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October 20, 2014 #72

October 20, 2014, Issue 72

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BE INFORMED, DO BUSINESS

David Usupashvili: Saakashvili Prosecuted by His Own Past And Not Putin’s “Accomplice” Ivanishvili Pg. 2

GEORGIA FORBES: WHY UKRAINE, GEORGIA AND MOLDOVA SHOULD CHOOSE THE EU OVER PUTIN’S EURASIAN UNION, IN FOUR CHARTS

AZERBAIJAN CAR IMPORT DROPS

zerbaijan imported 47,984 vehicles in January-September versus 75,502 vehicles for the same period in 2013. Pg. 10

CIS KIEV FILES NEW $5BN LAWSUIT AGAINST GAZPROM IN STOCKHOLM

kraine’s Naftogaz has filed a second lawsuit with the Stockholm arbitration institute against Gazprom claiming it should repay $5 billion for transit gas “under-delivered” between 2009 and 2014. Pg. 11

WORLD NEWS GERMAN ECONOMY IN ‘CHOPPY WATERS’, AS GROWTH FORECAST SLASHED TO 1.2%

he German Ministry of Economic Affairs has slashed its of growth this year to 1.2 percent, which is mounting evidence that Europe’s biggest economy is losing steam. Pg. 13

TWELVE COMPANIES SHOW INTEREST IN ANAKLIA SEAPORT CONSTRUCTION

he deadline for submitting interest expressions for constructing and managing a new deep-water seaport in Anaklia, the Samegrelo Region, is over. A total of 12 companies from various countries have submitted interest expressions for the seaport construction. “We are glad 12 companies have submitted applications. They represent various countries, including, Belgium, India, Israel, Singapore, USA, Cyprus, China, Great Britain and so on. The next stage implies the composition of the sol-called short list of these companies to continue direct negotiations with them on the seaport concept and contract details”, Economy Minister Giorgi Kvirikashvili noted at then first meeting of the due commission.

FACTORS THAT DETERMINE PRICE OF APARTMENTS

Pg. 14

Pg. 2

GEORGIAN OIL MARKET FACES UNPRECEDENTED CHAOS

KAZAKH BTA WITHDRAWS FROM BTA BANK GEORGIA CAPITAL

Pg. 2

Under the terms, the seaport will be located on the Black Sea coastline near the village of Anaklia. The seaport will serve mixed cargo consignments. The seaport construction works will be carried out in 7 phases to increase its working capacity. 1) the Anaklia seaport annual capacity must reach 7 mllion tons in 3 years after the construction inauguration; 2)the annual capacity must increase to 20 million tons in 7 years; 3) the capacity must increase to 40 million tons in 12 years; 4) The fourth phase will start for a month after the annual turnover makes up 90% of the third phase’s capacity; In 5 years after the inauguration of the fourth phase the annual turnover must reach 55 million tons; Pg. 2

David Saganelidze: Mashkevich Interested in Investing in Engineering, Tourism and Hotel eorgia Sectors in Georgia French economist Jean Tirole wins Nobel Prize for economics Pg. 13

Pg. 2

MAIN EVENTS caucasian business week

NY TIMES: “SAAKASHVILI PROSECUTED BY HIS OWN PAST AND NOT PUTIN’S “ACCOMPLICE” IVANISHVILI” – USUPASHVILI

t is an offense to me, as Bidzina Ivanishvili’s political partner, chairman of the Parliament of Georgia, cofounder of the Georgian Dream Coalition, to claim that my former political leader and the country’s former Prime Minister has been serving another state and committing treason,” Georgian Parliament Speaker Davit Usupashvili says in an article with the title “Saakashvili Prosecuted by His Own Past and Not Putin’s “Accomplice” Ivanishvili,” published in The New York Times. According to him, debating whether or not Bidzina Ivanishvili has been consciously, methodically, and consistently pursuing Russia’s interests (“Russia’s patriot”) or striving to ensure Georgia’s return into Russia’s orbit (“Georgia’s mistaken patriot”), however, is immature and embarrassing. “Therefore, I feel it is my duty to respond to this issue and remind those misled about a few facts. Ivanishvili: a Georgian nationalist - besides his unprecedented mammoth philanthropic activities, little was known about Ivanishvili’s views, values, and plans before the autumn of 2011. Over the past three years, however, every detail about his past and present have been part of the public domain, so any questions about Ivanishvili’s motivation when it comes to his homeland and people are easily answered. Let us call to mind some of the easily verifiable facts regarding Ivanishvili’s allegiances. What does Georgia mean to Bidzina Ivanishvili? Georgia is first and foremost Ivanishvili’s homeland, where he was born and raised in a family of ordinary working people. Ivanishvili left Georgia at the age of twenty-nine to continue his academic activities. But, as soon as he became able to benefit his country, twenty-two years ago, Ivanishvili, a rookie businessman at that time, sent 400 tractors to support Georgia, which was devastated by the war. In the 1990s, when trials and tribulations befell Georgia, he saved many members of the Georgian intelligentsia from poverty and starvation and issued monthly assistance to hundreds of people. Over two decades, his charity foundation has financed the restoration and renovation of hundreds of churches and monasteries, monuments of culture, the construction and renovation of schools, universities, medical institutions, theaters, libraries, roads, bridges, and much more. He has been financing social projects for years, helping nursing homes and orphanages, as well as earthquake victims. All this took place when Georgia was trying to deliver itself from Russia’s orbit. Back then, not many Georgians knew his name, and few outside his family knew him personally”, Usupashvili said. According to him, Bidzina Ivanishvili has to date spent over three billion USD on charity in Georgia, delivering already on this stated commitment to use at least 90 percent of his wealth for the building of the Georgian state. Ivanishvili’s dedication to Georgia and to the future of our country cannot be doubted, he adds. “What does Russia mean to Bidzina Ivanishvili? Russia is a place where he worked on his academic paper, where he became a businessman, made most of his fortune. Ivanishvili left Russia after the end of President Yeltsin’s rule and never returned there over the last twelve years. He is

remembered by Russian business circles of that time as an extraordinary character who would not put up with any dishonesty or unlawfulness. As for being “the main Gazprom shareholder”, the truth is that Ivanishvili bid farewell to his last Gazprom stock seven years ago, coincidentally, when he severed business ties with President Saakashvili also. His other assets in Russia were liquidated immediately after Ivanishvili entered active politics, prior to the 2012 parliamentary election. Russia belongs to Ivanishvili’s past. What do Georgia’s freedom and European choice mean to Bidzina Ivanishvili? He supported Saakashvili and his team who, having come into power after the 2013 Rose Revolution, gave political priority to fighting corruption and ensuring the country’s democratic modernization and Euro-Atlantic integration. He provided unprecedented financial assistance to state agencies. With a view to strengthening anti-corruption activities and attracting professionals into public service, for two years he financed funds to pay salaries to ministers, senior government officials, judges, and other public servants, as the state at that time could afford to pay only symbolic salaries. Yet, no one has ever claimed that he tried to interfere in any way with political processes or decisionmaking in government. Moreover, to avoid unnecessary rumors and speculation, his name was kept out of the spotlight; it was widely believed that these salary funds were financed by the George Soros Foundation”, Usupashvili says. At that time, According to Usupashvili, under Saakashvili’s presidency, Ivanishvili provided the Georgian armed forces with significant financial aid to draw closer to NATO standards. Between 2004 and 2008, it was he who financed the procurement of equipment and military uniforms for the Georgian army and the establishment of military bases meeting high standards and commended by our American partners. (Unfortunately, most of them were demolished during the 2008 war.) As long as he believed that President Saakashvili and his team led the country toward the democratic West and fought the remnants of the Communist and colonial past, Ivanishvili even donated 90 million USD to public funds intended for the direct support of Saakashvili and his government. Four hundred schools were built, renovated and equipped with that money, so that Saakashvili and his team could take all the credit, which they did; Saakashvili prided himself on this project for a long time. “In all, Ivanishvili spent hundreds of millions of dollars in support of Saakashvili and his team over four years, with the aim of expediting the country’s democratic modernization and EuroAtlantic integration. (Out of curiosity, I would like to know how Saakashvili now explains this support in view of his current claims.) However, after police forces reformed thanks to Ivanishvili’s efforts were used by Saakashvili against his own people on November 7, 2007, and Saakashvili turned to electoral fraud to remain in power in January 2008, Ivanishvili refused to maintain relations and severed ties with him. Then there was the August 2008 war, a case of premeditated Russian aggression and yet another imprudent gamble on the part of Georgia’s President”, Usupashvili says in his letter.

October 20, 2014 #72

GEORGIAN OIL MARKET FACES UNPRECEDENTED CHAOS

fter July, oil prices, and consequently, fuel prices decreased by almost 25%, while in Georgia petroleum products fell only by 2.5% - this means that chaos reigns on the Georgian oil market that has never occurred before - “Rezonansi” newspaper writes. A long and steady decline in oil prices has long made it possible for importers to significantly reduce prices, but apparently they do not want to give up excess profits in the context of high world oil prices. It is interesting that under the previous government, when the price of oil declined unevenly, experts and non-governmental organizations called all the bells. Today, for some reason, no one protested against the arbitrary actions of importers. The fact is that after the change of power, the situation on the oil market has only worsened. Today, international wholesale price of a ton of petrol is USD 805 (GEL 1 408) plus VAT - GEL 235, the excise tax – GEL 250, transport - GEL 80. In the end, a ton of gasoline costs importers about GEL 1 991 GEL. Or GEL 1.53 per liter. Today, the minimum price of a liter of gasoline is GEL 2, 05, that is, it turns out that the oil companies of Georgia are working on more than 25% of the profits. By the same simple calculations, a wholesale price of 1 liter of diesel fuel in the Georgian market should be 1.63 GEL, at filling stations diesel is sold for GEL 2, 04 - that is, almost 20% of the profits. Importers in one voice say that in the near future they are not going to reduce the price because once they already cut it, but in the period when

they did it a ton of gasoline cost USD 1 050, and now - USD 805. The difference is obvious. Though in the case of the growth in international oil prices, importers immediately increase the cost of fuel at the gas stations, but now, when the international situation has changed in the opposite direction, they do not pay attention to it. As of cartel deals in the oil business, the Government states that this issue should be studied by the Competition Agency, but at the same time, according to Deputy Economy Minister Natia Mikeladze, the Agency cannot reduce the prices on the market - it can only examine the situation and determine the existence of cartel deals. As it turned out, the study of the market will take at least 3 months, and most likely, the Agency will not be able to win importers who will hire the best lawyers in Georgia. Thus, a more efficient mechanism is required without which the promise of the ruling party to establish order on the fuel market will remain a bluff. There is no competition on the oil market of the country - it can be seen with the naked eye. All world news starts with information about the catastrophic decline in oil prices, respectively, cheaper oil products. It is clear that oil importers are businessmen seeking to maximize profits, but members of the government should be ashamed when they see prohibitively high prices on petrol stations. By the way, what does the Economic Council of the Government, which includes 40 people, do at this time? It is obvious that such lawlessness in the oil market, which takes place today, has never occurred before.

KAZAKH BTA WITHDRAWS FROM BTA BANK GEORGIA CAPITAL

azakh BTA Bank informed stock exchange of Kazakhstan that they left capital of Georgian BTA Bank and currently Kazakh bank does not own a single stock in Georgia

subsidiary. Kazakh portal capital.kz releases information about it. The information also indicates that preparation of final consolidation of BTA Bank and KazCommerceBank is going. The bankers expect comple-

tion of the process at the beginning of next year. Kazakh businessman Kenes Rakishev buys 46,5% of the BTA Bank’s stocks, KazCommerceBank - 46,5%. They will redeem these shares from the state fund Samruk Kazina. Samruk Kazina will give remaining 4,26% to KazCom for management. 50,99% of BTA Banks belongs to JSC Silk Road Financial Group, remaining shares belonged to BTA Bank Kazakhstan. Capital.kz

KAZBEGI HPP LAUNCHES OPERATION

eputy Prime Minister, Minister of Energy Kakhi Kaladze, “Feri Group” Executive Director and “Kazbegi HPP Ltd” Chairman of the Board Lasha Iordanishvili as well as government officials and representatives of energy companies attended the commissioning ceremony in the Kazbegi municipality in the Darial Gorge. The installed capacity of Kazbegi plant is equal to 6 megawatts and an annual output will be 30 million kWt/ h. Construction began in November 2013. During the construction period, at different stages, the number of employees amounted to 80

people, most of them were local residents. “Feri” Ltd.” has already invested USD 30 million in the energy sector. “Feri” carried out the construction of “Khadori- 2 HPP”, “Larsi HPP “ and “Shilda HPP”.

TWELVE COMPANIES SHOW INTEREST IN ANAKLIA SEAPORT CONSTRUCTION 5) The fifth phase will start for a month after the annual turnover makes up 90% of the fourth phase’s capacity; in 5 years after the inauguration of the fifth phase the annual capacity must increase to 70 million tons; 6) The sixth phase will start on the day the annual turnover will reach 90% of the 5th phase’s capacity; in 5 years after the inauguration of the sixth phase the annual capacity must reach 85 million tons; 7) The

7th phase will start for a month after the annual turnover makes up 90% of the 6th phase’s capacity; in 5 years after the inauguration of the 7th phase the annual capacity must reach 100 million tons. The investor must invest own capital in the project implementation and draw new investments too. The investor is also obliged to draw cargo consignments to the seaport.

PUBLICITY October 20, 2014 #72

According to the GOEuroâ&#x20AC;&#x2122;s 2014 research, Georgia ranks second worldwide in terms of cheapest train tickets. Only South Africa is recorded ahead of Georgia. GOEuro is one of the major multifunctional research companies in the travel sector. The company compares and calculates prices for travel by train, bus and airplanes. GOEuro published the report in August 2014.

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INTERVIEW caucasian business week

KHUDONI HPP CONSTRUCTION WORKS TO START IN 2015 An interview with Deputy Minister of Energy of Georgia Ilya Eloshvili

- In recent years, there is talk that the Georgian government will possibly take over the construction of Khudoni HPP. Where will the government find these funds? We are talking about more than USD 1 billion? - The state does not seek to play the role of an investor or be a competitor to private companies, especially since we always try to give a chance for investors to invest their capital in the business. As for the funds, one part of them will be mobilized from the budget; we can take a long-term loan on the basis of state guarantees, which in itself would mean lower interest rate. And this in turn will give the opportunity to sell electricity at a lower rate. There are several options for the development of the situation in which the state can take on the full or partial implementation of the project of construction of the hydroelectric power plants. - Completely – if an investor for one or another reason abandons the project, or is not able to continue it. In this case, the state will have to take on all costs for the HPP construction. - If during negotiations with investors, which are currently underway, they ask the state to help, the government can take partial participation in the project - it is possible that it may be necessary based on a variety of factors - in particular, the growth of confidence from local population. - Recently, there are several opinions around this issue. In particular, some experts say that the government should give the green light to investors, and if the current investor - Indian “Transelectrica” is forced to withdraw from the project, the state must find another investor.The second part of investors consider that the project is clearly strategic, accordingly, it should be realized only by the state. What is your opinion about this? - The main purpose of the construction of hydroelectric power station is to cover our energy deficit in the autumn-winter period, in the rest

it’s a usual business, the company produces and exports electricity. Its administrative and fiscal structure is the same as in all other commercial objects. Why is it strategic in this case? - You are speaking of investor obligations. You do not like the terms of the contract? In particular, the fact that a significant part of the energy is exported, and a small part is left inGeorgia? - I would not say that just so small. In general, in winter power generation at hydroelectric power plantstraditionally declines, but our energy deficit grew. Our energy consumption will continue to grow, so we need to develop energy. As for the contract, we’ll try as much as possible to make it maximally profitable for Georgia. - How are things going with resettlement of residents of the villages which are supposed to flood? - In order to start construction, it is necessary to resolve three issues - to study the influence of HPP on the environment - the company has not conducted it yet but we gave it an additional term. Another two issues is the registration of land and resettlement of local residents. We had problems with the local population in the issue of land registration. In this case, the investor will not do without support from the state At this stage 1 400 hectares of land are already registered. - In the second quarter of 2014 the situation was not very positive in terms of investment. USD 45 million was invested in the energy which is 36.6 million less than in the 1st quarter. What is the reason? - If you look at previous years, the rate of investment in the energy sector is very mutable, it can grow, and then abruptly go into decline. For example, there is a specificity of counting investments in the sector, so to judge directly about the growth or decline is impossible. - In general, it is planned to spend USD 10 billion in the energy projects in Georgia in the next 10 years. What projects will be carried out? - Mostly hydroelectric power plants - basically 4 major projects, including Khudoni HPP. In general, it isUSD 4 billion in investment and 1 800 megawatts of power. We have seen progress in all these projects. Apart from that, a tender was announced for the construction of HPP with total capacity of 1 000 MW, contracts on 600 MW HPPs construction have already been signed. Capacity of small and medium hydropower plants in Georgia is 1 500-2 000 megawatts - that’s additional USD 4 billion. In addition, it is necessary to develop infrastructure, construct new power lines worth more than USD400 million. Anyway, in total USD 10 billion will be spent over 10 years.

October 20, 2014 #72

EAST GATE GROUP: GOVERNMENT TENDS TO REGULATE BUSINESS SECTOR ARE INAPPROPRIATE An interview with Director of “East Gate Group” Irakli Iashvili - President of the International Chamber of Commerce Fadi Asli said that businessmen didnot trust the tax authorities. Do you agree with this statement? - I do not know on what grounds he says so. Today, the business is not under pressure, businessmen arenot summoned to the prosecutor’s office, and so on. What happened in the past? Businessmen were forced to do what they did not need, were given different instructions. Now this does not happen, no one deprives the property, no one is arrested, noone blackmails businessmen, and so on. - If the business is so free, why the economy is growing so slowly? - These are different things. Freedom or unfreedom of business is not the reason for the weak development of the economy. There are many objective reasons. Under the previous government, economic growth was mainly due to government projects. The government has spent a lot and it certainly affected the economic situation. Now, the state does nothing artificially - respectively, the budget money is being spent to a lesser extent. Economic growth was a short-term under the previous government. In general, there are two ways of development of the economy - exports and investments, in none of them we have a progress. The largest investments were carried out in 2006-2007, after 2008 the flow began to decline, and has not recovered until now. - In your opinion, is Georgia an attractive country for investors? - It’s another issue. This is a global theme that is not directly related to economic growth. Freedom of business and economic development - are different topics. Economy has its own formula. The economy is growing at the expense of investment, export growth, public and private expenditure. Growth is registered in none of these components. In addition, Georgia’s economy is not too attractive for international investment. The CoinvestmentFund was established, but it has not launched any serious project. One of the main reasons is thatGeorgia is not a country of such a scale to invest here a great investment. There are several sectors that develop and attract major foreign investment - for example, energy. There are prospects for major transit projects. While the rest fields face problems. For example, for many years Georgia has had a preference for the export of a number of goods to Europe, but so far no one uses it. - It turns out that the recently signed Association Agreement with the EU will not bring any good?

- It’s a very long-term process. The European market is very specific, and the Georgian producers need a lot of time in order to get there. Very complex mechanisms and procedures are enacted on the European market . But Georgia still sells products which were produced under the communists - wine, Borjomi, and so on. Nothing that could be sold on the international market has been created in our country yet. - Are the government’s messages clear for business? Whether or not they are uncertain? - The Government has established several funds which are tools for doing business. The state itselfcannot engage in business, it can create tools to revitalize business, for example, cheap loans, cheap insurance. But it cannot do business instead of businessmen. It is a matter of private initiative. Currently, the economy is in a crisis. We have no factors that could attract a huge inflow of money. Some investments are coming from Asia, but to attract investors weneed years of stability, and it is hoped that with time the situation will change. - How would you assess the government’s initiatives of last time - for example, a ban on the sale of agricultural land to foreigners, a tightening of procedures in the aviation business, the tightening of visa regulations, etc.? - The previous government had the ultra-liberal approach, that is, the government gave a full freed to business and completely eliminated from the intervention in the economy, even in issues such as food security. Today, the situation is opposite. I would advise the current government to abandon the introduction of various regulations and promote competition. At present, there is a tendency in the government to introduce regulations but it will not lead to anything good.

ALEXANDER MASHKEVICH INTERESTED IN INVESTING IN ENGINEERING, TOURISM AND HOTEL SECTORS IN GEORGIA An interview with the leader of the parliamentary majority David Saganelidze

- Several days ago, Israeli billionaire Alexander Mashkevich visited Tbilisi. He held an informal meeting with the Minister of Health, Deputy Prime Minister and Economy Minister Giorgi Kvirikashvili. The meeting was also attended by you and businessman Vano Chkhartishvili. Could

you tell us in detail about his plans in Georgia? - It’s very good that a businessmen of such rank and his team members as well as Tariel Vasaze arrived in Georgia. We’ll do everything possible to show them the business environment in Georgia, acquaint them with the sectors in which they can invest. Unfortunately, they stayed in Tbilisi for only one day and had a meeting with Patriarch as well. The meeting was also attended by Minister of Economy George Kvirikashvili and Health Minister David Sergeenko. - Are Alexander Mashkevich and Tariel Vasadze interested in joint investing in Georgia? - They are too close to each other, therefore, they may have the same interest. However, they mayexpress their interest in different areas. It refers generally to the field of health care. The reform, whichis carried out in this regard in Georgia, is very acceptable for the both busi-

nessmen. They are also interested in the hospital sector, diagnostic and pharmaceutical fields. The meeting also touched on tourism, in particular, the construction of hotels. The businessmen also interested what happens in the field of machine building. I think it was a very interesting conversation, however, short. - Should we expect that Alexander Mashkevich will invest in Georgia in the nearest future? - I hope. I think that the appearance of these businessmen on the Georgian pharmacy market and any other sector would be very interesting. This will have an impact on prices, quality and so on. - It turns out that Alexander Mashkevich is interested in pharmaceutical, hospital and tourism sectors? - Yes, it is true. His company is not small and of a narrow profile. If they decide to invest in Georgia, I hope they will not focus on one area. We

try to convince them that the business is free here and there is no pressure on businessmen. I would also like to mention another good fact. Alexander Mashkevich has a very good relationship with Bidzina Ivanishvili. Mr.Bidzina is a serious guarantee that the business is protected in Georgia. - If Georgia attractive for other investors who don’t know Bidzina Ivanishvili personally. - The steps taken in this direction in the last two years make Georgia more interesting for investors. A serious pressure on business in Georgia was an obstacle for investment. However, we still have to do a lot to prove investors that the country is really interesting for investors.For this, we need to create financial institutions. In particular, the Development Finance Corporationhas been recently established in Georgia. I believe that the country needs such a large financialinstitution.

BUSINESS October 20, 2014 #72

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NINO CHKHOBADZE: “RMG’S OPENNESS TO CONDUCT AN ECOLOGICAL AUDIT IS QUITE WELCOMED

he result of the audit will be a full report containing analyses and recommendations on the environmental effects caused by the company’s mining efforts. It’s important to ensure that both before issuing the international contest and during the ecological audit itself to maintain the independency and objectiveness of the processes, by including Georgia’s Ministry of Environment and Natural Resources Protection as well as various other regulative agencies and civil societies. “Environmental defense audit is crucial for such establishments,” – said the head of Georgia’s “Earth Friends” movement and former minister of environmental protection, Nino Chkhobadze, during a meeting between RMG Gold and members of Sakdrisi’s social committee. The meeting encompassed the issues of environmental pollution and hosted a public discussion on the topic of technical hurdles for the environmental audit. The aforementioned audit was planned as a result of negotiations between the civilian initiative group and RMG Gold/RMG Copper. In order to

choose an international environmental protection company, RMG Gold/RMG Copper prepared a technical assignment. The audit’s goal is to ensure the independent evaluation of RMG Gold/RMG Copper’s ecological indexes and their correspondence with Georgia’s environmental protection laws, as well as international regulations and standards. By the opinion of the program manager for the non-governmental environmental protection organization network in the Caucasus, Kakha Bakhtadze, the audit works need to be done in haste as to reveal the historic, environmental and geological damage done by the company. However, according to Chkhobadze, “the government has released foundries from necessitating Environmental Impact Assessment researches. It is law that no one can request a company to conduct an audit, it is solely dependent on the goodwill of the establishment. If a company does make this decision though, it will be welcomed. “Environment protection has released RMG and not only them, but all foundries - from necessitating Environmental Impact Assessment procedures. Opening a new carrier isn’t dependent on any such procedure. RMG has submitted an Environmental Impact Assessment to the ministry and the company has discussed its plans, and I know these discussions took place at Bolnisi, as well. I think it’ll be good if this document becomes publicly available, since it was made without an environmental protection audit. The environmental protection audit is not necessary for any foundry, since this is dependent on the stance and disposition of the individual companies. We do have a discrepancy in our law regarding Environmental Impact Assessments, and some foundries are having it done. Based on international experience, this is nonsense,” stated Chkhobadze.

INTELLIGENCE DEVELOPMENT AND ASSESSMENT CENTER (IDAC) PRESENTED THE 4S, THE FIRST GEORGIAN TESTING PROJECT

he Intelligence Development and Assessment Center (IDAC) presented 4S - the first Georgian tests project. It allows the users to verify working skills by means of electronic method in Georgian language. 4S was developed by foreign experts. The test assesses person’s skills in math, logic, spatial perception and decision-making. As David Chantladze, Managing Partner of Intelligence Development and Assessment Center (IDAC) noted, the test represented unified and standardized product that would be successfully utilized by job-seekers, or those interested in career advancement, as well as by employers. “4S assists persons in self-evaluation and helps employers in selection of candidates. Respectively, it will make contribution to development of labor market in the country”- David Chantladze noted. According to him, tests in math, logic and spatial skills consist of 13 while in decision-making of 9 questions. For passing each module, 25 minutes and for the entire test 100 minutes are allocated. The test results will be known immediately upon test completion. Applicants with the highest scores will end up among top 100 candidates, posted and regularly updated at the webpage: www.idac.ge. All applicants will be assigned unique 6-digit verification code, by which their

testing results can be found in a database. As Lasha Gotsiridze, the Rector of Agrarian University, Representative of Free and Agrarian Universities and a Project Partner stated, such testing system would have great significance in educational as well as employment areas. „I hope that this product will be liked by employers and job-seekers. Our infrastructure is ready for implementation of the system and the first test will be held by October 25”, - he said. The presentation was attended by senior officials of public institutions and HR managers. They received information on skills development and potential cooperation with the Assessment Center. 4S is the first test that offers users verification of their working skills by means of electronic testing method. The system developed by foreign experts is in Georgian and allows to assess the person’s skills in 4 various aspects, specifically: math, logic, spatial perception and decision-making. These four skills in combination allow to comprehensively assess person’s working skills. 4S is unified and standardized product, that will be successfully applied by job-seekers, or persons interested in career advancement, as well as by employers. Job-seekers and persons interested in career advancement will have the opportunity to assess their own skills while employers will be able to make prompt and facts-based decision in candidates selection process.

5 GEORGIAN “SUPRA” COULD NOT BE IMAGINED WITHOUT GEORGIAN WINE AND TAMADA WHO HAS GREATEST RESPONSIBILITY

IROSMANI’s great Painting is conceptually linked with the idea of Georgian Wines and relationships; at the same time due to the status of the feast participants, points to the premium quality of Georgian TAMADA wines. Georgia is the cradle of wine, the place where Man first grew the grape vine and tasted wine. Archaeologists found in Georgia, “Shulaveri” which are 8000 years old grape seeds in wine jugs, and also the same age ceramic jugs. Leading archaeologists and wine writers accept the fact that winemaking in Georgia is 8000 years old. The history of Georgia, its culture and the rule of life are embodied in Georgian wine. It is a mystery of hospitality, friendship and longevity. Christianity was introduced by Saint Nino in the early 4th century AD and the symbol of Christianity became the weaved cross made from the vines. The image of the vine is illustrated on most historical and religious objects throughout history. There are 4000 grape Varietals around the world, more than 500 of them are unique, generic Georgian grape Varietals. Regarding the importance of phenomenon of Georgian wine culture, traditions, Georgian cuisine speaks TAMADA wine brand Manager Nata Kandelaki . Georgian Wines and Spirits Company – “GWS” was founded in 1993. From 1999-2006 the Company undertook a dramatic increase in the level of quality of its wines. The Company was awarded about 140 prizes at different national and international competitions: 67 Gold, 41 Silver and 21 bronze medals together with many honorable diplomas. In parallel with the increase of quality, “GWS” team planted red varietals and in 2001 introduced two brands: TAMADA – within the premium segment and made of appellation controlled and vintage wines & Old Tbilisi, within the entry level segment. These two brands, TAMADA and Old Tbilisi compose a diversified portfolio of Dry, Semidry, Semi-sweet and Sparkling wines. The high quality of “GWS” wines, the know-how of our teams and the relevance of their positioning make TAMADA and Old Tbilisi increasingly popular in Georgia and key international markets (Russia, Kazakhstan, Belarus, Ukraine, Baltics, China and even Japan). After small pause, in September 2013, wine TAMADA returned on the Georgian market with new enthusiasm. Nowadays TAMADA brand portfolio is made of white, red, dry and semisweet wines. Among them are 6 types of wine from appellation controlled origin. - Why TAMADA ? / What is the main idea of the brand? - The name was chosen for the brand in 2001. Georgian wine and Georgian feast, unlike other alcoholic beverages is associated with relationship. Georgian “Supra” could not be imagined without Georgian wine and TAMADA who has greatest responsibility. - Tamada – Is the Georgian Toastmaster who has always been a respectable and intelligent person, able to lead the “Supra” and officiate at the feast. The main duty of the Tamada is a toast, which gives him the ability to raise different issues and

make “Supra” more interesting by stimulating conversation. - Even nowadays, at celebratory gatherings, the institution of Tamada is very popular though in a somewhat different perspective – Everyone who says a toast can be called Tamada, or in some cases just one person with very good communication skills is appointed to the position. While drinking TAMADA one understands the true spirit of Georgian wine. We enjoy the relationships and it adds value to us. The theme of relationships fits very well with the TAMADA brand and Georgian wine as a whole. It not only expresses the brand itself, but links the idea of the brand to the value of Georgian wines and traditions. Niko PIROSMANI’s outstanding painting “Feast of five Princes” displayed on our label is the inspiration for the exclusive TAMADA wines. It expresses our distinctiveness and emphasizes our Georgian origin. Niko PIROSMANI is of a great value to Georgian society and history. This is the reason why his outstanding painting “Feast of five Princes” is displayed on the TAMADA Label. It expresses the distinctiveness of the brand and emphasizes our Georgian origin. This Painting is conceptually linked with the idea of Georgian Wines and relationships; at the same time due to the status of the feast participants, points to the premium quality of Georgian wines. - How many types of wine are in brand “Tamada’s” portfolio? - We have 10 kinds of wine in brand “Tamada” portfolio, both white and red, naturally semisweet and dry wines. Among them are 6 wines from appellation of controlled origin - For the wine production grapes are chosen particularly … - The great majority of TAMADA vineyards are 15 years old, up to 25 years for some parcels and Appellation of Origins wines. Deep roots draw the refreshing water, brought by the pure springs of the Caucasus Mountains and produce bountiful and rich juices. They ultimately deliver consistent wines that any host would be proud to serve and share during each ceremony of life. All TAMADA vineyards are hand-picked during our harvests, under the leadership of our Winemaker. The workers only select the best grapes, avoiding the overripe fruit from the high branches, and ignoring the green and dry berries near the ground. Thus, perfect, rich and juicy fruit leaves the Vineyard to reach the winery. TAMADA wine has invited the world champion sommelier Gerard Basset . Please tell us briefly about this visit … - On October 24 th, the world champion sommelier Gerard Basset will visit Georgia. Special food pairing and wine degustation will be leaded by the Sommelier and Georgian Chiefs In funiculars restaurants. Chefs and Gerard worked about ultimate food pairing for Georgia, and exclusively for TAMADA wines. During the event they will recommend special food pairing for Tsinandali, Mukuzani, Kindzmarauli, Pirosmani. TAMADA is supporting the same tour in Mosow, Kiev and Almaty.By this kind of activities, we will change and increase Georgian Wine consumption culture in all key markets.

FORBES caucasian business week

October 20, 2014 #72

WHY UKRAINE, GEORGIA AND MOLDOVA SHOULD CHOOSE THE EU OVER PUTIN’S EURASIAN UNION, IN FOUR CHARTS QUALITY OF INSTITUTIONS AND CORRUPTION Economic opportunity and quality of life are largely affected by public institutions and level of corruption. The World Governance Indicators compiled by the World Bank rates 215 countries and territories based on government effectiveness and control of corruption. The higher the scores, the more effective governments are and lower the level of corruption is. A quick glance at the scatter diagram shows that compared to the EU member states, Belarus, Russia and Kazakhstan are at the bottom of the barrel. When the EU and the ECU countries are put in worldwide perspective based on the Corruption Perceptions Index 2013 rankings by Transparency International, the difference is even starker. Out of 176 countries, Belarus (123), Russia (127) and Kazakhstan (140) are ranked among the most corrupt. For comparison, the most corrupt EU member Romania (69) is still 54 ranking spots ahead than the least corrupt ECU member Belarus.

ussia has been fiercely opposing integration of the former Soviet Union republics of Eastern Europe into the “western” blocs, such as NATO and the EU. Moscow has demonstrated readiness to use military means to avert this process. In August 2008, Russia invaded Georgia as punishment for its active pursuit of NATO membership and gravitation towards the West. Six years later, the Kremlin annexed Crimea and has been waging a covert war against Ukraine for its decision to ally with the EU and declining to join the Russiadominated Eurasian Customs Union (ECU). Despite the risk, Ukraine, Georgia and Moldova are still leaning to the West. On June 27, these countries signed an Association Agreement with the EU bringing them closer to Europe. A more balanced Azerbaijan is closely watching and to Moscow’s fear may consider following the suit at some point in future. But is this the right choice? Is allying with the EU a better alternative than integrating with the ECU comprising Russia, Belarus and Kazakhstan? If the “quality” of the EU and the ECU member states matter then the answer put in numbers seems obvious. Economic Opportunity Measured on GDP the EU economy dwarfs that of the ECU. Estimated at $16.17 billion, it is 5.6 times larger than the Russia-led union, providing a larger market for future members. Stacked up against the 28 EU members based on GDP per capita, the ECU member states do not fare any better. Russia, Belarus and Kazakhstan share the bottom five spots with Bulgaria and Romania.

POLITICAL RIGHTS AND CIVIL LIBERTIES A comparison of the ECU versus the EU in a broader political and societal context reveals that the EU citizens enjoy greater political rights and civil liberties. Freedom House rates all 28 EU member states as “free.” The annual rating is based on scoring a whole gamut of political rights’ and civil liberties’ indicators in 195 countries. Free countries tend to have competitive political process, robust opposition, better minority representation, freedom of expression and independent judiciary. From three possible statuses–free, partially free and not free–Russia, Belarus and Kazakhstan are rated as “not free.” The countries of this status tend to have restricted political rights and civil liberties. Holding political prisoners and repressing freedom of expression is common in such states. The gap is even more evident when the scores of seven political rights and civil liberties are individually plotted. On all of the seven indicators the ECU countries fall behind Bulgaria–the EU member with the lowest overall score.

Comparing economic attractiveness of the ECU versus the EU is not just a factor of estimating GDP and its per capita distribution. Economic freedom is an important consideration as a comprehensive indicator of nations’ prosperity and economic growth potential. According to the Index of Economic Freedom by Heritage Foundation, which ranks 186 countries worldwide, the countries with higher degree of economic freedom enjoy stronger economies, healthier societies, greater human development and poverty elimination. Comparing the ECU and the EU suggests that Ukraine, Georgia and Moldova could expect better economic spillover effect from the latter. All of the EU members except for Greece are ranked as mostly or moderately free. Russia and Belarus, being mostly unfree, occupy the 140 and 150 worldwide ranks, correspondingly. Only Kazakhstan offers moderately free economic environment.

Associating with any union has spillover effects which reflect in political, economic or social life. If the goal of any transitioning former Soviet republic, such as Ukraine, Georgia and Moldova, is achieving higher economic growth, advancement of political and civil rights and institution building, the choice between the EU and the ECU is a no-brainer. The EU’s superiority also explains why the Kremlin uses military power to coerce its former satellites to stay in Russia’s orbit. Moscow just has much less to offer. Disclaimer: The expressed opinions belong to the author and do not represent the opinion of the government of the District of Columbia.

BUSINESS October 20, 2014 #72

caucasian business week

RADISSON BLU INTRODUCES #BLUROUTES FOR FITNESS ENTHUSIASTS

adisson Blu®, one of the world’s leading hotel brands, today announced a new program called #BluRoutes that will provide guests with running and cycling routes at select Radisson Blu hotels. #BluRoutes start and end at the hotel. #BluRoutes are designed to help guests maintain their exercise routines while travelling. For a list of participating hotels and more information, visit radissonblu.com/bluroutes “We know that exercise is important to many of our guests, and we are delighted to introduce #BluRoutes to help them maintain their fitness regime while staying with us.” said Rose Anderson, vice president, Branding, Radisson Blu. “Each route has been carefully designed by hotel staff with a passion for sport so our guests can be sure that they are experiencing the

A New Program Will Provide Guests with Running and Cycling Routes at Radisson Blu Hotels best run or cycle that the immediate local area has to offer.” Participating hotels will have one or more routes of varying length and degree of difficulty that start and end at the hotel. #BluRoutes may be accessed via the Radisson Blu One Touch app, the new mobile app which puts all Radisson Blu hotel services and local area information in the palm of our guests’ hands. Guests can simply choose their hotel and select ‘Out and About’ from the main menu to view the #BluRoutes. Guests may also access #BluRoutes via the hotel’s web site, or request a printed map from the hotel’s reception desk. For a full list of participating hotels and more information, go to http://www.radissonblu.com/bluroutes. To download the Radisson Blu One Touch app, visit https:// itunes.apple.com/us/app/radisson-bluone-touch/id708407920?mt=8

THOUSANDS OF PLANTS IN DIRSI DISTRICT

bout thousand bushes of Thuja, hundreds of maple, spruce and oak trees are being planted in the DIRSI district. The residential complex greening phase is being actively carried out. First new-dwellers of the DIRSI complex will enter new apartments in November 2014. Today they immediately visited the construction process in the residential complex and took part in the greening works. Owners of the DIRSI apartments have planted deciduous and coniferous plants in yards of the residential complex. We have made our contribution to ecological development of DIRSI and Tbilisi, they noted. There were children, adults and ordinary people wishing to plant trees. At the end of the process the owners of DIRSI apartments moved to the central office and marked the

campaign by having a cake with a green tree. A recreation zone plays a significant role in the DIRSI project. The company managers say the DIRSI complex greening project is three times bigger than the norm determined by the legislation for the development companies. As part of the first stage of the project, on average 26 000 square meter space will be planted. Thousands of various species of plants have been brought to the complex, including deciduous and coniferous plants, curb lining and exotic plants. Three various species of maple and spruce trees have been already planted the DIRSI boulevard. Along with the greening works, the infrastructure is being also arranged. Plates are laid, garden benches are installed and lining works are being carried out at commercial assets. These spaces will give a room to favorite brands, various trade assets and cafes and bars.

PUBLICITY caucasian business week

October 20, 2014 #72

BUSINESS October 20, 2014 #72

caucasian business week

PRODUCE IN GEORGIA PROGRAM TO CO-FINANCE TWO NEW COMPANIES

IFC HELPS GEORGIAN FARMERS CATCH UP GLOBAL STANDARDS TO BOOST EXPORTS POTENTIAL

2 new enterprises - micro electric enterprise and decorative sand enterprise will be established in the financial support component of Produce in Georgia program. Entrepreneurial Development Agency signed cofunding contract with 2 new companies - representation of LTD „AG Telekom in Georgia and LTD Dekora. According to contract, these companies will get amounts necessary for business development with preferential conditions. VTB Bank approved loan of $606 250 to LTD AG Telekom. During first 2 years the agency will cofund 10% of the total interest rate of the loan. Respectively, the company will have to pay only 2%. As for the second company - LTD Dekora received loan of $150 000 from VTB Bank. The agency will fund 10% of the interest rate. Director of LTD Telekom Constantine Bakanidze explains that total investment value of the project is $2 million. The enterprise will be arranged in Rustavi and employ 100 persons. According to plan, it will be opened in November 2014.

n international financial institution is coming together with the Georgian Farmers’ Association to offer assistance to local farmers as the European market opens up to Georgian products. The International Finance Corporation (IFC), a member of the World Bank Group, and the Georgian Farmers’ Association announced they planned to jointly help Georgian farmers introduce key global standards to boost farm production and ramp up exports to the European Union (EU). The IFC and the Georgian Farmers’ Association hosted a two-day workshop in Tbilisi on October 15 and 16 on GLOBALG.A.P. – an internationally recognised set of farm standards dedicated to good agricultural practices. The standards were also a requirement for exporting to the EU. Chairwoman of the Georgian Farmers Association Nino Zambakhidze believed this was the first workshop of its kind in the Caucasus. “We joined IFC in this pioneering initiative because we believe that Georgian farmers will benefit from introducing this key international standard, especially in light of the export opportunities provided by the EU-Georgia Association Agreement,” Zambakhidze said. The GLOBALG.A.P. standard helps companies assess and reduce food safety-related risks and thereby increase consumer confidence in the quality of their products, as well as ensuring a responsible approach to worker health and safety, she said.

“Similar enterprise does not exist in Georgia. We plan to produce electric and micro electric products (motherboards, computers, phones, tablets and so on). As for target market, we aim to utilize Caucasian and European countries. Till the end of the year products of $200 000 will be exported to Azerbaijan. We plan to occupy 60% of Georgian market. Entrepreneurial Development Agency supports us in implementation of these projects. It will pay 10% of the interest rate”, - Constantine Bakanidze stated. Activity sphere of the second beneficiary - LTD Dekora is production and sales of decorative sand. Potential consumers of the production will be local self-governments, professionals in the landscape design and architectural sphere and private companies. “Total investment made by the company is $175 000. With co-funding of the agency, the enterprise will be arranged in Kutaisi and opened in January 2015. In the case of full production capacity, 15-20 persons will work locally, 100 people - in sales.

MARSHE TO ENTER RUSSIAN MARKET

he company refrains about talking on amount of the first batch amount and other details. They state that it’s a working process - negotiations are going with the Russian side. Marshe

is in the list of meat producers sent by Georgian side to Rosselkhodnadzor. List of the business operators include honey producer companies and fishing farms. Currently insolvency case against Marshe is under processing. After the court verdict decision will be made whether to start rehabilitation or bankruptcy process. Bureau of Enforcement is a trustee (until bankruptcy case prosecutor or rehabilitation manager is appointed). Creditor company states that rehabilitation is supposed to be started. Currently Marshe’s debt is 14 million GEL, 7 million out of which is debt of Goodwill.

IC GROUP: FARMERS SHOW GROWING INTEREST IN AGRO INSURANCE PRODUCTS

C Group states that interest of farmers into agro insurance is high. The company informs that first policy was sold in the village Darcheli, Zugdidi municipality. The company also plans to intensify activities in Kakheti, Imereti and Guria regions. “Interest is very high and cooperation is enhancing gradually. In addition to subsidized insurance program, IC Group offers other agro insurance products to

the consumers, such as insurance of cattle from death and insurance of greenhouses from wind, storm, hail and animals,” - the management states. According to last week’s data, 6 000 policies have already been issued in the framework of agro insurance project. After Cartu Insurance left the project, 4 contractors remain - Irao, GPI Holding, Aldagi and IC Group. Budget of the pilot project is 5 million GEL and it continues till September 1, 2015.

TOYOTA CENTER TEGETA INVESTMENT VALUE HITS 15 MILLION USD

nvestment of 15 million has been made for opening of Toyota Center Tegeta. New dealer of Toyota Motors Corporation in Georgia - Toyota Center Tegeta started to operate in Georgia. Director general of Toyota Center Tegeta - Giga Metepshishvii states that the center is unique in the Caucasian region with its scale and is fully relevant to Toyota’s standards.

He also says that 120 persons are employed in the center. The center is located on the [lot of 10 000 square meters area and includes administrative office, showroom and service center. The center is considered for service of 250 vehicles a day. The project was implemented with support of TVC Bank and European Bank for Reconstruction and Development (EBRD).

GULF IMPORTS EURO-5 STANDARD FUEL

ulf offers another new product to the clients - Europe diesel GForce. Company’s management states that import of the products of Euro-5 standard is a very important issue, as one of the most important aspects of Association Agreement is ecologically clean environment. First of all, it’s provided by the quality of the fuel. The company states that new G-Force Euro Die-

sel fully meets Euro-5 standards, It increases power of the engine and considerably increases speed of the vehicle, protects it from corrosion, also reduces emission and engine noise both on the low and high temperature. The company introduced new product on Wednesday. On the event members of Gulf Club got olive plants as present. The clients should plant them on the dry and bright place. Price of G-Force diesel equals to 2,23 GEL in the network.

Project Manager for the Caucasus, IFC Agribusiness Standards Advisory in Europe and Central Asia Maia Tevzadze noted World Food Day was celebrated globally today and this year focussed on family farming and smallholder farmers. “This is particularly relevant in Georgia where the majority of the poor lives in rural areas and relies on agriculture for a living.” She believed by supporting farmers, those communities would grow and develop Georgia’s agricultural potential. Agribusiness was a priority for IFC in Europe and Central Asia. IFC supported growth of the sector through a comprehensive set of investment and advisory services along the agribusiness value chain. The IFC Agribusiness Standards Advisory Program in Europe and Central Asia was part of these efforts. The program was supported with funds from the Austrian Federal Ministry of Finance.

EUROPEAN INVESTMENT BANK WILL OPEN HEADQUARTERS IN TBILISI

he European Union’s leading financial institution, the European Investment Bank (EIB), will open a regional headquarters office in Tbilisi. The announcement came after Georgia’s Finance Minister Nodar Khaduri met EIB Vice President Wilhelm Molterer in Washington on Tuesday, and stated the bank would implement and coordinate its regional projects from Georgia. Khaduri believed the EIB’s existence in Georgia’s market would support financing investment projects in the private and public sectors. The EIB was the only bank owned by and represented the interests of the European Union member states. The bank worked closely with other EU institutions to implement the EU policy. The EIB haS lent EUR 30 million to Georgia to continue with the rehabilitation and capacity increase of the East-West highway. This key road infrastructure linked Georgia’s capital Tbilisi and the country’s Black Sea ports with Turkey and Azerbaijan. In 2012 the EIB granted a loan of EUR 170 million for the project. The EIB loan will contribute to an upgrade and improvement of the western most part of the East-West highway, connecting Zestaponi with Batumi-South 10km before the Turkish border at Sarpi, with a total length of 183km. The project was expected to be implemented by the end of 2017.

The loan brings the EIB lending commitments in Georgia to EUR 490 million in support of projects developing the Georgian energy, water and road infrastructure and SMEs. Meanwhile, the EIB financed projects in Georgia on the basis of an EU Council and European Parliament mandate for the countries of the Eastern Neighbourhood (Ukraine, Moldova, Georgia, Armenia, Azerbaijan and Russia) of EUR 3.85 billion for the 2007-2013 period. The current mandate provided for the financing of projects of significant interest to both the EU and its Eastern Neighbours in the areas of local private sector support, social and economic infrastructure and climate change.

GLOBAL FOOD PRICES AFFECT GEORGIAN CONSUMER BASKET

eorgia should have subtle information systems that enable experts to forecast increasing food prices, as global prices influence domestic markets, says a research group. Policy and Management Consulting Research Centre (PMC RG) hosted a presentation of their research – Global Food Price Shock Impact on Georgian Consumers – which recommended that such systems can contribute to practical food security policy formation. “In addition, special prior warning system should be introduced,” it said. “In terms of growing food products trade, the global price volatility is necessary to analyse as this may cause serious challenges in long and short term periods for the citizens of the capital,

as well as for the people who live in regions and for vulnerable people,” said PMC RC research director Tamar Jugheli. “The research aimed to develop recommendations based on quantitative analysis of above listed shocks in order to meet possible challenges.” The research showed that if the 2007-2008 crisis scenario repeated now, Georgia’s regional population was more likely to suffer. “Price increases in 2010-11 affected all kind of food products, hence both people living in capital and regions were harmed,” the research said. Jugheli believed those living in urban areas were more sensitive to price rises on vegetables and dairy products, while rural residents were more affected by price volatility on sugar, oil and other basic commodities.

AZERBAIJAN October 20, 2014 #72

caucasian business week

CZECHIA KEEN ON IMPORTING AZERBAIJAN’S AGRICULTURAL PRODUCTS

he Czech Republic is interested in importing Azerbaijan’s agricultural products, in particular fruits, vegetables and vine products. This remark was made by Deputy Speaker of the Chamber of Deputies of the Czech Parliament Vojtech Filip at a meeting with Azerbaijani Agriculture Minister Heydar Asadov on October 15. During the meeting Asadov mentioned the necessity to apply new systems in agriculture, as well as establishment of relevant legal base and working group.

The Azerbaijani minister also invited the leasing companies and banks of the Czech Republic to Azerbaijan’s leasing market, offered to invest in the agrarian sector of his country and develop exchange of information and experience between the two countries, as well as to organize student exchange and training courses. The Czech delegation also met with Parliamentary Speaker Ogtay Asadov, Deputy Speaker Valeh Alasgarov and Chairman of the Agrarian Policy Committee of the Parliament Eldar Ibrahimov. The Czech Republic recognized the independence Azerbaijan on January 8, 1992. Diplomatic relations between two countries were established in January 1993. Azerbaijan and the Czech Republic are interested in future development of mutual cooperation within UN, OSCE, NATO, EU and other international organizations. The trade turnover between the two countries amounted to $515.51 million in January-September 2014. In the reported period Azerbaijan imported goods worth $35.1 million, while exported goods worth $480.4 million.

AZERBAIJAN’S STATE BUDGET REVENUES FORECASTED AT 19.5 BLN MANATS

he revenues of Azerbaijan’s state budget for 2015 are forecasted at 19.438 billion manats (32.5 percent of GDP). This comes as estimations put the expenditures at 21.1 billion manats (35.3 percent of GDP). This was noted at the presentation of projects on Azerbaijan’s state and consolidated budget for 2015, released by the country’s Finance Ministry. The Azerbaijani government predicts the budget deficit in the amount of 1.7 billion manats in 2015. The budget revenues in 2015 will increase by 5.7 percent and expenditures by 5.2 percent compared to 2014. Also, the documents said next year the share of the oil sector in general budget revenues will decline to 65.3 percent compared to the 66 percent in 2014. The budget revenues will include 7.112 billion manats from the Taxes Ministry, 1.59 billion manats from the State Customs Committee, 10.388 billion manats from state oil fund SOFAZ, 7 million manats from the lease of state property, 300 million manats from extra-budgetary revenues of budget organizations, as well as 41 million manats from other incomes. The budget expenditures will include over 1.778 billion manats of military expenditures, the investment making will reach 6.93 billion manats and the expenditures on the industry and construction field will amount to around 6.952 billion manats, and on education and health care around 1.711 billion manats and 777.7 million manats, respectively. The revenues of the consolidated budget for 2015 are projected at about 20.717 billion manats and expenditures at 25.911 billion manats. The deficit of the consolidate budget will amount to over 5.194 billion manats. The budget revenues for 2015 are projected based on oil prices at $90 per one barrel, and the rate of the manat against the dollar at 0,784 manats. Azerbaijan also plans to export products worth $26.8 billion in 2015, some $2.7 billion of which will be goods of non-oil sector. The country will import products worth $11.1 billion next year, and the share of the non-oil sector will amount to $9.5 billion.

Also, the share of non-oil sector in Azerbaijan’s GDP in 2015 is predicted at 65.1 percent, which is 5.5 percent higher than the forecasts for 2014 and 8.5 percent higher than in 2013. The share of oil sector in GDP for 2015 is predicted at 34.9 percent versus 40.4 percent in 2014. The real growth of the national economy will be 4.4 percent in 2015, and the volume of GDP in market prices will amount to 59.8 billion manats. The GDP for the oil sector in 2014 will be reduced by 2.2 percent, while the value added in the non-oil sector will increase by 8.1 percent compared to the last year, and is expected to reach 39.5 billion manats. The share of private sector in GDP of Azerbaijan in 2015 is predicted to reach 83 percent. The share of industry in GDP will amount to 37.3 percent, the main part of which falls on the oil and gas industry (with a 32.1 percent share of GDP). The share of non-oil industry in GDP is expected to reach 5.3 percent, which is 0.4 percent higher than the forecast for 2014 and above the actual figure of 2013 by 0.7 percent. The Azerbaijani government has lowered the forecast of oil prices from $100 in 2014 to $90 per barrel for 2015. It is expected that the share of the oil sector in general revenues will fall to 65.3 percent in 2015, compared to the forecast for 2014, where the level is expected to be at 66 percent. In 2013, the figure stood at 73.1 percent. “One of the factors influencing the decline of oil prices on the world market, is that the U.S. has increased the production of hydrocarbons (11.5 million barrels per day), and reduced the volume of oil import since the beginning of the year,” the document said. “Since last year, the U.S. stopped the import of natural gas, and now tries to reduce the supply of oil.” The weak development of the economy of the EU countries has led to a decrease in demand for oil in the region. Currently, energy export has increased to East Asia countries (China, India). However, economic growth has fallen below predicted forecasts for the last period in these countries, which is also one of the factors influencing the decline in oil prices. “At the same time, geopolitical instability in the Middle East and a number of countries involved in the production of oil, as well as the lifting of sanctions against Iran are the reasons that oil prices remain at a high level, but the gradual stabilization of these processes will affect the decline in oil prices,” the document said. Also, some 928 million manats will be allocated from the state budget for next year as part of the implementation of a project on the second stage of development of Azerbaijan’s giant Shah Deniz field in the Caspian Sea.

CAR IMPORT DROPS

zerbaijan imported 47,984 vehicles in January-September versus 75,502 vehicles for the same period in 2013. Thus, reducing car import by over one third. The State Customs Committee of Azerbaijan reports. Some 43,496 units out of the total volume of imported vehicles were cars and motor vehicles used for transportation. For January-September 2013, the figure stood at 68,487 units. In 2013, some 104,385 cars imported in Azerbai-

jan, whilst in 2012 the number reached 101,255. Meanwhile, 94,879 cars and motor transport vehicles imported in the country in previous year versus 89,652 units in 2012. Besides, some 3,946 trucks were imported to the country during the reported period while in January-September 2013 their number were 5,661. The shank of the imported cars was accounted for other vehicles. Some 7,823 trucks were imported in Azerbaijan in 2013, whereas a total of 9,433 trucks - in 2012.

AZERBAIJANI RAILWAYS TRANSPORTS 16M TONS OF CARGO IN 2014

zerbaijan Railways transported 16 million metric tons worth of cargo in January-September 2014, Head of the company Arif Asgarov said on October 13. Some 4.8 million metric tons of the cargo fell on the internal transportation, and some 2.9 million metric tons on export transportation, he added. About 4.9 million metric tons of goods were imported during this period, while some 3.3 million metric tons fell on the transit cargo. Within 9 months of this year, some 9.4 million metric tons of cargo were sent from the railway stations, 5 million metric tons of which fell on oil and oil products (in particular, 1.6 million metric tons on the transit oil), Asgarov said. Regarding the passenger traffic, he said 1.8 million people were sent from the railway stations during the same period. Azerbaijan Railways ranks 57th in the world in terms of the length of railroad. Currently, the total length of main roads is 2,932 km; the operational length is 2,117 km, including 815 km of bilateral roads. 1,272 km of the total length of the path, i.e. 60 percent is electrified, 845 km, i.e., 40 percent is operated by the diesel traction.

Earlier, the Azerbaijani Cabinet of Ministers increased the authorized capital of Azerbaijan Railways by 21.2 percent-from 599 million manats to 726.146 million manats. Azerbaijan Railways’ revenues amounted to 223.1 million manats in 2013. The revenues were generated through freight (208.2 million manats) and passenger (14.9 million manats) transportation. The company’s expenditures in 2013 reached 214 million manats, and the company’s net profit last year was 9 million manats. Azerbaijan Railways transported 23.2 million tons of cargo and 2.5 million passengers in 2013.

BTK RAILWAY IMPORTANT FOR TURKEY

urkey highly appreciates the investments made in its economy, Prime Minister Ahmet Davutoglu told local TV on October 13. He noted the project for construction of the Baku-Tbilisi-Kars (BTK) railway is very important for Turkey. “Turkey is aiming at turning country’s territory into an energy corridor, which will connect the South Caucasus and Europe,” he added. Being a regional rail link project that connects Azerbaijan, Georgia, and Turkey, the BTK railway is planned to be completed in late 2015. Azerbaijan has allocated a $775 million loan to the construction of the Georgian section of the railway. Financed by Azerbaijan’s state oil fund SOFAZ, the project was implemented after Azerbaijan’s President issued a decree on the ‘Implementation of measures within the Baku-Tbilisi-Kars project’, on February 21, 2007. The total length of the BTK is 826 kilometers (about 513 miles). After commissioning the railway, mutual trade between Azerbaijan, Georgia, and Turkey will increase significantly, the total volume exceeding $10 billion per year. Azerbaijan and Turkey’s relations have always been strong due to their common culture and history and the mutual intelligibility of Turkish and Azerbaijani languages. Turkey was the first country in the world to rec-

ognize Azerbaijan’s independence in 1991 and has been a staunch supporter of Azerbaijan in its efforts to consolidate its independence, preserve its territorial integrity, and realize its economic potential that arises from the rich natural resources of the Caspian Sea. Economic projects, jointly implemented by Azerbaijan and Turkey, are bringing these countries together and strengthening their cooperation. The two countries’ economies and cooperation have reached a high level. SOCAR is one of the world’s most well-established oil companies, active in Turkey since May 30, 2008. SOCAR is involved in a number of major investment projects in Turkey, including the construction of TANAP, Star refinery, and others. The volume of investment of SOCAR in Turkey’s economy will reach $5 billion by late 2014.

CIS October 20, 2014 #72

caucasian business week

MASTERCARD TO COMPLY WITH NEW RULES AND REMAIN IN RUSSIA - CEO

he MasterCard international payment system will continue operating in Russia and comply with the new rules set out by the Central Bank of Russia, CEO Ajay Banga has said. “We have intentions to remain in Russia,” TASS quotes Ajay Banga the President and Chief Executive of MasterCard. “My approach is that we will follow the new rules. The law requires a partnership with the Central Bank of Russia. We think, this is reasonable for Russia,” he said. However, the MasterCard chief said the firm won’t be servicing salary cards belonging to the blacklisted Russian banks. He said he couldn’t influence the sanctions imposed against the coun-

try and needed to “react to the events.” The Russian market, is a “prospective platform” for MasterCard, the CEO said. Currently, MasterCard and Visa occupy about 90 percent of the market. Under new legislation signed by President Vladimir Putin in May “not systematically important” foreign payment systems need to find Russian partners for settlements and processing within the country before October 31. If they fail to do so, they’ll be charged 25 percent of the average daily turnover in Russia, to be paid each quarter to the Central Bank. The new legislation was triggered by a disruption in March, when, Visa and MasterCard stopped servicing a number of Russian banks which fell under US sanctions.

KIEV FILES NEW $5BN LAWSUIT AGAINST GAZPROM IN STOCKHOLM

kraine’s Naftogaz has filed a second lawsuit with the Stockholm arbitration institute against Gazprom claiming it should repay $5 billion for transit gas “underdelivered” between 2009 and 2014. In the claim sent Monday Ukraine insists Russia’s Gazprom delivered less gas for transit than the 2009 contract stipulates, says the head of business reform at Naftogaz Yury Vitrenko. The compensation Ukraine is asking for would be at around $5 billion, according to Russian daily Kommersant’s calculations. Naftogaz also says transit terms should comply with the EU’s Third Energy Package which Ukraine is due to join in 2015. The package doesn’t allow one company to own both a pipeline and the fuel flowing through it. According to the existing transit contract with Ukraine the minimum supply volume is 110 billion cubic meters (bcm) a year, although Naftogaz claims Russia supplied only 86 bcm in 2013. “We believe that our appeal to Stockholm arbitration does not affect the supply of Russian gas to Europe”, RIA quotes Vitrenko as saying.

Gazprom however is ready to defend itself at the international arbitration tribunal. “There are no conditions in the 2009 contract like ‘pumpor-pay,’ so the obligation of Gazprom to pump at least 110 bcm of gas per year is nothing more than a declaration,” the head of Russia’s National Energy Security Fund Konstantin Simonov told Gazeta.ru. The gas row between Russia and Ukraine intensified in June when Russia cut off supplies over Kiev’s multibillion dollar debt. Since then a number of trilateral talks have been held, but no real breakthrough has been reached so far. In the latest round of talks in late September Russia, Ukraine and the EU came up with a so-called ‘winter plan,’ while no concrete agreement has been sealed. The plan outlines the supply of Russian gas to Ukraine resuming, only if Kiev pays Moscow $2 billion to settle a part of its $5.3 billion debt, and another $1 billion paid by the end of year as prepayment for gas supplies. The next round of talks is set for October 21. Naftogaz filed its first lawsuit in the end of September asking for a “fair and market price” for Russian gas.

UKRAINE, GEORGIA AND EU CANDIDATE COUNTRIES LINE UP FOR ANTI-RUSSIAN SANCTIONS

U candidate countries Norway, Iceland, Montenegro, Albania and Lichtenstein, as well as Ukraine and Georgia have joined the third package of sanctions against Russia, according to the European Union. “The candidate countries, former Yugoslav Republic of Macedonia, Montenegro, Iceland, and Albania, and the EFTA countries Liechtenstein and Norway, members of the European Economic Area, as well as Ukraine and Georgia align themselves with this decision,” says the statement from the Council of the European Union

published on October 15. European Free Trade Association countries Norway and Lichtenstein, who are also members of the European Economic Area, supported only part of the measures concerning blacklisted individuals, RIA Novosti says. The latest round of sanctions is a significant extension of those previous that were mostly individual. The economic sanctions targeted some of Russia’s biggest energy companies and banned the supplying of technology and services for deep water and Arctic oil exploration and production, as well as dual use goods.

RUSSIA’S TWO LARGEST BANKS PLAN SWIFT ALTERNATIVE

he two biggest banks in Russia, Sberbank and VTB, are in talks to create an alternative to the SWIFT global system for interbank financial communications, VTB head Andrey

Kostin said. According to Kostin, Russia has two options: either use the system run by the Russian Central Bank or create a new homegrown transaction platform. “There is an alternative, we can use the Central Bank system that is already in operation, and we may make our own, we are already in discussions with Sberbank,” Kostin told reporters in Washington DC, where he is for the annual fall meetings of the International Monetary Fund (IMF) and World Bank. However, the catch with the Central Bank’s international transaction system is the price. “It’s expensive, in fact several times more expensive than the SWIFT payment system,” the VTB head said. “If we create our own interbank system, which isn’t difficult at all and we are in the process of doing, it will be cheaper. And then hold talks with the Central Bank,” Kostin said.

Switching Russia off SWIFT, the Society for Worldwide Interbank Financial Telecommunication, would instantly isolate it from global finance, as happened with Iran in 2012. According to reports, EU leaders, especially in Britain, were discussing the option as a sort of super sanctions to punish Russia for its involvement in the Ukraine crisis. Many US senators have also been pushing to block Russia from SWIFT payments. SWIFT, the Brussels-based global payments system, said last week that they wouldn’t succumb to political pressure and cut Russian payments and would continue services. The group said that disconnecting Russia violates the company’s mission and that it doesn’t make such unilateral decisions. However because it’s based in Brussels, it would have to comply with any greater EU ruling. Last month the SWIFT system transmitted more than 21 million financial messages a day between more than 10,500 financial institutions and corporations in 215 countries. The Russian National SWIFT Association, or ROSSWIFT for short, is the second biggest worldwide, after the US.

PUBLICITY caucasian business week

October 20, 2014 #72

WORLD NEWS October 20, 2014 #72

caucasian business week

APPLE, FACEBOOK & AMAZON MULTI-BILLION ‘DOUBLE IRISH’ TAX LOOPHOLE CLOSED

FRENCH ECONOMIST TIROLE WINS NOBEL PRIZE FOR ECONOMICS

reland has dropped its lucrative tax scheme that helped multinationals like Apple and Amazon to pay lower taxes and save billions. The EU and the US have been increasing pressure to bring taxable income back home. The tax code change announced by Ireland’s Finance Minister Michael Noonan Tuesday means that all Irish registered companies will be obliged to be tax resident in the country. The so-called ‘Double Irish’ scheme that’s now being abandoned allowed a multinational to send untaxed profits to an Irish subsidiary, that then paid the money to another Irish registered company that is a tax resident of a some tax haven – most often Bermuda. This scheme was often coupled with a relevant tax trick known as a ‘Dutch Sandwich’, which uses a structure based exclusively in the Netherlands to avoid some taxes. The changes announced Tuesday are Ireland’s biggest tax reform since the country cut the corporate tax rate to 12.5 percent in the late 1990s when it sought to attract more jobs. It remained untouched in the 2015 budget, the first since Ireland withdrew from the EU-led austerity program. Mr. Noonan said that for new companies the law will come into effect on January 1, 2015, while existing companies will have a transition period until the end of 2020. “This proactive change will not bring an end to international tax planning. We are giving certainty to investors about corporate tax in Ireland for the next decade,” he said. Such tax schemes in Ireland helped the country

add around 160,000 new jobs that were created by some 1,000 international firms that came to Ireland to benefit from its tax regime. Unlike most of Europe, Ireland is expected to grow 5 percent in 2014 and 2015. In December, Ireland became the first country to leave the IMF bailout program and it can now borrow money for 10 years at 1.7 percent. JOINING ‘BEST INTERNATIONAL PRACTICE’ “These measures [Tuesday changes - Ed.] will enhance Ireland’s corporate tax regime and align it with best practice internationally. It will ensure that Ireland continues to be the home of the best and most successful companies in the world. It will attract and retain companies with real substance offering real jobs,” Mr. Noonan said. The EU and the US have been increasingly pressing Dublin to put a plug in the tax loophole, as it meant billions of lost revenue from such huge multinationals as Facebook, Amazon, Apple, Starbucks and carmaker Fiat’s financial arm. Most recently, officials from the European Commission demanded that Luxembourg hand over documents relating to online retailer Amazon’s tax affairs. The US loses up to £56 billion a year through companies that use Irish tax structures to legally protect their money. The latest Amazon EU Sarl financial report showed the Luxembourg structure helped the company cut its overall tax rate by 8 percent to 31.8 percent. Apple also managed to apply a corporate tax rate of just 2 percent, as a US Senate committee claimed.

rench economist Jean Tirole on Monday won the 2014 Nobel Prize for economics. The prize was awarded for his work that has shed light on how governments should regulate powerful companies that dominate markets, Reuters said, citing the Royal Swedish Academy of Sciences. The research showed that market regulations should be carefully adapted to the conditions of specific industries, rather than general regulations such as price caps.

SWITZERLAND CUTS GROWTH FORECAST, BLAMES SLOWING EUROPE & GEOPOLITICAL CRISIS

ven the Swiss economy isn’t immune to the “fragile and vulnerable eurozone” and has cut growth forecasts for this year and next. The government points its finger at weak exports to Germany and geopolitical crisis in Ukraine and the Middle East. The Swiss government has cut back its GDP expectation to 1.8 percent from 2.0 percent growth in 2014, the second revision this year, the State Secretariat for Economics (SECO) said in a statement Thursday. “In light of the dampened short-term economic outlook for the euro region, including Germany, the conditions deteriorated compared to the last forecasts in June,” the statement said the lull is temporary, and expects growth to gradually increase. Switzerland’s is waiting for a pickup in exports, which will be challenging given that its biggest trading partner, Germany, is showing signs of weakness. Switzerland sends 60 percent of exports to the EU, and Germany is a destination for 25 percent of overall goods. German economy in ‘choppy waters’, as growth forecast slashed to 1.2%.

Switzerland points to geopolitical tension between Russia and Ukraine and the Middle East as contributing to falling growth. Employment has stagnated and business sentiment indicators are gloomy. According to government economists called the “Expert Group”, the downturn in Germany should be temporary, but other eurozone countries continue to suffer “protracted consequences of the crisis.” The eurozone had no growth in the second quarter and Germany’s GDP dropped 0.2 percent in the same time period. In the second quarter, German purchases of Swiss goods fell 10.2 percent. The three largest economies, Germany, France, and Italy all failed to grow in the second quarter. Europe’s €9.5 trillion economy hasn’t been able to shake off the recession that started six years ago after the outbreak of the global financial crisis. At $1.5 trillion, Germany accounts for nearly 30 percent of the gross domestic product of the entire 18-member eurozone. “As a result of the continuing fragility of the global environment, in particular the faltering recovery in the euro region, the Swiss economy has lost some of its momentum since the beginning of 2014,” the statement said.

EUROZONE INFLATION SLUMPS TO 5YR LOW RISKING TRIPLE-DIP RECESSION

nflation in the 18-member eurozone has dropped precipitously low to 0.3 percent, the lowest since 2009. The European Central Bank missed its 2 percent inflation goal for the 20th straight month. Consumer prices rose 0.3 percent last month, compared to 1.1 percent in September 2013. Monthly inflation in August 2014 was 0.4 percent, Eurostat reported Thursday. The prognosis was slightly better in the whole EU rather than the 18 eurozone members. Overall EU inflation was 0.4 percent last month, compared to 1.3 percent in September 2013. In August inflation was recorded at 0.5 percent. Inflation is one of the major economic indicators, with limited price rises signaling robust growth. A combination of weak growth in the eurozone and deflation threaten an excessive debt burden. “We expect inflation to pick up only modestly to 0.5 percent to 0.6 percent by the end of the year,”

HSBC analysts told the Telegraph. European Central Bank President Mario Draghi has talked about using “extraordinary tools” to bring the eurozone back to growth, one of which may be monetary easing, or pumping stimulus into the economy, as the US did after the 2008 financial crisis. Adding to the problems, the region’s GDP looks set to contract in the third quarter of the year, after showing no growth at all in the second quarter. The International Monetary Fund published a report saying the EU has a 35-40 percent likelihood of falling back into recession. If the eurozone doesn’t post growth in the third quarter, it will have hit a triple dip recessionmeaning it hasn’t shown any growth in nine months. The three largest economies, Germany, France, and Italy, all failed to grow in the second quarter.

GERMAN ECONOMY IN ‘CHOPPY WATERS’, AS GROWTH FORECAST SLASHED TO 1.2%

he German Ministry of Economic Affairs has slashed its of growth this year to 1.2 percent, which is mounting evidence that Europe’s biggest economy is losing steam. The numbers released Tuesday are a significant downward revision from the 1.8 percent growth expected earlier in the year. Growth for 2015 was also revised down to 1.3 percent from 2 percent, the ministry said. “The German economy is in choppy waters concerning foreign trade,” Sigmar Gabriel, Minister for Economics and Energy, said in a statement. Better growth will largely depend on international factors improving, he added. The continuing standoff with Russia over Ukraine that turned into a so-called ‘sanctions war’ with the West is eroding growth everywhere, the ministry statement said. The GDP report was released on the same day as the closely watched ZEW economic sentiment

survey showed that businesses in the country are growing more pessimistic about the future. The indicator turned negative in October, to minus 3.6, which is much weaker than the average forecast of 0.8 expected by the Wall Street Journal. Sentiment in the survey over current conditions also dropped to 3.2, compared to 25.4 in September. Last week a number of key German economic indicators, such as industrial production and exports, showed that the economy was heading towards contraction. The country’s leading economic think tanks also said they expect weaker growth in 2014 and next year, as both domestic demand is weakening and the EU is slowing. They said Germany is set to grow 1.3 percent this year and further slowdown to 1.2 percent in 2015. Last week an International Monetary Fund report raised the likelihood of eurozone recession to almost 40 percent from just over 20 percent in April.

PUBLICITY caucasian business week

October 20, 2014 #72

FACTORS THAT DETERMINE PRICE OF APARTMENTS

xpensive Apartments â&#x20AC;&#x201C; neither high prices mean high-class apartments nor low prices imply low-quality apartments. It is difficult to determine real advantages of apartments due to prices. There are several components that determine pricing of apartments, including the components that are not famous to potential clients. For example: part of real estate owners finds it difficult to leave the apartment they have accustomed to. They find their houses very valuable and set quite high prices for them. Some of them artificially grow the prices so as to avoid selling the property at very low prices. Some people prefer to make comparison. They evaluate their property due to prices of apartments of their neighbors or other real estates in the neighborhood. It is harder to determine advantages of apartments due to prices on the primary real estate market. Development companies often try to draw interest of target groups by active AD campaigns. All development companies resort to different positioning on the market. Part of them makes accent on reliable investments, major investments and the might of the company. Part of them makes focus on modernized styles and new standards of living, some companies pay regard to PR activities, affordability and low prices. In all cases, there are several factors on both primary and secondary real estate markets that make decisive influence

on the pricing. In most cases, the location of the asset should be also taken into account. As a rule, the price of apartments is higher in the center or near the center compared to outskirts. For example, clients are able to buy tworoom apartments in outskirts, for example in Temqa, at the price that would suffice for buying only a one-room apartment in the Saburtalo that is considered to be the central district. Logistics also make considerable role in pricing. If the real estate is located near the airport, underground station, transportation hub, the prices are higher by 10% to 15% in Tbilisi. But there are opposite cases too. Namely, if an apartment is very close to a railway station, for example the Station Square, the price falls considerably, because there are noisy and unclean places, crowded areas, where many crimes are committed. Constructions and buildings around the apartment are also very important. If there is mortuary, cemetery, industrial assets or power stations in the neighborhood, the price of the apartment may shrink by 20%. In the opposite case, the price rises near the park, recreation zones and assets. Major part of the customers give preference to the quality of apartments when selecting the asset, but they have no answer to the question â&#x20AC;&#x201C; how to examine the quality of the built asset. The price is significantly determined by technical characteristics of

the residential building. Customers should have information on the materials and structure used in the construction process. Today, monolithic method of the construction works is widespread worldwide. In Tbilisi this method is widely used in the DIRSI complex. Over 3 000 apartments have been built by the tunnel gauge system. In Tbilisi the quality is very expensive, but the DIRSI project managers do not plan to increase the price of apartments because of this factor. They say all Tbilisi based development projects must use high-quality cement, high-quality reinforcements and this obligation should not become precondition for growth in prices. Besides high-quality materials, the project of an apartment is also very important factor for the pricing. Several years ago customers considered Czech project apartments with red brick very convenient, while the interest was low on Khrushchovk aand Moscow project apartments. Today, all the mentioned projects have been replaced by new ones. Modern apartments are comparatively higher with wider, brighter and more convenient rooms contrary to standard project rooms. Indeed, there were several expensive development projects in Tbilisi earlier that used to offer nonstandard and nicely projected apartments, but, for the first time, only DIRSI has launched the construction of the so-called studio style apartments. This style implies a combination of the en-

trance and kitchen. The secondary market lacks for studio style apartments, while the DIRSI project includes several hundreds of studio style apartments and they are very popular. Finally, the unconditional element that makes direct affect on change in apartment price is related to infrastructure. Naturally, the price of apartments with disordered entrance, no elevator, bad roads and a long way from stores is far lower. In this case it is less important whether the apartment has been built by high-quality materials and whether the apartment is located near the airport. It is main thing that surrounding infrastructural assets make comfort in everyday life. At the same time, infrastructural variety should not extremely increase the real estate price. There are several districts in Tbilisi that are considered to be elite ones because of their vicinity to entertainment and trading assets and their are quite expensive for a major part of Georgian citizens. The first residential complex w6th all required commercial and social assets will open in Tbilisi in November 2014. The DIRSI district will include 4898 apartments, a shopping mall, medical assets, a secondary school, nursery schools and a strolling boulevard. It should be also noted the price of an apartment in the complex is based on averaged price of the real estate and is affordable for average-income families.

TBILISI GUIDE October 20, 2014 #72

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: +995 32 2 75 21 11, Fax: +995 32 2 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 RESTAURANT BARAKONI Restaurant with healthy food. Georgian-European Cuisine Agmashenebeli Alley 13th Phone: 555 77 33 77 www.barakoni.com CHARDIN 12 Tbilisi , 12 Chardin St. , Tel: 92 32 38 CAFE 78 Best of the East and the West Lado Asatiani 33, SOLOLAKI 032 2305785; 574736290 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

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

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

October 20, 2014 #72