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BUSINESS WEEK December 23, 2013 #35

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December 23, 2013, Issue 35

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Georgian President to Visit Azerbaijan

GEORGIA

GOVERNMENT: NOVEMBER RECORDS 14.4% GROWTH IN VATPAYERS TURNOVER

Georgia’s Economy Received 730 Million USD from Tourism this Year Pg. 5

n November turnover of VAT-payer enterprises increased by 14,4% Government members stated about it on the session of economic council of the Prime Minsiter. Pg. 5

“ZHVANIA PROMISED US THAT KHUDON HPP WOULD BE CONSTRUCTED DURING HIS OFFICE TERM AS A PRIME MINISTER”

oday Georgia is energy dependent on its neighboring countries by 75%. However, Georgia really has the opportunity to be energy independent by means of its natural resources. Pg. 4

AZERBAIJAN FOREIGN INVESTMENTS IN AZERBAIJAN’S ECONOMY JUMP

he total amount of foreign investments in Azerbaijan’s economy amounted to 3.78 billion manat in January-November

2013.

Pg. 10

ARMENIA SOUTH CAUCASUS RAILWAY EXPECTS FREIGHT TRAFFIC OF 3.25 MILLION TONS IN 2013

outh Caucasus Railway CJSC CEO Viktor Rebets, speaking today at a news conference, freight traffic is expected to total 3.25 million tons in 2013 - 1% less than the 2012 result. Pg. 11

CIS $15 BILLION AID TO UKRAINE NOT A ‘GIFT’, RUSSIA EXPECTS A 5% RETURN

WORLD NEWS CHINESE FOREIGN INVESTMENTS TO REACH $41 TRILLION: BANK OF ENGLAND

EU WILLING TO FURTHER SPEED UP SIGNING AA WITH GEORGIA, MOLDOVA

he European Union is willing to speed up the signing of the Association Agreements (AA) with Georgia and Moldova by August, 2014 “at the latest”, European Council President Herman Van Rompuy said after a two-day meeting of EU leaders in Brussels on December 20. He said that heads of states and governments from EU member states reiterated readiness to sign AA with Ukraine as soon as the country is ready. He also said: “What we see at ‘Maidan’ is a yearning for a better future. This thirst for freedom will not disappear.” “This aspiration to come closer to the European Union is shared also by the people of Georgia and of Moldova. The European Council’s message this morning is that we will stand by the side of these countries in their choice, and that we are willing to speed up the signing of the agreements with them, next August at the latest,” Van Rompuy said.

In its final statement released upon the conclusion of the two-day meeting the European Council said the EU is ready “to sign these agreements as soon as possible and no later than the end of August 2014.” Georgia and Moldova initialed their respective Association Agreements at the Eastern Partnership summit in Vilnius in late November. In September European Commission officials confirmed intention to speed up the process and to prepare Association Agreements, which also include deep and comprehensive free trade treaties, with Georgia and Moldova for signing before the end of the term of sitting European Commission – that is before October 31, 2014. Before that a potential date and venue for signing was considered the Eastern Partnership summit in Riga in 2015. Before Van Rompuy’s announcement on Friday, both the EU and Georgian officials were speaking about September, 2014 as the potential date of signing.

GEORGIA RECORDS HIGHEST INTEREST RATES IN MICROFINANCE SECTOR OF EUROPEAN COUNTRIES

Pg. 3

ONLY 10 OTHER COUNTRIES RECORD HIGHER INTEREST RATES ON LOANS COMPARED TO GEORGIA Pg. 8

KHUDONI HPP – THE OPPORTUNITY TO REPLACE RUSSIAN ELECTRICITY IMPORTS BY DOMESTIC GENERATION Pg. 4

Kakha Kaladze: $400-700 million will be invested in Georgian in the II phase of Shah-Deniz h-Deniz Pg. 5

“RusHydro“ Interested in Energy Cooperation with Georgia Pg. 4

Iran – Georgia Chamber of Industry to be Established at the End of January 2014 14 Pg. 5

11 Adolescents got employed with assistance of Natakhtari Fund Pg. 7

New Year Discount at the Special Issue for the 31st of December Congratulate the Coming New Year to Diplomatic and Business Establishment

Pg. 2

MAIN EVENTS caucasian business week

December 23, 2013 #35

GEORGIAN PRESIDENT TO VISIT AZERBAIJAN

resident of Georgia will visit Azerbaijan next week - Azerbaijani agency Trend.az releases this information, based on anonymous diplomatic source. If this information is true, Azerbaijan will be the first country (excluding Lithuania, when George Margvelashvili headed Georgian delegation on Eastern partnership Summit), where newly elected President of Georgia will pay an official visit. In the framework of the visit discussion perspectives of two countries and regional cooperation is planned. Reminding that George Margvelashvili was elected as President of Georgia on October 27.

IRAKLI GHARIBASHVILI: WE DO OUR BEST TO SIGN ASSOCIATION AGREEMENT BY SEPTEMBER 2014

rime Minister Garibashvili positively evaluates readiness of Russian president to improve relations with Georgia. He said that direct dialogue started last year with initiative of Georgia side and already brought some results. “We have a great desire to continue this dialogue and step by step approach to resolution of complicated, delicate problems. I think review of existing visa regime with Georgia by Russian side, about which President Putin commented, will be a positive step in terms of promotion of humani-

tarian relations”, - Prime Minister’s statement says. Prime Minister expressed personal attitude about the tragic affairs of the nearest history, which is different from Russia. “We have different positions from Russia about its reasons and results. As you know Taliavin Commission, created by EU, made a vast and competent conclusion about August 2008 war,” - the statement says. Recent steps made forward in relation of two countries gives basis for optimist to the Prime Minister.

PRIME MINISTER GARIBASHVILI POSITIVELY EVALUATES READINESS OF RUSSIAN PRESIDENT TO IMPROVE RELATIONS WITH GEORGIA

e are doing everything necessary to sign the Association Agreement by September next year - Irakli Gharibashvili We are doing everything necessary to sign the Association Agreement by September next year, Prime Minister Irakli Gharibashvili said at the meeting with diplomats today. ‘’First of all, let me thank the Lithuanian EU Presidency for organizing this Summit of histoncal importance I would also like to thank all those Nations of the European Union who have made exceptional efforts to develop and advance the Eastern Partnership Policy, which has offered us an unprecedented opportunity to move further in terms of political association and economic integration With the European Union. The Eastern Partnership Policy has been a ground-breaking initiative for the willing Eastern European Partners Importantly, the progress

within this policy rests on the ments of each individual partner Those partners who are ready to do more to pass the test of the legal, economic and political reforms promoted by the European Union, are invited to deepen their economic and political ties with the Union This is indeed an important encouragement for the process of Georgia’s democratic consolidation and economic modernization. We are doing everything necessary to sign the Association Agreement by September next year. Moreover, we are ready to start the implementation of the provisions of the Agreement’’, the PM said. Irakli Gharibashvili also touched upon the Ukrainian developments. ‘’As for the situation in Ukraine, we believe that countries must be free in their choice and no one should be allowed to infringe this freedom of choice. In addition, I am convinced that the Ukrainian Government will find a solution that reflects the interests of Ukraine and the Ukrainian people’’, he said.

MAYA PANJIKIDZE: GEORGIA WELCOMES SPEEDING UP THE SIGNING OF THE ASSOCIATION AGREEMENT WITH THE EUROPEAN UNION

eorgia welcomes speeding up the signing of the Association Agreement with the European Union - Maya Panjikidze Georgia welcomes speeding up the signing of the Association Agreement with the European Union, Georgian Foreign Minister Maya Panjikidze told reporters while commenting on Herman Van Rompuy’s statement. She said heads of many countries said at the Vilnius summit that it was desirable to sign this agreement as quickly as possible, but it was recorded in the declaration that it would take place

in the fall of 2014. “We, of course, welcome this move. From our side, all the work has been completed. Technical processes are to be carried out by the EU and if they can speed up this process, it is only to be welcomed by our side,” the Minister said. European Council President Herman Van Rompuy said after the European Council session today that ‘’European Council’s message this morning is that we will stand by the side of Georgia and Moldova in their choice, and that we are willing to speed up the signing of the agreements with them, next August at the latest’’.

PUTIN SPEAKS OF RELATIONS WITH GEORGIA

ussian President Vladimir Putin said on December 19 that “we might well go towards returning to the visa-free regime” with Georgia, adding that this issue should be thoroughly thought out. Russian Foreign Minister Sergey Lavrov said on December 18 that although issuing of Russian visas to the Georgian citizens was “liberalized”, Moscow “is not yet ready to lift visa regime.” During his annual press conference on December 19, Putin was asked about Lavrov’s these remarks, as well as about what steps Russia can make to “normalize” ties with Georgia and whether his positions have changed after the new government came into power in Georgia. “You have such a wide-ranging question that I do not know if I can answer it in the same way,” Putin said and continued: “But I will say the main thing. Personally my attitude has been changed towards the leadership of Georgia, but not towards the Georgian people. It is as kind and benevolent as it was previously. Even during the most difficult time, when fighting was underway in the Caucasus [reference to the August, 2008 war], relations with the Georgian people were very good. And it was confirmed even during those difficult days and hours and demonstrated in attitude of Georgians themselves towards Russia. Don’t remember if I have ever said it publicly, but in one of the towns a grandpa approached our soldiers and told him: ‘What do you want here? What are you looking for here? Go over there – Tbilisi and take Mishka [referring to then President Mikheil Saakashvili]’.” “You know we had losses among our military servicemen. Aircraft was downed, a pilot ejected

and landed somewhere; a Georgian babushka approached and told him: ‘Come here son’; she took him and fed him. Then he was sent towards the Russian military,” Putin said. “I am not kidding, I am neither ironic, when I say that I have the kindest attitudes towards the Georgian people,” Putin continued. “We have the deepest relations both cultural and spiritual; I mean religious closeness to each other.” “There are problems, which arose through no fault of ours; we did not start these hostilities [in August, 2008]. We did not start it and now it is quite obvious; everyone has already acknowledged it a long time ago. Whatever happened, happened. We said thousands of times: do not do it no matter what; do not allow bloodshed. But they did it anyway. Now there is a certain reality; we cannot neglect it. But still, we see some signals coming from the new leadership of Georgia,” he said. Putin then continued by responding on the question of visas: “I do not know what our [Foreign] Minister meant; there might be some formalities related to the work of the Foreign Ministry. But understanding situation as we see it, developments in Georgia, I think that we might well go towards returning to the visa-free regime. It should be properly thought out on the level of experts.” Russian citizens do not require visa to enter into Georgia. “I think it would be a very good step in normalization of relations between the countries, meaning that it would help people to have more communication between each other, it would help Georgian enterprises to work on the Russian market and in general it would create conditions for fundamental and eventual normalization of our relations,” Putin said.

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MAIN December 23, 2013 #35

caucasian business week

GEORGIA RECORDS HIGHEST INTEREST RATES IN MICROFINANCE SECTOR OF EUROPEAN COUNTRIES

he microfinance sector is reported to be Georgia’s one of the most quickly-growing economic fields. Even in 2008 during the hostilities and the world financial crisis assets of the microfinance sector rose by 100% compared to 2007, while unshared profits increased 8 times. Microfinance organizations appeared on the market in 2006 and their number has marked 63 in the second quarter of 2013. The companies have also enlarged their financial indicators. Namely, total assets in 2012 rose 261 times compared to 2006, while net loans rose 256 times and net profits grew up by nearly 50 times.

Other indicators of the microfinance sector have also grown. Namely, the sector employs 3398 individuals as of the second quarter of 2013, up 774 persons compared to the same period of 2012. At the same time, the quantity of branches and service centers rose by 80 ones to 225 ones compared to the same period of 2012. Under the new statistics published by the National Bank of Georgia (NBG), the microfinance sector has issued 318 887 loans of 611 190 963 million GEL. The ratio of individual loans in total loans portfolio is 98.5% (602 million GEL). Corporate loans marked 3.6 million GEL (1%), while group loans made up 5.4 million GEL. Thus, the microfinance sector is a dynamically growing sector. The fact is businessmen find it attractive to put investments in the sector because of its comparatively higher return. For example, as to the bank sector, return on assets (ROA) in the microfinance sector made up 7.1 in 2012, while the figure marked 5.8 in the bank sector. As to the return on equity (ROE), the coefficient in the bank sector is 5.8 and in the microfinance sector – 28.2 Naturally, similar growth rates are conditioned by due reasons and the tendency has got its preconditions. After the 2008 hostilities experts concluded the microfinance sector was growing as the complicated situation had worsened the relations of a part of the clients with commercial banks and microfinance organizations turned out almost the only source for drawing credit resources. Furthermore, profitability and high margin are the fundamental factors that strongly stimulate the sector. The high margin is based on the interest rates microfinance organizations have set on their loan products. The highest demand is recorded for auto loans and pawn loans. NBG doesn’t not provide as accurate statistics for microfinance organizations as for the bank sector. Consequently, there are no official statistics foir interest rates, but the analysis of the terms set by the market players enable us to calculate an average interest rate. There is the following situation on the market:

The diagram shows interest rates on distinct products range from 18% to 72% and this is quite high indicator. It is interesting what the situation in other countries is. Official indicators of the European Central Bank (ECB) show interest rates on micro credits are far lower in European countries than in Georgia. ECB has published the following indicators for July 2013: Bulgaria – average interest rate 7.07%, Finland – 1.18%, Czech Republic – 2.68%, Estonia – 2.65%, Hungary -7%, Latvia – 2.71%, Lithuania 3.15%, Romania – 9.02%, Poland – 4.9%, Slovenia 4.1% and so on. B&F

ADB PROVIDES $98 MILLION TO IMPROVE WATER AND SANITATION SERVICES IN EXPANDING SECONDARY TOWNS OF GEORGIA

he Asian Development Bank (ADB) and the Government of Georgia today signed a loan for $98 million to support improved water and sanitation services in Georgia’s secondary

towns. The concessional loan, part of a $500 million Urban Services Improvement Investment Program multitranche financing facility resourced from ADB’s Asian Development Fund, will fund infrastructure improvements in Ureki and Kutaisi, and will strengthen the capabilities of the country’s leading water and sanitation provider, which services 58% of Georgia’s population. The water supply system in Kutaisi town will be augmented through construction of three reservoirs, two pumping stations, 11-kilometers of water transmission mains, and a 158-kilometer water supply distribution network. In addition, the project will finance a new water supply and sewerage system for Ureki town comprising a 3.2 million liters per day capacity sewage treatment plant. Approximately 21,150 households will benefit from this ADB-supported project. “The investment program supports Georgia’s long-term sector development plan to provide reliable, safe water and sanitation services to urban residents in secondary cities and small towns,“ said Klaus Gerhaeusser, Director General of ADB’s Central and West Asia Department. “The institutional effectiveness component of this loan is especially important to securing sustainable and efficient water services to the customers of the United Water Supply Company of Georgia”. Institutional components include GIS mapping of

water and sewerage network in some 25 towns human resource development through a WSS management program in Georgian universities, creation of sex-disaggregated database to develop targeted marketing campaigns, establishing customer care units in the service centers to inform on water, hygiene, and sanitation, and capacity development and training support to UWSCG staff. “Providing reliable, quality water and sanitation services to meet growing demand and to prevent health and environmental problems, is now a leading government priority,” said Sanjay Joshi, Senior Urban Development Specialist, Urban Development and Water Division, Central and West Asia Department. ADB’s $98 million concessional loan will have a 25-year term, with a 5-year grace period, and carry an annual interest rate of 2% per annum during the grace period and thereafter. ADB and the government of Georgia also signed a $73 million loan to improve the connectivity between Tbilisi and Rustavi and reinforce the coast of the Black Sea tourist destination of Anaklia. The improved infrastructure will ease chronic

traffic congestion, improve the environment and road safety, and contribute to growth and job creation. The $73 million loan is the third tranche of the Sustainable Urban Transport Investment Program, a $300 million multitranche financing facility approved by ADB in 2010 to address urban transport issues in Georgia. Both loan tranches were signed at the Ministry of Finance by Klaus Gerhaeusser, Director General of ADB’s Central and West Asia Department and Minister Nodar Khaduri. Director General Gerhaeusser is visiting Georgia for consultations

with the Government of Georgia on the ongoing assistance program and further development priorities. ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2012, ADB assistance totaled $21.6 billion, including cofinancing of $8.3 billion. Since 2007, it has approved more than $1.1 billion in financing operations for Georgia.

INTERVIEW caucasian business week

December 23, 2013 #35

“ZHVANIA PROMISED US THAT KHUDON HPP WOULD BE CONSTRUCTED DURING HIS OFFICE TERM AS A PRIME MINISTER”

oday Georgia is energy dependent on its neighboring countries by 75%. However, Georgia really has the opportunity to be energy independent by means of its natural resources. You would agree that energy independence is equal to country’s independence and therefore we have to use the country’s resources at maximum extent.” – said Kakha Kaladze, the Minister of Energy. Khudoni HPP currently is regarded as the only way for achieving the energy independence and energy security. Experts engaged in the project for years state that Khudoni HPP will be a very significant project for country’s development and economic strengthening. Zurab Gedenidze, Professor and a Dean of Construction Faculty of the Georgian Technical University in his interview with Guria News stated exclusively that after becoming a Prime Minister even Zurab Zhvania started to lobby construction Khudoni HPP actively.

You will find out from interview where the meeting took place and what Zhvania told the experts. “Environmentalists nowadays talk that big HPPs are no longer being constructed in developed countries, which is far from reality. As of beginning of the 2013, over 271 hydro dams with the height over 60m are being constructed in the world. Do you think that Georgia has excessive power and does not need more? Then let’s follow the judgment: In 1990 we were using 19 billion kwh and the generation used to be 15 billion. Now the generation is 11-12 billion kwh. I noted once and it was not broadcasted on TV and I’ll tell now, if you are visiting the country for the first time and want to have information on its economic situation and cultural level, you have to ask what is electricity consumption per capita, since without electricity there is no culture or anything. This absolutely determines the country’s economic as well as cultural position. You can classify developed countries by consumed electricity per capita and we will find ourselves in the lower part of the list as the consumed electricity per capita equals 2,000 kwh in Georgia, while in developed countries it constitutes 15-20,000 kwh. Therefore, we need power generation don’t we?”-says Zurab Gedenidze. - That is the fact we need it, but environmentalists talk about alternatives, do you as an expert in this field think there is an alternative that would replace a big hydro dam? - If they talk about construction of thermal power plants they should know that it completely destroys the environment. In addition, greenhouse effect is created, greenhouse gases gather like a cloud and extract steam. In fact, we do not have

GEORGIAN-AMERICAN COMPANY FOR RESEARCH AND DEVELOPMENT OF ALTERNATIVE ENERGY WAS FOUNDED

inister of Energy Kakha Kaladze and director of American company Aeolus Apollo Alto Energy Mukemmel Sarimsakci signed a cooperation memorandum on Wednesday. Ministry of Energy informs that American company and subsidiary company of the Ministry Georgian Energy Development Fund also signed a partnership agreement. The agreement

provides creation of the new company, which will research and develop up to 400 MW capacity wind and solar stations throughout the country. Share of Energy Development Fund in the company is 15%, share of Aeolus Apollo Alto Energy - 85%. On the first stage technical and economic justification of wind and solar stations will be researched. Afterwards concrete places for power station construction will be determined.

“RUSHYDRO “ INTERESTED IN ENERGY COOPERATION WITH GEORGIA

he Chairman of the Board of JSC “RusHydro” Evgeny Dod said in an interview with the Russian newspaper “Kommersant” . “Now Georgia has adequate power, and our dialogue with Tbilisi on hydropower and, in general, regarding the business opportunities that exist in Georgia , is not bad. But it is clear that our colleagues from “Inter RAO» have the main business in Georgia. We consider it in the background. If there are market opportunities, if external funding is possible, we will be happy to direct our expertise there. Especially, we have hydroelectric power plants in Armenia, we’ll make there a big modernization program, and then the potential of our research, design and construction

complex will be unclaimed. We must not lose this competence, and if our country doesn’t currently have consumers, we need to move abroad. As for Abkhazia, my heart just bleeds that good projects built during the Soviet era were destroyed during the war. And they should be restored, “says Dod . In his words, a situation is amazing in Abkhazia now: the rate for the population is 0.4 rubles per 1 kW/h , for the industry - 0.8 rubles. The reason for this is that under the agreement with Georgia, Abkhazia takes 40 % of the output of Inguri HPP . “Cooperation in the energy sector is the only topic on which Abkhazia and Georgia have no strong contradictions. Even during the war, no one dared to touch Inguri HPP. It was saved and it is clear that the recovery of these HPPs is an efficient and profitable thing . They need small investments. Hydropower equipment, turbines, generators , transformers, transmission of power , control system should be purchased. Basically, all of them are of Russian origin. Our task is to make a good project. In my opinion, there are serious prospects. Sooner or later, relations with Georgia will be improved, “ - said the head of “ RusHydro “ .

the other alternative either we have to construct a big hydro dam or nuclear power plant, which is accompanied with much more risk factors. There was one academician Givi Svanidze who used to say: “as twenty 1-year old boys are unable to do the job of one 20-year old, the 20 small HHPs cannot perform like one big HPP”. During the construction period I was visiting Enguri for 18 years, I thought that washout in Anaklia would have been much serious, however it was not. If the washout was significant neither the Port not the camp would be constructed there. Enguri is a 271m hydro dam, we endured this and why should be a danger in Khudoni HPP? On the contrary, it will prolong the sediment duration for Enguri and it would be better. - You as the person actively engaged in HPP construction what would you say, why did Russia stop Khudoni construction in 1989? It was said that suspension of the construction was not related with the starting national movement… - Russia felt during that period that Soviet Union was going to break up. It wouldn’t stop the construction of Khudoni HPP without this threat. Turbine – generators were ready and arriving in Rostov for installation. When Russia realized that threat of break-up it stopped 11 biggest constructions in the other republics including Khudoni. Vakhtan Grdzelishvili, a Chief engineer of Zhinvali HPP told me that when they met the Minister and told him modestly that the situation was very hard in Georgia and the construction was to be stopped he threw papers back and said: “if you do not want go away”. - Therefore, on the one hand, they did not spend money and took care that we were not energy independent on the other? - Absolutely, they knew that we would be un-

able to construct a big hydro dam with our own funds. - Mister Zurab, it is said that after becoming a Prime Minister Zurab Zhvania was not against construction of Khudoni HPP, on the contrary, he wanted to implement this project. During that period some meetings were held on this issue. Do you know anything about this? - Yes, Zurab Zhvania wanted Khudoni HPP to be constructed and I’ll tell you in detail. After the Rose Revolution, in the room where Saakashvili drank Shevardnadze’s Tea, Energy experts had a meeting with Zurab Zhvania. Many of them died, but there are still alive witnesses: e.g. Elizbar Eriastavi, Former Chair of the GNERC, Nodar Chitanava, Zurab Mindeli, myself… Before making speech Zurab Zhvania asked Anzor Chitanava to speak about Khudoni HPP. Afterwards Zurab Zhvania said: “You hydro electricians blame me for stopping Khudoni construction, but I give you my word that the construction will be completed while I am the Prime Minister.” One more thing, Eldar Shengelaya and I used to work in one of the firms. Eldar knew Zhvania well and told me every time he congratulated him on his birthday he would mention Khudoni and Zhvania always used to answer that he was young at that time and did not have good consultants either. So when the Prime Minister felt the burden of state problems, he realized the need for energy… - Therefore, if Zhvania were alive Khudoni would have been built? - Others also attended the meeting when Zhvania said “the construction will be completed while I am the Prime Minister” at that time he had been the Prime Minister for three weeks…

KHUDONI HPP – THE OPPORTUNITY TO REPLACE RUSSIAN ELECTRICITY IMPORTS BY DOMESTIC GENERATION

rans Electrica Indian company will submit a final environment impact report for Khudoni HPP construction to the Environment Protection Ministry in the near future. The project includes all remarks that had been presented by Georgia’s state structures. The final construction project has been also revised, the Indian company says. “The cascade will have the same height. I mean a cascade with 202 meter in height. The project contains many novelties anyway. The project has been developed by a Swiss company Stuke. We will introduce the document in the near future. It includes all important values and remarks expressed by only two companies. The new version will definitely contain the research developed by the initiative of the Environment Protection Ministry. Special work was performed in terms of seismology and the document has no analogy in terms of seismology in the world”, David Mirtskhulava, a technical director for Khudoni HPP told the

Saqme (Business) program of PalitraTV.ge Today Georgia’s energy dependence makes up about 75%. “On average there is no other country in Europe with over 54% energy dependence. Georgia has got the chance to be an energy independent country in line with the world standards. 133 million GEL is a guaranteed purchase agreement. There is no one having seen an agreement for electricity sales to Turkey or any other country, because there is no similar document”, David Mirtskhulava noted. As to the future plans, I think a major part of Khudoni HPP energy will remain in Georgia. I want to note with full responsibility if the country builds 100 new enterprises, we will not be able to supply due volume of energy. Even Today our electricity potential and energy security issues are alarming. New enterprises will need additional generation sources. If our GDP growth rate rises to 3% to 5%, Khudoni HPP must be definitely constructed in Georgia”, he added.

BUSINESS & ECONOMY December 23, 2013 #35

caucasian business week

GOVERNMENT: NOVEMBER RECORDS 14.4% GROWTH IN VATPAYERS TURNOVER

n November turnover of VAT-payer enterprises increased by 14,4% Government members stated about it on the session of economic council of the Prime Minsiter. Official data about amount and growth of VAT-payer enterprises will be known at the end of the month, on December 31. Although, based on preliminary data of the government, in November turnover of VATpayer enterprises was 4 068 864 800 GEL, while in November 2012 turnover of these enterprises

was about 3,557 billion GEL. According to official statistic, in November 2012 annual growth of VAT-payer enterprises was only 2,5%. From April of the current year turnover of VATpayer enterprises permanently reduced. In May turnover of VAT-payers reduced by 5,6% in comparison with the same period of last year, in June - by 2,7%, in July - by 2,7%, in August - 1,5%, in September - by 1,6^. In October turnover of these enterprises increased, annual growth equaled to 5,3%.

FREIGHT TURNOVER OF GEORGIAN RAILWAY REDUCED BY 9,7% IN A YEAR

he company informs that in 11 months Georgian Railway served to 16 737 677 tons of freight, which is 1,8 million ton less than in the same period 2012. According to company statistic, in January-November export freights have been shipped. In 11 months Georgian Railway shipped 1 590 990 tons of export freights, which is 22,38 tons more than in the same period 2012. It’s noteworthy that

this year increase of export freights is mentioned in comparison with all months of 2012. In the same period local shipments of 2 296 224 tons was made by railway, which is 16% less than in January-November 2012. Amount of the imported freights shipped by Georgian Railway reduced by 17,8%, to 2 495 660 tons; transit freights reduced by 7,5%, to 10 354 489 tons. Meanwhile, only in November Railway served to 1 643 637 tons of freight. In the current year freight turnover of Georgian Railway is characterized with reduction trend. The only exception is data of January-March, when amount of the shipped freights was increased by 5 605 tons in comparison with the same period 2012.

NEXT YEAR ROMPETROL, LUKOIL AND WISSOL WILL SUPPLY FUEL TO THE STATE ORGANIZATION

ompetrol, Lukoil and Wissol will supply fuel to the state organizations next ear. Competition and State Procurement Agency informs that in 2014 following results were mentioned in the consolidated tenders announced for purchase of oil products; Rompetrol Georgia won tender for diesel fuel and will supply 1-liter diesel for 1,84 GEL to the state

companies. Lukoil Georgia will supply Premium petro (1 liter for 1,77 GEL); Wissol Petroleum Georgia will supply Super petro (1 liter for 1,90 GEL). The agency explains that after the upload to the united electronic system of the “Z” calculated form the final price of the winner suppliers, from December 24, the buyer organizations van sign agreement on procurement of these kinds of fuel.

GULF PARTNERS CHANGED DIRECTOR

TD San Petroleum Georgia, which is an owner of petrol station networks, has a new director. From December 6 Sergo Babasov leads the company, which replace Ianiv Adams on this position. According to the document, submitted to Public Registry, decision about the appoint-

ment of the new director was officially made on the shareholder’s meeting held on November 18 in Tel-Aviv, Israel. US-founded Energy Investment Venture Holdings is a holder of San Petroleum Georgia. According to existing information, main stockholder of the company is a businessman David Iakobashvili.

„M² REAL ESTATE” STARTS CONSTRUCTION OF 2 ENERGYEFFICIENCY RESIDENCE HALLS

² Real Estate starts construction of 2 energy-efficient residence halls. Chairman of supervision board of the company Irakli Burdiladze presented 2 projects of 40 million GEL value on Nutsubidze and Kazbegi on Friday. He said that construction of green buildings will save communal expenses of its residents by 20%. “Special material will be built in the walls, which will provide warmth in winter and coolness in summer. Respectively, less electricity and natural gas will be spent”, - Irakli Burdiladze stated. He says that flats on Nutsubidze will be ready in November 2015, on Kazbegi - in February 2016. In the case of inner installment, contribution of the fat buyer reduced from 35% to 20%; annual rate of the mortgage loan of the Bank of Georgia

from 12% to 11%. Flat buyer will not have to pay additional amount for renovation, technologies and kitchen equipment. In the flat he will have kitchen produced in Italy, with installed gas and vent. The construction is going with landscape design. Great attention is paid to recreational zone and greenery. Next year another 300-flat residence hall will start at #6 Tamarashvili Street. Special offer of10% New Year discount will be available for the completed project at Hippodrome. M² Real Estate implements the projects with loan assigned by International Financial Corporation (IFC). Overall amount of the loans equals to $14 million. $4 million out of this amount will be allocated from the Climate Change Reaction Program of IFC-Canada.

GEORGIA’S ECONOMY RECEIVED 730 MILLION USD FROM TOURISM THIS YEAR

Economy Minister: More routes and more tourist places are needed

evenues received from tourism totaled 730 million USD in the current year - Economy Minister said at thepresentation summing up the work done in the tourism sector in

2013. According to Giorgi Kvirikshvili , in recent years the number of tourists traveling to Georgia has significantly increased, this year’s rate is high as well : compared to last year the number of international tourists in Georgia increased by 23% and amounted to five million. According to the Minister, the number of tourists is expected to grow by 18 % next year, while revenues from tourism should make 1.1 billion USD of the gross domestic product . Kvirikshvili says that foreign tourists are particularly interested in Kakheti and wine tours and tourist interest and routes should grow.

We need to have more routes and more tourist places to attract more tourists. Today it was announced that 2014 would be the year of improving the quality of tourist services in Georgia.

KALADZE: $400-700 MILLION WILL BE INVESTED IN GEORGIAN IN THE II PHASE OF SHAH-DENIZ

inister of Energy Kakha Kaladze states that $400-700 million will be invested in the II phase of Shah-Deniz. Kakha Kaladze stated about it during his visit in Azerbaijan, where he participates in the conference Agreement on Shah-Deniz Second Phase Funding along with Prime Minsiter Irakli Garibashvili. The minister says that during the construction peak about 2000, during exploitation period - about 130 permanent jobs will be created in the country. “In addition to this, after the exploitation of the pipeline we’ll get additional natural air, which is vitally important for our country”, - Kaladze stated. Delegation of Georgia headed by Prime Minsiter Irakli Garibashvili has a 2-day visit in Azerbaijan. The delegation includes Vice Premiers - Kakha Kaladze and George Kvirikashvili. Signature of the resolution on Phase 2 of the Shah-Deniz project is planned on the conference. In the framework of II phase development of Shah-Deniz project, in the current year contracts on natural gas sale was signed by Georgia and Azerbaijan. The project considers expansion of the South Caucasus pipeline, to provide supply of additional 16 billion cubic meters gas to Turkey. Parallel pipeline construction is also planned - 387 km on Azerbaijani, 55 km on the territory of Georgia. Also, installation of two additional compressing stations, pressure regulation and a new measuring station in Georgia. According to existing agreement, Georgia can purchase 5% of the transit gas with preferential price,

which is over 1 billion cubic meters annually in the case of maximal load of the pipeline. Besides, about 350 000 tons of construction freight and materials will be transported through Georgian port and railway for the parallel construction. ShahDeniz deposit is the largest deposit in Azerbaijan located at Caspian Sea coast, in 70km Southeast from Baku. The deposit was found in 1999. Deposit operators include companies: BP (25.5%), Statoil (25.5%), SOCAR (10%), Total S.A. (10%), LUKoil (10%), NIOC (10%), TPAO (9%). ShahDeniz deposit reserve is about 1 trillion cubic meters Obtaining of gas and gas condensates started in 2006 on the deposit. Investment of $6 billion was made on the development of the first phase; second phase is evaluated for $28 billion. SOCAR should pay $2,8 billion (10%) of this amount. Supposed amount of the obtained gas on the second phase is 25 billion cubic meters in a year (peak obtaining). To date 43 billion cubic meters gas I obtained from the deposit.

FINANCIAL AND BUDGET COMMITTEE: GEORGIA CAN PAY DEBTS

ccording to Chairman of Budget and Finance Committee of the Georgian Parliament David Onoprishvili, the state takes the debts , because it can repay them , so there is no reason to panic. In his words, the country has no special difficulties in terms of internal or external debt, and next year the government will be able to repay the debt, which it is planning to take.

“To cover the budget deficit all countries take debts and the problem is not in their size but in their ratio to GDP. In this case the situation is quite normal, as the internal and external debt of Georgia is 35,3% in relation to GDP, whereas in 2010 - 42,2% . We may pay the debts. Including the debt that we’ll take in 2014. There is no reason to panic. Financial capabilities of the state allow it, “- says Onoprishvili .

IRAN – GEORGIA CHAMBER OF INDUSTRY TO BE ESTABLISHED AT THE END OF JANUARY 2014

he Iran – Georgia Chamber of Commerce and Industry will be established by the end of January 2014. One of thefounders of the Chamber and Chairman of the Union of Oil Products Importers Vano Mtvralashvili explains that the organization will promote economic relationsbetween the two countries. It is stated that energy,

construction sector as well asfood products represent the Iranian investors’ interest.The Chamber has 5 Georgian and 4 Iranian founders. As it turned out, “Tskali Margebeli” represents the Georgian side in the organizations. Mtvralashvili notes that an annual trade turnover between Georgiaand Iran amounts to 120-150 million USD. The Chamber plans to increase this figure significantly.

BUSINESS caucasian business week

GEORGIAN COMPANIES TO ACTIVELY ENTER THE EU MARKET IN 2015

ll companies that, at that date, meet the EU requirements will be able to start exporting in the EU market since the entry into force of the provisional applications of the trade agreements, i.e. in the early months of 2015. Boris Iarochevitch, Deputy Head of the Delegation of the European Union to Georgia, said in an interview with “Financial”. The rapidity of entering into EU markets largely depends on the activity of the sector, the stage of development and degree of maturity of the business, its innovative capacity, the management attitude, market approach, availability of human and financial resources. According to Iarochevitch, in any case, to take advantage of DCFTA opportunities, Georgian businesses must start preparing and plan strategi-

cally in the short, medium and long run. In his words, Georgian companies differ by their level of knowledge, capacity to export and innovate, and financial strength. Most small and medium size enterprises still lack export capacities, therefore for them DCFTA will initially mean “adaptation to a transforming local market” more than entering new markets. The starting point however for any business, is to clearly understand the Association Agreement/ Deep and Comprehensive Free Trade Agreement (AA/DCFTA) provisions, preferably if translated into business language. For this, we strongly rely on the cooperation with business associations, central and local authorities and donors’ supporting measures as businesses must be informed on the consequences of the package. The Head of the International Chamber of Commerce explains to “Commersant “ that a deep and comprehensive free trade agreement with the EU will open a stable market for Georgian business . Fadi Asli says that the EU market has 560 million users and this process will cause investment inflow and employment growth in Georgia. For more information: Georgia initialed the Association and Free Trade Agreement with the European Union at the Vilnius Summit on November 28-29 while the official signature will take place in the fall of 2014.

ECONOMY MINISTRY TO UNVEIL TERMS FOR FINANCING START-UP PROJECTS

he budget of Small Business Development Agency which is to finance start-ups will be 22 million GEL. Deputy Economy Minister Keti Bochorishvili states “Commersant” that at this stage details are being clarified , and finally, information on the principles of the fund’s activity will be known in January. “There is not a complete clarity regarding the budget and the concept of the Agency , but in January everything will be known, “ - she says. According to her, the Agency will be launched

next year and will offer novice businessmen services such as information centers, consulting, drafting of business projects, as well as certain types of financial instruments. Recommendations of international organizations have become one of the reasons for the Agency’s creation. “The Agency will consider a variety of projects, and suitable ideas will be transformed into professional business plans, which then will be submitted to the banks,” – says the Ministry of Economy.

AMERICAN, BRITISH COMPANIES AND INTERNATIONAL FUNDS INTERESTED IN THE PORT OF ANAKLIA

ommersant” radio reports that apart from the American “Conti Group”, a British investment company and several international funds are interested in the port of Anaklia. Ministry of Economy confirms this information, but other details have not yet been specified. According to them, they expect suggestions from all companies interested in building the Anaklia port in the first quarter of 2014. Furthermore, the Anaklian port’s concept will be resolved and the identity of a construction company will be known. The then Prime Minister Bidzina Ivanishvili announced about the construction of the port with the highest conductivity in Anaklia in September at the presentation of the Co-investment Fund which annual capacity would be 110 million tons.

“GINO PARK” TO OPERATE AT FULL CAPACITY FROM MID-JANUARY

ommersant” radio station reports that “Gino Park ‘’ located in the territory of the Tbilisi Sea will operate at full capacity from mid January. The park’s administration informs that it was planned to open the park for the New Year, however, SPA - centers and indoor pool cannot be completed before the New Year.

They also say that on January a wellness spa - salon, indoor pool, Georgian - European restaurant and several gastronomic objects will be added. The entry fee will start from 15 GEL. “Gino Park ‘’ was opened in the area of the Tbilisi Sea in August. Switzerland -based businessman has invested 20 million Euro in the project.

December 23, 2013 #35

NOVEMBER RECORDS DOWNTURN IN NUMBER OF REGISTRATION OF BUSINESS COMPANIES

ublic registry reports that in November 2013 number of registered business subjects equaled to 3 847 units, among which 97,4% are business entities, 2,5% - non-commercial subjects. In November decline was mentioned in comparison with previous month (4,2%), growth - in comparison with the same month of last year (11,8%). IN November 2013 number of business entities reduced by 3,4%, non-commercial subjects - 26,1% in comparison with previous month. Different trend was mentioned in com-

parison same month of last year: number of business entities increased by 13.0% and number of non-commercial entities reduced by 20.2%. In November of the current year majority of business entities registered as individual entrepreneur (2 410 units or 61,6% of the business entities) and LTD (1 317 units or 34.2% of the registered business entities). 96,8% of the subjects gives preference only these legal statuses. In the same month 99 non-commercial legal entities, 9 branches of the foreign legal entities, 6 cooperatives, 5 JSC and 1 solidary liability companies have registered in the country.

REAL ESTATE TRANSACTIONS REDUCED IN NOVEMBER

ccording to Public Registry report, in November 2013 number of real estate registration transactions increased by 8,8% in comparison with the same period last year and equaled to 42 664 throughout the country. Compared to previous month - October, number of registered transactions reduced by 3,3% - increase was mentioned in the primary (3,9%), decline in the secondary (4,9%) registration transactions. November of the current year is distinguished with growth in comparison with the same month of 2010-2013: 34,4$ growth in comparison with November 2010 (31 773 units of registered transaction), 16,1% growth in comparison with November 2011 (36 733 units of registered transactions) and 8,8% growth in comparison with November 2012 (39 218 registered

transactions). Compared to the same month of last year number of both primary (9,1%) and secondary (8,7%) transactions increased. In November 2013 number of primary registration transactions equaled to 8 679 units, secondary - 33 985. As for ratio of primary and secondary registration transactions compared to the same month of previous year, situation did not change: in November of the current year 79,7% were secondary, 20,3% - primary transactions.

FOREIGN TRADE TURNOVER OF GEORGIA INCREASED

roducts export from Georgia reached a new record in November. According to preliminary data of Geostat, in January-November 2013 foreign trade turnover with goods in Georgia (without unorganized trade) equaled to $9,681 billion, which is 4% more than data of previous year. Among them, export was $2,618 billion, which is 20% more than 2012 data. Import was $7,064 billion, which is 2% less in comparison with 11 months 2012.

In January-November 2013 Negative trade balance equaled to $4,446 billion and 46% of the foreign trade turnover. It’s noteworthy that in November both import and export amount increased in November. Export equaled to $311,8 million and reached a new record. Meanwhile, import equaled to $778,9 million, which is the highest indicator of 2013, also for 11 months of last year. Adjusted data of Georgia’s foreign trade will be published on December 24 of the current year.

LIVING WAGE REACHED TO YEAR’S MINIMUM IN NOVEMBER

n November living wage reached to year’s maximum. In a month living wage increased by 2,1 GEL. Geostat informs that in November living wage for a man, capable for working equaled to 150,8 GEL, this data equaled to 148,7 GEL in October. According to official statistics, living wage of November 2013 is 30 Tetri more than the data of analogic period last year.

It’s noteworthy that in November, living wage of average consumer equaled to 133,6 GEL (131,7 GEL in October), average family -253 GEL (249,4 in October). According to statistics, living wage of 1-person family equals to 133,1 GEL, 2-person family - 213,7 GEL, 3-person families - 240,4 GEL, 4-person families - 267,1 GEL, 5-person families - 300,5 GEL, families with 6 and more members - 355,3 GEL.

FOREIGN PHARMACEUTICAL COMPANIES TO LAUNCH PRODUCTION IN GEORGIA

oreign pharmaceutical companies, which, according to the Ministry of Health of Georgia, are going to start working in the country, plan to build factories for the production of drugs. Their representatives have already begun selecting a territory for this purpose. According to Deputy Minister of Economy of Georgia Keti Bochorishvili , information about companies will be made public after they deem fit. “We are in active negotiations with investors and the first data about them will be made public after they choose the territory under construction of plants. It is expected that construction will begin in 2014, “ - she says. Health Minister David Sergeenko announced that new players would appear in the pharma-

ceutical market in Georgia some time ago. In his words, we are talking about large companies from Britain, Germany, Hungary, and Israel, which have already made the decision about entering the Georgian market and talks about it are almost completed. “Now it depends on us how effectively we can use a quality control system in order to open the way for foreign investors to the Georgian market . It is about the companies from Britain, Germany, Hungary and Israel, “ - says the Minister. The then Prime Minister Bidzina Ivanishvili was the first who planned to attract large pharmaceutical companies in Georgia - in his opinion, it was necessary in order to stimulate competition in this area and provide for the reduction the prices of medicines.

SOCIAL RESPONSIBILITY December 23, 2013 #35

caucasian business week

11 ADOLESCENTS GOT EMPLOYED WITH ASSISTANCE OF NATAKHTARI FUND

und established by Natakhtari Company for strengthening corporate social responsibility has been implementing its Project Take Care of Future, focused on integration and adaptation of children deprived of care in the society, in cooperation with the Association - Our House Georgia and the Patriarchate of Georgia. Briefly, the company through proceeds generated from Natakhtari Lemonade sales assists over 150 adolescents from 15 to 18 across Georgia so that they acquire vocational and secondary education, get employed and live independently without assistance of the state. „Our aim is to enable as many adolescents as possible to live independently and not have trouble in integration in the community. The best way to achieve this is to equip them with vocational knowledge and jobs. Employed adolescent is a closed i.e. successful project and a case. In addition, it is important that adolescents are psychologically and professionally ready to start working and retain it” – said Tornike Nikolaishvili, Marketing Director of Natakhtari. Participants of the project implemented by Natakhtari Fund have the opportunity to acquire profession in accordance with their interests. It is noteworthy that three beneficiaries from cases closed in 2012 got employed, in particular, two of them as hairdressers in a salon and one as an electrician in a hotel. From cases closed in 2013, 8 participants got employed. Two beneficiaries work in a shop, one in a auto service, one in a salon, one in bakery, one in the Environment Protection Service, one in a café and one in a restaurant. Three beneficiaries who passed driving courses got employed with assistance of Karitas and world Vision. There are 12 temporarily employed beneficiaries noted in current cases. Adolescents are currently on probation and therefore their cases are not considered as closed yet.

ROLE OF NATAKHTARI FUND’S PSYCHOLOGY SERVICE Psychology Service of Natakhtari Fund coordinated by Association - Our House Georgia was established in the beginning of 2012 and since then has been assisting adolescents deprived of care (mostly those living in a small family type houses) in the process of getting ready for the independent life. We talked to Manana Omarashvili, a Head of the Service and the Association Representative: “Prior to writing a concept for Psychology Service we posed a question: what does it mean to prepare an adolescent for an independent life? Some specialists think that our objective should be teaching adolescents deprived of care minimum life skills and not to have expectation that they would achieve great success in their independent lives, since majority of them fall behind their peers in school studies and face bunch of social and psychological problems. We dramatically do not agree with this opinion and set as an objective development of such programs, which would assist 18-year olds after leaving the state care system to compete with their peers brought up in well-to-do families. You would say that this is a difficult task, but the results attained in several years will prove that we are not mistaken. In order to achieve this goal, it is the most important to reduce the age of beneficiaries gradually. We managed to reduce the age from 16 to 15 within a year. The more the age reduces, the closer we‘ll get to the goal, since it is much easier to work with psycho- social problems at an early age. Personal features of a 15-16 year old child is almost formed and traumatizing past is longer. In addition, as a result of the child care reform, there are no big homes any longer for children and they got replaced with small family-type houses, where children are individually being cared for and far better environment is created for prepar-

ing them for independent lives. In this regard, state social workers and teachers work a lot.” And again, what does it mean to prepare an adolescent for an independent life? „We met with focus groups comprised of experts and applied to them with a question: imagine, that your child got already 18 and leaves home, what he would need for an independent life?” The list was so long including selfcare and communication skills and apartment and work that one of the participants said: “my child will not have so many things at the age of 18 and it would be better if he stays at home and we parents take care of him”. Here we posed a second question: “What an adolescent, who lives in a small family type house, should do since as soon as he turns 18 he should leave state care system and will not be funded under voucher. How should he start an independent life? That is why our program is calculated for the maximum: higher education, renting an apartment, acquiring the vocational skills, adaptation with a new environment, acquisition of working instruments, popularization of healthy lifestyle, developing emotional intellect and communication skills, teaching assertive behavior, raising self-esteem… the program is being imple-

mented by 10 professional psychologists across Georgia. I would like to thank them for special efforts and continue cooperation for achievement of set objectives especially as we have 5 students, more than 20 employed, 8 school graduates, 50 students of various colleges. These figures will improve with the fund’s assistance.”

EXHIBITION caucasian business week

CHOOSE GEORGIAN, THE EXHIBITION, SALES AND TASTING OF GEORGIAN PRODUCTS IN GOODWIL

December 23, 2013 #35

BANKING & STATISTICS December 23, 2013 #35

HALYK BANK COMPLETED JANUARY-NOVEMBER WITH PROFIT

SC Halyk Bank (Georgia) completed 11 months with 687 041 GEL profit (01/11/13 -505 000). By December 1, 2013 bank’s credit portfolio equals to 75,7 million GEL (01/11/13- 73,7 million GEL), deposits - 15 million GEL (01/11/13-12,7 million GEL), overall obligations - 85,4million GEL (01/11/13 - 76,2 million GEL). Bank’s actives are 126 million GEL, market share - 0,8% (01/11/13 -116 million; 0,7%). JSC Kazakhstan People’s Bank *Halyk Bank) is a founder of the bank. It got license at the beginning 2008. Overall stock capital of the bank equals to 40,6 million GEL.

PROGRESS BANK COMPLETED 11 MONTHS WITH 145 116 GEL PROFIT

SC Progress Bank completed 11 months of 2013 with 145 116 GEL profit (Q3 - 180 416; Q2 - 236 175 GEL). By December 1, deposit portfolio of the bank equals to 34,07 million GEL (Q3 - 34,4; Q2 - 23 million); loans 36,08 million GEL (Q3 - 33,4; Q2 - 25,8 million GEL). Overall obligations are 35,8 million GEL (Q3 - 34; Q2 - 25,8 million GEL). Since the beginning of the year deposit portfolio has increased buy 8 times (2012 - 4,05 million GEL), loans - 2,3 times (2012 - 16,024). Bank’s actives equal to 51,1 million GEL, market share - 0,3% (Q3 - 50,3 million, 0,3%; Q2 - 39,8 million, 0,3%). 78% of the bank’s stocks belong to Kakha Kaladze, 22% - to Bidzina Ivanishvili. Stock capital of Progress bank is 15,3 million GEL.

PROCREDIT BANK COMPLETED 11 MONTHS WITH 15 MILLION GEL PROFIT

SC Procredit Bank (Georgia) completed 11 months 2013 with 15,04 million GEL net profit (Q3 - 12,32 million GEL). Deposits equal to 541,9 million GEL (Q3 - 529,2 million GEL), credit portfolio - 678,55 million GEL (Q3 - 673,2 million GEL), overall obligations - 884,3 million GEL (Q3 - 870 million GEL). By December 1, bank’s actives equal to 1,014 billion GEL (Q3 - 1,002 billion GEL). JSC Procredit Bank is a member of international banking group, operates in Georgia since 1999. It’s mainly oriented on the crediting of small and medium-size businesses. 100% of the bank stocks belong to Procredit Holding (ProCredit Holding AG &Co. KGaA). Out of 9 beneficiaries, more than 10% belongs to: IPC (17,88%), KFW (13,74%), DOEN Foundation (13,44%), IFC (10,39%). Stock capital of the bank equals to 129,4 million GEL.

MONEY TRANSFERS REDUCED IN NOVEMBER

n November 2013 transfers of $124,4 million was made to Georgia, which is 8,1 million less in comparison with previous month. According to statistic of the National Bank, compared to the same period of last year 12,6% (25,2 million GEL) can be mentioned.

Over 94,8% of the money transfers made from abroad to Georgia comes on the 12 largest countries, transfers from which exceeded to $1 million. November transfers from the main partner countries have reduced.

caucasian business week

BANK SECTOR ENDS JANUARY TO NOVEMBER PERIOD IN 390.2 MILLION GEL PROFITS

anking Sector completed 11 months 2013 with 390,2 million GEL profit (Q3 - 275 million, Q2 - 153 million, Q1 - 65,3 million GEL). Net profit of 10 months of last year equaled to 116 million GEL. 16 banks are profitable, other 5 have loss. IN the same period 12 banks out of 19 were profitable. For the reporting period own capital of the banking sector (Stock capital) is 2,893 billion GEL (01/12/12-2,309 billion GEL). Supervision capital equals to 2,893 billion GEL (01/12/12- 2,439 billion GEL), Capital adequacy coefficient - 17,6%-, in comparison with previous month it has reduced by 0,1% (01/12/12-16,7%). For the reporting period Return on Equity (ROE) is 16,1%, Return on Actives (ROA) - 2,8% (01/12/12 - respectively 5,5%, 0,9%). Consolidated data includes results of 21 commercial banks.

İŞBANK COMPLETED 11 MONTHS WITH 260 850 GEL LOSS

atumi branch on the Turkish İşbank slightly reduced loss in November - to 260 850 GEL (01/11/13 - 272 000 GEL). By December 1, 2013 deposits (fixedterm, current) equal to 1,218 million GEL (01/11/13 -776 000), loans - 13,960 million GEL (01/11/13 -12,207 million GEL). Bank’s actives equal to 25,036 million GEL (01/11/13 -24,8 million), market share - 0,2%. Branch of the Turkish İşbank operates for a year. It’s represented with 1 branch and a service center (in Batumi airport) in Batumi. It will be opened in Tbilisi at the beginning next year. Owner of 40,4% of the bank’s stocks is pension fund of the İşbank, 28,1% belongs to Republican People’s Party.

ONLY 10 OTHER COUNTRIES RECORD HIGHER INTEREST RATES ON LOANS COMPARED TO GEORGIA

igh interest rates on credits always cause discussions. The theme remains still relevant despite last period has recorded downturn in interest rate on various loans as apart of various campaigns. However, specialists employ basis indicators for making analysis, not figures recorded in distinct campaigns. A major part of experts agree that the bank sector is less competitive and a major part of assets is recorded for only several banks. According to the World Bank (WB) indicators, Georgia is one of the leading countries all over the world in terms of high interest rates on credits. Only ten other counties are recorded to have higher interest rates than Georgia, including: Madagascar (60%), Brazil (36.6%), Sao Tome and Principe (26.1%), Tajikistan (25.1%), Yemen (24.5%). As to Georgia, averaged weighed interest rate makes up 22%. It should be noted the lowest interest rate is recorded in the UK with averaged 0.5%. Japan is second with 1.4%, the Netherlands records 1.6%, Switzerland -2.7% and Canada – 3%.

AZERBAIJAN caucasian business week

AZERBAIJAN’S WTO MEMBERSHIP KEY STEP FOR ECONOMIC REFORMS: ENVOY Azerbaijan has held consultations with 12 countries in bilateral meetings, including Argentina, Indonesia, and other countries of the region.

.S. Ambassador to Azerbaijan believes one of the key steps for carrying out economic reform in Azerbaijan may be its accession to the World Trade Organization (WTO). Speaking at a meeting with member companies of the Caspian-European Integration Business Club (CEIBC) on December 18, Richard Morningstar said the U.S. supports Azerbaijan’s efforts for accession to the WTO. The meeting was devoted to the possible expansion of U.S.-Azerbaijan relations and the expansion of the activities of U.S. companies in Azerbaijan and Azerbaijani companies in the U.S. Morningstar went on to note that despite the government’s efforts, there are still obstacles in this direction and in order to overcome them, Washington recommends Azerbaijan to continue its work on simplifying bureaucratic procedures, improving the efficiency of government agencies’ activities and the transparency of the economy, and creating opportunities for the development of small and medium businesses. Morningstar said Azerbaijan has made impressive strides in recent years. “To continue this success, a major challenge for Azerbaijan is to develop the human factor. Azerbaijani population is young and very talented. The education system that is being reformed now should create conditions for using these talents,” the ambassador said. Azerbaijan has been in talks with the WTO since 2004 to join the organization. Azerbaijan’s accession to the WTO is expected to help increase the country’s non-oil exports. The next round of negotiations on Azerbaijan’s accession to the organization was postponed till thefirst quarter of 2014. The delay is related to the organization’s preoccupation with countries that are in the very last stage of their accession to the WTO. Meanwhile, the Azerbaijani side has prepared all the necessary documents. Talks are also being held at bilateral and multilateral levels with WTO member states, and work is underway to bring Azerbaijani laws in line with the WTO regulations. The number of WTO member states seeking to start bilateral talks with Azerbaijan is growing.

U.S. APPRECIATES SHAH DENIZ 2 Touching on the completion of the Shah Deniz -2 final investment decision, Morningstar gave a high evaluation of the documents signed within the framework of the Shah Deniz Stage 2 project in Baku on December 17, as well as the development of the Azerbaijani-American relations over the past years. The ambassador noted that the Shah Deniz 2 project would provide big benefits for Azerbaijan, Georgia, Turkey, Greece, Italy, and Balkan countries including Bulgaria, Albania, Croatia, Montenegro, and possibly Bosnia. He highlighted the participation of many companies in the implementation of these projects, saying, “Turkey and Greece will become not only customers, but also transit countries. Azerbaijan in its turn will strengthen its role as an energy supplier.” Morningstar also said the export of Azerbaijani gas is playing an important role in meeting global gas demands, adding that the energy corridor ensures the sovereignty of Azerbaijan and Georgia, and is considered an alternative source for provision of global energy security. Morningstar considers the implementation of the gas corridor project as part of the East-West corridor. The U.S. Ambassador was then presented with the CEIBC honorary membership certificate by CEO Telman Aliyev. The Shah Deniz Consortium has made the final investment decision (FID) on the second stage of offshore gas condensate field development. The signing ceremony of the document kicked off in Baku on December 17. Southern Gas Corridor is a major project, designed to meet European gas needs for decades to come. The gas which will be produced in the second phase of Shah Deniz field is considered the main source of the Southern Gas Corridor project. A consortium of Azerbaijani Shah Deniz gas condensate field development announced its choice of the TAP project as a gas transportation route to the European markets in late June. Shah Deniz-2 project authorization means the transition of the project from concept into immediate implementation. Shah Deniz reserves are estimated at 1.2 trillion cubic meters of gas. The cost of developing the second phase of the Shah Deniz gas condensate field is estimated at $25 billion. Within the second phase of development, some 16 billion cubic meters of gas is planned to be produced, six billion of which will be transported to Turkey and ten billion to Europe.

NON-OIL SECTOR PROVIDES ABOUT 55% OF TAX LEVIES

he Azerbaijani Taxes Ministry provided proceeds of 6 245.44 million manat from tax levies to the state budget in January-November 2013. The ministry reported that the spe-

cific weight of tax revenues to incomes made up 37.9 per cent of total tax revenues, value added tax - 24.7 per cent, income tax - 12 per cent, excise tax - 7.5 per cent, other taxes - 17.9 per cent. Tax deductions from the non-oil sector to Azerbaijan’s state budget amounted to 3,409 billion manats or 54.59 per cent of total revenues. The outlook on tax deductions for 2013 for the Tax Ministry is defined in the volume 6.4 billion manats. Some 66,162 taxpayers passed state registration in Azerbaijan in January-November 2013, including 30,221 taxpayers (45.7 percent) who registered in electronic form. The total number of taxpayers on December 1, 2013 was 533,093 people, or 11.8 percent more than the same period last year. In January-November 2013, the specific weight of tax declarations, presented in electronic form, amounted to 90.4 per cent. The official exchange rate for December 19 is 0.7844 AZN/USD.

December 23, 2013 #35

ADB GIVES AZERBAIJAN ADVICE TO ELIMINATE TRAFFIC CONGESTION

he Asian Development Bank (ADB) has presented some recommendations on the elimination of traffic congestions in Azerbaijan, head of ADB’s Baku office, Olli Norojono, said on December 16. Norojono said that the bank has conducted an analysis of the transport sector and submitted the results to the government. “We offered Azerbaijan to eliminate congestion by introducing additional lines for buses, as well as providing a more comfortable transition from one kind of transport to another and the improvement of road infrastructure in general,” he said. The official noted the bank also analyzed the possibility of introducing toll roads and welcomed such a move. “The report was submitted to the Azerbaijani government and the latter is to make a decision on the occasion,” Norojono explained. “The Bank is also ready to take part in the realization of the Regional Development Plan of Greater Baku,” he said. Norojono went on to say that ADB is ready to offer Azerbaijan $45 million worth of the new tranche of multi-tranche financing facility (MFF) Road Network Development Program. Norojono noted the tranche will be spent on construction of four bridges and locally important roads in the city of Ganja. ADB has conducted an appraisal of the Ganja beltway construction project. The bank has set aside $55 million in a loan for the project. ADB approved a $500 million loan for road upgrades in Azerbaijan in 2008. Earlier Azerbaijani Transport Ministry and ADB jointly organized a consultation meeting with relevant agencies to discuss Baku urban transport issues. The meeting was held as part of a technical assistance (TA) grant for preparing sustainable urban transport program for Baku. A $925,000 grant was approved by ADB in 2012 to conduct the TA which will support the Azerbaijani government in establishing an urban trans-

port sector road map and investment program for Baku’s metropolitan area. Musa Panahov, the Deputy Transport Minister, chaired the meeting, during of which a French consulting firm was selected to conduct the TA and present a preliminary report. David Margonsztern, ADB’s urban development specialist, briefed the meeting participants that, “The study will carry on throughout 2014 and will produce a multi-modal traffic forecasting model to analyze different options and recommend notably a parking strategy, traffic management measures, new mass-transit systems such as Bus Rapid Transit on strategic corridors, improvement of the road network and main junctions, intermodal hubs, public bicycle sharing schemes and other innovative and sustainable actions to improve Baku’s traffic and relieve the capital city of its congestion”. The Manila-based ADB is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members, including 48 from the region. In 2012, ADB assistance totaled $21.6 billion, including co-financing of $8.3 billion. Azerbaijan’s share in the bank’s capital is 0.5 percent.

FOREIGN INVESTMENTS IN AZERBAIJAN’S ECONOMY JUMP

he total amount of foreign investments in Azerbaijan’s economy amounted to 3.78 billion manat in January-November 2013. The figure higher by 31.18 percent compared to the same period of 2012, the Azerbaijani State Statistics Committee reported. Some 87.4 per cent (3.301.4 billion manat) of investments made in Azerbaijan’s economy in January-November 2013 by foreign countries and international organisations accounted for investors from the UK, the U.S., Japan, Norway, Turkey, the Czech Republic and France. The UK continues to maintain a leading position in the list of foreign investors in Azerbaijan. This country’s specific weight in total foreign investments made up 35.9 per cent, while the investments totalled 1.354 billion manat. Norwegian investments in the Azerbaijani economy totalled 467.6 million manat with a specific weight of 12.4 per cent, the U.S. - 454.64 million manat (12 per cent), Japanese - 346.06 million manat (9.2 per cent), Czech - 258.11 million manat (6.8 per cent), Turkish - 270.53 million

manat (7.2 per cent), French - 149.99 million manat (3.9 per cent) and Russia and Iran - 118.72 million manat each (3.1 per cent), according to the report. Among the international financial institutions, the largest volume of investments was allocated by the World Bank - 139.1 million manat with a specific weight of 3.7 per cent. In January-November, the Asian Development Bank allocated 42.3 million manat (1.1 per cent) for implementation of projects in Azerbaijan and the Islamic Development Bank allocated 9.27 million manat (0.3 per cent).

AZERBAIJAN TO RECORD HIGHER CEREAL PRODUCTION

he Azerbaijani Agriculture Ministry has forecasted a 3.9 percent increase in cereal production in 2014 through the expansion of areas under autumn crops. Currently, the sowing continues and as of December 1 some 934,811 hectares of land have been ploughed up for the autumn crops, which are 34,740 hectares more than the same period of the last year. The State Statistics Committee (SSC) reported that some 616,700 hectares of area have been planted with wheat (a decrease by 0.4 percent compared to January-November last year), and

301,560 hectares have been planted with barley (an increase of 11.4 percent). In general, the grain area in Azerbaijan for the year grew by 3.2 percent. Sown areas under cereals increased by 28,230 hectares, which allows forecasting the growth of grain production in Azerbaijan. As of December 1, Azerbaijan produced 2,961,800 tons of cereals, including corn, according to the SSC. Azerbaijan’s demand in crops is currently estimated at 3-3.2 million tons. Azerbaijan imports grain from Kazakhstan and Russia.

ARMENIA December 23, 2013 #35

caucasian business week

CONSTRUCTION OF IRAN-ARMENIA RAILWAY POSSIBLE FROM 2015: SCR

ccording to the assessment of the expert group the maximum annual turnover of the Iran-Armenia railway will reach 15-18 million tons. The General Director of the South Caucasus Railway CJSC Viktor Rebets stated this at the course of the press conference held on December 19. As reports “Armenpress” among other things the General Director of the South Caucasus Railway CJSC Viktor Rebets underscored: “In case

of favorable development of circumstances the construction of the Iran-Armenia railway will be launched not sooner than in the mid 2015.” The construction of the Armenia-Iran railway is among the priorities of the Government of the Republic of Armenia. In February 1899 the first train, having overcome 180 km site, arrived in Alexanderpol (nowadays Gyumri) from Tiflis. Since then for Armenia not having a direct exit to the sea and located in mountains 1800 metres high above the sea level, the railway transportation has an important strategic value in maintenance with the reliable transport communication promoting economic and social development of the Republic. Joint-Stock Company “SCR” is 100 % Open Society affiliated company of Public Corporation “Russian railways”. On February, 13th, 2008 in Yerevan between Open Society Republic of Armenia signed the Concession contract on transfer of state Joint-Stock Company “Armenian railway” to Joint-Stock Company “SCR” management. According to the contract, the term of

concession management is 30 years with the right of prolongation to 10 years after the first twenty years of work by a mutual consent of the parties. According to conditions of the tender employees of the railway of Armenia (4300 persons), except for the persons who have reached a pension age, are translated into the staff of Joint-Stock Company “SCR” with increase of wages to 20 %. Joint-Stock Company “SCR” problems include modernisation of an infrastructure of railway RA, development of cooperation with the adjacent with Armenia states, development of the mid-republican and international passenger and cargo traffic. The size of the investments that are carried out by the Company makes $ 572 million, out of which $ 220 million is planned to invest within the first 5 years. The activity of Joint-Stock Company “SCR” began on June, 1st, 2008. Joint-Stock Company mission is development as the national transport company dynamically developing efficiency and quality of services by means of certain strategic tasks.

EU GIVES € 4.8 MILLION TO ARMENIA AS BUDGET SUPPORT FOR 2013

ithin the 2010 Budget Support Operation, on the basis of a total variable commitment of € 6 million for 2013, the European Union makes a € 4.8 million disbursement in reward to the Government of Armenia’s implementation of reforms enshrined in the European Neighbourhood Policy Action Plan in the areas of public financial management, improvement of public sector transparency, and regulatory approximation with EU and international trade-related standards.

As Armenpress was informed from the EU delegation in Armenia, on 14 December 2013, within the Multi Sector Budget Support Operation, the European Union provided an instalment € 4.8 million in support to the implementation of the European Neighbourhood Policy Action Plan in the areas of public financial management, improvement of public sector transparency, and regulatory approximation with EU and international trade -related standards. The tranche is part of a Budget Support Operation that was agreed between the European Union and the Government of Armenia in 2010. Budget Support funds are channelled directly into the Treasury of the Government of Armenia. The overall programm amounts to € 21 million of which 20 million consists of budget support. The current disbursement of € 4.8 million follows a previous disbursement in December 2011 of € 8 million for a total amount of €12.8 million. € 1 million is set aside to provide Technical Assistance to the Government’s institutions and Non State Actors that are active in the areas as well to assess the progress of the operation. The progress of the operations

is assessed jointly by the European Union and its services, the Republic of Armenia institutions, international development partners and local Non State Actors. Specifically to the current disbursement, in the public finance management area , the programme has encouraged the creation of a register in the e-gov.am website to enhance the transparency of the external audit process ; furthermore, in the Ministry of Finance it has set up a C entral Harmonisation Unit in charge of guiding reforms in public procurement and public financial internal controls . The Programme has supported the set up of the public procurement Appeals Board that is responsible to deal with public procurement complaints. In the traderelated area, the programme supported the government’s adoption of the Strategy on the reforms of quality infrastructure, and to adopt and to publish a register for intellectual property-related legislation and sub-legislation acts, court rulings and international treaties. The final disbursement was inferior to the total available under this tranche, i.e. € 6 million, owing to two unmet targets regarding the operational capacity of the newly set-up public procurement appeals board; and the disclosure regarding the follow-up of the implementation of the recommendations in the field of external audit.

SOUTH CAUCASUS RAILWAY EXPECTS FREIGHT TRAFFIC OF 3.25 MILLION TONS IN 2013

outh Caucasus Railway CJSC CEO Viktor Rebets, speaking today at a news conference, freight traffic is expected to total 3.25 million tons in 2013 - 1% less than the 2012 result. He said this decline is mainly due to contraction in imports. The company finds discounts in transportation of

socially important cargoes, such as sugar, grains, flour and fuel, justified. Rebets said passenger traffic grew 3% in 2013, compared with the previous year. He said Georgia is the most demanded destination. He stressed that the company kept fares to this destination unchanged in winter season gradually building up services. In particular, passengers

enjoy free Wi-Fi services this year. South Caucasus Railway, a subsidiary of Russian Railways, runs Armenian Railway, which was handed over to the South Caucasus Railway on February 13, 2008 for 30-year concession management with a right to prolong the management term for other 10 years. ($1 – AMD 405.25).

EXPERT: COLLAPSE OF ARMENIA’S AIR CARRIER ONE OF BIGGEST LOSSES FOR NATIONAL AVIATION AND SECURITY

he collapse of Armenia’s national air carrier has become one of the biggest losses for national aviation and security, Izabella Muradyan, a member of the presidential council’s commission on air transport, said Friday at a news conference. On April 1, 2013, Armavia, the only national air company of Armenia canceled all its flights and started bankruptcy procedure. “This has stricken hard at the country, since the lack of own air carrier have very adverse impacts in the event of disasters or wars, and Armenia has no airplanes belonging to the government or Armenian air companies,” Muradyan said.

She pointed out that Georgia has 54 aircraft and Azerbaijan 28, and these airplanes are very modern. Muradyan stressed that Azerbaijan’s air companies are state-owned. Armavia, she said, had eight own aircraft – three CRGs, three Boeing 737500, one Airbus and one YAK 42, and the company’s AirArmenia Airbus 320, Boeing 373500 and other cargo airplanes were leased. “If state of war is declared or any force majeure circumstances appear, nobody let own airplanes to fly to Armenia,” she added. Muradyan also said that Armavia’s personnel have to work at other companies now or stay jobless losing their qualifications. She said the government should be anxious to have this niche

filled since these specialties are very high-paid and complicated, and it is difficult to obtain such qualifications. “We will long feel these losses,” she said. Muradyan refused to answer additional questions asked by journalists and to comment on the matter. On October 23, Armenian government approved the program of provision of competitive and sustainable air services in Armenia. Prime Minister Tigran Sargsyan called the program the first step on the way to aviation liberalization, which implies establishment of at least three national air carriers in Armenia.Earlier, Air Armenia company expressed wish to take part in a tender.

ARMENIAN FIRST TABLETS TO PRODUCE IN FREE ECONOMIC ZONE OF YEREVAN

he Government of the Republic of Armenia will allow the ArmenianAmerican “Technology and Science Dynamics Inc/Armtab Technologies” company which produces tablets to expand activity in “Alliance” free economic zone with the exploiter’s status which operates in “RAO MARS” CJSC areas. The draft of the decision about that is included in the agenda of the session of the Government of the Republic of Armenia held on December 19. The operating permit validity period will be 3 years with the possibility of prolongation. The company will have an office with 200 square meters area in the Free economic zone. The main activity of “Technology and dynamics” will be the collection of the tablets and the development of software. The Armenian office will carry out only the collection of the tablets in the initial phase, but all the processes of the development and production are assigned to move to Armenia in the near future.

REAL ESTATE TRANSACTIONS INCREASED IN ARMENIA 18,241 real estate transactions were implemented in October 2013 in the Republic of Armenia, which is more by 4,8% than the indicator of the same month of the previous year. According to the data provided by the State Committee of Real Estate Cadastre of the Government of the Republic of Armenia, 36,9% of the transactions in October were made in Yerevan. Armenpress reports that in October 73,2% of the real estate alienation transactions made sales and purchases, 26,1% - donations, 0,7% - exchanges. 44% of the real estate alienation transactions were carried out in Yerevan.

CHINA REDUCED EXPORT OF MOBILE PHONES TO ARMENIA

he number of the mobile phones imported to the Republic of Armenia for China during the months of January-September reduced twice in comparison with the same period of the previous year and made 267,4 thousand pieces. The total customs value of the imported devices exceeded $16,2 million. Armenpress reports that during the first nine months of the current year 342,7 thousand pieces of mobile phones and other devices were imported to Armenia, 78% of which from China.

RUSSIAN BILLIONAIRE SERGEY GALICKY IS PROUD OF HIS ARMENIAN ORIGIN

he owner of the Russian “Krasnodar” club, businessman Sergey Galicky who is also one of the richest people in Russia and the owner of the largest supermarkets chain in the Russian Federation, has told “Mayak” Radio Company about his Armenian sources. “I have Russian origin by 75 percent, and Armenian one by 25 percent. As I grew up in the Russian environment, unfortunately I do not master Armenian, but I am proud of having Armenian origin,” Sergey Galicky stated, “Armenpress” reports citing Armenian Reporte newspaper. Sergey Galicky was born on 14 August 1967, in the village Lazarevskoye of Krasnodar Krai. In 1993, he graduated from the Economics Faculty of Kuban State University. A year later, he founded the company, “Tander”, which traded wholesale cosmetics and perfumery. In 1998, he built the first distribution center (currently there are nine), and immediately after a crisis opened the first grocery store “Magnit” in Krasnodar. In 2000, he switched to retail, and created the largest network by number of stores in Russia. In 2006, the company conducted its IPO and was valued at $1.9 billion.

12 ADB PROPOSES THREE-YEAR BUSINESS PLAN FOR KAZAKHSTAN

CIS caucasian business week

$15 BILLION AID TO UKRAINE NOT A ‘GIFT’, RUSSIA EXPECTS A 5% RETURN “If Ukraine accepts the standards of Europe, they won’t be able to sell anything to Russia, just read the agreements,” the President said, adding most officials don’t understand Citing helicopters as an example, Putin stressed machinery and equipment trade with Russia ($7 billion) trumps its $5 billion in agricultural trade with Europe.

he Asian Development Bank (ADB) has proposed a Country Operations Business Plan (COBP) for Kazakhstan for 2014-2016. The proposed COBP, which is consistent with the country partnership strategy (CPS) 2012-2016, supports the CPS’ strategic directions of economic development and diversification through infrastructure modernization and finance sector development, including improved access to finance for small and mediumsized enterprises. The ADB said the main cross-cutting CPS themes of regional cooperation, private sector development, knowledge solutions, environmental sustainability under climate change, governance, and institutional strengthening are promoted under the COBP. The COBP provides a 3-year pipeline (20142016) of proposed lending and non-lending products and services (NLPS) to implement the CPS. It aims to achieve the targets in the CPS results framework. The bank said Kazakhstan is currently eligible only for financing from ADB’s ordinary capital resources (OCR). Indicative public sector assistance of about $310 million per year is allocated in the COBP for 2014-2016. The COBP will mobilize funds to support projects in the public and private sectors. It will help mobilize public-private partnerships, co-financing operations, ADB-administered trust funds, and special initiatives from ADB’s Regional and Sustainable Development Department, as well as promote partnerships with the ADB Institute and other development partners. The lending program of the COBP focuses on modernizing infrastructure and improving access to finance for small and medium-sized enterprises. A total of $955 million is envisaged to finance six OCR projects during 2014-2016. The lending program is complemented with an NLPS program that includes project preparation support, capacity development, and a joint government-ADB knowledge and experience exchange program. The NLPS program will be supported through technical assistance (TA), knowledge products, policy dialogue, and transaction advisory services for public-private partnerships to promote economic diversification and private sector development. The indicative NLPS program for 2014-2016 is over $7.8 million. In addition to public sector assistance, ADB’s private sector operations focus on trade finance, transport, energy, and agribusiness. ADB will also explore selected equity investments in banks, as well as equity and debt financing of investment funds, ADB said. As the world’s largest landlocked country, and with a sparse population disbursed across the vast land, Kazakhstan faces high costs and challenges in accessing global markets and delivering domestic public services. The national priority is improved transport networks to help reduce transport costs and facilitate movement. ADB’s country partnership strategy (CPS), 2012-2016, for Kazakhstan is designed to make the economy more competitive and diverse in order to sustain growth and create jobs. It defines a new development partnership with ADB that is relevant and responsive to Kazakhstan’s goal of transitioning to a high-income country. azernews.az

December 23, 2013 #35

ussia’s decision to invest $15 billion in ‘brotherly’ Ukraine, as well as grant a $7 billion gas discount was pragmatic and based on economic facts, President Putin said at his annual press conference on Thursday. The economies of Russia and Ukraine are closely connected, with trade at $17 billion, and Russia’s”generous gift” to Kiev, as many dubbed it. In fact, it was a well thought out and pragmatic decision for Russia, Putin told over 1,000 reporters on Thursday. Russia expects a 5 percent return on bond investments, the President said, which Ukrainian President Viktor Yanukovich confirmed in a separate press conference. Russia will place $3 billion of Eurobonds by the end of this year, in addition to a temporary $7 billion gas discount, both financial buffers that will help Kiev avoid economic collapse. The bonds will be in circulation through January 1, 2016. Russia will use money from its $88 billion rainy-day National Welfare Fund. VTB, Russia’s second largest state bank, will organize the bond placement on the Irish Stock Exchange, which according to Putin, was suggested by Ukrainian negotiators. Putin stressed the decision was pragmatic, but also reminded of the deep historic and fraternal ties between the nations.

“If we really believe this is our brotherly nation, we need to support Ukraine, this is the main reason, I assure you, why we made these decisions,” Putin said. The deal will prevent Ukraine from defaulting on debts, and buys the country time to enact serious reforms to get its derailed economy back on track. Ukraine’s total foreign debt is $140 billion, nearly 80 percent of gross domestic product. Ukraine’s economy is expected to contract 1.5 percent in 2013. ‘APPENDAGE’ TO EUROPE If Ukraine abandons Russia entirely for the EU, Putin warned Ukraine would become an “appendage” to the European economy and would see a sharp drop. The bulk of Ukrainian exports to European are agricultural products, while Russia primarily purchasesindustrial products. Putin says Russia has nothing against Ukraine looking towards Europe, but Moscow has to protect its own interests. If Ukraine opens it borders to Europe, the percentage of Ukrainian agricultural products to European markets will not grow as a result of quality controls and other restrictions in the EU. Under current trade regulations, Russia would be forced to abandon all kinds of trade preferences for Ukrainian goods.

GAS DISCOUNT On behalf of Gazprom, Russia’s state-controlled gas giant, Putin promised a 33 percent discount on natural gas. From January 1, Ukrainians can start buying Russian gas for $268.5 instead of $400 per 1,000 cubic meters. However, Putin maintains gas prices to Ukraine are fair, and the contracts, first signed with then Prime Minister Yulia Tymoshenko in 2009, are “not designed to strangle anyone”. “The formula for natural gas prices are the same for our European partners,” the President said. Since 2009 Gazprom has signed several annexes with Naftogaz to postpone payments, and Putin said he hopes to find a long-term solution, and also requested Western powers not meddle. “Third parties shouldn’t address us asking us to lower natural gases for Ukraine, if they want to help, they are welcome,” Putin said. BACK IN KIEV The deal was not well-received by the pro-EU opposition, who have flooded Kiev’s streets since Yanukovich walked away from a November EU trade Association Agreement, which would have aligned Kiev closer with Brussels, not Moscow. European officials meet today to further discuss Ukraine trade, but most officials have signaled the deal is off the table, for now. Since entering trade negotiations with its neighbors, Ukraine has been caught in the center of an ideological tug-of-war between East and West, both trying to win influence over Ukraine. Rt.com

EU PUTS UKRAINE INTEGRATION DEAL ON HOLD BLOC’S ENLARGEMENT CHIEF

he European Union is freezing its work with the Ukrainian government on a controversial trade agreement, which the country decided to postpone last month triggering massive protests. Kiev said it has the will to continue talks. The EU believes that Ukraine’s position in the negotiations on the Association Agreement has “no grounds in reality”, tweeted EU enlargement chief Stefan Fuele. The angry remarks came after Fuele’s meeting with Ukrainian Deputy Prime Minister Sergey Arbuzov. Commenting on the news, the Ukrainian PM’s office said Kiev has a strong intention to continue negotiations with the EU. But Kiev will only respond to official messages from the Europeans, and not tweets, a spokesman for the Prime Minister added. The EU and Ukraine resumed work on the agreement on Thursday this week after a pause. Ukrainian officials insist that the country is interested in signing it, but wants to do it on its own terms. The EU says it will not change the terms of the deal, but is prepared to ‘negotiate a roadmap’ on the deal’s implementation and assist Kiev in securing credit tranches from the International Monetary Fund. Following Fuele’s outburst, an EU source familiar with the stalled talks said Ukraine is being unreasonable in demanding financial compensation from the union. “We are essentially making a gift to Ukraine [by

offering the free trade deal], so we cannot understand their talking about compensation,” the source told the Itar-Tass news agency. The trade deal, which was viewed by many Ukrainians as the first step for an eventual accession of their country into the European Union, was due to be signed earlier this month at a summit in Lithuania. But weeks before the meeting Kiev decided that it would suspend signing the deal. It cited concerns over the impact on the Ukrainian economy the move would have caused, and the lack of financial aidfrom Europe to cushion the blow. The decision announced in late November triggered massive protests in the Ukrainian capital and some other large cities. The protesters initially demanded that President Viktor Yanukovich overturn his decision. But as the EU summit passed without a trade deal for Ukraine, they turned their anger on the government and demanded its resignation. “I would have expected the EU to play softball with Yanukovich - by raising the stakes and acting as if they had him in their hands, they’re actually only going to force the issue, which is that the EU didn’t offer a deal. The EU offered a very dubious arrangement which would have opened the Ukraine to west industrial products, without the possibility of Ukrainian industry exporting to the East any longer,” said Srdja Trifkovic, Foreign Affairs Editor at Chronicles magazine. As the confrontation continues, European and

American politicians and top officials are flocking to Ukraine to cheer up the opposition crowds and criticize the Yanukovich government for not following their demands. Russia, which was blamed by both the Ukrainian opposition and western statesmen for twisting Ukraine’s arms to stop its EU integration, is trying to distance itself from the conflict. But on several occasions it has criticized the West for what Moscow sees as blatant interference in Ukraine’s sovereign affairs. Moscow warned Ukraine against signing the trade agreement, saying that it would be forced to revoke its own free trade arrangement with the country to protect Russian markets from the inflow of European goods. This was branded as economic blackmail by some in the pro-EU integration ranks. Russia insists that it is only protecting its economic interests and in turn accuses the EU of covering their grudge from failing to reach their political and economic goals in Ukraine with prodemocracy rhetoric. But in fact foreign support of the Ukrainian opposition ignores the will of those Ukrainians who stand against the integration deal. “The EU doesn’t exist as a coherent entity. We’re looking at ‘Mitteleuropa’ – that’s the German term for Central Europe - which is Germany, Austria, Benelux, perhaps France. But certainly not the southern fringe of the EU. And they have had geopolitical interests in Ukraine all along,” Trifkovic told RT. Rt.com

WORLD NEWS December 23, 2013 #35

caucasian business week

EUROZONE MINISTERS AGREE ON ‘FINAL LEGAL PILLAR’ TO CREATE BANKING UNION

he eurozone finance ministers have agreed to create a 55 billion euro ($75billion) mutual fund financed by the banking sector to bail out failing lenders without using taxpayers’

money. It marks a crucial step forward on the way to create a banking union and is scheduled to begin in 2015. “We have created the banking union’s final legal pillar”, commented German Finance Minister Wolfgang Schaeuble. The whole idea of a bank-

ing union rests on three basic pillars. The European Central Bank, that’ll be monitoring the health of the union and be alert for coming dangers in the industry, will be the first pillar. The “resolution authority” will cover the second part which means taking decision to bail out the problematic bank or to let it go bust. The final pillar will be the common deposit guarantee which promises anyone who has a bank accountin the eurozone up to 100 thousand euro ($138,000) will be replaced should a bank collapse. The idea of creating a mutual banking union was to avoid bank bailouts and make a bank collapse a thing of the past. “If we continue... on the path toward banking union then we will be able to continue the stabilization of the European currency as the basis for a return to stable growth in Europe,” said Mr. Schaeuble. Helping out banks in trouble, Europe has already spent 1.5 trillion euro ($2 trillion) during the financial crisis.

WORLD’S BIGGEST EARNER: WARREN BUFFET MADE $37 MILLION A DAY IN 2013

S investor Warren Buffett tops the list of the biggest 2013 earners, having added $12.7 billion to his wealth, according to a report by the international analyst

Wealth-X. The 83-year-old head of the Berkshire Hathaway investment vehicle earned $12.7 billion in the year. In January the wealth of the businessman, nicknamed the “Oracle of Omaha” for his phenomenal market intuition and faultless economic forecasts, was estimated at $46.4 billion and by December it had grown to $59.1 billion. Buffett’s fortune increased by about $37 million daily. However, Buffet is still not the richest man in the world, that’s the founder of Microsoft Bill Gates, whose personal wealth is estimated at $72.6 billion. His wealth only increased by $11.5 billion in 2013. American gambling tycoon Sheldon Adelson made $11.4 billion and rounds out the

top three earners. Jeff Bezos, the founder and the chief executive of the largest world online retailer Amazon comes next with $11.3 billion, followed by the founder of Facebook, Mark Zuckerberg with $10.5 billion. Founders of Google, Sergey Brin and Larry Page have split the seventh and the eighth places with $9.3 billion equally. Besides Americans the list covers the president of one of the largest Japanese mobile network operators – Softbank, Masayoshi Son and one of the richest people of China, the gambling tycoon, Lui Chee Woo. They earned $10.3 billion and $8.3 billion respectively, having appeared at the sixth and ninth positions in the rating. The list of the most successful businessmen of 2013 is rounded out by Carl Icahn, the US investor, who has increased his wealth by $7.2 billion. The world now has 2,170 billionaires, whose cumulative capital amounts to $6.5 trillion.

AUSTRALIA ‘PUTS THE GAS DOWN’ BRITISH POUND NOTES TO BECOME TO END 40-YEAR DEFICIT – MORGAN STANLEY PLASTIC FROM 2016

he Bank of England (BoE) says it will begin issuing its first new– era plastic 5 and 10 pound banknotes in 2016. Though slightly smaller in size, the banknotes will basically look the same as current conventionalpaper money. The concept of the portrait of the queen on one side and a historic person overleaf will remaining untouched. The first plastic or polymer banknote valued at 5 pounds with Winston Churchill represented on the reverse will be printed in 2016. The 10 pound note will come a year later with the picture of writer Jane Austen, according to the Bank of England (BoE) website. Plastic notes have a number of advantages over paper. In particular, they are more dirt resistant, and harder to copy. Because of the more solid material the notes can stay in circulation for at least two and a half times longer than traditional paper money. On top of that, printing and storing smaller plastic banknotes will be cheaper, according to the BoE. Mark Carney, BoE Governor, said: “Ensuring

trust and confidence in money is at the heart of what central banks do. Polymer notes are the next step in the evolution of banknote design to meet that objective. The quality of polymer notes is higher, they are more secure from counterfeiting, and they can be produced at lower cost to the taxpayer and the environment.” The decision to put a portrait of Jane Austen on the 10 pound note was made in July, 2013. The Bank of England had been criticized for its rare depiction of women on notes. The new design of 5 pound banknote with the image of former Prime Minister Sir Winston Churchillwas announced in April. The thenhead of the Bank of England Mervyn King said Churchill was chosen in connection with his recognition as the “hero of the entire free world”. The Bank of England annually issues approximately a billion banknotes; and the same amount is removed from circulation. Plastic banknotes are used in about 20 countries all around the world, with Australia having pioneered it in 1988.

EBRD TO ALLOCATE $40 MLN TO KAZAKH RAILWAY COMPANY

he European Bank for Reconstruction and Development (EBRD) will provide a loan worth $40 million to Kazakh national railways company Kazakhstan Temir Zholy (KTZ), the

bank said. The appropriate agreement was signed in EBRD headquarter in London between EBRD First Vice President Phil Bennett and KTZ Vice President of Logistics Kanat Alpysbayev on December 19. The EBRD said the loan will finance a series of new technologies to reduce energy consumption, from an upgraded lighting system to alternative heating solutions such as heat pumps, solar water heaters and boiler upgrades. The program will allow the company to reduce its greenhouse gas emissions by 80,000 tons per annum. EBRD First Vice President Phil Bennett said the bank supports Kazakhstan’s green economy drive, as does KTZ, for the benefit of its passengers and the whole of the country. “We are very pleased to be able to support the company’s ongoing efforts to save energy and to reduce greenhouse gas emissions. We have been working with KTZ to identify new opportunities for energy efficiency, such as installation of LED lighting across more than 100 depots and stations, and to finance their introduction,” he said. Kanat Alpysbayev, the KTZ Vice President of Logistics said railways are strategically important for Kazakhstan’s economy. “KTZ operates one of the largest rail networks in the world. Our goals coincide with the gov-

ernment goal of developing a green economy, and our cooperation with the EBRD will allow us to take a major step in that direction. In this regard, one of the priorities is to improve energy efficiency, namely to purchase and install energy efficiency components such as heat pumps, solar water heaters and gas boilers,” he said. Energy-rich Kazakhstan is currently looking for ways to use renewable energy sources. In late January, an action plan was adopted on the development of renewable energy sources for the period from 2013 to 2020. According to a recently adopted concept for a transition to ‘green economy’, in case of high domestic prices for natural gas, the energy basket of the country will comprise 11 percent of wind and solar energy sources while the share of nuclear power will be 8 percent, hydropower 10 percent, gas 21 percent and coal 49 percent by 2030. The EBRD has pledged strong support for the Kazakh authorities’ green economy strategy. The bank has supported the country’s participation in the Clean Technology Fund (CTF). Since 2006, it has invested about 13 billion euros (over U$17 billion) in sustainable energy projects across all of its countries of operations. The legal framework for renewable energy in Kazakhstan was developed with the EBRD’s involvement and $1 million in financial support from the CTF. Currently the EBRD is developing new approaches to financing clean technology transfer to Kazakh industry with support from the Global Environment Facility (GEF).

organ Stanley says Australia will become the world’s biggest liquefied natural gas (LNG) exporter by 2017. This will help the country end 40 years of current account deficits. “Liquefied natural gas (LNG) exports from Australia could be the next big thing,” The Telegraph cites the report as saying. According to the research, the county is expected to experience a “huge ramp-up” in LNG output, pushing Australia to top of the list of LNG exporters, leaving Qatar behind by 2017. That pace of development, coupled with coal exports, will make the country a major force in global energy production. “The ramp-up would be enough to see Australia record a current account surplus in 2015, the first since the second quarter of 1975. It is difficult to overestimate the long-term structural importance of this industry to Australia,” said the bank’s East Asia expert Geoffrey Kendrick.

Australia faces a current account deficit of about 5 percent of gross domestic product; LNG development will see a remarkable shift in the national economy. Currently Australia accounts for two-thirds of the total global LNG trade increase. While the socalled”shale revolution” has seen a boom in US gas production, Australia still needs 5 to 10 years to establish infrastructure and export terminals. That gives it an advantage to strengthen its positions on the global energy market. One of the most lucrative of Australia’s potential customers is Japan. After the Fukushima disaster, the country was forced to rely on more traditional energy sources such as gas. The price there is about $19 per British thermal unit (BTU), which is more than 4 times more expensive than in the US, where gas costs $4.3 per unit. According to Morgan Stanley estimates, Australian share of gas exports will go from 20 percent to 22 percent by 2016.

CHINESE FOREIGN INVESTMENTS TO REACH $41 TRILLION: BANK OF ENGLAND

hina’s overseas investments could mushroom over the next decade, bringing significant economic benefits to Britain but also, potentially, considerable financial dangers, according to the Bank of England. Armenpress reports, citing The Independent that in a paper published yesterday, researchers from the Bank said that if the Beijing authorities follow through on their stated plans to liberalize the country’s capital account – meaning Chinese people and companies will be able to shift money freely across the nation’s borders – China’s gross international investment position could rocket from 5 per cent of world GDP today to more than 30 per cent by 2025. “If China does liberalize, few other events over the next decade are likely to have more impact on the shape of the global financial system,” the researchers noted. The Bank added that the UK, which has one of the world’s premier financial hubs in the City of London, would be particularly affected by the Asian nation’s full integration into global capital markets. It said that financial liberalization in China could be a “force for economic growth and financial stability not just in China but also globally”. Capital account liberalization by Beijing, the Bank suggested, would help unwind the international economic imbalances that contributed to the global financial meltdown of 2008-09. The massive accumulation of dollar assets by the Chinese central bank over the past decade, a direct consequence of the country’s closed capital account, depressed interest rates in Europe and

America, facilitating a build-up of debt in the West. If China were to lift the tight restrictions on outward investment, this frenetic reserve accumulation would abate. However, the Bank also highlighted potential risks to financial stability from the liberalization of capital flows, warning that shocks within the Chinese financial system could be rapidly transmitted to the rest of the world. It also noted that a sudden flood of Chinese liquidity into global capital markets could result in a potentially hazardous “mispricing of risk”. The Bank said that this fine balance of opportunities and dangers underscored the need for a “careful sequencing” of China’s integration into the global financial system and would require heightened vigilance from regulators round the world. These challenges were highlighted during George Osborne’s October trip to China, when the Chancellor announced that the rules on Chinese banks wishing to set up shop in London would be relaxed. Some analysts raised their eyebrows at this because during the financial crisis five years ago, branches of Icelandic banks, which had lured ordinary depositors by offering market-beating rates of interest, failed and the British Government was forced to step in to bail these customers out. Andrew Bailey, the head of the Bank’s Prudential Regulatory Authority, stressed that Chinese banks would not be allowed to take deposits from ordinary depositors and that they would only be permitted to operate here if there was a potential burden on the British taxpayer.

CAMPAIGN caucasian business week

December 23, 2013 #35

CHILDREN SUFFERING FROM JUVENILE RHEUMATOID ARTHRITIS ARE STILL AWAITING DECISION AND ASSISTANCE FROM THE MINISTRY OF HEALTH!

ow many children are currently affected by this disease in Georgia? How are they treated and what are the conditions? How does the state care and do for them? As we found out, kids affected by juvenile arthritis are still awaiting for the state’s decision and assistance! For Your Information: Juvenile arthritis represents a rare chronic disease, which develops in children of age 6 months - 16 years. It progresses primarily with joint and eye damages. In Georgia, around 700 kids are affected with this disease. Their majority experiences significant disability to work and act. More than half of patients, in case of especially aggravated forms, become handicaps of the III-IV Group within 5-10 years. Unfortunately, the specific cause is unknown. Belated application to physician and inadequate treatment worsen the disease forecast. - And still, why is this disease so dangerous and what it can cause if not treated promptly and adequately? „The structure of the joint changes in the course of disease. The joint loses its function – the ability to move, sprain as well as subsprains develop. The child loses the ability to move, walk, serve himself/herself even eat sometimes, since the joint which ensures chewing no longer works. Far more aggravated is the situation in case of the systemic form when arthritis is accompanied with fever and damages of organs: Plevritis, pericarditis, endo-

carditis, nephritis and etc. In such case, unfortunately the quality of live is not the only concern. Use of biological medicines resolves this problem at some extent,” – said Maka Ioseliani, Head of the Rheumatology Center, Chief Physician and Associated Professor. According to European data, use of biological medicines changed the forecast for juvenile arthritis. In case of inadequate, untimely treatment the forecast is not desirable: duration of life for such kids declines by 10% and 50% of patents become persons with limited abilities during the 10 years. What is destiny for children affected with Juvenile Rheumatoid Arthritis? How the state is going to change their future and what are the comments made by the Ministry of Health regarding this issue? As it turned out, the Ministry of Health does not have specific position on this matter yet. Although the working group is already established and the issue is being studied, the major factor is a timely resolution of the problem since it pertains to children. Disease we are talking about is hazardous for life. Our union has been permanently trying to have communication with the Ministry of Healthcare since 2011. Unfortunately, this was achieved only in February, this year. In particular, a close meeting was held where apart from medical personnel, representatives of the Ministry of Health and non-governmental organizations were present. Joint address to the Ministry was prepared, which clearly depicted current problems and our vision for their resolution. Moreover, we provided the Ministry with a list of those 14 kids who urgently

required treatment with biological medicines and asked for funding. In response we received a letter signed by the Deputy Minister, stating that this problem was being worked on. However the situation has not changed.”–said Ana Boqolishvili, the Chair of the Parents’ Union. It is quite unclear whether the Ministry reviewed the issue and what was the decision. Scarce diseases are to be financed by the state, but in Georgia there is not even a complete list of such diseases, not to consider the list of scarce diseases approved in 2001. Renewal of this list is of key importance. Based on a renewed list the funds allocated for regulation of diseases shall be allocated in a rational manner. „Based on international practice, management of scarce diseases represents a state’s function. This is reflected in legislations of majority of states. In 2000 a Law of Georgia on Patient’s Rights was adopted . In one of its

articles, scarce diseases are listed as well as liabilities of the state towards the patients with such diseases. In addition, a set of regulations was adopted in recent years. In all countries, there are lists of priority scarce diseases based on which medical services are rendered to patients. Naturally, the number of diseases on this list is directly related to the degree of country’s social-economic development: the richer the country, the longer the list. It needs also to be noted that the official list approved in 2001 by the Ministry of Labor, Health and Social Security does not reflect a real picture of scarce diseases. Unfortunately, it does not include the series of really priority diseases and such ones are covered the cases of which not only are not registered, but also do not meet the scarce disease criteria,”– said Professor Oleg Qvlividze, Executive Director of Georgian Fund on Genetic and Scarce Diseases.

TBILISI GUIDE December 23, 2013 #35

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 caucasian business week

December 23, 2013 #35