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Issue no: 882/46 • SEPTEMBER 27 - 29, 2016 • PUBLISHED TWICE WEEKLY PRICE: GEL 2.50

In this week’s issue...

Qvevri Making School Opens in Ikhalto, Kakheti PAGE 3 Jobs for Life in Georgian Universities? ISET PAGE 4 Innovation! Promising Exhibition FOCUS for Georgian ON THE PREMIUM SEGMENT Businesses in Milan TBC Bank CEO, Vakhtang Butskhrikidze, PAGE 5 speaks to TODAY about the opportunities being on the London Stock Grant Thornton Holds Exchange Premium Listing offers PAGE 7 Regional Conference in Georgia Ski Resort Goderdzi to Become Year-Round Recreation Center

BY THEA MORRISON PAGE 8 he Government of the Autonomous Republic (AR) of Adjara announced INTERVIEW: Winners of on Saturday that the well-known Goderdzi ski resort will be devel- Startup Georgia oped to become a year-round rec- PAGE 11 Treation center of international standards. Goderdzi is located in a unique climate zone in Adjara, on the Goderdzi Pass - just 100 kilometers Retail FPI | Supermarkets from the coast and 2000 meters above sea level. Goderdzi ski-resort was opened in 2015 Photo: Adjara Slash Food Prices To Gain and is three times larger than Georgia’s other Government Chair Zurab Pataradze at Market Share mountain resorts Gudauri and Bakuriani. Goderdzi Resort Continued on page 2 PAGE 12

Prepared for Georgia Today Business by Markets Asof23ͲSepͲ2016 STOCKS Price w/w m/m BONDS Price w/w m/m BankofGeorgia(BGEOLN) GBP29.49 Ͳ0,4% +5,7% GEOROG04/21 106.19(YTM5.21%) +0,5% +0,8% GHG(GHGLN) GBP3.18 +3,5% +15,5% GEORG04/21 112.24(YTM3.91%) +0,1% +0,2% TBCBankGroup(TBCGLN) GBP11.75 +4,4% +5,6% GRAIL07/22 113.75(YTM4.98%) +0,7% +1,6% BGEOLN07/23 103.94(YTM5.30%) +0,7% +1,2% COMMODITIES Price w/w m/m CrudeOil,Brent(US$/bbl) 45,89 +0,3% Ͳ8,1% CURRENCIES Price w/w m/m GoldSpot(US$/OZ) 1337,56 +2,1% Ͳ GEL/USD 2,3200 +0,4% +1,6% GEL/EUR 2,6045 +1,7% +0,9% INDICES Price w/w m/m GEL/GBP 3,0050 +0,1% Ͳ0,3% FTSE100 6909,43 +3,0% +0,6% GEL/CHF 2,3835 +1,2% +0,6% FTSE250 17923,08 +0,4% Ͳ0,3% GEL/RUB 0,0361 +2,3% +2,0% DAX 10626,97 +3,4% +0,3% GEL/TRY 0,7818 +0,8% +1,0% DOWJONES 18261,45 +0,8% Ͳ1,5% GEL/AZN 1,4074 +0,9% +0,7% NASDAQ 5305,75 +1,2% +0,9% GEL/AMD 0,0049 Ͳ +2,1% MSCIEMEE 130,89 +4,1% +1,1% GEL/UAH 0,0893 Ͳ0,1% Ͳ1,0% MSCIEM 917,50 +3,6% +1,2% EUR/USD 0,8908 Ͳ0,6% +0,7% SP500 2164,69 +1,2% Ͳ1,0% GBP/USD 0,7711 +0,3% +1,8% MICEX 2011,83 +1,5% +1,1% CHF/USD 0,9704 Ͳ1,0% +0,7% MSCIFM 2535,32 +1,5% Ͳ2,3% RUB/USD 64,0796 Ͳ1,8% Ͳ0,8% GTIndex(GEL) 841,46 Ͳ Ͳ0,1% TRY/USD 2,9689 Ͳ0,4% +0,5% GTIndex(USD) 720,40 Ͳ +1,1% AZN/USD 1,6495 Ͳ0,5% +0,8% GEORGIA TODAY 2 BUSINESS SEPTEMBER 27 - 29, 2016 Ski Resort Goderdzi Aghmashenebeli Avenue to Become Year- Renovation Finished Round Recreation Center

Continued from page 1 “This is a very important project lead- ing to the ultimate aim of an international The resort development strategy, elab- standard resort. The new infrastructure orated by Georgian and foreign special- projects will promote economic devel- ists, will be launched from 2017. opment of the region and create employ- According to the strategy, the resort ment opportunities for the people living development area will cover 633.45 hec- in the mountains,” Adjara government tares and will be able to receive 7,000 chair Zurab Pataradze said. visitors at any one time. Moreover, the Pataradze also visited the construction Adjaran government is to allocate 4 mil- process of two new hotels at Goderdzi lion GEL for infrastructural projects in resort. the area. 5 mln GEL was invested in the con- The new regulation plan of the resort struction of 4-star international standard envisages the addition of two new cable hotel ‘Alliance Resort’, which will have ways and a number of new ski slopes. 100 rooms and accommodate up to 250 guests. The hotel will open in 2018, cre- ating around 100 jobs for locals. The complex will boast a swimming pool, tennis courts, children's entertainment center, a bar, restaurant, fi tness complex, Photo: Opening of the renovated Avenue casino, conference hall and other facili- ties. the opening of which marks the end of and the complex of 19th century gardens.” The new infrastructure BY NINO GUGUNISHVILI A second 4-star hotel to be built at the the fi rst stage of the New Tifl is project. He also mentioned the signifi cant boost projects will promote resort is ‘Euphoria Sky Towers’ with a Roofs, facades with historical ornaments, in the real estate prices for that part of economic total investment of 15 mln GEL. The hotel old balconies, doors, entrances, gates, and the city due to the recent renovations. will have 150 rooms and create 100 jobs. even months of massive recon- courtyards were all renovated, and drain- The Aghmashenebeli Avenue recon- development of the Pataradze said that a new ‘Goderdzi struction works have fi nished age, sanitation, gas and electricity systems struction is seen as a chance to redirect Subalpine Garden’ will also be built near and the new pedestrian part were changed along the avenue. tourist fl ow, with Maidan, Chardin and region and create the Goderdzi Pass, spread over 10 hec- of Aghmashenebeli Avenue in Prime Minister of Georgia, Giorgi Erekle II streets still in the top places employment tares of land and containing a natural was offi cially opened Kvirikashvili, who attended the offi cial for tourists to hang out in, in Tbilisi. lake, spring and waters. Sthis weekend, with crowds out to enjoy opening of the new pedestrian part of The New Tifl is rehabilitation plan had opportunities for the According to him, creation of subalpine a brilliant festive atmosphere. the city alongside Tbilisi Mayor Davit a 30 mln GEL budget for its fi rst stage. people living in the botanic garden will create new perspec- 47 buildings, of which 38 are assigned Narmania, said that more reconstruction The second stage will see the rehabilita- tives of tourism development in highland to National Cultural Heritage Site status, works are ahead. tion of the Dry Bridge and Orbeliani mountains of Adjara Region. were renovated in the last seven months, “We intend to restore the upper streets Square area and is set to begin in 2017. GEORGIA TODAY SEPTEMBER 27 - 29, 2016 BUSINESS 3 Qvevri Making School Opens Leuville Estate in Ikhalto, Kakheti Returned to Georgia ernment of Georgia had made a decision BY THEA MORRISON to spend EUR 5,600,000 over 10 years BY NINO GUGUNISHVILI on the Chateau estate for further devel- opment of the property. fter 12 years of active nego- “After 25 years, the estate is returned eorgian Wine Week kicked tiations and 25 years of to its legal owners - the people of Geor- off with the opening of the expectations, the historical gia. This place will remain as the center Ikhalto Qvevri School. Leuville Chateau Estate, of Georgian-French culture,” he noted. Qvevris are clay wine ves- located around 27 kilom- The fi ve hectare Leuville Estate is impor- sels traditionally used to Aeters from Paris, , was offi cially tant for as it is the place where Gferment and store wine, listed by UNE- returned to Georgia on September 23. the fi rst government of Georgia settled SCO as part of the world’s Intangible The signing ceremony of the transfer in exile after fl eeing their home in 1921, Cultural Heritage in 2013. act was held in Leuville and from the when the Russian Red Army entered The school aims to revive and preserve Georgian side was signed by Gela Dum- Georgia and the fi rst Georgian govern- the ancient tradition of Qvevri-making badze, the State Minister of Georgia for ment offi cials, chaired by Noe Zhordania techniques in Georgia, while at the same Diaspora Issues and from the French and their families, boarded the Ernest time promoting and developing the cul- side by the representatives of the fami- Renan ship and sailed to Paris, where tural, hitorical, educational and touristic lies of the government of the fi rst Dem- they acquired the chateau using Georgian potential of the village of Ikhalto, located ocratic Republic of Georgia. state fi nances and founded the Georgian in the Kakheti region in eastern Georgia. Also attending the ceremony were Tea Association. The 30 emigrant families The Ikhalto School of Qvevri-making Tsulukiani, the Minister of Justine of lived in 15 fl ats inside the castle and never is seen as a possibility to learn about the Georgia; Ekaterine Siradze-Delone, lost hope of returning to their homeland. oldest methods of vessel production. It Ambassador of Georgia to the Republic The negotiations about the transfer of is equipped with the latest technological of France; Gocha Javakhishvili, Envoy Leuville estate were fi rst initiated in 1991 advances such as mod- Extraordinary and Plenipotentiary of by academician Guram Sharadze. Geor- ern clay stoves, cisterns Georgia to France; the representatives gia’s fi rst president, Zviad Gamsakhurdia, for clay washing, and the project will increase aware- of the Leuville City Hall, and members was also involved in the process. The clay-mills. ness of the Georgian Qvevri inter- of the Georgian Diaspora. negotiations were intensifi ed in 2004 The project is co- nationally and help it to gain a Dumbadze explained that as a result and offi cially ended on September 23, fi nanced by the Govern- distinctive place on the world of a resolution adopted in May, the Gov- 2016. ment of Georgia and markets. World Bank, with a “It is essential to preserve this budget of 5 mln GEL. exceptional tradition we have, Minister of Agricul- through creating an infrastructure ture of Georgia Levan that will assist the development Davitashvili stressed of its production,” the Minister the importance of the said. event and underscored The Ikhalto School of Qvevri- the signifi cance of coop- making will be a multifunctional eration between the venue with workshops, museum, State and private sectors library and an internet cafe. The that resulted in the school will also have clay and opening of the School. Georgian porcelain-making, and He expressed hope that enamel and goldsmith workshops. Photo: The Signing Ceremony at Leuville GEORGIA TODAY 4 BUSINESS SEPTEMBER 27 - 29, 2016 THE ISET ECONOMIST A BLOG ABOUT ECONOMICS AND THE SOUTH CAUCAUS www.iset-pi.ge/blog

The ISET Policy Institute (ISET-PI, www.iset-pi.ge) is an independent think-tank associated with the International School of Economics at TSU (ISET). Our blog carries economic analysis of current events and policies in Georgia and the South Caucasus region ranging from agriculture, to economic growth, energy, labor markets and the nexus of economics, culture and religion. Thought-provoking and fun to read, our blog posts are written by international faculty teaching at ISET and recent graduates representing the new generation of Georgian, Azerbaijani and Armenian economists. Jobs for Life in Georgian Universities?

ERIC LIVNY AND TENURE AND ACADEMIC MARIDASVHILI FREEDOM: FROM SOCRATES TO PRESENT DAY Tenure is a twentieth-century invention, yet it has long historical roots in the ew may have noticed an amend- Western world, often seen as a means ment to the Georgian Law on of protecting academic freedom: free- Higher Education, passed in dom of inquiry, as well as freedom “to December 2015, which poten- teach or communicate ideas or facts tially ushers in a new era for (including those that are inconvenient Georgia’sF higher education system. As to external political groups or to author- of January 2017, (some) Georgian profes- ities) without being targeted for repres- sors and senior research staff will be sion, job loss, or imprisonment.” appointed for an indefi nite term. Offered The trial of Socrates at the hands of decent compensation and protected from Athenian democracy (of which he was political pressures and job insecurity, highly critical) probably represents the they will be able to indulge in academic fi rst major instance of political repres- endeavors, nurturing a new generation sion used against a scholar. However, it of Georgian academics and promoting was not until the Middle Ages that a Georgian science onto the global scene. systematic confl ict emerged between This is, of course, the dream scenario. academic freedom and politics, with Unfortunately, there are also many options Roman Catholic Church (and, later, for this reform to go awry, with the good secular rulers) trying to force their reli- intentions behind it paving yet another gious dogma and political ideology on road to hell. The devil is in the detail on the fi rst European universities (of which which the recent amendment to the Law they happened to be the founders and on Higher Education is lacking. The most sponsors). important detail is the “who” and “how” While the Church’s infl uence weakened of granting “tenure” (or indefi nite term) in the Age of Enlightenment, it took until contracts. If these are to be granted by the 19th century for the modern concept Georgian universities subject to their of academic freedom to be fi rst formu- individual statutes and, furthermore, lated in . This concept was (that comes with little monitoring). land” abroad. voted (for or against) by existing uni- further developed in the US, culminating The fact that most tenured American Another (perhaps surprising) argument versity staff, instead of progress, this in the "1940 Statement of Principles on academics do not spend most of their for the introduction of a tenure system reform might lead to a further entrench- Academic Freedom and Tenure". As time on the golf course (some do, though!) in Georgia is to circumvent the current ment of incumbent academics in the discussed in J. Peter Byrne’s “Academic is because for a vast majority teaching practice of political “clientelism” that is comfort of protections afforded by the Freedom: A Special Concern of the First and research is a way of life, not a 9-to-5 quite prevalent at the country’s public “tenure” institution. Not exactly the Amendment" and elsewhere, the institu- job. The diffi culty of getting tenured in Selective lifetime universities. Lacking in professional Georgian lawmakers’ intent. tion of academic tenure sought to protect the extremely competitive US university qualifi cations and, therefore, in job secu- This article is but an attempt to start academic freedom by ensuring that environment is what reduces the risk of appointments rity, Georgian academics tend to nurture a process of broad public discussion of teachers may only be fi red for causes mistakes, such as granting life employ- mediocre PhD students whom they con- the pros and cons of the proposed reform, such as gross professional incompetence ment to lazy or mediocre academic, to have become an sider loyal and on whom they count for its key principles and practicalities. We or behavior condemned by the academic a tolerable minimum. But how would future protection (when hired as full begin by providing a brief overview of community itself. the same rules of the game perform in instrument for time academic staff in the same depart- two relevant concepts – academic free- While the initial function of tenure had a different setting, such as Georgia’s ment). Those not demonstrating loyalty, dom and tenure – and how they have been to protect academic freedom, its post-Soviet universities? competing and/or daring to challenge their masters’ evolved over time. role started changing in the age of cap- knowledge and skills, are perceived as italism and globalization. For example, ACADEMIC TENURE universities to dangerous and are not retained even if selective lifetime appointments have SYSTEM IN GEORGIA? granted a PhD degree. become an instrument for competing The massive exodus of Georgian edu- attract and retain If properly implemented, so the argu- universities to attract and retain top tal- cated elites over the span of 15-20 post- ment goes, the tenure system has the ent. Moreover, the economic security Independence years has turned Georgian top talent potential to bring the practice of politi- provided by the tenure system gave aca- academia into an intellectual desert, with cal clientelism to an end by reducing the demia a competitive edge over the pri- only a few tiny oases in fi elds such as decades. Indeed, the tenure system, if importance of personal loyalty as a fac- vate sector, which could afford much bacteriophages. Even these oases, how- accompanied with a fundamental way tor in the process of academic hiring. The massive higher salaries. ever, are to be found in specialized in which universities are fi nanced, man- Yet, what matters at this stage is to make However, the benefi ts associated with research institutes, not universities. aged and governed, could help turn brain sure that only truly distinguished schol- exodus of the tenure system are achieved at a cost. Brain drain remains the most acute drain into brain circulation or brain gain. ars (at least by Georgian standards) are For instance, a decision (essentially a challenge faced by the Georgian public Specifi cally, assurances of academic appointed for an indefi nite term. At least Georgian gamble) to grant tenure to “an exception- education system. Wave after wave of freedom, economic security and appro- initially, this would require almost exclu- ally productive scholar” may turn out to talented young individuals leave the priate funding could help attract back sive reliance on an external referral sys- educated elites have been wrong or biased towards yes- country to pursue better education and to Georgia distinguished scientists who tem, independent not of the Georgian terday’s scientifi c truths (espoused by academic careers abroad, and only a have made a career abroad. government or Patriarch but of present over the span of tenure committee members). Moreover, fraction are coming back as the “new Some Georgian scholars, as pointed day small time politics and academic given the limited number of academic Argonauts”. Thus, Georgian universities out by Zaal Kokaia (Lund Stem Center politicians ruling Georgia’s public uni- 15-20 post- appointments at any department, a tal- see very little generational change, par- director at Lund University, versity system. In practice, it means that, ented newcomer may be denied a job ticularly in fundamental sciences and and a proponent of the Georgian tenure if at all, initial tenure appointments would Independence simply because all positions are fi lled engineering, which faced very little system), may not be in a position to have to be made by independent panels with no-longer-productive-but-tenured demand in the post-Soviet de-industri- receive tenure at say Harvard and Oxford, of globally recognized scholars in each years has turned veterans and the only way to create new alization period. but are still brilliant “material” for lower- relevant fi eld. If the selection process is positions is to wait for their retirement. One argument in favor of instituting a rated Georgian universities. The best unbiased and transparent, the tenure Georgian Finally, there is the grave risk of (lazy) proper tenure system in Georgian uni- way to get them engaged would be to system has the potential to put Georgia’s academics losing the motivation to per- versities is to make them more attractive offer part-time contracts with Georgian education system and Georgia on the academia into an form (in either teaching or research) once for aspiring scholars, particularly those universities allowing these scholars to global map. If not, this reform will pro- intellectual desert granted a lifetime employment contract who have left the country in previous stay in touch with the scientifi c “main- duce a lot of hot air. Not much else. GEORGIA TODAY SEPTEMBER 27 - 29, 2016 BUSINESS 5 Innovation! Promising Exhibition for Georgian Businesses in Milan

National Geographic to Run Feature Story on Georgia

cuss each destination’s tourist potential, as well as BY NINO GUGUNISHVILI their culinary and viticulture traditions. After years of acrimonious relations during the administration of staunchly pro-Western former eorgia’s National Tourism Adminis- President Mikheil Saakashvili, Russia has once tration (GNTA) and Ministry of again taken a keen interest in Georgia. conference ses- Economy have continued with their Travel and culture reports have become regular BY DIMITRI DOLABERIDZE sions. aggressive effort to promote the small features in the Russian media as direct investment And fi nally, BI-MU South Caucasus nation of 3.5 million into Georgia from its former imperial master has offers the widest Gby organizing a one-week press tour for journalists grown exponentially over the last four years. he 60th edition of the Italian innova- communication from National Geographic’s Russian language edi- Russia’s business holdings and tourism numbers tion consortium, 30.BI-MU, one of the campaign in the tion and US food and wine magazine, Zester Daily. have far outpaced those from the West since regu- most qualifi ed international events main sector’s maga- The articles will focus on Tbilisi, Kazbegi, lar transportation links were re-established between dedicated to machine tools, robots, zines, social net- Sighnaghi, Telavi, Kvareli and Kutaisi, and will dis- the two countries. production systems and the auxiliary works and new Ttechnologies industry, will be held from Tuesday media at an inter- 4th to Saturday 8th October in the Italian city of national level. Eugenio Novarios, Executive Milan. With over 1,000 companies expected to Vice-President of International attend, the exhibition will offer not only spaces for Energy Agency (IEA) WHAT IS Consortium Export THE FAMILY HOTEL companies to show off their products, but also for THE ROLE B2B meetings and special focus areas, such as ‘Fluid OF UCIMU? Power’ which is dedicated to components for oil- The promotor is UCIMU-Sistemi per Produrre, the 'The Family', a brand new conceptual hotel focusing hydraulic and pneumatic systems. association of Italian manufacturers of machine on high quality decor details and personalized customer services, GEORGIA TODAY spoke to Eugenio Novarios, tools, robots and automation system. It plays a key Executive Vice-President of the International Energy role in developing all aspects of the fair and organ- welcomes guests from around the world! Agency (IEA) Consortium Export, who enthusias- izing the visits of international delegations, support- tically supports Italian businessmen in the creation ing them in matchmaking with Italian producers. Located in the ecologically clean and cozy district of Svanetisubani (Svaneti district) just two of joint ventures and in export growth in the Cau- kilometers from Rustaveli Avenue, ‘The Family’ features three fully equipped modern rooms – casus, the Caspian region and Central Asia. WHAT IS THE IAE CONSORTIUM EXPORT AGENDA FOR GEORGIAN VISITORS? Standard Double Room, Studio Room and Family Suite. WHY IS BI-MU THE MOST IMPORTANT IEA Consortium Export cooperates with UCIMU MACHINE TOOL EXHIBITION IN EUROPE? for the Caucasus, Caspian and Central Asia regions, 'The Family' has its own restaurant and garden with an open kitchen available for guests Only BI-MU guarantees 60,000 visitors (85 percent and will happily assist Georgian visitors with any of whom are involved in the purchasing decisions logistics problems, offer information on Italian to learn more about Georgian traditional cuisine and taste the delicious local food. of their respective companies) and informs you products, customs issues and contracts, and sup- who they are and what they are looking for at the port entrepreneurs as they visit the stands and Owners of 'The Family' welcome guests with a high sense of responsibility, believing in the exhibition with the opportunity to fi x appointments meet with Italian producers. online through the MATCH MAKING service. Georgian tradition of hospitality, and aiming to offer their guests something extra special. Offering free admission to visitors, BI-MU is ide- HOW DO YOU SEE THE ally located to be accessible from around the world, ECONOMIC RELATIONS BETWEEN www.facebook.com/thefamilyhoteltbilisi whether you are arriving by plane, car, high speed AND GEORGIA? www.hotelthefamily.ge train, bus or subway (with a stop at the fair). BI-MU IEA Consortium Export works to strengthen eco- +995 32 2910009; +995 599 588202; +995 574 501407 updates information on the exhibitors in real time nomic relations between Italian and Georgian entre- thanks to the SMART CATALOG. preneurs. We believe that Georgia and Italy could BI-MU puts the spotlight on tomorrow’s tech- become very important partners. This cooperation nologies and keeps you updated on technical and could help Georgia to develop its economy and THE FAMILY HOTEL production issues of the moment with the best increase the level of knowledge of Georgia in Italy. 'The Family', a brand new conceptual hotel focusing on high quality decor details and personalized customer services, welcomes guests from around the world!

Located in the ecologically clean and cozy district of Svanetisubani (Svaneti district) just two kilometers from Rustaveli Avenue, ‘The Family’ features three fully equipped modern rooms – Standard Double Room, Studio Room and Family Suite.

'The Family' has its own restaurant and garden with an open kitchen available for guests to learn more about Georgian traditional cuisine and taste the delicious local food.

Owners of 'The Family' welcome guests with a high sense of responsibility, believing in the Georgian tradition of hospitality, and aiming to offer their guests something extra special.

www.facebook.com/thefamilyhoteltbilisi www.hotelthefamily.ge +995 32 2910009; +995 599 588202; +995 574 501407 GEORGIA TODAY 6 BUSINESS SEPTEMBER 27 - 29, 2016 Tbilisi Mall Offers New Fixed-Rate Taxi Service BY NINO GUGUNISHVILI

ne of Georgia’s largest shopping centers, Tbilisi Mall, had introduced a new taxi service from any location in the Georgian capitalO for a fi xed fare of 5 GEL. According to Tbilisi Mall’s administra- tion, the 15-vehicle fl eet of Fiat-made taxis are new and fully equipped with and sensors to monitor both the driver and the safety of the passengers. “I am very happy that Tbilisi Mall has fi nally provided a comfortable and rea- After Tbilisi’s far larger East Point Both malls have struggled to attract sonably priced option for getting to and opened in late 2015, the two retail cent- regular customers due to their locations from the city. I often come to the Mall. ers have competed for customers, with on the outer reaches of Tbilisi’s city lim- This makes the trip much more con- both offering an increasing number of its, where public transportation is limited venient,” said Tariel, a visitor to the Mall. services to their potential clients. to small minibuses and private taxis. Business Georgia to Host

FOR SALE: BMW – 321 model Date of issue 1936 PRICE 10.000 USD ‘Tourism Industry’ Forum Business Georgia. "This is the fi rst time tourism, Historical and Cultural tourism, PREPARED BY KATIE RUTH DAVIES that Business Georgia is organizing the Leisure tourism, Adventure & Sport Tourism Forum and we are bringing tourism, Winter tourism, Gambling, participants to a beautiful touristic region Hospitality and Health tourism. he Business Forum “Tour- Adjara. It will provide the perfect back- The last part of the Forum will include ism Industry 2016” will be drop for participants to learn from and a discussion panel with the facilitators organized by the JSC Busi- network with each other in a vibrant and who are involved in implementing vari- ness Georgia, on 29-30 culturally as well as historically rich ous programs for promoting tourism September in Castello Mare atmosphere." industry in Georgia. HotelT & Wellness Resort in Tsikhisdziri. The theme and topics are specially The representatives of the GNTA, Under the theme ‘Past, Present and the designed to provide insights that are International Investors Association, CONTACT PERSON 557 12 38 90 Future of Tourism in Georgia’, the event practical and to share experiences on Partnership Fund, Ministry of Culture will be a high-level meeting to address how to capture the hearts and minds of and Monument Protection of Georgia, how tourism can contribute to the devel- tourists in the challenging and compet- and Agency of Protected Areas of Geor- opment of the private sector in Georgia. itive landscape of Georgia. gia will be discussing tourism advantages The event is expected to bring together The Forum is to be moderated by San- of Georgia, target markets, barriers and around 300 local and international busi- dro Vepkhvadze, Editor-in-Chief of Busi- problems, and at the close, they will ness leaders in tourism, high-level policy ness Georgia, and will include two ses- introduce future plans for the sector. makers, specialists and experts from the sions of individual speeches and Forum participants will have great public and private sectors, academicians presentations by main players in the networking opportunities during the and media representatives to exchange sector. coffee-break and non-offi cial part of the ideas and knowledge as well as share The fi rst session will provide an over- forum, which includes a lottery and experiences to enhance tourism devel- view of the Georgian Tourism Industry, After-Party. opment further. presented by the Georgian National On September 30, the event will be "Tourism Industry 2016’ promises to Tourism Administration (GNTA) fol- followed by Business Visits organized be an exciting and engaging tourism lowed by Ramaz Bolkvadze, Minister of by Business Georgia. Forum participants forum for Georgian and international Economy and Finance of Adjara, who will have the opportunity to visit a num- guests to learn of success stories of will share with the audience the success ber of companies, learn about their pro- Georgian Tourism, current issues, solu- story of the Adjara region. jects in the tourism direction and fi nd tions and best practice case studies," The Business Forum will touch almost out about investment opportunities in said Ana Gogishvili, General Director of all types of tourism, including: Eco- Batumi. GEORGIA TODAY SEPTEMBER 27 - 29, 2016 BUSINESS 7 TBC Bank Moves to London Stock Exchange’s Premium Segment

BY NINO GUGUNISHVILI

s if the recent acquisition of Bank Republic was not impressive enough, smoothly making TBC Bank leader on the Geor- gianA market, the countdown on the London Stock Exchange on 23rd of Sep- tember, Friday, turned out to be yet another landmark moment in the bank’s history as it made its way up to the London Stock Exchange Premium List- ing. Its impacts, benefi ts and outcomes are not limited to the strengthening of Georgia’s image as a stable, dynamically developing country with the lowest rate of corruption and a fl exible taxation system. The reforms undertaken over the years, social and economic stability, all make Georgia truly unique in the region, while its banking sector turns out to be one of the healthiest, since it managed to avoid the risks of devalua- tion. All of these factors naturally led to the general boost of interest towards Georgia’s growing investment potential. At the same time, TBC Bank being listed on the London Stock Exchange Premium segment opens enormous possibilities for other companies in Georgia, par- ticularly those planning to take the same route. TBC Bank CEO, Vakhtang But- skhrikidze, spoke to GEORGIA TODAY about the opportunities being on the London Stock Exchange (LSE) Premium Listing offers, and summed up the pro- cess of the group’s hard work in achiev- Georgia and will create the necessary that currency depreciation has had on SIGNED AN AGREEMENT ON successful. Each year we are experi- ing this stunning result. preconditions for businesses that oper- the economies and banking sectors in THE PURCHASE OF BANK encing signifi cant growth. We plan to ate in Georgia to enter the international our neighboring countries, it can be REPUBLIC. IS THIS MERGER continue this strategy. As we have TBC BANK’S SHARES HAVE arena. said that the Georgian economy and RELATED TO THE MOVE TO promised our investors, we expanded BEEN TRADED ON LSE SINCE banking sector had the healthiest and PREMIUM SEGMENT AND the scope of our services over the WHAT IS THE NEXT STEP 2014. AT THE END OF THE IN PARTICULAR, HOW WILL THE the most effective recovery. This year course of one year - we currently oper- IN YOUR STRATEGY? SECOND YEAR, COULD YOU COUNTRY AND CUSTOMERS we are focused on growth, unlike our ate as a fi nancial group, i.e. previously SUMMARIZE HOW THE BENEFIT FROM THIS? neighbors, which still face unsolved Yes, I hope we will fi nalize this transac- we were present on the market only BANK HAS BENEFITED FROM It has an indirect impact on the market problems. tion by the end of the year. As a result through a bank and a leasing company. LISTING ON THE LSE? and customers. Today, we have a large of this purchase, TBC Bank will be the Now, we have made signifi cant invest- The Initial Public Offering of TBC Bank’s number of foreign companies among WILL THE BANK BECOME number one bank on the market in terms ment in the investment services. I think shares was carried out in June 2014. In our investors. These are the foundations A CANDIDATE FOR THE of deposits and loans. Consequently, these investments will become tangible just two years, the bank has demon- that demonstrate trust in our country, FTSE 250 LIST? WHEN? we can achieve more effectiveness. All for our group in 2017-2018. We have strated the standards of corporate gov- which of course means they are inter- This is our goal and I believe we will this makes us anticipate an increased established an asset management com- ernance and transparency that were ested in it. Secondly, their decision to manage to enter the FTSE 250 Index interest from investors. pany, which will start offering asset necessary to qualify for the LSE’s pre- invest depends on the conditions of the within the next two years. During the last four years, TBC Bank management products to local and mium segment. Premium listed com- fi nancial industry and the country’s has followed a strategy to become the foreign customers in 2018. We have panies are regulated by the highest banking sector, as well as on perspec- IT WAS RECENTLY strongest bank in Georgia in the retail even more plans and ideas; but you’ll standards of corporate governance and tives of its development. And, the third ANNOUNCED THAT TBC BANK and SME sectors. The strategy has been have to wait and see! transparency. This implies that we have factor is TBC Bank itself. raised our standards of performance In other words, country risks are even higher and now offer our custom- already assessed and made by investors, ers the world’s best practices in cus- which bring potential investments to tomer service. other industries. Of course, investors The move to LSE premium segment have to see the perspective of growth, creates unlimited opportunities for the but the actual decision to invest will be bank’s development –now TBC Bank much easier. shares are available to the world’s larg- Premium Listing gives us a chance to est and most infl uential investors, which expand our investor portfolio. If before will eventually increase the liquidity of going to the premium segment, the our shares. majority of our investors were the ones In addition, we believe that our pres- who fi nanced emerging markets, now, ence in the LSE premium segment will we have the chance to attract British contribute to raising awareness about fi nancial foundations. This raises aware- ness for Georgia while simultaneously assisting the liquidity of our shares.

HOW DO YOU PLAN TO ATTRACT BRITISH FUNDS? IS THE SITUATION IN THE REGION ATTRACTIVE ENOUGH We have raised our FOR THEM TO INVEST? Georgia goes to the category of “mostly standards of free” economies according to the World’s Index of Economic Freedom performance even and the number of taxes and tax rates higher and now offer are low in our country. In addition, reforms have been implemented here our customers the over the last 12 years. These are all factors that trigger investor interest. world’s best practices Georgia’s banking sector is unique in in customer service terms of stability. If we look at the impact GEORGIA TODAY 8 BUSINESS SEPTEMBER 27 - 29, 2016 Grant Thornton Holds Regional Conference in Georgia

ember fi rms of Grant Thornton Another key aspect of discussion was coopera- network across the CIS region tion of the public and private sectors, and the guest held their annual conference in speakers of the conference, Sarah Williamson from Tbilisi, Georgia, on 26-27 Sep- AmCham Georgia, and Bruno Balvanera from EBRD, tember, 2016. The annual confer- talked about the investment climate in Georgia and enceM is the largest regional annual event, which highlighted the prospects of public / private sector brings together over 60 partners from 13 post- cooperation for delivering economic growth. soviet republics and representatives of Grant Commenting on the conference, Gernot Hebe- Thornton International. Discussion on Grant streit, Grant Thornton Global leader for business Thornton’s global strategy 2020 set the scene development and markets, said: “We are gladly along with sharing the best practices and planning hosting our annual regional conference in Georgia, actions to enhance the depth of collaboration in a country well-known for its hospitality and gen- the region. erosity. Moreover, the Georgian economy has great “Collaboration” and “growth” were the two bed- potential for growth in a number of areas, and we rocks of the conference, highlighting the success are happy to state that Grant Thornton in Georgia of Grant Thornton fi rms on their local markets and is delivering an exceptional client experience on on the regional level, as well as calling to life new this market, supporting our dynamic clients in initiatives during the next twelve months. achieving their growth targets.” “Grant Thornton annual regional conference is one of the highlights of the year,” said Nelson Pet- rosyan, Managing Partner of Grant Thornton Geor- gia. “We come together to discuss strategic devel- opment, set targets for greater growth, share best practices and build on the successes we recorded. There is a high level of cooperation between Grant Thornton fi rms in the region, ranging from provid- ing complex services and delivering value to our international clients with operations in this region, to internal initiatives aimed at growing our people and communities.” GEORGIA TODAY SEPTEMBER 27 - 29, 2016 BUSINESS 9 Cheated Investor: Dispute over Krtsanisi Residence asel LLC is the Georgian sible to recruit their half of the needed to which Company assets were trans- a year ago. Another Waldmann device carved out and used for construction company which owns the investment from new investors because ferred. Some of these bank accounts for obstructing enforcement of the and renovation of isolated structures. real estate and infrastruc- of the ethical need to disclose what were owned by Mr. Waldmann person- Supreme Court order was to provide the But there has been no development ture of the former Krt- Waldmann had done, Joel and Barry ally through off-shore dummy companies. bailiff with a few innocuous documents whatsoever for housing and space for sanisi Presidential Resi- signed over management to Waldmann, When Mr. Waldmann continued to refuse (out of the hundreds required) instead public use for the people of Tbilisi. dence.B Joel Golovensky, a citizen of invested no more time and funds beyond to disclose the fi nancial information, a of handing them all over. No fi nancial This is a "crime" committed against the USA and of Israel came to Georgia those already committed, and moved on law suit was instituted in Georgia with records or accounting or audit were the people of Tbilisi. almost 12 years ago together with a to other projects. The agreement pro- the result that the courts required full revealed and not one of the many foreign The bulk of the money received from real estate developer and fi nancial vided for full and frequent disclosure of disclosure by Waldmann to Golovensky. bank records, through which tens of mil- selling the real estate was transferred investor to negotiate the purchase of all Waldmann’s activities, so they hoped To date, Mr. Waldmann, as the sole direc- lions of US Dollars have passed, was out of Georgia to foreign accounts, the Presidential residence from the for the best. But they got the worst. tor, has done everything possible to turned over. Since all these documents many millions of US Dollars to accounts government. The fi nancial investor, Waldmann gave no information to obstruct enforcement of the Georgian are required to be kept at the Company's not belonging to Basel LLC, the owner Barry Septimus, also a USA citizen, is Golovensky or any other investor. On court decisions, and the Enforcement Krtsanisi offi ce, and since the police of the property, but instead belonging part of a prominent family of real estate the contrary, Mr. Golovensky's insistent Bureau, following a number of feeble offi cers of the Ministry of Internal Affairs to Mr. Waldmann's private companies. developers all over the US and par- requests for fi nancial information about and failed attempts at enforcement, has of Georgia have now assumed respon- Lease payments were similarly sent ticularly in the greater New York City the Company, its income, and its opera- turned the matter over to the police. sibility to enforce the law, one would abroad and substantial amounts of area. Both Joel and Barry fell in love tions were repeatedly refused. To make As an oppressed minority partner of have expected that the Georgian court these funds, too, were diverted to per- with Tbilisi, with Georgia and its peo- matters worse, it has been diffi cult to get Basel LLC, Mr. Golovensky called a part- orders would fi nally be enforced. But, sonal accounts. ple, and with this incredible pearl of hold of Mr. Waldmann since, for reasons ners’ meeting to discuss and clarify issues as of the date of this writing, the police, All these illegal acts should matter real estate up for sale. They negoti- known best to him, he has constantly connected to the sole and willful deci- like the Enforcement Bureau before it, to Georgian legal authorities and should ated with the government and outbid changed his residence. In the past ten sions of Mr. Waldmann acting without has still done nothing. have been reviewed by the Georgian all others interested in the property. years, he seems to have resided s in Basel, the consent or even knowledge of Mr. The police department has shuffl ed legal and tax authorities. But this still Barry wanted to build a mini city on ; Tbilisi, Georgia; New York Golovensky. Mr. Golovensky demanded the case from one desk to another and has not happened and Golovensky and the property to include residences for City, USA; Miami, Florida, USA; Ventura, his own withdrawal from Basel LLC, an the 7th Division of the Old Tbilisi dis- Septimus have now fi led a formal all income levels, recreational facili- Florida, USA; London, UK; and appar- accounting, and just compensation for trict police, where it now rests, seems request for Criminal Investigation ties and public use parks and buildings. ently elsewhere in Europe. He seems to his interest since it is impossible to con- to have done nothing. We fi led this law with the Prosecutor General. They brought in international archi- constantly change locations. tinue being even a passive partner with- suit in October of 2013. It was appealed It is up to the Ministry of Justice, the tects and told them to build a fantas- We now know that parts of the prop- out sharing in any of the income, without at every stage, and the Supreme Court police, and the Prosecutor General to tic facility to serve the people of Tbi- erty was sold off piecemeal and some being repaid for initial capital loans made fi nally ruled and ordered disclosure see that Georgian court orders are lisi. Barry and Joel engaged local were leased. Mr. Golovensky became to Basel LLC, without any disclosure of almost 17 months ago (19/4/2015). Because enforced and respected. professionals and staff members and aware of disreputable actions on the part any fi nancial transactions, and without of this fl agrant failure to enforce justice The purpose of this article is to were most enthusiastic. of the Company such as entering into being able to argue as a partner against by enforcing its own court decisions, inform the Georgian and international Barry also brought Mr. Ron Wald- legal commitments regarding the same unlawful actions perpetrated by the Mr. Golovensky wrote a letter directly public about serious problems foreign mann along and this Waldmann, a property with two different entities and Company. At the partner’s meeting, Mr. to the Honorable Ms. Tea Tsulukiani, investors face when doing business in citizen of Switzerland, wanted to be soliciting investments from unsuspect- Ronald Waldmann refused to compen- the Minister of Justice, setting forth the Georgia. A basic requirement of a a full partner. He claimed to be a ven- ing foreigners for projects never under- sate Mr. Golovensky for any of the income, history of failure and asking to remedy healthy business climate which will ture banker with extensive experience taken. for his loan, or for his ownership interest the non-enforcement of the court deci- attract foreign capital must be confi - in Europe and Wall Street. This is Some led to law suits against the Com- in the Company. sion and to enforce court orders. We dence that the judicial process in where the nightmare began. pany in the US and in Georgia for fraud; The director of Basel LLC, Mr. Wald- have been waiting for a response from Georgia will be effective impartial and A few months after Barry and Joel others were settled out of court in "con- mann, has tried every method in order the Minister for more than four months swift. When an investor concludes started the venture, they discovered fi dential" agreements where duped inves- to deny the exercise by minority partner and still have not received it. Now we that he must take legal action, he invests that Waldmann had illegally and tors were happy to get part of their money Joel Golovensky of his rights as a share- have initiated a formal administrative much time and resources to achieve fraudulently transferred the entire back and run as far away as possible from holder. He claims that he saved their action with the Inspector General of the a meaningful remedy. If the court property out of Georgia to Waldmann's Waldmann and his Georgian schemes. investment and was skillful in selling the Ministry of Justice, and we still hope to orders here - orders of the Supreme personal British Virgin Islands, off- Waldmann himself took huge cash kick- prime real estate to European custom- learn that the Ministry of Justice cares Court- are not enforced, justice is shore corporation. He did this by lying backs under the table, secretly contracted ers. But he hides all fi nancial and bank about justice. denied and the reliability of the entire to the Company lawyer and by fabri- for a personal share of investor profi ts records He has appealed the court deci- There are other law suits by Mr. Golov- system is shaken and called into seri- cating a phony protocol of a share- (which would siphon even more money sions to ever higher courts only to obstruct ensky pending in Georgia-which Mr. ous question. holder meeting that never took place. away from legitimate Company income), and evade the courts' orders, including Waldmann attempted to avoid by Until now, the system has not worked. Under threat of the courts and of used Company assets for his luxurious those of the Supreme Court. In a bizarre obstructing legal service. Mr. Goloven- Although the courts consider the cases criminal charges, Waldmann was forced lifestyle, and generally treated Company scene which could have been part of the sky brought a legal action before the brought before them and render judge- to return the property ownership to assets as his own private property. "Godfather" movie, Mr. Waldmann and Georgian courts and at present the court ment, its orders are ignored by the Georgia (to the jointly held Georgian Waldmann looked for foreign purchas- his agents physically prevented the is considering the case on withdrawal executive branch. The Georgian sys- company, Basel LLC). But when Barry ers and tenants so that he could divert National Bureau of Enforcement from of Mr. Golovensky from the partnership tem of enforcement seems to be asleep disclosed what had happened to his as much money as possible to secret, collecting the court-ordered evidence of the company and the payment to him or not to care. It is our intention to group of fellow investors which had sheltered bank accounts outside Georgia by using guards to keep them locked out of the proper value of his interest. keep the public informed on the court committed to invest the necessary and far from its legal authorities. Golov- of the fortifi ed Krtsanisi presidential Mr. Waldmann, as mentioned, has sold proceedings, the police enforcement funds, they all fl ed the project, declar- ensky demanded full disclosure of the compound. The Enforcement Bureau land to various foreign embassies (Swit- of the Supreme Court order and the ing that they would not do business tens of millions of dollars of income and Bailiff, turned away, simply went back zerland, UK, France, Iraq) and other criminal investigation. with "a thief". Joel and Barry were the disposition of the many off-shore to her offi ce and continued to do noth- entities, so that central parts of the Krt- stymied. Realizing it would be impos- bank accounts opened by Mr. Waldmann ing effective. This occurred more than sanisi Residence property have been PUBLICITY

China’s Southern Airlines Opens to Sell 26 Beijing-Urumqi-Tbilisi Route SOE’s on October 25

are to be auctioned off at a public offer- BY NICHOLAS WALLER ing, including poultry factory Salyan Broyler, grain supplier Qax Taxil, agri- cultural producer Zardab Aqrotexservis zerbaijan’s State and nut processor Zaqatala Findiq. Committee for The upcoming auction comes in the Property Affairs wake of the Azeri government’s August announced Mon- announcement that 65 SOEs would be day that 26 state- privatized by early 2017. That number Guangzhou-Toronto, and Tbilisi- BY NINO GUGUNISHVILI owned enterprisesA (SOEs) would put up was later revised on September 11 when Urumqi-Guangzhou-Los Angeles. for sale at a public auction on October Baku announced that 85 SOEs would be In recognition of the growing tourism 25. put up for sale a month later. potential for Chinese tourists, the Geor- According to the Committee, the open- The latest round of auctions will sharply rom 23rd of September a twice gian National Tourism Administration ing bidding price for each company will contrast with Azerbaijan’s previous pri- weekly fl ight will serve the (GNTA) held a specially organized be set at USD 914,000, a 50 vatization programs. According to Azeri Urumqi-Beijing-Tbilisi route, informational tour for major Chinese percent discount from their President Ilham Aliyev’s point man on with a Boeing 737-800 landing tourist agencies and representatives of estimated nominal value economic issues, Natig Amirov, the new at Tbilisi International Airport Chinese media, who had an opportunity of USD 1.83 million. owners will be required to include invest- atF 21:45 every Tuesday and Friday. to visit the main travel destinations Local Azeri news ment projects to the government once Southern Airlines are also offering within the country: Tbilisi, Mtskheta, agencies have reported they’ve acquired a controlling stake in fl ights from Tbilisi to Seoul, Tbilisi- Sighnaghi, Kvareli, Batumi, Kutaisi and that the largest companies each enterprise. Guangzhou-New York, Tbilisi-Urumqi- Mestia. GEORGIA TODAY 10 BUSINESS SEPTEMBER 27 - 29, 2016 Delving into London’s Georgian Restaurants MIMINO This smart dining room was opened in 2006 by a native of Adjara. George lived in London for six years before he hit on the idea of starting a restaurant. Soak- ing in a west-London sauna with Rus- sian friends was a treasured weekly event but – where to eat afterwards? The only Georgian restaurant was on the other side of the city. So, with a course of UK business education behind him, George found a suitable property in up-market Kensington and created Mimino. In the early days, Mimino was a mag- net for Russians, who more or less fi lled the place. But as more Russian restau- rants opened in London, their number dwindled, and now Londoners and London’s cosmopolitan population, IBERIA including Georgians, fi ll around half the tables. The house specialities are dump- favourite. Around the walls hang photographs lings and shashlik. The meat is mari- For the interior, Nino has reproduced from the early 20th century depicting nated in Svanuri salt, imported from a feature familiar to a lot of Georgian uniformed soldiers and offi cials, street Georgia, before it is cooked over char- households – a clutter of pretty china vendors and mountain villagers in old coal. Spices are imported from Georgia, that she brought with her from home. Georgia. too, but not the essential ingredient for – sulguni cheese is imported MIMINO from a specialist company in Germany. of Tbilvino, Marani and Bagrationi, and George makes a special feature of the BY SANDRA BUCHANAN sales are growing. wine table: at the front of the restaurant is a table with sample bottles, uncorked IBERIA so customers can taste as many as they eorgian restaurants began The name of this restaurant seems like before choosing from the wineries to appear in London about entirely out of place to a Londoner – it of Marani or Tbilvino. And at the back ten years ago. I went to makes Europeans think of . But a of the restaurant, lending another kind meet three Georgians who quick look at Wikipedia tells us that in of emphasis to the spirit of Georgia, are came to the UK in the the 9th century there was a region in some gorgeous paintings by Georgian earlyG 2000s and decided to make a home, Georgia named the "Curopalatinate of artist Mamuka Mikeladze. and ultimately a restaurant, in London. Iberia”. Inside, the restaurant’s décor So far, there are only six Georgian refl ects a traditional Georgian style with THE GEORGIAN restaurants in London and the popula- simple white walls, dark furniture and Nino is an artist who loves cooking. She tion of the city is 8.6 million – that’s wine bottles decorating the walls. graduated art school in Tbilisi in 2000, only one for every 1.4 million people, Lasha opened Iberia in 2009. Soon but after a couple of years with poor which is defi nitely not enough. Of those after completing his law studies in Tbi- employment prospects, left for London 8.6 million not many are Georgians – lisi he came to London and enrolled on to study English, and in 2009 she opened maybe 15,000 or 20,000 and while they a course of UK law, but found the fees The Georgian café-restaurant. She loved are the natural customers for these res- too expensive to continue. He wanted London from the beginning, especially taurants, native Londoners are fi nding very much to have his own business, the art galleries, and says she felt so out that they love Georgian food, too. but why a restaurant? Because, he says, comfortable and so little like a guest, Each restaurant has a different style and he couldn’t get the food he liked. Long- that staying was an easy decision. Besides is located in a different part of London ing for some real Georgian cooking, he which, she met and married an English- – but whether it’s a cosy café or a smart found a property in an ordinary street man. dining room, the same traditional dishes in north London and Iberia was born. Driven by the desire to introduce the and wines are served. Soon the young, the knowledgeable and art of to Londoners, National dishes are not always as good the curious from two blocks away in Nino hunted down a small property, outside their native country, but Geor- fashionable Islington came to eat at previously a sandwich bar, close to gians living in London are enthusiastic Iberia. Clapham Common in south London. about the fl avors produced in London A Georgian on holiday would not be The café opens at 8am to serve Geor- restaurants – just like home. Georgian disappointed with the menu: four kinds gian breakfasts with aladzki and kha- spices are so distinguished they have of khachapuri, badrijani, kombosto and choiani proving very popular on the to be imported from Georgia, but the cicaka, followed by (for example) sacivi, English palette, lunches that include herbs are common to Europe; sulguni kalmakhi or khinkali. Everything is deli- Georgian salads, blinis and pelmenis, cheese is not made in the UK, but it can cious, but what people in Georgia will and stays open till 11pm for chakhokh- be imported; a combination of soft Ital- want to know is – how authentic is the pili, chaqapuli, kotnis lobio and other ian cheeses is subtle enough to make a cooking? Lasha says that he imports familiar main courses. Nino does all the very good khachapuri. sulguni cheese, all the spices and some cooking herself, including cakes, which British taste buds love , of the herbs from Georgia to achieve she makes fresh every day. While no too. The Georgian Wine Society has the true fl avours. Other specialities like cake is exclusively Georgian (cake is established itself in the last few years, dried barberries and pomegranate seeds not bound by national borders), tradi- importing directly from the wineries are available in the UK. tional honey cake with walnuts is a big THE GEORGIAN Photo © Sandra Buchanan

ROUTING FLIGHT NUMBER WEEK DAYS DEPARTURE ARRIVAL TK 379 02:35 04:05 TBILISI - ISTANBUL ATATURK AIRPORT TK 387EVERYDAY 06:35 08:05 TK 383 22:55 00:30+1 TK 386 01:40 04:55 ISTANBUL ATATURK AIRPORT - TBILISI TK 382EVERYDAY 18:10 21:30 TK 378 21:15 00:30+1 TK 381 1/2/4/5/6/7 04:25 05:50 TBILISI - ISTANBUL SABIHA GOKCEN AIRPORT TK 381 3 05:05 06:30 ISTANBUL SABIHA GOKCEN AIRPORT - TBILISI TK 380 EVERYDAY 19:40 22:55 TK 391 1/2/4/6/7 10:35 11:40 BATUMI - ISTANBUL TK 393 1/3/4/5/7 20:15 21:20 TK 390 1/2/4/6/7 06:25 09:20 ISTANBUL - BATUMI TK 392 1/3/4/5/7 16:20 19:20 Tel: (995 32) 2 45 08 08 10 Galaktion Street E-mail: [email protected]

TIFLIS 7.5x6cm ING.indd 1 13/06/16 15:16 GEORGIA TODAY SEPTEMBER 27 - 29, 2016 BUSINESS 11 INTERVIEW: Winners of Startup Georgia

high-tech products and one solely focusing on BY NATIA LIPARTELIANI innovative ideas. In terms of the latter, the sponsor would get 50 percent of the company’s shares, while the high-tech program implied giving up only 5 tartup Georgia is a government-initiated percent of your shares. But as we did not want 50 competition aiming to fi nd and support percent external involvement in our company, we the best new business ideas. In August, decided not to apply and to continue developing 20 participants were chosen from the 150 the startup on our own. Then our friend told us applications by experts from the US’ about the high-tech program and as our idea involved SSilicon Valley. the usage of high technologies, we decided the GEORGIA TODAY spoke to the founders of one project was a good fi t for us. of the winning companies, Bubblestack, a startup focused on developing a high-tech platform to WHAT IS YOUR COMPANY’S MISSION? Bubblestack: Hydroponics is an agricultural method that involves growing plants in water without soil. With automate the agricultural hydroponics process. Nika: Hydroponics is an agricultural method that this method, 90% less water and 50% less soil is needed and you get a larger yield as plants do not have to compete for nutrients CEO of the company, Nika Ckhikvishvili, and involves growing plants in water without soil. With CTO, Dato Gokadze, enthusiastically shared their this method, 90% less water and 50% less soil is success story and their views on the current startup needed and you get a larger yield as plants do not and a great deal of scientifi c knowledge in order on competition and have self-suffi cient business ecosystem in Georgia for young entrepreneurs. have to compete for nutrients. Additionally, there to be able to control this process. Existing autom- models. But we as a company need a grant, not for is no need for pesticides, thus fresher healthier atized solutions are expensive, often over USD 100 just our budget but also to launch our product in HOW DID YOU FIND OUT products are grown. The technology itself has 000, thus only big businesses can afford to integrate the market to make it available to farmers. ABOUT STARTUP GEORGIA? existed since ancient times, however, it is very dif- this technology. We wanted to make this process Dato: The main problem with grants is that you Dato: We found out about it one week before the fi cult to control this process and it is not fully more personalized and accessible. An analogy can play by the rules given by the program that is fund- deadline. There were two types of project- one for automatized anywhere. You also need experience be drawn to Steve Job’s mission to make comput- ing you, but in our case, it is only 5 percent involve- ers personal and cheap. We want this technology ment and we are not limited according to any par- to be available to SMEs. ticular business model.

THIS PROJECT CAN HAVE AN ON GEORGIA’S INNOVATION AND IMPORTANT INFLUENCE ON TECHNOLOGY AGENCY’S LIST OF GEORGIA’S AGRICULTURE STARTUP COMPETITION WINNERS, Nika: Yes, it can, as almost 50 percent of the coun- YOU SCORED LOWEST IN THE try’s population is in the agricultural sector. And ‘MARKETING’ CRITERION AND only 20 percent of the Georgian market is satisfi ed THE HIGHEST IN ‘IDEA.’ WHY? with agro-products. This means 80 percent of Nika: Because we’re still new in the business fi eld. products are imported. Initially, we were overexcited about the idea itself, but we soon discovered we had issues delivering THIS PROJECT REQUIRES NOT ONLY our idea to potential sponsors and customers. Our IT KNOWLEDGE BUT ALSO A GOOD product requires awareness-raising, so we need to UNDERSTANDING OF BIOLOGY, design a social campaign about the cultivation pro- CHEMISTRY AND PHYSICS. WHAT’S cess, ecologically clean products, etc. We’ve just YOUR EDUCATIONAL BACKGROUND? created a website and we post live videos explain- Dato: I have an educational background in Eco- ing the whole process. We also aim to publish an nomics, but I’ve been working in the IT sphere for online book about hydroponics. years. Nika: I have a background in Chemistry and Biol- IS YOUR TARGET ONLY ogy, but I also worked in IT after I graduated. How- GEORGIAN FARMERS? ever, my educational background helped me a lot Nika: Not only them, as this product can also be while developing this idea. utilized by large supermarket chains, in order to grow fresh products in an energy effi cient way. GIVE US A SWOT ANALYSIS Additionally, we see the potential in the larger, OF YOUR STARTUP international market. Dato: to start with strength, this technology makes the process of cultivation 50 percent more effi cient WHAT WILL YOU DO IF ANOTHER and productive, as less soil, water, nutrients are COMPANY INTRODUCES A required. It saves energy. A weakness might be that SIMILAR IDEA OF AUTOMATIZED the capital investment might be relatively high. But HYDROPONIC SYSTEM? the benefi ts that it brings in the long term are more Nika: This is no unique project in these days of than worth it. Another weakness is that we need overpopulation and scarcity of resources in the the government to be involved in the successful world today. The aim of our project and the brand launch of this product as we develop it, but it should identity itself is that we are an open source. We be available to farmers. actually aim to involve many people, even our competitors (if there are any) in order to have some DO YOU THINK THE BUSINESS kind of modular system, de-facto standard that will ENVIRONMENT IS FRIENDLY FOR be used by lots of companies in future. Our system STARTUPS IN GEORGIA? is not closed- we want development and that’s why Dato: We are very content with this the Startup our written code is openly available to anyone Georgia program- it’s clear innovations are wel- wanting to add on something or be somehow comed and there is minimal bureaucracy. Though, involved. I think specifi c laws could be introduced for start- ups, in the form of tax deduction, for example, at the initial stage.

YOU ATTENDED THE INNO4 FORUM IN TECH PARK WHERE HUNGARIAN STARTUP FOUNDER GERGELY BOSZORMENYI STATED THAT EU FUNDS ARE ACTUALLY HARMFUL TO STARTUPS. DO YOU AGREE? Nika: If we take Silicon Valley as an example, they do not receive grants there, as businesses are based

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aving experienced a tem- Table 1. Changes in Rice and Coffee Prices porary 1% spike in August, Product Weekly Bi-weekly Monthly Annual food prices are going down Change Change Change Change again. In the second week UN Human Rights Point of September, ISET’s Coffee -5% -17% -10% -11% HRetail Food Price Index dropped 0.7% Rice 0% -14.3% -5% -4% m/m (compared to August 2016) and 2% y/y (compared to September 2015). from 2.50 to 1.65 Lari. likely to purchase other products as well. Man to Look into Plight Similarly, the same supermarket started As a result of more aggressive pricing IN THE SPOTLIGHT offering a more than 10% discount on employed by some of the supermarkets, Compared to the end of August, the big- Jacobs coffee, selling it at 10.55 GEL as after a few months of convergence, we of Georgia’s IDPs gest prices declines were observed for opposed to 11.80 GEL the previous week. begin to observe a gradual divergence coffee (-17%), apple (-15.5%), and rice By selling rice, coffee (and, possibly a between the minimum and maximum the protracted situation of IDPs in Geor- BY NATIA LIPARTELIANI (-14.3%). Prices moved up the most for few other key staples) at or below cost, Retail Food Price Indices, increasing the gia and their inability to voluntarily the following food items: peach (35%), the supermarket in question may be payoffs of those Georgian consumers return to their places of origin. Some of cucumber (17.2%), and eggplant (14.3%). hoping to attract bargain-seeking cus- who are willing to invest a bit of their those who did return to con- It can be noticed that 4 out of the 6 tomers, who, once lured inside, are quite time in bargain-hunting. he ’ Special tinue to face diffi culties regarding their largest price changes were recorded for Rapporteur on Human basic civil rights and freedom of move- seasonal food products such as fresh Rights, Chaloka Beyani, ment.” fruit and vegetables. Rice and coffee are arrived in Georgia on Sun- Georgian government forces fought interesting exceptions. day to review the small three wars against Russian-backed sep- TSouth Caucasus country’s ongoing crisis aratist forces in Abkhazia and South IT’S COMPETITION, STUPID! regarding thousands of internally dis- Ossetia between 1991-2008. The primary cause of the movements in placed persons (IDPs). The wars left thousands dead and led the prices of rice and coffee appears to During his four-day visit, Beyani will to the ethnic cleansing of a quarter of a be related to the competitive strategies meet with Georgian government offi cials, million Georgians. employed by Georgian supermarket civil society organizations and several Abkhazia and were rec- chains, three of which (Carrefour, Good- IDPs. ognized as independent states by Mos- will, and Spar) are included in our survey. “I will review any progress made in cow following the 2008 war. As discussed in one of our previous regards to the protection and assistance According to the Ministry of IDPs from publications, supermarkets compete by provided to IDPs and look at current the Occupied Territories, Accommoda- using some of the staple goods as so- challenges and opportunities for durable tion and Refugees of Georgia's latest called “loss leaders”. Thus, the entire solutions in Georgia, particularly the statistics, there are currently 263,598 14.3% biweekly decline in the price of integration of IDP needs into broader registered IDPs in Georgia. rice is the result of one supermarket development plans and initiatives,” said Beyani will later present his fi ndings slashing the price of domestically pack- the Zambia-born Beyani. to the UN in a report compiled after his aged Supremo rice by more than 30%, “I have continued to pay attention to departure from Georgia.