Investor.A MAGAZINE OF THE AMERICAN CHAMBER OF COMMERCE IN GEORGIA geISSUE 24 DEC.-JAN. 2011/12

Includes articles from the FT More Cheese, Please

Georgia’s First World Standard Gulf Course

American Baseball Fans Send Uniforms for Little League

Ski Georgia! A look at investment in winter destinations

Investor.ge

Investor.ge CONTENT

Investment/ 21 Georgian Wine: Development To Hong Kong and 6 Investments in Brief Beyond A brief synopsis of Tbilisi is focusing on new investments and new markets for its business news. wine, particularly fast growing markets in 9 Georgia on Google Hong Kong, China and Maps India.. Georgia is no longer a white spot on Google, 24 Recycling in thanks to JumpStart, a Georgia: A Wasted Tbilisi-based NGO. Opportunity or an Opportunity for 10 Tbilisi, the City that Waste? Loves You – Even Recycling is big business Without a Car around the world, but Happy Holidays! City Hall, together with not in Georgia. Investor. See page 57 for more Christmas Cheer from Dutch the Asian Development ge looks at why not. Bank, is upgrading Design Gardens public transportation. 26 More Cheese, Please! 34 Low-Key Leaders 40 Stage Left: The 12 Bring Manufacturers The passion of an May Unlock New Potential of the to Georgia: A New ethnographer for Problems for Banks Georgian Film Plan Georgian cheese is FT report on the Industry GNIA is working giving the country its challenges facing Investor.ge spoke with on new incentives latest international new CEOs at major producer Gia Bazgadze to attract Turkish calling card. European banks. about the commercial light manufacturing potential of Georgian companies. IT Special Feature 36 Man in the News: films. 28 GITI Conference: Alexei Navalny 14 Ski Georgia Showcasing FT profile on the man 42 NY Baseball Fans Investor.ge looks at Georgia’s Potential some are calling Donate Gear new investments and as an IT Hub in the Russia’s Julian Assange. and Uniforms to development projects in Caucasus Georgian Players Georgia’s ski resorts. The second article in a Culture New batting tees, three part series about 38 Stage Right: uniforms and gloves 18 Hotels: High the IT sector. Bollywood Directors will help struggling Occupancy, High Spotlight Growing Georgian baseball Expectations The Financial Times Interest in Georgian players. High seasonal 29 Model that Works Film occupancy rates are Even in Turbulent Foreign film producers bolstering expectations Times and directors – for a boom in the hotel FT report on the including Bollywood sector. resilient outsourcing – are taking a new look market. at Georgia. 20 Good Inspector, Bad Inspector: New 32 ‘Tis Not the Season Programs Seek to to be Shopping Ease Tax Evasion FT report on economic The Georgian Revenue impact of holiday Service is betting on shopping . two new programs to eradicate lingering problems for tax payers...... 46

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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, Kate Davies 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 Helena Bedwell, Aleqsandre Bluashvili, stated. AmCham Georgia neither endorses, Molly Corso, Maia Edilashvili nor can be held liable for any eventuality arising from the use of any product or Photographs Molly Corso, Jackie Koney service advertised within the pages of this

issue.

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36a Lado Asatiani Street, 3rd fl oor Tel: 2 22-69-07 Special thanks to the AmCham Editorial Board – Irakli Baidashvili, Betsy Haskell, [email protected] Badri Japaridze and Stephanie Komsa – the AmCham staff, Aleqsandre Bluashvili, as well as COATS, Dutch Design Gardens, GITI, TBC Bank and Tbilisi International [email protected], www.amcham.ge Players Foundation for the generous use of their photographs for the social section. www.investor.ge

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Investments In Brief

Georgian microfinance organization JSC MFO planting an additional 25 hectares to their 40 hectare plantation. “Crystal” receives equity investment from There are also plans for a processing plant; 80 of their harvest international financial institution DWM will be used to produce olive oil. JSC MFO Crystal and Developing World Markets Group (DWM) successfully closed an equity investment in Octo- Gulf buys several small scale petrol stations in ber, 2011. The DWM investment vehicle became the largest the regions of Georgia shareholder of Crystal through a $2 million investment in the “Gulf” management announced the company is ready to company’s equity. expand and is purchasing small stations throughout the country. With the additional funding, Crystal will be able to provide Over the next three years “Gulf” plans to construct 150 affordable loans for more middle and low income families. petrol stations. “Gulf” entered the Georgian market this year, taking over several existing players on the market including “Geolive” To Broaden Area of Olive Groves in “Sun Petroleum Georgia”, “Senta” and “Magnat.” Georgia Geolive, a Georgian-Turkish company, plans to expand its French Grocer in Georgia operations in Kakheti. “Geolive,” founded in 2009, has planta- Group Auchan SA, a French grocer, is considering the pur- tions in Kakheti, Imereti, KvemoKartli and Guria. According chase of Goodwill and G-mart in Georgia. The two hypermar- to management, the fi rst seedlings were a success so they are kets recently announced the merger whereby stores of G-mart

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will start operating under the Goodwill brand, although they and the survey, see www.doingbusiness.org. will remain separate legal entities with their own management. “Fitch International Ratings Agency” has changed Georgia’s The deal will be confi rmed once Auchan tests its products Sovereignty Outlook from “Stable” to “Positive.” The agency, on the Georgian market. which predicts Georgia’s GDP will grow by 6% next year, Auchan has placed about 1000 kinds of goods in Goodwill granted Georgia a B+ rating. stores to test the local market. A spokesperson for Goodwill said a fi nal decision will be made after the company has assessed EBRD to finance Georgian commercial banks the demand for their products in Georgia. Bank of Georgia, TBC, VTB and Procredit Bank are set to Auchan has been in the grocery business for 50 years and receive EBRD funding to fi nance loans for agrobusiness. The operates a chain of super and hyper markets in twelve countries program, worth 40 million euro, is the fi rst for the Caucasus. around the world. Loans will be available in lari to help protect banks from cur- rency risks. Japan to Finance Grassroots Development Projects First Pro Golf Club in Region to open in Georgia Japan is providing $265,486 to improve the lives of Geor- “Primera Golf Club” will be Georgia’s fi rst 18-hole champi- gians living in rural areas. The funds will be spent on three onship golf course. The course and club, a $15 million invest- projects: $83,763 to set up new poultry farm for 1500 hens, ment, is slated to be fully operational by 2013. Grupo Pastor, including an incubator for 7500 eggs - in Dzevera village, near a Spanish development company with extensive experience in Gori in ShidaKartli region; in Akhaktsikhe, $73,312 will be the construction of luxury homes, villas and residential areas, spent on the purchase of two tractors for local farmers; and will manage the “Primera Golf Club” project together with its $108,411 will be used to build a 40-bed rehabilitation centre partners Getinsa and LV Salamanca. for people with disabilities in Ureki, Guria. The Japanese government has provided $362 million to as- “New Cement” opened factory in Kutaisi sist development in Georgia since 1998, funding a broad range The factory will produce a new type of cement that was of sectors from economic infrastructure to human resources developed in Georgia. At full capacity, the factory should pro- development. duce 100 thousand tons of cement a year starting from 2012. An estimated $750 thousand investment, the product was launched “Rakeen Development” to open biggest on the Georgian market after months of development and test- shopping mall in Tbilisi ing in Germany. Uptown Tbilisi, Rakeen Georgia’s shopping mall develop- ment, on November 23rd. Starting from April, major brands EU-Georgia free trade negotiations launched will be sold at the mall, including Zara, Bershka, Stradivarius, On December 12, 2011, the Prime Minister of Georgia Nika Massimo Dutti, Pull and Bear, Oysho, Gap, Banana Republic, Gilauri signed an agreement to start negotiations of DCFTA deal and NewLook. In addition, Carrefour plans a hypermarket at with the EU. The fi rst round of negotiations will take place in the mall. January 2012. Currently EU accounts for the 26% share of Geor- gia’s total foreign trade, and the government hopes a free trade Georgia-moving up in economics/business agreement with the EU will further strengthen EU-Georgia ties. ratings Georgia is now the 16th easiest country to do business in, Alitalia to start service to Tbilisi according to the World Bank’s 2012 Doing Business report. TAV Georgia reported that the Italian airline will start bi- Registering property - a procedure requiring two days at the weekly fl ights between Tbilisi and Rome; pricing and schedule cost 0.1% of property value - helped buoy the country’s rating are still to be determined. this year. Other improvements include access to credit and pay- Alitalia is the latest international air carrier to start a ser- ing taxes. Trading Across Borders remains an issue, however: vice to Georgia over the past year. Air Astana, China Southern Georgia moved down from 34th to 54th compared to the same Airlines and Fly Dubai have also started fl ights from Tbilisi. indicator last year. For more information on Georgia’s ratings Qatar Airlines is slated to start fl ights next year.

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Georgia on Google Maps

Georgia on Google maps www.maps.google.com will make the country Google maps also opens up new pos- more accessible for businesses and travelers alike. The data, collected by sibilities for businesses, allowing them to JumpStart – an NGO in Georgia, is being used to create user-friendly maps place themselves on the map so potential for everything from streets to water supplies and bus routes. clients can fi nd them more easily. Devel- opers can prepare different applications eorgia is no longer just a “Google did not use all of the data using ‘Google Maps API’ that provides white spot on Google, thanks that we sent them... out of 30,000 objects a programming interface. Gto JumpStart, a Tbilisi-based that we provided, only some are placed In addition, JumpStart is using the NGO. JumpStart launched the project in on ‘Google maps’,” noted Gogishvili. mapping data to make other types of February 2010. With the help of approxi- He added that while some villages and information more accessible. There are mately a thousand volunteers, the team small settlements are not included in the three new projects including. ‘OpenTaps’ was able to create a “comprehensive e- Google version, all the information is – an initiative to make it easy to use map”, according to Davit Gogishvili, the accessible at mapspot.ge. thedatabase for information relating to Geographic Information System analyst Georgia on Google maps represents water supply.; MapSpot 2.0, an upgraded and project manager at JumpStart. an additional source of information for version of MapSpot online which will He said that they initially did not foreigners. They can learn more about include bus routes and street numbers. plan to send the data to Google maps, cities and villages in Georgia, plan their In addition, the data is being used to sup- and only decided to following a meeting trips more easily, choose their desired port TbiliCity – an access to information with Google in San Francisco during the means of transportation and fi nd the most project funded by JumpStart together ‘Where 2.0’ conference. appropriate routes. with Open Society Georgia.

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Tbilisi, the City that Loves You - Even Without a Car

The city of Tbilisi, together with the lion loan to help the city develop the “I think bus stops need maps so Asian Development Bank (ABD), is Transport Master-Plan for Tbilisi. The people know where they are going and investing heavily in improving public fi nancial assistance also includes creating it would be wonderful if there could be a transportation in Tbilisi, including a roadmap for further transport related website [with a timetable] to know travel English language signs and maps. interventions by the government and options,” she says after spending several interested donors including ADB. months in Tbilisi. MAIA EDILASHVILI Over the course of the eight year A program to provide English transla- program, specifi c projects like the new tions for public transportation is already ike all densely populated cities, tunnel on Gorgasali Avenue, to ease traf- underway, noted the press service of the Tbilisi is plagued with traffi c fi c to Abanotubani, will be built. There Tbilisi City Hall. Ljams, pollution and out-dated are also plans to extend the subway on Signs have already been installed public transportation. the Saburtalo line by two kilometers on in select metro stations and more are “Tbilisi lies on a fairly complex Vazha Pshavela and to build a new bridge planned. landscape in terms of urban develop- over the Mtkvari River. In addition, station names are an- ment,” Giorgi Kiziria, ADB Country Funds from the city budget are also nounced in English on the subway trains. Coordinator in Georgia told Investor.ge being used. Over the past year, Tbilisi Electronic signs with English transla- in an email. City Hall has built additional roads and tions have also been installed on major “The capital’s long shape, two riv- pedestrian crossings to help ease trans- roads in central Tbilisi with more signs ers – Mtkvari and Vere, and various hills portation in the city. However the lack planned for 2012, according to the press and mountains, while contributing to the of English-language signs and maps service. uniqueness and glamour of the capital, remains a problem. This year Tbilisi Municipality has create obstacles to urban transport devel- It is “very diffi cult” [to get the right also installed 100 bi-lingual boards opment and require very creative and at directions] if you don’t read Georgian, throughout Tbilisi to show directions in times costly transport solutions.” Maria Jose Riquelme del Valle, a journal- the city and there are plans for bi-lingual In 2010, ADB approved a $300 mil- ist from Spain comments. maps and bus routes.

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MAIA EDILASHVILI Chain Assessment report, prepared Bring by USAID’s Economic Prosperity Manufacturers Made in Georgia Initiative (EPI) – a four-year, $40 eorgia’s annual apparel million project aimed at increasing To Georgia: and textile production has Georgia’s competitiveness. Gincreased in value from Other lower operating costs include A New Plan about 8 million lari in 2004 to around the price of electricity, which is half 40 million lari in 2010. The sector, that of Turkey, and the corporate Georgia is becoming an comprising 200 – mostly small – income tax rate which is 5% lower. increasingly attractive enterprises, employs approximately Another advantage, noted the destination for light 5,000 people throughout Georgia. report, is the fact that Turkey has manufacturing companies. The country’s location, business The biggest employer is Turkey: the implemented a tariff on imported reforms and lower costs have top four factories – BTA textile, Adjara textiles and clothing. “To continue already convinced several Textile, Batumi Tex and Georgian domestic production at current rates, Turkish manufacturers to textile – are Turkish investments based Turkish apparel manufacturers have to open factories here – and in the Adjara region, employing 4,200 either switch to local textiles or face the Georgian government is people. And all four are growing. higher expenses on imported ones. hoping focused marketing will build on the trend. Adjara Textile, which currently This is an important development and employs 600 people and holds a 21% Turkish manufacturers can realize share of Adjara’s exports, is due to signifi cant cost savings by either open a new 300-man plant to produce establishing operations in Georgia or clothing for Adidas. BTM Textile, by outsourcing production to Georgian with a 31% export share, will soon manufacturers.” start a jeans line employing up to To capitalize on its competitive 100 people in addition to the current advantages, GNIA is bringing in 632 employees. Recently, Koton and delegations from leading Turkish Karden, two leading Turkish producers, manufacturing companies – have placed orders for Georgian plants. introducing them to the country, educating them about Georgia’s trade Low costs, better trade regimes regimes and business reforms, and Georgia’s attractive trade regimes highlighting inexpensive investment with Turkey, CIS countries, EU, opportunities in western Georgia. US, Canada, Japan, Norway and The chairman of the Turkish Clothing Switzerland, are driving the interest – Manufacturers Association (TGSD) and the Georgian government is eager and representatives of Koton, to encourage the trend. Seleksiyon Tekstil, Negreti Tekstil, The Georgian National Investment Ogretmen Corap (PENTI), and Istanbul Agency (GNIA) recently launched the – factories that produce clothing for website www.apparel.ge that promotes major brands like Cavalli, Mango, other incentives for companies to move GAP, H&M and Scervino – have their factory operations to Georgia, already visited Georgia to meet with notably low operating costs. GNIA offi cials. While the average minimum wage Keti Bochorishvili, director of in Turkey is approximately $605 GNIA, hosted the delegation and per month, average apparel wage stressed that building relations with the rates in Georgia are around $250 clothing manufacturing association is per month, according to the Value key to bringing more investment into

12 DEC.-JAN. 2011/12 Georgia’s clothing industry. market information and little evidence The company opened its Georgian “For us cooperation with TGSD of horizontal collaboration. plant in Batumi in 2007 and since then is crucial as it has approximately 400 However, the government has has invested up to $10 million in this members, all of which are leaders created a package of incentives to business. in the Turkish apparel industry,” she convince investors to take the risk; Ladies and children’s wear said, “…if some of the companies including offering land in western produced by BTA textile is among the are interested in starting businesses Georgia as well as full access to roads, 800,000 individual items of clothing – in Georgia it will create hundreds electricity, water supply and natural sportswear, shirts, blouses, coats and of additional jobs in our regions, gas. other ready-to-wear garments – that combined with an infl ow of new Bochorishvili added that the cross the Georgian-Turkish border on technologies and the opening of government plans to reimburse onsite their way to European markets every factories.” labor training costs after a factory has month. been operating for one year. “Georgia has pretty nice conditions Free training to overcome low For BTM Textile and the Georgian for the development of apparel production subsidiary ATK Textile, a Turkish manufacturing,” noted Metin Yagli, The EPI report pointed out four company that supplies Tommy Hilfi ger, general director of BTM Textile Ltd in concerns regarding Georgia’s potential Mexx, Zara, Marks & Spencer, an e-mail interview. to develop the apparel sector: lower Puma, Lotto and others with clothing “Our [Turkish] investments in the productivity per employee, heavy produced in Georgia, the move to construction and apparel sectors here dependence on imported inputs, poor Adjara has already proved a success. have yielded quite good results.”

ADVERTISEMENT Ski Georgia: New Investments in Resorts to Bolster Tourism Infrastructure projects in the country’s four ski areas underscore the government’s plans to attract 5 million tourists by 2015. Investor.ge looks at the potential and investments being made at Georgia’s winter destinations.

ALEQSANDRE BLUASHVILI

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Proposed development plans for Gudauri

Bakuriani The new runs are tentatively planned Tbilisi, Gudauri is ramping up its ski runs akuriani, one of Georgia’s top to open next season. and lifts for the 2012 season. winter destinations, is adding to There is also a new private ski park Just seven months after Tbilisi took Bits attractions for families. The open for the 2011-2012 season in Baku- over management of the hamlet, the ski lift on Koxta Gora ski trail was reno- riani’s central park. resort boasts 57 kilometers of ski runs, vated. GRDC, the development company Joyland, a private park, is opening a more than double that of last year. The that operates the ski lift, invested 498 special ski area for beginning skiers, and extra trails make Gudauri one of the 20 thousand lari ($300 thousand) for its a tubing run for both children and adults. largest ski resorts in Europe. reconstruction. In addition, GRDC plans The park is an 830 thousand lari ($500 Other improvements include refur- to add three more kilometers of ski runs thousand) investment, with 25 percent bished ski lifts and a new, 2450 meter lift to the Mitardi trails. “Currently we are coming from foreign capital. with 72 gondolas. The lift, built by Eagle working with the investors to fi nance the Helicopters, a Swiss company, cost 15.6 project,” Levan Akhvlediani, GRDC’s Gudauri million lari ($9.38 million) and was paid chief fi nancial offi cer, told Investor.ge. A perennial favorite with skiers from for largely with budgetary funds.

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Tbilisi City Hall took over Gudauri’s ing ski destination among post-soviet tion in Mestia to house the anticipated development in May 2011 for fi ve years. countries…increasing interest to skiing demand for 2012: a 20-room hotel on With a budget of 3.9 million lari ($2.35 among Georgians, coupled with a grow- Zuruldi Mountain is under construction million), the Gudauri Development Proj- ing number of tourists, creates a bigger for next season and 85 new hotel rooms ect plans to work with the Ministry of demand on the real estate and we are will be opened when the new hospitality Regional Development and the Ministry trying to fi ll the gap in the market,” noted complex is built in Mestia. of Environmental Protection to renovate Nicke Director Irakli Beridze. Currently, Mestia can provide accom- roads, parking lots, and water lines at modation for 1000 tourists; 42 thousand the resort. Mestia tourists visited the resort last year, ac- Over the past eight months, Black Investment in the Svaneti ski resort cording to government data. Sea Group has built 1.5 kilometers of continues apace, with two new ski trails new road at the resort, and four kilome- on the Hatsvali slope, for a total of fi ve Adjara Mountains ters of new water lines. kilometers of ski runs at the resort. The newest of Georgia’s ski resorts, “Gudauri should become a favorite In addition, two platter lifts – also the slopes in mountainous Adjara, are winter destination for all types of visi- known as j-bar lifts – were built at Hats- getting more attention from skiers and tors, starting from families with children vali making it more accessible for skiers. private investors. to extreme adventure seekers… Our The government also invested heav- Goderdzi mountain resort shows goal is to lay the foundation for private ily in road, water, and sewer systems in the most promise out of the region’s investors and then they should drive the the region, partially fi nanced by a $5 mil- three existing ski resorts. In 2011, the development of Gudauri resort,” said lion grant from the Asian Development government spent one million lari ($600 Giorgi Tskhakaia, the deputy mayor in Bank. A new road from Zugdidi to Mestia thousand) on a new road to the resort and charge of the project. is under construction, reducing travel a new master plan for its development. Private investors appear to be eager time from nearly seven hours to fi ve. The An additional 10 million lari ($6 million) to join the project: Kalasi, a Georgian 51 million lari ($30.7 million) project is is earmarked for infrastructure projects construction company, is investing 3.5 nearly complete. An additional 49 mil- in 2012. million lari ($2.11 million) in a new hotel lion lari ($29.5 million) is earmarked in Gomarduli and Kedlebi, Adjara’s at the resort. Financing for the hotel is the 2012 budget for development proj- remaining ski resorts, have attracted 600 from the Bank of Georgia. ects in Upper Svaneti, together with 40 thousand lari ($361 thousand) in private In addition, Nicke, a development million lari (18 million euro) in French investment and, according to projects by company, is investing 4.98 million lari investment. The French funds will be the autonomous region’s government, ($3 million) in a new apartment complex. used to build a mini meteorological sta- investment should double in 2012. Funding comes from TBC Bank, and the tion on Tetnuldi Mountain, as well as There is an increased interest in the project will be completed by September being used for other projects slated for two resorts – the number of visitors 2012. fi nal approval in spring 2012. doubled from a thousand in 2010 to 2000 “Gudauri is becoming an outstand- New hotels are also under construc- last year.

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Sheraton Metechi Palace, Radisson Blu to serve market demand, and new hotel Hotels: High and Holiday Inn. Two also operate in investments will be required to satisfy Occupancy, High Batumi – Sheraton Batumi and Radisson that demand.” Blu Batumi. Keti Bochorishvili, director of the Expectations This past summer saw high occupan- Georgian National Investment Agency cy rates and during the peak of the tourist (GNIA), which is part of the Ministry of High seasonal occupancy rates are bolstering expectations for a boom season there were not enough rooms and Economy and Sustainable Development, in the hotel sector. in particular not enough three and two says that the construction of three and star hotel rooms to meet the demand. And fi ve star hotels will be the government’s MAIA EDILASHVILI with international events planned such priority in the coming years. as the 2015 Summer European Youth For investors who would take the ver the last few years the Geor- Olympic Festival in Tbilisi, there will be initiative, the government is offering sev- gian government has made an even greater need for three and fi ve eral state-owned facilities in downtown Ohuge efforts to build a new star accommodation. Tbilisi for sale. These include the 3-sto- image for Georgia as an attractive tourist Caltrider Advisors, a consultancy rey former Physical Education Institute destination both regionally and globally. fi rm that published an industry analysis on Chavchavadze Avenue; the 2-storey Experts, however, say the potential still for the hotel sector, found that there is former Finance Ministry building on remains untapped. “an immediate need” for new hotel in- Abashidze Avenue; the 11-storey former There are 52 hotels with approxi- vestment to support these events. Ministry of Economy and Sustainable mately 2,400 beds in Tbilisi, including The Caltrider Advisors report notes Development on Chanturia Street and guest houses, family houses and fi ve that if the current growth trend contin- the 2-storey Clinical Hospital of I. Ja- international franchises in the capital ues, the supply of available high-quality vakhishvili Tbilisi State University on – Courtyard Marriott, Tbilisi Marriott, accommodation “will not be suffi cient Agmashenebeli Avenue.

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DEC.-JAN. 2011/12 19 Investor.ge

he Georgian Revenue Service and anybody can enter into the shops.” Good is enlisting paid informants to The program seeks to resolve a Tcombat tax evasion. common problem for tax inspectors: Inspector, Bad The new Private Tax Inspector pro- exposure. gram empowers civilian recruits to report The new inspectors’ anonymity is Inspector: New on stores for not issuing receipts. their greatest strength, noted Begiashvili, Around 150 trained inspectors work adding that since the inspectors are paid Programs Seek around the country, purchasing things based on the number of violations they at stores and restaurants – and reporting fi nd, they are less susceptible to bribes to Ease Tax on proprietors who don’t use the cash and corruption. register. The service, she stressed, includes Evasion But the program, which rewards an internal mechanism to follow up on trained recruits for fi nding wayward tax the inspectors’ reports and insure they The Georgian Revenue Service (RS) payers 100 lari per fi ne, could hamper are valid. is betting on two new programs to confi dence building between the Geor- A second program to build relations eradicate a lingering “mentality” gian Revenue Service (RS) and the busi- with tax payers, Begiashvili added, is problem about paying taxes. ness community. being unrolled in parallel to the secret Investor.ge spoke with the RS about The Revenue Service maintains the tax inspectors. how the new policies are working. initiative is just one more cost effective District tax inspectors are being innovation to combat tax evasion, a new trained to work neighborhoods, visit- chapter in Tbilisi’s fi ght to erase decades ing businesses and stores and educating of bad habits and low tax returns. proprietors and clerks about changes to “We were aware that nobody would the tax code – and their responsibilities like these kinds of inspectors because as tax payers. they are bothering businesses, they are The focus is on education, not penal- pushing businesses to bring themselves ties, she stressed: district tax inspectors into compliance to the tax legislation … are going through four weeks of training It means that the tax inspectors would not so they will be service providers, not be loved by any of the tax payers – there tax police. is absolutely nothing strange about this,” Unlike the secret tax inspectors, noted the RS’s Lily Begiashvili. the district unit cannot fi ne a business. “It is not so easy to change the men- Currently based in Tbilisi, Kutaisi and tality of tax payers in Georgia.” Batumi, district tax inspectors will be Begiashvili, the deputy head of the consulting tax payers in every major service’s tax and customs administra- city in the country by the end of the year. tion, said the program is a “clever” way “Those two projects work together. to change the lingering “mentality” that …tax payers should understand that they taxes are optional. should obey tax legislation and also they “At large, it serves to increase the cul- should get the feeling from us that we ture of increasing voluntary compliance, really are partners and friends for them,” changing the mentality of every shop – Begiashvili said. large businesses, small businesses. Just “That is the fi rst reason the district to bring them closer to compliance with tax offi cer was created and, as you know, the tax legislation,” she said. “Everybody the district tax offi cers are not allowed should know throughout Georgia that to fi ne. They only go to the business and those kinds of people are among them advise them.”

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Georgian Wine: To Hong Kong and Beyond

While the WTO agreement with prize at the Hong Kong International cultivate fans among Chinese wine con- Moscow might reopen the Russian Wine and Spirits Competition, a large noisseurs. Keti Bochorishvili, head of the market for Georgian wine, Tbilisi is contest that attracts wines from around agency, said a special iPhone application focused on opening new markets the world, including France and Aus- that matches Georgian wine with food in the east, particularly the fast growing markets in Hong Kong, tralia. dishes is in the works. China and India. In Tbilisi, the success is viewed as a In addition, the GNIA tapped Lisa signal that this could be the right time for Perroti- Brown, a master of wine from a marketing push into Asia. Hong Kong, who presented at the Tina Kezeli, the head of the Georgian November alcoholic beverage expo Wine Association said the win in Hong in Tbilisi. Perroti -Brown is a well inding a new, large market for Kong is particularly important because respected authority on the Asian wine Georgian wine – like China – Hong Kong is “a hub” for the region. market, Bochorishvili noted, – and her Fwould be a coup for the Geor- “… if you are present in the Hong participation in the Georgian expo gave gian government, which is grappling Kong market it means at the same time the event additional importance for wine with high unemployment in rural, wine that you are in the Chinese market – if importers and enthusiasts in China and producing regions such as Kakheti and you work properly in the right direction,” neighboring countries. mountainous Racha. she said. According to Kezeli, since China is a In November, Kindzmarauli Marani’s The Georgian National Investment new market for Georgia, the expo was a Saperavi 2006 Vintage won the grand Agency (GNIA) is already trying to good opportunity for Georgian producers

DEC.-JAN. 2011/12 21 Investor.ge

to understand Chinese and Asian tastes would offer Georgian wine makers a portant” for Georgian producers, Irakli in wine. potentially safer alternative than the re- Matkava, a deputy economy minister “The thing is that now many new suming of mass exports to Russia. While said diversifi cation has made Georgian markets have opened up and this is the the new WTO agreement with Moscow exports stronger. moment when you need a huge, sustained could reopen Russian markets to Geor- Matkava was speaking from South approach to enter strongly into these gian wine producers, potential exporters Korea – on one of the latest in a year of markets,” she said. should be cautious about returning there, trips to Asia that underscore the govern- “I don’t see any markets as a real sub- Kezeli said. ment’s new focus. Prime Minister Nika stitute and there shouldn’t be any market “…of course Russia is a very impor- Gilauri traveled to the region in Septem- substitutes… You have to be known on tant market and I should be glad to make ber, and the Georgia National Investment different markets…” use of it – but there should be a very Agency (GNIA) has participated in three In 2009, the Chinese drank 1.2 billion careful strategy of how, who and when… beverage expos in Hong Kong and China bottles of wine – a 104% increase from this is not so easy,” she said. over the past year. 2004, according to a study by Vinexpo. “… in this situation, I think they Georgian exports to China and the Giorgi Gaganidze, the head of Geor- [wine producers and exporters] will be Southeast Asian markets have increased gia’s former export agency, said if waiting and looking at the market… Rus- over the past three years from just under Georgian wine exporters can tap into the sia should be handled, in my opinion, like $12 million in 2007 to over $39 million Chinese market, the potential volume of any other potential market. No special in 2010. sales would help buoy up an industry that preference – no difference.” Bochorishvili said the Chinese mar- is currently focused on niche markets in Wine exports to new markets, like ket is a natural choice for Georgian North America and Europe. the United States and the EU, have in- producers. “The major problem for Georgian creased, but the volume of wine sales has “In the Asian market, the consump- wine is the question where should never reached its pre-embargo height. tion of alcoholic drinks is increasing Georgia go,” he said, noting that just 90 In 2005, Georgia exported $81 million – especially in China. Of course there is thousand tonnes of wine was produced worth of wine. Last year wine exports opportunity and the market is not really in Georgia last year. were roughly half that, $39.2 million. mature at all so it is easier for us, and less Breaking into the Chinese market While the Russian market was “im- expensive, to achieve results,” she said.

Russia’s Entry to the WTO: What does it mean for Georgia? Georgia can only benefit from having Russia in the World Trade Organization, according to Giorgi Shengelia, a senior associate at BG Capital.

Years of negotiations over Russia’s 60% of Georgian agricultural products businesses” to Russia due to the strained entry to the World Trade Organization exports – mostly wine and mineral water, relations between the two countries. (WTO) could prove to be a boost for went to Russia,” he said. But indirectly, the WTO deal between both Georgia and Russia, Shengelia said. “ We probably won’t see trade Tbilisi and Moscow could help Georgia While it is unlikely that Georgia will volumes with Russia picking up to the attract more foreign direct investment, immediately resume high volumes of pre-embargo levels straight away - due Shengelia noted. trade with its estranged northern neigh- to capacity restrictions for producers as “[Russia’s entry to the WTO] may bor, Shengelia noted that the WTO’s well as existing commitments with cur- have a positive effect in attracting inves- rules and procedures should make Mos- rent export markets - but in the long term tors in Georgia, as they will have an op- cow a more reliable trading partner in Russia will probably reemerge as one of portunity to operate their business in the the future. Georgia’s main trading partners.” most liberal market environment in the “Before Russia’s embargo on the He added, however, that it is unlikely region and will also have the possibility Georgian products in 2006…more than Georgian companies will “expand their of exporting their products to Russia.”

22 DEC.-JAN. 2011/12 DEC.-JAN. 2011/12 23 Investor.ge

MONICA ELLENA sector. Tbilisi alone produces about Recycling ust one word... plastics!” 0.6-0.7 kg of trash per capita per day When Benjamin, the Dustin (around 60 percent of the EU aver- “JHoffman character in the age), while regional municipalities are in Georgia: 1960 fi lm “The Graduate”, was looking responsible for about 0.4-0.5 kg. 100% for career advice, plastics were the of the municipal solid waste which is A Wasted hot new thing. Since then millions of sent to landfi lls. graduates have gone into plastics. Now, “There is no national policy, no Opportunity decades later, millions of people across strategic plan,” says Tamuna Gugush- the world are looking at how to get out vili, environmental expert at the Aarhus of them, through recycling. Center, a environmental NGO. “We or an But you won’t fi nd many of them lack the mechanisms to support the in Georgia. As the lack of colored recycling business, such as reduced tax Opportunity containers to separate household waste or cost of utilities. The landfi ll in Lilo, suggests, recycling is low on the coun- operational for a year now, allocates try’s agenda. an area for recycling, but so far there for Waste? It is not as if Georgia is not short of is no developed infrastructure for the trash. A recent study by the Caucasus collection and separation of recyclable Environmental NGO Network (CENN) rubbish.” suggested that there is the necessary The Georgian Ministry of Environ- base resource for developing a strong ment Protection has completed a draft and economically viable recycling new legal framework on environmental

plasticsmakeitpossible.com 24 DEC.-JAN. 2011/12 Investor.ge

protection that includes a national stra- packaging; hence the majority of pack- Even after factoring in transportation, tegic waste management policy. aging is imported. producing packaging in Georgia may “The document has been drafted “With companies undertaking be as much as 20 percent cheaper than with international consultants; it is little marketing,” Saffery explains, anywhere else. mostly harmonized with EU directives “they have little clear awareness of Some ad hoc initiatives show the and requirements,” explains Khatuna market needs in terms of quality, style, way forward. CENN, for example, Chiviladze, head of the Waste and strength, design and utility.” Consider signed the fi rst ever organized paper Chemical Division of the Ministry. paper: Georgian companies produce recycling programme in Georgia called Recycling is also included, but low quality toilet paper and napkins, “Green Offi ce”. It ran for almost ten limited resources mean it may struggle but struggle to sell them in a market years with over a hundred organiza- to take off. saturated with imported products. tions handing over their waste paper to Reliance on imports also undermines be recycled. Now it has been trans- A Wasted Opportunity? domestic production of plastics, wood ferred to the Ministry of Youth. “The lack of legislation is not the and articles of wood, cork, wood pulp, There are currently a handful of main obstacle though; there is no real paperboard, printed materials and operational recycling plants, mainly in legislation on scrap metal either, but it glass. and around Tbilisi, focusing on paper, is still Georgia’s third largest export,” Indeed, in one EPI report, a Tbilisi- plus one for PET (polyethylene tere- says Alan Saffery, component leader based freight forwarder admitted to phthalate, the most common consumer for the manufacturing and services sec- throwing away signifi cant quantities plastic) and one for glass. tors of the USAID-funded Economic of waste cardboard, at cost, despite the An estimated 200,000 tonnes of Prosperity Initiative (EPI). “One of fact there were cardboard manufactur- PET are produced every year in Geor- the key issues is that trash is perceived ers willing to pay for waste cardboard. gia, according to Enrico Mosulishvili, to have no value. Once we know how The monopoly power of some local executive director of the Caucasian much and what types of waste are be- companies reinforces the status quo. PET factory in Rustavi. This Italian- ing thrown out and have a clearer idea “There is a business lobby to founded company supplements its of market demands, then I’m sure the keep business-as-usual,” states Nana production with recycling, as it enables private sector would jump in,” he adds. Janashia, CENN’s director. “There are the company to re-use some of its own Perhaps the best way to implement certain local companies well-connected raw material. an effective recycling system is to look with government who defi nitely prefer The numbers show how much at commercial waste fi rst and move things to continue as they are since the room there is for growth. “But without to residential households over time. situation brings quite good money with proper political support, recycling can- “It’s easier to train people: experience little effort.” not become a profi table business like in Europe showed us that educating Saffery adds that “there appears it is in Europe,” Mr. Mosulishvili says. households requires more time,” says to be a lack of support from Tbilisi Other barriers to entry include high Saffery. “It is also more cost effective Municipality for the development of bank interest rates and the absence of as we talk about higher volumes.” industry or a public municipal-wide economic and environmental incen- One of the easiest commercial entry recycling collection system.” tives. points for recycling is packaging. To Perhaps the biggest change needs further understand the potential for Opportunities for Waste to take place in people’s minds. If the growth within Georgia’s packaging In theory, Georgia’s advantages Georgian public were more aware sector, EPI undertook research on the should enable it to reduce its reli- of the benefi ts of recycling, then profi le and capacities of paper, glass ance on imports. The cost of labor they would pressure the government and plastic packaging companies. and energy are very competitive when to make more effort, thinks Nana Poor market linkages were the fi rst compared with Turkey and Ukraine, Janashia. If that happens, perhaps problem they found. Production vol- and raw material costs are similar. future Georgian graduates can start to umes are low because there is limited There are no tariffs on the importa- think about careers to get out of plas- demand for domestically produced tion of machinery and/or equipment. tics – with or without Mrs. Robinson.

DEC.-JAN. 2011/12 25 Investor.ge

The passion of a ethnographer for Georgian cheese More Cheese, is giving the country its latest international Please! calling card.

26 DEC.-JAN. 2011/12 Investor.ge

HELENA BEDWELL tion, she says that she started to turn her ter Bakur Kvezereli noted, however, that passion for cheese into a business after more and more farmers are registered na Mikadze asks me to try the traveling to other countries, where she with the government’s agricultural de- Vaio Imeruli Cheese, made saw just how many kinds of cheeses there partment and are open to the inspection Aat an altitude of 2,200 meters are, so she said to herself, ‘Why not us?’ of their facilities, which will result in somewhere in the Georgian mountains When she returned to Georgia she started better quality milk on the market, in a by Catholic Meskhs. to explore the entire country looking for bid to make the cheese safe to consume. Today Ana and her ‘Farmer’s Assis- forgotten cheese recipes. He added that Georgian cheese has tance Association’ – a non-governmental She spent years living with villagers “its niche” in the global agricultural mar- organization are selling 25 varieties of and shepherds in almost every region ket, and the ministry plans to trademark cheese at the shop and are ready to sup- of Georgia and describes her attempts the names of Georgian cheeses to pre- ply as many as 60 on demand from 26 to obtain these recipes as very diffi cult, serve their originality in foreign markets. different farmers nationwide, with the joking that sometimes she had to extract In 2009, Georgia exported 5 tonnes help of her business partners. them almost by force. Through these of cheese; while in 2010 the amount “Each cheese has its own distinctive endeavors, however, she acquired those increased to 53 tonnes, according to name and history,” she says. ancient cheese making recipes. Georgian government statistics. As a hostess, Ana is bubbly and full With all this information she made During the fi rst six months of 2011 of energy, greeting me at her new bou- a large cheese map denoting the areas cheese exports from Georgia reached 18 tique “Cheese Corner” located on a busy where each cheese is made, which hangs tonnes, with the products mainly being Tbilisi street. proudly on the wall in her shop. sold to Ukraine, Kazakhstan and Belarus. “I am crazy,” Mikadze, 40, says, “I Some of the methods of making For Ana, the interest is clear: tour- talk to my cheese; this is how much I cheese were learned when she watched ists and cheese lovers visit her cheese love what I am doing today and everyone with fascination how the monks and boutique every day. should experience how pleasurable it is shepherds made their variety of cheeses. Their favorites are the organic chees- to watch how cheese is born right before “After the cheese is made and then ma- es that look and taste exotic, with names your eyes!” tured, they used several methods for the the cheese enthusiasts have never heard Georgia was once considered ‘the fi nal fl avoring, this was because they of. The shop’s selection includes a bread basket of the Soviet Union’ be- have time and dedication to store their large smoked cheese which looks like a cause of its cuisine and agricultural cheeses,” Ana said. wheel – Skibu – hanging from the ceil- products and was popular for its four “We found out that they bury some ing; Tenili, – the shredded cheese strips, kinds of cheese: Standard Imeruli, Sul- cheese; they also hang others in the sometimes also made inside a large head guni, Guda (smelly cheese) and normal woods somewhere and then come back of cheese; Gebzhalia – a cheese roll with factory cheese. for them after a period of time; or store cream and mint;, and Sulguni, matured “Georgian’s became used to this false them in honey – the list is just endless,” in Saperavi wine or stored in honey, idea that there are only four types of she added. which gives it a slightly sweet taste that cheeses,” Ana says. “The Soviet Union Ana’s odyssey into Georgia’s rich becomes stronger with age. was mostly to blame because as many as cheese culture has turned into a mission The most expensive cheese sells for 80 varieties of cheese making traditions to turn cheese into a Georgian calling $18 per kilogram at the boutique, which were lost over several generations. It was card, bringing tourists and cheese con- sell 100 kilograms daily. easy to lose those traditions, because noisseurs to the country. Ana said that she will struggle further true cheese making requires care and But the problem of an inconsistent to discover more cheese recipes across dedication, while during Soviet times milk supply chain is an obstacle for Ana the country and favors the idea of linking the strategy was to make and sell cheap and other cheese producers. It is impor- her fi ndings with wine tourism. cheese.” tant for local farmers and milk producers “Imagine a tourist who comes to Ana’s endless curiosity for cheese to supply healthy milk with the relevant Georgia for its wine; why not offer them took her across Georgia in search of certifi cation, she stressed. our cheese map as well, along with the lost recipes. An ethnographer by educa- Former Georgian Agriculture Minis- wine route?” she muses.

DEC.-JAN. 2011/12 27 Investor.ge

GITI Conference: Showcasing Georgia’s Potential as an IT Hub in the Caucasus

For its second article in a three-part series about the IT sector, Investor. ge spoke with Giga Shubitidze, the president of the ICT Business Council and co-organizer of the GITI Conference and Award Ceremony, about how the event is helping Georgia build a reputation as an IT innovator in the region. For more information please contact helped build Georgia’s reputation as a re- Those reforms have helped Georgia Molly Corso, editor, at m.corso@ gional IT hub. “We defi nitely believe that win accolades from investors and inter- amcham.ge. Georgia could become a regional hub national business climate surveys like the not only for IT competencies, but that World Bank’s Doing Business Survey. we could provide a much more complex After four years, however, the con- experience to our neighbors - We have ference is evolving into more than just he fourth annual GITI Confer- accumulated a lot of knowledge during a forum to exchange success stories and ence is one more sign the Geor- the reforming process,” he said during IT solutions for governments. Tgia has its sights on becoming an an interview via Skype. For the past two years, the event has IT powerhouse in the Caucasus. The conference is one way the gov- dedicated a day to seminars on cyber IT professionals, policy makers and ernment is trying to reach out to potential security, an issue that has gained promi- analysts from 18 countries attended the investors, and sell the story of how IT nence since the cyber attacks Georgia event, which focused on cyber security helped Georgia streamline procedures suffered during the August 2008 war. and innovative IT solutions. and improve the business climate. “During the past two years we have Guests included neighboring coun- The Data Exchange Agency of the seen rapidly growing interest to discuss tries like Armenia, Azerbaijan and Tur- Ministry of Justice of Georgia, the con- cyber security problems, to share solu- key, as well as the United States, the UK ference’s other co-organizer, has been tionss,” Shubitidze said. and South Korea. on the forefront of using technology to “We see that the conference has Giga Shubitidze, a co-organizer of simplify registration procedures and ac- established a [reputation] … GITI is the event, noted that the conference has cess to vital documents. already important event in the region.” Investor.ge

Model that works even in turbulent times

“Outsourcing is providing comp- infrastructure services, including a mul- anies with alternative business models, tilingual service desk, datacentre hosting whereby they can manage a small but and management, end-user computing market-differentiating core while engag- services and application support services. PAUL TAYLOR ing expert third parties to perform the “Royal Haskoning is planning to necessary work. grow, not only in our home countries but n the 25 years since such western “This ‘atomic’ business model is across emerging markets,” explains Eric multi nationals as Eastman Kodak, helping them not only weather the [eco- Overvoorde, chief information offi cer. IGE, Citibank and American Express nomic] storm, but create a market ad- “We face interesting challenges, so began to outsource their IT operations, vantage - even in these turbulent times.” consistent experience of service delivery the global IT services industry has grown Companies, big and small, also use is essential for us to be successful.” into an $820bn behemoth and outsourc- outsourcing to give them fl exibility as With TCS taking care of Royal Has- ing has gone mainstream. they expand their markets. koning’s IT infrastructure, its manage- “Outsourcing is no longer a novel In March, Royal Haskoning, an ment will be able to focus on business business tactic where companies are Netherlands-based engineering and performance and international growth forced to farm out a function they cannot environmental consultancy, signed a plans in Europe and elsewhere. manage internally,” says Jagdish Dalal, multiyear, multimillion IT infrastructure As Royal Haskoning demonstrates, managing director of the 110,000-mem- outsourcing deal with India’s Tata Con- IT outsourcing is no longer the preserve ber Inter national Association of Out- sultancy Services. of big multinationals. sourcing Professionals. TCS is providing a full suite of IT The market has expanded to embrace

DEC.-JAN. 2011/12 29 Investor.ge

relatively small and medium-sized com- provements”. More recently, in 2009, A recent survey of more than 2,500 panies. Genpact (the Indian BPO company that chief information offi cers conducted by In the UK, for example, Everest, was spun out of GE) signed a fi ve-year PA Consulting and Harvey Nash, the a provider of double glazed windows, contract with AstraZeneca to provide the recruitment business, reached similar wanted to upgrade its network and IT pharmaceutical group with global fi nance conclusions. infrastructure but did not want to commit and accounting services, which it did not While cost reduction was the ratio- to a long-term deal. consider to be a “core competency”. nale most often given for outsourcing, “Initially, we needed a supplier with Tony Glynn, AstraZeneca’s senior companies reported that the second most system expertise but with fl exibility in director for transformation global trans- important reason was to to access skills its approach,” explains Dave Gordon, actional finance, explains: “We had not found in-house. IT services manager. Last year, Everest entered into a period when the whole The same survey also underscores the selected Calyx, a US-based independent pharmaceutical industry was changing growing popularity of IT outsourcing. managed service provider for the project. and getting ready for greater competition, Almost a third of CIOs said they “We agreed a one-year contract with more uncertainty around patent expiries would spend up to a quarter of their Calyx that had the merit of minimal set- and so forth.” entire IT budget this year on outsourced up costs,” says Mr Gordon. Mr Glynn initially identifi ed some activity and more than one in 10 said they “Once we had worked with Calyx six BPO providers that could offer the will spend 50 per cent of their budget on for a while, its team’s ability to innovate transactional fi nance processing services outsourcing. while retaining a fl exible approach in that he was looking for and fi nally chose Software application development day-to-day operations was obvious. Genpact. remains the most popular outsourced “We have been pleased with the “We signed a contract in November activity, although external help/service team’s input and extended the managed 2009, and we are now about 80 per cent desks are now being used by 40 per cent services agreement and this is helping of the way through the transition of our of CIOs worldwide. us ensure enhanced wide area network activities across to Genpact,” he says. Do companies also have an eye on the (WAN) capabilities for our departmental Like most other big pharmaceutical growth of enterprise cloud computing? users.” companies, AstraZeneca has also out- “Cloud computing is one form of In the past, outsourcing mainly fo- sourced much of its IT. outsourcing,” says Daryl Plummer, of cused on IT services, but one of the fast- “We have also signed a contract to Gartner, the research company. est areas of growth over the past decade outsource some of or human resources “The difference is in the types of has been business process outsourcing work, and we’ve already done some se- contracts and terms applied. (BPO). lective outsourcing of some of our R&D “In cloud computing, there is one As with IT outsourcing, there are work,” explains Mr Glynn. contract that is applied to all customers many reasons why companies such as Mr Dalal points out that the phar- in the same way.” Microsoft, the US software group, and maceutical industry is full of examples Mr Plummer believes cloud comput- pharmaceutical companies including of companies that outsource their R&D ing and traditional outsourcing will both AstraZeneca have chosen to hire external activity for drug development. continue to exist side by side. help with business processes. On the other hand, he says: “real “Some companies need the custom- Microsoft set out to re- engineer estate outsourcing provides companies ised delivery of services that traditional its global fi nance processes and opera- with options for conserving their capital outsourcers deliver. tions under its ‘OneFinance initiative’, instead of investing in a building.” And “Some need more commoditised launched in 2006. IT departments have long used outsourc- services at the large scale that cloud As part of this effort, the company ing to provide innovation and fi ll skills computing delivers. outsourced back-office finance trans- gaps. “But as the cloud model continues to actions in 95 countries to Accenture, “Manufacturing outsourcing [also] grow, it will steal more and more atten- the consultancy, under an agreement provides many examples of converting tion away from traditional outsourcing designed to promote a commitment to fi xed cost base for production to a more models.” “mutual gains and performance im- variable cost basis,” he says. (c) 2011 The Financial Times Limited

30 DEC.-JAN. 2011/12 Investor.ge

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on Friday the 4th were even more chal- lenging. But contrast that peak of 42 workers with much of the rest of the year, when Hayes works alone. To cope this year, he called in favours from old associates who travelled from Cornwall and Leeds. He even organised a post- fi reworks reunion party. Firework displays are, of course, particularly challenaging: they are ex- traordinarily seasonal, cannot be stored, and require skilled staff. But other busi- ‘Tis Not the Season To Be Shopping nesses must cope with versions of the same challenge. (about USD8 per person per extra day). Does this matter? The economist Daily spending rises in November after Jeffrey Miron pointed out in The Eco- Thanksgiving, but is just as high in De- nomics of Seasonal Cycles, published cember even during the most protracted more than two decades ago, that a shopping seasons. perfectly effi cient market will cope just The economist Joel Waldfogel, au- fi ne: prices, wages and rents will rise at thor of Scroogenomics, estimates that peak times to cover the very real costs TIM HARFORD the extra spending on Christmas and of seasonal booms. Customers will either Hanukkah in the US in 2007 was US- willingly pay extra, because they value ’m one of those old-fashioned types D66bn - a substantial sum, and relative the convenience of the timing, or will who reckons the Christmas season to the size of the economy it is even instead buy Christmas presents in the Ishould begin late. I like to put the larger in the UK. January sales, order cocktails during Christmas decorations up the Sunday No wonder that at this time of year, happy hour, and organise weddings on before Christmas at the very earliest, and everyone hurries to publish articles Wednesdays in October. I even enjoy working on the morning about how the Christmas spending rush In practice, Miron argued, things are of Christmas Eve - there’s something is good for retailers. But this is odd. not quite so simple. For various reasons - more magically Dickensian about tak- Imagine how much easier life would be some cultural, some legal - there are lim- ing just that afternoon off and heading for retailers if that extra USD66bn was its to how fl exible prices and wages tend home with beribboned parcel, rather than spread evenly across the year. to be, and how responsive people can be taking up residence on the sofa a week For a hint at the inconvenience, I in return. Some offi ce Christmas parties beforehand. Christmas Day should be spoke to Derek Hayes, of Oxfordshire- are successfully moved to January, but the beginning rather than the end of the based Skyline Promotions. Hayes runs few family Christmases are. And most festive celebrations. the ultimate seasonal business: a British schools will not applaud parents who Commercial logic points in a differ- company producing fi rework displays. seek a cheaper holiday by pulling their ent direction. There is little profi t for Sel- This year was particularly challenging children out of class. As a result, shops fridges or Dixons or Hamleys trying to because Bonfi re Night fell at the week- will remain congested and staff harassed get people in a Christmassy mood at the end. (Wednesdays are easiest, because during Christmas, and managing inven- very last minute. Indeed, the economist they spread the workload across two tory will be a logistical nightmare. Emek Basker has found that in the US, weekends and midweek.) My Christmas decorations may be where the Christmas shopping season Skyline employed 42 people to run going up late in the season, but I did varies between 26 and 32 days depend- 16 fi rework displays on Saturday, No- most of my Christmas shopping early. It ing on the date of Thanksgiving, longer vember 5. Because most of Hayes’ staff was the least I could do. seasons mean more overall spending have unrelated day jobs, the 14 displays (c) 2011 The Financial Times Limited

32 DEC.-JAN. 2011/12 Investor.ge

DEC.-JAN. 2011/12 33 Investor.ge

Low-key leaders may unlock new problems for banks

34 DEC.-JAN. 2011/12 Investor.ge

the banks, too. Top investment bankers taken a battering. The message from the have been moving to new roles in less BofA succession should have been clear stressful locations, quitting banking for - low-key may well equal second-rate. jobs in the “real” economy, or simply Yet at UBS, Deutsche and now Lloyds, retiring and living off the accumulated the lesson appears to have been ignored. pay of 10 or 20 good years. UBS has an enormous task ahead - If this is the impact of the global shrinking its business methodically and fi nancial crisis, mark II, a very similar in a way that allows it to prosper as a trend was evident three or four years ago global force in wealth management and with the mark I version - that time with a albeit less risky investment banking. Yet US bent - when the heads of Citigroup, the two most powerful executives - new PATRICK JENKINS Merrill Lynch, Lehman Brothers, Bank chief Sergio Ermotti and investment of America and Morgan Stanley all bank boss Carsten Kengeter - have been BS, Intesa, BNP Paribas, disappeared in quick succession. The promoted repeatedly in rapid succession, Deutsche Bank and potentially only big European casualty of the day with question marks over their proved ULloyds Banking Group - the was RBS’s Sir Fred Goodwin, though abilities. Mr Ermotti’s biggest plus was roll call of Europe’s big banks that are in the other UK bank bosses - at Barclays, his Swiss passport. the process of changing chief executive HSBC and Lloyds - as well as the head Deutsche, too, has found it diffi cult is pretty lengthy. Good thing? Bad thing? of Italy’s UniCredit, had all gone by the to break with a nationalist agenda. On the face of it, all fi ve banks have beginning of this year. Alongside Anshu Jain - long the obvious very different reasons for switching their The wipeout of top management candidate to replace Josef Ackermann - it man at the top. UBS was cleaning up purged a wealth of experience, too - and has insisted on a co-chief executive in the after a trading scandal; Intesa is replac- the inevitable consequence has been a form of Jürgen Fitschen, a perfectly nice ing a recruit to the Italian cabinet; the rapid promotion of some relatively lowly chap with plenty of banking experience, changeovers at BNP and Deutsche follow bankers to fi ll the gap. A change of style but someone who would never have long-term stints by outgoing chairmen is perfectly welcome. The slick, arrogant dreamed of being a big bank chief even and chief executives; and Lloyds is a bosses who blew up their banks in 2008 a few months ago. special case, with the newly arrived chief never imagined they were putting their At Lloyds, plan A was impressive. on medical leave, possibly to return at the own institutions at risk, let alone the But if Mr Horta-Osório cannot return end of the year, possibly not. world economy. So if the bank chief in from medical leave in the new year, the Despite the differences, there is one the mould of Sir Fred at RBS, Dick Fuld plan B of resorting to David Roberts - a common cause behind these moves - cri- at Lehman Brothers and Chuck Prince at second-tier banker with stints at Barclays sis. Oswald Grübel’s decision to resign Citigroup has been broken, then so much and Austria’s Bawag under his belt - will from UBS, just like the earlier-than- the better. More sobriety is welcome. hardly inspire shareholders. expected departures of Josef Ackermann But that is just what Bank of America Low-key chief executives might from Deutsche and Michel Pébereau said in 2008. When Brian Moynihan - a soften banks’ images - under attack from from BNP, were at least partly motivated lawyer with no pretensions and an im- politicians and the general public - and by a realisation that the bleak state of age to match - succeeded Ken Lewis, he they might seem a good low-risk op- the markets was not going to improve was supposed to return the US’s biggest tion. But if they are unable to lead the any time soon, giving them no more at- bank to health with a measured plan to vast, complex institutions they head, tractive retirement date to aim for in the simplify the business. Since then, largely the bank boards that appoint them could future. As for António Horta-Osório, the thanks to blow-ups in the operations well rue a generation of second-rate bank Lloyds chief who was signed off work by he inherited (notably the beleaguered bosses as much as they did the pre-crisis his doctors a month ago with stress and Countrywide subprime mortgage unit), superheroes. exhaustion, the painful consequences of he has lurched from one mishap to an- Patrick Jenkins is the Financial the crisis environment are all too plain. other. His reputation - internally, with Times’ Banking Editor A similar trend is evident lower down investors and with the authorities - has (c) 2011 The Financial Times Limited

DEC.-JAN. 2011/12 35 Investor.ge

rather than Mr Assange’s trademark Man in cream-coloured designer suits. He lives not in monastic seclusion but loves the the News: hurly-burly of public life and debates. His hardline stance on gun-control and Alexei immigration grates with Moscow’s smug liberal elite. Navalny CHARLES CLOVER AND But that’s fi ne with him, it seems. CATHERINE BELTON Behind his dolphin-like smile and ca- sual manner is an ambitious operator, e may have been dubbed whose website, rospil.info, has gained Russia’s Julian Assange but notoriety throughout Russia, publishing Houtwardly there is little Alexei documents which purport to show the Navalny seems to have in common with pervasive corruption at the heart of the the enigmatic founder of WikiLeaks. decade-old regime of former president, He dresses in polo shirts and jeans now prime minister, Vladimir Putin. This

36 DEC.-JAN. 2011/12 Investor.ge

week his ascent into the stratosphere of Moscow where his father served in a mis- tions into the money disappearing from Russian public life was heralded in a way sile defence unit. As the fi rst independent state companies have fallen on deaf ears, wearily familiar to human rights lawyers: political broadcasts and newspapers ap- the authorities have instead turned their the prosecutor’s offi ce launched a fraud peared, he says he was drawn into heated attention to the blogger. On Tuesday, case against him dating back to 2009 - a political discussions with his parents. But the prosecutors’ offi ce said they were charge he calls “absurd”. his fi rst fl irtation with real politics ended opening a criminal case against him on Russia’s criminal justice system in disappointment when he left the liberal suspicion of defrauding a state-owned is notoriously inverted. With charges Yabloko party after being accused of be- timber company of more than Rbs1m regularly levelled by the ones accused of ing a nationalist. ($32,000) for allegedly urging it to make committing the crimes against the ones He starting blogging on corruption in what turned out to be a lossmaking deal. investigating them. But Mr Navalny says 2008 because, as he put it, he had “had He faces up to fi ve years in jail if with relish that visits to his website, and enough”. “In Russia, everyone talks convicted. His wife goes around with donations, have rocketed since his latest about the so called vertical [system] of a sheet of paper with phone numbers to troubles. “Our prosecutors are doing their power,” he says. “But it’s really just a call if he is arrested, but he insists he is best to promote Alexei’s image,” laughs vertical of corruption.” His investiga- not afraid. When a mob of football hoo- his friend, Ilya Ponomarev, a deputy from tions have turned up billions of dollars ligans - presumed to have been sent by the Just Russia party. “Many people try in alleged embezzlement at Transneft, the Kremlin - invaded a debate he was to portray him as a Che Guevara type of the state oil pipeline monopoly, where, hosting at a Moscow nightclub in 2007, guy,” he says. “But he is not a revolu- he claims, former managers handed arti- he shot one of them with an air pistol. tionary at all. He is very pragmatic - and fi cially bloated construction contracts to He wasn’t aiming for the head so it was successful.” what appear to be related parties. Trans- OK, he says. Mr Navalny has made a political and neft denies any wrongdoing. At VTB, Mr Navalny is not a typical Russian media career as an activist shareholder, Russia’s second biggest state bank, his dissident, of the type the west is used to buying shares in the large, untranspar- digging uncovered a scheme in which - like Garry Kasparov - who have made ent state-controlled companies that run the bank’s employees allegedly over- much of their liberal, western-leaning Russia’s economy, such as Gazprom and paid $150m for 30 drilling rigs with the credentials. He is a nationalist, having Rosneft, and then trying to exercise his funds mysteriously squirrelled through helped found a movement known as legal rights as a minority shareholder. a Cyprus fi rm. VTB, too, denies any Narod or “People” dedicated to saving His accounts of his efforts have led to wrongdoing, but the offi cials involved “Russian civilisation”. He wants to limit his becoming the hottest political blog have since been replaced. immigration and favours cordoning off in Russia, a nation of 40m internet us- Mr Navalny’s rise has been watched the troublesome north Caucasus region. ers, even though Mr Navalny admits that with trepidation by the Kremlin. He The blend of nationalism and anti- reading ìt is a “bit boring”. has been hounded by Russia’s Federal corruption fervour is hugely popular. Visitors to the site can download Security Service. A list of all the donors “Today, you are a politician if you minutes of board meetings, offi cial audits to his website was seized last month by engage in politics, which is what I am and legal correspondence with some of the security services and released to the doing every day with my website and my Russia’s biggest companies, won in court Kremlin-backed Nashi youth group, who debates.” For the moment, the internet is battles or leaked by whistleblowers. “It’s have begun harassing his donors. the only platform in the country free of like an online show. It’s a show about a “They are convinced I am working censorship. “I am having my 15 minutes person who is confronting the system,” on behalf of the CIA to undermine Rus- of fame, as Andy Warhol put it,” he says. he says of rospil - “pil” means to saw, sian institutions. They don’t believe that “But I know that those 15 minutes will as in to saw off part of a contract as 15,000 people would donate 400 roubles not last.” kickback. apiece to my site. They are convinced Born on June 4 1976, Mr Navalny that it is just a way to legalise money for (c) 2011 The Financial Times Ltd. grew up enthralled by politics, watch- the CIA, MI6 or Mossad.” All rights reserved. Please do not cut ing the Soviet Union’s collapse from his While his attempts to prod federal and paste FT articles and redistribute family home in a military town outside prosecutors to launch criminal investiga- by email or post to the web.

DEC.-JAN. 2011/12 37 Investor.ge

Stage Right: Bollywood Directors Spotlight Growing Interest in Georgian Film

38 DEC.-JAN. 2011/12 Investor.ge

A growing interest in Georgia mountain… you have sea, you have cit- means that Georgia is part of the wider from foreign film producers and ies. You can shoot Iran, for example, in European scene in a way, so it has equal directors in Bollywood and Europe Georgia,” she said. rights, like the Romanians or French to could mean more investment, But producer Gia Bazgadze noted co-produce together,” said Tatishvili. more tourism and greater access to resources for Georgian films. that stunning backdrops alone are not “I think it is very important and mo- enough for Georgian cinema to “break tivating for young Georgian producers through” to the international fi lm market. and directors to have this opportunity to “The industry is moving slowly, be equal with their peer colleagues from but moving forward, in the direction of European countries.” improvement in Georgia. More films Director Ketevan Machavariani, rom Hollywood to Bollywood, are shot, more producers are showing who debuted her movie ‘Salt White’ at there are an increasing number themselves on the market; you see more the prestigious Karlovy Vary Festival, Fof foreign fi lms being produced directors, more studios and more produc- agreed that Eurimages would be an es- in Georgia. While the productions are a tion companies,” he said. sential help for fi lmmakers. boost for the country’s image as a fi lm But Bazgadze, who is also a partner “Eurimages really should be a big destination, a new agreement with the in the largest chain of movie theaters in support and big issue for Georgian fi lm,” European Union’s Eurimages could Georgia, noted that tax incentives are she said. mean more resources for Georgian fi lms. vital for the industry to attract foreign “Last year, after Georgia became an Filming for two Indian movies – fi lm-makers. eligible member of Eurimages, we went Bilia 2 and Double Trouble – initially “To make this country attractive for to Sarajevo. The trip was organized by scheduled for October and November, fi lm-makers, you need some tax incen- the Georgian film center…everyone, and Georgian offi cials and fi lm directors tives to be established here and have every European producer during the hope more will follow. the rebate system that is happening in meeting mentioned that Georgia is now Chakri Toleti, the director of Bilia 2, many countries, including European a member of Eurimages and that it is a estimated a budget of roughly $500 thou- countries,” he said. good opportunity to start cooperation and sand for his 20 day shoot in November. The Ministry of Culture and the collaboration with Georgian producers Georgia, he noted, is a new location Georgian National Film Center are cur- and fi lm directors.” which is a commodity for an industry rently working on a draft law that will The program will also help with that produces, on average, nearly two create tax incentives for fi lm production fi nancing, and could prove to be a boost fi lms a day. teams, he added. to fi lmmakers who are struggling to fund Toleti and his colleagues are follow- A new agreement between the Eu- their projects. The fi lm center provides ing a long tradition of fi lming in Georgia. ropean Union’s Eurimages grant co- subsidies and grants for Georgian fi lm- A favorite backdrop for Soviet directors fi nancing progam and Georgia is also makers, but Tatishvili noted the budget for decades, the country’s diverse climate “highly important,” Bazgadze said. is much smaller than the fi lm industry’s and good weather have the potential to “It is very important that Georgia potential. compete with Prague, noted the interna- makes coproduction go international. “Georgian fi lm makers will be suc- tional award winning Georgian director, For that, the best news is that Georgia cessful if they tell truly Georgian stories Nino Kirtadze. became part of Eurimages. I think this as long as they show them in a way that Kirtadze, now based in Paris, said is the most important achievement that is appealing to an international audi- Georgia’s climate – which varies be- happened over the past several years.” ence,” she said. “This is the language tween the sea and the mountains within a Eurimages will give Georgian fi lm- of cinema.” matter of kilometers – could be a magnet makers a chance to reach a wider audi- The more exposure Georgian fi lms for fi lm makers looking for exotic locales ence, noted Georgian National Film receive – either through co-productions, on a budget. Center Director Tamara Tatiashvili. The festivals or awards – the more the world “In a very small country you can center played a pivotal role in bringing will learn about Georgia, noted Macha- have totally different and landscapes. Eurimages to Georgia. variani. You can have a desert, you can have a “Being a member of Eurimages “Any appearance of Georgian movies

DEC.-JAN. 2011/12 39 Investor.ge

on international venues is important to believes Bollywood directors can intro- shot.“We want this sector to develop in let people know that Georgia exists…it duce Georgia to a whole new audience Georgia; for Georgia to become a fi lm is a promotion of the country,” she said. of fi lm-goers. production location… the biggest result Bazgadze noted that films have “[In] Bollywood there are about 500 that it will create is an awareness of the helped tourism develop around the new movies a year; at least two movies country,” she said, noting the number world, from the explosion of tourists a day. So when one producer discovers of Indian tourists that have fl ocked to to New Zealand following the Lord of [a location], they have a pulling effect,” Switzerland to visit the backdrop of their the Rings series to a new call for monu- Bochorishvili said. favorite fi lms. ments in Europe after the Da Vinci Code “[The movie business] is really good “We would expect increased numbers blockbuster. for the budget in two ways. Whatever of tourists coming to Georgia… and it “The government should be treating investment comes into the country, it will be easier for us to talk about Georgia fi lm-making as a business,” he said. “One stays in the country… everything stays after this movie than it was before this of the benefi ts of fi lm is for developing a in the country. It makes the economy movie.” country’s tourism industry: you already move forward.” Toleti said that Georgia has the have many examples where a fi lm sub- She added that the government is also makings of a new international fi lming stantially increased a country’s tourism hoping to cash in on the Bollywood ef- location.“I think that once we expose potential.” fect: the apparent power of Indian fi lms Georgia to our fi lm industry, others will Keti Bochorishvili, the director of the to draw scores of Indian tourists to the want to come,” he said in a telephone Georgia National Investment Agency, countries where their favorite fi lms are interview from his offi ce in India.

Stage Left: The potential of the Georgian film industry

Investor.ge spoke with Gia Bazgadze, a producer and part owner of Light But agreements with Eurimages, an Bank productions – as well as the largest chain of cinemas in Georgia, EU-driven program that supports fi lms, about Georgian film as a business and the potential of being part of should make it easier for Georgian fi lms Eurimages. to gain wider exposure in European mar- Georgian fi lm is making a slow but on his resume, and an impressive array kets, which is an important step toward steady comeback, thanks in a large part to of accolades from international festivals. commercial success, he noted. the enthusiastic support of cinema lovers But not many of his business col- “[F]ilm making is a risky thing. It is like Gia Bazgadze. leagues have followed in his footsteps. like gambling. Of course every business A managing partner at Ernst&Young “It is not easy to cover the expenses person wants to make a profi t, and the in Georgia, Bazgadze’s fi rst foray into of the fi lm with the small number of more guarantees the better. That is why the fi lm industry was strictly business: screens that are in Georgia. The market they are not jumping to invest in fi lm- he and his partners started buying, reno- is limited and the number of screens is making as a business,” he said. vating and reopening movie theaters in also limited,” he said. “Most of the businesses that are Tbilisi. Now they have the largest chain “If you want to make a Georgian fi lm investing now, invest because they want of movie theaters, as well as their own commercially successful, you have to to help this business, they have some pa- production company - Light Bank - that expand this market, you have to go out- triotic incentives or something like that. I makes fi lms for the local market. side…either to Russia or international.” was the same. When I started this, I like Several years ago, however, Ba- The Georgian film industry, Ba- the cinema, I really wanted to help young zgadze decided he wanted to do more: zgadze notes, is not yet commercially directors – I really wanted this business so he became a producer. viable for any production with a budget to move forward and I think I contributed Today, he has three art house fi lms over 200 thousand lari. something to that, together with others.”

40 DEC.-JAN. 2011/12 Investor.ge Investor.ge

42 DEC.-JAN. 2011/12 Investor.ge

NY Baseball Fans Donate Gear and Uniforms to Georgian Players

New batting tees, uniforms and gloves will help struggling Georgian baseball enthusiasts.

Photos by Jackie Koney

DEC.-JAN. 2011/12 43 Investor.ge

co- founder board member of Friends of Georgian Baseball and Softball. She said the donations will help “keep the game alive” in Georgia. “From a practical standpoint, it’s tough to play proper ball without gloves and balls and it’s dangerous to play with- out safety equipment like batting helmets and catcher’s gear. These are items you just can’t get in Tbilisi and it’s out of reach, price wise, to order and send from abroad,” she said in an email interview. “From an emotional standpoint, knowing that there’s a connection to people in NYC who love the game and want to share it with us here is just really exciting … There was an immediate and palpable sense of pride when the kids gathered for photos -- they looked and felt like a “real” team.” Mitchell noted that there are tentative plans for more gear drives, and, perhaps, clinics or player exchanges in the future. He said building relationships around eorgian baseball players have Italy have increasingly serious baseball baseball is another way to teach Geor- new gloves, uniforms and programs,” he said in an interview via gians about American culture. Gsafety gear thanks to the gener- Skype. “I have spent a number of years osity of New York baseball fans. “I approached Gia [Kemoklidze, one working in and studying Georgia. The After reading about the plight of of the founders of Little League in Geor- Georgian people and leadership often Georgian baseball teams on EurasiaNet. gia –ed] in May when I was in Tbilisi mention how they love America, but org (an adapted version of the article was about ways that I could help baseball in too frequently this is just limited to reprinted by Investor.ge in June), Lincoln Georgia. An equipment drive seemed American powers and ideals… For Mitchell decided to organize a gear drive. like a natural thing to do. I coach Little me, loving America means loving, not Mitchell, an associate at Columbia League in New York and have two sons just democracy and equality but also University’s Harriman Institute and who are big youth baseball programs so I things and people like Bob Dylan, Walt former chief of party for the National know how much fun this can be for kids.” Whitman, James Baldwin, Jazz music, Democratic Institute (NDI) in Georgia The Baseball Center in Manhattan, and, frankly, as much as anything else, from 2002-2004, has strong ties to Geor- where his two sons play for the traveling baseball,” he said. gia – and baseball. team, made a call for gear and, several “The opportunity to share this with “I am a big baseball fan and am weeks later, seven boxes of gear – includ- Georgian Little League and, with luck, intrigued by the spread of baseball in- ing 20 new baseball gloves, uniforms to engender a lifelong passion for base- ternationally. I am often struck by how and a catcher’s mask – arrived in Tbilisi. ball in a few Georgian young people is a little many people know about how many For Georgian players, the matching way for me to help introduce the young countries play baseball. Countries that uniforms and gear means they can look people of a country that, while not mine we don’t think of as baseball countries like proper teams, noted Jackie Koney, is very close to my heart, to another part at all like Australia, the Netherlands or president of the Tbilisi Little League and of America.”

44 DEC.-JAN. 2011/12 CONTENT

Amercian Citizen Information Night at the U.S. Embassy

46 Amcham Members Meet New 48 Meeting with Treasury 54 Social: KPMG 10th USAID Georgia Director Advisors Anniversary in Georgia

46 AmCham Office-Warming 50 AmCham Georgia Creates 55 Social: Tbilisi International Party Agriculture Committee Player’s Sleeping Beauty

46 Third Annual American Citizen 50 Revenue Service Presents New 55 Social: Second Annual Information Night Reforms C.O.A.T.S.

47 GNIA: Doing Business in 50 The Tbilisi Summit: Georgia’s 56 Social: “Chateau Mukhrani” Georgia “Quick, Cheap and Potential from the Ground and “TBC Bank” traditional Right Now” harvest celebration 51 New Members 47 Fourth Annual GITI Awards 57 Social: American Information 52 Member Directory Night 48 AmCham Legal and Tax Committee Created 54 Social: GITI Awards 57 Social: Dutch Design Garden’s Open House

DEC.-JAN. 2011/12 45 Third American AmCham Members Meet Citizen Information New USAID Mission Director Night Around two hundred American citi- zens came to the US Embassy to meet with the Embassy staff and various ser- vice providers during the Third Annual American Citizens’ Information Night that took place on November 10. The event, which was co-hosted by AmCham Georgia, allowed citizens to get answers on a variety of questions. The purpose of the event is to inform the US citizens living and working in Georgia of various goods and services that are of direct relevance to their needs in this country. Over thirty information providers presented their goods and services, ranging from the Embassy departments and Georgian government

Stephen Haykin, the new country Mendelson also provided a com- mission director of USAID, and Tina prehensive overview of EPI’s four Mendelson, the chief of party for the year program in Georgia. Four areas - Economic Prosperty Initiative (EPI) gave manufacturing and services, agricultural members an in-depth look at the two pro- sectors, investment promotion, access grams during the November 22 luncheon to finance, workforce education and at Tbilisi Marriott. Haykin’s presenta- business enabling environment – will tion “USAID/Caucasus: Past, Present be priorities during the program. Her & Future,” provided an overview of the presentation “EPI: Latest Developments” aid organization’s accomplishments in is also available on www.amcham.ge. Georgia – as well as its long term strategy Deloitte Georgia, TBSC Consulting until 2017. Please visit www.amcham.ge and The Salvation Army made announce- agencies to international educators and to view the presentation. ments at the end of the meeting. medical companies, real estate, postal and relocation services, hospitality and charities. Ambassador John Bass hosted AmCham Office-Warming Party the event and addressed fellow Ameri- cans with welcoming remarks. On October 10, the American Cham- and network in a relaxing atmosphere, AmCham Georgia and the US Em- ber of Commerce hosted an offi ce-warm- as well as explore the new offi ce. In his bassy are grateful to the generous spon- ing party for its members on the build- welcoming speech, AmCham Georgia sors of the event who provided snacks ing’s terrace overlooking old Tbilisi. President David Lee stressed that the and drinks for the event: Borjomi, Cha- The event was kindly supported by Chamber is always there to serve its teau Mukhrani, McDonalds, Natakhtari, Deloitte. members’ needs as a reliable partner on Pepsi, and Texas Chicken. Members had an opportunity to meet the ground.

46 DEC.-JAN. 2011/12 Civil Registry Agency was Doing Business in Georgia: “Quick, awarded four prizes at the Cheap and Right GITI Awards 2011 Now” More than 350 participants from won the award for software of the year; From tourism to textiles, Georgia eighteen countries participated in the and the State Revenue Committee of the is full of opportunities for businesses three-day Fourth Regional Georgian Government of the Republic of Armenia willing to invest now, according to Cyber and ICT Innovation Conference won an award for the most “widely ap- Keti Bochorishvili, the director of the on November 17-19, an annual event plicable e-service.” Georgian National Investment Agency that focuses on sharing IT best practices For more information about award (GNIA). Bochorishvili presented a wide in public and private sectors. winners, and photographs from the event, range of investment possibilities to Am- Several companies and government please see page 54. Cham members during the October 12 bodies were awarded for innovative Winners of the Georgian IT Awards roundtable meeting at the Radisson Blu projects. 2011 were revealed during the Gala Iveria Hotel. The star of the awards was The Civil Reception at the Tbilisi Marriott Hotel. Deputy Director of the U.S. Agency Registry Agency of the Ministry of Jus- The purpose of the award ceremony for International Development (USAID) tice of Georgia. The agency received four was to credit governmental and private Joakim Parker also briefed members on awards this year: The Most Successful entities for good work and best practices political and economic developments, Infrastructure Solution, The Best IT and encourage them and others to invest including the recent National Democratic Management Entity, The Best Informa- their time and energy in further develop- Institute (NDI) survey and planned meet- tion Security Management and the super- ment of the IT fi eld. This year the panel ings in Washington. prize - the IT Agency of the Year. The of judges was comprised by: Alexander Bochorishvili stressed that govern- master of ceremony of the GITI Awards Jejelava, Management Academy; Shota ment initiatives for investors, like the 2011 for the 4th time in a row was Keti Gvinianidze, Magticom; Ana Nakashid- free land, free design and free casino Sidamonidze from the American Cham- ze, Silknet; Ramaz Kvatadze, Georgian license for Anaklia hotel proposals that ber of Commerce in Georgia. Research and Education Network Acad- meet certain criteria, are an opportunity Other companies and government emy; Vahan Hovsepyan, Union of Infor- that will not last forever. agencies were also recognized, including mation Technology Enterprises. “Doing business in Georgia is quick, the Ministry of Justice for using innova- The event was organized by the ICT cheap and right now,” she said, noting tive IT solutions to streamline business Business Council of Georgia and the that eight hotels are already set to launch processes; the Georgian computer pro- LEPL Data Exchange Agency of Minis- in the new resort over the next two years. ducers Algorithm for its laptops for fi rst try of Justice of Georgia and held at the Tasked with bringing in new invest- graders program; CHS Vericel Service Courtyard Marriott. ment, GNIA is transforming from an agency that promotes awareness about Georgia to a service provider that creates sector-specifi c proposals for potential investors. For more information about GNIA’s projects and investment incentives, please see AmCham’s website, www. amcham.ge. Alliance Trading also announced its partnership with LGM Cold Storage. For more information, please see www. amcham.ge.

DEC.-JAN. 2011/12 47 Commercial Law and Tax Committee Created

AmCham re-launched the Com- mercial Law and Tax (CLT) Com- mittee on October 1. The committee includes members from BDO, BGI, BLC, Deloitte, DLA Piper, Ernst and Young, GSMEA, HBSS, KPMG, LPA and PWC. The committee is working to guide a new project that is run by AmCham Commercial Law & Tax Committee three lawyers employed by AmCham, meets the U.S Treasury Department intended to analyze developments in Committee Co Chair Mr. Justin Ban- the U.S Treasury Department. Recent the area of commercial law and tax croft led a meeting of the tax and legal changes in tax administration and the and identify ways in which the law and committee with representatives from newly adopted tax code were discussed. its implementation can be improved. The project is funded by USAID through Eurasia Partnership Foun- Head of Revenue Service Jaba Ebanoidze Meets dation and East-West Management AmCham Trade and Transportation Committee Institute. During the committee’s regular ous issues related to the customs regula- One of the central elements of this meeting with RS management, Head of tions in Georgia during the October 13 project is to hear the experiences of Service Jaba Ebanoidze presented an meeting. businesses in Georgia in their dealings overview of recently adopted changes To view the presentation, please visit with the Courts and the Ministry of to the tax legislation, including customs www.amcham.ge. Finance. The project is not intended issues. Co-chairs of the T&T Committee For any inquiries please contact to offer free commercial law or tax John Braeckveldt and Ivo Bakhuijzen Committee Coordinator Gigi Liluashvili, advisory services, but if cases are on- facilitated the discussion regarding vari- [email protected]. going, legal staff of the CLT committee will be happy to discuss the details and see if there is any possibility to help in Commerical Law & Tax Commerical Law and securing an equitable resolution. Committee Discusses Tax and Tax Committee Discusses AmCham CLT committee already Commercial Cases Communication Strategy has held three meetings where the Justin Bancroft, the co-chair of the Ted Jonas, the co-chair of the com- committee has identifi ed a number of committee, facilitated the November 18 mittee, led a discussion about different judicial and tax issues that the project meeting. Committee talked about the ex- commercial and tax problems revised will work on. However, the committee isting problems in the legislation as well and amended by committee legal staff is in the process of setting its priorities as concrete tax and commercial cases. during the meeting on December 2. Com- and so is open to the discussion of any Future action plans and concrete propos- mittee members talked about the priority concerns that businesses may bring to als were also discussed at the meeting. ares to focus on, as well as discussed the their attention. If any AmCham member wishes to communication strategy. If any AmCham If you have experiences you would join the monthly committee meetings, member wishes to join the monthly com- like to share please contact our Project please contact Committee Coordina- mittee meetings, please contact Commit- Coordinator & Legal Analyst Gigi Li- tor and Legal Analyst Gigi Liluashvli, tee Coordinator and Legal Analyst Gigi luashvili – [email protected]. [email protected]. Liluashvli, [email protected].

48 DEC.-JAN. 2011/12 DEC.-JAN. 2011/12 49 Reforms Seek to Streamline AmCham Georgia Creates Agro-business Committee Customs Warehouse, Tax Administration AmCham’s new agro-business com- izer and herbicide input prices and qual- Simpler regulations for customs mittee met on November 22 at the ity. In the coming months the committee warehouses are one of many changes AmCham office conference room. shall focus on: the Revenue Service has implemented Introductions were made by David Lee looking at and reviewing the Agro this year, according to Ia Mikhelidze an and Irakli Baidashvili, the Co-chairs of strategy for the country as a whole, advisor at the service. the Committee. on the condition that the government Mikhelidze, speaking at the No- Members of the agro-business com- releases one; vember Amcham roundtable event on mittee include: MagtiCom, GMT Group, fi nding ways to improve the leg- November 9, gave AmCham members GAU, TBSC, Teliani Valley, Mobipay, islative environment for agrobusiness – an in-depth overview of a multitude of Alliance Group Holding, Sense Selec- including issues like land, tax, enabling changes to the tax and customs codes - tion, ISET, Cold Brook Ventures, Krt- environment for insurance, etc.; both implemented and planned - that ease sanisi, EPI, Financial Brokers Georgia, looking at business issues – bank- the burden on businesses. VD Capital, Georgian Wine Association, ing and insurance support; availability Some of the most signifi cant changes SEAF, CRRC, Gosselin Moving, HBSS, of FDI; helping finding partners and affect custom warehouses: just five Gastronomia - Ioli Supermarket, Chateau suppliers/markets; some specifi c queries documents are necessary to apply for a Mukhrani, CARE International, Good- of our members, etc. permit - down from over a dozen required will, Wimm Bill Dann and Caucasus If you wish to join the committee previously. University. or for more information please contact In addition, now there are just two A range of issues were highlighted at the AmCham Agri-business Committee technical requirements, a significant the meeting, including: lack of knowl- Coordinator and AmCham Projects Team reduction. For more details, please visit edge, forward contracting, insurance, Leader/Manager Keti Sidamonidze: www.amcham.ge. fi nance, registration of land plots, fertil- [email protected]. Ambassador John Bass opened the meeting with a candid assessment of the latest political and economic devel- The Tbilisi Summit: Georgia’s Potential from the Ground opments in the country and the United States, particularly negotiations on Rus- sia’s potential WTO membership and Georgia’s business climate reforms – board members, including BP’s Neil billionaire Bidzina Ivanishvili’s decision for better and for worse - were on display Dunn. Dunn, the general manager of BP to enter Georgian politics. during The Economist’s Tbilisi Summit Georgia, told participants that the energy AmCham will co-host the annual on November 17. giant plans to stay in Georgia, noting that American Citizen’s Information event Highlights included a frank discus- the company has been “operating already at the embassy on November 10. For sion with Kakha Bendukidze, who for 15 years in Georgia and we plan to more information, please contact the is largely credited as an architect for stay even longer.” AmCham offi ce. Georgia’s efforts to improve the business He noted, however, that more vo- Other announcements included the climate and streamline the government. cation education is needed to create a planned Slovak-Georgian business con- Prime Minister Nika Gilauri was skilled labor force. ference on December 10 and the IOM the key speaker, stressing Georgia’s Jobs and employment featured in job fair at Expo center on December 2. economic success despite the global several panel discussions. Former Eco- In addition, tickets for the annual Panto fi nancial crisis and the 2008 war. nomic Minister Davit Onoprishvili, now production - Sleeping Beauty on De- Other speakers - investors and policy a member of the opposition, questioned cember 2-4 - are currently on sale. For makers - were largely upbeat about Geor- the government’s policy but investors information about any of these events, or gia’s progress and potential after seven like Rakeen’s Khater Masaad said the other AmCham activities, please contact years of reforms. Panel discussions fea- in expensive and fl exible labor force is [email protected]. tured several AmCham businesses and Georgia’s “biggest advantage.”

50 DEC.-JAN. 2011/12 Pfizer Georgia JTI Caucasus EPI Project Beeline GeoCapital Save the (Mobitel Ltd) Children

Pfi zer, Inc. is an JTI - Japan Tobacco USAID’s Economic “Mobitel” Ltd. is a GeoCapital is a Save the Children American multina- International is the Prosperity Initiative Georgian cellular Georgian registered is the leading inde- international tobacco communication op- pendent organiza- tional pharmaceutical (EPI) is a four-year company, managed NEW MEMBERS corporation that has business of Japan To- program designed to erator. The company by US citizens. It also tion creating lasting remained dedicated bacco Inc., a leading improve enterprise, has the license for has US citizens on its change in the lives to discovering and international tobacco industry, and country- providing cellular board of directors and of children in need developing new, product manufacturer, level competitive- communications ser- accepts investments in the United States and better, ways to with a global market ness in Georgia. vices. JSC “Vimpel- in the form of loans and around the world. prevent and treat share of almost 10%. EPI assists private Com” has 51% share from people in the Recognized for disease and improve www.jti.com fi rms across various in “Mobitel” Ltd. The US. our commitment to health and well being sectors to increase VimpelCom Group’s www.geocapital.ge accountability, inno- for people around the investment, open license portfolio cov- vation and collabora- world. The company new markets, raise ers a territory with a tion, its work takes is based in New York productivity, drive population of about the otganization into City, New York with domestic and export 340 million. Geo- the heart of commu- its research head- sales, and create graphically it covers nities, where it helps quarters in Groton, jobs. EPI facilitates a the whole territory children and families Connecticut, United consultative process of Russia as well as help themselves. Save States. between businesses the entire territo- the Children works www.pfi zer.com and government ries of Kazakhstan, with other organiza- agencies to further Ukraine, Uzbekistan, tions, governments, improve Georgia’s Tajikistan, Georgia, non-profi ts and a va- business enabling Armenia as well as riety of local partners environment. Vietnam and Cam- while maintaining its www.epigeorgia.com bodia. own independence www.beeline.ge without political agenda or religious orientation. www.savethechil- dren.org

DEC.-JAN. 2011/12 51 AmCham Company Members as of December 2011

PATRON MEMBERS Caucasia Trading HSBC Bank Georgia JSC Radisson BLU Iveria Hotel 5/7 Navtlugi St., Offi ce #1 15 Rustaveli Ave. 1 Rose Revolution 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 Salford Georgia www.apmterminals.com 77 Kostava St., Bld.6, 4th fl . Tetri Khevi Hesi District, Orkhevi 44 Leselidze St. Tel: 2941691; Fax: 2253814 Tel: 2241091; Fax: 2241090 Tel: 2505400-03; Fax: 2505406 BP Exploration Georgia www.cu.edu.ge www.pepsi.ge www.salford.com.ge 38 Saburtalo St. CH2M Hill Tel: 2593400; Fax: 2593488 Imedi L International SEACOR Response 5th Floor, GMT Plaza, Freedom www.bp.com 20 Chavchavadze Ave. 9 Khvichia St. 0160 Square Tel: 2223520; Fax: 2293075 Tel: 2244141, 2382825 Tel: 2474040; Fax: 2470210 Exxon Azerbaijan Ltd www.imedi-l.com.ge www.seacorresponse.com Landmark Suite 300, 95 Nizami St., www.ch2m.com Baku, AZ1010 Azerbaijan SEAF Management LLC Chartis Europe S.A. Georgia KPMG CIS Ltd. Tbilisi Branch Tel: (994-12) 4982460; Fax: (994-12) 7, Niko Nikoladze St. II Floor. Branch 3rd Floor, Besiki Business Center, 4982472 Tel: 2998115; Fax: 2923533 7 Bambis Rigi St., 0105 4Besiki St., 0108 www.exxonmobil.com www.seaf.ge Tel: 2439025; Tel: 2935713; Fax: 2982276 Fax: 2439026 www.kpmg.ge Sheraton Metechi Palace Hotel PricewaterhouseCoopers www.chartisinsurance.com 20 Telavi St. 7 Bambis Rigi St., 0105 Levon Travel Tel: 2772020; Fax: 2772120 Tel: 2508050; Fax: 2508060 Chemonics International 20 Chavchavadze Ave. www.sheraton.com/tbilisi www.pwc.com/ge 6a N. Ramishvili St., 0179 Tel: 2250010; Fax: 2232399 Tel: 2234311; Fax: 2234309 www.levontravel.ge T&K Restaurants (McDonald’s UGT www.chemonics.com Georgia) 1 Dzmebi Kakabadze St. 17a Chavchavadze Ave., 7th fl oor Deloitte Maersk Georgia LLC Tel: 2921246; Fax: 2251422 Tel: 2220211; Fax: 2220206 36a, L. Asatiani St., 0105 6 Khetagurov St. www.mcdonalds.ge www.ugt.ge Tel: 2244566; Fax: 2244569 Tel: 2200800; Fax: 2200815 www.deloitte.ge www.maerskline.com TBC Group 7 Marjanishvili St. CORPORATE A MEMBERS Diplomat Georgia Magticom Tel: 2272727; Fax: 2228503 65, Kakheti Highway 5 Politkovskaya St. ABRIS Distribution AG. www.tbc.com.ge Tel: 2984950 Tel: 2171717; Fax: 2171171 21 Liubliana St. www.diplomat.ge www.magticom.ge TBSC Consulting Tel: 2527271; 6 Marjanishvili St. www.abrisdc.com DLA Piper Georgia LP 10 Melikishvili St. Marriott Hotels, Resorts & Suites Tel: 2959019; Fax: 2420215 Advanced Engineering Tel: 2509300; Fax: 2509301 13 Rustaveli Ave. www.tbsc.ge Associates Georgia www.dlapiper.com Tel: 2779200; Fax: 2779210 www.marriott.com Apt 3, 20 Kipshidze St., 0162 Economic Prosperity Initiative CORPORATE B MEMBERS Tel: 2913892; Fax: 2252762 (EPI) Metromedia International Group AGV Czech Republic Ltd www.aeai.ge 6 Samghebro St. 8000 Tower Point Dr., Charlotte, NC 63 Kostava St. Tel: 2438924 Alliance Group Holding, JSC 28227 Tel: 2242559; Fax: 2242549 www.epigeorgia.com 47/57 M. Kostava St., 0179 Tel: 2171201; Fax: 2210101 www.agv-czech.com www.metromedia-group.com Tel: 2424181; Fax: 2998112 Ernst & Young Aliance Georgia Ltd www.agh.ge 44 Leselidze St. Microsoft Georgia LLC 33 Samurzakano St. Tel: 2439375; Fax: 2439376 6 Marjanishvili St. Tel: 2243773 www.ge.ey.com Avon Cosmetics Georgia LLC Tel: 2424478 www.groupaliance.com 117 Tsereteli Ave.. Georgian American University www.microsoft.com Tel: 2226805; Fax: 2226806 21a Chavchavadze Ave., Alioni-99 Holding Company www.avon.com 2d Arch #3 Mobipay (OpenRevolution 12a Kazbegi Ave., 0160. Tel: 2915003; Fax: 2915004 Georgia) Tel: 2922993; Fax: 2389737 F H Bertling Georgia Ltd. www.gau.ge 19 T. Abuladze St. 0162 www.alioni99.ge 9 Tarkhnishvili St. Tel: 2235403 Georgian Audit & Consulting GZ American Academy in Tbilisi Tel: 2443356; Fax: 2443376 www.mobipay.ge www.bertling.com Company 37a Chavchavadze Ave. 47 Kostava St. Suite 29 MSD (Schering Plough Central Tel: 2227441; Fax: 2227889 Tel: 2984039; Fax: 2438352 Betsy’s Hotel / Prosperos Books East AG) www.aat.ge 32/34 Makashvili St. / 34 Rustaveli www.gacc.com.ge 44 K. Abkhazi St. 0105 Bagebey City Group Ave. GMT Group Tel: 2438978 Tel: 2987624, Fax: 2923592 49b Chavchavadze Ave. 4 Freedom Square www.merck.com Tel: 2913152; Fax: 2290169 www.betsyshotel.com Tel: 2988988; Fax: 2988910 Pfi zer Luxembourg SARL www.bagebeycity.com www.gmt.ge Representation Offi ce in Georgia Booz Allen Hamilton, Inc. Baker Tilly Georgia Ltd. Greco Group 58 I.Abashidze St. 7 Bambis Rigi St., 0105 Meidan Palace, 44 Kote Abkhazi St. 1 Nutsubidze St. Tel: 2252986 Tel: 2439072; Fax: 2439059 Tel: 2505353; Fax: 2505353 Tel: 2393138; Fax: 2311107 www.pfi zer.com www.boozallen.com www.bakertillyinternational.com www.greco.ge British American Tobacco Philip Morris GT Group Bank of Georgia 71 Vazha Pshavela Ave. 7 Bambis Rigi Str., 0105 48 B. Cholokashvili St. 3 Pushkin St. Tel: 2399103/01/02; Fax: 2399104 Tel: 2439001; Fax: 2439005 Tel: 2740740 Tel: 2444134; Fax: 2983269 www.bat.com www.philipmorrisinternational.com www.gtgroup.ge www.bog.com.ge Catoni & Co. Georgia Hall, Booth, Smith & Slover, P.C. ProCredit Bank Bank Republic 3 Lesia Ukrainka St. Apt.7 41 Vaja Pshavela Ave. 0177 154 Agmashenebeli Ave. 2 Gr. Abashidze St. Tel: 2989230; Fax: 2922264 Tel: 2394417, Fax: 1-404-9545020 Tel: 2202222; Fax: 2202222-2226 Tel: 2925555; Fax: 2925544 www.hapag-lloyd.com www.hbss.net www.procreditbank.ge www.republic.ge

52 DEC.-JAN. 2011/12 Basis Bank JSC GeoCapital Microfi nance Legal Partners Associated LLC Teliani Valley JSC 1 Ketevan Tsamebuli Ave. Organization Ltd. Offi ce #203, Besiki Business Center, 2 Marshal Gelovani Ave. Tel: 2922922; Fax: 2986548 Z.Gamsaxurdia Ave. 19/32.Kutaisi, 4 Besiki St. 0108 Tel: 2313245; Fax: 2313249 www.basisbank.ge 4600 Tel: 2200203; Fax: 2250458 www.telianivalley.com Tel: 431 267070 www.lpa.ge Batumi Oil Terminal www.geocapital.ge VD Capital GMT Plaza, 4 Freedom Sq. Liberty Bank JSC 77 Kostava St., 0175 Tel: 2241818; Fax: 2241817 Geocell 74 Chavchavadze Ave. Tel: 2363672; Fax: 2364302 www.batumiport.com 3 Gotua St. Tel: 2555500; Fax: 2912269 Wimm-Bill-Dann Georgia Ltd BDO LLC Tel: 2770100, ext. 7435; www.libertybank.ge Village Ponichala, Tbilisi 0165 42 Kazbegi Ave. Fax: 2770119 Tel: 2475290 Tel: 2545845; Fax: 2399204 www.geocell.ge Madneuli JSC www.wbd.ru www.bdo.ge 3/5 Kazbegi Street, 0179 GeoEngineering LLC Tel: 2474545, ext. 55 Wings and Freeman Capital Beeline (Mobitel Ltd.) 15a Tamarashvili St. www.madneuli.ge 6 Gorgasali St. Tel: 2311788; Fax: 2311787 Green Building, 6, Marjanishvili St. Tel: 2200606 www.geoengineering.ge Mgaloblishvili, Kipiani, Tel: 2940051; Fax: 2940053 www.beeline.ge Dzidziguri (MKD) Law Firm www.wfcapital.ge Georgian Airways 24 Suite, IV Floor, BG Capital Wissol Georgia 12 Rustaveli Ave. 71 Vaja-Pshavela Ave. 23 Chavchavadze Ave, 3rd fl . 0179 74b Chavchavadze Ave. Tel: 2999730; Fax: 2999660 Tel: 2973880; Fax: 2973884 Tel: 2444687; Fax: 2235804 Tel: 2915315; Fax: 2915615 www.georgian-airways.com www.mkd.ge www.bgcapital.ge www.wissol.ge Georgian Lottery Company LLC BGI Advisory Services Georgia Mina JSC 34 Chavchavadze Ave. 4 Besiki St. 18 Rustaveli Ave., II fl . Tel: 2649649 Tel: 2997292; Fax: 2996615 Tel: 2449981/82/83; Fax: 2449980 NON PROFIT ORGANIZATIONS www.georgianlottery.com www.mina.com.ge www.bgi.ge American Friends of Georgia Globalink Logistics Group BLC Law Offi ce Navigator Ltd Publishing House 77 Nutsubidze St. 14-A Shartava St, 2nd fl , Suite 7 4 Gudiashvili Sq. 34 Anton Katalikosi St. Tel: 2397174; Fax: 2388495 Tel: 2253262; Fax: 2439002 Tel: 2922491; Fax: 2934526 Tel: 2923615 www.afgeorgia.org www.globalinkllc.com www.blc.ge www.navigator.ge East West Management Institute, Casino Adjara Goodwill Inc (EWMI) 1 Parnavaz Mepe Ave. 0131 New School - Int-l House 1, 26 May Sq. 35 Tskneti Highway, Bagebi 3rd Floor , 5 Marjanishvili St. Tel: 2335519; Fax: 2334520 Tel: 2243673; Fax: 2243673 Tel: 2505404; Fax: 2202441 www.goodwill.ge Tel: 2231728 www.casinoadjara.com www.newschoolgeorgia.com www.ewmi-gpac.org CaucasTransExpress Gosselin Georgia The Eurasia Partnership 10a Tashkent St. 0160 3 M/D, Didi Digomi Orifl ame Georgia Foundation Tel: 2375715 Tel: 2596601/02/03; Fax: 2596600 57 Uznadze St. 29/31/33 Chavchavadze Ave., www.cte.ge www.gosselingroup.eu Tel: 2911064; Fax: 2911068 2nd Floor, 0179 www.orifl ame.ge Tel: 2253942; Fax 2252763 (ext. 112) Caucasus Online LLC Gvinadze & Partners LLC www.epfound.org 71 Vaja-Pshavela Ave. 44 Leselidze St, Tbilisi 0155 Overall Management Group Tel: 2480048; Fax: 2480048 Tel: 2235683, Fax: 2438971 (OMG) Inc. Foundation - Centre for Training www.caucasus.net www.gvinadzeandpartners.ge 12 M. Javakhishvili St. and Consultancy Tel: 2436052; Fax: 2436052 Château Mukhrani, J.S.C. Holiday Inn 34 Al. Kazbegi Ave., Plot #3, 0177 Tel: 2206774 III fl oor, Didube Plaza, 1, 26 May Sq., 0171 Publicis Hepta www.ctc.org.ge 116 Tsereteli Ave. Tel: 2300099 17 V. Jorbenadze St. Tel: 2201878; Fax: 2201878; www.hi-tbilisi.com Tel: 2745672; Fax: 2745671 Georgian Wine Association www.mukhrani.com HRG Georgia “Sky Travel LLC” www.publicishepta.com 5 Marjanishvili St. Citadines Apart’Hotel Tel: 2505456 Meidan palace Business Center, Rakeen Development LLC 4 Freedom Sq. 0105 44 Kote Apkhazi St. 2 Baratashvili St. 0105 International Relief and Tel: 2547030; Fax: 2547040 Tel: 2438958 Tel: 2933393; Fax: 2933993 Development Inc. www.citadines.com/en/georgia/tbilisi/ www.hrgworldwide.com www.rakeen.ge 66 Paliashvili St. freedom_square.html Intourist Palace Hotel Tel: 2250106; Fax: 2224837 Development Solutions LLC Rentals Ltd. 11 Ninoshvili St., Batumi International School of 37 Rustaveli Ave. 46 Rustaveli Ave. Tel: 422-75525, Fax: 422-76606 Economics at TSU Tel: 2241555; Fax: 2241552 Tel: 2454566 www.intouristpalace.com 16 Zandukeli St. www.ds.com.ge www.rentals.ge Ioli Supermarket Tel: 2507177; Fax: 2984815 Dika Ltd. 13 Abuseridze-Tbeli St. Rompetrol Georgia Ltd. www.iset.ge 40 Rustaveli Ave. Tel: 2745053 39 Navtlugi St. QSI International School of Tel: 2990994; Fax: 2990994 www.gastronomia.ge Tel: 2910727; Fax: 2910763 Georgia Donut Stop Cafe www.rompetrol.com Village Zurgovani, Tbilisi JTI Caucasus 10/12 Abashidze St. Tel: 2537670; Fax: 2322607 15 Kipshidze St. Tel: 2251466; Fax: 2999252 www.qsi.org Tel: 2604111 Silknet Ltd. 95 Tsinamdzgvrishvili St. Dutch Design Garden www.jti.com Save the Children Federation Tel: 2910345; 20 km, Agmashenebeli Alley Inc. Georgia Country Offi ce www.silknet.com Tel: 2530779 Kor-Standard Bank JSC 20 Gotua St. www.dutchdesigngarden.com 43 Chavchavadze Ave. Statoil Azerbaijan AS Tel: 2244520 Tel: 2507700, Fax: 2507707 Education and Training 96 The Landmark Building, Nizami www.savechildren.org International Ltd. Kutaisi Free Zone, Georgian Street, Baku AZ 1010. The Salvation Army 4 Kuchishvili St. Int-l Holding Ltd Tel: +994 (50) 2168981; Fax: +994 16 Ikalto St. Tel: 2250945; Fax: 2250945 6 Shio Mgvimeli St. (12) 4977 340 Tel: 2333786; Fax: 2330227 www.educatrain.ge Tel: 2232997, Fax: 2232997 www.statoil.com www.salvationarmy.org

DEC.-JAN. 2011/12 53 SOCIAL PAGE

More than 350 participants from eighteen countries participated in the three-day Fourth regional Georgian Cyber and ICT Innovation Conference on November 17-19, an annual event that focuses on sharing IT best practices in public and private sectors. Award winners included: The Civil Registry Agency the Ministry of Justice of Georgia; AzRy LLC; SouthTech Consulting, Inc., Branch of Armenia; CHS Vericel Service; Armenian Software LLC; Algorithm; A-LIVE Ltd.; Ministry of Justice of Georgia; Ministry of Labour, Health and Social Affairs of Georgia; The State Revenue Committee of the Government of the Republic of Armenia; The Georgian National Agency of Public Registry; Armenian ICT Industry Association was given the award for the Distinguished Partner of GITI. The master of ceremony of the GITI Awards 2011 for the fourth year in a row was Keti Sidamonidze from the American Chamber of Commerce in Georgia.

KPMG celebrated its 10th anniversary in Georgia with a reception at the Rustaveli Theater Ballroom on December 6.

54 DEC.-JAN. 2011/12 SOCIAL PAGE

On December 2-4 Tbilisi International Players Foundation presented “Sleeping Beauty” Panto by Richard Lovelock in English at the Tbilisi Kote Marjanishvili Drama Theatre. It was the third annual Panto performance. Traditionally revenue from performances goes to children’s charity. This initiative is supported by TBSC consulting, Radisson, Natakhtari, KPMG, McDonalds, Microsoft, AmCham Georgia, Gosselin Moving Georgia, Georgian American University (GAU) and Dutch Design Garden.

“Clothing Others Against the Snow’’ distributed coats to approximately 200 children during its second annual event on November 12 at the Radisson Blue Iveria Surface Bar. Children from Tbilisi Children’s Crisis Center and the Child and Environment Centers – Sapovnela in Rustavi, Tsisartkela and Begurebi in Tbilisi attended the event. Student- volunteers from New School International School of Georgia, QSI, American Academy, Ecole Fransise du Caucase, and the Robert Schuman European School helped children pick out clothes and coats.

Surplus clothing is distributed to others in need by the Salvation Army, MAC (McClain Association for Children), and Maya Frank- Hennig of the German Embassy via EUMM.

DEC.-JAN. 2011/12 55 SOCIAL PAGE

“Chateau Mukhrani” and “TBC Bank” organized traditional harvest celebration in Mukhrani village, hosted by Mr. Mamuka Khazaradze, the owner of TBC bank, on 15th of October .

Diplomats and the representatives of foreign companies attended the celebration. They had chance to experience Georgian style vintage and for those who wished – there was also an opportunity to ride a horse. The guests were offered to taste unique Georgian wine from Château Mukhrani.

56 DEC.-JAN. 2011/12 SOCIAL PAGE Around two hundred American citizens came to the US Embassy to meet with the Embassy staff and various service providers during the Third Annual American Citizens’ Information Night that took place on November 10. The event was co-hosted by AmCham Georgia.

AmCham Georgia and the US Embassy are grateful to the generous sponsors of the event who provided snacks and drinks for the event: Borjomi, Chateau Mukhrani, McDonalds, Natakhtari, Pepsi, and Texas Chicken.

Dutch Design Gardens held its annual holiday open house on November 27.

DEC.-JAN. 2011/12 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.

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