INCREASED INTEREST FOR GEORGIAN GOVERNMENT REVERSING GEORGIAN GREEN BONDS PROPOSES DOMESTIC THE BRAIN DRAIN “AMAZON” Investor.geA Magazine Of The American Chamber Of Commerce In Georgia ISSUE 62 APRIL-MAY 2018 Made in GEORGIA 68535,6()25,1'(3(1'(1&('$<2)*(25*,$ APRIL-MAY 2018 Investor.ge | 3 Investor.ge CONTENT 6 Investment News 10 The Best Minds in The Business: Famous Economists Weigh In On Georgia 12 Increased Interest for Georgian Green Bonds 14 Bringing the Talent Back 15 Reversing the Brain Drain: Experienced diaspora are returning to take jobs in Georgia’s financial 26 sector 18 Testing the Organic Standard: Turning Natural Georgian Products into Bona Fide Organic Goods 22 Georgian Tea Gets a Reboot from Local Entrepreneurs 24 Georgia Grapples with Quality over Quantity in Tourism 26 Buy Local: Georgian Companies Target the Domestic Market 30 Georgian Government Eyes E-Market, Proposes 31 Domestic “Amazon” 31 Cryptocurrencies, Blockchain Technology Continues to Excite Entrepreneurs in Georgia 34 Innovators and Disruptors: Ideas to Bring Change 35 A Leap of Faith: Creating Ivane Javakhishvili Tbilisi State University 38 A Wine For All Occasions: Pairing Georgian Wines with Seasonal Dishes 41 NEWS ...... 41 4 | Investor.ge APRIL-MAY 2018 ! "# $ " % ! & '$ ( ! APRIL-MAYAPRIL-MAY 20201818 Investor.geInvestor.ge | 5 GEORGIA CAPITAL PLANS $500 MILLION IN INVESTMENTS INVESTMENT Georgia Capital of BGEO Group will invest $500 million “over the next few years” in the country, according to agenda.ge. Prime Minister Giorgi Kvirikashvili announced the deal, noting that $300 mil- NEWS lion of the promised investment has already been listed and traded on the Irish Stock Exchange as Eurobonds. INVESTOR.GE ³,WLVYHU\H[FLWLQJWKDWDQHZLQYHVWPHQWRIPLOOLRQZLOOÀRZLQWRWKH PROVIDES A FRXQWU\¶VVWUDWHJLFDOO\LPSRUWDQW¿HOGVVXFKDVWRXULVPHQHUJ\DQGUHDOHVWDWH,WLV BRIEF UPDATE ZHOFRPHGWKDWDQRQJRYHUQPHQWDOQRQ¿QDQFLDO*HRUJLDQFRPSDQ\KDVOLVWHG(XUR- bonds and attracted $300 million,” Kvirikashvili said on March 14 at a presentation ON INVESTMENTS of investment plans of Georgia Capital. AND CHANGES IN GOVERNMENT GEORGIAN INDUSTRIAL GROUP TO BUY KAZTRANSGAS TBILISI Georgian and Kazakh media have reported that Georgian Industrial Group plans POLICY THAT COULD to purchase KazTransGas Tbilisi for $40 million. Reports on the deal have been IMPACT THE BUSINESS FRQ¿UPHGE\*HRUJLDQ,QGXVWULDO*URXSDFFRUGLQJWR*HRUJLD¶V,QWHUSUHVVQHZV ENVIRONMENT. THE agency. INFORMATION IN THIS GEORGIA, SAUDI ARABIA SIGN DOUBLE TAXATION DEAL ISSUE WAS TAKEN Citizens from Georgia and Saudi Arabia are now protected by a new double FROM AGENDA.GE, taxation agreement, signed by two countries’ governments on 15 March, agenda. A GOVERNMENT- ge reported the same day. The agreement was signed during Georgian Finance Minister Mamuka Bakhtadze’s visit to Saudi Arabia. Georgia and Saudi Arabia are SUPPORTED WEBSITE, increasing economic cooperation by avoiding double taxation. AND OTHER Double taxation is the levying of tax by two or more jurisdictions on the same SOURCES. GHFODUHGLQFRPH LQFRPHWD[HV DVVHWV FDSLWDOWD[HV RU¿QDQFLDOWUDQVDFWLRQ VDOHV taxes). This double liability is often mitigated by tax treaties between countries, agenda.ge said. Currently, Georgia has double taxation treaties with over 50 countries, agenda.ge said. Recent agreements have been signed with Moldova, Liechtenstein, Kyrgyzstan, South Korea and Iceland. UKRAINIAN AIRLINE YANAIR EXPANDS SERVICE BETWEEN BATUMI AND LVIV <DQ$LUZLOOSURYLGHQHZÀLJKWVEHWZHHQ*HRUJLD¶V%ODFN6HDUHVRUWWRZQRI Batumi to the western Ukrainian city of Lviv, starting on June 8, according to DJHQGDJH7KHÀLJKWVZLOOHQGRQ6HSWHPEHUDFFRUGLQJWRWKH*HRUJLDQ&LYLO Aviation Agency. OVER 1 MILLION DOMESTIC TRAVELERS DOCUMENTED IN 4TH QUARTER 2017 Over a million Georgians over the age of 15 made trips within the country during WKHIRXUWKTXDUWHURIDJHQGDJHUHSRUWHGRQ0DUFKFLWLQJLQIRUPDWLRQ IURPWKHFRXQWU\¶VRI¿FLDOVWDWLVWLFVERG\ Georgians aged 31-50 travelled the most (331,000 people); in total, domestic trav- HOHUVVSHQWPLOOLRQODUL DERXWPLOOLRQ ZKLOHWUDYHOLQJZLWKLQWKHFRXQWU\ The capital of Tbilisi was the most visited destination. 6 | Investor.ge APRIL-MAY 2018 APRIL-MAY 2018 Investor.ge | 7 APRIL-MAY 2018 Investor.ge | 9 The Best Minds In The Business: Famous Economists Weigh In On Georgia INVESTOR.GE IS PILOTING A NEW COLUMN: QUESTIONS WITH INTERNATIONALLY RENOWNED ECONOMISTS. WE ARE REACHING OUT TO ECONOMISTS FROM ALL OVER THE WORLD WHO HAVE WRITTEN POPULAR AND WELL-REGARDED BOOKS ON THE ISSUES THAT ARE IMPORTANT TO THE GEORGIAN ECONOMY AND TO DEVELOPING ECONOMIES, AND TO ECONOMISTS WORKING AT THINK TANKS THAT ARE AT THE FOREFRONT OF DEVELOPMENT POLICY. WE POSE QUESTIONS ABOUT THE ISSUES THEY ARE WORKING ON THAT APPLY TO THE CHALLENGES GEORGIA IS FACING. IF YOU HAVE A QUESTION, OR A RECOMMENDATION ON WHO WE SHOULD TALK TO, PLEASE CONTACT US AT [email protected]. 5% of GDP each year that does not return because property rights are not safe in the or the second column in the series, for the country? country. Therefore, locals save their money we spoke with Swedish economist Aslund on lessons Georgia can learn abroad. When the locals dare not invest in FAnders Aslund, a resident senior fel- from its neighbors: Unfortunately, I do not the country, foreigners that can do so do low in the Eurasia Center at the Atlantic think there is much that Georgia can learn not invest. Therefore, countries such as Rus- Council. He is a well-known specialist on from the other post-Soviet countries (not in- sia and Ukraine have an investment ratio the economic policy of Russia, Ukraine cluding the Baltic states) because Georgia of 18 percent of GDP, when they should and Eastern Europe and has written exten- is so far ahead of them. The overall lesson, have 25-30 percent of GDP. Georgia looks sively on Georgia’s economic reforms. He EHVWH[HPSOLÀHGE\(VWRQLDDQG*HRUJLD much sounder in this regard. is the author of 14 books and teaches at is that it is vital not to reform but to fully Aslund on the best opportunities for the Georgetown University. rebuild law enforcement, prosecution, Georgian economy: Georgia is a natural We asked Aslund three questions: and the judicial system from the top down. hub in the region for commerce and what do you think Georgia can learn Aslund on challenges inherited by tourism. The Chinese One Belt One Road from other countries in the region; what Georgia’s Soviet heritage: The key prob- [Initiative] offers the country a great op- particular challenges does its post-Soviet lem for post-Soviet countries is to estab- portunity. It needs to guarantee the best heritage bring with it; and do you have lish property rights. A typical post-Soviet legal environment to attract business from any thoughts on the greatest opportunities FRXQWU\ KDV D FDSLWDO RXWÁRZ RI DERXW the region. ADVERTISEMENT 1010 | Investor.geInvestor.ge APRIL-MAYAPRIL-MAY 20201818 DAVID GELASHVILI DAVID KHRIKADZE #BDOknows Corporate law and M&A Financial, banking and investment law Real estate transactions and construction law Personal data protection and „ Ten years is a milestone. It is an occasion GDPR compliance to celebrate - an opportunity to proudly Employment law Regulatory compliance and look back and also chart the path forward ’’ licenses & permits Litigation, alternative dispute resolution Taxes Intellectual property Outsourced on-going legal advisory APRIL-MAY 2018 Investor.ge | 11 WWW.BDOLEGAL.GE SALLY WHITE by other institutions or countries,” it Increased added. $19 BILLION. hat is the estimated cost of A TRILLION DOLLAR BUSINESS Interest for meeting Georgia’s climate and Green bonds could be timely for T“green” growth goals, accord- Georgia, as they can allow enable new ing to the Organisation for Economic classes of investors, such as pension Georgian Co-operation and Development (OECD) funds and insurance companies, to invest LQLWVODWHVWSDSHURQ³0RELOLVLQJ¿QDQFH in climate projects. Green Bonds for climate action in Georgia.” Green bonds are a rapidly develop- Little of the funding is currently LQJQHZLQWHUQDWLRQDO¿QDQFLDOPDUNHW likely to come from international inves- which is forecast by some to grow from GEORGIA NEEDS tors, so it looks as though consumers last year’s $180 billion to $1 trillion in BILLIONS OF could ultimately bear the brunt of costs a couple of years, according to Reuters. DOLLARS TO MEET through higher costs, tariffs and taxes. “Although green bonds make up a ITS CLIMATE AND The OECD’s suggestion for Georgia small fraction of the overall $100 tril- to issue “green bonds” could offer some lion international bond market, they are “GREEN” GROWTH relief, however. attracting more attention because meet- GOALS. WHILE THERE “Finance for climate action in Geor- ing emissions-cut targets will require IS LITTLE CHANCE gia is already available but is unlikely to be Microfinance institutions, institutional OF INTERNATIONAL sufficient to achieve INVESTORS the country’s over- investors and non-financial sector FOOTING THE BILL, all climate goals. It corporations could play a greater role A NEW INVESTMENT is estimated that be- WZHHQDQG in financial flows to climate action, it PRODUCT – GREEN DERXWELOOLRQZLOO says, noting that Crystal Microfinance BONDS – COULD be needed to achieve PROVIDE MUCH energy efficiency in has started a green program funded by industries, transport the Dutch Development Bank. NEEDED FUNDING. and buildings, non- energy related GHG emissions, activities related to land trillions of dollars