State Budget May Increase by 120 Million GEL New Regulations For

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www.georgiatoday.ge Issue no: 792/1 • NOVEMBER 10 - 12, 2015 • PUBLISHED TWICE WEEKLY YOUR FREE COPY

In this week’s issue... Georgian Saperavi 2011 Wins Top Two Awards in Hong Kong PAGE 3

OK! Awards Wissol Group Founder as FOCUS Business ON THE MARKET Celebrity 2015 PAGE 3 Galt & Taggart’s Archil Gachechiladze expects a strong pick up and a positive outlook for Georgia’s economy in 2016 following on from an, at times, shocking 2015. Read his Georgian Tea: Finding EXCLUSIVE interview only in GT/Business New Strength In Unity? PAGE 7 ISET PAGE 4

Dechert OnPoint: State Budget May Increase by 120 Million GEL New Regulations for

he Georgian Government plans to tion, I would like to ask to increase the tax plan Agricultural Cooperatives adjust the 2015 budget with an in the budget by 120 million Lari,” said Minister increase of 120 million Lari. The Khaduri. “At the same time, we want to reduce PAGE 11 Minister of Finance, Nodar Khaduri, borrowing in the domestic market by 283 mil- presented the state budget report lion Lari. There will be no need to issue treasury Tand a corrected budget draft of the ongoing year bills.” at a Government meeting. Foreign lending will decrease by approximately According to the Minister, from January to 100 million Lari and 96 million Lari, which will October the consolidated budget tax revenue be redirected to the Ministry of Labor, Health was 6 billion and 526 million, 641 million more and Social Affairs. Financing of leasing will than it was in the same period last year. Accord- increase by 4 million in the Ministry of Agricul- ing to data released on November 6th, the con- ture. Simultaneously, funds for irrigation and solidated budget tax revenue is already at 6 bil- drainage will decrease and the project will be lion and 641 million which is 85% of the annual delayed for one more year. Funding for the Min- plan. The state budget revenues amounted to 7 The Minister of Finance, Nodar Khaduri, istry of Regional Development and Infrastruc- billion and 962 million, which is 84% of the presented the state budget report ture will drop by 77 million Lari. annual plan. expenses amounted to 1 billion and 226 million The Minister of Finance has asked the Cabinet The state budget mobilized 605 million Lari Lari in the past ten months. of Ministers to send the presented amendments more than in the same period last year. In total “Based on these trends, we are presenting a to the Parliament this week. Prime Minister 7 billion and 710 million Lari was spent from state budget draft amendment of 2015. Given Irakli Garibashvili said the Government will January to October and the capital ﬁ nancing the trend of economic growth and tax mobiliza- approve the presented project. GEORGIA TODAY 2 BUSINESS NOVEMBER 10 - 12, 2015

Rustavi2 Shareholders Will Not Cooperate with Court-Appointed Managers

the TV Company,” reads the statement. BY KATIE RUTH DAVIES Levan and Giorgi Karamanishvili, previously unknown to the Georgian public who are believed to be close associates ajority shareholders of of former President Mikheil Saakashvili, the Rustavi 2 TV broad- claimed that they will continue to “strug- caster have refused to gle along” with the Georgian public and negotiate with the the international community within all court-appointed tem- the available legal frames. Georgia Today Offers poraryM managers of the TV company, “Like in all other aspects of the ongo- claiming they “have nothing to talk about” ing attack aimed at seizing Rustavi 2, with “government-appointed political this proposal [of temporary managers] censors.” contains an obvious cynicism common On November 5, temporary managers to Russian political mentality, wherein New GT Business Edition of Rustavi 2 TV, appointed by the City the party, which itself is the only source Court, asked the current owners of the of the problem, hypocritically expresses broadcaster to name ‘any’ trustful person a desire to help solve the very same and they will grant to this person full problem. Our people have become vic- Every Tuesday! authority to implement all executive tims of such cynicism multiple times in functions required for the smooth day- the past, including in our homeland, to-day operation of the TV station. Abkhazia,” the statement reads. “Of ou may have noticed that Georgia Today, in its 15th year of oper- slowly becoming more and more recog- Owners of 91% of the Rustavi 2 shares, course we are not going to legitimize this edition of Georgia ation, is proud to present to you its newly nizable on the world geopolitical map, brothers Levan and Gia Karamanashvili, political censors by cooperating with Today is not only purple, designed newspaper- fi t to compete with attracting an increased number of foreign then released a statement regarding the those who have been appointed by the but is now out on a Tues- the best in Europe- and to announce that visitors from year to year. With my friends developments surrounding the Rustavi government by circumventing the Con- day! Fear not! You’ll still be Georgia Today will now be brought to I established an English language news- 2 TV Company in which they pointed stitution,” reads the statement. gettingY an exciting bundle of politics, you TWICE weekly. paper with the ambition to become the to the illegality and violence that has Tbilisi City Court last Thursday even- society and cultural news every Friday, We sat down for a quick chat with leading news source about contemporary been on-going for three years in order ing terminated Rustavi 2’s General Direc- but the Georgia Today team will now George Sharashidze, Publisher & Gen- Georgia. At the time, Georgia Today was to seize Rustavi 2 and restrict freedom tor Nika Gvaramia’s right to manage also be offering you the double bonus eral Manager of Georgia Today newspa- only 10 pages long and, as it was until of speech. Georgia’s largest TV Company, appoint- of a second paper every Tuesday packed per, to discuss the fabulous changes. this month, was published every Friday. “In the light of the unprecedented reac- ing two outsiders, Davit Dvali, a former with Business, Economics and Law, I remember our fi rst exclusive interview tion from the Georgian public and inter- co-owner of the Company, and Revaz including EXCLUSIVE INTERVIEWS TELL US ABOUT THE with US Ambassador Kenneth Spencer national community, Ivanishvili’s gov- Sakevarishvili, the Deputy Director of with Georgia’s TOP BUSINESSMEN and BEGINNINGS OF THE GEORGIA Yalowitz on the back page which was a ernment, which is completely beyond rival TV Company Imedi, as provisional WOMEN, economic analyses from ISET TODAY NEWSPAPER message to our audience that Georgia the constitutional framework, retreated heads until the Constitutional Court and Galt&Taggart, and bi-monthly In early 2000 I realized the importance Today was striving to contribute to Geor- and offered us, through a third party makes the fi nal decision on ownership. updates on legal changes from Dechert. of having a professional newspaper in gia’s integration into western structures. naming, a candidate acceptable for us Judge Tamaz Urtmelidze ruled that, All in FULL COLOUR, every Tuesday! the English language as Georgia was who would be granted by the ‘temporary for former owner of Rustavi 2, Kibar WHY DID YOU DECIDE managers’ ‘full authority’ to manage the Khalvashi, to takeover, it has to be refl ected TO DIVIDE GT? TV company,” the statement read. in civil registry documentation before For 15 years Georgia Today has played The Karamanashvili brothers then go it becomes binding. an important role in the development of on to remind all that Rustavi 2 itself Rustavi 2’s current management con- quality media in Georgia. I, as a publisher, determines the editorial policy within sider the ruling unlawful based on the have had a growing need to make a big the framework of the joint Euro-Atlantic Constitutional Court’s ruling three days change which I knew Georgia Today values the TV Company has never devi- ago to temporarily suspend the govern- could handle and fi nally we decided to ated from. ment’s right to immediately enforce put our resources into a total rebrand- “Yes, Rustavi 2 is a television which decisions in fi rst instance courts if they ing. Thus, as 15 years ago, we can be sure criticizes. Who knows if the issues of Sak- have been appealed to a higher court. that Georgia Today is not only keeping drisi, Panorama Tbilisi, the economic The current situation surrounding the its position on the Georgian market but crisis and other actual issues would be Rustavi 2 has been called dire by experts leading the industry by providing Geor- covered if there was no Rustavi 2. This is who say there is no way to guess how gia with an example of a company work- the reason the government wants to seize the situation will develop. ing with European standards in the media sector. The idea about dividing GT from GT/Business comes from attracting an even wider audience, now from the busi- US Ambassador, EU Delegation Head ness sector, too. However, being published twice weekly has another impor- React to Rustavi 2 Development tant advantage in addition to business coverage. And this is timing; the way we are planning to deliver information to he United States (US) Ambas- to refrain from violence and dedicate our readers in a more operative and sador to Georgia, Ian Kelly, themselves to a peaceful resolution of the faster way. This means our readers will has expressed deep concern situation through dialogue,” The US be able to read the latest hot news, even over Rustavi 2’s recent devel- Ambassador continued. if non-business in nature, on a Tuesday. opments which has seen its The Head of the EU Delegation to Geor- Ttop management replaced through a court gia, Janos Herman, has made a statement WHAT WILL GT/BUSINESS HAVE order in an ongoing litigation over the highlighting the EU is closely watching THAT IT COMPETITORS DON’T? broadcaster’s ownership dispute. developments related to Rustavi 2. In short, quality of reporting, an unbi- “The Embassy is deeply concerned about “It is important that the execution of the ased, objective analysis, and checked developments late Thursday night related decision, including the change of Rustavi facts and data which leads to us becom- to Rustavi 2’s management and owner- 2’s management, will not start immedi- ing the most reliable source of informa- ship,” Ambassador Kelly commented in a ately. Rustavi 2 has the opportunity to fi le tion in the English language, now in written statement on Friday. a complaint and let’s wait for this process,” business news, too. The content our “Attempts to change the management of Herman stated. readers will fi nd in GT/Business will be the station, in advance of the appeal pro- According to Herman, adherence to the diverse and distinguished and often cess, have profound political implications. rule of law, democracy and principals of exclusive. In addition to news articles In a democratic society, critical opinions media freedom are important for the EU and interviews, we will have exclusive should be encouraged, not silenced. and, in this direction, the European Union analysis by prominent economic and “We are committed to supporting Geor- has repeatedly helped Georgia. business think-tanks such as ISET and gia’s Euro-Atlantic aspirations. We call on “It is important not only to preserve the Galt & Taggart and legal updates from the government to uphold the principals achievements that Georgia has in terms Dechert. of media freedom and political pluralism of the democratic, the rule of law and I wish our readers much enjoyment that are an integral part of those aspira- freedom of the media, but to take the next reading our rebranded Georgia Today tions. At the same time we urge all sides steps forward.” – designed with our readers in mind! GEORGIA TODAY NOVEMBER 10 - 12, 2015 BUSINESS 3 Georgian Saperavi 2011 Wins Top Two Awards in Hong Kong

part and win in such high-class interna- BY ANA AKHALAIA tional exhibitions. “We are actively working to diversify into new markets for which it is essential he Khakhetian Wine Cellar to promote and increase awareness of exhibited its products at the Georgian brand. Georgian products Hong Kong International and Georgian wine has outstanding Wine and Spirits Fair potential to take its honourable place in (HKTDC) 2015 which was the world market. I want to emphasize The OK! Business Celebrity award went to the founder and head of the supervisory Theld at the Convention and Exhibition that wine quality is actively controlled, board of Wissol Group – Soso Phkhakadze Centre on November 5-7. minimizing the chances of falsifi cation of Georgia, there are 6 Georgian com- Wine Saperavi 2011 won the two high- and occurrence of poor quality products panies presented at the exhibition: Tbil- est awards; Grand Prix in the nomination on local and international markets,” vino, Winery Khareba, Kakhetian Tra- OK! Awards Wissol Group Founder of Best Regional Wine in Eastern Europe, Davitashvili stated. ditional Winemaking, Badagoni, Georgian and the Gold Medal. The Bronze Medal The annual exhibition HKTDC is one Wine House and company Georgian as Business Celebrity 2015 was given to wine Mukuzani 2011 by the of the most important of its kind in Asia, Wine. same company. attended by tens of thousands of people The competition is held within the According to Deputy Minister of Agri- from around the globe. More than 1500 exhibition and the results are published nied by popular Georgian live band Band culture of Georgia, Levan Davitashvili, applications from all over the world are on the opening day which attracts more BY KATIE RUTH DAVIES E Roll, decorated by Kare Design and to promote Georgian wine on the inter- submitted to the competition every year. interested traders and importers to the hosted with delicious food and wine by national market it is essential to take Supported by the National Wine Agency stands of the winning brands. Schuchmann Wine Bar & Restaurant, OK! n 30th October, OK! Mag- awarded prominent celebrities for impor- azine Georgia and Radio tant roles played in the development of OKFM hosted an Autumn their respected fi elds and for their popu- Chinese Government Offers Continued Support Ball in Tbilisi’s historic larity amongst readers of OK! Magazine “Karvasla” event hall, the Georgia and www.okmagazine.ge. locationO of the Tbilisi Museum. OK! is As the publisher and GM of OK! Geor- for Georgian Revenue Service a famous brand in Georgia not only for gia said, according to the decision of the its magazine title but also for its loud editorial department and the manage- The equipment was given to the Geor- partners. Georgia, as a World Trade BY ANA AKHALAIA events aimed not only to entertain busi- ment, taking into account the contribu- gian side based on the Economic and Organization member, together with ness partners but also to create a special tion made to the development of society, Technical Agreement between the Geor- partner countries, plays an active role in atmosphere for direct communication changing people’s lives for the better gian and Chinese governments, signed terms of strengthening regional economic and socialization between the magazine through business novelties and an active he Chinese Government by the Minister of Finance, Nodar Kha- integration. The constant support of the management team and business partners CSR policy, the OK! Business Celebrity has gifted special customs duri, and Ambassador Extraordinary and People’s Republic of China is quite impor- of OK!. award went to the founder and head of inspection equipment to Plenipotentiary of the People’s Republic tant in this regard,” stated Minister Kha- As Maiko Tsereteli, executive director the supervisory board of Wissol Group the Revenue Service of the of China, Bin Iue. duri. of OK! Georgia told GT: “Through such – Soso Phkhakadze. Ministry of Finance. The The Minister says that the Chinese The 30 million Yuan grant was spent events we try to communicate with our According to Phkhakadze: “Despite not MinistryT of Finance continues to improve government has given important techni- on automated inspection systems for partners and readers not only from the yet having been on the market for long, customs clearance zones and customs cal support to the Ministry in recent containers, their installation and the pages of the magazine but also face to OK! magazine Georgia is a distinguished checkpoints infrastructure to simplify years and now signifi cant branches of training of Georgian customs offi cers. face, expressing gratitude to our hun- brand which we love, respect and wish taxpayer service and customs procedures. Georgian agriculture are also being The equipment is used to detect poten- dreds of strong business partners who further development to. For me, it’s a big The Chinese Government granted the equipped through the fi nancial support tial dangers at the border. It will help play such a signifi cant role in the devel- honor to be nominated as a Business Georgian side a container inspection of the People’s Republic of China. public safety and reduce the duration of opment of quality European standard Celebrity by OK! Magazine, the world system and other technical equipment “After the restoration of independence customs procedures which is a step for- media in Georgia.” famous celebrity magazine strongly rep- necessary for the safety of passengers to Georgia, the Republic of China has ward in the development of legal and At the glamorous ceremony accompa- resented in Georgia.” and freight. been one of the most important trading effective trade cooperation. GEORGIA TODAY 4 BUSINESS NOVEMBER 10 - 12, 2015 THE ISET ECONOMIST A BLOG ABOUT ECONOMICS AND THE SOUTH CAUCAUS www.iset-pi.ge/blog

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

for hundreds of hectares?! Ltd (business) mode of operation or BY ERIC LIVNY, LASHA According to Giorgi Trapaidze, “with a expand membership. LANCHAVA, NINO KAKULIA, bit of fertilizer, farmers would be able to Membership in a processing coopera- IRAKLI KOCHLAMAZASHVILI harvest tea 6 instead of 3 times per year tive would provide smallholders with the and thus double their yields.” Yet, oper- long-term incentives to invest in skills ating outside any cooperatives, lacking and technology, thus helping overcome fter many years of chaos in skills and fi nancial resources (access the chronic present-bias from which they and utter collapse, Georgia’s to credit is a major constraint given that suffer. It may also provide them with the once glorious tea industry the collateral value of a tea plantation is resources (subsidized loans or grants) is again showing signs of a miserable 500 GEL per ha), smallhold- and knowhow (learning from other mem- life. More and more indi- ers’ attitude to innovation has been bers or ENPARD) to undertake the nec- Avidual farmers and businesses – mostly described to us as nihilistic. Instead of essary technological adjustment. Addi- very small, but some quite ambitious, maximizing profi ts, they minimize inputs. tionally, significant gains could be such as Geoplant (known for its “Guri- Not spending and not investing, they fail associated with better coordination and eli” brand) – grow, process and pack tea. to do well for themselves and supply the division of labor, resource sharing and Despite competition from major produc- downstream industry. mutual help. ing countries and international brands, Incidentally, this is not a problem that is But what about the founding members Georgian tea has great export potential unique to the tea industry or Georgia. As and initial investors in a processing coop? because of the value attached to it all has been found in recent experimental How are their rights to be protected in over the former Soviet Union. studies, myopia or present-bias is a com- a larger cooperative? While the potential is clearly there, it is mon smallholder malaise (see a seminal It is quite obvious that what stands in not at all clear what strategy should Geor- paper by Dufl o, Kremer & Robinson, the way of enlarging existing coopera- gia pursue in developing the sector. The “Nudging Farmers to Use Fertilizer: The- tives is the prospect of new members old Soviet model of large scale sovkhoz- ory and Experimental Evidence from outvoting the founders and stripping them based production is dead. What we have Kenya.” American Economic Review, 2011). of their assets. Therefore, if our goal as a instead is a multitude of extremely frag- society is to promote inclusive farmer mented plantations in need of recultivation MAKING COOPERATION cooperation, cooperation that works for and technological upgrading. The million Strength is in Unity. Photo by Irakli Kochlamazashvili WORK FOR THE POOREST the poor while at the same time supply- dollar question is how one can integrate The manner in which farmer cooperation ing the food industry with the raw mate- these plantations into a modern and inter- erated on many dimensions, sharing For lack of raw materials, the processing is currently being developed in Georgia rials that it needs, the Law on Agricultural nationally competitive value chain. transportation and distribution costs and capacity of Guria Company 14 – 2 tons of is leaving the poorest Georgian farmers Cooperatives would have to allow farm- engaging in joint marketing abilities. As fresh tea in 24 hours – is very far from outside the fl edgling cooperative move- ers like Giorgi and Avto to expand mem- IN SEARCH OF THE RIGHT Giorgi knows to tell, “If I had more tea being fully utilized. During harvest time, ment. It is only natural that the most bership without losing control. This can ORGANIZATIONAL MODEL leaves than I could process during the they employ up to 15 workers, who oper- capable and entrepreneurial – such as be achieved by creating different classes One alternative would be to have small- harvest, I could rely on Avto and Merab ate in two shifts, day and night. Yet, all Merab, Avto and Giorgi from our story of members (voting and non-voting) or holders gradually replaced by large to process them to avoid waste. We were they were able to process in 2015 was about – would be the fi rst to get organized in making voting rights proportionate to industrial farms. Yet, while perhaps ‘effi - mixing each our teas and selling them 10 tons of fresh tea leaf (they bought an small groups and prevail in the competi- initial investment and/or labor inputs. cient’ in the narrow technical sense together so as to cut distribution costs additional 2.5 tons of dry tea to fulfi ll obli- tion for ENPARD or government funding. Despite the challenges, the future of (particularly for low-quality teas that and exploit economies of scale.” gations to their marketing partners). To It is only natural that they would have Georgian tea looks quite bright. Local don’t require many manual processes), In 2007, Merab and Avto’s business was make use of excess capacity, the coopera- better business ideas, and the resources and international demand is an inexo- this scenario carries very large social, lifted by the wave of new entrepreneur- tive would occasionally process tea leaves to hire grant proposal writers. rable pull factor driving investment economic and political costs associated ial activity which swept Georgia in the for other producers, charging for the ser- The fact that the more entrepreneurial throughout the entire value chain. It is with a massive dislocation of Georgia’s early years following the Rose Revolu- vice. That, however, is far from their ideal. and capable farmers get additional sup- only a matter of time before the right rural population. tion of 2003. A partnership with Mikho Just like its business parent, Lodo Ltd, port is perfectly fi ne from the ethical organizational model emerges in a pro- Another possibility is provided by the Svimonishvili’s newly established the new cooperative is focused on pro- point of view. After all, selection and cess of trial and error. However, it is in likes of Avtandil (Avto) Lomtatidze and Marneuli Food Factory (MFF) helped cessing. With all the new EU-fi nanced survival of the fi ttest is what evolution our hands to nudge the process in the Giorgi Trapaidze who are performing the them to the national scene. “This was equipment (an aroma oven, a tea drying is all about. The problem with this direction of greater or lesser inclusivity, critical aggregation function by collecting like infusing new blood into the com- and sorting machines, green tea fi xation approach is that its leaves behind the greater or lesser preservation of Geor- and processing tea leaves produced by pany”, recalls Avto Lomtatidze. Mikho equipment, and a truck), Guria Company large mass of Georgian smallholders who gia’s rural traditions and landscapes. Guruli smallholders. Avto and Giorgi live agreed to purchase their tea and sell it 14 is now well-positioned to produce are badly needed as suppliers of raw The article was produced with the assis- and operate in Kvenobani and Khidistavi, under the MFF brand. By 2010, Lomtatidze large quantities of higher quality teas. materials for the food industry. This is tance of the European Union through its two neighboring villages in the Chokha- and Dolidze felt the time was right to Yet, as far as raw material supply is con- a problem of economic policy, not of European Neighbourhood Programme tauri municipality. Among their suppliers launch a private company. Lodo Ltd cerned, Lomtatidze and Trapaidze remain ethics or morality. for Agriculture and Rural Development are more than a hundred small farmers (combining the fi rst two letters of the totally dependent on neighboring farm- The latest proposed amendment in the (ENPARD), Austrian Development Coop- each owning between 1000 sqm to one founders’ names) was born that year. In ers, whose productivity is a major drag Law on Agricultural Cooperatives is eration, CARE Austria and CARE Inter- hectare. In this way, they provide the link 2012, while continuing their cooperation on their business. The cooperative’s own apparently aimed at addressing this gap. national in the Caucasus. The contents between these small guys and the market with MFF, Lodo and Giorgi Trapaidze tea plantations total a meager 5ha (fenced The lawmakers’ idea is to NOT allow are the sole responsibility of the authors – local, national, and even international. agreed to package and sell their tea and recultivated with ENPARD’s sup- processing cooperatives to source more and can in no way be taken to refl ect the Against all odds, in part out of love of through Shota Bitadze – a tea broker port) but what are these 5ha compared than 30% of raw materials from non- views of the European Union, Austrian his profession and in part thanks to his selling tea locally as well as internation- to the processing capacity of Guria Com- members. The choice to be faced by such Development Cooperation, CARE Austria Guruli character, Avto was among the ally, particularly in Ukraine. pany 14, which is large enough to cater cooperatives will be to either shift to the or CARE International in the Caucasus. fi rst Georgian farmers to start a private tea processing business soon after the REDISCOVERING FARMER Soviet Union’s collapse. He was fortu- COOPERATION? nate to fi nd a great friend and colleague Aggregation by tea processing and pack- in the person of Merab Dolidze – an ing businesses, such as Lodo (and, on a experienced engineer who passed away much larger scale, by Gurieli), certainly in 2015. Merab was instrumental in assem- helps small farmers to bring their prod- bling the tea processing line. Avto was uct to the market. Yet, it does not solve a chemist by education and a tea tech- the fundamental problem of low pro- nologist by training. His main responsi- ductivity and quality at the farm level. bility was to operate the line and make The lack of high quality raw material – sure that the fi nal product met the desired tea leaves – is THE major constraint for quality standards. The small factory Avto Lodo and other Georgian processors as and Merab set up in Kvenobani processed they seek to scale up and enter interna- and sold tea in the local market. Very far tional markets. from breaking into the global markets, To undertake additional investment and but good enough to help themselves and improve coordination at the processing many of their fellow neighbors. stage, in 2014 Lomtatidze, Dolidze and Their success inspired others. In 2005, Trapaidze, together with four other part- a very similar processing operation was ners, formed an agricultural cooperative, set up in the nearby Khidistavi village by “Guria Company 14”, which was offi cially Giorgi Trapaidze. Being new to the tea recognized by the Agricultural Coopera- business (his prior experience was in tive Development Agency (ACDA) and wood processing), Giorgi relied on his received funding support from an NGO Tel: (995 32) 2 45 08 08 friendship with Avto and Merab to acquire coalition led by CARE-International as 10 Galaktion Street E-mail: [email protected] the necessary knowhow. The trio coop- part of EU’s ENPARD program.

GEORGIAGEORGIA TOTODAYDAY 6 BUSINESS NOVEMBERNOVEMBER 10 - 1212,, 2015 TBC Bank Signs Agreement for GEL 48 Million Loan from BSTDB

BSTDB, will support TBC Bank in stimulating eco- BY KATIE RUTH DAVIES nomic growth and job creation through development of Georgia’s SME sector. The new Georgian Lari denominated facility will complement BSTDB’s BC Bank and the Black Sea Trade and existing USD 10 million SME Loan Facility and USD Development Bank (BSTDB) have 10 million Trade Finance Facility with TBC Bank.” signed an agreement in the amount of BSTDB is an international fi nancial institution GEL 48 million. The three-year local established by Albania, Armenia, Azerbaijan, Bul- currency SME Loan facility will enable garia, Georgia, Greece, Moldova, Romania, Russia, TTBC Bank to fi nance small and medium-sized enter- Turkey, and Ukraine. The BSTDB headquarters are prises in Georgia. BSTDB has arranged to obtain located in Thessaloniki, Greece. the local currency funds through a private placement of GEL denominated bonds arranged by TBC Capital, a subsidiary of TBC Bank. This is the fi rst such loan from BSTDB. “We are delighted to continue our partnership with BSTDB,” said Vakhtang Butskhrikidze, CEO of TBC Bank. “The transaction is of great importance not only for TBC Bank but for the entire fi nancial sector as This fi rst GEL it enables us to provide loans in local currency that are increasingly in demand from our customers and denominated will enable TBC Bank to further strengthen its position in the SME segment. This transaction refl ects loan, provided by both institutions’ commitment to continuing cooperation and we look forward to more years of pro- ductive partnership. In addition, the issuance of the BSTDB, will bonds will support local capital market development.” support TBC Bank “We are pleased to continue our successful rela- tionship with our long-standing partner, TBC Bank in stimulating and to offer a product that eliminates currency risks,” said Ihsan Ugur Delikanli, BSTDB President. economic growth “This fi rst GEL denominated loan, provided by and job creation Ihsan Ugur Delikanli, BSTDB President National Bank of Georgia Increases Refi nancing Rate

increase in the input costs of production due to BY ANA AKHALAIA exchange rate depreciation and higher prices on certain imported goods. An important impact on infl ation came from the one-time increase in the he Monetary Policy Committee (MPC) electricity tariff. The rise in infl ation has been lim- of the National Bank of Georgia (NBG) ited by the weak aggregate demand and decrease decided to increase the refi nancing in the world prices of oil and food products.” rate by 50 basis points to 7.5 percent. According to preliminary forecasts, the real GDP The monetary policy decision is growth since the start of the year was 2.7%. The basedT on the macroeconomic forecast. In response external sector and weak domestic demand are the to increased infl ation expectations, the National factors which hold up the real growth. Bank of Georgia continues tightening the monetary The change in the exchange rate (GEL/USD) has policy. caused import to adjust; thus on some level help- National Bank of Georgia: “According to the ing the elimination process of external imbalance. current forecast, at the beginning of 2016 the infl a- Since the beginning of the year import has decreased tion will remain above its target value, will start by 14%. Accordingly, it can be assumed that the decreasing afterwards and will return to its target impact of the existing external shock on the exchange value of 5% in the second half of 2016. The annual rate has been exhausted. growth in consumer prices equaled 5.8% this Octo- Further changes in the monetary policy will ber. The main factors causing the rise in infl ation depend on the infl ation forecast, factors affecting are still coming from the supply side, namely the it, and on general state of the economy.

Galt & Taggart Signs with Saxo Bank for a Better Global Trade Experience

quartered in Copenhagen and has ofﬁ ces in 26 BY STEVEN JONES countries. Saxo Markets provides institutional clients and their end customers with multi-asset trade execution, prime brokerage and industry-leading alt & Taggart (Galt & Taggart) and trading technology. Saxo Markets’ speed of innova- Saxo Bank announced today the sign- tion and use of disruptive technologies empowers ing of an agreement that will allow institutional clients to deliver seamless experiences clients of Galt & Taggart to access for their end users to access the capital markets. global capital markets and invest on Saxo Markets serves institutional clients through Ga multi asset basis. The product will be available key hubs in the UK, Denmark and Singapore. from November 2015 and will provide a highly “We are very pleased to join forces with Saxo adaptive trading experience with professional tools, Bank to further enhance our clients’ trading expe- insights and world-class execution to its users. rience. With this we are looking forward to extend- Galt & Taggart, a wholly owned subsidiary of JSC ing Galt & Taggart’s track record of offering the Bank of Georgia, is the leading investment banking best trading capabilities in the country. Our part- and investment management service ﬁ rm in the coun- nership with Saxo Bank will allow us to bring the try with a unique insight into the regional market. The latest technology to the market and provide our company is at the forefront of capital markets devel- clients with full control over their investments,” opment in Georgia and in the neighboring markets. said Archil Gachechiladze, Chairman of Galt & Saxo Markets is the institutional division of Saxo Taggart. “We are looking forward to unveiling full Bank Group. Founded in 1992, the Bank is head- details of the partnership in November 2015.” GEORGIA TODAY NOVEMBER 10 - 12, 2015 BUSINESS 7 Galt & Taggart - Making Investing in Georgia Easier

BY ANA AKHALAIA

n September 2014, the Investment Management arm of Bank of Geor- gia was rebranded as Galt & Tag- gart, a name that goes all the way back to 2000. The fi rm has invested Ia great deal of resources since then in becoming the major player in the Geor- gian investment banking sphere. G&T built the fi rst research house in the country from the ground up, providing macroeconomic, sector, and fi xed income (Georgian Railway and Georgian Oil & Gas Corporation) coverage. Furthermore, Galt & Taggart, already the leading brokerage in Georgia, recently announced a landmark partnership with Saxo Bank, which will enable it to offer clients a highly adaptive trading experience, with professional tools, insights, and world- class execution. Georgia Today met exclusively with Archil Archil Gachechiladze, Deputy CEO, Gachechiladze, Deputy CEO, Investment Management of Bank of Investment Georgia, and Chairman of its subsidiary, Management of JSC Galt & Taggart, a leading fi rm in Bank of Georgia, investment banking and investment and Chairman of management services in Georgia. its subsidiary, JSC Galt & Taggart INTERNATIONAL FINANCE MAGAZINE RECENTLY NAMED GALT & TAGGART THE BEST countries. Azerbaijan has spent 55% of WHAT IS YOUR OUTLOOK ON Georgia remains an attractive tourism INVESTMENT BANK IN its foreign reserves, whereas we only THE GEORGIAN ECONOMY? destination. At the same time, the busi- GEORGIA. WHAT WERE ITS spent 9%. I think we fared considerably Growth in Georgia in 2015 mainly refl ected ness supportive environment attracts IMPORTANT ACHIEVEMENTS better than the rest of the region. a deterioration in the external environ- foreign investors, which allows the coun- OVER THE PAST YEAR? Bank of Georgia (BOG) had announced ment, as the region has been hit hard by try to realize its potential in transport, We are at a stage when the capital mar- a new initiative of GEL-denominated falling oil prices, related regional cur- logistics, energy, and hospitality sectors, kets should be reactivated in Georgia. The business bonds, but had to suspend it due to the rency depreciations, and negative reper- among others. As growth is expected to The fi rst steps were taken in this direc- Lari depreciation. It’ll be a signifi cant cussions from the recession in Russia. pick up modestly in the region in 2016, tion last year, with three different bonds supportive step forward for the economy once local However, with the fl oating exchange rate Georgia’s healthy macro fundamentals, issued by private companies, in addition currency bonds are accepted by NBG regime and prudent fi scal framework, economic diversifi cation, low oil prices to the issuances of international fi nance environment for liquidity measures. Georgia managed to remain competitive and EU DCFTA provide a solid base for organizations. G&T acted as the lead and keep macro fundamentals healthy. a strong pick up and a positive outlook placement agent for these transactions attracts foreign ARE THERE ANY OBSTACLES FOR Despite economic troubles in the region, for Georgia’s economy in 2016. and is the clear leader on the market in INVESTORS IN GEORGIA? this regard. The market is small at pre- investors, which Georgian legislation is quite good, with sent, but we have great expectations. no big barriers. Bonds carry a 5% income We launched a new product for Georgia. allows the country tax that should be removed, in our opin- Depositors faced with lower interest rates ion. The Minister of Finance announced today need to get used to bonds, which to realize its readiness to work on this issue, so bonds are higher-risk, higher-returns instru- can compete with bank loans. ments. To ease this transition for the potential in Georgian investor, we started with the WHAT ARE G&T’S FUTURE PLANS bonds of our subsidiaries, which were transport, AND PROJECTS? very well received. Notably, not only our It is good news for our company as well relatively wealthy clients, but foreign logistics, energy, as the Georgian economy that many funds showed signifi cant interest. companies have approached us. We will We started with GLC, our leasing sub- and hospitality soon announce another bond issuance sidiary, which launched a three-year bond, by a private company. For now, I can placed a 20 million bond for m2 Real sectors, among say that it is a Georgian company in the Estate, a signifi cant amount for the local food industry. In addition, there are market, and another 15 million GEL three- others several other companies we are work- year issuance by Evex. 10, 15, 20 million ing with. There is signifi cant demand GEL bonds are now a reality as a new for GEL-denominated bonds. We are form of funding for Georgian companies. for the Georgian economy. Many families awaiting next steps for NBG to recog- have had diffi culties, especially those nize Lari bonds for bank liquidity WHAT WAS THE BIGGEST with bank loans in US dollars. But the requirements. CHALLENGE THIS YEAR? economy endured the hardships without The Lari depreciation was a big shock losing a lot of reserves, unlike other WHAT ARE THE ADVANTAGES OF BONDS? We believe that now is a good time for investment banking in Georgia. On the The one hand, there are the depositors faced with lower interest rates on foreign currency deposits. Rates on one-year USD new look deposits of leading banks have dropped to 4% from a high of 12-13% in previous Georgia years. On the other hand, corporate loan issuances are down. The National Bank applies a high risk weighting to dollar- Today denominated loans. Therefore, issuing 9-10% bonds would be benefi cial for companies and would allow them to diversify Tell us what their funding sources, attracting investors in addition to traditional bank fi nancing. you think? Depositors will be able to earn 9% on GEORGIA TODAY bond issuances of companies they know well instead of 4% on bank deposits. We believe in the potential of this market and will continue to play an important role info@ facebook.com/ www.georgiatoday.ge +995 32 229 5919 georgiatoday.ge GeorgiaToday in its development. GEORGIA TODAY 8 BUSINESS NOVEMBER 10 - 12, 2015 Carrefour Georgia Employees Double USAID’s REAP Offers Mariam as Second Carrefour Hypermarket Kutelia Internship Program Opens in East Point Mall

l Futtaim Retail - the retail committed to provide the widest range arm of Majid Al Futtaim, of quality products at the most affordable BY ZVIAD ADZINBAIA REAP’s program’s the leading shopping mall, prices to its customers. offi cial poster retail and leisure pioneer in Carrefour Georgia was established in and logo the region and owner of the 2012 with the opening of its fi rst Hyper- SAID’s Restoring Effi- portraying Aregional franchise rights to Carrefour, has market in Tbilisi Mall Hypermarket , fol- ciency to Agriculture Mariam opened a second Carrefour hypermarket lowed by two supermarkets; Karvasla in Production (REAP) is Kutelia. in Tbilisi, located in East Point Mall. 2013 and GTC in 2014. Source: REAP offering an innovation for Georgia The 10,000 sqm hypermarket offers Georgian youngsters customers the widest choice of fresh pro- ABOUT MAJID AL FUTTAIM RETAIL Uinterested in the sphere of agriculture. duce and household goods with over Majid Al Futtaim Retail is the exclusive The US-funded organization has recently 40,000 items, including groceries, home franchisee of the second largest super- launched a substantive internship pro- appliance, home, and sports and leisure market chain in the world, Carrefour, and gram, named the Mariam Kutelia Intern equipment as well as textiles. holds the rights to operate the brand in Program. Commenting on the signifi cance of the 38 countries across the Middle East, West- The organization invites applications opening, Philippe Peguilhan- Country ern and Central Asia and Africa. It is the for intern positions every six months, Manager of Carrefour Georgia -said: “Car- retail arm of the leading shopping mall, where students from different universi- refour East Point has provided employ- retail and leisure pioneer across the region, ties are given the opportunity to work ment to more than 450 people and that Majid Al Futtaim. Since opening its fi rst in various fi elds that support REAP’s means we’ve doubled the number of Car- hypermarket in the UAE in 1995, Majid implementation, including administra- refour employees in 2015 to a total of 1200 Al Futtaim Retail currently operates 150 tion and fi nance, monitoring and evalu- in Georgia. Carrefour stores in 12 countries across ation, environment, and access to fi nance “As part of Majid Al Futtaim Retail’s 45 the region. and technical assistance. million GEL investment plan in Georgia, Carrefour operates a range of retail con- In addition to the internship, for each a revised set of skills is needed to address having interesting tasks, and interacting we will also be opening a third supermar- cepts to suit every customer. These include incoming group, REAP offers one com- new challenges and stimulate its devel- with professionals” says Mariam Mtsi- ket next week in Isani which will add Carrefour Hypermarkets, Carrefour Mar- petitive research grant to address con- opment,” says the REAP team, consider- turidze, a former REAP intern. another 120 jobs. Expansion will continue kets and Carrefour City stores, as well as straints faced in Georgia’s agriculture ing young qualifi ed specialists as key Alexander Charkviani, who has con- in Tbilisi as well as in Rustavi and in two the Carrefour online shopping portal. sector. REAP says all selected interns drivers in these processes. tributed to the REAP program as a young other major cities of Georgia- Batumi and In line with the brand’s commitment to are eligible for the grant and application This month REAP has awarded diplo- professional, believes his internship at Kutaisi as we seek to extend our commit- provide the widest range of quality prod- is voluntary, with one applicant selected mas for the successful completion of the CNFA was a life changing experience. ment to create great moments for every- ucts at the most affordable prices, Car- for funding. The application selected program to the previous team of moti- “This is an ideal opportunity to start a one, every day,” he continued. refour today offers an unrivalled choice will be the best research idea and pro- vated Georgian interns. The 6-month career because of professional co-work- Presently, Carrefour is working with of more than 40,000 food and non-food posal submitted as judged by REAP internship united 34 students from 11 ers, who are always ready to give you an more than 500 suppliers, including 20 products through many promotions each management. universities in REAP’s Tbilisi, Telavi, advice and instruct you as they are inter- from different regions of Georgia, such year. Goals of the grant include providing and Kutaisi offi ces. The interns had been ested in developing young profession- as Kakheti, Imereti, and Shida Qartli, as Carrefour promotes the highest service the recipient with management and involved in a variety of REAP program als.” well as 30 local farmers, whom Carrefour standards in the region and shapes the decision-making experience and with areas. They had the chance to directly The USAID-supported REAP program collaborated with to elevate to interna- development of the regional retail indus- fi nancial responsibility. Thus, the grant interact with businesses and act as con- is an integrated enterprise development tional standards. try. Majid Al Futtaim Retail carefully will be managed in all aspects by the sultants under the close mentorship of designed to increase incomes and the Carrefour also brought international selects the location of each Carrefour recipient with the availability of advice REAP specialists. rural employment by launching success- standards to retail in Georgia as a leader store based on convenience and ease of and counselling from REAP management “I had the pleasure of working at USAID ful agribusinesses and promoting in Europe, such as hygiene standards to access for its shoppers, including in shop- and the university advisor. project REAP for the past six months. increased investment in Georgia’s agri- guarantee high quality products with best ping malls, and residential and commer- “Agriculture is changing, and with it, The program for me meant being active, culture sector. practice hygiene processes. The brand is cial hot spots. GEORGIA TODAY NOVEMBER 10 - 12, 2015 BUSINESS 9 Georgian Railway: Passenger Comfort Our Top Priority

At the same time, we are focusing on valuably and thoroughly repaired loco- BY ANA AKHALAIA improving the quality of services. To motives, all of which were tested, and that end we have signed an agreement demonstrated very good results. with Ilia State University Business We have also been working actively eorgian Railway has intro- School on training our staff. Cashiers, to repair platforms all over Georgia. At duced many innovations operators, and conductors, who directly this stage we have reconstructed eight to improve the quality of relate with passengers, now go through platforms and we plan to repair a fur- its services. Passengers rigorous training. We are very content ther 12 in 2016. who often travel by train with the results of these trainings, and appreciateG these changes. What’s more, can see that the quality of services has WHAT OTHER PROJECTS Georgian Railway is able to draw a high already improved. WILL GEORGIAN RAILWAY number of passengers thanks to its low- Moreover, for many years information IMPLEMENT? cost tickets. displays were out of order. As a result, We plan to introduce many other pro- Dachi Tsaguria, Head of the Georgian passengers were uncertain when this jects. We are working on changing the Railway Service Quality Development or that train would arrive or leave. We ticket sales system. The new system Offi ce, talks about specifi c innovations have bought the necessary equipment will be introduced in summer 2016 and and plans. and installed it at 18 main stations across will secure passengers from unexpected Georgia. complications. With the new system, THE SITUATION IN PASSENGER To further improve the quality of ser- even if a passenger loses their tickets, TRAINS HAS DRAMATICALLY vices, we have simplifi ed the ticket they will still be able to travel using our IMPROVED. TODAY, WE HAVE purchasing process. In summer the fl ow new e-tickets with barcodes which will MANY INNOVATIONS. WHAT of passengers is higher, therefore, long include passenger information. Conduc- SPECIFIC PROJECTS HAVE YOU uncomfortable queues occur frequently tors will check the e-tickets through IMPLEMENTED TO IMPROVE at booking offi ces. We have installed barcode readers. THE QUALITY OF SERVICES? special regulating systems to manage Moreover, we plan to rehabilitate the Georgian Railway receives revenues from such queues. We have also worked to Tbilisi Railway Station. As reported, cargo transportation and we also subsi- ease the ticket purchase process and we have repaired Batumi railway sta- dize passenger transportation services. now passengers can buy tickets on campaign and our passengers are now paired old wagons which used to run tion through an entirely new concept. We do our best to offer full comfort to various websites, for example, on www. able to buy 40-GEL tickets at 25 GEL, in foreign countries but these have been Today, the Batumi Railway Station is our passengers and to make their journeys railway.ge, and at quick payment termi- and 23 GEL tickets at 18 GEL. almost fully amortized. We have not the best in Georgia. I would like to con- more pleasant. We have introduced a new nals. All these innovations inspire us. We spared efforts on this project and have gratulate not only Batumi residents, but cleanup system with modern equipment It should also be noted that, according do our best to maintain low prices and repaired 17 wagons of 20. By the end of the whole country on this fact. We also and techniques. The system enables car- to various international reports, Geor- simultaneously to increase the quality 2015, we plan to have overhauled all 20 want Tbilisi Railway Station to have a riages to be cleaned with 180-degree high gian Railway has set one of the lowest of our services. wagons. good appearance and are developing a pressure steam whereas previously we tariffs worldwide and ranks second in Our wagons were recently improved, We have also repaired seven locomo- new project which we have high expec- cleaned the exterior of carriages by hand. the world and fi rst in Europe. Ticket but there is still considerable work to tives- each modernized to the highest tations for. We have restored the carriage wash plant prices range from 1 GEL to 55 GEL be done in this regard. level jointly with the Locomotive Repair I would like to assure all passengers that had been suspended since the col- depending on the destination. We have We have launched the intensive reha- Plant. of Georgian Railway that we aim to cre- lapse of Soviet Union. also introduced a 10-month discount bilitation of carriages. We have unre- Georgian Railway has never had so ate full comfort for each of them.

WHAT’S ON IN TBILISI

THEATRE Start time: 12:00, 15:00 Start time: 22:15 THE LAST WITCH HUNTER November 7 – December 6 Ticket price: From 8 Lari Ticket price: 11.50 – 12.50 Lari (Info Above) THE EXHIBITION OF GABRIADZE THEATRE Start time: 17:15, 20:15, 22:45 SCENOGRAPHY by three November 11 THE LAST WITCH HUNTER Ticket price: 9.50 – 12.50 Lari Address: 13 Shavtelis St. Directed by Breck Eisner Georgian artists – Oleg Kochakidze, Telephone: 2 98 65 93 BASHI-ACHUKI Akaki Tsereteli Cast: Vin Diesel, Rose Leslie, MUSEUM Alexander Slovinsky, Yuri Directed by Dimitri Khvtisiashvili Elijah Wood Chikvaidze. November 11 English Subtitles Genre: Action, Adventure, Fantasy MARSHAL DE FANTIE’S DIAMOND SHALVA AMIRANASHVILI Start time: 12:00, 15:00 Language: Russian VERNISSAGE GALLERY Rezo Gabriadze Start time: 22:20 MUSEUM OF ART Ticket price: From 6 Lari Address: 49 Kote Apkhazi Str. Directed by Rezo Gabriadze Ticket price: 11.50 – 12.50 Lari Address: 1 Lado Gudiashvili St. English Subtitles Tel.: 2 99 88 08 November 12 Telephone: 2 99 99 09 Start time: 20:00 SPECTRE www.museum.ge Ticket price: 10, 15, 20 Lari BIRTHDAY PARTY Directed by Sam Mendes November 3-13 Fairy Tale Cast: Daniel Craig, Christoph Waltz, Tamuna Melikishvili’s solo exhibition Directed by Nikoloz Sabashvili November 4-11 GRIBOEDOV THEATRE Léa Seydoux DRAUGHT. English Subtitles THE JAPANESE Address: 2 Rustaveli Ave. Genre: Action, Adventure, Thriller Start time: 12:00 CONTEMPORARY ARTIST SHU Telephone: 2 93 11 06 Language: Russian Ticket price: From 8 Lari KUBO’S EXHIBITION ARTISTERIUM 2015 www.griboedovtheatre.ge Start time: 12:15, 16:00, 19:15, 22:30 Ticket price: 7.50 – 12.50 Lari TBILISI ZAKARIA November 5-23 November 10 November 10 PALIASHVILI OPERA AND RUSTAVELI CINEMA MALKHAZ KUKHASHVILI’S 18:00 – I REMEMBER, group ELDER SON BALLET THEATRE Aleksandre Vampilov Address: 5 Rustaveli Ave. PERSONAL EXHIBITION exhibition project, Georgia. Directed by Gogi Margvelashvili Address: 25 Rustaveli Ave. Telephone: 255 50 00 Container Gallery, 10 Radiani Str. Language: Russian Telephone: 2 99 04 56 www.kinoaﬁ sha.ge ZURAB TSERETELI MUSEUM Start time: 18:00 OF MODERN ART MUSIC Ticket price: 5 Lari November 10 November 10-12 Address: 27 Rustaveli Ave. DAISI SPECTRE Telephone: 2 14 84 11, 2 98 60 04 Zakaria Paliashvili (Info Above) TBILISI CONCERT HALL TBILISI VASO ABASHIDZE www.momatbilisi.ge MUSIC AND DRAMA STATE Participants: Liana Kalmakhelidze, Start time: 12:00, 14:30, 16:15, 19:30, Address: 1 Melikishvili St. THEATRE Elene Janjalia, Teimuraz Gugushvili, 22:45 Telephone: 2 99 00 99 October 9 - November 15 Address: 182 D.Agmashenebeli Ave. Eldar Getsadze, Gia Asatiani, Tamaz Ticket price: 9.50 – 12.50 Lari Saginadze THE SOLO EXHIBITION OF Telephone: 2 34 80 90 Conductor: Revaz Takidze FAMOUS GEORGIAN ARTIST November 10 www.musictheatre.ge THE MARTIAN 3D Start time: 19:00 OLEG TIMCHENKO GIYA KANCHELI 80 Directed by Ridley Scott The exhibition combines the series of Ticket price: From 5 Lari Cast: Matt Damon, Jessica Chastain, Conductor: Nikoloz Rachveli November 10 three different projects under the title Kristen Wiig INTROSPECTION – STORY ABOUT US “Self-Portrait, Culmination, No Com- Start time: 20:00 Genre: Adventure, Drama, Sci-Fi Directed by Davit Doiashvili CINEMA ment”. Ticket price: From 15 Lari Language: Russian Musical Start time: 22:20 English Subtitles AMIRANI CINEMA GALLERY MOVEMENT THEATRE Ticket price: 11.50 – 12.50 Lari Start time: 19:00 Address: 36 Kostava St. Address: 182, Aghmashenebeli Ave., Ticket price: From 20 Lari Telephone: 299 99 55 AN INTERRUPTED FLIGHT TUMANISHVILI THEATRE Mushthaid park www.kinoaﬁ sha.ge Directed by Arshakyan Yelena Address: 164 D. Agmashenebeli Ave. Telephone: 599 555 260 TBILISI NODAR DUMBADZE Cast: Tatev Omakimian, Tigran Telephone: 2 34 28 99; 2 35 70 13 STATE CENTRAL CHILDREN’S Makarian THEATRE November 10-12 www.tumanishvilitheatre.ge November 10, 12 BLACK MASS Genre: Drama Address: 99/1 Agmashenebeli Ave. Language: Russian JAM SESSION Directed by Scott Cooper November 10-17 Telephone: 295 39 27 Start time: 15:15 Leaders: Cast: Johnny Depp, SIMON MACHABELI’S Ticket price: 8.50 – 9.50 Lari Reso Kiknadze (sax) Benedict Cumberbatch, EXHIBITION November 10 Dakota Johnson Nika Gabadze (guitar) SALAMURA Genre: Biography, Crime, Drama BLACK MASS Misha Japaridze (bass) Archil Sulakauri’s Tale Language: English (Info Above) THE NATIONAL GALLERY Irakli Choladze/Gio Kapanadze Directed by Kote Mirianashvili Start time: 19:30 Start time: 18:05, 19:40, 22:45 Address: 11 Rustaveli Ave. (drums) English Subtitles Language: Russian Ticket price: 9.50 – 12.50 Lari www.museum.ge Start time: 21:00 GEORGIA TODAY 10 BUSINESS NOVEMBER 10 - 12, 2015

Aversi: Voluson E10 Ultrasound Apparatus Now in Georgia

BY KATIE RUTH DAVIES

presentation has been held at the Aversi Clinic in Tbi- lisi to show off the latest standard echoscope apparatus. The head of General AElectric, the creating company of the Voluson E10, spoke about the quality of National Wine Agency: Wine Export Up the equipment and the opportunities it will present. According to the General Director of after Russia, Kazakhstan and Ukraine. fi gures in two largest exporter countries, BY ANA AKHALAIA Aversi, Dimitri Jorbenadze, the “Voluson Export has increased into EU coun- Russia (-54%) and Ukraine (-61%), E10” is based on innovative Radiance tries: Poland - 2% (1,260.870 bottles), refl ected on the overall 10-month export System Architecture that has set a new Latvia - 3% (924,792), Estonia - 35% fi gure which has reduced by 43% com- standard for Imaging Performance. The ccording to data conducted (389,274), Germany - 14% (211,236), pared to the same period of 2014,” states E10 has the technology to study both the by the National Wine Netherlands - 88% (47,232) and France the NWA. inside and outside of a foetus. Agency (NWA) of Georgia, China is fourth - 104% (29,100). In addition, according to NWA data, Equipment of this type is already in wine export increased into Export also increased in such strategi- during the reporting period, the country use in a number of countries around the EU countries over the past among the top cally important markets as the US - 26% exported 5,450.321 bottles (0.5 L) of brandy world, Georgia currently being the only A10 months with most Georgian wine (209,339), Japan - 19% (126,686), Canada into 17 countries (US $14.2 million); 7.1 post-Soviet one. going to the Polish market. fi ve Georgian - 66% (147,636), Kyrgyzstan - 168% million liters of brandy spirit in 7 coun- The founder of Aversi Clinic, Paata According to NWA offi cials, over the (172,536), Israel – 212,% (33,720), Korea tries (US $21.7 million); and 104,580 bot- Kurtanidze, said doctors in Georgia will last 10 months Georgia exported 28,101.431 wine exporting - 37% (24,054) and other. tles (0.5 L) of Chacha (Georgian pomace be trained by specialists from General bottles (0.75 L) of wine to 42 countries The top fi ve Georgian wine exporting brandy) in 20 countries (US $403 mil- Electric in the use of the new echoscope around the world which amounts US countries after countries are as follows: Russia – lion). equipment. $77.2 millionl 14,660.981, Kazakhstan – 4,004.586, Overall, according to data of the NWA, “But in Aversi Clinic, regardless of the 1.8 million bottles of Georgian wine Russia, Ukraine – 2,569.249, China – 1,807.955, income derived from exports of wine, introduction of this new technology, were exported to China, 87% higher than and Poland – 1,260.870 bottles. brandy, Chacha, wine materials, pouring prices will stay the same,” Kurtanidze past year. China is fourth among the top Kazakhstan and “Due to political and economic events brandy and brandy spirits in January- stated. fi ve Georgian wine exporting countries Ukraine in the region, a sharp decline of export October reached US $115.6 million. GEORGIA TODAY NOVEMBER 10 - 12, 2015 BUSINESS 11 Dechert OnPoint: New Regulations for Agricultural Cooperatives

echert Georgia, through MEMBERS OF AGRICULTURAL in order to manage and oversee the the contribution of part- COOPERATIVES development of agricultural coopera- ners Archil Giorgadze and Under the Amendments, agricultural tives on the Georgian market. The Nicola Mariani, joined by cooperatives shall have associated mem- Agency is the main registration author- senior associates Ruslan bers in addition to general members. ity, carrying out the administrative pro- DAkhalaia and Irakli Sokolovski, as well The general members participate in the cess for granting relevant cooperative as Ana Kostava and Ana Kochiashvili, is agricultural activities of the cooperative status to legal entities of private law. partnering with Georgia Today on a and hold respective stakes, while associ- The Agency is also tasked with moni- regular section of the paper which will ated members hold stakes but are not toring the activities of those private provide updated information regarding involved in agricultural activities. Gen- legal entities which were given the sta- signifi cant legal changes and develop- eral as well as associated members are tus of cooperatives. Notably, the coop- ments in Georgia. In particular, we will natural and legal persons in Georgia, eratives enjoy tax advantages, which highlight signifi cant issues which may including foreign citizens and corpora- mostly serve the sole purpose of sup- impact businesses operating in Georgia. tions registered abroad. Every coopera- porting the practical cooperation among Dechert Georgia is the Tbilisi branch tive is obligated to have an up-to-date farmers. For the same purpose, the of Dechert LLP, a global specialist law member registry compliant with specifi c Amendments intend to broaden the fi rm that focuses on core transactional rules established by the Minister of Agri- authorizations of the Agency by empow- and litigation practices, providing culture of Georgia. ering it with the authority to issue grants world-class services to major corpora- Individual membership in the coop- to agricultural cooperatives. The Amend- tions, fi nancial institutions and private erative may be terminated in cases when documents, the right to dividends, the associated member may agree with the ments do not provide, however, the funds worldwide. For more informa- a member leaves the cooperative, is right to receive part of the property cooperative to receive the dividends rules directly applicable to this author- tion, please visit www.dechert.com or expelled, dies or if the cooperative itself remaining after liquidation of the coop- pro rata with its contributions. In such ity of the Agency. Most likely the pro- contact Nicola Mariani at nicola.mar- ceases to exist. Members may be pre- erative and/or after the termination of cases, dividends distributed to associ- cess will be subject to requirements of [email protected]. vented from leaving the cooperative if the member’s membership with the ated members shall not be more than the Law of Georgia on Grants, adopted they have not made their due contribu- cooperative. 15% of the total value of the contribu- on 28 June 1996, as amended. NEW REGULATIONS FOR tions. Members may only be expelled All cooperative members are legally tions made by the associated member AGRICULTURAL COOPERATIVES by the decision of the general assembly obliged to: (i) comply with the require- for the given fi nancial year. On the other CONCLUSIONS The legal framework for the organiza- of the cooperative if: (i) they breached ments of the Law and the statute of the hand, the general assembly may decide, The new regulations intend to support tion of agricultural cooperatives in Geor- their obligations; or (ii) they committed cooperative; (ii) make any mandatory in accordance with the individual agree- development of the agricultural sector gia is a relatively new development. It a material breach of the cooperative and voluntary contributions as set out ment between the cooperative and the in Georgia. The existing legal framework was adopted in August 2013 after being statute or decision of the directors, in the internal documents and agree- associated member, to distribute divi- might not be able to deal with all obsta- introduced by the Law of Georgia on supervisory board or general assembly ments between the cooperative and the dends based on the yearly profi t of the cles which exist in the sphere; however, Agricultural Cooperatives (the “Law”). of the cooperative. member; and (iii) comply with any other cooperative. In such cases the Amend- it is evident that legislators are constantly Related legal issues have been, generally, obligations set out in the statute of the ments provide that no more than 30% working to improve the situation by regulated by the Law of Georgia on MEMBERSHIP CONTRIBUTIONS cooperative, the Law and any other legal of the annual profi t made by the coop- observing and assessing problems aris- Entrepreneurs, which mainly deals with General members are obligated to make acts and regulations adopted under erative may be distributed as dividends ing during the practical implementation the business registration process and mandatory contributions to the coop- Georgian legislation. in total for the given fi nancial year. of the law. Legal provisions are being overall management of cooperatives. In erative fund. The cooperative fund is the Similar rules apply to distribution of accordingly adapted to best suit the pri- 2013, the Georgian Government prior- sum of the accumulated contributions, DISTRIBUTION OF DIVIDENDS dividends to general members, with the mary interests of natural and legal per- itized the development of agricultural and can be used only by the decision of According to the Explanatory Note, one condition that the associated members sons active in this sector. In our view, business and introduced tailored rules the cooperative’s general assembly. The of the main changes proposed in the have already received their share of the Law provides reason to be optimis- to govern the legal aspects of agricultural amount of mandatory contributions by Amendments relates to the mandatory dividends. tic about the future of the Georgian cooperatives. Over the past two years, a general member is calculated before regulation of dividend distribution by agricultural sector. the Law has been regularly updated to the start of each fi nancial period, taking the cooperative. In particular, the divi- AGRICULTURAL COOPERATIVE refl ect issues arising during its practical into account the estimated volume of dends shall fi rstly be distributed to the DEVELOPMENT AGENCY * * * application. work to be performed by the member associated members. The Amendments LEPL Agricultural Cooperative Devel- Note: this article does not constitute legal The Parliament of Georgia is currently and the value of products/services to be set forth two structures available for opment Agency (the “Agency”) is a legal advice. You are responsible for consulting with working on another set of amendments provided to said member. distribution of dividends to the associ- entity of public law established under your own professional legal advisors concern- (the “Amendments”), aimed at better Members can also make additional ated members: on the one hand, the the Ministry of Agriculture of Georgia ing specifi c circumstances for your business. serving the interests of farmers and har- contributions, provided they have fully monizing applicable rules with the best covered the mandatory contributions. international practices. The Amendments The terms of contributions to be made have now passed two readings at the by associated members are established Parliamentary sessions without any par- by the general assembly of the coopera- ticular resistance from voting members, tive, the Law and specifi c agreements which gives the impression that they concluded between the cooperative and will most likely achieve fi nal passage at the associated members. Property used the third and fi nal parliamentary read- to make either mandatory or additional ing. contributions to the cooperative fund The Amendments are accompanied by shall be subject to prior evaluation. Such an explanatory note setting out the main property may not be placed under any changes and their respective purposes restrictions and may not be disposed of (the “Explanatory Note”). The Explana- without prior written consent of the tory Note provides that the correct agri- member who made the contribution. cultural cooperative practices could lead to rapid economic development of the OTHER RIGHTS AND country, which is why the Amendments OBLIGATIONS OF aim to introduce more legal regulations COOPERATIVE MEMBERS in this sector. Such regulations are Rights and obligations of cooperative expected to guarantee that agricultural members are separately regulated by the cooperatives, unlike other business enti- Law, with the Law prescribing different ties, are focused more on optimization rights and obligations for general and of labor forces than receiving profi t from associated members. In comparison with invested material resources. The Explan- general members, associated members atory Note also mentions that since the are prevented from participation in the Law entered into force in 2013, 1,000 new management of the cooperative. On the agricultural cooperatives have been reg- other hand, they have prevailing rights istered. Therefore, it is apparent that the during dividend distribution. internal business relations of agricultural Other general rights and obligations cooperatives require further regulation. of cooperative members are the right to For these purpose the Amendments focus use the services of the cooperative, the on several structural changes, which are right to information, including the right set out below. to request auditory checks of fi nancial

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