnover and therefore serves the legitimate aim of consumer protection of health, according to the Court, the role of an individual user in the support of marijuana circulation is very small, and consequently the threats from individual consumption are likewise small. Due to the above, the punishment for consumption of marijuana is disproportionate.” Continued on page 2

Unparalleled Swissôtel Comfort & Design Now Available in Montenegro BUSINESS PAGE 8

Giorgi Mikadze Speaks on the Upcoming Project VOISA CULTURE PAGE 11 Prepared for Georgia Today Business by

Markets Asof27ͲJulͲ2018

Price

w/w

m/m

BONDS

Price

w/w

m/m

BankofGeorgia(BGEOLN)

GBP18.15

+2,4%

Ͳ5,0%

GEOROG04/21

101.72(YTM6.06%)

+0,1%

+0,9%

GeorgiaCapital(CGEOLN)

STOCKS

GBP10.00

+2,5%

Ͳ9,3%

GEORG04/21

106.98(YTM4.12%)

+0,2%

+0,3%

GBP2.59

Ͳ0,6%

+2,2%

GRAIL07/22

106.43(YTM5.90%)

+0,3%

+1,0%

GBP17.00

Ͳ1,4%

Ͳ0,1%

GEBGG07/23

100.05(YTM5.99%)

+0,2%

+0,1%

GHG(GHGLN) TBCBankGroup(TBCGLN)

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

Price

w/w

m/m

CURRENCIES

Price

w/w

74,29

+1,7%

Ͳ4,3%

GEL/USD

2,4482

+0,1%

Ͳ0,2%

1224,22

Ͳ0,4%

Ͳ2,2%

GEL/EUR

2,8488

Ͳ0,5%

+0,5%

Ͳ0,1%

m/m

Ͳ0,2%

GEL/GBP

3,2082

INDICES

Price

w/w

m/m

GEL/CHF

2,4560

Ͳ

Ͳ0,1%

FTSE100

7701,31

+0,3%

+1,0%

GEL/RUB

0,0390

+1,3%

+0,3%

20868,94

Ͳ0,3%

+0,1%

GEL/TRY

0,5049

Ͳ0,9%

Ͳ4,9%

DAX

12860,40

+2,4%

+4,1%

GEL/AZN

1,4400

+0,3%

Ͳ0,2%

DOWJONES

25451,06

+1,6%

+5,5%

GEL/AMD

0,0051

Ͳ

7737,42

Ͳ1,1%

+3,9%

GEL/UAH

0,0919

Ͳ0,5%

Ͳ1,4%

159,99

+3,8%

+4,0%

EUR/USD

0,8579

+0,6%

Ͳ0,9% +0,1%

FTSE250

NASDAQ MSCIEMEE MSCIEM

Ͳ

1092,36

+2,1%

+3,8%

GBP/USD

0,7633

+0,2%

SP500

2818,82

+0,6%

+4,4%

CHF/USD

0,9945

+0,2%

MSCIFM

2746,25

+2,0%

+3,9%

RUB/USD

62,7126

Ͳ1,3%

Ͳ0,7%

GTIndex(GEL)

1582,68

Ͳ

Ͳ

TRY/USD

4,8517

+1,2%

+4,9%

GTIndex(USD)

1208,13

Ͳ

Ͳ

AZN/USD

1,6971

+0,1%

Ͳ

Ͳ0,3%


2

NEWS

GEORGIA TODAY

JULY 31 - AUGUST 2, 2018

Smoking Marijuana Georgian PM Presents Legalized in Georgia Green Economy Concept Continued from page 1

The court takes into account certain exceptions for today's decision in cases when the use of marijuana creates threats to third parties. "In addition, the Constitutional Court highlights the imposition of responsibility of marijuana consumption when it creates a threat to third parties. For instance, the Court will justify responsibility when marijuana is consumed in educational institutions, public places, such as on public transport, and in the presence of children”, stated the Court. Zurab Japaridze congratulated every-

one on the decision made today on July 30, 2018. "I would like to congratulate everybody on the decision made by the Constitutional Court. Through this decision, Georgia became a freer country. Administrative punishment for consumption of marijuana was revoked by the Constitutional Court, which means that consumption of marijuana in Georgia is now legal," said Japaridze. He noted that it is the duty of individuals to go about the use of marijuana in a responsible manner, in consideration of other smoking laws, as these will still apply.

Georgia’s Basilashvili Wins ATP World Tour

BY THEA MORRISON

G

eorgian tennis player Nikoloz Basilashvili, ranked the 81st in the world, has become the first Georgian to win an ATP (Association of Tennis Professionals) World Tour title. Winning the title moved Basilashvili up to number 35 in the ATP rankings. Basilashvili defeated two-time Hamburg titlist Leonardo Mayer 6-4, 0-6, 7-5 on Sunday and won the title. Basilashvili is the fourth qualifier to triumph on the ATP World Tour this season, joining Daniil Medvedev (Sydney), Mirza Basic (Sofia) and Roberto Carballes Baena (Quito). Marco Cecchinato claimed his maiden title in Budapest as a lucky loser. “I am sure that every player worked so hard for this, but it’s an unbelievable moment for me,” Basilashvili stated after the victory. Basilashvili reached a career high combined (singles and doubles) of World No. 59 on January 5, 2009. He ended his junior career with a 35–22 record on singles and 14–17 on doubles. In 2015, he qualified for his first Grand

Slam Tournament – Roland Garros, losing in the first round to Thanasi Kokkinakis. Later the same year, he managed to qualify for Wimbledon, where he beat Facundo Bagnis and the 15th seed Feliciano Lopez, advancing to the third round of a major for the first time in his career. He then qualified for US Open the same year. In February 2017, Basilashvili participated in the Sofia event, grabbing victories over Adrian Mannarino, 1st seed Dominic Thiem and 8th seed Martin Klizan, before losing to 3rd seed and eventual winner Grigor Dimitrov in the semifinals. Basilashvili continued his good form at the Memphis Open, where he defeated 1st seed Ivo Karlovic and went on to reach the final, but lost to Ryan Harrison in the straight sets. In June 2017, Basilashvili achieved a career-high singles ranking of 51. He reached three semifinals and one final throughout the year. At the 2017 French Open, after defeating Gilles Simon and Viktor Troicki, Basilashvili lost to eventual champion Rafael Nadal in the third round, winning just one game across three sets. In July 2018, he made it into the main draw of the German Open in Hamburg as a qualifier and went on to win the tournament, defeating Leonardo Mayer in the final.

BY THEA MORRISON

G

eorgian Prime Minister Mamuka Bakhtadze has presented the Green Economy Concept, a part of the governmental program aimed at improving the ecological situation in Georgia. During the presentation on Friday in Kojori, the PM noted that not only Georgia but the whole world has environmental problems. “The policy that Georgia has had over recent decades has been completely unacceptable and brought us to very serious consequences. The main focus of the Green Economy concept is to protect the environment in order to improve the ecology of the country and maintain natural resources for future generations,” he stated. Bakhtadze noted that the European Union states are taking serious steps towards improving the ecological situation and added that Georgia should do the same in order to align with the EU. He noted the process of harmonizing the Georgian legislation with European norms has begun and added that in the next few years more clear and concrete steps should be taken to prevent air, soil and water pollution, and to improve waste management and the sustainable management of biodiversity, ecosystems and natural resources. “The new concept aims at taking care

Photo source: PM’s Press Office

of the environment and sharing responsibilities while ensuring fresh air, water and quality food,” he explained. The Georgian PM noted that the new strategy includes two main priorities: to neutralize the results of previous environmental management and to preserve existing natural resources in such a way as to ensure that Georgia is perceived as a country with a green economy. He said that from August 1, Georgia will switch to a European standard air monitoring system. The evaluation will be based on an already developed automatic monitoring network which is going to be widened. Also, a web portal will be developed enabling citizens to receive regularly updated online information on the air quality in certain locations. “Each state agency, including the private sector, will have specific liabilities and recommendations for the improve-

ment of the atmospheric air condition in Georgia,” he added. Bakhtadze also spoke about the need to set up an Environmental Ombudsman Institute which will communicate with the public in order to guarantee better efficiency as the government works with citizens to solve ecological problems. He noted that the compulsory inspection of vehicles, which will have checked every vehicle running in Georgia by the end of 2019, will have a positive impact on the air condition in the country and vehicles which do not meet the necessary standards will be banned. One of the main aspects of the Georgian Green Economy is improving fuel quality by slowly moving to "Euro 4" from October and to "Euro 5" from 2020, meaning the sulfur content will be reduced 10 times in the fuel imported to Georgia.

Enterprise Georgia on Georgia’s Manufacturing Potential

Source: Enterprise Georgia

BY ANNA ZHVANIA

E

nterprise Georgia has conducted an analysis of exportoriented production to reveal those products with high investment potential within the Deep and Comprehensive Free Trade

Agreement (DFCTA). International consulting company KPMG conducted a detailed analysis of the market, and identified the shoes, bags and accessories industries as investment opportunities. KPMG prepared three investment proposals, specifically in the directions of leather and sports shoes and travel bags. The investment offer includes a financial model for enterprises producing between

6 to 8 million units per year. Pre-selected state lands can be used to build given enterprises for potential investors. The study revealed the main advantages that Georgia has to offer investors. The first being access to potential markets without customs. Import taxes on bags and shoes amount to 17-30%, and with goods originating from Georgia, the product will be able to take advantage of the zero tariffs according to the Free Trade Agreement. Thesecondfactoriscompetitiveexpenses related to business operation. The average accrued salary for bag producers amounts to $290 and for bags $450. The cost of electric power per kilowatt is about $6-8 for industrial consumption. Additionally, in case of reinvestment, profit tax in Georgia is 0%. Salary is taxed by a fixed income tax of 20%. Thus, producers have the opportunity to benefit from the tax privileges established in the free industrial zone. Finally, potential investors have the opportunity to cooperate with the Partnership Fund, through which investors can benefit from both infrastructural and financial support.


4

NEWS

GEORGIA TODAY

JULY 31 - AUGUST 2, 2018

Interview With A Billionaire

IMF, back in 2015, 68% of adults in Georgia had active loans, and 30% of these borrowers had already been blacklisted. Ivanishvili accused Kvirikashvili and Kumsishvili of attempting to hide this report from both him and the public. “I was crestfallen for several days after I had found out that the economic situation had worsened for a certain part of society following Georgian Dream’s rise to power,” Ivanishvilli said, adding that he and the party confronted Kvirikasvhili over the economy at a June 12 meeting, and that the ensuing argument lasted three hours. The Georgian Dream Chair said it became apparent at the meeting that Kvirikashvili eventually had to go, and he did. In his farewell speech on June13, Kvirikashvili cited these disputes on economic

issues with the party leadership as the motive for his resignation. In the televised interview, Ivanishvili was also asked about the uprooting and moving of giant, century-old trees to his new park, which left patches of green land near the Black Sea coast deforested. “I know people are saying, ‘what is wrong with this guy?’” Ivanishvili conceded, but added that it is only for the good of the people. He said he compensated farmers and the Georgian railway authorities for the interruptions that the movement of giant trees may have caused, but did not offer much of an explanation. Another project that he defended was a real estate complex that is controversially under construction in and around capital Tbilisi’s historic center, named Panorama, with several segments to be connected via cable ways. Ivanishili said that having a golf course a mere fourminute cable car ride from downtown will be a great asset to the economy, and he played down the impact on the rich architectural heritage of the city. This interview had mixed reactions amongst Georgians. “We see a total evasion of responsibility for things that Ivanishvili is responsible for,” stated member of European Georgia, Elene Khoshtaria, in comments to the channel. “He installs people to lead the government, vouches for their qualifications and then replaces them if the public is disappointed, without taking any responsibility for it,” she said. However, Georgian Dream supporters were happy with their Chairman’s interview.

of the economy. We are delighted that the British Council will facilitate rapid development of this sphere, together with its expertise. Establishing such ecosystems will help young adults be entrepreneurial and successful.” Institutes holding legal status, such as cultural departments of the local government and municipalities, NGOs and charitable organizations, will be able to participate in the competition. In order to promote higher education reform and student employment, the British Council plans to use British experience in the field of entrepreneurial education. The main purposes are to: 1. Create British-Georgian University and Institutional partnerships to form creative entrepreneurship development centers. 2. Develop entrepreneurial skills for students, new graduates and employees

of the creative industry by conducting training series. 3. Enhance the level of English through existing online platforms and newly created courses. Apart from Georgia, the program will be implemented in the UK and in Azerbaijan, Armenia, Uzbekistan, Ukraine, Kazakhstan and Kyrgyzstan. The British Council is the leading international organization of the United Kingdom of Great Britain and Northern Ireland, enhancing cooperation in the field of culture and education in over 110 countries. It allows people living in Great Britain and other countries to establish relationships. Through the British Cultural Resources, the British Council contributes to the developmentofcountries,workingtogether to offer positive changes in human life through different possibilities, connections and confidence strengthening.

BY SHAWN WAYNE

K

nown as Georgia’s richest man, Bidzina Ivanishvili is someone to whom people seem to listen, especially when he appears on televi-

sion. During his latest interview on Georgia’s Channel One, the billionaire and ex Prime Minister stated that the country’s gross domestic product per capita has tripled, making the EU membership dream a reality, and said he hopes voters “stay with him” for at least the next 12 years. Even after Ivanishvili officially retired from politics in late 2013, he has continued to have influence on the Georgian Dream party, being known as the “puppet master” behind the scenes of Georgian politics. Many people believe this places Georgia in a vulnerable position democratically. And what may have been speculation was made fact as Ivanishvilli was quite open about the influence he has had over the government and the ruling Georgia Dream party since stepping down as Prime Minister, however, he said it “hardly qualifies [me] as a puppet master working in the shadows.” Ivanishvili also admitted to his participation in selecting former Prime Minister Giorgi Kvirikashvili’s replacement, Mamuka Bakhtadze. “They are confusing informal governance with public oversight: the public put a degree of trust in me and I can use this trust at any moment and criticize

any leader. We don’t have extensive experience of public oversight in the government and I’m there to fill that gap,” Ivanishvili told the Channel One audience. Ivanishvilli has now returned to a formal role in politics as Chairman of Georgian Dream, leaving the role of shadow ruler behind. “There was a serious risk of the team falling apart,” he said. “I was watching this from the outside and, at a critical point, I realized that exercising remote control was not enough to keep the team together.” Ivanishvili also stated that he is not like former President Mikheil Saakashvili, who, as Ivanishvili put it, ran the whole show. “God spare us from governance

like that!” he stated. “I don’t want society and also you, the journalists, to believe that I’m doing everything and that I make all the decisions.” “Georgian democracy is developing so fast that the economy can’t keep up with it,” Ivanishvili said. He also claimed that he was not fully aware how bad the economy was faring because the government officials had hid it from him. “That was part of the reason Kvirikashvili had to go,” Ivanishvili said. Kvirikashvili concealed the true state of economic affairs, such as citizens’ overdependence on bank loans, “from me and society.” He said that Kvirikashvili disrupted the balance between state and business interests, using his tax policies to lobby for Georgian banks. According to the

New initiative of the British Council ‘Creative Spark: Higher Education Enterprise Georgia’ BY ANNA ZHVANIA

N

ew British Council Initiative: 'Creative Spark: Entrepreneurial Education Program’ aimed at promoting higher educational reforms and student employment in Georgia and other participating countries. A presentation was held at Hotel Courtyard Marriott on July 27, where the invited guests were informed about the goals of the program and the terms of participation in the open competition announced for the development of university partnership. The conference was attended by the British Council delegates, Minister of Education, Science, Culture and

Sport, university representatives and interested parties. The new initiative will assist the development of a creative economy in Georgia, and young adults will have the opportunity to acquire knowledge and skills, allowing them to become competitive in both local and international markets. The program will facilitate the development of British-Georgian University and Institutional cooperation. “The British Council's new program aims at promoting the creative industry and employment, sharing British experience and facilitating the development of entrepreneurial collaboration between universities and creative institutions,” said Zaza Purtseladze, Director of British Council Georgia. “It is vital for us to establish co-operation between British and Georgian universities, as well as

between British and Georgian creative institutions. Entrepreneurial Education Centers will facilitate the development of business skills for people employed in the creative industry, and students. Today, the creative institution in Georgia has huge potential, but entrepreneurial skills like business ventures, development, business plans, and idea pitching are skills lacking not only in Georgia but also in the other countries the program will be implemented in.” “The British Council has made a huge contribution to education as well as in the field of culture,” said Mikheil Batiashvili, Minister of Education, Science, Culture and Sport. “Many projects have been implemented over the years, including ‘Creative Spark’, which holds enormous potential. Creative industries are dynamically developing around the globe, playing an integral role in the development

SUBSCRIBE! 1 YEAR SUBSCRIPTION - 60 GEL (6 ISSUES) Money Back Guarantee!  any@where.ge

 +995 32 229 59 19 10 Galaktion Street

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


BUSINESS

GEORGIA TODAY JULY 31 - AUGUST 2, 2018

Why Invest in Georgia: The French Chamber of Commerce Explains All BY ANTOINE DEWAEST

T

he French Chamber of Commerce and Industry in Georgia (CCIFG) is a French local business network. At the beginning, in 2008, it was merely a business “club” composed of four persons. In 2011, the club became a Chamber of Commerce and currently brings together around 70 members. The aim is to support the businesspersons by helping them through procedures and giving them some knowledge of the country. Antoine Bardon, living in Georgia since 1992, President of the CCIFG, gave GEORGIA TODAY an exclusive insight into the local economic institution. The question is, why might a foreign investor want to enter Georgia? PROS: The Georgian market is free and easily accessible to any foreign company. The cost of establishing a business is far below some European countries, this being a financial advantage. In addition, the procedures which are necessary to set up a new company are quick and effective. Moreover, Georgia faced its corruption issues many years ago and became the most economic friendly environment in the region. Some EU countries could take a leaf out of Georgia’s book. You can create your enterprise (included setting up a bank account and registering the company) in one day. Corporate taxes are business-friendly by being low. A lot remains to be done in the country, particularly in the industrial sector, so there are many opportunities awaiting investors. CONS: The market deals with just four million consumers. That is a small market. Therefore, the fixed costs which are the same for any company at the beginning could make investors reluctant to raise their investment, or to invest here at all. Moreover, since the collapse of the Soviet Union, Georgia has been lacking of a powerful industry, and nowadays, companies find it hard to hire skilled workers. But this is beginning to change. Education is high on the government agenda- witness the university partnership with the French government

Photo: CCIFG

signed in May, focusing on the food-industry, industry and digital technologies. But currently, even in the hospitality business, companies might entice away a competitor’s skilled workers. FRENCH INVESTMENTS: Right now, the focus is the industrial sector, with three main French companies. Lactalis has a subsidiary here and recently became shareholders of Sante, one of the national market leaders in milk and dairy production in Georgia. The Atlantic Group (water heater and conditioning), which invested 45 million GEL, is strongly implanted here. Carrefour, a franchisee, is also succeeding in the local market. We can think about Renault and Peugeot (car resellers) and all the pharmaceutical laboratories like Sanofi and Servier. About the projects to come, there may be an important investment in hydro energy as well as several projects in cattle breeding for a total investment of 6 million GEL. Antoine Bardon co-founded the Salve Association which aims to reduce food waste and to provide shelter and food to street children in Tbilisi.

Rail Freight Transportation Down BY MARIAM KUKHILAVA

T

he transportation of oil products and raw sugar by Georgian Railway has reduced. According to the official information, Georgian Railway transported 1,622 542 tons of crude oil and other oil products, and 154,143 tons of raw sugar, in the first six months of 2018, while in the same period of 2017, the number was 2,307 348 and 220,777 respectively. In contrast, the transportation of cereal products has increased compared to last year.

Geostat: Construction Permits Reduced by 1.4% Y/Y BY MARIAM KUKHILAVA

G

eostat has released statistics regarding building permits. According to the data, from January to June 2018, 4941 permits were granted for construction, which is 1.4% less compared to the same period of 2017. 72.4 % of permits were granted in three regions of the country: 46.8 % in Tbilisi, 14.3% in Adjara and 11.3% in the Kvemo Kartli region. The permits were granted for multifunctional residential complexes, hotels, trade facilities, industrial enterprises, agricultural and other kinds of buildings. The majority of the permits were granted for

multifunctional residential complexes. More than half of the already constructed buildings are in the three regions: in Tbilisi- 29.3%, Kakheti Region16.3%, Kvemo Kartli Region- 11%. In January-June 2018, 1163 objects were taken into exploitation, making up 928.9 thousand square meters.

5


6

BUSINESS

GEORGIA TODAY

JULY 31 - AUGUST 2, 2018

Georgia Moves Up 11 Spots in the World Bank's Logistics Index BY SAMANTHA GUTHRIE

I

n the 2018 release of the World Bank's Logistics Performance Index (LPI), Georgia is ranked 119 of 160 countries that were evaluated. The country’s overall score was 2.44 points out of a possible 5. Georgia has improved its position by 11 places since the 2016 LPI, where it ranked 130 with an overall score of 2.35. The LPI is an interactive benchmarking tool that the World Bank developed to help countries identify challenges and opportunities in the field of trade logistics. It also serves as a guide for where performance can be improved. LPI scoring is a combination of qualitative and quantitative factors. The qualitative component is based on a global survey of logistics operators (international freight forwarders and express carriers), who judge the logistics ‘friendliness’ of the countries where they work. The LPI website explains that survey respondents “combine indepth knowledge of the countries in which they operate with informed

qualitative assessments of other countries where they trade and experience of global logistics environments.” Operators’ survey responses are combined with quantitative performance data on key components of a country’s logistics chain. Georgia’s scores have improved in nearly all six of the categories evaluated: efficiency of the clearance process (i.e. speed, simplicity, and predictability of formalities) by border control agencies, including Customs; quality of trade and transport related to infrastructure (e.g. ports, railroads, roads, information technology); ease of arranging competitively priced shipments; competence and quality of logistics services (e.g. transport operators, customs brokers); ability to trace and track consignments; and timeliness of shipments in reaching destinations within the scheduled or expected delivery time. The LPI offers both international and domestic perspectives. The international LPI takes a qualitative approach, aggregating evaluations of a country by logistics professionals working outside the country in the six categories described above. The domestic LPI surveys logistics professionals inside

Customs

Infrastructure

International Shipments

Logistics Competence

Tracking & Tracing

Timeliness

2016

2.26

2.17

2.35

2.08

2.44

2.80

2018

2.42

2.38

2.38

2.26

2.26

2.95

Category/ Year

Photo: Ministry of Economy and Sustainable Development

a country to get a qualitative and quantitative perspective, including detailed descriptors of the logistics environment, core logistics processes, institutions, and information on performance speed and costs. Data for the 2018 LPI was collected by the World Bank during the period from September 2017 – February 2018. A total of 869 respondents from international logistics companies participated in the data collection process.

The number one spot in this year’s LPI was taken by Germany, for the third time in a row, with a score of 4.20, followed by Sweden (4.05) and Belgium (4.04). Near Georgia in the rankings are Togo at 118 and the Democratic Republic of Congo at 120. Among its neighbors, Georgia ranks near the bottom: Turkey – 47 out of 160 countries Romania – 48 Bulgaria – 52 Iran – 64

Ukraine – 66 Kazakhstan - 71 Russia – 75 Armenia – 92 The worst ranking countries in this year’s LPI are Afghanistan, with a score of 1.95 out of 5, Angola (2.05), and Burundi (2.06). For the full Logistics Performance Index, visit: https://lpi.worldbank.org/international/ global/2018


BUSINESS

GEORGIA TODAY JULY 31 - AUGUST 2, 2018

Georgia Enslaved!

Source: nzcusouth.co.nz

OP-ED BY ARCHIL SIKHARULIDZE

O

n July 24, Bidzina Ivanishvili, Georgian tycoon and Chairman of the ruling party Georgian Dream, gave a long-awaited interview to Channel One journalist Maka Tsintsadze in which he unleashed a stream of criticism of the country’s financial system, claiming that the two leading bank institutions, TBC and Bank of Georgia, have “swallowed” the state and stuck people in endless debts. Then he called this policy “shameful”. These statements may be perceived as historic because this is the first time in Georgian modern history that a high state official has openly and decisively attacked “business” and the “business environment” that was step-by-step established following the collapse of the Soviet Union. For years, Georgian governments were not only aware of the existing economic processes in the country but were very keen to support particular politicaleconomic approaches, which ultimately lead to a reality where every fifth individual in the state lives in poverty today. It is interesting as to why the current government and its leader, Bidzina Ivanishvili (who is an active businessman himself), were forced to openly criticize two leading bank institutions and the business environment in general. The answer is simple: Georgia can’t move on unless some significant changes are made to it is politicaleconomic paradigm.

SHIFTING PARADIGMS When explaining why Marxism took such extreme forms (for example, military communism) in postEmpire Russia, prominent Russian philosopher and political thinker Nikolai Berdyaev argued that it was a result of an old tradition set by Orthodoxy. For centuries, the Russian Orthodox Church demanded blind loyalty from its “flock” that dismantled critical thinking within the ranks. As a result, the new political-economic theory of Karl Marx that would have been slowly analyzed, criticized and assessed by every Western society, was turned into another dogma; another form of totalitarian thinking in Russia. The collapse of the Soviet Union was not only an appraisal against totalitarianism and a fight for national self-determination, but also a shift from planned economy to market. It was and still is logical that independent Georgian society wanted to abandon everything that the Soviet period had established, including the government’s involvement in everyday life. Local political and economic philosophers immediately picked up the so-called liberal-economic model, wholeheartedly preaching the “laissez-faire” model where the private sector was totally free from government interventions, while every single citizen was left “tete-a-tete” (Eng. "head to head") against business. Furthermore, Georgian governments have actively tried to create the best possible hothouse conditions for the sector, frequently turning a blind eye to the growing gap between the business and Georgian societies. This approach can be easily reflected by a statement of former Georgian Minister of Econ-

omy (June–December 2004), Minister for Reform Coordination (February 2008 – February 2009), Kakha Bendukidze, who argued that it is possible to privatize everything except your own mother. Local political-economic thinkers became enslaved by the so-called liberal model, pushing it despite opposition. As Russia before, they managed to transform this frequently criticized model into a new undisputable dogma.

THE WIN-LOSE GAME Ivanishvili’s expression of a “swallowed” state perfectly reflects the existing socio-economic situation on the ground. Nowadays, the obsession of local elites to push the liberal economic model, without taking into consideration some important variables such as concurrency and mentality, have led to the establishment of a “win-lose” game. In this game, business is always the winner and the consumer is always the loser. Every single deal is, by default, much more profitable for the financial institution than the citizen. Moreover, the private sector feels totally untouchable and as yet has been unpunishable. In 2015, former Prime Minister Irakli Garibashvili questioned why the price of oil on the local market continued to be high despite the cost of commodities falling around the globe. Garibashvili was highly criticized by various actors for interference in private sector matters. In April 2018, former finance minister Mamuka Bakhtadze (current PM) criticized the leading banks of the country for not pushing the state’s economy forward. Bakhtadze argued that the banking system should be driving Georgia’s economic development; a grand mission that is not pursued by the leading local financial institutions. Bakhtadze, as Garibashvili before him, was so harshly attacked that he was pushed to give some “explanations.” But Ivanishvili’s case is totally different. As a Georgian tycoon, the richest and most influential political-economic figure, he can finally break through barriers and focus on those clearly existent flaws. In 2012, Georgian society hoped that Bidzina Ivanishvili would lead the country to a better future. He has a chance to do it by pushing forward changes to the country’s financial system, transforming the “win-lose” game to “win-win”. By and large, this tendency of ruling representatives expressing their dissatisfaction with the existing financial system is a reflection of dramatic socio-economic conditions. The Georgian state and society has become enslaved by its own business actors whose activities have frequently a more negative than positive impact; moreover, this negative impact is so immense that even state officials (who are actually to blame for its establishment) are pushed to recognize it. Georgian business holds both the state and society restrained and thus blocks state-development. The country’s political elite must free itself from “liberal fanaticism” and start implementing the necessary political-economic methods to ensure that local financial institutions are as free and independent as socially possible, working on the market, state and society simultaneously. Only in this scenario can the existing “win-lose” game be replaced by the “win-win” model. Only then will Georgia finally be able to move forward.

7


8

BUSINESS

GEORGIA TODAY

JULY 31 - AUGUST 2, 2018

Unparalleled Swissôtel Comfort & Design Now Available in Montenegro 175 private residences, in absolute harmony with nature, available for sale

M

ontenegro, like Georgia, is a country of the sea and mountains, wine and authentic hospitality, rich culture and history. It’s a country of proud people striving for freedom! Indeed, one can find many similarities between Georgia and Montenegro. But this is not the only reason to visit this wonderful country which will soon become a member of the European Union! Tourism is booming in Montenegro, proving it one of the most attractive tourist destinations in the Adriatic region, in the country of the museum of nature, boasting five national parks of rare beauty, breathtaking views of numerous lakes, and fine mountains, colorful culture and the rich variety of local cuisine. Montenegro has much to offer its visitors, including an azure Adriatic landscape, wild nature and more importantly, rich cultural heritage, found in its historical cities of Kotor, Budva, and Perast amongst others. From year to year, more and more touristsarechoosingtovisitMontenegro,which, in recent years, logically followed the increased interest of investors in the local hospitality sector and international hotel brands wishing to meet the demand with the highest quality tourism infrastructure. If Montenegro is a museum of nature, then Kotor is a museum of nature, history and culture, all together. The old city is protected by UNESCO can impress visitors day and night with the spirit of its ancient dwellers still to be felt while walking the narrow streets of the old town and when touching the walls of old churches such as St. Luka’ Church of the 12th century, the Romanesque cathedral of St. Tryphon from 1116, the town clock tower from 1602 and a 15th century church, part of the city’s amazing defensive wall, seen from almost every angle of the Kotor Bay. There are strict rules to preserve the style of the old architecture and historical landscape, making the introduction of world class brands like Swissôtel both a challenge and more interesting as the final product must be tailored to the authentic nature and cultural heritage of Kotor Bay. Hexagon Investments new lifestyle residence and hotel project by Swissôtel Residences, Bay of Kotor, Montenegro features 175 private residences available for sale, as well as a 137-room 5-star hotel, unique for many reasons. Firstly, there is no more large areas of land available in the Kotor Bay, making this tremendous, first ever brand project in Kotor, including 175 residential units and a 137-room 5-star hotel by Swissôtel, totally unique. Secondly, the Swissôtel concept envisages it being ecofriendly, with the majority of the territory kept as a green area with its uneatable healthy air within a unique local climate. Residents and guests of the Swissôtel Residences will be able to enjoy sports and leisure activities in a 15,000 m2 forest zone. Third is the ecosystem, built with technology that keeps damage to nature to a minimum. The stones and the construction technology are such that there is no waste of electricity on air conditioning in summer or for heating in winter. The Residences are designed in harmony with the historical architectural style of Kotor, and the buildings’ façade will be developed using local natural materials, especially stones, to preserve the spirit and the colors of the old town. Fourth is a location of Swissôtel Residences, Bay of Kotor, Montenegro as it is only 3 km from the Old Town, 9 km from Tivat airport, and just a 1-hour drive from Podgorica airport. The location of the Swissôtel Residences will also make it a center of one-day tours from the famous Dubrovnik resort for those who wish to discover the Adriatic coast of

Georgia Institutes Visa Free Regime with Montenegro

Montenegro and the scenic Kotor Bay. And finally, the quality of hotel infrastructure and the service provided at Swissôtel Residences is a guarantor of the safe and healthy living of the owners and their guests on the property. It will combine the outstanding natural beauty of Kotor Bay with the unparalleled Swissôtel comfort and design. Swissôtel Residences will incorporate the very spirit of Swiss hospitality, presenting its guests with all the privileges necessary to enjoy each day of their stay. The Life is a journey; live well! philosophy behind Swissôtel invites everybody to start a new life where every day is cherished. The hotel guests and residence owners will enjoy access to a 250-meter private beach as well as facilities offered at the Owners’ Lounge that can be used for all kinds of celebrations and events. The Residents will also be able to enjoy the full range of optional and al a carte Swissôtel luxury services provided by the Hotel, including in-residence dining, catering, private transportation, laundry and housekeeping services, usage of a state-of-the-art fitness and SPA-center, valet and concierge services, and much more. Residence owners will have the option

to participate in a Rental Program operated by Swissôtel, enabling Purchasers to let their property while not using it. Residence owners will also enjoy VIP status at the resort, including preferred pricing at the hotel’s restaurants and bars, as well as being eligible for exclusive benefits and privileges at more than 4000 AccorHotel properties worldwide. Residence Owner’s, as property investors, will also get added value by receiving a temporary residence permit in Montenegro, expected to become an EU

member by 2025. Construction works for the Swissôtel Residences, Bay of Kotor, Montenegro are to start in July of 2018, and the project will launch in 2020. For any further details: swissotelresidencesmontenegro.com +382 32 327 763

Citizens of Georgia can now travel to Montenegro without a visa. Georgians will be able to stay in Montenegro for up to 90 days in any 180-day period. Montenegrins will also now be able to visit Georgia without a visa. Georgians, who have standard biometric passports, can now travel visa-free to 57 countries worldwide, including the European Union. “Montenegro fully supports Georgia’s territorial integrity and sovereignty and its Euro-Atlantic aspirations,” it said in a statement made June 12 at the joint press-conference of Montenegro Foreign Minister Srdjan Darmanovic and Georgia’s VicePremier and Foreign Minister, Mikheil Janelidze. “Montenegro is a full-fledged member of the Alliance and we support NATO's open-door policy, including full support for Euro-Atlantic aspirations of our aspirant countries, including Georgia,” Srdjan Darmanovic stated. According to Janelidze, at the faceto-face meeting, the sides discussed important issues of bilateral and multilateral relations between Georgia and Montenegro. Janelidze thanked Montenegro for establishing a visa-free regime for Georgian citizens. “I am convinced that this mutual visa-free regime, which exists between the two countries, will contribute to the development of the tourism direction and will not only increase tourist flows, but will also increase investments in Georgia from Montenegro and vice versa," said the Minister.


10

BUSINESS

GEORGIA TODAY

JULY 31 - AUGUST 2, 2018

Latvia, Azerbaijan Agree on Intercontinental MultiMode Transport Route

Photo: Wikimedia Commons

Georgian fusion restaurant "Meama" with an authentic taste tradition! Adress: 8 Dzmebi Zdanevichebi str. Tbilisi Mob: 558 31 11 33

BY SAMANTHA GUTHRIE

L

atvia and Azerbaijan have plans to expand cooperation regarding the transport of Azerbaijani goods to Europe, Latvia’s Ministry of Transport told Baku-based Trend News Agency last week. "We see great prospects for expanding our cooperation in the area of increasing the export of Azerbaijani goods to the European market. The opening of the Azerbaijan’s Trade House, held in Riga on July 23 in the framework of the visit of the Deputy Minister of Economy of the country, Sahib Mammadov, will give a new impetus to the bilateral cooperation. We are confident that as the volume of sales increase, the volume of freight traffic between our countries will increase. And we also see ample opportunities for the creation in the future of trade, logistics and manufacturing enterprises for the products of Azerbaijan in Latvia for their further processing and distribution in the markets of the Baltic states, northern and western Europe," the ministry said. Azerbaijan is an important player in the field of transport and logistics in the Trans-Caucasian region, bordering the Caspian Sea to the east, Iran to the south, and Armenia, Georgia, and Russia to the north. The Trans-Caspian International Transport Route (TITR) starts from Southeast Asia and China, runs through Kazakhstan, the Caspian Sea, Azerbaijan, Georgia and on to Europe. The multimode container line ‘Nomad Express’ organizes regular container trains from China to Turkey and Europe in 14-15 days. 3 million tons of cargo are expected to be moved through the TITR in 2018. The agreement creating a coordinating committee to develop the TITR was initially signed in late 2013 by representatives from Kazakhstan, Georgia, and Azerbaijan. The first test container train was sent from China to Baku in August 2015. The ministry noted that China’s One Belt, One Road initiative is creating new possibilities to develop logistics supply chains across the region. "The international transport corridor ‘North-South’ is included in the list of priorities of the Latvian logistics industry represented by the state company Latvian Railway JSC. A multi-mode route India-Iran-AzerbaijanRussia-Latvia is being created in order to ensure regular container traffic. It is envisaged that the proposed logistics solution will ensure an efficient, reliable and rapid flow of goods from India to Europe. The access to the region of the Baltic countries and northern Europe, as well as to eastern and western Europe will be gained with the use of the advantages and logistics services of Latvia in the direction of the international transport corridor North-South,” said a ministry spokesperson. The proposed route will operate in the framework of the International North–South Transport Corridor (INSTC) – a 7,200-km-long multi-mode ship, rail, and road network for moving freight between India, Iran, Afghanistan, Armenia, Azerbaijan, Rus-

sia, Central Asia and Europe. In addition to the INSTC, TRACEA, the EuropeCaucasus-Asia transport corridor, also passes through Azerbaijan. TRACEA is a part of the new Silk Road and links the Caspian and the Black Seas. In light of Azerbaijan’s strategic transport links, the Latvian Ministry of Transport said that they “believe that Azerbaijan has excellent prospects for the development of freight transport. The development of railway communication with Iran will strengthen the North-South corridor, and the recently opened Baku-Tbilisi-Kars railway line will develop freight traffic in the East-West direction.” The ministry offered Azerbaijan "the opportunity to supplement its logistics routes in North-South and East-West directions with access to the market of northern and western Europe through our railway and ports – Riga, Ventspils, Liepaja.” The ministry also emphasized existing cooperation between Latvia and Azerbaijan in air transportation, saying, "We are glad that our national airline Air Baltic, in cooperation with Azerbaijan Airlines, serves the passenger transportation between Riga and Baku twice a week in the summer season, and Air Baltic is extending the period of flights by 10 weeks this year. This will undoubtedly contribute to the development of tourism and business contacts between our entrepreneurs.” Earlier this month, Azerbaijan’s Transport, Communications and High Technologies Ministry released a statement saying that, in a meeting of an Azerbaijan-Latvia joint commission on international road networks between the two countries, it was agreed that efforts will be made to increase bilateral road transportation between Azerbaijan and Latvia by 20% in 2019. Late last week, the Latvian Ministry of Transport invited Azerbaijan Railways to join the ZUBR transport project. ZUBR is a container block-train running north-south between the Baltic and Black Seas. The operational principles were agreed on between Estonian, Latvian, Belorussian and Ukrainian railway administrations in 2009, and regular traffic flow started in 2012. "Azerbaijan, in the context of further development of the ZUBR project, plays a very important role," the ministry told Trend News Agency. "Latvia sees potential for development of the ZUBR project in Azerbaijan to attract cargo from Central Asia and China through the TRACECA corridor, as well as cargo from India, Iran and other countries of the Middle East and South Asia through the North-South corridor." Joining ZUBR would provide an opportunity for the export and transit of goods from and through Azerbaijan to Latvia, and possible distribution throughout the Baltic countries, Scandinavia, and other parts of Europe. It would also, of course, facilitate imports to Azerbaijan from Europe. While Azerbaijan Railways has not yet officially responded to the invitation, Latvia’s Ministry of Transport confirms that Azerbaijan is interested in the project. Georgia has also expressed interest in participating in ZUBR.


CULTURE

GEORGIA TODAY JULY 31 - AUGUST 2, 2018

Giorgi Mikadze Speaks on the Upcoming Project VOISA

11

Azerbaijan to Significantly Increase Tobacco Production

BY DIMITRI DOLABERIDZE

T

he volume of tobacco production in Azerbaijan may increase by 30% by the end of 2018, said the Chairman of the Association of Tobacco Producers and Exporters of Azarbaijan, Telman Khasratov. "Tobacco picking started relatively recently, but we are already expecting tangible growth in production by the end of 2018. At present, the largest volumes of tobacco production are concentrated in Balakan, Sheki, Ismayilli, Gabala, Lerik and Masalli," Khasratov said. The main directions of export of Azerbaijani tobacco, he said, are Belarus and Russia. The bulk of the tobacco produced in Azerbaijan, in turn, goes to the domestic market.

In parallel with production, it is planned to increase by the end of 2018 the export of tobacco. Speaking about the purchase price of tobacco, which is currently unprofitable for producers, Khasratov said that this issue would be resolved at a meeting scheduled for July 27 by the Azerbaijani Agriculture Ministry in Zagatala. "At the same meeting, issues of lending to tobacco producers will be discussed. The acreage of tobacco will also increase. In Zagatala, in 2017, 600 hectares of land were used for tobacco production: in 2018 the area increased to 800 hectares," Khasratov said, adding that tobacco producers are also planning to upgrade the fleet of equipment. According to the State Customs Committee, Azerbaijan exported tobacco and its industrial substitutes to the amount of $5.52 million in January-June 2018 and imported $60.1 million. Compared to the same period in 2017, exports decreased by 9.06% and imports by about 17%.

BY ANNA ZHVANIA

O

n July 30, press-conference of Georgian pianist and composer Giorgi Mikadze was held at the head office of Bank of Georgia, attended by director Basa Potskhishvili, Giorgi Donadze, Artistic Director of the Basiani ensemble, Georgian National Tourism Administration Director Giorgi Chogovadze, and Head of Public Relations Department of Bank of Georgia, Khatuna Kakabadze. The press-conference was dedicated to discussing the upcoming project of Giorgi Mikadze ‘VOISA’, taking place at the Black Sea Arena. “This year, within the framework of Check-in Georgia, we present very diverse concerts of different directions at the Black Sea Arena. I want to highlight once more that the project will further aid the development of our authentic Georgian culture, worldwide. Giorgi Mikadze’s efforts have been extremely valuable in this direction. We would like to wish the project authors as well as the involved parties success and we are sure that this will be one of the most special and distinguished project held in the Black Sea Arena,” Choghovadze said. “I’d been thinking about VOISA for a long time, but I needed professional experience before taking it on,” Mikadze noted. “After the Basiani ensemble came on an American tour, the idea of the project was born, and we started getting it ready. The project debuted in New York’s prestigious concert hall ShapeShifter Lab in 2016 and later in 2017 was presented to the wider audience in China’s capital Beijing, to great success. It’s

VOISA will further aid the development of our authentic Georgian culture, worldwide been a long-awaited moment to present the project to the Georgian audience at the Black Sea Arena. I have the greatest honor to work with Basa Potskhishvili and am very excited to present an atypical show to the audience for the very first time.” On August 4, within the frames of the government’s ‘Check in Georgia’ program, renowned Georgian pianist Giorgi Mikadze will present his ambitious project VOISA at the Black Sea Arena to a Georgian and international audience. The event will be dedicated to the 100th anniversary of Georgia’s Independence Day. It is an unprecedented musical project of high importance since it aims to introduce Georgia to the world and become the country’s cultural trademark. Mikadze is a young virtuoso pianist, composer, MA graduate at Berklee College of Music and Manhattan School of Music, and Yamaha Jazz artist. He has created an exceptional musical project in collaboration with his All-Star Band and the Basiani ensemble. In addition, the well-known US hip-hop artist, MC and OK Player’s artist, Raider Ellis, will take to the stage the same evening.

PUBLISHER & GM

George Sharashidze COMMERCIAL DEPARTMENT

Commercial Director: Iva Merabishvili Marketing Manager: Anuka Poladishvili

GEORGIA TODAY

EDITORIAL DEPARTMENT:

Editor-In-Chief: Katie Ruth Davies

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

Website Manager/Editor: Tamzin Whitewood Layout: Misha Mchedlishvili Webmaster: Sergey Gevenov Circulation Managers: David Kerdikashvili, David Djandjgava

ADDRESS

1 Melikishvili Str. Tbilisi, 0179, Georgia Tel.: +995 32 229 59 19 E: info@georgiatoday.ge F: GeorgiaToday ADVERTISING & SUBSCRIPTION

+995 577 14 14 87 E-mail: marketing@georgiatoday.ge

Reproducing material, photos and advertisements without prior editorial permission is strictly forbidden. The author is responsible for all material. Rights of authors are preserved. The newspaper is registered in Mtatsminda district court. Reg. # 06/4-309


Issue #1070 Business  

July 31 - August 2, 2018

Issue #1070 Business  

July 31 - August 2, 2018

Advertisement