THE UNTAPPED AMCHAM MEETS PRESIDENT ARMENIA POTENTIAL OF GIORGI MARGVELASHVILI OPTS FOR THE REMITTANCES EURASIAN UNION

Investor.geA MAGAZINE OF THE AMERICAN CHAMBER OF COMMERCE IN GEORGIA ISSUE 41 OCT.-NOV. 2014

Amcham Launches Youth Program

OCTOBER-NOVEMBER/2014 • Investor.ge | 3 Investor.ge CONTENT

6 Getting More Bang From The Remittance Buck Dollars and Euro from abroad are an important source – at times the only source – of income for some Georgian families. But is the Georgian economy making the most of this valuable resource?

8 Careful Analysis, Planning Needed To Make Most Of Trade Deal As Georgia works to simultaneously attract investors and implement EU-approved trade regulations, the united states and the european union continue negotiations over the transatlantic trade and investment partnership (TTIP).

12 A New Plan Of Action For Georgian Agriculture Investor.Ge’s Heather Yundt interviewed Agriculture Minister Otar Danelia about the government’s new action plan to bring European standards to Georgian 12 agriculture and how cooperatives can fit in.

14 Irakli Margvelashvili: New Prescription Rules Will Usher In Higher Standards For Medicine

15 Government, Private Sector Working To Address Concerns Over Proposed Postal Law Parliament is considering a law that could give the Georgian postal service a monopoly in the market, analysts and private shipping companies warn.

15 19 Enabling The Lights To Burn Bright: Georgian Electricity Sector Tackles Issues Of Quantity And Quality

22 Stricter Visa Rules Disappoint Foreigners, Trigger Economic Concerns

26 From Fierce Maidan To New Global Order A reporter’s view from Ukraine

32 The South Caucasus: Regional Division And Divergence

34 Tbilisi: The Caucasus Muse For centuries, Tbilisi – and the rest of the country – 40 has served as a muse for foreigners. From Pushkin to Dumas, Tbilisi has been a gateway to the exotic. Russian writers and poets used to flock to the city’s ancient walls and bewitching culture in search of a safe haven to work. Today, writers and poets from Germany and the Netherlands, great britain and beyond are discovering Tbilisi and finding their own inspirations.

52 NEWS ...... 38

4 | Investor.ge • JUNE-JULY/2014 OCTOBER-NOVEMBER/2014 • Investor.ge | 5 “Remittances may be the unsung hero of the Georgian economy. Remittances from abroad amounted to $1.477 billion in 2013, or 9.3% of GDP – similar to agriculture and the services sector.”

– particularly in times of crisis. When ment can do. It cannot control where GETTING Georgia’s GDP contracted by 7% in these remittances go, or how they are 2009, remittances decreased by about used. But it can enable recipients to make MORE BANG 16%, while FDI shrunk by over 57%. the most of the money they receive. Here, Of course, remittanceshave vices the authorities have got two things right. too. Most notably, they can subsidize Effective regulation means that sending FROM THE unproductive areas of the economy (the remittances to Georgia now costs less so-called “Dutch Disease”), and create a than 1% of the total sent; worldwide, REMITTANCE culture of dependency among recipients. the average is around 9%. Neither does Nor are they immune to geopolitics. For the government tax the remittances sent example, over half of Georgia’s remit- to recipients. That is wise; experience BUCK tances come from Russia. As a recent elsewhere suggests it simply encour- report from the European Council on ages senders to use informal methods REMITTANCES ARE AN Foreign Relations points out, that gives of transfer. IMPORTANT PART OF THE Moscow signifi cant leverage over the GEORGIAN ECONOMY BUT Georgian economy, should it choose to “BANK” TO THE FUTURE THEY ARE LARGELY IGNORED use it. A remittance ban, although hard to Encouraging greater fi nancial literacy BY POLICY MAKERS AND implement, could be one way of infl ict- would be another important step. The RESEARCHERS. DOLLARS AND ing damage; expelling Georgian migrant country’s Soviet past means that con- EUROS FROM ABROAD ARE workers (as happened in 2006) would cepts such as savings, investment and AN IMPORTANT SOURCE – be another. private pensions are relatively new to AT TIMES THE ONLY SOURCE Georgian society. As a result, Georgia – OF INCOME FOR SOME HOW TO SPEND IT has a relatively low national savings rate GEORGIAN FAMILIES. BUT IS Yet despite their importance, Geor- (about 20% of Gross National Income). THE GEORGIAN ECONOMY gian remittances receive comparatively More than anything else, this is a func- MAKING THE MOST OF THIS little attention from policy makers and tion of poverty: if incomes rise, savings VALUABLE RESOURCE? researchers. As a result, an important rates are likely to rise, too.But ignorance question remains largely unanswered: of personal fi nance is also a factor. GUY EDMUNDS is Georgia making the most out of this Greater use of the banking system cash cow? would also help, given its role in allocat- emittances may be the unsung Most remittance money is spent on ing money effi ciently between savers hero of the Georgian econo- basic needs. In the 2012 study Socio- and borrowers. Only 56% of Georgians Rmy. Remittances from abroad economic Problems of Return Migration say they have bank accounts or bank amounted to $1.477 billion in 2013, or in Georgia, researcher Mirian Tukhash- cards, according to 2013 data from the 9.3% of GDP – similar to agriculture and vili found that over half of it was spent on Caucasus Research Resource Centres the services sector. Add in money sent by food, healthcare and the like. Payment of (CRRC) – despite the fact that all social informal channels (such as handing cash debts accounted for approximately 10% security and pension payments are made to friends or bus drivers), and the total of remittances expenditures as did chil- through the banking system. (Any dis- is higher still. dren’s education and property purchases. crepancy here may refl ect the fact that On a micro level, remittances help This is not a bad thing: economists and many people do not use banking services to keep some of the poorest families other scholars praise spending on health beyond receiving money). in Georgia afl oat. In macro terms, they and education as contributions to “human Moreover, Georgians have mixed provide an important counterweight to capital formation.” But equally important feelings about banks. According to the country’s trade defi cit, and help to for Georgia’s longer-term development CRRC, only 35% of respondents say balance the economy. They are also a is the proportion of money saved (16%) that they trust banks, while 22% distrust more stable source of foreign exchange or invested in businesses (less than 5%). them; 31% appear to be indifferent to than Foreign Direct Investment (FDI) There is only so much the govern- them, while 9% say they don’t know.

6 | Investor.ge • OCTOBER-NOVEMBER/2014 “There is only so much the government can do. It cannot control where these remittances go, or how they are used.”

Instead of opening up savings accounts, cording to CRRC. The “Kerketi” mobile currently Chief Financial Offi cer of the many Georgians prefer to stash their wallet system, which allows people to Georgian Co-Investment Fund. cash at home. Another problem is ge- transfer money and make payments, “Thus far, a combination of market ography. Banks and other micro-fi nance was launched in Georgia in 2013, and factors has not rendered such instruments institutions are expanding their presence has ambitious roll-out plans. Banks and attractive for Georgia,” she adds,“but in Georgia: since January 2012, for micro-finance institutions could also as the growth of the Georgian economy example, the numbers of bank branches expand the range of remittance-related shifts into higher gear, this alternative and services centers have increased by services available. For example, Crystal source of cheap and convenient fi nanc- 12% and 37%, respectively. But since and Bank Constanta offer special loans ing for banks will be worth revisiting. roughly half of remittances fl ow to the that use future remittance fl ows as col- So called future-fl ow securitizations are countryside, access remains a diffi culty lateral. For now, the numbers taking diffi cult and costly to set up, but once for those in remote areas. advantage remain small. But the idea has structured, can be re-used indefi nitely.” One idea that could work is “mobile” potential to expand. banking, which enables people to access Finally, banks looking for additional Guy Edmunds works for the Dan- basic banking services and to receive sources of liquidity to fund their grow- ish Refugee Council in Tbilisi. DRC is remittances through mobile phones. ing business could “securitize” future currently implementing a project called The idea has a strong track record in remittance fl ows as the basis for bor- “Enhancing the Role of Georgian other countries, such as Kenya and the rowing money. “Inbound transfers are a Emigrants at Home” in partnership with Philippines, and has strong potential well-tested source of securitized lending the International Centre for Migration in Georgia, where 89% of households globally,” says Thea Jokhadze, Char- Policy Development, which is funded by claim to have a mobile telephone, ac- tered Financial Analyst (CFA), who is the European Union.

ADVERTISEMENT ver the summer, Tbilisi hosted a kashvili, Georgian Minister of Economy joint Georgia-EU international and Sustainable Development? Indeed, Oinvestment conference. At- the representative group of speakers was tendees were greeted with a gleaming, comprised of EU Commissioners, while 21-page booklet detailing answers to the the attentive audience was mostly private question, “Why Invest in Georgia?” The businesses. response came not only in the form of a CORDELIA PONCZEK, cohesive list of Georgian companies, but TRADE RELATIONS ABROAD: KOŚCIUSZKO FOUNDATION also in an eloquent point-by-point expla- ECONOMICS OR POLITICS? RESEARCH GRANT RECIPIENT nation of Georgia’s investment position. Throughout Georgia’s EU integra- The latter touted such things as Georgia’s tion process, certain reforms have been DCFTA with the EU (signed June 27), rolled out, primarily under the auspices its strategic location (“a bridge between of European values. Indeed, the Euro- Careful Europe and Asia”), and its investment- pean Union testifi es loudly and fi rmly friendly environment (“setting up a to bringing Eastern Partnership countries Analysis, business in Georgia is a straightforward closer to a European-based values sys- process”). The reader could then look up tem. And what resides on the other end from his or her packet to see the mani- of the scale? Some critics may point to Planning festation of these promises: a variety of Ukraine as the response. While they may Georgian businesses splayed across the be right in terms of values-based politi- dramatic backdrop of the Mtkvari River. cal policy, how can a for-profi t company Needed to This was Georgian entrepreneurship at be a bearer of morality? On September its best. 18, the Polish Institute of International Make Most While the conference was fi lled with Affairs (PISM) asked that very question people in suits bantering (as ever confer- in its conference on Polish-Turkish rela- ence inevitably is), the real weight of the tions in the common Eastern Partnership of Trade conference was outside its panel format: neighborhood. A project planner for the businesspeople would rather discuss Turkish BOTAS energy corporation investment over coffee while lingering pointed out that companies cannot weigh Deal in the lounge, than listen to yet another in too heavily on policy; likewise, it is speech about the political benefi ts of diffi cult for government to weigh in on AS GEORGIA WORKS the DCFTA and deeper Georgian-EU the profi t pursuit. TO SIMULTANEOUSLY relations. Why? Here a dialogue was ATTRACT INVESTORS AND forged between what Georgia had to of- ANALYZING THE COSTS, IMPLEMENT EU-APPROVED fer—economically, not politically—and PREPARING FOR THE TTIP TRADE REGULATIONS, THE UNITED STATES AND THE what it hoped to gain in return. The challenges that Georgia faces EUROPEAN UNION CONTINUE One may wonder: if the DCFTA is over DCFTA or TTIP engagement are NEGOTIATIONS OVER THE an economic agreement, why would economic, not political, and it is impor- TRANSATLANTIC TRADE AND politicians be a representative group of tant to draw the distinction as such. On INVESTMENT PARTNERSHIP speakers at all? Why was it the President June 6, the policy institute at the Inter- (TTIP). GEORGIAN of the European Commission, President national School of Economics in Tbilisi POLITICIANS, BUSINESSPEOPLE AND CITIZENS ARE UNITED IN José Manuel Barroso, who gave the key- (ISET) commented on the costs and ben- DETERMINING HOW GEORGIA note speech, rather than Karel De Gucht, efi ts of the then-proposed (now ratifi ed) CAN GET A PIECE OF THE EU Trade Commissioner? Why was it Dr. Deep and Comprehensive Free Trade TRADE PIE. Maia Panjikidze, Georgian Minister of Agreement (DCFTA): “If […] a deci- Foreign Affairs, who gave the Georgian sion is made to join a particular union, keynote speech, rather than Giorgi Kviri- it should be implemented on the basis

8 | Investor.ge • OCTOBER-NOVEMBER/2014 OCTOBER-NOVEMBER/2014 • Investor.ge | 9 of careful analysis and discussion with be obligated to open its market to U.S. domestic stakeholders, and after tough goods without reciprocal access to the Transatlantic Trade and negotiations, as opposed to a process U.S. market for Turkish goods. Georgia Investment Partnership: rushed for political reasons.” A similar could face a parallel situation. argument can be made for in pursuing the It is expected that the TTIP, when an Overview from TTIP.While Georgia may want to focus implemented, will have a “trickle-down” AmCham EU on the political possibilities of joining an effect on neighboring countries that have exclusively Western trade partnership, preferential trade agreements. It has even • An ambitious TTIP will pro- politicians and businesspeople alike been suggested that preexisting trade vide EU consumers with a need to focus on the greenbacks, and the agreements, like the North American wider choice of goods to buy politics will follow. Free Trade Area (NAFTA) and the Eu- at more competitive prices Amidst the political-economic ben- ropean Free Trade Association (EFTA), across a wide variety of sec- efi ts debate, there is yet another group to be honored and eventually enveloped tors be considered: Georgian citizens. Within in the TTIP to create an even larger • TTIP will improve all aspects the DCFTA, regulations may impose a free-trade area. This would increase the of online shopping across burden on markets still working to es- aforementioned market potential for borders tablish market norms. Would sellers at products, but it is completely contingent • TTIP will reduce time and the bazaars of Tbilisi still be at liberty to upon the ability of Georgian products cost for certain product (such sell milk in old Nabeghlavi bottles? Last to gain a foothold in the EU and U.S. as life patients year saw a rise in egg prices on account markets. On the other hand, Georgian • EU and US regulators envi- of origin-stamp requirements—and this products would again need to compete ronment) and duplication is one simple example. Consider labor with presumably cheaper U.S. and EU • Many EU degrees and quali- costs, procurement, and other regulatory products, while also needing to adhere fi cations are not recognised frameworks that Georgian parliament is to the same regulations. by the US, something which still working to overhaul. While Georgia The usefulness or uselessness of TTIP could change strives to be a Westward-leaning regional regulations is in the eye of the beholder. • TTIP could create more than hub, it also needs to consider the effects They are either an excellent foundation 500,000 new jobs in EU and US such policies have on its own citizens, ef- for future growth or a project for over- SMEs: fects like raised product costs, increased haul. If Georgia is interested in pursuing The more than 20 million oversight, and potential distrust in a sys- TTIP inclusion down the road, now is SMEs in the EU represent 99% tem that many still view as bureaucratic. the opportunity to plan. As Georgia is of businesses, and are a key Given Georgia’s choice to pursue one aligning its regulations with the EU, it driver for economic growth, trade agreement—the DCFTA, with the would behoove the country to conduct innovation, employment and EU—another is approaching on the ho- the overhaul with the TTIP in mind. social integration. SMEs’ con- tribution to EU GDP was trillion rizon. The opening salvo of the Transat- Georgia could even take a huge hint from in 2012. lantic Trade and Investment Partnership the regulations negotiations between the In the EU, SMEs provide (TTIP) negotiations has begun. Given its U.S. and EU. two thirds of all private sector promises—lower costs, open markets, There are three proposed solutions. jobs and 85% of net new jobs hundreds of millions of potential cus- The fi rst is that one market would give between 2002 and 2010 were tomers—it is natural for Georgia to be reciprocity to business adhering to simi- created by SMEs. SMEs are expected to gain taking stock of its entrance feasibility. lar regulations in the other market. The signifi cantly from TTIP because However, Georgia also needs to assess second is consolidation of regulations SMEs tend to dominate high its own political stake in the matter. using a problem-based approach. The tariffs sectors (food, machin- First and foremost, it has been clearly fi nal proposal is to come to a consensus ery, automobile) where in- conveyed that TTIP negotiations are cur- on practical application of disparate creased trade is expected to rently not open to non-EU or non-U.S. regulations to fi nd common ground. Us- result from an agreement. countries. So a country like Turkey may ing these proposed solutions as a bench-

10 | Investor.ge • OCTOBER-NOVEMBER/2014 mark, policy makers, economists, and in mediating, accounting for, and plan- that countries like Poland and Turkey businesspeoplemay come to a consensus ning for any market shocks.” He noted offer to help Georgia in implementing on how best to prime Georgia’s market political unrest, transportation disrup- reforms. These countries have been in for future cooperation. tions, or outside interference as his top Georgia’s shoes in the past 20 years; When asked about why he chose three concerns in Georgia they know the strengths, the weaknesses to invest in Georgia, Ian Hague, co- Such words are valuable takeaways and the challenges of being a country founder of Firebird Management, LLC, for Georgian politicians and business- undergoing reform. It is in this spirit that responded that it was “for the green.” He people alike. They explain the mindset Georgian politicians and entrepreneurs further explained that he saw Georgia’s behind investment and the willingness to must engage DCFTA regulations and investment climate, understood the op- cooperate. For all of Georgia’s eagerness TTIP aspirations. portunities, and invested—to great suc- to implement reforms, when it comes to cess. What about the political course of appeasing both the economic regulators Cordelia Ponczek is a graduate stu- Georgia? A Polish businessman at the and the investors, dialogue is perhaps the dent and analyst in Warsaw, Poland. She investment conference noted that “there best course of action. Experts at PISM’s is the Kościuszko Foundation research is always risk, but the challenge comes Polish-Turkish conference suggested grant recipient for 2014-2015.

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OCTOBER-NOVEMBER/2014 • Investor.ge | 11 A NEW PLAN OF ACTION FOR GEORGIAN AGRICULTURE

INVESTOR.GE’S HEATHER YUNDT sector to develop and implement new standards. HEATHER YUNDT he signing of Georgia’s historic “We should not consider [these INTERVIEWED Association Agreement and Free agreements] just as an obligation. Even AGRICULTURE TTrade Agreement with the Euro- if there was no Association Agreement MINISTER OTAR pean Union in June has raised both hopes or [Deep and Comprehensive Free Trade and fears about how the removal of EU Agreement], Georgia was supposed to DANELIA ABOUT THE import duties will affect one sector in start implementing standards,” he said. GOVERNMENT’S NEW particular: agriculture. “That’s why it is not only necessary, but ACTION PLAN TO The agricultural sector employs as very important that it happen now when much as half of Georgia’s workforce, the government is supporting the agricul- BRING EUROPEAN but accounts for less than 10 percent of tural sector like never before.” STANDARDS Georgia’s GDP, despite becoming a state “Georgia has been struggling for the TO GEORGIAN funding priority in recent years. past few years because the agricultural AGRICULTURE AND Otar Danelia, Georgia’s newly ap- sector was not in a very good position, pointed as agriculture minister, sees the unfortunately. HOW COOPERATIVES long-awaited signing of the agreements It was not promoted by the previous CAN FIT IN. as a much-needed opportunity for the government, and therefore the science

12 | Investor.ge • OCTOBER-NOVEMBER/2014 is gone, the education is not there, the we have, what sorts “According to each region, we have a technologies are not there.” are there, so that we have a catalogue. So development plan. What we’re going to do A PLAN FOR EACH VILLAGE we will see which one is on the level of each single village.” Danelia says his team at the Ministry is for making juice or of Agriculture has been working hard to jam and which is con- develop extensive plans for each region, sidered for the table.” nothing to do with each other. But so far which include projects like animal vac- the communication we have provided has cination and identifi cation, irrigation, and COOPERATIVES ONE OF THE been very successful.” the building of a phytosanitarium for the “HIGHEST PRIORITIES” To address the confusion, Danelia testing of products like honey. To develop the technical capacities of says the Ministry of Agriculture will soon “According to each region, we have Georgian farmers, the European Neigh- have a bus tour the country promoting a development plan. What we’re going bourhood Programme for Agriculture agricultural cooperatives in the villages. to do is on the level of each single vil- and Rural Development (ENPARD) is lage. We will have a clear vision of what working with the Georgian government BUDGETING FOR CHANGE is supposed to be developed there and to establish agricultural cooperatives It’s not just the EU that’s supporting where we see the sector in the next ten across the country. the extensive reforms in the sector. The years,” he said. “[Cooperatives are] one of the high- Georgian government has also made “In all directions, we have an action est priorities,” Danelia said. “Coopera- agricultural development a priority by plan. And it’s very gentle, I would say, tives seem to be quite effi cient, because increasing the Ministry of Agriculture’s to make sure we consider the interests if you want to have some machine or if budget exponentially in recent years, of our people. Imagine, for tens of years you want some special equipment, it’s from just 30.6 million GEL in 2010 to there was no practice and then you want diffi cult to buy when you’re alone.” more than 260 million GEL this year. to implement something in one day? It “We will have special programs for Danelia says this support, in addition would be painful. So we will make sure [the cooperatives], we will have special to tens of millions of euros in program it is not painful for them. We will give products for them, we will have special support from the EU and other funders, [the farmers] proper recommendations rates, we will promote them. ensures his team will have no problem and consulting.” We will fi nd the key fi gures, let’s say implementing the reforms. Given the proven success of Geor- one in each village, and we will coach “It’s all a challenge, but I don’t see gian wine exports, Danelia says wine will them. We will teach them how to man- any problems,” Danelia said. “We are remain a priority. But he also expects to age the cooperative, because it needs looking for additional external expertise see a signifi cant boost in exports of fruits management.” if we have a lack of knowledge in some and vegetables. Since the law on Agricultural Coop- specifi c areas. I pretty much know which “Pretty much every single vegetable eratives was introduced last year, Geor- country has the knowhow in different in Georgia has huge potential, as well as gian farmers have registered more than areas. The team is motivated and the fruits, because we are going to standard- 80 cooperatives. However, promoting government is supporting it. And once ize fruits. cooperatives is no easy task in a country you have government support, you have When we had the harvest, I asked the that still remembers the Soviet “kolk- resources, you have the team, you have experts to investigate what types of fruits hozes,” or collective farms. experts.” “Some people are “I think by the end of 2015, people Otar Danelia, Georgia’s newly appointed mixing cooperatives should feel a difference. Normally it minister of agriculture, sees the long-awaited with kolkhozes, be- takes three to fi ve years to see a result. cause that is the only But as a feeling, it should be there by the signing of the agreements as a much-needed unit they have seen in end of 2015. That’s how ambitious our opportunity for the sector to develop and terms of agricultural plans are. But they are all achievable. It implement new standards. cooperation,” he said. will take hard work, but we are ready “They really have for it.”

OCTOBER-NOVEMBER/2014 • Investor.ge | 13 IRAKLI MARGVELASHVILI: NEW PRESCRIPTION RULES WILL USHER IN HIGHER STANDARDS FOR MEDICINE

ON SEPTEMBER 1, THE GEORGIAN he new rules, which reorganized overuse of medicines. GOVERNMENT LAUNCHED A NEW the way the government catego- POLICY ON PHARMACEUTICAL OBSTACLES FOR ADDICTS PURCHASES, WHICH LIMITED Trizes drugs and restricted access THE TYPE OF MEDICATIONS THAT to more types of medications, were met One of the main goals of the change CAN BE OBTAINED WITHOUT A with public outcry. is to restrict access to medicines that ad- PRESCRIPTION AT PHARMACIES. But Dr. Irakli Margvelashvili told dicts use to make drugs at home. THE POLICY HAS BEEN HEAVILY POLITICIZED OVER THE PAST SEVERAL Investor.ge the decision to return to Prescriptions, which have been on WEEKS BUT, ACCORDING TO THE prescriptions will ultimately help society the law books for years but fell into ASSOCIATION OF PHARMACEUTICAL – and the pharmaceutical industry. disuse, are a “defensive mechanism” COMPANIES REPRESENTATIVES IN GEORGIA EXECUTIVE DIRECTOR “The pharmaceutical sector is not that protects the public from abusing and IRAKLI MARGVELASHVILI, THE NEW like other sectors… there are some rules, misusing medicine, Margvelashvili said. REGULATIONS WILL BE GOOD FOR some kind of standards which are created PATIENTS AND PHARMACEUTICAL COMPANIES ALIKE. in the countries that went through the ENDING A CULTURE OF stages that we are going through now,” he OVERCONSUMPTION said, noting that the new rules will help Another issue is overmedication – curb abuse of over-the-counter drugs and and improper medication.

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14 | Investor.ge • OCTOBER-NOVEMBER/2014 Over the past two decades, Geor- “This local behavior is not correct,” and get this consultation, but of course gians have grown accustomed to self- he said, adding a one-size-fi ts-all attitude it takes time.” medication and the power to buy nearly to medicine consumption is dangerous. The association worked with the any medication over the counter without health ministry to help create a pre- a doctor’s prescription. ADAPTING FOR THE GEORGIAN scription form that enables patients to A blood pressure pill that helped MARKET purchase their dose in smaller portions to someone’s aunt may be quickly pur- Change is diffi cult, however. minimalize cost as well, he noted. chased to help a neighbor’s mother-in- Margvelashvili noted that while “as a Margvelashvili added that a more law. doctor” “any time was time” to reinstate “active” awareness campaign could Ditto for the antibiotic that worked the policy of prescriptions, for Georgian have eased some fears about access to wonders on someone’s cousin’s child. society the fi rst month under the new commonly used medication and other The result: a population that buys too rules has been challenging. concerns. many unnecessary drugs. “The negative reaction of the Geor- But the ministry has been open to In a 2012 study of the pharmaceutical gian population was due to two main society’s complaints and has already industry based on 2010 fi gures, Transpar- reasons. Number one was, whch always tweaked the categories to meet some ency International Georgia reported that happens when you put new restrictions, public demands. the average Georgian household spends is that it takes more time. [Before], I The changes has also affected phar- 34 percent of its income on healthcare. could go and buy whatever. But that is macies and pharmaceutical manufactur- The Health Utilization and Expen- not for me an option; that is not accept- ers, he said. diture Survey of the World Bank found able for me” he said. But he added: “For the industry itself, that, in 2010, Georgia spent four percent “The second one was ‘how can I we do not complain about it. Of course of its GDP on medicine – double what is go to a doctor and get a prescription?’ there could be some temporary issues spent in the US. Some people were complaining that it but…for the companies that really care The culture of over-medicating – and costs money. about the ethical way of marketing…for self-medicating – needs to change, Mar- Now all of Georgia has the state us it is only positive. Medicine should be gvelashvili noted. insurance and you can go to the doctor used for what it was created for.”

Government, Private Sector Working to Address Concerns Over Proposed Postal Law

THE GEORGIAN MINISTRY OF HEATHER YUNDT ECONOMY AND SUSTAINABLE AFFAIRS IS WORKING ON A LAW draft bill designed to regulate Georgia’s postal service could THAT HAS RAISED FEARS THE end up pushing up to 40 postal service companies out of the GEORGIAN POSTAL SERVICE WILL AGeorgian market, critics say. HAVE AMONOPOLY IN THE MARKET, The bill, currently in its second draft, would re-introduce state ANALYSTS AND PRIVATE SHIPPING regulations on the postal market for the fi rst time since 2005. The COMPANIES WARN. THE MINISTRY, government maintains that those regulations would designate a na- HOWEVER, BELIEVES THE NEW LAW tional postal service operator as responsible for providing Georgia’s WILL HELP LIBERALIZE THE MARKET AND HAS BEEN WORKING ON A NEW universal postal service, a broadly defi ned concept that ensures a DRAFT OF THE LAW TO ADDRESS basic level of affordable postal service to every resident of Georgia. CONCERNS. What’s more, certain postal services would be reserved ex-

OCTOBER-NOVEMBER/2014 • Investor.ge | 15 clusively for that national operator, “contradictory to the path of Georgia to- says the wording the ministry’s draft law including money orders, the handling wards a free market economy with a fair would force them to operate under the of domestic parcels weighing up to 20 and competitive business environment.” umbrella of the state-owned company, kilograms, and the handling of interna- Initial versions of the draft included which would encourage them to leave tional parcels of up to 30 kilograms sent “overbroad and overreaching” defi ni- the market and ultimately hurt Georgia’s by land or sea — essentially granting the tions that have raised serious concern in business environment. national operator a monopoly on almost the banking community, as well as with “The world renowned companies all mail in Georgia. This would leaving the market will have a make Georgia the only country negative economic effect not in the world to reserve services only on this concrete area of the for a national postal operator to According to the current market, but also on the entire this extent. national economy,” Transparency While the government is still draft, Georgian Post would International Georgia said in a working on the draft of the law, press release in July. The organi- together with the EU Commis- be granted that monopoly zation estimates there are about sion and the European Express 40 companies providing postal Association (EEA) in Brussels, — without a formal public services in Georgia. the latest version available has Large postal companies and caused concern in the business tender process — for a banks are also encouraging the community. government to further revise the One of the biggest concerns period of five years, a draft postal law. is the draft law’s potential to “If the postal law passes as it create unnecessary barriers to reduction from the 20 is now, it will be hard for DHL to the market. continue operations in the coun- AmCham Georgia, as well years stated in the original try,” said TamtaPapelashvili, a as Transparency International spokesperson for DHL in Georgia. Georgia, Georgian banks and draft. She says DHL will do whatever is businesses involved in the post- necessary to prevent the law from al sector, has been working with passing before the company’s the government to try and ensure the new express courier services operating in concerns are addressed. legislation does not reintroduce a postal Georgia, Williamson said. The government appears to have monopoly. Although there is no move to formal- heard the concerns. AmCham Georgia President Sarah ly kick competitors of Georgian Post out The economy ministry has been Williamson noted that any measures of the market, Transparency International in close communication with the EU that reintroduce a monopoly would be Georgia Senior Analyst NatiaKutivadze Commission and the European Express

16 | Investor.ge • OCTOBER-NOVEMBER/2014

liberalize its postal service within fi ve years in accordance with this directive when it signed the much-anticipated European Union Association Agreement in June, it has a history of granting the postal service a monopoly. In a similar case last year, the Minis- try of Finance issued a directive adding regulations to the postal carrier market. After receiving complaints from carrier companies saying that the regula- tions favored Georgian Post, Transpar- ency International Georgia fought the case and won. “We recognize that Georgia needs a postal law in general, but this postal law shouldn’t be defi ned in a way to monopolize the market,” Kutivadze said. Now, the business community is re- questing that the draft bill be revised in line with international standards of mar- ket liberalization and ensure transpar- ency in selecting the national operator. The bill, currently in its second draft, would “We hope that the fi nal draft legis- lation will accurately refl ect the spirit re-introduce state regulations on the postal of liberalizing access to trade in postal market for the first time since 2005. services in Georgia as per commitments undertaken in the Deep and Comprehen- Association (EEA), an organization rep- rent format, companies will only have to sive Free Trade Agreement in a way that resenting the express industry in Europe, undergo an authorization process simpler best supports Georgia’s overall economic which had voiced concern regarding the than that in European countries to be able development,” Williamson said. re-monopolization of many aspects of to continue to provide postal services. Underscoring the ministry’s coopera- the postal service. She calls the law necessary and tion on the issue, she expressed cautious Deputy Economy Minister Nati- says it serves the important function of optimism that the fi nal draft will “best aMikeladze told Investor.ge that repre- ensuring the provision of universal mail support Georgia’s overall economic sentatives from the ministry had a video services for all residents, as well as of development.” conference with the EU Commission protecting customers. She adds that the in early October to discuss “all the is- fi nal decision on the national operator has sues.” She said clarifi cations have been not yet been made, despite wording in the Investor.ge note: The draft law is made and amendments have been agreed draft that indicates otherwise. still under intense revision, with the to. The ministry has sent a draft law “The long-term lack of regulation economy ministry working closely with to Brussels and, once the government within the postal system created a false the EU Commission on changes. Inves- reaches an agreement with the EU, the impression that the postal market is lib- tor.ge is committed to providing the latest fi nal draft will be sent to parliament, eralized and the new law is nothing but information possible; for updates please Mikeladze said. a step backwards,” she said in an email. check our webpage, www.investor.ge, However she noted that under the But market players have reason to and our facebook page: facebook.com/ government’s vision for the law in its cur- be concerned: while Georgia agreed to investorge.

18 | Investor.ge • OCTOBER-NOVEMBER/2014 Enabling the LIKA ZHORZHOLIANI BLACKOUTS: A THING OF THE PAST hen a sizeable part of Georgia went Lights to Burn black in July – including Tbilisi – the Wthree hours of darkness served as an unpleasant reminder of what living in the country Bright: Georgian used to be like: lights on, lights off – sometimes for days, often with no warning. Electricity Sector The problem with the electricity supply, how- ever, is largely an issue of the past, according to SulkhanZumburidze, the chairman of the board Tackles Issues of directors for the Georgian State Electrosystem. Zumburidze told Investor.ge that the outage that caused the major blackout in July was the of Quantity and fi rst massive system failure since 2010, when the country’s Imereti transmission line was down for Quality four hours and fi fteen minutes. “In the past, there have been such types of failures nine times but the consumers didn’t feel them,” he said, adding that employees have IT HAS BEEN YEARS SINCE been trained to provide “fast restoration” when a GEORGIA FACED REGULAR blackout occurs. BLACKOUTS. BUT WHEN THE To eliminate blackouts completely, Zumburid- LIGHTS WENT OFF AROUND ze said that it is imperative that the country create “alternative” transmission lines to the single line THE COUNTRY IN JULY, IT WAS that currently connects the Enguri Hydro Power A STARK REMINDER THAT THE Plant – Georgia’s largest source of power – to the COUNTRY’S ENERGY SECTOR country’s Zestaphoni substation. New and improved infrastructure will play IS STILL UNDER DEVELOPMENT a crucial role as Georgia grapples with issues of IN TERMS OF SUPPLY, increased demand for more – and more reliable RELIABILITY, AND QUALITY. – electricity. Georgia was ranked 52 out of 148 countries for the quality of its electricity supply in the 2013-2014 Global Competitiveness Report. In the previous year’s report, the authors noted that economies “depend on electricity supplies that are free of interruptions and shortages so that businesses and factories can work unimpeded.” Steps need to be taken to improve Georgia’s transmission network, noted a sector SWOT analysis that Bank of Georgia Research con- ducted in 2012, which found that “issues need to be addressed in terms of access, congestion, and tariffs.” Georgia and the European Bank of Recon-

OCTOBER-NOVEMBER/2014 • Investor.ge | 19 struction and Development (EBRD) are currently working to address some of Georgia’s infrastructure problems. With co-fi nancing from Germany’s KfW and the European Union, they are building a new substation, Jvari-Khoga, and new transmission lines to help ease the pressure on the existing system. The project, which will be ready at the end of 2016, will help “support us in the sustainability of the power grid,” Zumburidze told Investor.ge. The EBRD has said the €60 million project will “strengthen the reliability and stability of the Georgian transmission network; pave the way for investments in more hydropower production in northwest Georgia; and improve capacity and reliability of the electricity system supplying areas of signifi cant demand growth.” The infrastructure problems are not just a headache for households; Zumburidze noted that supplying major foreign investments, like the Poti Free Eco- nomic Zone, is “impossible” without the Jvari-Khorga project.

TOMORROW’S INFRASTRUCTURE TODAY The Georgian State Electrosystem is also working on other projects to ease pressure on the system. A six-year program, which focused on fi nding better ways to use the existing infrastructure, will soon be completed. And the €300 million Black Sea Power Transmission Lines project has also fi nanced construction in vital areas. Transmission lines have also received a boost with a $18.5 million rehabilita- tion project and USAID has given the state $35 million to develop power system infrastructure. “Modernized infrastructure will allow us to decrease[electricity] defi cits in the winter and mini- mize [power outages],” Zumburidze said.

NEW REGULATIONS TO TACKLE QUALITY CONCERNS Building and rehabilitating infrastructure is just part of the solution where quality of supply is con- cerned, however. The jumps in the quality of electricity that is provided – even if the lights never go off completely – creates problems for all users, from households In its latest energy policy, the Georgian Ministry of trying to protect their refrigerators and computers, Energy said that “optimizing the country’s energy con- to factories and other producers that require a steady sumption dynamics” is a priority. This includes energy and consistent power supply for sensitive equipment. transportation, allocation, consumption – and energy ef-

20 | Investor.ge • OCTOBER-NOVEMBER/2014 Georgia’s power lines, Galt & Taggart Research

fi ciency programs. and laws that will help ensure a high- will be disrupted or fl owing at a reduced To that end, the Georgian National quality power supply for consumers. capacity. In addition, the commission Energy and Water Supply Regulatory Power companies are required to inform can fi ne a power company if it does not Commission is planning new regulations their customers when the power supply resolve quality issues in a timely manner.

OCTOBER-NOVEMBER/2014 • Investor.ge | 21 MAIA EDILASHVILI benchmarks of the Visa Liberalisation STRICTER Action Plan (VLAP) requires Georgia to eorgia’s new immigration laws “consolidate the legal and institutional are creating havoc for foreign framework for migration policy, in line with VISA RULES Gnationals living in the country, EU and international standards, including irrespective of nationality or employment in the fi eld of legal/labour migration.” status. In its fi rst progress report on the imple- DISAPPOINT Reports of freelance professionals mentation of the VLAP, the delegation and contract workers struggling to re- noted that the EU Commission recom- ceive documentation, as well as students mended that Georgia adopt the law on FOREIGNERS, being denied the permits necessary to foreign nationals and stateless persons. attend university are widespread. Like- “The period concerning the visa-free wise, foreigners working for international stay indeed brings Georgia closer to the TRIGGER organizations in Georgia are being bom- EU standards, where the ‘90 days in any barded with misinformation or incomplete 180-day-period’ rule applies. The change regulations, leading to hours of work lost was not explicitly required; however, it ECONOMIC and, in some cases, unplanned trips home should be seen as a part of general ap- to apply for newly required visas or other proximation,” the EU Delegation said in an paperwork. email to Investor.ge. The new visa and residence permit CONCERNS policy, which the government introduced A WELCOMING HOME BASE on September 1, is part of a larger effort Interest in Georgian citizenship – and to improve “alien data administration.” residency – has been high in the past, But some analysts warn it could harm the even though foreigners from 118 countries Georgian economy and roll back the enjoyed visa-free entry to the country and country’s success at attracting tourists could stay for 360 days. and investors. Giorgi Meurmishvili, a chief specialist in the public relations department at the RADICAL CHANGE IN POLICY Public Service Development Agency, FOR LONG-TERM VISITORS which issues residence permits, told In- Under the changes, visitors who qualify vestor.ge that the agency responded to for visa-free travel to Georgia can stay 7,162 applications for temporary residence for just 90 days; longer stays – or if one permits and 1,466 applications for per- is a resident of a country that does not manent residence permits in 2013, and qualify for visa-free travel – require travel an approximately same number applied documents that only Georgian diplomatic in 2012. Meurmishvili did not respond to missions and consular offi ces abroad issue. questions about how many applications All types of visas costs $50. Ninety-four were approved. Under the previous legis- countries are eligible for short-term, visa- lation, which allowed citizens of 118 coun- free travel to Georgia, including the U.S. tries to enter Georgia without a visa and and EU member states, as well as Armenia, stay for 360 days, Georgia developed a Azerbaijan, Turkey, and Russia. reputation as a welcoming destination for For a long stay, either a temporary freelancers, students, and travelers, noted residence permit – which allows the bearer economists Florian Biermann and Eric Livny to work, receive an education or reunite in an editorial published in the Georgia with family members in Georgia – or a Today newspaper on September 26. permanent residency permit are required. “The foreigners are traveling in Geor- An investment residency permit is also gia, working, bringing along investment available for those who have invested at and expertise,” noted Inge Snip, a Dutch least 300,000 lari in the country. freelance consulltant, trainer and writer. According to the government, the Freelancers and researchers like Snip new rules are an effort to regulate the provided Georgia with the skills and ex- country’s immigration law prior to it receiv- perience that the developing economy ing visa-free travel to the EU. needs, Biermann and Livny said, adding The political and press section of the that, unlike developed economies (they EU Delegation to Georgia told Investor. used Germany as an example), which ge in an email interview that one of the are fi ghting against too much immigra-

22 | Investor.ge • OCTOBER-NOVEMBER/2014 OCTOBER-NOVEMBER/2014 • Investor.ge | 23 tion from low-income European countries, Georgia needs the knowledge that its skilled classes of immigrants bring, espe- cially consultants and students. Having spent seven years in Georgia, Snip said she finds the new visa rules “troubling”. “The personnel [at Public Service Hall] were friendly, though no one really knew what kind of documents we needed and how to deal with particular cases. So you would hear different stories from different people,” Snip complained. After receiving only a six-month stay permit, she will have to reapply in Decem- ber and spend additional time, energy and 210 lari ($120) because her document will expire in February. “These regulations should have been debated beforehand and the service per- sonnel should have undergone training,” Georgian PM Irakli Gharbiashvili announced on she told investor.ge. Many in the expat community agree, October 2 that he will task a group to look into citing uneven application of the rules – and a troubling prevalence of misinforma- the problems with the new immigration policy and tion during the application process. ISET, the International School of Eco- vowed to make changes if necessary based on the nomics at Tbilisi State University, where both Biermann and Livny work, has ex- complaints and concerns that have been raised, perienced the challenges fi rst hand: ten foreign students from Armenia and Azer- Interpressnews agency reported. baijan applied for residency permits. Their applications were identical; seven were approved, two were denied and one is still in process, the economists wrote in an professionals. Also, the law reads that, this development came about because editorial. Their experience is not unique. “any activity for which a person receives Georgia was so successful in attracting “I applied [for a residence permit] us- remuneration shall be considered labor artists, bloggers, travelers and generally ing the same documentation as my Ameri- activity.” interesting people (in economics, these can business partner,but I got one year Despite this, foreigners state it is very people are considered to belong to and he got fi ve,” Joseph Alexander Smith, diffi cult to receive residency if one lacks the ’cultural capital’ of a country),” the from the UK, told Investor.ge. A freelance permanent employment because one is economists wrote. journalist based in Tbilisi and a managing requested to submit a contract or employ- They added that“[b]eing a ‘cool’ co-director of the American Language ment document. place is not about having a lot of people Center, Smith has felt a sense of instabil- “Ours was a letter from our partner or- who work from nine to fi ve every day, as ity, which is causing him to reconsider his ganization saying we were needed for the Georgian lawmakers may have thought. investment plans. next fi ve years and they [the government] Rather it is about artists and cultural entre- “I want to be able to keep running the accepted it, but no one who was free- preneurs who may indulge in a precarious business, but right now I have no guaran- lancer or self-employed could submit a and unpredictable life.” tee of staying after January 2015,” he said. letter; they needed contracts,” said Smith. “And this has economic implications, “Also, if I want to start another business it Those restrictions, noted Biermann and because it is much easier to attract eco- will be almost impossible to prove I’m em- Livny, ultimately work against Georgia. nomically relevant people to places which ployed [because immigration authorities] “Thanks to many of these irregularly have a cosmopolitan, culturally attractive only accept contracts.” employed foreigners, Georgia was about atmosphere, like Amsterdam and Lon- The Ministry of Justice has written that to become a ‘cool’ place, something don. Georgia may now be squandering residency permits are accessible to those that can be easily confi rmed by reading the advantage it had over much richer “who carry out entrepreneurial or labor their declarations of love for Georgia on places like Almaty, Baku, and Tashkent,” activity in Georgia,” including freelance the internet. To a considerable extent, Biermann and Livny concluded.

24 | Investor.ge • OCTOBER-NOVEMBER/2014 ing a visa. The Ministry is planning to roll out a program of e-visas that will, in part, ease the burden on Georgia’s limited number of consular offi ces. In the meantime, however, Gotsiridze said that Georgia is losing out on tourists and visitors. “Tourists in today’s world make deci- sions very quickly, so the visa obligation will likely de-motivate many people to travel to Georgia,” he told Investor.ge. Kakha Bendukidze, who served as Minister of the Economy after the Rose Revolution, also denounced the new visa rules. On his Facebook page, the former minister wrote that issuing visas at the border is a common practice “in all developing tourist-[oriented] economies.” According to Bendukidze, the reform Justice Minister Tea Tsulukiani defended the law in an of easing visa rules, which he personally launched in 2004, was composed of three interview with Imedi television broadcast on October components: increasing the list of visa-free entries, providing visas on the state border 7. The minister scolded foreigners who were not and allowing long-term stays. The reform proved a success. Accord- prepared for the new regulations but vowed to help ing to offi cial statistics, the number of for- eign visits started to increase progressively, the “around 400” who are in the country and still jumping from a low of around 700,000 in 2006 to over 5 million in 2013. Currently need assistance complying with the new rules. the share of tourism in Georgia’s service exports is as high as 58%. Lambasting the stricter visa rules, Gotsiridze now expects that the worst out- REFORMING THE REFORM Center of Georgia, argues, however,that come from the changes may be a decline But the government has argued that a “reciprocal approach” does not make in the infl ow of tourists who would, before the regulations are necessary as part of sense for a small, developing country like the reforms, had the chance to stay in a principle of “reciprocity” with other Georgia. Georgia and start working here. countries and for Georgia’s own strategic Once an advisor to former Georgian “I personally don’t mind them bureau- interests, as well as a part of Tbilisi’s efforts President Mikheil Saakashvili, as well as cratizing the system and making sure they to adhere to the standards required for the former president of Georgian National know who is who and where they are the EU’s Schengen zone. The Ministry of Bank,he believes that instead of unnec- and for how long and applying penalties Foreign Affairs did not respond to Investor. essary bureaucratic principles, Georgia for over-staying, but Georgia isn’t the UK, ge’s questions about the implementa- should seek to be innovative – “[This is] France or Sweden with a generous benefi t tion of the new rules or any government the only solution for a small country,” system,” said Smith, a journalist and the projection about its potential impact. Gotsiridze noted. co-director of the American Language The Ministry’s press department did note, Economists are worried that because Center. however, that several countries were consular services abroad are usually lo- He warned the new regulations could removed from the visa-free list (countries cated in the capital cities that this would be a deterrent for investors like himself whose residents can stay in the country for complicate visa procedures for people against opening small and medium size 90 days without a visa). leaving in other areas. businesses (SMEs). The ministries of these countries, how- Additionally, Georgia has 63 diplo- “I don’t really leach off the Georgian ever, did not respond to the Georgian matic missions abroad, meaning that state; I pay taxes and employ locals. So I government’s proposal; the ministry plans citizens of many countries would need have a lot riding on staying in Georgia, but to repeat the proposal at a later date. to apply for Georgia’s consular service I don’t want to stick around if they make Roman Gotsiridze, the president of in a neighboring country, which would it diffi cult for no reason. [The new regula- the Tbilisi-based Economic Development further complicate the process of obtain- tions] will drive SMEs away.”

OCTOBER-NOVEMBER/2014 • Investor.ge | 25 HELENA BEDWELL pro-Russian government was deposed in FROM February, followed by other whirlwind entral Kyiv is looking less events like the giving up of Crimea FIERCE sad now, months after the Eu- without fi ring a shot. But eventually the Cromaidan Revolution, when residents of Kyiv grew tired of the black unimaginable violence occurred as the smoke, rallies and clashes. MAIDAN TO previous government attempted to break Maidan was cleaned; commerce and up anti-government demonstrations. city life returned. Once the capital’s buzzing Indepen- NEW GLOBAL dence Square, today it is simply called THE UKRAINIAN CRISIS Maidan. When one walks across the Under the Maidan, however, there is square now, portraits of the deceased a shopping mall called “Globus” where ORDER and fl owers scattered across the area the revolutionary spirit lives on in the still remind one of the atrocities that countless souvenir shops, where bubbly A REPORTER’S VIEW occurred there. shopkeepers offer one anything one de- FROM UKRAINE Today, however, Maidan is full of sires, from a simple Slava Ukraini brooch sunshine and is calm. People are walking to Putin KHX t-shirts, from Ukrainian around completely freely and, for most hero Bandera shirts to toilet paper il- part, it’s business as usual: customers lustrated with mockeries of Yanukovich are sipping cups of coffee from the nu- and his closest allies. Or, if one is not merous cafes in the district; cars circle feeling that humorous about it all, one the area; buses and tourist minibuses can purchase Ukrainian national-dress- are picking up visitors, going places. inspired clothing. The most favored destination for tour- Natalya, who runs one of the coffee ists, ironically enough, is the in famous shops at Globus, told me that she fully Mezhyhirya residence, the lavish home supported Maidan when it fi rst started, of the runaway president Viktor Yanu- but was not pleased with the way it had kovich, complete with his personal zoo! progressed. I was here last March, while on my People are still searching for justice way to Crimea; I stood where I stand for those who lost their lives, but others now, then smelling the burnt tires and have even forgot about the sacrifi ces the aroma of military kitchen food that made during the Maidan protests because surrounded the area. It felt like a scene — as some of my local friends remind from a Hollywood disaster movie. A me — today Ukraine faces even bigger huge stage had been erected where the problems. most amazing motivating addresses were “There is a war, which is wrongly delivered to the crowds during the times called a ‘Ukrainian crisis.’ It’s a Russian of the Maidan. invasion, the same as it was in Georgia In those days of violence, the bravest in 2008, masked as a separatist confl ict,” and most vocal of the protestors were said Kakha Bendukidze, a former Geor- brutally targeted and fell onto the cobbles gian Minister of the Economy who is HELENA BEDWELL IS A BLOOMBERG JOURNALIST WHO HAS TRAVELLED and barricades. But their slogans - Слава now chairman of the Free and Agricultur- TO, AND REPORTED FROM, UKRAINE країні!, GEROYAM SLAVA [Glory to al Universities and was recently invited THROUGHOUT THE CRISIS. THE Ukraine! Glory to the Heroes!] - made to join the Advisory Board for National OPINIONS EXPRESSED IN THIS ARTICLE them immortal in the hearts of Kyiv’s DO NOT REFLECT THE OPINION Reforms Council (NRC), President Poro- OF THE AMERICAN CHAMBER OF citizens and abroad. shenko’s initiative to coordinate reforms COMMERCE IN GEORGIA OR STAFF. This bravery was rewarded when the in Ukraine.

26 | Investor.ge • OCTOBER-NOVEMBER/2014 OCTOBER-NOVEMBER/2014 • Investor.ge | 27 There is wide popular public support Russian president has led many Ukrai- talk about what they expect now that- for radical reforms. People are sick and nians to defi ne their nation in opposition Maidan is over. tired of corruption, regulations and want to Russia – a mentality shift that will It is clear men want to fi ght. Stepan lean government with less spending. prevail in the end unless Russia is able Grono, who left Ukraine years ago, even “Ukraine is the most important coun- to change itself. brought his sons to Kyiv to awaken pa- try in the world today because the future triotic feelings. of new global order, which was invented AFTER MAIDAN: LIVE FREE OR DIE “They should have stopped them in the Ukrainian city of Yalta following Despite the crisis, Ukrainians have right in Crimea and ended this then. If WWII, depends on what will happen remained united. they call me to go to war, I will here,” Bendukidze says. Many tell me that they should have go! What else shall I do, wait Georgia’s former economic minister never left Crimea because it fed Putin’s when they come to Kyiv? But is not alone in his thinking. appetite. you are Georgian, and you know U.S. Defense Secretary Chuck Ha- Today many western Ukrainians are how Russia does things; you must gel, who spoke in Tbilisi earlier this also fi ghting on the front line in eastern live free, or die.” month, also said that the world order has Ukraine, against the Russian-backed A shaky ceasefi re was an- held fairly dramatically and effectively separatists. nounced on September 5th, since WWII. But now Putin’s actions Vladymir Drozd, a taxi driver, drove by which time 2,905 civilians have truly raised some questions about me around the city and even took me (including 31 children), and this world order to look around the ousted President 935 soldiers had been killed in Pundit Mark Mullen noted in an Viktor Yanukovych’s estate, Mezhy- Russia’s war against Ukraine, the email interview that Putin is known to hirya. It is hard to concentrate in that Kyiv Post news- be erratic – and is not a leader who pri- tasteless—albeit sumptuous—concrete, paper reported, oritizes stability and predictability like wood and glass residence, so I many democratic leaders instinctively decided—with my friend and do. With his actions, Mullen said, the several Ukrainian immigrants we met on the trip—to bicycle along the waterfront and simply

28 | Investor.ge • OCTOBER-NOVEMBER/2014 citing offi cial statistics. WAITING ON THE WEST My Russian hairdresser Olya, from Russia also has another powerful The civilized world must certainly do Mariupol, located on the coast of the Sea tool to make the world cringe: media more to help Ukraine; it should pay more of Azov, had her whole family, includ- propaganda, something everyone is attention to Ukraine’s reforms, provide ing her seven-year-old niece Nastya, talking about in Ukraine, like the atroci- fi nancial aid and even provide weapons. evacuated to Tbilisi. They were even too ties Ukrainians supposedly committed, Sanctions may work and many may think scared to talk about it to me when I called including the downing of Malaysia Air- that Putin is in some kind of deadlock, them in Tbilisi. All they would say was lines Flight MH17 and the “stopping” of but time doesn’t wait. Ukrainian Presi- that they want peace and Nastya cannot humanitarian aid of buckwheat and rice. dent Petro Poroshenko’s visit to the U.S. sleep after having heard explosions. “If we want to live in this new real- ended without a pledge of weapons to My Russian friend from Donetsk, ity with Russia claiming more and more fi ght pro-Russian rebels. who runs a successful business in Tbilisi territories and taking on weak neighbors, When I came back to my hotel, a but whose whole family remains in Do- calling them [Russia’s] nearest neighbor- group of German fi nanciers were eager netsk says, “I am Russian, but I am help- hood — if we will let Putin get away with for me to draw parallels between Geor- less in this; there is nothing I can do.” this — we will all lose. If not, we will gia’s and Ukraine’s respective struggles On my way back to Tbilisi, I remem- win, simply,”Bendukidze said. for freedom. After listening to some of bered my good friend Sergey the taxi The current Georgian govern- the voices gathered in the streets, one of driver, who helped to drive me around ment, however, has been trying them ironically said that it all sounded Crimea during the referendum period very hard to fi nd a common like Fox News television propaganda. and even managed to smuggle me out language with Putin by be- So it’s true. Ukraine still has not of the country when it was offi cially ing reasonable. But it has gotten what it deserves. It appears to declared as having joined Russia, mak- rarely received a proper be going at it alone, while people ing me an unwelcome Georgian citizen. response. from both sides - even those Rus- “Please don’t call me anymore,” Ser- sians who did not chose to be gey begged, “we have enough problems there - die, are wounded or are here as it is. I do not wish to speak on displaced. the phone about it. Stay well and happy.”

OCTOBER-NOVEMBER/2014 • Investor.ge | 29

or the three countries of the South Caucasus, the priority has always been to overcome the limits Fof geography. And for Armenia, Azerbaijan and Georgia, the preference has been to look beyond the re- gional confi nes of the South Caucasus. But never before has the region been as divided as it is now, as the South RICHARD GIRAGOSIAN IS THE Caucasus has become a strategic arena of competition and DIRECTOR OF THE REGIONAL confrontation with Russia seeking to push back and push STUDIES CENTER out European Union (EU) engagement. This confrontation is marked by the Russian-led Customs Union, or Eurasian Union, on the one side, as THE SOUTH an instrument for Russian pressure and power, but based solely on short-term political pressure and economic co- ercion. And on the other side, the European Union offers CAUCASUS: a more seductive, incentive-based offer of “Association Agreements” and an “Eastern Partnership.” REGIONAL Yet beyond the broader geopolitical context, the con- frontation is matched by a division of the region, based on a divergence of interests in three main areas: economic in- DIVISION terests, political preference, and the imperative of security.

AND ECONOMIC INTERESTS In terms of economic interests, the promise of greater market access and a “return on reform,” Georgia has DIVERGENCE clearly embraced its Association Agreement with the EU. Unlike its neighbors, the Georgian Association Agreement represents a crucial step to bringing the country closer to Europe, and fulfi lling a key strategic goal. But for Georgia, the challenge was not in signing the Association Agreement. Rather, it is the implementation stage that promises to be the more diffi cult and daunting task. For Armenia, the painful sacrifi ce of its own Asso- ciation Agreement has been defended by the Armenian government’s stated commitment to become a full member of Moscow’s Customs Union/Eurasian Union. While the economic benefi ts are meager and the higher trade tariffs rather punitive for the Armenian economy, Yerevan seeks some relief by lobbying for a set of over 800 goods and products to be at least temporarily exempt from the higher tariff rates. Nevertheless, the economic impact of joining the Customs Union is inevitably negative, only reinforcing the lack of competition, triggering a rise in prices, and RICHARD GIRAGOSIAN IS THE DIRECTOR OF THE REGIONAL bolstering the market dominance of the Armenian “oli- STUDIES CENTER (RSC), AN garchs,” who control several commodity-based cartels. INDEPENDENT THINK TANK IN Pursuing a unique and fairly effective “go it alone” YEREVAN, ARMENIA. strategy, Azerbaijan is neither interested in an Association

32 | Investor.ge • OCTOBER-NOVEMBER/2014 Agreement nor in joining the Customs harder to overcome once Armenia joins strategic desire for deeper security to Union. Its energy wealth, strategic sig- the Customs Union. And even more NATO and the West is a clear and pres- nifi cance and authoritarian government distressing, the political implications ent imperative. In the face of Russian has each contributed to this stance, and will only solidify Yerevan’s vulnerable aggression, well beyond the 2008 war, only demonstrated the paucity and weak- position within Moscow’s orbit, thereby there is no recourse and no alternative ness of Western, or Russian, leverage. contributing to even greater dependence for Georgian security. And while this on Russia and even weaker sovereignty. security necessity has only reinforced the POLITICAL PREFERENCES Yet it is Azerbaijan that loses the appeal of the EU, it also drives Georgian The divergence is also evident in most from its isolation. The country has commitments to NATO and more recent terms of political preferences. For Geor- already been marked by a new stage of pledges of partnership with the US in the gia, the EU model is a natural comple- political repression, with the government new counter-terror campaign targeting ment to the hard-won gains of the earlier only escalating its “creeping crackdown” ISIS, or the “Islamic State.” reform period, which has also helped to on civil society. This trend is only ex- The security imperative is equally make Georgia the true leader of the re- pected to increase, as neither the EU, nor serious for Armenia and was also the gion. And despite some recent setbacks the West in general, has any real leverage main determinant of the Armenian deci- and shortfalls, Georgia has still set an or infl uence over the Azerbaijani leader- sion to choose the Customs Union. And important precedent in the region’s only ship. And Baku’s quest to remain inde- given the leverage of the unresolved example of a peaceful transfer of power pendent of Russia will also only further Nagorno-Karabakh confl ict, Russia has from an incumbent government to an drive its desire for “domestic stability” long exploited the insecurity of both opposition coalition. at the expense of even the trappings of Armenia and Azerbaijan. And for Armenia, the economic cost democracy. As the number one arms provider to of its fateful decision to align itself with both Armenia and Azerbaijan, Russia has Moscow’s Customs Union model is THE IMPERATIVE OF SECURITY also been able to maintain its power and only matched by the negative political The third area of this regional di- position over both countries, making the impact. The trend of authoritarian rule vergence is defi ned by the imperative imperative of security more of an instru- in a one-party system will be that much of security. In the case of Georgia, the ment of insecurity.

And for Armenia, the economic cost of its fateful decision to align itself with Moscow’s Customs Union model is only matched by the negative political impact.

OCTOBER-NOVEMBER/2014 • Investor.ge | 33 34 | Investor.ge • OCTOBER-NOVEMBER/2014 TBILISI The Caucasus Muse

For centuries, Tbilisi – and the rest of the country – has served as a muse for foreigners. From Pushkin to Dumas, Tbilisi has been a gateway to the exotic. Russian writers and poets used to fl ock to the city’s ancient walls and bewitching culture in search of a safe haven to work. Today, writers and poets from Germany and the Netherlands, Great Britain and beyond are discovering Tbilisi and fi nding their own inspirations.

OCTOBER-NOVEMBER/2014 • Investor.ge | 35 TBILISI, WITH ITS BEWITCHING STREETS, EXOTIC SMELLS AND AGELESS HOSPITALITY, HAS BEEN LURINGWRITERS AND POETS TO COME AND SEEK AN EXCERPT INSPIRATION IN ITS ANCIENT WALLS FOR CENTURIES. FROM PUSHKIN AND DUMAS TO JOHN STEINBECK (HE CAME TWICE) AND BORIS PASTERNAK, FROM THE SNAKE GIANTS OF THE LITERARY WORLD HAVE FOUND THEIR MUSE, AND SOMETIMES EVEN SANCTUARY, IN THE CITY’S ANCIENT STREETS. AND THAT LEGACY EATERS BY IS CONTINUING TODAY AS MORE FOREIGN WRITERS AND POETS ARE DISCOVERING TBILISI’S QUIET CHARM. TARA ISABELLA “THE FABULOUS LAND” sian avant-gardists came to Georgia,” she BURTON: For Alexandr Pushkin, one of Tbilisi’s said, noting that the love affair continued most exalted expat writers, Tbilisi was a in the Soviet era, through the repression Maia went on talking, but gate from Europe to Asia. Today, there of the 1930s and on. The state even spon- Rebecca hardly heard her. She are even tours around the country inspired sored the close relations between Russian was caught up in the heart of the by his writings about Tbilisi and Georgia, and Georgian writers. labyrinth, now, in the warren of which he famously referred to as “the “In 1950s and 1960s there was another old streets she could have sworn fabulous land.” wave of Russians coming to Georgia and she had taken that morning but Pushkin was far from alone: Waves getting inspired by Georgia…For this gen- which were now newly revealed. of Russian writers and poets have come eration – Georgia was kind of a resort… The angels with their pockmarked to Tbilisi since the 19th century, seeking they were coming here and fi nding some cheeks and chiseled eyes stared safety, inspiration, or simply the foreignness relaxation and warmth, some wine and down at her; the griffons beat the of the near abroad, Ilia State University some sun, and they were all writing… remnants of their wings. The light Professor Bela Tsipuria told Investor.ge. and some friendships were also struck,” spackled and shimmered down There was Mikhail Lermontov, who she said. on the tails of the wrought-iron reportedly wrote Mtsyri in Tbilisi. There The Soviet state even paid for Russian mermaids, and in the cicada was also Alexander Griboedov, and Lev writers to travel to Georgia’s rich sanatori- fullness of the silence surrounding Tolstoy, to name a few. ums and soak up the local color, allowing them Rebecca felt at last that Not only Russian writers fell under them to create, translate, and publish their she knew on what ground she Tbilisi’s spell: French novelist Alexander works while enjoying the country’s resorts. stood. Dumas famously documented his stay in The close relations did not last in post- Yes, that smell in the air – she the city in Tales of the Caucasus – and Soviet times, however, Tsipuria noted. remembered, now; that was tone spent enough time in Tbilisi to fall in love “They could not accept Georgia’s will bread, dough hot-thrown against with the local ritual of going to the baths. for freedom. So when the Soviet Union the sides of the oven – mixed with Some expat writers, like Dagny Juel- collapsed, this kind of friendship also col- coriander and the curious and Przbyszewska, left their mark on the soul lapsed,” she said. acrid sweetness of aubergine of the city. Juel-Przybyszewska, the Nor- left too long in the sun. The wegian writer who was just as well known “AN EXTRAORDINARY HISTORY signs – yes, by this light Rebecca for her liasons with famous artists as for OF CULTURAL AMALGAMATION could read them now – were for her writing, was killed in Tbilisi in 1901. Her AND DEFIANCE” bakeries, market-stalls, churches, death has inspired its own books, including In the waning days of the Soviet Union, the shops of icon-makers. the novel Dagny or a Love Feast by Zurab and during the heady years of new in- It was real; it was unreal; it was Karumidze. dependence and confl ict, a new wave dream-like and unfathomable. of writers, journalists and poets fell under Once it had been a palace, in THE DAYS OF THE BLUE HORN Tbilisi’s spell. the old Moorish style, but time Writers and poets who were drawn to Peter Nasmyth fi rst came to Georgia as and fate had stretched out Tbilisi wrote about the city’s culture and a tourist and journalist. His writings about the stucco and weathered the traditions, Tsipuria said, adding that the Georgia – and his love of the country - stained glass; the carved ceiling writers and the poets also drew inspiration have gone much deeper than the chaotic curled with plaster tendrils; from Georgian food, wine and women. political turmoil of the 1990s, however. purple and pink, yellow and pale As Georgia embraced its indepen- “I fi rst came as a tourist in 1987, when green. Above these carvings, a dence after the Russian Revolution, I was a journalist. Two years later I came kaleidoscope of stained glass – Russian avant-gardists flocked to Tbilisi again with a publisher and through one shot through by holes through to escape the brutal war and revolution of those lengthy commissioning processes which the sky seeped in – rained hardships at home and they found kindred ended up writing ‘Georgia, Rebel in the down rays of many colors, spirits in the Blue Horn movement of the Caucasus’ (1992),” he told Investor.ge. dappling the marble staircase time, she added. “My trip timed itself one month after with shadows dense and dark as “During the period of the fi rst Georgian the 9th April and I was witness to those stones. democracy, 1916-1921, Tbilisi was a real huge Soviet-era demonstrations on safe haven – the whole generation of Rus- Rustaveli. The Vampire Wars (Blood Omen Saga 1). It will be out this fall with an offi cial launch on October 31 at the Museum of Theatre, Music, Cinema and Choreography. Roloefshas also helped bring more European writers to the city through the EU’s City Books project. One, Stefan Hertmans, captured the essence of the city in a short story about trying to track down the knife sharpener who captivated his imagination during an earlier trip to the city. “I descended the steps to the shad- owy, subterranean underpass that takes pedestrians to the other side of the traffi c- choked square – a shadowy world of undefi ned stench in which musicians, lace- making widows, needy woodcarvers and impoverished booksellers importuned the clacking heels of every-hurrying women,” he wrote in The Knifemaker of Tbilisi, a tale so full of the color that, as a reader, you feel as if you were in Hermans’ back pocket as he jostles around the glorious –and grimy - moments of street life that make Tbilisi great. The streets of Tbilisi have inspired other expat writers, as well. Tara Isabella Burton fi rst came when she was in college, and eventually started to write and establish herself as a free- lancer from Tbilisi. Now widely published, Burton still returns to Tbilisi when she has work in the region. Tbilisi, she said, is a writer’s city. Alexander Dumas The streets, smells and sounds of So- lolaki played a starring role in her latest After that I was hooked - it seems for 2004-2005) which I enjoyed a lot doing,” book, currently at the on submission with life!” she told Investor.ge in an email interview. her agent, The Snake Eaters, a novel that He added: “It’s hard not to be inspired “I have been thinking of writing a sec- features Machabelis Kucha. by Tbilisi - which is the natural byproduct ond book (even started a sketch) about “I love all of Georgia, of course, but of these magnifi cent mountains and an a woman in Darkveti (region of Chiatura). for me there’s something quite special extraordinary history of cultural amalga- She has really existed and fell in love with about Tbilisi. The art nouveau buildings in mation and defi ance. I view the city in her foreign neighbor honored years ago Sololaki, the sense of faded grandeur, the breaks of about three months so receive (a Belgian).” way public and private spaces are not the changes more powerfully than most.” Roloefs added that she writes mainly quite so strictly delineated (i.e., courtyards Former First Lady Sandra Roloefs has in English but also in Dutch and Georgian. that emerge just off streets, gorgeous entry also watched Tbilisi change with a writer’s Katie Davies was also already writing halls you can just peer into, like the one eye. A published author, Roloefs wrote her when she came to Tbilisi. She fi rst started on Machabeli St. that inspired the novel fi rst book, an autobiography, in Tbilisi and writing books while living in Spain and has I’ve recently completed) all give walking she has already started a second one, also self-published two volumes of her fi ve- through the city a sense of magic,” she inspired by the country. book series Blood Omen, writing under the said in a skype interview with Investor.ge. “I like to write about Georgia, about name KR Davies. “I love the carved angels you find its customs, traditions, culture and about But Tbilisi was the city that appreciated above doors, the wrought-iron mermaids its health system. I like to share my experi- her writing talents the most: a local publish- you fi nd on balconies. Culturally, it is that ences from Georgia and usually do that ing house is republishing the fi rst book of blend of infl uences that you fi nd in Tbilisi in the form of blogs or articles. I have only the series in Georgian, Vampire Wars. (The that excites me most. It’s certainly a writ- written one autobiographic book (back in original English title is Blood Omen Book I: ers’ city.”

OCTOBER-NOVEMBER/2014 • Investor.ge | 37 NEWS

CONTENT

AmCham Meets Georgian 40 President Giorgi Margvelashvili

40 Georgian President Giorgi Margvelashvili 44 American Friends of Georgia Celebrate 20 Years Addresses AmCham of Philanthropy

41 Defense Minister Irakli Alasania Meets with 45 US Ambassador Richard Norland Speaks with AmCham Members AmCham About NATO, ISIS

42 AmCham Launches Youth Program 46 Member Feature: Lemondo, Georgia’s Mobile Game Pioneer 43 AmCham Assists Members with New Immigration Policy 47 Member Profile: JSC Mina

43 AmCham President, Executive Director Discuss 48 New Members Global Diaspora Week with Minister 50 Membership Directory 43 Asian Development Bank Investment Forum 52 Social: AmCham Cocktail Reception 44 Energy, Mining & Utilities Committee Drafts Amendments to Eminent Domain Law 54 Social: Ice Bucket Challenge

44 AmCham Agribusiness and CLT Committees 55 Social: Oktoberfest at the Sheraton Metechi Secure Delay Over Agricultural Land Palace Hotel Amendments 56 Board of Directors

38 | Investor.ge • OCTOBER-NOVEMBER/2014 NEWS

OCTOBER-NOVEMBER/2014 • Investor.ge | 39 NEWS

President Giorgi Margvelashvili Meets, Addresses AmCham Members

stone on Georgia’s free access to European market. That European develop- is an open possibility for new foreign ment, but also it is a investors. very important asset The projects that are developing in for Georgia’s eco- our region, especially the Trans-Anato- nomic development. lian Project for gas pipeline, as well as Through signing the TAP project, are creating possibilities this agreement, an for Europe to access the Caspian Sea impressive market, resources for gas and oil. European market, That is very interesting, especially in which overall is the the context when we see that some of the biggest market in geopolitics are linked to Russia’s policy, the world, has been to the energy security issues, and I think opened for Georgia, that we are suggesting a very interest- for the investors that ing solution to some of our European are doing their busi- partners and doing this in a close contact ness in Georgia. between Georgia, Turkey and Azerbai- The achievements jan; this context has been re-defi ned and Georgian President Giorgi Margvelashvili was the are important in sev- re-stated recently, when we had a summit keynote speaker at AmCham’s October luncheon eral contexts– fi rst of of three presidents here, in Tbilisi, and at the Tbilisi Marriott Hotel. The president thanked AmCham for its work and highlighted the country’s all we believe that it we decided to have this summit every economic prospects. He also took questions from will improve the qual- year for further advancing of this issue. members during a frank discussion following his address. The following are excerpts from his speech, taking from ity of products that There is also a very interesting de- his offi cial website, www.president.gov.ge. are produced in our velopment in Georgia’s economy, which country, it will further is linked to the railway project - Baku- I think that the new government, as our economy as well as investments. In Tbilisi-Kars Project. By this project we well as the coalition, has very clearly this respect, there are several challenges are opening possibilities for the Caspian defi ned that the future priorities of our that we have to overcome. First of all, resources to be transferred to Georgia. country are basically built on develop- it is, sort of, binding or going deeper Actually we are also opening resources ment of economics, furthering economi- into European standards and European for the ISAF mission to withdraw their cal processes, and some of the main is- formats of doing business and I think forces through Georgia; but I think we sues in our society are going to be solved that those challenges will be overcome are also opening a great possibility for with effective economic development. eventually, because Georgian business, development of logistics business in our I believe is fl exible to adopt those new country through this railway, and I have FUTURE PROSPECTIVE OF standards and open itself to European already talked on the issue with my col- GEORGIAN ECONOMY market. league presidents. Let me start from the most important It is very important that at the same that I think has happened this year - Geor- time we are creating opportunities for WEALTH DISTRIBUTION IN gia signed the DCFTA agreement, the new businesses in Georgia, and I think GEORGIAN SOCIETY Association Agreement with European that people all around the world will be First of all, this is the fact that the Union, which is a very important mile- interested to invest in a country that has Georgian market is small and you are

40 | Investor.ge • OCTOBER-NOVEMBER/2014 NEWS

all aware of it; our GDP is growing - we have had a positive growth this year and eventually, I think, it will come up to six Defense Minister Irakli Alasania: percent of growth. But, at the same time, one of the main Security neccessary for economy, problems that I am personally concerned about is a distribution of existing wealth future middle class among society. Defense Minister IrakliAlasania told AmChammembers security is key to provid- We have a relatively lower GDP com- ing the country with a stable and prosperous future during the Chamber’s October pared to some of the other countries, even roundtable meeting at the Radisson IveriaBlu Hotel on October 13. among the post Soviet Union states, but The minister stressed that over the past two years the government has worked the distribution of wealth among society, to create an environment that supports business and investment in the country. “If the country is not well protected, economy development and social wel- which is also a part of jobs creation, fare can’t be reached,” he said, noting that the future of the country is tied to the is pretty poor. If we look at the GINI economy and the future growth of the middle class. index, one of the indexes that gives us a But the minister also underscored the role of defense and security in the coun- possibility to observe this, we’ll see that try’s future, stressing the support Georgia is receiving from NATO and the United States. He said that the country received the “maximum” out of the NATO special it is pretty poor, which is eventually a package it received during the September Wales Summit, and Georgia is prepar- problem for our social stability. ing to open a NATO training center in the country. If look at either parameter of the Alasania denied rumors that Georgia has been in discussion with the United distribution of wealth and look at the States or NATO to train Syrian rebels; rather, he said, the training center will train soldiers from NATO countries around the globe. Georgia, too, will receive valu- portion of small and medium businesses able training and insight both from NATO training at home as well as abroad. Skills now in our economy, the picture is even include special efforts to combat cyber-attacks and protect the country from worse. We are up to 20%, which eventu- terrorist threats. ally shows that those are the problems During the question and answer session, for our future development and stability. the minister fielded Another problem, of course, is the questions about me- stability in the region and we look at dia reports regarding those projects as two sides of a process Georgian-born Islamic extremist fi ghters in Syria – on one hand, if we increase the number and the threat of them of our global projects and transportation returning home or using of energy resources through Georgia, Georgia’s Pankisi Gorge including the transition of electricity as a base for attacks against Russia. and gas and oil, as well as transportation Alasania said that projects, it must be stated that we are the reports have been dramatically investing in the develop- “exaggerated” and the Georgian authorities ment of the transportation infrastructure. are fully aware of who It will increase the interest of many is leaving to fi ght in Syria, and where the fi ghters are from. Georgia is also working more countries to invest in Georgia; and closely with the Turkish government to track militant fi ghter movements, especially not only among our European partners, when they travel back to Georgia from Syria. The minister stressed, however, that the situation in Pankisi requires the gov- but also among all those states that are ernment’s attention so it cannot, once again, be used by Russia as a pretext to interested in stability and safety of the attack Georgia. Alasania praised the government’s strategy of reapproachment route through which they transport their with Russia on economic issues but stressed that offi cials have to be careful of not goods. reaching a “tipping point” that would allow Russia to use non-government orga- nizations and other means to manipulate Georgia’s domestic politics and polices. On the other hand, those projects will Alasania also noted that work is continuing, through Swiss negotiators, to put develop in a stable environment. So fur- customs control measures at the recognized Georgia-Russian border that is cur- thering and progress of them, I believe, rently being manned by the separatist governments in Abkhazia and South Ossetia. will infl uence the stability of our country.

OCTOBER-NOVEMBER/2014 • Investor.ge | 41 NEWS

AmCham Georgia’s Youth Leadership PARTICIPATING UNIVERSITIES Georgian American University (GAU) Program: Empowering students to Free University Agricultural University reach their potential Caucasus University

AMCHAM GEORGIA IS TEAMING UP WITH MEMBER PROGRAM MENTORS: BUSINESSES TO SUPPORT BEST PRACTICES FOR FUTURE Robin McCone, PwC | Director, BUSINESS LEADERS. Topic: Megatrends

In October, 2014 AmCham Georgia launches our Youth John Robinson, Deloitte | Partner, Leadership Program to support best practices for future business Topic: Presentation skills leaders in Georgia. Nelson Petrosyan, Grant Thornton | Director, Partner, This unique pilot program brings 20-30 top students from Topic: Consultative Selling - how to become a trusted AmCham member universities into a program of mentorship advisor with some of the leading business representatives in Georgia. The mentors will lead interactive workshops for these students giving ZviadSkhvitaridze, British American Tobacco | Head of Corporate & Regulatory Affairs Caucasus, advice on international best practices in the Georgian context Topic: Government Relations, Lobbyism and its specifi cities in areas such as intellectual property rights, time management, in the Caucasus presentation skills, confl ict resolution, business communications and more. Michael Cowgill, GAU | President, This program empowers students on their path towards a Topic: Business Communication successful career, and benefi ts members by giving them access, GiorgiChaladze, National Center for Dispute Resolution through our student career promotion segment, to some of the | Founder, Mediator, most motivated university students in the country for jobs and/ Topic: Confl ict Phycology, Alternative Dispute Resolution or internships. David Asatiani, Microsoft | General Manager, Our program will help these future business leaders reach their Topic: Intellectual Property Rights great potential as responsible business men and women in Georgia. AmCham expresses our gratitude to member representative Cliff Isaak, CanArgo Georgia | Chief Administrative mentors who enthusiastically support this pilot program. These Offi ce, mentors are top level managers from: PwC, CanArgo Georgia, Topic: The Art of the Interview

Deloitte, Grant Thornton, BAT, Microsoft Georgia, National LadoGurgenidze, Liberty Bank | Executive Chairman Center for Dispute Resolution, GAU and Liberty Bank. Topic: To be announced

42 | Investor.ge • OCTOBER-NOVEMBER/2014 NEWS

AMCHAM PRESIDENT, EXECUTIVE AmCham Working DIRECTOR DISCUSS GLOBAL with Members DIASPORA WEEK WITH MINISTER to Navigate New Immigration Law

The Chamber is helping member companies with foreign workers navi- gate the government’s new immigra- tion law and visa requirements. AmCham welcomes Prime Minister IrakliGharibashvili’s initiative to task a working group to study the law and the problems and issues that have arisen during its fi rst month of implementa- tion. The Chamber is also committed to working with the government to help improve the implantation of the law. The Chamber’s on-staff lawyer, IrakliGelovani, has identifi ed several major issues that have caused foreign- ers problems or unforeseen expense and delay. This is not an exhaustive list or legal advice. If you have any ques- tions or comments, please contact AmCham [email protected] or AmCham President Sarah William- of the week’s activities and detailed his [email protected]. son and Executive Director Amy Den- ministry’s plans for encouraging diaspora man met with State Minister for Diaspora to participate in the economic develop- MAJOR ISSUES ENCOUNTERED Issues Gela Dumbadze on September 9 to ment and growth of Georgia. Under the new law, a foreigner who entered Georgia after September 1 is discuss Georgia’s fi rst Global Diaspora Specifi cally, he discussed coopera- obliged to obtain a working visa back Week. tion with AmCham on supporting the cre- in his home country, i.e. the visa free The minister outlined his visions and ating of special investment vehicles for regulations for foreign nationals who future plans for the offi ce and informed Georgian diaspora. An estimated 300,000 can still enter the country without a visa does not extend to work visas and work about the upcoming plans for Global Georgian diaspora are currently living in visas cannot be issued in Georgia. This Diaspora Week which will be held in the United States. is additional time and money expenses Georgia for the fi rst time this year (Oc- Nina Matiashvili, the minister’s advi- for foreigners, who entered after 1st tober 12-18). Mr. Dumbadze outlined sor for economic and commercial issues, September and who intend to stay and work in Georgia. the Diaspora Economic Forum as part also attended the meeting. Another major issue has been the government’s approach to family members: if a foreign national has al- GATEWAY TO EUROPE INTERNATIONAL ready obtained all necessary visas and permits, his or her family members are INVESTMENT FORUM OPENING IN TBILISI still required to fi rst obtain a visa and then apply for a residency permit. In The Asian Development Bank (ADB), together with the Ministry of Economy and practice, this has meant that families, Sustainable Development of Georgia, is hosting an international investment forum, once they have arrived in Georgia, are Georgia-Regional Hub and Asia’s Gateway to Europe, on October 29-30. forced to travel to their native countries again to apply for a family reunion visa For more information about the event, please check its offi cial website: and then return to Georgia. www.investmentforum.ge and [email protected].

OCTOBER-NOVEMBER/2014 • Investor.ge | 43 NEWS

Amcham Agribusiness and CLT Energy, Mining & Utilities Committee Committee Secure Delay Over Drafts Amendments to Eminent Agricultural Land Amendments

Domain Law At the September 26 meeting, the On October 6, the committee chairs committees discussed the most recent from the agriculture and the CLT com- The AmCham Energy Mining and Utilities (EMU) committee, draft amendments to the law. Based mittees met with Business Ombudsman chaired by Frontera Resources’ on committee agreement, AmCham Giorgi Gakharia and his deputy, as Levan Bakhutashvili, met on Sep- contacted several government offi cials well as the head of the Association of tember 19 to discuss two major requesting a delay of introduction of Banks of Georgia, the Georgian Young issues that negatively affect the development of the upstream oil the bill in Parliament until the business Lawyers Association and Transparency sector in Georgia: VAT exemption community and other stakeholders had International to discuss the draft amend- under the Price Sharing Agreement time to give thoughtful input and com- ments to the law on foreign ownership of (PSA) for upstream companies and the eminent domain legislation. ments. AmCham continues to oppose Agriculture Land. The eminent domain legisla- over reaching restrictions on foreign AmCham is also pleased to announce tion, which creates the possibility ownership of agricultural land, and will that SacshaTernes, Bank of Georgia; of expropriation of land if deemed continue to give constructive input on and George Welton, GeoWel have been in the interest of the state or the public in exchange of compensa- any proposed restrictions and welcome named as the new chairs of the agricul- tion to be paid to the land owner member input towards this process. ture committee. based on fair market value, poses several problems to the inves- tors, committee members said. The fi rst problem is related to an obligation to buy the land, which energy companies may not be interested in buying. Plus, the fair market value for compensation is not defi ned by the law. Another issue is related easy access to land meaning that expropriator can be denied to access to land if the land owner is not satisfi ed with the compensation and sues them. In practice, this law is affecting not only oil or energy companies but also the railway, hotel industry American Friends of Georgia and several others sectors. The committee will be drafting relevant Celebrates 20 Years of Philanthropy amendments to the eminent do- main law to submit to the relevant The American Friends of Georgia known photographersVittorio Sella, government agency. Committee members also- (AFG) will celebrate 20 years of phi- Maynard Owen Williams, Frederick agreed that Georgia’s tax code lanthropy on October 15 at the Sheraton Simpich, who all traveled to Georgia should be amended to synchro- Metechi Palace Hotel. over the past century. nize VAT exemptions with the PSA. The evening will include a cocktail All proceeds from sales will go to The committee members will draft changes to the Tax Code to submit reception, live music and a charity ex- support AFG’s Palliative Hospice and them with the Ministry of Energy hibition of photographs printed from Home Care Program and help to provide and to facilitate further discussion. National Geographic’s unique archival home-based service for more than 100 materials, including the work of well- needy elderly in Tbilisi.

44 | Investor.ge • OCTOBER-NOVEMBER/2014 NEWS

US AMBASSADOR RICHARD NORLAND SPEAKS WITH AMCHAM ABOUT NATO, SECURITY, AND POLITICAL DEVELOPMENTS

attended the meeting. Ambassador Norland provided members with an Embassy perspective on local, regional and global is- sues of importance, including a roundup of the NATO summit in Wales and the subsequent visit of U.S. Defense Secretary Chuck Hagel. The Ambassador also relayed thoughts and in- formation on the unrest in Ukraine, the situation with ISIS and how the U.S. and its partners, including Georgia, are dealing with these issues. Following the talk, members had an engaging Q&A session with the Ambassador. New Chief Consular Christa Perozo was introduced to the members and spoke about US immigration procedures and visa issuance. She stated that Georgia had a very healthy amount of business travelers to the U.S. which is a good indication of AmCham hosted a regular roundtable meeting with U.S. our economic cooperation. She also discussed the new Geor- Ambassador to Georgia Richard Norland in the Courtyard Mar- gian Immigration Law with members and answered questions riott hotel on September 11. More than 100 AmCham members regarding this law.

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OCTOBER-NOVEMBER/2014 • Investor.ge | 45 NEWS

their products for free if they like it!” Lemondo is also a leading voice in the campaign to motivate and support the next generation of IT innovators. The company was an offi cial partner for Georgian Innovations Week this year, which Kiladze called “a big success” at creating a “buzz among young students.” “It gives a real torque to young innova- GEORGIA’S MOBILEBILE tors to start creating some products. It was a wonderful opportunity for networking and demonstrating your product,” he said. GAME PIONEER Kiladze noted that Georgia’s IT sector is “taking pretty big steps forward” and the For its second member feature, Inves- been featured in gaming apps’ blogs. creation of GITA – the Georgian Innovation tor.ge speaks with Lemondo, the Georgia- Lemondo has been a pioneer at and Technology Agency – can provide based mobile game and app designers. bringing Georgian produced apps to the strong support for the industry. When Lemondo founders Levan international Apple App Store. Kiladze told He added that at Lemondo, new staff Kiladze and Giorgi Otiashvili started feeling Investor.ge that posting apps is “not a big goes through an intensive education once a bit bored with corporate life a few years issue.” The main challenge, he said, is the they are hired because there are few ago, the two childhood friends decided product creation and marketing. ready-made staff on the market. to start something new – a business that “The product should be useful, pol- Universities, he said, should “teach would allow them to use their “creativity ished and well placed, so that it gets based on a more practical application and mojo” to create something fun, and a high reach of potential customers,” of knowledge and thought during the ses- useful, for smartphone users. Kiladze wrote. sions. For example, physics students should “It all started with a strong interest in “A customer pays a dollar only when be able to create some devices, robots or digital entertainment,” Lemondo CEO he/she sees a high quality product, posi- other products as well instead of studying Kiladze wrote in an email interview with tive reviews and trusts the developer.” only formulas.” Investor.ge. Today, Kiladze notes, 99.9 percent of Focusing on buying locally can also “We were keen to create products Lemondo’s customers are not Georgian. help develop the sector. “Creating local where we could utilize our technical skills, The company is including a Georgian demand on the market is key for new creativity and mojo to create products language option on games targeted for generations to start supplying products,” that would be useful and/or fun for millions children under the age of 5. But Kiladze Kiladze noted. of smartphone customers. Unless you jump said the Georgian market – even though The mobile development boom, he and start taking the fi rst steps yourself, it there are more than 150,000 Georgian said, is similar to the Dot Com era at the all seems ‘diffi cult.’ Once you are in, you iPhone owners – is not big. end of the 1990s. start to solve daily problems, accept big- “The Georgian market itself is not that “I think good positions are reserved ger challenges and see your company big, especially taking into account that for those countries where there are many evolving.” there is a low level of ‘purchasing culture.’ professionals and entrepreneurs in the The two created Lemondo in 2010 and People lack the habit of paying for digital sector,” Kiladze said. have never looked back. Over the past goods in Georgia. They expect to get “Whether it be web, mobile, or other four years, they have developed scores everything for free,” he said. wearable devices, professional HR avail- of mobile games and apps, including Kite “We have discovered a few times ability and entrepreneurial spirit are the Surfer, Pixel Hunter, Basketball Machine, some of our products being distributed by main drivers for success. That is why I like and Rage Wars. mobile device stores for free. We decided the initiatives of GITA to further stimulate Their game Milk the Cow has even to close our eyes on this – let them enjoy the development of these two factors.”

AMCHAM GEORGIA INTRODUCES NEW FEATURE FOR MEMBERS

Recently AmCham Georgia asked its members for sug- This page is the fi rst improvement we are making based on gestions and feedback about Investor.ge. Thank you to all the the responses we received: more information about member members who took time to respond! Your comments, criticism, companies. In every issue, we will publish interviews with member and insights were invaluable and will help us make changes as companies. We hope to publish at least two or three per issue. To we move forward. participate, please contact [email protected].

46 | Investor.ge • OCTOBER-NOVEMBER/2014 NEWS JSC MINA PRODUCER OF GLASS CONTAINERS IN GEORGIA

JSC Mina has been operating on the Georgian market since 1998. Its Ksani Factory supplies majority of Georgian companies manufacturing mineral waters, wine, soft drinks and beer. In 2014,the company invest- ed in new furnace construction and state-of-the- art modern equipment at Ksani factory. The company holds an ISO 9001:2008 Quality Manage- ment Certificate and an ISO 22000:2005 food Safety Cer- tifi cate. Implementation of new procedures has improved pro- duction control and quality management unifi ed system, as one of the most major goals of the company. As a result, Mina has most updated production and technical abilities, newest equipment and experienced staff. JSC Mina is actively involved in various charity projects, in- cluding environment preserva- tion and supporting historical research of the history of our country. The company under- stands its social responsibility and tries to realize its industrial targets in order to contribute the development of our country.

OCTOBER-NOVEMBER/2014 • Investor.ge | 47 NEWS

CORPORATE A CORPORATE B CORPORATE B CUSHMAN & WAKEFIELD | AMK LAW CAPITAL BANK VERITAS BROWN

AMK Law is a Georgian based JSC Capital Bank is a bank- Cushman & Wakefi eld | Veri- law firm, developing its legal ing institution providing its clients tas Brown is an established Com- practice in Georgia in all major with the wide range of banking mercial Real Estate company practice areas, but mainly con- products and services. The com- active throughout Central Asia centrating on commercial, busi- pany is oriented on e-commerce and the Caucasus with offi ces in ness, investment related activities. operations, distance banking and Tbilisi, Astana and Almaty. Our partners have been advising providing clients with the fast and The fi rm offers professional ad- on many of the Georgia’s lead- high quality banking services. vice across a range of services, ing transactions in the corporate, www.capitalbank.ge including Agency (Leasing and In- fi nance, public and other business vestment), Capital Markets, Con- and civil law related matters, sultancy, Valuation & Advisory, the experience they decided to Research, Property Management combine and put in the service and Serviced & Virtual Offi ce ac- of clients. commodation. www.amklex.com Cushman & Wakefi eld are the worlds largest privately owned Commercial Real Estate services fi rm with 16,000 professional staff operating 250 offi ces in 60 coun- tries. The fi rm has around $5billion of assets under management with global transactions valued at over $114 billion in 2013. www.veritasbrown.com NEW MEMBERS

48 | Investor.ge • OCTOBER-NOVEMBER/2014 NEWS NEW MEMBERS

CORPORATE B CORPORATE B NON PROFIT DUTY FREE GEORGIA LLC MIRA-GROUP SAN DIEGO STATE UNIVERSITY - GEORGIA

Compnay has has 5 border Mira-Group is involved in Tour- SDSU Georgia will provide US- shops of 4 borders of Georgia: ism since 2009. It operates a brand accredited bachelor’s degrees in Red Bridge (Azerbaijan border) Hotel River Side Tbilisi - an offi cial Science, Technology, Engineering Sadakhlo (Armenian border), four star hotel with unique Geor- and Mathematics (STEM) areas Sarp & Vale (Turkish border). For gian architecture, located in Old in Tbilisi. This program is funded nes investments the company is Tbilisi district. Accredited by CESO, through the Millenium Challenge in the process of negotiations to awarded by ISAQ (Genève 2013) Account - Georgia, and was increase business both in Georgia and Tripadvisor Inc. the hotel aims made offi cial via the Memoran- and beyond its borders. to become even better, working dum of Understanding between www.dfg.ge constantly to provide highest San Diego State University and the service available. This is one of Government of Georgia signed the few hotels in Georgia who in July of 2014. The forst cohort received certifi cate of excellence of students in Electrical Engineer- of Tripadvisor.com . ing, Computer Engineering, and In February 2014, the company Chemistry will be accepted in the has opened the fi rst Tiffany Bar in Fall of 2015. Georgia, with beautiful décor, www.sdsu.edu atmosphere and attitude. www.riverside.ge

OCTOBER-NOVEMBER/2014 • Investor.ge | 49 AmCham Company Members as of October 2014

PATRON MEMBERS Chemonics International Greco Group SEAF Management LLC 6a N. Ramishvili St., 0179 1 Nutsubidze St. 7, Niko Nikoladze St. II Floor. BP Exploration Georgia Tel: 2234311; Fax: 2234309 Tel: 2393138; Fax: 2311107 Tel: 2998115; Fax: 2923533 38 Saburtalo St. www.chemonics.com www.greco.ge www.seaf.ge Tel: 2593400; Fax: 2593488 Colliers International Gryphon - FK Sheraton Metechi Palace Hotel www.bp.com Georgia LLC 8603 Westwood Dr. Suite 310 20 Telavi St. 37/39 Kostava St., Vienna, Va 22182, USA Tel: 2772020; Fax: 2772120 Exxon Azerbaijan Ltd Grato Business Center 7th Floor Tel: 1 703 992 8664 www.sheraton.com/tbilisi Landmark Suite 300, 95 Nizami St., Tel: 2224477 Baku, AZ1010 Azerbaijan www.gryphonairlines.com www.colliers.com T&K Restaurants (McDonald’s Tel: (994-12) 4982460; Fax: (994-12) Georgia) 4982472 Cushman & Wakefi eld - GT Group 1 Dzmebi Kakabadze St. www.exxonmobil.com Veritas Brown 48 B. Cholokashvili St. 6th fl oor, Block 10, 71 Vaja-Pshavela Tel: 2740740 Tel: 2921246; Fax: 2251422 www.mcdonalds.ge PricewaterhouseCoopers Ave. www.gtgroup.ge Tel: 2474849 7 Bambis Rigi St., 0105 TBC Group www.veritasbrown.com GULF Georgia Tel: 2508050; Fax: 2508060 7 Marjanishvili St. by Sun Petrolium Georgia LLC www.pwc.com/ge Dechert Georgia LLC Tel: 2272727; Fax: 2228503 Pixel Business Center, 7th fl oor, Pixel building, www.tbc.com.ge TBSC Consulting 34 Chavchavadze avenue 34 Chavchavadze Ave. 3, Rapiel Eristavi Street, IV Floor Tel: 2334719 Tel/Fax: 2496444 TMC Global Professional Tel: 2959019; Fax: 2420215 www.dechert.com www.gulf.ge Services www.tbsc.ge 6001 Indian School Road NE, Suite Deloitte Hilton Batumi 190, Albuquerque, NM 87110, USA UGT 36a, L. Asatiani St., 0105 13 Takaishvili St., Batumi Tel: (1 505) 8723146 17a Chavchavadze Ave., 7th fl oor Tel: 2244566; Fax: 2244569 Tel: 292092 www.tmcservices.com Tel: 2220211; Fax: 2220206 www.deloitte.ge www.hilton.com www.ugt.ge Diplomat Georgia 65, Kakheti Highway Iberia Refreshments, JSC CORPORATE B MEMBERS CORPORATE A MEMBERS Tel: 2984950 Tetri Khevi Hesi District, Orkhevi Aliance Georgia Ltd Tel: 2241091; Fax: 2241090 Alliance Group Holding, JSC www.diplomat.ge 33 Samurzakano St. www.pepsi.ge 47/57 M. Kostava St., 0179 DLA Piper Georgia LP Tel: 2243773 www.groupaliance.com Tel: 2424181; Fax: 2998112 10 Melikishvili St. KPMG Georgia LLC www.agh.ge Tel: 2509300; Fax: 2509301 3rd Floor, Besiki Business Center, AMK Law www.dlapiper.com 4 Besiki St., 0108 Auto Service Caucasus 1 Iv. Javakhishvili Sq., 0102 Tel: 2935713; Fax: 2982276 5 Shalikashvili St. Economic Prosperity Initiative Tel: 2054628 www.kpmg.ge Tel: 2208080 (EPI) www.amklex.com www.precisiontune.com 6 Samghebro St. Maersk Georgia LLC Tel: 2438924 Asseco Georgia Avon Cosmetics Georgia LLC 6 Khetagurov St. www.epigeorgia.com 24 Mosashvili St. 117 Tsereteli Ave. Tel: 2200800; Fax: 2200815 Tel: 2720901 Tel: 2226805; Fax: 2226806 EY Georgia www.maerskline.com www.avon.com 44 Kote Abkhazi St. www.asseco.ge Tel: 2439375; Fax: 2439376 Magticom F H Bertling Georgia Ltd. Aversi Pharma www.ge.ey.com 5 Politkovskaya St. 10 Shevchenko St. 148/2 Aghmashenebeli Ave. Tel: 2171717; Fax: 2171171 Tel: 2252287 FINCA Georgia Tel: 2987860 www.magticom.ge www.bertling.com 71 Vazha-Pshavela Ave. 3rd fl . www.aversi.ge Tel: 2207410 Betsy’s Hotel / Prosperos Books www.fi nca.ge Marriott Hotels, Resorts & Suites 32/34 Makashvili St. / 34 Rustaveli 13 Rustaveli Ave. Bagebey City Group Ave. Frontera Resources Georgia Tel: 2779200; Fax: 2779210 49b Chavchavadze Ave. Tel: 2987624, Fax: 2923592 12 Paliashvili St. www.marriott.com Tel: 2913152; Fax: 2290169 www.betsyshotel.com Tel: 2252412 www.bagebeycity.com www.fronteraresources.com Microsoft Georgia LLC Booz Allen Hamilton, Inc. Baker Tilly Georgia Ltd. Georgian American Alloys, Inc. 34 Chavchavadze Ave. 4 Freedom Sq. Meidan Palace, 44 Kote Abkhazi St. 200 S Biscayne Blvd Suite 5500, Tel: 2970123 Tel: 2481348; Fax: 2481349 Tel: 2505353; Fax: 2505353 Miami FL 33131 USA www.microsoft.com www.boozallen.com www.bakertillyinternational.com Tel: (1)3053757560 British American Tobacco www.gaalloys.com NRC 71 Vazha Pshavela Ave. 9 Khvichia St. 0160 Bank Constanta Tel: 2157500/01/02; Fax: 2157503 Georgian American University Tel: 2244141, 2382825 139 Tsereteli Ave. www.bat.com 8 Aleksidze St. www.nrccintl.com Tel: 2401401 Tel: 2206520; Fax: 2206519 www.bankconstanta.ge Catoni & Co. Georgia www.gau.ge 7 Dzmebi Zubalashvilebi St. Pfi zer Luxembourg SARL Bank of Georgia Apt.22/23 Georgian Audit & Consulting Representation Offi ce in Georgia 3 Pushkin St. Tel: 2989230; Fax: 2922264 Company 58 I. Abashidze St. Tel: 2444134; Fax: 2983269 www.hapag-lloyd.com Axis Business Pl, 2 Gamrekeli St. Tel: 2252986 www.bog.com.ge Tel: 2904522; Fax: 2904523 www.pfi zer.com Caucasia Trading www.gacc.com.ge Apt 11, Bld 7, 16 Krtsanisi St. Philip Morris Bank Republic Tel: 14433050083; Fax: GMT Group 1 Tabidze St. 2 Gr. Abashidze St. 14433788388 4 Freedom Square Tel: 2439001; Fax: 2439005 Tel: 2925555; Fax: 2925544 www.caucasiatrading.com Tel: 2988988; Fax: 2988910 www.philipmorrisinternational.com www.republic.ge Caucasus University www.gmt.ge ProCredit Bank Basis Bank JSC 77 Kostava St., Bld.6, 4th fl . Gosselin Moving Georgia 154 Agmashenebeli Ave. 1 Ketevan Tsamebuli Ave. Tel: 2377777; Fax: 2313226 3 M/D, Didi Digomi Tel: 2202222; Fax: 2202222-2226 Tel: 2922922; Fax: 2986548 www.cu.edu.ge Tel: 2596601/02/03; Fax: 2596600 www.procreditbank.ge www.basisbank.ge CH2M Hill www.moving.gosselingroup.eu 5th Floor, GMT Plaza, Freedom Grant Thornton LLC Radisson BLU Iveria Hotel BDO LLC Square 61 D. Aghmashenebeli Ave. 1 Rose Revolution Sq. Pixel Center 8th fl oor Tel: 2474040; Fax: 2470210 Tel: 2604406 Tel: 2402200; Fax: 2402201 Tel: 2545845; Fax: 2399204 www.ch2m.com www.grantthornton.ge www.radissonblu.com www.bdo.ge

50 | Investor.ge • OCTOBER-NOVEMBER/2014 BGI Advisory Services Georgia GeoEngineering LLC Luca Polare Tbilisi View 18 Rustaveli Ave., II fl oor 15a Tamarashvili St. 54 Oniashvili St. 4a, Freedom Sq. Tel: 2997292; Fax: 2996615 Tel: 2311788; Fax: 2311787 Tel: 2990399 Tel: 2999980 www.bgi.ge www.geoengineering.ge www.lucapolare.com www.tbilisiview.ge

BLB (Business Legal Bureau) Georgian Airways Mina JSC Teliani Valley JSC 1 Shevchenko St, Apt.1 12 Rustaveli Ave. 4 Besiki St. 2 Marshal Gelovani Ave. Tel: 2995797 Tel: 2999730; Fax: 2999660 Tel: 2449981/82/83; Fax: 2449980 Tel: 2313245; Fax: 2313249 www.blb.ge www.georgian-airways.com www.mina.com.ge www.telianivalley.com BLC Law Offi ce Theco Ltd. Georgian Resources Company Mira-Group Ltd. 4 Gudiashvili Sq. 16 Chikovani St. 3-5 Kazbegi St. Brose Street Turn,Old Tbilisi Tel: 2922491; Fax: 2934526 Tel: 592107515 Tel: 2936676 Tel: 2242244/55/88 www.blc.ge www.tbilisia.ru www.georgianresources.com www.riverside.ge Thermarsenal Ltd. Canargo Georgia 101, Tsereteli Ave. 67 Aghmashenebeli Ave. Globalink Logistics Group National Center for Dispute Tel: 2473112 Tel: 2332527 14-A Shartava St, 2nd fl , Suite 7 Resolution Tel: 2253262; Fax: 2439002 4/7 Rustaveli St., Rustavi www.arsenal.ge Capital Bank www.globalinkllc.com Tel: 2193406 VD Capital 1 Vertskhli St. www.ncdr.ge 77 Kostava St., 0175 Goodwill (G-Mart) Tel: 2428888 Tel: 2363672; Fax: 2364302 www.capitalbank.ge 1 Parnavaz Mepe Ave. 0131 Nodia, Urumashvili & Parnters Tel: 2243673; Fax: 2243673 Offi ce #28, IV Block, Wimm-Bill-Dann Georgia Ltd Capto Group www.goodwill.ge 71 Vazha-Pshavela Ave. Village Ponichala, Tbilisi 0165 67 Aghmashenebeli Ave. Tel: 2207407 Tel: 2475290 Tel: 2558899 Gvinadze & Partners LLC www.nplaw.ge www.wbd.ru www.rsmcapto.ge 44 Kote Abkhazi St, Tbilisi 0105 Wings and Freeman Capital Tel: 2438970, Fax: 2438971 Overall Management Group Casino Adjara Green Building, 6, Marjanishvili St. www.gvinadzeandpartners.ge (OMG) Inc. 1, 26 May Sq. Tel: 2940051; Fax: 2940053 29 Marjanishvili St. Tel: 2335519; Fax: 2334520 www.wfcapital.ge Holiday Inn Tel: 2436052; Fax: 2436052 www.casinoadjara.com 1, 26 May Sq., 0171 Wissol Georgia Caucasus Online LLC Tel: 2300099 Paine Stevens LLC 74b Chavchavadze Ave. 71 Vazha-Pshavela Ave. www.hi-tbilisi.com 1 Ivane Javakhishvili Sqr. Tel: 2915315; Fax: 2915615 Tel: 2480048; Fax: 2480048 Tel: 2903211, Fax: 2903291 www.wissol.ge Hualing International Special www.caucasus.net www.painestevens.com Economic Zone NON-PROFIT ORGANIZATIONS Channel Energy (Poti) Limited 25 Apt. 34/36 Kobuleti St. Policy and Management Georgia LLC, By Petrocas Energy Tel: 591005900 Consulting Group (PMCG) Agricultural University of Group www.hualing.cn 57 Uznadze St., 4th Floor Georgia 52, David Agmashenebeli St., Poti Tel: 2921171 140 David Aghmashenebeli Alley Tel: (995493) 2-7-08-60 Imedi TV www..pmcg.ge Tel: 2594901 www.petrocasenergy.com 51 Ljubljana St. www.agruni.edu.ge Tel: 2464646 Publicis Hepta Château Mukhrani, J.S.C. www.imedi.ge 17 V. Jorbenadze St. American Friends of Georgia III fl oor, Didube Plaza, Tel: 2745672; Fax: 2745671 77 Nutsubidze St. 116 Tsereteli Ave. Imperial Tobacco International www.publicishepta.com Tel: 2397174; Fax: 2388495 Tel: 2201878; Fax: 2201878; Limited Representative Offi ce in www.afgeorgia.org www.mukhrani.com Rakeen Development LLC Georgia CARE International in the Pixel Business Center, City & Co. 12 Dariali Turn, 0162 Caucasus 34 Chavchavadze Ave. 4 Besiki St. Tel: 2232438 37 Tsagareli St., 0162 Tel: 2933393; Fax: 2933993 Tel: 2920921 www.imperial-tobacco.com Tel: 2291941 www.rakeen.ge www.care-caucasus.org.ge Crystal, MFO JSC Interco Travel Holding 72 Tamar Mepe St. Kutaisi, 4600 36 Al. Kazbegi St. Rustavi Azot Ltd. Eurasia Partnership Foundation Tel: 431253343 Tel: 2294343 2 Mshvidoba St. Rustavi-3702 3 Kavsadze Str. www.crystal.ge www.intercontinental.ge Tel: 995341270900 Tel: 2253942; Fax 2252763 (ext. 112) www.azot.ge www.epfound.org David Tvildiani Medical Univesity JTI Caucasus 2/6 Ljubljana St. VII Floor, Pixel Business Center, Rustavi Steel LLC Free University of Tbilisi Tel: 2516898, Fax: 2527196 34 Chavchavadze Ave. 12 Y. Gagarin St., 3700 Rustavi 140 David Agmashenebeli Alley www.aieti.edu.ge Tel: 2604111 Tel/Fax: 260 66 99 Tel: 2200901 www.jti.com www.rmp.ge www.freeuni.edu.ge Dika Ltd. 40 Rustaveli Ave. Kordzahia, Jgenti Law Firm Safe LLC Georgian Wine Association Tel: 2990994; Fax: 2990994 10 Petriashvili St. Pixel Business Center, 12 Mtatsminda St. 34 Chavchavadze Ave. Tel: 2505456 Duty Free Georgia Tel: 2921878 Tel: 2333333; 3rd fl oor, 4 Besiki St., Besiki Business www.kjlaw.ge www.safeinvest.ge QSI International School of Center KSB Bank Georgia Tel: 2430150 3 Ketevan Tsamebuli Ave. Sayali Ltd. Village Zurgovani, Tbilisi www.dfg.ge Tel: 2550000, Fax: 2507707 6 Ushangi Chkheidze St. Tel: 2537670; Fax: 2322607 www.qsi.org Gebrüder Weiss LLC www.ksb.ge Tel: 2951212; Airport Adjacent Territory, www.sayali.ge Salvation Army Legal Partners Associated LLC Kakheti Hwy 16 Ikalto St. Offi ce #203, Besiki Business Center, Silknet Ltd. Tel: 2710011 Tel: 2333786; Fax: 2330227 4 Besiki St. 0108 95 Tsinamdzgvrishvili St. www.gw-world.com www.salvationarmy.org Tel: 2200203; Fax: 2250458 Tel: 2910345; GeoCapital Microfi nance www.lpa.ge www.silknet.com San Diego State University - Organization Ltd. Georgia 5 Tsereteli St, Kutaisi Lemondo LLC SRG Investments LLC 3 Chavchavadze Ave. Tel: 431 267070 13 Dzotsenidze St. 49a Chavchavadze Ave, 3rd fl oor Tel: 2290820 www.geocapital.ge Tel: 2193377 Tel: 2253581 www.sdsu.edu www.lemondo.com www.silkroad.ge Geocell Transparency International 3 Gotua St. Liberty Bank JSC Statoil Georgia Tel: 2770100, ext. 7435; 74 Chavchavadze Ave. GMT Plaza, 4 Freedom Sq. 26 Rustaveli Ave. 0108 Fax: 2770119 Tel: 2555500; Fax: 2912269 Tel: 2471002 Tel: 2932129 www.geocell.ge www.libertybank.ge www.statoil.com www.transparency.ge

OCTOBER-NOVEMBER/2014 • Investor.ge | 51 NEWS

AMCHAM BACK TO BUISINESS POOLSIDE PARTY AT HOLIDAY INN TBILISI

ON SEPTEMBER 17 AMCHAM HOSTED ITS BACK TO BUSINESS HAPPY HOUR FOR ITS MEMBERS AND PARTNERS AT THE HOLIDAY INN POOLSIDE.

52 | Investor.ge • OCTOBER-NOVEMBER/2014 NEWS

THE HAPPY HOUR WAS ATTENDED BY MORE THAN 90 BUSINESS PEOPLE WHO WERE WELCOMED BY AMCHAM PRESIDENT SARAH WILLIAMSON. MS. WILLIAMSON BRIEFLY OUTLINED THE CHAMBER’S PLANS FOR THE REST OF THE YEAR AND INFORMED MEMBERS ABOUT THE UPCOMING HIGH LEVEL MEETINGS AMCHAM WILL BE HOLDING WITH

GOVERNMENT OFFICIALS. OCTOBER-NOVEMBER/2014 • Investor.ge | 53 NEWS

Tbilisi area hotels took part in the world-wide Ice Bucket Challenge in honor of raising money and awareness about Amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease. The fi rst challenge was issued by Sheraton Metechi Palace Hotel, and other hotels – including the Tbilisi Marriott, the Courtyard Marriott, the Radisson IveriaBlu and the Holiday Inn – followed suit.

54 | Investor.ge • OCTOBER-NOVEMBER/2014 NEWS

Sheraton Metechi Palace Hotel hosted Tbilisi’s own Oktoberfest on October 1-5. Guests enjoyed real Bavarian cuisine and culture, including musicians fl own in from Germany.

OCTOBER-NOVEMBER/2014 • Investor.ge | 55 NEWS

Board Of Directors 2014

SARAH WILLIAMSON PRESIDENT

R. MICHAEL COWGILL IRAKLI BAIDASHVILI ESBEN EMBORG FIRST VICE-PRESIDENT VICE-PRESIDENT & TREASURER DIRECTOR

LASHA GOGIBERIDZE BADRI JAPARIDZE STEVE JOHNSON DIRECTOR DIRECTOR DIRECTOR

AmCham Executive Director Writers Amy Denman Helena Bedwell, Maia Edilashvili, Guy Edmunds, Richard Giragosian, Cordelia Ponczek, Heather Yundt, Lika Zhorzholiani Copy Editor Alexander Melin Photographs Vladimir Valishvili Marketing & Promotion Cover: Antonio di Vico/Magnethic.com Sophia Chakvetadze Special thanks to the AmCham Staff, the editorial board, Galt &Taggert Research Promotional Design and all of our contributors. This magazine would not be possible without you. Levan Baratashvili

Magazine Design and Layout Giorgi Megrelishvili 56 | Investor.ge • OCTOBER-NOVEMBER/2014 NEWS

TED JONAS KETTI KVARTSKHAVA ROBIN MCCONE DIRECTOR DIRECTOR DIRECTOR

DAVID LEE BETSY HASKELL, K.G. MOORE CHAIRMAN EMERITUS FOUNDING ADVISOR EX-OFFICIO MEMBER

AMY DENMAN EXEC. DIRECTOR

AmCham Georgia Patron Members:

© The American Chamber of Commerce in Georgia, 2014 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 fl oor. Tel: 2 22-69-07 The opinions expressed in this magazine do not refl ect the opinion [email protected] of the American Chamber of Commerce in Georgia nor its Board [email protected] │ www.amcham.ge Members or staff, unless otherwise stated. AmCham Georgia neither endorses, nor can be held liable for any eventuality www.investor.ge OCTOBER-NOVEMBER/2014 • Investor.ge | 57