GEORGIA’S NEW CHACHA COCKTAILS GEORGIAN LARI BONDS PENSION REFORM Investor.geA Magazine Of The American Chamber Of Commerce In Georgia ISSUE 63 JUN-JULY 2018 What to Do in Georgia this Summer JUNE-JULY 2018 Investor.ge | 3 Investor.ge CONTENT 6 Investment News 8 Innovators and Disruptors: Ideas To Bring Change 10 The Best Minds in the Business: Famous Economists Weigh In On Georgia 12 Big Georgian Brands Look to Lari Bonds for Expansion 22 14 Explainer: Georgia’s New Pension System 16 Fake Cement is a Problem in Georgia: How to Spot Counterfeits 18 Tbilisi Overhauling Master Plan, Tackling Traffic 20 Georgia Plans Recycling Programs to Tackle Growing Waste 22 Tbilisi’s Night Economy: A New Mayor and a New Plan to Boost Jobs 24 SUMMER FUN: A Cultural Calendar of Events, Performances, Exhibitions and Festivals in 32 Georgia 32 SWOT: Georgia’s Tourism and Hospitality Sector 36 In Numbers: Georgia’s Growing Tourism Sector 38 Chacha Stars in Tbilisi’s Growing Cocktail Culture 40 Georgia Celebrates the Centenary of the Georgian Democratic Republic 44 NEWS ...... 44 4 | Investor.ge JUNE-JULY 2018 ! "# $ " % ! & '$ ( ! JUNE-JULYJUNE-JULY 20182018 Investor.geInvestor.ge | 5 and more inclusive growth by fostering The factory, MGMtex, will produce INVESTMENT private investment, productivity, and clothing for H&M stores and is projected competitiveness.” to employ as many as 400 people. There are currently 130 people working GEORGIA, EUROPEAN FREE at the factory, which was built with a Geor- NEWS TRADE ASSOCIATION SIGN DEAL gian-Romanian investment of 7 million lari The Georgian government and the (about $2.81 million), the report said. European Free Trade Association’s trade agreement went into effect on May 1, GEORGIAN TOURISM AGENCY economy.ge reported the same day. LAUNCHES YOUTUBE ADVERTS The European Free Trade Associa- The Georgian National Tourism Admin- tion (EFTA) is comprised of four countries: istration will be targeting European and Iceland, Liechtenstein, Norway, and Middle East tourists with a series of YouTube Switzerland. The deal gives Georgian advertisements this summer, agenda.ge producers access to a market of 14 million reported on May 17. consumers. The three-month campaign will start on May 29. It is estimated that the clips will be $93-MILLION DOLLAR AIRPLANE viewed over 21 million times. PARTS FACTORY OPENS A factory set to manufacture civil TOP SWISS TOURISM SCHOOL aircraft parts for Boeing, Airbus and OPENS IN GEORGIA Bombardier passenger planes opened Le Roche, one of the top three hospi- in Tbilisi on May 10, agenda.ge reported tality schools in the world, has announced the same day. it will start operations in Georgia, gov.ge GEORGIAN ECONOMY GROWS 7KHÀUVWSURGXFWLRQOLQHVZLOOVWDUWZRUN- website reported on May 18. BY OVER FIVE PERCENT ing by 2020, the report said. Prime Minister Giorgi Kvirikashvili at- The Georgian economy grew by 5.2 The factory was built by a joint Israeli- tended the presentation, the report said. SHUFHQW LQ WKH ÀUVW TXDUWHU RI DF- Georgian venture company, Aerostruc- “There comes a time when Georgia FRUGLQJ WR RIÀFLDO VWDWLVWLFV DJHQGDJH ture Technologies Cyclone (ATC). An must place special emphasis on service reported on April 30. estimated 300 locals will be hired and will quality. It is at this time of such rapid The government has forecast 4.5 receive specialized training. growth that the issue of preparing high- percent growth this year, the report said. level managers in our country is becoming ,W QRWHG WKDW LQWHUQDWLRQDO ÀQDQFLDO FIREFIGHTING VEHICLES TO BE especially urgent. institutes have also predicted positive PRODUCED IN GEORGIA This is why we are eager to welcome growth for the Georgian economy: the An Austrian company plans to start Les Roches, one of the world’s top three World Bank forecast 4.2 percent growth; EXLOGLQJ ÀUHÀJKWLQJ YHKLFOHV LQ *HRUJLD hospitality schools, entering Georgia to the European Bank for Reconstruction agenda.ge reported on April 26, citing operate at the University of Business and and Development (EBRD) predicted 4.5 information provided by the Emergency Technologies and to start training high- percent growth, as did the Asian Devel- Management Service of Georgia. level managers. We certainly welcome opment Bank. The plant will be built at Delta, Geor- this fact,” Kvirikashvili said. The International Monetary Fund has gia’s State Military Scientific Technical increased its estimate for Georgia’s eco- Center. OVER HALF A MILLION TOURISTS nomic performance this year, predicting “The time has come when it is neces- VISIT MOUNTAIN RESORTS the country will grow by 4.5 percent this VDU\ WR IXOO\ UHHTXLS WKH ÀUHÀJKWLQJ DS- Over half a million tourists visited Geor- year and 4.8 percent in 2019. paratus in Georgia. We have chosen [the] gia’s mountain resorts during the 2017-2018 “According to the International Mon- company Rosenbauer and together we winter season, a 25 percent increase from etary Fund forecasts, Georgia will have will manage to achieve this goal. I have last year, agenda.ge reported on April 27. one of the highest economic growth great expectations of fruitful cooperation Goderdzi, located in Adjara, saw the rates among the countries of Eastern Eu- with Rosenbauer,” agenda.ge quoted biggest increase in visitors, the report said. rope and Central Asia in 2018-2023,” the Giorgi Mgebrishvili, the head of the Emer- There was a 129 percent increase in Georgian Economy Ministry said in a press gency Management Service of Georgia, the number of people who traveled to release published on April 23. as saying. Goderdzi, compared to a 122 percent “Growth in 2018 is expected to remain increase at Tetnuldi, 119 percent increase VWURQJ>@7KHFXUUHQWDFFRXQWGHÀFLWLV NEW SEWING FACTORY OPENS IN in Tatsvali and a 25 percent increase in expected to widen slightly due to higher KUTAISI Gudauri. oil prices and public investment. Over A new factory opened in Kutaisi on the medium term, the sustained imple- May 16 as part of the government’s Pro- ASIAN DEVELOPMENT BANK TO mentation of Georgia’s economic reform duce in Georgia program, agenda.ge FUND RENOVATIONS AT GUDAURI program is expected to support higher reported on May 17. The Asian Development Bank will fund 6 | Investor.ge JUNE-JULY 2018 the second phase of work on water sup- AUSTRIAN LOGISTICS ister’s remarks to journalists. ply, sanitation and wastewater treatment COMPANY EXPANDS IN “Today our budget is dependent on systems at Gudauri ski resort, agenda.ge GEORGIA about 300 companies, which is a bad has reported. The Austrian Gebruder Weiss transpor- tendency. This means that we have such The bank is also helping to fund the tation and logistics company will invest €2 sectors in the economy where a high risk of development of Georgia’s transit system million in Georgia to expand its logistics monopolization has occurred. This makes and its tourism sector, including the con- terminal, agenda.ge reported on April 19. our economy less sustainable,” he said. struction of a 24-km-long section of the ´:HHQWHUHG*HRUJLDDERXWÀYH\HDUV “At the same time, we see high interest road leading from Mtskheta to the Larsi DJRDQGDUHVDWLVÀHGZLWKRXULQYHVWPHQWV rates, which do not allow the chance to checkpoint at the Georgia-Russia border. We have attracted a number of businesses start businesses. The banking system should The Asian Development Bank has in- [. .] We intend to invest €2 million to en- not be a brake for economic develop- vested over $2 billion in Georgia over the large our logistics terminal in Georgia,” ment, but its driving force.” past 10 years, the report said. Wolfram Senger-Weiss, a member of the “Taking into account these circum- Gebruder Weiss Management Board, told stances, we decided to start a large-scale EUROPEAN INVESTMENT BANK Prime Minister Giorgi Kvirikashvili. reform in our economy, which aims to pro- TO OFFER €250 MILLION FOR Gebrüder Weiss has invested €10 mil- vide young start-ups with zero-interest-rate GEORGIAN ROADS lion in Georgia, establishing one of the capital,” said Bakhtadze. The European Investment Bank (EIB) largest premium logistics terminals in the is proposing €250 million to help improve South Caucasus region. GEORGIAN POST STARTS regional connectivity and road transport Gebrüder Weiss includes 150 branches E-COMMERCE PLATFORM efficiency in Georgia, agenda.ge has in 28 countries and employs more than Georgian Post has created a platform UHSRUWHG7KHEDQNKDVDOUHDG\ÀQDQFHG 7,000 people. to help small- and medium-sized business- over €500 million within the Georgian es sell their goods in Georgia and abroad, Transport Communication Project. The GEORGIA PLANS FINANCING Economy Minister Dimitry Kumsishvili an- project includes the construction of a 14- REFORM nounced on May 16. km section of the Grigoleti-Choloki road, Georgian Finance Minister Mamuka The new service is called ‘Georgian as well as rehabilitation work on other Bakhtadze has pledged to make it easier Products to the World’ and aims to international and secondary roads in the for start-ups to receive funding, agenda. strengthen the e-commerce industry of country, the report said. ge reported on April 12, quoting the Min- Georgia, agenda.ge reported on May 17. ADVERTISEMENT 5HSURGXFWLRQVRI*HRUJLDQ3DLQWHUVE\&H]DQQH3ULQWLQJ+RXVH 7VHUHWHOL$YHQXH7ELOLVL 7HO ZZZVKRVKDQDJH Innovators And Disruptors: Ideas To Bring Change INVESTOR.GE IS STARTING A NEW COLUMN ON THE ENTREPRENEURS PUSHING GEORGIA’S DEVELOPMENT FORWARD. FOR OUR SECOND INTERVIEW, WE SPOKE WITH cines cannot be retailed alongside other enough that their industry and medical GIORGI BEZHITASHVILI AND e-commerce traded products because partners, advisers and mentors are well- HIS START-UP PARTNER medicines are controlled by extensive entrenched, connected and respected JOSUAH RECHTSTEINER ABOUT THEIR APP TO CUT MEDICAL government regulations. In the U.S., locally in the U.S. BILLS, WHICH THEY PLAN TO GHGLFDWHGRQOLQHSUHVFULSWLRQIXO¿OOPHQW “The solution is to restore competi- LAUNCH IN THE U.S.