Caucasian Business Week #52 by Caucasian Business Week

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BUSINESS WEEK May 5, 2014 #52

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May 5, 2014, Issue 52

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GEORGIA IMF MAY LAUNCH NEW AID PROGRAM FOR GEORGIA

he Georgian government and International Monetary Fund (IMF) mission mulled the possibility of launching a new program in Georgia. Pg. 2

GEORGIA, INDIA TO BOOST ECONOMIC TIES

Small Business Development Agency to be Launched in a Few Days Pg. 5

RATING OF THE LEADING BANKS ACCORDING TO ECONOMIC INDICATORS

In January Banks got 118 million GEL incomes from the loans

he Georgian Chamber of Commerce and the Federation of Indian Chambers of Commerce and Industry signed a memorandum of understanding. Pg. 2

“TBC GROUP’’ AND ‘’CONTI GROUP” SUBMITTED A JOINT PROJECT TO MINISTRY OF ECONOMY

Pg. 4

eputy Minister of Economy confirms with “Commersant ‘’ that “TBC Group’’ jointly with the American ‘’Conti Group” plans to build a port in Anaklia. Pg. 5

Pg. 9

CIS PAIN FOR UKRAINE: ECONOMY LOSES 1.1 PERCENT IN Q1

kraine’s economy contracted 1.1 percent in the first three months of 2014, Ukraine’s Statistical Service reported Wednesday. Pg. 10

International Centre of Education Established in Georgia Pg. 4

GEORGIAN “MARANI” AMONG 5 BEST RESTAURANTS IN LONDON

Association of Banks of Russia: “There is a Positive Example of Georgia”

AZERBAIJAN AZERBAIJAN CENTRAL BANK’S CURRENCY RESERVES EXCEEDED $14.87 BN FIRST TIME

he Central Bank of Azerbaijan (CBA) reports that its currency reserves continue stable growth in 2014 as well. Pg. 11

Pg. 9

WORLD NEWS TWITTER’S $132BN Q1 LOSS SENDS SHARES TUMBLING MORE THAN 11%

hares in the social network Twitter have fallen 11.1 percent on market opening in New York on Wednesday after the company announced disappointing first quarter results. Pg. 13

Pg. 5

COMING SOON first Wine Bar project in Tbilisi by “Schuchmann Wines” Pg. 6

NABEGHLAVI AWARDED BY GOLDEN BRAND Pg. 6

Azerbaijani gas not big competitor to Russian gas: SOCAR official Pg. 11

MAIN EVENTS caucasian business week

May 5, 2014 #52

GEORGE KVIRIKASHVILI MET WITH HANS-JOACHIM FUCHTEL

ice Premier, Minister of Economy and Sustainable Development George Kvirikashvili hosted to Parliamentary State Secretary of the German Federal Minister for Economic Cooperation and Development HansJoachim Fuchtel, which is for business visit in Georgia. On the meeting the sides discussed issues of Georgian-German economic cooperation, among them the projects implemented by German Inter-

national Cooperation Association (GIZ) and German Reconstruction Credit Bank (KfW). German companies are interested in Georgian economy, especially in the local agro sector. On the meeting decision was reached that the sides will intensify cooperation for the attraction of German investments and technologies in Georgia. In this process German Reconstruction Credit Bank will provide partnership to Georgia side. The meeting topics also included importance of professional education and development opportunities in this direction. Besides, the dialogue dialed to the possible involvement of German political funds in the economic development processes of Georgia. They also discussed issues of private sector development especially of the small and mediumsized business and production of local competitive products. In this process GIZ is partner of Georgian side, which cooperates with the Business Development Agency of Ministry of Economy and Sustainable Development within their format. On the meeting importance of the development of quality infrastructure was emphasized, which will promote maximal integration of Georgia to EU market and export increase.

IMF MAY LAUNCH NEW AID PROGRAM FOR GEORGIA

he Georgian government and International Monetary Fund (IMF) mission mulled the possibility of launching a new program in Georgia. During a meeting at the Finance Ministry, the sides discussed the preparation of a new IMF program for Georgia, the ministry reported. The Georgian side expressed hope for the suc-

cessful launching of the program implementation, which would be a signal to other donors and investors to intensify activity in Georgia. “IMF’s support for the Georgian government’s policy is important for us,” Finance Minister Nodar Khaduri said. The funds envisaged by the new program will be used for budgetary support and the reserves of the National Bank, he noted.

GEORGIA, INDIA TO BOOST ECONOMIC TIES

he Georgian Chamber of Commerce and the Federation of Indian Chambers of Commerce and Industry signed a memorandum of understanding. The document was signed at the first meeting of the Georgian-Indian intergovernmental commission on trade, economic, scientific and tech-

nological, cultural and educational cooperation, which took place in New Delhi on April 29, the Georgian foreign ministry reported. Deputy Foreign Minister David Jalagania headed the delegation at this meeting, while Deputy Foreign Minister Dinkar Khullar was a co-chairman from India’s side. The participants stressed that the trade-economic cooperation between Georgia and India is an important lever for further developing the friendship and partnership between the two countries and improving the economic situation of people of both countries. The parties reached progress on a number of issues of trade-economic cooperation, agreed to promote the development of relations in the fields of energy, agriculture, tourism, transport and communications, information technologies, pharmacy and industry.

EU-GEORGIA FREE TRADE MAY BOOST POLISH-GEORGIAN RELATIONS, REPORT SAYS

he implementation of a Deep and Comprehensive Free Trade Area (DCFTA) between the EU and Georgia may create attractive conditions for Polish exports and investments in Georgia, a bulletin reports. The Polish Institute of International Affairs released a bulletin which said even if Poland was currently not a significant economic partner of Georgia’s, “both countries may still benefit from the DCFTA.” The benefits could come into effect once the Association Agreement is signed this June. “For its part, Georgia needs to enhance its economic cooperation with European countries in order to strengthen its still fragile economy,” the report stated. “The Polish and Georgian governments should encourage Polish entrepreneurs to enter the Georgian market and provide them with the necessary support and information,” the report read. The Institute believed despite good political relations between Poland and Georgia, the intensity of the two countries relations had remained relatively low over the last couple of years. However, a steady increase in bilateral trade has been recorded. The value of bilateral trade amounted to $53 million USD in 2009 but this number nearly doubled to $96.4 million by 2012. Although in 2012, Polish export to Georgia were worth $86.8 million USD and imports $9.6 mil-

lion USD (meaning a $77.2 million trade surplus). Georgia’s share of Polish overall trade was only about 0.05 percent and 0.01 percent respectively. The report reads Polish investors in Georgia are barely noticeable, with their contribution ranked 37th among investment sources with $1.37 million in 2013. The biggest Polish investor in Georgia is Asseco, an IT company that bought Onyx Consulting (now Asseco Georgia) for $1.3 million in mid2013. “The implementation of the DCFTA could prompt companies to search for prospective niches in both markets,” the report read. The report believed, for Polish exporters, opportunities may arise in such areas as agricultural machines and equipment for processing and food storage. “Producers of chemical products and pharmaceuticals also could enlarge their presence in Georgia.” The report said as more Polish people showed their interest in visiting Georgia, tourism cooperation should be enhanced. “This is especially obvious for mid-range services, as the country is now visited mostly by backpackers seeking cheap stays and those who book into luxury hotels.” The bulletin also issued the recommendations reads that the promotion of Polish businesses as well as the “Made in Poland” brand campaign in Georgia should be intensified.

AZERBAIJAN-GEORGIA-TURKEY ENERGY BRIDGE TO START POWER INTERCHANGE BEFORE 2016

ower transmission within the Azerbaijan-Georgia-Turkey Energy Bridge can start in 2014-2015. “The power interchange within this energy bridge will start following the completion of commercial talks and settling all the legal issues,” Deputy Energy Minister Natig Abbasov told Trend Agency. He further said Georgia will act as a transit country, and will also export the electricity. “Azerbaijan, in turn, will be able to repay Turkey for the delivery of electricity to Nakhchivan Autonomous Republic, and then will be able to enter the European market,” Abbasov added. He said such a scheme of repaying energy debt to Turkey will allow full load of Azerbaijan’s generating capacities, which will further improve the

efficiency of electricity production in the country. Back in early 2013, Azerenergy JSC which is engaged in production and distribution of electricity in Azerbaijan said a number of electric power facilities were reconstructed in the country as part of the Azerbaijan-Georgia-Turkey Power Bridge Project. In particular, work on the full reconstruction of the Mukhranis-Veli 500-kV overhead line to a length of 150 km, has been completed. Installation of the third 400-megawatt autotransformer at the 500-kV Absheron substation and reconstruction of a 300-kilovolt open distribution facility have also been completed. Current capacity of Azerbaijan’s power system is 6,450 megawatts.

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PUBLICITY May 5, 2014 #52

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INTERVIEW caucasian business week

May 5, 2014 #52

TOURIST SEASON BEGINS The April month is official beginning of tourist season in Georgia. It lasts till end of October month. Touristic companies make arrangements and prepare for this period. Business Week talked to the deputy of the director of Caucasus Travel Gvantsa Razmadze about preparations and touristic infrastructure development in country. The interview showed that there are positive expectations about the growth of tourists in Georgia this year.

CBW. How would you estimate the touristic activity in Georgia and can you evaluate the level of this activity? Gvantsa Razmadze: Caucasus Travel is one of the leaders of Georgian market that’s why I can say that we can determine the activity in this field. Our company has 20 year experience and it was first travel and tourist business in Georgia. We were leaders during years: though there are many competitors but we still maintain the status of the leader. BW. How many tourists do you hosts her year and per season and what countries tourists are coming mostly from? Gvantsa Razmadze: The tourist season lasts from April till October month. This is most ac-

tive period though there are visitors also in other seasons of the year too. We have about 4-5 thousand tourists per season. The countries that tourists are coming from are Western Europe, US and Japan. This is our segment we work on. There are companies that host visitors from Israel, or other countries. Our targeted market is diversified. CBW. Do you have information about the quantity of tourists that came to Georgia during last year? Gvantsa Razmadze: Due to the statistics of The Department of Border Defense nearly 5 million visitors crossed the border of Georgia. We can’t exactly say how many percent from visitors were tourists: nearly 30-40% were tourists whose aim was to rest in Georgia and to make tour. The organized tourists were 3-4%, means visitors who were using service of touristic companies. BW. Don’t you think that 3-4% small quantity for touristic companies and do you aim to interest more visitors to take guide service? Gvantsa Razmadze: Most of the visitors plan their tours online. Though there is number of visitors that prefer organized tourism through the company and this is high spender segment and we serve this segment exactly. We don’t talk to our clients we have relations with other tourist companies. We collaborate with companies that are interested in Georgia in different countries of Europe and America. BW. How do you estimate touristic infrastructure in Georgia?

BUSINESSMAN LEVAN VASADZE BELIEVES THAT ANTIDISCRIMINATION BILL WILL DESTROY GEORGIA’S ECONOMY

usinessman Levan Vasadze sees the threat of disruptions in economy in the anti-discrimination bill. As the businessman said in a speech aired on “Maestro” TV , there is a lot of talking around the bill, but people do not know what is going on, Vasadze notes that the law expressly states that any person who considers that he is oppressed can sue. Levan Vasadze cites the examples of the countries that signed up the Association Agreement with the European Union, however, a similar law was not adopted. The businessman names Turkey, which is associate member since 1959 but has not adopted this law. According to him, this law directly hits the moral basics of our country, as it says that everything should be resolved in court and all those who consider themselves oppressed have to go

to court. In his words, just this law attempts to discredit “the best sides” of the West. He believes that if the Parliament adopts the law, this fact will cause a very negative reaction in the country. Parliament has unanimously adopted the bill on Elimination of All Forms of Discrimination with 112 votes in the second reading. “The bill on Elimination of All Forms of Discrimination prohibits any kind of discrimination. The law is aimed at eliminating all forms of discrimination and at ensuring equality despite race, color, language, sex, nationality, origin, birth, place of residence, property or social status, religion or belief, national, ethnic or social origin, profession, marital status, sexual orientation, gender identity, political or other opinion. The bill will be discussed in the third reading at today’s plenary session.

TELIANI VALLEY MANAGEMENT CALLS TO STAKEHOLDERS TO MAINTAIN LAST YEAR’S PROFITS UNDISTRIBUTED

tockholders of Teliani valley should discuss the issue of profit distribution on May 19 session. The management recommends not distributing the profit to the stockholders. It’s noteworthy that last year net profit of Teliani Valley increased by 65,5% and equaled to 2,521 million GEL. According to the same report, last year the company got 34,95 million revenue from the sales, which is 5,8 million more than 2012 data. Total profit from sales equaled to 17,17 million GEL. It’s noteworthy that amount of the profit before taxation exceeded to 3,4 million GEL. Re-

spectively, the company paid 903 thousand GEL as a profit tax in the budget. By December 31, 2013, stockholders of the company are - Liberty Consumer - 50,23%, Scaropel Limited - 17,54%, Firebird Aurora Fund - 14,21%, Firebird Republics Fond - 8,82%, Eastinvestor - 2,93%, other - 6,27%. The stockholders will adopt 2013 financial results and report of director general; also elect auditor company for 2014. The management advises the stockholders to elect auditor company EY Georgia LLС („Ernst & Young” LLC) for 2014, which also provided audit of previous years.

Gvantsa Razmadze: While talking about infrastructure I would like to talk about hotels. I think that state should promote more investments in country in this field: in Tbilisi there are hotels but resources are not enough. There is always lack of hotel rooms on touristic season. Demand is much high than offer. BW. What kind of product you offer to the visitors of the country? Gvantsa Razmadze: 70-80% of our product is cultural tourism. Also there is wine tourism mostly combined with cultural tourism. There is adventure tourism too. Also there are specialized tours for example archaeological and these tours don’t intent to interest masses but some individuals and professionals. Our company is mostly specialized on cultural tours that are combines with ethnos, wine and adventure tourism. BW. What kind of themes visitors are mostly interested with? Gvantsa Razmadze: This is culture combined with wine and lifestyle tourism and Georgian traditions. BW. Do you see changes how tourists perceive Georgia or what kind of themes they are interested in? Gvantsa Razmadze: The wine tourism became topical. This is result of active promotion during last several years. The promotion is based on the fact that Georgia is homeland of wine culture. That’s why interest grew in this direction. Besides there is more interest towards country and this is result of active promotion on international

touristic market. BW. Which region of Georgia offers developed touristic infrastructure and do you face some problems or challenges in this direction? Gvantsa Razmadze: The diversity of touristic product most developed we have in Tbilisi. Also Batumi is well organized in this direction. Kakheti became very interesting though we face problems regarding hotels in this region. BW. Ancient Georgian Qvevri wine making tradition became the nontangible cultural heritage of UNESCO. Do you provide with this kind of information visitors of Georgia and do you have additional services to show the wine making process? Gvantsa Razmadze: This is one of the highlights while offering Georgian touristic product. But we can’t say that whole world is informed about and it needs more promotion. We have our ways of sharing information. Our web site is quite organized and provides lots of information to the future tourists who plan to visit Georgia. Besides when there is first stage of relations with future visitors we provide with maximum information. After visiting country our guides are responsible for. BW. There is beginning of tourist season in Georgia. What are your expectations and how do you make preparations for? Gvantsa Razmadze: We expect nearly30% growth in new season. I have to say that dynamics is positive during last five years. Ketevan Charkhalashvili

INTERNATIONAL CENTRE OF EDUCATION ESTABLISHED IN GEORGIA

n the initiative of the Prime Minister of Georgia, an international centre of education has been established in the country, which will at least partially solve the problem of unqualified personnel in government agencies. According to the head of the administration of the government of Georgia Nino Kobakhidze, the centre aims on the one hand, to grow accessibility of higher education for citizens of the country, on the other hand, to overcome the shortage of qualified personnel in the civil service. “International centre of education is working in three areas : the funding master’s and doctoral programs in prestigious foreign universities, the attraction of skilled professionals from abroad, advanced training of state employees. Any citizen of Georgia can receive funding for master’s and doctoral programs, including those living in occupied territory, the disabled and socially vulnerable citizens,” - Nino Kobakhidze underlines. In her words, the Center has already developed the most objective criteria for the selection of candidates - such as high academic attendance, personal motivation, the coincidence of the chosen specialty with the interests of the state. “Priority directions are law, agriculture, engineering, architecture, urban studies, social sciences,

defense, security. In addition, the student will be required to return to Georgia after completion of education and to work in the civil service at least 3 years and to use this knowledge for the benefit of the state”- said the head of the administration of the government. In total 7 million GEL are allocated for the programs.

GEORGIAN AIRWAYS PERFORMS FLIGHTS TO BATUMI WITH FREE SCHEDULE

eorgian Airways performs domestic flights on the summer season. Civil Aviation Agency states that flights are regular, although schedule is free. The plane with first with the first flight landed in

Tbilisi Airport at 18:15. Price of round-trip ticket is 278 GEL. Georgian Airways performs flights to over 20 directions, mainly from Tbilisi, from Batumi - to Moscow, Erbil and Suleimania, from Kutaisi - to Moscow. Flights to Sochi are suspended.

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PARTNERSHIP FUND PRESENTED PROJECTS TO IMF MISSION

ission of Monetary fund, which is on a business visit in Tbilisi, met with management of Partnership Fund. On the meeting director of

partnership Find Irakli Kovzanadze talked about the projects, on which intensive works are going. Among them is 230-MW thermal power plant of the first combined cycle in Gardabani, 230-MW Nenskra hydro power plant, projects of the new port at the Black Sea coast, Likani, Rixos and so called sandwich panels. “Several of ones, among them projects of Likani and sandwich panels will be completed this year. As for other projects, the fund is actively working for their implementation”, - Irakli Kovzanadze stated. Reminding that Partnership Fund was founded in 2011. The state owns 100% of the fund, its actives exceed to 5 billion GEL.

“TBC GROUP’’ AND ‘’CONTI GROUP” SUBMITTED A JOINT PROJECT TO MINISTRY OF ECONOMY

eputy Minister of Economy confirms with “Commersant ‘’ that “TBC Group’’ jointly with the American ‘’Conti Group” plans to build a port in Anaklia. “TBC Group ‘’ founder

Mamuka Khazaradze has recently announced about their interest in Anaklia port. Khazaradze names Anaklia port construction among his mega projects which will be implemented in cooperation with American partners. Deputy Economy Minister Keti Bochorishvili says that a joint project of “TBC Group” and “Conti Group’’ aimed at Anaklia port development was submitted to the Ministry. In her words, the government has not yet taken a decision with regard to the investor and the investor is likely to be selected on the basis of expression of interest. The Partnership Fund continues feasibility studies of the port project and the process is expected to be completed by the end of May . As a result of the study, the location of the port will be defined. In the first phase a port, in the following phases the airport, logistics center, industrial zones of are planned to be developed in Anaklia.

SMALL BUSINESS DEVELOPMENT AGENCY TO BE LAUNCHED IN A FEW DAYS

eorgia Small Business Development Agency will announce a tender to select an implementing organization in June, the Agency will take effect in May. The Agency’s acting director Giorgi Tsikolia told commersant. ge. He says that banks as well as micro-finance, non-governmental and international organizations will be able to participate in the tender. As for the details of issuing loans and grants, in Tsikolia’s words, the details will be specified as soon as the tender winner will be revealed.

He notes that one of the products, which is being developed, is a program focused on regions and micro business, which will contribute to development of small business in regions in the form of micro grants. In his words, it is planned to allocate a total of 3.5 million USD to support small businesses in the form of grant. Chairman of the Board at Georgia Microfinance Association Archil Bakuradze welcomes the enactment of the Agency. He says he had no information about the tender and learned about it from a conversation with commersant.ge. He notes that if their and the state objectives coincide, the organization will take part in the tender. He adds that if this program will increase the number of beneficiaries in microfinance institutions or banks and they will be able to issue loans at more favorable conditions, it can only be welcomed. Recommendations given by the international organizations were one of the reasons for the creation of the Small Business Development Agency. As reported, the Agency will fund startup business in the amount of 150 million USD for 3 years.

FITCH AFFIRMED RATING TO GOGC AT “BB-”

ating agency Fitch Ratings affirmed rating to Georgian Oil and Gas Corporation equaled to the state, which is the best possible rating for the companies operating in Georgia. Rating of GOGC is “BB-” with outlook stable. Oil and Gas Corporation releases information about it. Remaining that in May 2013 the corporation placed Euro obligations of $250 million cost on London Stock Exchange, annual interest rate for which is 6.875%. GOGC uses this

amount for the construction of the new combined cycle thermal elector station in Gardabani, completion of which is planned for October 2015. The corporation states that the rating equal to the sovereign rating of Georgia is important factor for positive image of the corporation, for creation of their positive history, which will simplify attraction of the financial resources from the international stock exchanges not only Georgian Oil and Gas Corporation, but also other Georgian companies as well.

GEORGIAN “MARANI” AMONG 5 BEST RESTAURANTS IN LONDON

ritish magazine Esquire published 5 best restaurants in London, among them - Georgian restaurant “Marani”. The publication notes that until recently, unremarkable, ordinary Italian restaurant located in its place in the prestigious London’s Mayfair district and now “Marani”, which is one of the sights of London, replaced it there. “The clients are offered delicious Georgian dishes, starting from meat sauces and ending with cheese pies (khachapuri). This is a family res-

taurant with Georgian traditions. Everything reminds a royal palace - the restaurant is decorated with mirrors, original curtains, modern lighting, a collage of old family photos that create a cozy and intimate environment. The restaurant offers the most interesting dishes that you can taste,”says the magazine.

COLLIERS INTERNATIONAL TO ENTER THE GEORGIAN PROPERTY MARKET

lobal real estate services company, Colliers International is to enter the property market in Georgia. Colliers offers comprehensive real estate services to investors, property owners, tenants and developers worldwide. Its main service lines of the company will be: real estate development, corporate brokerage, market research, valuation and advisory. The company will offer global expertise and local experience to Georgian real estate market. Being among the three largest International real estate services companies, Colliers is already present on Georgian market legally, however it will start its business activity officially from May 15th. EMEA CEO Chris McLernon will visit Tbilisi within this period and hold official meetings with both business and state sectors. Colliers has already worked on several projects in Georgia, including the New Downtown Tbilisi

project, contracted by the state. Previously this was managed through office in London, Kiev or Istanbul and now the clients will deal directly with the local office in Tbilisi. Colliers are a global leader in real estate, represented in 63 countries and 485 offices. The annual transactions volume of the company exceeds USD 75 billion and their head office located in Seattle, WA, USA. “

IDS BORJOMI STARTS BOTTLING MITARBI

ew brand of IDS Borjomi - Mitarbi is already on the shelves. Company IDS Borjomi expands brands portfolio and starts bottling of the new mineral water -

Mitarbi. The company informs that Mitarbi production is going in the #2 bottling plant of Borjomi. Product sales started from April 29 on the Georgian market. According to calculation of the company management, the brand will take 15% of the mineral water segment of the market during 3 years. “Enrichment of mineral water portfolio with the new brands is one of the directions of our company’s business development strategy. It means expansion of portfolio and offer of variety of choices to the consumers. IDS Borjomi is a leader company on mineral water market. That’s why we always try to offer innovations to the consumers. This day proves that. Mitarbi is an unique mineral water and I’m happy that another brand

was added to the portfolio of our company,” - director general of IDS Borjomi Zaza Kikvadze says. The company states that Mitarbi - is a natural mineral water distinguished with light and pleasant taste. It’s recommended as a mineral water useful for health. The new brand of the mineral water will be represented by 3 SKU on Georgia market - 0.5 liter, 1-liter and 1.5 liter PET packaging. Price of Mitarbi will be following on the shelves: 0.5 L - 0.70 Tetri, 1 L - 1 GEL; 1.5 L - 1.20 GEL> Mineral water ore is located in Borjomi municipality, on 1322 meters above sea level, on the Mitarbula Gorge. IDS Borjomi Georgia obtained 25-year license for utilization of Mitarbi ore for 2 802 065 GEL. Reminding that the company IDS Borjomi is represented by following brands on Georgian market: Borjomi, Likani, Borjomi Springs, Bakuriani.

NEW BEER BY ZEDAZENI TO ENTER ARMENIAN AND AZERBAIJANI MARKETS

new beer manufactured by “Zedazeni “ - “Golden Eagle” will be tasted in neighboring countries . Premium beer will be exported to Armenia and Azerbaijan in the near future. “Zedazeni” commercial director Kakha Paichadze told commersant.ge. He says that negotiations regarding export of products are underway with these countries but a volume of beer that to be exported to the markets of Armenia and Azerbaijan is still unknown. “This is a gold Czech beer of a very high class, which is made of precious German raw materials, “ – Paichadze notes and says that regardless of quality, the beer cost is available to everyone and a bottle price is 1.80 GEL. According to “Zedazeni” Commercial Director , this brand is for people for whom beer is anything

more than a cool drink, while its manufacturing technology is a guarantee that the “Golden Eagle” will take an honorable place in the market. “Zedazeni” appeared on the market since 2012. During this time, the company has invested 11 million euros. “Golden Eagle” is the company’s fourth beer brand. When it comes to cool drinks, along with lemonade, “Zedazeni” produced the first Georgian energy drink “WILDER”. The company’s products are exported to 11 countries.

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COMING SOON first Wine Bar project in Tbilisi by “Schuchmann Wines”

oon Schuchmann Winery in old district of Tbilisi City will open Wine Bar with handmade extraordinary interior design and according Georgian historical and cultural concept. The wine bar concept is new for Tbilisi touristic and gastronomic sector and it aims to increase awareness of Georgian Legend with all details what Georgian wine considers. …”It was our dream to combine wine and dine concept, what we realized successfully at our Château in Kakheti and nowadays Schuchmann Wines Château with its Hotel and Restaurant is leading and most popular destination in Kakheti region. We are proud that Brand “Schuchmann” has been successfully implemented in sectors we operate: in wine production, agriculture and tourism. Besides our core business – wine production and export, we deliver to our guests in Château an excellent combination of wine and gastronomic tourism. As we realize the importance of tourism sector in Georgian economy and as Tbilisi City as a touristic hub, we decided to launch an extraordinary Wine Bar in old district of Tbilisi City, in 8, Sioni street in a very exclusive and real Tbilisian atmosphere in ancient Tbileli Caravansaray, which is dated back XVII century and is most touristic

attractive location in Tbilisi City. In Tbileli Caravansaray one can find boutique galleries of handmade artworks, fine art, Georgian ceramics and many more interesting things. Project Schuchmann wine bar is about presenting Georgian signature, Georgian wine and Georgian cuisine. Our concept was created under historical and traditional idea, to bring together all about winemaking and Georgian Story. The exclusive atmosphere will serve to relax and to wine the minds of our guests. We will have variety of services, including wine degustation, business lunches and Georgian À la carte menu. Our sommeliers will do their best to present guests the uniqueness and characteristics of Georgian wines. Our kitchen crew will satisfy our guests with their best skills of cooking. In long term perspective we plan to franchise the concept abroad and achieve primary goal of this project - to market and export Georgian legend, Georgian wine, and gastronomic tourism. The local and international guests will be highly welcomed and appreciated! Nutsa Abramishvili , the author of the project and Director General of “Schuchmann Wines Georgia” Ltd.

NABEGHLAVI AWARDED BY GOLDEN BRAND

arketing Company Global Idea and The FINANCIAL Newspaper with the support of the Georgian Chamber of Commerce and Industry and the American Chamber of Commerce hosted Golden Brand 2013 annual award ceremony. Golden Brand 2013 revealed and awarded the most successful companies on the Georgian market. This year, at the ninth ceremony, Nabeghlavi became the “favorite” of experts once again. It is the only producer of non-alcoholic beverages awarded with the Favorite Brand Title. „We have been awarded repeatedly during last several years by Golden Brand in a mineral water nomination. This is the proof that Nabeglhlavi is invariably retaining the title of a popular and favorite brand. This recognition emphasizes one

more time stability and reliability of our brand, which is determined by high quality and distinguished taste of our products. We would like to thank experts and of course our loyal customers, whose support is important in our success.”- said Victoria Zhizhko, PR Manager of JSC Healthy Water (Tskali Margebeli). The ninth ceremony of the annual Golden Brand Awards was held at Sheraton Metechi Palace on April 29. It has been the ninth year that this event is being held with the support of Global Idea Project, The FINANCIAL Newspaper, Georgian Chamber of Commerce and Industry and the American Chamber of Commerce. This project increases recognizability of brands and contributes to their popularization. It is noteworthy that this year the activities and achievements of brands were being evaluated by 200 experts.

LAST YEAR INSURANCE COMPANIES ATTRACTED BONUSES OF 471,15 MILLION GEL AND REIMBURSED DAMAGE OF 387,6 MILLION GEL

tate Supervision Service of Insurance reports that 72,46% or 341,37 million GEL of the total bonuses attracted by the companies come on the medical insurance. In the market structure property insurance ranks second, land transport insurance - third. Their share is respectively 8,73% and 7,74%. 41,1 million GEL is attracted

in the property insurance segment, 36,48% - in the land transport insurance. 12,59 million GEL is attracted in the life insurance segment, which is 2,67% of the total bonuses. 1,19% comes on the liabilities fulfillment insurance, 1,18% - on the civil responsibility insurance. The indicators include consolidated data of the 13 operating companies.

INSURANCE INDUSTRY COMPLETED LAST YEAR WITH LOSS

ast year insurance industry completed with loss. State Supervision Service of Insurance reports that in 2013 net loss of the insurance sector equaled to 3.29 million GEL. In 2012 net loss of the sector was about 7.29 million GEL. It’s noteworthy that insurance sector paid 6,488 million GEL as a profit tax in 2013. The institution reports that in 12 months net insurance profit of the operating insurance companies equaled to 49,18 million GEL from non-life insurance, 11,37 million from the life insurance.

Total net profit exceeded to 60,56 million. Profit-Loss Sheet reveals that in 2013 insurance companies got revenue of 13.08 million Gel from the investments; Profit from pension activities equaled to 83 565 GEL. In 2012 loss from this segment was 17 134 GEL. It’s noteworthy that in a year overall actives of the insurance sector actors have reduced by 93,78 million GEL. It was 536,4 million GEL in 2013; liabilities are 411,69 million GEL, which is 99 million GEL less than in 2012. 13 insurance companies operated on the market last year.

WINE EXPORT INCREASED BY 180%, COGNAC BY 84%

n April 3,5 million bottle (0,75L) wine is exported (In March - 5,5 million bottles). National Wine Agency reports that during 4 months 19 million bottles have been exported to 26 countries, which is 180% more than in the same period last year (Q1 - 15,5 million bottles in 19 countries). Russia is a leader among export markets with 70% share (13,3 million bottles; Q1 - 11 million/71%). Export amount equaled to 62,2 million. Compared to the same period last year, growth is 215% (Q1 - $51,2 million/290%). 1 RUSSIA 2 UKRAINE 3 KAZAKHSTAN

4 POLAND 5 LATVIA 6 CHINA 7 LITHUANIA In April 492 528 bottles (0,5 liter) cognac have been exported (939 758 in March), in JanuaryApril - 4 382 119 bottles of $16 million cost (Q1 - 3,9 million bottles/$14,5 million). Compared to the same period of last year, growth is 84%. Ukraine is a leader among brand exporter countries. 2 547 720 bottles have been exported. Russia ranks second (1 570 506 bottles). Ukraine was a leader in the Q1 as well (2 504 520 bottles) and then followed Russia (1 242 408 bottles).

ECONOMY May 5, 2014 #52

caucasian business week

IN MARCH GEORGIAN ECONOMIC GROWTH ACCELERATED

ccording to preliminary evaluation of Goestat, compared to the same period last year, in March 2014 real GDP growth equaled to 8,3%, average real growth of Q1 2014 to 7m4%. It’s noteworthy that Geostat adjusted

economic growth indicators of January and February. In January GDP growth was 8,2% instead of 8%, in February - 5,6% instead of 5,4%. It’s also noteworthy that during specification of the preliminary data, calculations may be slightly different form the preliminary evaluations.

APRIL’S ANNUALIZED INFLATION INDEX MARKED 3.4%

eostat informs that compared to March, in April inflation level is 0,3%. Average inflation level equaled to 1,2%. In 1-month interval price on food and beverages increased only by 0,7%, which was reflected by 0,23 percent points in the total inflation indicator of April. Among them vegetable prices increased the most - by 6,2%, price of fruits and grapes increased by 3,6%, besides, prices reduced by 1,3% on the milk, cheese and eggs subgroup. Compared to March, in April accommodation, water, electricity and air prices increased by

0,4%. Respectively, share of the group equals to 0,03 percent points in the April inflation. As for 12-month period, in this period price of food and non-alcohol beverages increased by 7,6%. Among them in a year prices on the vegetables increased by 50,1%. Prices also increased also on the subgroup of eggs, cheese and milk (9,3%), sugar, jam and other candies (5,1%), and fish (2,3%). Besides, prices reduced on the oil and far (-3,7$). Compared to last year, in April prices in the healthcare group increased by 4,3%, prices on the alcohol drinks, tobacco group increased by 6,8%. Tobacco products increased by 12%.

MARCH RECORDS GROWTH IN TURNOVER OF VAT-PAYERS

eostat informs that turnover of VAT-payer enterprises equaled to 4,1 billion GEL, which is 19,6% more than in March 213. Besides, turnover of these enterprises in January and February have been ad-

justed, which equals to 16,1% instead of 15,4% as published before; in February it was 12,4% instead of 11,8%. According to official statistic, in March 4 715 new enterprises have been registered in Georgia, which is 12,7% more than in the same period 2013.

NUMBER OF GEORGIAN POPULATION EQUALS TO 4 490 500 PERSONS

y January 1, 2014 53,7% of the country’s population (2 411.7 thousand persons) live in the urban areas, 46.3% (2 078.8 thousand person) - the rural areas. According to official data, in 2013 number of emigrants increased by 5% and equaled to 95 064 persons. Meanwhile, number of immigrants increased by 25%. 92 458 immigrants have been registered in the country. Migration balance (difference of the number of emigrants and immigrants) equaled to negative

-2 606 units in 2013. By January 1, 2014 47.7% of the population (2 141.4 thousand) are male, 52.3% (2 349.1 thousand) - female. Geostat informs that in 2013 0.2% increase was mentioned in the 5-9 age group in comparison with previous year, which is caused by increased number of live births since 2006. Compared to 2012, in the 10-24 age group 0.7% reduction was mentioned, among them 20-24 age group experienced the highest drop (0.3%), which was influenced active participation of this age group in the migration processes.

GEORGIA EXPORTS 26% OF IMPORTED AUTOMOBILES TO ARMENIA

ccording to official statistic, in the Q1 7142 motorcars of $39,97 million have been exported from Georgia to Armenia, which is 49% more than in the same period last year. Besides, 21 668 motorcars of $120,6 million were exported in Armenia in 2013, which is 17% of the car export. In the Q1 total amount of the motorcars exported from Georgia equaled to $152 million, out of which 52,5% comes on Azerbaijan, 26,2% - on

Armenia, 21,3% - on the other countries. Reminding that Georgian vehicle market is adjusting to the new reality. From April 1 Azerbaijan launched a new standard of Euro-4, which means that old cars will not enter on the Azerbaijani market. Besides, Armenia plans to become EU member, due to which price of car import from Georgia to Armenia will increase. When Armenia signs membership of Customs Union will be known on April 29, on the meeting of Customs Union countries in Minsk.

HPP caucasian business week

ELISO CHAPIDZE: KHUDONI AND NAMAKHVAN HPPS MUST BE BUILT

ne of the priorities in the economic strategy of Georgia’s government is the utilization of energy resources and hydropower potential, as well as electric power export. As field experts state, these factors define a country’s energy independence. What benefits can hydro power plants bring to Georgia and what stance does Eliso Chapidze, member of the majority, hold on this issue? Eliso Chapidze: “To be honest, the over-the-top trumpeting of these topics gives me the impression that certain powers are doing it to discredit the new government. I wonder if they are us-

ing honest people in order to expose something supposedly special and bad happening. You can solve any problem by just sitting around a table and conversing. Protests cannot solve problems. I think if the ecology will not be subject to major damage, the Khudoni HPP should be built, as should the Namakhvan HPP. I have high hopes for that, since every time we talk about new workplaces in Georgia or national products being made, we have to realize that these products need to be made at something else’s expense. The HPP must be built and the factory must operate, how else will we employ the people and how else will the government improve our economy if we’re told not to touch anything, hold back from changing anything, but help the economy bloom? This is not how it happens anywhere else in the world. I think that certain powers benefit fueling these issues to discredit the government, I think certain people are scoring points here.” - And yet the government still has not made a final decision regarding the Khudoni HPP… - “The government’s stance should be as follows: listen to experts, listen to specialists, listen to the population and then make an informed decision. I can remind you that back in the day, the Baku–Tbilisi–Ceyhan project had its own share of movement against it. As of today, if we did not have the Baku–Tbilisi–Ceyhan pipeline, we would not have income in the government budget and we would not be a strategically and geopolitically relevant country. Certain Georgian nongovernment organizations were disrupting this project’s execution but I repeat, without it there would be no well-being in the country. But all this should happen according to strict standards on environmental protection, of course.”

GIGI TSERETELI: “EVERYONE KNOWS OF ALL THE GOOD THAT PROJECTS LIKE THE KHUDONI HPP BRING”

ow important is the implementation of the Khudoni HPP for the country’s economic development and what are the parliament’s minorities’ opinions on the issue?

Gigi Tsereteli states that he is not well-versed in the project’s details, but he thinks that the country’s energy independence will greatly benefit from it. According to him, solving the issue with the local population should happen via dialogue and agreements. Gigi Tsereteli: “To be honest, I’m no specialist and I’m not aware of all the details on the project. But there’s two points which are important for everyone: One, everyone knows of all the good that similar projects bring, which are new job positions and energy independence for the country, and the Khudoni HPP definitely lends assistance to these. However, there’s the second point of the interests of the people living in a certain geographic area. For me, as for a politician, it would be the best outcome to look at the project and take the people’s worries into account, take ecological ramifications into account. At the same time, a large-scale project crucial for the country’s development should definitely be carried out.”

May 5, 2014 #52

GIGA BUKIA: “THE KHUDONI HPP IS THE PROJECT OF THE CENTURY”

ebates don’t falter around the Khudoni HPP. Representatives of the country’s government, governmental or non-governmental structures, experts and various parts of society all have principally different opinions regarding the project. However, all of them agree on Khudoni’s construction determining economic advancement and ensuring the country’s energy independence. A member of the majority, Giga Bukia, states that the project will undoubtedly be carried out. Giga Bukia: “The Khudoni HPP is the century’s project, which has enormous importance for the country’s development. This project will be undoubtedly implemented, but the difference between the previous government and our government is in the way they approach the issue. I’m talking about the interests and problems of the local populace, interests and problems they will find we fully share. These people will be given worthy compensation. And I’ll tell you more, that this is a unique project for Svaneti’s blossoming, since the local budget will undergo a significant multiplication. - How will it affect the improvement of the locals’ social status? - Implementing the project will be in direct connection to improving social conditions, since new

job positions will come up and the property tax will be large enough to change people’s lives for the better. Apart from this, the Khudoni HPP project equals energy independence and energy security for the country, which is our topmost priority. I will say once again that all of this will happen while taking the local population’s interests into account as much as possible.

THE KHUDONI HPP IS BEING EVALUATED BY BOTANISTS INSTEAD OF ENERGY EXPERTS

he main engineer of the “Vartsikhe” HPP cascades, Aleko Kavelashvili, says that the whole world stands at the precipice of energetic changes and that the future sees the possibility for halting not only environmentally hazardous nuclear, but also costly thermal reactors. Only hydro power plants will remain and in places that see the option as a possibility. The energy expert states that Georgia has rich potential on this front, since only 18-20% of the country’s hydro resources are currently utilized. In the future, in case we manage to utilize 6070 percent of our hydro resources, Georgia will stand a chance to become an electricity exporter. “Our electricity is bound to go on export. The Khudoni HPP project is five times the size of Vartsikhe HPP. In our case, the government is charging 16% of the income. The government gets millions of laris just from our cascade alone. Now imagine the Khudoni HPP, its energy out for export and the billions of laris that will enrich Georgia’s budget. Now everyone can imagine and calculate the profits that will mean for a country of 4.5 million. The project’s importance should be evaluated by its cost. The Khudoni HPP is a topic of many conversations today, including politicians and even botanists, instead of energy experts. I do mean botanists, and not environmentalists. If we only think about the damages done then even I, as a human being, am damaging the environment, since I eat and breathe oxygen. The same goes

for cars and any technological machine. Evaluations should be done by measuring up the damage done versus the benefits gained,” – stated Kavelashvili. Aleko Kavelashvili deems that apart from Khudoni, all 40 HPP projects planned by 2015 should be implemented. On high-scale projects like Khudoni, up to 4000 new job positions can be created, with 300-400 personnel required for technical maintenance after it’s been completed. “Apart from this, we have a serious lack of young energy experts, since in this field knowing something is only half of the way. An energy expert must always be employed in order to reinforce their theoretical knowledge with practical experience, which is when they grow. If we don’t build such projects, we’ll be simply run out of energy experts in a very short amount of time,” – said Kavelashvili. Also according to him, the Khudoni project has one more benefit apart from the aforementioned, which is a guarantee that Georgia will not see a rise in electricity fees in the nearest future. “The guarantee that usage fees won’t increase in the nearest future exists and can be freely stated. Even more, implementing large projects like the Khudoni HPP will grant us perspectives and hopes to not only keep the electricity customer prices from rising, but also manage to lower them,” – stated the main engineer of the Vartsikhe HPP.

BANKING NEWS May 5, 2014 #52

caucasian business week

ASSOCIATION OF BANKS OF RUSSIA: “THERE IS A POSITIVE EXAMPLE OF GEORGIA”

resident of the Russian Banks Association Garegin Tosunyan in an interview for the Russian “Kommersant” cited Georgia as an example in implementing high standards of banking services. This applies to draft law limiting cash

turnover over which the Ministry of Finance of the RF is currently working. “As a representative of the banking community , I support this idea. Cash transactions generate costs and risks for all parties to transactions . It is not safe, when a person buys a car or an apartment for a million in cash - five million in cash. Moreover, the Russian buyer can often make payment only in cash, because the seller does not want to carry out calculations in the mode of non-cash payment . But I am not a supporter of tough administrative bans and fines. It seems to me that the transition should be smooth and largely through economic incentives. We have a positive example of our neighbor Georgia, which just in a few years has introduced a very high level of computerization of everything , including the ability to minimize cash payments “- said Tosunjan.

CARTU COMPLETED Q1 WITH 657 262 GEL PROFIT

SC Bank Cartu completed Q1 with 657 262 GEL profit (Q1 2013 - 1,9 million GEL). According to Q1 data, deposit portfolio equals to 214,4 million GEL (Q1 2013 - 119,3 million GEL), loans - 426,6 million GEL (Q1 2013 - 282 million). Respectively, annual 80% and 51% growth can be mentioned. Share of inactive loans is 19%. Revenue of the bank (interest and non-interest) equals to 7,846 million GEL, expenditure - 7,853

million GEL. Liquid actives/overall actives is 16,8%, Return on Actives (ROA) - 0,46% (Q1 2013 - 2%), Return on Equity (ROE) - 1,3% (Q1 2013 - 5,8%). Bank’s actives are 570,3 million GEL (Q1 2013 - 397,6 million), market share 3,2% (Q1 2013 - 2,8%). Cartu Bank is founded by Bidzina Ivanishvili. It operates since 1998 and sun of the founder Uta Ivanishvili owns it. Stock capital of the bank is 202 million GEL (Q1 2013 - 135 million).

BANK CONSTANTA TO CARRY OUT STRUCTURAL REORGANIZATION

tructural reorganization is planned in the Bank Constanta. The stockholders will discuss this and other changes in the statue along with other issues on May 27 session. The banking circles state that corporate/structural reorganization is related to IPO. Change was already made in the supervision

board of the bank. The director of TBC Bank Vahktang Butskhrikidze replaced Ben Simess. TBC share in Constanta currently equals to 99,65%. By the end of the first quarter it was 88,7%; 10.98% belonged to OikoCredit, Ecumenical Development Cooperative Society U.A. TBC Bank became owner of the control package of Constanta in Spring 2012.

BANK OF GEORGIA INTRODUCES NEW BANK PRODUCT

rivate Bank introduces 5% bonus Private bank started promo Sport Bonus, in the framework of the sport support campaign. The promo continues till August 1 and everyone who will pay cost of the sport products and service with the

banking card, can be involved in it. The bonus will be determined according to each 10 day data, 5% of the amount. Private Bank became sponsor of the teams in athletics foe Europe championship, which will be held in Tbilisi.

RATING OF THE LEADING BANKS ACCORDING TO ECONOMIC INDICATORS

iquidity of the banking sector increased by 6,4% in a year. By Q1 liquidity coefficient is 31,4% (Q1 2013 - 29,5%). Liberty has the most surplus among the banks with the largest actives. Return on Actives (ROA) for

the whole sector is 2.2% (Q1 2013- 1,8%), Return on Equity - (ROE) -12,7% (Q1 2013 - 10,5%). Supervision capital adequacy coefficient (SCAC) is 18% (Q1 2013 - 17,7%). According to norm, the coefficient should be no less than 12%. Top-6 list of the leading banks.

CURRENT CONDITION OF COMMERCIAL BANKS’ ASSETS

ccording to the National Bank of Georgia, As of April 1 2014, the banking sector in Georgia is represented by 21 commercial banks, including 18 foreign-controlled banks and two branches of non-resident banks. Compared with the previous month, the total assets of Georgian commercial banks increased (in current prices) by 0.4 billion GEL (or by 2.5 percent) and constituted 17.6 billion GEL. The bank-

ing sector’s own funds (equity capital) equal 3.0 billion GEL, which makes up 17.3 percent of the commercial banks’ total assets. The share of foreign capital in banks’ total paid-in capital constituted 78.7 percent. In March 2014, the banking sector finished with a net profit of 18.5 million GEL. The five banks with the largest assets constituted 76.4 percent of the total share of assets in the banking sector.

BASIS BANK COMPLETED Q1 WITH 2,8 MILLION GEL PROFIT

SC Basis Bank completed Q1 with 1,8 million GEL profit (Q1 2013 - 3,348 million). By April 1 deposits of the banks (not including banks’ deposits) is 212,7 million GEL (Q1 2013 -117 million), loans - 205 million GEL (Q1 2013 -114 million), overall obligations - 282 million GEL (Q1 2013 -162 million). Annual growth of the loan portfolio is 80% (Q1 2013 - 51%), deposits - 82% (Q1 2013 -17%), actives - 85% (Q1 2013 - 41%), to 401 million GEL (Q1 2013 - 217 million GEL) and market share - 2,3% (Q1 2013 - 1,5%). Return on Actives (ROA) is 2,77%, Return on Equity (ROE) - 9,45%.

Revenues of the Q1 2014 is 9,06 million GEL (Q1 2013 - 7,5 million) among them 6,07 million is received from the loans. 1,9 million GEL out of the total 5,4 million GEL expenditures is made on the deposits. Basis Bank operates from 1993. From May 2008 European Bank for Reconstruction and Development (EBRD) is it s stockholder. Xinjiang Hualing Industry & Trade (Group) Co ltd became owner of Basis Bank in 2012, to which belong 93% of the stocks. 5% belongs to Zurab Tsikhistavi, 1,85% - to EBRD. Overall stock capital of the bank is 119,3 million GEL (Q1 2013 - 55 million GEL).

BANK OF GEORGIA ANNOUNCED ABOUT INSTANT UPDATE PROMO

he bank informs that Instant Update is an installment of Bank of Georgia in the totally new opportunities. “The consumer who will use Instant Update till May 30, will be able to purchase more items with installment and make less monthly payments”, - says the statement released by the bank.

Instant Update promo of the bank gives opportunity to the consumers to purchase household, electronic and computer technologies, cell phone, furniture and other commodities. Maximal term of the installment is 36 months, amount - up to 5 000 GEL, contribution is not required. The consumer is not required to have transferred their income in any bank in order to use Instant Update.

TRADE SECTOR’S RATIO IN TOTAL CORPORATE LOANS PORTFOLIO MARKS 44.8%

n the lending of the legal entities, share of trade sector is 44,8% by the end of the Q1 (Q1 2013 - 48,6%; Q1 2012 - 47,5%). Bank of Georgia reports that amount of the trade lending is 2,4 billion GEL by April 1 (Q1 2013 - 2,3 billion Q1 2012 - 2,06 billion). In March 0.1% growth (1,8 million) was mentioned. Amount of the loans issued on industry equals to 944 million GEL (Q1 2013 - 885,4 million; Q1 2012 - 873 million) and 17,5% in the total portfolio of legal entities (Q! 2013 - 19%; Q1 2012 20,1%). In March growth was 3,4%. In February

declines was 2,3% (02/14 ->2,3%). 7,8% - 421 million comes on the construction (Q1 2013 - 9.2%, 427 million; Q1 2012 - 10.3%, 443 million). In the annual dimension reduction is 1,4%; in March reduction is 0,7%. Therefore, 70% of the total amount of legal entity lending (Q1 2013 - 76,8%. Q1 2012 -77,8%) comes only on 3 spheres - industry, construction and trade. By April 1 portfolio of corporate loans is 5,4 billion GEL (01/04/13 -4,632 billion 01/04/12 -4,37 billion).

NET PROFITS OF COMMERCIA BANKS MARKED 95.6 MILLION GEL IN JANUARY TO MARCH 2014

et profit of Georgian commercial banks for the period from January to March 2014 inclusively amounted to 95.6 million GEL (about $ 54.3 million). According to the National Bank of Georgia, this is the highest figure for the same period in the last 16 years. Total assets of commercial banks of Georgia at current prices compared with the previous month increased by 2.5% and reached 17.6 billion GEL ( $ 10 billion ) . At the same time own funds of the banking sector amounted to 3 billion GEL, or 17.3 % of total assets . Participation of foreign capital in

the encashment authorized capital made 78.7 %. Non-bank deposits placed in the banking sector reached 9.7 billion GEL as of April 1, 2014 which is 1.3 % higher than a figure for March 1 of this year. The coefficient of dollarization of deposits was 0.23% lower than as of March 1 , and totaled 60.86 %. The weighted average interest rate on deposits was 6.6%, including deposits in national currency - 9.5%, on foreign currency deposits - 5.3%. As of April 1, 2014 21 commercial banks functioned on the Georgian banking market, including 18 banks with foreign capital participation in the authorized capital and 2 - branches of foreign banks.

10 GAZPROM WAS TOP GLOBAL COMPANY BY EBITDA IN 2013

CIS PAIN FOR UKRAINE: ECONOMY LOSES 1.1 PERCENT IN Q1

payments this year. The country owes at least $2.2 billion to Russia’s Gazprom, but says this obligation will not be a priority. State-owned Naftogaz is on the brink of bankruptcy, because it has been selling gas domestically for only a fraction of the import price. A Eurobond sale could help stabilize the financial situation, Deputy Finance Minister Vitaliy Lisovenko said Friday April 25. The Eurobond sale would be under a US guarantee.

ussia’s Gazprom became the top global company by EBITDA (profit before tax) and is among the top five by net profit in 2013, the company said on its website yesterday. The closest competitors were Petrochina, ExxonMobil and Apple. Record gas supplies to Europe helped bump Gazprom from third to first place this year. In 2013, Gazprom increased its supplies to Europe by 16 percent, pumping a total of 161.5 billion cubic meters.

EUROPEAN COMMISSION ALLOCATES 365MN EURO TO UKRAINE

he European Commission has allocated an additional support package of 365 million euro to Ukraine, the commission’s press service said on Tuesday. “In response to the urgency of mobilizing assistance contributing to the stabilization and development of Ukraine,” a special support package worth 365 million euro was adopted, the statement said. The first tranche will be allocated after an agreement with the Ukrainian government is signed.

UKRAINE WEAKENS IMF GROWTH IN E. EUROPE

he growth outlook for Central and Eastern Europe has weakened in recent months, the Financial Times said, citing a report issued on Tuesday by the International Monetary Fund. The IMF said its forecast for growth in output for 22 countries in Central and Eastern Europe for this year has dropped to 1.9 percent, from a projection of 2.7 per cent in October. Russia’s 2014 growth forecast is slashed from 3 per cent last October to 1.3 percent. The fund also cut its forecast to 2.6 per cent from 3.3 percent for 2015. European countries could be affected by a further escalation of geopolitical tensions surrounding the crisis in Ukraine.

GAZPROM SIGNS MEMORANDUM ON CONSTRUCTION OF SOUTH STREAM EXTENSION TO AUSTRIA

azprom has signed a memorandum on the construction of the extension of the South Stream gas pipeline to Austria, the Russian natural gas producer’s CEO Aleksey Miller told Rossiya 24 TV on Tuesday. He earlier reportedly met with Austria’s OMV Director-General, Gerhard Royce, to discuss the project.

ARMENIA’S ECONOMIC ACTIVITY INCREASED BY 3.3 PERCENT

rmenia’s economic activity index in January-March of 2014 is 3.3% more than the index of the same period of the last year. As reports “Armenpress”, the National Statistical Service of the Republic of Armenia represented the preliminary main macro-economic indicators describing the country’s social-economic conditions obtained by the currentoperative summary. Under the conditions of the global financial crisis after the collapse of the construction sector recorded in Armenia, for the first time the growth observed in the previous two months was preserved, amounting to 100.7 per cent (39 billion, 813.1 million). The volume of foreign trade, which was down in January-February, again rose. The decline in the spheres of power production and industrial production was preserved.

May 5, 2014 #52

caucasian business week

‘HELP’ ON THE WAY

kraine’s economy contracted 1.1 percent in the first three months of 2014, Ukraine’s Statistical Service reported Wednesday. This poor performance puts the economy on track to slow 4 percent overall in 2014. The preliminary estimate compares to a 1.2 percent drop in the same 3-month period in 2013, and a 2 percent GDP fall in the fourth quarter, data also provided by Ukraine’s Statistics Office. There was zero growth in 2013, and the IMF has forecast a 4 percent contraction in 2014. The past few months have been tumultuous times for Ukraine, which has been the epicenter of violent protests that reveal the deep political divide between the West and East. In February, a provisional government took control of Kiev in the course of events viewed as a coup in Russia. Presidential elections will be held May 25. But Ukraine’s economy had been headed towards default long before Maidan protests began in November 2013 when then-President Viktor Yanuk-

ovich refused to sign a trade agreement with the European Union. Gold and foreign exchange reserves are quickly depleting, and currently stand at $12 billion. In February, before the coup-appointed government took power, reserves had reached a critical level of $18 billion. In 2013, more than $4 billion in international reserves were wiped out. Reserves are nearly gone because Ukraine’s Central Bank has spent billions on currency intervention to prop up the sinking hryvnia, which has depreciated 28 percent against the dollar this year. The sliding hryvnia is also adding pressure on government solvency, as over a half of Ukraine’s debt is denominated in foreign currency. Inflation is expected to continue to rise, with the IMF predicting 12 percent in 2014. The Ukrainian Central Bank is also tapping into the country’s reserves to pay off the country’s fast-accumulating debt. Finance Minister Vitaliy Lisovenko said the government has $9 billion in foreign-currency debt

Ukraine is waiting for a final loan figure from the International Monetary Fund, a package expected to be upwards of $18 billion. Details on the package are expected to be announced today. The first tranche will come in May. An additional $750 million from the World Bank, 600 million euro from the European Union, and $100 million from Japan in aid will make its way to Kiev. The US has also promised $1 billion in loan guarantees to help the collapsing Ukraine economy. However, so far these are just promises and no physical funds have been transferred to torn apart Ukraine. “Of course we need a fully fledged agreement with the IMF but the European Union is ready for macro-financial aid in the framework of the overall package. So we are ready to support Ukraine,” European Council President Herman Van Rompuy told reporters Wednesday. In December, Russia provided Ukraine with a $15 billion ‘no-strings-attached’ loan, but so far, the West hasn’t delivered on any of its promises to help Ukraine. Under the terms of the Russia-Ukraine deal signed in December, Ukraine’s debt shouldn’t exceed 60 percent of GDP. This means that technically Russia has the right to demand the money back before the bonds are due in 2015.

UKRAINE’S GAS DEBT TO RUSSIA REACHES $3.5 BN

kraine’s gas debt to Russia has hit $3.5 billion, according to preliminary data released on Wednesday, a Gazprom official told reporters. The new data includes Ukraine’s Naftogaz order as of April 30 and those volumes that were already supplied this month, Sergey Kupriyanov stated. Ukraine’s energy minister, Yury Prodan, responded, stating that Ukraine does now agree with Russia’s gas debt estimate of US$3.5 billion, UNN news agency reported. Prodan added that Ukraine continues to insist on the price of $268.5 per 1,000 cubic meters for Russian gas. Last week, Russian energy minister Aleksandr Novak said that Ukraine’s growing gas debt may lead to the failure of the country’s transit obligations and the reduction of gas supplies to southeastern Europe. The debt may force a situation where not enough gas will be pumped into Ukrainian underground storage facilities, which may create the risk of non-performance by Ukraine of its transit obligations and of an undersupply of gas to southeastern Europe, the minister stated. In December, Russia provided Ukraine with a $3 billion loan, which was part of a larger $15 bil-

lion aid package agreed the same month. Moscow also offered a 33 percent gas price discount that would have saved more than $7.5 billion. In April, Russia’s President Vladimir Putin said that Russia cannot continue to prop up Ukraine’s faltering economy. “The Russian Federation doesn’t recognize the legitimacy of the authorities in Kiev, but it keeps

providing economic support and subsidizing the economy of Ukraine with hundreds of millions and billions of dollars. This situation can’t last indefinitely,” Putin said. Ukraine has not paid for Russian gas since the beginning of 2013, and with all discounts withdrawn it is now charged $485 per 1,000 cubic meters of gas.

KAZAKHSTAN LAUNCHES FIRST EARTH REMOTE SATELLITE

azakhstan has successfully launched its first earth remote sensing satellite into orbit. KazEOSat-1 was launched from the French Guiana Space Center, Kazakh Space Agency reported on April 30.

The high-resolution observation satellite, which will operate for at least seven years, was built by French Airbus Defense and Space (Astrium) for Kazakhstan’s Earth Remote Sensing Satellite System. Weighing 900 kilograms, the KazEOSat-1 satellite was put into orbit by Arianespace’s Vega light launcher. Earth Remote Sensing Satellite System will ensure Kazakhstan’s independence in obtaining online monitoring information and data for resolving problems in a number of economic sectors. The system will include KazEOSat-1 high resolution earth observation satellite and KazEOSat-2 medium resolution earth observation satellite. KazEOSat-2 is scheduled to be launched in June, and preparing the Dnepr rocket which will deliver KazEOSat-2 into orbit has already been ini-

tiated. Earlier, carrier rocket Proton-M delivered the Kazakh KazSat-3 and the Russian Luch-5B satellites into the intermediate orbit. Both satellites were launched from Kazakhstan’s Baikonur Cosmodrome, and the Briz-M booster launched them into the target orbit. The KazSat-3 satellite is designed to provide communications, television, and high speed Internet access in Kazakhstan and neighboring countries. Kazakhstan was the first post-Soviet country after Russia which launched its own space satellite. KazSat was launched in June 2006, and the second Kazakh space satellite was launched in July 2011. KazSat-2 operates in the normal mode, provides services to 11 Kazakh operators, and gets over $2 billion tenge (about $11 millions) for its services.

AZERBAIJAN May 5, 2014 #52

caucasian business week

SOCAR SUBSIDIARY AWARDED FOUR ISO CERTIFICATES

AZERBAIJAN CENTRAL BANK’S CURRENCY RESERVES EXCEEDED $14.87 BN FIRST TIME

he Central Bank of Azerbaijan (CBA) reports that its currency reserves continue stable growth in 2014 as well. The CBA reports that as of 1st May 2014 its currency reserves totaled $14.87 bn (absolute record) versus $14.715 bn by 1 April, $14.15 bn by 1 January 2014 and $11.69 bn by 1 January 2013. Growth of currency reserves reached 1.06% ($155.4 million) for April and for the passed term of 2014 – 5.08% ($719.1 mil-

lion). By the end of 2014 currency reserves are expected to reach $16 bn. In 2013 their rise was 21.01% ($2.457 bn). The CBA began 2012 with foreign exchange reserves of $10.48 bn and for 2012 it accumulated them by 11.58% ($1.2 bn). Over 2011 foreign exchange reserves of the Bank grew by 63.6%, or $4.07 bn - an absolute record for the CBA. CBA’s currency reserves reached $6.407 bn by 1 January 2011, $5.175 bn by 1 January 2010 and $6.137 bn by 1 January 2009.

AZERBAIJAN PREPARES A NEW ROUND OF BILATERAL WTO MEMBERSHIP TALKS

zerbaijan had shifted to the certain extent the focus of the process of registration of full membership in the World Trade Organization (WTO) - bilateral negotiations with WTO members have been brought to the foreground. Deputy Foreign Minister Mahmud Mammadguliyev says that answers are being prepared currently to the questions posed during the February round of multilateral negotiations, and proposals for goods and services from WTO members are received.

“Under these conditions, probably in June or July we’ll be ready to hold bilateral negotiations with WTO members. The composition of their foreign participants has not been defined clearly, but we are holding consultations with a number of countries about the possibility of a round of bilateral negotiations,” Mammadguliyev said. This February in Geneva Azerbaijan held bilateral negotiations with 11 WTO members. They were part of the XI meeting of the working groups on Azerbaijan’s admission to the WTO, held on 21 February.

IRAN SEEKS TO LEARN SOFAZ’S EXPERIENCE

ran intends to become familiar with Azerbaijani State Oil Fund’s (SOFAZ) activity and to learn experience. SOFAZ and Iran’s National Development Fund discussed the prospects for bilateral cooperation in Baku. The meeting was aimed to become familiar with SOFAZ’s activity, to learn experience within the International Forum of Sovereign Wealth Funds, comply with the Santiago Principles and to become closely familiar with the reporting in this sphere. The Iranian delegation that took part at the meeting was headed by member of the Board of Directors and chairman of the Fund, Seyed Ghasem Hosseini, SOFAZ said on May 1. The parties also discussed the aspects of bilateral cooperation. SOFAZ was established in 1999 with assets worth $271 million. The main purposes of the fund are the accumulation of funds and placement of assets abroad to minimize negative impacts on economy to pre-

vent the ‘Dutch disease’, ensuring savings for future generations, and maintaining the current social and economic standards in the country. Azerbaijan and Iran have had diplomatic relations since 1918. Iran recognized Azerbaijan’s independence in 1991, and diplomatic relations between the two countries were established in 1992. Data from the State Customs Committee of Azerbaijan shows that trade turnover between the two countries amounted to $281.03 million in 2013, which is 6.13 percent higher than 2012. The figure stood at $263.785 million in 2012. Iran imported $73.347 million worth of goods from Azerbaijan in 2013, while its exports to Azerbaijan stood at $207.683 million during the same period. Iran’s trade turnover with Azerbaijan in the first eleven months of 2013stood at $470 million ($448 million exports and $22 million imports), Iran’s customs administration’s latest report shows. The statistics of Iran’s customs administration are based on the official rate of rial/USD which is different from the free market rate.

PROFIT OF AZERBAIJAN’S POWER OPERATOR FELL 1.87-FOLD

he profit of Azerenerji OJSC, Azerbaijan’s power operator, fell 1.87fold in 2013. In accordance with the Azerenerji’s consolidated statement on its financial condition for 2013, the operator’s total profit for the last year made only AZN 84.589 million against AZN 158.550 million a year before. It’s necessary to clarify that the profit reduction was conditioned by the specific character of tax accounting and not by the operational indexes. In 2013 Azerenerji paid AZN 46.018 million of profit tax to the state budget, while in 2012 it received AZN 38.012 million refund on this tax due to debts settlement in energy sector. In 2013 Azerenerji’s profit before taxation made AZN 130.607 million against AZN 120.538 million, though the total revenue of the opera-

tor reduced from AZN 749.997 million to AZN 743.252 million. At that, growth of currency transaction earnings from AZN 28.623 million up to AZN 47.431 million played into the operator’s hands, as they exceeded 50% of its operating profit which increased only from AZN 89.342 million up to AZN 92.110 million. The growth of sales volume (income from power sales) was also slight last year: from AZN 716.319 million up to AZN 717.176 million. The assets of Azerenerji OJSC increased up to AZN 5.518 bn against AZN 5.334 bn a year before and the total capital – from AZN 2.02 bn up to AZN 2.201 bn with the charter capital remaining at the level of AZN 1.76 bn. As a result, Azerenerji’s main dividend per share made AZN 0.96 against AZN 1.8 a year before and reduced dividend – AZN 0.86 against AZN 1.69.

OCAR Petroleum SA was awarded four ISO international certificates. The subsidiary company of Azerbaijan’s state energy company SOCAR in Romania entered the list of nominees for ISO 9001 quality management system. The system is aimed at improving the development, implementation, and improvement of performance of the quality management system to enhance customers’ satisfaction by meeting their requirements. As a quality management standard, ISO 9001 also ensures the quality of produced goods or services. Along with the ISO 9001:2008 ‘Quality Management System’ standard, the company was awarded international standard certificates, particularly ISO 18001:2008 ‘Occupational Health and Safety Management Systems’, ISO 14001:2005 ‘Environmental Management Systems’, and ISO 22000:2005 ‘Food Safety Management Systems’.

SOCAR Petroleum SA invited the SC Racis Management Systems SRL company to acquire four international certificates in 2013. SOCAR Petroleum SA was able to develop appropriate rules based on the recommendations of the SC Racis Management Systems SRL company in a short time. The auditors which checked the SOCAR Petroleum SA at its own invitation confirmed its compliance with international standards. The SC Grup de Certificare Sisteme de Management SRL (GCSM) Company was then invited to complete the certification process. As a result of the audit, it was decided to award SOCAR Petroleum SA four international certificates for three years. SOCAR Petroleum SA was founded in 2011 to manage the purchase and sale of petroleum products in Romania and provide supply services that meet international standards and a diversified transportation infrastructure.

AZERBAIJANI GAS NOT BIG COMPETITOR TO RUSSIAN GAS: SOCAR OFFICIAL

zerbaijani gas is not a big competitor for the Russian gas at the European market. The remarks were made by Vice President of Azerbaijan’s state energy company SOCAR Elshad Nasirov. The volumes of Azerbaijan’s gas supply to Europe will not be substantial for the moment, he explained. “We think that our deliveries of additional or alternative gas to Europe will be a step in the diversification of supplies to the European Union, and we will fill the gap between gas supply and demand until our gas will be ready to be supplied to Europe,” Nasirov said in an interview with CNN. He believes Azerbaijan shouldn’t use companies like SOCAR or the gas production as a tool against others. “Our goal is to diversify gas supplies to the European Union,” Nasirov said. “Azerbaijan is interested in becoming a reliable energy partner for Europe. At the same time, we are ready to supply gas at shorter destinations to our neighbors -Georgia, Russia, and Turkey.” Touching on the price of the supplied gas, SOCAR official said they are based on market prices. “If gas deliveries to Europe is profitable enough, we will provide additional volumes of gas to the same countries,” Nasirov stressed. The gas which will be produced at the second stage of Azerbaijan’s Shah Deniz field development will be the main source of the Southern Gas Corridor, which envisages the transportation of the Caspian gas to European markets.

The Shah Deniz consortium announced the selection of TAP as the main route for transporting its gas to Europe in late June. Another pipeline which was vying for Azerbaijan’s gas transportation to Europe was Nabucco West. Azerbaijan agreed to sell over 10 billion cubic meters of natural gas a year from the second phase of its Shah Deniz development to nine companies in the European Union in September 2013. The contracts were signed for 25 years between SOCAR and the European utilities, including Axpo Trading AG, Bulgargaz EAD, Depa, Gas Natural Fenosa, Hera Trading Srl, Shell Energy Europe, Enel SpA, E.ON SE, and GDF Suez SA. The initial capacity of TAP will amount to 10 billion cubic meters per annum with the possibility of expanding to 20 billion cubic meters per annum. The TAP’s construction project is planned to start in 2015.

AZERBAIJANI-DUTCH TRADE TURNOVER EXCEEDS $300 MLN

rade turnover between Azerbaijan and the Netherlands amounted to $320 million in 2013. The news was announced by Ambassador of the Netherlands to Azerbaijan Robert Jan Gabrielsen on April 22. Dutch companies are mainly investing in the nonoil and non-financial fields, he told journalists at a press conference held on the occasion of King’s Day in the Netherlands. On this national holiday, the Dutch Embassy holds Netherlands Week and organizes a number of activities in Baku on April 22-26. “The Netherlands made investments worth about $180 million in Azerbaijan last year,” Gabrielsen said. Bilateral economic relations are developing gradually between the two countries, he added. “The Dutch companies are showing interest in Azerbaijan’s economy.”

Gabrielsen also said ways of developing these relations further will be discussed during the Dutch trade mission’s visit to Azerbaijan, adding that the visit will be effective. The Dutch ambassador added that the Netherlands is interested in the development of relations with Azerbaijan in the field of agriculture as well.

NEWS caucasian business week

May 5, 2014 #52

THIS IS THE CHART THAT HAS APPLE ANALYSTS DROOLING ABOUT THE IPHONE 6

hen it comes to Apple, you can forget the iWatch and forget the Apple TV, and there’s no need to worry about the iPad. There is really only one thing that matters: the iPhone. The iPhone accounts for 60% of Apple’s sales but about 99% of what investors and analysts think about when it comes to Apple. That’s why they mostly shrugged last quarter when Apple delivered horrible iPad sales numbers. The iPhone, which is what matters, was stronger than expected. Analysts think Apple has an opportunity to de-

liver boffo iPhone sales this fall when it rolls out the iPhone 6. The new iPhone is expected to come with a much larger screen, which will drive people to upgrade their phones. And, as you can see in this chart, iPhone owners — at least in the U.S. — are due for an upgrade. Morgan Stanley made this chart, which shows that more than half of the U.S. iPhone owners on Verizon are stuck with a 4 or 4S. Nearly half of AT&T owners are in the same predicament. When the iPhone 6 hits, Morgan Stanley, like many on Wall Street, expects a massive upgrade cycle from all these people with tiny old iPhones.

RATING OF QUICK MONEY TRANSFER SYSTEMS IN MARCH

Like in previous months, Zolotaya Korona is a leader among quick money transfer systems according to transfers.

Source: National Bank of Georgia. Receiving and sending of international money transfers is available through commercial banks and microfinance organizations, with service of over 20 international companies. In March 2014 $112,7 million has been transferred from abroad to Georgia (03/2013 - $120,5 million).

WORLD NEWS May 5, 2014 #52

caucasian business week

US ECONOMY GROWS AT SNAIL’S PACE IN FIRST QUARTER, EXPANDS 0.1%

he US economy came to a near standstill in the first quarter of 2014, growing at one of its weakest paces since 2012. The slow growth could indicate that America’s post-recession honeymoon is over. Gross Domestic Product (GDP), or the total sum of all goods and services produced within the USA, only advanced 0.1 percent in the first threemonth period of 2014, the Commerce Depart-

ment said on Wednesday. The report is a preliminary estimate and can be revised significantly, either up or down. Economic momentum slowed down due to the effects of extreme winter weather, as well as a decrease in business spending. Exports fell at a rate of 7.6 percent in the first quarter – the biggest fall since the recession ended. The frigid weather could be to blame for less consumer spending, which only increased at a rate of 0.4 percent.

The slowdown is in stark contrast to the 3.4 percent economic expansion that the US enjoyed in the second half of 2013. “We’ve been living in sub-3 percent land, and people have gotten used to that as the new normal. But it’s not. It’s anemic,” Dan North, chief economist at Euler Hermes North America, told The New York Times. America’s economy slowed drastically in the first quarter of 2014, as wintry weather depressed corporate spending and housing sector activity. Smaller additions to inventories by farmers and businesses also held back growth. Business spending dropped 2.1 percent between January and March, as companies spent less on buildings, equipment, and intellectual property. Federal spending is set to grow in 2014, which could help offset the lackluster first quarter growth. Most economists are predicting an overall growth of between 2.5 and three percent. Later on Wednesday, the Federal Reserve will finish its two-day meeting and will likely announce another $10 billion in monthly bond purchases as part of its planned ‘tapering’ of stimulus spending.

JAPAN AND CHINA THREATEN ASIAN ECONOMIC GROWTH - IMF

sian growth will remain steady at 5.4 percent in 2014, however a steeper than expected slowdown in China and a failure in Japan’s “Abenomics” program could derail the region’s economic progress, says the IMF. Asia also faces risks from outside the region, including improving growth in the US, which could raise global interest rates the new IMF study said. “Bouts of capital flow and asset price volatility are likely along the way, with exchange rates, equity prices, and government bond yields affected by changes in global risk aversion and capital flows,” the IMF concludes. The IMF raised its growth forecast for Asia this year due to a pickup in external demand alongside a recovery in advanced economies. Growth is also expected to improve slightly to 5.5 percent in 2015. Last year, the region grew 5.2 percent. However, the IMF predicts China will slowly decelerate to growth of 7.5 percent this year and 7.3 percent in 2015,to a “more sustainable path”. 2014 has been a bumpy start for China, due to financial sector vulnerabilities, and the temporary cost of reforms, along with the transition toward a more sustainable growth path would have significant adverse regional spillover. Domestic and global political tensions could also

nemployment in Germany declined again in April as the country benefits from a favorable outlook and unseasonably warm weather, AFP reported. The number of people registered as unemployed fell by 25,000 in seasonally adjusted terms this month, the Federal Labor Office said. In raw or unadjusted terms, the German jobless total fell by 111,400 to 2.943 million and the unadjusted jobless rate slipped to 6.8 percent from 7.1 percent. The unemployment rate, which measures the number of people looking for work as a proportion of the working population, was unchanged at 6.7 percent in April.

CHINA’S MINISTRY OF COMMERCE TO LEVY DUTIES ON EU POLYSILICON IMPORTS

hina’s Ministry of Commerce has warned it will impose two-year anti-dumping and antisubsidy duties on imports of solar-grade polysilicon from the EU, starting May 1, Xinhua reported. The substance is a key material for making solar cells. The ministry found that EU products were dumped and subsidized in the Chinese market and caused substantial damage to domestic producers. The probe was launched on November 1, 2012 in response to requests from Chinese polysilicon manufacturers, amid an import surge and price drop of EU products.

MOODY’S CHANGES GREEK BANKING SYSTEM OUTLOOK TO STABLE

oody’s has changed the outlook for the Greek banking system to stable from negative. After six years of contraction, the gradual economic recovery, coupled with Greek banks’ recapitalizations and regained access to inter-bank and international capital markets, will further ease funding pressures, the rating agency said. The process will also lead to a gradual recovery of pre-provision profitability in 2015. Moody’s Investors Service said that despite continued weak domestic demand and an elevated unemployment rate that is persisting, the operating environment for Greek banks will gradually improve.

BP’S PROFIT DROPS 23.5% IN Q1

B create trade disruptions and weaken investment and growth across the region. In some frontier economies, high credit growth has led to rising external and domestic vulnerabilities. The IMF expects Japan’s growth to decrease to 1 percent in 2015 from 1.4 percent this year, due to a reduction in the stimulus effects from monetary and fiscal easing. Another barrier towards growth will be a need to reduce debt, the outlook said. Abenomics is Japanese Prime Minister Shinzo Abe’s plan to stoke the economy and spur growth after decades of decline, with a commitment to

keep the yen weak. Meanwhile, the IMF says a pickup in external demand coupled with a recovery in advanced economies and resilient domestic demand should contribute to growth across most of the region. “The advanced economies are turning a corner and many Asian economies which depend on exports as a main growth engine are in a good position to capitalize on the recovery. That’s the main reason why we are positive on the Asian region,” CNBC quotes Changyong Rhee, the director of Asia and Pacific Department at the IMF.

TWITTER’S $132BN Q1 LOSS SENDS SHARES TUMBLING MORE THAN 11%

hares in the social network Twitter have fallen 11.1 percent on market opening in New York on Wednesday after the company announced disappointing first quarter results. Decreasing user growth and deep net loss triggered a shareholder sell off. The micro-blogging service posted a net loss of $132.4 million accrued from stock compensation costs. In comparison, the same period last year the company posted a $27 million loss , according to the company’s financial statement.

GERMAN UNEMPLOYMENT DECLINES IN APRIL

Even a sharp increase in advertising revenue didn’t help Twitter make a profit. Company revenue more than doubled to $250 million, up from $114 million in the first quarter of 2013, which beat the company’s own forecast and analysts’ expectations. Advertising generated $226 million with 80 percent coming from mobile. “We had a very strong first quarter. Revenue growth accelerated on a year over year basis fueled by increased engagement and user growth,” said Dick Costolo, the CEO of Twitter.

“We also continue to rapidly increase our reach and scale. With the integration of MoPub, we now reach more than 1 billion iOS and Android users each month, making us one of the largest in-app mobile ad exchanges in the world and the only one at scale to offer native in-app advertising,” Costolo concluded. Twitter, which went public on the New York Stock Exchange last November, says it has 255 million average monthly active users (MAU) as of March 31, a 25 percent year-over-year increase. The MAU growth appears to be falling as at the end of the last quarter the number of the active blogs increased by 30 percent. “They need to prove that they can be a very largesized platform,” the Economic Times quotes Arvind Bhatia, an analyst with investment firm Sterne Agee. “Can they get to 500, 600 million users worldwide? That’s what they have yet to prove.” By comparison, Facebook has 1.28 billion users, and the professional networking service LinkedIn had 277 million users at the end of 2013. WhatsApp, the messaging app Facebook bought for $19bn, recently passed the 500 million user milestone.

P’s Q1 underlying replacement-cost profit dropped to $3.23 billion from $4.22 billion from the previous year, the company said. Revenue declined to $91.71 billion from $94.11 billion. As production fell 8.5 percent to 2.13 million barrels of oil a day, BP warned that output would fall in Q2 from Q1, mainly due to major maintenance. However, despite the fall in earnings, BP raised its Q1 dividend to 9.75 cents a share from 9 cents last year.

APPLE TO LAUNCH $17BN BOND SALE

pple is preparing the groundwork for another debt sale in the region of $17 billion, the Financial Times wrote. The corporate bond sale could rank as the second-largest of all time. The company said last week that it planned to increase its share buyback from $60 billion to $90 billion, funded by domestic and international bond sales. Apple plans to use proceeds from the debt sale to fund the buyback rather than tap its $150 billion cash pile, according to the paper. About $130 billion of that cash is held overseas, and returning it to the US would lead to a tax charge of up to 35 per cent.

LG ELECTRONICS REPORTS 44% ON-YEAR RISE IN Q1 OPERATING PROFIT

G Electronics beat market expectations by reporting its strongest quarterly profit in nearly two years, on high-end television sales, Reuters reported. For January-March, LG reported a 44 percent on-year rise in operating profit to $486.89 million - the highest since the second quarter of 2012. The company is battling overall weak TV demand by ramping up production of high-end products. The world’s secondlargest TV maker on Tuesday said that it expects TV revenue to increase in the second quarter.

UK GDP EXPANDS TO 0.8% AS RECOVERY BROADENS

ritain’s economic growth accelerated in the first quarter amid signs that the recovery is broadening beyond consumer spending, Bloomberg said. Gross domestic product expanded 0.8 percent from the final three months of 2013, when it grew 0.7 percent, according to the Office for National Statistics. GDP grew 3.1 percent from a year earlier, the biggest annual increase since the fourth quarter of 2007. Services increased output by 0.9 percent as the UK is on track to have the fastest-growing economy of any Group of Seven nation in 2014.

PUBLICITY caucasian business week

May 5, 2014 #52

TBILISI GUIDE May 5, 2014 #52

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

May 5, 2014 #52