Caucasian Business Week #41 by Caucasian Business Week

DISTRIBUTED FREE OF CHARGE

BUSINESS WEEK February 10, 2014 #41

caucasian business week www.facebook.com/CBW.ge Partner News Agency

February 10, 2014, Issue 41

caucasian1

BE INFORMED, DO BUSINESS

GEORGIA

U.S. IMPOSES RESTRICTIONS FOR COMPANIES IN GEORGIA FOR EVADING U.S. SANCTIONS ON IRAN

Giorgi Kvirikashvili: Business Really Saw New Opportunities

PARTNERSHIP FUND HOSTS BRITISH BANKERS

rakli Kovzanadze, Executive Director of the Partnership Fund met with high officials of BARCLAYS, UK’s multinational banking and financial services company, while they visited Tbilisi. Pg. 5

IRANIAN BUSINESSMEN ARE INTERESTED IN INVESTING IN GEORGIA

BANK OF GEORGIA MAY INTRODUCE PAID SERVICE FOR CELL PHONE BALANCE RECHARGE

iorgi Kadagidze, the President of the National Bank of Georgia (NBG), has got several questions to pose to cell communication operators. Pg. 8

TBC BANK LAUNCHES FINANCIAL LITERACY PROJECT

new face has emerged on social networks. Salome Shelia, the author of the new project of TBC Bank. Over 4,000 viewers have seen Salome Shelia’s promo video in one day alone. Pg. 9

AZERBAIJAN PRESIDENT ALIYEV: AZERBAIJAN BECOMES INDISPENSABLE PARTNER FOR CONTINENT

Pg. 4

GEORGIAN PRODUCERS AGAINST LIPTON TEA

he MP from the parliamentary majority Gogi Topadze states that “Lipton” tea contains dyes, nevertheless imports flooded the country, despite the fact that Georgia has all the features to provide itself with this product through domestic production. “Instead of Georgian tea, imported European often GM tea is sold today. Given a fact that Georgia may satisfy market demand in tea on its own,”- says Topadze. The representative of “Unilever” company in Georgia (producer of tea “Lipton “) Nino Gordiashvili says that recently the examination has been conducted excluding the possibility of the presence of dyes in the tea. “Univeler” company’s motto is a healthy and beautiful lifestyle so it’s absurd to say that our products contain dyes. On this occasion, we have been repeatedly appealed to. We even conducted an examination in 2010 to find out whether our products contain banned substances. The report

H CIS

SOCHI OLYMPIC DEBT ‘MANAGEABLE’ - FITCH

WORLD NEWS SUGAR DEBATE TURNS SOUR FOR FOOD GROUPS

clearly states - “ Lipton “ tea is without any dyes,” - she says. According to her, at the stage Georgian manufacturer “Gurieli “ competes with “Lipton “ tea but “Lipton “ is sold in 150 countries and is much more famous and popular brand. Chairperson of the Association of Georgian Tea Producers Tengiz Svanize notes that a few years ago an examination of several kinds of tea was carried out, as a result of which, a number of dyes were found in “Lipton” but later the company denied this information . “Today, many manufacturers mislead consumers and the presence of dyes is not declared on the labels.We intend to apply to Parliament demanding to pass legislation that would oblige all producers to identify the composition of ingredients. For example, if a company produces a jasmine tea, it is natural there will be a certain amount of dye there. The main thing is that the consumer must be informed about this,”- says Tengiz Svanidze .

ARCHIL GEGENAVA’S “FOODMART” IS SUED

ebt created by the Sochi 2014 Olympics will be “manageable” for the Russian Krasnodar region, Fitch Ratings wrote in a note Wednesday. Pg. 12

Bidzina Ivanishvili: Georgia could become the new Dubai Pg. 3

s “PirWeli” was told, a suit has been lodged aginst the former MP of the “National Movement” Archil Gegenava and a supermarket chain “FoodMart” associated with him. A founder and current shareholder of JSC “Populi” network, Evgeni Pichkhaia is planning to launch a legal dispute against Gegenava in order to protect his own interests. During a telephone conversation with “PirWeli”, Evgeni Pichkhaia confirms that he is being consulted

with several groups of lawyers and notes that a dishonest deal has completely ignored his rights, as an acting shareholder of JSC “Populi”. Evgeni Pichkhaia owns up to 12% of the shares of JSC”Populi”. Recently, “Ioli” Ltd, a holder of the remaining 88% of the company shares, has sold the assets to “FoodMart” so that Evgeni Pichkhaia had learnt about that after the deal, as he says himself. SEAF CAUCASUS GROWTH FUND LP founded “FoodMart” shortly before buying shares of “Populi”. About a month later, 30% of its shares gave to “Food Service” Ltd and got a 10% share in the same company’s capital. According to Evgeni Pichkhaia, he has serious doubts that “SEAF’s” partner international financial institutions did not have comprehensive information about this dishonest transaction. The media linked “Food Service’s” name with Archil Gegenava in the past years. The company has often won less transparent public tenders. It was impossible to communicate with Archil Gegenava, though, “Maestro” TV reported the news that made clear that the Financial Police has already started to investigate this case because of the complaints voiced by “Populi” distributors against “FoodMart”.

Kakha Kaladze: The Khudoni HPP Project is of Utmost Importance to Georgia Pg. 10 Tornike Abuladze: Banks Began to Compete with Business Pg. 4

Archil Gachechiladze: The Devaluation of the GEL is a Healthy ProcessPg. 6 Lasha Nikoladze: Mandatory Auto Insurance will Be Introduced in 2014 Pg. 4

Irina Gaprindashvili: Marneuli Food Factory proves that Georgian Agriculture has Future Pg. 7

MAIN EVENTS caucasian business week

February 10, 2014 #41

GEORGIA COULD BECOME THE NEW PRESIDENT EXPECTS KHUDONI HPP DUBAI, SAYS EX-PM ISSUE TO BE RESOLVED THROUGH ed people and Europeanization would put GeorDIALOGUE gia on a successful economic path.

f everything goes right, Georgia might become the new Dubai”. This was what Georgia’s ex-Prime Minister Bidzina Ivanishvili said when asked about the economic situation in the country at a press conference. Today Ivanishvili presented his new non-governmental organisation to a crowd of journalists and answered a variety of questions afterward regarding the economy, justice reforms and other topics. The ex-PM said creating proper economic legislation and enforcing the rule of law were factors that would develop Georgia into a country with a strong economy. Ivanishvili believed Georgia’s location, its talent-

The former leader was reminded by a journalist that 2013 was the first year since the Rose Revolution when a budget breakthrough occurred in Georgia. In response to this, Ivanishvili said the Saakashvili-led government used to fill the budget with money received from plea agreements, which deprived people of their property, and other illegal activities. “We did not do anything like this”, Ivanishvili stated. “I would criticize Irakli [Garibashvili, Georgia’s current PM] for using imprecise wording when he said that Georgia had experienced an economic decrease under the new Government’s conditions. I disagree with this,” Ivanishvili said. “We came and started to recover the ways of how the [United] National Movement [former ruling party] used to manage the economy.” Ivanishvili compared the economy during the time of the former government to a tree planted into the ground by its leaves with its roots sticking out the top. “We put the tree the right-way down, cured its roots and now it needs time to grow,” he explained. Ivanishvili left Georgian politics in November 2013 after the inauguration of President Giorgi Margvelashvili.

US IMPOSES RESTRICTIONS ON GEORGIA-BASED COMPANIES FOR EVASION OF US SANCTIONS ON IRAN

.S. imposes restrictions for companies in Georgia for evading U.S. sanctions on Iran The U.S. Treasury Department has announced new actions against companies and individuals in Europe and the Middle East that have been doing business with Iran in defiance of international sanctions. The Treasury Department imposed restrictions for 3 entrepreneurs and 8 companies controlled by them in Georgia for evading U.S. sanctions on Iran, foreign media says. Those affected by the February 6 decision are alleged to have played “key roles in supporting

Iran’s nuclear program and active support for terrorism.” The Treasury Department said the actions target entities and individuals located across the world, operating in Turkey, Spain, Germany, Georgia, Afghanistan, Iran, the United Arab Emirates, and Liechtenstein. The announcement marks the second time Washington has acted against those who are evading sanctions on Iran since an international deal was reached with Tehran in November. Iran has pledged to curb its nuclear development activities and allow inspections of its nuclear facilities in return for an easing of sanctions.

U.S. INTELLIGENCE REPORT HIGHLIGHTS GEORGIA’S SLOW ECONOMY

he United States Intelligence Community’s annual Worldwide Threat Assessment highlights the economic slowdown as Georgia’s “greatest immediate concern”. The 27-page Worldwide Threat Assessment of the US Intelligence Community report contained one paragraph about Georgia in the Caucasus and Central Asia section, as it had for the past several years. “The economy, which has slowed since the Georgian Dream Coalition was elected in October 2012, will be an area of greatest immediate concern,” the report read. Director of National Intelligence James Clapper presented the report and its findings to US Senate Intelligence Committee on Intelligence on January 29. “Georgia’s new political leaders have inherited pressing domestic and foreign policy problems amid high public expectations for progress,” the report said.

Clapper mentioned the prosecution of former officials in Georgia was a task the current Government had to carefully balance. “The new government will also continue to balance a series of high-profile legal cases against former government officials for past abuses. The cases, while popular inside Georgia, have generated concerns of political retribution abroad and risk polarizing Georgian politics,” the report read. Near the end of the statement, Russia-Georgia relations were highlighted and said progress had been made in this area. “Tensions with Russia have eased over the past year, decreasing the risk of renewed conflict. Progress nonetheless remains unlikely on the core disputes between Tbilisi and Moscow,” it said. A previous report released in March 2013 focused on Russia-Georgia relations and the country’s exPrime Minister, Bidzina Ivanishvili’s interest in normalizing relations with Russia.

resident is sure that Khudon-hesi problem will be solved through dialogues. “We have two important values. On one hand, interests of the local population, individuals and we should protect rights of each individual. On the other had it is a topic of the state importance. IN the normal society compromise always can be reached by dialogue, because on one hand we all are individuals, but on the other hand we are citizens of Georgia and serve to our homeland. Because there are state interests and individual interests, I’m sure that it can be solved by dialogue”, - George Margvelashvili states.

NEW LAW: IMPORTS OF GENETICALLY MODIFIED SEEDS BANNED IN GEORGIA’

ork on a new Bill to prohibit importing live genetically modified organisms into Georgia has begun. The Bill prepared by the Ministry of Environment and Natural Resource aimed to place restrictions on genetically modified organisms being imported to Georgia. The Genetically Modified Organisms Bill stated it would be illegal to bring seeds of live genetically modified organisms (GMO) into Georgia. However it was permissible if someone brought such seeds into the country only if the seeds were planted in a quarantined enclosed area. The new Bill does not include issues related to genetically modified products stored in market networks therefore it did not set any regulation on this. “A distinction must be made between genetically modified seeds and genetically modified

seed production. This latter is permitted to be imported to Georgia,” George Tsagareishvili, of the Environment and Natural Resources Committee of Parliament, said. “But Georgia has been declared as a closed zone … [which] means genetically modified raw seeds must not come into Georgian territory.” “We do not have huge rural - agricultural lands but Georgia within Europe is the ‘Last Island’ which provides ecologically pure products. This is why we are attractive to the rest of the world. Ecologically clear products are what we should promote to the European food market,” Tsagareishvili believed. A detailed Government study into GMO’s revealed there appeared to be two companies which imported GMO products into Georgia. Under the new law, activities relating to live GMO’s will be subject to administrative and criminal responsibility.

RUSSIAN MEDIA: GEORGIAN WINE’S SUCCESS IN RUSSIA EXCEEDED THE MOST BOLD EXPECTATIONS Georgian wine ousted Ukrainian and Moldovan products from Russia’s market

indzmarauli and Khvanchkara, which have appeared in Russia for the first time since 2006, managed to return the earlier volumes, despite a prediction made by Russia’s former Sanitary Doctor Gennady Onishchenko that Georgian wine could not hold more than 1 % of the Russian market. Georgian side’s forecasts were more optimistic: the Head of the National Wine Agency Levan Davitashvli claimed that by the end of 2013 the Georgian manufacturers would be able to export 10 million bottles to the Russian market. According to Federal Customs Service ‘s data, the reality exceeded the most bold expectations: within half a year after the lifting of the embargo, more than 21 million bottles or 14.70 million liters of wine were exported from Georgia to Russia. The “RBK” edition writes that “ the Georgians” appeared on the Russian market for the first time since 2006 have managed to enter the top ten leading importers. Georgian wine already holds 5.45 % of the total imports that is 2.42 % of the entire Russian wine market . For comparison, before the embargo in 2005, Georgian wine held only 5% of the entire Russian wine market and

import volume from Georgia to Russia amounted to 52 million bottles. As per the 2013 data, supplies to Russia totaled 40 % of the whole Georgian wine exports which, according to the Georgian side, is 15 percent of the national wine production. Director of the Research Center of the federal and regional alcohol markets “Tsifrra” calls figures of wine imports from Georgia to Russia “impressive”. In his opinion, the secret to success is that the audience loyal to the Georgian wine remained in Russia and the product itself has no analogue in the market.

The Newspaper is Distributed at Tbilisi to Athens Flights of Aegean Airlines

BUSINESS WEEK

caucasian The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Director: Levan Beglarishvili DISTRIBUTED FREE OF CHARGE Editor-in-chief: Evgeni Mikeladze Mobile phone: 591 013936; 577965577 Commercial Department: Irakli Lekvinadze Email: caucasianbusiness@gmail.com

The weekly is distributed to top companies, banks, embassies, state sector, Tbilisi and Batumi hotels, Tbilisi, Batumi and Kutaisi Airports, as well as in the town of Marneuli. The newspaper will also penetrate Azerbaijan in the near future

PUBLICITY February 10, 2014 #41

caucasian business week

INTERVIEW caucasian business week

February 10, 2014 #41

MINISTER OF ECONOMY: BUSINESS REALLY SAW NEW OPPORTUNITIES

- What was the previous year, what are your main achievements and what are the priorities for 2014 ? - 2013 was transition for the Georgian economy. We secured the release of the business from political pressure and created an environment where businessmen could choose how to develop their

business. The transition period is always difficult, especially for the economy, and even more when it is accompanied by the political instability. However, despite the apocalyptic predictions of our opponents, in the second half of 2013 the business really saw new opportunities and economic growth has begun - in particular, in the 3rd quarter industry turnover increased by 8.4 % compared with the 2nd quarter.Turnover of small and mediumsized businesses grew by 24 %. According to the data for 9 years, private business turnover reached 30 billion GEL. - In the 3rd quarter, foreign investment rose in comparison with the 1st and 2nd quarter, and compared to the same period in 2012 - by 20%. - Trade turnover for 11 months in 2013 increased compared to the same period in 2012 by 4%, exports grew by 20% and stood at 2.6%, which is a record for Georgia’s economy. A negative trade balance decreased by 549 million USD, exports

to Europe increased by 65 % and amounted to 540 million USD , exports to Russia tripled and amounted to 161 million USD. With regard to other successes, first of all, it is the initialing of the Association Agreement with the EU, which after the signing will open a 500 million European market for Georgian producers. In the results we’ll receive investments, jobs, increased exports, new initiatives, and in general - a stable, irreversible development of the economy. 2013 was successful for the transport system. In particular, the country has made progress in the transport and transit potential, for example, after a 7- year pause vehicular traffic between Georgia and Russia has been resumed, more than 1 000 permits for transportation have been issued, moreover, recently Turkey reduced 4 times the cost of transit vans to Georgia. The construction of the Baku -Tbilisi-Kars rail route has resumed and actively continues. Another our priority is the development of information technology. In 2013, we are actively working on the project “Innovative Georgia - 2020” . We forecast that in 2020 the country will have hundreds of IT professionals, which will create new high-tech products, and the total revenue from exports will be 1.1 billion in this sector. We work closely with multinational corporations in the development of the IT sector of Georgia such as Google, Oracle, HP as well as major international financial institutions. Tourism is another important sector of the economy of Georgia. 2013 was a very successful year for tourism, the country was visited by over 5 million people, or 23 % more than in 2012. 180 000 people are employed in the tourism sector, the share of tourism in relation to GDP was 7.3%, income from tourism amounted to 730 million USD.

- Adoption of the Law on Competition is always postponed, this time it was announced that it would be adopted in the spring. How do you assess the current bill, which is scheduled to submit to the Parliament? - Unfortunately, the development of the competition law took a very long time, but we passed on the razor’s edge as improperly enacted law could hurt business companies and, accordingly, the Georgian economy . Therefore, we considered the project with the participation of all stakeholders - businessmen, business associations, chambers of commerce and industry, universities, etc. At this stage, we have a few final comments from the World Bank , and after their consideration the final version of the document will be sent to the Parliament. We assume that by the end of the 1st quarter we will be able to create a Competition Agency. - What can you say about the two other very pressing issues - the sale of land and assistance to citizens who face eviction from their homes for mortgage arrears? - With regard to the sale of land, the existing agreements will not be canceled if they are signed lawfully. It’s planned to pass laws that will give local authorities greater powers to manage land. It will assist to resolve such issues as the shortage of grazing land, respect of the interests of the population at privatization , etc. Regarding moneylenders, I can say that humanly I sympathize with them all. Now we are taking steps to ensure the limit on the percentage of usurious loans in order to get rid of predatory interest. We have also decided to sell the mortgaged property for a more flexible procedure, in order to receive the sum as close as possible to the market. At this stage, the state can do nothing else in this matter.

TORNIKE ABULADZE: BANKS BEGAN TO COMPETE WITH BUSINESS

ecently, the issue of ownership of non-core assets by banks has become more urgent, and especially it applies to construction companies who openly declare that the banking sector has become their competitor that seriously hampers the development of the development business - in fact, they believe that the lion’s share of responsibility for unfinished construction projects lies with the banks which can be seen in large numbers throughout Georgia. CEO of the construction company “Arci “ Tornike Abuladze stalks about the conflict of interest between developers and banks that emerged after the financial institutions created a construction company. “When you go to the bank for a loan, you have to talk in detail about the project, to reveal all the details, in a word , banks have almost a completed project that can easily be implemented by them

using subsidiaries . It is almost as if you tell some secret to the priest in confession, and he runs to inform on you to the intelligence. The bank has significantly more resources for the projects implementation than construction companies, and if they can earn on our projects without breaking the law, why should they give loans to construction companies? Conflict of interest arises just here,” - says the businessman. According to him, as soon as the bank has a noncore business, it immediately becomes a competitor interested in how to sink the company. “A bank can do a lot of things. For example, give a credit to competitors under the worse conditions than to its own company, and thus putting a subsidiary in a privileged position. This applies not only to banks. Why the chief architect of the city has no right to own a construction company? Because there is a conflict of interest here, as he is responsible for issuing building permits, re-

spectively , he may interfere with other companies. The same thing with the banks “ - Tornike Abuladze believes . In his words, a problem is aggravated by the fact that the National Bank almost does not deal with noncore assets, and except for general rules , there is no special law , so the bank can easily get the right to the establishment of the company in any industry. “ It’s very easy to check. Look at the names of the companies included in the structure of banks and ask who owns the land , which now belong to them - 90 % -of these land plots are either seized or bought at very favorable terms from businessmen and developers. I am sure that today the discussion of non-core assets is deliberately blocked. The bill was submitted to the Parliament , a special commission was set up, but has virtually no contact with construction companies and in general , this problem is hardly considered “Tornike Abuladze adds.

MANDATORY AUTO INSURANCE TO BE INTRODUCED IN 2014 An interview with the Head of the Insurance Supervision Service Lasha Nikoladze - How much are you satisfied with the service’s work over the past period ? - Supervision Service is working only 7 months and this period was quite complex. Today, the insurance business is facing some very serious challenges, primarily with regard to their participation in government programs. Unfortunately, in this period one company has gone bankrupt, in others financial audits have begun. In addition, we are working on a new regulation to change the regulatory framework in order insurance companies to be more protected from the possibility of bankruptcy . The insurance industry and the public are eagerly awaiting legislative changes. In particular, we are talking about the introduction of the compulsory motor insurance, which is mandatory in most

countries in both Europe and even the former Soviet Union for almost 70 years. The project will be considered during the year and we expect that from the beginning of 2015 auto insurance will be mandatory. We already have a project, but in the near future we will begin consultations with both the government and the parliament. The document is likely will take the final shape in 2-3 months. - As it is known, in the coming months private insurance companies will be completely excluded from participation in the public health program. What is the forecast of private companies in this regard? - When a government program just began, we predicted that successful companies would be able to create new products that are not included

in the public insurance packages and thus will attract private and corporate clients. This is very important taking into account that the state pays for basic services, and on this basis, private companies can offer more services for the same price as before. In addition, it’s time for insurance companies to develop other types of services, since today this business actually works only on health insurance, but this is not enough. Management of the companies will have to make considerable efforts to interest customers in other services. In general, for comparison, I can say that after the state took over the administration of the program of universal health care, it could make it 30% cheaper than private insurance companies.

INVESTMENT February 10, 2014 #41

caucasian business week

IVANISHVILI SHOWS READINESS TO SELL GEORGIA-BASED BUSINESSES WITHOUT BENEFITS

very businessman will be able to redeem shares of Ivansihvili in the businesses created by funds of CoInvestment Fund for the same price as Ivanishvili invested in the busi-

ness. Former prime minister stated about it on the Tuesday’s presentation of NGO Citizen and explained that he makes this offer as a respond to the opponents, if it’s considered that Ivanishvili came into politics in Georgia in order to invest personal money. Ivanishvili stated many times that he’s going to invest $1 billion, although today he added that he does not exclude to increase amount of personal investment. “Team of Co-investment Fund currently works

more to attract projects and money, because business-projects are problem in Georgia... What projects exist? Resources - only usage of hydro resources and construction of power stations is possible in Georgia. Construction of hotels is also important for tourism development... Since the beginning of the work we could attract the projects with a value slightly more than $1 billion”, - Ivanishvili stated. He said that Co-Investment will be able to help Georgian economy and it will become economic stimuli, although it’s important that government adopt right economic, European economic laws and protect their implementation. “Civilized laws and them political and economic stability are important for the economy”, - Prime Minsiter stated.

PARTNERSHIP FUND HOSTS BRITISH BANKERS

rakli Kovzanadze, Executive Director of the Partnership Fund met with high officials of BARCLAYS, UK’s multinational banking and financial services company, while they visited Tbilisi. The British delegation included MakramAzer, Vice Chairman of Investment Banking at BARCLAYS, Directors Julian Macedo and Baris Efe as well as George Tkhelidze, Vice Prezident of Investment Banking at BARCLAYS who are studying the investment opportunities of the country and have already met with Giorgi Kvirikashvili, the Minister of Economy and Sustainable Development of Georgia and representatives of the commercial banks. “For us, Georgia is a very important country. We are here to study all the existing opportunities. The country has very good geopolitical location and is important crossroad between the west and the east, especially in terms of connecting with the Chinese market,” Makram Azer, Vice Chairman of Investment Banking at BARCLAYS said at the meeting. Irakli Kovzanadze, Executive Director of the Partnership Fund introduced to the guests the

fund’s mission, work guidelines and priority sectors, such as agriculture, manufacturing, infrastructure/tourism and energy sector. The delegation from UK expressed interest in activities of the PF’s daughter companies Georgian Railway and Georgian Oil and Gas Corporation. They also discussed the PF’s priority sectors in 2014. According to Kovzanadze, around 23 projects are under discussion in various sectors. Kovzanadze touched upon the Partnership Fund’s planned transformation into a Sovereign Fund, which he said will increase confidence among foreign investors and will allow the management more freedom of choice. “The goal of the mission is to set up the Sovereign Fund which will be similar to other foreign funds. As a result of the change, our fund will become more transparent and will be more attractive for investors. In addition, after the transformation into the Sovereign Fund we will have the rights to discuss small and mediumsize projects,” Kovzanadze said adding that “chances to increase our portfolio will be on the agenda too.”

AMERICAN INVESTORS INTRODUCE ANAKLIA SEAPORT DEVELOPMENT PROJECT

insiter of Economy and Sustainable Development George Kvirikashvili met with president of American investment holding Conti Group - Curt

Conti. Minsiter of Regional Development and Infrastructure David Narmania, executive director of Partnership Fund and other official persons also attended the meeting. The participants discussed development issues of Anaklya port and adjacent territories. Conti Group presented 3-phase project of the construction of port with 100-million tons of capacity. George Kvirikashvili stated that with order of

Partnership Fund, Japanese company studies terrain of Georgian coast line and the government will get specific strategy of Anaklya Port on the basis of all researches and Analysis, which will occur in about 304 months. Delegation of Conti Group visited Georgia in December 2013. During that visit they met with prime minister of Georgia and other representatives of the government. According to preliminary calculation, in addition to port, development of logistic and industrial zone, as well as international airport and liquefied natural gas terminal in planned in Anaklya. Conti Group has 100-years experience in the management of such projects.

INDIAN BUSINESSMEN SHOW INTEREST IN GEORGIA’S PHARMACEUTICAL MARKET

he visit aims to study pharmaceutical market of the country, regulations of business opportunities in this sphere, establishment contacts with interested Georgian companies. The visit will be organized by Georgian Chamber of Commerce, Ministry of Foreign Affairs

of Georgia and Pharmaceutical Product Export Promotion Council of Ministry of Trade and Industry of India. Delegation includes representatives of about 41 companies in pharmaceutical products sector, plant and traditional Indian medicine and other sectors.

ACHARA GOVERNMENT RECORDS IRANIAN INVESTORS PLAN TO BUILD 25% UPTURN IN INVESTMENTS IN A 5 - STAR HOTEL IN TBILISI AUTONOMOUS REPUBLIC

ranian companies are beginning large investment projects in Georgia. The oil importing company “Bizol Georgia ‘’ states “Commersant ‘’ that they have been working in Georgia since 1997 , and except for the import of petroleum products, are engaged in construction business. In his words, they have acquired a plot of land in the center of Tbilisi where plan to build a five-star hotel. “Bizol Georgia ‘’ DirectorGeneral says that the company plans to carry out the project co-financed by the partner company and the company is seeking partners at

the stage. The construction will start next year and the company will invest $ 60 million in the project. A construction company “Home Pride” based on Iranian investments also plans to invest in Georgia’s hotel business. As the company’s CEO explains to “Commersant ‘’, they have been operating in Georgia for three years. He notes that the company has already bought land in various districts of the capital where it plans to build hotels and spent 4 million GEL for this purpose. In the first phase, the company will make an investment of 6 million USD.

IRANIAN BUSINESSMEN ARE INTERESTED IN INVESTING IN GEORGIA

ranian businessmen are interested in investing in construction and agro-sector of Georgia. Delegation of Iranian businessmen will visit Georgia in the framework of Georgian-Iranian business forum at the end of February. Newly founded United Georgian-Iranian Chamber of Commerce organizes the forum. Member of founding council of the Chamber Alireza Tari stated to GBC that in addition to businessmen, representatives of Iranian Chamber of Commerce will also participate in the forum. Currently it’s known that 35-persons delegation will arrive to Georgia.

It’s noteworthy that Chamber of Commerce aims to enhance economic and trade cooperation between two countries, attract investments, approach business circles and promote implementation of their initiatives in various spheres. Part of the Iranian businessmen faced problems in Georgia after The Wall Street Journal wrote that Iran avoids sanctions imposed by USA by Georgia and that’s why thee use companies founded in Georgia. Soon after releasing this information Georgian government unilaterally cancelled visafree regime with Iran from July 1. Accounts of the citizens and legal entities of Iran were also frozen.

he government of Adjara Autonomous Republic speaks about increased investments. According to their data, investments in the region increased by 25% in the first 9 months of 2013. In total 122.4 million USD were

invested in the reporting period which is 25% higher than in he same period of last year. Most of the investments are carried out in the construction and tourism sectors, including 50 million in the tourism industry and 55 million in construction.

“WENDY’S” CONSIDERS GEORGIAN MARKET PROFITABLE

merican fast food chain “ Wendy’s” shows better results in Georgia than in Azerbaijan - the company’s President Emil Brolik told “Commersant”. According to him, at the first phase the company planned to focus on developing the network in Azerbaijan, but at this stage the priority is Georgia. “We have signed a 10-year partnership agree-

ment with Georgia, which includes the opening of 25 “Wendy’s” restaurants in the country. However, we believe that Georgia’s potential is not exhausted. For example, we have not yet signed the agreement with Azerbaijan,” - he says. Georgian “Wissol Group” is a partner of the American fast food network. “Wendy’s “ owns 6 500 restaurants in 28 countries. In Georgia, the first restaurant of this network was opened in September 2013.

22.8% STAKE IN CAUCASUS ENERGY AND INFRASTRUCTURE GOES FOR 6.323 MILLION GEL 22,8% share of Caucasus Energy and Infrastructures (NRGY) was sold. 10 537 723 stocks of the company was sold on the stock exchange by so called “fixing”, in 1 deal. The deal value equaled to 6 322 634 GEL.

The deal was made on January 24 on the stock exchange. It’s noteworthy that Caucasus Energy and Infrastructures has emitted 49 162 553 stocks, with nominal value of 0,25 GEL.

ECONOMY caucasian business week

FINANCE MINISTER EXPECTS 5% ECONOMIC GROWTH IN 2014

inistry of Finance published data of budget fulfillment and foreign trade turnover and stated based on them that trend of October-December of last year was maintained in January and 5% economic growth prognosis in 2013 is at least realistic. The Ministry informs that in January 2014 cumulative incomes of the joint budget equaled to 527 million GEL, which is 65,3 million GEL more than in the same period 2013. IN comparison with January 2012 revenues of joint budget have increased by 75.4 million GEL, in comparison with January 2011 - by 131 million GEL, in comparison with January 2010 - 237 million GEL. Among them, it’s noteworthy that in January 2014, in comparison with January 2013 tax revenues mobilized on the territory of the country increased by 51.6 million GEL and equaled to 437 million GEL.

ARCHIL GACHECHILADZE: THE DEVALUATION OF THE GEL IS A HEALTHY PROCESS

eputy Director General of “Bank of Georgia” Archil Gachechiladze believes that the current devaluation of the GEL will not have negative consequences for the economy if the process does not go beyond a certain frame.

“The main thing is that at this stage GEL depreciated less compared to the currencies of other countries - Turkey, Ukraine, Brazil , Argentina, etc. On this basis there is no reason to panic. Healthy processes are taking place in the economy and most importantly Georgia’s debts have not yet reached a dangerous level, “ - says the banker. According to him, zero inflation recorded in 2013 is too small for Georgia , respectively , inflation in November and December has not had much impact on the annual figures. “Besides, I do not consider growth of money supply a dangerous phenomenon, as it is fully consistent with the current state of the economy. In early 2013, economic activity was clearly reduced, but by the end of the year activation was observed, and I hope that it will also continue in 2014,” - the banker notes. In his words, in early 2013 consumer lending exceeded business lending, but the ratio of retail lending and volumes of economy is abnormally low. “However, despite this, there is clearly a trend of economic growth,” - says Archil Gachechiladze.

EBRD PURCHASED MINORITY SHARE IN AMTEL PROPERTIES

uropean Bank for Reconstruction and Development purchased minority share in Amtel Properties. Deal cost is $50 million. Information published on the website of Amtel Properties indicates that investment received by the deal with EBRD first of all will be directed on the construction of refrigerator logistic terminal in Tbilisi, adjacent to airport and 3-star 120-room hotel in Minsk. Hilton will manage the hotel Money

will be also spent on the projects in Russia and Ukraine. “Trust of the powerful investor such as EBRD emphasizes that our strategy is right and projects portfolio is attractive for the investments. I’m sure great experience of EBRD will expand our opportunities in the improvement of energy-efficient projects”, - director general Daniel Gufta stated. Amtel Properties owns apart-hotel Citadines in Tbilisi, Georgia.

MANDATORY TECHNICAL INSPECTION FOR VEHICLES WILL COST MAXIMUM 48 GEL

ccording to the Director of the Service Agency of the MIA Otar Danelia, a practice for the technical inspection of vehicles usually operates in Georgia, however, these services are not obligatory for vehicles. “The technical inspection is obligatory only for buses and high weighted cars and this service costs from 48 GEL to 102 GEL, according to the different categories of vehicles. The mandatory technical inspection, which will take effect from March 1, 2015, will not be more expensive than it is today. It will cost maximum GEL 48 for a vehicle. We have built up such a

business plan in order the price on this service not to be increased,”- said Danelia Danelia talked about the standards that vehicles will have to meet. “For example, if a car is conventionally issued in accordance with “Euro 1-”standard, it does not matter in which year this one was issued. It has to meet the “Euro 1-”standard and not other one,”- said Danelia. As for the “TUV Rheinland Group’s” cooperation with the holders of the technical inspection service centers, as Danelia noted, this issue will be discussed. According to him, 24 units of the technical inspection services for vehicles operate in Georgia nowadays.

February 10, 2014 #41

TBILISI MAY RESTORE RELATIONS WITH RUSSIA ALONG WITH EU ASSOCIATION

ormer Georgian Prime Minister Bidzina Ivanishvili believes establishment of the relations with Russia in parallel with accession to the EU is possible. Georgia needs to establish relations with Russia on a positive basis and the country’s government is taking the ‘right steps’ in this direction, Ivanishvili said at a press conference in Tbilisi on February 4. “One of the steps in establishing the relations is the participation at the Sochi Olympics and our team must participate. I welcome the authorities’ activities,” he said. The Georgian delegation will leave for Sochi on February 4 on a direct flight. Direct flights from Tbilisi in the direction of Sochi will start from February 4. Georgia and Russia, its giant northern neighbor, have maintained no diplomatic relations since a brief war in 2008. Tbilisi broke off relations with Moscow in August 2008 when Moscow crushed a Georgian assault to reassert control over two

rebel regions -South Ossetia and Abkhazia- and later recognized the regions. Georgia announced the two unrecognized republics as occupied territories in September 2008. Also, Ivanishvili presented his NGO “Citizen”, which will define the requirements of the civil sector to the government. “My dream always was to be an independent citizen of my own nation. I came to the politics and left it due to this. Today I intend to control the authorities out of the civil sector and call the whole civil sector for this,” he said. He believes that civic responsibility is very important and NGO “Citizen” will ensure a high control over the government’s activity by the society. Ivanishvili was Prime Minister of Georgia from 25 October 2012 to 20 November 2013. He founded and led the Georgian Dream coalition, which won the 2012 parliamentary election. He announced his withdrawal from politics on November 2013 saying that he will remain an active member of society.

EXPERTS AGREE WITH BIDZINA IVANISHVILI: “ THERE WAS NO ECONOMIC DOWNTURN LAST YEAR” Expert: Economic downturn means moving into recession , while economic growth is the increase in national income which was observed last year

xperts speak about the necessity of defining the economic ups and downs. The economic expert Irakli Lekvinadze states commersnat.ge that there was no economic downturn last year and these terms are used incorrectly in the recent period. Another economic expert Emzar Jgernaia also talks about the necessity of the terms definition. He says that economic downturn means moving into a recession while economic growth is the increase in national income which was observed last year . Former Prime Minister of Georgia disagrees with his successor Irakli Garibashvili who used the term “an economic downturn” at the presentation of the NGO “Citizen”. As Bidzina Ivanishvili noted with regard to the economic downturn, he didn’t agree with Prime Minister Irakli Garibashvili, as the new government came

to power and began reviving the economy. “I criticized Garibashvili because he used the term incorrectly that the economic downturn was observed under the new government. I do not agree with it. We came and started the recovery of the economy. By the way, the nationals also exhausted the methods by which they replenished the budget and managed the economy. We came and returned everything into place, “- said Ivanishvili. Prime Minister responded to Ivanishvili’s criticism saying that objective criticism is always acceptable. “I agree with Mr. Ivanishvili ‘s statement . We did not have an economic downturn, there was a delay which was caused by the economic recovery process. Currently we have economic growth and this year we expect a 5% economic growth, the World Bank predicts economic growth of 6.3%, “ - says Prime Minister.

RETAIL SALES OF GPI HOLDING INCREASED BY 40% IN DECEMBER 2013

he company informs that GPI Holding completes last month of last year with a considerable growth. The company reports that mainly auto-insurance and health insurance increased, but also number of small and medium-sixed enterprises purchasing business insurance product also increased. Retail sales have increased by 40% in comparison with the same period 2012. “In addition to corporate segment, development of retail sales is priority for us. This market is not utilized more or less and we see a great potential in it. Out company has very interesting offers for the families will any income, also for small and medium-sized enterprises. In these directions we have been working in this direction for several years and had a great progress. Although it’s clear that much more should be done in order more people to get interested in insurance and see the benefit what we offer them. In 2014 we are going to focus on the success-oriented individuals, for whom stable and prognosticated environment is important - out insurance is created to help them overcome problems quickly and simply in their hard times. Next year we plan to introduce sev-

eral innovation on the market”, - states director general of GPI Holding Paata Lomadze. GPI Holding informs that summarization of annual results has been started and they will present a report to the society in the near future. GPI Holding is one of the leading companies on the retail markets. 7 branches and large agency network offers company products in all branches of the country to the customers. The company was one of the first developing retail lines and introduced several innovative individual products on the market: health insurance - Policy Med, auto insurance - Policy-auto; travel insurance - policy - Travel; pension insurance - Policy-Pension; for small and medium-sized companies - Policy-Business and property insurance - Policy Comfort.

BUSINESS February 10, 2014 #41

caucasian business week

MARNEULI FOOD FACTORY PROVES THAT GEORGIAN AGRICULTURE HAS FUTURE Irina Gaprindashvili: “Agriculture is a complex and specific industry, which requires gradual development, sharing European experience and making continuous investments.”

eorgian consumers like tasty Marneuli products, placed on shelves of commercial outlets across the country, representing the outcome of quite risky and innovative business initiative. Interests of Tskali Margebeli’s (producer of famous Nabeghlavi mineral water) shareholders got linked to revival of Georgian agriculture and development of food industry in 2007. The history of Marneuli Food Factory and Marneuli Agro started also during that period. Marneuli Food factory is a part of Margebeli Holding, which was established in 2007 and now represents one of the biggest enterprises in the country. The Factory is equipped with the European machinery and produces up to 50 types of natural and tasty tinned food made of Georgian raw materials. Each product placed in a tin is grown on Georgian land and is 100% of local origin. Respectively, the sign M turned into a synonym of a quality and healthy food. “Agriculture is a complex and specific industry, which requires gradual development, sharing European experience and making continuous investments. Without consideration of innovative approach of developed countries the potential, which still exists in the country will disappear. Six-year experience of Marneuli Food factory and Marneuli Agro showed this clearly” - noted Irina Gaprindashvili, Director of Marneuli Food Factory. New technologies implemented during 2012 allowed the Company to offer more innovations to consumers. Respectively, the year 2013 was remarkable for Marneuli Food Factory. Production increased, as evidenced by growing volume of products in the retail chain. In addition to increasing the assortment of pickles and tomato pastes, the company started production of salads and made first export to Europe. Currently Marneuli Food Factory occupies nearly 30% of tomato paste and 40% of pickles markets. Ms. Gaprindashvili, the main goal of Marneuli Food Factory was replacement of imported products with Georgian ones… Since the first day of Company’s establishing

our goal was replacement of imported food with Georgian products. We offer consumers 100% Georgian products. Our main objective was to break the myth that production was impossible in Georgia and the country was unable to compete with Turkey and China. Of course, it is a long-term process though achievable. In order to make the Factory competitive it is necessary that the full production cycle complies with high standards. That was why the investments were made in Marneuli Agro in order to have constant supply of raw materials. The Company’s sales are increasing on a daily basis and we are expanding the assortment. We are going to continue this process in 2014 as well. The more Georgian companies are in the country, the more Georgian products will replace imported ones on the market. - Your products got exported in 2013 and as far as we are concerned they were liked by foreigners. Do you plan activities in this direction? - There is great interest in Marneuli’s products and we received many offers for export. The company regularly takes part in foreign exhibitions e.g. we attended FoodIst in Istanbul in December, 2012 and at the end of February the Company will be represented at largest exhibition GulFood in Dubai. The similar exhibitions allow us to learn foreign market requirements. Exporting products is a long-term issue and we are trying to be ready and offer such product to foreign consumers that would become popular shortly and find its niche easily on an international market. Currently the company is more focused on a local market. - Main suppliers of the Factory are Marneuli Agro, Member of the Holding, and local farmers, how is the process planned – the growing and harvesting? - Marneuli Agro is a part of Margebeli Holding, which is one of the leading companies in agriculture. The Company is the main supplier for Marneuli Food Factory. It has its own land, where it grows vegetables and cereals. Vegetables are initially grown in nurseries and then transplanted in the open air. Marneuli Agro uses European methods and technologies for vegetable growing. The Company has a modern equipment required

for dripping irrigation, as well as cucumber and tomato picker, which does not have an analogue in Georgia. As a result, the yield of Marneuli Agro per hectare is increasing annually. The main objective of the Company is to reach global indicators. For example, average global yield for tomatoes’ per hectare is 100-120 tons, while average figure for Georgia is 15-20 tons. We managed to yield 70 tons on our fields. As regards the cucumber, European benchmark is approximately 80-100 tons and we received 55 tons on Marneuli Agro’s fields. It should also be noted that Marneuli Agro harvested record wheat yield this year – 450 tons of wheat from 120 hectares. Average yield per hectare constituted 7.5 tons, which exceeded the country’s average four times. These figures are record –breaking for Georgia. - Main suppliers of the Factory are Marneuli Agro, Member of the Holding, and local farmers, how is the process planned – the growing and harvesting? - Marneuli Agro is a part of Margebeli Holding, which is one of the leading companies in agriculture. The Company is the main supplier for Marneuli Food Factory. It has its own land, where it grows vegetables and cereals. Vegetables are initially grown in nurseries and then transplanted in the open air. Marneuli Agro uses European methods and technologies for vegetable growing. The Company has a modern equipment required for dripping irrigation, as well as cucumber and tomato picker, which does not have an analogue in Georgia. As a result, the yield of Marneuli Agro per hectare is increasing annually. The main objective of the Company is to reach global indicators. For example, average global yield for tomatoes’ per hectare is 100-120 tons, while average figure for Georgia is 15-20 tons. We managed to yield 70 tons on our fields. As regards the cucumber, European benchmark is approximately 80-100 tons and we received 55 tons on Marneuli Agro’s fields. It should also be noted that Marneuli Agro harvested record wheat yield this year – 450 tons of wheat from 120 hectares. Average yield per hectare constituted 7.5 tons, which exceeded the country’s average four times. These figures are record –breaking for Georgia.

- What would you say about production season in 2013? - Marneuli Food Factory is supplied with raw materials by local farmers and its own farm, the shares are as follows: 40% of raw materials from our own fields while 60% is received from local farmers operating on the Georgian market. We receive raw materials from almost whole territory of Georgia. The yield is growing every year. We are investing in harvesting technologies for the next season to ensure even larger production for the market. Georgian climate allows us to allocate cucumber yield for two seasons. The first yield season will start in mid-May and go till the beginning of July, while the second season starts in the beginning of September and go till the end of October. In 2013, we received record yield of cucumber. There are famous European machinery installed in the factory, which ensure high level and quality of production. The existing technology lines allow the Company to pack products in 200, 250, 370, 580, 730, 1000, 3000 ml glass jars and 210,425, 830 gr tins. Also jams are packed in 5, 10 and 20 kg buckets and for corporate clients in 14 and18 L packages (since 2013).

FOR EDUCATED FUTURE -THE PROJECT OF TSKALI MARGEBELI AND UNFORGETTABLE MEMORIES FROM GREAT BRITAIN

nglish is a native language for nearly 300 million people all over the world, while for 500 million it represents a second language. Therefore, it is not surprising that English is the most demanded language in our country and is a precondition for achieving success for people of any age or social group. Respectively it is very important to promote and support learning of this language by public as well as private sector. For Educated Future -The Project of Tskali Margebeli being implemented for the second year now was designed for this purpose. The project is mainly focused on pupils of Chokhatauri Municipality. Based on the results attained in a National Olympiad organized by the Ministry of Education Tskali Margebeli awards the top three participants with twoweek English Language Course in Great Britain. The Company finances English language courses, travel, accommodation, excursions and the other activities. Results for this year will be announced on May 2. Company Tskali Margebeli (Nabeghlavi) developed a special Project For Educated Future in 2013 for school pupils of Chokhatauri Municipality for the purpose of improving their English language skills. Children got selected based on the English Language Olympiad results held by the Ministry of Education. According to ratings, the top three pupils Gvantsa Tsintsadze (53 points), Luka Kacheishvili (50 points) and Magda Mamaladze (45 points) left for Great Britain in August, 2013 to attend English Language Course.

They came back with unforgettable impressions. It should be noted that this was a pilot project, which will be held annually. „It is very important for us to implement such projects, since educated individuals can create real values for their country and the country’s development depends on them. Access to education including to English language courses will be important for development of competitive personnel in the future. We hope that pupils will get interested in our project and get engaged in it. We, on our side, promise that our efforts will be directed to creation of educated future”- said Gia Gogoladze, Tskali Margebeli Director. „This would not happen in our lives if not great surprise by Tskali Margebeli Company – we, as successful pupils, were given the opportunity to attend Summer School in Great Britain; the company paid tuition, travel costs…” – said participants. Upon their return, kids told us that these two weeks were unforgettable and extremely productive. Magda Mamaladze, N 1 Public school of Chokhatauri: I’ll never forget EC LONDON school, where I spent two weeks. Professional, merry teachers, interesting lessons, nice learning environment … and unique English language practice. I got acquainted with my peers from Germany, France, Poland, Ukraine, Italy, Spain and many other countries. I used to live in a nice family, members of which were trying to create warm environment around me.

I fell in love with London with its red buses, telephone booths, polite people, huge subway stations. I visited the National Gallery of London and never forget emotions raised by works of Leonardo da Vinci, Van Gogh, Monet, Manet, Renoir, Picasso, Alfred Sisley. Although I had seen many of paintings in various publications, I was greatly impressed by originals. We also visited the British Museum where the world’s history is collected and along with old Egyptian, Roman, and Helenian artifacts unique copper coin of David the Builder is kept. We saw Madame Tussaud’s Museum. I had the opportunity to view myself with wax figures of famous historian persons, scientists, cinema, music and sports stars as well as with gangsters. Hair color, face contour, haircut everything were close and analogous to reality. It was extraordinary feeling to stand next to Einstein, Picasso, Van Gogh, Mahatma Gandhi, Churchill, Shakespeare, British Queen, even Hussein Bolt, the multiple world champion and Pele. I had the opportunity to see the whole London from “London Eye”, where the greatest watching wheel is installed in Europe and takes 40 minutes for one

complete turn. We also saw the London Bridge, Westminster Abbey, Trafalgar Square, Oxford Street, Greenwich Observatory and Hyde Park. On weekends we visited maritime city of Brighton located on the South Coast of England at English Channel. I’ll always remember every day spent in this noisy, beautiful and merry town… I’m grateful to Tskali Margebeli for all of these, that my first trip abroad turned out to be such an enjoyable experience. Prior to departure and upon arrival we were met by Mr. Mikheil Svimonishvili and Gia Gogoladze. They were interested how was our trip to London, whether it was useful for studying English language”.

BUSINESS caucasian business week

GEORGIA SEEKS DAVOS INVESTORS TO BOOST ECONOMIC EXPANSION TO 7%

eorgia’s economy will expand 6 percent to 7 percent this year, driven by investments including a $5 billion seaport and infrastructure development, Prime Minister Irakli Garibashvili said. “We believe that it is an absolutely realistic expectation,” Garibashvili, 31, said in an interview yesterday in Davos, Switzerland. “Georgia lacked long-term capital, this is why we will start a new sovereign wealth fund in February and are planning new infrastructure projects.” The government is seeking to lure investors to a state fund, Garibashvili said. Potential backers at the World Economic Forum are “motivated” to invest in the Black Sea country, he said. The premier met with companies including Lazard Ltd. (LAZ:US), Lafarge SA (LG), Blackstone Group LP (BX:US), Jumeirah Group LLC, Tata Group and OAO Lukoil (LKOH), according to his press office. BLOG: DAVOS PROFOUND Georgia, home to energy links between Europe and the Caspian Sea that ship oil and gas westward to bypass Russia, is struggling with stuttering economic growth and waning foreign investment. The pace of expansion was 1.4 percent from a year earlier in the third quarter, the slowest since 2009. Moody’s Investors Service rates the country’s debt at Ba3, three steps below investment grade and on par with Bangladesh and Portugal. The government wants to build a $5 billion deepsea port as part of a plan to turn the country into a transport hub, Garibashvili said. Georgia also set up a $6 billion state-run fund, which includes a $1 billion contribution from former Prime Minister Bidzina Ivanishvili, for investments in energy, manufacturing, tourism, logistics and agriculture.

STORY: INDIA’S FARMERS BENEFIT FROM BETTER ROADS, WHICH MAY HELP SINGH Handpicked Successor Garibashvili is the handpicked successor of Ivanishvili, who has a fortune of $5.6 billion according to the Bloomberg Billionaires Index. The tycoon relinquished the position in November after his Georgian Dream party conquered both the premiership and presidency within a year. Garibashvili, who has a degree in political science from Sorbonne University in Paris and masters in international relations from Tbilisi State University, served as interior minister in Ivanishvili’s cabinet after working at the billionaire’s charity foundation. Their relationship sparked claims from ex-President Mikheil Saakashvili’s party that Ivanishvili is retaining control over the country. Garibashvili last week told reporters in Tbilisi, the Georgian capital, that he “proudly” takes advice from his mentor. STORY: AMAZON AND EBAY INCH INTO INDIA’S E-COMMERCE MARKET Russian Relations Ivanishvili made his fortune in Russia, which routed Georgia in a five-day war over two breakaway provinces in 2008. The billionaire pledged to improve ties between the countries when he rose to the premiership in 2012. Russia has since lifted trade restrictions including on wine and mineral water imports from the former Soviet republic. Russia maintains military bases in Abkhazia and South Ossetia after recognizing the breakaway Georgian regions as independent states following the war. “We did our best to normalize relations with Russia since we came to power, Garibashvili said. ‘‘Exports tripled after the market was opened. We welcome this, but honestly, we face a number of difficulties and provocations along the’’ border..

February 10, 2014 #41

GEORGIAN-GERMAN ECONOMIC FORUM WILL BE HELD IN FRANKFURT ON MARCH 18

he forum will be held in the conference hall of Commerzbank. Honorary consul of Georgia in Germany Klaus Hip is its initiator. GeorgianGerman Economic-Cultural Association is its organizer; Georgian Chamber of Commerce supports it. Chamber of commerce informs that Ministry of Economy and Internal Affairs of the Hassen Land, Mayor of Frankfurt, representatives of Ministry of Economy and Sustainable Development of Georgia, Ministry of Regional Develop-

ment, Ministry of Finance, National Investment Agency, Co-investment Fund and other organizations will participate in the forum. In the framework of the forum meeting with Georgian and German companies will be held in the following sectors: agriculture, real estate and construction, alternative energy, tourism, transport and logistic, banks and finance. Bilateral meeting between Georgian and German companies will be planned in advance, depending on the activity sphere and interests.

BANK OF GEORGIA MAY INTRODUCE PAID SERVICE FOR CELL PHONE BALANCE RECHARGE Have cell communication companies concluded cartel collusion?

iorgi Kadagidze, the President of the National Bank of Georgia (NBG), has got several questions to pose to cell communication operators. When commenting on problems with quick payment terminals, Giorgi Kadagidze expressed interest how all cell operators have managed to change the service regulations on the same day. « The process has been already protracted. This is not a simple issue, because it concerns various sectors of the state economy. I want to ask several questions to cell operators. I have talked with the Georgian National Communications Commission (GNCC), the Economy Minister and we have agreed on our positions over the issue, as a regulator and policy-maker. I hope the issue will be resolved, in other case, we will receive a situation, when quite successful sector of our economy will turn out in worsened conditions and bankruptcy hazard may also arise. The way the regulations have been changed on the same day by all operators is questionable », Kadagidze said. The cell phone balance recharge regulations changed in April 2013. Cell communication operators have refused to pay commission fees for quick payment terminals. As a result, commission fees are written off from clients’ balance in several networks. In this situation cartel collusion signs are outlined. First of all, the NBG President noted cell operators have simultaneously refused to pay commission fees. The price policy of quick payment companies also point to cartel collusion signs. The matter is that these companies did not have price competition and all of them had set 4% commission fee. The situation changed after Bank of Georgia appeared on the market. The bank offered interest-free commission fee to mobile operators. As a result, cell communication companies refused to pay the fee. Akaki Chargeishvili, a representative of quick payment companies, says the decision of Bank of Georgia was a part of the dumping policy. The interest-free commission fee of Bank of Georgia will run until April 1, 2014, Akaki Chargeishvili said, and later the bank will make the service paid. Before, the bank plans to lead competing companies to bankruptcy. « The bills of quick payment terminals indicate that the service

is free of charge and it will run for a period of one year. In this period, other companies will be bankrupt, while commercial banks will make the service more expensive and the population will have no alternative. Commercial banks have made benefit from this situation, because they have financial resources to remove commission fees for clients. They have also made benefit from absence of antitrust and antidumping efficient services », Chargeishvili said. Cell communication companies have made benefit from the Bank of Georgia decision and refused to pay commission fees to the remaining quick payment companies. As a result, the tax burden moved to the clients. Almost all quick payment companies have set 4% commission fee and this step have led them to bankruptcy. OSMP company has been bankrupt and withdrew from the market. NOVA Technology is also facing serious problems. « The question is to all participants, including cell operators. How have all three cell operators managed to change the distribution policy on the same day and to send identical contract agreements to all participants that signifies the growth in their service price », Giorgi Kadagidze noted. Teona Baghdavadze, a head for Beeline PR office, says : « Clients are able to choose how to recharge the balance and therefore, we do not create discomfort to subscribers. we have ceased subsidizing quick payment business, because we think subsidizing this business is not relevant for us. In response to Giorgi Kadagidze’s question about the way cell operators have simultaneously refused paying commisison fees and whether they have concluded cartel collusion, Teona Baghdavadze said this is an internal process and she would not comment on the issue. The decision of Bank of Geoirgia has brought strange results. Cell operators have not to pay commission fees. Bank of Georgia becomes a monopolist in the quick payment business sector and receives huge profits in the form of commission fees from other services, while the attainability of services have been restricted and prices have grown. At the same time, other quick payment companies have not introduced alternative offers and continue operating with old tariffs.

BANKING NEWS February 10, 2014 #41

caucasian business week

BANK OF GEORGIA INCREASED SUPERVISION CAPITAL BY $65 MILLION WITH IFC ASSISTANCE

ank of Georgia increased supervision capital by $65 million. Bank of Georgia and IFC made a joint statement on the $65 million investment of IFC capital-

ization fund. The investment promotes sustainable development of the economy by the bank. “We are glad that by cooperation with Bank of Georgia, which is expanding, increases lending opportunities and makes funding sources in Georgia more accessible”, - head of IFC capitalization fund Marcos Bruges stated on the press conference on February 6. IFC loan is for 10 years. “Above-mentioned subordinated loan, which is secondary capital, will strengthen overall capitalization of the bank and at the same time will

enhance lowering of financial resource value of the bank”, - director general of Bank of Georgia Irakli Gilauri stated. By January 1 supervision capital of the bank equals to 867 million and exceeds to norm (≥12%), overall capital is 1,02 billion GEL. According to overall banking sector’s actives, loans, clients’ deposits and stock capital Bank of Georgia’s share is over 1/3. IFC is a stockholder of the holding company of Bank of Georgia, registered UK, stocks of which are traded in the premium listing of London Stock Exchange. Georgian became IFC member in 1995. Since then IFC has implemented 57 projects with $695 million investment value.

REPUBLIC COMPLETED 2013 WITH 15,236 MILLION GEL PROFIT

ank Republic completed 2013 with 15,236 million GEL profit (15,235 million in 2012, 16 969 million in 2011). By January 1, 2014 amount of non-banking deposits equals to 509,8 million GEL (01/01/13 -427,4 million; 01/01/12 - 334,6 million GEL), credit portfolio - 713,1 million GEL (01/01/13 -572,5 million; 01/01/12-472 million GEL). Annual growth of deposits equaled to 19,2%, loans - 24,6% (01/01/13

-28%, 21,3%). During a year actives increased by 36% (2012 -15%), to 1.058 billion GEL; market share is 6,1% (01/01/13 -5,5%). Bank Republic operates since 1991. French Banking group SOCIETE GENERALE is its major stockholder, which purchased control package (60^) in 2006 and currently their share in the capital is 93,64%. 6,35% belongs to EBRD. Stock capital equals to 146,8 million GEL.

VTB SHOWED HIGHEST GROWTH OF INDIVIDUALS’ LENDING IN 2013

TB Bank increased lending of individuals by 43,6% in 2013, which, according to banks, statement is highest growth data on the market. By the end o the year loans amount equaled to 208,3 million GEL. Out of the loans for individuals, mortgage loans portfolio increased the most. By the end 2013

growth of this portfolio equaled to 55,1%. Consumer loans portfolio increased by 33,2%, auto loans - by 43,3%. These growth data of individuals portfolio was determined by the promos initiated by the bank in 2013 on consumer, auto, mortgage loans, low rates, flexible and quick procedure of loan issue.

PREFERENTIAL AGRO CREDIT PORTFOLIO OF VTB IS 37 MILLION GEL

he bank informs that loans are mainly issued in the framework of II, III and V components. With Component II, loans issued for funding of agricultural turnover and main tools with 8% interest rate, equal to 17,6 million GEL. With component III (investment loan for the enterprises, 3%) - 5,6 million, with V component (funding for vintage, 6%) - 9,5 million. Annual growth for agro-loans portfolio of VTB Bank equaled to 225%. Funded sectors include: plant growing, viniculture, livestock, poultry, greenhouse farming, and so on. “We positively evaluate participation of the bank in the Agro-credits Project. VTB Got involved from the very first day and we predicted investment of 25 million, although it exceeded to this

demarcation by 12 million, which indicates importance and success of the project”, - Retail Business Director of VTB Valerian Gabunia stated. Agro-credit is initiated by former prime minister, co-funded by the stated and issued since April of last year. In the framework of the project over 220 million GEL is issued for over 8 000 beneficiaries. I component - 0% commodity credit II component - loan for medium-sized and large farmers III component - loan for enterprises. 53 out of 308 are startups IV component - leasing V component - 15-months loan for vinery VI component - 4-months loan for citrus producers VII grant component will be added.

TBC BANK LAUNCHES FINANCIAL LITERACY PROJECT

new face has emerged on social networks. Salome Shelia, the author of the new project of TBC Bank. Over 4,000 viewers have seen Salome Shelia’s promo video in one day alone. If you have not watched the video yet, we encourage you to watch it on Youtube or TBC Bank’s Facebook page. The title of the video is Salome Shelia’s Personal Finance Tips. Until then, we would like to share with you more details about the project. TBC Bank is launching one of the most innovative projects in the banking sector named The project, entitled Salome Shelia’s Personal Finance Tips , aims to deliver useful financial advice to the public. The management of personal financial resources, careful spending and saving… These are the issues that we come across in our everyday life. However, when seeking sound financial advice, we often do not know who to turn to for advice. From now on Salome Shelia is your personal financial advisor, and through short interesting video clips, she will try to provide you with necessary advice on how to meet your daily needs and plan your future the right way. You may ask: why should I listen or trust a person I have never met or heard of before? Well, Salome Shelia is a manager with extensive experience, a highly qualified business consultant, successful entrepreneur and a personal financial expert. Before starting her project with TBC Bank, she enjoyed a very successful manager’s career in the commercial, public and non-governmental sectors. Salome has long consultation experience in management. From 2006, she was the Head of IMG, a Management Consultation Company, which used to cooperate with well-known companies like Poto Port, Socar, Axis and many others.

Salome Shelia holds an MBA degree in business administration from the Weatherhead Management School of Case Western Reserve University; as well as a master’s degree in psychology from Tbilisi State University. We expect many people to say: Let me have money- there is no need to teach me how to manage it. Shelia however, has her own opinion on this. She says that the less money you have, the better management is needed. “Let me try to convince listeners that whether you have a lot of money or very little, all money needs to be managed correctly. Nobody’s safe from making the wrong financial decisions – this includes both the wealthy and those who live salary to salary. However, the less money you have, the more noticeable the negative effects are after making a poor financial decision,” Shelia explains. Shelia has already recorded and posted her first video blog, “Desired VS goals” which is available on social media. The video can be found on Youtube and TBC Bank’s Facebook page. “We all seek a peaceful and happy life, and money is an inseparable aspect of our lives. Our wealth, like it or not, affects our life, so we are betteroff managing our money rather than letting our money manage us,” this is the philosophy carried by Salome Shelia’s project. Issues that she is considering, studying, processing and offering to customers as guidelines, come from everyone’s daily living and this is why TBC Bank is confident that Salome’s communication with cthe ustomers is going to be one of the most efficient ways to help them make the right decisions. Thus, all who are concerned about their financial situation should participate in this greatly useful project.

INVESTBANK’S STOCKHOLDERS STRUCTURE CHANGES

he bank’s management informs that currently the stockholders discuss the issue. Entrance of non-residents in the stock capital of the bank is not considered. Resident should be added to the existing stockholders, but it’s not specified whether it’s a concrete Georgian bank, financial group, individual or individuals. National Bank states that they are working on the entrance of the new stockholder in the bank’s structure. Investbank has been managed by the temporary

administration of National Bank for 4 months. Failure to fulfill the supervision capital requirement became basis for entrance of the regulator at the end of October 2013. Coefficient was 11,826% and respectively was slightly behind to 12% norm. IvenstBank operates since 2003. So far 70% of the bank’s stocks belong to Dimitri Gabrielshvili and Ladi Alexidze, 30% belongs to Patricia Cocksage. Stock capital of the bank exceeds to 12 million GEL. Possible changes in the stockholder structure will be known till the end of this month.

FINCA BANK COMPLETED 2013 WITH 7,059 MILLION GEL PROFIT LIBERTY BANK INTRODUCED LOWinca Bank (Georgia) completed on Actives (ROA) - 5,7%. FINCA Microfinance 2013 with 7,059 million GEL profit Cooperatief U.A. (Netherlands) is owner of JSC (01/10/13 - 4,659 million). Finca Bank. Partners include IFC, World Bank RATE CREDIT CARD

By January 1 loan portfolio of the bank is 113,3 million GEL (01/10/13 -98,8 million GEL). It has not yet attracted deposits. Former micro-finance organization obtained banking license on August 6, 2013. Overall obligations equal to 108 million GEL (01/10/13 - 92,3 million GEL), overall actives 144,8 million GEL, market share - 0,8%. Ratio of liquid actives to overall actives is 9,3%, Return

Group, KfW Bankengruppe, FMO, Global Microfinance Fund, Triple Jump. Stock capital of the bank equals to 36,9 million GEL. Return on Equity is 20,7%. Primary capital coefficient 17,5% (≥8), supervision capital 22,9% (≥12%). Finca maintains profile after transformation into bank. Their priority is financial service to lowincome entrepreneurs.

irector of the bank Sandro Rtveladze stated on the presentation that the special card is for the individuals, who pay property tax, has 20% rate with 55-day preferential period and includes various benefits. The cardholder will get 10year package of banking service as a gift, also Smartive card as a bonus, with 10% rate accrued on the account.

The client will enjoy with following benefits: exclusive account packages, multi-currency account in 10 various currencies, up to 50% discount in over 100 partner objects of the bank. Besides, loan rate will be lower and deposit rate will be higher for them. The bank introduces a new project in the framework of Elite-2014 project.

HPP caucasian business week

February 10, 2014 #41

KAKHA KALADZE: THE KHUDONI HPP PROJECT IS OF UTMOST IMPORTANCE TO GEORGIA

he story named Khudoni HPP, counting several decades, started during the Soviet period... and ended shortly... however, as experts say, the reason was not the national movement of that time opposing the construction... The Soviet Union, being at the verge of the break-up, had its own subjective reasons... Zurab Gedenidze, Professor and a Dean of Construction Faculty of the Georgian Technical University: “Russia felt during that period that Soviet Union was going to break up. It wouldn’t stop the construction of Khudoni HPP without this threat. Turbine – generators were ready and arriving in Rostov for installation. When Russia realized that threat of break-up it stopped 11 biggest constructions in the other republics including Khudoni. Vakhtan Grdzelishvili, a Chief engineer of Zhinvali HPP told me that when they met the Minister and told him modestly that the situation was very hard in Georgia and the construction was to be stopped he threw papers back and said: “if you do not want go away”. Therefore, on the one hand, they did not spend money and on the other took care that we were not energy independent.” After coming to power, even Zurab Zhvania, opponent of the project, started thinking of the country’s energy independence and Khudoni HPP. In his interview to Version Newspaper in 2002 he said: Zurab Zhvania: “When I was a Chair of the Parliament and used to have meetings with businessmen in the US and Europe, I often was offering them to think seriously about investing in Georgia’s energy system, including on revival of Khudoni Project, of course, with consideration of environmental requirements. There are several versions how the kettle existing there can be used. Significant works were already conducted there in Soviet times and we were opposing such abandonment of the construction even when I was in the Greens’ Party. We were supporting the idea of conservation, not such abandonment. Well, in short, the works performed allow us to add a significant object to Georgian energy system.” COMPANSATIONS PAID TO 130 FAMILIES – “NOBODY DENIES IT… I ALSO TOOK THE COMPENSATION…” Although the Soviet Union being close to dissolution stopped Khudoni HPP construction in addition to the other 11 objects, the government in 1988 paid significant amount as a compensation to 130 families residing there in exchange for leaving the village. Part of Khaishi population does not deny this fact. Pasiko Guledani, Acting Director of Khaishi Public School: “Compensations were paid, I also took it, but I deposited it to the Savings Bank and I lost it. I still have the cash book and as a I lost my money so did others. All of us used to keep money in the Savings Bank, but the State took it back from us. So should I buy a T-shirt instead of a house?” Nana Aptsiauri, Logistics Manager of Khaishi Public School: “When these compensations got paid I was a child and I don’t know much about it. But let’s consider what Miss Pasiko said, that she took compensation. The amount received 30-35 years ago how can be useful now? Oleg Chkadua, the Ranger, Employee of the Ministry of Environment Protection does not deny the fact of taking compensations, he is considered as one of the chieves of Khaisi striking residents. His argument is the same as Pasiko Guledani’s - the money was paid but they lost it in the Savings Bank. Manana Qochladze, representative of Green Alternative, in her interview with Guria News, did not deny the fact of taking compensations and made such explanation: “As regards taking compensations during Soviet Period, nobody denies that, including families who took those. However, under the decision of the Georgia’s Cabinet of Ministers of 1998, Khudoni HPP Project should have been not only

stopped but liquidation and conservation works were to be conducted. This was not fulfilled. Respectively, if now the company wants to prove that these people already took the compensation this is not the right approach. These people were once re-settled from Svaneti and they came back after the construction got completely stopped.” KAKHA KALADZE: “IMPLEMENTATION OF KHUDONI HPP PROJECT HAS VITAL IMPORTANCE FOR OUR COUNTRY!” “We strongly support the idea that such significant project is implemented in our country. We have such approach: we want to be constructive, but simultaneously we will not allow that it is misused by some people or groups. There is the law in the country and we will act within its scope. Implementation of Khudoni Project is of vital importance for the country.”- said Kakha Kaladze, the Minister of Energy. According to him compensations will be high: “I know approximately what is the amount of compensation, these are solid sums, however I do not have the right to make a statement on this issue since it is confidential. I assure the local population that none of them will be left deceived.” After once received compensations can the recipients considered as owners and what are the rights of the state and the investor in whose name this territory is legally registered? Levan Alaphishvili, the lawyer, made explanations with Guria News on this issue. Levan Alaphishvili: “In this particular case it was buyout of houses not of the land. Such transaction should have been registered in the Technical Bureau or Executive Committee of that time, this was the Civil Code requirement. Transaction would have been deemed void without registration. Nullity of the transaction obliges both parties to restore the status quo, i.e. return everything received through transaction – the state had the right to claim and the house owners had to return the compensation amount. Ownership right is the right guaranteed by the Constitution. However, it does not mean that it is absolute and unlimited right. The Constitution stipulates that this right may be restricted for public interests in the events specified in the law in accordance with the respective procedures, under the court decision and respective compensation. In reality some of Khaishi residents refuse to be owners. If this property is not registered as an estate of specific citizens, then according to the legislation it can be simply assumed that this is a public property with its consequences. It may happen that when they decide to have negotiations with the investor, the latter says that they are not entitled to negotiate since they are not owners. Incidentally there were many of such cases when the population was left at loss because they did not have land registered. My advice at this stage - whether or not Khudoni HPP

is constructed, the land is to be registered by owners.” Will it come to the point of expropriation i.e. forfeiture of property for public needs? The comment of Kakha Kaladze, the Minister of Energy was: “I think in such case application of this law will not be necessary!” Levan Alapishvili: „ Pursuant to the Law on Property Forfeiture Procedure for Public Needs, the forfeiture or expropriation is carried out on the basis of the Order of the Ministry of Economy and Sustainable Development and court decision. THE MINISTRY OF ECONOMY - THE AGREEMENT SIGNATORY USES THE RIGHT TO SILENCE In 2011 The Government of Georgia, on behalf of the Ministry of Energy, concluded an agreement on implementation of Khudoni Project. In January 2012, The Ministry of Economy signed an agreement with Company Trans Electrica on transfer of land owned by the state for construction of Khudoni HPP. Acquisition of additional private land plots for the project was provided for in the project action plan. The land was agreed upon and the company is paying tax for it. At the meeting of May 2, 2013, the Government unanimously made decision on implementation of Khudoni Project. New Government, during 4 months, revisited this project and a new agreement was concluded with the company. Within the project framework, main impact on land is made by hydro dam and reservoir taking 528 hectares, representing 0.12% of Svaneti territory. According to the initial description, conducted in 2012, 184 families - 769 people would be affected. As regards the resettlement, the following is defined according to the international resettlement policy requirements (World Bank): The quality of life of affected population shall not be deteriorated, on the contrary, it needs to be improved; • Compensation and resettlement program development shall be conducted in consultations with the affected population; • The land shall be bought out, where possible, based on agreements concluded under negotiations; •All types of compensations need to be evaluated based on replacement cost; •Special attention needs to be focused on vulnerable groups; • The grievance mechanisms need to be developed. According to the investor company, it is ready to meet all of the above listed terms, in addition, cemeteries and graves located on the territory will also be moved. The company is ready to review settlement area development perspectives and offer the population various combinations of cash and in-kind compensation. As regards the Ministry of Economy, a successor of the Agreement concluded in 2012, it deems that the issue related with land plots falls under the competence of the Ministry of Energy. The

Comment of Giorgi Kvirikashvili, the Minister of Economy was as follows: “I am not acquainted with the materials of this case and therefore I cannot make any comment on this.” The Minister did not answer at all the question: “The land represents the property and the Property Management Agency is subordinated to your Ministry”. Ucha Nanuashvili, the Ombudsmen, has some complaints against the Ministry of Economy. According to him, the stakeholders did not know anything about the agreement between the Ministry and the investor company. However, it needs to be noted that the Ministry of Economy furnished us with this agreement without request. In response to four questions that we sent to the Agency of Property Management, only this comment was received: “Trans Electrica Georgia LTD was handed over the state-owned property (in the form of free construction) for fulfillment of assumed liabilities. We hereby enclose the copies of documents.” The questions sent to the Ministry are presented below: 1. Could you please explain how and in what format does the Ministry of Economy participate in implementation of one of the largest infrastructural projects such as Khudoni HPP and specifically what actions are to be implemented by the Ministry of Economy. 2. In 1998, Khudni Directorate was established at the Mestia Executive Committee. Based on available documents, 130 families of Khaishi Community signed an agreement and received compensations from the state. Given that the state in the past already bought out the land and paid respective compensations to the population, and simultaneously Georgia represents a successor of the Former Soviet Socialistic Republic of Georgia, can it be presumed that the state bought out the land and it represents the public property? 3. According to Trans Electrica, Khudoni Inevstor, it is ready to pay compensations to local population. In case this property is already in the state ownership and respective compensations were paid, do we face a legal case? 4. According to the Property Management Agency, does the Khaishi Community pay property and land taxes? We failed to receive answers to these questions despite many efforts… Who owns the land and who is to decide the issue of the one of the most important projects Khudoni HPP? - the state or Svaneti Elders? We do not have answer to this question either. However Sozar Subari, the Minister of Penitentiary, Probation and Legal Assistance of Georgia, Victor Japaridze, a representative of the Parliamentary Majority and Kakha ZhorZholiani, Mestia Gamgebeli, stated that they would make their comments after meeting of the Svaneti Elders…

AZERBAIJAN February 10, 2014 #41

caucasian business week

PRESIDENT ALIYEV: AZERBAIJAN BECOMES INDISPENSABLE PARTNER FOR CONTINENT

eydar Aliyev Center hosted a conference on the implementation of the state programs for social and economic development of Azerbaijan. The conference was chaired by the country’s President Ilham Aliyev. The Head of State first viewed an exhibition on implementation of government programs for socio-economic development of regions held in Heydar Aliyev Center. The exhibition featured the main indicators of socio-economic development of the country in 2003-2013 reflecting the development of industry, infrastructure, information and communications technology, agriculture, social services, tourism, environment, business and other sectors of the economy. The state programs aimed at accelerating the socio-economic development of the regions played an important role in the dynamic development of the country. As a result of the focused and integrated government policy carried out in the past years, three quarters of the entire South Caucasus economy belong to Azerbaijan. In 2003-2013, Nakhchivan Autonomous Republic has also gone a long way of development, with increasing GDP, industrial, agricultural production. President Aliyev made an opening address at the event. The main point about the state regional programs is that they cover all areas. “Adoption of the first program in 2004 has played a special role in the development of the regions of Azerbaijan,” he said. The first five-year program led to a turning point in the regions. Then the second program was adopted. These programs played a very important role in regional development and strengthened the economic potential of Azerbaijan as a whole. During the last ten years, Azerbaijan has developed most rapidly in the world; the economy grew by 3.4 times. “As a result of these two programs, industrial production grew by 2.7 times. If in the first years of the program implementation, the economy and industry made progress mainly because of oil sector revenues, in recent years, the non-oil sector has played a great role in the development of our country,” Aliyev added. “It is no coincidence that last year oil sector expanded by almost 10 percent. This is also one of the highest rates in the world. Overall, in the past year, the economy grew by nearly 6 percent,” the president stressed.

All achievements are reflected in the statistics. The economy grew by 3.4 times, industrial production by 2.7 times, agriculture by 1.5 times. The country created 1.2 million jobs, 900,000 of which are permanent. “Poverty declined from nearly 50 percent to 5.3 percent. Unemployment is 5 percent. Based on these figures, Azerbaijan is ahead of even developed countries. Our foreign debt is 8 percent,” Aliyev said. “Over the past ten years $160 billion has been invested in Azerbaijan and the volume of investment in recent years continued to grow. Last year it reached a record level when $28 billion was invested in the Azerbaijani economy. Domestic investments have already exceeded foreign ones, which is also a very positive fact. The composition of domestic investment is still dominated by public investment spending, which is natural, since infrastructure projects and other programs necessary for the economy are implemented,” he said. “The private sector has also increased its investment in Azerbaijan. This was made possible primarily thanks to the prevailing stability in our country. It is a testament to the faith of the private sector in the future of Azerbaijan. I am sure that in the coming years, investments will not be reduced, as there is still much to do,” the president said. “Despite the major oil contracts have already been signed and implemented, Azerbaijan remains an attractive country for foreign businessmen,” he believes. “Today, more funds are invested in the development of non-oil sector. Investment climate created in our country is very positive. Azerbaijan is at the forefront in the CIS for the volume of direct foreign investments per capita.” Also, over the past ten years, a great attention was given to the development of entrepreneurship. In particular, the government invested 1.2 billion manats through the National Fund for Entrepreneurship Development. President Aliyev also emphasized dynamic development of Azerbaijan, growth of the population and growth of economy. “We have big plans for the future industrial development. Azerbaijan will become a modern industrial country. Hundreds and even thousands of new businesses will be created,” he said. President Aliyev said today Azerbaijan is a strong state, and the Azerbaijani people live in safety. “Azerbaijan is among the countries that speak their word in a global scale. We have our own opinion, our own attitude on every issue.” “Azerbaijan must addresses food safety and transport security. Today we are becoming a transport

hub for the entire world, not only for the continent,” he said. “Azerbaijan has become an indispensable partner for the continent in terms of energy security. In December last year, the largest contract of the 21st century was signed. “The Contract of the Century”, that is a contract of the 20th century, is implemented successfully. Azerbaijan undertook basic economic weight and the primary responsibility. We are ready for this responsibility. We are aware of this responsibility. By proper leadership will be able to implement these projects,” Aliyev underlined. Afterwards, Minister of Economy and Industry Shahin Mustafayev, Minister of Transportation Ziya Mammadov, Minister of Agriculture Heydar Asadov, President of the State Oil Company Rovnag Abdullayev, President of Azerenergy Etibar Pirverdiyev and chairman of Azersu Gorkhmaz Huseynov addressed the meeting. President Aliyev made closing remarks to the conference. “The overall economic development of the country should be achieved in the coming years,” he said. “In the coming years, the country expects a large currency income thanks to development of oil and gas as well as non-oil sectors,” he noted. “These funds will be transparent. They will be used for major expenditures and addressing social issues. Infrastructure projects, and support to entrepreneurship will be also in focus.” “In other words, over the next 5 years, we will have enough economic, financial and technical resources to successfully implement the third program. Of course, we have gained a great experience over the last 10 years. Thousands of new companies have emerged over the past 10 years, and we are trying to strengthen local companies. In particular, favorable terms have paved the way for their participation in the state projects.” “Full implementation of infrastructure projects should be completed within the next five years. The development of agriculture will continue to be a priority in the coming years,” he said. The banking sector has developed rapidly in the recent years. “I think the time has come for the banks to allocate more financial resources to economy. One of the main functions of banks is to give greater impetus to the country’s economy.” “The government is greatly supporting the development of the banking sector. Banks should be aware of their social responsibility and allocate more funds in the form of credit to the economy,” the president stressed. “This year is a year of industry. Special attention is paid and will be paid to the development of industry. The process of creating industrial parks is in full swing. Also, industrial areas and industrial zones should be established in every city, as the economy, the industrial potential, and the population is growing,” Aliyev said. “There are some countries where the population is decreasing. We have grown tby more than 170,000 people last year. This is a very positive growth and demonstrates our economic development. Our economic potential and industrial capabilities must comply with this trend. Therefore, in every city, probably in suburbs, special industrial zones should be created,” he noted. The president underlined that different measures have been implemented over the last 10 years. The state program was fulfilled which was a great support to the development of the country. He assured that the third program will be also implemented on time ensuring a successful and dynamic development of Azerbaijan.

SOCAR EXPANDS DEVELOPMENT DRILLING

zerbaijan’s energy giant SOCAR carried out some 10,492 meters of drilling operations (excluding joint ventures and operating companies) in January 2014, compared to 10,629 meters in January 2013. The company reported that about 10,424 meters of all the drilling works carried out in January 2014, fell to development drilling (around 9,320 meters in January 2013) and 68 meters fell to exploration drilling which amounted to 1,309 meters in January 2013. SOCAR carried out about 142,656 meters of

drilling operations in 2013. Some 135,665 meters of all the drilling works carried out in 2013, fell to development drilling and 6,991 meters fell to exploration drilling. SOCAR includes the production association Azerneft (companies producing oil and gas on land and sea), Azerkimya (chemical industry enterprises), and Azerigaz (gas distribution). Jointly with foreign partners, SOCAR participates in major projects such as the development of Azeri-Chirag-Guneshli block of oil and gas fields and the Shah Deniz gas condensate field in the Caspian Sea.

S&P PREDICTS ‘STABLE’ OUTLOOK FOR AZERBAIJAN’S ECONOMY

he Standard & Poor’s Ratings Services (S&P) has affirmed its ‘BBB-/ A-3’ long- and short-term sovereign credit ratings for Azerbaijan with a stable outlook. The S&P reported on January 31 that the ‘stable’ outlook reflects the agency’s view that the development of large oil and gas fields in Azerbaijan will support economic growth, but will not provide as high a budget surplus, as happened in previous years. The agency’s analysts noted Azerbaijan maintains a strong net general government and external asset positions. The S&P also noted these assets continue to provide substantial buffers against potential shocks. “The country’s ratings may be raised if Azerbaijan’s net external asset position were supported by a significant improvement in the macroeconomic environment, an acceleration of institutional reforms that enhanced policymaking predictability and transparency, or a strengthening of monetary policy and the banking system,” according to the message. The agency estimates an economic growth at around 5.8 percent in 2013, the fastest pace of expansion since 2009. “While the oil sector is just emerging from a recession, public spending especially on infrastructure, is contributing to higher growth rates in the non-oil sector. We expect GDP growth to average about four percent in the medium term, equivalent to long term GDP per capita growth of 3.6 percent. This is in line with peers,” the agency’s analysts said. The real GDP growth in Azerbaijan amounted to 5.8 percent, the non-oil sector increased by 9.8 percent. The country’s GDP in 2013 increased up to 57 billion manats. The European Bank for Reconstruction and Development (EBRD) has predicted Azerbaijan’s gross domestic product (GDP) will be 3.5 percent in 2014, unchanged compared to 2013. The World Bank predicts Azerbaijan’s economic growth at 5.3 percent, and the potential GDP growthat 6.6 percent while the Azerbaijani government forecasts the GDP growth at 4.7 percent in 2014. The S&P also believes the annual volume of oil production will be at approximately the same level until 2017, but the growing volume of gas production will support the economic growth. “We expect the development of the Shah Deniz II gas fields to remain on track for 2018 now that the SOCAR-led (State Oil Company of Azerbaijan Republic) consortium has chosen the TransAdriatic Pipeline as the connecting grid to the Trans-Anatolian Pipeline, the latter being the initial carrier of Azerbaijani gas toward Europe”. The agency’s analysts believe that capital expenditures remain high at about 40 percent of total expenditure. “In our view, this provides a large degree of fiscal flexibility in the event of a financial shock to the economy,” the S&P said.

AZAL CUTS COST OF BAKU-TBILISI-BAKU FLIGHT

zerbaijani Airlines (AZAL) has reduced the cost of Baku-TbilisiBaku flight. The number of seats for this offer, according to the company, is limited. “The cost of a ticket for Baku-Tbilisi-Baku flight starts just from 174 euros (taxes and fees included),” the company said. Being the biggest Azerbaijani airline and national flag carrier, and a regional and CIS leader in the number of new aircrafts, AZAL offers its passenger flights to European countries, the CIS, Middle East, and Asia. After purchasing new Boeing aircrafts for long-haul flights in 2014, the airline plans to open regular flights to several destinations in North America and Southeast Asia. The company cooperates with about 60 airlines to provide its passengers with an opportunity to travel freely around the world.

CIS caucasian business week

February 10, 2014 #41

RUSSIA’S INTERNET GROUP YANDEX TO OPEN NEW OFFICE IN BERLIN

ussian internet group, Yandex, plans to open an office in Berlin to attract western technological expertise, Reuters reported. The office will employ 30-40 software engineers and user interface designers by the end of this year, who will work on the global version of Yandex’s mapping service, the company said. Moscow-based Yandex, has operations in Belarus, Kazakhstan, Ukraine and Turkey and developer offices in Switzerland and the US. The firm leads Google in Russia, with a market share of more than 60 percent.

EXPEDIENCY OF ADDITIONAL NORD STREAM BRANCHES CONFIRMED – GAZPROM

he Nord Stream gas pipeline’s operator has conducted a study showing that construction of one of two additional pipeline branches is economically expedient, Russia’s Gazprom has said. The Russian gas giant is a major shareholder in the Nord Stream project. The need for new branches is also technically and ecologically feasible and investment-attractive, the statement said, as cited by ItarTass. “Nord Stream AG’s feasibility study paves the way for the project’s expansion,” the company said.

MOODY’S SAYS OLYMPICS UNLIKELY TO BOOST RUSSIAN ECONOMY

osting the Winter Olympics in Sochi is unlikely to give the Russian economy a big boost, according to ratings agency, Moody’s. The report assumed that uncertainty over the long-term legacy overshadowed the benefits of the Games, which are expected to cost more than $50 billion, Reuters said. The Games would have a neutral impact on Russia’s debt rating, and the outcome for Russian firms involved in the Games would be mixed, Moody’s said on Wednesday.

RUSSIAN HYPERMARKET CHAIN LENTA ANNOUNCES IPO

ussian hypermarket chain Lenta, part-owned by US private equity firm TPG, has announced plans for an initial public share offering in London and Moscow. London listing could raise around $1 billion for its shareholders, Reuters said. TPG owns a 49.8 percent stake in Lenta. VTB bank holds 11.7 percent and the European Bank for Reconstruction and Development has 21.5 percent. Sources previously said the banks advising on Lenta’s IPO are JP Morgan Chase & Co, Credit Suisse, UBS, Deutsche Bank and VTB.

HSBC’S PMI SHOWS RUSSIAN SERVICE SECTOR STAGNATES IN JANUARY

rowth in Russia’s service sector all but evaporated in January, the HSBC purchasing managers index (PMI) showed on Wednesday. The headline figure fell to 50.2 in January from 53.6 in December, reinforcing concerns that the economy is losing momentum, Reuters said. “January PMI indices just confirm that the downward trend in economic activity growth in Russia has returned,” according to Aleksandr Morozov, chief economist for Russia and CIS at HSBC. “It was sufficient to put the economy at risk of recession.”

SOCHI OLYMPIC DEBT ‘MANAGEABLE’ - FITCH

ebt created by the Sochi 2014 Olympics will be “manageable” for the Russian Krasnodar region, Fitch Ratings wrote in a note Wednesday. Financial risk for the region will be reduced by heavy government funding and high return on investment. The Krasnodar economy is “well diversified and there is a steady flow of funding from the federal government,” the ratings agency said in a statement. Olympic Committee members first estimated the Olympics would cost around $10 billion, but the debt has grown because investors are certain they will be paid back by the federal government. According to Igor Nikolaev, director of strategic analysis at PKF, the Olympics are a “holy” event so the state will help to pay off Olympic debt. Many of Russia’s state-owned banks are providing loans to Olympic projects, which in Fitch’s eyes, makes the debt less risky. Russia’s fourth largest bank, Vnesheconombank (VEB) is lending $6.7 billion to finance projects, or 12 percent of its loan portfolio. Another measure which will make Olympic debt more manageable is Russia’s rainy-day fund, the National Welfare Fund, as it will likely convert about $6 billion (200 billion rubles) in deposits held at the bank into long-term subordinated securities. “Costs associated with the sports facilities totaled $6.5 billion (214 billion rubles). Overall costs, including infrastructure total $51 billion (1.5 trillion rubles), an estimate of the Ministry for Regional Development,”Nikolaev told RT. “We believe the risks from VEB’s Winter Olympics infrastructure loans should largely be offset by funding from the authorities,” said Fitch. “Krasnodar Region’s strong, diversified economy provides a broad tax base and growing tax revenue flows. We believe it will continue to benefit from its strong industrial base, transport sector

and natural resource endowment,” Fitch said. The Russian government is funding 58 percent of the region’s debt. Construction of Olympic facilities and infrastructure in Sochi made debt soar from 3 percent in 2009 to 47 percent of the region’s revenue in 2013. “Certainly, revenue from this infrastructure will have a positive affect on regional development,” said Nikolaev. Russia’s nearly $2 trillion economy now ranks the eighth largest in the world, with growth at 1.3 percent in 2013. Vancouver Canada was left with $1 billion in debt after the 2010 Winter Games. SOCHI, THE RESORT TOWN Situated on the Black Sea in southern Russia, the Krasnodar region has been a domestic vacation hotspot since Soviet planners designed it as Russia’s premier resort town, which dates back to 1920s. The 350,000-resident city has had a complete makeover. More than 85 percent of the Sochi infrastructure had to be built from scratch, according to Jean-Claude Killy, chair of the International Olympic Committee’s coordination commission for the Games. In total, 378 federal and 46 regional facilities are being built for the Sochi Olympics. Of these, only 13 are sports-related; the others are linked to infrastructure and accommodation. Unlike recent hosts Beijing, London, and Vancouver, the development of Sochi was still in its nascent stage when it was selected to host the Games in the summer of 2007. Built from the ground up, Sochi has transformed from a seaside town with one main road to a city that is going to host one of the world’s largest winter sporting events. In the case of Sochi, there were many more indirect costs, with a need for infrastructure projects in the region unrelated to hosting the games in

February. The Olympics are bringing a much needed facelift to the mediocre ski resorts in Krasnaya Polyana, which will host the Mountain Cluster events like biathlon, skiing, and snowboarding. A personal favorite ski destination of the president, it hardly attracted an international crowd, let alone a domestic one. Slope traffic is set to increase with newer facilities and services, as well as the railway that connects to downtown Sochi. Before, ski enthusiasts had to brave the winding mountain roads in a taxi to reach the ski areas. Nikolaev is skeptical the sub-tropic mountain resort can become a worldwide destination, but is confident it will become a main regional training hub for athletes. Salt Lake City’s alpine makeover boosted ski resort numbers by 37 percent in the six years following the 2002 games, transforming it into a billiondollar industry. Drawing tourists to Sochi -both foreign and domestic- is a goal of the Games. “The infrastructure for the games should also boost the accessibility of the region’s seaside and ski resorts. However, maintenance costs for these facilities are likely to add to the region’s budget expenses in the medium term,” the note says. According to Deputy Prime Minister and Olympic Chairman Dmitry Kozak, investment in the Games was split fifty-fifty between state-funding and private investment. Hotel and power generation facility contracts were handed out to private companies, and rail and road transport was delegated to Russian Railways, the state-owned railway group. “For each facility constructed using state funds, a post-Olympic purpose has been assigned for it,” Kozak said, adding, “with regard to private investors, all construction projects will remain under their ownership and they will operate them using their own discretion on the basis of authorized use on the respective site.”

EBRD IMPROVES WATER AND SANITATION SERVICES OF KYRGYZ CAPITAL

he European Bank for Reconstruction and Development (EBRD) has helped to improve Bishkek’s water and sanitation services and plan for long-term sustainability. “With a 5.5 million euros loan from the EBRD, co-financed with a 5 million euros grant by the Swiss State Secretariat for Economic Affairs (SECO), the water supply and sanitation infrastructure is being restored for the first time in decades,” the bank said on February 4. After the collapse of the Soviet Union, Kyrgyzstan faced a rapid deterioration in public infrastructure. The rapid urbanization in the capital in recent years with increase of water consumption registered in the north and new settlements to be supplied in the south have put an additional strain on the already stretched capacity of the water mains. The Bishkek Water Company manages assets including a 1,277 kilometer-long water supply pipe network and 605 km of wastewater. These are only part of the infrastructure that helps to provide clean water and sanitation services to over 1.5 million people living in Bishkek and its surroundings. The problem is that most of it is more than 30 years old. EBRD said the water project benefited from extensive international donor support that provided

a total of 1.4 million euros. Sweden provided funds for all the work needed to prepare a solid investment plan. SECO funded engineering and implementation support while the Bank’s Early Transition Countries Fund and the Shareholder Special Fund funded technical cooperation to increase the company’s capacity and help them engage with the local community through public awareness campaigns on the ongoing works, the importance of saving water and paying for the service. EBRD also noted said three old pipes that connect to the chlorination system have been replaced in Orto-Alysh. “This new technology was identified thanks to a study funded by the EU Central Asia Investment Facility (IFCA). It will prevent water from freezing and damaging the infrastructure during the cold winter,” the bank noted. Also, 700 meters of new pipes have already been substituted and over 1,000 more will be in place before the end of the year. This work is being done while the water is still being pumped, with no interruption to the service. The loan was also used to purchase new equipment and vehicles for the repairs. This was the first EBRD operation in the Kyrgyz municipal and environmental infrastructure sec-

tor. Since then the cooperation between Bishkek’s city government and the bank has grown strong and the EBRD has extended loans and technical cooperation support to improve public transport and solid waste services in the capital. Now households and industries have responded well: the collection rate in 2011 reached 98.6 per cent. The better the service, the more people are willing to pay for it. Earlier EBRD said it will allocate a loan of up to 2 million euros, the EU’s Investment Facility for Central Asia-1.85 million euros (this is the first allocation to Kyrgyzstan under the facility), and the World Bank Global Environmental Facility’s Special Climate Change Fund-1.15 million euros to modernize Kyrgyzstan’s Talas city’s water and wastewater services. The modernization of water and wastewater services in Kyrgyz cities is a priority for the EBRD, which has developed a dedicated financing facility for the purpose. Currently, the EBRD has provided financing to six cities in the country to support critical investments in the water supply and waste water networks and is considering further expansion throughout the country to smaller cities. The EBRD has invested over 450 million euros in more than 105 projects in Kyrgyzstan.

WORLD NEWS February 10, 2014 #41

caucasian business week

SUGAR DEBATE TURNS SOUR FOR FOOD GROUPS

APPLE CAUGHT IN NEW PATENT BATTLE IN GERMANY AS IPCOM DEMANDS $2BN

pple is caught up in a new patent battle in Germany, risking a great fine in a trial over the iPhone’s emergency phone-dialing feature, AFP reported, citing a Mannheim court. German patent-holding company, IPCom, is demanding $2 billion in damages from the technology giant in a trial set to start February 11 that involves two patents. The European Patent Office recently approved the validity of one of the patents. It was reportedly contested by several firms, including Apple. The IPCom patent allows priority access to certain mobile phone calls even when a network is saturated.

TWITTER SHARES SLIDE AS USER GROWTH SLOWS

ugar in fizzy drinks and food came under fresh attack from scientists on both sides of the Atlantic this week in an escalating public health debate about the link between added sugar and mounting global health problems. A growing number of scientists and public health authorities are putting pressure on food and beverage companies to reduce added sugar – sugar that does not occur naturally – which they say is overused to help sales but contributes to problems of obesity, diabetes, heart disease and cancer. For highly profitable food and drink multinationals, the challenge is to absorb these pressures without threatening their business models and losing out to newer, more health-focused companies. “Reducing or removing sugar has a host of complications for the food industry, including taste, formulation, texture, regulatory, labelling, etc,” said Charles Mills, analyst at Credit Suisse. The lack of conclusive proof linking added sugar to disease is beginning to be eroded. Laura Schmidt, professor of health policy at the University of California, San Francisco, said this week: “We are in the midst of a paradigm shift in research on the health effects of sugar, one fuelled by extremely high rates of added sugar overconsumption in the American public.” The World Health Organisation projected a 75 per cent increase in annual cancer cases over the next two decades in a report on Monday that linked the causes of cancer to lifestyle. It has called for higher taxes as “an effective way to control and reduce the consumption of these products.” So far the industry has broadly avoided extra regulation and tax through voluntary deals. But the growing body of research on sugar could push governments facing escalating healthcare costs to use taxes or step up regulation to force through changes in eating habits. Such moves are not necessary, according to the industry, which says that it has been reducing fats, sugar and salt from its products. Nestlé, the world’s biggest food group by sales, says it reduced sugar in its products overall by 30 per cent over the 10 years to 2011. Last year it cut saturated fat in its Kit Kat wafers 11 per cent. Unilever, the world’s biggest ice-cream maker by sales, has a target of lowering sugar in its tea-

he stock of social media firm Twitter fell as much as 18 percent in after-hours trading on Wednesday, as investors took fright at slowing growth in new users, the Financial Times reported. Twitter first public announcement showed that monthly active users grew less than 4 percent to 241 million between the third and fourth quarters. Timeline views, a measure of engagement, fell from 159 billion in the third quarter to 148 billion in the fourth. In the US, user growth was at 3 percent quarter-on-quarter. However, the revenue and net loss of $512 million for 2013 was better than expected.

based drinks by 25 per cent by 2020. These promises are hard to measure, says Action on Sugar, a UK campaign group formed last month. Having successfully campaigned for salt reduction in the UK, it is lobbying the government for a sugar reduction target in drinks and foods – including soups, pasta sauces, baked beans and bread – of 30 per cent over three to five years. The industry says the focus on sugar is exaggerated and that other factors, such as sedentary lifestyles, are a big factor in expanding waistlines. “Our portfolio includes chocolates, candies and gum,” said Hubert Weber, head of Europe for Mondelez, which makes Oreo biscuits, and Cadbury chocolate. “Most cultures have a traditional between-meal eating moment. I don’t think we should demonise a behaviour that is widespread and rooted in tradition.” Simon Litherland, chief executive of Britvic, the UK producer of Fruit Shoot, Tango and a bottler for Pepsi, said: “The causes of obesity are far more complex than simply the amount of sugar a person consumes. Blaming one ingredient or one set of products is misguided, particularly when soft drinks comprise only 3 per cent of calories in the average diet in the UK.” Consumer behaviour affects sales – concerns about health have contributed to a downward trend in fizzy drink sales since 2010. “There’s no question that US beverage stocks have been underperforming relative to the rest of the consumer staples stocks, and we still don’t know if they can figure out a way to deal with the public health concerns,” said Ali Dibadj, analyst at Bernstein. Sales of zero calorie drinks made with artificial sweeteners are also falling in the face of health trends. PepsiCo and Coca-Cola have reduced their dependency on fizzy drinks by diversifying into healthier drinks such as flavoured waters and fruit juices. Some analysts predict tough times ahead for artificial sweeteners. The UK’s Tate & Lyle, which makes sucralose, is also working on natural alternatives. “Sucralose is zero calories and 600 times the equivalent sweetness of sugar,” said Robert Dickinson, analyst at Citigroup. “But increasingly companies want to put ‘natural’ on the label, which means no artificial sweeteners.”

Stevia, a fast-growing sweetener, has the advantage of being natural – but tastes like liquorice. “It’s relatively more expensive and doesn’t mirror the taste of sugar,” Mr Dickinson said. Coke used stevia to sweeten Sprite in France but sales were down last year – albeit in a falling market. Action on Sugar says consumers will get used to less sweetness if sugar is reduced gradually – without adding sweeteners. For manufacturers, taking sugar out is not as simple as it sounds – sugar adds bulk and texture, not to mention taste. “Reformulating products does have cost implications, but nothing material – the issue is more about avoiding any compromise on taste that could lead to a loss of sales. That’s why finding a non-calorific substitute for sugar has been the holy grail for decades,” Mr Mills said. The large food and beverage producers are pouring money into this quest – the research and development budget of Nestlé alone stood at SFr1.54bn ($1.7bn) in 2012. For the time being, the limits of the compromise between calorie-reduction and taste have been reached, according to Mars. The US confectioner reduced the weight of its Mars bars in the UK by 12 per cent and Snickers bars by 17 per cent in December – without altering the price – to meet its promise of getting calories in the chocolate bars down to a maximum of 250. “Having taken product reformulation as far as we can for now without compromising the great taste, we have reduced the portion size,” Mars said. Coca-Cola is set to axe its two-litre bottles in the UK next month, replacing them with 1.75-litre bottles at a price that will work out 3p a litre higher, which the company says reflects production costs. Shrinking portions are welcomed by public health lobbyists, some of whom say the food and drink industry’s big mistake was to have got consumers used to outsized portions. Simon Capewell, professor of public health at the University of Liverpool and a member of Action on Sugar, calls sugar “the new tobacco”. He is convinced the industry will respond to the public health pressure. “Sugar is recognised as a hazard to health. We are pushing at an open door – there is a real feeling of zeitgeist,” Prof Capewell said.

NDONESIA GDP GROWTH AT SLOWEST IN 4 YEARS

ndonesia’s economy grew in 2013 at its slowest pace in four years, Reuters said, citing a statistics bureau report released on Wednesday. GDP product rose 5.78 percent last year, after a 6.23 percent increase in 2012 and marking the slowest growth since 2009. The end of a commodities boom undermined the country’s exports and higher interest rates depressed consumption.

SATYA NADELLA REPLACES STEVE BALLMER AS MICROSOFT CEO

ndian-born Satya Nadella, 46, former head of Microsoft cloud computing division, replaced Steve Ballmer as the company’s CEO on Tuesday. The replacement comes as Microsoft faces a challenge to meet increasing competition from online alternatives to its traditional Windows and Microsoft Office software. Nadella was “the right leader at the right time” for Microsoft, the Guardian quotes Ballmer as saying. In another Microsoft replacement, John Thompson is succeeding Bill Gates as chairman.

BP Q4 EARNINGS FALL 28% TO $2.8BN

P’s fourth-quarter earnings fell 28 per cent to $2.8 billion, as the energy group was hit by the impact of divestments, weakness in its refining division and exploration write-offs, the Financial Times reported. BP also said Tuesday that impact was partly offset from higher earnings from Rosneft, its Russian partner and by strong growth in production in key regions such as the North Sea, Angola and the Gulf of Mexico. As BP’s results continued a trend of weak earnings from the Western oil majors, rival Royal Dutch Shell last month issued its first profit warning in 10 years.

PUBLICITY caucasian business week

February 10, 2014 #41

TBILISI GUIDE February 10, 2014 #41

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

February 10, 2014 #41