Caucasian Business Week #39 by Caucasian Business Week

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BUSINESS WEEK January 27, 2014 #39

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January 27, 2014, Issue 39

GEORGIA

AUSTRIAN BUSINESSMEN ARE INTERESTED IN INVESTING IN GEORGIA

epresentatives of Austrian company PRESSBURG PARTNERS are having a business visit in Georgia. Pg. 7

caucasian1 Bidzina Ivanishvili Sets up NGO

BE INFORMED, DO BUSINESS

GEORGIAN PRIME MINISTER INTRODUCES GEORGIA’S INVESTMENT POTENTIAL AT DAVOS FORUM

Pg. 5

David Onoprishvili: In Mid-February, the National Currency will Stabilize within 1.7 and 1.8 GEL Kakha Bendukidze does not Expect Hike in Inflation Rate

ENERGY MINISTER UNVILES LARSI HPP

inister of Energy Kakha Kaladze opened Larsi-hesi on Friday in Kazbegi settlement. Installed capacity of Larsi-hesi is 19 MW, annual output - 100 million KW/hour; new hydro power station is a derivation kind. Pg. 5

CONSTRUCTION OF KHUDONI HPP WILL NOT CREATE AN ENVIRONMENTAL CATASTROPHE FOR SVANETI!

Pg. 4

ebates are still going on around construction of Khudoni HPP. Various comments are frequently made in social networks, TV or newspapers. Pg. 6

IN 2013 PROFIT OF BANKING SECTOR TRIPLED

anking sector completed 2013 with 397,9 million GEL net profit (Q3 - 275 million, Q2 - 153 million, Q1 - 65,3 million GEL). IN 2012 net profit of this sector of the economy equaled to 134,2 million GEL. Respectively, the profit has tripled during a year. Pg. 7

AZERBAIJAN EBRD OKS LOAN FOR SHAH DENIZ DEVELOPMENT

he European Bank for Reconstruction and Development has approved a loan worth $200 million for Russia’s Lukoil Overseas Shah Deniz Ltd for financing the development of giant Shah Deniz gas condensate field located in Azerbaijan’s sector of the Caspian Sea. Pg. 9

Pg. 2

“YOUNG BARRISTERS” – FROM 22 RANKING COMPANIES, ONLY 7 SATISFIED THE REQUIREMENTS OF THE NEW LABOUR CODE AND 15 COMPANIES’ POSITION IS UNCLEAR

GO “Young Barristers” presented the results of implemented research: “Georgian ranking companies in the process of implementation of the new Labour Code’s standards”. Organization considered public’s high interest towards labour legislation alterations and

decided to monitor well-known Georgian companies. Taking into account the amendments, the purpose of the research was to make public the legal status of employees and employers, identify problems and submission of the existing gaps in the legislation and lobbying. Pg. 3

TBC BANK KEEPS TERRORIZING BUSINESS SECTOR

WB RECOMMENDS AZERBAIJAN’S FINANCIAL REPORTING TO CIS

he World Bank (WB) has recommended the Azerbaijani experience in financial reporting to Eastern Europe and the CIS countries, Azerbaijan’s Finance Ministry reported on January 21. Pg. 9

CIS UKRAINE UNREST SLAMS CURRENCY, RUSSIA’S $15BN AID CRUCIAL TO AVERT FURTHER COLLAPSE

points.

iolence on Kiev’s streets has sent the hryvnia to an almost 4-year low, with bond yields jumping 3 percentage Pg. 11

WORLD NEWS IMF WARNS ON EMERGING MARKET EXPOSURE TO CAPITAL FLIGHT

eaker emerging economies are exposed to sudden capital flight with the global economy staying on course to strengthen as expected this year, the International Monetary Fund said on Tuesday. Pg. 13

Pg. 4

Israeli Investments will Reach Peak in case of Agreement with Bank Sector and Co-Investment Fund

Pg. 2

Levan Pkhakadze: Business Sector will Have Better Positions in the Near Future Pg. 4 Each adolescent engaged in the project Take Care of Future represents an individual case kept open until the child becomes independent Pg. 5

Businessman Sews Lips at Whether TBC Bank Takes TBC Bank Head over Shevardnadze’s Stake Office in Goodwill Pg. 7 Pg. 7 EXPERTS APPLY TO PRIME MINISTER WITH REQUEST TO ESTABLISH STATE INVESTMENT COUNCIL Pg. 6

APG Georgia introduced an innovative product for Travel Agencies

Pg. 5

MAIN EVENTS caucasian business week

SAUDI ARABIA PRINCE TO MAKE INVESTMENTS IN GEORGIA

n January 23 Georgian Prime Minister Irakli Gharibashvili met with Saudi Arabia Prince Turki bin Faisal al-Saud in Davos. According to the Prime Minister’s press service, Saudi Arabia is ready to make investments in Georgia and this process will further advance Georgia’s state economy.

LAZARD MAY MAKE INVESTMENTS IN GEORGIAN ECONOMY

AZARD company is expected to enter Georgia and make investments in the Georgian economy. As part of the World Economic Forum (WEF), Georgian Prime Minister Irakli Gharibashvili met with LAZARD executive director Mattie Pigas. The sides discussed Georgia’s business environment. According to the Business Doing Account of the World Bank (WB) and the International Finance Corporation (IFC), Georgia ranks 8th among 189 countries in terms of Business Doing Simplicity. Georgia’s rating is close to those of the USA, Singapore, Denmark, Norway

and Great Britain. As a result of substantial reforms, Georgia offers liberal taxation system to investors: only six varieties of low-rate fixed taxes. The Georgian Prime Minister expressed his gratitude to LAZARD director for his interest in Georgia and expressed willingness to back LAZARD”s expected investments in Georgia. LAZARD is a leading independence finance and consulting and assets management company founded in 1848. The company operates in 40 cities in 26 countries. The company has head offices in New York, Paris and London. The company revenues marked 1971 million USD in 2012.

BLACKSTONE MAY PUT CAPITAL IN GEORGIA’S CO-INVESTMENT FUND

LACXKSTONE company is interested in making investments in Georgia. As part of the World Economic Forum (WEF), Georgian Prime Minister Irakli Gharibashvili met with BACLSTONE executive director Steven Schwartzman. The sides discussed business environment in Georgia and the Co-Investment Fund opportunities. The Fund was founded inn September 2013 by the initiative of the former Prime Minister Bidzina Ivanishvili and with the

support of international and domestic investors. The Co-Investment Fund’s budget is 6 billion USD. The Fund is to make investments in Georgia and develop the capital market. BLACKSTONE is the world’s leading company in the field of investments and consulting. The company head office is located in New York. The company was founded in 1985 by Steven Schwartzman and Peter Peterson. Thanks to investment mechanisms, the company management controls assets of 248 billion USD.

GHARIBASHVILI MEETS WITH LUKOIL FOUNDER IN DAVOS

rime Minister Garibashvili met with LUKOIL founder and executive director Vagit Alekperov during World Economic Forum. Prime Minister’s administration in-

forms that on the forum they talked about the vital importance of the foreign investments for Georgia economy. It was also noted that entrance of recognized and trustworthy companies in Georgia is one of the priorities of the government of Georgia, especially in the strategic sector such as logistic. During the visit in Davos meetings with the representatives of about 10 leading companies (LAZARD, TATA SONS LTD, EMAAR PROPERTIES, JUMEIRAH GROUP, BLACKSTONE GROUP, LAFARGE, AGILITY LOGISTICS, AGCO, ROYAL PHIPIPS, MOLLER MAERSK) are planned.

PM SETS UP WORKING GROUP TO IMPROVE INVESTMENT ENVIRONMENT

M sets up working group to improve investment environment The Prime Minister of Georgia has created a working group to improve the investment environment and investment legislation in the country. Irakli Garibashvii made this decision during the last session of the Economic Council at the Prime Minister’s Office. The working group is composed of: Advisor of Prime Minister on Economic Issues - Roman

Chkhenkeli, Deputy Head of the State Chancellery - Nino Kobakhidze and Parliamentary Secretary of Prime Minister - Shalva Tadumadze. Within a one month period, the group will develop an action plan including problem identification according to sectors. The second stage implies creating sectorial committees that will elaborate an action plan in detail, identify specific problems and present recommendations in relation to decision-making.

January 27, 2014 #39

PRIME MINISTER MEETS EBRD PRESIDENT

rime Minister meets EBRD President Prime Minister Irakli Gharibashvili has met with the President of the European Bank for Reconstruction and Development, Suma Chakrabarti. According to the PM’s press service, Gharibashvili thanked the EBRD President for cooperation

and noted the projects funded by EBRD play an important role in further development of Georgia. At the meeting the Georgian PM once again expressed readiness for the EBRD annual meeting, which will be an opportunity for attracting new investments to Georgia, to be held in Tbilisi in 2015.

ROYAL PHILIPS TO OPEN REGIONAL HEAD OFFICE IN GEORGIA

oyal Philips plans to open a regional head office in Georgia. The plans were unveiled by Philips director general Pieter Vueling after his meeting with Georgian Prime Minister Irakli Gharibashvili in Davos. The details will be agreed as part of the visit of Philips executive director Harry Hendrix on April 23 to April 25. The Georgian Prime Minister pledged to provide overall support to the company management in implementing the idea. Royal Philips known as Philips is a Dutch technological goods manufacturer with a head office

in Amsterdam. The company is one of the major electric appliances manufacturer in the world with about 121 000 workers in over 60 countries.

AUSTRIAN BUSINESSMEN ARE INTERESTED IN INVESTING IN GEORGIA

epresentatives of Austrian company PRESSBURG PARTNERS are having a business visit in Georgia. Executive director of Partnership Fund Irakli Kovzanadze met with businessmen: Florian Kneidiger, Rolf Teuer and Ben Sal-Reifforseidt on Thursday. Fund’s leadership introduced fund’s mission, working principles and priority sectors to the guests. “In addition to agriculture, industry and infrastructure, our interest sphere also includes energy. We are working on several large-scale projects in Georgia, among them: 210-MW Nenskra, 270-MW Oni and 230-MW thermal power stations projects”, - said deputy executive director of Partnership Fund Natia Turnava. Florian Kneidinger stated that they are interested in renewable energies.

“We are interested in implementation of 10-30 MW hydro energy projects and that’s why we are visiting Georgia, in order to study market and its opportunities on the place”, - Kneidinger stated and added that “Georgia is a very attractive country for investments for them”. It’s noteworthy that PRESSBURG PARTNERS invests in the renewable energy projects and consults the investors. The company successfully implements projects in various European countries, among them Romania, Spain and Slovakia.

ISRAELI INVESTMENTS WILL REACH PEAK IN CASE OF AGREEMENT WITH BANK SECTOR AND COINVESTMENT FUND

f a common language is found with Georgian banks and the Georgian Co-investment Fund [GCF], Israeli investments are expected to reach their peak in the current year – President of the Georgia- Israel Chamber of Business states. At the same time, Itsik Moshe does not specify what particular difficulties are created in the relationship with the banking sector. President of the Chamber notes that this year the main focus will be placed on 3 projects, in particular, “ Rixos” hotel and the number of rooms and other architectural details are currently being negotiated with the management of the hotel. Simultaneously, the construction of the most expensive boutique hotel in Tbilisi “Art Hotel” will start in April. The third project is a department store project. According to the Chamber of Business, a total of 100million will be invested in three projects.

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BUSINESS & ECONOMY January 27, 2014 #39

caucasian business week

“YOUNG BARRISTERS” – FROM 22 RANKING COMPANIES, ONLY 7 SATISFIED THE REQUIREMENTS OF THE NEW LABOUR CODE AND 15 COMPANIES’ POSITION IS UNCLEAR

uring the monitoring process the organization was guides by several principles to check the implementation of the new Labour Code’s standards by ranking Georgian companies, in particular: Companies participating in the research should be reliable and well-known to the public; Companies participating should not be from one field of market; and companies participating should have a large-scale payer status. Taking into account the database received from the Revenue Service of Georgia, the following 22 companies were selected: “Aldagi”, “Barambo”, “Elit Electronics”, “Gumbati Group”, “Caucasus Online”, “Casino Adjara”, “Coca-Cola Botllers Georgia”, “Magticom”, “Lomisi”, “Nikora”, “New Hospitals”, “Populi”, “ProCredit Bank”, “PSP Pharma”, TV company “Rustavi 2”, “Taglaura Management Company”, Tegeta Motors”, “Telasi”, “Wisol Petroleum Georgia”, “KazTransGas-Tbilisi”, “Georgian Post” and “Georgian Railway”. From selected 22 companies only 7 of them involved in the research, 12 companies did not participate for various reasons and 3 of them did not provide communication on the whole. Research revealed that after the amendments of the Labour Code companies: “Coca-Cola Botlers Georgia”, “Magticom”, “KazTransGas-Tbilisi”, “Georgian Post”, “New Hospitals”, Tegeta Motors” and “Gumbati Group” provided new labour agreements for employees and by December 2013 condition upgraded all existing labour contracts on the basis of the new Code. According to the results of research “Coca-Cola Bottlers Georgia” has renewed labour contract with 365 employees in company, “KazTransGas-Tbilisi” with 983 employees, “Gumbati Group” with 85 employees, “Tegeta Motors” with 780 employees, “New Hospitals” with 808 employees, according the “Georgian Post’s” information, since 1 September of 2013, they had renewed labor contract with all employees of the company and the “Magticom” noticed that “There are hundreds of employees in their company and the alterations in the Labor Code had not any influence over the number of employees”. Research revealed that the companies participating in the study signed 1 year contract with employees. Prior to the amendments to the Labour Code employees signed a 1 month contracts or 6 month contracts with probationary period. The organization expressed their desire to make a legal examination of labour contracts, but “New Hospitals” and “Gumbati Group” were the

only companies who had provided samples of new labor contracts. Other companies participating in the study had not produced the contract templates proving that it contains confidential content. Organization noticed that the companies participating in the research had not any legal obligation to participate in the research on issue: “Georgian ranking companies in the process of implementation of the new Labour Code’s standards”. But the companies that had not participated in the suggested initiative could not satisfy public’s high interest toward the amendments to the Labour Code. Despite of the publication of the research, organization takes into consideration the fact that, despite of alterations in the Labour Code, labor relation between employer and employee is still problematical in Georgia and the organization recommends the companies which were not participated and the citizens who are working in the companies listed above, taking into consideration the public’s and employees’ high interests and according to the principle of transparency the implementation of the following actions should take place: • Companies, which denied to take part in the research: “Georgian ranking companies in the process of implementation of the new Labour Code’s standarts”, ought to make ready the information, that was addressed to them on August 16, 2013 and have to publish it on their official websites till 10 February, 2014. • The organization, taking into consideration the high standart of confidence, is ready to meet and get acquinted with employees of the companies, in order to provide the reliable and unbiased information, about implementation of the new Labour Code and about the possitive and problematic sides of the work enviroment between employers and employees. • In case these companies would leave unattended monitoring of the issues raised by the organization to publicize in the proposed timing and format, the authors of the research will suggest that this companies have not implemented the regulations of the new Labour Code, and if so, this might become a subject of public discussion and consideration. The prepared document for future introduction will be sent to the executive and legislative branches of Georgia, also to other organizations and groups interested by the subject, in order to take into account companies’ conceptions and observations, while working on future improving of the Legal Code. The research was conducted from august 2013, to the end of December, 2013.

GOVERNMENT TO CREATE LIST OF STRATEGIC ASSETS Alienation of objects entered into the list to be subject to a special control

he Georgian government is working on the creation of the list of strategic objects. After the meeting of the Economic Council, government’s Parliamentary Secretary Shalva Tadumadze says that according to the law on the state property , state -owned property will be included in the list of a particularly important sites. He explains that the proposal does not apply to private legal entities and their relationship with the state is defined by the agreement which has been drawn up with them. According to the government’s parliamentary secretary, all strategic objects that are owned by the state will get into the list. The facilities that meet the abovementioned criteria will be revealed by a special working group. ”Georgian Railway”, TV tower and so on might be included in the list of strategic objects. Minister of Economy and Sustainable Development Giorgi

Kvirikashvili says that criteria will be defined taking into account threats faced by Georgia. “ We believe that there should be such a list. It is an international practice. In almost all countries there is a criteria when alienation of this or that object is subjected to a special control,”- Giorgi Kvirikashvili notes . Prime Minister Irakli Garibashvili came out with the initiative of the creation of a list of strategic sites at the meeting of the Economic Council.

MOST DEMANDET PROFESIONS IN GEORGIA, 2014

INTERVIEW caucasian business week

January 27, 2014 #39

DAVID ONOPRISHVILI: IN MID-FEBRUARY, THE NATIONAL CURRENCY WILL STABILIZE WITHIN 1.7 AND 1.8 GEL An interview with Chairman of the Budget and Finance Committee of the Parliament of Georgia DavidOnoprishvili

Dear Readers,

n two weeks time, the South Caucasus Infrastructure & New Energy Investment Summit will open its doors in Tbilisi. We kindly remind you and your colleagues to secure your places now as this event is generating an enormous interest from both the international and local/regional business community, so we expect to reach capacity soon. It will be the largest investors get together, bringing under one roof up to 250+ senior representatives, both local and international, keen to exchange ideas and to receive first hand information on the increasing potential of the Region. As Georgia is the organizing country this year, we will have the honor of welcoming the Keynote Addresses of both the Minister of Regional Development & Infrastructure and the Minister of Energy & Natural Resources. Opportunities for business development and investment are plentiful in the area of environmental infrastructure, construction, roads, railways and public transport, urban utilities, cleaning and waste recycling as well as of water supply and management. Other areas eyed up include terminals and warehousing, as South Caucasus is viewed as a transit corridor and an ideal regional transport and logistics hub. Equally importantly, the continuing growth will come from the booming alternative energy sector production and distribution ( hydro, wind, solar, etc. ) when Georgia, Azerbaijan and Armenia are positioning themselves as important players for export. Taking place in the brand new conference venue of Expo Georgia, this is a unique occasion for you to network with key government officials, projects owners, recognized large industry players and SMEs operating in the sector, contractors, consultants and other solution providers. Join the numerous attendees already registered and learn from the experiences of regional experts and their approaches, including best practices in project financing, PPP and execution as well as sustainability and green practices. Details on the agenda of this 2 day event, registration form and fees are available upon your written inquiry to : administration@euroconventionglobal.com Caucasus Business Week Readers benefit from a 20% discount on the registration fee. Just mention it when returning your registration form to the organizers. If you think your company would benefit from branding, exhibiting or having a speaking slot in the agenda, there are still limited possibilities; please ask for the corporate/sponsorship packages available. Just pick up the one you are interested in and I will personally be at your attention to guide you or for any further clarification and a tailored pricing, if needed. If you come from abroad, we recommend you to stay with our hotel partner, the Holiday Inn offering preferential rates for the accommodation of the Summit delegates. We will send you the booking document upon your registration to the Summit. Looking forward to hearing from you and to welcoming you in Tbilisi. With kind regards, Francis Smith Event Director Euroconvention Global Avenue du Pérou 84 1000 Brussels - Belgium

- How can you explain the further depreciation of GEL, and whether the Government intends to take any steps to stabilize it? - In this case, there are several factors with which thedepreciation of GEL is associated. In the past year the devaluation began as a result of the increasedfunding of investment projects, and significant amounts in GEL returned to the budget, the same happened in the consumer market. Furthermore, this process coincided with the traditional pre-New Year rise in imports, because of which GEL had a difficult period, and therefore, the growth of imports put additional pressure on the national currency. Another factor - is that during the year a significant amount of money has been taken from the country by the companies close to the former ruling party - so they tried to save their money , often earned by dishonest means. Thus, by the end of the year a volume of GEL exceeded amounts of foreign currency. In this situation, it would be a wrong decision to keep the national currency by any means; accordingly, we have not done this. In this situation the National Bank’s position that

inflation should not unduly grow is very important. At this stage, it is 2 %, while the budgeted are 5 %. This process cannot continue forever, and I want to reassure the population - if necessary, the National Bank has all the possibilities to control the situation. There is no reason to panic, it is a natural process. The current exchange rate of GEL is more corresponds to the state of the economy than it was in the past. - A few days ago the World Bank issued a forecast according to which, in 2014 the Georgian economy will grow by 6, 3 %. Do you agree with this assessment and what is the reason? - I’m not going to make predictions, as we reviewed the budget which provides for an increase of 5%. It is our approximate goal we strive for. If growth is above 5 % then it will be even better. We optimally planned budget for 2014, but if there is more investment, it is natural that growth will be higher than we expect. Let’s wait and see how things will be, we should not rush things. Since mid-February, the national currency will stabilize within about 1.7 and 1.8 GEL per dollar. There is no reason to panic, the process is fully controlled.

- There is still a lot of time until mid-February. Will the prices of basic goods grow during this period? - This is to be solved by the importers. If they make a wrong decision, they will suffer. So I would advise them to more closely monitor trends. Rise in prices will not happen immediately. Some products are made in Georgia, and the exchange ratewill not affect them.

“WISSOL GROUP”: BUSINESS SECTOR WILL HAVE BETTER POSITIONS IN THE NEAR FUTURE An interview with” Wissol Group’s” Vice President Levan Pkhakadze

- A few days ago, Prime Minister of Georgia met with representatives of the business. How acceptable are meetings in this format , isn’t there the moment of inconvenience that prevents entrepreneurs to talk openly about their problems? - The meeting was quite positive and frank. A frank discussion was held on all issues that concern Georgian business. Prime Minister gave us his vision of how the business should develop in the country. It is very important that according to him, this year will focus on agriculture. - It was announced about the creation of a working group upon the initiative of the head

of the government which will facilitate contacts between government and business. Who will be in this group, representatives of government or business? - Since the working group will be working throughout the issues of business and government, accordingly, the group should include both those and others. - Business ombudsman and tax ombudsman institution is functioning in the country, unless these structures cannot serve as the contact between business and government? - The meeting was attended by business ombudsman, but it is another institution which is mainly designed to protect the rights of individual businessmen. In this case, we say that there are many different initiatives, issues that relate to the business and they should be discussed together. Thus, these two structures do not interfere with each other. - Reporters learned that the issue of monopoly on the Georgian market was raised. What topics discussed at this meeting were the most important? - Several sectoral issues were discussed, but the

main issues related to agriculture. Businessmen informed the Prime Minister about the challenges in this industry. Grain growing issue as well as bread production were also considered, etc. In general, the main topic was agriculture and local production. - As far as we know, the government is working on a strategy of economic development. If you discussed this document? - Basic signal received from the Prime Minister is just that business will have freer climate for doing business. In addition, there should be more communication between government and business. About strategy, it will be calculated for the period up to 2020 , and work on it will be completed soon. All this gives guarantee that tomorrow will be better than yesterday, both for business and for the country as a whole. - Whether or not it is planned to hold such meetings in the future? - Prime Minister expressed the desire to hold such meetings more often. Dates were not specified, but probably a similar meeting will be held in the near future.

KAKHA BENDUKIDZE DOES NOT EXPECT HIKE IN INFLATION RATE

ue to the depreciation of the lari, prices for certain types of products are likely to hike, for example, for medicine, and it is certainly a very bad moment, “ - “Free University “ founder Kakha Bendukidze states. According to him, some of the legislative initiatives of the government have had negative effects on the economy, and talk about the fact that inflation will contribute to the development, can only come from those who remained at the level of the 20th century. “I cannot imagine any serious economist who believes that inflation promotes economic development , it’s just a fairy tale having no economic basis,” - he says. In Bendukidze’s words, depreciation of GEL is a very bad moment , but in this case more fundamental solutions should be taken. “Thanks to the reforms carried out since 2004, we got the economy which in a sense can be compared to a car which was referred to the legacy of the cur-

rent government . After the elections, a new driver who had two choices sat in the car - to continue to go normally or try to remake it. One of the problems that hampered the development of economy was a fact that instead of going in a working car, a driver began to remake it spontaneously and stupidly. In particular, the laws that didn’t develop business and had only negative consequences were adopted, “ - Bendukidze notes. In his opinion, a 3% economic growth cannot be considered a success for Georgia - it could be a success in the United States or Switzerland, where due to higher economic development growth rate is always lower. “Too often remaking of a car does not increase the level of investor confidence, moreover, it generates an indefinite feeling, as they are very sensitive people and they have a large choice of where to invest.In general, legislative activity should be strictly limited, and must be under Prime Minister’s control, otherwise, we’ll get chaos,” - Kakha Bendukidze notes.

“As for inflation, I do not expect any special problems. Of course, prices for certain types of goods will hike, for example for drugs, but overall inflation will be at a normal level provided that the government will finally stop to mindlessly remake a car. In this situation, our economy has a chance to progress, “ - “ Free University “ founder says.

BUSINESS January 27, 2014 #39

caucasian business week

EACH ADOLESCENT ENGAGED IN THE PROJECT TAKE BIDZINA CARE OF FUTURE REPRESENTS AN INDIVIDUAL CASE IVANISHVILI SETS KEPT OPEN UNTIL THE CHILD BECOMES INDEPENDENT UP NGO

t has been the third year the Natakhtari Fund implements the project Take Care of Future, assisting children deprived of parental care and allowing them to get integrated into the society and be prepared for an independent life. In addition, the project aims to offer supporting services to children and equip them with certain working skills. So far special services and assistance within the project framework were provided to over 224 inmates (orphans and children deprived of care) of small family-type homes and large institutions. Each year, during the period from November to February certain amount from each sold bottle is transferred to the Fund. Transferred amounts are 1, 3 and 5 Tetri in accordance with the bottle volume 0.33 L, 0.5L, 1L and 2L. The project is being implemented by Association My House – Georgia (NGO), a Partner of Natakhtari Fund. More than GEL 240,000 got collected during two years and this amount was used for preparing kids deprived of care to face independent life. Each adolescent engaged in the project represents an individual case kept open until the child becomes independent. Some stories of project participants are presented below: NANA N. 18 Nana’s father always used to tell her that she should become a good and exemplary girl, but he could not

take part in her up bringing. When the time came to commence an independent life, the Father was still unable to assist Nana. However, she always hoped and believed that after leaving the family-type home she would move to live with her father… Until Nana’s father is able to directly assist his daughter, Natakhtari Fund is providing her with rent and allowance. Nana graduated from the school and was the most beautiful girl at the graduation party… She also was accompanied by the senior supporter like her peers, it was a psychologist of Natakhtari Fund and Association My House – Georgia… With active support of the psychologist Nana got employed and acquired friends who helped her in furnishing her small room. New friends turned out to be students who organized a special campaign for supporting Nana. During the first days of her independent life Nana was frightened and confused. Now she has an apartment, job, friends and supporting professional psychologist who is going to assist her until she gets really independent. GIORGI D. 19 Giorgi, like many of his inmates, used to live in a small family-type home where he had an excellent teacher. Giorgi, with active support of the teacher and psychologist of Association My House – Georgia, got involved in the project Take Care of Future financed by Natakhtari Fund. He

graduated from a college, acquired occupation, got employed in the company Nutcracker and started to attend Auto School Lessons… Time came when Giorgi had to leave the small familytype home and start an independent life. At that time his mother could not help him, on the contrary, she needed assistance due to her health problems. Giorgi rented an apartment with Natakhtari Fund’s help, received allowance and took the responsibility to run his small family. The case was closed, since the Coordinating Board of Experts of the Association My House – Georgia and Natakhtari Fund Decided that Giorgi was ready for independent life. As a result of consistent work of the psychologist and a teacher Giorgi acquired the skills needed for independent life: effective communication skills, ability to take the responsibility and manage his own emotions, confidence and grown self-esteem… Now he is in military service fulfilling his duty. DATO G. 21 Dato got 18, he had to leave the big children’s home and found himself in the street with no home, no family, no relatives. Two years of hard life were sufficient to make him think that nothing would change in his life and give up his fight for better life. This is a logical outcome of years spent in children’s home and life he went through thereafter. Dato was already of full age when he got discovered by psychologist of Natakhtari Fund and Association My House – Georgia. The psychologist talked to him and notified him about the new project. It was not easy to convince him… Dato, with active support of the psychologist, started trainings in various subjects. He found an apartment with Natakhtari’s assistance and received allowance. The psychologist organized a training for him in cooking and assisted him to acquire the other essential skills. Now Dato is a student. He is still fighting with a despair in his heart, but now he has the aim in his life and psychologist’s permanent help assists him in overcoming the past experiences.

ormer Prime Minister Bidzina Ivanishvili founded a new non-profit organization Citizen, which will guide by himself. According to press release of the organization aim of the NGO is strengthening of civil sector in Georgia. The founder will talk about vision and aims on January 28, on the meeting with Georgian and international media representatives. According to Public Registry, Citizens is a noncommercial legal entity and Bidzina Ivanishvili is its chairman, George Sabanadze - executive director.

ENERGY MINISTER UNVILES LARSI HPP

inister of Energy Kakha Kaladze opened Larsi-hesi on Friday in Kazbegi settlement. Installed capacity of Larsihesi is 19 MW, annual output - 100 million KW/hour; new hydro power station is a derivation kind. Company Peri started construction of Larsi-hesi on the River Tergi, Kazbegi settlement in 2011. $20 million was invested in the construction. 150 persons were employed during the construction and major part of them was locals. After the power station is launched, 40 permanent jobs will be created on the object. To operate the power station, the company constructed 110 KW substations, which will connect electro station to the central energy system. Total electricity produced by Larsi-hesi will be supplied to the energy system. Minsiter of Finance Nodar Khaduri and Minsiter of Regional Development and Infrastructure David Narmania, also representatives od the power station developer company attended the opening ceremony of the hydro power station.

APG GEORGIA INTRODUCED AN INNOVATIVE PRODUCT FOR TRAVEL AGENCIES

PG Georgia introduced an innovative product APG IET for Travel Agencies. APG is the leading network for airline commercial and distribution services. APG serves up to 390 airlines worldwide. As the company management explains, by using new service of APG IET, Travel Agencies will be able to issue e-tickets of more than 90 airlines which are not operating in Georgia, and are not member of local BSP. APG IET is an interline e-ticketing platform developed in partnership with Heli Air Monaco (airline code: YO). “Interlining” is an agreement between airlines to handle passengers travelling on a multi-airline itinerary. Airlines that participate in the APG IET program are able to be ticketed and interlined in 83 BSPs around the world and ARC in the United States. - The head of APG Georgia Iako Khomeriki said. As the company management states, using APG IET gives the opportunity to issue e-ticket on YO ticket stock with any GDS in the world or with-

out it. Within the APG IET program, payments can be made via any kind of Credit Card valid on local market. “APG Georgia was established in 2012 in Tbilisi. It intends to assist Airline Industry development in Georgia. Our company offers airline companies and airline agencies various innovative products. APG offers wide range of products and minimizes administrative expenses by working with one partner” –Iako Khomeriki said. As the company management informs that APG Georgia is the General Sales Agent of such companies on Georgian market as Heli Air Monaco, Egyptair, Estonian Air, and British Airways World Cargo. Also, under the IBSC program APG Georgia serves airline companies like - UTair, Arkia Israeli Airlines, Air Onix, and Heli Air Monaco. The presentation of new service was held on January 20. Presentation of APGIET has launched its Executive Product Director Mrs. Ophelie Cherdrong from APG Paris. The evening was attended by representatives from 120 travel companies.

HPP caucasian business week

January 27, 2014 #39

REJECTING KHUDONI CONSTRUCTION IS EQUAL TO TREASON Decent People live in Svaneti and they eventually will arrive at a reasonable decision

Public opinion about construction of Khudoni PPT is different. Representatives of the country’s government, non-governmental agencies, experts and population have dramatically different attitudes. However, all of them agree that construction of Khudoni HPP implies economic development and is going to ensure country’s energy independence. As regards project-related issues, namely resettlement and ecology they still remain disputable. Economic experts think that the Project, in addition to economic benefits, will be a guarantee for Georgia’s security and reliability. We interviewed Mr. Solomon Pavliashvili, Full Professor of the Technical University and Economic Expert, who evaluated country’s energy position in detail, explained where he sees the way out and what will be benefits of the construction for Georgia’s economy.

- How do you assess the situation with respect to energy independence, how secured is the country in this regard? - The reality is that Georgia has neither energy resources nor energy independence. We meet only 25 - 30% of local consumption. All those processes that in this regard take place in the region are directly reflected on our energy carriers. The only way for improving the situation is development of hydro energy. This will allow us to reduce the level of external dependence. Khudoni HPP is the most efficient project, rejecting its construction equals treason. Georgian interests shall not be sacrificed for emotions of certain interested groups. Khudoni HPP does not have only energy impor-

tance. It also covers various issues such as investments, rise in GEL rate and etc. which finally will contribute to economic development. At certain extent it represents a guarantee for the country’s security and reliability. - In 80s of the last century Khudoni HPP construction campaign was actively being conducted. During the post-revolution period this issue was raised again and Zurab Zhvania was supporting this project. What has changed since then and what is the public opinion nowadays about this subject? - In 80s Khudoni HPP construction project was provoked by the national movement. This issue was being addressed without reviewing economic aspects. It happens this way, public opinion does not get used to unpopular decisions, which in the long run may turn out to be beneficial for the country. At that time we were not ready for such a grand construction and there were no resources available

either. In my opinion, if the construction started in the past it would not have been completed. - What is the public opinion about Khudoni HPP, what causes the most confusion among the population, perhaps the time has come that parties move from emotions to a dialogue? - Whatever the public opinions and attitudes are, the final decision is to be made by the government. It shall convince a large part of the population in significance of the project and take peoples’ opinion into account at maximum extent. Apart from the government, representatives of various organizations and structures having some relation with the project shall have to find common language with the local population. We cannot afford rejection of investments, since there is no other choice. The most significant issue is not to prejudice the national interests. - In your opinion, what is going to be the ben-

efit of Khudoni Construction for the Country’s economy, will it be a factor of country’s energy independence? - The final goal of Khudoni HPP construction will be energy independence. In addition, it is going to ensure employment of many people. In my opinion, in case of implementing the project the whole Georgia will get engaged in it, like Enguri HPP. Khudoni HP might not ensure energy independence completely but it is going to generate such volume of electricity that will equal to country’s salvation. To achieve this goal it is necessary to work with the Svaneti population. One part of the public states that Khudoni needs to constructed, while the other part is contradicting it. There are decent people living in Svaneti. In my opinion, they will arrive at a reasonable decision. The compensation needs to be allocated fairly so that some people do not start speculation with this topic.

CONSTRUCTION OF KHUDONI HPP WILL NOT CREATE AN ENVIRONMENTAL CATASTROPHE FOR SVANETI! Debates are still going on around construction of Khudoni HPP. Various comments are frequently made in social networks, TV or newspapers. Part of these comments are made by competent persons, while others belong to accidental people. Unfortunately, it should be noted that their comments are mostly illogical. Given the circumstance that a part of the population still does not have a correct information abour Khodoni HPP’s benefits, comments like “Svaneti will get flooded”, “Svaneti will submerge into the water!”, “Khudoni Construction will entail earthquake!” and etc. were quite many. The issue how dangerous is Khudoni construction from the seismic point of view was addressed in an interview with Doctor Nino Tsereteli, the Head of the Center for Seismic Threats and Multi-natural Disasters:

- When the first report was submitted on Khudoni HPP, which addressed evaluation of seismic hazard it was reviewed in quite a loyal manner. We presented different opinions to Ministries of Economy, Energy, Environment and Transelektrika Construction Company. We substantiated that the seismic evaluation in (G’s) was quite low. Then we conducted new researches and provided a completely new evaluation of modern standards. We prepared an opinion, that if our assessments were taken into account the seismic problems would not exist in the construction. - How unstable is the zone where Khudoni is to be constructed? - This zone is active in the seismic perspective, however if the seismic potential that we assessed is considered the problem will not emerge. In the event our assessment is not considered the problem may arise. - What would be an expected magnitude of the earthquake at the hydro dam construction site?

- Our comments are made for earthquake with the magnitude of 9, but in this case the magnitude is not important. The key parameter is “G” which refers to soil acceleration. It is extremely important. We recommended twice as much high parameter than calculated. The calculated one was 0.38 while we gave 0.8G. - When was the last time the earthquake took place on this territory? - There were earthquakes during the past century in the whereabouts of Khaishi, they were not strong. There are historical data about earthquakes in the country. All of these are considered in the opinion we prepared. - What is the potential and what will be the level of energy independence brought by Khudoni HPP construction? - I am a seismic expert, but as a citizen I think that if the state is independent with its energy resources it has the greater chance of being independent politically. As regards the financial opinion, the economist’s opinion will be more competent for

this purpose. I do not have economic assessments but as a seismic expert I can say what I know for sure: if our comments are considered seismic risks will be mitigated. The threat of seismic risks does not exist currently. As regards the profit derived from the project, these figures need to be provided by economists, who could calculate construction value and received profit. However, I understand that energy independence is the way towards the country’s independence. - According to the available data Georgia uses only 11% of its hydro resources, while the same figure in Switzerland and Austria equals 90%. Also, according to the official data, Georgia has been the second in Europe by the volume of its hydro resources. There are 26 thousand rivers in the country. Given this figure, in your opinion, is the government or peoples’ behavior correct when they do not try to use these resources at maximum extent, while we do not have neither oil nor gas. - I, as a citizen, think that if the country is going

to move to European standards many industries need to be developed and for this we need more electricity. Therefore, it is necessary to use our energy resources at maximum extent. This is necessary for the state and it is a very sound idea. Though the project is to be implemented with comprehensive examination and involvement of professionals. - There is a very important issue reviewed by the community that in case of HPP construction Svaneti will get flooded, the background for region destruction is created. How dangerous is construction of this hydro dam? - If construction is conducted in a qualified and professional manner and all those seismic, environmental or geological evaluations are considered no ecological catastrophe will be faced by Svaneti. One village where the dam itself is to be placed will get flooded undoubtedly, but here we have the interests of one village versus the country’s interests, which in my, as one citizen’s opinion, shall prevail.

EXPERTS APPLY TO PRIME MINISTER WITH REQUEST TO ESTABLISH STATE INVESTMENT COUNCIL

xperts Levan Kalandadze, Irakli Leqvinadze, Levan Alaphishvili and Giorgi Abashishvili deem that large investment projects should not be left in the hands of ministries and governmental agencies only. As experts explained at today’s joint meeting, one of the major preconditions for public and economic development is growth of foreign direct investments (FDI) and implementation of large strategic infrastructure especially energy projects. Levan Kalandadze, an Economic Expert explains that in the light of current economic events part of experts decided to apply to the Prime Minister to undertake certain measures to optimize investment policy in the country and implement result-oriented positive actions. “We came up with the initiative to establish State Investment Council for managing strategic investment projects, it will be chaired by the Prime Minister and staffed by all ministers. In our opinion, such important and large investment projects at this stage cannot

be left only in the hands of ministries and government agencies. Given the current situation, that there is a transitional period in the country, the systems are not finalized and their effective work raises many questions. We would like to have a better situation in this regard and think that such a format can be that optimum one bringing better results. There are several projects being implemented in the country, however due to technical or uncoordinated

work, these projects are suspended at the time when we say that the main priority for the country is lack of investments. In the event of inefficient implementation of investment policy, if we are unable to ensure high volume of investments, this will significantly impede economic development of the country and affect its stability”- said Levan Kalandadze. Levan Alaphishvili, an Expert, deems that activities of ministries and the other public institutions

require significant improvement. Low level of coordination of public institutions, inefficiency of decisions, the problem of making decision and taking responsibility create efficiencies on which making decisions will be impossible in the future. According to Irakli Leqvnadze, an Expert, if the State Investment Council is established at the level of the Prime Minister then the Council has to make decisions not only on expediency of large investment projects, but also on implementing such projects by public institutions without delay. “This issue acquired importance due to the situation which exists with respect to investors, especially regarding large infrastructural projects, when series of decisions which should be facilitating investment activities are delayed due to record-keeping processes in various ministries. Also there are contradictory statements being made through media, which create certain vagueness among investors. Therefore, in our opinion, the Investment Council will be the body making general decisions”- said Leqvinadze.

BANKING NEWS January 27, 2014 #39

caucasian business week

BASISBANK ENDS THE YEAR OF 2013 IN 10.697 MILLION GEL PROFITS

SC Basis Bank completed 2013 with 10,697 million GEL profit (1k3 million GEL in 2012). By the end 2013 clients’ deposits equaled to 231,3 million GEL (01/01/13 - 115 million GEL), credit portfolio - 190 million GEL (01/01/13- 97,6 million GEL). Annual growth of deposits equaled to 101%, loans 0 95%. Overall obligations are 298,4 million GEL Actives have increased by 108%, to 414,9 million GEL (01/01/13-199,9 million GEL).

Bank’s incomes equal to 34,5 million GEL, spending - 19,8 million GEL (01/01/13 -19,6 million; 16,8 million). Basis bank operates since 1993. European Bank for Reconstruction and Development (EBRD) is its stockholder since May 2008 (15%). Large Chinese company Xinjiang Hualing Industry & Trade (Group) Co ltd became owner of Basis Bank in 2012; 95,6% of the stocks belongs to it. Stock capital of the bank equals to 116,528 million GEL (01/01/13- 51,6 million GEL).

GVASALIA EXPECTS FINANCE MINISTRY INITIATIVE TO INCREASE LONG-TERM LOANS PORTFOLIO

inistry of Finance will place 33% of the loans got from commercial banks for the state obligations on the deposit accounts of the commercial banks. 200 million GEL out of 600 million will be deposited in the banks and rate of the Ministry of Finance will equal to the interest rate of the sold securities +1%. Banks Association president Zurab Gvasalia states that it will stimulate long-term lending of the banks. Gvasalia calls it

unprecedented, as he does not remember any instruments of this kind, when the state supported the sector. IN fact, the banks get loan from the government for 1% interest rate. As the banker’s evaluate, allocation of this resource is importance, as it enables banks to issue loans to the companies in GEL. Respectively, the companies will be able to insure currency risks. In addition to 2-5 years state obligations of 600 million GEL, this year Ministry of Finance also plans to emit 2-year state obligations of the same amount.

WHETHER TBC BANK TAKES OVER SHEVARDNADZE’S STAKE IN GOODWILL

n several days the developments around Goodwill will reach the decisive phase and creditors will elect a rehabilitation manager. It is upon the assembly of creditors to appoint a rehabilitation manager and TBC Bank as a major creditor pays a decisive role in this process. Under the legislation, the rehabilitation manager should be an independent, unbiased person that will balance the situation between the company and creditors. At the same time, Goodwill says there is hazard that the rehabilitation manager be granted exaggerated rights. If the decision is taken, Goodwill will indirectly move to the management of TBC Bank. The same situation emerged in 2013 too,

when Goodwill movable and unmovable property was handed over to TBC Bank at discounted prices. “I am afraid if the rehabilitation manager is granted the Goodwill management and representative rights, under the legislation, creditors are able to supervise the rehabilitation manager activities. Therefore, the rehabilitation manager is expected to serve the interest of TBC Bank as a major creditor. In the end Goodwill may be led to bankruptcy so as TBC Bank appropriate the stake of Gogi Shevardnadze. It should be also noted TBC Bank has already sued Goodwill founder Giorgi Shevardnadze and imposed arrest on his stake in LLC Goodwill”, the Goodwill management says.

BANK SECTOR’S CREDIT PORTFOLIO CONSTITUTES 10 BILLION USD BUSINESSMAN SEWS LIPS AT TBC IN 2013 n the total portfolio of the banks, share During a year slowdown of the inactive loans BANK HEAD OFFICE of problem loans has reduced. By Janu- growth was mentioned, by the end of the year it

ary 1, 2014 this data equaled to 7,5%. In the same period of last year it equaled to 9,3%. According to statistic of National Bank of Georgia (NBG), amount of the problem loans (non-standard, dubious, hopeless) equals to 791 million GEL (01/01/13 -810 million).

started to reduce and has declined buy 19 million. Annual growth of the total loan portfolio equals to 21%. Cumulative credit portfolio of 21 banks equals to 10,6 billion GEL by January 1, 2014 (01/01/13 -8,7 billion).

BANK SECTOR’S PROFITS TRIPLE IN 2013

anking sector completed 2013 with 397,9 million GEL net profit (Q3 275 million, Q2 - 153 million, Q1 - 65,3 million GEL). IN 2012 net profit of this sector of the economy equaled to 134,2 million GEL. Respectively, the profit has tripled during a year. Last year 16 banks were profitable, other 5 had loss. 13 banks were profitable in the same period 2012. For the reporting period own capital of the

banking sector (stock capital) equals to 2,916 billion GEL (01/01/13-2,390 billion GEL). Supervision capital equals to 2,951 billion GEL (01/01/13- 2,534 billion GEL), capital adequacy coefficient - 17,2% (01/01/13-17%). For the reporting period Return ON Equity (ROE) is 14,9%, Return on Actives (ROA) 2,1% (01/01/13 - respectively 5,8%, 1%). Consolidated data includes results of 21 commercial banks.

STATE AID WILL ACCRUE TO THE FARMERS ON AGRO-CARDS OF LIBERTY BANK

irector general of the bank George Arveladze and director of Agricultural Projects Management George Chkeidze signed the agreement. 800 000 farmers are involved in the state program for small-land farmers assistant. This year residents of the villages adjacent to Tbilisi and Batumi are also able to get involved in the program. The beneficiaries will get the cards for free; spending of the state subsidy will be possible at the merchants who are involved in the projects. Agro-card is a modern, contactless card with

multi=currency account and additional benefits: it’s for 10 years term; GEL-denominated deposits (except subsidy points) get 5-10% interest rate; cardholders will be involved in the loyalty program of Liberty Bank and will enjoy with 1050% discounts in over 100 trade objects (their list is available on www.cheap.ge); farmers can manage account by mobile phone, will pay communal taxes with preferential fee. Liberty Bank serves to 1.4 million individuals and about 70 000 legal entities through 565 branches and service centers (among them mobile service centers).

PROGRESS BANK PROFITS IN 2013 MARKED 133 242 GEL

SC Progress Bank completed 2013 with 133 242 GEL profit (1,5 million GEL net profit in 2012). BY January 1 deposit portfolio (nonbanking) equals to 36,3 million GEL (01/01/13 - 4,053 million GEL), loans - 37 million GEL (01/01/13- 16 million GEL). Deposits

have increased by 9 times during a year; annual growth of the loans is 131%. Overall obligations of the bank equal to 39,9 million GEL (01/01/13 - 5,5 million GEL). 78% of the bank’s stocks belong to Kakha Kaladze, 22% - to Bidzina Ivanishvili. Stock capital of the bank equals to 15,3 million GEL.

usinessman Zaza Zakareishvili has sewn his lips to express his protests against TBC Bank. The businessmen took action in front of the TBC Bank head office on Marjanishvili Street in Tbilisi. The businessman’s relatives were also assembled on the spot, as well as TBC Bank representatives, who were trying to persuade Zakareishvili to resolve the issue by negotiations. Businessman Zaza Zakareishvili had borrowed a loan of 430 000 USD with a maturity period of 10 years, but his defense lawyer says later TBC Bank shrank the maturity period to 5 years. Defense lawyer Irakli Zakareishvili says the businessman has to pay only 260 000 USD from the

loan. Moreover, Zaza Zakareishvili demands that the mortgaged property of about 0.5 million USD be freed. The defense lawyer asserts the bank is not interested that the businessmen pay off the loan. The bank is interested in appropriating the property, he said. TBC Bank has already released a special statement over the issue: “We are ready to satisfy his demands if he puts forward unbiased and substantiated pretences. If his pretences are found ungrounded, the bank cannot satisfy these demands. Unfortunately, the borrower refused our two-hour requests for meeting and discussing the issue in details and he preferred to stay in the street to draw public interest”, the statement reads.

INVESTBANK LOSSES MADE UP 2.9 MILLION GEL IN 2013

SC Invest Bank completed 2013 with 2.9 million GEL loss. In 2012 the bank’s profit equaled to 3,3 million GEL (2011 loss: 0,8 million GEL). By January 1, 2014 deposits (without banks’ deposits) equal to 11 million GEL (01/01/13-15,9 million GEL), credit portfolio - 9 million GEL (01/01/13-6,9 million GEL). Loan portfolio has increased by 30%, overall obligations equal to 24 million GEL (01/01/13- 17 million GEL).

Actives are 24 million GEL (01/01/13 - 32,3 million GEL). InvestBank operates since 2003. 70% of the bank’s stocks belong to Law Company Dimitry Alexidze and Vladimer Gabrielashvili, 30% - to TRENDFOR HOLDING LTD. Gabrielashvili and Alexidze own 35-35% of the stocks, Brenda Patricia Cocksage - 30%. Stock capital of the bank exceeds to 12 million GEL (01/01/13 -15,3 million GEL).

CARTU BANK PROFITS MADE UP 67.9 MILLION GEL IN 2013

SC Cartu Bank completed 2013 with 67,9 million GEL net profit (57,3 million GEL loss in 2012). By January 1, 2014 deposit portfolio equals to 179,871 million GEL (01/01/13- 67,6 million GEL), loans - 402,3 million GEL (01/01/13- 260,5 million GEL). Respectively, annual 166% and 54% growth can be noticed. Overall obligations are 344 million GEL (01/01/13-260,2 million GEL). Bank’s actives equal to 545,3 million GEL (01/01/13 -372 million GEL). Actives have increased by 47%. Bank Carty is founded by Bidzina Ivanishvili and operates since 1998. Its owner is a son of founder

Uta Ivanishvili. Stock capital of the bank is 201,3 million GEL (01/01/12- 111,8 million GEL).

STATISTICS caucasian business week

January 27, 2014 #39

AZERBAIJAN January 27, 2014 #39

caucasian business week

WB RECOMMENDS AZERBAIJAN’S FINANCIAL REPORTING TO CIS

he World Bank (WB) has recommended the Azerbaijani experience in financial reporting to Eastern Europe and the CIS countries, Azerbaijan’s Finance Ministry reported on

January 21. This was announced at the “Professional Accounting Education Community of practice” workshop organized by the WB Centre for Financial Reporting Reform (CFFR) in Vienna on January 16-17. Director of the Ministry’s Project Implementation Unit Fuad Nasirov and director of the Financial Scientific and Education Center Elman Huseynov have participated at the workshops.

Senior Advisor of the World Bank Center for Financial Reporting Reform Alexander Fawcett and Nasirov made presentation on “Azerbaijan - establishment of new qualifications in accounting: challenges and opportunities”. The experience gained and the advantages of the hybrid qualifications model created within the Corporate and Public Sector Accountability Project were touched in the presentation. Fawcett recommended applying the experience gained in Azerbaijan in Eastern European and CIS countries. The bank has supported a number of the project in Azerbaijan and financed over 50 projects worth more than $3 billion after the country joined it in 1992.

EBRD OKS LOAN FOR SHAH DENIZ DEVELOPMENT

he European Bank for Reconstruction and Development (EBRD) has approved a loan worth $200 million for Russia’s Lukoil Overseas Shah Deniz Ltd for financing the development of giant Shah Deniz gas condensate field located in Azerbaijan’s sector of the Caspian Sea. The loan was approved by the Board on January 15, the EBRD said on January 22. The proposed financing is a pre-planned increase to the existing exposure of the bank to the Lukoil Overseas Shah Deniz Ltd relating to the development of the off-shore Shah Deniz gas and condensate field in Azerbaijan. Financing is sought for the first stage extension of field development and implementation of the more advanced technologies, including the existing terminal and platform. The total cost of expenditures on the first stage of the Shah Deniz field development project is estimated at $2.128 billion. Lukoil’s share in the projects will amount to $212.8 million. Lukoil Overseas Shah Deniz Ltd is a 100-percent daughter company of Lukoil Overseas, a holding company that manages Lukoil’s participation

in exploration and production projects outside Russia. Lukoil holds a ten-percent interest in the Shah Deniz development project. The Shah Deniz field was discovered in 1999. It is one of the world’s largest gas-condensate fields. The reserves are estimated at 1.2 trillion cubic meters of gas. The Shah Deniz Stage 1 was launched in 2006. It has the capacity to produce about 9 billion cubic meters of gas per year and approximately 50,000 barrels a day of condensate. Shah Deniz is operated by the London-based BP. The partners include SOCAR, Statoil, Total, Lukoil, NICO and TPAO. BP and Shah Deniz partners have invested $6 billion in Shah Deniz Stage 1 up to date. 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 percent 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.

AZERBAIJAN UPS POWER EXPORT IN 2013

zerbaijan exported over 595.67 million kilowatt/hours electricity in 2013 on customs declaration compared to 482.7 million kilowatt/hours in 2012, Azerbaijan’s

State Customs Committee reported. Azerbaijan exported electricity totaling $24.85 million in 2013 compared to $24.76 million in 2012, the committee reported. Azerenergy JSC (engaged in the production and distribution of electricity in Azerbaijan) generated over 21.5 billion kilowatt / hours of electricity in 2013 compared to 21.3 billion kilowatt / hours in 2012. The capacity of power plants owned by Azerenergy JSC exceeds 6,000 megawatts. The JCS has over 200 substations with capacity of 500, 330, 220 and 110 kV / amp, as well as eight hydroelectric plants and 13 thermal power plants.

AZERBAIJAN TO CHAIR MEETING ON BROADBAND INTERNET CHALLENGES IN DAVOS

zerbaijan’s Communications and IT Minister Ali Abbasov will chair an extraordinary meeting on “Broadband Internet and sustainable development” in the frame of the World Economic Forum in Davos on January 24. The meeting will be organized by the broadband communication commission in the interests of digital development under the sponsorship of Azerbaijan, the ICT ministry said. The event is expected to discuss the current issues in the field of broadband Internet solutions, impact of broadband Internet on the social sphere, and further funding of broadband Internet development. Rwandan President Paul Kagame, European Commissioner for Digital Development Neely Kroes, Qatar’s ICT Minister Hessa Sultan AlJaber, Director General of the World Intellectual Property Organization Francis Gurry and other

representatives of organizations and UN officials will attend the meeting. Azerbaijan ranks first among the CIS countries in terms of Internet penetration among individual users, according to “State of Broadband Report 2013”. Azerbaijan ranks 66th out of 194 countries, with 54.2 percent of individual Internet users, according to the report. In 2013, Azerbaijan’s ICT sector grew by 14 percent, topping the average world indicator by almost two times. The country is expecting to be fully covered with a broadband Internet, including mobile access until the end of 2017.The cost of the project is estimated at more than 450 million manat ($573 million). The ultimate aim of the project is to provide the entire country including remote rural areas with high-speed Internet in a range of 10-100 Mbit / s and to bring the number of broadband Internet users up to 85 percent.

ANGLO-ASIAN MINING BOOSTS GOLD PRODUCTION

nglo-Asian Mining plc, which extracts precious metals in Azerbaijan, produced over 52,000 ounces of gold from the Gadabay mine complex in 2013, compared with 50,025 ounces in 2012. However, it was expected to produce about 60,000 ounce of gold in 2013. Anglo Asian CEO Reza Vaziri said, “Naturally we are disappointed to have missed our production target for the year due to unexpected weather conditions and processing issues in fourth quarter of 2013, especially given the successful commissioning of our new Agitation Leaching Plant in June 2013.” This, in tandem with the lower gold price, in particular during the second half, will see the cash cost per ounce increase and profitability for 2013 significantly reduced from 2012, he said. “Looking ahead, we are taking steps to ensure we maximise our output and efficiency for 2014 and beyond. We are committed to increasing Gadabay’s gold production by utilizing the Agitation Leaching Plant and aim to double production from the heap leaching operation through efficiencies,” Vaziri said. Additionally, the installation of a Knelson concentrator in the second quarter of 2014 is expected to enable isolation of copper sulphides that have been found to restrict gold recoveries in the agitation leach tanks during the latter part of 2013. The company also makes good progress on the development of the second mining project in Azerbaijan, Gosha, located 50 km away from Gadabay, with the prospect of gold production in 2014.

Earlier, Anglo-Asian Mining announced further positive exploration updates from new drilling undertaken north of Gadabay mine. Anglo-Asian Mining has also increased sales of gold. In 2013, the company sold 46,076 ounces of gold, while in 2012 the gold sales totaled 42,743 ounces. However, the gold was sold at a price of $1,387 per ounce, while in 2012 an average price was $1,660 per ounce. Anglo Asian Mining, a cash generative and profitable gold and copper mining and exploration company, started gold and silver production in May 2009 and copper concentrate production in 2010 at the Gadabay mine. The company has the rights to develop six deposits in the south-west of Azerbaijan - Gadabay, Ordubad, Gosha Bulag, Gyzyl Bulag, Vezhnali and Soyutlu, under a production sharing agreement signed in August 1997 with Azerbaijan’s government. The gold and silver produced there are sent to Switzerland for refining, and gold bars are delivered to the country and preserved by the government.

AZAL TO RECEIVE NEW AIRCRAFT IN 2014

zerbaijani Airlines, AZAL, will receive the first Boeing-787 Dreamliner aircraft in summer 2014, AZAL reported on January 17. This will allow performing flights over longer distances, particularly to the North and South America, Southeast Asia and other regions of the world. “It is expected that the second aircraft of this brand will be received in November, 2014,” the report reads. Moreover, AZAL received Embraer-190 aircraft in July, 2013, and expects to receive the two remaining Embraer soon. The Boeing 787 Dreamliner, a long-range, midsize wide-body, twin-engine jet airliner developed by Boeing Commercial Airplanes, is the company’s most fuel-efficient airliner, according to the company, and the world’s first major airliner to use composite materials as the primary material in the construction of its airframe.

The Boeing 787 has been designed to be 20 percent more fuel efficient, than the Boeing 767. The Dreamliner is able to place from 210 to 330 passengers. AZAL, being the biggest Azerbaijani airline and national flag carrier, and a regional and CIS leader in the number of new aircrafts, offers its passenger flights to European countries, the CIS, Middle East, and Asia. The company cooperates with about 60 airlines to provide its passengers with an opportunity to travel freely around the world. AZAL was certified by IATA Operational Safety Audit, a program that is an internationally recognized evaluation system designed to assess the operational management and control systems of an airline.

PUBLICITY caucasian business week

January 27, 2014 #39

CIS January 27, 2014 #39

caucasian business week

RUSSIA BREAKS INTO BLOOMBERG TOP 50 COUNTIES FOR BUSINESS

or the first time Russia has entered the top 50 in Bloomberg’s Best Countries for Business 2014 ranking at 43rd. It’s up 13 positions from last year primarily due to improved domestic consumption and WTO membership. Russia scored 61.6 out of 100, sharing the position with Oman, and in between Bulgaria and Panama. Russian Prime Minister Dmitry Medvedev called 43rd place “not strongly outstanding”, nevertheless recognized the rating promotion as “pleasant”, says the Kommersant daily newspaper. Bloomberg experts analyzed data from 157 countries. A similar Doing Business (DB) rating by the World Bank has Russia moving to 92nd place from 111th out of 189 countries. Unlike DB, the Bloomberg rating ranges countries not only by the costs of a specific business, but also by the macroeconomic situation, and global market involvement. Thus many parameters involving state regulation are united under

the general grouping of “less-tangible costs”, at 20 percent of the total score. This grouping is where Russia did worst. The criteria covered are the risks of corruption, the extent of protection of property rights, rates of inflation, tax loading and accounting adaptability, which gave it a rating second worst after India,. Russia got its highest score in the “degree of economic integration” criteria with 78 out of 100 points – comparable to the total score of the best ten countries. Number one in the ratings was Hong Kong, which took top spot last year as well, and it’s where there are the least number of restrictions on the movement of goods, and it’s the easiest to begin new business. Many developing countries, including Russia and China, entered the top 50, mainly due to an extensive consumer market, and also due to high level of economic integration, taking into account the WTO membership, low import tariffs and global market access.

KAZAKHSTAN TO CUT GDP ENERGY INTENSITY

azakhstan intends to decrease its GDP energy concentration by 10 percent by 2015, Director General of the KAZENERGY Association, Asset Magauov told Trend

Agency. “Kazakhstan intends to reduce its GDP energy intensity by 10 percent by 2015 and by 25 percent by 2020,” Magauov said commenting on the clauses of Kazakhstan’s National Energy Report. Kazakhstan possesses significant potential for reducing energy consumption and is among those countries with the highest level of energy intensity in the economy, according to the director general. “However, despite the high GDP energy intensity, energy consumption in Kazakhstan (per capita) is at a comparable level with developed countries,” Magauov said. In order to achieve this goal, the country plans to strengthen state control over the observance of regulations on energy consumption and monitoring phases of implementation of the ‘Energy saving - 2020’ programme, according to the director general. “The technically feasible potential of energy saving and cost-saving potential should be distinguished. The technical potential for energy saving in the country is estimated at 28 percent of the total consumption of primary energy resources. At the same time, under the conditions

in Kazakhstan, the implementation of only some part of this potential, 19 percent of the total consumption of primary energy resources will be economically justified,” Magauov said. Implementation of the economic potential of energy saving will allow Kazakhstan to continue its economic and industrial growth in the medium term without significant increase in energy consumption, according to Magauov. It was earlier reported that Kazakhstan had worked out a National Energy Report which reflected key directions of development of national energy, including the oil and gas sector which is very important for the country. The report was developed by KazEnergy. It is planned to adopt the document after its analysis and evaluation by international experts.

KAZAKHSTAN UPS URANIUM PRODUCTION IN 2013

UKRAINE UNREST SLAMS CURRENCY, RUSSIA’S $15BN AID CRUCIAL TO AVERT FURTHER COLLAPSE

iolence on Kiev’s streets has sent the hryvnia to an almost 4-year low, with bond yields jumping 3 percentage points. Ukraine’s future economy depends on whether Russia delivers the promised $15 billion aid on time and in full, Chris Weafer told RT. Watch LIVE UPDATES on Ukraine’s protests here. Since early December, the hryvnia has lost 3 percent, falling to 8.44 against the dollar. In the last 12 months the Ukrainian currency depreciated by 4 percent, with almost half of the decrease taking place in the past week, says the Financial Times. Any further devaluation is hardly likely, as the Ukrainian government is determined to keep the hryvnia pegged to the US Dollar, Chris Weafer, senior partner at Moscow-based consulting firm, Macro Advisory, told RT in an emailed note. “But it does depend on Russia actually sending all of the promised aid (so far $3 billion of the promised $15 billion has been delivered), and that will clearly depend on the government regaining political control,”he said.

The country’s bonds also weren’t left untouched. After the killing of three anti-government protesters was reported, the yield of Ukraine’s international dollar bond, expiring later this year, jumped by almost 3 percent points to 9.3 percent on Wednesday. The yields on the longer-term Ukraine bond - to mature in 2023 - have also risen by more than half a percentage point to 8.52 percent. However, the plunge hasn’t been dramatic, especially when compared to what was happening late last year before Ukraine agreed on a $15 billion financial bailout from Russia, Weafer said. “Here also the key issue is whether Russia will deliver the full $15 billion promised. If it does then there is no default risk and bond yields should remain relatively stable,” said Chris Weafer. “If the political situation worsens and the government loses control then the Russia payments could be delayed until there is clarity and stability. In that case, the default risk would increase…. But, for now, investors assume the rescue deal will remain intact and default is not a risk,” the analyst concluded.

ranium production in Kazakhstan amounted to 22,500 tons in 2013, which corresponds to the planned targets, Trend Agency reported on January 23 with reference to the Kazakh national company Kazatomprom. Kazakhstan produced 20,900 tons of uranium in 2012. The exports on contracts in Kazakhstan (excluding Stepnogorsk Mining-Chemical Complex) amounted to 23,400 tons of uranium concentrate. Kazakhstan has maintained leadership in the global uranium mining industry, providing more than 38 percent of global uranium production, which, according to preliminary data, totaled 58,800 tons of uranium. In 2013, Kazatomprom extracted 12,600 tons of uranium, or 21 percent of world production (on

the expected forecasts). Sales on contracts of Kazatomprom stood at 10,200 tons of uranium concentrate. Kazatomprom also continued exploration activities aimed at increasing the resource base of uranium in Kazakhstan and more than 2,300 exploratory wells were drilled. Kazakhstan has 0.85 million tons of uranium reserves and ranks second in the world in terms of reserves. The country ranks first in the world in terms of uranium mining. As of 2012, uranium production in Kazakhstan amounted to 21,240 tons, or about 37 percent of world production. Earlier CEO of the Kazenergy Association Aset Magauov said all the uranium produced in Kazakhstan is being exported, in particular to China and Europe.

UZBEKISTAN’S FOREIGN TRADE TURNOVER UPS

zbekistan’s foreign trade increased by 9.4 percent and hit $28.886 billion in 2013. Exports grew by 10.9 percent and amounted to $15,087,200,000 and imports saw growth by 7.7 percent and equaled $13,798,800,000, the state statists committee reported. Uzbekistan’s foreign trade surplus in 2013 amounted to $1,288,400,000 The committee did not provide information about the commodity structure of exports and imports, as well as the country’s main trading partners. As of 2012, foreign trade turnover of Uzbeki-

stan increased by 0.9 percent and amounted to $26.287 billion. Exports fell by 5.1 percent to $14.259 billion and the volume of imports rose by nine percent to $12.028 billion. Uzbekistan’s foreign trade surplus amounted to $2.231 billion. This showed this figure decreased by 42.3 percent in 2013.

UZBEKISTAN’S TRADE SURPLUS HIT $1.3 BILLION

zbekistan’s foreign trade balance amounted to $1.3 billion in 2013. President Islam Karimov made the remark at a meeting of the Cabinet of Ministers. The president stressed that despite the instability of world market conditions, growth in exports in 2013 amounted to 10.9 percent and in recent years there has clearly been a strong tendency of an increase in the export sales of finished competitive products. “This means that over 72 percent of total exports accounted for non-primary products in 2013, which is seen as concrete evidence of the econo-

my’s diversification,” the president said. The report published on Saturday by the central Uzbek media outlets, does not include data on the volume of foreign trade, exports and imports in late 2013. Previously it was reported that according to the State Statistics Committee, Uzbekistan’s foreign trade turnover in 2012 stood at $26.287 billion, increasing by 0.9 percent compared to 2011. In addition, exports totalled $14,259 billion (94.9 percent against the same period in 2011), the volume of imports rose by nine percent up to 12.028 billion and the positive foreign trade balance totalled $2.231 billion compared to $4.517 billion a year earlier.

PUBLICITY caucasian business week

January 27, 2014 #39

WORLD NEWS January 27, 2014 #39

caucasian business week

IMF WARNS ON EMERGING MARKET EXPOSURE TO CAPITAL FLIGHT

eaker emerging economies are exposed to sudden capital flight with the global economy staying on course to strengthen as expected this year, the International Monetary Fund said on Tuesday. Although the fund said growth in most advanced and emerging economies was accelerating as expected, it warned that the world was “not out of the woods yet” with deflation fears increasing in Europe and the US and vulnerability in some emerging economies. The warnings came as the IMF upgraded its 2014 global growth expectation by 0.1 percentage point. It now forecasts 3.7 per cent expansion in 2014, a figure that shows the world economy recovering from the 3.0 per cent rate last year. Britain’s ability to surprise the fund with its resilient recovery continued with its growth forecast upgraded0.6 percentage points, more than any other country, to 2.4 per cent in 2014. In an interview with the Financial Times, Olivier Blanchard, the IMF’s chief economist said that the upgraded forecasts showed a strengthening global economy although with a number of caveats. “The main brakes to the recovery – which were fiscal consolidation, weak banks and uncertainty – are slowly becoming less intense. So there is hope,” he said. Expanding on concerns raised last week by Christine Lagarde, the IMF managing director, Mr Blanchard said the eurozone is the main region of the world threatened by deflation. He added that the European Central Bank will need to do whatever it takes to prevent deflation, but its powers are limited. “They have many more legal and constitutional constraints than many central banks. We have to be realistic at this point. Monetary policy cannot work repeated miracles,” he said. He said that the eurozone must try every means possible

to bring down the high interest rates faced by firms and consumers in southern European economies. Sovereign debt yields have fallen but that has not passed through to the rest of the economy. Mr Blanchard said he fears that, even if eurozone banks are recapitalised, the weak balance sheets of companies in southern Europe may still be a problem, with many lacking the profits to service their debts. “I think that, for the moment, we may have understated this aspect of things,” he said. “Even if you made the banks virginal again, there would still be this problem.” The eurozone would emerge from contraction to post 1 per cent growth in 2014 and Japan’s growth rate would remain stable at 1.7 per cent, the IMF forecasts suggested. Mr Blanchard said that Japan’s policy of raising consumption tax but offsetting it with some extra spending this year made sense. “The main challenge on the fiscal front is this incredibly difficult juggling act. They need to do some fiscal consolidation because the level of debt is truly, truly high,” he said. “The minute the debt holders start having doubts – then Japan is in trouble. At the same time, Japan should not kill growth.” For emerging economies, the fund forecast that growth would pick up a little to 5.1 per cent from 4.7 per cent in 2013 even with further slight slowing in China. He said that, so far, China has managed well its efforts to slow down a credit boom. “You can think of it going bad both ways: that somehow they are not able to slow it down and then it gets worse or they squeeze too fast and have a harder time maintaining growth,” he said. “Our assumption is they largely know what they’re doing and have the fiscal means to avoid further effects on the economy – but there is some uncertainty, obviously.”

WORLD ‘GREAT’ FOR BILLIONAIRES AT DAVOS, RAMPANT INEQUALITY STILL THREAT

n the eve of the Davos forum Bill Gates, the world’s richest man, said that “the world is better than it has ever been before,” but experts at the forum in Switzerland suggest his view from the top may be a bit foggy. The world’s rich and powerful have congregated in the picturesque Alpine resort of Davos to discuss issues most have never had to deal with up close and personally – severe poverty and inequality. The Gates Foundation, the world’s largest and most generous charitable foundation released theirannual open letter which sought to debunk myths of poverty and inequality and predicted that by 2035“there will be almost no poor countries left in the world”. The World Economic Forum (WEF) which hosts the event, warned last week that the biggest danger to the global economy over the next decade is wealth inequality, as it can give rise to social instability and rampant poverty. “I think, when you have such a disparity between the wealth controlled by such a few number of individuals, or the gap that exists between that minority verses the majority, you really do have the potential for such significant unrest in different parts of the world, which is going to be one of the biggest challenges we are going to have to deal with,” Dennis Nally, Chairman and Senior Partner of PricewaterhouseCoopers LLP, told AP on the sidelines of the forum. “The biggest danger is that this small group of people also capture political power,” Winnie Byanyima, Ex-

ecutive Director, Oxfam International United Kingdom said. World leaders gather at the WEF at the beginning of each year to gauge what’s coming up next in the economic year, and the theme for the this year’s forum is “The Reshaping of the World: The Consequences for Society, Politics, and Business”. Businessmen and CEOs at the forum are optimistic about the upcoming economic year. Nally said of 1344 CEOs surveyed, 44 percent expect the global economy to improve, more than double the 18 percent figure last year. A preview of the year to come, the gathering of the brightest minds and most successful business men is an opportunity for colossal change on a range of issues- from private sector forecasts and political monetary policy to the issues of climate change and virtual currency. A study released last week by the host organization found that 1 percent of the world’s population owns one half of the world’s wealth. This year’s forum in Davos has attracted more than 2,500 business and political leaders and at least 80 billionaires. Twenty millionaires hailed from the US, home to 132 of the Fortune 500 companies according to 2013 numbers. India is also well represented at the forum, with 19 billionaire attendees with a combined net worth of $250 billion, Bloomberg News reported. Key events of the forum will be held January 22-26 and concludes with a black-tie ball on Saturday evening.

LONDON SEEKS TO REFORM 100YEAR-OLD ‘GOLD FIX’

ricing probes have forced London’s biggest banks to consider a systemic overhaul of the dated practice of “fixing” gold prices, which sets spot pricing for the world’s $20 trillion physical gold market. A committee has been set up to consult on improving the fixing, which is set twice a day by five banks - Barclays Plc, Deutsche Bank AG, Bank of Nova Scotia, HSBC Holdings Plc, and Societe General SA, Bloomberg News reports, citing an anonymous inside source who wasn’t named because the review is not yet public. The practice dates back to 1919 and helps determine the price of the precious metal on exchanges worldwide. The ‘fixing’ method has come under fire from US, UK, and European regulators who say it lacks transparency. Representatives of the five banks set the benchmark gold price in a teleconference call, and either recommend a higher or lower price to meet supply with demand. The prices are then used as a guide for miners, jewelers, as well as traders that sell securities tied to metals prices. Deutsche Bank AG will withdraw from participating in setting gold and silver benchmarks in London, a decision linked to a larger strategy to cut the bank’s commodities and raw materials divisions. The UK’s Financial Conduct Authority started its investigation into possible gold benchmark rigging in November, but a larger investigation started last April when the authority started looking into the forex trading practices of Deutsche Bank, Barclays, Citigroup, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Royal Bank of Scotland, Standard Chartered, and UBS. Six other regulators are helping with the worldwide investigation.

US and European authorities are also closely reviewing the case, but haven’t accused banks of any wrongdoing in either gold or forex fixing. However, experts do say the practice is out of date, and susceptible to abuse because of lax oversight. Germany’s financial regulator was the first to comment, and likened possible gold, silver, and forex manipulation to the scale of the Liborscandal, which led to $6 billion in fines against banks. Tampering with currency and precious metals markets is “particularly serious, because such reference values are based - unlike Libor and Euribor - typically on transactions in liquid markets and not on estimates by the banks,” Elke Koenig, the president of Bafin, said in a speech in Frankfurt on January 15. FIXING HISTORY The method of ‘fixing’ benchmarks, especially those which hold such a crucial grip on the financial sector, has been questioned in the aftermath of the Libor-rigging scandal, when bankers fixed the interbank lending rate to company gain. Control over the Libor rate, which is tied to over $300 billion in loans, securities and derivatives may transfer to supervisory hands, possibly to an agency like Reuters or Bloomberg, which have less direct ‘gain’ in setting interbank interest rates higher or lower. Germany’s biggest bank, Deutsche Bank, has already dismissed currency traders over probes involving alleged forex manipulation. Libor manipulation has raised questions over other lending rates like the Euribor, WM/Reuters, and the Platts oil benchmark.

HAVEN FOR BILLIONAIRES At the beginning of the week Oxfam released a report that says 85 of the world’s wealthiest people have as much money as the poorest 3.5 billion - half of the Earth’s population. “Working for a Few” focuses on economic inequality, and reports 210 people became billionaires last year, joining the existing 1,426 billionaires, who combined, have a net worth of $5.4 trillion. The rapid increasing wealth poses the biggest threat to civil society, and those with power must act responsibility. Post financial crisis economic development has gone back into the pockets of the already mega wealthy. The World Bank expects the world economy to expand 3.2 percent in 2014, but this expansion will be polar between the haves and the have-nots. Pope Francis sent Cardinal dispatch a special representative envoy to Switzerland to deliver acautionary message to the over 2,500 businessmen and political leaders.

PUBLICITY caucasian business week

January 27, 2014 #39

TBILISI GUIDE January 27, 2014 #39

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 16 Akhmeta Str., Avlabari, 0144 Tbilisi. 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

January 27, 2014 #39