Caucasian Business Week #73

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BUSINESS WEEK October 27, 2014 #73

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October 27, 2014, Issue 73

GEORGIA FITCH CHANGES GEORGIA’S OUTLOOK FROM “STABLE” TO “POSITIVE”

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eorgian financial officials are celebrating a positive affirmation by Fitch Ratings, a global ratings agency. Pg. 2

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BE INFORMED, DO BUSINESS

GEORGIA RANKED IN TOP 10 SAFEST COUNTRIES BY TRAVEL WEBSITE

GEORGE SOROS: Wake Up, Europe!’

AZERBAIJAN AZERBAIJAN, WB INK CREDIT AGREEMENT

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zerbaijan and World Bank has signed a credit agreement “Judicial services and smart infrastructure” project (JSSIP). Pg. 4

CIS UKRAINE’S MULTIBILLION-DOLLAR GAS DEBT: WHO PAYS?

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kraine plans to buy $770 million worth of gas from Russia this winter to keep the heat on. Pg. 4

WORLD NEWS HUNGARY TO IMPOSE WORLD’S FIRST INTERNET TAX

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ungary is preparing to impose the world’s first tax on internet usage in the latest example of the unorthodox economic policies being. Pg. 13

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eorgia has been named among the top ten safest countries to live by travel website www.see.place. com. The ‘Top 10 Safest Counties To Live In The World’ list placed Georgia eighth, behind Luxembourg and in front of Bahrain. The website, which regularly posted travel articles, described Georgia as a welcoming, friendly place with diversity and uniqueness. “Georgia is situated at the junction of Asia and Europe. This country shows a combination of di-

versity and uniqueness. It welcomes its visitors with Black Sea coastline, curative climate, national parks, Caucasus mountain range, mineral waters, delicious cuisine, rich culture, UNESCO Heritage Sites and popular Georgian hospitality. The crime rate in Georgia is reported to be very low and is exactly why it has made it to eighth place in the safest countries in the world list.” Asian countries dominated the list of safe countries and took the top four spots. Pg. 2

ITALIAN INVESTORS TO PUT 40 MILLION GEL IN GOODWILL’S RETAIL CHAIN

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XV AWARD CEREMONY OF BUSINESS RATING HELD BY “GEORGIAN TIMES” Pg. 6

TBC BANK RETURNS EXPATRIATE PROFESSIONALS TO GEORGIA The Company that attracts human capital from abroad

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GOLD ALLOYS PRODUCTION VOLUME FALLS

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Israeli Businessmen to Invest in Georgia’s High Technology and Real Estate Sectors Pg. 4

4G-Internet 10 Times Faster than 3G RENE SCHUSTER Group Chief Operating Officer at Vimpelcom

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MAIN EVENTS October 27, 2014 #73

caucasian business week

GEORGIAN PRESIDENT MEETS JAPANESE PM IN TOKYO

J JAPAN TO REPLACE GRUZIA BY GEORGIA IN OFFICIAL TERMINOLOGY

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apan will use ‘Georgia’ instead of ‘Gruzia’ in its official documents. The announcement was made during a meeting between Japan’s State Minister for Foreign Affairs, Minoru Kiuchi and Georgian President Giorgi Margvelashvili who is on an official visit to Japan. Advisor to Georgian president for foreign affairs,

Tengiz Pkhaladze said that Japan’s parliament will start to consider this issue at the spring session of 2015. Touching upon Margvelashvili’s visit to Japan, he said the president has already held his first meeting with Japan’s state minister for foreign affairs and discussed the bilateral cooperation issues.

GEORGIAN PRESIDENT SEEKS SUPPORT FROM JAPAN, WORLD IN STANDING UP TO RUSSIA

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eorgian President Giorgi Margvelashvili said his country needs continuous support from Japan and the rest of the international community to maintain stability in the Caucasus region in the face of an increasingly assertive Russia. Speaking at the Japan National Press Club in Tokyo on Tuesday, Margvelashvili said Russia is taking further steps in its occupation of two Georgian territories, and is moving toward fully annexing them. Russia has controlled Abkhazia and South Ossetia since 2008, establishing them as quasi-states, the 45-year-old president said. “Now there is a new project developed by Russians, which is basically taking every function

of the quasi-states and integrating them socially, militarily, politically, judicially,” Margvelashvili said. “All functions of these quasi-states are integrated into Russia.” He stressed the importance of support from the international community in solving one of Georgia’s main issues. “It is important to acknowledge that if we have unanimous support of unacceptance of aggression, of occupation, of annexation policies around Russia or in other parts of the world,” he said. “Then . . . we will eventually prevail.” He also expressed appreciation for Japan’s support for Georgia over its territorial issues. Margvelashvili arrived in Japan on Tuesday for his first visit since being elected president in October 2013.

apanese PM Shinzō Abe told Georgian President Giorgi Margvelashvili at a meeting in Tokyo on October 24 that the two countries are “friends, which share fundamental values.” “Furthermore the both countries are making tremendous efforts for peace and stability,” PM Abe said and praised Georgia’s “contribution to the international peace.” The Japanese PM also said that the two countries should “play together even more pro-active role for the international peace and stability.” After the meeting the Japanese PM and the Georgian President signed a “joint statement on solidarity for peace and democracy.” PM Abe reiterated Japan’s support towards Georgian territorial integrity and also said that Georgia’s “dialogue with Russia is highly appreciated.” “We appreciate favorable business environment of Georgia, which is advancing on the path of integration of its market with Europe,” the Japanese PM said. President Margvelashvili said that Georgia “applauds and supports” Japan’s efforts to increase its role on the international stage, because “Japan is one of the strongest democracies in the world and democracies should speak out more strongly on the international stage.” President Margvelashvili asked Japan to refer to his country in Japanese as “Georgia” instead of Russian pronunciation “Gruzya” – an issue,

FITCH CHANGES GEORGIA’S OUTLOOK FROM “STABLE” TO “POSITIVE”

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eorgian financial officials are celebrating a positive affirmation by Fitch Ratings, a global ratings agency. Fitch Ratings affirmed Georgia’s credit ratings at “BB-”, and advanced the outlook from “Stable” to “Positive”. Georgia’s Economy Ministry believed this positive change was based on several factors: Georgia firmly continued its economic and structural reforms within its cooperation with the International Monetary Fund; Georgia had a comfortable business environment affirmed by the country’s eights place in the World Bank’s Doing Business rating;

ITALIAN INVESTORS TO PUT 40 MILLION GEL IN GOODWILL’S RETAIL CHAIN

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he hypermarket chain “Goodwill” will repay its debts until November 30, in particular, GEL 8 million will be paid to the largest lender - “TBC Bank”, and then funds will be invested to increase the company’s turnover. Only then the remaining debt will be repaid. At the moment, the total debt of the hypermarket chain amounts to GEL 25 million, while the number of creditors reaches 600. It is assumed that all debts will be paid by 2022. The company is currently working on a 3-year development plan, which includes investing in the amount of GEL 3.4 million, which will focus on sales growth, upgrading facilities, marketing, cre-

ation of public catering facilities, etc. Work on the detailed plan will be completed within a month. Currently, 51% of the shares of “Goodwill” became the property of the Italian company “Milano Investment”, in the near future it is planned to increase the share of investors up to 60%, and only then the sale will be stopped. According to Director General of the network “Goodwill” Besik Jikurauli, the Italian company will attract investments from its own reserves. A representative of the “Milano Investment”, before deciding to purchase a trading network in Georgia, the overall situation in the country has been studied as well as the financial position of “Goodwill”.

BUSINESS WEEK caucasian

The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Address: Shrosha Street 8/10 Director: Levan Beglarishvili Mobile phone: 591 013936; 577965577 Commercial Department: Irakli Lekvinadze Email: caucasianbusiness@gmail.com WWW.CBW.GE

which Georgia has raised years ago. “During the talks I received the President’s request for change of the name of his country in Japanese. Our government decided to study this along the direction of changing from Gruzya to Georgia,” PM Abe said after the meeting. Also on October 24 President Margvelashvili and first lady Maka Chachua were received by Japan’s Emperor Akihito and Empress Michiko. During his official visit to Japan President Margvelashvili also met Foreign Minister Fumio Kishida; Agriculture Minister Koya Nishikawa; speaker of Japan’s lower house of parliament Bunmei Ibuki. President Margvelashvili, accompanied by a group of lawmakers from ruling GD coalition, also met representatives of Japan’s ruling Liberal Democratic Party. According to the Georgian President’s office, Russia’s “unconstructive” policy and continuing “occupation” of Georgia’s territories by Russia, as well as Moscow’s recent attempts to “annex” Abkhazia through its proposed new treaty with the breakaway region were high on agenda of President Margvelashvili’s discussions with the Japanese officials. The Georgian President also held meeting with president of Japan International Cooperation Agency (JICA) and representatives of the Japan Association for Trade with Russia and Newly Independent States (ROTOBO) and Japan Association of Corporate Executives.

Georgia had a notable political progress affirmed by recent democratic and transparent elections; Georgia had strengthened institutionally, which was recognised by international monitors; And Georgia had signed the Association Agreement (AA) with the European Union, which included the Deep and Comprehensive Free Trade Area (DCFTA) agreement. The Ministry expected the AA and DCFTA deals would have more positive results in the future. In 2012, an EU-commissioned study said, if implemented and sustained, the DCFTA could increase exports to the EU by 12 percent and imports by 7.5 percent. In the long run, it could boost national income by €292million (705 million GEL).

GEORGIA RANKED IN TOP 10 SAFEST COUNTRIES BY TRAVEL WEBSITE

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apan placed first and was described by the website as a place with extremely low crime. “Topping this list of safest countries in the world is none other than Japan. The reason behind this is its rare crime activities. On the other hand, its culture becomes one of the main reasons honoring this country. I am sure you must have heard how well disciplined Japanese are and therefore, they will never involve in activities which brings shame to their country,” stated the website. In second place was Taiwan, followed by Hong Kong and South Korea. Singa-

pore placed 10th on the list. Top 10 Safest Countries to Live In The World (* Source www.see.place.com.) JAPAN TAIWAN HONG KONG SOUTH KOREA UNITED ARAB EMIRATES MALTA LUXEMBOURG GEORGIA BAHRAIN SINGAPORE

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

Source: www.commersant.ge, www.bpi.ge, www.gbc.ge


PUBLICITY October 27, 2014 #73

According to the GOEuro’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

ISRAELI BUSINESSMEN TO INVEST IN GEORGIA’S HIGH TECHNOLOGY AND REAL ESTATE SECTORS An interview with President of the Georgian-Israeli Chamber of Commerce Itzik Moshe

- What are the results of the recent GeorgianIsraeli Business Forum, and if a specific agreement was reached to invest in the economy of Georgia? - In business, it is necessary to speak with facts, so I’ll familiarize you with what has happened at the Business Forum. Vice-speaker of Parliament of Israel and representatives of more than 100 companies that are interested in investing in the Georgian economy arrived in Georgia as well as journalists of leading Israeli media, who are interested in the economic potential of Georgia. More than 50 meetings were held, and 5 of them culminated in specific outcomes - an agreement was reached on investing in two projects in the

hotel business, two projects will be carried out in industry and one- in the field of high-technologies. This is the first concrete result and it is a very positive fact. - Three Israeli companies have expressed interest in investing capital in the energy, agriculture, and infrastructure. What’s going on in this area at the moment? - Our motto is to turn the union of the peoples into the union of the countries, so the meaning of the last business forum was to discuss possible investments. Interest is shown by specific companies and specific investors. In this case we are talking about companies that have not previously worked in the Georgian market. - When will specific business projects be launched? - Private investments in the amount of USD 350 million have already been made in Georgia mainly funds are invested in real estate, in order to bring these projects to the end another USD 500 million will be invested. An agreement to build two hotels has been signed. Now technical matters are being discussed, and construction will begin immediately after permission is obtained. We are talking about private investment and not about credits and tenders. Thesituation with the enterprises is the same. Representatives of the companies that will explore specific issues related to the implementation of projects have already arrived in Georgia. - Do the Israeli businessmen plan to cooperate with the Georgian Co-investment Fund? - Funds established in Georgia, in particular, the Co-investment Fund, are required in order to attract investments from Israel. A collaboration with the Fund, which accumulated considerable resources that can help attract capital, will be positive for investors in any case.

GOVERNMENT’S ECONOMIC TEAM RECOMMENDS TO CHANGE NEW VISA REGULATIONS

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inistries of Justice and Foreign Affairs do not take into account the expected economic effect when imposing new visa regulations- the Prime Minister’s adviser Roman Chkhenkeli states. According to him, new regulations were adopted without consultations with the economic team of the government. Despite the fact that the new visa regulation entered into force on September 1, they have created a lot of problems both to business and tourism industry. Due to the problems, Prime Minister of Georgia Irakli Garibashvili was forced to apologize to all those affected by the new regulations and pledged to solve the problem. “The decision to impose visa regulations was adopted by the Ministries of Justice and Foreign Affairs, which had not had any consultation with the economic bloc. The Prime Minister very quickly responded to emerging complications, held several meetings on the issue which identified the problems and gave appropriate instructions to the

ministries. I think that in the near future regulations will be changed at the legislative level, and the current problems will no longer arise, “Chkhenkeli notes. “We all have the desire to maximally get closer to the standards of the European Union, as it is necessary for the liberalization of the visa regime and the successful continuation of the negotiations on this issue. However, we should not create artificial barriers for the growth of the tourist and investment inflow. These circumstances have not been taken into account by developers of new visa regulations ,”- he adds. On September 1, a visa regime was introduced with a number of states, in particular, Iran and China, while new immigration regulations - for the citizens of the states which maintain the visafree regime - the former Soviet Union, EU, USA, Japan, Canada, etc, in total 108 countries. If earlier, they could stay in the country for 360 days a year, now only 180 days. This has created great difficulties for the foreigners working in Georgia.

SEPTEMBER RECORDS DOWNTURN IN EXPORTS AND UPTURN IN IMPORTS

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n September amount of Export reduced. Geostat informs that in January-September 2014 foreign trade turnover in Georgia (without unorganized trade) equaled to $8,376 billion, which is 10% more than in the same period of last year. In 9 months products of $2,153 billion was exported, which is 7% more than in 9 months of 2013. As for import, its amount has increased by 12%, to $6,223 billion. In January-September 2014 negative trade bal-

ance equaled to $4,070 billion and 49% of foreign trade turnover. It’s noteworthy that only in September export equaled to $240 million, which is 8 million less than in August. Export amount has reduced by 18 million since September of last year. In the same month export equaled to $726 million, which is 44 million more than in August of the current year. It’s also 37 million than in September 2013. Detailed data of foreign trade of Georgia will be published on October 24.

October 27, 2014 #73

VAZIANI TO INCREASE OUTPUT IN 2015

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AZIANI” winery plans to increase production capacity in the future. The company’s founder Irakli Iashvili says that at the stage the company produces 1.5 million bottles, however, next year this number will be increased to 3.5 million bottles. Iashvili claims that the manufactured products are exported to the European countries, China and Vietnam. In the words of Iashvili, in the

nearest future it is planned to construct the cellar where the company’s wine will be sold. Iashvili notes that the company planted a vineyard on the area of about 100 hectares, which will be expanded in approximately 1.5 -2 years. The plant was built in the frames of the preferential agro-credit program 2 years ago in Telavi district of Kakheti region (Eastern Goergia). A total of 4 million Euro has been invested in the project.

4G-INTERNET 10 TIMES FASTER THAN 3G

RENE SCHUSTER, Group Chief Operating Officer at Vimpelcom - a major telecommunications service operator, is paying a visit to Georgia. He met with representatives of the government and the media. Rene Schuster took the post in 2014, previously he had worked in leading positions in companies such as Telefonica Deutschland, Vodafone, HewlettPackard, Compaq, KPMG (operates “Beeline»), IBM and General Electric. It should be noted that this visit is very important from the point of view of implementation of a 4Gwireless internet in Georgia. In an exclusive interview with “Banks and Finance”, Rene Schuster said that it is impossible to believe in the quality of services provided by this new technology. - In your opinion, how important for Georgia is the introduction and development of LTEtechnology? - Development of LTE technology will be a cornerstone not only for Internet users, but also for business development. It will play a crucial role in the growth of the country’s competitiveness. 4G Internet is 10 times faster than 3G, and it will give users a real pleasure in all that relates to the worldwide network. - What is the experience of “VimpelCom” in the development of LTE and how will it help in the development of 4G internet in Georgia? - We have a pretty extensive experience in implementing 4G-Internet, we are working with this

system in many markets. In general, we work in 16 countries, we have more than 220 million customers, more than 100 million of them already use this technology. So, we have quite a lot of experience and knowledge in this field. We have centers equipped with the new technology, and we intend to deliver them in Georgia. We’ll also bring here the engineers who implement 4G internet , they will share their experiences with local engineers. - What would be your recommendations on the 4G-internet? - I think everyone should try and make sure that , as it may sound unbelievable, but 4G-Internet is 10 times faster than 3G. You will certainly be amazed.

EXPORTS WITH EU GROW BY 23%, WITH CIS RISE BY 1%

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xport with EU countries increased by annual 23%, with CIS countries - by 1%. According to Geostat data, during last year trade turnover with EU countries has increased by 8%. In particular, in January- September of the current year turnover equaled to $2,187 billions. Among them export was 458 millions (23 millions more), import - 1,729 billion (5% more). It is noteworthy that only in September export of 53 million was made from Georgia to EU. Share of EU in the foreign trade of Georgia equals to 26%. Among them in the total export these countries occupy 21%, in import - 28%. 31% of the trade deficit came on EU countries (36% in January-September 2013). As for trade turnover with CIS countries, in January-September 2014 turnover equaled to $2,612 billions, which is 0,4% more than last year. Export amount increased by 2% and equalled to $1,128 billion. Import was $1,484 billion (0,3% more). Share of CIS countries in the foreign trade turnover of Georgia equalled to 31%, among them 52% in export and 24% in import. In January-September 2014 9% of the trade defi-

cit came on CIS countries (10% in January-September 2013). Reminding that in 9 months foreign trade turnover of Georgia (without unorganized trade) equalled to $8,376 billion, which is 10% more than last year.


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BUSINESS & ECONOMY October 27, 2014 #73

caucasian business week

RESEARCH TO DETERMINE INVESTMENT POTENTIAL OF FORMER MILITARY RANGE IN GONIO

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ccording to order of Investment Agency, international consulting company Colliers International conducts research for justification and investment potential of the coastal line and adjacent resort zone to former Gonio military polygon. In the framework of justification research for Gonio resort zone workshop was held in the hotel Radisson, Batumi. Members of the working group are representatives of National Investment Agency of Georgia, government of Adjara Autonomous Republic, Co-Investment Fund of Georgia, World Bank and international consullting company „Colliers International”. On the meeting representatives of London office of company Collers presented primary development concept of former Gonio military polygon. The parties discussed several directions, which may be competitive and commercially justified

in the region. They elaborated further steps for the work. Gonio Development Concept aims to determine investment potential of the former military polygon and adjacent territories, with total are of 315 hectares. To elaborate territory development concept and pan, the winner company „Colliers International Specialist and Consulting UK LLP”, with which government of Georgia signed contract, conducs project justification research, which includes market research and elaboration of general development plan. The agency considers that existence of united investment plan on the territory of former Gonio military polygon will help state of Georgia to maximally utilize potential of this unique territory and reveal the mist efficient decision for its development. Respectively, Gonio development project will become unprecedented project on Adjara coastal line.

INVESTOR TO BUILD NEW OIL REFINERY IN POTI

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oon Ministry of Economy will announce expression of interest soon. The issue was discussed on the government session on Thursday. As Ministry of Economy explains, the plant will be completely constructed by private investment. Expression of interest is assumed to complete in early February 2015.

It’s already known that the plant should be able to process at least 2 million tons of raw oil annually. Amount of the investment will be known when expression of interest is over. It’s noteworthy that Ministry of Economy elaborated terms and conditions for expression of interest. It was also entitled to form commission, which will review submitted proposals.

TAV GEORGIA’S NEW CONTRACTUAL OBLIGATIONS DETERMINED

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t the moment we are in a phase of negotiations in the frames of which, specific legal, conceptual details are being specified ; a contract with “Tav -Georgia” will be signed soon,” - Ministry of Economy and Sustainable Development of Georgia George Kvirikashvil told “Commersant”. He says that the company initially signed a contract for 10 years but extended it for another 10 years and 9 months and eventually the contract was not signed until 2037. And now, as the Minister notes, the airport man-

agement will continue until 2027. According to Kvirikashvili, “Tav Georgia” has an obligation to build a new runway, as well as to expand the terminal, etc. We are talking about an improved environment for consumers, - the Minister says. As for the investment commitment, the Minister cannot specify anything at this stage noting that the project has changed and, therefore, the costs of the new project should be calculated. It should be noted that the old agreement signed with “Tav Georgia” has been revising for quite a long time, and the date of signing a new contract has been postponed several times.

OIL PRODUCTS IMPORT INCREASED BY ANNUAL $28

EBRD WILL COOPERATE WITH PRODUCE IN GEORGIA PROGRAM

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uropean Bank for Reconstruction and Development (EBRD) signed memorandum of understanding with Georgia in the framework of the state program Produce in Georgia. The signing ceremony was held in the government administration, on the meeting of Prime Minister Irakli Garibashvili and representatives of EBRD. European Bank will provide Ministry of Economy and Sustainable Development of Georgia and Entrepreneur Development Agency with technical assistance for the small and medium enterprises, to ensure stimulation of their competitiveness, improvement of the potential for the attraction of the foreign investments, introduction of innovations and active usage of the new technologies. European Bank will promote creation of the sustainable infrastructure for business consulting service and will help enterprises to establish connections with local consultans. European Bank

will also carry out activities for development of the market, for instance training of the local consultans, small and medium businessmen and development of their potential. “I’m glad that new initiative stars today. It is excellent opportunity for cooperation with government of Georgia in the framework of cooperation in the important economic segment of the country - Business Assistance Program. Real sector is a spine for healthy and growing economy of any country. We have established close and productive cooperation with Ministry of Economy and Sustainable Development of Georgia by dialogue in the sectoral policy. Therefore we are pleased to continue teamworking with them in the framework of the new initiative,” - regional director of the EBRD representations in the Caucuses, Moldova and Belorussia Bruno Balvanera stated. The memorandum signed by EBRD, Ministry of Economy and Entrepreneurial Development Agency determines future cooperation format between the parties.

IRAN WANTS TO ENHANCE TRADE AND ECONOMIC COOPERATION WITH GEORGIA

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mbassador Extraordinary and Plenipotentiary of Iran in Georgia Abbas Talebidari stated about it on the meeting with Minsiter of regional Development and Infrastructure David Shavliashvili on Thursday. On the meeting Ambassador of Iran mentioned that he would be glad if cooperation between two

countries will enhance and develop in terms of trade and economic relations. The ministry informs that the ambassador focused on the visit of Iranian delegation in Georgia, which is scheduled next week. The delegation, which includes representatives of Chamber of Commerce of Iran and businessmen, will meet Minister of Regional Development and Infrastructure on October 30.

GEOCAP TO INVEST 2 MILLION USD IN INDUSTRY SECTOR

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ompany Geocap, which participates in the state program Produce in Georgia, will invest $2 million in the new direction of the industry. The company will receive loan of $2 million from ProCredit Bank. Interest rate is 11%. Entrepreneurial Development Agency will pay 10% of the rate during 2 years. It’s noteworthy that main direction of the project is production of plastic corks. The company states that the plastic cork selected for the project is for the new types of bottles,

which has lower screw and aims to replace import in the country. Till now such enterprise have not existed in Georgia despite the fact that large amount more expensive products are imported on the local market. The new enterprise will be opened in the Q3 2015. In the future it will double capacity and export the products. It’s noteworthy that company founders had multiyear experience in the production and realization of the plastic packaging and owned pet-preforms and bottle enterprise.

TELIANI VALLEY NET PROFITS IN 1H14 MARK 1.196 MILLION GEL

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il products import increased by $28 million in Georgia. Geostat informs that in JanuarySeptember 2014 oil and oil products was the largest import group. Its amount equalled to $696 millions and 11% of the import. Motorcars rank second in import with $532 milion. it is noteworthy that compared with the data of 9 months of last year, cars of 15,3 millon more have been imported. Oil airs and gaseous hydrocarbons rank third with

$238 million. Compared with last year, natural gas import has increased by $35 millions. Top-5 list includes remedies and copper ores and concentrates. Import of this group equaled to respectively 228,3 millions and 139 millions. In the same period phones of $130 millins, wheat of $102,5 millions and cigarettes of 73,3 millions have been imported. Top-10 list includes calculation machines - 71,8 millions and black metal constructions - 70,8 millions.. Reminding that in January-September import amount exceeded to $6,2 billion.

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eliani Valkey completed 6 months of the current year with 1,196 million GEL net profit. Profit before the tax payment was 1,49 million GEL. As financial report published by the company indicates, by June 30 2014 actives of the company exceeded to 36,6 million GEL. Long-term liabilities were 61,5 million GEL. It’s noteworthy that financial reporting is a consolidated report of JSC Teliani Valley and member companies of its group (LTD Teliani Trading - 100% share, LTD Lekavkas - 100% share, LTD Kupa - 70% share, LTD Teliani Trading (Ukraine)

- 100% share) by June 30, 2014. Reminding that the company operates since 1997. In 2000 the company was formed as JSC. Declared authorized capital of the enterprise equals to 1 200 000 GEL, which is divided into 1 200 000 common stocks with nominal value of 0.01 GEL. By December 31, 2013 number of shares placed by the enterprise equals to 77 094 255. Currently Teliani Valley sells products in over 25 countries, among them Ukraine and Poland are the largest sales markets. As for local market, here Teliani Valley is a leader according to bottled wines sales.


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BUSINESS caucasian business week

XV AWARD CEREMONY OF BUSINESS RATING HELD BY “GEORGIAN TIMES”

ACHIEVEMENTS OF NATAKHATI FUND

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Natakhtari Fund for Vano’s and Soso’s Successful and Independent Life (Names of Beneficiaries Replaced for Anonymity)

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ano joined the Care for Future project in April 2013. He is 18 years old. He was very small when his aunt took him to an orphanage jointly with his sister. From there Vano moved to a small family house. He has graduated from a college as an engine specialist. Currently, he rents an apartment and works as an operator for a metal constructions plant. Salary does not suffice for independent life, therefore, the Natakhtari Fund finances his rentals and pays for public utilities. Soso was brought to an orphanage after his lonely mother became unable to keep him. Despite this fact, Soso has maintained positive attitude to people and the life. He is 20 years old. He joined the Care for Future project in April 2013. He fulfils tasks smartly, timely and zealously. Specialists provide permanent physiological consultations to him for adaptation to new environments, professional orientation and efficient communications kills. Soso has successfully finished driving school courses with the support of Natakhtari Fund and he has already received a driving license.

October 27, 2014 #73

Soso has chosen to study electricity communications, cable networks and web technologies at the college. In tight cooperation with psychologists and Silknet company, he has successfully passed trainings and practical work at the company. Soso is ready to start independent life, but he does not work yet, therefore, Natakhtari Fund continues his support. Natakhtari Fund launched support of orphan children for preparing them for independent life in 2011. The Fund collects sums from a November to February period. In this period each sold bottle of Natakhtari lemonade earns 0.01 GEL, 0.03 GEL and 0.05 GEL (due to container volume – 0.33 liter, 0.5 liter and 1.0-.20 liters) for the Fund’s account. Over 420 000 GEL was collected for three years. A total of 159 beneficiaries enjoy the following services from the Fund: psychological consultations, preparation in subjects, reception of professional education and driving licenses, buying materials and tools for work, scholarships (apartment rental, food, and transportation fees). It is also worth noting funds are allocated due to the needs of each beneficiary on an individual basis.

RADISSON BLU INTRODUCES #BLUROUTES FOR FITNESS ENTHUSIASTS

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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 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-blu-one-touch/ id708407920?mt=8

eportedly, 30 best companies have already been awarded in different nominations. As for, the winning companies, they, from their part, have chosen the best company. The status of a winner has been given to the “Bank of Georgia,” which received the national prize, the cross from Bolnisi. The companies having been awarded in different nominations are presented below: 1. Tegeta Motors – Temur Kokhodze – new technologies, recognition abroad, public image and reputation, effective marketing. 2. Caucasus Auto service – Levan Surguladze – new jobs, highly qualified team and professionalism, high-standard service. 3. Black Sea University – Adam Unal – public image and reputation, charitable activities. 4. GAU (Georgian-American University) – R. Michael Cowgill – the symbol of high-quality education 5. Royal Baton – Giorgi Piradashvili – tourists’ choice, high-standard service, exclusive design 6. President of Football Club Dinamo Tbilisi – Roman Pipia – grandiose investments in the development of national football as well as in projects aiming to unlock the potential of future generations, strategic projects in Georgia’s economy. 7. Schuchmann Wines Georgia – Nutsa Abramishvili – high-quality wine producing company popularizing Georgian wine and gastronomy. 8. Geoplant – Mikheil Tchkuaseli – new technologies, customers’ choice, new export markets 9. RMG – Sergo Eganov – symbol of success, investment attractiveness, new jobs 10. NICORA – Vasil Sukhiashvili – quality mark of national product, effective marketing, permanent progress, new technologies. 11. DWC – GOMI – Davit Dugladze – Quality mark of Georgian vodka, loyalty to Georgian industrial traditions, leading exporter of alcoholic drinks. 12. Sarajishvili – Giorgi Sharvashidze - Quality mark, famous Georgia brand abroad, traditions and latest standards 13. Brewery ZEDAZAENI – Vasil Sulkhanishvili - Quality mark, new technologies, effective marketing 14. SOCAR Georgia Gas – high-quality standard, new jobs, effective management, importer of the year 15. Petrocas energy group –Ivane Nakaidze – leading transit company in oil products, hi-0tech technologies, high-standard service, world recognition 16. Visol Group – Soso Pkhakadze – public image and reputation, new jobs, international recognition, ecologic standard 17. GULF – Giorgi Devidze – the largest and the fastest developing network in Georgia, corporate social responsibility, eco-friendly products, effective management 18. KODA – Zurab Tchutchulashvili – high ecologic standard, quality mark, new jobs 19. Company Avers – Paata Kurtanidze – public recognition, charitable activities, team work principle, effective marketing

20. PSP Group – Gocha Gogilashvili - stability, effective management, new technologies, new jobs 21. Toyota Centre TEGETA – Gega Metepshishvili – Customers’ Choice, international recognition, latest standards 22. Kopenbur – Zviad Chachanidze – best debut, effective service, innovative insurance products 23. Gino Paradise – Ramaz Mikadze – Discovery of the Year, best service, oriented on customers’ comfort 24. Kordzadze Law Office – Zviad Kordzadze – best management, stability, team of professionals 25. MISTER MASTER – Boris Soselia – creative brand, high-quality service, effective marketing 26. GWP ( Georgia Water and Power ) – Giorgi Gachechiladze – investment attractiveness, effective management, new jobs, social responsibility 27. Geocell – Pasi Koistinen – best service, effective marketing 28. Liberty Bank – Giorgi Arveladze – permanent progress, new technologies, effective advertising company, social responsibility 29. Basisbank – Davit Tsaava – stability, investment attractiveness, support of small and medium business 30. VTB Bank – Archil Kancelidze – popularity, team work, best service 31. TBC Bank – Vakhtang Buckhrikidze – international recognition, stable development, investment attractiveness, perfect reputation, social responsibility 32. Bank of Georgia – Irakli Gilauri – high credit rating, support of social projects, effective marketing 33. Procredit Bank – Asmus Rotne – new technologies, investment attractiveness, latest standards, support of small and medium businesses. 34. NCC - Gegi Kalbakian – financial transparency, investment attractiveness 35. ORBI Group – Irakli Kverghelidze – Exclusive style, new technologies, new jobs 36. GIG – Levan Tcholadze – new jobs, new technologies, investment attractiveness 37. Geosteel - Jaspal Singh - investment attractiveness, quality mark 38. Rustavi Azoth – Abesalom Kevkhishvili – grandiose funds in budget, social responsibility, new technologies 39. Rustavi Metallurgical Plant – Faruk Sidik – new jobs, new technologies, investment attractiveness 40. Georgian American Alloys – Velvel Lozinsk – stability, largest exporter 41. Carriage Building Holding – Badri Tsilosani – new projects, innovative style, professionalism, quality mark. 42. Favorite of Georgian Times- TEGETA MOTORS 43. Image and reputation- Wissol Group 44. Favorite of journalists – Brewery ZEDAZENI The festive ceremony of XV traditional business rating was attended by the representatives of executive and legislative branches of government, businessmen, the representatives of different NGOs as well as local and foreign media.


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BANKING NEWS October 27, 2014 #73

caucasian business week

IVANISHVILI TO FURTHER EXPAND CARTU BANK

TBC BANK RETURNS EXPATRIATE PROFESSIONALS TO GEORGIA

ormer prime minister of Georgia, billionaire Bidzina Ivanishvili changed mind about sale of bank Cartu and is going to expand it, - chairman of Cartu’s supervision board stated to Bloomberg. The bank, which belongs to Ivanishvili’s son Uta, is the 6th largest creditors in the country and is going to move to the 4th or 3rd position, - Nodar Javakhishvili stated in the phone interview with

The Company that attracts human capital from abroad

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Bloomberg. “After a long thinking Ivanishvili decided not to sell the bank and focus on its expansion”, - Javakhishvili stated. He also said that negotiations with businessman Shota Shalelashvili about the sales of Bank Cartu were completed. On October 20 Shalelashvili stated to Bloomberg that he wanted to buy the bank for $270 million. Currently bank Cartu completely belongs to Uta Ivanishvili. He got actives from father in 2011.

BANK OF GEORGIA PLANS STRUCTURAL CHANGES

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irector general of Bank of Georgia Irakli Gilauri announced about necessity of the structural changes in the holding. He said that structural changes will be made through mother-company. Changes are related to expected regulatory restrictions in the management of non-profile businesses by the bank. National Bank of Georgia is preparing the legal initiative. According to preliminary information, the restriction does not teal to the financial companies owned by the banks; neither to insurance

business. Bank of Georgia is represented by subsidiary companies in almost all sectors (tourism, development, energy, education, healthcare...). There are over 50 companies, among them Imedi L, Teliani Trading Georgia, Teliani Trading Ukraine, Medical Corporation Evex, Inter-Tour, Business Center Kazbegi, Svaneti Hydro, University of Bank of Georgia, professional basketball club Dinamo, m². Companies of various profile appeared in the balances of the banks after August 2008 war and global crisis.

BANK CONSTANTA MERGER WITH TBC BANK TO END BY FEBRUARY 2015

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ounder of TBC Bank Mamuka Khazaradze stated about it on Maestro. His bank owns 100% of Constanta. Khazaradze states that till January brand Constanta, which is positioned on the market as sponsor of small and mediumsized business, will remain. TBC starts taking all liabilities of the bank from January. TBC started entrance to the capital of Constanta in May 2011 and completed share increase process to 100% in this month. The last transactions were paid to

7 individual shareholders, total share of which in the capital equaled to 0,35%. The sides do not talk about this specific deal value and they say that it’s confidential information. Meanwhile, one of the former shareholders Levan Lebanidze stated to GBC that the sides agreed on the acceptable conditions, otherwise deal would not have made. President of TBC Vakhtang Butskhrikidze stated that total contribution of TBC in the capital of Constanta, also in the payment to the old shareholders from 2011 till now equaled to 100 million GEL.

TBC BANK PROFITS IN JANUARY TO SEPTEMBER PERIOD REACH 86.1 MILLION GEL

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BC completed 3 quarters with 86,1 million GEL profit (Q2 -49 millions; Q1 - 21 million GEL). Loan portfolio of the bank equals to 2,9 billions GEL (Q2 - 2,8 billions, millions Q1 - 2.637

billions), deposits - 2,9 billions (Q2 - 2,8 billions). Actives atand at 4,6 billions, market share according to this indicator - 24,1% (Q2 - 4,338 billions , 23,7%; Q1 -4,074 billions; 23,2%). Stock capital of the bank is 432 millions GEL.

BANK SECTOR ENDS 3 QUARTER IN 303.7MILLION GEL PROFITS

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et profit of the banking sector equaled to 303,7 million GEL for 3 quarters (Q2 - 192,4; Q1 - 94,6 million). 15 banks are profitable. By October the sector is represented

by 21 commercial banks, among them 2 branches of the foreign bank 17 – with contribution of the foreign capital in the authorized sector. BTA Bank left them in October. Contribution of the foreign capital exceeds to 75% of the paid-in capital.

VTB INTRODUCES ENERGY CREDIT FOR LEGAL ENTITIES

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TB makes offer along with EBRD. The energy credit funds energy efficient and renewable energy projects. Energy efficient projects, which considers reduction of direct of final consumption of the existing energy in any forms. Implementation of renewable energy projects should provide reduction of non-renewable energy source consumption and their replacement with renewable energy, such as hydro, wind, solar and other geothermal resources. The project will also provide free energy effi-

ciency audit to the companies by EBRD. Maximal amount of energy credit is $1 million. Interest rate varies from 9% to 11%, maximal term is 7 years. Besides, during the usage of energy credit the company can return 10% of the loan, in the case of energy audit - 15%. VTB offered energy credit to retail customers, 10% of the loan is a gift. Energy credit is issued for purchase of refrigerator, oven, washing machine, conditioner, central heating system, double glazed doors and windows, thermal isolation, also for solar system heaters.

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bilisi – October 23rd, TBC Bank Chairman Mamuka Khazaradze and CEO Vakhtang Butskhrikidze held a news-conference to introduce three new Vice Presidents of the company. Giorgi Tkhelidze, David Tsiklauri and Nikoloz Kurdiani are Georgian expatriates, who have made successful careers abroad in the field of finances. Their portfolios include such prominent financial institutions as Barclays, Deutsche Bank and Unicredit Bank. Giorgi Tkhelidze will join the TBC team as a Vice President in the field of Risks Management. Previously Mr. Tkhelidze has worked as a Vice President at Barclays’ Financial Institutions Group (FIG) overseeing the bank’ initiatives in Eastern Europe. Mr. Tkhelidze says, “It is essential we have very rich experience and I hope this experience will blend well with TBC’s existing management.” Mr. Tkhelidze stresses the fact that the decision to move back to Georgia was a great change for him and his family. It comes as no surprise that individuals who have lived abroad and achieved prominence in the highly competitive field of finances would be facing high stakes giving up their careers at once and starting anew in Georgia. Yet Mr. Khazaradze believes that the future development and prosperity of Georgian economy lies in the hands of such individuals precisely. He stressed TBC Bank has undertaken lengthy negotiations in order to bring the expatriate professionals to the TBC Bank team. Mr. Khazaradze recognizes the bank’s responsibility on relocating these professionals to Georgia: “First and foremost I want to thank their families for having left the places, where they have resided and led their everyday lives for many years. By returning to their homeland, these individuals have not only added highly qualified professionals to the TBC team, but also enriched the Georgian economy overall.” Attracting human capital from abroad represents TBC Bank’s long-term HR strategy. Mamuka Khazaradze says, “We will continue recruiting Georgian nationals who have gained high-quality education and independently paved successful careers abroad.” In turn, the returned professionals are hopeful about their future career plans in Georgia. David Tsiklauri with eleven-year experience of working for Deutsche Bank as a Vice President in the capital markets and financial operations says: “We are in the process of studying the market. Very soon we will start implementing new products in an innovative way.” Another coming TBC Vice President Nikoloz Kurdiani who will lead the company’s microfinance issues had occupied a chief position at UnicCredit Group in Austria before becoming an Executive Director of Kazakhstan’s top bank Kaspi. He received his MBA from IE Business School in Madrid, Spain. His outlook regarding his future at TBC is hopeful: “Today Georgian business sector’s competitive environment gives much room for many new endeavors. When the market is full of many successful players, one has to think on a broader scale. Consequently, I think we will make significant progress in the near future.” Nino Gojiashvili Nuca Galumashvili

NIKOLOZ KURDIANI: Today Georgian business sector’s competitive environment gives much room for many new endeavors

GEORGE TKHELIDZE: It is essential we have very rich experience and I hope this experience will blend well with TBC’s existing management

DAVID TSIKLAURI: We are in the process of studying the market. Very soon we will start implementing new products in an innovative way


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PUBLICITY caucasian business week

October 27, 2014 #73


ECONOMY October 27, 2014 #73

caucasian business week

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GEORGIAN AGRICULTURE COOPERATIVES POST SUCCESSFUL 2014

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eorgian farming, ranches and fishery cooperatives have a total 5 million GEL capital since March 2013when Georgian farmers where encouraged to organise into viable producer groups like - Agriculture Cooperatives. Looking back at the challenges during that period, the Government said the key concern has been to stimulate peasants and farmers to unite in cooperatives with the aim of growing their crops and commercialising the agriculture sector. The Agriculture Cooperatives Development Agency (ACDA), which was in charge of granting and terminating the status of individual cooperatives and monitoring their activities, believed these attempts resulted in approving 264 agricultural cooperatives.

GOLD ALLOYS PRODUCTION VOLUME FALLS

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n October 22 members of the Economic Experts Club gathered at Radisson Blu Iveria Hotel. The meeting was organized by Initiative of Infrastructure Projects of Georgia and the Association of Young Financiers and Businessmen. The meeting made focus on problems before gold mining and processing in Georgia. Production of gold, silver and copper fusions has considerably shrunk since 2011, economic experts noted.

A total of 470million GEL was invested in the production of gold, silver and copper alloys in 2011 to 2013. Thou, the current situation and the existing obstacles do not enable to keep on active investment activities in the long-term period, RMG company says. The production has shrunk because of sensible downturn in gold content in ores and artificial factors. Economic experts noted gold-mining sector development perspectives have become questionable.

“In 2014, totally more farms, ranches and fisheries are united in agricultural cooperatives,” head of the ACDA Giorgi Misheladze said at a presentation on October 16, as he summed up the achievements of Georgian agriculture cooperatives from March 2013 to October 2014. Georgia’s Minister of Agriculture Otar Danelia believed entering into a cooperativewasan advantage that would help a person gradually develop their business and be oriented on the quality of the products. “If you plan to produce low quality products it would be better if you don’t produce at all. We must have high quality products that will be compatible on the international market, including European and local markets.” “Georgia is not the Soviet Union [and] have different products, one for local consumption and another for export.” Of the 264 approved cooperatives, 106 were located in the eastern part of the country while the rest were situated in western Georgia. One was located in in the capital city Tbilisi. The presentation, held at Expo Georgia exhibition hall in Tbilisi, was attended by high officials from the Government, representatives of international organisations andthe private sector, including deputy head of the European Union (EU)delegation to Georgia Boris Iarochevitch. In his welcoming speech Iarochevitchsaid the EY was very proud of its contribution to Georgia’s success andthe extremely positive path of agriculture cooperative development which was taking place in Georgia. “For many years, when almost no one else was actually paying that much attention to this subject, we promoted a deep policy dialogue with the Government, the Parliament, civil society organisations and all the relevant stakeholders on the potential role that cooperatives could play to modernise small farming in Georgia,” he said. Through the European Neighbourhood Programme for Agriculture and Rural Development (ENPARD), the EU contributed €52 million to Georgia’s agricultural sector, with a very strong emphasis to cooperatives development. Iarochevitch highlighted the experience of the European agriculture that a large proportion of farmers in most European countries were small farmers. Of these people, the majority of which (who were also medium and large-sized farmers too) were members of cooperatives. In total, there were nine million agriculture cooperatives members across the EU, which meanttwo thirds of farmers was a member of at least one cooperative. Furthermore, cooperatives represented over 60 percent of shares of the collection, processing and marketing of agricultural products. The total turnover of the European agriculture cooperatives was around €260 billion. “Some of the biggest cooperatives in Europe have turnovers which are three or four times the total budget of the Ministry of Agriculture of Georgia,” Iarochevitch said. Official figures claimed the total budget of Georgia in 2015 will be 9.4 billion GEL. In the agricultural sector, the Government expected to spend 291 million GEL next year. While speaking of the future plans of the ADCA,Misheladze said the agency planned to open “cooperative markets” where products only produced in agriculture cooperatives would be sold. The ADCA also expectedto create an information bank where a raft of information and materials about the cooperative development,and other information relating to the sale of products, will begathered.


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AZERBAIJAN caucasian business week

SOCAR TO LAUNCH NEW CAR SERVICE CENTERS IN SWITZERLAND

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zerbaijan’s state energy company SOCAR plans to commission three car service centers under its own brand in Switzerland by late 2014, Trend agency reported with reference to SOCAR Energy Switzerland. Two service centers will be opened in Valbella and Lommise on October 22 and 24 and in Vaduz on November 5, as well as other centers will be inaugurated in Walenstadt and Grono on January 7, 2015. SOCAR, which is keen on expanding operations in the retail oil products market abroad, is involved in exploring oil and gas fields, producing, processing, and transporting oil, gas, and gas condensate, marketing petroleum and petrochemical products in the domestic and international markets, and supplying natural gas to industrial and public sectors in Azerbaijan. It has representative offices in Georgia, Turkey, Romania, Austria, Switzerland, Kazakhstan, Britain, Iran, Germany and Ukraine, and trading companies in Switzerland, Singapore, Vietnam, Nigeria, and other countries.

SOCAR started its operation in Switzerland in September 2012 with commissioning its first petrol station in Zurich. In December, the first gas station under the SOCAR brand was opened in western Switzerland. SOCAR is now selling classic fuels such as gasoline and diesel fuel in Switzerland. However, they are enriched with special additives that ensure optimal level of combustion which is important from an environmental point of view and in terms of the cost and performance of the internal combustion engine of the car. SOCAR acquired all shares in Esso Schweiz GmbH and thus took over Esso’s network of petrol stations in Switzerland in July 2012. The total cost of the assets acquired by SOCAR in Switzerland is $330 million. With the acquisition of Esso Schweiz, SOCAR received the retail network, the company’s division for marketing of fuel for industrial and wholesale customers (the division sells household fuel and bottled gas to independent distributors throughout Switzerland). SOCAR has also taken over the Wangen-Olten gas station group and a number of others as well as joint ventures specializing in aircraft refueling at Geneva and Zurich airports and the Swiss Provision and Supply Company that controls joint ventures managing terminals and pipelines. SOCAR’s revenues obtained in 2013 as a result of the activity in Switzerland amounted to 30.69 billion manats compared to 3.33 billion manats in 2012.

AZERBAIJAN STRENGTHENS TIES WITH LABOUR ORGANIZATIONS

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he Executive Committee of the General Confederation of Trade Unions convened in Baku on October 22. Addressing the event, the President of the General CAonfederation of Trade Unions and vice-president of the International Confederation of Free Trade Unions Mikhail Shmakov said about 10 national trade unions associations and 30 international trade unions organizations have united under the General Confederation. Shmakov appreciated the auspicious conditions created for the development of the trade unions in Azerbaijan. “The volume of the GDP, per capita income increased in Azerbaijan and it keeps going on. Of course, all these contribute to improve the social conditions in the country. Trade unions are well-organized in Azerbaijan,” he said. Shmakov underlined the meeting in Baku as an important event to carry out experience exchanges and discuss ways of improving the trade unions’ activities. Chairman of Azerbaijan Trade Unions Confederation, Member of Parliament Sattar Mehbaliyev highlighted the history of the trade unions in Azerbaijan. He hailed the role of the General Confederation of Trade Unions in strengthening the mutual

ties between trade union organizations. Mehbaliyav has also touched upon the activities of Azerbaijan Trade Unions Confederation, saying it keeps friendly relations with other trade unions organizations of the General Confederation. “We have joint efforts to resolve the global problems. Azerbaijan strengthens its ties with the International Labour Organization by joining its regular actions,” Mehbaliyev noted. He added that the positive changes in Azerbaijan’s labor market continue on based on regular reforms. “About 100,000 new workplaces have been created in the country in the first nine months of this year. The total number of the newly opened workplaces increased to 1,3 million over the last ten years. Current unemployment rate in Azerbaijan is 5 percent,” Mehbaliyev said. Azerbaijan Trade Unions Confederation was established on February 5 in 1993. The organization stands for the representation and protection of the labor, social-economic rights of the trade unions’ members in the country. The confederation have almost 11,000 organizations, 3 trade unions federations and 1,6 million members throughout Azerbaijan. Azerbaijan joined the General Confederation of Trade Unions in 2001.

AZERBAIJAN, WB INK CREDIT AGREEMENT

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zerbaijan and World Bank (WB) has signed a credit agreement “Judicial services and smart infrastructure” project (JSSIP). The agreement was signed by Fikret Mammadov, a Justice Minister and Larisa Leshchenko, the World Bank Country Manager for Azerbaijan. The total project cost is $200 million including funding from World Bank an amount of $100 million and Azerbaijani government source in $100 million. The realization of the project is planned till December 31, 2018. JSSIP constitutes a second phase of World Bank support for Azerbaijan’s efforts to improve the performance of its justice sector and strengthen access to justice, especially for the vulnerable. The project is designed to sustain Azerbaijan’s justice sector modernization by expanding access, strengthening

due process, and ensuring transparency in the delivery of key justice and legal services. The Project has four components that will upgrade e-justice services, such as case filing and case management systems; improving business registry and inspections, and enforcement of judicial decisions; improving information technology capabilities of the justice sector; and expansion and modernization of judicial infrastructure. In the framework of the project it is also planned to build a new court complex, the widespread use of electronic court system and other advanced information technologies, training of the judiciary and judges, increasing citizens’ awareness of different areas of law and other activities. The current World Bank investment portfolio in Azerbaijan includes 17 projects. Since joining the World Bank in 1992, commitments to the country have totaled over $3 billion for 54 projects.

October 27, 2014 #73

AZERCELL SUPPORTS RESPONSIBLE AND TRANSPARENT BUSINESS MODEL

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rom the very first year of its establishment the leader of Azerbaijan’s telecom market Azercell has demonstrated an exemplary model of business ethics and corporate conduct. Being a part of European Telecom giant TeliaSonera Azercell once again proves its leadership in the industry promoting and demonstrating ethical business behavior. Together with its investors, owners, customers, partners and employees Azercell joins the TeliaSonera initiative towards sustainable and transparent business operation. This is another pioneering step by Azercell as a safe and secure way to report on wrongdoings and concerns, thus initiating further investigation to maintain a healthy work environment for its employees and partners. TeliaSonera’s global whistle blowing channel named Speak-Up Line is now available via Azercell’s official site, where employee or any Azercell partner having business with the company can raise concerns and report misconduct 24/7. The Speak-Up Line provides the possibility to remain anonymous when raising a concern, question or reporting a violation. A person does not need to leave his name and the report cannot be tracked to him/her as a person. The Speak-up line covers various concerns that can be reported, including Anti-bribery/competition, Auditing violation, Breach of company ethics, Compliance with laws and regulations, Conflicts of interest, Corruption, Discrimination or harassment. The reporting person will get a unique report key and password. After seven

days, the reporter is urged to check the report for answers or feedback from the investigation. TeliaSonera and Azercell management expects its stakeholders, including employees and strategic partners to voice ethical concerns and contribute to a responsible business, thus being more compliant to laws and ethical standards, as well as internal policies and instructions. The new Speak-Up Line tool launched by Azercell with the initiative of global TeliaSonera is an obvious sample of the transparent business conduct of the leader mobile operator in the country, complying to the highest ethical standards. Azercell Telecom LLC was founded in 1996 and since the first years sustains a leading position on the market. Azercell introduced number of technological innovations in Azerbaijan: GSM technology, GPRS/EDGE, 24/7 Customer Care, full-time operating Azercell Express offices, mobile e-service “ASAN imza” (ASAN signature) and others. With 51 percent share of Azerbaijan’s mobile market Azercell’s network covers 99.8 percent of the country’s population. By the end of 2013 the number of Azercell’s subscribers reached 4.5 million people. In 2011 Azercell deployed 3G and in 2012 the fourth generation network – LTE in Azerbaijan. The company is the leader of Azerbaijan’s mobile communication industry and the biggest investor in the non-oil sector.

AZERBAIJAN, POLAND TO EYE NEW PROSPECTS FOR ECONOMIC COOPERATION

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he governments of Azerbaijan and Poland will review the new prospects for cooperation in the economic sphere. The sides will hold negotiations during the 7th meeting of Azerbaijan-Poland intergovernmental commission on economic cooperation to be held on Dec.15 in Baku, Poland’s embassy in Azerbaijan told Trend on Oct.21. A delegation of the Polish government, led by the country’s Deputy Prime Minister, Minister of Economy Janusz Piechocinski will pay a visit to Azerbaijan. During the meeting, it is planned to hold discussions on the expansion of the bilateral trade turnover and economic cooperation, as well as making investments in Azerbaijan. The co-chairs of the commission are Energy Minister Natig Aliyev from Azerbaijan and Janusz Piechocinski from Poland. Earlier, the Director of the Foreign Relations Department of Poland’s National Chamber of Commerce, Jerzy Drozdz told Trend that the agrarian sector, production of food products, and other

areas can be promising spheres for expanding the cooperation between Azerbaijani and Polish entrepreneurs. “We positively assess the cooperation with Azerbaijan, especially between small and medium-sized enterprises and want the Polish entrepreneurs to establish cooperation with their Azerbaijani colleagues,” he said. “Certain agreements have been reached in the sphere of industrial production and I hope these agreements will be implemented in the near future,” Drozdz said. Polish entrepreneurs gradually are moving to a new stage of cooperation, namely to the stage of making investments, according to the department director. Several Polish firms make investments in Turkey, as well as in a number of CIS countries. These firms also expressed readiness to participate in the Azerbaijani market, Drozdz said. “Azerbaijan is known as the world’s oil country, and everything that is connected with the oil industry is also interesting for Polish entrepreneurs,” the department director said.

BAKU AIRPORT MAY BECOME TRANSIT POINT FOR ISTANBULISLAMABAD FLIGHTS

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urkish Airlines” can use the Baku airport as a transit point for flights from Istanbul to Islamabad. Azerbaijani ambassador to Pakistan Dashgyn Shikarov told Trend Oct.21 that governments of Azerbaijan and Pakistan put forward this initiative. The ambassador said that both Azerbaijan and Pakistan have reached an agreement on the implementation of this flight with the leadership of the Turkish airlines. “It was suggested that the “Turkish Airlines” would start making the Istanbul-Baku-Islamabad

flights,” he said. “Turkish Airlines aircrafts can land in the Heydar Aliyev International Airport for an hour, and passengers from Azerbaijan will be also able to take advantage of this flight,” he said. Shikarov said that technical details of this issue are currently being solved. He expressed hope that the issue will be resolved by the end of 2014 or in early 2015. Presently, there is no direct flight between Baku and Islamabad. Passengers from the both countries usually use flights of the “Turkish Airlines”.


CIS October 27, 2014 #73

caucasian business week

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REAL WAGES START TO CONTRACT UKRAINE’S MULTIBILLION-DOLLAR his was the second consecutive and the impact of the food import ban. Real disGAS DEBT: WHO PAYS? month during which real wages have posable household income continued to grow in

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contracted in year-on-year terms, following a 1.2% fall in August. Wages declined by 0.3% overall in the third quarter year on year, the first quarterly decline in real wages since the financial crisis of 2009. The decline in real earnings is in part due to rising inflation as a result of the depreciation of the rouble and the ban on a large range of Western food imports. Consumer price inflation stood at 8% year on year in September, while food prices rose by 11.4%. However, wage growth has also slowed in nominal terms, rising by 7.4% year on year in the third quarter, compared with an average of 10.8% in the first half. This suggests that profitability in many firms is now being squeezed as a result of the economic slowdown and higher borrowing costs. We expect wages to continue to decline in real terms in the final months of 2014 and into 2015. Inflation is likely to rise further over this period as a result of the ongoing depreciation of the rouble

September, but by just 0.6% year on year, down from 3.4% in the previous month. It is likely to start contracting before the end of the year. Retail sales volumes rose by 1.4% year on year in the third quarter, the slowest rate of growth since the 2009 crisis, and down from an annual average of 3.8% in 2013. In contrast to the 2009 financial crisis, the impact of the sanctions regime has been more gradual, with an incremental erosion of household incomes and business output. Despite the worsening outlook, surveys have yet to show a significant fall in consumer confidence. One reason may be that firms have yet to start shedding workers in response to the downturn. The labour market remains tight—unemployment fell to just 4.8% in September. Some sectors, such as manufacturing, have benefited from import substitution as the rouble has weakened. Industrial production has remained positive, rising by 1.5% year on year in the third quarter.

NO PROGRESS EXPECTED IN KAZAKHSTAN’S CASPIAN OIL TRANSPORTATION SYSTEM

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azakhstan doesn’t expect progress in realization of the project for creation of the Kazakhstan Caspian Transportation System due to searches for oil transportation route alternatives to the Russian route, Kazakh Energy Ministry told Trend Oct. 22. The ministry said the further schedule of the KCTS project is to be synchronized with the schedule of the second phase of Kashagan field’s development, which is still to be specified. “Due to the postponement of the second phase of the Kashagan field’s development it was decided to suspend the Kazakhstan Caspian Transportation System project,” according to the ministry. The Energy Ministry earlier said that due to the Western sanctions on Russia, Kazakhstan is eyeing other oil export routes that will be an alternative to the Russian one, including the possibility of transporting oil to Azerbaijan through the Aktau sea port and the Caspian Sea. “Given the current situation, one can assume that the anti-Russian sanctions will not block oil and gas deliveries from Russia to the EU, including Kazakhstan’s oil through the Russian pipelines. However, the diversification of oil exports is being studied,” the ministry told the News-Kazakhstan Agency. The ministry said that currently the transit through Russia is the main route for Kazakhstan among all the other oil export routes. In particular, the pipeline system of the Transneft JSC and the pipeline of the Caspian Pipeline Consortium are the traditional routes for transportation of Kazakhstan’s oil.

The KCTS is to provide Kazakh oil exports to international markets mainly from the Kashagan field (second and third phases) across the Caspian Sea, via the Baku-Tbilisi-Ceyhan oil pipeline and other oil transportation systems in Azerbaijan, as well as in other transit countries. The KCTS is assumed to include the EskeneKuryk oil pipeline running to the Kuryk oil terminal on the Kazakh coast of the Caspian Sea, as well as an oil terminal on the Kazakh coast, tankers, vessels, an oil terminal on the Azerbaijani coast, and the linking facilities up to the Baku Tbilisi-Ceyhan pipeline. The Oil and Gas Minister of Kazakhstan Uzakbai Karabalin earlier told Trend that the need for the KCTS project will occur no earlier than 2020. The production at the Kashagan field started Sept. 2013, but in October, it was ceased after a gas leak in one of the main pipelines. The analysis conducted over several months revealed numerous micro-cracks on the pipeline that appeared due to the impact of the associated gas with high sulfur content to the metal. The project’s operator, the North Caspian Operating Co. (NCOC) confirmed the need for a complete replacement of the gas and oil pipelines, which have a total length of about 200 kilometers. The government said the replacement of pipes will take at least two years. Earlier, the Deputy Energy Minister of Kazakhstan Magzum Mirzagaliyev said the production at the Kashagan is expected to resume in the second half of 2016.

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kraine plans to buy $770 million worth of gas (2 billion cubic meters) from Russia this winter to keep the heat on, but before that, they must pay off $1.45 billion in debt. The question is: who is going to pay the bill? All three parties, Russia, the EU, and Ukraine met in Brussels on Tuesday and confirmed Kiev will pay$385 per 1,000 cubic meters of Russian supplied gas through the end of March. Before Ukraine can start purchasing gas, they need to pay off $1.45 billion in debt. “There’s one obstacle: Ukraine failed to pay for Russian-supplied gas for seven months,” Oettinger said Tuesday. It will be difficult for Ukraine to find a benefactor, since, as Oettinger pointed out, its credit history is less than stellar. The economy is in ruin and may already need extra IMF money to stay afloat. So where should Ukraine get the money from? 1. EU ENERGY COMMISSIONER GUNTHER OETTINGER SUGGESTS THE EU BECOME A BROKER BETWEEN UKRAINE AND RUSSIA. “If Naftogaz can’t pay, another European company may buy Russian gas and then resell it.” “It is also possible that the Russian gas transit tariff can be used as gas payments,” Oettinger said.Russia sends more than 80 billion cubic meters of gas to Europe through Ukraine, and each entry/exit point has a different tariff, ranging from $14 to $45 per 1,000 cubic meters. The question of payment for Russian gas remains key, according to Oettinger. 2. THE CEO OF GAZPROM, ALEKSEY MILLER, IS NOT PLEASED WITH OETTINGER’S CAVALIER SUGGESTION AND SAID ONLY GAZPROM CAN SELL UKRAINE RUSSIAN GAS, NOT EUROPE. “We will not sell gas to Ukraine through a third party.” Miller said Europe cannot resell gas to Ukraine, since all gas is supplied under specific contracts with each country, and enters at different delivery points. Russia turned off gas supplies to Ukraine in June over a pricing dispute and the debt, and is demanding repayment of at least $3.1 billion before deliveries are resumed. 3. UKRAINE’S ENERGY MINISTER YURI PRODAN SAYS THEY ARE READY TO PAY FOR FUTURE GAS, BUT NOT FOR THE $3.1 THEY OWE GAZPROM. “We are ready to make an advance payment, but we haven’t yet settled the way to pay our $3.1 billion debt.” Naftogaz, Ukraine’s national oil and gas company, owes Gazprom $4.5 billion in total, at least

$3.1 billion before the new year, and $1.45 billion before they can start buying gas again. 4. EITHER WAY, RUSSIA WANTS EUROPE TO COME UP WITH THE CASH, AND SOON, SAYS RUSSIAN ENERGY MINISTER ALEKSANDR NOVAK. “Possible sources include guarantees from firstclass European banks, bridging loans, funds from the European Bank for Reconstruction and Development, or the European Commission.” Novak says Kiev will purchase 2 billion cubic meters of gas, or $770 million worth from Russia, as well as another 2 billion from neighboring European states. “If Europe gives them the money, then gas will flow,” Novak said at an energy forum in Moscow Wednesday. The last stumbling block in the negotiations is simply a matter of money. According to Novak, the deal could have been signed on Tuesday if Kiev could show they are financially solvent enough to pay for future deliveries and debt. 5. VLADIMIR PUTIN SAYS RUSSIA HAS GIVEN UKRAINE ENOUGH FINANCIAL CUSHION OVER THE YEARS, AND NOW ITS EUROPE’S TURN. “In this situation, our European partners must give Ukraine a shoulder to lean on, and help.” 6. SO FAR GAS TO EUROPE IS STILL FLOWING, BUT THE SHUT OFFS IN 2006 AND 2009 OVER UKRAINE’S DEBT HAVE ANGELA MERKEL CALLING FOR COLLECTIVE ACTION. “Everyone must contribute.” Including Slovakia, the Chancellor said after a meeting in Bratislava. Germany depends on Russian gas for 25 percent of its energy needs, and Slovakia gets more than 80 percent of its natural gas from Russia. Slovakia has been pumping reverse flows to Ukraine to make up for the Russian shortage, and may pump another 1-2 billion cubic meters this winter, according to Prodan. Both Russian energy officials and Gazprom heads have warned against the illegality of reverse flows, as they violate Gazprom contracts, which don’t allow a country to re-export gas. 7. UKRAINIAN PRESIDENT PETRO POROSHENKO IS LOOKING RIGHT BACK AT MERKEL FOR THE MONEY. “We have several options, ranging from International Monetary Fund finance to international financial organizations that could support the deficit of Naftogaz.” The next meeting is scheduled for October 29 and EU Energy Minister Gunther Oettinger expects an agreement to be inked.

RUSSIA RESERVES FALL $7.9 BILLION, BIGGEST DROP SINCE MAY

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ussia’s international reserves tumbled $7.9 billion in the biggest drop in more than five months as the central bank sold foreign currency to arrest the ruble’s decline to a record. The value of the stockpile, the second-biggest in Europe after Switzerland’s, shrank for a ninth week to $443.8 billion in the seven days through Oct. 17, the central bank said on its website today. It dropped $3 billion a week earlier. “So far this level isn’t critical, although the trend of falling reserves isn’t optimistic,” Vladimir Tikhomirov, chief economist at BCS Financial Group in Moscow, said by phone. “The drop in reserves is largely due to the central bank’s more active interventions and revaluation of the euro exchange rate over the past week.” The foreign-currency and gold holdings have slumped about 13 percent this year as the central bank has defended the currency. Sanctions imposed by the U.S. and its allies after Russia’s annexation of Crimea from Ukraine in March have stoked capital flight, undercutting the ruble and fanning inflation. The Bank of Russia sold foreign currency in October for the first time since May as the price of oil, the country’s chief export earner, plunged to a four-year low. The ruble has depreciated more than 16 percent in the past three months against the dollar, the worst performance globally, data compiled by Bloomberg show. It headed for a record low for the second day today, weakening 0.7 percent to 41.7 versus the dollar as of 8:28 p.m. in Moscow.

Bonds and the Micex stock index dropped. PRESSURE ON The pressure on international reserves “will be on for a month or so, just like during the March episode,” Ivan Tchakarov, chief economist at Citigroup Inc. in Moscow, said by e-mail. Russia’s reserves fell $27.7 billion from March 7 through May 30 as President Vladimir Putin absorbed Crimea and violence spread through eastern Ukraine. A “critical” level for reserves is equal to three months of imports of goods and services, according to Dmitry Polevoy, chief economist for Russia and the Commonwealth of Independent States at ING Groep NV (INGA) in Moscow. Russian imports reached $116.9 billion in the third quarter, or almost $40 billion a month, according to central bank data. That means the country’s reserves provide an 11-month import cover. NOT SCARY “The current level of reserves doesn’t look scary,” Polevoy said. Days before before the Russian government defaulted on $40 billion of local debt in August 1998, reserves dropped to $15.1 billion. The central bank, which has raised its benchmark rate three times since March to 8 percent to curb consumer-price growth, plans to shift to inflation targeting and a free floating ruble starting from 2015. The monetary authority isn’t planning to use foreign-exchange reserves as much as it did in 2008 and 2009 to help companies, First Deputy Governor Sergei Shvetsov said yesterday in London.


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WORLD NEWS October 27, 2014 #73

caucasian business week

HUNGARY TO IMPOSE WORLD’S FIRST INTERNET TAX

H TOTAL’S CEO CHRISTOPHE DE MARGERIE DIES IN MOSCOW PLANE CRASH

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hristophe de Margerie, the chief executive of French oil company Total, has died in an air crash in Moscow. His corporate jet collided with a snow plough and was then engulfed in flames. All four people on board were killed. The driver of the snow plough was drunk, according to Russian investigators. Mr de Margerie, 63, had been chief executive of Europe’s third largest oil company since 2007. He was highly regarded within the oil industry.

‘Original personality’

A statement from the office of French President Francois Hollande said: “Christophe de Margerie dedicated his life to French industry and to building up the Total group. He made it into one of the very top global companies “Francois Hollande cherished Christophe de Margerie’s independent character, original personality and his devotion to his country.” Russian President Vladimir Putin sent his condolences. News agency Tass quoted a Kremlin spokesman as saying: “The President highly appreciated de Mergerie’s business skills, his continued commitment to the development of not only bilateral Russian-French relations, but also on multi-faceted levels.”

Analysis: Andrew Walker, Economics correspondent, BBC World Service

Christophe de Margerie leaves a large gap to be filled. He was a hugely influential figure in the global energy industry and a colourful and instantly recognisable character. For colleagues as well as family, there’s no question that it’s a huge loss. But already the markets appear to think the company will cope. The board is seen as strong and a wobble in the share price seems to have been no more than that. It is significant that Mr de Margerie was in Moscow. He took the view that the energy industry needed to go to difficult places. Russia is a prime example. A Total project there - a joint venture with Russia’s Lukoil to explore for shale oil - has come to a halt due to Western sanctions. Mr de Margerie joined Total Group after graduating from the Ecole Superieure de Commerce in Paris in 1974. At the company, where he had spent his entire career, he was nicknamed “Big Moustache”. John Hofmeister, former president of Shell Oil, told the BBC: “It’s a huge loss to the industry and its future focus.

“What he has done for Total in repositioning the company to return to integrity and sound operations is deeply respected and highly regarded.”

Russian investments

According to Russia’s Vedomosti newspaper, Mr de Margerie had met Russian Prime Minister Dmitry Medvedev at his country residence outside Moscow to discuss foreign investment in Russia. Total is an important player in the Russian energy market and Mr de Margerie was a staunch defender of maintaining ties, despite Western sanctions against Moscow over its actions in Ukraine. Total is one of the biggest foreign investors in Russia and is planning to double its output from the country by 2020. It is working on the Yamal project, a $27bn joint venture to extract natural gas in north-west Siberia. During his time at the helm of Total Mr de Margerie successfully defended the company against allegations of corruption around the UN oil-forfood programme in Iraq. He maintained the company’s investments in Burma and Iran despite US sanctions against those countries. Mr de Margerie’s jet had been due to fly to Paris from Moscow’s Vnukovo International Airport. Vnukovo, is located to the southwest of Moscow and is used by President Vladimir Putin and other government officials. Russia’s emergencies ministry said in a statement the accident had involved a Falcon-50 plane shortly before midnight local time (20:00 GMT) on Monday. “Among the chief versions for what happened, investigators are looking at a mistake by the air traffic controllers and the actions of the driver of the snow plough. Apart from that, they will also check the versions of poor weather conditions and mistake by the crew,” said Russia’s Investigative Committee, a federal agency that answers to President Putin. “At the current time, it has already been established that the driver of the snow plough was drunk.” Pictures from the scene show the driver looking shocked, but walking unaided and without any obvious serious injury. Reports say the visibility at the airport was 350m (1,150ft).

New leadership

Total did not have a succession plan in place for Mr de Margerie, but in July he said that a replacement would come from inside the company. The company plans to hold a board meeting as soon as possible. Philippe Boisseau, in charge of Total’s new energy division, which is developing renewable energy sources, has been mentioned as one possible successor. Patrick Pouyanne, president of Total’s refining and chemicals division, has also been named as a possible new boss.

ungary is preparing to impose the world’s first tax on internet usage in the latest example of the unorthodox economic policies being pursued by prime minister Viktor Orbán and his increasingly dominant Fidesz party. Mihály Varga, economy minister, on Wednesday unveiled the plans, which include a charge of Ft150 (62 US cents) for each gigabyte of internet data consumed. Mr Varga said the tax – to be paid by internet service providers – was a logical extension of levies on phone calls and text messages the government announced in 2011. Neelie Kroes, the EU’s outgoing digital chief, told the Financial Times the measures would damage Hungary’s digital economy. “Unilateral Internet taxes are not a clever idea. It will increase internet access prices for consumers,” she said, noting that Hungaryscored below the EU average for internet usage, broadband access and digital regulation. “This isn’t going to help,” she added. Opponents called for protests against the measure, which Péter Banai, state secretary, estimated would raise Ft20bn next year. A Facebook group set up to oppose the tax garnered more than 6,000 members within hours of its creation. The internet tax is the latest among a series of controversial taxes and financial penalties introduced by Mr Orbán’s government in recent years as it seeks to restore the public finances and – critics say – punish opponents. Earlier this year the government forced banks to compensate borrowers for “unfair” conditions on foreign currency loans issued before the Hungarian forint’s fall during the 2008 financial crisis. The move came after a windfall tax on banks in 2010 and a financial transaction tax introduced this year.

The government also imposed a new levy on advertising revenue in August that provoked accusations of media censorship. Independent TV station RTL Klub last week filed a complaint to the European Commission, alleging that the tax was designed to discriminate against the broadcaster. Brussels has repeatedly clashed with the Fidesz government. Ms Kroes denounced the media advertising tax as an attempt “to silence dynamic debate” and “an attack on Hungarian democracy”. Yet the party has continued to rise, despite controversial remarks from Mr Orbán in July about his desire to create an “illiberal state”, alluding to examples such as China, Russia and Turkey. His spokesman later said the remarks were misunderstood. In municipal elections earlier this month, Fidesz won the mayoralties of all but one of the country’s 10 largest cities. During his victory speech, Mr Orbán promised to further squeeze the banking sector, which he said “must be held to account”. Magyar Telekom, the country’s largest telecoms operator, said the draft bill implied a potential cost of up to Ft100bn for the sector and warned that broadband development would be “paralysed” by a charge of this magnitude. Shares in Magyar Telekom fell nearly 4 per cent to Ft334 hours after the announcement. A spokesman for the Hungarian government said opponents of the tax were generating “hysteria” and said that parliament will agree a cap on charges for individual telecoms companies. He also rejected warnings that charging for internet usage would harm Hungary’s digital economy: “This was the charge we heard about the telcom taxes; ultimately nothing was proved, just the opposite.”

GEORGE SOROS: ‘WAKE UP, EUROPE!’

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ultibillionaire investor George Soros has issued a warning to Europe’s democracies over the threat that a resurgent Russia poses to the continent. In an essay published Thursday in the New York Review of Books, Soros calls for more economic and military support for Ukraine, as well as the abandonment of the eurozone’s current austerity programs. Europe is facing a challenge from Russia to its very existence. Neither the European leaders nor their citizens are fully aware of this challenge or know how best to deal with it. I attribute this mainly to the fact that the European Union in general and the eurozone in particular lost their way after the financial crisis of 2008. The fiscal rules that currently prevail in Europe have aroused a lot of popular resentment. AntiEurope parties captured nearly 30 percent of the seats in the latest elections for the European Parliament but they had no realistic alternative to the EU to point to until recently. Now Russia is presenting an alternative that poses a fundamental challenge to the values and principles on which the European Union was originally founded. It is based on the use of force that manifests itself in repression at home and aggression abroad, as opposed to the rule of law.

What is shocking is that Vladimir Putin’s Russia has proved to be in some ways superior to the European Union — more flexible and constantly springing surprises. That has given it a tactical advantage, at least in the near term. Soros is probably a better authority than most to talk about the threat from a divided Europe. In 1944, Soros was 13 years old and living in Hungary when Germany invaded. He goes on: It is high time for the members of the European Union to wake up and behave as countries indirectly at war. They are better off helping Ukraine to defend itself than having to fight for themselves. One way or another, the internal contradiction between being at war and remaining committed to fiscal austerity has to be eliminated. Where there is a will, there is a way. He ends on a call for the EU to be more “united, flexible, and efficient”: There must be something wrong with the EU if Putin’s Russia can be so successful even in the short term. The bureaucracy of the EU no longer has a monopoly of power and it has little to be proud of. It should learn to be more united, flexible, and efficient. And Europeans themselves need to take a close look at the new Ukraine. That could help them recapture the original spirit that led to the creation of the European Union. The European Union would save itself by saving Ukraine.


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TBILISI GUIDE October 27, 2014 #73

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


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