Election Round-Up U.S

Issue no: 1096/153 • OCT. 30 - NOV. 1, 2018 • PUBLISHED TWICE WEEKLY PRICE: GEL 2.50

In this week’s issue...

Weekly Entrepreneurial News @entrepreneur.ge NEWS PAGE 2 Georgia’s Growth Projections Still Optimistic, but the Downside Risks Are Signifi cant ISET PAGE 4 Dream Big But Don’t Forget To Deliver! FOCUS BUSINESS PAGE 6 ON UNCERTAINTY Customer Seminar by AG Salome Zurabishvili will face MELCO Elevator Georgia opposition candidate Grigol Vashadze in a second round to on Mitsubishi Elevators, be held by December 2 PAGE 2,3 Escalators, Air-Conditioning & Factory Automation BUSINESS PAGE 11 Election Round-Up U.S. National Security competitive but "an unlevel playing fi eld" affected BY TEAM GT by private-media bias. Advisor John Bolton Visiting CEC: VOTER TURNOUT the Caucasus ccording to the results of the 3705 LOWER THAN IN 2013 precincts published by the CEC, Georgia’s Central Election Commission (CEC) presidential candidate Salome spokesperson Ana Mikeladze stated that at 12:00 Zurabishvili, supported by Geor- on election day (October 28), voter turnout had gian Dream, received 38.64% of amounted to just 15.95%. The highest activity Athe votes and United National Movement can- (27.4%) was observed in the Ambrolauri district, didate Grigol Vashadze received 37.74%. while the lowest was 12% in Kazbegi. Mikeladze According to preliminary information of the noted that compared to the voter turnout during CEC, 615,624 voters supported Salome Zura- the 2013 presidential elections, the number of bishvili, and Grigol Vashadze 601,188. voters was down. "By 12:00, the voter turnout was Zurabishvili will face opposition candidate 15.95%, which is 558,755 voters. If you compare Grigol Vashadze in a second round to be held this data to the presidential elections in 2013, then by December 2. the voter turnout by 12.00 amounted to 17.15%,” International observers say the fi rst round was she stated. Continued on page 2 CULTURE PAGE 15

Prepared for Georgia Today Business by Markets Asof26ͲOctͲ2018 STOCKS Price w/w m/m BONDS Price w/w m/m BankofGeorgia(BGEOLN) GBP14.87 Ͳ7,6% Ͳ14,1% GEOROG04/21 102.88(YTM5.50%) na Ͳ0,2% GeorgiaCapital(CGEOLN) GBP11.50 +0,3% +5,0% GEORG04/21 105.15(YTM4.63%) +0,2% Ͳ0,1% GHG(GHGLN) GBP2.40 +9,1% +7,4% GRAIL07/22 106.17(YTM5.87%) Ͳ0,0% Ͳ0,2% TBCBankGroup(TBCGLN) GBP15.74 +3,7% Ͳ3,6% GEBGG07/23 98.07(YTM6.48%) +0,1% +0,0%

COMMODITIES Price w/w m/m CURRENCIES Price w/w m/m CrudeOil,Brent(US$/bbl) 77,62 Ͳ2,7% Ͳ4,6% GEL/USD 2,6979 +0,3% +3,2% GoldSpot(US$/OZ) 1233,53 +0,6% +3,3% GEL/EUR 3,0753 Ͳ0,8% +0,2% GEL/GBP 3,4616 Ͳ1,5% +0,5% INDICES Price w/w m/m GEL/CHF 2,7062 +0,1% Ͳ0,0% FTSE100 6939,56 Ͳ1,6% Ͳ7,6% GEL/RUB 0,0411 +0,2% +3,5% FTSE250 18352,90 Ͳ2,4% Ͳ10,2% GEL/TRY 0,4824 +1,1% +12,7% DAX 11200,62 Ͳ3,1% Ͳ9,6% GEL/AZN 1,5904 Ͳ0,1% +3,3% DOWJONES 24688,31 Ͳ3,0% Ͳ6,4% GEL/AMD 0,0056 Ͳ +3,7% NASDAQ 7167,21 Ͳ3,8% Ͳ10,3% GEL/UAH 0,0958 +0,1% +2,8% MSCIEMEE 149,68 Ͳ3,7% Ͳ7,2% EUR/USD 0,8770 +1,0% +3,0% MSCIEM 939,55 Ͳ3,3% Ͳ10,2% GBP/USD 0,7793 +1,8% +2,6% SP500 2658,69 Ͳ3,9% Ͳ8,5% CHF/USD 0,9970 +0,1% +3,2% MSCIFM 2465,99 Ͳ1,5% Ͳ5,3% RUB/USD 65,5977 +0,2% Ͳ0,4% GTIndex(GEL) 1582,68 ͲͲTRY/USD 5,5936 Ͳ0,8% Ͳ8,5% GTIndex(USD) 1208,13 ͲͲAZN/USD 1,6956 +0,0% Ͳ0,0% GEORGIA TODAY 2 NEWS OCTOBER 30 - NOVEMBER 1, 2018 Election Round-Up

@entrepreneur.ge Gamarjoba! I’m the Editor-in-Chief of the Georgian edition of Entrepreneur magazine and I’m here to share the top weekly Entrepreneurial news with you:

Silk Road Group founder Giorgi Ramishvili, Partnership fund CEO David Saganelidze and TBC Bank founder Mamuka Khazaradze ofﬁ cially opened the Radisson Collection in Tsinandali on the grounds of the Aleksandre Chavchavadze museum and historic garden complex. The Tsinandali complex features a 1200- seat amphitheater, 600-seat music hall, wine factory, vineyard and now a 142-room 5-star hotel with event venues, library, restaurants, spa center, swimming pool and ﬁ tness club. Total investment in the hotel was $35 mln, while the overall investment in the complex was $60 mln.

Future Laboratory founder Irakli Kashibadze, former GD of GITA, is working on a new education project with the Ministry of Education and Science to foster the idea of innovative education. The aim is to maximize access to new technologies and modern infrastructure to master future professions through Continued from page 1 PRELIMINARY RESULTS SHOW - Shalva Natelashvili, 2,26% - Davit Usu- updated information, with the help of a new, more UNITED OPPOSITION ZURABISHVILI GETS 38,66%, pashvili, 2.26% - Zurab Japaridze and facilitating teacher. Future Lab has started pilot CANDIDATE GETS MAJORITY VASHADZE - 37,7% 1.33% - Kakha Kukava. programs in several private schools and according to OF VOTES ABROAD The Central Election Commission (CEC) Kashibadze, soon the same projects will be launched Central Election Commission (CEC) preliminary results showed that ruling BIDZINA IVANISHVILI at public schools. preliminary results showed that the can- Georgian Dream (GD) supported can- ON HIS VOTE & THE didate of the United Opposition, Grigol didate Salome Zurabishvili led with SECOND ROUND-OFF Georgian startup winery My Way, aiming to fi nd Vashadze, led in the elections held abroad, 38.66%, while the candidate of the United “Today, we voted Georgia's European the balance between traditional Georgian followed by the ruling Georgian Dream Opposition, Grigol Vashadze, took sec- choice,” Ivanishvili announced. “With winemaking and modern techniques, presented (GD) supported candidate Salome Zura- ond place with 37.7%. This was at a time today's choice, we will eventually reject the App myway.wine. Using their online bishvili. when votes had been counted at 3689 lies and violence, and will fi nd our right platform, you can get your very own bottle of The CEC stated that according to the precincts out of total 3705. path - Europe and culture. wine in 4 easy steps: 1. Chooses your favorite results of 44 out of 58 polling stations At that time it was clear Salome Zura- It will be respect for our great history, variety and vine in a vineyard in Georgia 2. opened abroad, Vashadze got the major- bishvili had been supported by 614,964 which is our greatest wealth. Finally, we Receive an e-certifi cate and a photo of the vine ity of votes in all, excluding Afghanistan, voters, while Grigol Vashadze had 599,662 will join our big family, which is a devel- tagged with your name 3. myway.wine makes a where the majority of the Georgian votes. oped Europe.” Special Edition wine from its vineyard for you 4. peacekeepers voted for Zurabishvili. A total of 3705 polling stations were He then commented on the second You get a Bottle of Wine in a vintage wooden At the time this was released votes had opened in the country, and the results round-off by noting, “The probability of box labeled with your name. not been yet counted in the United States, of 3689 precincts amounted to 99.57% a second round run-off is very low, but Bulgaria, Ireland, Canada, Lithuania, 5 of total votes. there is probability. If there is a second Follow the Entrepreneur Georgia Instagram page to get the latest updates from polling stations of Greece in 1 polling 10.97% of voters supported European round, there is no doubt Salome Zura- Georgian Entrepreneurs. For doing business with Georgian Entrepreneurs, write us on station of Spain. Georgia candidate David Bakradze, 3.76% bishvili will win.” [email protected] GEORGIA TODAY OCTOBER 30 - NOVEMBER 1, 2018 BUSINESS 3 Presidential Elections: How Has the Media Reported? 72 media outlets. is hard for the public to decipher what BY AMY JONES Speakers George Jologua of the Civic is a lie and what is the truth,” said George Development Institute, Eka Beridze of Jologua. Voters can access more and Internews Georgia, and Giorgi Mgeladze more information, especially online. n October 28, voting for and Nata Dzvelishvili of the Georgian However, the public may be easily mis- the presidential elections Charter of Journalistic Ethics, discussed led due to a shortfall of high-quality Sunday, has been targeted by media with The election results showed a marginal took place across Georgia. the media coverage from press and online journalistic work which verifi es and an above average amount of negative win for Zurabishvili over Vashadze, with Media campaign coverage media, radio stations, and TV channels. scrutinizes evidence. Information was coverage. Newspaper Asaval Dasavali, Davit Bakradze lagging behind. The can have a huge impact on Findings showed that the media was often taken from only a small number ran stories entitled ‘Salome’s Cursing’, president will now be decided in a run- theO outcome of elections. In fact, the generally critical of all presidential can- of sources and focused on personal comparing her to a horror movie. Offen- off. The political unbias of the media media can be considered a key pillar of didates with the exception of radio which attacks, generalized statements, and sive terminology towards her was com- perhaps fuelled the closeness of the two democracy. Campaign coverage is essen- has had a more neutral tone. For example, events, rather than critical analysis and monplace in many news outlets, perhaps candidates. However, more analytical tial since the information available to the graph below shows that Rustavi 2, evidence. in part due to gender bias as she was reporting may have better-informed vot- voters comes almost entirely by means Georgia’s most successful private televi- Nata Dzvelishvili gave the example of expected to become the fi rst female ers of the differences between candidates. of various media outlets. Biased cover- sion broadcasting company, scarcely the TV coverage of the marijuana legal- President of Georgia. The media landscape in Georgia is age and improper reporting can, there- reported anything positive about any of ization debate. News shows reported on Four out of seven newspapers analyzed improving in many areas, notably show- fore, sway opinion and impact voting. the parties or candidates. Their coverage events surrounding the debate rather included offensive terminology from ing a reduction in hate speech and bias. How did the media potentially affect the focused on the Georgian Dream party, than the issue itself. They refrained from journalists and respondents. It was some- However, the panel clearly underlined voting decisions of Georgians through who was a typical focal point of coverage discussing the social and economic times present even in the titles of articles, the need for better quality investigative their rhetoric and coverage? for the majority of media outlets. implications of legalization, instead stat- demonstrating the explicit intent of journalism and critical analysis. Munkh- Last Thursday, a meeting held in Tbi- The minimal praise or criticism of one ing basic developments. journalists to use such language. None- tuya Altangerei, UNDP Resident Rep- lisi by the EU and UNDP, together with specifi c party or candidate could be used Moreover, the media generally shied theless, the amount of hate speech has resentative a.i. in Georgia noted that this NGOs, discussed the fi ndings of media to demonstrate that media outlets showed away from in-depth analyses of the decreased year on year since monitoring is important “so voters can make an monitoring of the presidential elections less bias compared to previous years. manifestos of candidates, also rarely began. Only two of eleven online outlets informed choice about candidates.” Jour- from 18 June to 15 October. Media mon- Although the decrease in biased report- covering social, regional, and minority were found to have made grave viola- nalism, after all, is not simply a com- itoring in Georgia has taken place since ing is a positive trend, it could also issues. tions of journalistic ethics. In addition, mentary of events, but rather a means 2010, covering the past seven elections. underline a scarcity of scrutiny and However, independent MP Salome participants of talk shows were able to by which democracy should be strength- This year’s report includes quantitative analysis that is vital during an election. Zourabichvili, supported by Georgian speak more freely and there were less ened. More media monitoring results and qualitative information taken from The lack of critical analysis means “it Dream and favored by polls to win on physical battles. will be released in December. OSCE Observers Assess the Presidential Election Process in Georgia

importance of the fact that this year an commission,” Margareta Cederfelt noted. BY ANA DUMBADZE especially large number of OSCE observ- The OSCE observation leaders stressed ers is monitoring the election process. the fact that the members of the local We are here to express our solidarity election commission are well-trained n October 28, the day of towards the Georgian people. We want and properly prepared for the election Presidential Elections in to be confi dent that the elections are process: Georgia, OSCE observa- conducted transparently and fairly. We “We had some questions to put to them, tion leaders monitored the will assess the election process and will the answers of which were already clear voting process at the poll- present the relevant conclusions at a for us, but we needed to check that they ingO stations to assess the presidential press conference which will be held [on were trained well and knew the right election for its compliance with OSCE Monday 29]. We hope that this year’s answers. We got the right answers from commitments and other international elections will be peaceful, the Georgian them. What is also impressive, there obligations and standards for democratic people will have an opportunity to express were lot of observers from non-govern- elections, as well as with national legis- their choice, and the fi nal result of the mental organizations, from the candi- lation. elections will be in compliance with the dates, from the different parties, so, from Kristian Vigenin (MP, Bulgaria), the voters’ position,” Vigenin elaborated. that point of view, interest in the elec- OSCE Special Co-ordinator responsible The OSCE representatives talked with tions is high throughout the country,” for leading the short-term OSCE observer the representatives of the local election said Vigenin. mission for the presidential election in commission. They had questions about As for the reasons behind international Georgia, and the Head of the OSCE Par- the number of registered voters, the society’s interest in the Georgian presi- liamentary Assembly’s mission, Marga- and accordingly, in 2024 the President viewed the local observers, the repre- process of voting and the voter turnout. dential elections 2018, the representa- reta Cederfelt (MP, Sweden), closely of the country will be appointed through sentatives of non-governmental organ- They also checked the voter lists and tives of the OSCE explained that it is the monitored the election activities, the a secret ballot, not through the direct izations and the local citizens within the ballot boxes to make sure everything last election of this kind. Additionally, voting and the work of the election voting. the framework of our work and mission. was in compliance with the standards international society is interested to see administration and shared their pre- “There is a huge interest towards the Additionally, we talked with the mem- for democratic elections. how democracy in Georgia is develop- liminary impressions with the repre- presidential elections in Georgia, which bers of the Election Administration of “The election process must be free and ing and this presidential election is a sentatives of local media, including is why we are here today,” stated Mar- Georgia to fi nd out more about the voter fair, that is the main thing. Apart from good step in this direction. GEORGIA TODAY. gareta Cederfelt, OSCE PA mission turnout. We will defi nitely monitor the checking the voter lists and the ballot On October 29, the day after the elec- They noted that a peaceful and trans- Head. “We want to observe the process. transparancy of the voting and ballot- boxes, we also checked if the polling tions, the OSCE Observers presented a parent election environment is essential As a result of constitutional changes, counting processes.” stations were accessible for people with statement of preliminary fi ndings and for the country’s future development. the rule of appointing the next Presi- Vigenin noted the interest of interna- disabilities. Additionally, we looked the relevant conclusions at a press con- The OSCE observation leaders also dent of Georgia will be different. The tional society towards the presidential through the number of women who vote ference. stressed the importance of this years’ future President of Georgia will be elections in Georgia is quite high: and the number of women who are A fi nal report on the observation of the Presidential Election; the rule of appoint- appointed in a different way, not through “The interest of international society appointed at the polling stations and entire electoral process will be issued ing the President of Georgia has been direct elections. The OSCE observers towards Georgia’s presidential elections serve. So, there were plenty of questions approximately eight weeks after the end changed due to the constitutional changes are presented here today. We have inter- is remarkably high. I want to stress the we had for the members of the election of the electoral process. GEORGIA TODAY 4 BUSINESS OCTOBER 30 - NOVEMBER 1, 2018

Georgia’s Growth Projections Still Optimistic, but the Downside Risks Are Signiﬁ cant

EXTERNAL STATISTICS from Turkey declined signifi cantly. Were commercial banks’ consumer credit Despite the deterioration of economic it not for the latter decline, money trans- increased by 19% relative to the same conditions in the wider region – notably fers would have increased by 13.5% instead month of the previous year. the currency crisis and economic down- of 11.4%. The credit expansion contributed to turn in Turkey along with the deprecia- The number of international visitors an increase in the amount of currency tion of the Russian ruble – Georgia’s to Georgia increased by 10.7% in August in circulation. All monetary aggregates, external statistics continue to improve. compared to the same month of the pre- including the largest Broad Money (M3) Exports grew by 16.6% year-over-year vious year, while the number of tourists and M2 aggregates experienced signifi - in August of 2018 and were driven by increased by 13.9% annually and cant yearly growth (the M3 and M2 signifi cantly larger exports/re-exports accounted for 70.8% of all international aggregates rose by 17% and 19% respec- of motor cars, cigarettes and cigars to visitors. According to the model, both tively). Our model’s outcomes confi rm Azerbaijan, increased exports/re-exports tourism and remittances made a sig- the standard textbook result that an of copper ores and concentrates to China, nifi cant positive contribution to the GDP increase in monetary aggregates posi- and recovered exports of ferroalloys to growth forecast. tively contribute to real GDP growth in Russia (which happened despite the the short run. in the August growth data). appreciation of the lari against the ruble). Our forecasting model is based on the BY DAVIT KESHELAVA DEPOSITS, CREDIT A number of variables demonstrated However, Georgian exports to Turkey Leading Economic Indicator (LEI) meth- AND YASYA BABYCH EXPANSION AND IMPROVED signifi cant monthly and yearly changes declined signifi cantly due to the lari MONETARY AGGREGATES odology developed by the New Economic in August. In particular, the real effec- appreciation against the Turkish lira and The other group of variables that expe- School, Moscow, Russia. We constructed tive exchange rate appreciated in both the deterioration of economic conditions rienced remarkable monthly and yearly a dynamic model of the Georgian econ- SET-PI has updated its forecast monthly and yearly terms, despite the in Turkey. During the same period, changes and made a signifi cant posi- omy, which assumes that all economic of Georgia’s real GDP growth rate economic diffi culties in the region. imports increased by 8.3%. The trade tive contribution to the Q3 and Q4 variables, including GDP itself, are driven for the third and fourth quarters Georgia’s external statistics are still defi cit thus deepened by 4.1% compared forecasts was the volume of domestic by a small number of factors that can be of 2018. Here are the highlights of quite promising, while higher domes- to the same month in 2017 and reached and foreign currency deposits in com- extracted from the data well before the this month’s release: tic deposits and the ongoing credit 492.3 million USD. mercial banks. In particular, the total GDP growth estimates are published. I expansion resulted in improved mon- In addition, both remittances and tour- volume of domestic currency deposits For each quarter, ISET-PI produces fi ve HIGHLIGHTS etary aggregates (however, it should ism showed signifi cant yearly increases increased by 33% annually, while the consecutive monthly forecasts (or “vin- • Growth projections for the 3rd and be noted that incoming regulations in August. Money transfers increased total volume of foreign currency depos- tages”), which increase in precision as 4th quarters of 2018 were revised down- might have a more pronounced effect by 11.4% in the fi rst eight months of 2018. its went up by 15% compared to the time goes on. Our fi rst forecast (1st vin- ward by less than 0.1 percentage point. on the credit growth fi gures in the next These were driven by a rise in remit- same month of the previous year. In tage) is available about fi ve months before They now stand at 7.2% and 6.4% respec- few months). tances from Israel (20.3%), Azerbaijan addition, despite more restrictive reg- the end of the quarter in question. The tively. (51.7%), Italy (28.2%), Greece (9.8%) and ulations introduced by the National last forecast (5th vintage) is published • Recently, Geostat published its pre- EXCHANGE RATE EFFECT France (52.0%). However, remittances Bank of Georgia, the total volume of in the fi rst month of the next quarter. liminary estimate of real GDP growth The Real Effective Exchange Rate (REER) for August, which now stands at 2%. As appreciated by 1.7% relative to July, and a result, the real GDP growth estimate by 4.6% relative to the same month of for the fi rst eight months of 2018 was the previous year. The appreciation of reduced to 4.8%. the REER is typically associated with • Based on the August data, we expect domestic export goods losing competi- annual growth in 2018 to be 6.3%. Although tiveness on foreign markets. Notably, the the growth forecast remains unchanged, lari real exchange rate appreciated with we expect a downward correction of the respect to the national currencies of two annual GDP growth numbers towards major trading partners – Turkey and the end of the year. Russia. The GEL/TRY and GEL/RUB It is noteworthy that the average real real exchange rates appreciated com- GDP growth in the fi rst two months of pared to the same month of the previous the third quarter of 2018 was only 3.3%. year by 37% and 5% respectively. In ISET-PI’s growth projection for the third August, Georgia’s exports to Turkey quarter of 2018 is expected to have over- declined signifi cantly as a direct result estimated the actual quarterly growth of the lira currency crisis. In contrast, rate due to a combination of factors. the lari real exchange rate experienced Most importantly, our model has not yet a slight depreciation against the US dol- fully taken into consideration the nega- lar and the euro (falling by 5% and 2% tive consequences of the Turkish cur- respectively in annual terms). Overall, rency crisis and the announced, or already REER-related variables had a small neg- enacted, tightened credit restrictions ative contribution to the Q3 and Q4 real (the effect of these was partially refl ected GDP growth projections. Source: National Bank of Georgia The long-term delivery service of 25 to 50 kilograms sacks from China. With the organic responsibility of the Trading Company "Khanlin" from Alashankou.

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GEORGIA TODAY 6 BUSINESS OCTOBER 30 - NOVEMBER 1, 2018

Dream Big But Don’t Forget To Deliver!

Mishiko dreamed big: Tskaltubo was to be restored to its former glory. Instead of healing the joints of fatty Soviet bureaucrats shipped by a daily train from Moscow, Tskaltubo was now to become an offshore zone, attracting gamblers from all over the (Muslim) world. The Saakashvili administration amended the Georgian law on gambling establishments, eliminating the licensing fees for casinos located in designated areas, such as Tskaltubo. This was a serious incentive, considering Tbilisi’s licensing fees of 3mln GEL and 1mln GEL in other locations. Plans were quickly developed to rehabilitate the entire 78ha of parks and public recreation areas; repair drainage, drinking water and sewage systems; resettle thousands of IDPs (legally) squatting in 22 Soviet resorts (‘sanatoriums’) and BY ERIC LIVNY, TBILINOMICS privatize them to new owners; and POLICY ADVISORS attract private investors interested in the restoration and operation of nine mineral springs – a critical piece of ART I: THE DREAM Tskaltubo’s spa tourism infrastructure. infrastructure started in 2014. A total of ing to fi nance musical performances in Tskaltubo, such as the Legends Spa “I never liked Mishiko Adam Smith’s invisible hand would take 12 large projects have been implemented during the high season, but there is little Resort or the 4-star Tskaltubo Palace, [Saakashvili] because of how care of everything else – a shopping to date, including constructing new private sector provision of music, danc- are not able to deal with the remaining he treated people”, Tamuna mall, restaurants and cafés, nightclubs drainage canals, greening of the central ing, theater, cultural events, eating and public infrastructure issues. They are Meunargia tells me, “but he and beauty parlors, bike rentals and park, restoring drinking water and sew- shopping. currently strained by the need to com- knewP how to dream big”. We are sitting sports facilities. age systems. All streets and the main This is a classical chicken-and-egg plete their private infrastructure projects, on the patio of the Legends Tskaltubo Rezo and Andro Dzhishkariani wanted road connecting Tskaltubo to Kutaisi problem. The lack of a vibrant hospital- e.g. renovating additional Soviet-era Spa Resort, enjoying an exceptionally to gain a fi rst-mover advantage in the have been repaved and road lights were ity industry detracts from Tskaltubo’s buildings or constructing new spa, sports warm late autumn day. Tamuna is a child- potential Tskaltubo Gold Rush, and installed. And, of course, the opening of value proposition, particularly in the low and recreation facilities. hood friend of the owners, Rezo and quickly staked their claim on one of the the Kutaisi International Airport in 2012 season. And because the high season is Private actors will not be able or will- Andro Dzhishkariani. A classical ‘city best assets in Tskaltubo, the 500-bed, made Tskaltubo much more accessible neither very high nor long (only 4-5 ing to invest in marketing Tskaltubo as girl’, she moved to Tskaltubo two months 16ha Military Sanatorium. Other inves- for tourists from an ever growing num- months), private businesses face an a prime spa tourism destination in Geor- ago in order to manage the place. tors followed suit. Zviad Zviadadze ber of European destinations. extended payback period for investment gia’s traditional markets, such as Kazakh- The hotel is the only former ‘sanato- acquired Shakhtior, the largest resort in Aided by the general surge in foreign in the hospitality industry. A deadlock. stan. Promoting Georgia and its tourism rium’ open for business in Tskaltubo - Tskaltubo, once a pearl of Stalinesque arrivals to Georgia, the number of tour- destinations has all the attributes of a once a bustling all-Soviet center of spa architecture; Badri Kakabadze purchased ists staying in Tskaltubo has grown over PART III. LESSONS LEARNED public good. Individual operators have tourism, now a ‘sleeping beauty’ in the and fully restored the mineral springs time, from 12,000 in both 2014 and 2015, Early investors in Tskaltubo’s hospitality the incentives to freeride, hence a role vicinity of Kutaisi. I am here for a week- #1 and 2; and mineral springs #6 and 9 to 18,000 in 2017, to 19,000 in the fi rst 9 industry, such as the brothers Dzhishka- for the government in coordinating a end retreat with a group of Caucasus also sprung to life thanks to another months of 2018. A total of 11 new hotels riani, may be now beginning to see the joint marketing effort. University colleagues. Our only company group of private investors. are now operating in the municipality, light at the end of the tunnel, but the * * * are a handful of Russian-speaking fami- Legends Tskaltubo Spa Resort, previ- not counting private guesthouses and road ahead is still very long. Mishiko’s Spa tourism to places like Borjomi, lies, spa tourists from Kazakhstan relish- ously known as the Military Sanatorium, B&Bs. According to Aleko’s rough esti- bonanza will take many more years to Sairme or Tskaltubo is Georgia’s best ing in Tskaltubo’s radon-rich waters and is the only Soviet-era resort, out of 23, mate, at least a 1/3 of Tskaltubo’s 5,658 materialize, given the lack of a continu- chance to smoothen the seasonal tour- beautiful autumn colors. However, the that is currently open for business in households currently derive their income ous coordination effort by the Georgian ism pattern. What is needed is another high season has just ended, and Tskaltubo Tskaltubo. 16 are still occupied by IDPs from employment in tourism and hos- government. The WB-fi nanced invest- big dream and a sustained effort to coor- is getting ready for a lengthy winter from Abkhazia; six are in various stages pitality services. ment in Tskaltubo’s infrastructure was dinate public and private sector invest- hibernation period. of privatization. So much for the full half of the glass. defi nitely a necessary condition for Adam ment in infrastructure and international Previously known as the Military San- On the negative side, of Tskaltubo’s 23 Smith’s hand to do its job. But it is far marketing. atorium, the hotel is the only Soviet-era PART II. THE REALITY Soviet-era resorts, 16 are still occupied from suffi cient. Our toast this week is for dreaming big resort in Tskaltubo (out of 23) that was Large parts of Saakashvili’s original dream by IDPs. This is neither good for the As long as the fl ow of tourists staying but also not forgetting to deliver. not settled – and plundered – by Geor- were implemented, although with a sig- IDPs themselves, nor for the local tour- in Tskaltubo falls below a certain thresh- gian refugees from Abkhazia (commonly nifi cant delay. Aleko Dadunashvili (39), ism industry. old – particularly in the low season – the ABOUT THE AUTHOR: referred to as Internally Displaced Per- Tskaltubo’s deputy mayor, gave me a Another issue is the dearth of local private sector will not step in to provide Eric Livny is Founder and President at Tbilinom- sons - IDPs) in the early 1990s. Rezo and long list of recent accomplishments when entertainment options, a serious con- modern hospitality services. Tskaltubo ics Policy Advisors. In 2007-2018, he served Andro bought it in 2009, having been we met on a busy Friday afternoon, just straint for long-term spa tourists. Casinos municipality’s meager budget and human as President with the International School of impressed by Mishiko’s vision to turn prior to Georgia’s presidential elections. are nowhere in sight, which may be fi ne. resources will not be suffi cient to address Economics at Tbilisi State University (ISET) and Tskaltubo into a crossbreed of Las Vegas Financed by the World Bank, the reha- More importantly, tourists have little to the gap. ISET Policy Institute. He may be reached at and Baden-Baden. bilitation of Tskaltubo’s dilapidated do after sunset. The municipality is try- Even the largest hospitality operators [email protected]. The Olive Industry is Growing in Kakheti With an investment of 5 million GEL, it of Georgia Olive Oil, announced last week BY AMY JONES was the fi rst production plant of its kind that Georgian olive oil will be available in Georgia. Equipped with modern man- at Carrefour supermarket and Agrohub ufacturing machinery to create compet- for the fi rst time. Next year, they plan to s the wine harvest in Kakheti itive olive-based products, the plant sell their olive oil in almost all large super- comes to an end, there is manufactures olive oil and soap through markets. Georgia has a long-standing another crop ripening for cold distillation. history with olives. The fi rst known olive picking this year. The village “Over the past 5-6 years, tens of suc- trees were planted by a monk in Atoni in of Saqobo, near Sighnaghi, cessful enterprises have been established 1879. However, the tradition was lost dur- hasA begun gathering olives that are to be as part of the state programs. This enter- ing Soviet times. Today, olives are grown sold both domestically and abroad. prise manufactures the core product of in Kakheti, Imereti, Guria, and Kvemo The trees were planted on 300 hectares olive and processes olive, which is very Kartli. The olive industry in Kakheti of land 7 years ago. In 2016, an olive pro- popular in Georgia and abroad,” noted employs more than 100 people, with plans cessing plant was opened in the village Luri Nozadze, Deputy Minister of Envi- to continue expansion. In the future, by Dutch-Turkish investments as part of ronment and Agriculture. Georgia Olive Oil plans to produce pip, the state-run program for Co-fi nancing The market for Georgian Olive Oil is pomegranate, and peach to provide prod- Agriculture Products Processing Plants. progressing. Giorgi Svanidze, the founder ucts year-round. GEORGIA TODAY OCTOBER 30 - NOVEMBER 1, 2018 BUSINESS 7 Business-Economic Forum to Promote Closer Collaboration between Government & Business Sector

ment of Georgia and the business sector. partnerships,” she added. BY ANA DUMBADZE ‘Successful business for a successful In the fi nal part of the event, the Gala government, a successful government Awards Ceremony will be held, where for successful business’ is the main motto all the participants of the forum will be n December 18, 2018, BMC of the forum. The embassies and inter- awarded with certifi cates and an exclu- and Area Group will host national chambers of Commerce are sive award as an honorable participant the Business-Economic actively involved in the process, as they who contributed to the development of Forum ‘Business-Govern- pass the invitations to foreign investors Georgia’s economy and business. The ment Contact’ at the Grand for the Forum. Not only the development Awards Ceremony and the live videos ConferenceO Hall of The Biltmore hotel sector but all the business directions, of the participants will be broadcast on in Tbilisi. Within the framework of the including agriculture, will be presented the leading TV channels of Georgia. forum, the State and private sector, at the International Business-Economic According to Inga Makharadze, all the together with international organiza- Forum. LEPL Enterprise Georgia and successful State projects implemented tions, diplomatic corps, chambers of JSC Partnership Fund, as government by various ministries that contributed Commerce and more than 150 foreign projects aimed at promoting business to the business promotion in Georgia delegates invited from 15 countries, will development, will be also widely pre- will be presented at the forum. TV shows and profi le videos will be cre- awareness about it throughout the world,” discuss the State and business-investment sented there,” Jinjolava explained. “This is an annual International Busi- ated about all the participant companies Makharadze told us. projects and establish future partner- Various international speakers and ness-Economic Forum, the follow-up of of the forum. Imedi TV is the main sup- The forum will be widely broadcast by ships. foreign investors are invited to the forum. which will be the Awards Ceremony. All porter of the event, and live videos of the leading international and local media, The forum aims to demonstrate Geor- B2B meetings will be held between the the important reforms and draft laws the participants of the forum will be such as business-analytic TV shows of gia's economic and business potential representatives of the private business that signifi cantly contributed to the busi- broadcast on this channel. Imedi Media Holding and TV Compa- and current and planned state or private sector and interested investors, while ness development in the country will be Business and Media Contact started nies Imedi and Maestro, First Channel projects in the international market, presentations and panel discussions will awarded and all the successful state releasing international media products, of the Public Broadcaster, TV 1, Rustavi which will emphasize the country’s be held about the existing challenges in agencies will be presented by their own aimed at supporting and popularizing 2, Kavkasia TV, Palitra TV, Ajara TV, positive and stable business-economic different fi elds of business and important stands at the Forum. The high offi cials the Georgian business environment and Obieqtv, Starvision and the representa- and investment environment. Within issues of the reforms and the investment of the agencies will also attend. With the products in the international market. tives of international TV companies, the scope of the Business-Economic environment. help of the Ministry of Foreign Affairs Special TV shows in this regard are being who will cover the forum outside Geor- Forum, future partnerships with inves- Jinjolava says the development com- of Georgia, which claimed an Honorary broadcast on Imedi TV Channel. gia. International Television and Broad- tors will be established and interesting pany’s participation in the forum was Award at last year’s forum, the diplomatic “The fi rst international project, Prime casting Company MIR, which operates projects will be created. conditioned by the main purpose to corps and chambers of Commerce of Show from Israel covered the business in post-soviet countries (Ukraine, Lith- The forum is held annually and com- promote strengthening the development various countries are invited to the Forum. news and the relations between Georgia uania, Latvia, Armenia, Azerbaijan, prehensively summarizes and promotes sector and popularizing their products. As for the Area Group’s participation, it and Israel in this direction. While pre- Kazakhstan, etc), will also cover the the relations established between the “Area Group’s participation in the will be holding an exhibition this year, paring this project, we popularized the forum. government and business sector, and above-mentioned project includes the main purpose of which is to enhance Georgian business platform in Israel and The honorary participants and nomi- stresses the most successful business enhancing the development sector the development sector. the most important investment projects nees of the project include: Tbilisi City and state platforms and agencies of the directly within the framework of the “We think that our collaboration with implemented between Georgia and Israel. Hall, the Ministry of Education, Science, year. For the last fi ve years, the forum forum. Our company organizes the Area Group will be very fruitful, as Area This cycle of TV shows signifi cantly Culture and Sport of Georgia, The Min- has been held in a different format. involvement of the development com- Group already has experience related to contributes to attracting foreign invest- istry of Environmental Protection and GEORGIA TODAY met the Co-founder panies in the forum. We arrange an exhi- exhibitions and sales. Their experience ments and promoting our business plat- Agriculture of Georgia, Ministry of and Managing Partner of Area Group, bition space for them, set up the business will make our Business-Economic Forum form in the international market. At this Economy and Sustainable Development Nino Jinjolava, and the Founder and panels and arrange their meeting with more attractive and interesting for for- stage, promoting Georgian-Chinese of Georgia, Ministry of Finance of Geor- Director of ‘Business and Media Contact,’ interested investors. Various panels and eign investors. We think that this plat- international relations is also planned, gia, Business Chamber of Georgia, Inga Maakharadze, who elaborated on discussions will be held within the scope form is yet another opportunity for the which means active collaboration with American Chamber of Commerce in the main purposes and the importance of the forum which will give foreign development sector to popularize their international media. Our project gives Georgia, Georgian Business Association, of the forum and discussed its contribu- investors an opportunity to directly speak products, fi nd new partner companies us an opportunity to meet many foreign German Economic Union in Georgia, tion to the close collaboration of the with the representatives of successful and collaborate with them,” she elabo- investors, and we help them to establish Chamber of Commerce and Industry of Georgian government and the business development companies, discover the rated. new partnerships with the Georgian the People's Republic of China, Japanese sector. current situation and tendencies in the Business and Media Contact is the businessmen, itself essential for the Chamber of Commerce and Industry, “The one-day forum aims to promote Georgian market, draw the relevant con- organizer of the Business-Economic country’s economy. We do our best to and the diplomatic corps of various the collaboration between the Govern- clusions and to establish fruitful business Forum. As Makharadze noted, special promote Georgian business and raise countries. GEORGIA TODAY 8 BUSINESS OCTOBER 30 - NOVEMBER 1, 2018 Kaspi Innovations Center Tech Park & Vocational College

BY SAMANTHA GUTHRIE

n Friday, October 26, Geor- gia’s Minister of Economy and Sustainable Develop- ment Giorgi Kobulia, Vice Prime Minister and Min- isterO of Regional Development and Infra- structure Maia Tskitishvili, and Minister of Education, Science, Culture and Sport, Mikheil Batiashvili were in the central Georgian town of Kaspi to visit the site of the new Innovations Center Tech Park and Vocational College. They were accompanied by the Majoritarian MP for the Shida Kartli region, Irakli Mezur- nishvili, and selected regional youth. Kobulia noted that it is important that the services and benefi ts of the Innova- tions Center will reach beyond the Kaspi district to the whole region. "The construction of such centers is very important for our country - not only in term Image source: Ministry of Economy and Sustainable Development of economic development but in general, it is a strong driving force to encourage begin in February of next year. Currently, for people with disabilities. The entire vides for them. Kaspi Tech Park, as well tunity to realize their potential com- our young people to gain knowledge, the Ministry is searching for a company complex will cost an estimated 2,156,093 as Tbilisi Tech Park, provides young pletely.” develop, get acquainted with new tech- to construct the facility – an open tender GEL ($800,034) and is funded by the people with access to technologies: 3D The vocational college will offer courses nologies, and be creative. This greatly was announced October 10 and will close European Investment Bank. printers, various machine tool stations based on regionally in-demand profes- facilitates the entire population to fi nd on November 9. Constructions plans Describing the process of designed the and all the equipment which the Tech sions. The institution will focus on apply- full intellectual realization and to further include a two-story building with edu- Tech Park, Tskitishvili said, “We had a Park is to be equipped with. The youth ing new technologies and collaborating develop their potential. I think this will cational classroom space, a Fab-Lab very good meeting with the youth of will be enabled to participate in grant with the tech park. greatly contribute to the economic devel- offering digital creation and 3D printing Kaspi Municipality. It is important that fi nancing to implement their projects “I am sure that we have great potential opment as well as to the social welfare services, conference and auxiliary halls, both projects, the vocational college and and share information and knowledge in the region to develop th innovative and human well-being,” said Kobulia. co-working spaces, and support facilities the tech park, will be completed simul- of experts. Most importantly – everything fi elds. This is the fi eld by means of which The Tech Park complex will be con- designed for 200 students. The entire taneously, which will enable the youth will be located in Kaspi and nobody will we will be able to overcome and decrease structed in Kaspi by the Municipal Devel- Tech Park will be developed for various of Kaspi to study and work in practice have to leave for Tbilisi. It will be an employment, especially amongst the opment Fund of the Ministry of Regional activities and will include a parking lot too. It means that they will be able to educational center for technological youth. I am glad that such a platform is Development and Infrastructure of and landscaping. The Innovations Center combine professional education with education and development that will being formed in the Kaspi region and Georgia. Construction is scheduled to and Tech Park will be fully accessible the opportunities that the tech park pro- unite the youth and give them the oppor- that I am part of it,” said Mezurnishvili. GEORGIA TODAY OCTOBER 30 - NOVEMBER 1, 2018 BUSINESS 9

Image source: OGT Omega Group Resumes Work

Tbilisi City Court to obtain a permit for the sale BY THEA MORRISON of seized property of OGT. In June, the Tbilisi City Court satisfi ed the request of the Revenue Service, which was appealed by the company. On the deci- mega Group has been allowed to sion of the Appeals Court on 25 July 2018, the com- renew production after it paid part pany's complaint was not satisfi ed and the Revenue of its debt to the State, which accu- Service was granted permission to sell the seques- mulated due to its not paying taxes tered property of Omega Group. for four years. Omega Group Tobacco work was suspended for OGeorgia’s Revenue Service (RS) told media that three months before they paid GEL 1 to the budget. after paying GEL 1 million to the budget, the accounts The company accused the authorities of pressure, of the Omega Group Tobacco (OGT) were unfro- saying the reason was Omega-owned opposition- zen and the company purchased excise stamps in minded Iberia TV Company, which suspended accordance with Georgian legislation. broadcasting this month due to lack of fi nances. “On October 26, the company OMG transferred The authorities rejected the accusations, saying a part of the debt, GEL 1 million, to the state budget. everyone has to pay taxes and if Omega avoids this The company asked for permission to renew oper- responsibility, proper legal measures would be car- ations for the purpose of maintaining production ried out, including selling their shares. and existing jobs. The Revenue Service satisfi ed General Secretary of the ruling Georgian Dream the request of the company,” the statement of the (GD) party and Mayor of Tbilisi Kakha Kaladze RS reads. stated every job is important for the government. The agency says that now Omega Group has to “As soon as Omega started paying taxes, it was present a schedule how it is going to pay back the allowed to resume working… Business is very remaining debt, which is up to GEL 51 million. important for us. It creates welfare in the country, The previous statement of the RS reads that OGT contributes to economic development and employs fi rst violated the obligation to pay taxes in October people,” he stated. 2014, which initially amounted to 18,444 GEL, which Economic expert Soso Archvadze says it is a very increased year by year. positive step that Omega started paying the debt. The agency explains that as of January 26, 2016, According to him, the company realized that eve- OGT's tax liability increased to GEL 3,402.943. At ryone has to pay taxes and the state’s approach in the same time, the payer's request was satisfi ed this regard is quite strict. and a new schedule was set up which, according “The fact that the company started paying debt to RS, was violated almost every month. before the October 28 presidential elections and The RS said the company applied to them 11 times not after is even better. This means the company to postpone compulsory measures against them is well aware of its responsibilities. Everyone has and all their requests were satisfi ed. However, by to pay taxes,” he said. the end of 2017, the taxpayer was no longer paying The expert says that Georgia has a very liberal taxes and the debt had reached GEL 38 million. tax regime and the state's attitude towards busi- In March 2018, the Revenue Service appealed to ness requires a similar attitude from the companies. Frida Kahlo Exhibition to Open in Tbilisi BY AMY JONES

he exhibition “Diego and Frida. A smile in the middle of the way” will open in Tbilisi October 30 at the Geor- gian National Museum, following signiﬁ cant public interest. Presented Tby the Embassy of the United Mexican States in Georgia and the Ministry of Foreign Affairs of Georgia, the exhibition depicts the personal life of the well-known couple. Frida Kahlo was a prominent Mexican artist famed Photo source: blog.teacollection for her vibrant colors and progressive ideas, espe- Frida’s death in 1954. The exhibits cover all angles cially regarding feminism and the LGBTQ move- of their relationship: from love to hatred, and ment. togetherness to separation. Visitors can see over 100 photographs depicting The exhibition will run until November 8 from the daily life of Frida and Diego, a relationship 10 am to 5.30 pm Tuesday to Sunday. Admission to spanning 25 years from their marriage in 1929 to the opening event at 5 pm on October 30 is free. GEORGIA TODAY 10 BUSINESS OCTOBER 30 - NOVEMBER 1, 2018

Sector at a Glance: The Georgian Sheep Market

also higher compared to the previous year and exceeded to 300 million GEL. This indicator is 85% higher compared to the previous year (162 million GEL).

INTERNATIONAL PRICES International prices decreased in Sep- tember 2018. The Food Price Index, measured by the Food and Agriculture Organization (FAO), decreased by 7.4% in September 2018, compared to the previous year. Prices dropped for the following sub-categories: Vegetable Oil (-21.5%), Sugar (-21%), Dairy (-14.6%), and Meat (-4.5%).

TRADE HIGHLIGHTS During September 2018, Georgia’s agricultural exports (including food) amounted to $59 mln, which is almost a Source: Ministry of Finance, 2018; Note: 2018 data refers to quarter of total Georgian export value. the period January-September While comparing this indicator to Sep- opment Agency, the Government of RURAL DEVELOPMENT tember 2017, it is down by 4%. As to Georgia plans to support organic pro- PROGRAM ack in 2015, the Georgian sheep unchanged in the category of food and imports, in September 2018, Georgia’s duction by offering tax relief to organic The Ministry of Regional Development market was in the spotlight non-alcoholic beverages (-0.1%). Com- agri imports reached $88 mln, which producers. According to the Ministry of and Infrastructure announced the renewal due to the increased demand pared to September 2017, the prices of constitutes 16% of total Georgian imports. Environment Protection and Agriculture of the state support program for rural for sheep from Arabic coun- food and non-alcoholic beverages Year on year (compared to September (MEPA), organic production is an impor- development. According to the ministry tries. Prior to 2015, Azerbaijan increased by 1.8%, contributing 0.55 per- 2017), agricultural imports shrank by 7%. tant component of the green economy, representative, currently the ministry is Bwas the most important export destina- centage points to the annual infl ation which aims for sustainable development working on the selection of projects to tion for live sheep, while in 2015, in addi- rate. In September 2018, prices for fruit EXPORT DIVERSIFICATION without degrading the environment. be implemented in regions. tion to Azerbaijan, Georgian sheep were and grapes dropped by 9.9% compared As already mentioned in our previous For more information: https://com- For more information: https://bpn.ge/ exported to the United Arab Emirates, to September 2017. According to Geostat publications, the country’s export/import mersant.ge/ge/post/biomeurneobebist- ekonomika/49556-regionuli-ganvitharebis- Jordan, Lebanon and Saudi Arabia. Cur- data, prices declined mostly for plums diversifi cation can be measured by the vis-shegavatiani-sagadasaxado-rejimi- ministris-moadgile-2019-tslidan-sofl is-mkhardat- rent trends in the trade data show that (-35%), kiwi (-32%), apples (-24%), pears Herfi ndahl-Hirschman Index (HHI), dawesdeba ceris-programa-aghdgeba.html?lang=ka-GE exports of live sheep are decreasing, while (-17%), lemon (-16%), and grapes (-14%). which ranges from zero to one. The lower exports of sheep meat are on the rise, The low prices of fruit and grapes might the HHI, the more diversifi ed trade is. which is a sign of sheep market develop- be the result of a comparatively good In the last month, Georgia’s export diver- ment and increased potential for higher harvest and increased production in sification stayed at the same level value added in the sheep value chain. 2018. 2017 was a bad year in terms of (HHI=0.11) as in June 2018, while export While generally switching from pri- harvest for Georgia’s agriculture; a spring diversification by product slightly mary exports to more value addition is frost followed by a summer drought cre- decreased. good news for the sector, the imports of ated unfavorable weather conditions for live sheep and sheep meat dramatically deciduous fruit trees. In addition, the IMPORT DIVERSIFICATIONLIGHTS increased in 2018, which might negatively Asian Stink Bug, an agricultural pest In September 2018 Georgia performed affect domestic production. Particularly which attacks fruit trees and vegetables, quite well in terms of its import diver- dangerous is re-export of sheep meat damaged the crops. Consequently, we sifi cation by country. The HHI index fell which requires strict control to ensure saw a signifi cant annual decrease in pro- to its record low (HHI=0.09) since Janu- that imported foreign sheep meat is not duction of the following crops in 2017: ary 2017 mainly due to the shift from re-exported as Georgian sheep meat. In apples (-70%), plums (-55%), lemon Ukrainian market to other trading part- the absence of control, there are food (-53%), and pears (-48%). ners. Import diversifi cation by product safety related risks which might adversely 2018 seems to be a good year not only also increased, yet it has remained more affect domestic sheep farmers and Geor- for plums and apples, but for grapes as concentrated than usual since last July. gia’s relations with its trade partners as well. As of today, more than 230 000 tons well. of grapes have been processed; that is DEVELOPMENT OF ORGANIC 72% higher compared to the previous PRODUCTION AS PART OF DOMESTIC PRICES year (134 000 tons). The revenues of THE GREEN ECONOMY Month-on-month prices went almost Georgian grape growers this year were With a grant from the Austrian Devel- 6th Volume of Fuckup Nights Tbilisi Held at Fabrika ometimes, the best stories start of people with different professions and others and give them insight into their with wrong decisions! experiences, but this time we decided own mistakes. On October 25, the sixth vol- to talk about a particular direction, namely The project is intended for entrepre- ume of Fuckup Nights Tbilisi Fintech, which is the most relevant and neurs, businessmen, executive directors, took place at Fabrika, with interesting fi eld in the era of digital tech- managers, creative professionals, stu- Sinteresting speakers and even more nologies,” the event organizers said. dents, and for everyone who wants to interesting stories of failure. The partners of Fuckup Nights Tbilisi learn from others' mistakes and spend The sixth volume of Fuckup Nights Vol. 6 included the Friedrich Naumann time in a good environment surrounded Tbilisi was different from its predeces- Foundation for Freedom South Caucasus, by interesting people. sors, as, with Fintech.ge's support, all Grant Thornton Georgia, Kedari Ven- Learning from your mistakes makes four speakers of the event were the rep- tures, Blue Ocean, Snap Fitness Georgia, you smart, but learning from others’ resentatives of the fi nancial technologies’ adjaranet.com and Estrella Damm. mistakes makes you a genius – that is fi eld and accordingly, the failure stories The movement Fuckup Nights was the main motto of Fuckup Nights. were related to this direction. launched in Mexico in 2012 and nowa- The speakers of Fuckup Nights Vol.6 days represents a global movement and included: series of events, within the framework Shota Giorgobiani, Co-founder & CEO, of which once a month, 3 or 4 success- Optio.Ai entations, a Q&A session was held and Fabrika was proud to host the sixth event ful people share their experience of David Mizandari, Co-founder & CEO, the attendees of the event had an oppor- of Fuckup Nights Tbilisi. professional failure with a wider audi- Biletebi.ge tunity to get answers to their questions "We try to present professional failure ence. Levan Labartkava, Entrepreneur, Busi- from successful people who know what in a different way and show everyone The speakers of Fuckup Nights are ness Consultant failure is and have experience overcom- that failure is a part of knowledge and people who have experienced failure yet Koba Kurdadze, Founder & CEO, Uni- ing the diffi culties and challenges. is valuable experience that is worth talk- did not give up: they learned and devel- PAY With the partnership of the Tbilisi ing about. In general, each event of oped from their own mistakes, now being After the speakers’ speeches and pres- Startup Bureau and Impact Hub Tbilisi, Fuckup Nights brings together a variety ready to share their experience with GEORGIA TODAY OCTOBER 30 - NOVEMBER 1, 2018 BUSINESS 11 Customer Seminar by AG MELCO Elevator Georgia on Mitsubishi Elevators, Escalators, Air- Conditioning & Factory Automation

subishi Elevators and AG MELCO’s Global opera- ADVERTORIAL tions and processes. Mitsubishi fi rmly believes and considers environment protection a companywide priority. A range of eco-friendly products and com- G MELCO Elevator Georgia Co. L.L.C., ponents are available for Mitsubishi Elevators and exclusive distributor of Mitsubishi Escalators, such as the PM motor, Regenerative Elevators and Escalators, hosted a Converter and Variable Traveling Speed Elevator customer seminar on October 11, 2018 system which all increase energy effi ciency during at The Biltmore hotel, Tbilisi. their operational times. ALeading developers, consultants and engineers Mr. Antony Duarte explained why Mitsubishi of Georgia attended the insightful and interactive takes pride in having the lowest breakdown rate seminar. The event was organized to explain the and strongly advised and recommended that ser- technical superiority of the Mitsubishi Vertical vice and maintenance should be through author- Transportation System and announce the addition ized distributors of Mitsubishi in the region, to of the new solution to the existing portfolio – Air- ensure a safe, smooth and comfortable ride for Conditioning. years to come. Local third-party companies tend AG MELCO Elevator Georgia Co. L.LC. is a fully to use spurious spare parts and under-qualifi ed owned subsidiary of AG MELCO Elevator Co. L.L.C., technicians, not only risking the lives of the pas- UAE which is a joint venture with Mitsubishi Elec- sengers but also reducing the life of the product. tric Corporation, Japan and operational in 23 coun- AG MELCO-Georgia’s latest addition to its prod- tries. AG MELCO offers design, sales, installation, uct portfolio is Air Conditioning Systems for resi- maintenance and modernization solutions and dences and commercial buildings (including hotels takes great pride in their highly precise installa- and shopping centers). The systems provide pro- tions and strict compliance to Japanese standards cess cooling for automotive, manufacturing, food, of service procedure. logistic, plastic molding, and pharmaceuticals. AG MELCO-Georgia has been operational for more Precise temperature, humidity control and fi ltra- than a decade and within this time-span has gained tion for information and communication technol- the trust and confi dence of reputed clients through ogy (Data centers and Telecom applications) give their exceptional service and high-quality products. an added value to the portfolio. Ms. Tatiana Bitner, Through the event, AG MELCO-Georgia shared Customer Manager at Mitsubishi Electric – Russia comprehensive information with the audience regard- briefed the audience on the solutions and benefi ts. ing products and services, a company overview, lat- Mr. Husnu Dokmeci, Director of Business Devel- est technologies, eco-friendly solutions and more. opment for Factory Automation, Mitsubishi Elec- Mr. Abdul Mujeeb, CEO, in his key-note address, tric – Turkey shared insightful details regarding highlighted the company philosophy of adapting Mitsubishi’s Factory Automation solutions which a business model to develop long-term relation- includes Programmable controllers, AC servo sys- ships to sustain profi ts. The utmost priority is tems, inverters, industrial robots, processing always given to customers, followed by the employ- machines, and more. ees and lastly, the profi ts. “Like in agriculture; you An interactive Q&A session followed through have to fi rst sow, nurture, protect and then reap which the attendees were able to have all their the benefi ts,” stated Mr. Mujeeb. queries solved and clarifi cations sorted through Mr. Hiro Ishiyama, Deputy CEO, addressed the the expert panel. Mr. Jegannath Mariappan, Branch attendees on how Mitsubishi Electric Corporation Manager – Georgia conveyed the vote of thanks sets the world’s highest standards in elevator and for the valuable time given by the guests to attend escalator innovation, effi ciency, safety and comfort. the informative seminar. Other speakers from AG MELCO Corporate offi ce AG MELCO ensured the attendees were given a included Mr. Yoshitaka Asaba, Strategic Planning; detailed overview of AG MELCO’s Global Opera- Mr. Taha Mahmood, GM - Global Sales & Market- tions, Network, Japanese standard of Service pro- ing, and Mr. Antony Duarte, GM - Global Service cedures and information regarding ‘green tech- Sales and Modernization. nologies’ adopted by Mitsubishi Electric Mr. Yoshitaka Asaba and Mr. Taha Mahmood Corporation, to ensure their solutions contribute emphasized the eco-friendly components of Mit- to the realization of a sustainable society. GEORGIA TODAY 12 BUSINESS OCTOBER 30 - NOVEMBER 1, 2018 Giorgi Kobulia Meets with Vice President of Hitachi focused on politics and profi table geo- BY SAMANTHA GUTHRIE graphical policies. We can offer digital solutions on the Internet and an artifi cial intelligence base and provide the Geor- n Friday, October 26, Geor- gian economy with relevant services that gia’s Minister of Economy will help develop its higher levels.” and Sustainable Develop- Also attending the meeting was Deputy ment Giorgi Kobulia met Minister of Economy and Sustainable with senior vice-president Development Genadi Arveladze and ofO Hitachi, Yasuo Tanabe, who has had Director of the Produce in Georgia pro- a long career in international trade pol- gram, Mikheil Khidureli. icy making. Georgia and Japan are currently in the Describing the meeting, Kobulia said process of negotiating an Agreement on “During the meeting with the vice pres- Protection and Promotion of Bilateral ident of the renowned Japanese corpo- Investments between the two countries. ration, we discussed investment oppor- In August, the 4th round of negotiations tunities in Georgia. It is true that the on the document was held in Tbilisi. course of our government, in terms of Initial consultations between Georgia simplifying the tax regime and liberal- and Japan began in May 2017. The agree- izing the business environment is cor- ment is designed to facilitate investments rect, as our foreign guest said that this between Georgia and Japan and will factor is one of the main advantages over strengthen trade-economic ties, encour- other countries in the region. We wel- aging Japanese investors to consider come both Hitachi and other Japanese Georgia as a strong, reliable investment investors to the Georgian market, for option. which we will continue to work in this Japan is already one of Georgia’s most direction. We discussed that Hitachi will Image source: Ministry of Economy and Sustainable Development active investment partners. The coun- study the Georgian market and come tourism, and reported that the Japanese Georgia has a very good geographical conglomerate and is represented in many tries have cooperated since 1997. From back with specifi c proposals.” representatives were very interested in location and it is possible to use this as business sectors, including information 2007-2017, Japanese investments in Geor- The Georgian side introduced national these details. an advantage. We also know that many technologies, public and industrial infra- gia totaled $152.16 million. Investment economic trends, tax and investment After the meeting, Tanabe said that reforms are being implemented in Geor- structure, energy systems, home appli- has recently been ramping up: in the fi rst legislation, and major investment pro- during his visit to Georgia, he took the gia to make it more attractive to foreign ances, motor parts, and more. quarter of 2018, Japanese investors jects in the country, including construc- opportunity to study the economy and investors,” he noted. “So, I think what we can do in Georgia,” invested $16.21 million in Georgia, up tion, real estate, heavy industry and market of the country. “We know that Tanabe explained that Hitachi is a large Tanabe continued, “is to use these reforms 96% from the fi rst quarter of 2017. New Radisson Collection Hotel Opens in Tsinandali

BY THEA MORRISON

new hotel complex of the Radisson Collection of the Silk Road Group has been opened in Telavi Munici- pality, Kakheti region, 79 Akilometers east of Georgia’s capital Tbi- lisi. The fi ve-star hotel has 142 rooms and also features a library, outdoor and indoor restaurants, a spa-center, swimming pool and a fi tness club, an amphitheater, and a concert hall. It also has a winery equipped with the latest technology and restored vineyards. The project amounted to $35 million, of which $10 million was paid by the state-owned Partnership Fund. The project was also co-fi nanced by TBC Bank. The hotel was opened by the Prime Minister of Georgia, Mamuka Bakhtadze who said the place is unique and special as it consists of a mix of old and new architecture, with the hotel being located near the Tsinandali Palace Museum of Prince Alexander Chavchavadze, a memo- rial to the founder of Georgian Roman- ticism and an important cultural attrac- tion in its own right. “It is no coincidence that the best traditions of Georgian culture continue Image source: gov.ge here in Tsinandali, near the Chavchavadze Bakhtadze thanked the Silk Road Group round destination for visitors and tour- the government always supports such tions of the country's progress,” he added. Palace, where cultural life brimmed with for implementing the project, and the ists. I am convinced that this exceptional initiatives and projects, adding Georgia The Silk Road Group (SRG) is one of activity as early as the 19th century. In Partnership Fund of Georgia, the pro- complex with its hotel, concert halls, is the regional hub and should be a cul- the leading private investment groups addition, classical Georgian viniculture ject's fi nancial supporters, and every historical vineyards and wine, will make tural center too. active in the Caucasus and Central originated here on the Tsinandali Estate representative of different branches of a tremendous contribution to the pro- “Projects of this scope always have a Asian regions with participation in dif- and here our winemaking traditions art involved in the creation of the beau- motion of our country, including its spillover effect, such as new jobs, attrac- ferent sectors of the Georgian economy, spanning 8,000 years continue today, tiful infrastructure. positioning the country as the cradle of tion of private investments, development including transportation, trading, real with European viniculture also taking "This unique place offers everything wine,” he added. of tourism, services, and businesses, estate, retail, telecommunications and roots," the PM said. to make Tsinandali an attractive year- The Prime Minister underlined that which make up one of the key precondi- banking. GEORGIA TODAY OCTOBER 30 - NOVEMBER 1, 2018 BUSINESS 13 Forbes Magazine: "No Company Can Offer as Much as HUAWEI” and enhanced in the new models of HUAWEI. Through the 4200 milliampere battery and 40W fastest charging technology, it is now possible to charge 70% of the battery in 30 minutes. • The HUAWEI Mate 20 Pro is the fi rst smartphone in the world to have support relevant to 4.5G LTE Cat. 21 standard, giving the users an opportunity to benefi t from 1.4 GB/s download speed. It also has the fastest Wi-Fi connection, allowing for max. 10 seconds downloading. • HUAWEI Mate 20 Pro has the support of 3D Face Unlock. Through this feature, it is possible to identify the user in just 6 seconds. A camera with 3D in-depth sensor is installed on the front, which allows the device to see even the smallest details of the subjects with the highest precision. • HUAWEI Mate 20 series is also distinguished by a portrait-colored video regime created on the basis of AI which allows it to isolate the image of a person and divide it into colors in the way that emphasizes their personal characteristics. The lighting system created on AI identifi es videos with mutual themes and automatically montages them. • With the fi ngerprint access installed directly in the screen, 3X optical zoom, 4K support, an innovative processor, unique design, innovative camera technologies and limitless AI possibilities, the HUAWEI Mate 20 series creates perfection in an industry of innovative technologies. HUAWEI products and services are available in over 170 countries and are used by a third of the world's population. 16 research and development centers operate throughout the world, in the USA, Germany, Sweden, Russia, and India and China. HUAWEI Consumer BG is one of HUAWEI's three business units, and their main direction is the production of smartphones, personal comput- ers, tablets, and cloud services. HUAWEI Global Network is based on 20 years’ experience in the telecommunication business and offers innovative technologies for consumers worldwide.

orbes Magazine has responded to the unique and innovative colors; release of the HUAWEI Mate 20 smart- • The HUAWEI Mate 20 series is equipped with phones. The English edition of Forbes the most innovative and small 7 nanometer proces- writes: “We are sure that no company sor - Kirin 980, that works more effi ciently by 20% can offer as much as HUAWEI offers and consumes less time by 40%. throughF its new smartphones.” • The new Kirin 980 gives customers improved Alongside the Forbes’ appraisal, the HUAWEI graphics by 46%. Additionally, while playing games, Mate 20 series has become a topic of discussion AI can determine the working pressure and fi nd among experts and other foreign editions that resources for optimal image and quality. In com- unanimously recognize the superiority of HUA- parison with the previous generation, the Kirin 980 WEI's innovative devices: provides the fastest loading of applications. “The features of new HUAWEI Mate 20 Pro make • The old tradition is preserved in the new smart- me wanna change my Iphone.” (www.businessin- phone, and all three main cameras are created in sider.com) collaboration with Leica, giving users an opportu- “HUAWEI has created the best Android device nity to capture objects at minimum distance and in the world.” (bgr.com) focusing at even 2.5cm from the lens. Unlike the “The HUAWEI Mate 20 Pro - Excellent design previous models, there is a more enhanced lens and the best innovation among the smartphones.” with a broader view (16 mm). www.forbes.com) • The HUAWEI Mate 20 series is equipped with “HUAWEI Mate 20 and HUAWEI Mate 20 Pro, operative system EMUI 9.0 based on Android Pie, undoubtedly the highest level.” (www.android- through which users can access all the working headlines.com) and entertainment functions of the smartphone It was unexpected for everyone when HUAWEI with a simple touch to the screen. EMUI 9.0 is fol- beat Apple's sales and occupied the second place, lowed by the GPU Turbo 2.0 – with more support but after the presentation of the new Mate 20 series, for game-lovers. experts predict HUAWEI will make fi rst place and • Yet another important function of the system replace Samsung. is HiVision, which enables the camera to capture Why the unconditional leadership of the HUA- the famous attractions, paintings and deliver the WEI Mate 20 series? users the information about them. • The most refi ned and attractive design, with • The working time of the battery is improved GEORGIA TODAY 14 CULTURE OCTOBER 30 - NOVEMBER 1, 2018 Russia’s Economic Offensive in Central Asia military cooperation and held their fi rst remain Moscow’s close ally, while Azer- BY EMIL AVDALIANI bilateral military exercise in 2017, after baijan is unlikely to join Russia-led unions a 12-year pause under the former Uzbek as Baku has its own resources to build President Islom Karimov. a more or less independent foreign pol- ecent months have seen a At the same time, Russians have made icy. Even with relations with Georgia, wave of Russian economic interesting moves in the neighboring both Tbilisi and Moscow have reached moves in Central Asia which Turkmenistan. a stage where neither of the sides wants are likely to increase Mos- Ashgabat’s relationship with Russia’s to concede. cow’s geopolitical clout in Gazprom has always been diffi cult over It is clear that Georgia is strongly pro- theR region. gas which the country sold to the Rus- European due to the popularity of polit- On October 19, the Russian President sians. In early January 2016, Gazprom ical parties and more importantly, large Vladimir Putin, with a large team from stopped purchasing Turkmen gas. This anti-Russian sentiment. In Ukraine too, almost every sector of the Russian econ- put Ashgabat in a diffi cult position, with Moscow is very unlikely to push further omy, visited Uzbekistan. The state visit no other major buyers except for China. with its military involvement in Donbas brought about a record number of long- This changed on October 9, 2018 when and hopes for change in Kyiv which term and short-term strategic projects, Gazprom CEO Aleksei Miller visited might bring in a pro-Russian govern- the largest of them an $11 billion nuclear Turkmenistan and both sides agreed ment. Large-scale geopolitical distur- power plant. Overall, Putin’s team signed Gazprom will resume buying Turkmen- bances could usher in changes positive 785 agreements and memorandums, istan’s gas from January 1, 2019. It is also for Moscow, but there is no real basis altogether worth $27.1 billion, which is interesting that the agreement follows for this as the US and EU pressure on the biggest overall sum that the Uzbek the resolution on the Caspian Sea. Offi - Russia is increasing. President Shavkat Mirzyoyev has signed cially, no third party can intervene if Thus, the successful western expan- since he came to power in 2016. This Turkmenistan and Azerbaijan decide to sion into what was always considered sum of potential investments even out- build the Trans-Caspian Pipeline (TCP). the “Russian backyard” halted Moscow’s strips what Mirzyoyev reached when he Fear on the Russian side that Ashgabat projection of power and diminished its visited China. might succeed in selling its resources to reach to the north of Eurasia. True that This Russian economic offensive in other regions might have been a driver this does not mean that Russia will not Uzbekistan followed other political deci- behind Miller’s visit and the agreement. be playing an important role in the affairs sions made by Moscow in the past year In a way, this Russian economic offen- of Ukraine or the South Caucasus coun- and a half. Russia, for instance, agreed sive in the Central Asian region is not tries, but it nevertheless shows that the to military concessions to Tashkent that surprising. You increase your infl uence Image source: news.bitcoin.com only region out of three crucial geopo- up until that point were available only where it is possible, where geopolitical litical arenas where Moscow can still to full members of the major Russia-led space allows you to do so. When looking its neighborhood has become. throughout what constituted the former hope for more than it has is the Central organizations such as the Eurasian Eco- at the map of Russia, there are three The current crisis between Russia and Soviet Union territory. Essentially, Rus- Asian region. Other geopolitical com- nomic Union (EEU) and the Collective discernible geopolitical areas which have the West, the product of many funda- sia’s modern western borders are nearly petitors such as China might hinder Security Treaty Organization (CSTO). historically attracted Russian economic mental geopolitical differences in both at the same level as it was in the pre- Russian advances, but still there is a Russia began to sell military hardware and political attention: Eastern Europe, the former Soviet space and elsewhere, Peter the Great period in the late 17th much larger space for Russian actions. to Tashkent at domestic prices, which the South Caucasus and Central Asia. is likely to remain well into the future, century. Unlike in Ukraine or the South Cauca- makes Uzbekistan the only non-CSTO However, over the past decades there barring large concessions by one of the Russia has also reached the limit of its sus, Western infl uence in Central Asia country in the post-Soviet enjoying this have been developments which show sides. Thence come Russian failures on geopolitical expansion in the South Cau- is minimal, making it the only region privilege. how constrained the Russian ability to its western border which diminished casus. Armenia, due to its diffi cult rela- Russia can hope to enhance its position Both countries have increased their expand its infl uence in some regions of Moscow’s projection of power even tions with Azerbaijan and Turkey, will in. Education Minister Promotes Georgian Language in Marneuli

BY SAMANTHA GUTHRIE

ith the support of the Government of Geor- gia, the Embassy of Bulgaria, and the European Union in WMarneuli, the International Education Center Georgian-language private school and kindergarten "Future" was opened in Marneuli. The Minister of Education, Science, Culture and Sport, Mikheil Batiashvili visited the new school and met with teachers, students and parents. Batiashvili emphasized the importance of the school being taught in Georgian and that there are young teachers. He thanked donors and the private sector for supporting the success of the project. "In the multiethnic environment of Marneuli, Georgian language education has state signiﬁ cance," said Batiashvili. The modern, high academic standards for teaching are supported by the educational environment of "Future." The school is staffed by young and experienced teachers from the local area and the capital. Currently, the school has about 150 students, the majority of whom are ethnic Azerbaijani. The school, with a capacity of 500 students, has been operating since September. Photo: Ministry of Education, Science, Culture, and Sport GEORGIA TODAY OCTOBER 30 - NOVEMBER 1, 2018 CULTURE 15 U.S. National Security Advisor John Bolton Visiting the Caucasus

consultations." He says no date has been set yet, #Georgia-#US relationship is at an all-time high but noted that Trump and Putin are also planning and we are further exploring opportunities to to meet in Paris on November 11 at events marking strengthen existing #Synergy.” 100 years since the end of the fi rst World War. According to Bakhtadze, the meeting focused on Eurasianet quotes the director of the Georgian the possibility of the Georgia-U.S. free trade agree- Institute of Politics, Kornely Kakachia, as explaining ment and “the most painful issue for Georgia, the that Georgian government offi cials are likely to steer catastrophic humanitarian situation in the Georgian conversations towards issues such as security coop- occupied regions, as well as the peace initiatives eration rather than being drawn into a U.S.-Iran [offered by the central Georgian government] which confl ict. “Georgia remains a steadfast supporter of are meant to help us, the Georgian government, U.S. initiatives. However, due to permanent pressure respond to existing security challenges.” He said from Russia it can't endanger its national interest, Bolton was supportive, and promised that Georgia which seeks pragmatic and balanced relations with is highly strategically important to the U.S. Iran. So, as in the last decade, Tbilisi will try to fi nd Speaking with reporters, Bolton also mentioned a delicate balance between its regional interests and that he “was told [by representatives from the U.S. those of the West,” said Kakachia. Chamber of Commerce] that there is a certain level While in the Georgian capital, Bolton met with of corruption in Georgia, but this level is the same Prime Minister Mamuka Bakhtadze, Vice-Prime as in many other developed countries, in the US Minister and Minister of Internal Affairs Giorgi among them.” Gakharia, and Defense Minister Levan Izoria, among Earlier in the day, Bolton met with Georgian other senior offi cials. Defense Minister Levan Izoria to discuss the 2016- After their meeting, Bakhtadze tweeted: “I just 2019 agreement between the Georgian Defense met with good friend of #Georgia @AmbJohnBol- Ministry and the US Defense Department. ton. We are grateful for his steadfast support. The Bolton plans to leave the Caucasus tomorrow. Photo: Ministry of Internal Affairs major regional players Iran, Russia, and Turkey. BY SAMANTHA GUTHRIE Bolton has long been a staunch opponent of Iranian nuclear ambitions and pushes against the country’s attempts to gain infl uence and power. nited States National Security Adviser Eurasianet’s Joshua Kucera writes, that Bolton is John Bolton is in Tbilisi today. He “expected to try to enlist the region's three govern- spent October 24 in Baku, and the ments in Washington's campaign of isolating Iran. 25th in Yerevan. It marks the highest- But leaders in the Caucasus, wary of confronting profi le visit from a Trump adminis- Tehran, will likely instead be promoting their own Utration offi cial to all three South Caucasus countries. interests to an administration that has thus far None of the three countries currently have a U.S. largely neglected the region.” ambassador. During a press briefi ng in Tbilisi, Bolton announced, Bolton’s visit has focused mainly on regional "We have invited President Putin to Washington security, particularly in relation to dealing with after the fi rst of the year for, basically, a full day of Georgian Schools Among Those Awarded the European Quality Label 2018

BY SAMANTHA GUTHRIE

he EU-funded eTwinning Plus project has announced the schools awarded the European Quality Label 2018. The European Quality Label is a second mark of success and indicates that a Tproject conducted within the eTwinning program has reached a certain European standard. It is awarded by the Central Support Service (CSS) to teachers in a project which has been proposed for the European Quality Label by at least one National Support Service, after a screening process and includes at least two partners that have received the National Quality Label. The European Quality Label is awarded once a year. Photo: eTwinning A total of 1,204 projects received the 2018 Euro- pean Quality Label for outstanding work, including Gori, Zugdidi, and Khashuri. schools and teachers from four Eastern Neighbor- The eTwinning Plus project offers a platform for hood countries: Armenia, Georgia, Moldova and staff (teachers, head teachers, librarians, etc.), Ukraine. working in a school in an EU Eastern or South A detailed list of the distinguished schools, teach- Neighborhood country (Armenia, Azerbaijan, ers and the projects that helped them obtain their Georgia, Moldova, Tunisia, Ukraine, Jordan and Quality Label can be found here. 24 projects in Lebanon). The safe, online platform allows staff to Georgia were awarded, including projects imple- connect with counterparts in European schools, mented by teachers in public schools in Tbilisi, facilitating communication, collaboration, joint Kutaisi, Tsalenjikha, Gurjaani, Baghdati, Kareli, project development, and information sharing.

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