Rebuilding an Icon: Mtatsminda Funicular Station
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Investor.A MAGAZINE OF THE AMERICAN CHAMBER OF COMMERCE IN GEORGIA geISSUE 34 AUG.-SEP. 2013 Obstacles for Tourism Issue: Education Challenge Facing Hospitality Industry Agriculture and the Agribusiness Sector: Problems and the Need for Change A Magician in the Kitchen Rebuilding an Icon: Mtatsminda Funicular Station Investor.ge AUGUST-SEPTEMBER 2013 3 Investor.ge Investor.ge CONTENT AmCham Executive Director 6 Investment in Brief 25 Education Challenge Facing Amy Denman A brief synopsis of new investments Hospitality Industry and business news. Georgians’ love of guests and Editor in Chief hospitality has failed to cross over Molly Corso 8 Finance Minister Nodar from culture at home to practice in Khaduri: Georgian Securities business. Copy Editor Market in “Embryonic” Stage Alexander Melin An interview with Minister Nodar 28 The Travel Advisory Khaduri about the government’s Conundrum Marketing & Promotion plans to recharge the local stock Georgia is a gem for tourists, but Sophia Chakvetadze market. foreign embassy travel advisories paint a less than tempting picture. Promotional Design Investor.ge looks at why, and what Levan Baratashvili 10 TI Georgia: Georgia’s Procurement System impact it is having on tourism. Magazine Design and Layout Transparent but Loopholes Giorgi Megrelishvili Remain 30 Shopping for Souveniers Transparency International Why is it so hard to spend money Writers published a report on Georgia’s on souvenirs outside of Tbilisi? Emil Avdaliani, Helene Bedwell, Avtandil procurement system in June. Chedia, Molly Corso, Maia Edilashvili, 32 Independence of the Judiciary Alexander Melin, Nino Patsuria 13 ISET: Agriculture and the in Georgia: Trends and Agribusiness Sector Challenges Photographs A report by ISET about the BGI’s Otar Kakhidze looks at Helene Bedwell, Molly Corso, AmCham agriculture sector’s problems and changes and challenges for the Picnic photographers the need for change. judiciary in an editorial. Special thanks to the AmCham Editorial Board and the AmCham staff, as well 16 Reforming the Civil Service 34 Siemens Brothers in Georgia as to BGI Legal and ISET for their Investor.ge spoke with Irakli Historian Emil Avdaliani provides submissions. Kotetishvili, the head of the Civil another fascinating look at Service Bureau. Georgia’s business history. 17 U.S.-Georgia COmmerical 36 A Magician in the Kitchen Diplomacy Training to Helene Bedwell interviews Black Strengthen Georgia’s Lion (Shavi Lomi)’s Meriko © The American Chamber of Diplomatic Corps’ Expertise Gubeladze about her take on Commerce in Georgia, 2011 traditional Georgian cuisine. All rights reserved. No part of this magazine 20 Five Questions with Vano may be re-printed, or reproduced or utilized Sturua, founding partner of 38 My City, Tbilisi: Rebuilding in any form or by electronic, mechanical or Villa Dzara Capital Tbilisi’s Icon other means now known or hereafter invented, Investor.ge speaks with Vano For the first article in a new including photocopying and recording, or in any Sturua of VD Capital, a chain of Investor.ge series about Tbilisi, information storage or retrieval system without eight restaurant brands. permission. GMT Group’s Irakli Baidashvili speaks about the developers’ The opinions expressed in this magazine do not refl ect the opinion of the American Chamber of 24 Radisson Plans Ten Hotels in newest historic property. Commerce in Georgia nor its Board Members or Georgia Over Next Five Years staff, unless otherwise stated. AmCham Georgia Investor.ge interviewed Tom neither endorses, nor can be held liable for any Flanagan, Area Vice President for eventuality arising from the use of any product or Eastern Europe for the Carlson service advertised within the pages of this issue. Rezidor Hotel Group. Investor.ge is printed by CEZANNE ...... 44 AmCham Georgia 36a Lado Asatiani Street, 3rd fl oor AmCham Georgia Patron Members: Tel: 2 22-69-07 [email protected] [email protected], www.amcham.ge www.investor.ge 4 JUNE-JULY 2013 Investor.ge AUGUST-SEPTEMBER 2013 5 Investor.ge AVTANDIL CHEDIA highway, which will connect Tbilisi and Investment the Black Sea, easing transit and trans- Georgia, EU Conclude DCFTA portation costs. in Brief Talks On July 22, the European Commis- Number One Investor in sion announced that the European Union Georgia: Japan and Georgia have completed talks on a Geostat reported, based on prelimi- Deep and Comprehensive Free Trade nary data, that in the fi rst quarter of 2013, Agreement (DCFTA). The agreement, Japan was the country’s largest foreign part of Georgia’s Association Agreement direct investor, with $46.3 million. Com- with Brussels, will be signed as soon as ing in second was Azerbaijan, with $38.4 “internal EU and Georgia procedures” million, followed by the Netherlands are completed, the commission reported. with $34.9 million. Specialists have estimated that the DCFTA could increase exports to the IFC Extends $4 Million Credit EU by 12 percent, and imports by 7.5 Line to Finca percent. The International Finance Corpora- tion (IFC) has opened a $ 4 million credit Three Year EU/UN Project to line to microfi nance organization Fincato Aid Ministry of Agriculture spend on loans to small- and medium- The European Union and the United sized businesses. Nations Food and Agriculture Organi- zation (FAO) have announced a new Millennium Challenge three-year project to provide technical Corporation Approved Second assistance to the Ministry of Agriculture. Compact to Georgia The project, and 2 million euros in aid, The Georgian Ministry of Education will focus on improving the competitive- and Science reported on June 19 that the ness of the agricultural sector through the board of the US Millennium Challenge development of effective policies. Corporation approved a fi ve-year com- pact with Georgia worth $140 million. Georgian American Alloys The program includes three projects: Invests in Mines improvement of general education qual- Over the course of 2013, Georgian ity, development of production skills and American Alloys has invested more than labor force, and STEM (Science, Tech- 10 million lari in its mining holdings, nology, Engineering and Mathematics) including 600,000 lari spent to improve higher education. social conditions for miners. The bulk of the investment was for new equipment. Radisson Plans New Park Inn Hotel in Tbilisi World Bank Allocates Another Carlson Rezidor, the parent company $75 Million for East-West of Radisson Hotels, announced plans for Highway a new Radisson Park Inn Hotel in Tbilsi Georgia and the World Bank signed on July 9. the fourth fi nancing agreement for the The 200-room hotel is scheduled to East-West Highway project in June. open mid-2015 on Rustaveli Avenue. The World Bank has committed a total Radisson currently operates two hotels of $292 million to construct the modern in Georgia, in Tbilisi and Batumi. 6 AUGUST-SEPTEMBER 2013 Ernst & Young will now be known as... Investor.ge Finance Minister person goes groping in the darkness, ment: our enterprises go to the European and when a person enters a lighted room market to trade,” he said. Nodar Khaduri: where they see where investment oppor- “We must create conditions here to tunities are, what is the value of this or develop the securities market … We Georgian that enterprise,” he said. should encourage our neighbors, Arme- Securities Market in “The price of and demand for a nian and Azeri entrepreneurs, to trade on company’s shares provides opportunities our stock exchange. The most important “Embryonic” Stage to analyze the market and invest in this thing is to create proper institutions that country. We might attract many more we lack at the moment.” The Georgian Stock Market has investments…” Khaduri added that creating a pension failed to ignite investor’ interests in the past, but Finance Minister Khaduri, appointed to the Ministry of market will play an important role in Nodar Khaduri is betting that new Finance (MOF) last October, is not the the process. The Ministry, together with reforms could bolster investor fi rst member of the cabinet to see poten- parliament, the Economy Ministry, and confidence and create new tial in the country’s sluggish securities the National Bank of Georgia are already opportunities for portfolio investors. market. Trade skidded to a near standstill working on creating the new legislation after a 2006 effort to reform the Georgian to support their efforts. Stock Exchange; today just state entities He stressed that creating better insti- and the Bank of Georgia are listed. tutions for the securities market and more But mere reform, noted the minister, effective legislation – as well as learning is not enough: the new law has to encour- from stock market success stories like age private companies to look locally for Poland and the Baltic States – will be the opportunities they are currently fi nd- crucial to rebooting the country’s securi- ing abroad. To date, the Bank of Georgia ties market. NINO PATSURIA has already been listed on the London “[Over the past 20 years] we lost an Stock Exchange and TBC Bank is eyeing important institution that might attract or Finance Minister Nodar an initial public offering on the Warsaw very important investments and lay the Khaduri, the Georgian Stock Stock Exchange in 2014. groundwork for economic development FExchange is something akin to a Georgian companies who tried to of the country,” he said. fl ashlight for investors: when it works, it raise capital on the Georgian Stock “There are a lot of joint stock com- shines a light on all the country’s oppor- Market were met with silence in the past. panies … operating in Georgia but tunities. When it doesn’t, potential inter- Now, stressed Khaduri, the government nobody trades on the GSE … therefore, est in the country’s enterprises and joint needs to create a law that will attract in- we should properly create institutions stock companies fades into darkness.