Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Copy Public Disclosure Copy I. Concept ReviewDecision Estimated DateofBoardApproval Estimated DateofAppraisalCompletion Date PIDPrepared Environmental Category Implementing Agency Borrower(s) Project ID Lending Instrument Sector(s) Country Region Project Name Introduction andContext Sectoral andInstitutionalContext impediments needtobeovercome. in .TheESWwillidentifythetargetedoutcomes terms offutureeconomicgrowth,whatneedstobedoneand intervention willlikelyfocusonagriculture,benefittingfrom a plannedESWtoprovideroadmapsupportregionaldevelopment will focusonsupportforthetourismsectorandenabling environmentfortheprivatesectortoinvestinKakheti.Afollowup interventions willemphasizetourismandagricultureastwo keypillarsanddriversofeconomicgrowth.Theproposedinitialproject Bank tosupportregionaldevelopmentinKakhetibyapplyingaverticalprogrammaticapproach.Theproposedprogram of In theframeworkofCPS-PRforperiodFY12-FY13presentedtoBoardinApril2011,Governmenthas askedthe needed foragrowingeconomyandincreasedproductivity. chains forbothexportandimportsubstitution.Thereisalsoaneedskillsdevelopmentinordertoprovidetheskilled labor sustainable tourisminpromisingregions,suchasKakheti,ortransformtheruraleconomythroughinvestmentagriculture supply regions (,AdjaraandImereti)onvarioussectors.,however,hasnotyetfullytappeditspotentialtopromote The Governmentrefocusedeffortsinthepastsixyearsbylaunchingseveralinitiativestoattractprivateinvestorsselected stimulus package. fiscal, monetaryanddebtmanagementpolicies.InfrastructureprojectsareconsideredbytheGovernmentaspartof physical to refinanceapublicdebtamortizationspikein2013.Theauthoritiesareaddressingthesevulnerabilitiesthroughwell designed adjustment tosafeguardsustainability.Thereis,however,uncertaintyregardingthepaceofeconomicrecovery.Georgia willneed takes hold,drivenbyhigherexportsandprivateinvestment,theauthoritiesarewindingdownstimulusimplementing fiscal coupled withamarkedreallocationofpublicexpenditurestowardsocialandinfrastructureinvestments.Aseconomic recovery growth ofanestimated6.3percentin2010.Theauthoritiesrespondedtothedownturnwithacountercyclicalfiscalstimulus economic downturnresultingfromtheAugust2008conflictandglobalfinancialcrisis.Economicrecoveryisunderway, with Following fouryearsofrapidgrowth,backedbyfar-reachingreformsandstrongFDIinflows,Georgiaexperiencedasharp Country Context 31-Jan-2012 Track II-Thereviewdidauthorizethepreparationtocontinue 20-Mar-2012 02-Nov-2011 F-Financial IntermediaryAssessment Georgia MunicipalDevelopmentFund Ministry ofFinance P126033 Specific InvestmentLoan government administration(8%),Vocationaltraining(2%) General water,sanitationandfloodprotectionsector(60%),UrbanTransport(30%),Sub-national Georgia ANDCENTRALASIA REGIONAL DEVELOPMENTPROJECT(P126033) PROJECT INFORMATIONDOCUMENT(PID) CONCEPT STAGE Report No.:PIDC82 Public Disclosure Copy Public Disclosure Copy development; improvedvisitorservices,signageandinterpretation; andmarketingactivities. and office);institutionalstrengtheningcapacitybuilding; association/clusterdevelopment;geotourismmappingandtourcircuit improvement toattractprivatesectorinvestments;improved planningandorganization(e.g.destinationmanagement Development ofthetourismvisionandproposedtwoleisure travelclusterswillrequire,ataminimum:infrastructure kayaking) andhard(mountaineering,paragliding,heli-skiing) adventure. primary focusshouldbeonproductandcircuitdevelopment, marketing,andtraining,forbothsoft(hiking,birding,trekking,skiing, market tendstobeyounger(25-45) andlowerspending,whichmorecloselyfitstheprofile ofcurrentvisitorstotheregion.The - Ecotourism/AdventureCluster: Stunninglandscapes,pristine,naturalandprotectedareas. Thedemographicprofileforthis branding, marketing,eventsand improvedfacilitiesandservicesshouldbetheprimaryfocus. have higherlevelsofdisposable income,education,andtimeforleisuretravelthanthecurrent markettoKakheti.Packaging, experience livingculture(music, art,dance,culinarycuisine).Themarketforthiscluster tendstoskewabitolder(45-65)and - Culturalheritage/winetourism cluster:Defineandlandscapecircuitstovisitwineries,spectacular monuments,monasteries,and revitalize local business activity,developafull-fledged regionaltourismcircuit, andfostertwoleisuretravel clusters: centers ofattraction (cityofTelavi,Kvareliand heritagevillageofDartlo). These willattractprivateinvestments, promotePPP, integrated approach,using thegeotourism andapplying verticalapproach toacomprehensive urban regeneration effortinkey focusing onquality(tourist spending) ratherthanquantity (touristarrivals). Success oftourismwill dependonthe useofan throughout the year through attracting domestic and international tourists; building on its cultural heritage and biodiversity; and The proposed tourism development vision forthe region envisages developing Kakheti as ahigh quality geotourism destination - edge; and - - - - ); - coming fromfairlylowspending marketsandcomingforbusinessortovisitfriends relatives (VFR); - The tourismvalue-chainanalysisrevealshugedevelopment potentials,butalsosomekeychallenges: to invest$50mduringtheperiod2012-2016,whichcanmultiply suchagrowthestimate. $10m in2012canincreaseVAgrowthratefrom5.4%to7.2%, inrealterms,thesameyear.Theproposedprojectisenvisaged of theproposedinvestmentswithsectoralbreakdowns.Asimple analysisofgrowthshowsthatanincreaseinvestmentbyabout thinking regardingfuturedevelopmentofKakheticanbeorganized. Thiswillincludeananalysisofthegrowth/employmentimpact Planned economicanalysisduringpreparationofthisProject willaimatprovidinganoverarchingframeworkwithinwhichpolicy have becomerecentlyanimportantgrowthdriverinKakheti. administration isstillplayingthedominantrole.However,service sectorsofhigherproductivity,suchashotelsandrestaurants, productive thanelsewhere.Services,includingtourism,generate about60percentofthevalueaddedinKakheti,whilepublic though decliningintermsofcontributiontoGDPandemployment,stillrepresentsalargeparttheeconomyremains less density inKakhetiisaboutGEL74,000/kmcomparedtoGEL409,000Adjaraand52mTbilisi.Theroleofagriculture, Kakheti, incontrasttosomeotherGeorgianregions,hasnotyetundergoneimportanttransformationofitseconomy. Economic historical stands,wherehouseholdsstillmaintaintheirculturalendowmentsandpatternoflife. for itsmagnificentlandscape.ThetwohistoricalvillagesinTusheti:,andOmalo,areveryuniquefromarchitectural and south. Tushetihasmaintaineduniquemonumentsofculturalheritage,traditionsandceremonies.isparticularly outstanding Kakheti isalsohomeofthreemagnificentprotectedareas,Tushetiinthenorth,LagodekhicenterandVashlovani inthe andSignagivalleys,whileseveralfoodprocessingplantsarelocatedinTelavi,,,. region withuniquearchitecture.Kakhetiisalsoknownasthecradleofvineandwine.Thevineyardscoverbestpart ofthe Greek scholarPtolemy(IIcenturyAD).SignagiandKvareliaretheothermostimportantculturaleconomiccenters ofthe The ancientcityofTelaviisthecapitalKakheti,culturalandeconomiccenter.firstrecordsaboutarefound withthe Cathedral (11thcenturyAD),BodbeMonastery(9-11thGremiArchangelComplex(16th AD),etc. Caved Monastery(6thcenturyAD),OldShuamtaBasilica(5-6thNinoTsmindaCitadel(7th Alaverdi Road. ItishomeofseveralancientanduniquemonumentsinGeorgia:NekresiChurchRemnants(4thcenturyAD),Davit Gareja as aregionofancientculture.TheStoneAgeresidenceshavebeendetectedthere.KakhetiwasonthecrossGreat Silk Kakheti hasalwaysbeenoneofthemostimportantplayersinhistoryandeconomyGeorgia.isrecognized worldwide region isweaklyurbanized,withabout21%ofpopulationlivingincites. kmgross density,comparedto75persons/kmGeorgiaaverage,mostlylivinginthemiddletwovalleysofAlazaniand Signagi. The making itthefourthlargestregion.Duetohighmountainsinnorthandsouth,Kakhetiissparselypopulated,with35 persons/ municipalities/local self-governmen inadequate skillsandforeign languages proficiency. lack ofinvestor informationexchange,communication andcooperationbetween keyinvestorstoachieve acompetitive seasonality, particularly inthewinter; limited hotelcapacity; low qualitymunicipalinfrastructure (water,sanitation,accessroadsandsolidwastedisposal); need forurbanregenerationand improvequalityofmunicipalinfrastructureinkeycultural centers(,Kvareli,and while thenumberofovernight visitorstothecountryisgrowingrapidly,atnearly20percent peryear,thevastmajorityare Public Disclosure Copy Public Disclosure Copy III. II. Proposed DevelopmentObjective(s) - - - - Transformationof3keycenterseconomicactivities. The keyresultsexpectedfromtheprojectareto: Key Results - Enablingtheenvironmenttoattractprivatesectorinvestments. - Supportingthetourismdevelopment;and - Improvingthequalityandreliabilityofmunicipalinfrastructure; population's andprivatesector'saccesstomunicipalservicesinfrastructure.Thiswillbeachievedthrough: The ProjectDevelopmentObjectiveistoincreasetourismintheKakhetiregion.Indoingso,projectwill local Proposed DevelopmentObjective(s) Concept Description Preliminary Description at thebottom.MoreIFCinvestmentsareenvisagedtocomeunderprogram. financial servicesprovider,toexpandtheirproductofferinginKakheti.ThishasputKakhetiatthetopofprioritylist, ratherthan crushing facilitynearKvareli.TheIFChasalsoprovideda$400,000performancebasedgranttoMobyPay,fastgrowing mobile IFC hasprepareda$2.0minvestmentinTbilvinocompany,whichwillhelpsupporttheconstructionofgrapecollectingand state budget.Undersuchaframework,SIDAhasagreedprovisionallytoco-financethisprojectintheamountof$8.0m,while The programisviewedbythegovernmentasacatalyst,leveragingadditionalfinancialresourcesfromdonoragencies,IFCand facilitated andhostedbytheWorldBankTbilisiOffice. Regular meetingsarealsoheldwiththePrimeMinister.Meantime,MinistryofFinanceisleadingdonorcoordinationeffort, the Bankteamduringidentificationandpreparation,whichincludesallMinistersconcernedaswellGovernorofKakheti. There isaverystrongclientownershipoftheprogram.Asteeringcommitteehasbeenestablishedtoactascounterpartweight approaches; andcomparativeadvantagesfortourismdevelopment. regeneration ofSignagi,andinfrastructure;moderatelysizedpopulatedregion,suitableforpilotingnewverticaldevelopment Secondary andLocalRoadProjects;significantpublicprivateinvestmentsalreadybeingmadeinnewattractions,e.g.urban of Tbilisihinterland)withreasonablygoodexternalandinternalconnectivityduetotheBankfinancedEast-Westhighway impact potential,especiallyintourismandagriculture,whichareprioritygrowthsectorsforthegovernment;proximitytoTbilisi(part The rationaleforBankinvolvementlieswithinthelargeopportunitiesKakhetisuccessduetofollowingreasons:Largest Report, presentedtotheBoardinApril2011. growth andcreatejobs,Improvesocialservices,Acceleratebusinessgrowth.TheprogramisincludedintheCPSProgress FY10-FY13 approvedbytheBoardinSeptember2009.TheprogramsupportsfollowingCPSResults:Preserveeconomic The proposedregionaldevelopmentprogramsupportsbothpillarsoftheCountryPartnershipStrategyforGeorgiaperiod Relationship toCAS Increase realdomesticandinternationaltourismspendingby20%. Increase tourismarrivalby20%. Increase numberofprivatesectorinvestments(economicdensity)by20%. Public Disclosure Copy Public Disclosure Copy IV. Safeguard Policiesthatmightapply - - - information exchangeactivities; - - - other localandregionalentitiestocarryoutthefollowingactivities: Enhancing theinstitutionalcapacityandperformanceofGeorgiaNationalTourismAgency,ProjectImplementing Entityand Component 2:InstitutionalDevelopment(WB5.0m;Borrower:$2.5m) restaurants andcafes. - - , Shuamta(newandold),Ikalto,Ujarma; - protected areas; - - The followingarepossibleareasforprivatesectorinvestmentsinthetourismbasedonvaluechainanalysis: free tourismzoneforlargeresortinvestmentaroundthelakebetweenDavidGarejiandVashlovani. infrastructure, andpossiblecreditprovidedbyIFCtoaselectednumberofinvestmentsthatpassthestandardcriteria. Also in Kakheti,includingtransparentandcompetitiveselection,streamlinedbusinessstartupprocedures,provisionofpublic similar project(s)inGeorgiaorworldwide.Apackageofincentiveswillbeprovidedtodomesticandinternationalinvestors tolocate jobs tobecreated,timestartoperation,governanceandfinancialhealthofthecompany,successfulexperience inpast Prime Ministerwillselectinvestorsbasedonthefollowingfivevaluationcriteria:economicviabilityofproposedproject,number Private sectorinvestmentswillbeselectedcompetitivelyusingaCallforInvestmentProposalmethod.Acommitteechairedby investments intourismandfoodprocessing. Component 1.2:Provisionoffinancialresourcestolocalself-governmentsprovidepublicinfrastructureprivatesector prepared byGiZ. - RehabilitationofaregionalTelavi-Akhmetasolidwastelandfillandcollectionsystem.Thetechnicalstudytheisalready culture heritage,nature/protectedareas,winetourismandadventure,thusincreasenightstaysinKakheti. Kvareli-Nekrsi; c)Telavi--Dartlo;andd)Dedoplistskaro-Vashlovani.Thesecircuitscombinerichvariedexperienceof info kiosk,cafe,andpublictoilet.Fourmaincircuits:a)goldenpathfromUjarma-Shuamta-Ikalto-Telavi-Alaverdi,b)Signagi-Bodbe- - Tourismcircuitsdevelopment:Integratedrevitalization,includingroadrehabilitation/safetymeasure,urbanlandscaping,parking, revitalize infrastructureandattractincreasedvolumeofprivatesectorinvestmentsintourismfoodprocessing. which willhelpimproveurbanhabitatandhospitalityinaculturally-informedmanner,enhanceattractivenessforvisitors, - Urbanregeneration:IntegratedapproachtourbantransformationofTelavi,Kvareli,andDartlo(heritagevillagerevitalization), activities: Component 1.1:Provisionoffinancialresourcestolocal-selfgovernmentscarryoutInvestmentSubprojectsforthefollowing Component 1:InfrastructureInvestment(WB:$45m;Borrower:$10m;SIDA:$8m) infrastructure toeconomicandenablingtheenvironmentforprivatesectorinvestments. and disbursementarrangements.TheProjectiscomprisedofthesametwocomponents,butwithashiftinactivitiesfromsocial Development Projectisarepeaterinthesenseofimplementationarrangements,procurement,safeguards,financialmanagement Building onthesuccessfulexperienceofRegionalandMunicipalINfrastructureDevelopmentProject(RMIDP), Projects onInternational WatersOP/BP7.50 Safety ofDamsOP/BP4.37 Involuntary ResettlementOP/BP 4.12 Indigenous PeoplesOP/BP4.10 Physical CulturalResourcesOP/BP 4.11 Pest ManagementOP4.09 Forests OP/BP4.36 Natural HabitatsOP/BP4.04 Environmental AssessmentOP/BP4.01 Safeguard PoliciesTriggeredbytheProject Construction supervisionandmonitoring&evaluationactivities. Preparation offeasibilitystudiesandengineeringdesigns; and Provision oftraining,artisanandskillsdevelopment; Establishment ofDestinationManagementOfficeineachvisitorcentertocarryourpromotional,branding,PPPand Rehabilitation ofvisitorcentersinTelavi,Tusheti,Kvareli,andSignagi; Production ofKakhetitourismcircuitsandgeotourismmaps; Culture andcuisineentrainment,especiallyinSignagi,Telavi,Kvareli,Tusheti:folkdanceclubs,artgalleries,culinary Ikalto Academy:revivalofitsarchaeologicalsite,famousforqvevriwineandculturalheritage; Ujarma-Alaverdy GoldenPath:tripcircuits,cafes,souvenirshops,oldvillagereplicainthegoldenpath:Alaverdi,, Boutique hotels:vernaculararchitecturelodgingaroundthe4circuitsandinbufferzoneofTushetiLagodekhi Free TourismZoneintheunder-utilizedstripfromDavidGarejitoVashlovaniprotectedareas,including2lakes; Yes ✖ ✖ ✖ No ✖ ✖ ✖ ✖ ✖ TBD ✖ Public Disclosure Copy Public Disclosure Copy VII. VI. V. Email: Tel: Title: Contact: Name: Implementing Agencies Email: Tel: Title: Contact: Name: Borrower/Client/Recipient Email: Tel: Title: Contact: Web: http://www.worldbank.org/infoshop Fax: (202)522-1500 Telephone: (202)458-4500 Washington, D.C.20433 1818 HStreet,NW The WorldBank The InfoShop For moreinformationcontact: World Bank Contact point Tentative financing Financing Source Projects inDisputedAreasOP/BP7.60 Total SWEDEN SwedishIntl.Dev.CooperationAgency(SIDA) International BankforReconstructionandDevelopment Borrower [email protected] 995-32-484509101115306 Executive Director Mr.Levan Chichinadze Georgia MunicipalDevelopmentFund [email protected] (995-32) 446-447 Minister Mr. DimitriGvindadze Ministry ofFinance [email protected] 995-32-291-3 Country SectorCoordinator Ahmed A.R.Eiweida Amount 70.50 50.00 12.50 8.00 ✖