Investor.A MAGAZINE OF THE AMERICAN CHAMBER OF COMMERCE IN geISSUE 23 OCT.-NOV. 2011

Includes articles from the FT

Pay it Forward: Businesses Invest in Community

A Guide to Hydro Investments

Supermarket Mania

IPO: The Next Wave of Privatization

Investor.ge

Investor.ge CONTENT

Investment/ 18 Liberty Act: Putting Development the “Burden of 6 Investment in Brief Proof” on the A brief synopsis of Government new investments and The Georgian business news. parliament passed the government’s 8 Investment Watch: controversial Liberty Act Hydro Investment in in July. Georgia An overview of hydro 20 Supersize Markets: investments and Georgian grocery planned developments. chains compete for French President Nicolas new demand 10 Bidding Online Supermarkets are Sarkozy Visits The government’s popping up all over systems of online Tbilisi, but CEOs say the auctions – www. demand is still growing. FT report on BP’s months towards iauction.ge and www. proposal for a 800 mile achieving a “Deep and eauction.ge – are CSR Special Feature pipeline to Europe. Comprehensive Free gaining speed and 23 Businesses Investing Trade Area” (DCFTA). popularity with bidders in the Community 32 The Inexorable at home and abroad. Investor.ge looks at Rise of the MBA 40 McKinsey Report: notable initiatives Politicians Georgia’s ‘one-stop 12 IPO: Georgia’s implemented by FT report on the shop’ for citizens Newest Round of Georgian companies. growing number of and businesses Privatization? MBAs in politics. A reform-minded A short series on the 25 Pay it Forward government tries to Georgian government’s Corporate strategies 34 Dip Fails to Deter break down “silos” plans to float IPOs for help build strong ‘Brave’ Private to speed government minority shares of state business and strong Investors services. assets. communities FT report on jump in private investments Culture 14 Georgia Priming IT Special Feature between May and 42 Tourism: to IPO Shares in 27 IT: A New Frontier August. Government paves Railway, Pipelines for Investors the way, private Georgian Railways From a new computer 36 Gas field discovered initiative must follow is already well on its factory to cutting edge off Azerbaijan Georgia has come a way to an initial public IT classrooms, Georgia FT report on Total’s new long way to recapture offering of a minority is awash with innovative gas field find in the its reputation as a stake and Georgian Oil programs geared to Caspian Sea. tourism destination. and Gas Corporation, capture a piece of the Now entrepreneurs the Georgian state growing technology 38 Georgia: Moving and businesses need to electricity distributor industry. towards a Free catch up. and Telasi also seem set Trade Area with to follow. But how are 28 Information Europe 46 Helping the Strays these plans proceeding Technology Virtual The European Union of Tbilisi and how likely are Zone and Georgia have A new dog shelter is they? A favorable tax regime been engaged in an working to save stray for IT companies ambitious process for dogs and support 16 Georgia goes Public more than eighteen neutering practices. More Georgian The Financial Times companies list on 30 BP Plans Gas International exchanges Pipeline to Europe from Azerbaijan ...... 49

OCT.-NOV. 2011 3 Investor.ge

AmCham Georgia Patron Members:

© The American Chamber of Investor.ge Commerce in Georgia, 2011 All rights reserved. No part of this magazine may be re-printed, or reproduced or utilized in any form or by electronic, AmCham Executive Director George Welton mechanical or other means now known or hereafter invented, including photocopying Editor in Chief Molly Corso and recording, or in any information Copy Editor Fiona Coxshall storage or retrieval system without permission. Marketing & Promotion Bella Makaridze, Diana Karibova The opinions expressed in this magazine Promotional Design Levan Baratashvili do not refl ect the opinion of the American Chamber of Commerce in Georgia nor its Magazine Design and Layout Giorgi Megrelishvili Board Members or staff, unless otherwise Writers Aleqsandre Bluashvili, Nick Clayton, stated. AmCham Georgia neither endorses, Molly Corso, Andrew Coxshall, nor can be held liable for any eventuality Fiona Coxshall, Keti Khukhunashvili, arising from the use of any product or Eteri Maisuradze, Paul Rimple service advertised within the pages of this Photographs Molly Corso, Davit Khizanishvili, issue. Jessica Lewis Investor.ge is printed by CEZANNE

AmCham Georgia

36a Lado Asatiani Street, 3rd fl oor Tel: 2 22-69-07 Special thanks to the AmCham Editorial Board – Irakli Baidashvili, Betsy Haskell, Badri Japaridze and Stephanie Komsa – the AmCham staff, Aleqsandre Bluashvili, [email protected] Keti Khukhunashvili, the EU mission and Jessica Lewis for the generous use of her [email protected], www.amcham.ge photographs from the IWA guide launch. www.investor.ge

4 OCT.-NOV. 2011 Investor.ge

OCT.-NOV. 2011 5 Investor.ge

ment center in Tbilisi. Construction of Gino Paradise Tbilisi is scheduled to start in late December. The complex, which will be built at Lisi Lake, will include hotels, swimming pools, a children’s entertainment center, apartments, confer- ence facilities and shops. The estimated cost of the 2-stage project is 50 million lari, over a two year implementation period, Giorgadze said. The project will be funded by Slo- vakian Eurocom Investment and Exim- bank, but may involve Georgian partners as well. It is expected that part of the fi rst stage will be completed by summer 2012, including sideshows and an open air swimming pool. An indoor pool and tion project, which includes several busi- spa center will be fi nished by winter Investments ness units - among them an Olympic-size 2012. The second stage will include swimming pool, outdoor pools, fi tness, construction of apartments and confer- in Brief retail and entertainment centers. ence facilities. Thermal Park Besenova operates in Slovakia since 2000. From hydro to real estate, Bollywood Shoots Movies in Bollywood to ski resorts, Investor.ge Georgia Official FDI Figure Jumps 47% reports on the latest developments According to the Georgian Na- Foreign Direct Investment (FDI) in investment opportunities. tional Investment Agency, Bollywood to Georgia was 47% higher last year chose Georgia to shoot two upcoming than initially recorded, according to an Indian fi lms. Roop Naik, Director of amended report by the Georgian Depart- Wide Angle Creations, an India-based ment of Statistics (GeoStat). fi lm production house, announced the The change, which pushed FDI to KETI KHUKHUNASHVILI project in August 2011. Tbilisi media- over $800 million, was due to a number house Metro Studio and Georgian cinema of factors, noted Zaza Chelidze, the Mziuri Park Reconstruction production company Kartuli Filmi JSC head of GeoStat. A new international ziuri Park is expected to be- will coordinate the production work in methodology allowed statisticians to come the new central park of Georgia. The week-long production of survey companies created using FDI but MGeorgia. Kensington Geor- the fi rst fi lm, Billa II, is set for for later also included foreign owned subsidiaries gia, the company that developed this month, while the 65-day shoot of the based in Georgia. This resulting in 200 Plaza in 2011, has been tapped to develop second fi lm Double Trouble reportedly more businesses being included in the the park. Kensington Georgia (www. began in October 2011. fi nal data. The annual survey refl ects kensington.ge) is a British-based com- companies’ revenues and losses pro- pany founded in 1998 with a portfolio Slovakian Thermal Park portionally to the percent of FDI in the that includes commercial and residential Besenova to Build a New Aqua business. Finally, not all eligible com- property developments in London and Park on Lisi Lake panies were included in the preliminary South East England. According to Lasha In an interview with Sarke, Tamar data because they did not respond to Matchavariani, the marketing manager at Giorgadze, Deputy Director of Slovakian GeoStat’s quarterly questionnaires. Their Kensington Georgia, nearly $10 million Thermal Park Besenova, announced responses were however, included in the has been invested in the park reconstruc- plans for a new aqua park and entertain- annual report.

6 OCT.-NOV. 2011 Investor.ge

OCT.-NOV. 2011 7 Investor.ge

Investment Watch: Hydro Investment in Georgia

Investor.ge is expanding its Javakheti region. The location is that are already under construction, coverage of investment and particularly suitable as its proximity to the Ministry of Energy and Natural business opportunities. Analyst the border with Turkey makes export Resources of Georgia also highlighted Aleqsandre Bluashvili reports on easier, while the recently improved a number of projects that are at new deals and trends in the hydro- power sector. local infrastructure aids construction. particularly advanced stages of Construction began in December investment. Investor.ge talked to 2009 and is scheduled to end in 2015. the companies involved. “Clean n the years since the Rose Revolu- When completed, Mtkvari HPP will Energy Invest”, a Norwegian-based tion, the turn-around of the electric- be capable of generating 200 thousand company, plans to build 4 HPP-s on the Iity production and distribution sys- MW annually. Taking into account Adjaristskali river, in Adjara region, tems has been one of the government’s that the average price of electricity in 15 km from the border with Turkey. most visible achievements. Thanks to Turkey is approximately 12.5 cents At an estimated cost of $385 million, increased production and more effi cient per kWh, this would translate into the annual electricity generation of distribution, most of the country now $26.25 million worth of electricity if the Adjaristskali project will be 864 enjoys 24-hour electricity supply and it was all exported. Total construction million kWh. Georgia has even become a considerable cost is estimated to reach $65 million. A feasibility study for the project net exporter. Caucasus Energy and Infrastructure is underway and, if approved, In 2004 annual generation of electric- received $58 million in funding from construction will start in January ity was 6.9 million Megawatts (MW); by the Overseas Private Investment 2012. “We are currently optimizing 2010 this had increased to 10.1 million Corporation to cover a large portion of the design of the project ... Hydro- MW. This has allowed Georgia to move the costs. power projects with dams and tunnels from a net importer of 1.2 million MW Another hydro-power plant under are very complicated construction in 2004 to a net exporter of 1.3 million construction is Paravani HPP. Georgian projects and a lot of effort has to be MW in 2010. Urban Energy, a subsidiary of Turkish put into the planning phase in order At the same time, the Government Anadolu Industry Holding, has to ensure that the construction phase of Georgia has been highlighting invested $125 million in the project. develops according to plan,” noted Georgia’s potential for developing Paravani HPP is located on Paravani Bjorn Brandtzaeg, Director of the hydro-electric power as a source of River in south-eastern Georgia, 35 km Adjaristskali project in an e-mail clean energy production. The Ministry from the Paravani Lake. Construction interview with Investor.ge. of Energy and Natural Resources of started in 2009 and will take four years. Clean Energy Invest plans to Georgia currently has preliminary Paravani HPP will start operating export more than 80% of the electricity agreements for up to 40 new hydro- by the end of 2013 at a capacity of 425 generated at Adjaristskali to the electric power stations. If all of these thousand MW per year. In addition Turkish market. are built, they will constitute $4 billion to the plant, the investment project The development of hydro-power in in new investments in the sector. includes construction of a 35 km Georgia is being supported fi nancially However, in the wake of the war transmission line that will connect the by a range of international fi nancial and the fi nancial crisis currently facilities to the national grid, as well as institutions, including the World Bank only Mtkvari HPP (Hydro Power roads to improve access to the plant. Group, Asian Development Bank, Plant) and Paravani HPP are under EBRD and the International Finance European Bank of Reconstruction and construction. The fi rst company to start Corporation have helped fi nance the Development and European Investment construction was JSC Caucasus Energy project with a $115 million loan. Bank. & Infrastructure; it is building a 46 In addition, other donor assisted MW hydro-power plant on the Mtkvari Projects in the pipeline programs are helping the government River in , in Samtskhe- In addition to these two projects to market the projects. The Hydro

8 OCT.-NOV. 2011 Investor.ge

Investment Promotion Program (HIPP) Energy Invest, for example, identifi ed line to Turkey will be operational by is a USAID funded project that assists this as the greatest challenge of the 2012-2013, facilitating the export of government efforts to implement project. “We are working with IFC, Georgian electricity. specifi c key tasks that should lead a member of the World Bank Group, Finally, the regulatory environment, to more investments in the hydro- our co-developer of the project to both in Georgia and Turkey, is still power sector, particularly in small and make the project bankable,” said Bjorn under development. medium plants. HIPP is expected to Brandtzaeg. Jake Delphia, head of the HIPP attract investment of up to $70 million, Another reason for the delays is project, told Investor.ge the biggest adding 400 MW of renewable energy that the infrastructure for electricity hurdles to investment in the Georgian to the current generation. export needs to be in place before hydro-power sector are the lack of But if the opportunities are this big companies are willing to invest. “full harmonization of energy sector and there is so much support, why has To that end, EBRD and EIB are regulations to international standards, it taken so long? currently implementing the Black an operational transmission line to The most obvious reason is Sea Transmission Network Project Turkey and an active promotional fi nancing. In the aftermath of the that will add 300 km of high-voltage campaign”. fi nancial crisis, credit is more transmission line across southern “Once everything is in place we expensive, which presents considerable Georgia connecting the Georgian will see much larger investment fl ows challenges for large, capital intensive transmission grid to the Turkish grid. into the Georgian hydro-power sector,” projects like hydro-power. Clean The new 400 kV transmission he said.

OCT.-NOV. 2011 9 Investor.ge

On both sites registration and bidding during an arrest, noted Jvania. The site Bidding are straightforward; auctions are open to is also opening up the option for people registered individuals, as well as busi- to post items they would like to sell. Online nesses. However language remains an Mamuka Woweria, adviser to the issue on www.iauction.ge, which is at chief of economic affairs at City Hall, The government’s systems of present only available in Georgian. told Investor.ge that their site is most online auctions – www.iauction. The MOF’s site, www.eauction.ge, popular with people bidding on land ge and www.eauction.ge – are gaining speed and popularity with sells everything except for land and “im- plots; unlike the MOF site, www.iauc- bidders at home and abroad. movable” property, Eka Jvania noted. tion.ge offers property as well as goods. Available in English and Georgian, the Items offered for auction even in- ETERI MAISURADZE service has gradually built up a large clude scrap metal, a traditional export following. The number of foreigners for Georgia. Woweria said land sales verything from houses to haird- using the site increased 18 percent from are the most popular on the site, with the ryers is available on the govern- July to August. city providing maps and other terrestrial Ement’s two online auction sites: Jvania, the chief of marketing and data so bidders can study the plots before www.eauction.ge from the Ministry of innovation at the Ministry of Finance the auction. Sales of government prop- Finance (MOF) and www.iauction.ge (MOF), said the volume of bidders has erty are treated as privatization. Tbilisi from the Tbilisi City government. increased monthly since the site was City Hall has already paid more than 21 The sites, a refl ection of the govern- launched in May. In the span of fi ve thousand lari in revenues to the budget ment’s efforts to streamline procedures months, over 100 million lari worth of this year, noted Woweria, and the MOF and transparency concerns over public goods has been sold on the site. estimates that by the end of 2011 it will auctions and privatizations, went online All the items available are state prop- have contributed four million lari to the earlier this year. erty, usually as a result of confi scation national budget.

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OCT.-NOV. 2011 11 Investor.ge IPO: Georgia’s Newest Round of Privatization?

12 OCT.-NOV. 2011 Prime Minister Nika Gilauri is backing a plan to sell minority shares of state entities, including strategic assets like the Georgian Oil and Gas Corporation, the railway and the electricity distribution line. Investor.ge looks at why an IPO is attractive for the government, and the domestic debate over the proposal. up strategic objects to foreign ownership. owned assets – marks a change to the Georgia There appears little doubt that the government’s usual method of straight amendments will be passed. Parliament privatization. has okayed the changes in the fi rst two Former Finance Minister Kakha Priming to hearings; it is largely perceived the third Baindurashvili noted that privatiza- and fi nal vote will pass as well. tion can mean “different things”. Now Prime Minister Nika Gilauri, who chairman of the supervisory council for IPO Shares initiated the changes in August, believes the Georgian Post, he said the post of- the sale of minority shares could bring fi ce is not being considered for an IPO “hundreds of millions in additional in- right now. in Railway, vestments”. The government is, however, invest- Speaking to the cabinet in September, ing heavily in the postal service. The Pipelines Gilauri tried to ease concerns that the sale intensity of the reforms, which include of minority shares of strategic assets like raising the cost of mailing and moving the railway and Georgia Oil and Gas Cor- a controlling share of the state lottery poration could harm national security. to the post, have raised questions about Government privatization is on “The Georgian government neither how long it will remain a state company. the agenda again, although now nor in the future plans to sell the But opposition leaders like Irakli now the government seems to controlling stake of these enterprises,” Alasania have objected to the new IPO be considering share offerings as a means of making the sale. PM Gilauri said at a government session plan. In an open letter to Gilauri, Alasa- Georgian Railways is already on September 14 - according to com- nia said Georgian “reality” – an apparent well on its way to an initial ments reported on Civil.ge. reference to relations between Georgia public offering of a minority “Our goal is to fl oat minority stakes and Russia – would make IPO sales stake and Georgian Oil and – 20, 25, 30 percent – of these strategic potentially “dangerous” for the country. Gas Corporation, the Georgian enterprises on the international stock Alasania also argued that the eco- state electricity distributor and Telasi also seem set to markets; no more than a 49 percent stake nomic crisis will push down the value of follow. But how are these plans in these companies will be fl oated.” the assets fl oated on international stock proceeding and how likely are According to some investors, these exchanges so Georgia will sell shares for they? sales make sense because Tbilisi is no less than they are worth. stranger to international markets. In Anders Åslund, a senior fellow at the 2006 Bank of Georgia was listed on the Peterson Institute for International Eco- MOLLY CORSO London Stock Exchange and in 2007 nomics in Washington, stressed however and 2011 Georgia made two large bond that IPOs are more secure than seeking a he fi rst step in any of these IPOs issues. “strategic investor” for sensitive assets. is the legislation to allow them For this reason, Georgia is a known “You can get into a situation that a Tto happen. Changes to legislation commodity for investors, noted BG Capi- strategic investor sells and to a less desir- are being heard by parliament; if passed, tal CEO Nick Piazza. It is also an easy able partner,” he noted. the state would be free to sell minority place to engage with the government. Investment analyst Stephanie Komsa shares in strategic objects like gas pipe- While the region has a reputation as a noted that right now appears to be a lines, the railway and the electricity grid. place where “investors go to be forgot- “good time” for Georgia. Other entities earmarked for IPOs ten and mistreated”, Georgia has been “I think there is growing interest,” include a minority share in the Georgian an exception. The waves of reforms, she said. State Electricity System and the state’s coupled with the government’s interest “I think this is a really good time minority share in the Tbilisi electricity in engaging with investors, have helped for Georgia, there is political stability distribution system. create interest in the country. and you can still see the progress that Opposition parties, however, are However, selling equities on the is happening with Georgia’s economic concerned the proposed sales will open international markets – IPOs for state growth.”

14 OCT.-NOV. 2011 Investor.ge

OCT.-NOV. 2011 15 Investor.ge

The electricity distribution line one of the assets slated for a possible IPO. Georgia goes Public More Georgian companies list on International exchanges

ANDREW COXSHALL, KPMG Bank of Georgia became the first increased from only 4 in 2005, peaking Georgian company to list its shares on at 12 in 2007 before dropping to zero in n August 2011, the Prime Minister an international exchange when, back in 2009. This is hardly surprising given the of Georgia announced that Georgian 2006, it was listed in London. However state of the global economy at that time. IRailways (GR) along with Georgian it has taken until now for other Georgian 2010 saw a slight revival with 4 Oil and Gas Company (GOGC), Geor- companies to follow suit. So why the listings and 2011 has already seen 11 gian State Electro Systems (GSES) and increase in activity? What does it mean listings. The listings/IPOs (Initial Public Telasi would be seeking to list shares for Georgia and what could it mean for Offerings) have ranged from $160 mil- in International markets (London and your business? lion to over $10 billion. This year’s clear Warsaw were mentioned by the PM). general increase in activity may partly Also Bank of Georgia announced that it The road to London explain the PM’s August 2011 statement. would be seeking a “Premium” listing on Since May 2005, nearly 40 compa- The Prime Minister’s announcement the London Stock Exchange (LSE) – a nies from the former Soviet Union have in August appeared to indicate a new move that should increase the liquidity of been listed on the LSE. Of these, over phase in Georgian privatizations (GR, securities and broaden the investor base. 30 are from Russia, 4 from Kazakhstan, GOGC and GSES are all 100% owned There is also speculation that another 2 from Ukraine and, until now, only 1 by the Government of Georgia) but this Georgian bank is looking to list. from Georgia. The number of listings time selling minority stakes on the in-

16 OCT.-NOV. 2011 Investor.ge

ternational markets. So what is actually ally require the company to “comply fi nancing (compared to debt fi nancing), involved in a listing in, say, London? or explain” adherence to the relevant a way for shareholders to extract value standards and benchmarks in the ap- and also cheaper fi nancing in the future, What is a listing? plicable jurisdiction. For example, for as listed companies can generally ob- When a company wants to have an a listing in London the company would tain fi nance at better rates than unlisted Initial Public Offering this normally need to take into account the Corporate companies.” means that it makes its shares avail- Governance Framework in the UK (such able for purchase on a recognized stock as the Turnbull report, the UK Corporate What to do next exchange. As an alternative, the com- Governance Code, the UK Companies So if you believe that your company pany can issue global depositary receipts Act, etc.). might be ready for a listing what do you (GDRs). A GDR represents an interest in For a few companies this may be need to do? Firstly, you need some good a share but is not actually a share itself straight-forward but for most companies advice from professionals who know and listing GDRs is the most popular unused to public scrutiny it will involve a what is involved in the process. Your method for listings of companies based large amount of work to put the necessary auditors should generally know what in the former Soviet Union. If a company policies and procedures in place and to is required. The company will need to wants to list in London, for example, the fi nd the right people (for example to be appoint underwriters, bankers, lawyers, question also arises whether to list on Independent Directors, head up a proper accountants, specialists depending on the main market, the “Offi cial list” or on internal audit department and to head up your business and internal committees the Alternative Investment Market (also an Investor relations department). (audit, nomination, remuneration) and known as AIM). Generally listings on be ready for a great deal of work. AIM are for smaller companies and AIM Why go for a listing? is perceived as a market for developing At this point you might be asking if What to expect companies with higher risk. going for a listing is so expensive, time- Lastly, be prepared for lots and lots of consuming and diffi cult, why bother? It discussions with lawyers (your lawyers, “I own a big Georgian is a good question which is not simple the advisor’s lawyers, local lawyers, company; can I just list in to answer. It really depends on what the international lawyers) and be ready for London?” management or shareholders are seeking. some strange terms such as “greenshoe”, Firstly, it should be noted that list- If shareholders are looking to unlock the “red herring”, “lock-up” and “book- ing shares or GDRs in London is not their investment but still maintain control runners”. an easy or quick process; it requires a and the company is already well-run, huge amount of effort by the manage- has good financial reporting systems End of the journey ment of a company and a great deal of and good corporate governance (audit The expected increase in listings time. Also it can be a very costly exer- committee, nomination committee, of Georgian companies will mean that cise – international bankers, who act as independent directors, etc.) then the Georgia becomes known to a wider circle underwriters, Reporting Accountants and process could be easier than trying to fi nd of investors and therefore could help pro- two sets of lawyers are expensive. Due a private investor to acquire a minority mote further direct investment into Geor- to the amount of time, effort and expense share in the business. gia. In addition, by making Georgian involved in a listing it does not really Also for a company to state that it is companies adhere to international best make much sense to try and raise small listed on an international stock exchange, practice the general level of corporate amounts from the international markets carries a certain amount of kudos. Svet- governance should also improve which – $50 million is about the minimum. So lana Marriott, a Capital Markets Partner should lead to better run, more effi cient only the very largest Georgian companies for KPMG in the CIS, currently on sec- and more profi table Georgian companies. should contemplate this route. ondment from KPMG in London where However the journey is not a short one, Another very important issue to she spent 8 years working for KPMG nor is it easy, but it can ultimately be consider before thinking about an inter- explained, “Listing on an international rewarding for those willing to take the national listing is that markets (and the exchange can hold many benefi ts for road to London, or Warsaw, or New York, relevant listing authorities) will gener- companies including relatively cheaper Hong Kong or Singapore . . .

OCT.-NOV. 2011 17 Investor.ge

Liberty Act: Putting the “Burden of Proof” on the Government

The Georgian parliament passed the government’s controversial Liberty Act Georgia’s in July. Among other things, the new law changes the constitution to make it more difficult for future governments to spend more. In an interview with Liberty Act: Investor.ge, the prime minister’s chief advisor Vato Lejava, outlines what the Ahead of the act means for business and investors. he Liberty Act will create a better ticular the International Monetary Fund curve fi scal environment for investors, (IMF) was concerned because it lim- Taccording to Vato Lejava. ited the government’s ability to regulate The act, set to come into force in shocks to the economy. The European European governments are 2013, is the Georgian government’s Union (EU) was displeased with plans passing similar measures ambitious law aimed at capping gov- to limit regulatory bodies, permits and inside the Eurozone to combat ernmental discretionary spending. It sets licenses – a move that might have con- the fi nancial crisis. “parameters” for a strict fi scal policy fl icted with the deep and comprehensive including a three percent cap on the trade agreement and negotiations. In 2009, President Mikheil budget defi cit and a limit on government But Lejava stressed that two years Saakashvili’s proposals to spending to ensure it does not exceed 30 on, the goals laid out in the Liberty Act cap government spending and percent of GDP. are far from radical. Many politicians in make tax increases subject The ability of the government to the EU and the United States are now to an obligatory referendum increase taxes is also strictly curtailed: considering “how to cut” spending to met with criticism and parliament made changes to the constitu- combat the global economic recession, disapproval. tion obliging future governments to hold instead of spending more – the ruling a referendum in order to raise taxes. philosophy in 2009. Fast forward to today: the Those restrictions provide a “stable” “Now during the last two years … we Liberty Act seems on par with environment for investors, Lejava said. can see a difference in the international several similar initiatives “I think it is a message, internally and arena; to tackle the crisis, is focusing ex- coming out of capitals as externally as well. It is about predict- actly on how to limit the discretion of the diverse as Berlin and Madrid. ability. What investors need, whether do- government,” he said. “[S]omething that In August, Spanish Prime mestic or foreign, is that the situation is was considered a novelty has become Minister Jose Luis Rodriguez stable and predictable,” he commented. something debated. Now it is important Zapatero proposed creating But the fi nal version of the law is to appreciate that the initiative of the a constitutional amendment quite a departure from the initiative president was quite visionary.” to force the government to President Mikheil Saakashvili laid out in The restrictions on government balance the budget. The law is 2009. Gone are the provisions banning spending fundamentally alter the “bur- expected to pass in November, new tariff regulatory bodies and new den of proof” for changing fi scal policy, before planned elections. licenses and permits. Lejava said, adding, “… any government However the government can bypass who will say I need to increase my dis- Germany and France have the referendum if the tax increase is tem- cretion will need to convince the public called on all governments in porary. Spending caps are also subject to and then bring the changes through the the Eurozone to incorporate a two year grace period if needed. democratic process.” similar laws in their Controversy over the initial proposal “The burden of proof will be on the constitutions. was premature, noted Lejava. In par- government.”

18 OCT.-NOV. 2011 Investor.ge

OCT.-NOV. 2011 19 Investor.ge

Georgian shoppers – especially in Tbilisi – are no stranger to the supermarket phenomena as supermarket chains expand into neighborhoods across the capital. While the volume of new grocery stores appears unsustainable, CEOs argue the potential for even more stores is huge. Goodwill hypermarket in Vake

by block, with nearly identical shops 80 percent of its food products, making Supersize opening within meters of each other. up a large proportion of its $1.3 billion Populi, the biggest supermarket annual trade defi cit. chain, opened 20 stores over the past two A 2006 report on agricultural de- Markets: years, and plans to increase its 44-store velopment in the former Soviet Union Georgian grocery network to 65 sites around the country indicates integrating local farms into by next year. Nikora, which specializes supply chains for large retailers was chains compete for in selling its own fresh food products, essential for meaningful agricultural new demand runs more than 70 shops nationwide, development in the Commonwealth of while dozens of smaller supermarket Independent States. competitors such as Big Ben, Ioli and The report, prepared by a large Rus- Salve operate 3-6 stores and Goodwill sian think tank, found that smaller farms operates three massive hypermarkets in were consistently left out of retailer NICK CLAYTON Tbilisi and Batumi. supply chains due to their inability to Newcomers, like Smart Retail and produce suffi cient volumes, resulting in Tbilisi, the supermarket capital Nikora’s line of supermarkets, are also retailers passing over local production ver the last decade, Geor- moving into the market even as existing for imported food products of similar gia, traditionally a country of brands expand. quality. Osprawling bazaars and corner Samson Pkhakadze, general direc- shops has increasingly become a su- From the farm to the aisle tor of Smart Retail, estimates that about permarket nation. This presents huge However, as Georgian food re- 28 percent of the products on Smart’s opportunities for retailers and challenges tailers continue to grow, the country’s shelves are local. for farmers as food consumption patterns food producers have largely stagnated. However, he noted that fi gure in- change. Despite the fact that more than half cludes a high percentage of products A frenzy of new Georgian grocery of Georgia’s population works in the from foreign companies who have dis- store chains has hit the capital, with agricultural sector, the industry only tributers in Georgia, but produce their brands like Goodwill, Ioli, Nikora, Po- represented 9 percent of Georgia’s GDP goods elsewhere. The rest of Smart’s puli and Smart supermarkets competing in 2010 — down from 14.8 percent in produce is directly imported. for customers. The battle is fought block 2005. Meanwhile, Georgia imports about “We are looking for companies who

20 OCT.-NOV. 2011

Investor.ge

will invest in (Georgian) agriculture,” he Jambazishvili said this is largely be- transitioned from being the only chain said. “We will help those companies; if cause of differences in demand between of its kind to one of several vying for a they invest in agriculture, then we will Georgia’s urban and rural customer market that continues to be wide open. fi nd shelves for their products.” bases, as the latter continues to prefer “We had an absolutely different Investment is exactly what the sector shopping in open markets and has a lower strategy in those days; we rebranded two needs, according to the Economic Pros- average disposable income. years ago and we’re now paying more perity Initiative (EPI)’s “Value Chains That is something that Pkhakadze, attention to customers, not just our as- Assessment” report produced by USAID. hopes to change. Smart is the newest ar- sortments,” she said. “The fi rst strategy The report’s researchers looked at ways rival to Georgia’s supermarket scene and was to open a large number of stores, to increase the overall value of Georgia’s hopes to have fi ve stores operational by now we’re working on quality.” agricultural sector from producer to pro- the end of 2011. Although Smart’s fi rst Populi now operates a customer cessor to retailer. two stores opened in Tbilisi, Pkhakadze hotline, which Jambazishvili said gets Among Georgia’s agricultural prod- said Smart’s goal is to bring “new for- around 100 calls per day. This is part ucts, it evaluated fresh Georgian vegeta- mat” shopping to the regions. of a wider move by the company’s new bles as “underperforming and [having] Currently, he said, 90 percent of the management to gather market research. signifi cant weaknesses” including a need Georgian retail market is made up of “old “We are conducting a lot of research for investment, greenhouses to increase format” businesses – market vendors, at the moment. As you know, the Geor- yields, a lack of proper logistical struc- corner shops and kiosks. That presents gian market is not transparent enough tures to get the produce to market and a major opportunity for growth. and is highly fragmented, so very often the inability to keep the produce in cold “The upside potential is huge. The we ask our customers to help us improve storage, leading to high margins of waste. market penetration of modern super- things and learn more about the their The EPI report found that processed markets is around 10 percent, so there expectations,” she said. fruit and vegetable products face similar is an ocean of opportunities,” he said, Both Populi and Smart have brought diffi culties as the country’s canneries are “especially in the regions.” in scores of foreign consultants, primar- currently only operating at 15-20 percent One way Smart intends to exploit that ily from EU countries, to modernize and capacity. And, as with fresh produce, potential is to open small trade centers standardize their brands and operations. processed food production in Georgia is outside Tbilisi that would centralize Pkhakadze said that the consultants have restricted by a lack of cold storage, and a multiple services such as pharmacies and been key for adopting best practices to need for better training of local growers banks within its stores. Smart also plans ensure that Smart does not re-invent the on international food safety standards. to open traditional supermarkets and wheel. Populi has gone local largely by roadside convenience stores throughout Every detail – from layout ergonom- producing its own goods. Part of Populi’s the country. ics to background music playlists – has 1,100 strong workforce is involved in Smart Retail is owned by Wissol been pored over with outside experts. producing and packaging its own com- Petroleum Georgia, the country’s larg- Jambazishvili stressed the rivalry modity products such as rice and sugar est chain of fi lling stations. As Georgia for business is making Populi stronger, and the company is expanding its private gains a greater role as a regional transit encouraging new innovation to win cli- brands to include toys, cleaning supplies and distribution hub, Pkhakadze said ents. Its move toward locally produced and other consumer goods. he hopes to capitalize on the increasing products, for example, is part of Populi’s Populi Customer Relations Manager demand for one-stop-shop locations for strategy to produce cheaper goods as the Khatia Jambazishvili said the company truckers and travelers passing through. competition multiplies. continues to lead in the supermarket Wissol/Smart are also in the process of In the end, she said, Populi has ben- category because they are “everywhere”. completing the country’s fi rst highway efi ted from its growing base of rivals, Although any Tbilisian can attest rest area near Gori. which has pushed the company to con- that Populi is indeed unavoidable in the tinually reinvent itself. capital, the chain’s reach in the regions From quantity to quality “[The competition is] really good for remains limited. Of its 44 existing loca- Jambazishvili said Populi has under- us,” she said. “[It’s] why we can never tions, 41 are in Tbilisi. gone major changes as the company has relax.”

22 OCT.-NOV. 2011 Businesses Investing in the Community

BP Youth Capacity Building Project (YCBP). For more photos of projects, visit www.investor.ge

Responsible business practices are paving their way into the modern (YCBP) aims to teach students from 44 Georgian corporate culture. Case studies of prominent local and schools in the Baku-Supsa Pipeline’s international companies indicate that social responsibility projects are now surrounding area leadership, presenta- more diverse, systematic, long-term, and goal-oriented. Below are some of tion and communication skills through the most notable initiatives implemented by Georgian companies. An article analyzing the trend starts on page 25. training sessions and summer camps at the National Park. In addi- Bank of Georgia: Partnerships ety. Staff involvement at Bank Republic tion to sharing daily choirs, the camp in Corporate Responsibility in Georgia is particularly active with the participants had the opportunity to take n addition to the more traditional bank’s latest project providing monetary on leadership roles within the camp and areas, environmental preservation support to the street children in Tbilisi. get involved in Scout Organization’s Iis a leading sector in Bank of Geor- The spirit of volunteering does stem future projects. gia’s corporate responsibility portfolio. from the overall corporate strategy of During its two-year partnership with social responsibility. As part of Bank DLA Piper: Supporting the the -Kharagauli National Park, Republic’s traditional Citizens Commit- community with pro bono legal the bank has fi nanced the Park’s tourist ment Week, Bank employees donated advise and charity center renovation works, which were blood to children suffering from leuke- From supporting charities like The completed this October. Since the Bank mia at the Iashvili Children’s Hospital, Way of the Future to providing pro bono envisions a long-term investment in the while the company purchased essential legal advice to an organization assisting Park, the tourist center – featuring tai- furniture and supplies. Other initiatives NGOs, DLA Piper is using the best of lored hiking tours and guide assistance, provided monetary and in-kind donations its experience to help and the a guesthouse, an administrative center, to several orphanages in Georgia and local community. In addition, thanks to and an exhibition hall – was designed to sponsored and participated in the breast DLA Piper’s support, Georgian students be functional beyond the short vacation cancer support race. can participate in the International Moot season. Courts (Willem C. Vis International In addition to its social and environ- BP: Responding to the Commercial Arbitration Moot Court mental importance, BOG’s patronage Community Needs and Phillip C. Jessup International Law of the Borjom-Kharagauli Park is an BP’s has established a complex and Moot Court Competition). We provide example of a successful partnership comprehensive approach towards corpo- fi nancial support and one of our lawyers between government institutions, non- rate social responsbility with the aim to usually serves as a judge/arbitrator for profit organizations – the Caucasia help develop socio-economic conditions local competitions. The law fi rm was also Nature Fund – and private companies. in communities through capacity build- one of the partners of European Law Stu- ing. The company works in partnership dents’ Association Georgia for its project Bank Republic: Corporate with different organizationsoffering Student Trainee Exchange Programme. Culture Driven by Staff the hands-on expertise needed in each Initiatives particular area. Eurasia Partnership Bank Republic, as part of the bigger In partnership with the Georgian Foundation: Awarding Green Société Générale Group, has numerous Organization of Scouts Movement Business policies and programs in place to boost as an implementing partner, BP inti- Since 2008, the Eurasia Partnership the company’s positive impact on soci- ated a Youth Capacity Building Project Foundation (EPF) has administrated

OCT.-NOV. 2011 23 Investor.ge

KPMG Promotes Healthy TBC: Building Community Lifestyles, Assists Families in Support Traditions Need TBC Bank has been diligent in choos- KPMG Georgia, together with the ing long-term and goal-oriented commu- David Mikeladze Fund for Future Sci- nity support projects. TBC’s traditional entists, started an annual charity football areas of work include literature, arts, and tournament in June. The fund was created culture, with exclusive events at the TBC to honor the memory of David Mike- Art Gallery, the annual literary award ladze, a KPMG employee killed in a car Saba and several publications made pos- accident in January 2010. Proceeds from sible through the Bank’s support. the tournament go to the fund to promote Restoration of historic and religious

TBC Bank supports community development healthy lifestyles. sites is another on-going project.The KPMG Georgia gave children pres- Poka Monastery, Cathedral and the BP’s Eco-Awards. The awards are an ents, held a concert and donated books Bagrationi Historical Stables are among annual event that reward communities for the library at an orphanage in Kojori the architectural monuments renovated and organizations for fi nding innovative – as well as provided materials for re- and maintained by TBC. The work done ways to build a stronger society and safer pair and helped paint children’s rooms. through TBC Fund for Victims has been environment. KPMG in Georgia also carried out a most urgent following the 2008 war and The program is an opportunity to CSR project to help a settlement of low the accompanying humanitarian crisis. “empower local communities by in- –income families in Dzegvi village, pro- The Bank’s patronage of the internally creasing their ability to address local viding a refrigerator and other appliances displaced (IDP) communities included environmental problems.” for newly settled residents. such services as health care, education, In 2011, six proposals were awarded infrastructure development, and sports including a project to set up a nursery ProCredit Bank: Being a and vocational training. for Kolkhian Pheasants and bio-farming Responsible Corporate Citizen and eco-tourism in Upper Svaneti.In ProCredit Bank believes it is im- Wissol: Working for the New addition to Eco-Awards, EPF is active portant to contribute to the preservation Generations in educating businesses about CSR and and protection of the environment. The Wissol CSR projects are particularly social enterprise in Georgia. Bank has thus organized two eco events comprehensive in addressing long-term supporting the Lagodekhi National Park, needs in society. Their youth-support JTI-Japan Tobacco cleaning up the area and planting olive programs aim to aid the development International: “Sharing the trees. ProCredit Bank plans to maintain of future generations and include the Fruits of Success” an on-going partnership with the Park, support of the Iavnana Fund, the youth JTI believes in sharing the fruits organizing further clean-up and environ- center Art Hall, and the #10 public school of business success through Corporate mental maintenance campaigns. for special needs children. Philanthropy programs that improve or Another notable feature of the Bank’s Wissol is also adamant about sup- enrich the communities it operates in. CSR initiatives is its investment in a porting healthy lifestyles for the youth. JTI has historically always given special “transparent and low-risk profi le.” Pro- To this end, the company has constructed attention to two areas: social and welfare Credit aims to become the trustworthy several state-of-art sports complexes, programs, and support of arts and culture. “neighborhood bank for small businesses purchased the rugby club Wissol Koche- In Georgia we run a charity project with and ordinary people”. bi, and founded the soccer club Wissol Caritas Georgia, providing support for This aspect of corporate responsi- Avaza. Another step toward promoting a free soup kitchen. 190 elderly people bility is especially timely in the wake healthier choices is the new bio produce are getting daily food at Caritas soup of the ongoing fi nancial crisis and has corner at Wissol’s supermarket chain kitchen. We also provide support to Japa- allowed the ProCredit group to boast a Smart. The Bio Corner offers products nese cultural programs in the country in “remarkably stable” 2010 performance that are not genetically modified or cooperation with the Embassy of Japan. world-wide. treated with artifi cial colorings.

24 OCT.-NOV. 2011 Investor.ge

in a monetary donation to the charity. The work of organizations like AmCham, together with businesses like BP, Wissol and many others, mirrors an increasing need and desire from com- KPMG Georgia, together with the David Mikeladze Fund for Future Scientists, started an munities and civil organizations to work annual charity football tournament in June with the private sector. Pay it Forward: Corporate A 2007 survey by the Center of Strategic Research and Development of strategies help build strong Georgia (CSRDG) found that 93% of the business and strong communities population believes implementing social projects is a “voluntary obligation that From banking to energy, education to transportation, companies from should be assumed by businesses”. sectors across the Georgian economy are finding policies that promote safety and economic security are good for business. Many Georgian companies are keen to respond to this demand. In fact, KETI KHUKHUNASHVILI essential for creating a strong company. business-driven projects are plentiful, For example, all companies seek to ranging from TBC Bank’s efforts to From the Board Room to the win consumers’ trust and CSR can help build a school for families displaced Living Room to deliver just that. Cowgill explains during the August 2008 war, to Bank of rom cultivating a healthier work- that the best way forward is to “make Georgia’s investment in Tsagveri forest force through training and safety [responsibility] part of the company’s rehabilitation. Fgear, to supporting healthier operational scheme and its long-term children by fi nancing sporting events, sustainability vision”. From Arts to Science Georgian businesses are fi nding innova- Viktor Baramia, the program manag- In Georgia, businesses are also de- tive ways to blend ethics and business er of Economic Development Programs veloping more long-term, sophisticated strategies to build stronger, more secure at the Eurasia Partnership Foundation, methods to assist communities with core communities - while also bolstering the agreed that corporate social responsibil- social issues. At Bank of Georgia, Brand bottom line. ity should revolve around a “strategic Executive Sophie Balavadze explained The practice of corporate social vision” and not just company marketing. that the bank is moving past its traditional responsibility, known as CSR, can eas- “The companies that try to look into role in fi nance to create social projects ily be confused with only charity or the future – they do more today in terms that support “themes that are important brand promotion. In fact, AmCham’s of long-term CSR,” he said. for our population, raising awareness and CSR Committee Chair Michael Cowgill This may begin as a simple code of putting them at the forefront”. stressed it produces concrete results that ethics, an HR policy or a volunteering “[Corporate social responsibility] is can benefi t any business. AmCham and incentive. For British Petroleum (BP), beyond sponsorship and philanthropy … its CSR Committee serve as the Secre- community-focused projects combine [it] is not the same as simple advertis- tariat, or operational body, in Georgia the best of the company’s corporate skills ing – BOG is now trying to do what is for the United Nations Global Compact with local needs like infrastructure devel- innovative and catch up with worldwide Program which is a worldwide effort to opment, skill building and fundraising. trends and tendencies,” she said, adding, promote CSR-related issues. In addition, the company is using a “… this is the private companies’ job as Cowgill, co-founder of Georgian volunteer incentive program to encour- [they] are visible on many levels and American University (GAU) and a vice age its employees to reach out to the touch a lot of people lives.” president on AmCham Georgia’s Board community. Rusudan Medzmariashvili, Across the globe, corporations have of Directors, together with the Global the Social Responsibility Manager at BP, discovered similar success using their Compact Steering Committee, is spear- noted when a BP employee volunteers at business platforms to tackle serious heading efforts to educate Georgian a charitable organization, the company social and medical issues. businesses on how social responsibility is matches the value of the employees’ time In the UK, for example, Barclays

OCT.-NOV. 2011 25 Investor.ge

Social Bank is a corporate sponsor for Macmil- media frenzy. While pundits predicted lan Cancer Support, as is a chain of health the company’s demise, executives rolled Enterprise: and beauty shops that delivers cancer out a progressive strategy of recall and support services through its stores, fun- free replacement. Several months – and Putting draises for the cause and encourages its over $100 million – into the crisis, John- Business to employees and colleagues to volunteer son & Johnson had reclaimed most of its for the organization. market share, regained public trust and Work A large balance sheet is, however, not maintained its brand integrity. essential in order to answer the various Cowgill noted that many Georgian In addition to its focus needs that exist in Georgian communi- companies are establishing ethical on corporate social re- ties. Large corporations with nationwide standards for business operations. Lead- sponsibility, EPF promotes outreach and established track-records of ing Georgian banks manage this by the development of social educational projects, as well as service- working towards transparency and self- enterprise in Georgia. Social based companies can help small organi- regulation, keeping policies in place for enterprises operate primar- zations by offering expertise and advice. fi nancing responsible businesses. Bank ily with social objectives as Companies like DLA Piper, an Republic, for instance, implements me- the bottom line, investing international law fi rm in Georgia, are ticulously designed crisis-management profi ts back into the social providing pro bono work in the country, and reporting policies, a strict code of objectives of the business. donating their time and resources to ethics, and staff protection and develop- After a period of training serving clients in special need for free. ment initiatives. BP has also made social and technical assistance, Lawyers at DLA Piper also support responsibility its everyday business. The EPF funded three non-profi t student competitions, sharing knowledge company begins each project with exten- organizations. One, Associa- and experience through lectures and sive research and assessment (including tion Women and Develop- public talks – opportunities that larger environmental and social impacts), a ment, established the First companies like Wissol and TBC also component of planning that, Cowgill Social Enterprise LTD and make use of. pointed out, is often minimized in other purchased equipment to start Georgian business operations. However, a small bakery in Gori that Good Business Makes “Cents” safety and security, Cowgill noted, are employs six people, includ- Pro bono legal work, a program not simply competitive advantages; as ing three during the 2008 offered by DLA Piper, and Wissol’s ef- well as being marketing tools, they are confl ict. Today the bakery is forts to promote healthy lifestyles are core to good business practices. generating small but consis- an important bridge between corporate “CSR does not always have to be tent profi ts. sponsorship and companies taking an part of the company’s competitive edge. NGO Tanadgoma used active role in promoting better lives. In fact, it should be a standard of doing the fi nancing to purchase At the heart of the international drive business that is upheld throughout the equipment and trained fi ve towards more socially responsible busi- industry,” he said. disabled people to make nesses is the push for higher standards in “For example, the energy business business cards, laminate and ethics, corporate practices and investor [companies] always talk about safety. copy, and bind hand-outs and relations. In international practice, com- Safety issues should not be thought of workshop materials. The panies that prioritize ethics and consumer as a competitive advantage – this is income generated is used to relations have been better positioned to something that helps everyone. This pay their employees; profi ts weather crises. should be something that is above com- are used to sustain the NGO. The U.S. healthcare and pharma- petitiveness.” Currently, EPF is look- ceutical giant Johnson & Johnson is a For more information about ing to expand the program good example: in 1982, the company’s Global Compact and CSR, please with a greater focus on IDPs best-selling painkiller Tylenol caused the contact Keti Sidamonidze, throughout the country. death of seven consumers and sparked a [email protected].

26 OCT.-NOV. 2011 Investor.ge

IT: A New Frontier for Investors

Investor.ge continues its series of sector overviews to provide background, Georgia, he said, is a fertile market for summaries and analysis of priority industries for investors in the Georgian innovative banking solutions. economy. This is the first of three articles about the growing interest – and “Georgia has become really a place potential – of Georgia’s IT sector. For more information, please contact where all these stories are unfolding, like Molly Corso, editor, [email protected] Kenya was in Africa and I think there is a combination of factors,” Bakuradze said. rom a new computer factory mously successful in both Africa and “First are the liberal regulations; to cutting edge IT classrooms, Asia, where they have provided access to regulators are stimulating the emergence FGeorgia is awash with innovative bank-like services for millions of people of new business models. Plus Georgia programs geared to capture a piece of the in rural areas and facilitated huge intra- defi nitely needs something for fi nancial growing technology industry. A govern- country fi nancial transfers. services to expand to the rural areas ment program to support IT free zones Bringing a similar platform to Geor- and this is defi nitely a state of the art and a push to introduce IT education in gia, MobiPay’s Gilstrap said the com- solution.” primary schools both indicate support for pany is a “poster child” for what the David Lee, the general director of technology and investment in technology Georgian government is trying to do in Magticom, said the potential is real – if is growing. IT development. developers can hit on the right product. For MobiPay, the country’s pro-busi- “I think the mobile platform has a lot Mobile phones: the new wallet ness reforms, employable population and of potential, but the situation in Georgia Georgia’s old-school economic re- strong mobile networks made Georgia an is closer to the one in the west, not like forms have created a fertile environment obvious choice, he said and explained Africa where these things initially took for new technology investments, noted they were attracted to Georgia because hold,” he said. Allen Gilstrap, the CEO of MobiPay. of the “complete absence of business While Geocell, one of the largest cell MobiPay, the mobile payment plat- corruption, fervency of the government phone operators in Georgia, has signed form created by U.S. investor Open- to promote foreign investment – Georgia on with MobiPay, Magticom is working Revolution Georgia JSC, chose Georgia has a fantastic future in front of it… we on its own platform. Lee noted that they over a list of 50 possible destinations are a poster child for what we think they launched a banking service earlier this when it decided to open its headquarters wanted to do.” year, but are still working on fi nding the in 2009. The technology, which is new to The company’s platform went online right mobile payment solution for the the region, required extensive investment earlier this year and already has over Georgian market. in software development and marketing 110 thousand customers. A network of “I think the killer application that and could make Georgia a regional hub 1800 merchants use the payment sys- will work in Georgia is still not here for electronic banking services. tem and MobiPay is expanding to other yet,” he said. MobiPay’s innovation is that it cities around the country. They are also But the “dynamic” telecommunica- enables people to put money into an working on opening similar platforms in tions sector in Georgia is creating a ‘electronic wallet’, similar to the credit Poland and Ukraine. deep pool for possible investments in the people usually put on their phones to The idea of transforming phones into country, Lee underscored. pay for phone calls. The innovation of bank branches has attracted interest from “The digitization of Georgia is taking the system is that this ‘e-money’ can be other potential investors, as well as from place and I think the telecommunications transferred to other phones, used to buy mobile phone operators. sector is one of the more dynamic sec- goods and services and retrieved as cash Archil Bakuradze, the Project Coor- tors,” he said. – all without the need for an ATM, a point dinator at Crystal Fund/Mobile Finance “The next stage will be [digital] of sale device or a bank. Unlike more Eurasia, is also gearing up to launch a TV and probably the final stage will high-end mobile banking platforms, it mobile wallet system. be making sure that everyone has high can be done with the cheapest available While the service will differ from speed internet in the home and Magticom mobile phones and does not need a bank MobiPay, he noted it would be a multi- will again be part of that…I think the account. currency wallet that will allow anyone future looks pretty bright in the case of Similar systems have been enor- to access funds from their telephone. Georgia.”

OCT.-NOV. 2011 27 Investor.ge

Bringing IT investors to however, that policy making has been novation,” he said. “That is why we are Georgia “disjointed”. “[The government] seems actively working to create policy that will President Mikheil Saakashvili has to be doing a lot of good things and at support the e-commerce development in praised the capability of technology to the same time it is doing a lot of negative the country.” A long-time advocate of reenergize the job market and Economy things,” he said. IT development in Georgia, Chirakadze Minister Vera Kobalia traveled to Silicon “On the good side, they are certainly said officials have been particularly Valley in 2010 to lure software giants to consistently encouraging people to de- successful at getting the word out about the Georgian market. Giorgi Chirakadze, velop this sphere, but on the negative Georgia’s potential. the founder and CEO of UGT a leading side they are taxing the mobile phone “The government is really trying to Georgian IT solutions company, said companies which are the most innovative move forward; the government is re- the government’s efforts have paid off. IT companies.” ally trying to fi nd potential investors in He noted that large venders like Cisco, Irakli Kashibadze, the head of the IT and is pretty much reaching a lot of HP and Microsoft have all entered the Communications, IT and Innovations international companies who are poten- market. Intel has even partnered with a Department at the Ministry of Economy tially interested to invest, mainly in the local fi rm to produce computers. and Sustainable Development, argued services area, in software and outsourc- Lee noted the government’s efforts however, that the government’s policy ing,” he said. have produced some tangible results, is focused on supporting innovation. “There are defi nitely some very posi- like MobiPay’s investment. He stressed, “For us [the goal] is technology and in- tive movements.”

Information Technology Virtual Zone - favorable tax regime for IT companies

applying special tax regimes on certain need any licenses, permits or any other transactions, namely the ones involving regulation documents for conducting its information technologies created by the activities. KETTI KVARTSKHAVA PARTNER, Person of Virtual Zone (PVZ). Within the special tax regime, fi nanc- BLC LAW OFFICE PVZ status can be granted to an IT es will remain in the company, boosting company registered in Georgia, by fol- its potential and strength - providing an eorgia, like many small coun- lowing simple a registration procedure, extra incentive for companies to invest tries, is striving to carve a posi- conducted electronically. The status in Georgia. Gtion in the market of innova- is granted to a legal entity engaged in A PVZ enjoys considerable tax ben- tive technologies by offering special activities relating to the study, support, efi ts, among them: profi ts received by the incentives and benefi ts to the companies development, design, production and PVZ from the supply of the information willing to expand to Georgia or locate a implementation of computer information technologies outside Georgia are exempt large part of activities in Georgia. Many systems, which result in the creation of from corporate profi t tax and VAT; export companies consider developing countries the computer software. of information technologies by the PVZ as insignifi cant markets for innovative The Financial Analytical Service of is exempt from texport tax; a PVZ may products and services. To combat this Georgia (FAS) – www.mof.ge -- grants deduct the expenses related to the receipt perception, developing countries use free applicants for PVS status. Together with of gross income from supplying of IT zones to present unique opportunities for the application, the FAS requires a list of technology in and outside Georgia in business. Free zones (sometimes called the projects carried out by the applicant proportion to the income generated from virtual free economic zones, virtual duty over the past three years (if any). the supplies made in Georgia in its total free zones, virtual tax free zones) - are The FAS is authorized to request gross income. specifi c areas where certain taxes or limi- additional information on the IT activi- Although PVZ status is granted for tations on business or trade do not apply. ties of the applicant; all information is the indefi nite term, the law of Georgia on In order to enhance the business confi dential. There is no registration fee information technology zones stipulates environment and foster the information and status is granted within 48 hours of that the status may be cancelled if it is technology sector, the Government of submitting an application. being abused or used to evade taxes. Georgia has undertaken an important After conferring PVZ status, the FAS It is expected that this innovation step : adopting a law on the informa- gives the applicant respective electronic will create an attractive environment tion technology zones, establishing certifi cate, authorizing the PVZ to enjoy for companies engaged in the IT sector information technology zones, while respective tax benefi ts. PVZ does not to establish their presence in Georgia.

28 OCT.-NOV. 2011 Investor.ge

OCT.-NOV. 2011 29 Investor.ge

UKRAINE Rostov Transportation corridors Mr Cook noted that BP had led the

Oblast of construction of two existing pipelines Rostov Azov Kray of Kalmykia linking Azerbaijan with Turkey. “This Sea Krasnodar Gorodovikovsk gives us the confi dence that we could do RUSSIAN FEDERATION Kropotkin Kray of it again,” he said. Armavir Krasnodar Stavropol Stavropol Novorossiisk The Nabucco proposal, described as Budyonnovsk Neftekumsk Maikop Nevinnomysk Jubga Adyghea “heavily politicised” by one banker, in- Mineralnye Komsomolsk Tuapse Vody KAZAKHSTAN Karachai Chechnya Aktau volves a 2,400-mile (3,863 km) pipeline Sochi Cherkessia Kabardino Abkhazia Balkaria Ingushetia Groznyi running from Turkey to the European gas Sokhumi North Makhachkala To Europe Black Ossetia Vladikavkaz Blue stream Caspian Sea hub in Austria. The price tag would be as South Sea NSGP Daghestan Kulevi Ossetia Poti Derbent Tskhinvali high as $20bn, according to people famil- Supsa GEORGIA

Ajaria Tbilisi iar with the scheme. Moreover, Nabucco Batumi Akhaltsikhe Sartichala Samsun Ordu Artvin Sheki Trabzon Mingechevir would have annual capacity of 31bn cu Gyumri Reservoir BTC Dilijan AZERBAIJAN Sumgait BTE Dyubendi TURKEY Kars Gyanja m, compared with the 10bn cu m that ARMENIA Lake Baku Turkmenbashi Bayburt Sevan Sangachaly Armavir Nagorno- Yerevan Karabakh to Central Asia will be available from Shah Deniz from Erzurum Ali-Bairamly Stepanakert Lachin Border of ecoregion 2017. Europe’s strategic interests explain to Ankara Nakhchevan (AZ) Kapan Oil pipelines Gas pipelines to Ceyhan Nakhchevan Elevation in metres 5,642 Nabucco’s size and cost. The idea is to Existing Existing Agaran Lenkoran IRAN 3,000 Alternative routes Projected Ports Lake Van Khoy 2,000 open a new corridor for the Continent to Ports managing oil transport Railway Ardabil 1,000 Refinery Main motorways 500 import gas not only from Azerbaijan, but Other motorways 200 NSGP - North-South Gas Pipeline 0 BTC - Baku-Tbilisi-Ceyhan TRACECA to Teheran Below sea level Rasht BTE - Baku-Tbilisi-Erzurum also from the wider Caspian region and Glaciers

SYRIA IRAQ the Middle East, including Turkmenistan 0 100 km Sources: Caucasus atlas project, 2007, ESRI Note: Ossetia and Nagorno-Karabakh have officially been disbanded Cartographic design: Manana Kurtubadze and Iraq. Map courtesy of Manana Kurtubadze, Caucasus Atlas Project 2007 BP’s new plan envisages a smaller and cheaper pipeline, geared to the com- mercial interests of BP and its partners, BP plans gas pipeline to who plan to invest $22bn in expanding the Shah Deniz fi eld. Europe from Azerbaijan The new proposed pipeline would start in western Turkey and run across companies, including BP. Bulgaria and Romania to Hungary’s The existing proposals are the Na- eastern frontier. It would make use of ex- bucco route, favoured by the European isting infrastructure to link to Azerbaijan Commission; the Trans-Adriatic Pipe- in the east and the Austrian gas hub in the DAVID BLAIR AND ENERGY line; and the IGI Poseidon scheme. west. In all, it would be about a third of CORRESPONDENT BP’s new plan - known as the “South Nabucco’s length, making it far cheaper. East Europe Pipeline” - has emerged It would also have about a third of the P is planning a pipeline stretch- before a crucial deadline: on Saturday, capacity, commensurate with the gas that ing 800 miles across three coun- Nabucco and its two competitors will Azerbaijan could supply. However, the Btries to bring gas from Azerbai- present their tariff offers to the Shah pipeline would be fl exible enough to be jan to Europe. Deniz consortium, which includes BP. scaled up if other sources of gas emerge. The scheme is a new entrant in the The consortium will decide which pipe- “It is in the interests of everybody to highly charged competition to construct line to favour by the end of this year. fi nd that magic number which makes that a supply route to the Caspian Basin and Al Cook, BP’s vice-president for pipeline both commercially viable and reduce Europe’s dependence on Rus- Shah Deniz development, described the politically interesting,” said Riccardo Pu- sian gas. South East Europe Pipeline as “another liti, head of energy and natural resources Until now, three projects have been possible solution”, saying that BP was at the European Bank for Reconstruction under consideration, each of which “open to the idea” of direct involvement and Development. would alter the strategic picture of Euro- in the project. He added: “It doesn’t fol- (c) 2011 The Financial Times Ltd. pean energy by constructing a “southern low from this that we necessarily fi nd All rights reserved. Please do not cut corridor” to Azerbaijan’s Shah Deniz gas fl aws in the three offers. But it is wise to and paste FT articles and redistribute fi eld, currently being developed by seven have another option.” by email or post to the web.

30 OCT.-NOV. 2011 Investor.ge

OCT.-NOV. 2011 31 Investor.ge The inexorable rise of the MBA politicians

(respectively British foreign secretary, education minister Valérie Pécresse are former US Treasury secretary and Indian graduates of HEC Paris. In the UK, Mr home affairs minister). Hague has an MBA from Insead and There are plenty of management Cabinet Offi ce minister Oliver Letwin BEN SCHILLER graduates in politics these days. and former shadow home secretary Da- In Europe, the Dutch fi nance minis- vid Davis both studied at London Busi- hat do William Hague, ter, Jan Kees de Jager, is an MBA from ness School. Harriett Baldwin, Tory MP Hank Paulson and P. Chid- Nyenrode (which also produced former for West Worcestershire, holds an MBA Wambaram have in common? prime minister Wim Kok). Jean-Louis from McGill in Canada. Answer: they are all MBA graduates Borloo, French minister for ecology and The US has also seen several MBA who have reached high public office energy until last November, and higher politicians in recent years, including

32 OCT.-NOV.OOCTCTCT.-N.-.-NOV.OV 20201101111 Investor.ge

Mr Paulson, (Harvard Business School) guard in public life. “They are less “Voters like to think that business former president George W. Bush, (HBS) ideological than previous leaders - the people are effi cient and that they can and former secretary of commerce ideology today is growth and economic bring good practices to government. But Donald Evans, who has an MBA from success. The question is how you move they only think about the best run com- McCombs. from a big government to a government panies and the worst run agencies. They Elsewhere, others include the deputy that facilitates, where it is private enter- forget about the thousands of start-ups prime minister of Singapore, Wong Kan prise that makes the big difference.” that go broke every year.” Seng, (LBS) and the vice-president of Prof Gowda, a Wharton MBA politi- And, there is no guarantee that man- Indonesia, Jusuf Kalla, (Insead). cian, argues that modern governments agement graduates will govern as their There are several competing explana- need offi cials who are comfortable in- training might suggest. Prof Pfi ffner ar- tions for the prominence of such politi- teracting with the business community gues that an MBA has limited usefulness cians: from the need for greater profes- - both to spur economic growth and to for aspiring politicians. sionalism in government, to the simple deliver social services that the govern- “Analytical skills and being able to fact there are more business school ment cannot provide on its own. think clearly are important for politics. graduates in circulation these days. This is a theme echoed elsewhere by But things like accounting, marketing Not surprisingly, however, opinion Kakha Shengelia, president of Caucasus or fi nance are not going to be directly is divided about their effectiveness in University, Georgia, where several man- relevant. The types of things that politi- offi ce. Depending on the point of view, agement graduates are in government. cians do need might be better gotten with MBA politicians either offer technocratic Vladimer Gurgenidze, former prime things like history or even philosophy.” common sense, or are symptomatic of a minister of Georgia for example, has an But Maurits van Rooijen, rector at creeping managerialism. MBA from Gouizueta Business School, Nyenrode, says this misses the point Rajeev Gowda, chair of the Centre Emory University. about business school. An MBA is not for Public Policy at IIM-Bangalore, is in “In the old days, we were a Soviet simply standardised knowledge about no doubt. He says India needs the skills Republic and there was no business edu- various corporate functions, he says, but and perspectives MBAs can offer. “As cation. It was all sciences and mathemat- - at its best - is a programme that encour- democracies mature, you need different ics. Now, if you want to be president you ages self-development and fosters lead- types of people. You go from wanting need some business education.” ership skills. It is therefore potentially people who can lead political agitations Mr Shengelia, a former deputy mayor useful for lots of occupations. and write constitutions, to people who of Tbilisi and an MBA from Hartford, “What we don’t want is the classic can manage a budget and improve the credits business school-trained politi- MBA who is just capable at analysing effi ciency of programmes. That’s where cians for recent improvements in Geor- data, and making decisions. We are trying an MBA training comes in useful.” gia’s “business environment”, and in its to teach contextual intelligence. It’s not India’s raft of MBA politicians railway services, for example. always precise data and facts that lead include Mr Chidambaram (HBS); the Similarly, last year the Economist you to a certain solution. You have to minister of social justice Mukul Wasnik praised Mr Hague for bringing an develop a sensitivity which goes beyond (Nagpur); defence minister Mallipudi “MBA’s wariness of passions and world facts and fi gures. That’s what you need in Raju Pallam Mangapati (Temple Uni- views” to the Foreign Offi ce, claiming business as well as in politics,” he says. versity, Philadelphia); commerce and he had imported a calm professionalism. Assessing politicians is subjective. industry minister Jyotiraditya Scindia Not everyone is convinced that But Prof van Rooijen says whether a (Stanford); and energy minister Jitin management graduates are as effective politician is effective ultimately depends Prasada (IMI, Delhi). Sachin Pilot, a as advertised, however. on the individual, rather than his or her 31-year-old minister for communications James Pfi ffner, a professor of public training. “You can do an MBA by sitting and technology, studied for an MBA at policy at George Mason University, who behind a computer, acquiring knowledge. the Wharton School at the University of studied George Bush’s performance as Or you can have an MBA that’s beyond Pennsylvania. the US’s “First MBA President”, says the the knowledge, where it’s about leader- Prof Gowda says Mr Prasada, Mr public tends to overestimate the abilities ship. That’s what we try to be about.” Scindia and Mr Pilot represent a new of the private sector. (c) 2011 The Financial Times Limited

OCT.-NOV. 2011 33 Investor.ge

Dip fails to deter ‘brave’ private investors

when they saw a dip,” said Charles Cryer, Much of that was caused by losses chief executive of Capita Registrars. “It’s in the resources sectors. In early August unusual to see retail investors buying the FTSE All-Share Mining index hit its CHRISTOPHER THOMPSON in very volatile times but there are so lowest level in a year, down 29.6 per cent few investment alternatives they were from a peak set last December, even as rivate investors bought a net tempted into the market.” the cost of many commodities such as £1.3bn of UK equities between The value of private investors’ share- oil, copper and iron ore remained close PMay and August, despite their holdings dropped by a total of £34bn be- to historically high levels. shareholdings losing £20bn in value in tween the end of May and September 22, Yet in spite of the market turmoil UK the period, according to data from Capita according to fi gures compiled by Capita. dividends rose 27 per cent to £19.1bn in Registrars. Until September, bargain- hunting the second quarter of this year compared It marks the biggest net purchase of investors had been net buyers of equities with the same period in 2010, according equities over a quarter since spring 2009 for fi ve consecutive quarters, represent- to Capita. Mining companies - whose and came as the world’s stock markets ing the longest sustained period of net stocks have borne the brunt of the re- fell heavily. buying for at least six years. cent volatility - increased their pay-outs The buying lifted the proportion of Investors bought a net £1.6bn of cy- almost fourfold, from £491m to £1.85bn. UK-listed companies owned by retail clical stocks, mostly in the resource and September has offered little succour investors to over 12 per cent for the fi rst fi nancial sectors. in terms of stability. On September 22, time in two years, with volatile resource By contrast they sold £300m of so- the worst day of trading since the col- and fi nancial stocks the most heavily called defensive stocks, such as utilities. lapse of the US-based investment bank bought sectors. At the market’s low point on August Lehman Brothers in 2008, the market “During August’s wild swings, pri- 10, private shareholdings were down closed down 4.7 per cent as private share- vate investors on average lost or made £35bn to £201bn, 15 per cent lower than holdings fell back to £203.1bn, costing £4.4bn every single day, so it was ex- their end of May close and £46bn lower investors £10bn. ceptionally brave of them to be buying than their pre-2007 fi nancial crisis peak. (c) 2011 The Financial Times Limited

34 OCT.-NOV. 2011 BDO, the Georgia Member Firm of BDO Network, is the fourth largest audit and advisory firm in the country. With over thirteen years of experience and qualified professional staff, BDO provides the local and international companies with high quality services in: t Audit t Tax t Accounting t3JTL Advisory t*5 Consulting t Valuation t-FHBM

BDO is a world wide network of public accounting firms, called BDO Member Firms. With more than 1,082 offices in over 120 countries and $5.28 billion combined free income in 2010, BDO is the fifth largest such network in the world. Investor.ge

“several trillion cubic feet of gas reserves and associated condensates” while drill- ing a fi rst well on the Absheron block offshore Azerbaijan about 25km from the huge Shak Deniz gas fi eld. “This discovery could be very signifi - cant in terms of resources,” Marc Blaizot, senior vice-president of exploration at Total, said in a statement. “Drilling will continue to explore further deeper objec- tives that look attractive.” Analysts said the gas discovery brightened the prospects for the EU- backed Nabucco pipeline to transport Caspian and Middle East gas to Europe and reduce dependence on Russian en- ergy supplies. Investors have struggled to secure suffi cient gas supplies to fi ll the 31bn cubic metres a year pipeline. Russia is competing for control of Caspian gas and has offered to buy all www.terna.it Azerbaijan’s surplus gas production. Gazprom, the Russian gas monopoly, plans to build the South Stream pipeline Gas field discovered to bring gas across the to south and central Europe that would compete in markets targeted by Nabucco. off Azerbaijan Azerbaijan exports small amounts of gas to Turkey, Georgia and Greece from ISABEL GORST IN MOSCOW the Shah Deniz fi eld, where a foreign consortium led by BP is developing one otal, the French oil group, has trillion cubic metres of gas reserves. The discovered a large gas field group is in talks to supply gas to Nabucco Toff Azerbaijan that will boost from the second phase of Shah Deniz the European Union’s plans to import expected onstream in 2017. Caspian gas and diversify away from Azerbaijan exports about 1m barrels Russian energy supplies. a day of oil through a pipeline across the Ilham Aliev, the president of Azerbai- Caucasus to the Turkish Mediterranean jan, said the gas fi nd was a “major event” that bypasses Russian routes to world that underscored Azerbaijan’s long-term markets. Growing gas exports in the prospects as a global energy supplier. coming decade will help compensate “This will allow us to press ahead for an anticipated decline at Azerbaijan’s more confi dently with our gas strategy Caspian oil fi elds. and strengthen the position of our coun- (c) 2011 The Financial Times Ltd. try as a world gas exporter,” he said. All rights reserved. Please do not cut Total said it had found a large gas and paste FT articles and redistribute reservoir that could potentially hold by email or post to the web.

36 OCT.-NOV. 2011 Investor.ge

OCT.-NOV. 2011 37 Investor.ge

Explaining the “Deep and Central and local government au- Georgia: Comprehensive” trade thorities: as they would spend more effi - agreement ciently and hence save taxpayers’ money, raditionally, standard free trade thanks to a competition-based and trans- Moving agreements foresee mutual open- parent system for public tenders. Ting of markets for goods and towards a services. The reason that this agreement The export potential of the is called ‘Deep and Comprehensive’ is DCFTA that it would go much further. It would On the export side, Georgian pro- Free Trade be “comprehensive” because it would ducers and exporters will be offered cover a wide array of trade-related issues free access to the EU market with over and it would be “deep” because it aims at 500 million high income consumers for Area with eliminating ‘behind the border’ obstacles almost all products traded. to trade, thus partially opening/extending At present Georgia enjoys unilateral Europe the EU internal market to Georgia. trade concessions from the EU through The European Union’s (EU) internal the so-called Generalized System of market consists of 27 member states. The Preferences (GSP+). This system offers removal of barriers faced by economic limited preferences compared to the fu- operators, as well as the introduction ture DCFTA. Once the DCFTA replaces The European Union and of high standards of consumer protec- the GSP+, tariffs will be abolished for Georgia have been engaged in an ambitious process for tion is the main foundation of the EU’s almost all products and on top of this more than eighteen months operation. Notwithstanding the current both sides will address regulatory barri- towards achieving a “Deep diffi culties in the Eurozone, most agree ers. This would be a major improvement and Comprehensive Free Trade that this internal market has created enor- over the current GSP+ treatment which Area” (DCFTA). mous benefi ts for its members. has a unilateral, temporary character and The free trade area will provide, as is not negotiable with the EU. This has become one of the most important issues in far as possible, the gradual integration of Georgia’s political agenda. Georgia with the EU’s internal market. The new status would bring Virginie Cossoul, EU Trade Extending the internal market to Georgia tangible benefits to Georgia, Officer at the EU Delegation to will bring benefi ts for: such as: Georgia explains what this may Substantial economic gains: a mean for the country. Domestic and foreign investors and predictable legal and institutional en- entrepreneurs: as more legal certainty vironment initiated and strengthened creates trust and a fair and business- by the DCFTA will greatly increase the friendly environment, and reduces cor- attractiveness of Georgia as an economic ruption (e.g. by introducing transparent partner. It will facilitate business-to- rules on competition); business contacts and encourage foreign Consumers: because EU internal and domestic investments. market rules would institute modern A stronger external anchor for the standards in the fi eld of industrial prod- reform process: Georgia is an economy ucts and food safety, ensuring better in transition from a centrally planned to a product quality; market economy. The economic reforms Inventors and artists: because their in Georgia will have to continue in the ideas and creativity would be better future in order to put the country on the rewarded, thanks to higher standards of path to sustainable economic growth. protection and enforcement of intellec- The DCFTA will establish a trans- tual property rights; parent scenario for economic operators

38 OCT.-NOV. 2011 Investor.ge

who will be able to prepare their strate- products enhance the overall standard terms. What is at stake is not simply the gies based on the agreed calendar of of living. increase of trade fl ows between the EU regulatory compliance with the legal and Georgia but market development, framework of the EU. Not just more regulations consumer protection and product quality; Encouragement for investment: It is true that the DCFTA is a very in other words Georgia’s ‘modernisa- DCFTA will help to create a favourable ambitious agreement and implies a lot tion’. Furthermore, this process is a business climate and attract investors, of reforms by the government. Like any gradual integration of legislation and thanks to its positive impact on eliminat- process of reforms it has a price, but one standards. The EU is not asking Georgia ing or streamlining complicated, unpre- should view this short-term price against to implement the full EU market rules dictable and often poorly implemented the long term benefi ts. within few months. Even when it comes business regulations. Closer integration with the EU into effect, it is expected there will be a Benefi ts for Georgian consumers: will require short-term costs, but will transitional period in many areas. Phasing out existing customs tariffs and signifi cantly improve the competitive- Importantly, the EU trade related reg- regulatory barriers will increase the vari- ness of Georgia’s products along with ulatory standards are used by many other ety and quality of products and services the investment climate making it more countries in the world, notably (from available to consumers. In addition, the conducive to attracting more stable FDI. the point of view of current Georgian competitive pressure stemming from the This would, in turn, create a positive exports) Turkey and the Balkan states, liberalisation of market access will en- impact on Georgia’s socio-economic so compliance with those standards will courage specialisation, thereby lowering development. help not only trade with the EU but with costs and generating innovation. Better It is also important to think in broader other signifi cant partners of Georgia.

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OCT.-NOV. 2011 39 Investor.ge

RENÉE PARADISE AND KEN SCHWARTZ tions in the belief that one-stop service Georgia’s not only makes citizens happy but also n the seaside resort town of Batumi entices investors. ‘one-stop sits a glass structure with an open So far, Georgia has three such one- Iatrium and tinkling Muzak chosen stop government centers offering in- shop’ for by marketing gurus. The blonde-wood dividuals and businesses a range of counters and children’s play area suggest services, including customs clearance, citizens and a Scandinavian furniture store. But this is new-business licenses, land deeds, and a government facility in a country once automobile licenses. Thirteen more pockmarked by Stalin-era concrete. public-service centers are scheduled to businesses Welcome to the Batumi Public open by the end of 2012. While the halls Service Hall, exhibit A in the Republic currently provide services only from the A reform-minded of Georgia’s quest to treat citizens and Ministry of Justice, in the future they government tries to business investors more like discerning will include services from the Ministry shoppers. True to the slogan hung in the of Energy and Natural Resources, the break down “silos” lobby—“Everything in one place”—the Revenue Service of Georgia, the Minis- to speed government integrated center offers 250 different try of Finance, and more. Eventually it services government services, from birth certifi - might be possible to register a car and a cates to divorce papers, under one roof. marriage at the same place. Uniformed greeters known as “con- In a nation still climbing out of deep MCKINSEY QUARTERLY sultants” welcome arrivals and direct unemployment—officially pegged at traffic: simple requests, to self-serve about 16.4 percent in 2009, but estimated Challenge: computers; more complex cases, such as by some nongovernment observers to To help establish its legitimacy quickly after the 2003 Rose a visa for a family member from Azer- be much higher—managers such as Revolution, Georgia’s government baijan, to staffed desks. The emphasis is Samsonia can draw on large talent pools. needed to boost its revenues. on speed and convenience. Need a photo Applicants, she said, fought for the 100 Citizens expected a rapid for that passport application? There’s a positions in Batumi because the pay is turnaround in the quality and booth in the lobby. Forgot cash to pay good, the atmosphere is pleasant, and delivery of services. Businesses for a marriage certifi cate? Hit the ATM. they can compete for awards, such as wanted to see measurable results The key point is that a citizen’s problem shopping discounts and ski trips. before investing. As President Mikheil Saakashvili took office, is characterized by how quickly it can be At the Batumi hall, which services the World Bank, citing onerous resolved—fast, medium, or slow—not by about 1,500 people a day, the goal is regulations and corruption, ranked the government department (say, a justice to help visitors dispatch their business Georgia 137th out of 153 countries issue, a security issue, or a health issue) in less than 30 minutes. Operations are as a place for doing business. in which it falls. “The customer is king,” enabled by a technology platform built explains Tamar Samsonia, who oversees over a unifi ed database, so citizens need Emerging solution: the center. Citizens “don’t need to waste not fi ll out multiple government forms. To deliver high-quality public The centers aggressively monitor em- services efficiently and to streamline money or time or energy. They just need regulatory and licensing processes to come here to receive their services ployee performance, collecting statistics for businesses, the government very quickly.” on error rates and wait times. Customer created customer-oriented, high- All across Georgia, officials are surveys, mystery shopper programs, and tech “one stop shops.” After waging erecting glistening new service centers even unannounced visits by cabinet min- a major anticorruption campaign, like the Batumi hall, visible evidence of isters reinforce the performance goals. the administration turned to the shift under way in the government’s By using technology to simplify pro- service delivery strategies common cesses, the government is mimicking the in the private sector: financial management philosophy. From family incentives to improve performance land deeds to licenses for hydropower efforts of many successful private fi rms and the elimination of bureaucratic plants, Georgia’s government is press- to disrupt traditional service channels. silos and paperwork. ing to simplify and streamline its opera- The focus on business analytics and

40 OCT.-NOV. 2011 Investor.ge

improving service has translated into resources. But its location—tucked be- utes after arrival. Despite the changes, real money. From 2005 to 2010, tax col- tween Russia to the north and Turkey to Georgia has room to further simplify lections in Georgia rose to 28.2 percent the south, with the Black Sea along the cross-border trade. The improvement of GDP, from 17.8 percent. western coast—offers opportunities as an is quite real, however. In 2006, it took “The fi rst phase was about getting rid international transport corridor. 52 days and 15 documents to import a of corruption,” President Saakashvili told To facilitate trade, Georgia’s gov- container into Georgia; today it takes 10 McKinsey. “The second phase is about ernment has brought one-stop customer days and 4 documents. moving toward government as a service.” service to its customs facilities. Similar Offi cials use continuous-improve- According to Nina Chichua, head of the in design and approach to the hall in ment techniques to fi ne-tune customs Justice Ministry’s Marketing Division, Batumi, the customs houses combine operations. Early on, the government before the reforms citizens found it creature comforts with modern technol- switched from paper forms to digitized nearly impossible to receive passports ogy to screen cargo and collect duties on records with electronic-signature ma- for the offi cial fee and within the offi cial goods rapidly. chines, but it still takes too long to enter processing times; they paid about $100 Customs cases are triaged for com- information, have customers verify it, in bribes and waited one month. Citizens plexity to expedite the process. Malkhaz and print out documents. The next move can now receive a passport in ten work- Mukutadze, owner of the Martve-5 will be to equip each agent with a second ing days for $59—and in just one hour construction materials fi rm, agreed to let computer monitor enabling customers for $120. Similarly, before the reforms, McKinsey follow him as he navi- to correct errors in real time, said Vano the wait time to register a business was gated the process at a customs house near Merabishvili, the minister of interior, about one month; businesses paid an the Turkish border. responsible for protecting Georgia’s unoffi cial “fee” of $150 and visited nine After parking his truck, Mukutadze borders. Soon the government hopes to government institutions to get the 35 draws a number in the reception area install a preclearance system allowing documents required. Registering a busi- and sits in a sunny waiting room. Soon some businesses to submit manifests ness at the Batumi Public Service Hall a neon sign directs him to a desk where ahead of time, to avoid customs facilities now takes four working days and a $29 he presents his documents—license, altogether. Georgia is still a long way fee. Georgia’s government is also using registration, and a manifest detailing from ensuring that its early innovations one-stop systems—both in person and the shipment. Salome Mamulashvili, a will deliver broader economic growth. online—to enhance the range of services newly hired customs offi cer, punches Corruption still lingers in certain cor- it offers business. The numbers, from the the information into a computer that runs ners—most notably, health care. World Bank, tell a story of improvement: an electronic “risk engine” identifying Tensions with Russia and unrest Georgia now ranks eighth out of which loads to search. About 95 percent continue. President Saakashvili ac- 183 nations in the ease of starting a busi- clear without inspection, but authorities knowledges that it is diffi cult to main- ness and second in registering property. say the system helps target high-risk tain the postrevolution “constant crisis” It takes just three days to start a cargo while speeding up legal trade. mentality that provided the energy and new business in Georgia, compared with With a few more keystrokes, Mamu- leverage to enact many bold, even radi- an average of 14 days for the countries lashvili calculates the duty on Mu- cal, changes. Still, a customer-focused in the Organisation for Economic Co- kutadze’s four truckloads of cement. mind-set appears to be taking hold. “Our operation and Development. Georgians Customers can pay immediately at a strategy is to mobilize our human capital spend about 2 days to register property, bank counter a few feet away or at other through technology,” said Saakashvili. versus the OECD average of 33 days. locations within a few weeks—an op- “If we make it easier for people to work Average wait times for construction tion Mukutadze, with his cash fl ow in with the government, we do our jobs permits and property registrations have mind, decides to take. “Before the new right and earn people’s trust.” fallen, respectively, from six months in system, I would sometimes wait for an Exhibit from “Innovation in govern- 2005 to 98 days and from 39 days to 2. entire day and my number would not be ment: Kenya and Georgia”, Septem- Perhaps the best example of change called. I would have to come back for a ber 2011, McKinsey Quarterly, www. in action can be found along Georgia’s second day,” said Mikutadze through a mckinseyquarterly.com. Copyright (c) borders. With the exception of hydro- translator. 2010 McKinsey & Company. All rights power, the country largely lacks natural On this Saturday, he departed 30 min- reserved. Reprinted by permission. Investor.ge

Tourism: Government paves the way, private initiative must follow

The new dolphin show in Batumi

Georgia has come a long way to robbed and Tbilisi was adorned with 50 fully booked the major hotels in Tbilisi recapture its reputation as a tourism billboards advertising a kidnapped busi- and Batumi this summer. For the govern- destination. With new infrastructure, nessman. If there was a tourist attraction ment, this is a sign there is a demand for big events and fresh destinations, in Georgia at this time, it was crime. more luxury hotels. However, industry the country is positioning itself to Fast forward ten years and we see professionals are saying Georgia needs compete with Turkey and other nothing short of a miracle occurring to provide more mid-range hotels and regional holiday spots. Now entrepreneurs and businesses need in Georgia. Batumi is a Riviera in the improve the services of existing ones, to catch up. making; Svaneti welcomes visitors in while the Georgian National Tourism guesthouses and Tbilisi is a legitimate Agency underlines there is a shortage of PAUL RIMPLE business center. While no one doubts this accommodation across Georgia. sudden metamorphosis from Midnight “There are enough big hotels in ourism in Georgia is generally Express to Casino Royale is an exem- Tbilisi. Maybe after three or four years traced back to when Jason and plary undertaking, there is an across the there will be room for more. The market Tthe Argonauts traipsed across board understanding that before Georgia is still developing,” says Atakan Turhan, , yet for practical purposes we can be the major global tourist destina- General Manager of Radisson Blu Iveria can say modern tourism took root in tion it aims to be, a lot of work still needs Hotel in Tbilisi. “As for Batumi, it’s too Georgia during Soviet times when, for to be done in very basic areas. early to say,” he adds. the majority, traveling beyond the Iron Numbers are one way of revealing Mamuka Kelauradze, tourist man- Curtain was not an option, and poor how far Georgia has come this past de- ager for Levon Travel says there are service was not an issue. cade. In 2001, 302,215 international visi- not enough 3 to 4 star hotels in Batumi By 2001, ten years after the fall of tors entered Georgia. Today, that number and complains that prices are high and the USSR, the Georgian tourist industry has risen to 1.79 million and is expected services poor. “There is a big problem should have improved, but in fact it to reach 2 million by the end of the year, with service. Too often, they give you regressed to a condition more closely re- despite a global economic crisis and the one price and then change it after book- sembling that of Jason’s era. Batumi was fallout from the 2008 war with Russia. ing without notice - not the chain hotels, an utterly corrupt, gritty little port town; While these numbers don’t refl ect the but the small ones,” he says. Svaneti was the most likely place to get actual amount of tourists, their presence Kelauradze claims the problem is Investor.ge

common wherever private businesses private sector, when in reality it is the to improve administrative concepts for operate, such as in Svaneti, where guest- private sector that needs to step up and guesthouse owners, including two-month houses, which were fully booked this take advantage of the opportunities the English courses to provide locals with season, are the principal accommodation government has made available in the basic English skills. Hospitality work- providers. tourism fi eld, including education. So shops sound pretty ludicrous in a country “We booked rooms for our clients far there are two private institutions that renowned for its hospitality, but when a at one guesthouse. We even called one specialize in tourism and hotel manage- host becomes a hotelier they often need hour before we arrived to confi rm and ment - Icarus and Tishom. These alone to learn how to assume the role, but the when we got there, they told us, “you are not enough to accommodate the rap- lessons don’t stop there. have no room.” ” idly growing need for professionals in the When the government revamped Chicanery is universally acknowl- service industry. Moreover, institutions Sighnaghi into the “city of love” locals edged as a bad business practice and do not address the problems encountered immediately opened guesthouses and refl ects one of the biggest obstacles for in the regions, which are becoming in- restaurants, but tourists need more than tourist development in Georgia. The creasingly popular travel destinations. a place to eat and sleep from a tourist concept “it’s bad for business” does not Deputy Chairman of the Georgian destination. Sightseeing is limited and yet compute; it’s a mindset that can only National Tourism Agency, Beqa Jakeli, if locals want people to stay for more be exorcised through education. says the government has been sup- than a day, they need to create a reason Typically, people expect the govern- porting short-term training sessions in to come. The government tries to help ment to be responsible for educating the Kakheti, Sighnaghi, and Tusheti, by providing free buses from Tbilisi

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OCT.-NOV. 2011 43 Investor.ge

and organizing events on the weekends, report there were over 101,000 Georgian Exploring but Sighnaghi’s huge potential is being tourists this year - a growth of 4.18%. Tbilisi: A guide overlooked and government sponsored Nugzar Davitadze owns a guesthouse events can be way off target. in Kvariati, a Georgian beach-side com- Two new guidebooks were recently “I went to Sighnaghi for the weekend munity near the Turkish border, where published for foreign and expat resi- and there was some live music - way many Tbilisians typically go on holiday. dents in Tbilisi – an effort to bridge the too loud. There was no harmony with “Last year we were up to here,” he says gap in information available about the the surroundings. You look around and running a fi nger under his chin. “We had Paris of the Caucasus. expect tradition, not loud music,” recalls to turn people down; some offered us Falling in love with Tbilisi is easy Atakan Turhan. money to kick guests out. This year was – but learning the city can be diffi cult. Much of the problem could be re- slow.” He blames the economy and Au- For years tourists and expats alike have solved if there was more coordination gust’s rainy weather for the bad season. struggled over the lack of information, between the government and the private But tourist seasons fl uctuate, states maps and guidebooks. sector, notes Ia Tabagari, Chairman of the Jemal Inaishvili, Chairman of the Board But two recently published books Georgian Incoming Tour Operators’ As- of the Georgian Chamber of Commerce are treasure troves of information for sociation. Many people have the private and Industry. He goes on to say that the newcomers – as well as good refer- resources but not the know-how to think arrival of Pegasus airlines in Batumi ences for long term residents. out of the box. Although the government means Georgians can easily afford to In September, the International has rebuilt the infrastructure, she feels it travel to Turkey, which is all perfectly Women’s Associations (IWA) released could do more by attracting the private natural in a competitive market. its second edition of Tbileasy, a guide sector. For example, inviting national “I flew to Batumi from Istanbul, that caters to newcomers struggling groups to perform is a great idea, but why which is very expensive now, and half with the day to day problems of mov- do that when there aren’t enough places the plane was full of Turks coming to ing in and getting settled. to sleep? “People are keen to learn how Georgia,” he observes. Designed as a directory, Tbileasy to exploit what they have, but the private As a successful businessman in his provides up-to-date information on sector can’t do much without help from own right, Mr. Inaishvili views the entire everything from catering to emergency the government,” she says. Black Sea coast as a huge opportunity ambulance services, including infor- “The big opportunity tourism pro- waiting for development. When asked mation about internet connections, vides is being missed,” says hotelier and about the wisdom of developing Anaklia, banks, schools and language courses. entrepreneur Betsy Haskell, who has which borders the Abkhazian confl ict “[T]he guidebook was envisioned spent nearly 20 years in Georgia doing zone, he retorts that something must be to provide day to day information for business. She explains that part of the done for the Zugdidi region and talks people who live in the city,” Marta reason we see a lack of development is about Anaklia’s potential as a sailing des- Lubeck explained. that people in Georgia have a particular tination from Batumi. Never mind there “[T]here are a number of good aversion to taking risks in investments. are no sailing boats to speak of in Batumi, tourist guides on sale already, so cre- Additionally, there exists an inherent there will be soon, he assures. And how ating a guidebook for tourists would trend in short term thinking. The tourist can you doubt him? New buildings are not add very much to what is already season is three months long and hotel sprouting up like dandelions all along out there. We decided to focus on investors want a return in three years, the Adjaran coastline. Hotels are going something in which we have relative which makes things expensive. “People up faster than they can fi nd employees expertise.” don’t think in fi ve to seven year terms.” to fi ll the positions. More foreign tour- City Pass Tbilisi Guide takes a she says. “There’s no business savvy.” ists are arriving each year. Sure there are different approach. The pocket-sized In Batumi, tour operators say in- problems, but the Chairman’s optimism guide is heavy on restaurants and creasing prices have driven Georgians reduces them to trifl es. shopping, with maps and walking tours to Turkey where one week all-inclusive “A lot has to be done, but we are very included. There are directories of phar- package deals can be found for $400. The close. Step by step, we are closer to our macies and business services, as well. Turkish Culture and Tourism Ministry fi nal goal,” Inaishvili smiles.

44 OCT.-NOV. 2011 Investor.ge

OCT.-NOV. 2011 45 Investor.ge

Desiani Haf cares for dogs at the shelter as a volunteer Helping the Strays of Tbilisi

FIONA COXSHALL dog control programs being declared, it is estimated there are some 25,000 dogs or locals and foreigners who have wandering the city’s parks and streets lived in Georgia for a number fending for themselves, struggling to Fof years, the sight of stray dogs survive and stay out of reach of the ‘dog wandering around is a familiar one. For catchers’. the most part people are indifferent to- More importantly for the general wards these animals and while some are public are the health issues: cats and kind enough to feed the dogs a few food dogs that have not been immunized may scraps, that is usually the extent of the carry disease and without sterilization care. In Tbilisi alone, despite various programs the street dog population gets

46 OCT.-NOV. 2011 Investor.ge

out of control – dogs gather in packs witness car after car simply driving past it is not viewed as fashionable to have that can potentially become dangerous a semi-conscious puppy that had clearly a pedigree-less pooch. Clearly attitudes and then mass rounding up and culling been hit by a vehicle; only Ivo stopped towards mixed breed dogs need to be takes place. to help. From that moment, Ivo decided changed. – DOG aims to educate the Like other developing countries of something had to be done and so estab- population: showing not only how lov- the former Soviet Union, Georgia has lished the charitable foundation - Dog ing, fun and loyal these animals can be numerous ‘people’ issues to address and Organization Georgia (DOG) to provide but also the rewards of owning and car- animal welfare is not seen as a prior- shelter and food for homeless animals; ing for one. ity. This became even truer during the prevent unwanted and uncontrolled The Haf family are already reaping worldwide fi nancial downturn and fol- births of stray animals and stop their the rewards of adopting a dog. Shortly lowing the August 2008 war with Russia abuse together with the reported use of after returning to Tbilisi for a second when most of the focus turned towards inhumane culling methods. contract, Alex and Desiani Haf’s dog assisting the homeless IDPs (Internally After extensive fundraising and over- died. To help their two young children Displaced Persons). coming numerous obstacles DOG even- cope with the loss, the couple visited In some ways Georgia is lucky – mil- tually opened Tbilisi’s fi rst western style the shelter and adopted fi rst one young lions of dollars in foreign aid has fl owed dog shelter early this year. Located near dog (Ladi), and then a playmate for her into the country over the past few years Lisi Lake, the shelter currently houses (Flecki). Within just a few days both dogs and there is a huge number of charitable around 20 canine guests rescued from were playing happily together and gently organizations helping people in need. But the streets, saving them from the city’s with the two toddlers and Desi now talks who helps the homeless animals? dog catchers. They are guests because it happily of her ‘four precious babies’. Arriving in Georgia in 2008, Dutch is hoped that for most of the dogs and Adoption frees up space at the shel- businessman and AmCham Board mem- puppies their stay will be temporary as ter, enabling the organization to care for ber, Ivo Bakhuijzen was astounded at the the organization tries to re-home these and hopefully re-home more of Tbilisi’s number of stray animals lying around adorable animals. stray dogs. DOG shelter has a dog to suit the streets of the capital and shocked to However this is a diffi cult task when everyone: lively or calm – puppies from

OCT.-NOV. 2011 47 Investor.ge

just a couple of months; small dogs of 1 izing animals (including their own pets in great need of more funds. In addition or 2 years or larger and older dogs. To who are often allowed to wander the the shelter welcomes gifts of dog food view photos of dogs that are looking for streets). While a few dogs and puppies or bowls along with any unwanted pet loving homes, visit the Dog Organization enjoy the sanctuary of the shelter, the beds/baskets, old blankets, old towels, Georgia Facebook page. facility is small and there is still much collars and leads or dog toys. Or perhaps Dog Organisation Georgia not only that needs to be done – water is currently you would like to volunteer some time cares for and vaccinates the rescued pumped out of the ground and the site to walk or groom a dog or play with a animals but also neuters them to prevent needs proper drainage, for which funds puppy. more unwanted dogs. However the long are required. This is in addition to the To fi nd out more about how you can term solution for controlling the stray everyday costs of caring for the dogs. help support the dogs and to donate, population lies in changing the attitude DOG is totally reliant on donations. please visit the Dog Organization of the public, which is another of DOG’s To achieve its long-term goals and to Facebook page or website: www.dog.ge goals: to educate adults and children fi nance the ongoing care of the dogs at (originally in Dutch; English translation alike to appreciate the benefi ts of steril- the shelter, Dog Organization Georgia is available) or email [email protected]

Case: Heineken Office Chair Grand Prix (Singapore) A CASE STUDY BY PUBLICIS HEPTA

Background: year-end bonus, by fi nding an innovative and unexpected Heineken has been enjoying a strong market posi- way to bring smiles to their faces and end the year on tion as one of the leading international premium beers a high in Singapore with a cosmopolitan image. However recently, other international and boutique beer brands Solution: (microbreweries) have invaded the market making Centred around the big idea of giving the busy bees the it challenging for Heineken to retain its status as the avenue to “end the year in good fun & company”, a fi rst- preferred brand ever experiential event was created. Just for good fun! ‘Heineken Formula Chair Race’ was held in Clarke Objectives: Quay Reinforce Heineken as an innovative brand (a key Boring offi ce symbols were transformed into tools differentiator for Heineken in Singapore) for fun and laughter To increase brand affi nity & preference Carpets became the race track Drive talkability and PR value of campaign beyond Water-cooler containers became obstacles paid media Offi ce chairs were transformed into motorized Increase volume sales (especially in “cluster drink- chairs so participants could race their workmates ing” areas) Ultimately, it was about letting loose and enjoying the year-end The Insight: Class 95FM was the anchor media partner, recruiting Singaporeans are some of the most industrious cor- the race teams, activating DJs to participate in the race, porate workers in the world, who spend from 10 to 14 host the event and amplify via live broadcasts hours confi ned in their offi ce daily A poll among Heineken core target audience - “cos- Results: mopolitan achievers and survivors”, revealed that their 13,6% sales increase vs last year’s festive campaign working week was fi lled with deadlines, targets, reports, 75% volume uplift in drinking zones presentations etc. >2x targeted increase in brand imagery scores Heineken’s challenge was to reward all workers with 257% increase in media and PR value vs last year

48 OCT.-NOV. 2011 CONTENT

BP 15th Anniversary Celebration

50 The Economist’s Conference in 52 IT&T Committee Discusses IPR 54 Member Directory Tbilisi 52 Georgia: “Great Potential” for 56 Social: BP 15th Anniversary 50 AmCham Takes on New American Investors Celebration Project to Improve Legal Environment for Business 52 Growing Number of 57 Social: IWA Guidebook Launch Georgians Getting News and FEI World Cup Jumping- 52 MCC Working with Georgian Online Caucasian League Government on Potential Second Compact

OCT.-NOV. 2011 49 The Economist’s Conference In Tbilisi: “A forum for some of the best and brightest minds “

Georgia’s reforms have left it in a its policies of being business friendly, in largest telecommunication companies strong position to attract investment, particular it needs to improve the opera- in the country, as well as investing in but more needs to be done to bring tion and transparency of the legal and tax agriculture. businesses here, stressed David Lee, the processes. It is very important that the ex- He said the government’s increased general director of Magticom and the isting and new businesses have complete interest in agriculture – which employs president of AmCham Georgia. confi dence and a full understanding of 50 percent of the population is vital to Lee, a panelist at the November 17 both the legal processes and the tax laws develop the sector’s potential. Economist’s Conference in Tbilisi, noted and regulations,” Lee stressed. “With 50 percent of the population the event will be “a good opportunity” for “The conference is important because employed in this area, and with agri- progressive business leaders and policy the Economist brand is an international, culture representing one of the limited makers to discuss Georgia’s potential – intellectual leader. It will be an opportu- number of sectors where Georgia enjoys and how to make the best use of it. nity in an open forum for some of the best true natural advantages, it is timely and Despite eight years of successful and brightest minds to discuss the situ- indeed urgent that this sector starts to reforms, the Georgian economy has not ation in Georgia and, most importantly, develop its obvious and historical po- fully recovered from the shocks of the how it can be improved for businesses tential,” he noted. 2008 financial crisis and the conflict and the general welfare of the Georgian For more information about the with Russia. people.” Lee has spent the past seven conference, please visit www.economist- “The government must continue with years in Georgia, managing one of the conferences.com/georgia

AmCham Takes on New Project to Improve Legal Environment for Business

American Chamber of Commerce To guide the project, AmCham will business growth and export promotion.” has just been awarded a grant to start form a new commercial law and tax “Our project will aim to help the conduct a 12 month project intended to committee that will be co-chaired by government in fi xing these problems by analyse developments in the area of tax Ted Jonas, the Managing Partner of giving them, and the general public, an and commercial law and identify ways DLA Piper, and Justin Bancroft the new unbiased sense of what is happening with in which the law, and its implementation, Director of Deloitte. The board will businesses in Georgia,” he said. can be improved so that businesses face provide guidance to a small team of le- For more information about Civic the most transparent, predictable and gal analysts in AmCham. This team will Initiative for an Independent Judiciary equitable environment possible. review legal cases as well as commercial and its upcoming public forum, please The grant is part of the Eurasia law procedures and tax dispute resolution contact Tamar Mosashvili - tmosash- Partnership Foundation’s (EPF) Civic mechanisms, to try and identify problems [email protected]. Initiative for an Independent Judiciary, in the current system and to suggest pos- Businesses who would like to talk a program implemented by EPF and sible ways to improve the system. to the project about their experiences funded by the USAID through East West The project will then liase with gov- should contact the Project Coordina- Management Institute. ernment to try and resolve the concerns tor, Gigi Liluashvili – g.liluashvili@ EPF’s Tamar Mosashvili said the they identify, and publish regular reports amcham.ge. goal of the program is to establish con- and articles to publicise their analysis. This article is made possible by the structive, results-oriented cooperation “We consider this project to be generous support of the American people among NGOs, media outlets, and the crucial,” said Ted Jonas, co-chair of the through the United States Agency for authorities in order to achieve greater committee. “It is commonly accepted International Development (USAID). government accountability and tangible that the perception of poor legal due- The contents do not necessarily refl ect policy improvements regarding judicial process and inequitable application of the the views of USAID, the United States independence in the country. tax code continues to be a big hurdle to Government, or EWMI.

50 OCT.-NOV. 2011 OCT.-NOV. 2011 51 MCC Working with Georgian Georgia: “Great Potential” for American Government on Potential Second Compact Investors

Discussions between the Millennium John Ashworth, the new Deputy American investors, a perception of risk Challenge Corporation (MCC) and the Chief of Political and Economic Af- continues to concern possible investors. Georgian government could lead to a fairs and Senior Economic/Commercial He comes to Tbilisi after a career second compact. offi cer at the U.S. Embassy, answered that spans embassies in Tashkent; Uz- U.S. Ambassador John Bass, MCC Investor.ge’s questions about investment, bekistan; Bridgetown, Barbados; and Resident Country Director Jim Mc- trade and opportunity for American busi- the India Desk at the State Department Nicholas and Giorgi Oniani, an advisor nesses in Georgia. in Washington. to Prime Minister Nika Gilauri, briefed U.S. investment in Georgia increased “All these previous jobs have taught AmCham members on a potential sec- last year, jumping to $135.8 million in me things relevant to Georgia,” Ash- ond compact for Georgia during the 2010 – almost reaching 2008 levels. worth said.“Working on India taught me September 14 roundtable meeting at the Increasing American trade and in- that big companies like to invest in large Sheraton Metechi Palace hotel. vestment with Georgia is one of the U.S. markets, even if the investment climate THe size and model of the second Embassy’s “primary goals” Ashworth has some problems. For Georgia, as a compact is still under discussion, and said in an email interview, noting that small country, it means businesses and fi nal depends on fi nancing available from the “dramatic pace of reforms” has made government have to work harder to get the U.S. Congress, as well as approval by the country an attractive location for major companies to notice and consider the MCC. If Georgia is granted a second investment. Georgia as an investment destination.” compact, it will be considerably smaller He stressed, however, that current Fears of a new conflict with Russia, than the compact that was completed in economic crisis means Georgia will have coupled with possible domestic tension April. Ambassador Bass also discussed to “work that much harder” to implement during the 2012-2013 election season are the on-going WTO negotiations between reforms “quickly and correctly”. concerns for some American businesses, Georgia and Russia, as well as President While trade continues to be a prior- he noted. “The more the Georgian gov- Mikheil Saakashvili’s planned trip to the ity, a free trade agreement with Georgia ernment can do to lower these perceived UN General Assembly in New York. is not on the immediate agenda, he said. risks by consolidating political and Other presentations included an an- Ashworth, the new ex-offi cio mem- economic reforms, the more attractive nouncement from Caucasus School of ber of the AmCham board, noted that Georgia will become as an investment Business about two conferences planned while Georgia has “great potential” for destination,” Ashworth said. in September. Growing Number of Georgians Getting News Online

IT&T Committee Discusses IPR Over the past two years, the number 2009 and 2011. Gutbrod noted that 70 of people who use the internet as their percent of Georgians online are using Timothy Trainer, an IPR expert, primary news source has doubled, ac- the internet to access social networks, was invited to the IT&T committee on cording to surveys by the Caucasus an increase from 2009. The number of October 6 by the U.S. Embassy. During Research Resource Center (CRRC), people using the internet daily also in- the September 22 meeting, Irakli Gvilia presented to members on September 28. creased over the past two years, growing overviewed plans and strategy of the At the Courtyard Marriott, Dr. Hans from 13 percent to 23 percent in 2011. BSA. He shared vision of the alliance Gutbrod, the director of CRRC, told Georgians are also increasingly about the violation of the intellectual AmCham members while television is aware of the infl uence of media owners property rights and about measures that still the primary source of information in on the quality of news presented. Over they are going to take against software Georgia, new media is becoming more half the people questioned in 2011 - 59 infringement. Committee members dis- popular. percent - said it was not acceptable for cussed strategy of BSA ;Wouter Metz Internet use has increased over the the government to check information facilitated discussion. past two years, based on surveys from before it was broadcast.

52 OCT.-NOV. 2011 OCT.-NOV. 2011 53 AmCham Company Members as of October 2011

PATRON MEMBERS Caucasia Trading HSBC Bank Georgia JSC Radisson BLU Iveria Hotel 5/7 Navtlugi St., Offi ce #1 15 Rustaveli Ave. 1 Sq. APM Terminals Tel: 2277323; Fax: 2277377 Tel: 2177777 Tel: 2402200; Fax: 2402201 52 D. Aghmashenebeli St., Poti www.caucasiatrading.com www.hsbc.com www.radissonblu.com Tel: 493-20660; Fax: 493-20688 Caucasus University Iberia Refreshments, JSC www.apmterminals.com Tetri Khevi Hesi District, Orkhevi Salford Georgia 77 Kostava St., Bld.6, 4th fl . 44 Leselidze St. Tel: 2941691; Fax: 2253814 Tel: 2241091; Fax: 2241090 BP Exploration Georgia www.pepsi.ge Tel: 2505400-03; Fax: 2505406 38 Saburtalo St. www.cu.edu.ge www.salford.com.ge Tel: 2593400; Fax: 2593488 Imedi L International CH2M Hill SEACOR Response www.bp.com 20 Chavchavadze Ave. 5th Floor, GMT Plaza, Freedom 9 Khvichia St. 0160 Square Tel: 2223520; Fax: 2293075 Exxon Azerbaijan Ltd Tel: 2244141, 2382825 Tel: 2474040; Fax: 2470210 www.imedi-l.com.ge Landmark Suite 300, 95 Nizami St., www.seacorresponse.com www.ch2m.com Baku, AZ1010 Azerbaijan KPMG CIS Ltd. Tbilisi Branch Tel: (994-12) 4982460; Fax: (994-12) 3rd Floor, Besiki Business Center, SEAF Management LLC Chartis Europe S.A. Georgia 4982472 4Besiki St., 0108 7, Niko Nikoladze St. II Floor. Branch www.exxonmobil.com Tel: 2935713; Fax: 2982276 Tel: 2998115; Fax: 2923533 7 Bambis Rigi St., 0105 www.kpmg.ge www.seaf.ge PricewaterhouseCoopers Tel: 2439025; Sheraton Metechi Palace Hotel 7 Bambis Rigi St., 0105 Fax: 2439026 Levon Travel 20 Telavi St. Tel: 2508050; Fax: 2508060 www.chartisinsurance.com 20 Chavchavadze Ave. Tel: 2772020; Fax: 2772120 www.pwc.com/ge Tel: 2250010; Fax: 2232399 Chemonics International www.sheraton.com/tbilisi 6a N. Ramishvili St., 0179 www.levontravel.ge UGT Tel: 2234311; Fax: 2234309 T&K Restaurants (McDonald’s 17a Chavchavadze Ave., 7th fl oor Maersk Georgia LLC www.chemonics.com Georgia) 6 Khetagurov St. Tel: 2220211; Fax: 2220206 1 Dzmebi Kakabadze St. Tel: 2200800; Fax: 2200815 www.ugt.ge Deloitte Tel: 2921246; Fax: 2251422 www.maerskline.com 36a, L. Asatiani St., 0105 www.mcdonalds.ge Tel: 2244566; Fax: 2244569 CORPORATE A MEMBERS Magticom www.deloitte.ge TBC Group 5 Politkovskaya St. ABRIS Distribution AG. 7 Marjanishvili St. Tel: 2171717; Fax: 2171171 21 Liubliana St. Diplomat Georgia Tel: 2272727; Fax: 2228503 www.magticom.ge Tel: 2527271; 65, Kakheti Highway www.tbc.com.ge www.abrisdc.com Tel: 2984950 www.diplomat.ge Marriott Hotels, Resorts & Suites TBSC Consulting Advanced Engineering 13 Rustaveli Ave. 6 Marjanishvili St. Associates Georgia DLA Piper Georgia LP Tel: 2779200; Fax: 2779210 Tel: 2959019; Fax: 2420215 Apt 3, 20 Kipshidze St., 0162 10 Melikishvili St. www.marriott.com www.tbsc.ge Tel: 2913892; Fax: 2252762 Tel: 2509300; Fax: 2509301 Metromedia International Group www.aeai.ge www.dlapiper.com 8000 Tower Point Dr., Charlotte, NC CORPORATE B MEMBERS Alliance Group Holding, JSC Ernst & Young 28227 47/57 M. Kostava St., 0179 44 Leselidze St. Tel: 2171201; Fax: 2210101 AGV Czech Republic Ltd Tel: 2424181; Fax: 2998112 Tel: 2439375; Fax: 2439376 www.metromedia-group.com 63 Kostava St. www.agh.ge www.ge.ey.com Microsoft Georgia LLC Tel: 2242559; Fax: 2242549 Georgian American University 6 Marjanishvili St. www.agv-czech.com Avon Cosmetics Georgia LLC 21a Chavchavadze Ave., Tel: 2424478 117 Tsereteli Ave.. 2d Arch #3 www.microsoft.com Aliance Georgia Ltd Tel: 2226805; Fax: 2226806 Tel: 2915003; Fax: 2915004 33 Samurzakano St. www.avon.com www.gau.ge Mobipay (OpenRevolution Tel: 2243773 Georgia) www.groupaliance.com F H Bertling Georgia Ltd. Georgian Audit & Consulting 19 T. Abuladze St. 0162 9 Tarkhnishvili St. Company Tel: 2235403 Alioni-99 Holding Company Tel: 2443356; Fax: 2443376 47 Kostava St. Suite 29 www.mobipay.ge 12a Kazbegi Ave., 0160. www.bertling.com Tel: 2984039; Fax: 2438352 Tel: 2922993; Fax: 2389737 www.gacc.com.ge MSD (Schering Plough Central www.alioni99.ge Betsy’s Hotel / Prosperos Books East AG) 32/34 Makashvili St. / 34 Rustaveli GMT Group 44 K. Abkhazi St. 0105 GZ American Academy in Tbilisi Ave. 4 Freedom Square Tel: 2438978 37a Chavchavadze Ave. Tel: 2987624, Fax: 2923592 Tel: 2988988; Fax: 2988910 www.merck.com Tel: 2227441; Fax: 2227889 www.betsyshotel.com www.gmt.ge Pfi zer Luxembourg SARL www.aat.ge Booz Allen Hamilton, Inc. Greco Group Representation Offi ce in Georgia Bagebey City Group 7 Bambis Rigi St., 0105 1 Nutsubidze St. 58 I.Abashidze St. 49b Chavchavadze Ave. Tel: 2439072; Fax: 2439059 Tel: 2393138; Fax: 2311107 Tel: 2252986 Tel: 2913152; Fax: 2290169 www.boozallen.com www.greco.ge www.pfi zer.com www.bagebeycity.com Philip Morris British American Tobacco GT Group Baker Tilly Georgia Ltd. 7 Bambis Rigi Str., 0105 71 Vazha Pshavela Ave. 48 B. Cholokashvili St. Meidan Palace, 44 Kote Abkhazi St. Tel: 2439001; Fax: 2439005 Tel: 2399103/01/02; Fax: 2399104 Tel: 2740740 Tel: 2505353; Fax: 2505353 www.philipmorrisinternational.com www.bat.com www.gtgroup.ge www.bakertillyinternational.com

Catoni & Co. Georgia Hall, Booth, Smith & Slover, P.C. ProCredit Bank Bank of Georgia 3 Lesia Ukrainka St. Apt.7 41 Vaja Pshavela Ave. 0177 154 Agmashenebeli Ave. 3 Pushkin St. Tel: 2989230; Fax: 2922264 Tel: 2394417, Fax: 1-404-9545020 Tel: 2202222; Fax: 2202222-2226 Tel: 2444134; Fax: 2983269 www.hapag-lloyd.com www.hbss.net www.procreditbank.ge www.bog.com.ge

54 OCT.-NOV. 2011 Bank Republic Education and Training Legal Partners Associated LLC Teliani Valley JSC 2 Gr. Abashidze St. International Ltd. Offi ce #203, Besiki Business Center, 2 Marshal Gelovani Ave. Tel: 2925555; Fax: 2925544 4 Kuchishvili St. 4 Besiki St. 0108 Tel: 2313245; Fax: 2313249 www.republic.ge Tel: 2250945; Fax: 2250945 Tel: 2200203; Fax: 2250458 www.telianivalley.com www.educatrain.ge www.lpa.ge Basis Bank JSC VD Capital 1 Ketevan Tsamebuli Ave. Geocell Liberty Bank JSC 77 Kostava St., 0175 Tel: 2922922; Fax: 2986548 3 Gotua St. 74 Chavchavadze Ave. Tel: 2363672; Fax: 2364302 www.basisbank.ge Tel: 2770100, ext. 7435; Tel: 2555500; Fax: 2912269 Wimm-Bill-Dann Georgia Ltd Fax: 2770119 www.libertybank.ge Batumi Oil Terminal www.geocell.ge Village Ponichala, Tbilisi 0165 GMT Plaza, 4 Freedom Sq. Madneuli JSC Tel: 2475290 Tel: 2241818; Fax: 2241817 GeoEngineering LLC 3/5 Kazbegi Street, 0179 www.wbd.ru www.batumiport.com 15a Tamarashvili St. Tel: 2474545, ext. 55 Wings and Freeman Capital Tel: 2311788; Fax: 2311787 www.madneuli.ge Green Building, 6, Marjanishvili St. BDO LLC www.geoengineering.ge 42 Kazbegi Ave. Mgaloblishvili, Kipiani, Tel: 2940051; Fax: 2940053 Tel: 2545845; Fax: 2399204 Georgian Airways Dzidziguri (MKD) Law Firm www.wfcapital.ge www.bdo.ge 12 Rustaveli Ave. 24 Suite, IV Floor, Wissol Georgia Tel: 2999730; Fax: 2999660 71 Vaja-Pshavela Ave. 74b Chavchavadze Ave. BG Capital www.georgian-airways.com Tel: 2973880; Fax: 2973884 Tel: 2915315; Fax: 2915615 23 Chavchavadze Ave, 3rd fl . 0179 www.mkd.ge Tel: 2444687; Fax: 2235804 Georgian Lottery Company LLC www.wissol.ge www.bgcapital.ge 34 Chavchavadze Ave. Mina JSC Tel: 2649649 4 Besiki St. BGI Advisory Services Georgia www.georgianlottery.com Tel: 2449981/82/83; Fax: 2449980 18 Rustaveli Ave., II fl . Globalink Logistics Group www.mina.com.ge Tel: 2997292; Fax: 2996615 NON PROFIT ORGANIZATIONS 14-A Shartava St, 2nd fl , Suite 7 www.bgi.ge Navigator Ltd Publishing House Tel: 2253262; Fax: 2439002 34 Anton Katalikosi St. American Friends of Georgia BLC Law Offi ce www.globalinkllc.com Tel: 2923615 77 Nutsubidze St. Tel: 2397174; Fax: 2388495 4 Gudiashvili Sq. Goodwill www.navigator.ge Tel: 2922491; Fax: 2934526 www.afgeorgia.org 1 Parnavaz Mepe Ave. 0131 New School - Int-l House www.blc.ge Tel: 2243673; Fax: 2243673 35 Tskneti Highway, Bagebi East West Management Institute, www.goodwill.ge Casino Adjara Tel: 2231728 Inc (EWMI) 1, 26 May Sq. Gosselin Georgia www.newschoolgeorgia.com 3rd Floor , 5 Marjanishvili St. Tel: 2335519; Fax: 2334520 3 M/D, Didi Digomi Tel: 2505404; Fax: 2202441 Orifl ame Georgia www.casinoadjara.com Tel: 2596601/02/03; Fax: 2596600 www.ewmi-gpac.org 57 Uznadze St. www.gosselingroup.eu CaucasTransExpress Tel: 2911064; Fax: 2911068 The Eurasia Partnership 10a Tashkent St. 0160 Gvinadze & Partners LLC www.orifl ame.ge Foundation Tel: 2375715 44 Leselidze St, Tbilisi 0155 29/31/33 Chavchavadze Ave., Overall Management Group www.cte.ge Tel: 2235683, Fax: 2438971 2nd Floor, 0179 (OMG) Inc. www.gvinadzeandpartners.ge Tel: 2253942; Fax 2252763 (ext. 112) 12 M. Javakhishvili St. Caucasus Online LLC www.epfound.org 71 Vaja-Pshavela Ave. Holiday Inn Tel: 2436052; Fax: 2436052 1, 26 May Sq., 0171 Tel: 2480048; Fax: 2480048 Foundation - Centre for Training Tel: 2300099 Publicis Hepta www.caucasus.net and Consultancy www.hi-tbilisi.com 17 V. Jorbenadze St. Tel: 2745672; Fax: 2745671 34 Al. Kazbegi Ave., Plot #3, 0177 Château Mukhrani, J.S.C. HRG Georgia “Sky Travel LLC” www.publicishepta.com Tel: 2206774 III fl oor, Didube Plaza, Meidan palace Business Center, www.ctc.org.ge 116 Tsereteli Ave. 44 Kote Apkhazi St. Rakeen Development LLC Tel: 2201878; Fax: 2201878; Tel: 2438958 2 Baratashvili St. 0105 Association www.mukhrani.com www.hrgworldwide.com Tel: 2933393; Fax: 2933993 5 Marjanishvili St. www.rakeen.ge Tel: 2505456 Citadines Apart’Hotel IOLI Supermarket 4 Freedom Sq. 0105 13 Abuseridze-Tbeli St. Rentals Ltd. International Relief and Tel: 2547030; Fax: 2547040 Tel: 2745053 46 Rustaveli Ave. Development Inc. www.citadines.com/en/georgia/tbilisi/ www.gastronomia.ge Tel: 2454566 66 Paliashvili St. freedom_square.html www.rentals.ge Tel: 2250106; Fax: 2224837 Intourist Palace Hotel Development Solutions LLC 11 Ninoshvili St., Batumi Rompetrol Georgia Ltd. International School of 37 Rustaveli Ave. Tel: 422-75525, Fax: 422-76606 39 Navtlugi St. Economics at TSU Tel: 2241555; Fax: 2241552 www.intouristpalace.com Tel: 2910727; Fax: 2910763 www.ds.com.ge 16 Zandukeli St. JTI Caucasus www.rompetrol.com Tel: 2507177; Fax: 2984815 Dika Ltd. 15 Kipshidze St. www.iset.ge 40 Rustaveli Ave. Tel: 2604111 Silknet Ltd. Tel: 2990994; Fax: 2990994 www.jti.com 95 Tsinamdzgvrishvili St. QSI International School of Tel: 2910345; Georgia Donut Stop Cafe Kor-Standard Bank JSC www.silknet.com Village Zurgovani, Tbilisi 10/12 Abashidze St. 43 Chavchavadze Ave. Tel: 2537670; Fax: 2322607 Tel: 2251466; Fax: 2999252 Tel: 2507700, Fax: 2507707 Statoil Azerbaijan AS www.qsi.org 96 The Landmark Building, Nizami Dutch Design Garden Kutaisi Free Zone, Georgian Street, Baku AZ 1010. The Salvation Army 20 km, Agmashenebeli Alley Int-l Holding Ltd Tel: +994 (50) 2168981; Fax: +994 16 Ikalto St. Tel: 2530779 6 Shio Mgvimeli St. (12) 4977 340 Tel: 2333786; Fax: 2330227 www.dutchdesigngarden.com Tel: 2232997, Fax: 2232997 www.statoil.com www.salvationarmy.org

OCT.-NOV. 2011 55 SOCIAL PAGE BP in Georgia celebrated its fifteenth anniversary on Saturday 17th September 2011 in the Open Air Ethnographic Museum

56 OCT.-NOV. 2011 SOCIAL PAGE On September 14, the International Women’s Association in Georgia launched the second edition of Tbileasy guidebook with a presentation at Prospero’s Books. The IWAG supports projects directed at women, children and elderly at risk due to poverty, poor health or disability. IWAG supports projects that help vulnerable people , focusing on medical, social and educational issues. The proceeds of the Tbileasy Guidebook – on sale at Prospero’s Books - will help fund IWAG’s work with women, children and the elderly. Mark your calendars: IWA’s annual Christmas Expo will take place on Saturday December 10 this year. Photos by Jessia Lewis

Fei World Cup Jumping- Caucasian League Friday, September 30-October 2

OCT.-NOV. 2011 57 Board Of Directors 2011

David Lee, PRESIDENT Sarah Williamson, David Lee is the General Director of Magticom, the First Vice-President largest telecommunications operator in Georgia and In Tbilisi since June 1998, Sarah Williamson is took up his position March 2004. David is also the the co-owner and Vice President of United Global Chairman of the Eurasia Partnership Foundation Technologies (UGT), the largest IT company in and is a Chartered Accountant with an MBA from Georgia. Warwick Business School. A Russian speaker, he has worked extensively in the former USSR and served as a Royal Naval Offi cer for 9 years.

R. Michael Cowgill, Irakli Baidashvili, Director Irakli Baidashvili is the Senior Vice President of Vice-President & Treasurer GMT Group. The company is one of the largest US In his 12th. year in Georgia, Michael Cowgill is direct investments in Georgia, the owner of two currently the President and co-founder of Georgian Marriott hotels, production facility SANTE and American University’s business and law schools in several major real estate sites in Tbilisi . Tbilisi, Georgia.

John Braeckeveldt, Director Esben Emborg, Director John Braeckeveldt arrived in Georgia in 2003 Esben Emborg has been in Georgia since 1999. He as the General manager for GOSSELIN in the has worked a General Manager for Caucasus Region Caucasus region. In recent years John also started for Cadbury Schweppes and Nestle until 2008. Now up a customs brokerage company, building new he is working as Principal Partner for an Investment European style warehouse in Tbilisi for freight Fund (SEAF) that is currently managing a 30 mil forwarding/storage solutions and customs bonded USD portfolio of investments all over Georgia. warehousing for diplomatic goods.

Neil Dunn, Director Badri Japaridze, Director Neil Dunn is the general manager of BP Badri Japaridze has been the Deputy Chairman of Georgia since October 2008. He has 30 years of the Supervisory Board of TBC Bank since 1999 experience in the oil and gas industry, having and the Vice-President of various engineering and operations assignments. Georgian Glass and Mineral Water Co. (GG&MW) since 1995.

Steve Johnson, Director Ted Jonas, Director Steve Johnson is the proprietor of Prospero’s Books Ted Jonas is the Managing Partner of DLA Piper’s and the General Manager of The Hotel Betsy. Tbilisi offi ce. He advises clients on international Prospero’s Books and Caliban’s Coffee House is business transactions, energy and infrastructure the leading English language bookstore in Georgia. projects, government relations, and dispute resolution.

Ivo Bakhuijzen, Director John Ashworth, Ex-Officio Member Ivo Bakhuijzen spent 9 years in the military, 5 of John Ashworth is the Deputy Chief of Political which as an offi cer within the airborne infantry; and Economic Affairs and Senior Economic/ with missions in the former Yugoslavia and Commercial Offi cer at the U.S. Embassy. He Afghanistan. worked previously in Uzbekistan, Barbados, and on Ivo has been in Georgia since 2008 as the director the State Department’s India Desk in Washington. of Dutch Design Garden, a sister company of the famous Dutch landscape architect Martin Veltkamp.

Betsy Haskell, Founding Advisor George Welton, Exec. Director Betsy Haskell is an 18 year resident of Georgia George Welton came to Georgia as a university who started four successful businesses, and is lecturer in 2004. Soon after arriving he started currently developing a resort hotel and villas in working as a professional researcher and founded the wine country. For the past 15 years, she has GeoWel Research in 2008. His company conducts been the Georgia Contractor for Metrica, Inc, a US research and analysis for non-profi ts like KfW, Treasury Department sub-contractor. GIZ, UNDP, DfID, CARE International and some private companies.

58 OCT.-NOV. 2011 OCT.-NOV. 2011 59