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BUSINESS WEEK December 30, 2013 #36

December 23, 2013, Issue 35

GEORGIA

EXPORTS WITH EU GROW BY 65%

xport with EU increased by 65%, with CIS - 29%. In January-November 2013 foreign trade turnover of Georgia equaled to $9,681 billion. Pg. 7

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ECONOMIC ANATOMY OF THE YEAR OF 2013

BANKING SECTOR COMPLETED 11 MONTHS WITH 390,2 MILLION GEL PROFIT

anking Sector completed 11 months 2013 with 390,2 mln GEL profit (Q3 - 275 mln, Q2 - 153 mln, Q1 - 65,3 mln GEL). Pg. 9

KAKHA BENDUKIDZE INVESTED 17 MILLION IN AGRARIAN UNIVERSITY

und for Knowledge, founded by former Minsiter of Economy Kakha Bendukidze, invested over 17 million GEL in the Agrarian University of Georgia. Pg. 5

Pg. 2

Overview of Comparatively Advanced and Frustrated Sectors

GOODWILL SUES TBC

FOODMART REPLACED POPULI

EAF CAUCASUS GROWTH FUND and Foodservice will equally share of the Company Foodmart, which is transformed Pg. 5 Populi and Ioli.

AZERBAIJAN BUSINESS INCUBATION CENTER INAUGURATED IN BAKU

usiness Incubation Center of the HighTech Park was officially inaugurated in Baku, Head ofResearch and DevelopPg. 10 ment of the Park, Ulvi Aslanov, said.

TBC BANK KEEPS TERRORIZING GEORGIAN BUSINESS SECTOR

ARMENIA ARMENIA’S ECONOMIC ACTIVITY INCREASED BY 3,1 PERCENT

CIS BELARUS PROMISES NOT TO ‘EAT AWAY’ $2BN LOAN FROM RUSSIA

elarusian President Alexander Lukashenko said that Minsk will not “eat away for no special reason” a $2 billion loan that Russia has promised to deliver in 2014. Pg. 12

WORLD NEWS STUDY FINDS CRIME, CORRUPTION, TAX EVASION DRAINED $946.7BN FROM DEVELOPING COUNTRIES IN 2011

rime, corruption, and tax evasion drained US$946.7 billion from the developing world in 2011, up more than 13.7 percent from 2010. Pg. 13

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Pg. 2

PASHA Bank: Promotion of Domestic and Azerbaijani Companies is one of the Main Priorities

Pg. 3

Economy Minister: 2013 was a Landmark Year for the Georgian Economy Pg. 4 Georgian Side Finds nothing Surprising in Free Trade Agreement with Abkhazia and South Ossetia

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rmenia’s economic activity rates for January-November of the current year surpassed the rates of the same period of the previous year by 3,1 percent. Pg. 11

Pg. 5

Bidzina Ivanishvili’s Property Shrinks by 1.1 billion USD

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Merry Christmas and Happy New Year!

Pg. 4

NBG President Exchange Rate Reflects the Current Trends in Georgian Economy Pg. 4

Business Ombudsman: Tax Authorities are Increasingly Losing essmen Lawsuits to Businessmen Pg. 4

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ECONOMIC ANATOMY OF THE YEAR OF 2013

BIDZINA IVANISHVILI’S PROPERTY SHRINKS BY 1.1 BILLION USD

he property of Bidzina Ivanishvili, a Georgian billionaire and ex Prime Minister of Georgia has shrunk by 1.1 billion USD year on year. The Forbes has published the rating of the world’s richest people and Georgian Prime Minister ranks 229th in the rating, while he occupied the 153rd place in the 2012 rating. The Forbes has estimated the property of Georgia’s ex Prime Minister by 5.3 billion USD for 2013. The figure is down by 1.1 billion USD compared to the 2012 rating, when the property of Bidzina Ivanishvili marked 6.4 billion USD. Ivanishvili started political activities in Georgia in 2011 and he sold Russian assets at 1.3 billion USD, the Forbes reports. He has invested his assets in the gold industry and Russian and foreign companies shares, the magazine says. Ivanishvili also owns a collection of artworks valued at 1 billion USD. The collection includes Pablo Picasso’s works Dora Maar with Cat. Ivan-

Overview of Comparatively Advanced and Frustrated Sectors

ishvili has bought the work at Sotheby’s auction at 95 million USD in 2006, the Forbes writes. Ivanishvili moved to Moscow in 1984 and obtained the title of a doctor of economic sciences, the magazine says. “In the privatization epoch in Russia, he launched business with his business partner Vitali Malkin. They have jointly established Rossiski Credit Bank and made investments in the real estate business. Ivanishvili returned to Georgia in 2003. For several years he has sold businesses and made reinvestments in the gold industry. Ivanishvili owns a collection of over 1 billion USD, including Pablo Picasso’s Dora Marr with Cat that he has bought at the Sotheby’s auction at 95 million USD”, the Forbes writes. According to the Forbes rating, Carlos Slim is the world’s richest person with 73 billion USD property. Bill Gates is second with 67 billion USD property and Amansio Ortega, the founder of Zara brand is third with 57 billion USD property.

IVANISHVILI: SAAKASHVILI’S GOVERNMENT HAD PLANS FOR ARRESTING MASHKEVICH

idzina Ivanishvili stated in the interview of Russian Forbes that Mikheil Saakashvili’s government was going to arrest businessman Alexander Mashkevich. Ivanishvili stated that Alexander Mashkevich has a pharmaceutical business Georgia. “They created serious partners to him and his partners. For some period he could not arrive here, there were attempts for his lure and wanted to arrest him”, Ivanishvili stated. Alexander Mashkevich is a citizen of Israel and

is considered as metallurgical tycoon in Kazakhstan. Forbes has evaluated his property for $2,1 billion. Officially it’s not unknown which pharmaceutical business belongs to Mashkevich in Georgia, Ivanishvili has not named the company in the interview. Ivanishvili also stated about Mashkevich that he invests in Co-investment Fund, where there are 7 other partners in addition to Mashkevich and Ivanishvili and each one’s contribution in the fund varies from several hundred millions to $1 billion.

BIDZINA IVANISHVILI ABOUT SERVILE POSITION OF GEORGIAN BUSINESS UNDER THE PREVIOUS GOVERNMENT IN RUSSIAN “FORBES“

ormer Prime Minister Bidzina Ivanishvili speaks about aservile position of Georgian business under the previous government in an interview with the Russian “Forbes“. The former Prime Minister says that after he came to power, he asked the Minister of Agriculture to gather businessmen working in this sector as he wanted to discuss the issues of development of agriculture and the possible ways of the assistance.

December 30, 2013 #36

In his words, the Minister called to say that he was shocked because they were not businessmen but slaves. “They looked at us in the eyes waiting that we would request something from them,” – says Ivanishvili.Ex - Prime Minister notes that businesses had to pay not only a tribute to the Government but they were compelled to re-register property. According to him, the prosecution will have to deal in more than 9 800 facts of the transfer of property to the state.

he year of 2013 was accompanied by many problems – the planned 6% growth failed, the business sector also looked inactive. The Government named heavy legacy behind those problems, but it hopes the business sector freed from state pressure has started development anyway. Despite difficulties, the last year was successful for several sectors of economy and business. In 9 months the exports rose by 14%, and agriculture and finances sectors indicators have also grown… IRAKLI LEKVINADZE, an economic expert, ,,Georgian Business Insight (BPI)’’: “I believe the tourism sector ranks first in the rating of successful sectors. The number of visitors have increased by 23% compared to the previous year and the figure has exceeded 5 million persons, while revenues have reached about 800 million USD. Active AD campaigns at various markets have brought real results and this policy should be continued. Entrance of low-cost airlines turned out very important and the transportation tariffs have shrunk. I think this sector will increase at the expense of Ukrainian and Russian tourists – they find Georgian tours very popular. At the same time, the infrastructure and services should be also improved. The year was successful for winemaking field too. In 2013 the wine exports have nearly doubled (96% growth). The market is large and 45 million bottles of Georgian wines were exported to 48 countries. Exports revenues exceeded 90 million USD. The return to the Russian market turned out important and the sector’s ratio in total exports is 45%. Moreover, many companies have used the cheap agro loan program for purchase of grapes. The 2013 vintage has also turned out one of the successful ones for the past years. The energy sector still remains one of the most attractive fields for investors. The sector draws 30% of the foreign direct investments (FDI). The potential of hydro resources is very huge, foreign and domestic markets are growing and investors show interest in the field. Projects for constructing large hydro power plants (HPP) have been initiated and I believe, despite difficulties, Georgia will become one of the major exporter of hydro energy. In 2013 both domestic and foreign investors have activated efforts in the sector. The project for constructing Khudoni HPP is very important and 1.2 billion USD will be invested in the project implementation. Moreover, an American investor plans to start implementing alternative energy projects in Georgia. Electricity tariffs were lowered for consumers, but corporate tariffs still remain high and make problems to the business sector. The bank sector has turned out successful traditionally. No serious changes have taken place in the sector. Only one new entity Finca has appeared on the market. The bank sector’s profits have tripled; assets have grown by 13%, loans portfolio increased by 12.5%. Growth in deposits volume is also stable. Commercial banks have also introduced new products – GEL-denominated mortgage loans with quite low interest rates that depend on refinancing instrument of the National Bank of Georgia (NBG). This product has lowered interest rate on mortgage loans and rates have dropped on other loans too. The transportation and logistics sector is developed stably for many years. Georgia has become a logistics hub and the factor ensures the stability in the business sector. Seaport and automobile carriage volume growth is also stable. The last sector was growing even before opening the Russian market. At the same time, the year has recorded downturn in the railage because of geopolitical and domestic factors. The continuation of construction of Tbilisi Bypass Railway was a correct decision. Baku-Tbilisi-Akhalkalaki-Karsi railroad section is being also actively constructed, as well as the highway. Austrian company Gebruder Weiss has unveiled a major logistics center. Airborne transportation field has recorded over 1.5 million passengers and the figure is a new record. New airlines Wizz Air and AtlasJet have appeared on the market. Kutaisi Airport continues active operation. The market is growing and competitive and this factor makes influence on service tariffs too. The communications sector has recorded no significant changes. The porting system has boosted competition on the market. Interconnection tariffs have also shrunk at the end of the year. I believe these factors will lower

tariffs on the market and increase the traffic. Nevertheless, the competition on the market still remains limited. Serious changes were made in the retail trade sector, especially, in supermarkets and hypermarkets segments. At the end of 2012 the entrance and expansion of Carrefour boosted competition in the sector. In 2013 financial problems arose in almost all networks that sometimes were caused by inefficient management (Ioli, Populi, Two Steps), sometimes by the previous government’s extortions (Goodwill, Marshe). Earlier only five companies operated on the oil products market in Georgia, while today more companies have entered the oil products imports sector. As a result, the competition on the oil products retail market has slightly increased. Nevertheless, prices have grown anyway, tariffs are various and there are less cartel collusion signs. However, the market concentration still remains high. Petrol and diesel consumption has sensibly shrunk, while the gas consumption is growing. This tendency is related to global factors. No serious changes have taken place in the pharmaceutics field. For exception, at the beginning of 2013 the Prime Minister urged the sector players to put an end to monopolistic environment. The market remains stable with three dominating players. The insurance sector is facing considerable problems that were caused by investments made in construction of regional hospitals in previous years, as well as the implementation of state insurance program. The market registers 13 insurance companies. At the beginning of 2013 Imedi L, one the leaders of the market, was bought by Aldagi insurance company. The insurance supervision service was separated from the National Bank of Georgia (NBG). The supervision service has made reaction several times and entered as a rehabilitation manager in several companies because of their instable financial condition. The market volume makes up 406 million GEL as of October 2013, down 5 times compared to the previous year. The processing industry remains the weakest chain in the economy. In 2013 no new major company has appeared on the market, in practice. The sector seems to be too sensible to transient period and political environment. The sector’s ratio in total investments is only 7%. The output has also slightly dropped and this may be explained by downturn in consumer activity and reduction in expenditures. Agribusiness sector remains one of the main directions of the past and coming years. The government has spent 700 million GEL on agriculture land works. The agribusiness sector has grown by 15% year on year. The current year has turned out quite fruitful. Farmers in the Kkakheti Region have sold grapes at desirable tariffs unlike citrus the sales of which have failed because of bad weather. At the end of the year potato became a deficient product because of small harvest. The agribusiness sector’s ratio in GDP makes up only 9.4% that is about 2 billion GEL and the figure points to advancements in the sector. The Russian market has opened for Georgian products, but Georgian fruits, tea, citrus and vegetables still face problems. Comparatively higher prices were recorded on the filbert market in 2013. In whole, the agriculture sector faces problems with commercialization. The sector satisfies the demand of the domestic market by only 15%. Access to regional markets also remains difficult. Major part of agriculture lands remain uncultivated. Technologies are outdated, the sector lacks for financial resources, agro insurance services are less accessible and there are serious problems with education in farmers. The year of 2013 has also shown domestic population has negative attitudes to the investors who cultivate agriculture land plots. The government has removed restriction on sales of land plots to foreign citizens and this decision has disoriented the domestic population. The housing sector has shrunk by 25%. After the new government has come to the power, many infrastructural projects were revised, especially in the state sector. The private sector mainly registers activity of Azerbaijan companies. There are a small number of projects of private companies, anyway, the private sector has slightly intensified efforts. As to real estate, tariffs on residential and commercial spaces, as well as on lands have not changed for the whole year.

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INTERVIEW December 30, 2013 #36

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PASHA BANK: PROMOTION OF DOMESTIC AND AZERBAIJANI COMPANIES IS ONE OF THE MAIN PRIORITIES CBW Interview with Anar Iismayilov, a Chief Executive Officer for PASHA Bank in Georgia - Mr. Iismayilov, PASHA Bank launched operation on the domestic market in December 2012. How would you appraise the bank’s job? Has the Georgian market justified your expectations? - One of the main objectives of PASHA Bank on the Georgian market is to provide financial support and contribution to investments and trade activities of the domestic players in the private sector that is represented by companies with foreign capital, including the investors from Azerbaijan. Our Bank makes focus on deepening trade and economic partnership among participants of business activity at the regional and international levels by offering, besides traditional bank products, higher quality and efficient solutions by use of instruments of trade financing. Despite the fact PASHA Bank has been represented in Georgia for a comparatively shorter period of time, we appraise the domestic market conditions very positively. In the past period our Bank has become an associated member of the VISA International payment system, a member of Georgian Card and SWIFT, a participant of the initiative of the Agriculture Projects Agency (APA) for issuance of preferential credits. In trying to contribute to the Georgian agribusiness complex development, we have jointly with EBRD financed a very interesting and important project for creating a modern milk production farm in the Kakheti Region. PASHA Bank has invested over 1 million GEL in the project implementation. Moreover, we have become pioneers in Georgia’s bank sector having finished the project for making routine interaction processes automatic with the state agency for enforcement of court decisions. As a result, the information management and exchange between our two institutions have been simplified. AS AN ORGANIZATION WITH SOCIAL RESPONSIBILITY, WE HAVE ASSUMED THE OBLIGATION TO FOSTER THE GEORGIAN SOCIETY DEVELOPMENT AND IN 2014 WE PLAN TO CONTINUE IMPLEMENTING PROJECTS AS PART OF THE CORPORATE SOCIAL RESPONSIBILITY PROGRAM (CSR). We have already financed a concert for Georgian and Azerbaijani children at Tbilisi Youth Palace under this program. The concert was dedicated to the World Day for Prevention of Child Abuse. Moreover, we have joined the International Chamber of Commerce of Georgia, where we support the initiative for holding competitions for developing business ideas, management skills among higher school graduates and just young people of our society. We have already provided support to the first gala-concert to the worldwide famous trumpeter Arturo Sandoval in Tbilisi. -At the opening ceremony Mr. Farid Akhundov, the Chief Executive Officer of PASHA Bank, noted the Bank had chosen Georgia as the first foreign market because of many factors. - You are right. And the main factors include the annually growing trade turnover between two countries. Currently, the turnover exceeds 1 billion USD. We also appreciate joint participation of Georgia and Azerbaijan in implementing strategic regional projects, strong his-

torical friendship of our neighboring peoples. However, the main factor in the Bank’s strategy for international expansion in the selected directions is based on our aspiration to make practical contribution to further processes of successful integration of the business at the regional and international levels to the benefit of economies of our countries, clients and, indeed, our Bank. -What are the Bank’s plans for 2014? Will PASHA Bank have only one office in the center of Tbilisi on Rustaveli Avenue or open new branches out of Tbilisi? -This year we have developed the Bank’s strategy for 2014 to 2017. We consider the year of 2014 the most important chain that will determine the future development and ambitions of our Bank. Under the strategy, the Bank’s growth will be based on enlarging the crediting volume, investment operations and introducing wider bank services for potential clients in cooperation with the head office in Baku. WE PLAN TO EXPAND INSTITUTIONAL ASPECTS TOO – TO ARRANGE SALES OF BANK SERVICES AND ENSURE EFFICIENT REMOTE SERVICES THROUGH DISTANT CHANNELS, ISSUE DEBIT AND CREDIT CARDS OF VISA PAYMENT SYSTEM. NEXT YEAR WE WILL EMPLOY NEW WORKERS AND OUR TEAM WILL RECORD ABOUT 40 INDIVIDUALS. As to opening new offices, the Bank’s physical expansion is planned for 2015. We plan to provide active cooperation with small and medium-sized businesses and we will need more offices in Tbilisi, as well as in other cities of the country. -What products does the Bank offer to the clients and which of them are the most demand-

ed? What is the peculiarity of the PASHA Bank’s approach to services that is different from other commercial banks in Georgia? -The point is that our business model has been developed to ensure individual approach to each distinct client, provide high quality and efficient solutions and if necessary to provide support to developing their businesses both in Georgia and Azerbaijan. I believe clients appreciate our flexible approach and the opportunity for implementing their interests in small and major projects on both markets of our countries. In the near future neighboring Turkey will also join the scheme and active job is being performed to this direction. AT THIS STAGE, PASHA BANK OFFERS A WIDE RANGE OF PRODUCTS AND SERVICES TO CORPORATE CLIENTS, NAMELY, WE PAY SPECIAL ATTENTION TO DOCUMENTARY OPERATIONS. MOREOVER, WE ALSO OFFER COMPETITIVE INTEREST RATES, COMMISSION AWARDS AND INDIVIDUAL TARIFFS. IN LINE WITH OUR STRATEGY, NEXT YEAR THE BANK WILL FURTHER DEVELOP PRODUCTS AND SERVICES ON THE GROUND OF CLIENTS DEMANDS AND NEEDS. -What is the Bank’s credit portfolio volume at the moment? Do you plan to increase the authorized capital in the near future? -The Bank that has recently launched operation on the Georgian market does not expect to get profits in the first year of operation, but we plan to make focus on investments for developing our business infrastructure, including the modernization of the Bank’s office that is located in one of the favorite historical buildings in the center of Tbilisi on Rustaveli Avenue.

Despite sharp competition on the domestic bank market, the current credit portfolio of PASHA Bank is reaching 6 million GEL. The bank ranks 18th in terms of assets as of early December 2013. Major part of the assets is made of securities of about 12 million GEL, besides the credit portfolio. ACCORDING TO OUR STRATEGY, IN 2014 WE PLAN TO INCREASE THE AUTHORIZED CAPITAL TO 70 MILLION GEL FROM 35 MILLION GEL TO MAKE OUR COMPANY MORE ATTRACTIVE BANK PARTNER FOR OUR MAJOR TARGET CLIENTS. WE ALSO EXPECT SIGNIFICANT GROWTH IN BUSINESS ACTIVITY IN 2014 SO AS THE CREDIT PORTFOLIO INCREASE TO 55 TO 60 MILLION GEL. -Which category of clients and which fields of activity do you prioritize? -We follow the same business model in both Georgia and Azerbaijan: we offer our services to both major and medium companies, as well as to small entities that are interested in doing business in the country and out of its borders. We show individual approach to each client and aspire for fostering their development in long-term perspective by offering efficient financial solutions that foster the implementation of their plans. Thus, we are open to both major clients and to small and medium entrepreneurs. Welcome to PASHA Bank in Georgia! I would like to use the opportunity and, in the name of PASHA Bank and personally, to sincerely congratulate honored readers of your edition and all Georgian citizens on the coming 2014 New Year. Wishing the coming year to bring full public consent, huge professional achievements and family welfare!

INTERVIEW caucasian business week

ECONOMY MINISTER: “2013 WAS A LANDMARK YEAR FOR THE GEORGIAN ECONOMY“

2013 was a landmark year for the Georgian economy - Economy Minister said at the presentation of the annual report. According to Giorgi Kvirikashvili, this was a transition period when the government provided an exemption of Geor-

gian business and economy from the political pressure, created an environment where entrepreneurs have the opportunity to determine priorities of their own business development and protected a private property. According to the Minister, the transition period is always difficult, especially for businesses and, therefore, economy, especially when the process is accompanied by the tense political situation in the country. However, Kvirikashvili states that in the second half of the year the local and foreign business was able to see opportunities offered by the new government and improvement of the economic situation is obvious. “Small and medium business turnover grew by 24 percent in the 3rd quarter compared to the first quarter. As per the data for nine months, the private sector turnover amounted to 30 billion GEL. Direct foreign investment increased in the third quarter exceeding the figure for the same period of 2012 by 20 percent. As per the data for 11 months of 2013, foreign trade turnover index exceeds a figure for the same period of the previous year by 4 percent. Exports increased by 20 percent and exceeded 2.6 billion USD which was a record figure for Georgian export, “- Kvirikashvili notes. Minister of Economy notes that Georgia’s export to the EU grew by 65 percent and totaled 540 million USD for 11 months, while exports to Russia increased nearly three times and amounted to 161 millionUSD.

NBG PRESIDENT - EXCHANGE RATE REFLECTS THE CURRENT TRENDS IN GEORGIAN ECONOMY

resident of the National Bank of Georgia [NBG] explains the current exchange rate of GEL by processes taking place in the economy. Giorgi Kadagidze said at today’s press conference summing up the 2013 that during the first half of the year pressure on the exchange rate appreciation was conducted. In particular, the central bank bought 550 million USD, while in the second half of the year the pressure was on impairment when NBG sold over 220 million USD. “Ultimately, we were able to maintain foreign exchange reserves to an adequate level that make three billion. This occurred at a time when in 2013 we paid 240 million USD to the IMF as a part of a loan repayment. In the third quarter of the coming year we’ll complete the loan repayment to the IMF and the National Bank will not have any external debt for the first time since 1994,” - Kadagidze states. According to the NBG President, GEL depreciated 4.5 percent against the US dollar since the beginning of the year; however, economic and financial stability is not in danger. “Our main task is to prevent a reflection of inflationary pressures on economic growth and price stability. If it so happens, we’re going to stop relaxed monetary policy and strengthen it. Georgia will continue tomaintain the floating exchange rate regime, which means that the GEL will ei-

ther enhance or impair but the amplitude will be so that wouldn’t damage the country’s economy, “- Kadagidze notes . Kadagidze estimates, many factors are involved in the formation of the rate, including the soft monetary policy, budgetary expenditures activation and import growth. As President of the National Bank explains,exchange rate volatility is not dangerous. Giorgi Kadagidze says that according to classical economic theory, exchange rate appreciation trend will be in medium and long-term only when Georgia’s economy grows more rapidly than economies of its main trading partners. “Our goal is not to control the exchange rate. Our goal is to maintain price control and inflationmaintenance. Exchange rate fluctuation is a common phenomenon and considering sufficient reserves, the country’s economy and its currency is not in danger,” - Kadagidze notes. On the last trading GEL again fell against USD and was set at 1.7331. According to the President of the National Bank of Georgia , the country’s financial stability is guaranteed in the current, medium and long-term period. Giorgi Kadagidze said at press conference summing up the current year that the banking sector would continue a stable and healthy development course. “During the year deposits grew by 25 percent, including deposits in GEL – by 50 percent. Such an increase in deposits indicates that there is a high level of trust towards the banking system and the banking sector. Loan growth is within 15 per cent. During the year bank assets increased by 18 percent and reached 17 billion, “ - Kadagidze says. In his words, another direction of the financial markets has significantly devolved in recent period - the microfinance sector, which total assets reached 800 million GEL. Giorgi Kadagidze explains that, respectively, the number of consumers of MFOS increased as well. He notes that the National Bank is trying to pay attention to the issue of rights protection of MFOs consumers and two important changes have been implemented for this purpose - refinancing rate was set at 2 percent for microfinance institutions as well as for banks and MFOs are required tostandardize contracts with customers.

December 30, 2013 #36

GEORGIAN SIDE FINDS NOTHING SURPRISING IN FREE TRADE AGREEMENT WITH ABKHAZIA AND SOUTH OSSETIA

eorgia’s Special Envoy for Relations with Russia is not surprised by Vladimir Putin’s decision to allow free trade with Abkhazia and South Ossetia. Zurab Abashidze states “ Commersant” that in 2008 Russia recognized the independence of Abkhazia and South Ossetia , accordingly, Moscow takes many such decisions which are unacceptable for the Georgian side . According to Abashidze, Georgian Ministry of Foreign Affairs

will surely respond in this regard. Foreign Ministry officials say that Putin’s decision shall be declared invalid by the international community as Abkhazia and South Ossetia are not recognized as independent states by international law. President Vladimir Putin signed a law on the ratification of trade agreements with Abkhazia and South Ossetia, RIA “Novosti» reports. These documents establish the duty-free importation of goods. While it still doesn’t include imports of sugar, alcohol and tobacco from these two republics.

BUSINESS OMBUDSMAN: TAX AUTHORITIES ARE INCREASINGLY LOSING LAWSUITS TO BUSINESSMEN An interview with Georgia’s Business Ombudsman Giorgi Gakharia

- What kind of cases are considered by the Business Ombudsman’s Office , what are the most problematic issues and what are the priorities? - Negotiability of businessmen to the Ombudsman’s Office is now quite reasonable. The most problematic issues - customs and tax procedures. There are also statements associated with the implementation of property rights and issues related to the fulfillment of investment obligations taken during privatization. There are occasions when the question of restricting competition and problems in public procurement are raised. There are complaints from the sphere of transport. In addition, our office analyzes shortcomings in legislation within its competence as well as drafting bills and monitors the activities of tax authorities. - At what stage is the consideration of cases of the businessmen affected by the previous government, is there any progress in this direction, and whether there are similar problems in business today? - We are in constant contact with various government agencies, which treat both separate complaints and legislative shortcomings. During the first 9 months of the existence of the Institute of Business Ombudsman we received about 250 complaints regarding the various problems that arise in business. 70% of these lawsuits are settled in favor of business.

- It is believed that under the new government attitude towards business is not particularly changed, in particular, we are talking about electoral law and the pressure on business - I mean sealing property, which prevents development of business and the economy in general. What is the current situation in the business? Authorities have repeatedly stated that they are ready to cooperate with the business sector and take into account opinions of entrepreneurs. Our priority is an independent and strong business sector. In order to create such a business environment, appropriate changes in legislation are already made - tax administration are simplified, fines are reduced, the rules of court litigation are changed , etc. It is noted in the government’s program presented to Parliament that they are working on changing the conditions of the sealing property, Economic Council at Prime Minister, which will consider issues related to business and the general economic situation, set to work. There are solutions that relate specific businessmen and do not affect the general problems of the economy - in particular, several companies have been exempted from penalties for failure to comply with investment obligations in time- it will give them the opportunity to resume projects that were stopped because of the war and the global crisis.

BUSINESS December 30, 2013 #36

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KAKHA BENDUKIDZE INVESTED 17 MILLION IN AGRARIAN UNIVERSITY

und for Knowledge, founded by former Minsiter of Economy Kakha Bendukidze, invested over 17 million GEL in the Agrarian University of Georgia. Agrarian University stated that amount of the investments considerably exceeds to 8 million GEL, determined according to the contract signed with government and investment still continues. As a result of the investment, new university infrastructure was created. The money was distributed in the following directions: over 12 mil-

lion GEL was spent for rehabilitation of Agrarian University buildings - educational and scientific environment respective to international standards was created; over 2 million GEL was spent for the procurement of the modern laboratory equipment - 47 scientific and educational labs operates; over 80 scientific researches have been funded by 3 million GEL - over 250 researches for scientific grants; during 2 years 5 new scientific institutes have been created. In Addition to above-mentioned investments, Fund for Knowledge allocated 1,5 million GEL to agricultural base - 7 experimental farms were enacted where over 15 cultures are produced; fruits and wine farms are being created; seeding planting and breeding farms have been created. Fund for Knowledge is a non-commercial nonprofit charity organization, founded by Kakha Bendukidze in 2007. It funds development of Free University of Tbilisi and Agrarian University, issues study grants. Amount of the grant program exceeds to 1 200 000 GEL in 2013.

GOODWILL SUES TBC

oodwill sues TBC and requires reimbursement of 41,6 million GEL. Large supermarket network owner company informs that the damage to Marshe and Goodwill was caused because of criminal attitude of creditor bank to the clients. The company informs that TBC appropriated property of 50 million GEL (land on #3 Eristavi street and buildings attached to it), total costof which was 14 million GEL. Besides, they requested dent of Marshe and wrote upon Goodwill (TBC provided credit to Goodwill, to cover loan of Marshe to the bank), to get decisive votes during Goodwill’s insolvency case. Director general of the bank Vakhtang

Butskhrikidze stated that TBC chooses rehabilitation, although Goodwill considers that this version is false. Goodwill has about 40 million GEL debt to 490 creditors and among them 18 million is to TBC, out of which major debt does not exceed 15,5 million. Remaining is bank securities. The company states that the case deals to the loan for Marshe. Debt of Goodwill to TBC was annulled last year, when the bank took buildings in Didi Digomi, Pixel and Batumi in expense of unpaid loan. Although this detail is not mentioned in the complaint. Goodwill’s insolvency case started on September 24. The court made this decision on the basis of appeal of Gogi Shevardnadze, owner of 100% of the company.

SPANISH KURATA SYSTEMS IS INTERESTED IN BUILDING OF WASTE FOODMART REPLACED POPULI PROCESSING PLANT IN KUTAISI

panish company Kurata Systems is interested in construction of waste processing plant in Kutaisi. Meeting with Spanish investors was held on December 23, in the Ministry of Regional Development and Infrastructure. Minister of Regional Development and Infrastructure David Narmania, deputy minister George Solomonia, director of Solid Management Company George Shukhoshvili and also Plenipotentiary ambassador of Spain George Pololikashvili attended the meeting. The meeting had an introductory character. The ministry reported that Spanish company Kurata Systems is interested in construction of waste processing enterprise in Kutaisi. Its director Julio Torres Verez presented own technology of waste processing and expressed

wish to actively participate with Georgian side. Currently the company owns several enterprises in Spain, operates Ecuador, Russia and opens a new one in Uzbekistan. On the other hand, the minister expressed gratitude to the investors for the interest. Director of Solid Waste Management Company introduced situation in waste manamgement in the country. “We already have a strategy of solid waste management and we know in which direction we shuld develop. The government will allocate funds for waste manamgent, but the budget funds aminly will be spent for improvement of the old landfills. Private companies should say the new work in this sphere. They are interested in it, which is proved by business proposals presented by them”, - Narmania mentioned.

GOVERNMENT BEGINS TO FINANCE CONSTRUCTION OF ENTERPRISES IN THE REGIONS

gricultural Projects Management Agency launches a project of co-financing agricultural product processing enterprises. As it was noted at the presentation of the project, financial assistance provides financial long-term bank loan, leasing or co- funding with the total value of 200 thousand - 1 million USD. According to Agriculture Projects Management Agency, the beneficiary’s monetary contribution should be at least 10 % of the project cost, while the maximum amount of co-financing by the agency

will be 40% while the remaining 50 % the beneficiary will receive from financial institutions . The project aims to create new enterprises in areas of low economic activity or rehabilitation of inactive enterprises. Wineries, spirits and alcoholic beverage production as well as wheat flour production will not be financed within the project. The loan interest rate co-financed by the Agency will be 12 %, the maximum loan term - 120 months. Recall that the project aims to create new enterprises in areas of low economic activity or rehabilitation of stopped enterprises.

TRADE CENTER WILL BE BUILT AT METRO RUSTAVELI

rade Center will be built at Metro Rustaveli. Ministry of Economy signs a new contract with the company Mowat Georgia, according to which the company’s fine will be discarded. Instead, they should build a trade center on Rustaveli Avenue, at Metro Rustaveli. They should invest $20 million for it. Building (swimming pool) located on #2/4 Rustaveli street, non-residential area and a land attached to it was directly sold to the company Mowat Georgia, according to the resolution of President of Georgia in 2007. According to new terms, the company should create, arrange and develop (among them purchase property for the above-mentioned aims) a trade center on the Rustaveli Avenue in 42 months after the contract is signed, area of which should be no less than 18 000 square meters. The center should have a trade and service area, common

utilizations areal, basement and multifloore parking. Entrance of subway station should be integrated in the building of the trade center. Mowat Georgia should obtain permission for construction of the trade center in 6 month after contract is signed and start construction lo later than in 16 months. The company is also required to give for free non-residential 1315,47 square meters area and partially attached land on it, located on #2/4 Rustaveli Avenue, Tbilisi for operation of the subway to the state in 43 months after contract is signed with the Ministry of Economy. (Basement 615.47 square meters and on the first floor 700 square meters, no less than 4 meters high, with respective placement of the rooms and autonomous entrance from the Rustaveli Avenue). Mowat Georgia is registered in 2007. 100% share of it belongs to Dorifoar Investments BV. Company directors are citizens of UK and France.

EAF CAUCASUS GROWTH FUND and Foodservice will equally share of the Company Foodmart, which is transformed Populi and Ioli, - head of Foodmart marketing service Oto Shamugia stated about it to GBC. Currently, 70% of the company belongs to SEAF CAUCASUS, 30% - to Foodservice. Shamugia states that Populi brand ceased existence. Currently 11 brands are opened with Foodmart brand. By the end of the year 23 supermarkets will be opened throughout the country. The network expansion will continue in 2014. It’s noteworthy that Foodmart will be focused on small-size supermarkets. Besides, rebranding of Ioli gastronomy is not

planned and it continues to exist. As Oto Shamugia explains, total investment of Foodmart partners is $25 million. It’s noteworthy that Foodmart offers cooperation to old suppliers of Populi, although plans to cover only 70% of the debts to them, after 2 years. Foodmart also plans to attract foreign investment, which will be directed to network extension. SEAF CAUCASUS GROWTH FUND founded JSC Foodmart on November 7, 2013. On December 12 they gave 30% share to Foodservice and got 10% of the company capital. LTD Foodservice is registered in 2006. 45% of the company belongs to Holding GE, 24,48% Andro Gegenava, 10,26% - Ivane Nikolaisvili, same share belongs to George Chubinishvili.

ACHARA TEXTILE GROWS OUTPUT

djara textile expanded production and starts to complete Nike’s orders. The company opened a new building of 5000 square meters are in the factory located in Bob-

okvati. Adjara Textile started to operate in 2008 and sews 3 million units of sport clothes annually. Number of employees increased from 750 to 1500 persons. Total amount of investments reached to $8 million. After Puma, Lotto, Erima predicts, Adjara Textile starts to fulfill Nike’s orders from the New Year. “It’s a very important product. During last sever-

al months we met with company representatives and new customers several times, as a result of which orders increased, company has expanded and number of employees also increased. In parallel training of workers is going, for which locals are very pleased”, - chairman of Adjara government Archil Khabadze stated after the visit to the new factory. The company also owns the factory in Batumi, Tamari Settlement, where 600 persons are employed. The company plans to expand tis factory as well. Director of Adjara Textile Jemal Bilbin Giurloglu states that employment of about 300 persons in both enterprises is planned.

GUDAURI – GEORGIAN RESORT WITH THE MOST EXPENSIVE REAL ESTATE

ccording to a survey conducted by “IliaUni Business Review “ which was aimed at revealing a price of real estate in the resort areas, Gudauri turned out to be the most expensive resort in terms of the value of real estate. In particular, the cost of one square meter in Gudauri amounted to 980 USD in November (in October – 892 USD), followed by Bakuriani - 928 USD (in October - 920 USD). The lowest price for real estate in the resort areas was registered in Batumi - 787 USD (in October - 848 USD). the survey shows that compared to October, in November the average value of real estate in the resort areas increased in Gudauri and Bakuriani and decreased in Batumi. Note: In the frames of the research three resort areas were selected: Batumi, Bakuriani and Gudauri. “IBR” survey was included prices of both new and the so-called secondary housing in the resort areas.

PUBLIC EVENT 6 JAM DAY - POWERED BY MARNEULI FOOD FACTORY caucasian business week

December 30, 2013 #36

New Year Festival and Exhibition of Fir Trees at Chardin Street

n December 22 and 25 the picturesque district of Old Tbilisi was hosting New Year Festival. Marneuli Food Factory organized a delicious confiture (preserve) day for Tbilisi residents. In parallel to the main event of Marneuli Preserve Day an exhibition of fir trees was held also. Organizers and hosts of the New Year Festival were Marneuli Food Factory, Tbilisi City Hall and Meidani Group. The event turned out to be very interesting, merry and grand. Marneuli Food Factory exhibited a wide range of confitures (preserves) and jams for tasting for sweets fans during the whole day. After tasting consumers could buy the products at special prices. Many other organizations and brands took part along with Marneuli Food Factory in tasting and New Year Bazaar within the Festival framework: Smart Supermarket Network and American Restaurant Wendy’s, Cake Shop Azzato, Italian Coffee Brand Lavazza and representatives of various regions who offered the visitors honey, dry fruits, “tylapi”, “gozinaki”, sweets, tea and glint wine. Guests visiting Sioni Square on a Confiture (preserve) Day along with tasting sweets could move to the fairy tale world. Characters of Multi-Pulti world were taking care of the guests’ and kids’ entertainment: Carlson,

Mickey Mouse, Minnie Mouse, Winnie, Shrek and Fiona, Pluto, Snow white. Winter collection made by kids of Ana Changiani’s Art School was presented during the event. Pupils of the Art School Abkhazia N1 and talented Zura Balanchivadze presented musical performance. Fir Tree exhibition was held during three days at the territory of Bambis Rigi in which various organizations took part. Their presented fir trees in an original form. Guests of the exhibition had the opportunity to identify the best host company and vote for the most desirable fir tree. Exhibition winners got identified and awarded on December 25 within the framework of the special event. „During frosty winter days our organism requires sweets the most. We wanted to make a surprise for our consumers for the New Year Eve and organize a Confiture (Preserve) day. Public is more familiar with our pickles and sauces. We want to introduce our jams and confitures to (preserves) more people. We produce watermelon, quince, cornel, paradise apple, walnut and tangerine confitures (preserves) and cornel, peach, quince and apple jams. We constantly are trying to offer innovations to sweets fans. Walnut preserve is a leader on the Georgian market,” – said Irina Gaphrindashvili, Director of Marneuli Food Factory.

WINNERS OF THE MEDIA CONTEST ON AGRICULTURE WERE REVEALED mum 10 points; • Publishing frequency – maximum 5 points; • Number of media materials prepared within the contest framework - maximum 5 points; • Correspondence with the contest topic Modern Agriculture and Agro-industry in Georgia - – maximum 10 points; The interest towards media contest was high. This was determined by high importance of agriculture and agro-industrial sector during the year. According to the Jury’s decision, Irakli Chanturia took the first place representing the CreaTV. The second place was shared by three journalists Tamar Lepsveridze (Guria News), Nino Natroshvili (NetGazet) and Nona Samkharadze (Marneuli TV). The third place was shared by

inners of the Media Contest “ Modern Agriculture and Agro-industry in Georgia were revealed on December 22. Competent Jury named the best media products (newspaper article, internet publication, blog, TV and Radio Report and etc.). In the spring 2013 Maregebeli Holding, in cooperation with PR Agency Gepra, announced a media contest on Modern Agriculture and Agro-

industry in Georgia aimed at presenting through media useful and unbiased information to Georgian consumers regarding current problems and challenges in the agriculture. All journalists working in Georgia were allowed to take part in the contest. The competent Jury was to ensure impartiality of the contest. When reviewing materials the Jury used the following criteria: • Mastery of journalists (original text, creative solution, presentation of clear messages) – maxi-

four journalists Eka Zhimsheladze (Business and Legislation), Ana Chankotadze (Liberal), Lika Zhorzholiani (Timer) and Levan Beglarishvili (CBW). The awarding ceremony was held at Café “Konka Stattion”. Journalists celebrated the success with sweets. Media Contest will become an annual tradition. „During 8 months journalists had the opportunity to write materials on agriculture and become contest participants in parallel. Our goal is to acquaint the public with problems or successes in this field. We made our contribution and for popularization of this topic we handed premiums over to winners,” – said Kakha Maghradze, Senior Consultant of Gepra.

ECONOMY December 30, 2013 #36

caucasian business week

GEORGIAN GOVERNMENT INTENDS TO BUILD AN AIRPORT IN ANAKLIA

EXPORTS WITH EU GROW BY 65%

ccording to Economy Minister Giorgi Kvirikashvili, government abandoned the idea of the previous government on the construction of the airport in the Black Sea city of Poti, as this project was not justifiedfrom an economic point of view. However, he says, the airport will be built in the region, in the village of Anaklia as well as a new deep-water port. “The project of the airport construction in Poti was completely ill-conceived, as there is a

xport with EU increased by 65%, with CIS - 29%. In January-November 2013 foreign trade turnover of Georgia equaled to $9,681 billion, which is 4% more tan data in the same period past year. Among them export was $2,618, which is 20% more than last year, import was $7,064 billion, 2% less than 11 months 2012. Besides, In January-November 2013 negative trade balance equaled to $4,446 billion and 46% of the foreign trade turnover. In January-November 2013 foreign trade turnover of Georgia with EU countries was $2,595 billion, which is 2% more than same indicator of last year. Among them export was $539 million, which is 65% more, import was %2,056 - 8% less. Share of these countries in the foreign trade turn-

swampy area there and a flight route for birds. The major international airport is planned to be built in Anaklia , and accordingly, there is no need to build two airports in the same region. Anaklia airport will be designed primarily for freight traffic “ - says the Minister . As it is known, the then President of Georgia Mikheil Saakashvili announced about the construction of a major international airport in Poti in 2009. He said the construction was to be completed by 2012.

GEORGIAN GOVERNMENT ESTABLISHES “SOVEREIGN FUND”

he Government of Georgia establishes Sovereign Fund of Georgia, which is 100% state-owned and the stocks of the Partnership Fund will enter its capital. Sovereign Fund will have the right of disposal of state-owned companies such as Georgian Railway”, Oil and Gas Corporation “, “ State Energy System”, “CommercialOperator of Electric Power System” , as well as government-owned stake in the electricity distribution company of Tbilisi “Telasi”. The government has already submitted to the Parliament a draft law on joint stock company

- Georgian Sovereign Fund, which aims to develop investment projects and attract investment in profitable private projects. The current Partnership Fund will be converted to the Fund of strategic development, which will be a subsidiary of the Sovereign Fund. The Government believes that the current structure of the Partnership Fund does not meet international standards, and the state shares in strategic companies are not adequately protected from risks. Sovereign Fund will also establish a company of strategic assets, which will include the mentioned state-owned assets.

U.S.,GEORGIA TO COLLABORATE IN DEFENSE SPHERE

.S. President Barack Obama signed the National Defense Authorization Act for Fiscal Year 2014, which provides military cooperation and assistance to partner countries, including Georgia, First Deputy Foreign Minister of Georgia David Zalkaliani said on December 27. “The discussions on the document were held in the House of Representatives and the U.S. Senate. Congressman Turner proposed additions to

the law, which did not contain positive moments for Georgia, but they were not accepted,” he said. Zakaliani noted that bilateral relations between Georgia and U.S. develop dynamically in all spheres, including the defense sector. Georgia’s diplomatic relations with the U. S. were established on April 23, 1992. Since the establishment of diplomatic relations the U.S. has provided immense political, military, financial and humanitarian assistance to Georgia.

OIL PRODUCTS RANK FIRST IN GEORGIA’S IMPORTS ITEMS

espite reduction in amount, oil products remain number 1 import product, Turkey is the largest trade partner. According to adjusted data of Geostat, in 11 months products of $7,063 billion has been imported in Georgia. Oil and oil products remain as the largest import commodity group, import of which equaled to $841,2 million and 11,9% of the total import. In the same period 2012 oil and oil products import equaled to $873,2 million. Motorcars import has increased y 37,8 million,

which comprises $638,19 million and 9% of the total import. Oil air and gaseous hydrocarbons rank third with $247,6 million and medicines group ranks 4th with $244,9 million (3,5% of import). Top-5 list includes wheat with 165,1 million and cell phones import with 129,2 million. Turkey is the largest trade partner according to import, out of which products of $1,198 billion have been imported. This indicator has reduced by 80,6 million in a year. Ukraine ranks second with 549,8 million, Azerbaijan ranks third with 544,7 million.

over of Georgia equaled to 27%, among them 21% in export and 29%. In January-November was respectively 27%, 15% and 31%. 24% f the trade deficit came on EU countries (38% in January-November 2012). In January-November 2013 Foreign trade turnover with CIS countries equaled to $3,368 billion, which is 14% more than last year. Among them export was $1,465 million (29%), import - %1,902 billion (4% more). Share of CIS countries in the foreign trade turnover of Georgia was 35%, among them 56% in export and 27% in import (respectively 32%, 52% and 25% in January-November 2012). In January-November 2013 compared to the same period last year, 10% of the foreign trade turnover came on CIS countries (In January-November 2012 it was 14%).

AUTOMOBILES RANK FIRST IN GEORGIA’S MAJOR EXPORTS ITEMS

otorcars remain number first export product, Azerbaijan is the largest export market. Geostat informs that in January-November 2013 motorcars of $638,2 million have been exported, which is 24,4% of the total export. It’s noteworthy that motorcars export has increased y $99,2 million in comparison with 11 months last year. Ferroalloys rank second in the export basket - ferroalloys of $204,5 million have been exported from Georgia in this period. This is 40,5 million less in comparison with 11 months last year. It’s noteworthy that recently demand and price of ferroalloys has considerable reduced. Nuts and hazelnuts moved on the 3rd place in the top-10 export list, with $151 million. IN 2012 export of this group equaled to $78,3 million. Copper ore and concentrates rank 4th in the export basket, amount of which has increased by 2,6 times in comparison with last year, to $140,2 million. Nitrogenous fertilizer group ranks 5th. Export of this commodity group exceeded to $118 million and comprised 4,5% of the total export. Wine export ranks 6th. Share of the group in the total export equals to 4,4%. Export amount exceeded to $114,1 million (59 million in 2012). Mineral waters export is the next with 94,7 mil-

lion (55,3 million in 2012). Top-10 list includes alcohol and spirituous drink (86,2 million), raw or semi-raw gold (68,2 million), so-called armature (58,3 million). It’s noteworthy that in 11 months 2013 export amount to Azerbaijan has increased, which exceeded to $647 million (578,1 million in 11 months 2012). Armenia ranks second, export with it increased to $288,1 million. Ukraine ranks third, export amount with which increased to $174 million. Next follows Turkey with $169,9 million. Export to Russia has increased sharply, by 4 times, which equals to $161,3 million. Export to Bulgaria exceeds to 135 million, next comes USA, where export reduced and equaled to $121,9 million ($84,3 million less), to Kazakhstan is 96,8 million. Top-10 list also includes Italy and Canada; export amount with them is respectively $77,1 million and $76,3 million.

TURKEY REMAINS A MAJOR TRADE PARTNER

urkey, Azerbaijan and Ukraine lead list of Georgia’s trade partners. Geostat informs that in January-November 2013 share of the 10 largest trade partners of Georgia in the foreign trade turnover was 66%. Turkey is the largest trade partner of Georgia, turnover with which equaled to $1,368 billion. Among them export is $169,9 million, import - $1,198 billion.

Azerbaijan ranks second with $1,191 billion. Export with Azerbaijan exceeds to $647 million, import is $544,7 million. Top-3 list of the largest trade partners include Ukraine, turnover with which exceeds to $724 million. Export amount is $549,8 million, import - $174,1 million. Top-5 list also includes Russia with $679,99 million and China with $549,1 million.

PUBLIC EVENT caucasian business week

December 30, 2013 #36

BANKING NEWS December 30, 2013 #36

caucasian business week

FORMER PRIME MINSITER OF GEORGIA WILL LEAD ISTANBUL OFFICE OF BANK OF GEORGIA

ormer head of Partnership Fund, former prime minister, Minsiter of Finance and Minsiter of Energy Nikoloz Gilauri will be head of Istanbul office of bank of Georgia. The bank is already represented by 4 branches in Istanbul, Tel-Aviv, London and Budapest outside the country. Maka Ekizashvili and Irakli Rekhviahvili manage offices in London and Budapest. Deposit portfolio in the investments of the Bank of Georgia exceeds to 615 million GEL.

BANK OF GEORGIA RATIO IN TOTAL CREDIT PORTFOLIO IS 33.9%

y December 1, 2013 credit portfolio of the Bank of Georgia equals to 3,222 billion GEL, market share - 33,9%. Since the beginning of the year portfolio has increased by 10%. The bank is a leader according to almost all indicators; the only exception is individuals’ deposits, amount of which exceeds 1 billion GEL. For the reporting period bank’s actives equal to 5,566 billion GEL, market share - 33,7%. Profit of Bank of Georgia in 11 months equals to 109,7 million GEL and ranks first with 27,5% among the profitable banks.

BANK OF GEORGIA ENDS JANUARY TO NOVEMBER PERIOD IN 109.7 MILLION GEL PROFITS

SC Bank of Georgia complete 11 months with 109,7 million GEL net profit. in the last reporting month, November profit equaled to 18,4 million GEL. At the end lf the third quarter profit of the largest bank of Georgia was 77,6 million GEL (Q2 - 59,3 million GEL). By December 1, 213 Bank of Georgia leads the list of profitable 16 banks with 27,5% share. The bank is a market leader with almost all indicators.

BANKS’ ACTIVES INCREASED BY 800 MILLION IN NOVEMBER

IN NOVEMBER TRADE LENDING REDUCED, IN CONSTRUCTION REDUCED

y December 1, 2013 in the overall amount of the legal entities lending, share of trade sector equaled to 45,9% (01/12/12 - 47,9%). National Bank informs that in November amount of the loans issued for trade sectors reduced by 41,7 million (1,8^), to 2,3 billion GEL (01/12/12 -2,2 billion GEL). Share of trade lending has reduced from the same period of last year, also it’s share remains the highest. Since December of last year Industrial lending has reduced by 11%, share - by 3,2%; in November it has increased by 2,9% (24,5 million) to 863,6 million GEL (01/12/12 -970,3 million GEL) and equals to 17,2% of the total portfolio of the legal entities (01/12/12-20,7%). 7,9% of the total portfolio comes on the construction. The amount has increased by 7,3 million GEL (7,3%) in November and equals to 397,5 million GEL. For 11 months 2012 portfolio equaled to 398 million GEL, share - 8,5%. In other words, 71% of the total lending amount of the legal entities (01/12/12-77,1%) comes only on 3 spheres: industry, construction and trade. Total portfolio of the corporate loans equals to 5 billion (01/12/12-4,667 billion GEL).

BANK SECTOR’S LOANS PORTFOLIO EXCEEDS 9.9 BILLION GEL

y December 1, in the total portfolio of the banks share of problem loans equaled to 8,6% (Q3 - 8,8%). According to statistic of the National Bank of Georgia, amount of the problems loans (non-standards, dubious, hopeless) is 853 million GEL. Annual growth of inactive loans does not exceed to 5,4%. Overall portfolio has increased by 16% since the same period of last year (01/12/12 -14%). Cumulative portfolio of 21 banks is 9,945 billion GEL (01/12/12 -8,594 billion GEL).

y December 1, 2013 overall actives of the banks equaled to 16,53 billion (01/12/1214 billion GEL). National Bank informs that in November actives increased by 0,8 billion GEL (4,9%), reduced by 0,2% in October. Own capital of the banking sector equals to 2,9 billion GEL, which is 17,5$ of the total actives of commercial banks (01/12/12 -2,3 billion GEL, 16,5%). Share of foreign capital in the total paidin authorized capital equaled to 77,1% (01/12/12 - 74,7%). Net profit of November equals to 81,4 million GEL (11/12 - 14,2 million GEL). Share of the 5 largest banks according to actives in the total actives of the sector is 77,1% (01/12/12- 81.8%). The sector is represented by 21 banks, among them - with contribution of foreign capital in the authorized capital and 2 branches of the foreign banks.

GEORGIAN BTA BANK STOCKHOLDER SET OUT FOR SALES

azakhstan reached preliminary agreement of the sale f problematic BTA Bank, on the saving of which it has spent $8 billion. It will be sold to the alliance, which will lead to the largest KAzKomercBank and remain as minority. Reuters report that BTA holder, Samruk Kazina stated on Monday that along with KazKomercBank local businessman Kenes Rakishev will be partners in deal, with parity conditions. British media named Rakishev as a son-on-law of the Mayor of Kazakhstan capital, ex-prime minister Imangali Tasmagambetov. Samruk Kazina will maintain minority share in the capital of BTA Bank. The deal structure considers control of KazKomercBank over BTA”, says the statement of Samruk Kazina. “After the deal is complete, the consortium will start procedure of unification of KazKomercBank and BTA Bank in order to provide their stable and dynamic development”, - says the same statement. It’s noteworthy that above-mentioned Kazakh Bank owns 49% of BTA Bank Georgia and in particular, 47,65% of Georgian bank’s stocks belongs to Samruk Kazina.

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% (01/12/1216,7%). 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.

NOVEMBER RECORDS 227 MILLION GEL GROWTH IN NONBANK DEPOSITS

y December 1, 2013 deposit amount in the banking sector (without banks’ deposits) equaled to 9,3 billion GEL (01/12/12 -7,4 billion), which is 227 million (2,5%) more than data of the previous reporting month. National Bank of Georgia informs that in November deposits on demand increased by 113,9 million (2,9%) and fixed-term deposits - by 113,1 million (2,3%). Deposits’ dollarization coefficient equaled to 59,34% (01/12/12 - 65,86%), which is 1,07% less than November data. Annual Average weighted interest rate on the fixed-term deposits equaled to 5,9 % (01/12/12 -8,2%), among them deposits in national currency - 9.1% (01/12/12-9,1%), in the foreign currency - 5.1% (01/12/12-8%). Share of USD in the deposits in foreign currency is 80,5%, EURO - 16,9% (01/12/12-78,6%, 18,4%).

AZERBAIJAN caucasian business week

BUSINESS INCUBATION CENTER INAUGURATED IN BAKU

usiness Incubation Center of the High-Tech Park was officially inaugurated in Baku, Head ofResearch and Development of the Park, Ulvi Aslanov, said on December 25. The incubation center with a total area of about 2,000 square meters and the central office of the park are located on the third floor of the “AF Business House” in Baku. Aslanov went on to note that ICT projects admission will begin in January. The center’s activities will be based on two principles. The first principle is the so-called “Open office”, which will allow everyone to separately work on one specific project. The second principle is called “shared office” and can include up to five companies. Each company can work on a project as a team. The business incubation center’s participants will be provided with computer equipment and internet access. If necessary, the center will be ready

to provide the necessary support for project initiators, as well. Only promising projects can claim to be developed in the incubation center. Once the project reaches the desired stage of development, the next step will be shifting them to the High-Tech Park. The center will also organize workshops to enhance the skills of the participants. The high-tech park, which is under construction, will cover 50 hectares in the Pirallahi district of Baku. Work is currently underway to build the park, construct the necessary infrastructure, study pertinent international experience, and address other organizational issues. The park is being created in the country under a decree of the Azerbaijani President, enacted on November 5, 2012. The new facility will be an area with the necessary infrastructure, logistics and governing entities for conducting research in ICT, telecommunications and space use, energy efficiency, and the development of new and high technologies. Once commissioned, the facility will expand the scope of ICTs, and lay the ground for creating a modern complex to carry out research and IT development based on current scientific and technological developments. Residents and companies operating in the park will be exempt from the 18 percent VAT on imported infrastructural and technological goods and services. The park participants will also be exempt from tax and customs duty for seven years.

FAO TO PRESENT AGRICULTURAL PROGRAM ON AZERBAIJAN

nited Nations’ Food and Agriculture Organization (FAO) will submit jointly developed framework program to Azerbaijan’s Agriculture Ministry in a short time. This was stated at a meeting of FAO Sub-Regional Coordinator for Central Asia Mustapha Sinaceur with Azerbaijan’s Agriculture Minister Heydar Asadov on December 19. Speaking about the role of the organization in support of activities aimed at the development of Azerbaijan’s agriculture, Asadov emphasized the need and importance of reflection needs of the agricultural sector

in the program. Sinaceur, in turn, said FAO’s support strategy on Azerbaijan reflects all the issues faced by the country’s agriculture. Moreover, the sides discussed the preparation of the strategy in the field of veterinary medicine, the issue of creating special places for slaughtering and other aspects associated with the expert support that FAO gives to Azerbaijan. FAO is a specialized agency of the United Nations that leads international efforts to defeat hunger. Serving both developed and developing countries, FAO acts as a neutral forum where all nations meet as equals to negotiate agreements and debate policy. FAO is also a source of knowledge and information, and helps developing countries and countries in transition modernize and improve agriculture, forestry and fisheries practices, ensuring good nutrition and food security for all. Earlier, Azerbaijan and FAO signed an agreement under the project on the development of seed-growing in the member states of the Economic Cooperation Organization and an agreement on improving the management of the situation with locusts in the Caucasus and Central Asia.

FUEL PRODUCED IN AZERBAIJAN TO MEET EURO-3 STANDARD BY LATE 2014

he quality of the fuel produced in Azerbaijan will be brought up to Euro-3 standard by late 2014, director of the Azerbaijan Standardization and Certification Institute Sabig Abdullayev told a local media. “We are negotiating with SOCAR [Azerbaijani State oil Company], which is continuously working on petrol quality,” he said on December 24. “Moreover, we signed a cooperation agreement as part of the collaboration with SOCAR. National standards will be introduced accordingly. They will be applied to the design, construction and operation of a new refinery. This proposal is designed for the next six years. We expect 2,000 standards to be introduced in various areas as a result of this cooperation,” Abdullayev said. He noted that the Cabinet of Ministers’ draft decision on the application of the new standard is ready and the public will be informed of the decision coming into force. Each transition to the next Euro standard requires

approximately $1 billion. Moreover, cars imported to Azerbaijan starting next year will be checked for engines matching Euro 3 standard. Only cars with engines matching this standard will be imported into the country, according to SOCAR. SOCAR has been taking steps to improve the quality of its fuel since 2004 under the program, which consists of several stages. Currently, gasoline produced in the country meets Euro 2 standards. Currently, the Euro-3 standard applies to vehicles and their spare parts in Azerbaijan, as well as to the fuel produced in the country. The diesel fuel produced by SOCAR already meets the Euro-3 standard. Further improvement of the quality to Euro-4 and Euro-5 gasoline standards will become possible after commissioning of a new oil and gas processing petrochemical complex by SOCAR, which is planned to be constructed in the Garadagh district of Baku, and commissioned by late 2020.

December 30, 2013 #36

EBRD BACKS REAL ECONOMY IN AZERBAIJAN The European Bank for Reconstruction and Development announced that it will issue $ 9.4 million to Azerbaijan’s Bank Respublika, which has wide national coverage and is the country’s sixthlargest bank in terms of assets. The bank reported that a credit line of $ 5.4 million will be used for on-lending to micro, small, and medium-sized enterprises (MSMEs) to finance investments and working capital for local businesses with medium and long-term loans This will help to address the poor access to credit faced by enterprises in the real sector - strategic priority for EBRD in Azerbaijan. Also, $ 1 million of the loan will be provided by BP and its co-ventures aimed to support MSMEs along the BTC/SCP pipelines as part of the Sustainable Development Initiative Programme in Azerbaijan. Another credit line of $ 4 million will be used for mortgage lending to private individuals, enabling them to finance the purchase, renovation or construction of homes. Head of Resident Office Neil McKain said small and medium-sized businesses are crucial for the sustainable development of the non-oil and gas economy in Azerbaijan “We are pleased that Bank Respublika will be the first financial institution to benefit from this new phase of cooperation with BP and its co-ventures under the Sustainable Development Initiative, which will bring more financing to the MSME sector and improve access to finance,” he said. The EBRD will issue the funds under its Azerbaijan Multi-Bank Framework Financing Facility, within the framework of which it extends loans to partner banks in Azerbaijan for on-lending to individuals and private companies.

Bank Respublika has been an active partner of EBRD since 2004 and was the first bank in Azerbaijan to receive an EBRD mortgage development financing loan in 2008. The EBRD invests in the enterprise, financial and infrastructure sectors to promote sustainable growth in Azerbaijan. Since the start of its operations in the country, the EBRD has invested around $ 2 billion in about 137 projects, with over 90 per cent of these projects investing in the development of the private sector. Around 73 transactions with a total value of approximately $ 540 million have been signed with financial institutions in Azerbaijan. In addition to partnering with Bank Respublika the EBRD has signed twelve other projects totaling $ 90.1 million during 2013, all in the private sector.

IRAN INVITES AZERBAIJANI INVESTORS TO ITS OIL, GAS PROJECTS

ran invites Azerbaijani companies to invest in its oil and gas projects, Yahya Ale Eshaq, the chairman of the Tehran chamber of commerce has said. Addressing the Iran-Azerbaijan entrepreneurs’ joint business forum held on December 17 in Azerbaijan’s capital Baku, Ale Eshaq said some $500 billion is projected to be invested in Iran’s oil and gas projects in the next five years. He added that Iranian enterprises are ready to start infrastructural, petrochemical and power plant projects in Azerbaijan. Speaking at the event President of the National Confederation of Entrepreneurs (Employers’) Organizations of Azerbaijan Mammad Musayev said the bilateral trade is not at a satisfactory level, and voiced hope for increasing the figure. Musayev noted the confederation has established good relations with the countries of the Commonwealth of Independent States, and this issue can be helpful for Iranian entrepreneurs. In his remarks, Vidadi Guliyev, the vice-president of the Azerbaijan Export and Investment Promotion Foundation (AZPROMO) said the Azerbaijani economy accounts for 70 percent of the South Caucasus region’s economy.

Guliyev noted that some $156 billion has been invested in different sectors of the country, 50 percent of which has been secured through foreign investments. “Iran has invested $104.5 million in Azerbaijan’s non-oil sector so far. Some 390 Iranian companies are active in Azerbaijan,” he said. During the meeting, National Confederation of Entrepreneurs (Employers’) Organizations of Azerbaijan, Iran Entrepreneurship Association and the Tehran chamber of commerce signed two Memorandums of Understanding (MoU). Iran and Azerbaijan have had diplomatic relations since 1918. After Azerbaijan regained independence in 1991, Iran was one of the first countries that established full diplomatic relations with Azerbaijan. Iran recognized Azerbaijan on January 1992, and upgraded its consulate in Baku to establish full diplomatic relations. Iran has owned a 10 percent share in Azerbaijan’s largest gas field, Shah Deniz. According to Azerbaijan’s State Customs Committee, Azerbaijan exported about $64 million worth of goods to Iran, while importing about $179 million worth of goods from Iran in the first 10 months of 2013.

AZERBAIJANI LEASING COMPANIES ISSUE BONDS

he Azerbaijani State Securities Committee registered the issue prospectus of the book-entry registered bonds of FinansLizinq and Joint Leasing Company to the amount of 195,000 manat and 10 million manat respectively. Around 390 unsecured bonds of FinansLizinq are at a par value of 500 manat each and 10,000 secured bonds of Joint Leasing Company have a par value of 1000 manat. FinansLizinq passed state registration on April 2, 2007. Presently, 16 Azerbaijani individuals are shareholders. The majority part of the shares is owned by Azad Javadov and Tokay Shakhalizade (15.83 per cent), Mobil Sharifov (15.17 per cent) and Ibrahim Ibrahimov (10 per cent). Joint Leasing has been operating since June 14,

2007 as the legal successor of the JV Azerlizing Company. The founders of Joint Leasing are the British company Dolphin Leasing with52.3 per cent and the International Bank of Azerbaijan. First Leasing Company of Azerbaijan, JV Azerlizing was created in 1999. The official exchange rate is 0.7845 AZN/USD on Dec. 26.

ARMENIA December 30, 2013 #36

caucasian business week

JOINING CUSTOMS UNION AMONG THIS YEAR’S ACHIEVEMENTS: ARMENIA’S ECONOMY MINISTER

he Minister of Economy of the Republic of Armenia Vahram Avanesyan finds that the decision on joining the Customs Union is among the achievements of the current year. As reports “Armenpress” at the course of the briefing with the journalists, which followed the session of the Government of the Republic of Armenia, the Minister of Economy of the Republic of Armenia Vahram Avanesyan underscored: “One of our achievements was our success in two directions of the foreign economy policy. One of them is the fact that we signed the roadmap for Armenia’s accession to the Customs Union two days ago. The second is that we already have the GSP system with the EU countries, which will be continued in 2014-2017.”

In the result of the negotiations on September 3, 2013 in Moscow the Presidents Sargsyan and Putin confirmed the aim of the Republic of Armenia and the Russian Federation in the direction of further development of economic integration processes in the Eurasian territory. In that context the President of the Republic of Armenia Serzh Sargsyan announced about the Armenia’s decision to join the Customs Union and the necessity of implementation corresponding steps for that aim and in future about participating in formation of the Eurasian economic union. The President of the Russian Federation Vladimir Putin expressed his support to the abovementioned decision of Armenia and informed about the readiness of the Russian side to support the process.

AGRICULTURE MINISTER DOES NOT FORECAST DIARY DEFICIT IN 2014

he Republic of Armenia will not have deficit in dairy products and rise of price next year. The Minister of Agriculture of the Republic of Armenia Sergo Kara-

petyan made this forecasting at the course of the summing conference convoked on December 25. Sergo Karapetyan reacted upon the issue of the possible decrease of the volume of the milk production because of the intensive butchery of the animals. “We will not have lack of dairy products, on the contrary, next year we will again have increase in livestock,” Minister of Agriculture said as reported by “Armenpress”. He noted that 230-240 large horned and 430-450 small horned animals are annually butchered in Armenia. “Our main butchery is done in October, November, and December. 50 percent of meat production is done within those three months,” the Minister stated.

GOVERNMENT EXPECTS 10% GROWTH IN TOURIST INFLOW NEXT YEAR

ervices to tourism support” program 2014 envisages to provide 10 percent increase in the flow of tourism to Armenia. The program will be introduced at the session of the Government of the Republic of Armenia on December 26. According to the the substantiation of the program, it corresponds to the conceptual goals and objectives of the state policy, is directed to the diversification of the result of the Armenian tourism, the development of tourism in the communities, prolongation of the tourist season, strengthening and increase in the competitiveness of the Armenian tourism result in the international market. “Armenpress” reports that this program envisages promoting the preservation of the growth rate of tourism visits to Armenia (around 10 percent). Tourism in Armenia has been a key sector to the

Armenian economy since the 1990s as half a million people visit the country every year, mostly ethnic Armenians from the Diaspora. The Armenian Ministry of Economy reports that most of the tourists come from the CIS, particularly Russia and Georgia, EU states, Iran and the US. Although there is a shortage of resources, Armenia has been investing in new hotels to increase tourism. Outdoor activities and scenery seem to be the primary attractions. Lake Sevan, the world’s largest mountain lake, is a popular summer tourist spot. The Tsakhkadzor ski resort is open for skiing in the winter and hiking and picnicking the rest of the year. Mt. Ararat, the traditional site of the landing of Noah’s Ark, is located in Turkey. Yerevan, Armenia’s capital, also boasts opera, theaters and other cultural attractions. The casinos in Argavand are also popular with tourists. Tourism has been growing gradually in Armenia since 2000. The Republic of Armenia Ministry of Economy declared that 575,281 tourists visited Armenia in 2009, 3% more than the estimated index for 2008, and 5% growth was predicted for 2010 as the world economy stabilizes. In 2011, Armenia is expecting to receive 800,00 tourist, which is 13% better than last year. Armenia attracts people with its sense of adventure and history. Many new hotels including a Hilton, InterContinental,and Kempinski are set to be built in the capital city, Yerevan as well.

OSTRICH IMPORT PALPABLY INCREASED IN ARMENIA

he ostrich farming is actively developing in Armenia. The ostrich chicks import to the Republic of Armenia has been increased for over 30 times at the course of the first 11 months of the current year in comparison with the same period of the previous year. Responding the inquiry submitted by “Armenpress” News Agency, the State Revenue Committee under the Government

of the Republic of Armenia stated that the Republic of Armenia imported 63 ostrich chicks in 2012, while by November 30 of the current year this number reached 2150. “The customs value of one ostrich chick totaled AMD 20 thousand 467 at the course of the first 11 months of 2013, while in 2012 it was AMD 33 thousand 208,” the State Revenue Committee under the Government of the Republic of Armenia underscored.

ARMENIA’S ECONOMIC ACTIVITY INCREASED BY 3,1 PERCENT

rmenia’s economic activity rates for January-November of the current year surpassed the rates of the same period of the previous year by 3,1 percent. The National Statistical Service of the Republic of Armenia informed “Armenpress” that almost all the spheres recorded a growth, except the construction and electricity production. In comparison with January-November of 2012, at the course of the first 11 months of the current year the total volume of services was increased by 2,9 percents and reached AMD 917 billion 122,9 million, while the volume of gross agricultural produc-

tion was increased by 6,1 percents and reached AMD 857 billion 367 million. The trade turnover was increased by 1,6 percent and reached AMD 1 trillion 971 billion 903,5 million.

EU TO SUPPORT ECONOMIC DEVELOPMENT, CIVIL SOCIETY AND INSTITUTION BUILDING IN ARMENIA

he European Union hasadopted a package of €41 million to support civil society, regional development and agriculture in Armenia. This assistance is beingprovided in the framework of the European Neighbourhood Policy. “The EU and Armenia are committed to continuing cooperation in all areas of mutual interest based on common values. Our assistance for agriculture and rural development, balanced regional development, a more efficient civil service and reinforced civil society will provide significant impetus for reforms in Armenia and bring concrete benefits to people,” Commissioner for Enlargement and European Neighbourhood Policy Štefan Füle said as reported by “Armenpress”. On agriculture and rural development, new EU initiatives will improve the agricultural institutions, encourage the development of farmers’ associations and improve access to more affordable food for Armenian citizens. The support is intended to contribute to better conditions in rural areas of Armenia. In the area of regional development, the programme will support specific projects (e.g. public-private partnerships, employment creation, training of the labour force) to step up the economic development of Armenia’s regions. The announced support will also reinforce civil society, as a very important partner for the EU, in promoting bilateral cooperation and monitor-

ing reforms, enhance the ability of civil servants in priority areas including the EU Visa Facilitation and Re-admission Agreements, and facilitate Armenia’s participation in EU programmes and cooperation with EU agencies. This programme is part of the Eastern Partnership initiative, which represents the Eastern dimension of the European Neighbourhood Policy and aims to bring Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine closer to the European Union. The Programme is financed from the European Neighbourhood and Partnership Instrument (ENPI) and consists of three parts: Support to Agriculture and Rural Development, to contribute to efficient and sustainable agriculture and development of rural areas in Armenia, in line with the European Neighbourhood Programme for Agriculture and Rural Development (ENPARD) approach. (€25 million) Support to Regional Development in Armenia to ensure progress towards the more balanced social and economic development between regions of Armenia. (€10 million) Support for EU-Armenia Agreements to assist key Armenian institutions to implement the Visa Facilitation/Readmission Agreements and the ENP Action Plan, to reinforce Armenia’s civil society role to monitor the implementation of the Armenian reform agenda, to strengthen the ability of civil servants, as well as to promote Armenia’s participation in EU programmes and cooperation with EU agencies.

GAS TARIFF WILL REMAIN IN REGULATION FIELD: ARMEN MOVSISYAN

he tariff of the gas will not stay in the neglected state in the result of entering the Armenian-Russian “gas” Agreement into force. The Minister of Energy and Natural Resources of the Republic of Armenia Armen Movsisyan stated this at the course of the concluding speech of the extraordinary session of the National Assembly of the Republic of Armenia on the issues of the ratification of the above-mentioned agreements on December 20. “As for the concerns on that the agreements will not allow to get use of other sources of energy, I assure that the agreements have nothing to do with it. I urge you once again to read the agreement in details and vote in favor of it,” the Minister appealed to the deputies, as

reported by “Armenpress”. Representative of the Republican Party of Armenia, Deputy Chairman of the National Assembly of the Republic of Armenia Galust Sahakyan urged the deputies to remember that due to the abovementioned agreements Armenia will become the only state in the region, which gets gas by the cheapest price. The leader of “Gazprom” Alexey Miller stated on December 2 that an agreement was signed on delivering 20 percent of the shares of “ArmRosGazprom” company of the Government to “Gazprom” Later, the President of the Russian Federation Vladimir Putin stated that gas will be supplied to Armenia on prices of Russia’s internal market and will cost 189 dollars before 1,000 c. meters.

CIS caucasian business week

ARMENIA SIGNS CUSTOMS UNION ROADMAP, KYRGYZSTAN NEEDS MORE TALKS

rmenia is on course to join the Customs Union with Russia, Belarus, and Kyrgyzstan by January 2015, after signing a “roadmap” in Moscow. Despite declaring its interest only three months ago, it may join earlier than Kyrgyzstan, which applied in 2011. The news was announced after an official meeting between the heads of state of the three original members and two potential ones. The meeting also included Ukraine, which has observer status. Ukrainian Prime Minister Nikolay Azarov was present at the gathering. “We welcome the interest in closer co-operation from the non-member states. We have approved the roadmap that will allow Armenia to join the union and the common economic area, and a similar document for Kyrgyzstan is virtually ready,” Russian President Vladimir Putin told reporters. The Customs Union, which seeks to gather all exSoviet nations to form a free trade zone to rival the EU, is the Russian leader’s project. Armenia’s bilateral trade with Russia, its biggest foreign partner, reached US$1.2 billion in 2012 – a negligible amount for Moscow. Double digit growth has taken place, however, as the Caucasian country of three million people continues to recover from the effects of a severe economic crisis. Armenia had long negotiated a potential Association Agreement with the EU, similar to the

one that has been causing upheaval in Ukraine, but reversed course towards Russia in September. Among the potential obstacles to effective membership for Yerevan are the lack of shared borders with other member states and the unresolved status of the Nagorno Karabakh region, which is contested with Azerbaijan. A special provision has been included in the roadmap, which will define the status of the region and whether it constitutes part of the Customs Union. Kyrgyzstan’s signing of a similar roadmap will be postponed at least until the next session of the union in March, following critical public comments made by the country’s president last week. Almazbek Atambaev told media in Bishkek that the roadmap had been “drafted without Kyrgyzstan’s involvement” and risked subjecting the country to “social problems and instability.” Belarus and Kazakhstan are also not entirely agreed on the nature of the partnership between the member states, with Belarusian leader Aleksandr Lukashenko calling for wider diplomatic and political integration between the countries during Tuesday’s meeting, and Kazakh leader Narsultan Nazarbaev retorting that the Customs Union “must not become politicized.” President Putin nonetheless assured that the union is still on course to come into power on the long-declared date of January 1, 2015, with details finalized by May 2014. “Next we must document the economic obligations of the member states to ensure that they are doing everything to ensure the free economic movement of goods,” said the Russian leader. “Eventually we are hoping that the amount of exceptions that restrict free trade will be reduced to zero,” he added.

BELARUS PROMISES NOT TO ‘EAT AWAY’ $2BN LOAN FROM RUSSIA

elarusian President Alexander Lukashenko said that Minsk will not “eat away for no special reason” a $2 billion loan that Russia has promised to deliver in 2014. After Russian President Vladimir Putin said on Wednesday that Moscow would help Belarus with another financial package, Lukashenko assured that the loan would be used efficiently and returned to the Russian economy. The Belarusian president reminded that the country’s economy was about 70 percent reliant on Russia’s commodities and components, which means the money lent will implicitly contribute to Russia’seconomic growth. “Both Russia’s gov-

ernment and, all the more, President Putin, can count money very well; don’t do anything just for the sake of it,” Russian newspaper Vzglyad [Judgement] quoted Lukashenko as saying. Belarus will receive the money in the form of an intergovernmental 10-year loan, leaving budget money untouched, explained Anton Siluanov, head of Russia’s finance ministry. Interest rates and credit terms will be discussed in 2014, and will involve some amendments to the budget law of the Common State of Russia and Belarus, the finance minister explained. Russia decided to help its closest CIS trade ally by “taking into account what’s happening in the world markets,” Putin said.

OIL PRODUCTION TO JUMP IN KAZAKHSTAN IN 2014

azakhstan plans to increase oil production up to 83 million tons in 2014, excluding the oil to be produced from the Kashagan field, Managing Director of Samruk-Kazyna JSC Malik Salimgereyev said on December 25. Speaking at a briefing in Astana, Salimgereyev said the oil production in Kazakhstan is expected to amount to 82 million tons in 2013. Salimgereyev also noted the production of oil and gas condensate in Kazakhstan in 2012 amounted to 79.2 million tons. OPEC predicts Kazakhstan’s oil production to increase by 50,000 barrels per day (bpd) and reach 1.7 million bpd in 2014. The U.S. Energy Information Administration (EIA) in turn forecasts Kazakhstan’s oil production to up by 40,000 barrels per day (bpd) up to 1.65 million bpd in 2014. According to BP, Kazakhstan’s proven oil reserves stood at 30 billion barrels as of early 2013.

The Central Asian state’s oil production amounted to 1.728 million barrels per day in 2012, which is 1.6percent below 2011. Kazakhstan’s largest hydrocarbon fields are Kashagan, Tengiz and Karachaganak. Recoverable oil reserves of Kashagan field are estimated at 11 billion barrels, whereas total geological raw material reserves stand at 35 billion barrels. It is believed to be the largest oil fieldin the world after Prudo Bay in Alaska. Besides, natural gas reserves are estimated at over 1 trillion cubic meters. The Tengiz oil field was discovered in 1979 and is one of the deepest and largest oil fields in the world. Reserves of the deposit are estimated at 750 million to 1.1 billion tons (6-9 billion barrels) of recoverable oil. Karachaganak is one of the world’s largest fields. Its oil reserves amount to 1.2 billion tons, while those of natural gas - 1.35 trillion cubic meters. 49 percent of Kazakhstan’s gas production and 18 percent of oil production comes from this field.

December 30, 2013 #36

RUSSIA FILES FIRST WTO DISPUTE OVER EU ENERGY POLICY

oscow has filed its first case with the World Trade Organization against the European Union, saying it was unfairly charging Russian companies hundreds of millions of dollars for allegedly reducing energy prices in global markets. The request for formal consultations is the first step in the WTO’s dispute settlement mechanism, Interfax reports on Monday. Under the WTO rules, the consultations must take place within 60 days from the date of the application, which means it’ll most likely to kick off immediately after the New Year holidays. “The EU’s unfair dumping practices were the discussion topic at numerous expert consultations, at virtually every high-level meeting, at EU courts, but it never led to a change in the position of our main trading partner. In circumstances when other means of settling the issue have been exhausted, appeal to WTO procedures is a forced, but necessary measure for restoring normal trade terms with the EU,” Interfax quotes its source as saying. Dumping is a term used to describe the trading practice when goods are sold abroad below the average price on the exporter’s domestic market. If such dumping is proved to harm the industry of the importer, special protectionist measures like

higher import tariffs may be imposed. The EU has been applying so–called energy adjustments on Russian companies accusing them of dumping. However, Russia says the block didn’t take into account prices on the domestic market, as required by international trade law. Even though Russia achieved the status of a market economy in 2002, the EU has kept on viewing it as a country with a non-market economy, and determined whether dumping had occurred by comparing the price of Russian exports with prices on the domestic markets in third countries. This approach hurt Russian exporters and, from Russia’s standpoint, violated EU commitments under the 1994 EU-Russia partnership and cooperation agreement. Under that agreement, the EU was to apply anti-dumping measures in accordance with the requirements of GATT and take into account Russia’s natural competitive advantages, including access to cheap feedstock. Overall, the EU initiated 17 anti-dumping cases against Russia between 1995 and 2012, according to the Economic Development Ministry, in Russia’s view the majority of them against international law. As a result, producers of Russian fertilizer alloyed steel, cables, pipes, and various other steel productsand aluminum foil suffered damages amounting to hundreds of millions of dollars, the ministry said.

SYRIA SIGNS OFFSHORE OIL AND GAS EXPLORATION DEAL WITH RUSSIA

amascus has signed a major oil and gas deal with Russian company Soyuzneftegaz which allows for offshore drilling, development, and production to take place in Syria’s territorial waters for the very first time. The deal permits the exploration of 2,190 square kilometers in the Mediterranean. The costs, which are estimated at around US$90 million, will be covered solely by Soyuzneftegaz. The contract covers oil exploration in Block no. 2 of Syria’s territorial waters, which stretches between the cities of Tartous and Banyas. Oil Minister Suleiman Abbas said during the signing ceremony that the contract covers “25 years, over several phases.” “During the first stage, which envisages research and initial prospecting, the contractor is expected to invest 15 million,” said a spokeswoman for Syria’s natural resources ministry.“Then, during test drilling, the contractor will further invest $75 million to make at least one test well,” she added, as quoted by RIA Novosti. In the event that the test drilling shows the site has commercial-scale reserves of oil and gas, the Russian company would build the necessary in-

frastructure to develop the field and extract the resources, the spokeswoman added. Under the deal, Soyuzneftegaz will also be responsible for training Syrian staff at the Syrian General Establishment of Petroleum, SANA news agency reported. The agreement was signed Wednesday by Oil Minister Abbas, Syria’s General Petroleum Company, and Soyuzneftegaz. The accord comes after “months of long negotiations between Damascus and Moscow,”according to the oil ministry. The contract is “the first ever for oil and gas exploration in Syria’s waters,” General Petroleum Company head Ali Abbas told AFP. As a result of international sanctions, Syria’s oil production has declined by 90 percent since the start of the uprising against President Bashar Assad in March 2011. Gas production has dropped from 30 million cubic meters per day to 16.7 million cubic meters per day, AFP reported, citing official figures. Additionally, there are losses in the country’s oil sector, which is essential for the Syrian economy, due to the destruction of infrastructure such as railways, oil pipelines, and refineries as a result of the ongoing civil war.

WORLD NEWS December 30, 2013 #36

caucasian business week

APPLE TO SELL IPHONES THROUGH WORLDS’ BIGGEST CARRIER CHINA MOBILE

pple, the world’s most valuable tech company, and the world’s largest mobile carrier China Mobile, have agreed a deal for selling iPhones in China. This puts Apple a huge step closer to getting a massive slice of the world’s biggest mobile market. Apple will start supplying its iPhones 5s and 5c to China Mobile shops across China from January 17, 2014. About 39 million iPhones will be sold in China next year, which compares to 34 million Apple gadgets sold worldwide in 3Q 2013, according to Dow Jones analysts. China mobile has more than 760 million subscribers, as well as over 1.2 million base stations and over 4.2 million Wi-Fi access points, which makes the company the largest network carrier in the world. “Apple’s iPhone is very much loved by millions of customers around the world. We know there are many China Mobile customers and potential new customers who are anxiously awaiting the incredible combination of iPhone on China Mobile’s leading network,” said Xi Guohua, China

Mobile Chairman. “China is an extremely important market for Apple and our partnership with China Mobile presents us the opportunity to bring iPhone to the customers of the world’s largest network,” said Tim Cook, Apple CEO. “We can’t think of a better way to welcome in the Chinese New Year than getting an iPhone into the hands of every China Mobile customer who wants one.” Chinese New Year also known as the Spring Festival is an important traditional Chinese holiday, which will takes place on January 31. The deal was facilitated after the Chinese government agreed to give 4G network licenses to its three major network carriers, which helps increase the performance of Apple’s devices over the internet. iPhone on China Mobile supports major cellular network standards, making a global phone a reality for China Mobile customers. Until now the leaders in the Chinese smartphone market, which has approximately 1.2 billion subscribers, were Samsung, Lenovo and Coolpad says the BBC. South Korea’s Samsung became the most profitable producer of phones and smartphones in the second quarter 2013, pushing Apple into second place. According to analysts, Apple lagged behind its main competitor because of weak sales of the iPhone and the growing competition in China, while Samsung improved its position in the USA. The two electronic giants have been fighting a ‘patent war’ which has cost $929 million and currently sees the US manufacturer on top. Rt.com

GERMANY TO REPATRIATE GOLD FROM US, FRANCE

ermany’s Bundesbank plans to store half the national gold reserves in its own vaults by 2020. It will mean the return of 700 tons of the precious metal from the US

and France This year the Bundesbank got back about 37 tons of gold from the US and France. The total value of the returned gold is estimated at 1.1 billion euro, the head of Bundesbank, Jens Weidemann told the Bild newspaper. Weidemann explained it is part of a program to increase the reserves held in Frankfurt, and there was no doubt on the security of the gold held in America and France. “The gold reserves of the country will be stored in Frankfurt because it has a special storage with the corresponding equipment,” said Carl-Ludwig Thiele, a Bundesbank board member.

A large part of the German gold is held in foreign banks, primarily in New York and Paris. At the beginning of this year the Bundesbank said it intended to repatriate 700 tons of gold worth 27 billion euro by 2020. Once completed, a half of the Federal republic’s gold reserves, or about 3,400 tons will be stored within the country. During the Cold War fearing a Soviet invasion the German government shipped two-thirds of its gold reserves to the UK, France and US. Recently, the Bundesbank has been criticised for not holding its reserves in Frankfurt, so it has decided that some should be brought back to Germany. Transporting the gold will be a high security operation. When France transferred its reserves in 1966 it used a submarine. Rt.com

CHINA ORDERS MEDIA TO HAVE MORE POSITIVE TONE ON INTEREST RATES STORIES

hinese officials have ordered local media not to “hype” a story about interbank problems and avoid the term “cash crunch”. The directive came as an effort to calm down financial markets that have seen interest rates rise sharply. Seeking to avoid an apparent repeat of the June cash crunch that caused panic among investors and weakened China’s debt-ridden financial markets, Chinese censors ordered financial reporters

to tone down the issue of a liquidity crisis, the Financial Times reports. Last week interbank rates jumped to 9.9 percent and neared a June’s sky-high of 13.4 percent, as the People’s Bank of China (PBoC) that wants to make lenders more disciplined, seemed unwilling to inject money into the markets. However, PBoC said on Thursday it had carried out “short-term liquidity operations” to tackle the problem and on Friday released a more detailed report, saying it would inject $49 billion into thefinancial market. In a similar move in June, Chinese authorities ordered the media to “strengthen their positive reporting”and “fully report the positive aspect of our current economic situation, bolstering the market’s confidence”, according to a copy obtained by the FT. Over nine consecutive days the benchmark Shanghai Composite Index has fallen, with 2 per cent on Friday, making it the longest losing streak in over 19 years. Rt.com

STUDY FINDS CRIME, CORRUPTION, TAX EVASION DRAINED $946.7BN FROM DEVELOPING COUNTRIES IN 2011 Illicit Financial Outflows from Developing World Up 13.7% from 2010 Nearly $6 Trillion Stolen from Developing Countries in Decade between 2002 and 2011 China, Russia, Mexico, Malaysia, India—in Declining Order—are Biggest Exporters of Illicit Capital over Decade; Sub-Saharan Africa Suffers Biggest Illicit Outflows as Percent of GDP Study Is First GFI Analysis to Incorporate Re-Exporting Data from Hong Kong and First GFI Report to Utilize Disaggregated Trade Data in Methodology

rime, corruption, and tax evasion drained US$946.7 billion from the developing world in 2011, up more than 13.7 percent from 2010—when illicit financial outflows totaled US$832.4 billion. The findings—which peg cumulative illicit financial outflows from developing countries at US$5.9 trillion between 2002 and 2011—are part of a new study published today by Global Financial Integrity (GFI), a Washington, DC-based research and advocacy organization. “As the world economy sputters along in the wake of the global financial crisis, the illicit underworld is thriving—siphoning more and more money from developing countries each year,” said GFI President Raymond Baker. “Anonymous shell companies, tax haven secrecy, and trade-based money laundering techniques drained nearly a trillion dollars from the world’s poorest in 2011, at a time when rich and poor nations alike are struggling to spur economic growth. While global momentum has been building over the past year to curtail this problem, more must be done. This study should serve as a wake-up call to world leaders: the time to act is now.” FINDINGS The US$946.7 billion of illicit outflows lost in 2011 is a 13.7 percent uptick from 2010—which saw developing countries hemorrhage US$832.4 billion—and a dramatic increase from 2002,

when illicit outflows totaled just US$270.3 billion. The study estimates the developing world lost a total of US$5.9 trillion over the decade spanning 2002 through 2011. “It’s extremely troubling to note just how fast illicit flows are growing,” stated Dr. Kar. “Over the past decade, illicit outflows from developing countries increased by 10.2 percent each year in real terms—significantly outpacing GDP growth. This underscores the urgency with which policymakers should address illicit financial flows.” Moreover, the US$946.7 billion that flowed illicitly out of developing countries in 2011 was approximately 10 times the US$93.8 billion [XLS | 49 KB] of net official development assistance (ODA) that went into these specific 150 developing countries that year. This means that for every US$1 in economic development assistance going into a developing country, roughly US$10 of capital are lost via illicit outflows. “Illicit financial flows have major consequences for developing economies,” explained Mr. LeBlanc, the co-author of the report. “Poor countries hemorrhaged nearly a trillion dollars from their economies in 2011 that could have been invested in local businesses, healthcare, education, or infrastructure. This is nearly a trillion dollars that could have been used to help pull people out of poverty and save lives. Without concrete action, the drain on the developing world is only going to grow larger.”

Dr. Kar and Mr. LeBlanc’s research tracks the amount of illegal capital flowing out of 150 different developing countries over the 10-year period from 2002 through 2011, and it ranks the countries by the volume of illicit outflows. According to the report, the 25 biggest exporters of illicit financial flows over the decade are: 1. China ...................................................US$107.56 billion average ($1.08 trillion cumulative) 2. Russia ..................................................US$88.10 billion avg. ($880.96 billion cum.) 3. Mexico ................................................US$46.19 billion avg. ($461.86 billion cum.) 4. Malaysia ..............................................US$37.04 billion avg. ($370.38 billion cum.) 5. India ....................................................US$34.39 billion avg. ($343.93 billion cum.) 6. Saudi Arabia ........................................US$26.64 billion avg. ($266.43 billion cum.) 7. Brazil ..................................................US$19.27 billion avg. ($192.69 billion cum.) 8. Indonesia .............................................US$18.18 billion avg. ($181.83 billion cum.) 9. Iraq ......................................................US$15.76 billion avg. ($78.79 billion cum.)1 10. Nigeria...............................................US$14.23 billion avg. ($142.27 billion cum.) 11. Thailand.............................................US$14.09 billion avg. ($140.88 billion cum.) 12. United Arab Emirates ........................US$11.46 billion avg. ($114.64 billion cum.)2 13. South Africa ......................................US$10.07 billion avg. ($100.73 billion cum.) 14. Philippines.........................................US$8.89 billion avg. ($88.87 billion cum.) 15. Costa Rica .........................................US$8.06 billion avg. ($80.65 billion cum.) 16. Belarus .............................................US$7.51 billion avg. ($75.09 billion cum.) 17. Qatar..................................................US$6.28 billion avg. ($62.82 billion cum.)2 18. Poland ...............................................US$4.94 billion avg. ($49.39 billion cum.) 19. Serbia ................................................US$4.94 billion avg. ($49.37 billion cum.) 20. Chile ..................................................US$4.52 billion avg. ($45.20 billion cum.) 21. Paraguay............................................US$4.01 billion avg. ($40.12 billion cum.) 22. Venezuela ..........................................US$3.90 billion avg. ($38.97 billion cum.) 23. Brunei ...............................................US$3.84 billion avg. ($38.37 billion cum.)2 24. Panama ..............................................US$3.81 billion avg. ($38.09 billion cum.) 25. Turkey ..............................................US$3.73 billion avg. ($37.28 billion cum.)

PUBLICITY caucasian business week

December 30, 2013 #36

TBILISI GUIDE December 30, 2013 #36

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 30, 2013 #36