Caucasian Business Week #25 by Caucasian Business Week

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BUSINESS WEEK October 14, 2013 #25

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October 14, 2013, Issue 25

GEORGIA

TOP 15 CHEAP, SAFE AND FRIENDLY COUNTRIES – GEORGIA RANKS SECOND

ave you ever wondered which is the cheapest, friendliest and safest country in the world? Well, wonder no more.

caucasian1

BE INFORMED, DO BUSINESS

ECONOMIC PROGRAMS OF PRESIDENTIAL CANDIDATES

Finance Minister Disagrees with IMF Unemployment Rate Projections Pg. 2

Pg. 13

ASKANELI BROTHERS EXPORTS PRODUCTS TO RUSSIAN MARKET WITHOUT PROBLEMS

AZERBAIJAN AZERBAIJAN’S MICROFINANCE MARKET TO DOUBLE

MARGVELASHVILI GIORGI

BURJANADZE NINO

BAKRADZE DAVID

TARGAMADZE GIORGI

Georgian Dream-Democratic Georgia

Democratic Movement United Georgia

United National Movement

Christian-Democratic Movement

n the near future, Azerbaijani microfinance market may double, Head of the National Confederation of Entrepreneurs of Azerbaijan (NCEA) Mammad Musayev said during a speech at the Investors Fair in Baku. Pg. 10

rmenia has by far the highest level of entrepreneurial activity among the countries of the Caucasus. Pg. 11

CIS LITHUANIA COMPLAINS TO EU ABOUT WHAT IT CLAIMS IS RUSSIA’S TRADE WAR

ithuania has accused Russia of unleashing a trade war. It suspects there is politics involved and has addressed the European Union with complaints.

Pg. 2

IMF LOWERS GEORGIA’S ECONOMY GROWTH FORECAST FOR 2013 AND 2014

ARMENIA ARMENIA HAS HIGHEST LEVEL OF ENTREPRENEURIAL ACTIVITY IN CAUCASUS: WORLD BANK

World leaders congratulate Ilham Aliyev on election win Pg. 10

Pg. 13

ccording to the new prognosis, published by the Fund, this year economy of Georgia will grow by 2,5%, next year - by 5%. In June of the current year IMF expected 4% growth o Georgian economy, 6% for next year. Government of Georgia, according to this year budget expects 6%

Pg. 12

growth. 5% growth is planned in th e next year budget project. IMF experts expect that consumer prices will reduce by 0,3% this year, increase by 4% next year. IMF’s attitude to unemployment reduction in Georgia is pessimistic: the fund prognosticates that this year unemployment in Georgia will increase from 15% last year data to 16,7%, in 2014 - to 17,3%.

KAZAKHSTAN’S AMBASSADOR:

WORLD NEWS THE IMF FORECASTS GLOBAL GROWTH TO AVERAGE 2.9 PERCENT IN 2013

INTERNATIONAL COURT TO CONSIDER CASE OF GEORGIAN BTA BANK

he IMF forecasts global growth to average 2.9 percent in 2013, below the 3.2 percent recorded in 2012, and to rise to 3.6 percent in 2014. Pg. 13

rmukhamet Ertysbayev, Kazakhstan’s ambassador to Georgia, said that case of Georgian BTA Bank’s shares will be considered in international court.

Pg. 7

David Sharvashidze: I Want To Believe Sales Of Georgian Products On Russian Market Will Be Successful Temur Chkonia: No Matter how We’ll Develop Agriculture, We will not be able to Meet the Needs of even Three Russian Supermarkets

Pg. 5

Kakha Okriashvili: “The Fund of One Billion will Face Shortage of Good Projects“

Pg. 5

Incorrectly constructed organizational structure can make most performing employees incapable and useless.

EXECUTIVE DIRECTOR: PARTNERSHIP FUND IMPLEMENTS MAJOR ENERGY PROJECT

FREE UNIVERSITY AND HUALING GROUP SIGN COOPERATION MEMORANDUM

Irakli Kovzanadze and Director of a major Turkish company “ÇALIK ENERJİ” Khalil Saribey. Pg. 2

China’s Major Corporation to Employ Georgian Students

Pg. 3

Pg. 5

Do not create organizational structure on your own!

MAIN EVENTS

FINANCE MINISTRY: MIGA IS READY TO INSURE SERIOUS PROJECTS IN GEORGIA

October 14, 2013 #25

caucasian business week

eorgian Finance Ministry informed that within his visit in the US, the Minister Nodar Khaduri had a meeting with Keiko Honda, executive vice president of the World Bank’s Multilateral Investment Guarantee Agency

(MIGA). After the meeting, Khaduri declared that MIGA is ready to

provide insurance for serious projects, including from political risks. It will be a sound factor for investors to continue investing in Georgia, he said. In his turn, Honda said that the sides have found a point of agreement in the energy sector and will continue working in this direction, the Ministry reported. To remind, Khaduri’s visit in the US started on October 8.

ECONOMIC PROGRAMS OF PRESIDENTIAL CANDIDATES What is your vision to accelerate economic growth? Which specific areas fall into your priorities and what kinds of policies would you propose to the parliament and the government of Georgia?

FINANCE MINISTER DISAGREES WITH IMF UNEMPLOYMENT RATE PROJECTIONS

eorgia’s Finance Minister, Nodar Khaduri, said he disagrees with “completely unimaginable” projections provided by the International Monetary Fund (IMF) about increase of unemployment in Georgia. In its periodic World Economic Outlook this month, IMF projected 16.7% and 17.3% unemployment rate in Georgia in 2013 and 2014, respectively, up from official unemployment rate of 15% in 2012; in April outlook IMF was forecasting 13.3% unemployment rate in 2014. “I was surprised that the [International] Monetary Fund tabled completely unimaginable forecast in respect of reduction of employment. It should be noted that there was no communication at all with the Georgian government and the Finance Ministry over this issue and no factual data whatsoever show that there

might be any problem,” the Georgian Finance Minister said. “On the contrary, employment has upward trend starting from the second quarter [of 2013] and this process will further strengthen, export has increased and we think that unemployment will be significantly reduced in following years,” Khaduri added. IMF expects Georgia’s economic growth to slow down to 2.5% in 2013 after 6.1% growth last year; IMF’s forecast for next year’s growth is 5% - the same figure is indicated in the government’s initial draft of 2014 state budget. “Growth in Georgia is expected to moderate given slower private investment, weak credit growth, and budget underspending,” IMF said in its World Economic Outlook, adding that “resolution of recent political uncertainty is needed to restore investor confidence.”

AGRICULTURE MINISTRY: KAKHETIAN FARMERS EARN ABOUT 100 MILLION GEL FROM 2013 VINTAGE

griculture Ministry informed that within rtveli (vintage), 16,885 families of Kakheti region got about 100 million lari after realization of grape. This amount exceeds 2 times the volume of last year, the Minister Shalva Pipia pointed. Average volume of sold lot of grape made up 5 t, in which families received up to 7,000 lari, the Ministry marked. Chairman of National Wine Agency Levan Davitashvili reported that at this stage, 84 companies have purchased and

processed 88,742 t of grapes, increasing the volume by 70.7% year-on-year. Davitashvili noted that this year’s price did not fall below 1 lari. Average price of Rkatsiteli (white variety) made up 1.20 lari (per 1 kg), of Kakhuri Mtsvane (green-white variety) – 1.45 lari, while of Saperavi (red variety) – 2 lari. At that, 38 companies applied for the 5th component of preferential agrolending program (preferential loans for grapes’ purchase) and got loans totaled to 43.69 million lari.

NATIONAL WINE AGENCY: GEORGIAN TABLE WINE COSTS $2-2.5 IN RUSSIA

ational Wine Agency told Sarke that price of Georgian table wine on Russian market makes up $2.0-2.5 per bottle. Appellation wines cost higher, the Agency noted, but found difficulty to specify.

According to the latest data, wine export to Russia exceeded 9 million bottles (money showing was not available at this stage). As the Agency said, Georgian wine export is implemented to 42 countries this year, reaching 91.98 million lari for the moment.

MARGVELASHVILI GIORGI

BAKRADZE DAVID

Political Party: Georgian Dream- Democratic Georgia

Political Party: United National Movement

omprehensive economic growth is the basic objective of the country’s strategy. Every citizen should be able to benefit from the positive results achieved, and the universal participation in this process of economic growth should be available for our population. Our priorities are: formation of a stable environment, introduction of new technologies, attracting investments, expansion of markets, stimulation of Georgian production export, growth of manufacturing, energetic and transit potential, more intensive participation in international economic projects. We have set out and have to improve the favourable conditions for business and entrepreneurship. In this regard, preferential loans and business-incubator programs are in development. The rural sector assistance is going to continue until the village gets back on its feet. The government is going to encourage the integration of urban lifestyle in villages through establishing such civil-cultural infrastructure that would make the rural life attractive and encourage young people to stay in villages. By creating valuable living opportunities in rural areas, we are going to avoid the migration and demographic problems. In the contemporary world, economics can not merely be based on exhaustible resources; moreover, natural resources can be consumed to the best by using the knowledge, rather than without it. We must acknowledge that human intellect is the major motive power, but not the exhaustible resources. That’s why it is crucial to develop the human capital assets and reform the educational system. Fully using the intellectual capacities of each of us, we will turn Georgia into an attractive and interesting country, with strong economics. Georgia will become a country of social welfare, based on traditional and European values, which always thrives for development.

t is a fundamental right to strive for welfare and this right may be enforced in a free environment. To ensure the welfare for each citizen, we should form such a model of sustainable development of the country that will be based on the principles of creating free economic environment. This model implies a small government, fiscal order, responsible macroeconomic and valuable monetary policy, low taxes, advanced investment environment, target social programs. The main goal of the economic policy of the united national movement implies quick economic development, creating new job places, overcoming poverty and unemployment, improvement of living conditions and all these factors are to attain more welfare, development and social protection for all citizens of Georgia. The united national movement realizes the role of Georgia in supply of energy carriers through alternative routes to the world from the Caspian Sea region and Central Asia and considers this factor as one of the cornerstones for their efficient operation. The attainment of energy independence is also Georgia’s priority. In this respect we should maintain the diversification of sources of supply of energy carriers. Georgia should become a major exporter of electricity and besides growth in energy generation, the country must construct new transmission lines. Georgia should also develop transport infrastructure. The Baku-Tbilisi-Karsi railway network will enhance economic ties between the East and the West and bring Georgia closer to European economic space. The construction of the seaport of Lazika will take Georgia’s transit potential to a higher level. The harmonization with the European Union and opening new exports markets will stimulate the creation f new job places. To this end, the country should accelerate the process of concluding a free trade agreement with EU and conduct due negotiations with the USA.

ILLEGAL USE OF SARAJISHVILI TRADEMARK REVEALED

nvestigation Service of the Finance Ministry reported that Nika Shavliashvili was detained on a charge of illegal usage of Sarajishvili trademark and adulteration of production. Besides, Tamar Bluishvili and Ruzana Gogochashvili were reported as persons, against whom criminal proceedings are launched on this case.

The Service said that the mentioned persons produced and put in trade 427 bottles of adulterated alcoholic drinks, worth of 8,000 lari, illegally bearing trademark of Sarajishvili (brandyproducer company). Investigation is underway, the Service reported, noting that Criminal Code envisages imprisonment for 3-5 years for the mentioned crime.

GEORGIA TO JOIN NATO RESPONSE FORCE IN 2015

eorgia will join NATO Response Force (NRF) in 2015, NATO’s Secretary General says. At a monthly press conference, Anders Fogh Rasmussen said that from next month the alliance will conduct a major exercise in Poland and the Baltics states. Rasmussen explained that its purpose is to make sure that the NRF, NATO’s rapid reaction force, is ready to defend any ally, deploy anywhere and deal with threats. The Secretary General remarked that Georgia has offered to join NRF in the future and the offer has now been accepted.

“I would therefore anticipate that Georgian troops would be made available for the force as of 2015,” he said. “This, again, would be a first: the first time Georgia has joined NATO’s rapid-reaction team.” Also Ukraine and Finland have offered to join the exercise and have been accepted. “So they will train alongside us – and will then have met the requirements to deploy with next year’s NATO Response Force.” NRF is a force of up to 25 000 troops for rapid deployment, used for collective defense, crisis management or stabilization, or as an initial entry force before the primary deployment. Troops train together and then serve in NRF for six months, until they are replaced by a new force. According to NATO’s official website, NRF is comprised of three parts: ‘command and control element from the NATO Command Structure; the Immediate Response Force, a joint force of about 13 000 high-readiness troops provided by Allies; and a Response Forces Pool, which can supplement the Immediate Response Force when necessary.’

BUSINESS WEEK

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BURJANADZE NINO Political Party: Democratic Movement - United Georgia

e have to determine the country’s economic trends that should be the priority for the country, which has never been done since the establishment of Georgia’s independent. Priority economic trends should be determined from this perspective and reflect the legislative level. In order to motivate the small and medium-sized businesses, we consider it necessary to increase the value-added tax threshold from 100 thousand to 150 thousand GEL; again, in order to encourage the businesses, in the case an enterprise reinvests more than 80% of its profit, both the reinvesting and receiving enterprises should be exempted from income taxes in the next year; due to the short tourist season periodicity in Georgia, for those legal persons engaged in the tourism business in tourism regions the property tax differentiation should be established by the law according to the seasonality; it is necessary to create an anti-monopoly service subordinated to the President, which would be one of the guarantors of creating and protecting the competitive environment in the country.

TARGAMADZE GIORGI Political Party: Christian-Democratic Movement

riority directions of our economic strategy are as follows: • Rationalization of budgetary expenditures; • Development of tax policy by upholding principles of social solidarity and equality; launching of progressive taxation and untaxed minimum; • Development of state policy facilitating the competition; • Support of small business through specific tax initiatives; • State support of export; • Establishment/strengthening of protection tools for free business; • Ensuring targeted and cheap loans for small businesses; • Establishment of fair and low tariffs. presidenti.ge

MEMORANDUM October 14, 2013 #25

caucasian business week

FREE UNIVERSITY AND HUALING GROUP SIGN COOPERATION MEMORANDUM China’s Major Corporation to Employ Georgian Students

ree University and China’s major corporation Hualing Group have signed a memorandum on cooperation. The document was signed by Free Universality Chancellor Vakhtang Lezhava and Hualing Group secretary general Vang Sheng. The signing ceremony was attended by an advisor to Chinese Embassy trade relations Loiu Po, Free University vice chancellor Marina Karchava, Asia and Africa Institute Dean Giorgi Katsitadze, the head of the Chinese direction and the Confucius Institute director Marine Jibladze and students. The guests visited the Free University laboratories, Cooking Academy, received information on students training and educating process, including practical trainings. At the end of the visit, the sides signed the memorandum. The memorandum calls for employing Free University students and graduates. To this end the company will refer them to China for trainings. The company’s staff policy is based on a maximal use of domestic resources. This cooperation also calls for efficient implementation of various joint projects as part of the GeorgianChina cooperation. Free University is an important center of highlevel education and a sole higher school in Georgia where students receive comprehensive knowledge of Chinese language and Chinese Studies. The students take tests in the University test center for Chinese Language and receive HSK international certificates in Chinese Language from China. Moreover, they take active part in various events related to China and Chinese language both in Georgia and other countries. Hualing Group has selected Free University for this trends. The University also fosters successful employment of its students and graduates. VAKHTANG LEZHAVA, a Free University Chancellor: “Free University is one of the suc-

cessful higher schools n Georgia. We are proud of having signed a memorandum on cooperation with one of the major corporations. We help student receive high-level education and knowledge and we also care for their successful employment in the future”. VANG SHENGSIN, Jualing Group secretary general: “We have made focus on Free University for cooperation, because it is a sole hiugh school to received comprehensoive knoeledge in Chinese langaige and Cjinese Studies. Moreover, The cmpany’s staff policy is based on maximal use of domestic resources to employ Georgian citizens. This coopera-

tion also calls for efficient emplementaiton of various joint projects as part of the GeorgianChina cooperation./ It is important we have many samples of career development of Free Univeristiy raduetes in Jualing Group. The memorandum will become one of the main preconditionso for their successful and efficient employment. Jualing Corporation makes focus on implementing major development projects both in China and various counties all over the world, including in the USA, Central Asia and Pacific Ocean basin countries. Founded in Sinzian in 1988 Jualing Gorup owns 4 million square meters of commericla space in

China jointly wioth four developed waholseal markets. Jualing Gorup launmched investments in Georgia at the end of 2007, when the company obtained a license foir logging 48 000 cubic meters of timbers and launched construction of free economic zonme in Kutaisi, the IMereti Region. IN 2012 the company bought a 90% stake in Basisbank. At this stage Jualingt Gorup is constucitng Okynpoic Village at the Tbilisi Sea. Initially, the company will invest 150 million USD in the prpoject oimplemnentation,. The comlexd will hold about 4 000 athletes. The Olympic Village will be handed over tpo Tbilisi City Hall free of charge by the 2015 Youth Olympic Games.

ECONOMICS caucasian business week

October 14, 2013 #25

ASKANELI BROTHERS EXPORTS PRODUCTS TO RUSSIAN MARKET WITHOUT PROBLEMS Company Reacts to New Misuinformation

EXECUTIVE DIRECTOR: PARTNERSHIP FUND IMPLEMENTS MAJOR ENERGY PROJECT

rakli Kovzanadze and Director of a major Turkish company “ÇALIK ENERJİ” Khalil Saribey signed an agreement to build an ultra-modern thermal power plant in the village of Gardabani. After the change of power, the new management of the Fund has worked on a project of the construction of a thermal power plants for several months, and now the parties managed to agree on all issues. According to Irakli Kovzanadze, it is the first energy project of such a scale in Georgia and it will create new opportunities for power generation. The investment cost of the project is 200 million USD while the Fund and the “Georgian

Oil and Gas Corporation will take a part of the funding. “After Georgia will receive additional 230 megawatts of power until the end of 2015, it will be a critical factor in enhancing the energy independence of the country as well as providing increasing energy consumption, “ - said Kovzanadze . Thermal power plant, which will be equipped with two turbines of the American company “General Electric”, will be able to connect to the power grid of Georgia in 25-30 minutes and maintain its stability. Owing to the latest technology, this power plant will be 50 % more economical than all other power plants operating in Georgia.

NORWEGIAN INNOVATION FUND WANTS TO COOPERATE WITH PARTNERSHIP FUND OF GEORGIA

orwegian Innovation Fund considers Georgia to be attractive for investments and expresses wish to cooperate with Partnership Fund. The meeting of executive director of Partnership Fund Irakli Kovzanadze with director of Norwegian Government Innovation Fund Eric Valvatne, also senior advisor Anne Eilertsen was held on Thursday. It’s noteworthy that Norwegian Innovations Fund is subordinated to Norwegian Business and Trade Ministry. It aims to support Norwegian business abroad. The fund makes investments along with Norwegian enterprises in Russia, Ukraine, Azerbaijan, Latvia, Lithuania and Poland. On the meeting Irakli Kovzanadze introduced Georgian investment environment and opportunities of Partnership Fund to Norwegian delegation. He stated that Norwegian delegation’s interest in the investing in Georgian economy is additional positive signal. “Georgian economy is open for discussion of all healthy ideas and mutually beneficial proposal discussions. Transparent policy of our government’s economic team In relation

to investment attraction already takes specific positive results. Todays’ meeting is a proof of it. Partnership Fund intensively works to establish new interesting economic connections and work out new projects. We introduced opportunities of Partnership Fund and our working specific to the Norwegian colleagues; also, completed and ongoing projects. In the near future Partnership Fund will be converted into Sovereign Fund and approach to the specifics used, for instance, by our Norwegian colleagues. In this context, sharing of their experience and intensive partnership with them is more interesting. I think interest of Norwegian side will lead us to the specific initiatives in the near future”, - Irakli Kovzanadze stated. Director of Norwegian Innovations Fund, Eric ValVatne says that Georgia has become interesting for hem as country’s statistic is characterized with improvement trend. “We see that Georgia is becoming attractive country for investments. Therefore, establishment of partnership cooperation with the structures interested in attracting investments is Georgia, is our priority. Our funds resemble each other with structure and specific, which is a good prerequisite for productive cooperation. I hope enhancement of trade-economic relations between our countries and Norwegian business interests t oGeorgia has real and good perspective”, - said director of Norwegian Innovation Fund.

skaneli Brothers company has been exporting products to the Russian market for the last three months without obstacles. Since June 2013 the company has exported over 650 000 bottles of wine to the Russian Federation. Moreover, the company has certified Askaneli Brothers brandy products too. Askaneli and Gideli brandy products will be exported in several days to the Russian Federation, an official press-release of Askaneli Brothers reads. Jimsher Chkhaidze, a founder of Askaneli Brothers, says at this stage the company exports nine varieties of wines to the Russian Federation, including Kindzmarauli, Tsinandali, Alazani Valley-Red, Alazani Valley-White, Khvanchkara, Saperavi, Mukuzani, Akhasheni and Odjaleshi. These wines are sold by Russia’s major network of supermarkets of Magnit all over the Federation. Moreover, Askaneli Brothers products are distributed in such major networks as X5, Kopeika, Perekriostok, Carusel and other ones. The company management says media information as if RosPotrebNadzor, the Russian Federation consumer rights supervision service, had blocked Askaneli Brothers products is a misinformation. “This is a new misinformation, as the company has been exporting wines to the Russian Federation for the last three months without problems and neither partner companies nor federal services have created any problems to our products. Our company has already applied to representatives of RosPotrebNadzor and we have received a response no problems exist concerning our company. Moreover, we received a conformation note on October 10 that two other varieties Gurjaani and Tvishi will be exported to Russia”, Jimsher Chkhaidze noted.

It should be also noted Askaneli Brothers is an only Georgian company that supplies products to Russia’s major network of restaurants Ginza Group. The company received a confirmation note from the network several days ago. Ginza Group is one of the major networks of restaurants in the Russian Federation that unites over 100 restaurants all over the country. Askaneli Brothers is being developed dynamically, the company is constructing a new plant equipped with modern Italian technologies. The plant with doubled production potential is being constructed in line with ISO standards and the process will be over in six months. Founded 15 years ago Askaneli Brothers is one of the leading Georgian alcoholic beverages manufacturers. The company bottles eight varieties of brandy, 32 varieties of wines and 4 varieties of vodka. Askaneli Brothers products have been acknowledged as the best and the company products have obtained over 100 awards at various exhibitions and tasting events. Askaneli Brothers exports products to 19 countries, including to the USA, Ukraine, China, Germany, Great Britain, Estonia, Lithuania, Latvia, Poland, Czech Republic, Kazakhstan, Finland, Azerbaijan and Belarus.

INA GUDAVADZE RECALLS ACTION FROM BRITISH VIRGIN ISLANDS COURT AGAINST VANO CHKHARTISHVILI

n October 4 Ina Gudavadze recalled an action against Ivane Chkhartishvili that had been submitted to the British Virgin Islands court. The trial had been scheduled for October 26. This is an important fact, as the supervision over the dynamics of the dispute leads to a clear inference the issue is of ungrounded pretences that are destined to failure during the trial and their only goal is to stage psychological pressure. Ina Gudavadze launched property dispute against Vano Chkhartishvili in four years after the death of her spouse Badri Patarkatsishvili and this is a questionable coincidence, one the one hand, with the so-called classified treaty between Gudavadze and the government of Saakashvili, and, on the other hand, with the confrontation between Vano Chkhartishvili and the regime of Saakashvili that ended in granting the status of a political refugee to Chkhartishvili. Ina Gudavadze had submitted actions to both Georgian and British courts. The British Virgin Islands court refused to satisfy the action in June 2012 and imposed trial costs on Ina Gudavadze. On July 2010 the side of Ina Gudavadze recalled the action from Tbilisi City Court under the pretext the case was being discussed by the British Virgin Islands Court. But later the action was recalled from the Virgin Islands court too. The only reason behind the decision was not the goodwill of the plaintiff but the fact the actions had no perspective for success. The Georgian society knows from the very beginning Ina Gudavadze put forward pretences against Vano Chkhartishvili and we offered the widow of Badri Patarkatsishvili to choose one of the world’s five leading auditor companies to ex-

plore all business details of our partnership with Badri Patarkatsishvili. This was a sole just way, one of the business partners had died and another side or the existing documents had been left for trust. Unfortunately, the widow’s so-called advisors chose other scenario. Television channels, media, armed forces, satellite political organizations and other elements that were controlled by the previous government were involved in questionable information war against Vano Chkhartishvili and they started psychological pressure on him to reach the desirable goal. Similar attempts were made after the power change too. During this period, the defense side of the widow has violated all legal and moral frames, but we have never dishonored the memory of Badri Patarkatsishvili and the reputation of her widow. At all stages we have maintained correctness and self-contrl. However, similar approaches do not mean participants of dirty information war campaign and organizers will not be called to just responsibility. In this case we have submitted concrete actions against attempts of disgrace the honor, dignity and business reputation. We understand very well that Ina Gudavadze was a hostage of a certain kind of the circumstances created by the previous government. We can also understand that she cannot avoid ungrounded promises of some forces in new circumstances too, but we cannot endure permanent continuation of this situation, as this is farce and this is fact. We would like also to note the worldwide acknowledged American investigation company is exploring the details of this dispute and the society will see the unbiased inference of this company. The Press Service of Vano Chkhartishvili

INTERVIEW October 14, 2013 #25

caucasian business week

TEMUR CHKONIA: NO MATTER HOW WE’LL DEVELOP AGRICULTURE, WE WILL NOT BE ABLE TO MEET THE NEEDS OF EVEN THREE RUSSIAN SUPERMARKETS “Can anyone name innovations implemented in Georgia for the last 20 years?” An interview with a businessman TEMUR CHKHONIA

- Georgia has become an attractive place for investment, but it still remains a poor country. A smooth business climate is not sufficient the country to get rich, core markets and a positive image of Georgian goods are necessary - the Russian publishing house “Kommersant” edition “Dengi” writes. Is our country attractive in terms of attracting investments, but at the same time poor ? - Georgia is a very poor country with all its data and resources. For example, no matter how we will develop agriculture, we will not be able to satisfy three Russian supermarkets. It must be bad to hear but in most cases the problem is in us. In our knowledge, experience ,finding quality products and so on. The country should go ahead with its technology, innovation,

the creation of new products and so on. It is often said that the Russian market opened for Georgia but only few products can enter the Russian market. We are talking about a country with the population of 200 million people. We need very serious economic programs, which require an intelligent knowledge, development of farmers and so on. They say that we do not have money, it’s not a question of first importance. The main thing is who will receive these funds. Our problem is ignorance. Georgian market will be attractive in the case if people are inclined to investors. We need to think about many issues. For example, rich Georgian people, who are scattered all over the world. We are looking for Arab, American investors, which is good, but we don’t find ways to return the Georgians who have the greatest knowledge, money potential. Let’s support them in making some investments here. The previous government had a special program focused on attracting money from Georgian businessmen living abroad. We do not need to attract funds, a spark should come from inside of them, which is called the homeland. This is one of the ways. - You’ve mentioned knowledge, innovations and new technologies, does business lack the desire or the government is not doing enough in this direction? - This is a combination. The Fund, which was created for Georgia’s economic development, should be specific. They should offer funding of any concrete program, innovation which will be export and will create many jobs.

- With regard to a positive image of the Georgian products. The article states that the Georgian products still do not have a positive image in the international markets. What can you say in this regard? - When we talk about wine, everybody has the fear of the requirements existed in Russia. We have wine of a very good quality; however, due to the greed someone can mix low-quality wine. I know that many people get upset, but this feature is characteristic for Georgian people. - Was wine sector unattractive for you? - I have the knowledge in a specific field. I am a specialist in soft drinks, I have experience in construction of fast food restaurants, I acquired knowledge in a hotel business, but I still consider myself a good non-alcoholic beverages specialist. - Is the investment environment not attractive today? - Regulations are the easiest problem in Georgia. We must admit: If we want investors to come, all must be ready to receive them. They write the truth that the country is poor and there is a lack of innovations. If anyone can name innovations implemented in Georgia for the last 20 years? Therefore, we need smart, educated people who will implement such new technologies that will overshadow the oil issue, and so on. - Do you see such people in the business elite? - Not in the circles in which I move. The Fund should search people who are able to develop new technologies. This is the country’s wealth and future.

KAKHA OKRIASHVILI: “THE FUND OF ONE BILLION WILL FACE SHORTAGE OF GOOD PROJECTS“

VAKHTANG KHMALADZE: ACCORDING TO SUBMITTED DRAFT, THE BUDGET IS PARTIALLY PROGRAMMIC, BUT STILL IMPERFECT

hairman of the Parliament’s Legal Committee Vakhtang Khmaladze declared that “according to submitted draft, the budget is partially programmic, but still imperfect”. Draft state budget-2014 shows what kind of projects are funded, but the bill lacks relevant grounding, Khmaladze said. He pointed that his committee’s recommends to accompany all allocations for each program with exact description in future. Draft budget was presented at today’s hearing in the Committee by Deputy Finance Minister Giorgi Tabuashvili. According to the draft, allocations of 3 ministries are significantly increased. In particular, allocation of Healthcare, Labor and Social Protection Ministry to increase by 15.1% (up to 2.7 billion lari), Agriculture Ministry – by 21.2% (up to 280 million lari), while Education and Science Ministry – by 14% (up to 764.3 million lari).

An interview with “PSP” founder KAKHA OKRIASHVILI

- During the recent meeting between the representatives of the Ministry of Finance, Tax Service and Business Association it was decided to establish a special commission which will make a number of changes in the tax legislation. You were present at the meeting. How satisfied are you with the results, and, in general, with the level of communication between business and government? - Communication is necessarily and lately it exists and it is welcome. For business the most important thing is justice and there should not be any ambiguity from the state with regard

to entrepreneurs. Everything must be transparent. During this meeting it was noticeable a desire of the Ministry of Finance to be transparent and open. It is also very important to avoid a subjective approach, in which case the business would not be in a state of stress. Now we are talking about 9 initiatives. For example, there is a norm in the current tax code which stipulates that a company cannot be checked by the tax authorities for 6 years, admit a random error and after 6 years a major penalty will be imposed on it. According to one of the initiatives, this term will be reduced to 3 years, although I’m all for it that audit to be conducted in all companies once a year. Anyway, it should be changed. It’s wrong when mistakes made 6 years ago can lead to a fine over 6 years. It is also planned to take other changes that will make the tax laws more understandable and unambiguous. - For many years, the business has announced that many items of tax legislation can be interpreted differently. What is the government planning to do in this regard? - There was a point, which concerned the powers of the Minister of Finance, and assumed that he has the right to interpret a particular provision of the tax law. This item will be abolished. There are still a lot of the provisions of the Tax Code that must be changed and improved. In addition, there is an initiative on the regional differentiation of the fixed taxes that is very correct - you cannot pay the same taxes somewhere in the alpine village and in the center of Tbilisi . In general, there are a lot of very good and right initiatives, the main thing is a contact with the Government and the Ministry of

Finance had a desire to correct the existing defects. So, reforms are continuing. I see that the approach is correct. I used to say that we have a good Tax Code, but during the administration the state ignored it too often. This will be put to an end. - A few days ago it was announced about the establishment of the Co-investment Fund. Many businessmen have expressed a desire to present their projects, it was said that the Fund would attract large long-term investments and business would no longer have problems with the availability of finance. What’s your opinion in this regard, how will the Fund help businessmen to attract capital and whether it will be designed only for a narrow layer of big business while ordinary businessmen will not be able to get anything ? - I think many people will try to get financing, but investing is not limited to the attraction of finances. I highly doubt that 6 billion USD will be invested in Georgia. And it’s not about the money, but the fact that we have a shortage of good and profitable projects. There is money, but there are no projects. Those who will have a good project will receive money, but we have a problem with projects. - The draft budget for 2014 has already entered Parliament, and it is socially oriented again. In your opinion, how is it justified? Does the country‘s economy allow focusing on social programs? - In this regard there are two approaches and a balance should be maintained here. I adhere to the right-centrist views and, in principle, oppose the increase in government spending. On the other hand, the question arises - what to do with the poor population? So, in any case it is necessary to find a balance.

DAVID SHARVASHIDZE: I WANT TO BELIEVE SALES OF GEORGIAN PRODUCTS ON RUSSIAN MARKET WILL BE SUCCESSFUL

eputy Minister of Agriculture David re David Sharvashidze responded to statement of Russia’s State Sanitary Service, who rejected 28 species of Georgian wine. “I want to believe that realization of Georgian products on Russian market will have no problems”, Sharvashidze said. In this particular case, we will thoroughly study the issue and then make respective statement, he added. In his turn, founder of one of the companies, mentioned in Russian statement, Askaneli Brothers, Jimi Chkhaidze declared that Russian Service told him that “it was old information and now there is no problem with the company”. Besides Askaneli Brothers, Russian State Sanitary Service named also Schuchman Wines, Imedi-96, Akhasheni-2005, etc.

BUSINESS caucasian business week

MTIELI AND SHAVPAROSNEBI COMBINE TO HIGHLIGHT GEORGIAN TRADITIONS

ornike Nikolaishvili: Mtieli Beer and Shavparosnebi are serving the common goal of reviving, maintaining, and popularizing Georgian traditions. The premiere of the new joint advertisement video featuring Natakhtari’s Mtieli Beer and Shavparosnebi was recently held at the National Folklore Center. Before the premiere, guests enjoyed the staged fight performed by Shavparosnebi and listened to Georgian folk songs performed by the

Boys’ Folk Ensemble. Mtieli is a beer made according to Georgian mountain traditions. The 54-second advertisement video is not only a beer advert; but also aims to popularize Georgia’s ancient martial arts traditions, which are performed in the video by Shavparosnebi. According to Natakhtari representatives, Shavparosnebi has spent a great deal of time learning, restoring and systematizing Georgian martial arts, which are some of the oldest fighting traditions known. The idea of the promotional advertisement is to let the wider public know how Georgians fought in the past. “When we decided to launch the brand on the market, we found old recipes for making beer in the mountains and brought them to a large audience of customers. On the other hand, there are the Shavparosnebi who found and sought to revive historical Georgian martial arts traditions. Their work is also connected to Georgia’s mountains. These two concepts match each other so well that it would be impossible not to cooperate together. We are also planning joint projects in the future,” Tornike Nikolaishvili, head of Natakhtari’s marketing service said. Irakli Kakosadze, the founder of Shavparosnebi, said that Shavparosnebi are members of the Georgian Federation of Martial Arts. For over 20 years, they have been reviving the ancient tradition of Georgian martial arts in contemporary Georgia, and they are training Georgia’s youth according to those traditions. At first, the Federation of Georgian Martial Arts was established. Later, the Khridoli group split from the federation and registered as a separate entity. Starting from 2011, the remaining members named themselves Shavparosnebi, based on ancient traditions and continued their activities. Currently Shavparosnebi unite over 400 youth. In addition to Tbilisi, the organization operates in Batumi, Kutaisi, Gori and Kazbegi.

October 14, 2013 #25

MARGEBELI HOLDING HOSTS TBILISI PICKLE FESTIVAL

n October 5-6, as part of the Tbilisoba celebration, Margebeli Holding held an unusual event in Georgia – the Marneuli Pickle Festival. In Ortachala’s Gorgasali Alley, on the premises next to the restaurant Maspindzelo, guests had the opportunity to taste products produced by the M brand. The event organizers explained that the festival will become a tradition in Georgia and will be held every year, as this year they had an unprecedentedly large number of visitors. Festival guests enjoyed the tasty pickles and sauces produced by the Marneuli Food Factory and made using Georgian raw products. Festival attendees were also able to sample cucumbers and tomatoes grown on the lands of Marneuli Agro and taste the various kinds of cheeses made of natural milk by the Teleti Farm Margebeli. Pickles are quite popular and are available all over the world, including Southern and Eastern Asia, the Middle East, Central and Eastern Europe, North and Central America. Due to the large geographical area of pickle distribution, there are a diverse array of options to taste. People started making pickles out of food products 4,000 years ago. For example, cucumber pickles were very popular in India. In Northern India it is called Achar. The pickle-making method was used to keep seasonal food products, and pickles were eaten during the season when other products were not available. Taking pickled products on long trips overseas were considered quite convenient. Because of the pickle’s flavorful taste, they were considered quite popular then and remain so now as well. The Tbilisi pickle festival was opened with the Modzakhili Folklore Ensemble. From 1-2 pm., a public pickling was held. In front of the guests, General Manager of the Marneuli Food Factory,

Irina Gaprindashvili, made pickles out of cucumbers with her own hands. Most importantly, products of the Marneuli Food Factory and Marneuli Agro were sold at special prices at the festival. The Marneuli Food Factory is part of Margebeli Holding, which was established in 2007 and is considered to be one of the largest enterprises in Georgia. The factory, equipped with European standard machinery, produces over 50 varieties of tasty canned products made from natural Georgian raw products. The factory is supplied with raw products by the Marneuli Agro Company and local small agricultural farms. According to the factory’s management, the enterprise has all the necessary technical capabilities to provide the Georgian market with products that have no alternative, are of high-quality and of local production. Each product put in the can is grown in Georgian soil and is natural. Thanks to this, the M brand has become synonymous with quality and healthy products in Georgia. “I am attending the festival as a guest but the main thing is that our products and our brand is already considered the “people’s brand”, which is loved by the entire country,” Mikho Svimonishvili, founder of the Margebeli Holding said. “Our goal has been achieved and we will continue our development in order to replace imports with as many local products as possible.” Margebeli Holding offers several novelties to their customers. This year, tomato salad “Lecho” and “Ajika” [spicy sauce] were released and are already being appreciated by Georgian consumers. As for traditional products, vegetable assortment, tomato paste, cucumber pickles, tomato pickles, mixed cucumber and tomato pickles, tomato sauce, red Tkemali sauce, various fruit jams, as well as Nabeghlavi and Bakhmaro waters, were presented at the festival with new packaging, different size jars and nice bottles.

HEIDELBERGCEMENT HUGE SOCIAL EVENT TBILISIMARATON Run for your health – Run for charity

he second Half Marathon, covering 21.095km will be held on October 26 at Tbilisi sea territory, organized by HeidelbergCement under the patronage of the Ministry of Sport and Youth Affairs of Georgia and the Embassy of Germany in Georgia. TbilisiMarathon aims to establish and promote healthy lifestyle in Georgia and at the same time contribute to the charity, as participation fee of 10

Gel is doubled by the company and transferred to Iavnana Fund. “We think that it’s worth doing something in terms of health of our employees and Tbilisi population, as well as for the charity,” says Michael Hampel, the General Director of HeidelbergCement. “Last year, we had 500 runners while this year we already have more than 1,000 willing participants. By the time of the marathon, I am sure we will reach 2,000 runners,” he added.

TbilisiMarathon 2013 will feature participants from various governmental organizations, institutions, embassies, companies and individuals from Georgia and 25 other countries. Importantly, for the first time in Georgia, results will be revealed using international standards organized by German Company Mika Timing’s ‘Official Timekeeping and Data Processing’ system, which is used in Stuttgart, Frankfurt, Hamburg and Berlin marathons. Health and Safety management is the integral part of HeidelbergCement corporate policy, especially for such huge social project, as TbilisiMarathon: every runner is insured by insurance company IC Group, besides Georgia Red Cross Society is TbilisiMarathon partner to provide the first aid service for participants and Davit Tatishvili Medical center will manage the massage service after run at the finish line. Police and Emergency service will be organized as well. Ortwin Hennig, an Ambassador of Germany in Georgia, stated that HeidlebergCement brings social and corporate responsibility common to German companies to Georgia. “In our understanding of a social market economy, a company should not only focus on its revenues but also contribute to the wellbeing of society,” he explained and added that TbilisiMarathon in longrun will contribute to the development of tourism potential of Tbilisi and the country itself. “The initiative to organize a marathon came from business sector and I believe the involvement of the sector in sport activities is quite important for

our country,” says Levan Kipiani, the Minister adding that hopefully HeidlebergCement will set an example for other companies. According to Paata Burchuladze, the founder of Iavnana charity fund, last year’s marathon helped three large families. “Hopefully, this year the marathon will have more participants and more families will benefit from the raised money,” he added. At the press conference held on October 4, HeidelbergCement signed two memorandums of cooperation with the Ministry and the Embassy, providing long-term support for the further development of the marathon and help to involve governmental institutions, federations, sport clubs and information distribution among German companies operating in Georgia. “TbilisiMarathon is huge social project, dedicated to health and charity, but at the same time marathons worldwide have proven to be tourism magnets that should be rather important for Georgia. TbilisiMarathon is the biggest challenge for us – organizational teem, as we develop such sport activity, that was not popular in our country… TbilisiMarathon is cultural change and in edition, this is behavior change that is rather important for country development!”- says Nino Subeliani, communication manager of HeidelbergCement in Georgia. And last but not least, amateurs and professionals aged 16-71 are welcome to register at www.tbilisimarathon.ge and run for health and charity!

BANKING & BUSINESS October 14, 2013 #25

caucasian business week

BANK OF GEORGIA INTRODUCED UNPRECEDENTED MORTGAGE LOAN ON THE MARKET

KAZAKHSTAN’S AMBASSADOR: INTERNATIONAL COURT TO CONSIDER CASE OF GEORGIAN BTA BANK

ank of Georgia announced about the mortgage loan with the least interest rate on the market. All who will be ported or receives mortgage loan, will get the lowest effective interest rte of 7,9%, without any additional expenses and will be exempt from interest payment during 3 months. Loan is issued in GEL and enables customers will enjoy with flexible loan payment conditions. Bank of Georgia informs that they enable to reduce interest rate 4 times by unique Offset function. For instance, the customer conditionally has 20 000 GEL mortgage loan and appeared free amount of 5 000 GEL. He’ll deposit it on the Offset amount, loan interest rate will be calculated only for 15 000 GEL instead of 20 000 GEL. Besides, in addition to interest rate reduction on the Offset account, free amount will appear which may be used any time. Loan is available for any retail clients, monthly revenue of which starts from 750 GEL and wants to purchase a flat, land, house, office area or furniture. The loan is issued for up to 15 years.

rmukhamet Ertysbayev, Kazakhstan’s ambassador to Georgia, said that case of Georgian BTA Bank’s shares will be considered in international court. The case will be considered either in Holland or in Sweden, where “I am sure we will win”, he declared. The matter concerns controlling stake of BTA Bank’s shares which “was illegally seized” by representatives of Silk Road Group, Ertysbayev pointed. As of June, LLC Silk Road Group owned up to 51 in the bank, while Kazakhstan’s BTA Bank – 49%. Ertysbayev said that initial stake of Silk Road Group made up 20%, while up to 31% was owned by 2 offshore companies. Silk Road Group purchased shares from these offshore companies, not informing Kazakh side on the deal, he claims.

REPUBLIC RECEIVED CREDIT OF $20 MILLION FROM EFSE

FSE opened $20 million credit line to the Bank Republic for small and medium-size business lending. The sides signed loan agreement. By initiative of German Reconstruction Bank (KfW), EFSE (European Fund for South-Eastern Europe) is created with financial support of Economic Cooperation and Development Federal Ministry of Germany (BMZ) and European Commission. Republic informs that with this resource, through 28 branches credits will be issued to over 1600 beneficiaries for micro and small businesses. “We are pleased that Republic is our new partner in Georgia. It has a powerfully developed distribution network. It will enhance accessibility of EFSE in Georgia, which is dynamically developing country of European neighborhood region”, - Monika Beck, head of EFSE board of directors mentioned. Director General of Republic Christian Carmagnole states that bank Republic offers micro and small business credits to the customers along with other products and through cooperation with the new partner funds for private business development will become more accessible for the entrepreneurs. EFSE aims to provide economic cooperation and prosperity in the countries: Albania, Armenia, Azerbaijan, Byelorussia, Bosnia and Herzegovina Bulgaria, Croatia, Former Yugoslav Republic of Macedonia, Kosovo, Georgia, Moldova, Montenegro, Romania, Serbia, Ukraine and Turkey. Individuals can also access on long-term funding, for housing renovation.

KSB COMPLETED 8 MONTHS WITH 4,936 MILLION GEL PROFIT

SC KSB Bank completed January-August with 4,936 million GEL (II Q 2013 - 3,535 million GEL, I quarter 2013 - 1,6 million GEL). By September 1 2013, non-banking deposits portfolio equals to 272 million GEL (II Q - 260 million GEL, I quarter - 235 million GEL), loans - 234,8 million GEL (II quarter - 230 million GEL, I quarter - 223 million GEL), overal obligatins - 354 million GEL (II quarter - 326 million GEL, I quarter - 306 million GEL). Bank’s actives equal to 444,6 million GEL, market share - 2,9 million GEL (II quarter - 416 million GEL, I qaurter - 393 million GEL). UAE Sheikhs are bank’s stockholders.

“Shares should be primarily offered to Kazakh side, which owned major stake. In case of offer, Kazakh side would purchase them, but it did not happen”, the ambassador said. The same time, Ertysbayev declared that former head of Kazakh BTA Bank Mukhtar Ablyazov, “now state criminal”, being imprisoned in France and against whom criminal case is initiated in Kazakhstan as well, borrowed in 2005-2006 several billion dollars from Russian and German banks. Up to $1 billion from this sum appeared in Georgia, resulting in opening of Georgian BTA Bank, hotels Radisson Blu Iveria, Radisson Blu Batumi and construction of some other objects, the ambassador said and added: “This money is debt of Kazakh BTA Bank until now, more specifically, of Kazakhstan’s Central Bank”.

OWNERS OF DELISI CONSTUCTION PROJECT TO APPLY TO COINVESTMENT FUND FOR FUNDRAISING

onsultations n funding on the multifunction center construction will be held in the Co-investment Fund in several days. One of the owners of the object Bakur Kiguradze considers that the project has all characteristics to interest potential investors. Kiguradze considers agreement with Carrefour as a first successful step. In the complex, on the very first stage of the construction placement of the largest trade object will be followed by inevitable entrance of the other brands. Construction starts in 2014 and on the first stage 30 000 square meters will be arranged, on the second one - 65 000 square meters and on the final stage - “skyscraper” (50-store) with hanged gardens. Project budget equals to $18 million. Complex name, in accordance to Turkmall leave of the project, Forum will be removed and named as Delisi. The owners say that Turkish operators ran away due to inappropriate attitude of the previous government. Bakur Kiguradze represents one of the owner companies of the object - Niba Invest, along with

former Tbilisi mayor Niko Lekishvili. Other coowners include Jewish businessmen, representing LTD Georgia Business Development and Union of Georgian Professional Unions (11,4%). Project works of the complex started in 2008. Potential investor and operators were changed several times. Famous Italian architecture Maximeliano Fuxas worked on the innovative project. Underground complex will be covered with cubic glass roof, which will provide illumination for all underground floors. Given that underground temperature does not exceed to 14 grades, maintenance of the necessary temperature in summer and winter time does not require much expenses. Usage of thermal waters significantly provides Energy efficiency for heating systems

ONISHCHENKO REJECTS 28 ALCOHOLIC DRINKS FROM GEORGIA Sanitary Supervision Service of Russia will not accept 28 kinds of Georgian alcohol drinks on the market, presented by Georgian producers for registration. Main sanitary inspector of the country Gennady Onishchenko stated about it. “According to expertise results, during last week 28 expert conclusions are registered about non compliance of the products to the required standards”, - Onishchenko stated to Interfax. He said that wines of Imedi-96, Shukhman WInes Georgia, Askaneli Brothers, Akhalsheni-2005 and others are among the rejected wines. “All these made us to express doubt on the will of Georgian side to establish long-term, stable and civilized relations with Russia, part of which should be stable quality of the wines presented to the Russian market”, - says main sanitary inspector of Russia.

“Such number of negative conclusions on Georgian wine, which should be etalon for Georgian producers means that all producers did not make appropriate conclusion from the situations we’d had with Georgia. All these makes us to review out attitudes with Georgia, which wants to resume business relations with Russia”, - Onishenko stated.

STARTING PRICE FOR 25-YEARS LICENSE OF THE MINERAL WATER

ational Agency for Environment sells 25-years license for Mitarbi mineral water deposit usage. Starting price of the deposit, located in Borjomi municipality is 903 892 GEL, trade step - 90 389.20 GEL. Capacity of the mineral resource is 50 114,5 cubic meters in a year, among them category A - 38

434,5 cubic meters in a year, C1 - 11 680 cubic meters, According to auction terms, license owner is required to provide water transportation between mineral water Mitarbi deposit and bottling enterprise only with their connecting pipeline. Meanwhile, they should provide arrangement and construction of the pipeline system. Auction ends on November 11, at 18:00. The winner should pay the amount in 15 days term.

BANK CONSTANTA’S STAKEHOLDERS POSTPONE CAPITAL GROWTH FOR DECEMBER

ank Constanta’s stockholders delied capital increase till December. Bank’s stockholders had to discuss stock capital increase issue on October 8 and they scheduled meeting in December. According to II quarter data, overall stock capital of the ban equals to 42,3 million GEL. Principal stockholder of the bank (86,3%) is TBC Bank, which became control package owned in SPring 2011. 9,4% belongs to Oiko Credit, 1,6% - Tamar Lebanidze and 1,1% - Levan Lebanidze. From TBC side indirect stockholders large beneficiaries are EBRD (17,09%), IFC (17,09%),DEG (9,9%) TBC Holdings (16,6%), Mamuka Khazaradze (15,4%), Badri Japaridze (7,7%).

BASISBANK ENDS JANUARY TO AUGUST PERIOD IN 6.2 MILLION GEL PROFITS

SC Basis Bank completed 8 months of 2013 with 6.2 million GEL profit (II quarter - 4,34 million GEL, I quarter 3,48 million GEL). By September 1 deposit portfolio (without banks’ deposits) equal to 175 million GEL (II quarter - 183 million GEL, I quarter - 117 million GEL), loans 156,2 million GEL (II quarter - 141,4 million GEL, I quarter - 114 million GEL), overall obligations 239,6 million GEL (II quarter - 237 million GEL, I quarter - 162 million GEL). Bank’s actives equal to 347,5 million GEL, market share - 2,2% (01/01/13 -1,4%). SInce the beginning of the year actives have increased by 74% (01/01/13 -199,9 million GEL). Major stockholder (95,6%) of the Basis Bank is Hualing Group, which has made $30 million investment in the supervisory capital in June/ Stock capital is also increased, which equlas to 108 million GEL by September 1 (II quarter 108 million GEL, I quarter - 56 million GEL). EBRD owns 1,9% share of the bank, Bank’s founder and head of supervision board ZUrab Tsikhistavi - 2,6%, owner of 95,4% beneficiary is Enhva Mi.

LIBERTY COMPLETED 8 MONTHS WITH 11,5 MILLION GEL PROFIT

SC Liberty Bank completed JanuaryAugust with 11,5 million GEL profit. Profit in the analogical period of last year equaled to 5,4 million GEL. By September 1, 2013 clients’ deposits equal to 1,052 billion GEL (01/09/12 - 703,1 million GEL), credit portfolio - 515,5 million GEL (01/09/12 - 450,3 million GEL), overall obligations - 1,09 billion GEL (01/09/12 -805,1 million GEL). Bank’s actives equal to 1,213 billion GEL, market share - 7,8% (01/09/12 -894,5 million GEL, 6,3%). Bank’s stock capital equal to 125,4 million GEL (01/09/12 -89,4 million GEL). Liberty Holding Georgia is a main stockholder of Liberty Bank (former People’s Bank) (73,1%). BNY owns 11,3%, 8,3% belongs to JSC Liberty capital. Bank’s beneficiaries are Dan Cortache Patriciu (73,1%) and Lado Gurgenidze (8,1%).

İŞBANK BATUMI BRANCH COMPLETED 8 MONTHS WITH 245 600 GEL LOSS

atumi branch of Turkish İşbank completed January-August with 245 600 GEL loss. By June 1, deposits (current accounts) equal to 721 000 GEL, loans 12,5 million GEL, Bank’s actives - 25,8 million GEL. Batumi branch of Turkish İşbank operates for a year. It’s represented by 1 branch and a service center (Batumi Airport) in Batumi; it will be opened in Tbilisi in autumn. Owner of 40,4% of the bank’s stocks is İşbank Pension Fund, 28,1% belongs to Republican People Party, other - to employees of the bank and other individuals.

8 UP TO 20 KAZAKHSTAN COMPANIES PARTICIPATE IN GEORGIAN – KAZAKHSTAN BUSINESSFORUM

eorgian-Kazakhstan businessforum, being organized by Georgian Chamber of Commerce and Industry, was started in Tbilisi on October 8. Up to 20 Kazakh companies participate in the event, which will last until October 10. Kazakh delegation includes representatives of companies, engaged in food, pharmaceutical, construction, engineering, leather processing and chemical industries. From the Kazakh side, the forum is organized by the Kazakhstan’s National Export and Investment Agency Kaznex Invest and Industry and New Technologies Ministry. Within the forum, Kazakh Concern TsesnaAstyk and Georgian Uni Trade Geo signed today an agreement regarding Kazakh pasta import to Georgia. According to Sakstat, Georgian export to Kazakhstan amounted in the first half of this year to $44.8 million, increasing by 78.5% year-on-year, while Kazakh import to Georgia – to $10.44 million, declining respectively by 86.1%. According to Sakstat’s preliminary data of the first half of the year, volume of Kazakh investments to Georgia made up $19.3 million, increasing by 80.1% year-on-year

ANOTHER FUND MAY BE CREATED IN GEORGIA WITH INITIATIVE OF ELENILTO GROUP

avid Alon, director of Elenilto Georgia (subsidiary of Israeli Elenilto Group), declared that there are plans regarding creation of fund of $2.5 billion, which will target development of the energy sector. Alon explained that his company is ready to invest $500 million in the fund, while “the rest sum will be invested by those business partners, who are willing and able to be investors of the fund”. Before Elenilto Georgia takes final decision regarding the fund’s creation, the company should analyze certain statistical and economical information, Alon pointed and added that at this point, the company is testing economic profitability, which may take several months. “If political stability and economic indices will be positive in terms of profitability, we do not see material problems”, Alon said. The company supposes to take final decision by the end of the year. To remind, Elenilto Georgia holds 25-year license on exploration and extraction of oil and gas on license block XIH (territory of Sagarejo and Gardabani districts) since June 2012. According to the license terms, the company should invest $41 million.

RUSSIAN MARKET TO OPEN FOR GEORGIAN VEGETABLES NEXT WEEK

eorgia’s Agriculture Minister Shalva Pipia reported that Russia will abolish last restrictions on import of Georgian phytogenous production on October 14. The matter concerns phytogenous production of high-risk, subjected to phytosanitary control, such as hazelnuts, citruses, grapes, apples, pears, quince, etc. Respective agreement was signed by chairman of Georgian National Food Agency Zurab Chekurashvili and head of Russia’s Veterinary and Phytosanitary Control Service Sergey Dankvert. Pipia pointed that since June 2013, Russia gradually removed restrictions on import of Georgian wine, alcoholic drinks, mineral waters and phytogenous production of low-risk.

FOREIGN PRESS caucasian business week

October 14, 2013 #25

NO CHANGE FOR THE BETTER Georgia appears to have moved backwards under Bidzina Ivanishvili

IKHEIL SAAKASHVILI, Georgia’s outgoing president, can be accused of many things, but lack of vision is not one. Ten years ago the then 36year-old Mr Saakashvili led the rose revolution to become the world’s youngest national leader. His country was a traumatised, failing state. Over the next ten years, he led it through a mental revolution, modernising it, shaking off its Soviet legacy and putting it back on the map. He also fought and lost a war with Russia, cracked down on the opposition, dominated the media, interfered with justice and monopolised power. “In our rush to impose a new reality, against the background of internal and external threats, we have cut corners and certainly made mistakes,” Mr Saakashvili said in his farewell speech at the United Nations. The price for those mistakes was the loss of last year’s parliamentary election to Georgian Dream, a coalition led by a reclusive 56-year-old billionaire, Bidzina Ivanishvili, who made his fortune in Russia. Many Georgians rejoiced that Mr Saakashvili’s monopoly on power was broken. On October 27th Georgia will vote for a new president, whose powers will be curtailed by a new constitution turning the country from a presidential into a parliamentary republic. But instead of excitement and hope, the air in Tbilisi is thick with anxiety. The leading contender is Georgy Margvelashvili, a former education minister, whose most striking quality is a lack of political experience or ambition. Mr Ivanishvili chose him instead of Irakli Alasania, an able West-orientated defence minister, whom he slapped down for his presidential ambition. Next comes the candidate of Mr Saakashvili’s United National Movement (UNM), David Bakradze, a soft-spoken former speaker of the parliament, who has tried to project a sense of calm and whose poll rating is around 18%. Then there is Nino Burjanadze, a populist, who has been endorsed by Mr Ivanishvili as a viable opposition force. Once an ally of Mr Saakashvili, she has become his fiercest opponent. After her dealings with Moscow and violent clashes in Tbilisi, she was presumed politically dead. Many Georgians now worry about the past rearing its head. Her eye-catching campaign appeals to those who consider Mr Ivanishvili too soft on Mr Saakashvili. Although her rating is below 10%, she has said any result short of victory would be a sign of rigging. There could also be a second round and calls for a new parliamentary election. Yet the main source of uncertainty is Mr Ivanishvili. Last month he shocked the country by saying

he would step down as prime minister after the presidential election to concentrate on strengthening civil society. Members of Mr Ivanishvili’s coalition, including David Usupashvili, the thoughtful speaker of the parliament, seemed relieved. But Mr Saakashvili’s supporters are worried. “Mr Ivanishvili wants to stay in charge but not be accountable. The danger is that his departure will create a power vacuum that could result in chaos,” says Giga Bokeria, one UNM leader. Georgian voters who hoped for a windfall from Mr Ivanishvili’s wealth feel cheated: some 70% say they disapprove of his early departure. Mr Ivanishvili came to power promising to respect the law and create jobs, but his main motive was to destroy Mr Saakashvili and his party machine, often through selective justice. Vano Merabishvili, a former interior minister, has been arrested and detained as his trial has been repeatedly postponed. Several local UNM mayors have also been dismissed or arrested on trumped-up charges. In trying to destroy Mr Saakashvili’s legacy, Mr Ivanishvili has gutted the mechanism of governance, say critics. Little progress has been made on things that matter to Georgians, including jobs and territorial integrity. The economy is stalling, foreign direct investment is drying up and Russian soldiers are drawing new borders with barbed wire in villages in occupied South Ossetia. Political pressure on the media is rising. Two political talk shows have been taken off air. In a recent meeting with Georgian journalists, Mr Ivanishvili lashed out at their critical coverage. (Mr Ivanishvili and most of his ministers refused to be interviewed by The Economist.) Most worrying, Mr Ivanishvili has stirred up some dark forces in Georgian society, including farright nationalists and semi-criminal groups, who have recently staged ugly anti-gay riots, defending “traditional Orthodox values” against corrupting Western influences. Anti-Armenian and antiMuslim rhetoric is on the rise. Convicted criminals have been let out of jail to roam the country. “Everything we fought against is back. We were tired of the last government, but what we’ve got is certainly no better,” says Shorena Shaverdashvili, editor of Liberali, a political magazine. Many young, Western-influenced Georgians feel that their country is going backwards. Mr Ivanishvili’s attempt to present the past ten years as a failure is an insult to their hard work. A decade ago, many bright Georgian expatriates returned, full of optimism. Now, the same people are talking of leaving. economist.com

GEORGIA’S PRIME MINISTER AND THE $6BN PRIVATE EQUITY FUND

idzina Ivanishvili, billionaire prime minister of Georgia (pictured), has launched a much-vaunted private equity fund less than a month before key presidential elections. The $6bn Georgian Co-Investment Fund has attracted heavyweight investors including the UAE’s Abu Dhabi Group, Turkey’s Calik Holdings and China’s Milestone Intl Holding – plus a commitment of $1bn of his own money from Ivanishvili himself. The fund’s size and governance structures raise concerns in an environment where business and politics have often been intertwined. The GCF aims to finance projects in energy, tourism, manufacturing, agriculture, infrastructure and other areas. George Bachiashvili, its 28-yearold chief executive, said in an interview: “GCF will prioritize projects worth over $5m. It plans to hold up to 75 per cent of equity shares in investment projects for up to seven years, extendable by a maximum of two years.” The fund would then exit by selling its share to co-owners or third parties or through initial public offerings. Georgia certainly needs investment. Its GDP grew by just 1.8 per cent year-on-year in the first half of 2013, a sharp fall from 6.1 per cent growth in 2012. The government had hoped to attract $2bn

in foreign direct investment this year, but recently halved its forecast to about $1bn. Georgians are worried about a rising cost of living and rampant unemployment – 46 per cent describe themselves as “unemployed and looking for a job”, a recent poll showed. Political uncertainty has contributed to the slowdown. In October 2012, parliamentary elections brought Ivanishvili’s Georgian Dream coalition into power, ending nine years of rule by the United National Movement. President Mikheil Saakashvili’s term in office runs out this month. Over the last year, political co-habitation between the prime minister and president, former allies turned bitter foes, has been deeply uneasy. They will not have to co-habit for much longer. Presidential elections on October 27 will bring Saakashvili’s term to an end. Ivanishvili’s term as prime minister runs until 2016 but he has said he will stand down once Saakashvili has gone, having achieved his goal of ousting his arch rival from power. Some critics fear that without Ivanishvili, his fractious coalition might fall. Others claim he will use his popularity and resources to control the government from behind the scenes, a charge that he denies. Nevertheless, his role in the new fund, as its

single investor and Georgia’s most powerful politician, poses tough questions. The fund’s unfinished website reveals few details about the shares of its investors. Bachiashvili, a long-time Ivanishvili associate, is quick to underline the entity’s independence. “GCF is a completely private entity, transparent and independent, where the current prime minister is an investor like any other,” he stressed. “We have set up a limited-partner fund following the British law, to purposefully avoid any conflict of interest.” Bachiashvili resigned from his previous position as deputy CEO of the government-financed Partnership Fund while setting up the GCF. At $6bn, the new fund is equal to 40 per cent of Georgia’s GDP. As GCF plans to spend all its $6bn in the next five years, analysts wonder whether Georgia’s limited economy will be able to absorb it. At the fund’s launch, Ivanishvili underlined his belief that his early departure would encourage other investment from abroad in Georgia, while he will “work on business and investors.” In an open letter in early September, he also wrote of his plans to strengthen civil society’s oversight of government. Much depends on how he will manage these different roles. FT.com

PUBLICITY October 14, 2013 #25

caucasian business week

AZERBAIJAN caucasian business week

WORLD LEADERS CONGRATULATE ILHAM ALIYEV ON ELECTION WIN

lham Aliyev, who won the October 9 presidential elections with over 84 percent of votes, continues to receive congratulations from senior officials of world countries. Co-chairs of the Congressional Azerbaijan Caucus Bill Shuster and Steve Cohen sent a congratulatory letter to the Azerbaijani President in connection with his election victory. The congressmen hailed President Aliyev’s reelection as another milestone in strengthening Azerbaijan’s civil institutions. “Nationwide elections offer voters a choice and represent an important part of the democratic process,” their letter said. The co-chairs said in the letter that the U.S. and Azerbaijan enjoy a strong partnership based on shared strategic interests. “Our nations work together to prevent the spread of extremism and promote tolerance and prosperity globally. We appreciate Azerbaijan’s vital contribution to the U.S.-led operations in Afghanistan, Iraq and Kosovo,” the letter said. Touching on Azerbaijan’s role in enhancing European energy security, Bill Shuster and Steve

Cohen said the two countries’ common efforts in this regard “benefit from the recent selection of Trans Adriatic Pipeline (TAP) as the European route for the Southern Gas Corridor”. According to the letter, the U.S. and Azerbaijan share many values, including a vision for greater diversity and tolerance as well as respect for minorities and gender rights. “We recognize that these fundamental building blocks for any democratic system have deep roots in the Azerbaijani society,” the letter says. Montenegrin President Filip Vujanovic has also sent a congratulatory letter to the Azerbaijani President. “The results reflect immensity of the contribution to prosperity of the people of Azerbaijan you have given so far,” the letter says. “The outcome of the elections proves as well that Azerbaijan under your undisputed leadership has been rapidly developing as a democratic society with a great prestige in the international community.” “I avail myself of the opportunity to reiterate the expressions of gratitude for your fruitful efforts in having our friendly countries embark on a path of affirmation of close cooperation in all areas,” Vujanovic wrote, adding that he was looking forward to continuing intensive and friendly communication invigorating the relations between the two countries. The Azerbaijani President was also congratulated by Belarus President Alexander Lukashenko, Tajikistan President Emomali Rahmon, Lithuanian President Dalia Grybauskaitė, Uzbekistan’s Islam Karimov, Israel’s Shimon Peres, Iran’s Hassan Rouhani, Emir of Qatar Tamim bin Hamad Al Thani, Georgian Prime Minister Bidzina Ivanishvili, as well as Governor of Russia’s Astrakhan oblast Alexander Jilkin.

AMF STARTS PLACEMENT OF NEW EMISSION OF BONDS

he placement of the first tranche of the seventh emission of interestbearing registered secured bonds of Azerbaijan Mortgage Fund (AMF) will start at the Baku Stock Exchange (BSE) on 14 October 2013, BSE reported. The volume of offering will be 5,000,000 manats and par value of each bond is 1,000 manats. The

bonds will be offered at price of 100 percent of par value. The bonds will mature in 10 years. The Central Bank of Azerbaijan is the initial organizer of bonds’ placement. In case the orders exceed offering, all of the orders will be filled proportionally. Persons wishing to purchase bonds of the fund may apply to the BSE member organizations, having license for brokering activity. On September 30, the State Securities Committee (SSC) of Azerbaijan registered the issue of mortgage bonds worth 20 million manats. The funds from the placement of mortgage bonds are directed to financing conventional mortgages. The AMF was founded in December 2005 and began to issue mortgage loans in Azerbaijan in March 2006. Currently, AMF’s authorized banks are 28 banks, 21 insurance companies and 11 appraisal organizations.

AZERBAIJAN’S MICROFINANCE MARKET TO DOUBLE

n the near future, Azerbaijani microfinance market may double, Head of the National Confederation of Entrepreneurs (Employers) of Azerbaijan (NCEA) Mammad Musayev said during a speech at the Investors Fair in Baku. “To date, the loan portfolio of microfinance institutions reach $1 billion, and in the near future it

may grow by one billion,” he said. In turn, executive director of the Azerbaijan Microfinance Association (organizer of the fair) Jala Hajiyeva, today the number of clients of microfinance organizations in Azerbaijan amounts to 530, 000 people. “The introduction by the Central Bank of Azerbaijan in early 2013 of the requirements on the application of the actual Annual Percentage Rate (APR) will improve the competitive environment in the banking sector, as a result of which ultimately the customers will benefit,” she said. Chairman of the Azerbaijan Microfinance Association Suleyman Kalyashev said that the decision of the Central Bank to lower the cost of the query to the Central Credit Register was also positive for the market. “With the global economic crisis in 2008, which affected the microfinance market, Azerbaijan continued to develop. If 10 years ago microfinance institutions had a portfolio of $12 million, now it reaches $1 billion. About one per cent of the total loan portfolio of the market is under the risk,” he said.

October 14, 2013 #25

AZERBAIJAN IMPROVES ITS ICT RANKING

zerbaijan ranks 61st among 157 countries on the index of information and communication technologies development this year, according to the 2013 report prepared under the auspices of the International Telecommunication Union (ITU). Azerbaijan ranked 68th in the ITU report for 2012. The Measuring the Information Society report takes into account the level of access to the latest technologies, their use and ICT skills. According to the report, the first 30 rankings are held by the countries with high incomes, which shows a strong relationship between the income and the progress in the ICT sector. Neighboring Russia as well as Belarus ranked 40th and 41st respectively, while Moldova is 65th, and Ukraine 68th; Georgia ranked 71st and Armenia 74th. The report points out that usage of the mobile broadband internet through smartphones and tablet PCs has now become the fastest growing segment of the world market. There is also an overall worldwide increasing demand for ICT products and services, along with continuously falling prices for mobile services and broadband connection, as well as unprecedented growth of the 3G technology implementation. Over 250 million people connected to the Internet over the past year, the report said. Almost 40 percent of the world population will use the Internet by the end of 2013. The Republic of Korea is the leader in the ICT development sector for the third year running. It is followed by Sweden, Iceland, Denmark, Finland and Norway. The top ten countries include the Netherlands, Britain, Luxembourg and Hong Kong (China).

Authors of the report expect some 6.8 billion users of cellular communication by the year-end, which is almost equal to the population of the planet. The internet will be available for 2.7 billion people. However, 1.1 billion households, or 4.4 billion people, will still have no access to the Internet by the end of 2013. Azerbaijan is developing its ICT sector, especially after 2013 was announced the ICT Year in the country. ICT plays one of the leading roles in the non-oil sector of the country’s economy and the budget revenues it generates have been increasing year-on-year. An ICT high technology park is being constructed in Azerbaijan, and its creation is a priority for the development of the ICT industry. The hightech park is supposed to be a territory with all the necessary conditions for the development of new and high technologies and researches. The park envisages the involvement of local and foreign ICT companies. In June, the government passed a decision making participants of the high-tech parks tax and customs duty-exempt for seven years, which will drive the development of this sector.

NATIONAL FUND FOR ENTREPRENEURSHIP SUPPORT NAMED PLANS FOR 2014

he National Fund for Entrepreneurship Support (NFES) under the Economic Development Ministry of Azerbaijan plans to keep level of preferential crediting of business at current level in 2014. NFES head said that Shirzad Abdullayev at least 250 million manat will be directed for preferential financing of entrepreneurship projects in 2014. Over 245 million manat worth of preferential loans were issued to the entrepreneurs through the National Fund since early 2013. According to Abdullayev, the financing is directed to implementation of investment projects on the priority areas of the national economy. “Some 63.8 per cent of the total number of projects is related to the agrarian sector and 36.2 percent covers the production and processing of industrial products,” he said. In 2013 the National Fund for Entrepreneurship

Support plans to allocate loans worth 250 million manats, with 150 million manats of the amount to be provided from the state budget funds. The National Fund for Entrepreneurship Support was established in 1992. Loans are allocated to entrepreneurs through a total of 43 authorized banks and non-bank lenders.

AZERBAIJANI INSURANCE MARKET TO BE PRESENTED IN GERMANY

ays of Azerbaijan will be held in the framework of an international conference of reinsurers in Baden-Baden, Chairman of Azerbaijan Insurers Association (AIA) Orkhan Bayramov said on October 3. “During the event, which is traditionally held in Baden-Baden on the last week of October, a presentation of the Azerbaijani insurance market will be held on October 20-24,” Bayramov said. According to Bayramov, AIA representatives will provide information on the number of players in the market, financial analysis of the company, the amount of fees and other indicators. “In addition, the conference provides a convenient way for the establishment and development of relations with European partners, as well as for the exchange of views on current issues,” he said. The Azerbaijan Insurers Association is a nonprofit organization established by insurers to co-

ordinate the activity of its members and to protect their interests, as well as to jointly address problems in the field of insurance. 28 insurance and one reinsurance company are operating in Azerbaijan. All of them are members of the AIA. azernews.az

ARMENIA October 14, 2013 #25

caucasian business week

ARMENIA HAS HIGHEST LEVEL OF ENTREPRENEURIAL ACTIVITY IN CAUCASUS: WORLD BANK

rmenia has by far the highest level of entrepreneurial activity among the countries of the Caucasus, according to the new World Bank report “Fostering Entrepreneurship in Armenia”. Armenia’s entrepreneurial culture is built largely on the very strong math and science foundation established during the Soviet era. However, it still needs to tackle the bottlenecks to business growth and entrepreneurship. As reported by Armenpress, quoting The Financial Newspaper, the findings of the study, which is based on an Entrepreneurship survey conducted in 2012,were discussed during a one-day seminar, organized by the World Bank with participation of Government agencies, representatives from tertiary education and enterprises, and associations. The authors of the “Fostering Entrepreneurship in Armenia” report, through the first of a series of planned stakeholder consultations, hope to facilitate the exploration of policy options that would lead to the enhancement of entrepreneurial activity in the country. Throughout the presentation they discussed innovative activities in existing firms along with detailed case studies that complement the findings aimed at highlighting the determinants of highgrowth entrepreneurship. “The average size of the firms surveyed in Armenia had 24 employees (as compared to 12 in Georgia and 44 in Azerbaijan). The largest firm in Georgia had 220 employees. More than 90 percent of surveyed firms had no research and development (R&D) expenditures in the previous five years and did not envision spending on R&D in the next two years. This is in sharp contrast to the firms surveyed in Armenia, where nearly 50 percent of surveyed firms had conducted some form of R&D in the previous five years. Almost 90 percent of firms drew funding from their founders’ own savings”, as stated by the report. One of the peculiarities of entrepreneurship in Armenia noted in the report was the unusually high educational attainment level, with 75 percent of firm founders having a postgraduate or doctoral degree. Armenian founders of firms in both high-tech and non-high-tech firms had simi-

lar education characteristics while in Georgia firms in high-tech sectors had a larger share of founders with a postgraduate degree or a doctoral degree. Armenian firms were found to be highly innovative according to recent research in which more than two-thirds of surveyed firms indicated that their products were either new or substantially improved versions of the previous ones. This was in sharp contrast with the respondents in Georgia, where only 7 percent of surveyed firms indicated that they had. More than 80 percent of the new products and services in Armenia were new to the market, and 3 percent were new to the world. However, business entry and creation is low in Armenia with only 2 percent of Armenians owning a business compared to 4percent of Georgians. “It is encouraging to see that nearly 50 percent of the surveyed firms conducted R&D within the last five years, as the World Bank has committed to support the government’s ambitious agenda of job creation through boosted competitiveness,” said Jean-Michel Happi, World Bank Country Manager for Armenia. “The study highlights the potential for this growth. It also supports the initial discussions around the need to minimize the skills mismatch, allowing the firms to grow to their full potential, as well as removing bottlenecks from the general business environment that impede able entrepreneurs with good ideas from starting a new venture and creating jobs.” Despite the high level of entrepreneurial activity evidenced by the report, entrepreneurs in the country still face significant obstacles that require policy action as discussed in the report and presented during the seminar. “It is concerning that in setting up or operating a firm, businesses experience difficulty recruiting highly skilled employees, market risk or uncertainties, and difficulty finding necessary funding,” said Aurora Ferrari, World Bank Sector Manager of Financial & Private Sector Development, Europe and Central Asia. “Furthermore, continually changing taxation regulations and favoritism by government officials for well-connected individuals are serious impediments that highlight the need for further improvement of the governance in the country.” “Given the high level of entrepreneurial activity noted among Armenian entrepreneurs, tackling the major impediments to entrepreneurship will serve as a catalyst to accelerate Armenia’s global competitiveness.” The seminar has helped to initiate the discussion and brainstorming around the report recommendations to outline possible scenarios for finding the suitable policy options for comprehensive reform in this area, with increasing role of the government and private sector in supporting innovation and knowledge led growth and job creation.

GEORGIAN AND INDIAN STUDENTS WANT TO STUDY TOURISM IN ARMENIA

oreign students as well want to study tourism and services sphere and gain relevant practice in the educational institutions of the Republic of Armenia.

The Rector of the Armenian Tourism Institute Robert Minasyan stated this at the course of the press conference held on October 10. Among other things he noted that recently the Georgian and Indian students have recently expressed such a desire. As reports “Armenpress” the Rector of the Armenian Tourism Institute Robert Minasyan underscored: “Specialization in the tourism sphere in the educational system of Armenia appeared in the centre of attention of the foreigners. Notwithstanding we still face a problem regarding the corresponding number of professional community. Taking into consideration the increasing number of tourists visiting our country, we must also increase the number of relevant specialists.”

GOVERNMENT SEARCHES FOR INVESTORS TO REALIZE ARMENIANCHINESE PROGRAM OF INULIN PRODUCTION

he Government of the Republic of Armenia is engaged in the activity aiming to find investments for the realization of the program of the Armenian- Chinese enterprise of inulin production. The Head of the Industrial Policy Department of the Ministry of Economy of the Republic of Armenia Armen Yeganyan stated this in a conversation with “Armenpress”. “The Government of the Republic of Armenia provided recourses. We have published the invitation in an international periodical to find investors,” the Head of the Department underscored. The preliminary total price of the program is USD 33 million. Among other things the Head of the Industrial Policy Department of the Ministry of Economy of the Republic of Armenia Armen Yeganyan emphasized that the C hinese side took the obligation to make an investment of 5 percent, to provide the relevant technology, and conduct the installation works. In addition Armen Yeganyan noted that there is a company from the Armenian side, which is willing to provide acreage for the cultivation of earth apple. Inulins are a group of naturally occurring polysaccharides produced by many types of plants, industrially most often extracted from chicory. The inulins belong to a class of dietary fibers known as fructans. Inulin is used by some plants as a means of storing energy and is typically

found in roots or rhizomes. Most plants that synthesize and store inulin do not store other forms of carbohydrate such as starch. Inulin is increasingly used in processed foods because it has unusually adaptable characteristics. Its flavour ranges from bland to subtly sweet (approx. 10% sweetness of sugar/sucrose). It can be used to replace sugar, fat, and flour. This is advantageous because inulin contains 25-35% of the food energy of carbohydrates (starch, sugar). Nonhydrolyzed inulin can also be directly converted to ethanol in a simultaneous saccharification and fermentation process, which may have great potential for converting crops high in inulin into ethanol for fuel. Inulin and its analog sinistrin are used to help measure kidney function by determining the glomerular filtration rate (GFR). GFR is the volume of fluid filtered from the renal (kidney) glomerular capillaries into the Bowman’s capsule per unit time. Inulin is of particular use as it is not secreted or reabsorbed in any appreciable amount at the nephron, allowing GFR to be calculated. However, due to clinical limitations, inulin and sinistrin, although characterised by better handling features, are rarely used for this purpose and creatinine values are the standard for determining an approximate GFR. It is also used for rehydration and remineralization following important loss of water, like diarrhea and diaphoresis. Inulin can also be used as a vaccine adjuvant.

ARMENIA EXPORTED BOEINGS TO UK

uring the first six months of 2013 the Republic of Armenia exported Boeings to the United Kingdom. As Armenpress was reported by the State Revenue Committee of the Government of the Republic of Armenia, the

total customs value of the two exported Boeings is $15,4 million. At the same time, during the first six months of the current year one airbus was imported from Canada to Armenia with the total customs value of $6,758,000.

UNMANNED FLYING DEVICES TO BE PRODUCED IN ARMENIA

he Armenian Instigate Company will implement the production of unmanned flying devices in Armenia, in particular, educopter, photocopter and agrocopter. This was reported to Armenpress by the Chief Engineer of Instigate CJSC Vahagn Poghosyan, stating that preliminary agreement on the devices supply has been already achieved. “One of the Danish companies, functioning in the field of production of the unmanned devices, which cooperates with an American company, does not manage to provide for the necessary production volumes and has agreed with the Armenian Instigate to launch the production of the unmanned devices in Armenia to provide for the necessary volumes of the devices”, - informed Vahagn Poghosyan. To the question – how much does one educopter cost – the Chief Engineer of Instigate CJSC noted that the price for the device is $5,000. Instigate is an engineering company with hardware and software teams headquartered in Yerevan, Armenia. Four R&D branches of the company are located in different cities of Armenia.

The main partners and customers are in the USA and EU. The main area of the expertise is system level design of electronic systems, EDA specific software design and parallel programming. The design services range from software design and quality assurance to comprehensive application engineering with an emphasis on audio/ video coding and communication. The company provides design services in development of massive parallel algorithms, system modeling and simulation, hardware-software decomposition and co-design, SW development and quality assurance and RTL design and verification. Since 2009 Instigate has extended the range of its services with software acceleration using General Purpose Graphical Processing Units such as NVIDIA’s and ATI’s cards and using modern multi-CPU devices with special optimizations for Non-Uniform-Memory-Architecture. Along with the ordinary design services Instigate has developed software libraries and tools, which were proven when being applied in the company’s design services. ARMENPRESS

CIS caucasian business week

October 14, 2013 #25

LITHUANIA COMPLAINS TO EU ABOUT WHAT IT CLAIMS IS RUSSIA’S TRADE WAR

ithuania has accused Russia of unleashing a trade war. It suspects there is politics involved and has addressed the European Union with complaints. October 7, Russia imposed restrictions on the import of all dairy products from Lithuania. The chief of Russia’s consumer rights watchdog, Gennady Onishchenko, said Lithuanian products contained yeast and mold in amounts by far exceeding the tolerance limit, as well as colon bacillus bacteria. Moscow’s restrictive measures are a heavy blow on the Lithuanian economy, because Russia is one of the key markets for Lithuanian dairy products. Nearly 85% of its export is Russia-bound. Lithuania exports over 50% percent of its national output of dairy products. As Onishchenko, Russia’s chief sanitary doctor has said, Rospotrebnadzor has warned Russian consumers there has been an increase in the number of cases of substandard and unsafe meat and dairy products of Lithuanian origin appearing on the Russian market. Also, Rospotrebnadzor addressed the Russian Customs with a special message to tighten control of dairy products, meat and fish entering Russia from Lithuania. Starting from September 11 the Russian Customs began to inspect all cargo transport from Lithuania in the most thorough way. Trucks had to spend in queue for days. Both transportation companies and producers were sustaining heavy losses. Experts at once said a new trade war was on with Russia’s near neighbour Lithuania. In the meantime, the Federal Customs Service declared that closer attention to Lithuanian cargoes was its response to ever more frequent cases of abuse. Lithuania took counter-measures. The rebroad-

casting of Russia’s first national television channel was suspended on October 7. On the same day the news arrived that President Dalia Grybauskaite was going to complain to the WTO, because the European Commission had found no flaws in Lithuanian dairy products. Some Lithuanian politicians proposed far more radical measures. Foreign Minister Linas Linkievicius even mentioned the possibility of a transport blockade of Russia’s westernmost region of Kaliningrad. He recalled that the railway from “mainland Russia” to Kaliningrad crossed Lithuanian territory. The leader of the Lithuanian parliamentary opposition, head of the country’s former ruling party Andrius Kubilius called upon all political parties and bodies of power to devise a common strategy of resisting the trade war, which, he claimed Russia was waging against his country. He also said Russia’s trade war against Lithuania was also a trade war between Russia and the European Union, and for that reason there should follow counter-steps not by Lithuania alone. The EU’s collective response should be arranged for, he said. EU leverage has begun to be used already. The

European Commission on Tuesday demanded that Russia should present reasons for the particularly scrupulous inspection of Lithuanian trucks on the border between the two countries. A number of analysts see a political background behind Moscow’s economic complaints. Last November Vilnius will host a summit of the Eastern Partnership, which is expected to promote a rapprochement between the European Union, on the one hand, and Moldova, Georgia, Belarus, Armenia and Azerbaijan, on the other. Lithuania would like to see early conclusion of a free trade zone agreement between Ukraine and the European Union. Russia has warned Ukraine of the adverse consequences this move might have on bilateral relations. The summit may make a decision in favour of Ukraine’s and Moldova’s associated membership of the EU, which would leave no chances for them to join the Customs Union of Russia, Belarus and Kazakhstan. Lithuania’s complaint to the EU’s anti-monopoly authority to the effect Russia’s gas monopoly Gazprom was overcharging the price of gas and hampering competition is another major controversy. If the EU finds the complaint well-found-

ed, Gazprom may have to brace for a 15-billiondollar fine. In the meantime, the chairman of the Lithuanian Confederation of Industrialists, Robertas Dargis, believes that in this particular case Lithuania’s problems are a side-effect of a lack of sensible policies in relations with Russia. Interviewed on the Ziniu Radijas radio station, he urged Vilnius to follow in the footsteps of Finland, which in his opinion, was conducting a far wiser policy towards Russia. True, some traces of a trade war are present, but they are also very effective measures and Russia will only benefit from them, the deputy director of the CIS Studies Institute, Vladimir Zharikhin, told Itar-Tass in an interview. “Ukrainian cheeses have become much better. So have the Moldovan and Georgian wines, which is very good for Russian consumers,” he said. “Of course, political elements are unmistakably present in Russia’s actions, but is there any place where one finds none?” he asked. “All countries fight trade wars. Among other things they are means of putting political pressures.” Zharikhin believes that Lithuania should take a milder stance on geopolitical processes. He slammed Linkievicius’s statement regarding Kaliningrad as particularly outrageous. “Statements like that are known to have began many real wars, and not just trade ones,” he remarked. Zharikhin agreed with Dargis’s call addressed to Lithuanian politicians to follow in Finland’s footsteps. “Finland is a small country. It uses cooperation with its large neighbour to the greatest benefit and feels just fine,” he said. Itar-Tass

IMF REPORT - CIS COUNTRIES: SLOWER GROWTH AMID WEAK EXTERNAL AND INTERNAL DEMAND

rowth in the Commonwealth of Independent States(CIS) has slowed, reflecting both a weak external environment and supply-side constraints in some economies. Reforms are needed to boost the region’s growth potential, while in several countries policies also need to reduce macro imbalances, given heightened risks and limited buffers. Growth in the European CIS economies, including Russia, slowed in the first half of 2013 Soft external demand was a factor but weak domestic investment also contributed, particularly where output gaps were small and supply constraints were binding. In the Caucasus and central Asia (CCA), however, economic activity continued to grow at a strong pace as in 2012, supported by an expansion of productive capacity in extractive sectors for the commodity exporters, as well as a stable inflow of remittances thus far. The recent increase in global financial volatility hit themajor European CIS economies more than the CCA, given the latter’s limited external financial exposure. Growth in the CIS economies is projected to decelerate slightly from 3Ѕ percent in 2012 to about 2 percent this year, before rising to 3Ѕ percent in 2014 (Table 2.5). Prospects vary within the region, with weaker growth in the European CIS economies and net energy importers, and stronger growth in the CCA economies and the net energy exporters: • In Russia, growth is projected to average 1Ѕ percent in 2013, increasing to 3 percent in 2014. This estimate reflects a downward revision of close to 2 percentage points for 2013 and ѕ percentage point for 2014 relative to the April 2013 WEO. Although consumption is still supported by strong real wage and retail credit growth, growth prospects have been dampened by a weak external environment, someacceleration of capital outflows and declining equity prices, and subdued investment. • Outside Russia, growth in the region’s energy exporters is forecast to remain strong. In Kazakhstan, growth will average 5 percent in 2013 and

5ј percent in 2014, driven by a recovery in oil production and strong activity in the industrial and services sectors. • In Ukraine, which has been in recession since mid-2012, growth will be near zero this year. Activity will be held back by weak exports, political uncertainty, and tight monetary conditions in defense of an exchange rate under pressure because of the economy’s twin deficits. Growth is projected to rise to 1Ѕ percent in 2014. • Most of the other energy importers have not seen large capital inflows, in part due to weak recenteconomic performance or limited linkages to external financial markets. Growth is projected to remain low in Belarus, reflecting structural rigidities and declining competitiveness. Activity will rebound in Moldova, driven by agriculture, exports, and consumption. The Kyrgyz Republic is projected to grow at 7 percent for 2013–14 as the economy recovers from earlier disruptions in gold mining and sustains strong performance in construction, trade, and services. • Growth in Armenia and Georgia is expected to decelerate this year. In Armenia, this reflects slower growth in the agricultural sector in 2013 after a strong performance in 2012 related to favorable weather, upward price adjustments in gas and electricity tariffs, and budget underspending. Growthin Georgia is expected to moderate given slower private investment, weak credit growth, and budget underspending. Inflation in the region will average 6–6Ѕ percent in 2013–14 and is a pressing issue in a few economies (Belarus, Uzbekistan). In Belarus, inflation has been declining, but is projected to remain in double digits. Inflation in Uzbekistan is also expected to stay in double digits, reflecting continuing depreciation of the currency, higher local food and administered prices, and wage increases. In Russia, inflation is projected to fall to about 6ј percent by the end of 2013, just above the upper end of the central bank’s target range of 5 to 6 percent, as the effects of temporary supply-side shocks fade. Inflation is expected to remain above

the central bank’s point inflation target of 4Ѕ percent in 2014. Risks are tilted to the downside. Higher government bond yields and borrowing costs or more difficult access to global capital markets would worsen the outlook for the region, especially for countries with relatively large fiscal and/or external imbalances and limited buffers, such as Belarus and Ukraine (which has seen sovereign credit default swap yields rise to prohibitive ranges in recent months). For the CCA commodity importers, however, the large share of longer-term instruments in the financing of their current account deficits would be a mitigating factor. Lower-than-anticipated growth in emerging market economies elsewhere would lower commodity prices, which would have a large negative impact on activity in Russia, Ukraine, and the CCA commodity exporters. Given the prominence of Russia in trade, and remittance flows in the region, the CCA commodity importers would be affected indirectly through the sharper-than-expected slowdown in Russia. Policies should continue to maintain macroeconomic stability and implement reforms to boost potential growth. Russia is now in a better position to absorb external shocks than it used to be because of its more flexible exchange rate, improved crisismanagement capacity, higher reserves, and narrower balance sheet mismatches. The priority is to raise the growth potential, im-

prove the investment regime, facilitate new energy production, scale back government involvement in the economy, and gradually strengthen fiscal buffers. Ukraine would benefit from a more flexible exchange rate regime, tighter fiscal policy, an increase in domestic gas and heating tariffs, and a restart of structural reforms. Belarus will need to coordinate fiscal and monetary policies to tightly manage domestic demand and adopt structural reforms to achieve sustainable growth. Kazakhstan should continue to move toward a long-lasting solution to its high stock of nonperforming loans and revamp its monetary and fiscal policy frameworks. Azerbaijan and Turkmenistan should remove fiscal stimulus to keep inflation at bay and improve fiscal sustainability while further enhancing the efficiency of government spending. Monetary tightening should continue in Uzbekistan to contain second-round effects on inflation from local food and administered price increases. For some economies, budget underspending has resulted in an unexpected fiscal tightening, which has also contributed to the recent slowdown (Armenia, Georgia). For these economies, the priority should beto allow policies to be more accommodative for productive spending to support demand. In Georgia, this year’s policy rate cuts should help reduce deflationary pressures, although resolution of recent political uncertainty is needed to restore investor confidence.

WORLD NEWS October 14, 2013 #25

caucasian business week

TOP 15 CHEAP, SAFE AND FRIENDLY COUNTRIES – GEORGIA RANKS SECOND

ave you ever wondered which is the cheapest, friendliest and safest country in the world? Well, wonder no more. A recent 500+ page report by the World Economic Forum contains a few golden data nuggets that has enabled me to come up with the answers. I also used data from this wonderful index website called Numbeo. Before traveling to any country, I suggest checking out a few indexes on Numbeo about the country of your choosing. From my limited but growing travel experience, I have come to the conclusion that there are three factors that influence how enjoyable a country is. In no particular order: Attitude of locals towards foreigners (we’ll call this “friendliness”): Friendly local people means it’s easy to get around, ask for directions and find people to party with. It also increases your chances of immersing yourself in the local culture and getting to know the people better. Cost of living: Everyone likes cheap countries or countries that are relatively cheaper than our own. This means that if you’re from Norway this doesn’t concern you because no country in the world is more expensive. Safety: Safe countries are fun. Why? Because you don’t have to restrict yourself to day-only activities in touristy areas. If a country is safe you can do more “off the beaten path” activities. You can explore new places and stay out late if you feel like it. You can walk around freely and fearlessly. Try doing this in Caracas. FRIENDLIEST COUNTRIES You can find the full list of countries in the WEF report that I mentioned above. It’s page 455 in the PDF. Here’s a quick snap shot and a list of the top

5 and bottom 5 countries. Most friendly countries: 1) Iceland 2) New Zealand 3) Morocco 4) Macedonia 5) Austria Least friendly countries: 140) Bolivia 139) Venezuela 138) Russian Federation 137) Kuwait 136) Latvia Special mention: 42) South Africa 55) United Kingdom 102) United States CHEAPEST COUNTRIES Cheapest countries: 1) India 2) Pakistan 3) Nepal 4) Algeria 5) Bolivia Most expensive countries: 95) Norway 94) Switzerland 93) Australia 92) Luxembourg 91) Denmark Special mention: 35) South Africa 78) United Kingdom 62) United States SAFEST COUNTRIES Safest countries: 1) Japan 2) Taiwan ) Hong Kong 4) United Arab Emirates 5) Malta Least safe countries: 95) Venezuela 94) Trinidad & Tobago 93) South Africa 92) Kenya 91) Puerto Rico Special mention: 45) United Kingdom 76) United States CHEAPEST, SAFEST AND FRIENDLIEST COUNTRIES Now, here’s what you are really looking for. The individual rankings are not very useful. Why? Because there’s no point going to Bolivia which is cheap but very unfriendly for tourists. There’s also no point in going to Pakistan which is cheap but not very safe or friendly. Iceland might be super friendly but your wallet will take a hammering. So what you need to know is which countries fair the best in all three aspects. These countries are golden and you should consider visiting them on your next vacation. If you like numbers and statistics, you can check out the spreadsheet I used to combine the rankings over here.

KEY CREDITOR CHINA BEGINS ACTING TO HEDGE AGAINST US DEFAULT

ong Kong has sent the first sign from Asia that the region is creating extra financial buffers against a possible default in the US. China said some US short – term Treasury bonds appear to be more risky to hold as collateral than previously thought. The clock is ticking for the US to make a decision on its spending bill and the massive $16.7trln debt. The country’s key foreign lender China has shifted from words to actions and said it has taken two steps to reflect the increased difficulty of valuing certain short-term US Treasuries, the Financial Times reports. One of the steps includes a so-called “haircut”, or a discount, on the value of US Treasuries held as collateral against futures trades. The interest rate for bonds held with maturity of less than one year would be raised to 3 percent from 1 percent. “Participants should make necessary funding arrangements to cover any shortfall to their margin requirements resulting from the increase in the US Treasuries haircut,” HKEx said. One of the concerns is whether the US Treasuries

may be easily replaced or supplemented in case their value slump in case of a default. Experts say,however, Treasuries make up a relatively low share of the collateral used in Hong Kong and Asia more broadly. The move comes after the Asia Securities Industry & Financial Markets Association (Asifma) warned of the possible “chaos” that a default announcement made by the US Treasury before the Asian market opening on October 17 may cause. “It has the potential to cause chaos and people may dump Treasuries because they won’t know whether they can exist the next day. They [Treasury] need to make that call early and not late,” said Mark Austen, chief executive of Asifma. The Japan Securities Clearing Corporation (JSCC), the clearing house in Japan, said it was getting ready for “anything that might happen”. Discounting the collateral by some of the members of clearing houses is a part of the bodies’ routine that allows them to take into account price fluctuations and the fact that some bonds are less secure than others. rt.com

THE IMF FORECASTS GLOBAL GROWTH TO AVERAGE 2.9 PERCENT IN 2013

he IMF forecasts global growth to average 2.9 percent in 2013, below the 3.2 percent recorded in 2012, and to rise to 3.6 percent in 2014, according to the latest World Economic Outlook (WEO) report. Much of the pickup in growth will be driven by advanced economies. In the US, growth is expected to rise from 1.5 percent this year to 2.5 percent in 2014 driven by continued strength in private demand.

PUBLICITY caucasian business week

October 14, 2013 #25

TBILISI GUIDE October 14, 2013 #25

Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail: tbilisivisa@state.gov; askconsultbilisi@state.gov United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: british.embassy.tbilisi@fco.gov.uk Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: ambafrance@access.sanet.ge Web-site: www.ambafrance-ge.org Federal Republic of Germany Embassy 20 Telavi St. Tbilisi Tel: 44 73 00, Fax: 44 73 64 Italian RepublicEmbassy 3a Chitadze St, Tbilisi, Tel: 299-64-18, 292-14-62, 292-18-54 E-mail: embassy.tbilisi@esteri.it Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: tbilisisaatkond@mfa.ee Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: amb.ge@urm.lt Republic of Latvia Embassy 4 Odessa St., Tbilisi Tel: 224-48-58 E-mail: embassy.georgia@mfa.gov.lv Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi Tel: 291-67-40/41/42 E-mail: czechembassy@gol.ge Web-sait: www.mzv.cz Japan Embassy 7 Krtsanisi St. Tbilisi Tel: 75 21 11, Fax: 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: zhangling@access.sanet.ge Republic of Bulgaria Embassy 15 Gorgasali Exit, 0105 Tbilisi, Georgia Tel: +995 32 291 01 94; +995 32 291 01 95 Fax: +99 532 291 02 70 Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08; E-mail: hunembtbs@gmail.com State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: RussianEmbassy@Caucasus.net Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail: ukraina_pu@wanex.net; emb_ge@mfa.gov.ua Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Av., Tbilisi Tel: 225-20-72/73/74/76 E-mail: turkemb.tbilisi@mfa.gov.tr Address: 8, M. Abashidze str. Batumi, Georgia tel: (8-88-222) 7 47 90 Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: tbilisi@mission.mfa.gov.az Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00 Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: armemb@caucasus.net Web: www.armenianembassy.ge Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16

caucasian business week Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.es Romania Embassy 7 Kushitashvili St., Tbilisi Tel: 38-53-10; 25-00-98/97 E-mail: ambasada@caucasus.net Republic of Poland Embassy 19 Brothers Zubalashvili St., Tbilisi Tel: 292-03-98 Email:tbilisi.amb.sekretariat@msz.gov.pl Web-site: www.tbilisi.polemb.net Republic of Iraq Embassy Kobuleti str. 16, Tbilisi Tel: 291 35 96; 229 07 93 E-mail: iraqiageoemb@yahoo.com Federative Republic of Brazil Embassy Chanturia street 6/2, Tbilisi Tel.: +995-32-293-2419 Fax.: +995-32-293-2416 Islamic Republic of Iran Embassy 80, I.Chavchavadze St. Tbilisi, Tel: 291-36-56, 291-36-58, 291-36-59, 291-36-60; Fax: 291-36-28 E-mail: iranemb@geo.net.ge United Nations Office Address: 9 Eristavi St. Tbilisi Tel: 225-11-26/28, 225-11-29/31 Fax: 225-02-71/72 E-mail: registry.geo@undp.org Web-site: www.undp.org International Monetary Fund Office Address : 4 Freedom Sq., GMT Plaza, Tbilisi Tel: 292-04-32/33/34 E-mail: kdanelia@imf.org Web-site: www.imf.ge Asian Development Bank Georgian Resident Mission Address: 1, G. Tabidze Street

Freedom Square 0114 Tbilisi, Georgia Tel: +995 32 225 06 19 E-mail: adbgrm@adb.org; Web-site: www.adb.org World Bank Office Address : 5a Chavchavadze Av., lane-I, Tbilisi, Georgia Tel: 291-30-96, 291-26-89/59 Web-site: www.worldbank.org.ge Regional Office of European Bank for Reconstruction and Development Address: 6 Marjanishvili St. Tbilisi Tel: 244 74 00, 292 05 13, 292 05 14 Web-site: www.ebrd.com Representation of the Council of Europe in Georgia Address : 26 Br. Kakabadze, Tbilisi Tel: 995 32 291 38 70/71/72/73 Fax: 995 32 291 38 74 Web-site: www.coe.ge

Hotels in Georgia TBILISI MARRIOTT Tbilisi , 13 Rustaveli Ave. Tel: 77 92 00, www.marriott.com COURTYARD MARRIOTT Tbilisi , 4 Freedom Sq. Tel: 77 91 00 www.marriott.com RADISSON BLU HOTEL, TBILISI Rose Revolution Square 1 0108, Tbilisi Tel: +995 32 402200 radissonblu.com/hotel-tbilisi RADISSON BLU HOTEL, BATUMI Ninoshvili Str. 1, 6000 Bat’umi, Georgia Tel: 8 422255555 http://radissonblu.com/hotel-batumi SHERATON METECHI PALACE Tbilisi , 20 Telavi St. Tel: 77 20 20, www.starwoodhotels.com SHERATON BATUMI 28 Rustaveli Street • Batumi Tel: (995)(422) 229000 www.sheratonbatumi.com HOLIDAY INN TBILISI Business hotel Addr: 1, 26 May Square Tel: +995 32 230 00 99 E-mail: info@hi-tbilisi.com Website: http://www.hi-tbilisi.com BETSY’S HOTEL With Marvellous Tbilisi Views Addr: 32/34 Makashvili St. Tbilisi Tel: +995 32 293 14 04; +995 32 292 39 96 Fax: +995 32 99 93 11 E-mail: info@betsyshotel.com Website: http://www.betsyshotel.com

Restaurants CHARDIN 12 Tbilisi , 12 Chardin St. , Tel: 92 32 38 CHINA TOWN Tbilisi , 44 Leselidze St. (ent. from Chardin St.) Tel: 43 93 08, 43 93 80, Fax: 43 93 08 BREAD HOUSE Tbilisi , 7 Gorgasali St. , Tel: 30 30 30 BUFETTI - ITALIAN RESTAURANT Tbilisi , 31 I. Abashidze St. , Tel: 22 49 61 DZVELI SAKHLI Tbilisi , 3 Right embankment , Tel: 92 34 97, 36 53 65, Fax: 98 27 81 IN THE SHADOW OF METEKHI Tbilisi , 29a Tsamebuli Ave. , Tel: 77 93 83, Fax: 77 93 83 PICASSO Tbilisi , 4 Miminoshvili St. , Tel: 98 90 86 SAKURA - JAPANESE RESTAURANT Tbilisi , 29 I. Abashidze St. , Tel: 29 31 08, Fax: 29 31 08 SIANGAN - CHINESE RESTAURANT Tbilisi , 41 Peking St , Tel: 37 96 88 VERA STEAK HOUSE Tbilisi , 37a Kostava St , Tel: 98 37 67 BELLE DE JOUR 29 I. Abashidze str, Tbilisi Tel: (+995 32) 230 30 30 VONG 31 I. Abashidze str, Tbilisi Tel: (+995 32) 230 30 30 BRASSERIE L’EXPRESS 14 Chardin str, Tbilisi Tel: (+995 32) 230 30 30 TWO SIDE PARTY CLUB 7 Bambis Rigi, Tbilisi Tel: (+995 32) 230 30 30 LOFT 11. I. Mosashvili str, Tbilisi Tel: (+995 32) 230 30 30 RESTAURANT NERO 21 Abano Street, Tbilisi Tel: (+995 32) 292 10 15

SH. RUSTAVELI STATE THEATRE Tbilisi. 17 Rustaveli Ave. Tel: 93 65 83, Fax: 99 63 73 TBILISI STATE MARIONETTE THEATRE Tbilisi. 26 Shavteli St. Tel: 98 65 89, Fax: 98 65 89 THEATRE OF PANTOMIME Tbilisi. 37 Rustaveli Ave. Tel: 99 63 14, (77) 41 41 50 Z. PALIASHVILI TBILISI STATE THEATRE OF OPERA AND BALLET Tbilisi. 25 Rustaveli Ave. Tel: 98 32 49, Fax: 98 32 50

Galleries ART GALLERY LINE Tbilisi. 44 Leselidze St. BAIA GALLERY Tbilisi. 10 Chardin St. Tel: 75 45 10 GALLERY Tbilisi. 12 Erekle II St. Tel: 93 12 89 GEORGIAN NATIONAL MUSEUM - PICTURE GALLERY Tbilisi. 11 Rustaveli Ave. Tel: 98 48 14 KARVASLA’S EXHIBITION HALL Tbilisi. 8 Sioni St. Tel: 92 32 27, KOPALA Tbilisi. 7 Zubalashvilebi St. Tel: 99 99 02, Fax: 99 99 02 MODERN ART GALLERY Tbilisi. 3 Rustaveli Ave. Tel: 98 21 33, Fax: 98 21 33 M GALLERY Tbilisi. 11 Taktakishvili St. Tel: 25 23 34 ORNAMENT - ENAMEL GALLERY Tbilisi. 7 Erekle II St. Tel: 93 64 12, Fax: 98 90 13

Akhvledianis Khevi N13, Tbilisi, GE. +995322958377; +995599265432

Cinemas AKHMETELI Tbilisi. “Akhmeteli” Subway Station Tel: 58 66 69 AMIRANI Tbilisi. 36 Kostava St. Tel: 99 99 55, RUSTAVELI Tbilisi. 5 Rustaveli Ave. Tel: 92 03 57, 92 02 85, SAKARTVELO Tbilisi. 2/9 Guramishvili Ave. Tel: 8 322308080,

Theatres A. GRIBOEDOV RUSSIAN STATE DRAMA THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 93 58 11, Fax: 93 31 15 INDEPENDENT THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 98 58 21, Fax: 93 31 15 K. MARJANISHVILI STATE ACADEMIC THEATRE Tbilisi. 8 Marjanishvili St. Tel: 95 35 82, Fax: 95 40 01 M. TUMANISHVILI CINEMA ACTORS THEATRE Tbilisi. 164 Agmashenebeli Ave. Tel: 35 31 52, 34 28 99, Fax: 35 01 94 METEKHI – THEATRE OF GEORGIAN NATIONAL BALLET Tbilisi. 69 Balanchivadze St. Tel: (99) 20 22 10 MUSIC AND DRAMATIC STATE THEATRE Tbilisi. 182 Agmashenebeli Ave. Tel: 34 80 90, Fax: 34 80 90 NABADI - GEORGIAN FOLKLORE THEATRE Tbilisi. 19 Rustaveli Ave. Tel: 98 99 91 S. AKHMETELI STATE DRAMATIC THEATRE Tbilisi. 8 I. Vekua St. Tel: 62 59 73

THE BEST GEORGIAN HONEY OF CHESTNUTS,ACACIA AND LIME FLOWERS FROM THE VERY HART OF ADJARA MATCHAKHELA GORGE IN THE NETWORK OF GOODWILL, NIKORA AND SMART

PUBLICITY October 14, 2013 #25

caucasian business week

Location City Batumi, Sarpi Black sea coast, on Silk Road, near Turkey-Georgia border checkpoint. 30 meters from the sea. There are shopping points near complex, Apsaros Castle and other sightseeings.

Hotel description Sarpi Resort Hotel & Restaurant â&#x20AC;&#x201C; at the Sarpi Black sea coast is located 3000 sq. m. modern hotel complex, near Turkey-Georgia border, 30 meters from the sea. Hotel complex is isolated, equipped with surveillance cameras, security and parking system, which provides safe and comfortable environment for guests. There is indoor and outdoor type of restaurant, cafĂŠ in the hotel complex. Our restaurant has Georgian and Turkish cuisine. Bar occupies 370 square meters in the hotel complex, with wide range of drinks. The hotel has fitness and entertainment room for guests (for free). Throughout the territory of the Hotel complex operates a 24-hour high-speed wireless Internet access, which is also free of charge. Sarpi Resort Hotel & Restaurant also offers sailing with boat and scooter in the sea. As well arranges special A la Furshets and banquets.

Cottage Description

WWW.SARPIRESORT.GE; Tel: +995 422 21 25 00 / 01; Mobile Phone: +995 577 43 00 03; FACEBOOK: Sarpi Resort Hotel

Hotel Complex has modern, luxerous 14 units cottage. Cottage is 2 storied, rooms 84 m2, with living room, bathroom, toilet, 3 bedrooms and 6 beds. Cottages has a sea view and balconies. Each room has air conditioning, TV, Phones and Mini-bars. You can order right from cottages from the restaurants and bars as well. Rooms are equipped with high-speed wireless internet access for free. Housekeeping service is provided during the day. Wake up service is provided upon request.