CASPIAN SEA GAS HEADS TO GEORGIAN BANKS EYE GEORGIAN CHATBOTS EUROPE THROUGH GEORGIA INTERNATIONAL WEALTH MANAGEMENT

Investor.geA Magazine Of The American Chamber Of Commerce In Georgia ISSUE 64 AUG.-SEP. 2018

Georgian Wine’s New Frontier   LAW PRACTICE

‘†‹ƒǡ”—ƒ•Š˜‹Ž‹ƒ†ƒ”–‡”•‹•ƒŠ‹‰ŠŽ›”‡‰ƒ”†‡†ˆ—ŽŽǦ•‡”˜‹ ‡Žƒ™ϐ‹”„ƒ•‡†‹ ‡‘”‰‹ƒǤ‹–Š‹‹–•’”ƒ –‹ ‡ǡ‹–Šƒ• †‡˜‡Ž‘’‡†ƒ•’‡ ‹ƒŽ‹•‡†–‡ƒ†‡†‹ ƒ–‡†‡š Ž—•‹˜‡Ž›–‘ ‘•–”— –‹‘Žƒ™’”ƒ –‹ ‡ǤŠ‡ϐ‹”‹•ƒ –‹˜‡Ž›‹˜‘Ž˜‡†‹–Š‡ƒŒ‘” ‹ˆ”ƒ•–”— –—”‡ǡ‡‡”‰›ǡŠ‘•’‹–ƒŽ‹–›ƒ†‘–Š‡”’”‘Œ‡ –•ƒ†ǡƒ•ƒ”‡•—Ž–ǡŠƒ˜‡ ‘•‘Ž‹†ƒ–‡†‹–•’‘•‹–‹‘ƒ•ƒŽ‡ƒ†‹‰ϐ‹”‹–Š‡ ‘•–”— –‹‘ϐ‹‡Ž†Ǥ

጖ ‡ƒ†˜‹ ‡‘–Š‡ƒŒ‘”‹ˆ”ƒ•–”— –—”‡’”‘Œ‡ –• ጖ ‡Šƒ˜‡ƒ•’‡ ‹ƒŽ‹œ‡†–‡ƒ†‡†‹ ƒ–‡†‡š Ž—•‹˜‡Ž›–‘ ‘•–”— –‹‘Žƒ™’”ƒ –‹ ‡ ጖ ‡ƒ”‡™‡ŽŽǦ‘™ˆ‘”‘—”—‹“—‡‡š’‡”–‹•‡‘ ‘–”ƒ –‹‘ ‘–”ƒ –•ƒ† ‘•–”— –‹‘†‹•’—–‡• ‘ ‘•–”— –‹‘ ‘–”ƒ –•ƒ† ‘•–”— –‹‘†‹•’—–‡•Ǥ ጖ ‡Šƒ˜‡•’‡ ‹ƒŽ‹•–‘™Ž‡†‰‡‘ˆ   ‘”•ǡ•‘• ƒ” ‡‘ ‡‘”‰‹ƒƒ”‡–Ǥ ጖ ‡Šƒ˜‡ƒ†‡ƒ‘ˆˆ‹ ‹ƒŽ–”ƒ•Žƒ–‹‘‘ˆ  ‘†‹–‹‘•‘ˆ‘–”ƒ –ˆ‘” ‘•–”— –‹‘ሺ ‹”•–†‹–‹‘ ͳͻͻͻሻˆ‘”„—‹Ž†‹‰ƒ†‡‰‹‡‡”‹‰™‘”•†‡•‹‰‡†„›’Ž‘›‡”ሺ  ‡†‘‘ሻ–‘ ‡‘”‰‹ƒ ƒ‰—ƒ‰‡ ጖ ‡’Žƒ›ƒ –‹˜‡”‘Ž‡‹‹†—•–”›„‘†‹‡•Ǥ‡ƒ”‡’ƒ”–‘ˆZPVS‹†—•–”› ጖ ‡ƒ”‡ƒ†˜ƒ ‡†„›‹–‡”ƒ–‹‘ƒŽƒ”‡–‡š’‡”–‹•‡ ጖ ‡–‡ƒ—’™‹–Š‹–‡”ƒ–‹‘ƒŽˆ‹”•–‘‘ˆˆ‡”•’‡ ‹ƒŽ‹•–‹–‡”ƒ–‹‘ƒŽ ‘•–”— –‹‘Žƒ™ƒ†˜‹ ‡ƒ† ”‡’”‡•‡–ƒ–‹‘ ጖ ‡‘ˆˆ‡”›‘— ‘•–”— –‹‘Žƒ™‡š’‡”–‹•‡•—’’‘”–‡†„›–Š‡”‡•‘—” ‡•‘ˆƒˆ—ŽŽǦ•‡”˜‹ ‡Žƒ™ˆ‹” ጖ ‡—†‡”•–ƒ†–Šƒ––Š‡„‡•–™ƒ›–‘”‡•‘Ž˜‡†‹•’—–‡•‹•–‘‡‰‘–‹ƒ–‡Ǥ‡Š‡Ž’ƒ˜‘‹††‹•’—–‡• ጖ ‡ƒ”‡•’‡ ‹ƒŽ‹œ‡†‹†‹•’—–‡”‡•‘Ž—–‹‘ƒ†ƒ –ˆ‘”›‘—” Ž‹‡–•ƒ–†‹•’—–‡„‘ƒ”†•ǡƒ”„‹–”ƒ–‹‘ƒ† ‘—”–•

ontact us: ƒ†—a K‘Š”‡‹†œ‡, Pƒ”–‡” †ƒ†—ƒ̷’Žƒ™Ǥ‰‡ ˆϐ‹ ‡ʹͺǡ Ž‘‘”ͶǡŽ‘ Ͷǡ͹ͳƒœŠƒǦ•Šƒ˜‡Žƒ˜‡Ǥ „‹Ž‹•‹ǡͲͳͺ͸ǡ ‡‘”‰‹ƒ Š‘‡ǣΪͻͻͷ͵ʹʹʹͲ͹ͶͲ͹ AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 3 Investor.ge CONTENT 6 Investment News

10 Investor Spotlight Investor.ge is starting a column on new investments and investors to the country.

11 Innovators and Disruptors: Ideas to Bring Change Georgian entrepreneurs are pushing the country’s development forward. This column is about how Georgia’s best and brightest are challenging the limits of technology and the market to create the businesses that will change our lives today and shape our future.

11 14 The Best Minds In The Business: Famous Economists Weigh In On Georgia

16 New PM Overhauls Economic Team

18 Georgia in Mid-2018: A Positive Economic Trend Continues

20 Georgian Households: Positive Long- Term Trends, Though Poverty Remains

22 Georgian Banks Eye International Wealth Management

26 Southern Gas Corridor: Delivery of Caspian Sea Gas to Europe through Georgia

30 Georgian Wines on Mars? A New Initiative to 26 Grow Grapes in Space 32 Bank of Georgia Demerger: An interview with CEO Kaha Kiknavelidze

33 Georgia’s Tobacco Gambit

36 Reuse, Reduce, Recycle: Georgian Businesses Making a Difference

39 Off the Beaten Path: Georgia’s Untapped Potential for Agrotourism

43 Tasting Georgia: An Interview with Award- Winning Author Carla Capalbo

46 NEWS ...... 46

4 | Investor.ge ‡ AUGUST-SEPTEMBER 2018                 

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AUGUST-SEPTEMBERAUGUST-SEPTEMBER 20182018 ‡ Investor.geInvestor.ge | 5 GEORGIA 17TH HIGHEST ing 17th place; Singapore was the most INVESTMENT COUNTRY FOR SAFETY secure country according to the survey. Georgia ranked in the top 20 out of 142 countries for security, according to a GEORGIA, HONG KONG SIGN NEWS poll by the American research company FREE TRADE AGREEMENT Gallup, agenda.ge reported on June 29. Georgia and Hong Kong signed The survey, known as the Law and a Free Trade Agreement on June 28, Order Index, uses four questions to agenda.ge reported the same day. INVESTOR.GE PROVIDES evaluate locals’ “sense of personal secu- Under the agreement, Georgia will A BRIEF UPDATE rity and their personal experiences with remove 96.6 percent of its tariff lines on ON INVESTMENTS crime and law enforcement,” according products from Hong Kong, the article AND CHANGES IN to the report. said. GOVERNMENT POLICY The questions are: In the city or area The article quoted Secretary for THAT COULD IMPACT THE ZKHUH\RXOLYHGR\RXKDYHFRQ¿GHQFH Commerce and Economic Development BUSINESS ENVIRONMENT. in the local police force?; Do you feel of Hong Kong Edward Yau as saying THE INFORMATION IN safe walking alone at night in the city or WKLVZDVWKH¿UVWIUHHWUDGHDJUHHPHQW THIS ISSUE WAS TAKEN area where you live?; Within the last 12 between Hong Kong and any country in FROM AGENDA.GE, months, have you had money or property the Caucasus. A GOVERNMENT- stolen from you or another household SUPPORTED WEBSITE, AND member?; Within the past 12 months, GEORGIA, CHINA START JOINT OTHER SOURCES. have you been assaulted or mugged? FILM PRODUCTION Georgia received a score of 87, rank- A memorandum of understanding has

ADVERTISEMENT New Associate Partner Announcement at EY Georgia EY Georgia is pleased to announce that, effective 1 July 2018, we welcome George Svanadze as an Associate Partner who is taking a leading role in further growth of our EY Law practice and building a better working world. The promotion recognizes George’s contribution to our law practice and d emonstrates our ambition to be the leader in the Georgian legal market.

Assigned to/from Georgia and wondering if you have any personal income or other tax liabilities in your host/home country? The EY Georgia Global Immigration and Expatriate Tax Services team will <]l]jeaf]qgmjlYphgkalagf^jgel`]dg[YdYf\afl]jfYlagfYdlYpdYoklYf\hgaflk3]fljq']pallYpZja]Õf_k 9\nak]gfl`]lYpaehda[Ylagfkj]dYl]\lgqgmjljYfk^]jlg'^jge?]gj_aY 9kkakloal`lYpj]_akljYlagfaf?]gj_aY =fkmj]^mddlYp[gehdaYf[]Yf\Ykkakloal`hj]hYjYlagfg^l`]YffmYdlYpj]lmjf 9kkakloal`gZlYafaf_f][]kkYjq\g[me]flk^jgel`]klYl]lYpYml`gjala]k ]&_&YlYp[d]YjYf[][]jlaÕ[Yl] on the taxes paid in Georgia to avoid double taxation, wherever applicable) Hjgna\]j]_mdYjmh\Yl]kgflYpdYo[`Yf_]kl`YleYqY^^][lqgmjafl]jfYlagfYdegZadalqhjg_jYe 9kkakloal`gZlYafaf_l`]j]imaj]\lqh]g^nakY 9kkakloal`gZlYafaf_']pl]f\af_ogjcj]ka\]f[]h]jealk^gjqgmYf\qgmj^Yeadqe]eZ]jk3

We also assist companies in developing international assignment tax policies that align closely with the organization’s business activities, are cost-effective and help to mitigate tax risks.

Contact us: Tina Kachakhidze Miranda Morchadze Tax & Law Practice People Advisory Services Tel: +995 (32) 215 88 11 (ext. 2112) Tel: + 995 (32) 215 88 11 (ext. 2231) [email protected] [email protected] EHHQVLJQHGEHWZHHQ*HRUJLDDQG&KLQDWRERRVWWLHVLQWKH¿OP industry, agenda.ge reporting on June 25. The memorandum was signed during the 2018 Shanghai International Film Festival, the article said. 7KH¿UVW*HRUJLDQ&KLQHVH¿OPZDVDOVRDJUHHGWRGXULQJ WKH¿OPIHVWLYDOWKH¿OPZLOOWHOOWKHVWRU\DERXWKRZWZR &KLQHVHPHQ¿UVWEURXJKWWHDWR*HRUJLD A Chinese television show, The Mask, is also currently being ¿OPHGLQ*HRUJLDDFFRUGLQJWRWKHDUWLFOH

NEW HIGHWAY BYPASS OPENS NEAR BLACK SEA RESORT A new 18-kilometer road was opened by Prime Minister Mamuka Bakhtadze on June 25, agenda.ge reported the same day. 7KHQHZURDGZLOOUHGXFHWUDI¿FRQWKHFRDVWDOURDGWKDW travels through the popular Black Sea resort of Kobuleti. It will also shorten the driving distance from the capital Tbilisi to the Black Sea port city of Batumi by an estimated 20 to 30 minutes. 7KHURDG¶VFRQVWUXFWLRQZDV¿QDQFHGE\WKH$VLDQ'HYHO- opment Bank.

GEORGIA’S ECONOMY GROWS 6.1 PERCENT IN FIRST HALF OF YEAR The Georgia economy has grown 6.1 percent from January through May, agenda.ge reported on June 29, quoting GeoStat, WKHQDWLRQDOVWDWLVWLFVRI¿FH 6HFWRUVWKDWSRVWHGWKHKLJKHVWJURZWKGXULQJWKH¿YHPRQWK SHULRGLQFOXGHGWUDQVSRUWPDQXIDFWXULQJWUDGH¿QDQFHDQG hotels and hospitality. The government has forecast a 4.5 percent growth this year, the article said.

GOVERNMENT TO CUT SPENDING – PRIME MINISTER Prime Minister Mamuka Bakhtadze has announced that government spending next year will be less than 3.9 percent of GDP, a reduction of around $40 million, agenda.ge reported on June 26. The Prime Minister also plans to reduce the number of government ministries from 14 to 11.

OMAN AIRLINE ENTERS GEORGIAN MARKET 2PDQ¶VEXGJHWDLUOLQH6DODP$LULVVWDUWLQJGLUHFWÀLJKWV between Muscat and Tbilisi, agenda.ge reported on June 26, FLWLQJWKH*HRUJLDQ&LYLO$YLDWLRQ$JHQF\7KHÀLJKWVZLOOEH offered three times a week, on Tuesdays, Thursdays and Satur- days. The new route is seasonal, and is planned to continue for this summer until October 27, 2018, the report said.

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AUGUST-SEPTEMBERAUGUST-SEPPTEMBER 201820018 ‡ Investor.geInInveveststoorr.g.ge | 9 INVESTOR.GE IS STARTING A COLUMN ON NEW Investor INVESTMENTS AND INVESTORS TO THE COUNTRY. INVESTOR.GE SPOKE TO INFINITY ENERGY’S KRESIMIR CONDIC ABOUT THE COMPANY’S PLANS TO BUILD A Spotlight NEW WIND FARM IN GEORGIA.

Infinity Energy

Q¿QLW\(QHUJ\EHFDPHLQWHUHVWHGLQ is part of the Black Sea – Caspian Sea environmental impact of the wind farms investing in Georgia after hearing wind tunnel, which means there are good on the surrounding areas. Based on the Iabout the country’s wind energy indicators for wind conditions in terms study conducted, the selected territory potential at an EBRD conference. of energy production. Kresimir Condic is favorable in terms of environmental Jointly owned by Austrian Ivicom notes Georgia’s potential as a provider impact, as it is neither the primary, nor Holding GmbH and Georgian Consul- of wind-based energy and says that a secondary route for migrating birds. It WHDP/WG,Q¿QLW\(QHUJ\LVFRQVLGHU- memorandum of understanding has is also remote from the local popula- ing building an up-to-420-megawatts already been signed with the Georgian tion. Potentially, if all goes well with (MW) wind farm project in Imereti, with Ministry of Energy. Now the company ¿QDOQHJRWLDWLRQVZLWKWKHJRYHUQPHQW DFDSDFLW\RI0:LQLWV¿UVWVWDJH is in the process of studying the wind construction on the project could begin and the rest in the second stage. Imereti conditions and investigating the potential in spring-summer 2019.

10 | Investor.ge ‡ AUGUST-SEPTEMBER 2018 NINO BAKRADZE ministration had to spend on answering Innovators and students’ questions,” Asatiani said. veryone who has ever used Siri “That’s why we think chatbots are the Disruptors: Ideas or Alexa can attest to how great future of business: generally, communi- Echatbots can be—and how frus- cation by words is natural for humans and to Bring Change tratingly limited they can be. instead of clicking some images on the GEORGIAN ENTREPRENEURS Artist Zura Jishkariani and program- computer, it is more comfortable to tell ARE PUSHING THE COUNTRY’S mer Sandro Asatiani have taken those someone what to do and then wait while DEVELOPMENT FORWARD. limitations head on and are creating chat- WKLVGLJLWDOFUHDWXUHIXO¿OOV\RXUUHTXHVW THIS COLUMN IS ABOUT HOW bots as eloquent and erudite as a poet. Now technology is changing and turn- GEORGIA’S BEST AND BRIGHTEST $FWXDOO\WKHLU¿UVWFUHDWLRQZDVD ing to verbal communication more and ARE CHALLENGING THE LIMITS OF TECHNOLOGY AND THE MARKET poet—the well-known Georgian poet more,” he added. TO CREATE THE BUSINESSES Galaktion Tabidze. THAT WILL CHANGE OUR LIVES Ilia State University was quick to FUTURE OF BUSINESS TODAY AND SHAPE OUR FUTURE. appreciate its potential: the University When this team started working on IN THIS ISSUE, INVESTOR.GE’S ordered its own chatbot and the pair chatbots, they were not targeting them NINO BAKRADZE SPOKE WITH delivered Una. for commercial purposes. But Jishkariani ZURA JISHKARIANI AND SANDRO ASATIANI ABOUT ANIMA “Una is full-time staff member at QRWHGWKDWWKHWHFKQRORJ\LVDSHUIHFW¿W CHATBOTS — INTERACTIVE the University now. It became a very for modern businesses because it allows PROGRAMS (COGNITIVE successful project because Una reduces them to communicate—if only they AGENTS) WITH A “SOUL.” the time, energy and resources the ad- didn’t sound so android.

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AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 11 “We very much wanted to change December. Currently the technology is In addition, the team is working on the behavior of chatbots and teach them not cheap—10,000 lari for a custom- a Tbilisi chatbot that will allow people how to talk to humans. Anima means made chatbot—but Anima chatbots can to talk to the city and ask it about the the “soul” and we want to create digital be hired for $30 a month. capital’s history and weather as well as creatures with a “soul.” Zura is a writer Some large companies are already different activities and events planned in and he understands how to communicate interested, Asatiani and Jishkariani said. the city during their stay. with people, how to write dialogues “On our webpage, clients can choose The chatbot will also be able to pro- better and how to make characters more which chatbot they want. We will name vide advice about routes and tours that intelligent,” says Asatiani. chatbots like “Giorgi, 27 years old,” “Sa- DUHWKHEHVW¿WIRUDQLQGLYLGXDOEDVHGRQ mantha, 30 years old” and each of them the user’s responses to a set of questions. FROM CUSTOMER RELATIONS TO will have different basic knowledge. The “We plan to present the Tbilisi Chat- TOUR GUIDE interface will be as simple as children’s bot at the Frankfurt Book Fair in the fall. The startup is funded by the Agency drawings, so it will be equally under- We will invite people to try this chatbot, of Innovation and Technologies in Geor- standable for children and for elders with and try to sell our projects there as well,” gia and will be available for clients by basic computer skills,” says Jishkariani. says Asatiani.

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© 2018 Grant Thornton Georgia - All rights reserved. “Grant Thornton” refers to the brand under which the Grant Thornton member fi rms provide assurance, tax and advisory services to their clients and/or refers to one or more member fi rms, as the context requires. GTIL and the member fi rms are not a worldwide partnership. GTIL and each member fi rm is a separate legal entity. Services are PRAGMATIC delivered by the member fi rms. GTIL does not provide services to clients. GTIL and its member fi rms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 13 Assessment (SEDA), a diagnostic tool THE BEST MINDS IN THE BUSINESS: that “assesses the relative well-being of countries.” SEDA uses 40 indicators over GLPHQVLRQVWR³ÀDJUHODWLYHSRVLWLRQV Famous Economists and weaknesses, to point to the need for further analyses of causes and possible remedies,” according to Hrtoko. Georgia ranked 60 out of 152, an Weigh In On Georgia improvement from previous years.

INVESTOR.GE IS PILOTING A NEW COLUMN: QUESTIONS WITH INTERNATIONALLY RENOWNED ECONOMISTS. WE ARE REACHING OUT TO JOAO HRTOKO ON HOW WELL- ECONOMISTS FROM ALL OVER THE WORLD WHO HAVE WRITTEN POPULAR BEING CONVERTS TO ECONOMIC AND WELL-REGARDED BOOKS ON THE ISSUES THAT ARE IMPORTANT TO GROWTH: THE GEORGIAN ECONOMY AND TO DEVELOPING ECONOMIES, AND TO “BCG has produced the Sustainable ECONOMISTS WORKING AT THINK TANKS THAT ARE AT THE FOREFRONT OF DEVELOPMENT POLICY. WE POSE QUESTIONS ABOUT THE ISSUES THEY ARE Economic Development Assessment WORKING ON THAT APPLY TO THE CHALLENGES GEORGIA IS FACING. IF YOU (SEDA) reports annually since 2012 — HAVE A QUESTION, OR A RECOMMENDATION ON WHOM WE SHOULD TALK HDFK\HDUIRFXVLQJRQDQHZ¿QGLQJ,Q TO, PLEASE CONTACT US AT [email protected] previous years, we’ve done deep dives on private sector opportunity to improving or the fourth column in the se- Director of Boston Consulting Group well-being, inequality and the effects on ries, Investor.ge spoke with Joao (BCG), about the firm’s proprietary well-being, etc. This year, we wanted FHrtoko, Partner and Managing Sustainable Economic Development to test whether improving well-being

ADVERTISEMENT takes a toll on the economy. Rather than in three other dimensions: Governance, well-being; RXU¿QGLQJVJRLQJDJDLQVWZKDWPDQ\ Infrastructure and Employment (albeit 2. Performance in converting wealth countries have done, we would argue that from a low starting point). In general, LQWRZHOOEHLQJ7KHFRHI¿FLHQWWKDWZH was has been missing is the awareness RXURYHUDOO¿QGLQJVVXJJHVWVWKDWWKHUH use in SEDA to measure this provides of the potential ‘win-win.’ Our analysis are strong complementary effects across valuable insights on whether a country simply compared the growth rates of dimensions, so the best way to improve is making the most of its resources, and countries that perform well at converting radically is to make progress in all SEDA can help identify priorities for wealth into well-being with that of other dimensions. But SEDA is also meant progress (and, where needed, for reme- countries and found that those countries to serve as a diagnostic tool and those dial action). performing better on well-being also dimensions in which a country is weakest This performance reflects the cu- tended to grow faster over the decade should receive special emphasis in terms mulative impact of policies, institutions we analysed.” of policy reform and investment—as and investment priorities, and improving relevant.” it can magnify the effect of economic HRTOKO ON GEORGIA’S growth for well-being. RANKING IN THE REPORT: HRTOKO ON HOW POLICY, Furthermore, SEDA also shows that “Georgia has improved considerably NOT JUST ECONOMIC WEALTH, countries at similar income level can in the rankings over the last 10 years, AFFECTS CITIZENS’ WELL-BEING: have quite different levels of well-being. moving from 74 to 60, a gain of 14 “We view well-being as a result of It is possible to create well-being with the positions. Georgia has done quite well two things: resources a country has at hand. over several dimensions. It improved 1. Wealth: countries with higher This is a direct result of policy choic- well in education, where it now ranks income levels can afford to do many es that are better designed to transform/ 39 overall. And it has shown major gains more things to improve their citizen’s convert wealth into well-being.”

ADVERTISEMENT FRRUGLQDWLRQLQWKH¿HOGVRIHGXFDWLRQ tion to the development of villages and culture and sport is of high importance regions outside of capital Tbilisi. Kobulia Georgian PM for us to achieve this goal,” Bakhtadze received his master’s degree in business VDLGGXULQJDOLYHWHOHYLVHGQHZVEULH¿QJ administration at the Business School Names New broadcast on Rustavi-2 TV channel on of the Emory University in Atlanta, 26 June. Other changes included merg- Georgia, United States. He started at ing the corrections ministry with the McKinsey and Company as a consultant Economic Ministry of Justice and the ministry that following graduation, working his way formally dealt with issues concerning up to the position of Chief Partner. Team internally displaced persons was abol- He provided “ consultancy services ished. Its functions were split between regarding the economic issues for the ew Georgian Prime Minister the Ministry of Regional Development leading and large-scale companies assist- Mamuka Bakhtadze has over- and Infrastructure, the Interior Ministry ing them in solving problems in strategic Nhauled the country’s economic and the Ministry of Labor, Healthcare management systems and production” team on his streamlined cabinet. and Social Welfare. while he was at McKinsey and Company, Bakhtadze was named prime minister DFFRUGLQJWRKLVRI¿FLDOELRJUDSK\ in June after Giorgi Kvirikashvili stepped MEET THE MINISTERS The head of Business and Technol- down from the post. Former CEO of the Geocell mobile ogy University based at Silicon Valley The new PM reduced the number of operator, Ivane Machavariani, was Tbilisi, Mikheil Batiashvili, is the new ministries in the country from 14 to 10 as QDPHG¿QDQFHPLQLVWHU head at the expanded Education and Sci- SDUWRIWKHJRYHUQPHQW¶VQHZ³ÀH[LEOH´ Machavariani has said that under his ence Ministry as it takes in the functions and “small government” policy. watch, the Finance Ministry will take a of the Ministry of Culture and Sports. The changes are predicted to help “leading role in the implementation of Batiashvili is a psychologist, associ- the government cut costs and Bakhtadze WKHUHIRUPV¿UVWDQGIRUHPRVWLQWKH ate professor of Business Administration said the new, smaller cabinet will help implementation of a small government”. and a long-time member of The Institute “ensure a close link between education Machavariani started at GeoCell in for Strategy and Competitiveness at and economy.” 1997 as a specialist in the company’s Harvard Business School. Under the new structure, the Ministry ¿QDQFLDOGHSDUWPHQW+HEHFDPH*HR- He helped establish the Business and of Culture and Sports merged with the Cell’s CFO in 2006, and was named CEO Technology University at Silicon Valley Ministry of Education and Science. in 2013. Giorgi Kobulia, who worked Tbilisi and served as the head of the “This is a very important reform. IRUWKH0RVFRZRI¿FHRI0F.LQVH\DQG university from 2016-2018. Prior to that, As you know, the main priority for us Company, is the country’s new economy Batiashvili worked as the dean of the in Georgia is human beings, care about minister. In comments to the press, Business School at Ilia State University. them and the creation of human capital. Kobulia said he will strive to ensure All other ministers retained their Therefore, achieving a high level of economic growth, with special atten- posts.

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7VHUHWHOL$YHQXH7ELOLVL 7HO ZZZVKRVKDQDJH AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 17 of January-May 2018, boosted by the Now, however, inflation declined GEORGIA IN regional economic recovery. Last but not VLJQL¿FDQWO\DQGDPRXQWHGWRRQO\ OHDVW*HRUJLD¶V¿VFDOVLWXDWLRQLVVWDEOH percent (yoy) in May 2018. The increase ZLWKLWVEXGJHWGH¿FLWDPRXQWLQJWR of the policy rate by the National Bank MID-2018: percent of GDP in 2017. of Georgia in 2017 has most likely con- Against this background, the smooth tributed to this stabilization. implementation of the IMF programme A Positive and the upcoming disbursement of the THE NATIONAL BANK OF IMF’s third tranche of credit do not come GEORGIA POLICY RATE Economic Trend as a surprise. Due to the effect of high excise taxes and the tight monetary policy, National Continues HIGH ECONOMIC GROWTH %DQNRI*HRUJLD¶VLQÀDWLRQWDUJHWRI Georgia’s real GDP growth amounted percent will most likely be met in 2018. IN 2017, THE GEORGIAN to 5.0 percent in 2017. In 2018, this In order to sustainably reduce dollariza- ECONOMY GREW WELL. BY positive economic trend has continued. tion in Georgia, the long-term stabiliza- MID-2018, ECONOMISTS HAVE According to preliminary estimates, WLRQRIWKHLQÀDWLRQUDWHDWDORZOHYHOLV OBSERVED A CONTINUATION Georgia’s economic growth amounted to essential. Currently, high dollarization OF THIS TREND. GDP 6.1 percent year-over-year (YoY) during SRVHVDVLJQL¿FDQWULVNWRWKHFRXQWU\¶V INCREASED BY 5 PERCENT the period of January-May 2018. For PDFURHFRQRPLFDQG¿QDQFLDOVWDELOLW\ IN 2017, AND DURING THE 2018, the IMF foresees a further expan- PERIOD OF JANUARY- MAY 2018, GROWTH EVEN sion of economic growth of 4.5 percent. LARI APPRECIATES AFTER ACCELERATED TO 6.1 Local investment banks even expect 5.4 SEASONAL FLUCTUATIONS PERCENT. THIS ECONOMIC percent growth. ,QDXWXPQWKHODULVLJQL¿FDQWO\ GROWTH IS BROAD-BASED— depreciated versus the U.S. dollar, with AGRICULTURE IS THE ONLY REAL GDP GROWTH the exchange rate increasing from 2.4 to EXCEPTION TO THIS GROWTH, In 2017, growth was broad-based, 2.7 GEL/USD. WITH A DECLINE IN 2017. driven by private consumption, invest- This depreciation caused concern ment and net exports. On the supply and many debates, including discussions DR. RICARDO GUICCI, NIKLAS side, the picture was different. Services about the exchange rate policy of the DORNBUSCH, GERMAN ECONOMIC (6 percent) and industry (4.5 percent) National Bank of Georgia. TEAM GEORGIA LQFUHDVHGVLJQL¿FDQWO\LQZKLOH Now, the exchange rate has “normal- agriculture declined by 2.7 percent. This ized” and equals 2.5 GEL/USD (as of QÀDWLRQLQ*HRUJLDQRZDPRXQWV sharp disparity is a clear sign of structural June 2018). to a moderate 2.5 percent. It can be problems and shows a need for vast re- Apparently, the depreciation was Iexpected that the National Bank of forms in the agricultural sector. caused by seasonal factors (energy *HRUJLDZLOOODUJHO\PHHWLWVLQÀDWLRQ imports and fewer tourists in autumn/ target of 3 percent in 2018. Thus, the PRICE STABILITY winter). country enjoys price stability. ,QLQÀDWLRQDPRXQWHGWR It was important that the National $IWHUDVLJQL¿FDQWGHSUHFLDWLRQLQ percent and has thus exceeded the Na- Bank refrained from any major interven- autumn 2017, the lari has regained value, WLRQDO%DQNRI*HRUJLD¶VLQÀDWLRQWDUJHW tions on the foreign exchange market without sizeable interventions by the of 4.0 percent. Importantly, the underly- in order to support the local currency. 1DWLRQDO%DQNRI*HRUJLD$ÀH[LEOHH[- ing reasons for this development have Instead, it allowed the exchange rate to change rate is essential for stability, even D¿VFDOUDWKHUWKDQPRQHWDU\QDWXUH,Q ÀXFWXDWHDQGLQIRUPHGWKHSXEOLFWKDWWKH though the National Bank of Georgia has the beginning of 2017, excise taxes for exchange rate can go both ways: upwards been repeatedly criticized for this policy. SHWUROHXPFDUVWREDFFRDQGJDVVLJQL¿- and downwards. Georgia’s external trade strongly cantly increased, and this in turn affected This is also important in order to expanded in 2017 and during the period consumer prices. sustainably reduce dollarization.

18 | Investor.ge ‡ AUGUST-SEPTEMBER 2018 EXTERNAL TRADE ¿VFDOGH¿FLWDPRXQWHGWRSHUFHQWRI million loan to be disbursed in several ,Q*HRUJLDQH[SRUWVSUR¿WHG GDP in 2017 and is supposed to decrease tranches. from the regional economic recovery WRSHUFHQWE\7KLVSODQQHG¿V- The upcoming third tranche amounts and increased by 29.1 percent. Georgian cal consolidation is remarkable, given to $44 million. The strict implementa- imports increased by 9.4 percent. that public investment is planned to tion of practically all IMF conditions is These dynamics continue in 2018, LQFUHDVHVLJQL¿FDQWO\DWWKHVDPHWLPH a welcomed development. While public ZLWKVLJQL¿FDQWH[SRUWJURZWKLQWKH That combination is planned be realized discussion in Georgia is often critical of period of January-May, especially to WKURXJKVLJQL¿FDQWUHGXFWLRQVLQFRQ- developments and policy, the country Azerbaijan (+156 percent), Ukraine sumptive expenditures, from 26 percent does stand out positively in this regard (+93 percent), Armenia (+36 percent) of GDP in 2016 to 20.6 percent of GDP in comparison with practically all of its and Russia (+13 percent). Also, exports LQ6XFKDVKLIWLQ¿VFDOVSHQGLQJ neighbors. to the EU further increased by 14 per- however, is only possible due to the This, too, is an aspect that should be cent. Increasing exports are a welcome country’s high economic growth. factored into a comprehensive assess- development, especially considering This clearly indicates the interde- ment of developments. WKHVWLOOVLJQL¿FDQWWUDGHGH¿FLWRI pendence between the economic and the The German Economic Team Geor- percent of GDP in 2017. ¿VFDOVLWXDWLRQV gia has been supporting the Georgian Export promotion remains a key government in designing its reforms target of the government. OUTLOOK since 2014. Georgia’s positive economic situ- For more analysis on economic de- REASONABLE BUDGET DEFICIT ation has decisively contributed to the velopment and reform see the German Finally, the country’s budgetary smooth implementation of a three-year Economic Team website at https://www. situation appears to be stable. Georgia’s IMF programme, which includes a $258 get-georgia.de/.

ADVERTISEMENT HANS GUTBROD mean annual nominal income increased Georgian from 609 GEL to 772 GEL in those two n early June, UNICEF published years, which constitutes a 27% increase. Households: the results of its biannual Welfare If this data is accurate, that would be IMonitoring Survey. Some of the a sizeable 13% year-over-year jump. Positive Long- KHDGOLQH¿QGLQJVVXFKDVWKHLQFUHDVH UNICEF also highlights that income in children growing up in poverty, drew inequality seems to have decreased Term Trends, much public attention. In social media, slightly, which runs against much of WKH¿QGLQJVVRPHWLPHVZHUHWUXQFDWHG public received wisdom. Though Poverty to “poverty in Georgia is up,” and some Other data seems to corroborate a commentators saw this as an indictment positive long-term trend. The Caucasus of recent government policy. Yet a closer Barometer, a survey by the Caucasus Re- Remains look at the data (available at http://bit.ly/ search Resource Centers (with which the UNICEF-WMS-2017) highlights that author used to work) has found that over there are many positive trends in Geor- the past several years, many households gia. Over the longer term, poverty seems are much better off. Many indicators to be decreasing. Certainly, many house- (see http://caucasusbarometer.org/en/) holds are better off than they were a few point in that direction: In 2008, 64% of years ago. Arguably, this illustrates that, households said they had a refrigerator. overall, Georgia is on a sensible course. In 2010, that number had climbed to Among other things, the UNICEF 89%. In other words, another 25% of data shows that incomes in Georgia have the population has been able to afford increased quite sizably between 2015 and an essential household item. Similarly, 2017. According to the UNICEF survey, 24% of households claimed to own a car

20 | Investor.ge ‡ AUGUST-SEPTEMBER 2018 in 2008. By 2017, 37% of households FODLPHGWRRZQDYHKLFOH7ELOLVLWUDI¿F jams seem to illustrate this change, too. We see an even more dramatic rise with washing machines, also essential for automating household chores: in 2010, 30% of households had a washing ma- chine. By 2017, this number had more than doubled to 71%. Such improvements don’t always mean that households think they are bet- ter off, as researchers around the world have found. If neighbors buy a newer fridge, you may feel left behind. Being well-off is a relative concept. Yet even here, one sees some positive trends. In 2010, 51% of Georgians saw themselves on the bottom four economic rungs (out of 10). In 2017, that number had fallen to 38%, occurring in a steady will continue to be important to give over the last 15 years. Good policy can decrease over the preceding years. Other disadvantaged children a fair chance in make a difference, even if progress has questions, too, show that households life. The problem is particularly acute not come quickly enough for many. are doing better. In 2008, 35% of re- in rural areas. Dr. Hans Gutbrod teaches at Ilia spondents said that they had typically Poverty, therefore, does remain very State University and works as an analyst had enough money to buy food without real. At the same time, there are posi- and consultant. He is on Twitter at @ borrowing money during the previous tive trends, too. The reason why these HansGutbrod. six months. By 2017, that number had positive trends matter is because they For more information: gone up to 48%. illustrate that many of the country’s http://bit.ly/UNICEF-WMS-2017 Positive as that trend is, it also shows economic policies have actually worked http://caucasusbarometer.org/en/ a real problem. The economic situation of way too many households is precarious, ADVERTISEMENT as nearly half the respondents says that www.ilf.com they sometimes have to borrow money to buy food. The UNICEF report, in partic- XODUKLJKOLJKWVWKDWRQHLQ¿YHFKLOGUHQ in Georgia grows up in a household in ZKLFKEDVLFQHHGVDUHQRWPHW7KLV¿QG- ing lines up with Caucasus Barometer data: 22% of households say they don’t typically have enough money to buy food. (The reported increases in poverty in the UNICEF report, however, may be 50 years of experience and innovation in providing world-class subject to debate, as they are close to the project management, engineering and consultancy services shaped ILF Consulting Engineers into your trusted advisor worldwide. margin of error; monetary income data is QRWRULRXVO\GLI¿FXOWWRFROOHFWH[FKDQJH 50 YEARS OF ENGINEERING EXCELLENCE UDWHÀXFWXDWLRQVPD\SOD\DUROHWRR 

Targeted social assistance programs ILF Consulting Engineers Georgia LLC ILF Consulting Engineers Austria GmbH 20, Ushangi Chkheidze Street Feldkreuzstraße 3 0102 Tbilisi, Georgia 6063 Rum, Austria Phone 1 +995 (59) 151 72 84 Tel. +43 (512) 24 12 - 0 Phone 2 +995 (59) 140 99 41 Fax +43 (512) 24 12 - 5900 E-Mail [email protected] E-Mail [email protected] 1,000 families with an average of half a million dollars in assets under manage- ment. Total funds under management are $640 million (1.57 billion GEL). &RQVLGHUDEOHGLYHUVL¿FDWLRQLVRQ offer, with the range of products into which money is invested extending from EDQNLQJSURGXFWVVXFKDVFHUWL¿FDWHVRI deposit, to local and international bonds. Over 2010 to 2017, the compound aver- age growth rate enjoyed by its investors was 27.31 percent. Nini Sturua, TBC Bank Eka Liluashvili, Bank of Georgia At TBC, the WM department is also part of TBC Bank, with some products, Georgian Banks Eye International such as corporate bonds or brokerage, offered through its brokerage, TBC Wealth Management Capital. It too, operates internationally, with the WM department overseeing GEORGIA HAS ENTERED A NEW FINANCIAL MARKET— services for 900 clients from 40 differ- INTERNATIONAL WEALTH MANAGEMENT, THE DOMAIN OF ent countries. “HIGH NET WORTH” INDIVIDUALS. THE SECTOR, WORTH $63.5 How can Georgia compete with the TRILLION ACCORDING TO THE LATEST WORLD WEALTH REPORT major international names, such as the FROM INTERNATIONAL CONSULTING GROUP CAPGEMINI, Swiss banks which have been in this COULD BE WELL WORTH THE BANKS’ EFFORTS. business for centuries? Eka Liluash- vili, Head of International Business SALLY WHITE at BoG Wealth Manage- ment names key strengths: t might not be expected that Georgia, “Georgia can offer discre- right at the beginning of its capital tion and very high levels of market development and without I personal service,” she said even a vibrant stock exchange as yet, Plus, Georgian banks could impress the 17 million rich individ- have been free of the kind uals targeted by established international of international banking ZHDOWKPDQDJHPHQW¿UPV

22 | Investor.ge ‡ AUGUST-SEPTEMBER 2018

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LQYHVWRUVVHHNLQJJOREDOGLYHUVL¿FDWLRQDQGIURQWLHU market opportunities, she points out. These days, Georgia can tick the required boxes, with DJURZLQJVSHFWUXPRIFXVWRPL]HG¿QDQFLDOVHUYLFHV double tax agreements with many countries, international approval for its banking system, tax advantages and its ease of doing business, to name a few. Banks have ac- cess to wide-ranging regional and international partners to help extend the products on offer where local experi- ence is lacking. At TBC, Nini Sturua is Head of the Wealth Manage- ment Division for Non-Resident Customers. There, too, clients come via a variety of routes. “There are different sources, some come through client introductions, some from agent referrals, some come themselves after doing their own research, many come because they are somehow connected to Georgia EXVLQHVVZLVHIUHTXHQWÀLHUVH[SDWV :HDOVRKDYH Georgians who are living and working abroad. And, RIFRXUVHRXUUHSUHVHQWDWLYHRI¿FHLQ,VUDHOLVDQRWKHU source,” she explained. TBC is also seeing that as the wealth management ser- YLFHJURXSVLQWUDGLWLRQDOFHQWHUVLQFUHDVLQJO\¿QGLWKDUG (because of bureaucracies and costs) to service all but the most wealthy clients, there is room for new players. “Georgia offers a variety of products with competi- tive rates, low costs, less bureaucracy, a customer-centric approach with dedicated bankers and outstanding remote banking channels. Segment entry is also relatively low compared to traditional centers. I think these are the main reasons why clients use Georgia in order to diversify their assets,” she said. A strong attraction, in this yield-scarce time, is the high level of interest rates that Georgia can offer, despite its relative stability. While clients buy predominantly dollar-denominated bonds, investment in Georgia’s increasing number of lari-denominated corporate bonds gives a superior rate to that available in many other coun- tries. From their domestic strengths, the banks have also been offering property investment. The Bank of Georgia is planning to launch a dedicated investment fund in this sector on the Georgian stock market. It will have an at- tractive yield that should appeal to overseas investors. As Otar Sharikadze, Managing Director of Galt & Taggart, points out, Georgia can offer the advantages of DQ³RQVKRUHHFRQRP\ZLWKEHQH¿WVVLPLODUWRKDYLQJ funds offshore.”

24 | Investor.ge ‡ AUGUST-SEPTEMBER 2018 AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 25 Southern Gas Corridor: Delivery of Caspian Sea Gas to Europe through Georgia

BP AND ITS PARTNERS ANNOUNCED THE STARTUP OF SHAH DENIZ 2 ON JUNE 30, 2018, INCLUDING ITS FIRST COMMERCIAL GAS DELIVERY TO TURKEY UTILIZING NEW PIPELINE, COMPRESSOR STATIONS, AND METERING FACILITIES IN GEORGIA.

26 | Investor.ge ‡ AUGUST-SEPTEMBER 2018 BP GEORGIA SPOKE TO INVESTOR.GE ABOUT THE SHAH DENIZ 2 AND THE SOUTH CAUCASUS PIPELINE EXPANSION PROJECT, THE GEORGIAN PART OF THE SOUTHERN GAS CORRIDOR.

AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 27 ob Dudley, BP group chief ex- bania and Italy) is one of the largest made in the region, and which will be ecutive, has called Shah Deniz energy projects anywhere in the world. exporting an additional 16 billion cubic B2 “one of the biggest and most It will link Caspian resources directly meters of gas per year. The Shah Deniz complex new energy projects anywhere ZLWK(XURSHDQJDVPDUNHWVIRUWKH¿UVW reservoir in the Caspian Sea is the starting in the world.” The project includes major time, diversifying energy markets and point for the Southern Gas Corridor series offshore, onshore and pipeline develop- creating a new secure source of supply of wells, offshore facilities, pipelines and ments. for the region,” Chris Schlueter, Country other facilities that ultimately will deliver Manager for BP in Georgia, said. natural gas from the Caspian Sea directly OVER TWO DECADES IN THE %3VLJQHGLWV¿UVWFRQWUDFWZLWKWKH to European markets. Schlueter noted that REGION Azeri government in 1994. Among the the new Southern Gas Corridor (SGC) “The Southern Gas Corridor (com- major energy projects developed since breaks new ground, with gas flowing prised of the Shah Deniz 2 in Azerbaijan, WKHQLVWKH6KDK'HQL]JDV¿HOGGHYHORS- from the Shah Deniz offshore develop- the South Caucasus Pipeline Expansion ment, launched in 2006, with 9 billion ment through one of the world’s biggest in Azerbaijan and Georgia, the Trans cubic meters of gas per year. terminals at Sangachal, located southwest Anatolian Pipeline in Turkey and the The Shah Deniz 2 development repre- of Baku, and through a pipeline network Trans Adriatic Pipeline in Greece, Al- sents the largest foreign direct investment —SCPX, TANAP and TAP, which, when

28 | Investor.ge ‡ AUGUST-SEPTEMBER 2018 fully completed, will be twice the length FUTURE DEVELOPMENTS The South Caucasus pipeline of the BTC project, at 3,500 km. “The “We believe there are great opportu- expansion (SCPX) is a part of Shan Deniz 2 development is one of the nities for the region’s future in terms of the Shah Deniz Development Project and is one of the most most complex challenges ever undertaken new developments” Schlueter said. important developments in by the global oil and gas industry,” Schlu- BP recently extended the Azeri- terms of the energy security of eter added. Chirag-Gunashli (ACG) contract until Georgia and the larger region. mid-century. The ACG is the largest The SCPX construction is making GEORGIA’S ROLE IN REGIONAL RLO¿HOGLQWKH$]HUEDLMDQVHFWRURIWKH good progress in Georgia ENERGY SECURITY Caspian basin. “In addition to the ACG and remains on-track for the completely new system to start BP’s Chris Schlueter noted that extension and SD2 [Shah Deniz 2], BP is up in 2018. In particular: *HRUJLDSOD\VDVLJQL¿FDQWUROHLQWKH currently involved in and is the operator energy security and supply diversity for of two exploration projects referred to as the region. “Georgia moves one percent the Shallow Water Abershon Peninsula Over 4,500 Georgian citizens were employed at the peak of of the world’s oil and gas volumes with and Shafag-Asiman. BP was also suc- the SCPX project construction. DOPRVWHI¿FLHQF\DQGUHOLDELOLW\´ cessful along with its partner Socar in Today about 2,000 people he said. One percent may not sound like signing a production sharing agreement continue to work on the project, much, but considering this is one percent for an additional prospective area in the including 1,350 local residents. of the entire demand of the planet, it is Caspian Sea referred to as Block 230. KXJHHVWDEOLVKLQJ*HRUJLD¿UPO\DVD There’s also the possibility for future More than $2 billion was critical energy corridor country. “ gas developments both in the ACG and invested under the SCPX project “Our major energy projects, the deeper in the Shah Deniz reservoirs,” he in Georgia as planned, including Baku-Supsa and Baku-Tbilisi-Ceyhan oil said. The Baku-Tbilisi-Ceyhan (BTC), $400 million spent on Georgian pipelines, as well as the South Caucasus Western Route Export Pipeline (WREP), suppliers and services. gas pipeline and the current expansion South Caucasus Pipeline (SCP) and the activities (the SCPX project) have sig- South Caucasus Pipeline Expansion Hydrocarbons were QL¿FDQWO\FKDQJHGWKHHQHUJ\PDSRI (SCPX) pipelines that pass through Geor- LQWURGXFHGLQWRWKHÀUVW Georgia and the Caspian region. The new gia will remain key to future oil and gas compressor station (CSG1) near the Azerbaijan-Georgia border Southern Gas Corridor will change the development in the region, underpinning in late December 2017 and energy map of Europe,” he said. BP has WKHHI¿FLHQF\DQGYLDELOLW\RIDQ\QHZ BP is now proceeding with its invested more than $4 billion in energy development in Azerbaijan as well as start-up activities. The second infrastructure and sustainable develop- across the Caspian, providing the export compressor station’s (CSG2) ment projects in Georgia, one of the of production to international markets. start-up is planned for late 2018. largest of which is the South Caucasus “Excellent regional cooperation and Pipeline Expansion project. “We invest- relationship models built in the region The new metering station ed over 2 billion dollars in recent years and solid trusting relationships built (MX81) and the interconnecting to build two new compressor stations, a upon over twenty years of operations in pipeline between SCPX and The new pipeline, and metering stations in Georgia will remain key to the success Traans-Anatolian Natural Gas Pipeline Project (TANAP) are Georgia. 4,500 Georgian citizens were of all future opportunities. ÀOOHGZLWKK\GURFDUERQVDQGDUH employed at the peak of SCPX construc- BP will continue to work closely fully operational. WLRQ´KHVDLG7KH¿UVWFRPPHUFLDOJDV with the governments, investors, part- was delivered via this project on 30 June, ner companies, communities and other The 62-kilometer SCPX pipeline 2018, exactly as planned from the onset stakeholders to build on the experience extension is completed and of the project. This gas leaves Georgia and achievements of our world-class ÀOOHGZLWKJDV via the SCPX metering station at the projects. One of my favorite phrases is Georgia-Turkey border near Akhaltsikhe ‘success builds success,’ and our busi- BP is on track to deliver and continues onwards into Turkey, sup- QHVVLQ*HRUJLDKDVH[HPSOL¿HGWKLV´ commitments for the pipeline’s plying Turkey’s new TANAP pipeline. said Schlueter. ÀUVWJDVGHOLYHULHVLQ

AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 29 a member of the working group, told years it will be so hot that grapes will not GEORGIAN Investor.ge. be able to grow outside, so why not work “We thought that Georgia could be on the technology where you can har- positioned quite well in a story where we vest grapes in a closed environment?,” have a history, but we should go forward, Doborjginidze said. WINES ON placing Georgia on the map of innovation as well,” he said. VERTICAL FARMING The working group includes Dobor- Encouraging innovation and technol- MARS? jginidze, who is involved in a personal ogy at home is an important part of the capacity; the National Museum of Geor- project, he noted. A New Initiative gia; the Business and Technical Univer- “Georgia is lacking in terms of in- sity; Cosmic Farms; and the Georgian novation index, and one of the problems to Grow Grapes Ministry of Education and Science. is that we don’t have much in terms of research going on. in Space MORE THAN GRAPES “So, we need innovation, we need “It might be a little bit crazy to to do something, why not do something working group has been cre- announce that Georgia wants to bring that is culturally and historically yours, ated to start researching how grapes into space but—it’s a long shot and that looks beyond tomorrow and that A to cultivate grapes and produce but we said we have to start at some goes further,” he said. wine in space. point,” he said. “We live in the fourth industrial It seems natural that the idea to There is a precedent: NASA is al- revolution, where the pace of innovation grow grapes on Mars would originate ready working on cultivating potatoes is so fast that it is really hard to catch the in Georgia. for Mars in Chile, Doborjginidze noted. WUHQGV0D\EHZHFDQ¿QGDQLFKH Widely accepted as the cradle of “Our aim is to have the idea and then, where, again, it is culturally ours and wine, Georgians have been fermenting as a working group, consolidate all these comes naturally to us . . . Maybe we can grapes in this region for over 8,000 years. resources that we have and start to build be the best cosmic farmers.” Now, a group of Georgian innova- WKHVFLHQWL¿FUHVHDUFKDURXQGWKLV´KH At this point, the group is looking for tors and supporting organizations have said. grants, with a long-term goal of attracting ODXQFKHGDSURJUDPWRGHYHORSWKH¿UVW “When you think about Georgia, international investment. grapes that can be cultivated in outer you won’t think only of the guys whose One member of the group, Cosmic space. ancestors 8,000 years ago created some- Farms, is the in-house farm for the St- The latest developments in com- thing, but the also the guys who are strug- amba Hotel in Tbilisi, and which will mercializing space—the plans for a gling and looking forward, maybe 50 or operate the lab for the project, Dobor- manned expedition to Mars, businesses 60 years ahead, and they want to try to jginidze said, adding that they are already like Tesla and SpaceX investing in space do something important and something ... experimenting with vertical farming. exploration programs—inspired Nikoloz We think that this project will cultivate ³7KH¿UVWLPPHGLDWHVWHSLVWRJHWWKH Doborjginidze and other members of other side effects,” he said. resources available. Right now, we are the working group to think about what The side effects—all the innovations investing our own human resources, what Georgia could do to get involved. and discoveries that Georgia will have we have, how we can organize things, but “When we were thinking about the as the project moves closer to its goal of this is not going to be enough. We need wine in general and Georgia and tech- cultivating grapes in space—could help grants, we need real scientists to work on nology, obviously being a Georgian and WKHFRXQWU\¿QGLWVQLFKHLQWKLVQHZDJH these projects,” he said. being involved in technology . . . We of technology. “We are setting a high bar aiming for were thinking ‘Well our ancestors did “We are researching the wine and the grapes, but you can develop grapes you a great job, but what can we add to this grapes to be cultivated for the cosmos, need to also raise so many things... Just whole thing?,’” Doborjginidze, Micro- EXW¿UVW\RXQHHGWRFXOWLYDWHWKHPLQD to get to that point. But we will have a soft Country Manager of Georgia and closed environment . . . Maybe in twenty mission, and that is the most important.”

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Bank of Georgia Splits, Creates Two FTSE Companies

THE BANK OF GEORGIA HAS DEMERGED INTO TWO SEPARATE ENTITIES, CREATING THE BANK OF GEORGIA GROUP AND GEORGIA CAPITAL. INVESTOR.GE SPOKE TO BANK OF GEORGIA CEO KAHA KIKNAVELIDZE ABOUT THE DEMERGER AND ITS IMPACT FOR THE BANK AND THE GEORGIAN BANKING SECTOR.

he demerger of Bank of Georgia into two separate busi- nesses — Bank of Georgia Group and Georgia Capital T— will strengthen both entities, according to Bank of Georgia CEO Kaha Kiknavelidze. Under the new structure, Bank of Georgia Group PLC (Bank of Georgia) will be a “pure-play banking story, and Georgia &DSLWDO3/& *HRUJLD&DSLWDO WKHRQO\GLYHUVL¿HGLQYHVWPHQW vehicle in Georgia,” he said. “As demerged entities, the companies are better positioned to invest in various sectors and thus create greater value in the Georgian economy. Importantly, the entities will no longer be FRQVWUDLQHGE\FRQÀLFWVRILQWHUHVWLQWKHLUUHVSHFWLYHVHFWRUV´ Kiknavelidze told Investor.ge. “Bank of Georgia will expand its lending activity in the corporate sector, including to Georgia Capital’s companies, which was restricted due to related party regulations. Georgia Capital will not be subject to the banking regulatory regime WKHUHE\LPSURYLQJLWVDELOLW\DQGÀH[LELOLW\WRDOORFDWHFDSLWDO take advantage of various investment opportunities and better execute its growth strategy.” While the change will require the group to separate support functions, the banking and non-banking businesses had been operating independently for years, Kiknavelidze said. “Today the two companies have fully independent opera- tions, management teams and two separate boards of directors,” he added. Georgia Capital will retain a 19.9 percent stake in Bank of Georgia as part of the deal. For the sake of independence, however, Georgia Capital has waived its active voting rights, Kiknavelidze said.

32 | Investor.ge ‡ AUGUST-SEPTEMBER 2018 eorgia has shot forward in its en, despite still being relatively low, has Georgia’s efforts to control tobacco use. almost doubled in the recent years,” the GIn recent years it has steeply team said in a press statement. increased taxes on tobacco sales, and ear- “Half of all long-term smokers will Tobacco lier this summer, introduced a series of be killed early by a smoking-related dis- amendments that restrict where cigarettes ease. Approximately 11,000 citizens of Gambit: New can be smoked and how tobacco products Georgia die prematurely every year from can be advertised. More changes are ex- diseases caused by tobacco, and among pected, which will further increase taxes those are approximately 3,000 non- regulations and restrict packaging. VPRNHUV7KHDODUPLQJ¿JXUHVFOHDUO\ The changes have garnered interna- indicate a need for strong and imminent impose strict tional praise from health organizations. action in tobacco control.” Smoking levels in Georgia are extremely The new regulations represent a high. An estimated 58 percent of men — “quantum leap” for Georgia in terms control on and six percent of women — smoke. As of its tobacco control policy, according a result, the health improvements could to Liber. tobacco use be dramatic. However, such a high in- “Prior to this, Georgia was very much cidence also means that the unintended a laggard in tobacco control policy,” consequences of a poorly implemented Liber said. policy could also be severe for public “Over half the world’s population is A SERIES OF NEW ¿QDQFHDQGWKHHFRQRP\ covered by some kind of smoking ban. REGULATIONS HAS Georgia was one of about 60 countries STRICTLY CURTAILED FROM ‘LAGGARD’ TO that only had a text warning on cigarette WHERE CIGARETTES CAN INTERNATIONAL STANDARDS packaging. It has made a quantum leap BE SMOKED AND HOW The new regulations, which went into forward.” TOBACCO PRODUCTS effect on May 1, put Georgia at the fore- Liber noted that it is “hard to name” CAN BE ADVERTISED. THIS front of international efforts to reduce another country that went from so little FOLLOWS SIGNIFICANT tobacco consumption, according to Alex to such high standards in tobacco control INCREASES IN TAXES ON CIGARETTES IN RECENT Liber at the American Cancer Society. legislation. YEARS AND PROPOSED From May 1, enclosed public and FURTHER INCREASES IN THE workplaces are smoke free in Georgia, CENSORSHIP AND ECONOMIC FUTURE. ANTI-TOBACCO and the advertisement, promotion, and CONCERNS ADVOCATES SAY THE sponsorship of tobacco is prohibited. It is precisely the speed with which CHANGES PUSH GEORGIA Other regulations are also set to be imple- the change is coming about that is a TO THE FOREFRONT OF mented over the next few years which source of concern for some. The tobacco INTERNATIONAL EFFORTS will dramatically increase taxes, as well industry has been generally accepting of TO CONTROL TOBACCO as placing more severe restrictions on the need for new regulations. USE AND ARE NECESSARY point of sale advertising and cigarette “In general, we are for regulations, TO COMBAT GEORGIA’S packaging. because tobacco is a controversial prod- HIGH LEVELS OF SMOKING. Health specialists, including the UN uct. It is harmful and we think that there QUESTIONS REMAIN, country team in Georgia, have argued should be regulations,” Nona Mamulash- HOWEVER, ABOUT HOW that the changes are necessary to save vili, from Phillip Morris International, THE AMENDMENTS WILL lives. pointed out. BE IMPLEMENTED AND THE “In Georgia, the prevalence of smok- However, along with others in the IMPACT THEY WILL HAVE ON ing among men is among the highest in industry, she says that laws have been HEALTH, PUBLIC FINANCES the world at approximately 57 percent; brought in quickly and with little con- AND THE ECONOMY. the prevalence of smoking among wom- sultation. “The regulations should be

AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 33 implemented gradually so that businesses shouldn’t be so strict especially since to bring ‘plain-packaging’ into Georgia, have time to adapt, and there should be we are not in Germany or Austria or so that cigarettes will simply be sold in discussions with all the sides. For this Greece,” he was shown saying. “First white boxes with no logos. set of regulations [that came into effect should come economic [growth] and Felizio Feraz, General Manager of in May] we were excluded from any then strict laws.” British American Tobacco notes that “if discussions,” she says. In response to these concerns, the UN not managed properly, that can make As a result of the failure to include country team in Georgia noted that the LOOLFLWWUDGHJURZVLJQL¿FDQWO\´ all stakeholders in discussions, she says, impact of similar bans in other countries “I worked in South America and I problems have arisen so “the same peo- has been positive for the economy. saw in Panama that [when they brought ple who were pushing forward to pass the “Case studies from other countries in these laws] while legal sales reduced law very fast … now have to recall the in the region indicate that a total ban on by half, consumption did not reduce by law and regulate the technical details.” smoking in restaurants and bars is likely KDOI%HFDXVHFRQVXPHUVWKH\¿QGD For example, she says that they way to get their product,” he adds. now realize, “there are some people This, he argues, will have an in a hospital and in institutions who From May 1, enclosed public and impact on government revenues. need to have a separate area where workplaces are smoke free in :KLFKFRXOGEHVLJQL¿FDQWDVWKH\ they will be able to smoke because, say that tobacco is responsible for as of today, there is no smoking Georgia, and the advertisement, as much as 10 percent of govern- place on the territory of institu- promotion, and sponsorship of ment revenue. He also argues that tion….so that a sick person has to plain-packaging makes this worse, go a few hundred meters away to tobacco is prohibited. Other by making it easier to counterfeit smoke.” cigarettes. Ovidiu Cernei from Japanase regulations are also set to be “We have seen plain pack- Tobacco International, makes a implemented over the next few aging…Australia was the first similar claim. “If we had been market and…illegal black-market consulted previously when the law years. increased, and they don’t respect was drafted, maybe we would have any regulations. So, they will not been able to recommend some practices to have a neutral to positive impact on comply with packaging regulations, they from other markets where similar laws revenue for the hospitality sector in the will not pay any excise,” Feraz says. have been implemented, but it was not short- to medium-term. Employment The answer, they argue, is that chang- the case because the law was passed in gains are more likely for this sector than es in the law need to be brought in more a hurry and we barely had the chance to job losses,” it said in a press statement. gradually, as Mamulashvili from Philip comment and there was not too much The other main concern is that in- Morris International points out, “the EU consideration for our comments.” creases in taxes and changes in packag- is telling the country that you need to Pub and restaurant owners inter- ing may lead to increases in smuggling have the regulations in place, but… You viewed by Rustavi-2 TV channel also and this will mean a loss of revenue for are not obliged to do it in six months or voiced concern that they would lose the government and increased criminal- even a year. Romania has taken 15 years business. ity generally. to come to the EU requirements. Georgia “It ends up you can smoke all you The government plans to increase is trying to do it much faster…” want at home, in your car, or at the casino duty on cigarettes to reach European lev- All sides seem to agree on one thing. but not in cafes and bars,” noted Chai HOVRYHUWKHQH[W¿YH\HDUV7KLVZRXOG 7KHQHZODZVDUHDQLQFUHGLEO\VLJQL¿- Khana cafe owner Levan Jibghashvili. amount to increasing the current duty cant change in a country with extremely “In the end, this will affect all of us.” from 1.7 GEL per pack to 5.2 GEL per high levels of smoking. Pub owner Levan Grigolia argued pack, an increase of the current duty of What impact that will have on the that the law is too strict for a developing 200 percent, which, according to the to- incidence of smoking, connected busi- economy like Georgia. bacco companies, will double the cost of nesses, smuggling and government “This law should be more liberal. It a pack of cigarettes. There is also a plan revenues, only time will tell.

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AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 35 21st century version of the old “These waste management plans REDUCE, REUSE, adage ‘nothing is certain in are very important because they are A life but death and taxes’ would prioritizing the issues and recycling,” RECYCLE: GH¿QLWHO\LQFOXGHJDUEDJHWRGD\WKHUH Nana Janashia, the executive director of Innovative ways local is nothing certain in life but death, taxes CENN, told Investor.ge. and the eternal question of where to put Janashia noted that raising awareness businesses are helping all the garbage. DQG¿QDQFLQJDUH³WKHWZRPRVWLPSRU- the environment Starting in 2019, municipalities tant areas for recycling.” across Georgia will have to start recy- “Our strategy is to develop and push ECO-FRIENDLY BUILDING cling. The Caucasus Environmental the laws, like strategies, and also to push MATERIAL, PARKS, NGO Network (CENN) has been work- from the ground, for people to demand INVESTING IN LOCAL ing with local governments in Tbilisi recycling,” she said. CENN’s efforts INCINERATORS— and three Georgian regions — Kakheti, have already made an impact: there are Adjara and Shida Kartli — to help them eight recycling locations for paper, glass, COMPANIES IN GEORGIA prepare as part of the USAID-funded plastic and aluminum waste in Tbilisi: ARE FINDING WAYS TO Waste Management Technology in Re- The French School of Caucasus, Public HELP THE ENVIRONMENT gions program. School #54, Green School, Goodwill Di- EVERY DAY. A crucial part of the program has gomi Branch, GTC Carrefour, Ministry been to create waste management plans, of Environment Protection and Agricul- and to raise awareness about the need to ture of Georgia (Ortachala), Hotel Old reduce, reuse and recycle. Maidan and East Point.

ADVERTISEMENT Waste recycling companies have 2030. To meet that goal, hotels across called ‘Planet 21’ in 2010, setting up received and recycled 7540.5 tons of the chain are engaged in a wide-range of sustainability targets for 2021. municipal waste (paper, aluminum, glass, activities. At the Batumi Hilton, they are At Mercure Tbilisi Old Town, that plastic). reducing the use of plastic bottles in ev- WUDQVODWHVWRVSHFL¿FUHF\FOLQJSURJUDPV ery operation departments to minimum. as well as food waste reduction and ef- A ROLE FOR BUSINESS There is also an effort to end the use of forts to reduce water waste and energy CENN is also partnering with local disposable straws. consumption, according to the hotel’s businesses and organizations around the Other hotels in Georgia are also SD Quality & Project Manager, Tamuna country to pick up trash and reduce liter Chkhikvadze. as part of its Keep Georgia Beautiful Janashia noted that BP Georgia is working on innovative Campaign (http://environment.cenn.org/ ways to deal with its waste, as well. join-us-keep-georgia-beautiful/). raising awareness and All non-hazardous waste from BP’s Local businesses, including several ILQDQFLQJDUHtWKHWZR sites are collected at a waste process- AmCham Georgia members, are par- ing and recycling center; the waste is ticipating. most important areas for segregated, compacted and routed to the The Batumi Hilton, for example, has appropriate facility. partnered with CENN to recycle as part UHF\FOLQJu “We have saved more than $600,000 of the Hilton hotels’ Travel With Purpose annually and significantly reduced campaign. working to reduce consumption and environmental impact by using seven The hotel chain has committed to cut increase recycling. For example, Accor local recycling companies, step-by-step its environmental footprint in half by hotels launched a sustainability scheme implementation and development of 12

ADVERTISEMENT minimization/reusing options of waste cording to the company’s environmental whole production cycle,” Chaladze said. treatments,” BP told Investor.ge. manager, Giorgi Chaladze. “The dry line project provides op- In addition, in 2015, BP Georgia The new plant will use less water portunity for using alternative fuel, for started usage of an EU/UK compliant than the old, wet process plants, he noted. example municipal waste or used tires, hazardous waste incinerator. BP and its which can result in a better waste man- partners have also supported total 34 agement and will reduce waste accumu- projects to support energy efficiency Enviroserve has been lation in Georgia,” he added. in Georgia. McDonald’s Georgia is working with governments ENVIROSERVE Caucasus has made LQYHVWLQJLQHQHUJ\HI¿FLHQF\E\XVLQJ a business of collecting and recycling e- HFRIULHQGO\DQGHI¿FLHQWEXLOGLQJPD- and communities in many waste, including old computers, phones, terials on its restaurants in Georgia. The printers. Enviroserve has been working restaurant chain is also planting trees and countries for over 20 with governments and communities in working to create a clean environment years to find solutions for PDQ\FRXQWULHVIRURYHU\HDUVWR¿QG for residents living near its facilities, solutions for e-waste related issues. Nikoloz Darbaiseli, McDonald’s Georgia e-waste related issues. In Georgia, ENVIROSERVE Cauca- Development Manager, told Investor.ge. sus collects e-waste, sorts it and ships it “The plant will be equipped with to the company’s facilities in the UAE. INVESTING IN THE FUTURE continuous emission monitoring sys- “As the volume grows, we will invest HeidelbergCement Georgia is build- tem – for measuring dust, also nitrogen, and expand with further facilities in ing a modern dry line cement plant in sulfur and carbon oxide emissions…The the recycling chain,” David Barker, the Kaspi municipality as part of its efforts new system will help company to reduce director of ENVIROSERVE Caucasus, to provide clean building materials, ac- HPLVVLRQVDQGLQFUHDVHHI¿FLHQF\RIWKH told Investor.ge.

ADVERTISEMENT UNTAPPED POTENTIAL OFF THE BEATEN PATH: *HRUJLDQYLOODJHVDUHEHQH¿WLQJIURP the international trend toward more rural tourism, noted Tamar Toria, the Execu- Georgia’s Untapped Potential tive Director of the Association of Farms of Georgia. for Agrotourism The tendency could be a boom for local farmers and rural communities as GEORGIA’S RURAL COMMUNITIES REPRESENT AN UNDERUTILIZED an alternative source of income, but more MARKET FOR TOURISM, BOTH DOMESTIC AND FOREIGN. FROM needs to be done to develop the sector, WINE-MAKING AND SPA TREATMENTS TO COOKING CLASSES she told Investor.ge. AND WILDERNESS TRAILS, THE POTENTIAL FOR TOURISM BEYOND Noting that Georgia has “potential,” THE TBILISI-KAZBEGI-BATUMI CORRIDOR CONTINUES TO ATTRACT Toria said it is “not developed properly” INTEREST AND INVESTORS. right now due to a myriad of reasons, including the lack of local experience, absence of promotion and poor infra- LIKA JORJOLIANI But for years the sector struggled to structure. compete with the draw of Tbilisi and She noted that two years ago, the omemade wine, organic toma- traditional destinations like Kazbegi Association invited a Dutch specialist toes, fresh cheese straight from and Batumi. Today, that is starting the to evaluate the potential of ten member Hthe farm: rural tourism in Geor- change, according to tourism specialists farms that are engaged in agricultural JLDKDVDOZD\VVHHPHGOLNHDQHDV\¿W and policymakers. tourism.

ADVERTISEMENT Rural commuities are developing tours that involve nature hikes and horseback riding.

After the trip, Toria said, the special- eration. Prior to that, there were few said. ist was generally impressed with the family-run guesthouses, and those that The network, known as the Rural accommodations. His main complaint: did exist were located close to the major Tourism Network, unites 186 guest- the toilets and bathing facilities. tourism sites. houses in eight regions of the country. Nana Kartvelishvili, the coordinator ³7HQWR¿IWHHQ\HDUVDJRWRXULVWV Members of the network meet a uni- of the Network of Agricultural Tourism were located only in large towns; today ¿HGTXDOLW\VWDQGDUGDQGDUHSURPRWHG at Association Elkana, agreed that pro- tourists have more choices. But, still we through the organization’s website, viding high-standard infrastructure and have a problem with equipping of these www.ruraltoursim.ge. “hygienic sites” is still a problem. hotels, improving of the infrastructure She added that, as part of the pro- But she noted that the growth in agri- and hygienic sites,” she told Investor.ge. gram, Elkana inspects the hotels and cultural tourism has been noticeable over The six-year program helped create gives them recommendations to help the past decade and Elkana has helped a base for agricultural tourism, Kartvel- improve their services, including training create a chain of rural guesthouses that ishvili said. for farmers. meet international standards. “A tourist network for agricultural One of farmers’ biggest takeaways Rural tourism development in Geor- tourism was created after 2012, com- from the training was the need for invest- JLDZDV¿UVWLQLWLDWHGE\(ONDQD¶V7RXU- bining family hotels. We are working ment to create guesthouses and hotels ism and Rural Development Project, in eight regions and want to connect the that meet international standards. which ran from June 2006 through June ninth one—the Samegrelo Region . . . In general, Kartvelishvili said, at this 2012 and was financed by the Swiss We created a website and have a system stage agricultural tourism is not “a main Agency for Development and Coop- for the booking of hotels,” Kartvelishvili source for receiving incomes,” although

40 | Investor.ge ‡ AUGUST-SEPTEMBER 2018 it does provide an additional source of revenue for farms.

BUCHAREST, ROME, KUTAISI There have been some exceptions, she said, and some rural households have succeeded at making tourism their main business. The potential is real, and the desire— and need—in local communities for such business is palatable. Search any Georgian destination on %RRNLQJFRPDQGDÀXUU\RIJXHVWKRXVHV from Batumi to Oni pops up. Farmer Levan Khmelidze lives in

the Tsageri municipality, in the village Georgian cooking is a big attraction for rural tourism. Korelishi, where he and his partner have been operating Rich Point Georgia, a from former Soviet countries, although grapes for Tvishi wine. tourism agency, for the past two years. there has been interest from European He said that while many of the coun- “It is a family business; we opened a tourists and tour operators. try’s over seven million visitors opt to hostel two years ago. At this stage, we Khmelidze said tourists are usually travel to Kakheti, Svaneti or Kazbegi, his can host 16 people,” he said, noting that interested in the family’s vineyard and family is working hard to promote Racha most of his business comes from tourists winery, where they cultivate Tsolikauri and their region, Lechkhumi.

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AMC Tbilisi AMC Batumi 24/7 Hotline: +995 32 250 00 20 24/7 Hotline: +995 32 250 00 77 11 D. Arakishvili Str. 114 Z. Gorgiladze Str. [email protected] [email protected] work between cities and rural commu- Georgia’s ancient method of fermenting nities. In addition, international airline grapes in large, oblong terracotta vessels Wizz Air is bringing tourists directly to buried in the ground. Imereti, which makes it easier for tourists In Kakheti, Shiumi wine company to visit Kutaisi and other areas nearby. hosts tourists from around the world, Rural communities in other areas are company director Akaki Tsopurashvili also working to promote their regions to told Investor.ge. tourists. Interest in Georgian wine is so high Karina Bezhashvili, the chair of that Shiumi created the country’s only Guesthouses are marketing local traditions and wine. the NGO Interethnic Union of Kvemo- museum dedicated to grapes and Vasioni Kartli, has been actively promoting rural wine. The museum, located at the winery “Here we have all the conditions tourism for years. in Tsinandali, has vintage wines from for the development of agricultural Bezhashvili has been working with over 300 types of grapes, including 92 tourism, high mountainous jeep tours guesthouses in Armenia and in Kvemo- European varieties, he said. and ski tourism. In addition to beautiful Kartli as part of a project to build coop- It also provides guests with a detailed nature, we offer local dishes made from eration between countries in the EU’s history of Georgia’s winemaking tradi- locally cultivated products . . . Lechkumi Eastern Partnership. tions. bacon is very famous. We have already Tourism, she said, helps rural com- Tsopurashvili said the wine museum researched Lechkhumi’s potential and munities create employment for the and tours are so popular that the winery created several tour packages consisting youth and build ties across borders. is opening a hotel near the winery. of two-, three- and seven-day packages. “The project is focused on expand- He noted that developing agricul- In the scope of the tours we acquaint ing the tourism potential of the region. tural tourism is important for the country tourists with local sightseeing spots and Mainly, the project supports the creation for more than just economic reasons. folklore,” he said. of cross-border tourism packages to at- Tsopurashvili agreed that developing Their efforts have already started tract domestic and international tourists,” the sector could help to create jobs and to pay off: last year, a group of Italian she said, adding that locals received improve the livelihoods of rural com- winemakers and journalists stayed at training as guides and are working to munities. Equally important, he added, is the hotel. meet a growing interest in agricultural that it could motivate people to preserve “We organized a tour for them in sev- and ethnic tours. and “study local traditions”—helping en regions, including Lechkhumi. They “Bolnisi is populated by many ethnic sparsely populated areas in the country visited our wine cellar and tasted wine. groups, mainly Greek, Armenian and develop. After visiting of the site, they posted a lot Azerbaijani families. In fact, we offer of interesting comments and articles. We trips to our farms and the opportunity to are working on actively promoting of our taste national cuisines,” she told Inves- region . . . I think that it is very important tor.ge. to raise awareness about our region, as The NGO is planning a festival well as to have well-developed infra- in September in honor of the local structure,” Khmelidze told Investor.ge. Khachinski pepper, a delicacy that was Deputy Minister of Agricultural Sec- well-known during the Soviet Union. In tor and Natural Protection of Georgia addition, they are working on preserving Gela Khanishvili underscored that infra- local wine-making traditions with the 50 structure is a key component to bringing grape varieties that are native to the area. tourists to rural areas, like the country’s remote Tusheti, famed for its mountain CHEESE AND WINE vista views and delicious cheese. The government has also been pro- The government has been actively moting traditional products such as expanding and improving the road net- regional cheese and qvevri wine—

42 | Investor.ge ‡ AUGUST-SEPTEMBER 2018 “BOWLED OVER” The book highlights the diversity of Tasting Georgia: rural life and cooking throughout Geor- gia, with special attention to winemakers. An Interview with Award-Winning Capalbo, who has written over a doz- en books that capture the beauty of rural Author Carla Capalbo life and winemaking, predominately in Italy, was inspired to come to Georgia INVESTOR.GE INTERVIEWED CARLA CAPALBO, by the ancient art of qvevri wine. THE AUTHOR OF TASTING GEORGIA: A FOOD In 2013, she came to attend an inter- AND WINE JOURNEY IN THE CAUCASUS, national qvevri conference, organized by Jonathan Wurdeman of Pheasant’s Tears ABOUT HER BOOK AND GEORGIA’S POTENTIAL Winery and Alaverdi Monastery. AS AN AGRITOURISM DESTINATION. Within days, she was captivated by Georgia’s food and its people, but when arla Capalbo’s award-winning the world. VKHORRNHGIRUERRNVWKDWUHÀHFWHGWKH book, Tasting Georgia: A Food Through her beautiful photographs recipes and beauty she had experienced, Cand Wine Journey in the Cau- and stories, Capalbo has captured the VKHFRXOGQ¶W¿QGDQ\ casus, has brought the dialogue about natural grace of rural life and exposed “Had I found the books that met my Georgia’s rich cuisine and wine to audi- the country’s largely unused potential expectations, I wouldn’t have written this ences in the United States and around for agricultural tourism. one. But the fact is there was nothing,

ADVERTISEMENT really,” Capalbo said. And a little cup full of cracked wheat, suddenly rediscovering this unbelievable “There was nothing about the kind of and she will make something out of it, richness that they have inherited: the rural life that I have spent so many, many what you could never imagine would diversity of the landscapes, the climates, decades working on and interested in. ever be good, and is actually just deli- but also cultures and down to grape vari- And yet that was the kind of thing I had cious,” she noted. eties or tomato types,” she said. kind of bonded on in Georgia.” “It is an exciting time. Even from With help from Wurdeman, Capalbo ECHOES OF ITALY the time when I started writing this to VWDUWHGFRPLQJWR*HRUJLDWRGR¿HOG That ability echoed what Capalbo when it came out, it has already really research and take photographs for her had experienced during her time in Italy. shot forward. The potential, as we have book. Over the course of three years, “As a foodie . . . to me what was seen over the past 20-25 years in Italy, is VKHVSHQWDURXQG¿YHPRQWKVWUDYHOLQJ interesting was the kind of foreignness huge—and in particular, in areas where around the country and spending time and exoticness; the otherness of what I the rural economy is struggling because with families—mostly winemakers—in was seeing in the landscape—and in the there is effectively no work,” she said. rural communities. kitchens—and at the same time what “It is a way of bringing an income While she did not set out to write a struck me was how familiar it all seems into the households—they don’t even book that focused on women winemak- . . . I spent years living in rural, southern have to go out to work, they can stay in ers, the stories and talents of strong Italy where the people similarly have no and work. What I think has been very Georgian women stand out. money—they are cash-poor but have big interesting to me has been I could see “First of all, of course one cannot vegetable gardens, probably still have all of that because I have seen it done help but be bowled over by the hospital- some animals, and they live—they make before, and so, I have encouraged people ity and generosity and openness really of a lot out of nothing,” she said. to do it.” the Georgians and, I found, in particular “I have written about all that for a of the women,” she said. long time, and so when I went to Georgia KEEP IT SIMPLE Capalbo was particularly impressed it was as if I could parse the landscape. Capalbo noted that she had to re- with their ability to turn very basic in- I looked out of the window from the assure people that tourists don’t need JUHGLHQWVLQWRVRSKLVWLFDWHGO\ÀDYRUHG little bus and I saw all sort of things that anything fancy. What visitors want is dishes. actually I understood: I understood the a “genuine rustic experience”—and, if As an example, she tells the story of shapes of the vegetable gardens, the scale possible, a modern toilet. a woman who produces amazing food of them, animals being free.” She recalled one family in Samegre- using next to nothing. The appeal of the cooking and the lo, which, over the course of three years, “This woman has no running water in people were so apparent to Capalbo created a place where visitors can eat and her house; she is cooking in her bedroom. that she found herself encouraging local watch how traditional food is prepared. However, the food that she makes is in winemakers to turn what came naturally “People come and all they want to terms of the palate of it, in terms of the to them into stops for tourists traveling watch is the old woman stirring the favors, of the subtly and the complex- in the area. holmi, they [the Georgian family] are ity, is as good as anything I have eaten Over the three years she worked on surprised that people would be inter- anywhere,” Capalbo said. her book, the changes were notable: Ca- ested in this. We want that, we want the “She will take a handful of dry sting- palbo can list the families that took her genuine rustic experience to feel and to ing nettle—of course, you have to have advice, and started serving paying guests taste the vegetables because the quality thought in the [growing] season to pick as wineries and small restaurants—and of the ingredients, when they are good them and dry them—and she has that in even guesthouses. in Georgia, are absolutely outstanding,” her larder. The Georgian people, she said, “are she said.

44 | Investor.ge ‡ AUGUST-SEPTEMBER 2018 AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 45 NEWS

CONTENT

Annual Fourth of 54 July Picnic

47 AMCHAM MEMBERS MEET 56 SOCIAL: US INDEPENDENCE DAY TURKISH AMBASSADOR PICNIC SPONSORS’ APPRECIATION COCKTAIL 47 AMCHAM HOSTS SPECIAL GUESTS AT ANNUAL PICNIC 58 SOCIAL: AMCHAM FAREWELL COCKTAIL RECEPTION 48 AMCHAM HOSTS U.S. DEPUTY CHIEF OF MISSION 59 SOCIAL: AMCHAM COCKTAIL RECEPTION 49 NEW MEMBERS 60 BOARD OF DIRECTORS 50 MEMBERSHIP DIRECTORY

54 SOCIAL: ANNUAL FOURTH OF JULY PICNIC

46 | Investor.ge ‡ AUGUST-SEPTEMBER 2018 NEWS

AMCHAM MEMBERS MEET TURKISH AMBASSADOR ON JUNE 26, AMCHAM GEORGIA HOSTED A MEMBERS’ ONLY LUNCHEON AT RADISSON BLU WITH TURKISH AMBASSADOR FATMA SEREN YAZGAN. AMBASSADOR YAZGAN SPOKE ABOUT TURKISH- GEORGIAN AND TURKISH- U.S. RELATIONS. HER PRESENTATION WAS FOLLOWED BY A LIVELY Q&A SESSION BETWEEN MEMBERS AND THE AMBASSADOR.

AMCHAM HOSTS SPECIAL GUESTS AT ANNUAL PICNIC

On July 7, 2018 The American is doing his portraits. I was excited to and run rehabilitation and vocational Chamber of Commerce in Georgia invit- meet him in person. I was asking lots of programs. HG$)*¶VEHQH¿FLDULHVIURPWKH']HJYL questions about his techniques and was AFG is hoping the genorisity of its Shelter Community and Nikozi Reha- watching how he was doing it,” said partner organizations and friends will bilitation Center projects to celebrate the Nick, who studies cartoon animation at help provide funding to complete the 241st anniversary of the signing the U.S. Nikozi Center. reconstruction work on the building. Declaration of Independence. Dzegvi Shelter Community is the Nikozi where Art rehabilitation and Happy kids were rushing from one important project not only for AFG but Education Center was constructed in place to another: They were lining in Georgia as well. It is the only free center cooperation with the Embassy of Japan the corner for ice-cream, soft drinks… of its kind in the country of Georgia, is located near the border of Russian- dancing under live music. They were where vulnerable individuals of all ages occupied South Ossetia. The center given lovely toys… they enjoyed taking live together as one large family. With has played an important role in helping pictures, listening to wonderful live mu- the help of many businsesses, AFG has war-affected children and adolescents VLFDQGZDWFKLQJWKHEHDXWLIXO¿UHZRUNV been able to start rebuilding a part of the of Nikozi through art and vocational “I always wanted to see how Zaliko shelter to house 60 more homeless people education.

AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 47 NEWS

AMCHAM HOSTS U.S. DEPUTY CHIEF OF MISSION AMCHAM HOSTED A MONTHLY BUSINESS ROUNDTABLE MEETING AT COURTYARD MARRIOTT ON JUNE 19 WITH U.S. EMBASSY DEPUTY CHIEF OF MISSION ELIZABETH ROOD, WHO DISCUSSED THE WORK OF THE EMBASSY AND THE U.S.-GEORGIA RELATIONSHIP, AND WITH DIRECTOR OF ENTERPRISE GEORGIA, MIKHEIL KHIDURELI, WHO PRESENTED ABOUT ONGOING AND FUTURE PROJECTS. THE PRESENTATION WAS FOLLOWED BY DYNAMIC Q&A SESSION BETWEEN AMCHAM MEMBERS AND THE SPEAKERS.

ADVERTISEMENT NEWS NEW MEMBERS

School of Tomorrow CaucasTransExpress CENN Dow LLC Ltd. Non-Profit Visiting Corp A Corp B CENN has been work- The Dow Chemical Com- School of Tomorrow was CaucasTransExpress start- ing since 1998 at the local, pany (Dow) combines science founded in 1992 as the first ed operating as an interna- national and regional levels and technology knowledge private school in Georgia. It tional freight forwarder in Tbilisi, in the Caucasus region to to develop premier materials offers the approved Geor- Georgia in 1999. In this short foster modern and sustain- and science solutions that are gian curriculum in addition time, everyone worked hard able development values essential to human progress. to the American based pro- to achieve the goal of making and practices. CENN works Dow has one of the strongest gram. Recently the American company capable of provid- with the government to de- and broadest toolkits in the in- program was accredited by ing a full and comprehensive velop sustainable solutions dustry, with robust technology, “Accreditation International,” range of services. Nowadays to existing challenges, assists asset integration, scale and an organization based in the the company provides all EXVLQHVVHVWRPD[LPL]HSURÀWV competitive capabilities that U.S. The American program is modes of land, sea and air while minimizing the impact on enable it to address complex based on Dr. R. Howards cur- transport. CaucasTransExpress the environment and is innova- global issues. Dow’s market- riculum and aims to identify covers Caucasus the Central tive and pro-active to respond driven, industry-leading port- and develop the intellectual Asia and main ports of Black to environmental and socio- folio of advanced materials, abilities of children. The School sea, including Poti, Batumi, economic concerns. With industrial intermediates, and of Tomorrow has had gradu- Chornomorsk (Illichivsk), Odes- representation throughout the plastics businesses deliver a ates since 1999. sa and Istanbul. With represen- Southern Caucasus and more broad range of differentiated www.st.edu.ge WDWLYHRIÀFHVDQGEXVLQHVVWLHV than 50 full time members of technology-based products with partners throughout the staff across the region, CENN and solutions for customers world, the company can truly has the capability and com- in high-growth markets such guarantee that CTE provides mitment to provide a service as packaging, infrastructure, services on a global scale. that is consistent, professional and consumer care. Dow is cte.ge and of the highest quality. a subsidiary of DowDuPont CENN delivers modern solu- (NYSE: DWDP), a holding com- tions for the public and busi- pany comprised of Dow and ness sectors and communities, DuPont with the intent to form assisting them in managing three strong, independent, their environmental and re- publicly traded companies in lated risks and helping them agriculture, materials science to achieve a competitive and specialty sectors. advantage through improved www.dow.com environmental and social per- formance. cenn.org

AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 49 AmCham Company Members as of August 2018

PATRON MEMBERS Betsy’s Hotel / Prosperos Books Diplomat Georgia Gosselin Mobility Georgia 32/34 Makashvili St. / 65, Kakheti Highway 3 M/D, Didi Digomi 34 Rustaveli Ave. Tel: 2984950 Tel: 2596601/02/03; Fax: 2596600 Tel: 2987624, Fax: 2923592 www.diplomat.ge www.gosselinmobility.eu BP Exploration Georgia www.betsyshotel.com 24, S. Tsintsadze St. Tel: 2593400 www.bpgeorgia.ge EY Georgia Grant Thornton LLC Best Western Hotel Tbilisi 44 Kote Abkhazi St. 61 D. Aghmashenebeli Ave. 11 Apakidze St. Tel: 2439375; Fax: 2439376 Tel: 2604406 Tel: 2300777 www.ge.ey.com www.grantthornton.ge KPMG Georgia LLC www.bestwesterntbilisi.ge 5th Floor, GMT Plaza, 4 Freedom Sq., 0105 Tel: 2935713; Fax: 2982276 British American Tobacco F H Bertling Georgia Ltd. Greco Group www.kpmg.ge 71 Vazha Pshavela Ave. Room 3, 4th Floor, 1 Nutsubidze St. Tel: 2157500/01/02; Fax: 2157503 154 Agmashenebeli Ave. Tel: 2393138; Fax: 2311107 www.bat.com Tel: 2252287 www.greco.ge www.bertling.com PwC Georgia 12 M. Aleksidze St., 0160 King David Business Center Budget Rent a Car - Otokoc GT Group Tel: 2508050; Fax: 2508060 Georgia LLC FINCA Bank Georgia 48 B. Cholokashvili St. www.pwc.com 37 Rustaveli St. 9D]KD3VKDYHOD$YHUGÀ Tel: 2740740 Tel: 2234112 Tel: 2244949 www.gtgroup.ge www.budget.com.ge ZZZ¿QFDJH

UGT D&KDYFKDYDG]H$YHWKÀRRU Tel: 2220211; Fax: 2220206 Caucasus University Food TV Geo LLC GULF Georgia www.ugt.ge .RVWDYD6W%OGWKÀ 45b. M. Kostava St. by Sun Petrolium Georgia LLC Tel: 2377777; Fax: 2313226 Tel: 2931570 Pixel Business Center, www.cu.edu.ge www.foodtvgeo.com 34 Chavchavadze Ave. Tel/Fax: 2496444 www.gulf.ge

CORPORATE A MEMBERS CleanTech Ltd. 5 Avlip Zurabashvili St., 0144 Frontera Resources Georgia Tel: 2922202 12 Paliashvili St. Tel: 2252412 Hilton Batumi AECOM Georgia LLC www.cleantech.ge www.fronteraresources.com 13 Takaishvili St., Batumi 34, Chavchavadze Ave. Tel: 292092 Tel: 555603200 www.hilton.com www.aecom.com Colliers International Georgia LLC Gazelle Finance Georgia LLC 11th Floor, King David Business Tatishvili st. 3/5 (Melikishvili Ave. Alliance LLC Center, 12 M. Aleksidze St. 0171 $ZRUG%XVLQHVV&HQWHUWKÀRRU  Iberia Refreshments, JSC 135 King Parnavaz St., Batumi Tel: 2224477 Tel: 2904304 Tetri Khevi Hesi District, Orkhevi Tel: 591555757 www.colliers.com ZZZJD]HOOH¿QDQFHFRP Tel: 2241091; Fax: 2241090 www.alliancegroup.ge www.pepsi.ge

Alliance Group Holding, JSC Conformity Assessment General Electric International (CAI) LLC 47/57 M. Kostava St., 0179 5th Floor, Pixel Bulding, IMSS Ltd. 8 Politkovskaya St., 1086 Tel: 2424181; Fax: 2998112 34 Chavchavadze Ave. 10a Bakhtrioni St. Tel: 595690008 www.agh.ge Tel: 2259516 / 2259505 Tel: 2920928 www.ca.international www.ge.com www.imss.ge

American Medical Centers, Georgia &XVKPDQ :DNH¿HOG*HRUJLD Georgian American Alloys, Inc. 11 D. Arakishvili St., Tbilisi WKÀRRU%ORFN 200 S Biscayne Blvd Suite 5500, Kavkaz Cement JSC Tel: 2500020 71 Vaja-Pshavela Ave. Miami FL 33131 USA 29 Andronikashvili St., 0189 114, Gorgiladze St., Batumi Tel: 2474849 Tel: (1)3053757560 Tel: 2619090 Tel: (+995 32) 250 00 77 ZZZFXVKPDQZDNH¿HOGJH www.gaalloys.com www.kavkazcement.ge www.amcenters.com

Deloitte Anaklia Development Maersk Georgia LLC King David Business Center Georgian American University Consortium 6 Khetagurov St. WKÀRRU0HUDE$OHNVLG]H6W 8 Aleksidze St. 6 Marjanishvili St. Tel: 2200800; Fax: 2200815 Tel: 2244566; Fax: 2244569 Tel: 2206520; Fax: 2206519 Tel: 2959910 www.gau.ge www.maerskline.com www.anakliadevelopment.com www.deloitte.ge

Avon Cosmetics Georgia LLC Dentons Georgia LLC GMT Group Marriott Hotels, Resorts & Suites 117 Tsereteli Ave. 10 Melikishvili St. 4 Freedom Square 13 Rustaveli Ave. Tel: 2226805; Fax: 2226806 Tel: 2509300; Fax: 2509301 Tel: 2988988; Fax: 2988910 Tel: 2779200; Fax: 2779210 www.avon.com www.dentons.com www.gmt.ge www.marriott.com

50 | Investor.ge ‡ AUGUST-SEPTEMBER 2018 Mastercard School of Tomorrow LLC Air Astana Airlines JSC %/&/DZ2I¿FH 2 Leonidze St. /1 G.Tabidze St., 21, Petre Kavtaradze St. 5th Floor, Pixel Business Center, 129a D. Agmashenebeli Ave., 0102 Premises No.315, Floor 4 Tel: 2233199 34 Chavchavadze Ave. Tel: 2922491; Fax: 2934526 Tel: 2900815 hwww.st.edu.ge Tel: 2514999 www.blc.ge www.mastercard.com www.airastana.com

SEAF Management LLC BMC Gorgia 7, Niko Nikoladze St. II Floor. 140 Tsereteli Ave. Meridian Express Tel: 2998115; Fax: 2923533 Aliance Georgia Ltd Tel: 2960960 15-17 Ketevan Tsamebuli Ave.0103 www.seaf.ge Tel: 2745188 33 Samurzakano St. www.gorgia.ge www.ups.com Tel: 2243773 www.groupaliance.com Sheraton Metechi Palace Hotel 20 Telavi St. Borjomi Likani International 16 Meskheti St., Borjomi 0*/DZ2I¿FH//& Tel: 2772020; Fax: 2772120 www.sheraton.com/tbilisi Tel: 2292292 WKÀRRU3L[HOEXLOGLQJ Aversi Pharma 34 Chavchavadze Ave., 0179 148/2 Aghmashenebeli Ave. Tel: 2206633 Tel: 2987860 SICPA Security Solutions CaspiGroup Ltd. www.mglaw.ge www.aversi.ge Georgia 29 Bochorma St. 79 Chargali St., 0178 Tel: 2550818 Tel: 2434580 www.caspigroup.com Microsoft Georgia LLC www.sicpa.com 34 Chavchavadze Ave. Baker Tilly Georgia Ltd. Tel: 2970123 Meidan Palace, 44 Kote Abkhazi St. www.microsoft.com Spotcoin LLC Tel: 2505353; Fax: 2505353 CaucasusTransExpress Ltd. 13 Shalva Radiani St., 0179 www.bakertillyinternational.com 10a Tashkent St. Tel: 599258539 Tel: 22375716 www.spotcoin.net www.cte.ge M & M - Militzer & Munch Georgien, FedEx GSP Bank of Georgia 39 Ketevan Tsamebuli Ave. T&K Restaurants (McDonald’s 3 Pushkin St. Caucasus Online LLC Tel: 2748240, 2748941 Georgia) Tel: 2444134; Fax: 2983269 71 Vazha-Pshavela Ave. www.fedex.com/ge 1 Dzmebi Kakabadze St. www.bog.com.ge Tel: 2000022 Tel: 2921246; Fax: 2251422 www.co.ge www.mcdonalds.ge 2I¿FH7HFKQRORJLHV6WHHOFDVH Dealership TBC Group Basel LLC Channel Energy (Poti) Limited 4 Freedom Sq., 0105 7 Marjanishvili St. 49 Krtsanisi St. Georgia LLC, By Petrocas Energy Tel: 2999980, 2688229 Tel: 2272727; Fax: 2228503 Tel: 2550110 Group ZZZRI¿FHWHFKQRORJLHVJH www.tbc.com.ge www.krtsanisi.com 52, David Agmashenebeli St., Poti Tel: (995493) 2-7-08-60 www.petrocasenergy.com Orient Logic Ltd. TMC Global Professional 8 Beliashvili St. Services Basis Bank JSC Tel: 2541818 6001 Indian School Road NE, Suite 1 Ketevan Tsamebuli Ave. Château Mukhrani, J.S.C. www.orient-logic.ge 190, Albuquerque, NM 87110, USA Tel: 2922922; Fax: 2986548 Sangebro St. Tel: (1 505) 8723146 www.basisbank.ge Tel: 2201878; Fax: 2201878; www.tmcservices.com www.mukhrani.com PepsiCo Wimm-Bill-Dann Village Ponichala, Tbilisi 0165 Visa International Service Batumi International Container Citicorp Funds Tel: 2475290 Association Terminal 32/34 I. Abashidze St. www.wbd.ru 900 Metro Center Boulevard, Foster 11, Baku Street, 6010, Batumi Tel: 555446699 City, CA 94404, USA Tel: 422 276452 laboheme.restaurant Tel: 599374877 www.bict.ge Philip Morris www.visa.com 1 Tabidze St. Tel: 2439001; Fax: 2439005 City & Co. West Invest Ltd. 4 Besiki St. www.philipmorrisinternational.com BDO LLC 13a Lortkipanidze St. Tel: 2920921 2 Tarkhnishvili Str. Tel: 2997275 Vere Business Centre, 0179 www.west-invest.ge ProCredit Bank Tel: 2545845; Fax: 2399204 www.bdo.ge CMC LLC 154 Agmashenebeli Ave. 4 Besiki St. Willis Towers Watson Ltd. Tel: 2202222; Fax: 2202222-2226 Tel: 2240717 17 M. Lebanidze St. www.procreditbank.ge www.cmc.ge Tel: 2905509 www.willis.com BGI Advisory Services Georgia 5XVWDYHOL$YH,,ÀRRU Radisson BLU Iveria Hotel Tel: 2997292; Fax: 2996615 Crowne Plaza Borjomi 1 Rose Revolution Sq. www.bgi.ge Baratashvili Str. 9, 1200 Borjomi Tel: 2402200; Fax: 2402201 Tel: 995 367 220260 www.radissonblu.com CORPORATE B MEMBERS www.cpborjomi.com

Biltmore Hotel Tbilisi Renstor LLC Adjara Group Hospitality 29 Rustaveli Ave. Crystal, MFO JSC Building I , Gamrekeli St. 1, 26 May Sq., 0179 Tel: 2727272 72 Tamar Mepe St. Kutaisi, 4600 Tel: 551122392 Tel: 2300099 http://www.millenniumhotels.com/en/ Tel: 431253343 www.renstor.com www.adjaragroup.com tbilisi/the-biltmore-hotel-tbilisi/ www.crystal.ge

AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 51 AmCham Company Members as of August 2018 NEWS

Dio Ltd. Georgian Airways HeidelbergCement Georgia Legal Partners Associated LLC 12th Km David Agmashenebeli Alley 12 Rustaveli Ave. 21 Al.Kazbegi Ave. 2I¿FH%HVLNL%XVLQHVV&HQWHU N3, Parsadani St. Tel: 2999730; Fax: 2999660 Tel: 2474747 4 Besiki St. 0108 Tel: 2361112 www.georgian-airways.com www.heidelbergcement.ge Tel: 2200203; Fax: 2250458 www.dio.ge www.lpa.ge

Georgian Beer Company Liberty Bank JSC Domson’s Engineering Herbalife Nutrition 3311 Saguramo, Mtskheta District 74 Chavchavadze Ave. 8a Sanapiro St. Bld. 4a Tamarashvili St., 0116 Tel: 2437770 Tel: 2555500; Fax: 2912269 Tel: 2050303 Tel: 2202929 www.geobeer.ge www.libertybank.ge www.domsons.com www.herbalife.com

Luca Polare Dorche Branch Prepabrik Iapi Ve Georgian Express 54 Oniashvili St. Inshaat Sanai Tijaret JSC 105, Tsereteli Avenue, 0119 Hualing International Special Tel: 2990399 026/13 Ilia Chavchavadze Ave. Tel: 2696060 Economic Zone www.lucapolare.com Tel: 593472419 www.dhl.com 25 Apt. 34/36 Kobuleti St. www.dorce.com.tr Tel: 591005900 www.hualing.cn Maqro Construction 22 Panjikidze St. Georgian Hospitality Group Tel: 2000909 Duty Free Georgia 22 Peritsvaleba St., 0103 www.maqro.ge UGÀRRU%HVLNL6W Tel: 2987789 Hydrolea LLC Besiki Business Center www.ghg.ge 11 A. Apakidze St. Tel: 2430150 Tel: 790420015 www.dfg.ge Maqro Food “Dinehall” www.hydrolea.com 28 Rustaveli Ave. Tel: 2001616 Georgian Industrial Group LLC www.dinehall.ge Efes Brewery in Georgia - GIG Plaza, 14 Gazapkhuli St., 0177 Tel: 2210187 Lomisi JSC ICS Ltd. TNT Agent in Georgia www.gig.ge Village Natakhtari, Mtskhta Region 25 Agmashenebeli Ave. Mercure Tbilisi Old Town Tel: 2357225 Tel: 2910220 9 Gorgasali St., Old Tbilisi, 0105 www.natakhtari.ge www.tnt.ge Tel: 2006060 www.mercure.com Georgian Integrated Systems (GiS) Enviroserve Caucasus 2I¿FH$EDVKLG]H6W [email protected] Tel: 2243724 ILF Beratende Ingenieure ZT Mgaloblishvili Kipiani Dzidziguri www.enviroserve.ae www.gis.ge GmbH Branch in Georgia (MKD) 15 Tamar Mepe Ave. 2I¿FH9D]KD3VKDYHOD$YH Tel: 2199453 Tel: 2553880 www.ilf.com www.mkd.ge ExpoGeorgia JSC Geo Steel LLC 118 Tsereteli Ave., 0119 36 Davit Gareji St., Rustavi, 3700 Tel: 2341100 Tel: 2243794 Mina JSC www.expogeorgia.ge 4 Besiki St. www.geosteel.com.ge International Black Sea Tel: 2449981/82/83; Fax: 2449980 University www.mina.com.ge David Agmashenebeli Alley 13 km, Gebrüder Weiss LLC 2, 0131 Airport Adjacent Territory, Globalink Logistics LLC Tel: 2595005 Kakheti Hwy 60 Sh. Nutsubidze St., 0186 www.ibsu.edu.ge Mira Hotels Ltd. Tel: 2710011 Tel: 2000238, 2208147 Brose Street Turn,Old Tbilisi www.gw-world.com www.globalinkllc.com Tel: 2242244/55/88 www.riverside.ge

Isbank Georgia JSC 140/B Agmashenebeli Ave., 0102 Geocell *ORULD//& 7LÀLV3DODFH Tel: 2310515 Murphy Bridge 3 Gotua St. 3 Gorgasali St., 0105 www.isbank.ge 8th Floor, Building 6, Saakadze Sq, Tel: 2770100, ext. 7435; Tel: 2000245 0160 Fax: 2770119 ZZZWLÀLVSDODFHJH Tel: 2007107 www.geocell.ge www.murphyshipping.com

JTI Caucasus VII Floor, Pixel Business Center, GeoEngineering LLC GM Capital LLC MyGPS 2 Tarkhnishvili St., 0179 34 Chavchavadze Ave. 6 Bokhua St., 0159 15a Tamarashvili St. Tel: 2604111 Tel: 2311788; Fax: 2311787 Tel: 2912626 Tel: 2180180 www.jti.com www.mygps.ge www.geoengineering.ge www.gmcapital.ge

National Center for Dispute Geomill LLC Gvinadze & Partners LLC Kordzahia, Jgenti Law Firm Resolution 4, Chirnakhuli St. 44 Kote Abkhazi St, 0105 10 Petriashvili St. 4/7 Rustaveli St., Rustavi Tel: 2400000 Tel: 2438970, Fax: 2438971 Tel: 2921878 Tel: 2193406 www.geomill.ge www.gvinadzeandpartners.ge www.kjlaw.ge www.ncdr.ge

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NCC Ltd. Qebuli Climate Terabank JSC CARE International in the 9, Erekle II turn 101, Tsereteli Ave. 3 Ketevan Tsamebuli Ave. Caucasus Tel: 2725088 Tel: 2356201 Tel: 2507700 37 Tsagareli St., 0162 www.ensisi.ge www.qebuli.ge www.terabank.ge Tel: 2291941 www.care-caucasus.org.ge Terma JSC Rakeen Development LLC Floor 1, 10 Budapest St. Nexia TA CENN Pixel Business Center, Tel: 599554794 4th Floor, 19 David Gamrekeli St., 27 Betlemi St., 0105 34 Chavchavadze Ave. www.terma.ge 0160 Tel: 2933393; Fax: 2933993 Tel: 2751903 Tel: 2242559 www.rakeen.ge www.cenn.org www.nexia.ge Terrace Hotel & Restaurant 7 Polikarpe Kakabadze St. Tel: 2999001 Regus, Georgian Branch, Tbilisi www.theterracetbilisi.com (CiDA) Civil Development Noblet Media Business Centre Agency Level 4, 1 Tabidze St., 2 Leonidze 2I¿FHQG)ORRU 9/1 Pirosmani St., Rustavi, 3700 Theco Ltd. 47/57 M. Kostava St., 0179 St.,0105 Tel: 341258822 16 Chikovani St. Tel: 555 003933 Tel: 2900039 www.cida.ge www.regus.com Tel: 592107515 www.nobletmedia.com www.tbilisia.ru Europe Foundation Rentals LLC University of Georgia 3 Kavsadze St. Nodia, Urumashvili & Parnters 46 Rustaveli Ave.; 36 Griboedov St. 77a Kostava St. Tel: 2253942; Fax 2252763 (ext. 112) 2I¿FH,9%ORFN Tel: 2454567 / 2996412 Tel: 2552222 www.epfound.org 71 Vazha-Pshavela Ave. www.rentals.ge www.ug.edu.ge Tel: 2207407 www.nplaw.ge Feel Harmony Veziri Ltd. Resolution Insurance Brokers, 187 E. Warm Springs Rd. 7 Luarsab Andronikashvili St., 0131 Georgia LLC Suite B172, Las Vegas, Tel: 2251614 61, Gorgasali St. Nevada 89119, USA www.veziri.net Nutrimax Ltd. Tel: 2936305 Tel: +1 702 781 7460 68a Rustavi Highway, 0165 www.rib.ge Tel: 2305335 Vinotel (“Aigvinissakhli”) LLC www.nutrimax.ge 4 Elene Akhvlediani Ascent Free University of Tbilisi 140 David Agmashenebeli Alley Rooms Hotel Tel: 2555888 www.vinotel.ge Tel: 2200901 14 Merab Kostava St. www.freeuni.edu.ge Tel: 2020099, 2730099 Overall Management Group www.roomshotels.com Wings and Freeman Capital (OMG) Inc. Green Building, 6, Marjanishvili St. Georgia Red Cross Society 29 Marjanishvili St. Tel: 2940051; Fax: 2940053 15 J. Kakhidze St. Tel: 2436052; Fax: 2436052 Sakcable JSC www.wfcapital.ge Tel: 2961092 Suite 414, 19 Gamrekeli St. www.redcross.ge Tel: 2221418 Wissol Georgia www.sakcable.ge Paine Stevens LLC 74b Chavchavadze Ave. Good Governance Initiative 1 Ivane Javakhishvili Sqr. Tel: 2915315; Fax: 2915615 Pixel Center, 8th Floor, 34, Tel: 2903211, Fax: 2903291 www.wissol.ge Chavchavadze Ave. www.painestevens.com Silknet Ltd. Tel: 2243111 95 Tsinamdzgvrishvili St. Zarapxana LLC www.ggi.ge Tel: 2910345; 15 Lubliana St. www.silknet.com Tel: 2510001 PASHA Bank Georgia JSC www.zarapxana.ge QSI International School of 15, Shota Rustaveli Ave. Georgia Tel: 2265000 SRG Investments LLC Village Zurgovani, Tbilisi www.pashabank.ge D&KDYFKDYDG]H$YHUGÀRRU Tel: 2537670; Fax: 2322607 Tel: 2253581 NON-PROFIT ORGANIZATIONS www.qsi.org www.silkroad.ge

Policy and Management Agricultural University of San Diego State University - Consulting Group (PMCG) T3Concept Ltd. Georgia Georgia $JKPDVKHQHEHOL$YHWKÀRRU 13 Radiani St., 0179 140 David Aghmashenebeli Alley 5 Kostava St. 0108 Tel: 2921171 Tel: 2434455 Tel: 2594901 Tel: 2311611 www.pmcg.ge www.turner.com, www.t3concept.ge www.agruni.edu.ge www.georgia.sdsu.edu

Transparency International Primera Golf & Residence TBC Leasing JSC Alliance for Progressive Georgia 36, Khetagurovi St., 0102 8 Bulachauri St., 0161 Healthcare 61 Agmashenebeli Ave. 0102 Tel: 2200036 Tel: 2272727 27/29 Chavchavadze Ave., 0179 Tel: 2932129 www.tbcleasing.ge Tel: 2242413 www.transparency.ge

Publicis Ltd. Tbilisi View American Friends of Georgia Union of Busines Ladies 17 V. Jorbenadze St. 4a, Freedom Sq. 77 Nutsubidze St. 8 D. Gamrekeli St., 0194 Tel: 2745672; Fax: 2745671 Tel: 2999980 Tel: 2397174; Fax: 2388495 Tel: 2308661 www.publicis.ge www.tbilisiview.ge www.afgeorgia.org www.ubl.ge

AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 53 NEWS

ANNUAL FOURTH OF JULY PICNIC AMCHAM GEORGIA JOINTLY WITH THE U.S. EMBASSY IN GEORGIA HOSTED A FAMILY PICNIC CELEBRATING THE 242ND ANNIVERSARY OF THE SIGNING OF THE U.S. DECLARATION OF INDEPENDENCE ON JULY 7TH. OVER 1500 AMERICAN, GEORGIAN AND INTERNATIONAL GUESTS ENJOYED AN AMERICAN-STYLE PICNIC WITH A GIANT BARBEQUE, LIVE BANDS, BOUNCY CASTLES.

54 | Investor.ge ‡ AUGUST-SEPTEMBER 2018 NEWS

AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 55 NEWS

AMCHAM US INDEPENDENCE DAY PICNIC SPONSORS’ APPRECIATION COCKTAIL

AMCHAM GEORGIA HOSTED AN APPRECIATION COCKTAIL FOR THE COMPANIES THAT SPONSORED THE ANNUAL FOURTH OF JULY CELEBRATION. THE EVENT WAS HELD AT THE MOXY HOTEL ON JULY 20.

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AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 57 NEWS

AMCHAM FAREWELL COCKTAIL RECEPTION

ON JUNE 8, AMCHAM GEORGIA HOSTED A FAREWELL COCKTAIL RECEPTION AT ANDROPOV’S EARS FOR U.S. EMBASSY CHIEF ECONOMIC AND POLITICAL OFFICER DWIGHT NYSTROM AND ECONOMIC OFFICER CHARLES SETEN. AMCHAM GEORGIA PRESIDENT MICHAEL COWGILL GREETED THE GUESTS AND THANKED ANDROPOV’S EARS FOR HOSTING THE RECEPTION. MR. COWGILL AND OTHER BOARD MEMBERS EXPRESSED THEIR GRATITUDE TO MR. NYSTROM AND MR. SETEN FOR THEIR CONTRIBUTIONS AND FOR SUPPORTING AMCHAM. MEMBERS ALSO BID THEM FAREWELL AND WISHED THEM ALL THE BEST WHILE THEY ENJOYED DRINKS AND TASTY FOOD.

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AMCHAM PRESENTATION, COCKTAIL RECEPTION AT STAMBA HOTEL

AMCHAM GEORGIA HOSTED A PANEL DISCUSSION ABOUT EXTENDED PRODUCERS RESPONSIBILITY (EPR) AT STAMBA HOTEL ON JUNE 21. THE PANEL MEMBERS WERE THE EXECUTIVE DIRECTOR OF CIVIL DEVELOPMENT AGENCY (CIDA), SALOME ZURABISHVILI; THE CEO OF CLEAN WORLD LTD, DAVID TSKITISHVILI; THE GENERAL DIRECTOR OF TBILISI MARRIOTT, CAMERON MCNEILLIE; THE PRIVATE SECTOR-LED RECYCLING COMPONENT LEADER AT CAUCASUS ENVIRONMENTAL NGO NETWORK (CENN), KAKHA RUKHAIA; AND ALVERD CHANKSELIANI, THE HEAD OF THE WASTE AND CHEMICAL SUBSTANCE MANAGEMENT DEPARTMENT OF THE MINISTRY OF ENVIRONMENT PROTECTION AND AGRICULTURE OF GEORGIA. THE PRESENTATION WAS FOLLOWED BY A Q&A SESSION BETWEEN THE MEMBERS AND THE SPEAKERS. THE PRESENTATION WAS FOLLOWED BY A COCKTAIL RECEPTION.

AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 59 NEWS

Board Of Directors 2018

R. MICHAEL COWGILL PRESIDENT

SARAH WILLIAMSON IRAKLI BAIDASHVILI ANDREW COXSHALL FIRST VICE-PRESIDENT VICE-PRESIDENT & TREASURER DIRECTOR

ESBEN EMBORG LASHA GOGIBERIDZE BADRI JAPARIDZE DIRECTOR DIRECTOR DIRECTOR

AmCham Executive Director Writers George Welton Nino Bakradze,Hans Gutbrod, the German Economic Team Georgia (Dr. Ricardo Guicci, Niklas Dornbusch), Lika Jorjoliani, Sally White Copy Editor Alexander Melin Special thanks to all the contributors to the magazine, AmCham Georgia’s Marketing & Promotion staff, and all our contributors, especially the the German Economic Team Nini Kapanadze Georgia. This magazine would not be possible without your help

Promotional Design Levan Baratashvili

Magazine Design and Layout Giorgi Megrelishvili 60 | Investor.ge ‡ AUGUST-SEPTEMBER 2018 NEWS

STEVE JOHNSON OTAR KIPSHIDZE KETTI KVARTSKHAVA DIRECTOR DIRECTOR DIRECTOR

CHRIS SCHLUETER BETSY HASKELL, DIRECTOR FOUNDING ADVISOR

GEORGE WELTON LIZ ZENTOS EXEC. DIRECTOR EX-OFFICIO MEMBER

AmCham Georgia Patron Members:

© The American Chamber of Commerce in Georgia, 2018 arising from the use of any product or service advertised within All rights reserved. No part of this magazine may be re-printed, or the pages of this issue. reproduced or utilized in any form or by electronic, mechanical Investor.ge is printed by CEZANNE or other means now known or hereafter invented, including AmCham Georgia: photocopying and recording, or in any information storage or rd retrieval system without permission. 36a Lado Asatiani Street, 3 ÁRRU7HO 7KHRSLQLRQVH[SUHVVHGLQWKLVPDJD]LQHGRQRWUHÁHFWWKHRSLQLRQ [email protected] of the American Chamber of Commerce in Georgia nor its Board HGLWRU#DPFKDPJHɕZZZDPFKDPJH Members or staff, unless otherwise stated. AmCham Georgia neither endorses, nor can be held liable for any eventuality www.investor.ge AUGUST-SEPTEMBER 2018 ‡ Investor.ge | 61

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