us business in georgia - 16 november, 2015

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1 USD 2.4018 2.39981 EUR 2.5879 2.6007100 RUB 3.6095 3.78051 TRY 0.8370 0.8334

CURRENCIES Record Number of Businesses Registered by US Citizens in Georgia in 2015

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AmCham Georgia:“We Have Some Nervousness Coming into Election Year in 2016”

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“The Main Problem Now is Restoring Confi dence in the Future of Georgia”

US Business in Georgia

The FINANCIAL

Georgian political parties are being advised not to destroy the country’s image in the international arena in the process of demolishing each

other. The political battle of parties for the 2016 elections is raising the level of nervousness in the business community. Court injunctions to freeze a company’s as-sets and tax audit are named the main con-cerns for businesses in Georgia. AmCham Georgia’s President calls on Georgia’s part-ners in the West to step up and help com-panies to understand and get the benefi ts of the AA and DCFTA deals, in order to halt growing Russian infl uence over Georgians.

Tako KHELAIA

The biggest development that we had in 2015 was in July, when we declared a moratorium on criticizing the Government until October, to give a chance to the

investors council under the Prime Min-ister to solve the problems that we have been talking about for about 3 years now. This was to be able to solve them far from the limelight, not to discredit anyone and not to give credit to anyone else. So we’ll see how this investor council is going to work.

2 HEADLINE NEWS & ANALYSIS FINANCIALC M Y K

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Q. What was the most signifi cant development in 2015 for businesses in Georgia?

A. The most signifi cant thing for businesses and future in-vestors is the recently formed Investors Council. The Coun-cil was sponsored by EBRD. The Georgian Prime Minister chairs the council. It’s mem-bers include leaders of the ma-jor business associations in the country, EBRD and the eco-nomic team of Ministers. Other IFI’s attend on a rotating basis. We had our fi rst meeting last month. I believe this is going to be a very strategic means of direct communication with the highest levels of the govern-ment for businesses. The Coun-cil is in-place to discuss the cur-rent issues. At the fi rst meeting we discussed very tough issues with the Government. In addi-tion, we will talk about strategic objectives such as making Geor-gia a more attractive place to invest and how we can work to-gether to do that. Overall, one of the things that businesses have been asking for is better com-munication with the high levels of the Government. With the PM chairing, and his economic team of ministers attending, I think this will provide an excel-lent means of improving public-private sector dialogue. We are also, at AmCham, excited about Georgia’s participation in a new Silk Road. The Silk Road Forum that took place here, in Georgia, was very important. There are lots of prospects that Georgia can gain through Asia and the FTA with China, combined with the already-achieved DCFTA with the EU. It provides lots of opportunities for bringing com-panies into Georgia to do soft repackaging and warehousing here, as well as other invest-ments for transit and logistics along the Silk Road.

Q. Did legislation for entrepreneurs improve or worsen over the last three years?

A. Any business that has been here for many years certainly got accustomed to, and ben-efi ted from, the very libertarian position of the previous govern-ment. It was a very necessary thing for businesses to be able to grow. Georgia has a develop-ing economy and businesses re-ally needed the breathing room. At some point, as a country de-velops, there are some regula-tions and bureaucracy that will come back into play. That is what we see now with Georgia

trying to amend its legislation and harmonize with the EU. You can call it reforms, but they are examples of more regula-tions. That is always diffi cult for to accept, and sometimes pain-ful and costly. Both the Govern-ment of Georgia as well as its partner countries that have an interest in seeing it succeed, really need to do everything they can to make sure that the masses understand what the long-term benefi ts will be. They have to reassure people that they have access to fi nancing and education that will enable them to take advantage of these benefi ts. In the long term, we certainly think that Westerniza-tion, including the EU DCFTA, is going to be worth it. Right now it is painful, especially for the local businesses that are not used to these kinds of regula-tions.

Q. What can Georgia do to attract more US inves-tors?

A. The distance problem is the main reason you do not see more US businesses here. Georgia is too far away from the US and in most investors’ minds the market here is too small. Since we can’t bridge the distance issue, Georgia has to stay strong on it’s Westerni-sation agenda. It has to make sure that it is seen as a demo-cratic, transparent society; that its values are really stand-ing on free market economic principles. We, the private and the public sector, have to work together to promote Georgia more. Georgia is a regional hub. With its trade agreements with the EU and the countries in the region, it makes sense to posi-tion Georgia as a regional hub. Perhaps more needs to be done with neighbouring countries to ensure that they honor their trade agreements the way Geor-gia does. The country needs to promote its achievements, strategic placement and really make the economic case. It is not just about politics. We have some nervousness coming into the election year in 2016. No one does Georgia any favours when they go out into the inter-national press, and destroys the country’s reputation in the pro-cess of destroying each other. It is really important to promote what Georgia has to offer eco-nomically and geographically.

Q. The World Bank has published its economic growth forecast for Geor-gia measured at just 3%. What are your expecta-

tions for 2016?A. I think 3% is reasonable.

However, a country like Georgia really needs at least 5% growth a year to be successful. It’s dif-fi cult to predict for 2016, but if we look back at recent history, when we had the last big elec-tions in 2012, on the one hand, there was a huge positive for Georgia in that we were able to show investors that Geor-gia was the fi rst country in this area to have had a peaceful transition of power. That was excellent. However, at the same time, the antics of both major parties leading into the elec-tions and the uncertainty that comes with a changing govern-ment in this part of the world, in a developing country, were bad for business. It is not a com-ment on one party being bet-ter than the other. It’s simply a statement of hope that all of us in Georgia have learned lessons from years. All of the political parties should focus on promot-ing Georgia in a good way. I am not naïve enough to believe that it will defi nitely happen, but if it does, we should not see too much disruption in 2016. On the other hand, if the opposite happens it will be very diffi cult on the economy. Nobody feels comfortable investing, or even reinvesting- when there is po-litical instability. Therefore, we hope that all the parties work hard to ensure stability for the 2016 parliamentary elections.

Q. How are US brands growing in Georgia?

A. US brands and franchises are popping up everywhere and as far as we know they are doing quite well. There is no street corner that does not have a Wendy’s or Dunkin’ Do-nuts. They are everywhere in Tbilisi and my children think that is fantastic. We have seen many restaurant chains open-ing with US franchises during the last year too. On the retail front there have been several US clothing stores, like Gap, Banana Republic, Tommy Hil-fi ger, and certain others that have opened in Tbilisi. It is a great time, especially for fran-chising US brands, as right now they seem to be very popular and successful.

Q. What are the main obstacles for investors in Georgia? What are the main complaints of Am-Cham member companies?

A. The biggest problems our members are having are court injunctions, where the court is able to freeze your assets based

on another party making claims against you. It relates to even relatively small claims. Very large assets are frozen and it really cripples a company’s abil-ity to function. Unfortunately, based on the legislation this is currently legal. This is legisla-tion that has existed for many years and at AmCham we be-lieve that there has to be chang-es to fi x it. We raised this issue at the Investor Council meeting. We were pleased with the fact that the PM agreed that that has to be fi xed quickly. The other big problem is the implementation of tax audit. Most of the prob-lems raised are eventually sort-ed out through the appeals pro-cess in the Ministry of Finance. However, it has unimaginable and unacceptable consequences on companies, in the form of the time and fi nancial resource allocation required to fi ght those appeals. It is extremely important for the Government to give new directions to the tax assessors. We have also raised this issue with the PM and In-vestor Council and have agreed to have a special meeting in De-cember to speak about these is-sues. AmCham’s position is that there needs to be some kind of technical assistance and reform of the audit implementation process, along with some swift direction from the highest lev-els of government to limit the immediate troubles companies face. We hope we can convince the Government to do that as it is better for everyone. We hope the government realizes that it is not only inhibiting the private companies growth as they waste time and money on lengthy ap-peals processes that shouldn’t be necessary, but it is also a waste of the government’s re-sources when these tax claims should never have been made and should never have required their time and resources in the appeals process either. Fixing this problem will be a great bo-nus for Georgia. I believe that the best advertisers for getting investments to come to Georgia are the people that have already done so and are happy tell oth-ers that it is a good place to be.

Q. Starting direct com-munication with offi cials can be named a positive step. Meanwhile, it is cru-cial to get concrete results and solve problems that matter to the business community. How optimis-tic are you in this regard?

A. I agree. We are all eager to see how these more open dis-

cussions can bring about posi-tive change and quickly. In Am-Cham we do not believe that the major problems, for example in the Revenue Service, is a mat-ter of corruption. It is a matter of competency- having enough of the right people and giving them the proper instructions. It is a fi xable problem and it needs to be fi xed.

Q. There are concerning results from an NDI poll, showing that Russian in-fl uence is growing among the population. Do you consider it a problem?

A. It is a problem. However, it is not just a problem of Geor-gia, but also of the EU and our western partners. When I see that poll I can easily understand how the masses of Georgians may feel. Georgia has signed the AA and DCFTA with the EU. We hear of progress on the visa liberalization processes. All of these sound great when you are only hearing headlines. Howev-er, when you get into the busi-ness of what is actually required to achieve that, it is quite scary. These regulations can be ex-pensive for businesses. Accord-ingly, it is very important for Georgia’s partners in the West to step up and help, especially small and medium companies in Georgia, to understand what the benefi ts will be and help them to get these benefi ts. If we do not do this we are go-ing to see Georgians get even more fatigued by all of these new regulations. It is a wake up call to all of us to realize that Georgia’s westernisation and western integration is really important. I think the West has a huge responsibility to try to help everyone here understand and participate in the process of these things, going forward. To keep things in perspective, lets acknowledge that luckily we are not seeing a shift of great proportions. Still, this is a trend that we certainly hope does not continue.

Q. Georgia has been ne-gotiating an FTA with the US for years. When should we expect this agreement to be reached?

A. Unfortunately I have no control over this process. Am-Cham, has strongly supported this agenda, both in Tbilisi and Washington DC, for many years. We will continue to do so. Realistically, there is so much going on in the world that it is that the US has recently made clear again that it cannot will start an FTA with Georgia in the nearest future. So, while I believe this would be a tangible, bilateral, thing that the US can do to show appreciation for the steps Georgia has made, I guess we’ll be waiting for a bit longer.

Q. Do you see the future of Georgia as a member of the EU and NATO?

A. If it was up to me Georgia would be a member of the EU and NATO tomorrow. I wish everyone saw it that way, but since they don’t Georgia and it’s partners have to be very careful moving forward. For ex-ample, I do not think that NA-TO’s membership action plan (MAP) will ever be good idea for Georgia because of Russia’s obvious response, as we saw in 2008 when they became afraid that Georgia was getting close to MAP. I hope that someday NATO will recognize Georgia as its member, skipping the MAP process. As for the EU, Georgia is a very European society and the country is taking every step to harmonize further with the EU, legislatively. So, while it is not on the table right now but I hope it will be some day.

AmCham Georgia: “We Have Some Nervousness Coming into Election Year in 2016”

The FINANCIALBy MADONA GASANOVA

Georgian political parties are being advised not to destroy

the country’s image in the international arena in the process of demolishing each other. The political battle of parties for the 2016 elections is raising the level of nervousness in the business community. Court injunctions to freeze a company’s assets and tax audit are named the main concerns for businesses in Georgia. AmCham Georgia’s President calls on Georgia’s partners in the West to step up and help companies to understand and get the benefi ts of the AA and DCFTA deals, in order to halt growing Russian infl uence over Georgians. “I hope that all of us in Georgia have learned lessons from the early years. All of the political parties should focus on promoting Georgia in a good way. I am not naïve enough to believe that it will defi nitely happen, but if it does, we should not see too much disruption in 2016. On the other hand, if the opposite happens it will be very diffi cult on the economy. Nobody feels comfortable investing, or even reinvesting- when there is political instability. Therefore, we hope that all the parties work hard to ensure stability for the 2016 parliamentary elections,” Sarah Williamson, President of the American Chamber of Commerce (AmCham) in Georgia, told The FINANCIAL.According to Williamson, Georgia has clearly adopted its Westernisation agenda. “It has to make sure that it is seen as a democratic, transparent society; that its values are really standing on free market economy principles.”

SARAH WILLIAMSON, President of the American Chamber of Commerce (AmCham) in Georgia

US US Business in GeorgiaBusiness in Georgia

3HEADLINE NEWS & ANALYSISFINANCIALC M Y K

FINCHANNEL.COM | 16 NOVEMBER, 2015

Tako KHELAIAThe FINANCIAL

ICC GEORGIA PRESIDENT SPEAKS ABOUT GEORGIA’S INVESTMENT PERSPECTIVES

The biggest development that we had in 2015 was in July, when we declared a mora-torium on criticizing the Government until October,

to give a chance to the investors council under the Prime Minister to solve the problems that we have been talking about for about 3 years now. This was to be able to solve them far from the limelight, not to discredit anyone and not to give credit to anyone else. So we’ll see how this investor council is going to work. If it’s going to work well then there will be no need for us to go public. If it’s not going to work then we will defi nitely have to go back to the media and speak openly about the problem.

Q. What are the main com-plaints that ICC member compa-nies have in Georgia?

There are 4 main complaints:The fi rst one relates to new leg-

islation. Every few days we have a new piece of legislation that’s adopted without consultation with the business community. This is a real problem be-cause we cannot keep up and then we don’t know what’s happening. And this is backfi ring very negatively on the confi dence of businesses and investors in the country.

The second issue is the revenue service. The revenue service is very aggressive with companies. Whenever they audit a company they decide ar-bitrary penalties that can be manifold what the company actually needs to be penalized for, if it needs to be penal-ized at all. They freeze bank accounts and totally paralyze the company.

The third issue relates to la-bour inspection. We are quite ap-prehensive about it. It’s a new control-ling body that will be watching over businesses, in addition to the compe-tition agency and the revenue service. This is not good news because it’s com-plicating the business climate.

Finally, the fourth issue relates to the courts. The courts are issu-ing injunctions against defendants re-questing the freezing of assets that are manifold the value of the claim against those companies and thus totally para-lyzing the companies.

Those are the 4 main issues that are of big concern to the business com-munity and we hope that through the investment council we will be able to solve them.

Q. What are the main obsta-cles that foreign investors are facing in Georgia?

A. I can’t differentiate between for-eign investors and Georgian business-men. They face the same problems.

Unpredictability in legislation - as I have said before; any day the Gov-ernment or parliament can come in with new legislation. There is no vis-ibility towards the future. We don’t know where Georgia is going to be in 6 months, a year, in 2 years or 5.

Investors want predictability. They want visibility. Without visibility and predictability investors are not inter-ested in a country, especially in a small one like Georgia.

For the past 3 years the Government has issued a lot of business-unfriendly legislation that has cooled down inves-tors and scared them off, so now they are looking for destinations other than Georgia.

Fortunately the Government has partially reversed this bad legislation. But it’s too late. I believe that the main problem now is restoring confi dence. Confi dence in the future of Georgia for businesses and investors has been lost

in the past 3 years. What we need to do together with the Government now is make sure that that confi dence is re-stored, so people invest in their own country and for foreign investors to invest in Georgia as well.

Q. It’s often said that doing businesses in Georgia is easy, would you agree?

A. On paper it’s easy, but practically it’s not that easy; especially when you have to deal with the revenue service, with the competition agency, with the Georgian courts, with the labour in-spection. No, it is not as easy as you can read on paper. And this is a real problem, because it takes one failure to spoil 100 success stories, and since we don’t have 100 success stories, we shouldn’t be surprised by how Georgia has lost its reputation as a good place for business and investment.

Q. Does the Georgian Govern-ment do enough to attract for-eign investors?

A. I cannot criticize the Government regarding their will to attract foreign investors. The will is there. What is not there is the understanding of what for-eign investors need. This means that if you are in Saudi Arabia and you open a restaurant where the menu is beer and pork, don’t be surprised if you have no clients.

In Georgia the situation is exactly the same. The Government is not serv-ing investors what investors want to eat. And the Government is unable to understand what the problems are that investors suffer from.

They don’t want to see it, we’ve been saying it a million times and I believe that it’s not the will that is lacking - they really want to get investors in, but they don’t know how to attract them. And they are not focusing on under-standing what the problems are with attracting investors.

Q. What have they done prop-erly?

A. What they have done properly is they have stopped using criminal courts to arrest businesses, put them in jail and then pre-bargain with them to take money from them. This, they have managed to do well. By the same token when the revenue service enters a company and fi nes the company GEL 1 million instead of GEL 10,000, and then freeze the bank account - this is just another way of persecuting an investor or business. The result is the same, but the tool has changed. In-stead of jailing them, they freeze their bank account and put pressure on them. I can’t say that the result is bet-ter and there is more confi dence than before. On the contrary, businesses were more confi dent about the future of the country then than they are now.

Q. In which sectors can new investors expect a rapid positive return?

A. I think tourism has huge poten-tial. There is defi nitely a lack of infra-structure for tourism which investors can get involved in. Georgia is really booming tourism-wise. I don’t know

anyone who has come to Georgia and not wanted to come back another time. So tourism is a defi nite, and then you have medium-sized industries.

Let’s say paint factories, paper tissue factories, not big factories of hundreds of millions of dollars, but anything between 5 to 20 million dollar indus-tries, that’s what we are lacking here and we are really in a very comfortable position considering that Georgia has signed a DCFTA association agree-ment with the EU. We have cheap la-bour, the Lari is weak so we have all the parameters on hand to be successful for medium sized industries.

Q. You often meet with the Georgian Government. What percentage of these meetings get positive results?

A. It depends on the government offi cial. For example, when Minis-ter Kvirikashvili was the Minister of Economy I can say that 70 percent of our requests had positive results. He was fantastic as minister of economy and also as a person. Out of the whole government we had the best relations with him. He always listened very care-fully, he understood what the problem was and took action. Unfortunately we lost him as minister of the economy but gained him as Minister of Foreign Affairs.

The situation with the Minister of Finance now is whenever we come with a problem he does his utmost to solve it. But this is a tactical approach. On a strategic level, considering that he oversees the revenue service, he never wanted to understand what the real problems with the revenue service were, and the cost of the actions of the revenue service on the economy. I al-ways think of the minister of fi nance as someone who can be called blind; meaning, when you tell him “This is red,” he says: “No, it’s yellow.” He cannot see the problem because he has no experience of it, I mean from the perspective of businesses. Every time we have gone and talked to him about a particular issue he has always been extremely helpful but we can’t al-ways tactically solve matters. The Eco-nomic Adviser to the Prime Minister Giorgi Gakharia is also always open. So, in general I can say that for tacti-cal problems, for punctual problems the Government is solving them, but strategically there is a lack of vision, a lack of understanding, and this is the main issue. This is what we are trying to explain to them - that they need to change strategy.

Q. In a 10 points system what would you give the Georgian Government?

A. I would give them 3, referring to the economy. I’m not referring to so-cial or other issues, just the economy.

Q. I have to ask you about Asian business in Georgia. We often hear hateful speech di-rected towards Asian investors. Do you think this is Georgians’ character or due to someone else’s manipulations?

A. No, I don’t think anyone is ma-nipulating them. I think that Geor-gians are ambivalent regarding for-eigners. They have something like a double approach to them. There is a social approach to foreigners where Georgians are extremely generous, extremely hospitable and extremely nice. And then there is a professional approach to foreigners where there is professional xenophobia. It means that Georgians don’t like to see for-eign people operating in the country, working in the country. They are very happy to see them as tourists: drink-ing wine around a “supra”, enjoying the landscape. But they don’t want to see foreigners working in Georgia. This is generally speaking though, not all of them of course. Generally there is a xenophobic feeling in the country professionally-wise.

Q. There are constant specula-tions among local and interna-tional media about the country’s political course. Do you doubt Georgia’s western aspirations?

A. I think that Georgia today is still western-oriented, but if you com-pare the pure results of 2 years ago to the pure results of 3 months ago you will see that enthusiasm towards the West is fading. This is not because of Georgians. This is because of the at-titude of the West towards Georgia. You know that NATO’s MAP has been postponed year after year, the visa facilitation also has been postponed. Georgians feel very frustrated. Geor-gians are very proud, they are not beggars, yet the message that they are receiving from the West is as though they are begging for something. So, for a proud nation I understand this feel-ing within the population. I mean if Europe doesn’t want us or they don’t want to give us visa facilitation, or if we cannot be on the map soon, then let’s forget about it. They think along these lines: “If we managed to survive for millennia without the EU, then we can survive without the EU for the next millennia,” especially as the EU has its own problems internally.

Q. Considering the current economic situation what do you fear the most?

A. I think that we are melting. We have lost our competitive advantage. There are many other emerging mar-kets that are competing with Georgia and that are offering even better pack-ages than Georgia - larger markets than Georgia as well. We are losing our competitive advantage and we have lost our momentum since 2012. We had a fantastic window of opportunity early in 2013. Unfortunately, the Gov-ernment couldn’t take advantage of this window of opportunity and they turned to social programmes instead of focusing on the economy, on invest-ment, on boosting, and this made us lose lots of momentum. So I believe that this is the main challenge now - to restore confi dence and to put Georgia back on the map, because Georgia un-fortunately is not on investors’ maps

so much anymore. However, there is still a fantastic opportunity for Georgia now for everyone to be aware of.

What is going on in the Middle East now is that many Easterners from wealthy countries like Saudi Arabia, the Emirates, feel uneasy at home be-cause of what is going on in the Middle East and are looking for other places to buy a house, to build a villa or make an investment - and they are looking to Georgia.

We know this because they come to us and they speak with us and this is a fantastic opportunity for the country. The Government needs to capitalize on it because they won’t have another opportunity like this one. We lost the opportunity with the Iranians; we shouldn’t lose this opportunity with the Middle Easterners.

Q. Looking ahead of develop-ments around National Bank of Georgia, It seems like interna-tional donors are losing their control over the Georgian Gov-ernment. Do you think that west-ern partners should be stricter in their demands?

A. Frankly, I don’t think that the international community is losing its control over Georgia. First of all there should be no control that the interna-tional community has over Georgia. Why should there be any control? Georgia is a sovereign country with a sovereign policy so it shouldn’t be controlled. Now we were very much against the removal of the branch of controlling banks from the national bank into another entity. We think this is counterproductive and the risk of it is that it could be controlled by the Government to put pressure on the banks to control who is contributing to which political party and to bankrupt any bank any time if the bank is not following the Government’s policies. So this is what we don’t like about it.

If you were in Switzerland and they would have separated from the nation-al bank no one would even talk about it, but the problem is that everyone knows that every administrative tool is used by the Government to strengthen itself and weaken the opposition. This is something that is not ethical and is not proper - this is where everyone got very twitchy about moving the bank controlling body to another body.

Q. As a Georgian citizen do you believe in a NATO or EU future?

A. I am going to answer that for myself, not on behalf of the Interna-tional Chamber of Commerce. Person-ally I don’t think that Georgia will be a member of NATO any time soon. And I don’t think that Georgia will integrate into the EU any time soon, at least not as long as I’m alive.

Let’s be pragmatic, regarding the EU, it has its own problem internally with Greece, Spain and Italy. They are not in the process now of enlarg-ing themselves. Concerning NATO, we know the situation with the Russians, so I don’t think that NATO is going to impose membership on Russia. This is my personal opinion.

We need to be more pragmatic and not focus too much on it. I think Geor-gia needs to do good homework for it-self, be a brilliant student for itself, not to get a reward from NATO or from the EU. Having said that though, I think that the EU needs to make an effort towards Georgia. Signing a DCFTA and an association agreement leads to a very high compliance cost for the economy.

You know we have to adapt our leg-islation according to the EU legisla-tion. This will complicate doing busi-ness in the country. We need to see something in return. Because when you pay you want to take advantage of it. We want to use the advantage of having an association agreement with the EU now and pay over a period of 12 years. And this is the feeling that Georgians are getting now - frustra-tion.

The EU needs to make a very seri-ous effort regarding this issue. I be-lieve that if Georgians at some stage change direction and head towards Russia (and it is possible), it will not be the Georgians’ fault but the fault of the EU and the West.

US US Business in GeorgiaBusiness in Georgia“The Main Problem Now is Restoring Confi dence in the Future of Georgia”

FADY ASLY, ICC Georgia President


16 NOVEMBER, 2015 | FINCHANNEL.COMUS US Business in GeorgiaBusiness in Georgia


A lliance Group Hold-ing (AGH) plans to position itself as a strong fi nancial and consulting company

on a regional level. Geographi-cal location together with human capital is believed to be the core competitive advantages of Geor-gia on a global level. Given the increased competition between developed and developing coun-tries, it is recommendable for Georgia to build up its agro and energy sectors to ensure its eco-nomic future.

“Development of the agro sec-tor is crucial for Georgia. It will allow us to supply local demand under the huge increasing defi cit and volatility of prices on a global level. Together with energy inde-pendence, it will ensure the future of our developed economy. The cooperation of society with the Government is important in this direction,” Aieti Kukava, CEO at Alliance Group Holding, told The FINANCIAL.

According to Kukava, AGH is a company of global ambitions. “Our goal is to be positioned as a strong consulting and fi nancial group in the region in 5-7 years’ time. Our current strategy is to attract more income from abroad rather than from local services. We believe that economic and political processes domestically will be in a better way and will promote the pace of our growth,” he said.

Alliance Group Holding was established as an investment and consulting company in 2005. The Holding incorporates: Alliance Group Leasing; Alliance Group Capital; Alliance Group Microfi -nance; the National Credit Infor-mation Bureau; Alliance Energy; Alliance Group Property; Alliance Group IT.

“Bringing value to the coun-try’s economy has always been the main goal of the company. This approach is unique; rarely do companies use it as their mis-sion. We have always realised that bringing long-term value to the economy is directly linked to the company’s future solid pros-pects. We have managed to make signifi cant progressive impact on all of the seven industries which are incorporated under our hold-ing.”

When the team of AGH started business in Georgia in 2002, its goal was to develop strategic in-dustries that were key to the coun-try’s development. The members had experience of the consulting and fi nancial industries. Accord-ingly, they chose other fi elds: business information; credit bu-reau; real estate database; micro-fi nance, leasing and investment. The energy sector was later added to these sectors.

“There were two main reasons that encouraged us to develop these fi elds. These industries were of strategic importance to the country. They would contrib-ute important benefi ts to Georgia and our society. The develop-

ment of the credit bureau has signifi cantly raised the effi ciency of banking and the fi nancial sys-tem. Risk optimization contrib-uted to considerable enhance-ment of crediting the economy. Therefore, the already competi-tive banking and fi nancial system of the country made a big step forward in increasing the com-petitiveness of the region,” said Kukava.

Offering those fi nancial and investment services that are out-side of the banking sector was the next stage of AGH. The company started developing microfi nance, leasing and investment services.

As Kukava explained, classic micro fi nancial companies that are mostly focused on fi nancing micro and small enterprises bring lots of benefi ts to the country’s economy. Such organizations are successfully helping entrepre-neurs that then start using bank-ing and other services at later stages.

Leasing is the most optimal

source for fi nancing equipment, according to Kukava. As he said, it is an attractive alternative to fi nancing for entrepreneurs in both fi nancial and taxation terms.

Later on, AGH started offer-ing its investment and consult-ing service. This incorporates assisting entrepreneurs to attract capital and long-term resources, as well as attracting strategic partners or just purchasing busi-nesses back.

The Holding is developing the business information sector. The company is producing a database of active Georgian companies. All of this simplifi es and increases the attraction of potential foreign partners to Georgian companies.

The Holding considers energy to be a core industry of our coun-try. “That was the main motiva-tor for why we decided to become involved in this sector. The de-velopment of renewable energy resources will increase export in-come by direct trade with gener-ated energy. It will also increase

the supply of cheap energy re-sources for the local economy. Fi-nally, the production of local ex-port production will signifi cantly increase.”

As the CEO of AGH explained, the company’s mission is about creating values for all stake and shareholders by developing the country’s strategic fi elds. “AGH has contributed to the coun-try’s economy by developing the above-mentioned seven fi elds. However, we are not going to stop at that.”

“Georgia is a country of huge opportunities,” believes Kukava. He distinguished its geographi-cal location and natural resources as well as prosperous human re-sources as the core advantages of the country.

“The geographical location al-lows the country to be a trade hub not only in terms of maritime and land but also from an aerial view,” Kukava said.

“An abundance of renewable energy can be used for developing

the economy. It will allow Georgia to meet the future with more con-fi dence when oil and other energy resources will be getting exhaust-ed in the world,” he explained.

Kukava believes that human resources are the most important thing the country has. “Through proper development and optimal usage of this resource, Georgia can compete and enrich all high skilled fi elds with innovations in a 5-15 year period.”

“The ongoing political pro-cesses and tension are pushing investors to invest in tradition-ally less risky regions, like the US and Europe. Currently developed and developing countries are in fi erce competition over attract-ing capital. Therefore, Georgia is facing quite a diffi cult task,” said Kukava.

“Georgia should use all of its potential and properly promote itself. The country should create stimulating packages to attract strategic investors with,” Kukava told The FINANCIAL.

AGH to Position itself on Regional Level

AIETI KUKAVA, CEO at Alliance Group Holding



Advertiser: AG Capital. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com




Tako KHELAIAThe FINANCIAL

VELVEL LOZYNSKYY SPEAKS ON THE DEVELOPMENTS AT GEORGIAN AMERICAN ALLOYS

Georgian Ameri-can Alloys (GAA), Inc., headquartered in Miami, Flor-

ida, manufactures and sup-plies ferroalloys used in the manufacturing of iron and steel through wholly-owned US based subsidiaries Felman Production, LLC, Felman Trading, Inc., CC Metals & Al-loys, LLC, and Eastern Euro-pean-based Georgian Manga-nese, LLC, which is comprised of Chiatura Manganese Mine, Zestafoni Ferroalloy Plant, and Vartsikhe Hydroelectric facility.

Georgian Manganese is a major producer of high-grade and regular-grade silicoman-ganese in Georgia. Georgian Manganese’s mining opera-tion includes seven mines and eight quarries. Vartsikhe 2005, LLC is a hydroelectric power plant that supplies power to its affi liated com-panies Chiatura Manganese Mine and Zestafoni Ferroal-loys Plant.

GAA is the largest Georgian exporter. In 2014, the com-pany invested USD 15 million. Out of this, USD 5 million has been issued for the construc-tion of a hydro separation dis-trict, and USD 3 million - for Zestafoni power plant.

Q. The year 2015 has been quite tough for the business community, how would you evalu-ate the current year for Georgian American Al-loys?

A. It’s a challenging year, although it is not over yet. World raw materials are fall-ing apart, every week the prices are going down. Right now we are somewhere in the middle of 2009 and things are getting worse every week.

There are no positive re-sults. I don’t know if in the real economy world or raw material world anything posi-tive exists. One of my col-leagues was recently at a fer-roalloys conference and it was like 3 days of visiting a cem-etery, nobody had anything positive to share.

Nobody has any positive in-formation, any positive news, everybody expects the year 2016 to be even worse than 2015 and nobody has any idea what has to happen for a comeback to be possible.

Q. The investment cli-mate hasn’t been very good lately in Georgia. Has that affected your company?

A. It’s not about the invest-ment climate, it’s just about what’s going on in the world with the oil price falling down, raw material prices falling down; everything that people are digging out of the earth is going for very low prices. When oil companies are cut-

ting their budgets I think it affects the steel industry. The steel industry is closing plants, which in turn affects us. The steel industry is cut-ting consumption, so are the truck producers, and so too the heavy equipment manu-facturers. They are shutting down their facilities. China’s consumption is going down as well, while in steel pro-duction the Chinese make up about 55% of the world mar-ket so everything depends on them as well. Manganese and oil prices are also falling every week.

Q. GAA was going to construct a mining fac-tory in Chiatura in 2015. Did you manage to stick to your plan as sched-uled?

A. Actually we are still plan-ning to construct that factory. That’s the future of Chiatura - doing what has to be done, no matter the situation, but unfortunately nothing is get-ting done on time in Georgia and we are in the middle of getting paperwork sorted be-tween ministries. Basically we are stuck in the middle of get-ting permits, environmental and construction papers. The plan has been pushed back to 2016 but it’s still in the works.

Q. What was the im-pact of the GEL’s devalu-ation on your business?

A. The Georgian Lari’s de-valuation was actually one of the problems that helped the business, not damaged it. If you ask me, personally I think it should be more devalued. I think 2,4 is not such a num-ber if you compare it with our neighbours. One and a half years ago the GEL and Turk-ish Lira were 1 to 1; now the Turkish Lira is 3,1, and the GEL - 2,4. We as an exporter have interests in the currency

being devalued. We actually benefi t from it.

Q. In 2014 GAA was the largest Georgian export-er. Which fi gures are you expecting to reach this year?

A. The 2015 fi gure will for sure be less for 2 reasons; the price of the material export is lower, and also the amounts are getting lower as well. We should be about 65% of 2014, and in 2016 we cannot predict the price, but volume-wise we should be about 60% of 2014 as well.

Q. GAA is an American company operating in Georgia. What are the main things that need

to be improved to at-tract more US businesses here?

A. First of all, a direct fl ight. It is very diffi cult to fl y from America to Georgia and I think Alitalia doesn’t fl y any-more either so it’s getting a little diffi cult, but the good news is that Turkish Airlines has started to fl y to Miami and our headquarters are in Miami which is useful for us. I think the overall climate is good, maybe what should be improved is quality of Tax and Revenue Service, the rest is fi ne I think.

Q. How has the busi-ness environment of Georgia changed since 2012?

A. I think in terms of the pressure. All businesses were under pressure before the parliamentary elections, and since then there has been no pressure from the Govern-ment, so it’s kind of a relief. There is less interference from the Government and I think sometimes there should be more involvement than there is now, but we have defi -nitely got more freedom.

Q. Have you witnessed anything positive in re-gard to the country’s business growth?

A. It’s hard to say, but as they say - “no bad news is good news”. However, it’s hard to recall something so positive that has happened in the last 5 years that has really changed something. But the fact that the French super-market network Carrefour came to the country makes life a little better.

What I can say about our company is that we have con-tinued to grow. We are invest-ing, changing things for the better. Every day we are doing something interesting. Lately we have started doing weekly news announcements on the

local TV channels in Chia-tura and Zestafoni where we always have something hap-pening.

Q. Companies like GAA carry extra responsibil-ity in dealing with envi-ronmental issues, as well as the healthcare of your employees. What can you say about CSR issues?

A. From a corporate point of view and social responsibil-ity we try to help the commu-nity as much as we can. Both of the towns Zestafoni and Chiatura kind of depend on us a lot and we are helping every-body. For example, right now we have a project in Zestafoni with 3 private schools where we subsidise the tuition fees for the children of our work-ers. We also have a hospital in Zestafoni and we have a small clinic in Chiatura as well. All our workers, including their families, have insurance. People’s expenses are covered in the event of an emergency.

We also have an outsourced network of food-stores. Our workers get slightly cheaper food, and also if they want they can use credit, and not have to pay straightaway. We are helping provide a water supply in Zestafoni and Chia-tura. Additionally, for some villages we provide transpor-tation for our employees to get to and from work. So there is a big list of CSR.

In regard to caring for the environment, we are trying to bring in the most western technologies possible, and I think anybody in Zestafoni nowadays doesn’t see the big

black cloud that there used to be. There is a big project for Chiatura, to build a new benefi ciation plant that would eliminate the water pollution that exists right now and also the recovery of the big open mines together with the Min-istry of Environment Protec-tion.

Q. What are your com-pany’s advantages over other competitors?

A. The biggest advantage is that we have a production complex; it is a mine plant and hydropower plant which operate together. Therefore we will always have the ad-vantage of being able to pro-duce our own electricity and use it to make our product. Georgia has a very free econ-omy with very low tax system, so the low tax has also been an advantage. The history of the plant is that it is 80 years old, which means we have some skilled workers.

Q. What are your ex-pectations for the year 2016?

A. We are scared that it will be a very diffi cult year and as we see what’s going on with the economy, we expect it to be very diffi cult and we are going to have to fi ght for every person’s job. It’s not going to be easy, that’s for sure.

Q. What will be the key plans of GAA in 2016?

A. Besides the Chiatura benefi ciation plant that we still have planned, I don’t think we will be doing much. With the cut expenses, we have to survive. When the world is pushing you to the wall that’s what you do.

Q. There are concern-ing results from the NDI poll showing that Rus-sian infl uence over the population is growing. Is this trend refl ected in the plans of American inves-tors?

A. Russia is a part of the western world. Even though Russia doesn’t want to admit it, they use Apple products, they drive western cars, their kids are in Western schools. They couldn’t live without the Western world.

“It’s a Challenging Year, although it is Not Over Yet”

MR. LOZYNSKYY JOINED GEORGIAN MANGANESE IN MAY 2012 AS THE COMPANY’S GENERAL DIRECTOR. IN HIS CURRENT ROLE, HE IS RESPONSIBLE FOR OVERSEEING ALL OPERATIONAL ACTIVITIES AND STRATEGIC INITIATIVES. MR. LOZYNSKYY WORKS DIRECTLY WITH GEORGIAN AMERICAN ALLOYS, GEORGIAN MANGANESE’S PARENT COMPANY, TO ENSURE OPERATIONAL EXCELLENCE THROUGH THE ORGANIZATION. PRIOR TO JOINING GEORGIAN MANGANESE, HE SPENT TWO YEARS REFINING HIS MANAGERIAL SKILLS AT NORTH AMERICA-BASED WARREN STEEL HOLDINGS. MR. LOZYNSKYY HOLDS DEGREES FROM KYIV STATE UNIVERSITY AND O.S. POPOV ODESSA NATIONAL ACADEMY OF TELECOMMUNICATIONS.

“WE ARE STUCK IN THE MIDDLE OF GETTING PERMITS, ENVIRONMENTAL AND CONSTRUCTION PAPERS.”

“WITH USD 20 MILLION GEORGIAN AMERICAN ALLOYS IS GOING TO CONSTRUCT A MINING FACTORY IN CHIATURA IN 2015. IN TOTAL THE COMPANY PLANS TO INVEST USD 36 MILLION DURING THE CURRENT YEAR, UP FROM USD 15 MILLION FROM LAST YEAR.”



Advertiser: Georgian American Alloys. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com


PROUDTO OPERATEIN GEORGIA



Q. BAT is one of the leading multinational companies, which has been operating in the Caucasus for twenty years already. Please can you tell us the main factors in creating a suc-cessful company?

A. BAT is a global tobacco company with more than 200 brands sold in over 200 mar-kets. Few companies founded in 1902 still exist today, yet BAT continues its journey to becoming one of the most successful companies in the

world. With one billion adult smokers around the world, we manufacture the cigarettes chosen by around one in eight of them.

BAT has been present in the Caucasus since 1995, cel-ebrating its 20 year anniver-sary of successful operations this year. Our market share has increased from 3% to 26% during this period while the number of our employees grew from a few people em-ployed back in 1995 up to 150 today. BAT Caucasus offers its consumers the following

brands: Kent; Dunhill; Vogue; Rothmans; Yava; Viceroy; Lucky Strike; and Pall Mall.

To run a successful com-pany you need to have pas-sion, drive, and to believe in its success. We at BAT take our business and our impact on society very seriously, and do our business in a very re-sponsible way - from growing the tobacco leaf through to how we market our products to adult consumers.

Q. As a multinational company BAT has al-ways been actively in-

volved in CSR activities. How do you structure and prioritize your social activities?

A. We are proud to have a number of important achieve-ments across our markets in the Caucasus. For example, BAT Georgia was awarded the Golden Brand award for the Best CSR Company (Educa-tion) and Best Employer in 2013 and 2014. This impor-tant award is organized by the newspaper The Financial, marketing company Global Idea, and supported by the International Chamber of Commerce and Georgian Chamber of Commerce.

This recognition came as a result of a number of projects run by BAT, such as the Schol-arship Project under which we managed to fund up to 30 Master level students of Tbili-si State and Sokhumi State Universities; a Business Case competition project where we managed to bring all the best universities of Georgia and Azerbaijan together, along with the Ministries of Edu-cation of both countries. We continue our best efforts in this direction.

As for Azerbaijan, BAT re-cently won its fi rst ever CSR Excellence Award for contin-uous support in improvement of education and employ-ment, a successful nationwide innovative job fair project supported by the local gov-ernment.

I am very pleased to see that all of our CSR initiatives are so successful and well rec-ognised by other companies and local governments. This is all the result of our hard work, dedication and passion for the best results.

Q. Human resources are at the core of the suc-cess of any company. Tell us about your experience of fi nding and recruit-ing professionals - how do you try to incentivize your workers?

A. British American Tobac-co is one of the world’s most international businesses. We employ more than 57,000 people worldwide meaning that we have a very diverse workforce in terms of nation-ality. Because our employees come from many cultures and backgrounds, it provides variety and different ways of looking at challenges, encour-aging creativity and innova-tion, who support each other’s successes and create a unique mix.

We are dedicated to provid-ing equal opportunities for

each employee. We devote a lot of attention to internal communications and rela-tions, focusing on a sense of belonging and trust. We seek to encourage confi dence to ensure that employees can air questions and problems aris-ing during the course of their work. We truly believe that the success of BAT is determined by our employees’ meaningful and confi dent contribution. Therefore we devote a lot of effort to developing our tal-ents and initiatives.

As we aim to foster a sense of pride and to be the employ-er of choice, we drive impor-tant projects to highlight the role of being a responsible cit-izen and best employer. The awards for the Best Employer in Georgia in 2013 and 2014 clearly demonstrate that we are on the right path, and we will continue to be a people-focused company.

Q. How has the compa-ny transformed over the years?

A. We always have a long way to go, and as much as our business has changed, so has the world around us - from evolving consumer demands and emerging opportunities in a new generation of prod-ucts, to increasing expecta-tions of the role of business in society.

In 2014, we sharpened our approach further with the de-velopment of a new sustain-ability agenda, focused on the most material issues for our business and our stake-holders in three key areas: harm reduction; sustainable agriculture and farmer live-lihoods; and corporate be-haviour. These are not only where we face some of our biggest challenges, but also where we see the greatest op-portunities.

Q. What is BAT’s eco-system policy?

A. We recognise that we have both an impact and a dependence on biodiversity, through our business opera-tions and use of ecosystem services, such as forest prod-ucts, soil and water.

Under the British American Tobacco business principle of Good Corporate Conduct, we aim to minimise our impact on biodiversity and the wid-er environment. Part of this commitment means avoiding, minimising or mitigating our impacts on biodiversity and linked ecosystem services, or where this is not appropriate or most benefi cial, offsetting those impacts at a regional or national level.

BAT: “We will Continue to be a People-Focused Company”


British American Tobacco (BAT), celebrating its 20 year anniversary in the Caucasus

this year, has managed to achieve a 26% share of the market, up from 3% from early 1995. Passion, drive and belief in success - these are at the core of the mul-tinational company, which has been operating since 1902. BAT was named the Best Employer of 2013 and 2014 in Georgia. The award demonstrated to the company’s management that they are on the right path, and to this end BAT plans to continue to be a people-focused company.BAT operates at a local, as well as global, level. The company does not own tobacco farms or directly employ farmers. More than 1,000 BAT leaf technicians worldwide support over 100,000 contracted farm-ers.BAT is a part of many local communities - both large and small - around the world, and in many countries BAT is the top employer and the com-pany of choice for people employed at every stage of its supply chain.In 2014, the company sold 667 billion cigarettes, made in 44 factories in 41 countries. The number of employees amounts to more than 57,000 people worldwide, with many more indirectly employed through the supply chain.British American Tobacco alone contributed ap-proximately £30 billion to governments worldwide in excise and other taxes in 2014.On behalf of US Business in Georgia The FINANCIAL interviewed Kakhaber Benidze, General Man-ager at British American Tobacco in the Caucasus. We asked him to share the company’s experience and the key factors in building and running a successful multinational company.

KAKHABER BENIDZE, General Manager at British American Tobacco in the Caucasus



Advertiser: BAT. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com





BLC Law Offi ce has handled more than 50 cases in 2015. However, due to

the diffi culties in court proceedings and extend-ed deadlines, only fi ve of them have been con-cluded thus far. Liberal and less stringent regu-lations are considered key factors in creating a business-friendly climate in Georgia. While the country continues with proceedings for certain EU regulations, trans-parency of their adop-tion and avoidance of over-regulation remain high on the agenda.

BLC is celebrating its 15th anniversary this year. 2007 was the most successful year for the company due to the booming economy. The cornerstones of the company’s legal services are: banking and fi nance law; tax law; corporate transactions and struc-tures; real estate; en-ergy; civil and adminis-trative litigations. The company is witnessing a signifi cant increase in upcoming transactions and mergers and ac-quisitions (M&A) deals in 2015. “This is a very promising tendency given the fact that legal service providers may be considered fi rst level indicators of economic growth. Now we have reason to expect that the end of 2015 and 2016 should be promising years,” Ketevan Kvar-tskhava, Partner at BLC, told The FINANCIAL.

BLC was established in 2000 by attorneys edu-cated in Georgia and the United States of America and experienced in dif-ferent fi elds of law. The company grew together with the Georgian mar-ket and businesses. BLC provided legal services to the very fi rst direct investors, multinational companies, internation-al organizations, fi nan-cial institutions, foreign embassies and diplo-mats, NGOs and Geor-gian companies.

BLC is the only Geor-gian law fi rm with an international practice operating a branch in Batumi and a number of correspondents in neighbouring Armenia, Azerbaijan, Russia and Ukraine.

Through its practice, BLC has worked in col-laboration with promi-nent international prac-tices, a few examples of which are: Slaughter & May, Baker & McKen-zie, and White & Case, amongst others.

“We have carried out many successful litiga-tions and arbitrations; provided our clients with comprehensive due dili-gence studies; have been engaged in large and medium transactions involving mergers and acquisitions. Through its associates and experts, BLC has provided ser-vices in family law, in-heritance, criminal and administrative matters. BLC has been largely in-volved in privatizations and auctions, carried out by the Georgian Govern-ment,” said Ms. Kvar-tskhava.

Q. Georgian legis-lation has been de-veloping year after year. Meanwhile it still remains far from international standards. What are your suggestions in this regard?

A. We do believe that Georgian legislation in essence is adequate and quite compliant with the leading international standards. It does cor-respond to the declared vision of the country to create a business-friendly climate and easy venue for start-ups. For this purpose, liberal and less strin-gent regulations should exist, which is the case here. We do observe a tendency of adopting certain EU regulations, but do expect that the process of adoption shall be transparent and over-regulation shall be avoided.

Q. What are the main differentiating features of running a law firm in Geor-gia compared to in its neighbouring

countries?A. Georgia is a small

market; legal services cannot develop on their own, they need to have economic support and demand. Nevertheless, this market is constant-ly growing, partially due to the increased public perception of the need for the legal profession, as well as due to the somewhat stable growth of the economy.

Q. How many dis-putes did you assist in solving this year? How many of them were successfully concluded?

A. We have handled more than 50 cases this year. Due to the difficul-ties in court proceedings and extended deadlines we have not yet conclud-ed more than 5 of them this year.

Q. Your clients have included large companies like Ca-nargo, BNP Pari-bas, TBC, HSBC and more. How did you manage to succeed in the competitive le-gal market from the beginning?

A. I believe that BLC has the best team of business lawyers in this country. With their di-verse experience in vari-ous segments of law we provide very quick, ef-ficient and reliable ad-vice. We come when needed and find solu-tions. Our working cul-ture, ethical standards and attitude have al-ways been outstanding. Partners and associates of BLC have excellent local as well as foreign

legal education and long term experience of en-gaging in Georgian legal services.

Q. BLC is one of the leading law compa-nies in Georgia, ac-cordingly you might be continuing your evolution in this di-rection. Where do you glean lessons from?

A. BLC is particularly aimed towards further professional develop-ment. We have the inter-nal practice of frequent professional trainings, a system of sharing ex-perience, attending all professional forums and discussions. We make sure that our lawyers are well informed of the practical, theoretical and legislative trends and novelties, so as to maintain the highest quality of legal services available in this country. We add experience from our cooperation with a number of international law firms and renowned legal practices.

Q. Recently Bak-er & McKenzie, the world’s largest law firm, announced that its global rev-enues had declined, attributed to global currency fluctua-tions. It turns out that law companies are no exception to being affected by economic changes. What was the im-pact of the devalua-tion of the Georgian Lari on your com-pany?

A. We are usually af-fected when our clients

suffer losses, therefore we can say that our rev-enues have also been af-fected by the local and global economic trends.

Q. The main sub-ject of this edition is US business in Geor-gia. On what basis would you encour-age US businessmen to invest in Georgia?

A. Georgia is a start-up market. Usually, the largest revenues come from emerging markets, in conjunction with fa-vourable local legisla-tion, low taxes, absence of corruption and very reasonable state ad-ministration, Georgia remains one of the best places to invest.

Q. How has the investment climate of Georgia changed over the past three years - has it wors-ened or improved?

A. Georgia passed the test of sustainable prog-ress and democracy dur-ing the past few years. It’s declared path of simple, understandable and business-friend-ly regulations have been steadily followed. Therefore, we would sum up the recent years as progressive.

Q. What will be the main challenges for BLC in 2016?

A. BLC is a growth-oriented professional organization. We are used to planning our progress in a sustain-able and prudent man-ner, therefore we do not expect to face any unusual challenge that we would have difficulty coping with.

BLC Law Offi ce Sees Signifi cant Increase in Mergers

and Acquisitions Deals

KETEVAN KVARTSKHAVA, Partner at BLC



Advertiser: BLC. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com





T he number of busi-nesses registered in Georgia in coopera-tion with US citizens amounted to 154

units during January-Octo-ber 2015, up from 69 from the same period of the prior year. The easy bureaucracy, considerably low sum of investments required, and free niches in various fi elds are the main factors encour-aging US citizens to start up business in Georgia.

“If American companies or investors are looking for something economi-cally friendly, Georgia is it. Keeping in mind they do not overpay or exploit the base margins. And obvious-ly, more professionals will only build up this country - hopefully, for a better and a stronger Georgia,” Nikol Burton, founder of Mr. Traveller Ltd and You Stu-dio, told The FINANCIAL.

“We hear a lot about the political uncertainty. For us, it has not affected our decision to relocate our family of four, as the pros outweigh the cons. How-ever, it may play into the decision of a large invest-ment which would depend on several years to recover,” said Burton.

Nikol Burton, together with her husband, is devel-oping two small companies in Georgia. One is in the fi t-ness industry - You Studio, and the other in tourism - Mr. Traveller Ltd. In total the couple has invested ap-proximately EUR 50,000.

“Georgia is developing. There are many opportuni-ties in a wide range of sectors. As in other developing coun-tries, having a foreign mind and experience works in our favour towards the execu-tion of such projects. What we liked about Georgia is the effi ciency and seemingly easy bureaucracy when it comes to starting up a business. Also, depending on what you are doing, the investment is considerably lower to that of a developed country. Em-ployment salaries are low and literacy is high. Train-able,” Burton said.

As Burton said, in their particular sectors, the fi t-ness business will be the most challenging. “There is a very low fi tness culture in Georgia. Though hope-fully through education and a handful of fun events, we can begin to educate the im-portance of being physically healthy. Tourism is devel-oping. Language and being foreign may slow us down here, but thanks to the very

open culture we are experi-encing and exploring many beautiful options to share with the world.”

Burton and her partner have over 20 years of en-trepreneur experience in developing countries. She described themselves as young, educated, and moti-vated. Burton’s experience lies in the fi tness sector, whereas her husband’s is in logistics and tourism.

“I was one of ten of the fi rst CrossFit instructors in Europe and the fi rst to operate an affi liated Cross-Fit fi tness centre. I worked closely with both CrossFit HQ and Reebok in training and promoting the Cross-Fit brand. I also worked in the collaboration of several sport related competition and obstacle races (Spar-tan) with Reebok. I hope to use that knowledge base/contacts and create some-thing fun and exciting in Georgia,” said Burton.

Her husband’s back-ground lies in internet busi-ness and commerce. Com-bined with his love of travel and adventure he is devel-oping a tourism package for Europe to introduce Geor-gia. Through his logistic ex-perience he will manage up to 50 Georgian employees in transport, rural tourism, and a small hotel resort.

Burton strongly encour-ages their co-citizens to start up business in Geor-gia, however there is one ‘if’.

“If it supports the culture and can aid in creating a better Georgia - then good. But, if it is to invest and take advantage of the natural re-sources for their own ben-efi t without the intention of maintaining the ‘rawness’ of Georgia, then please no. Factories and such would destroy this country.”

The main message Bur-ton has for their co-citizens is: “Invest to invest in a well preserved culture. Do not invest to exploit or destroy the beauty of what Georgia is as we know it today.”

William Ipsen, together with his partner Andro Dzneladze, has formed Georgia Pacifi c Partnership as an investment vehicle to take advantage of prospec-tive investment opportuni-ties in Georgia, most spe-cifi cally within the fi eld of medicine.

Currently the founders have issued just over USD 100,000 in their initial op-portunity, and have several more opportunities they are actively pursuing which could total another USD 200,000 to USD 1,000,000 if all options are exercised over the next 24 months.

“The opportunity in which we are currently en-gaged in Georgia had both the need for and, more importantly, the addition of well-qualifi ed Georgian partners to allow us maxi-mum opportunity to suc-ceed,” said Ipsen.

Ipsen has spent 40+ years in the medical fi eld, both in hospital administration and in the commercial business of medical imaging equip-ment. For the last 20 years he was co-owner of a medi-cal ultrasound business based in the USA, with a sat-ellite offi ce located in Tbilisi for some 5+ years, of which he was actively involved and knowledgeable regard-ing the Georgian market for imaging systems.

Following his retirement in December 2014, his for-mer Georgian partner in Tbilisi contacted him re-garding other business op-portunities. They are now engaged in one such oppor-tunity.

According to Ipsen, Georgia offers some very interesting opportunities for foreign investment. In his words, the people are friendly and local business infrastructure mostly avail-able at reasonable cost. “That said, any foreign in-vestment should not be undertaken without proper vetting and, more specifi -cally, I recommend if at all possible having partnership in some form with local in-vestors / operators experi-enced in the local business climate for your specifi c offering. One should also speak with fi nancial people early in the beginning of the due diligence process if Georgian fi nancing is im-portant.”

“The main challenge we faced, and likely that of other prospective investors in Georgia, was securing fi -nancing through Georgian fi nancial institutions. The length of the process is one that may persuade other investors to look outside Georgia for opportunity,” Ipsen said.

Giorgi Dalakishvili found-ed Rectus Development in Georgia. The company is involved in the construction and development fi elds. As a developing country, the market in Georgia is not saturated yet, therefore it is full of opportunities. This is why Dalakishvili decided to try his hand in Georgia.

“The bureaucracy is on a minimum level. No corrup-tion, no criminals, great lo-cation. Now is the greatest time to make investments here, because in the near-est future this market may also become very saturated and the competition will become very tough as well,” Dalakishvili said.

Dalakishvili previously worked in the agricultural business. He has worked for most of the leading ag-ricultural companies in the country. In addition to this, he managed to establish his own company, which is one of the most successful right now. He founded it as a very interesting and challeng-ing business. Nevertheless, Dalakishvili thinks he has already achieved everything he could in this fi eld. “I have almost fully used all my re-sources and it is time to change the fi eld. That is one of the reasons I am switch-ing to the construction busi-ness.”

Dalakishvili recommends everyone to make invest-ments in Georgia. “My main suggestion is to use the mo-ment which the country is in right now. Georgia is at a level where from a develop-ing country it will become a developed country very soon. This is a wave, which should defi nitely be caught. Such opportunities do not appear that often.”

The main challenges Dal-akishvili and his partners have faced in Georgia are making the decision about choosing the location for construction. “There were a lot of interesting alterna-tives and we had to think carefully to select the best one. As we have only just begun our business, we will have much bigger challeng-es in the future.”

The main fi eld of opera-tion of the company Go Ser-vices is implementing tech-nology, specifi cally in the transportation industry.

The current project of Go Services is GoTaxi.ge, which is a mobile platform for hailing a cab.

“We provide technology to connect customers to the service providers directly without a middle man, while making it convenient, en-gaging and a pleasant expe-rience. We are currently un-dergoing Beta testing, with second iteration available on Android platform, and in

production for iOS, and will be fully functional by the end of January, available in all major cities throughout Georgia by the summer of 2016,” said Zaza Zhvania, founder of Go Services.

From the fi rst draft of the business plan, till the fi nal Beta product, which Go Ser-vices has recently pushed out to its customers and employees (Android & iOS Platforms), its team of high-ly experienced staff have always kept an eye on one thing: growing the capital, and doing so quickly. “Our company platform in Tbili-si, Georgia, was launched this year with investments in the tens of thousands and I am happy to report that we have been well received among our demographics, with high levels of interac-tion and interest.”

From a business perspec-tive, investing in a business in Georgia was a no-brainer for Zhvania. “Georgia is a very interesting market, mobile services space is not as saturated as in other countries therefore there are tons of opportunities to grow and develop. The low amount of regulations on businesses like transporta-tion, and low investment needed for start-ups, are also a big factor. But from a personal perspective, be-sides the fact that I was born and raised in Georgia, I’ve worked and collaborat-ed with businessmen and the creative minds of my peers within Georgia and had wonderful experiences in the past.”

Zhvania graduated with a bachelor’s degree in Inter-national Business Admin-istration, and started up a few companies early in his career. Other than GoTaxi in Georgia, he is currently a partner at LV Tech Inc, in the US, and works for the New York State Department of Finance.

The biggest hurdle for Zh-vania was to fi nd qualifi ed and competitive software engineers, as their company relies heavily on software developers to bring prod-ucts to life, it was defi nitely the biggest challenge. “The next big challenge was adapting to a marketing state of mind, which is very unique and specifi c to the Georgian market. For for-eigners it is a big challenge to understand it so that the product can be properly presented, and positioned for success.”

According to Zhvania, Georgia is such a lucrative market that he would imag-ine it to be a great place to invest, although the politi-cal situation is very vola-tile, it would seem that this is the best time to invest long term foreign capital in Georgia. “The Dollar to Lari ratio is high, and it will not remain so high for long. Also given the fact that for-eign investments are in dol-lars it gives higher capital in the local currency, and an advantage over local inves-tors,” Zhvania told The FI-NANCIAL.

Record Number of Businesses Registered by US Citizens in Georgia in 2015



Advertiser: Grant Thornton. Contact FINANCIAL Ad Dep at marketing@fi nchannel.com




FALSE

“We have one of the best economic growth rates in the region.”

Beso NAMCHAVADZEFactCheck

On 22 September 2015, on air on Rustavi 2, a mem-ber of the Georgian Dream coalition,

Zviad Dzidziguri, stated that Georgia’s economic growth rate is one of the best in the region and is better than the economic growth rates of Azerbaijan and Turkey. According to Mr Dzidziguri, un-der such regional circumstances, a 2% economic growth rate is not a bad result.

FactCheck verifi ed the accu-racy of the statement.

Zviad Dzidziguri named Geor-gia’s neighbouring countries whilst talking about the region’s economic growth rate and so we looked into the economic growth rates for the fi rst months of 2015 in Georgia and the geographical neighbourhood. Preliminary data on economic growth rates for the period January-August 2015 is already available (see Table 1). The Georgian economy grew by 2.8% in this period and is higher than that of Russia and Ukraine but not of any other neighbouring country.

Azerbaijan’s economy is heav-ily dependent upon oil export and so falling oil prices has a negative impact upon its economy. In spite of this, Azerbaijan’s economy grew by 7.3% in January-August 2015. Even though Armenia is more heavily dependent upon the Rus-sian economy, this year’s growth rate of the Armenian economy is higher than that of Georgia. Ad-ditionally, notwithstanding the serious challenges facing Turkey (political crisis, fi ght against the Islamic State, more than two mil-lion refugees from Syria, terrorist attacks), the Turkish economy is

growing faster than the Georgian economy.

On 7 October 2015, the Inter-national Monetary Fund updated the annual economic growth prognosis for its 188 member states. The prognosis for Geor-gia’s economic growth rate re-mained the same at 2%. Based upon this prognosis, Georgia ranks 127th among the 188 coun-tries. Georgia’s economic growth rate is estimated to be 3% in 2016.

According to the data of the In-ternational Monetary Fund, Azer-baijan’s economy will grow by 4% in 2015, Turkey’s economy will grow by 3% in 2015 and Arme-nia’s economy will grow by 2.5% in 2015. Again, of the neighbour-ing countries, Georgia’s economic growth rate is only higher than those of Russia and Ukraine. Rus-sia’s economy will shrink by 3.8% this year. If we look at the regional picture, we have to compare Geor-gia’s economic growth rate to the analogous data of the larger group of countries. Even though Geor-gia, similar to Ukraine, is not a member of the Commonwealth of Independent States (CIS), the International Monetary Fund groups Georgia and Ukraine with the member states of the CIS. In the CIS region, Georgia, together with Kyrgyzstan, is ranked in the 6th and 7th places, respective-

ly, based upon their economic growth rates. The highest eco-nomic growth rate (8.5%) will be registered in Turkmenistan whilst Ukraine will have the worst eco-nomic performance as its econo-my is expected to shrink by 9% in 2015.

According to the classifi cation of the World Bank, Georgia be-longs to the region of the develop-ing countries of Eastern Europe and Central Asia. This means that 12 Eastern European countries are added to the group of CIS member states. If we look at the picture of the economic growth rates of the different countries from the Eastern European devel-oping countries region, we will see the following: Georgia ranks 10th from the 13 countries. Of note is that compared to the economies of these 12 countries, Georgia’s economy is less developed and, therefore, has a higher poten-tial to achieve a faster economic growth rate.

Since 2013, Georgia’s economic growth rate has signifi cantly de-creased. The economic growth rate was 6.4% in 2012 and 3.3% in 2013. The year 2014 was relative-ly better and Georgia registered a 4.8% growth of its economy. However, since 2015, the eco-nomic growth rate has dropped again.

Zviad Dzidziguri:

CONCLUSIONACCORDING TO THE DATA OF THE FIRST EIGHT MONTHS OF 2015, GEORGIA DOES NOT HAVE THE “BEST” ECONOMIC GROWTH RATE AS COMPARED TO ITS NEIGHBOURING COUNTRIES. MOREOVER, GEORGIA’S ECONOMIC GROWTH RATE IS LOWER THAN THE ECONOMIC GROWTH RATES OF TURKEY, AZERBAIJAN AND ARMENIA. IT IS IMPORTANT TO UNDERSCORE THAT THE ECONOMIC CRISIS IN RUSSIA HAS A GREATER NEGATIVE INFLUENCE UPON ARMENIA, AZERBAIJAN IS SERIOUSLY SUFFERING FROM FALLING OIL PRICES AND TURKEY HAS MULTIPLE SERIOUS CHALLENGES TO MEET.ACCORDING TO THE PROGNOSIS OF THE INTERNATIONAL MONETARY FUND, GEORGIA’S ECONOMY WILL GROW BY 2% IN 2015, AZERBAIJAN’S ECONOMY WILL GROW BY 4% IN 2015, TURKEY’S ECONOMY WILL GROW BY 3% IN 2015 AND ARMENIA’S ECONOMY WILL GROW BY 2.5% IN 2015. IF THEREFORE, FACTCHECK CONCLUDES THAT ZVIAD DZIDZIGURI’S STATEMENT IS FALSE.

The views expressed in this website are those of FactCheck.ge and do not refl ect the views of The FINANCIAL or the supporting organisations

Member of the Georgian Dream Coalition

9,8 ha non-agricultural, privately owned parcel for industrial use (cadaster code # 01.19.26.004.088) located next to Tbilisi Airport

Address: Airport settlement, Samgori district, TbilisiTel: +995 599 529 [email protected]

FOR SALE

FALSE


Country January-August 2015Azerbaijan 4.2%Armenia 3.9%

Turkey (2 quarters) 3.8%Georgia 2.8%Russia -3.5%

Ukraine (2 quarters) -16%

Table 1: Economic Growth Rate in the Period of January-August 2015

The FINANCIAL

61 percent of Georgians support the country’s goal to join the Euro-pean Union (EU), ac-cording to poll results

released in October by the National Democratic Institute (NDI) and CRRC Georgia.

At the same time, some citizens are considering alter-natives such as the Eurasian Union, which earned 31 per-cent support. Those Geor-gians approving Eurasian Union membership primarily cite perceived economic ben-efi ts (71 percent), not political or governance improvements, while 68 percent of European Union supporters say the same about joining the EU. In comparison, only 7 percent of Eurasian Union support-ers think that Eurasian Union membership would strength-en democratic development. 21 percent of EU supporters believe that EU membership would strengthen democratic development.

While the majority of Geor-gians supports joining the EU, when refl ecting on benefi ts and offered a choice between European and Euro-Atlantic (EU and NATO) integration and abandoning this direc-tion in favor of better rela-tions with Russia, 45 percent of citizens said Georgia would benefi t more from European and Euro- Atlantic integra-tion, while 30 percent would abandon these aspirations for better ties with Russia. Again, citizens give an economic, not political, rationale for closer relations with Russia, and only 6 percent of Georgians believe that Russia should have political infl uence on Georgia.

The poll also found that 14 percent of all citizens identi-fi ed Georgian Dream as the party closest to them, and 13 percent identifi ed United National Movement (UNM). Irakli Alasania-Free Demo-crats and the Alliance of Pa-triots both have 4 percent support, although the Irakli Alasania-Free Democrats is the most popular second choice, with 6 percent.

Responding to the question - if parliamentary elections were held tomorrow, would you say you are decided or undecided - 59 percent of citi-zens said they are undecided, including 41 percent of likely voters. Of likely voters, 15 per-cent would vote for the United National Movement (UNM) and 14 percent would vote for Georgian Dream Coalition.

The poll also revealed that most Georgians still do not have a preferred political par-ty. Responding to the ques-tion - if parliamentary elec-tions were held tomorrow, who would you vote for - 35% said don’t know, 14% - no par-ty and 13% refused to answer.

GEORGIANS CONCERNED ABOUT JOBS AND THE ECONOMY

The poll shows that Geor-gians perceive jobs, infl ation and rising costs, and poverty as the most important issues. In the survey, 67 percent chose jobs, 43 percent ris-ing prices and infl ation, and 37 percent poverty as among their top three priority is-

sues. Refl ecting on these top three issues, less than 3 per-cent of Georgians described the situation as improved over the last two years. Dem-onstrating growing concern, only 11 percent reported their household situation as ‘bet-ter off’ since October 2012, while 34 percent said they were “worse off” compared to 17 percent in August 2014.

The survey found that only a quarter (23 percent) of Georgians feel the country is moving in the right direc-tion, down from 40 percent in August 2014. For the fi rst time, more citizens believe the government is not mak-ing decisions that matter to them (49 percent) than those who believe it is (44 per-cent). Communication be-tween parliamentarians and constituents remains weak, and citizens have low expec-tations with regard to their representatives.

The view is not entirely pessimistic, however. The majority of Georgians are satisfi ed with the public ser-vice they have received, and the vast majority (90 per-cent) of those who have used government offered health insurance reported that they were very satisfi ed or satis-fi ed.

Most Georgians Continue to Support EU Membership



TRUE

Giorgi Kadagidze:

“International organisations are positively assessing the policies of the National Bank of Georgia.”

The views expressed in this website are those of FactCheck.ge and do not refl ect the views of The FINANCIAL or the supporting organisations

CONCLUSIONFACTCHECK CONCLUDES THAT GIORGI KADAGIDZE’S STATEMENT IS TRUE.

Zaza ABASHIDZEFactCheck

Whilst speak-ing about the policies of the National Bank towards the de-

preciation of GEL, the Presi-dent of the National Bank of Georgia, Giorgi Kadagidze, stated: “The policies of the National Bank of Georgia are positively assessed by all in-ternational organisations and partners.”

FactCheck took interest in this statement and verifi ed its accuracy.

Due to the depreciation of GEL, the National Bank of Georgia has on many occa-sions been accused of both an incorrect monetary policy as well as an intended deprecia-tion of the national currency. The most severe accusations could be heard from Bidzina Ivanishvili and members of the Government of Georgia.

In June 2015, the Manager of the World Bank Reserve Management and Consulta-tion Programme, Christian Malder, assessed the policies exercised by the National Bank of Georgia (in the fi eld of reserve management) as positive and successful. Ac-cording to him, the National Bank of Georgia is one of the best participants of the pro-gramme and its policies in the past months absolutely correspond to leading inter-national practices. According to Mr Malder’s statement, a signifi cant intervention from the state is not effective whilst the intervention of the Na-tional Bank of Georgia during the period of the depreciation of GEL was both sensible and reserved. The monetary poli-cies exercised by the National Bank of Georgia were also positively assessed by the Re-gional Director of the World Bank in the South Caucasus, Henry Kerali.

The President of the Euro-pean Bank for Reconstruction and Development (EBRD), Suma Chakrabarti, has also assessed the monetary policy of the National Bank of Geor-gia as successful and exem-plary. He made a statement

about this issue during his visit to Tbilisi on 12 May 2015. According to Mr Chakrab-arti, it is important to main-tain reserves and take good care of them which has been successfully implemented in the case of Georgia. Another high-ranking EBRD offi cial, the Deputy Director of the Middle East and Central Asia Department, Iuha Cah-Colen, has further positively assessed the work of the National Bank in crisis situations. Accord-ing to him, it is important for the National Bank of Georgia to have complete freedom in choosing the banking instru-ments it uses in order to main-tain a low level of infl ation.

Another authoritative or-ganisation, the International Monetary Fund, considers the work of the National Bank of Georgia to be successful and calls on the Government of Georgia to more actively co-ordinate with it. According to the 4 March 2015 state-ment made by the organisa-tion’s Head of Mission, Mark Griffi ths, it is important to preserve the independence of the National Bank of Georgia for its future success and this is threatened by political at-tacks. A representative of the International Monetary Fund in Georgia, Azim Sadikov, also assessed the steps taken by the National Bank of Geor-gia in crisis situations. He believes that the policies con-ducted by the National Bank are one of the most correct in the Caucasus and Central Asia the as they employ reserved currency interventions.

In 2015, a well-known British journal, The Banker, named the President of the National Bank of Georgia, Giorgi Kadagidze, as the Central Bank Governor of the Year in Europe. Stability during major shocks and the stability of the banking sector were some of the reasons for the President of the National Bank of Georgia to be granted this status. Mr Kadagidze is the fi rst in the Caucasus re-gion to garner such recogni-tion.

On the contrary, interna-tional organisations have neg-atively and critically assessed the decision of the Parliamen-

tary Majority to take away the function of fi nancial supervi-sion from the National Bank of Georgia. On 27 June 2015, the World Bank, the Inter-national Monetary Fund, the European Bank for Recon-struction and Development and the Asian Development Bank sent a highly critical let-ter to Irakli Gharibashvili and Davit Usupashvili. According to the position of these organ-isations, the aforementioned legislative changes will hinder the stability of the country’s fi nancial sector previously en-sured by the National Bank of Georgia.

Despite such assessments, the Parliamentary Major-ity adopted the changes and separated the fi nancial su-pervisory function from the National Bank of Georgia. However, the Parliamentary Opposition has appealed to the Constitutional Court of Georgia against these legis-lative changes. According to the assessment of the oppo-sition, taking away the fi nan-cial supervision department from the National Bank and establishing it as a separate structure is unconstitutional. The Constitutional Court has taken the appeal under con-sideration and stopped the operation of the Financial Su-pervision Service (as a sepa-rate agency) until reaching a fi nal decision.

The aforementioned de-cision of the Constitutional Court has caused a major out-cry in the governing coalition. Commenting on this issue, the Chairman of the Finance and Budgetary Committee of the Parliament of Georgia, Tamaz Metchiauri, stated: “Despite my deep respect to the court of any instance, the Con-stitutional Court is a direct supplement of the United Na-tional Movement and nothing more… it is not excluded that the Constitutional Court will make a decision according to the preference of the United National Movement. This is being done for destabilisa-tion. I would like to say that there are other ways to see what is really happening in the National Bank of Georgia; for example, the creation of an investigative commission.”

true

President of the National Bank of Georgia


On November 19, 2015, Tbilisi hosts the fi rst Georgia Agro Forum 2015 supported by the

Ministry of Agriculture of Georgia, the Georgian Ag-ricultural Projects Manage-ment Agency (APMA), the Georgian Farmers Associa-tion, the Shepherds Associa-tion of Georgia, and other organizations. The Forum, which is organized by APK-Inform Agency is a large-scale event for the agricultural sector of Georgia, which will bring together up to 200 Georgian and foreign industry representatives as delegates, and present the highly topi-cal business and networking program.

Being a regional bank providing corporate and in-

vestment banking services to large and medium-sized enterprises, PASHA Bank views the agribusiness sector as one of the most promising areas for investment and is strongly interested in sup-porting agro business devel-opment in the country. The event is aimed at fostering growth of the agribusiness sector, by showcasing the investment opportunities to the potential investor base and facilitating the B2B in-teraction. A diverse selection of agricultural enterprises active in manufacturing, processing and trading of ag-ricultural products will par-take in the event.

Representatives of for-eign businesses - suppliers of raw materials, equipment and wide range of material,

technical and educational resources for agribusiness industry, importers of agri-cultural products, logistics companies, investment com-panies with agribusiness fo-cus, fi nancial institutions, industry bodies, government agencies from Georgia and other countries will also be in attendance.

“We see Georgia Agro Fo-rum as an important industry gathering bringing together a wide range of industry partic-ipants and fi nancing provid-ers. Being keenly interested in funding the promising play-ers in this sector we gladly accepted the opportunity to sponsor this event – said Goga Japaridze, Commer-cial Director and Member of Board of Directors at PASHA Bank Georgia.

PASHA Bank – Sponsor of Georgia Agro Forum 2015

By SARAH WILLIAMSON

T his week Vice Prime Minister and Foreign Minister of Georgia Giorgi Kvirikashvili will meet with U.S.

Trade Representative Mi-chael Froman to conduct a high-level trade dialogue. The American - Georgian busi-ness community hopes that this meeting will lead to the beginning of negotiations on a U.S.-Georgia Free Trade Agreement (FTA). Open-ing such negotiations would increase opportunities for American businesses to ex-port to, and invest in, Geor-gia.

At a time when ‘Western-ization’ is under pressure in the region, an FTA would be a tangible political signal of continued U.S. support for Georgia.

This type of visible support is particularly important as Russia continues to pressure Western-oriented govern-ments in the region. While the government of Georgia remains committed to Euro-Atlantic integration, there are forces inside the country that would dearly love to see that orientation come to an end.

The U.S. alone can’t deliver NATO or EU membership. However, opening negotia-tions on a U.S.-Georgia FTA is a bilateral step that would be an ideal signal of support for Georgia’s Westernization agenda.

U.S. exports to Georgia, at $300 million in 2014, are sig-nifi cant and largely concen-trated in machinery and cars. However, there is evidence of fast expansion in others ar-eas. In the last two years fast food chains such as Wendy’s, Dunkin Donuts, Domino’s Pizza, Burger King, Taco Bell, KFC and Subway have all en-tered the Georgian market for the fi rst time. Clothing retail is also rapidly expanding with U.S. brands such as GAP, Ba-nana Republic and Tommy Hilfi ger opening storefronts in Georgia.

Large infrastructure proj-ects and government pro-curements also offer sizeable opportunities for U.S. fi rms. Projected investment in hy-dropower alone is $4.1 billion over the next few years. While

U.S. investors are prominent in developing large-scale projects, Asian and European fi rms have been winning the majority of engineering and construction projects. Ameri-can fi rms would do well to enjoy the same trade agree-ments as their international competitors.

The government is also currently selecting the fi nal consortium to build a new port in Georgia that could represent a $5 billion invest-ment over the next 7-10 years. The Conti Group, a U.S. fi rm, is on one of two fi nal consor-tia. American companies are also participating in projects from medical facility develop-ment to waste management.

An FTA between the two countries would not only aid these companies in ex-porting American products and machinery to facilitate these projects, but would also greatly encourage other American companies looking to expand into the region.

Georgia has worked hard to become a valuable part-ner to the U.S. The country is already a hub for the region, with low corruption, a sim-plifi ed tax system, bilateral trade ties with its neighbors and a business-friendly legis-lative environment.

In the technology sector, the government of Georgia

Continued from p. 21

Time Is Right for a US-Georgia Free Trade Agreement



16 November, 2015

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CURRENT PRICES ON GASOLINE AND DIESEL 16 NOVEMBER, 2015, GEORGIA

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GASOLINE PRICES PRESENTED BY BUSINESSTRAVELCOMHOTEL AND AIRTICKET BOOKING: 2 999 662 | SKY.GE

By LASHA LANCHAVA AND ERIC LIVNY

ISET

A postle Matthew was a tax collector in Galilee -- perhaps the most hated oc-cupation in the an-

cient world. By quitting his job and deciding to follow Jesus, Mathew accomplished one the greatest transformations pos-sible in a person’s life. Modern tax inspectors are certainly not expected to follow Jesus. How-ever, by following insights from behavioral economics, they may gain in respect and social status while also improving tax collec-tion, in Georgia and elsewhere around the world.

As discussed in our previous article, Georgia’s tax administra-tion has improved quite signifi -cantly following a massive crack-down on corruption and a series of reforms implemented after the Rose Revolution of 2003. As a result, the Georgian shadow economy has indeed shrunk, but not by as much as one might have expected. According to a World Bank study, Georgia’s shadow economy declined from 68.3% in 1999 (at the pinnacle of Shevarnadze’s rule) to 62.1% in 2007 (four years after the glo-rious Rose Revolution). Six per cent in 8 years is certainly an im-provement, but…

Anyone puzzled by the resil-ience of shadow economic ac-tivities should understand that being in the “shadow” is not nec-essarily about plain tax evasion. Equally important is tax avoid-ance (a variety of tactics used by corporations to shift profi ts to tax heavens or otherwise legally reduce their tax liability). Being legal, tax avoidance is very dif-fi cult to fi ght in the absence of motivation for voluntary com-pliance.

LESS STICKS AND MORE CARROTS

One way to increase voluntary compliance might be to invest in the government’s own image and quality of public services. Corpo-

rations (and individuals) might be more willing to pay taxes knowing that their contributions are used for good purposes by a benevo-lent, lean and effi cient adminis-tration.

It is worth noting that volun-tary compliance may be stronger in a decentralized fi scal system

in which at least some share of locally collected taxed is visibly contributing to the quality of local infrastructure, public schooling, etc. Rather than hiring expensive tax consultants, a business might just as well contribute a bit more to the local budget, if it sees any tangible benefi ts from doing so.

[To avoid any misunderstand-ing, fi scal decentralization (or fi scal federalism) is not about breaking a centralized tax pay-ment system of which Georgia may be proud; it is about linking the amount of taxes collected in a region to the amount of public funding it is able to spend on local needs].

Unfortunately, Georgia’s fi scal system is overly centralized, kill-ing the incentives of local govern-ment to cultivate local businesses, and those of local businesses to reciprocate by contributing re-sources, ideas and knowhow. For example, the Rooms hotel is by far the largest taxpayer in the Ka-zbegi municipality and the only paying client of the government-controlled United Water Supply Company (UWSC). Yet, none of its taxes remain in Kazbegi, which helps explain the poor quality of the road leading to the hotel and the fact that, until 2014, UWSC did nothing to prevent chronic water shortages that poisoned the hotel’s relationship with the com-munity.

This is clearly not the way to strengthen voluntary compliance.

NAMING AND SHAMING? LESSONS FROM THE UK

Corporations do care about their reputation. The fact that Starbucks, Google and Amazon

K hachapuri index changes its value in different re-gions according to sea-sonal demand and sup-ply peculiarities. The

latter are affected by milk pro-duction cycles (low in fall and winter, high in spring and sum-mer), Georgia’s religious calen-dar (e.g. the Great Lent), as well as the ups and downs in tourism.

Given khachapuri’s ubiquity, we used our index to estimate real income per capita for differ-ent Georgian locations, measured in khachapuri portions. We do so by dividing the average nomi-nal income in each region (using the latest available GeoStat data from 2014) by the correspond-ing Kh-Index (average for last 12 months). The result of this division stands for the number of (real) khachapuri portions a family can afford in each city of interest.

As can be seen from the chart, the wealthier Georgian regions are wealthier in both nominal

and real terms. Not only does an average Tbilisi household enjoy higher nominal income, but also – despite facing higher prices – it

is able to maintain a higher level of consumption compared with other Georgian locations. Mea-sured in khachapuri portions,

the gap between the average households in Tbilisi and Telavi stands at exactly 100 portions per month.

KHACHAPURI INDEX AS A MEASURE OF REAL INCOME ACROSS GEORGIA

Continued on p. 21

Tax Inspection With a Human Face?

Antoine-Laurent de Lavoisier – arguably the father of modern chemistry – was beheaded by angry mob because of his tenure as a tax collector

under the Ancien Régime. Can paying taxes ever be enjoyable?



TBC BANKTBILISI BRANCHESTbilisi #9 Service Center in Zahesi (Customs Terminal) 0125, 105 A, Mshvidoba St.Vake Branch #1 0179, 41, Abashidze St.Central Branch 0179, 11, Chavchavadze Ave.Chavchavadze Branch #1 0179, 29/31/33, Chavchavazde AveVera Branch 0179, 31, Melikishvili St.Parliament Service Center 0118, 8, Rustaveli AveMtatsminda Branch 0105, 1, Rustaveli Ave.Rustaveli Service-Center 0108, Marriot hotelRustaveli Branch #1 0108, 44, Rustaveli Ave.Mtatsminda Branch #2 0105, 22, Leselidze St.Rustaveli Branch #2 0105, 52, Rustaveli Ave.Avlabari Branch #1 0103, 2, Ketevan Tsamebuli Ave.Varketili Branch #1 Javakheti St.Isani Branch 0120, 67, K. Tsamebuli Ave.Vazha-Pshavela Branch #2 0186, 73, Vazha-Pshavela Ave.Vazha-Pshavela Branch #1 0160, 11, Vazha-Pshavela AveSaakadze Branch 0160, 6, Shartava St. (Saakadze Sq.)Saburtalo Branch 0160, 12, Al. Kazbegi Ave.Tbilisi Central Service Center 0112, Vagzali Sq. 2Agmashenebeli Branch #1 0102, 138, Agmashenebeli Ave.Marjanishvili Branch #2 0102, 16, Marjanishvili St.Tamar Mepe Branch 0112, 7, Tamar Mepe Ave.Head Offi ce & Marjanishvili Branch 0102, 7, Marjanishvili St.Tsereteli Branch #2 0119, 73a, Tsereteli Ave.Didube Branch 0119, 117, Tsereteli Ave.Digomi Branch in shop («My House») 0131, Agmashenebeli Alley, 12th km, furniture shop «My House»Digomi Branch in “Goodwill” 0131, 1, Parnavaz Mepe Ave. (Hypermarket Goodwill)Nadzaladevi Branch 0180, 109, Dadiani Ave.Gldani Branch 0172, Mukhiani Settlement, Plot 1/6Tbilisi Airport Service Center 0158, Tbilisi National Airport

TBILISI ATMSVazisubaniVazisubani III dstr., II Blk.Sanzona50, Guramishvili Ave. Nikora StoreVake11, Chavchavadze Ave. Vake Branch1, Tamarashvili St.Pharmacy “36.6”34, Chavchavadze Ave. Trading Center “Pixel”7, Kipshidze St. 41, Abashidze St. Vake Service Center #129, Chavchavazde Ave. TBC Bank Branch59, Paliashvili St. “Simba” Supermarket50, Chavchavadze Ave. 15, Phaliashvili St. Aversi PharmacyVera7, Kostava St. 36, Kostava St. Cinema “Amirani”8/1, Akhvlediani Ave18, Melikishvili St. 60, Barnovi St. “Fresh Market”31, Melikishvili St. TBC Bank branch Mtatsminda13, Rustaveli Ave. Hotel «Tbilisi Marriot»11, Rkinis Rigi Acura Billiard Room5, Rustaveli Ave. Rustaveli Cinema4, Freedom Square22, Leselidze St. TBC Bank branch52, Rustaveli Ave. TBC Bank branch44, Rustaveli Ave. TBC Bank branch1, Rustaveli Ave. TBC Bank branchAvlabari84, K. Tsamebuli Ave. 2, K. Tsamebuli Ave. TBC Bank branchNavtlugi2, Cholokashvili St. “36.6” PharmacyVarketili34a, Kakheti Highway 44, Javakheti St. (Varketili Metro)Varketili 3, 4th m/r. Javakheti St. TBC Bank branchIsani-Samgori39a, Moscow Ave. 169, Khmelnitski St. Supermaket“Isani” subway station 67, K.Tsamebuli Ave. TBC Bank branchSaburtalo40, Vazha Pshavela Ave. ESM Tbilisi67, Vazha Pshavela Ave. «Nikora» Shop68, Kostava St. Public Television Building22, Bakhtrioni St. 53, Saburtalo St. Nikora store12, Al. Kazbegi Ave. At Saburtalo Branch74, Kostava st. Shop “Caesar”Z. Zhvania Sq., 45, Gamsakhurdia Ave. “PSP” Pharmacy1, Nutsubidze St.52, Vazha-Pshavela Ave. Mobi Shop Riverside named after H. Aliev At Wissol gas station Turn at 4th Plateau of Nutsubidze 179, Nutsubidze St. “PSP” Pharmacy26, Kazbegi Ave. Shop “Planeta Z”Vazha-Pshavela V Blk, 4 Bld. 29, Gamsakhurdia Ave. Shop “Okaidi”6, Shartava St. 4, Gamsakhurdia Ave. 11, Vazha-Pshavela Ave TBC Bank Branch11, Mitskevichi St. Supermarket29b, Kazbegi Ave. 73, Vazha-Pshavela Ave. TBC Bank branch 11/5, Dolidze St. Supermartket “Mango”Chugureti39, Chitaia St. Aversi Pharmacy7, Marjanishvili St. Marjanishvili branch19 Tsabadze St. Trade center «Pasazhi»8, Tsabadze St. Trade center «Kidobani»4, Khetagurov St. Humana Pharmacy16, Marjanishvili St. TBC Bank branch4, Chubinashvili St. Aversi PharmacyDidube73a, Tsereteli Ave. At #2 Didube Branch114, A. Tsereteli Ave.

«Coca-Cola»117, Tsereteli Ave. At Didube Branch82, Tamar Mepe Ave. “MedService” Pharmacy1, Tsereteli Ave. Trading Center “Panda”7, Tamar Mepe Ave. TBC Bank branch138, Agmashenebeli Ave. TBC Bank branch12, Kereselidze St. “Megaline” Trading CenterDigomiDigomi District 3/2 Digomi District II BLK. Building 7 Digomi District, 3rd blk. D. Agmashenebeli Alley “Lukoil” Gas stationDidi DigomiEntrance of Didi Digomi Trade center GOODWILL12th Km, Agmashenebeli Alley. Shop “Chemi Sakhli”Nadzaladevi106, Ts. Dadiani Ave. Nadzaledevi Branch321, Ts. Dadiani Ave. Aversi Pharmacy144, Ts. Dadiani Ave. SupermarketTemkaTemka, 10th Block, BLD. 2. GldaniGldani District 1st blk. Supermarket “Bingo”Akhmeteli Metro Trading Center “Mariami”Mukhiani Settlement, Plot 1/6 TBC Bank branchMukhianiMukhiani III MKR, Dumbadze Ave., BLK.5a Mukhiani II M/R, Noneshvili St., BLk. 5 “Red A” PharmacyAvchala3, Sarajishvili St. “Alfa Express”Ortachala39, V. Gorgasali St. 28, Gorgasali St. AirportTbilisi International Airport

CONSTANTA BANKBRANCHES AND ATMS

Tbilisi

Sadguri Branch137, Tsinamdzgvrishvili StreetVarketili Branch20, Vazisubani turnIsani Branch84/86, Ketevan Tsamebuli AvenueGldani BranchThe right side of the Akhmeteli SubwayDidube Branch117, Tsereteli AveLilo Branch2, Chirankhuli Str.Saburtalo branch28, Vaja-Pshavela Str.Baratashvili Branch2, Baratashvili Str.

BANK OF GEORGIATBILISIMtatsminda-Krtsanisi3 Pushkin Str.4 Leselidze Str. 38 Tabukashvili Str.7 Pushkin Str. 1 Vekua Str. 3 Pushkin Str.Vake-Saburtalo24 Kostava Str.29 Vazha-Pshavela Ave.7 Kipshidze Str.14 Gamsakhurdia Ave.22 Bakhtrioni Str.72/12 I.Abashidze Str.70 Kostava Str.Sheraton Metheki Palace10 Melikishvili Ave.62 Chavchavadze Ave.Mtatsminda-Krtsanisi8 Rustaveli Ave. (Parliament)38 Tabukashvili Str.19 Rustaveli Ave.4 Freedom Square (Courtyard Marriott)Metro Station “Tavisuplebis Moedani”Metro Station “Rustaveli”3 Vekua Str. (Populi City)37 Gorgasali Str. OrtachalaRadisson SAS Iveria HotelIsani-Samgori10 Ketevan Tsamebuli Ave.80 Ketevan Tsamebuli Ave.7 Kalaubani Str.AirportMetro Station “Avlabari”Metro Station “300 Aragveli”Metro Station “Samgori 1”Metro Station “Samgori 2”Metro Station “Varketili”Metro Station “Isani” Temqa Block 10, Bulding 2544 Moskovi Ave.Vazis ubani block 4 (“Populi”)Vake-Saburtalo41 Vazha-Pshavela Ave.23 Chavchavadze Ave.70 Kostava Str.16 Gamsakhurdia Ave.7 Petritsi Str.Melikishvili Str. 10Gldani-Nadzaladevi39 Tsotne Dadiani Str.5 Tornike Eristavi Str. (“Electroplast”)Shopping Mall “Mariami”, GldaniMetro Station “Akhmeteli” Metro Station “Grmagele”Metro Station “Nadzaladevi” Metro Station “Sarajishvili” Metro Station “Guramishvili” Mukhiani, Block 4, Bulding 434 Tsotne Dadiani Str., Bulding 8Metro Station “Elektrodepo”Vake-Saburtalo1a Bulachauri Str.Metro Station “Politeknikuri Instituti 1”Metro Station “Politeknikuri Instituti 2” Metro Station “Vazha-Pshavela”Metro Station “Sameditsino Instituti 1”Metro Station “Sameditsino Instituti 2”Didube-Chugureti99 Tsereteli Ave.18 Tamar mefi s Ave.60 Tsereteli Ave.83/23 Davit Agmashenebeli Ave.142 Davit Agmashenebeli Ave.19 Tsabadze Str. (“Pasazhi”)12 Kereselidze Str. 1st turn (“Megaline”)137 Tsinamdzgvrishvili Str.127 Davit Agmashenebeli Ave.Metro Station “Vagzlis Moedani”Metro Station “Vagzlis Moedani 3”Metro Station “Tsereteli” Metro Station “Didube”Metro Station “Marjanishvili”3 Vagzali Str.Gldani-NadzaladeviGladni 1 Vekua Str., Block “a” 38 Guramishvili Ave.

ATM’STBILISIVake8 Mtskheta Street12 eristavi street72/12 Abashidze Street48 Chavchavadze Avenue22/23 Chavchavadze Avenue22/23 Chavchavadze Avenue62 Chavchavadze Avenue50 Chavchavadze Avenue52 Chavchavadze Avenue

22 Chavchavadze Avenue78 Chavchavadze Avenue7 Kipshidze Street9a nafareuli street13 Kipshidze Street2 Berdzenishvili Street41 abashidze street81/9 Abashidze Street3 Tamarashvili StreetTamarashvili Street16 Phaliashvili StreetTskneti 3 Rustaveli Street2 Rustaveli StreetSaburtalo67 Vazha-Pshavela Avenue41 Vazha-Pshavela Avenue41 Vazha-Pshavela Avenue2 Vazha-Pshavela Avenue27b Vazha-pshavela avenue27a Vazha-Pshavela Avenue17 Vazha-Pshavela Avenue27 Vazha-Pshavela Avenue72 Vazha-Pshavela AvenueVazha-Pshavela Avenue, II Block35/37 Shartava Street7 Shartava Street21 Dolidze Streetvakhushti bridgeSaakadze squareSamedicinoVazha-PshavelaPoliteqnikuri 1Politeknikuri 217a Saburtalo Street 37 Saburtalo Street 70 Kostava Street70 Kostava Street26 maisi street1 26 May squareKostava Street44 Khazbegi Avenue10 Khazbegi Avenue13 Khazbegi Avenue14 Khazbegi Avenue12 Khazbegi Avenuebagteriofagi8 a mitschkevichi street19 Gamrekeli Street23 kandelakis street43 Gamsakhurdia Avenue. gagarini16 Gamsakhurdia Avenue2 Gamsakhurdia Avenue14 Gamsakhurdia Avenue1a Bulachauri Street3 mk.2 kv. Nucubidze175 Nutsubidze Street221 Nutsubidze Street25 nutsubidze streetNutsubidze plato III mr. II kv1 Sandro Euli Street13 Bakhtrioni Street22 Bakhtrioni Street6 Phanaskerteli Street16 Chikovani Street25 Kavtaradze Street4 Gabashvili Street5 Jikia StreetMtatsminda2 Freedom Squaremtawminda square3 Pushkin Street3 Pushkin Street3/1 Pushkin Street3 Pushkin StreetTavisuplebis Moedani7 Pushkin Street4 Freedom Square12 Chanturia StreetRustaveli16 Rustaveli Avenue8 Rustaveli Avenue19 Rustaveli Avenue37 Rustaveli Avenue2 Leonidze Street22 Leselidze Street4, Leselidze Street38 Tabukashvili Street2 Baratashvili Street7 Ingorokva StreetGTC8 Erekle II Street13 Savteli Streer20 Akhvlediani street1 Vekua Street40 Khetagurovi streetrose squirerose squireVera28 petriashvili street25 Kostava Street24 Kostava Street44 Kostava Street1 Khorava Street10 Kekelidze Street8 Kuchishvili Street50 Gogebashvili Street13 Melikishvili Street10 Melikishvili Street10 Melikishvili StreetGldani-Nadzaledevi2 gudamakhari streetGldani V m/r Block14Gldani III m/r 2 Khizanishvili Street 2 Dadiani Street7 Dadiani street34 Dadiani Street151 Dadani Street21 Sarajishvili StreetSarajishviliGrmageleGuramishvili38 Guramishvili Avenue33a GuramiSvili avenue84 Guramishvili Avenue7 Guramishvili Avenue84 Guramishvili AvenuePeikrebi streetMukhiani, IV m/r, 4 blockDumbadze str IV m/r, Block 5NadzaladeviNadzaladevi metro Square15 Khizanishvili Street31 Khizanishvili Streetmetro axmetelis mimdebare. mariamimetro axmetelis mimdebared1 Vekua Street1 Vekua StreetAkhmeteliTemka 10 Kv, Block 25Temka samshobiaro saxli # 5 mimd34 Khosharauli StreetDidube-Chugureti8 tsabadze street17 Uznadze Street1 Tsereteli avenue60 Tsereteli Avenue55 Tsereteli Avenue95 Tsereteli Avenue110 Tsereteli Avenue99 Tsereteli Avenue118 Tsereteli Avenue118 Agmashenebeli Avenue127 Agmashenebeli Avenue80 Agmashenebeli Avenue96 Agmashenebeli Avenue1 Agmashenebeli Avenue89/24 Agmashenebeli Avenue86/90 Agmashenebeli Avenue15 Tamar Mepe Avenue10 Tamar Mepe Avenue20 General Kvinetadze Street5 marjanishvili streetMarjanishvili 83/23 Agmashenebeli street1 Chitaia Street19 Tsabadze Street, pasage 2 Chkheidze StreetTbilisi centralTsereteliVagzlis moedani 2Vagzlis Moedani 1Vagzlis Moedani 219 Agladze Street2 Vagzlis Moedani95 Tsinamdzgvrishvili Street137 Tsinamdzgvrishvili StreetMtkvari Left Riverside (mushtaedi)1 chaladze streetDigomi8 chachava streetMilitary Base (vashlijvari)Digomi II kv. 5 BlockDigomi Block V, I a Building11 George Balanchini StreetAgmashenebeli alley II kmAgmashenebeli alley 9 km.Agmashenebeli alley Didi Digomi way.Digomi village way (vashlijvari)8 Petritsi Street7 Petritsi Street10/12 Godziashvili Street Vashlijvari

Agmashenebeli alley 13 km6 gelovani avenue5 Lubliana StreetIsani-SamgoriIsaniSamgori 1Samgori 2VarketiliVarketili 3, IVm/r, near by 410 Building 1 Khomleli street64 Javakheti streetVazisubani IV m/r I block, petefi str.Vazisubani IV m/r I block2 Landia street300 Aragveli Kakheti Highway 21km60 Kakheti Highway Military Base (alekseevka)Military Base (alekseevka) AIR3a Khomleti Street10 Ketevan Tsamebuli Avenue80 Ketevan Tsamebuli Avenue51a Ketevan Tsamebuli Avenue4 Kiziki StreetAirportAirportAirportMilitary Base (vaziani2)7 Kalaubani Street7 Kalaubani Street14 Kalaubani Street39 Moscow Avenue17 chichinadze street44 Moscow Avenue10 Telavi StreetAvlabariAvlabari Metro Square8/10 Chekhov Street23 Shuamta Street155 bogdan khmelnitski street6/4 Naftlukhi StreetAtskuri, isnis metros mimdebareKairo & Javakheti Street64 Melaani Street1 Abdushelishvili street122 Kakheti Highway market lilo113 gakhokidze street38 Kakheti Highway Krtsanisi41 Gorgasali Street39 Gorgasali StreetMilitary Base (krtsanisi)2Military Base (krtsanisi)16 Gorgasali Street16 Gorgasali Street6 Gorgasali Street77 Gorgasali Street117 Gorgasali Street37 Gorgasali Street19/2 Rustavi Highway7 a krtsanisi street10 Gulua StreetKodjorimilitary baseMtskheta23 arsukidze streetBebriscixis mimdebared12 samxedro street

BANK REPUBLICTBILISI BRANCHES AND SERVICE CENTERS

Head Offi ce and Central Branch

2 Gr. Abashidze St.Tel: (995 32) 292.55.55Fax: (995 32) 292.55.44Vake13 Chavchavadze Ave. (24 hour)33a Paliashvili St.Freedom Square2, Leonidze St.AirportInternational Airport (24 hour)24 hours, except Christmas and EasterDidube10 Building, Tsereteli Ave.Sadguri10, Tamar Mephe Ave.SadguriNear the Railway StationSanzona34 Guramishvili Ave.Nadzaladevi34 Dadiani Ave.Saburtalo28 Pekini Ave.71 Vazha-Pshavela Ave.47 A. Kazbegi Ave.Isani6/2 Navtlughi St.Gldani20 Khizanishvili St.Mukhiani8b Block, IVa micro districtIashvili Clinic2/6 Lubliana St.Police Offi ce8 Gulua St.Dighomi1b Block, 1 micro district, Dighomi Building of City Court of TbilisiDavid Aghmashenebeli Alley VI km.Ortachala37 Gorgasali St.VarketiliAerodrome Settlement. St N 29-31

ATM

Tbilisi

Vake2 Gr.Abashidze St.13 Chavchavadze Ave.33 A Paliashvili St.1 Chavchavadze Ave.49b Chavchavadze Ave.50 Chavchavadze Ave.2 Mosashvili St.Mrgvali Bagi7 Kibshidze St.Mtatsminda27 Kostava St.32 Br/Zubalashvili St.20 Rustaveli St.10 Pushkini St.8 Erekle II2, Leonidze St.4 – 9aprili St.24 Gorgasali St. Ministry of Justice24 Gorgasali St. General Offi ce of Public Prosecutor37 Gorgasali St.8 Gulua St.Saburtalo75 Kostava Ave.16 Kazbegi Ave.47 Kazbegi Ave.2 Gamsakhurdia Ave.23-25 Gamsakhurdia Ave.28 Gamsakhurdia Ave.45 Gamsakhurdia Ave.6 Shartava St.19 Nutsubidze St.179 Nutsubidze St.5 Sandro Euli St.Nutsubidze Plato 3rd , 5 Dzotsenidze St.13 Bakhtrioni St.11 Dolidze St. Building 4/534 Vaja Pshavela Ave.Vaja Pshavela Ave.48 Vaja Pshavela Ave.71 Vaja Pshavela Ave.72 Vaja Pshavela Ave.Building 1, Block of fl ats 7, Vaja Pshavela Ave.Kavtaradze St.Digomi1st Block, 1 Micro District, Dighomi Masivi9 Mikeladze St. 3rd Block, Dighomi MasiviAghmashenebeli alley 6 th km.Aghmashenebeli alley2/6 Lubliana St.5 Lubliana St.13 Petritse St. Didi DigomiDidube-Chugureti1 Khetagurovi St.2 Tsereteli Ave.Tsereteli Ave. Building 1067 a Tsereteli Ave.144 Tsereteli Ave.10 Tamar Mephe Ave.Near Railway Station

44 Aghmashenebeli Ave.4 Chubinashvili St.19 Vakhtang Bagrationi Ave.19 Tsabadze St.Isani-SamgoriInternational Airport of Tbilisi, „Sakaeronavigatsia“International Airport of Tbilisi, Airport Service CenterKakheti highway112 Kakheti highway6/2 Navtlughi St.23 “Ghvinis Aghmarti”Varketili Subway Territory7 Varketili, Kaloubnis St.9 Tsinandali St.91 Ketevan Tsamebuli Ave. Opposite side2 Ketevan Tsamebuli square44 Moscow Ave.Vazisubani III Mik. II Block #15Gldani-Nadzaladevi34 Dadiani St.39 Dadiani St.263 Dadiani St.20 Khizanishvili St.Mukhiani 2nd , Block #5 (Noneshvili St.)Mukhiani, Building 8, 4a m/dTemka District, Building 10, 2 m/d, Block of fl ats: 2534 Guramishvili Ave.36 Guramishvili Ave.Subway Sadguri, Akhmeteli Theatre Territory

VTB BANKTbilisi37, Uznadze Str. 14, Chanturia Str. 5, Jikia Str. 3, Gotua Str. 6, Gorgasali Str. 16/18, Rustaveli Ave. 54, Chavchavadze Ave. 10, Chavchavadze Ave. 21, Vazha Pshavela Ave. I tr. 33, Kostava Ave. 16/18, Tamar Mepe Ave. 4, Leselidze Str. 15, Tamar Mepe Ave. 76, Tsereteli Ave. 3, Vani Ave. 147, D. Aghmashebeli Ave. 5, Khizanishvili Str. 12, Ketevan Tsamebuli Ave. 20, Telavi Str. 42, Al. Kazbegi Ave. 8, Tsabadze Str. 6/2, Navtlughi Str. 9, Tsinandali Str. 48a, Bogdan Khmelnitsky Str. 19, Gamrekeli Str. 143, Tsereteli Ave. 78, Nutsubidze Str. Aghmashenebeli Alley 60, Barnov Str.

KSB BANKTBILISI BRANCHESVake (09.30-21.00)43, Chavchavadze ave.Avlabari3, Ketevan Tsamebuli str.Vera8/2, Melikishvili str.Didube60, Tsereteli ave.Agmashenebeli147, Agmashenebeli ave.Varketili7, Kaloubani str.Krtsanisi37, Gorgasali str.Pekini (09.30-20.30)24a, Pekini ave. Didi Digomi8, Ioane Petritse str. Gldani15, Khizanishvili str.Freedom sq. branch (24 hour)4, Freedom sq.Service centre - Gudushauri hospital (24 hour)18/20, Lubliana str.

ATM’STBILISIVake – branch43, Chavchavadze ave.Vake - Fashion house24, Chavchavadze ave.Avlabari - branch3, Ketevan Tsamebuli str.Vera - branch8/2, Melikishvili str.Didube - branch60, Tsereteli ave.Agmashenebeli Avenue - branch147, Agmashenebeli ave.Varketili - branch7, Kaloubani str.Krtsanisi - branch37, Gorgasali str.Pekini - branch24a, Pekini ave.Didi Digomi - branch8, Ioane Petritse str.Agmashenebeli Alley - Prosecutor12 km, Agmashenebeli AlleyGudushauri Hospital18/20, Lubliana str.Gldani - branch15, Khizanishvili str.Freedom sq. - branch4, Freedom sq.Publich Television68, Kostava ave.Public Service Hall2, Sanapiro str.Mtatsminda-Krtsanisi, Revenue Service16, Gorgasali str.Mtatsminda-Krtsanisi, Revenue Service4, General Gulua str.Georgian railway15, Tamar Mepe ave.Trade center Panda1, Tsereteli Ave.Agmashenebeli Avenue96, Agmashenebeli ave. Old Tbilisi5, Virsaladze str.Church store67, Vazha-Pshavela ave.Book store14, Vazha-Pshavela ave.Dighomi district2nd block, building 6a. Airport customs clearance zone Old airportLilo customs clearance zoneMartkopi,Gardabani Region

LIBERTY BANKBRANCHES IN TBILISIVake-SaburtaloCentral Branch 74, I. Chavchavadze Ave.Central Branch’s s/c #1 2, Sanapiro St.Didi Dighomi s/c #1 9, I. Petritsi St.Pavilion #1 10-12, Vazha-Pshavla Ave.Pavilion #2 Kostava St. (Near Sports Palace)Pavilion #4 33-35, I. Tchavtchavadze St. (Near Hospital 9)Pavilion #9 48-66, Vazha-Pshavela Ave.Pavilion 13 13 Km. Aghmashenebeli HighwaySaburtalo s/c #1 34, Pekini St.Saburtalo s/c #2 7, Shartava St.Saburtalo s/c #7 2g, B. Zhgenti St. (Nutsubidze District)Saburtalo s/c #8 6, Budapeshti St.Saburtalo s/c #9 5, Kavtaradze St.Saburtalo s/c #11 10 Km. Aghmashenebeli HighwaySopeli Dighomi s/c #1 Village Dighomi, B. 7bSaburtalo s/c #15 2, Gamsakhurdia St.s/c #332 70, Tchavtchavadze Ave.Saburtalo s/c #13 3, Micro-District NutsubidzeSaburtalo s/c #14 46, Dolidze St. / 41,

Balanchivadze St.Tskneti s/c #1 3a, Rustaveli St.Vake-Saburtalo Branch 2, Marijani St.Vake s/c #2 1, Mosashvili St.Vake s/c #3 84, Tchavtchavadze Ave. (National Agency Bureau)Vake s/c #4 38, Paliashvili St.Vake s/c #12 14, Kipshidze St.Mtatsminda-KrtsanisiKrtsanisi s/c #1 10, Kikodze St.Krtsanisi s/c #2 2a, Sanapiro St.Mtatsminda-Krtsanisi Branch 37, Gorgasali St.Mtatsminda s/c #1 24, Kostava St.Mtatsminda s/c #4 3, Kostava St. Turn 2Ponitchala s/c #1 19, Rustavi Road, B. 4Ponitchala s/c #2 3, Micro-District Ponichala, B. 2Didube-ChughuretiChughureti s/c #2 153, Aghmashenebeli Ave.Chughureti s/c #3 3, Abashidze St.Chughureti s/c #4 21, Chitaia St.Digomi s/c #2 7, Robakidze St.Didube Branch 126, Tsereteli Ave.Didube s/c #1 60, Tsereteli Ave.Pavilion #5 A. Tsereteli St. (near Tsereteli Underground) Pavilion #10 Dighomi (Near Mayakovsky Monument)Pavilion #15 Didube (near the railway square)Gldani-NadzaladeviAvtchala s/c #1 1, Libani St.Avtchala s/c #2 7, Libani St.Avtchala s/c #3 5, Sarajishvili Ave.Gldani Branch 3, Block GldaniGldani s/c #2 Mukhiani (Near Akhmeteli Subway Station)Gldani s/c #4 3, Block Gldani, B. 86Gldani s/c #5 7, Micro-District Gldani (Prison Gldani) Gldani s/c #6 2, Botchorishvili St. Gldani s/c #7 6, Micro-District Gldani, 11 Tiulenevi St. Gldani s/c #9 8, Micro-District Gldani, B. 23 Gldani s/c #10 2, Micro-District Gldani, B. 24b Gldanula s/c #1 Gldani Khevi (Ravine), Near B. 6a Gldani s/c #11 18, Gombori St. Lotkini s/c #1 164, Tseronisi St. Mukhiani s/c #2 2, Micro-District Mukhiani, B. 5 Mukhiani s/c #3 3, Micro-District Mukhiani, B. 5 Nadzaladevi Branch 36, Guramishvili Ave. Nadzaladevi s/c #1 34, Dadiani St. Nadzaladevi s/c #3 261, Dadiani St. Nadzaladevi s/c #4 12a, Guramishvili Ave. Nadzaladevi s/c #6 30, Guramishvili Ave. B. 1 Temka s/c #1 11, Micro-District Temka, Block 1 Temka s/c #2 3, Micro-District Temka, Block 3, Near B. 41 Zahesi s/c #1 1a, Tchitchinadze St.Isani-SamgoriAfrika s/c #1 27, Tchitchinadze St.Afrika s/c #2 17, Tchitchinadze St.Isani-Samgori Branch Kakheti Alley 2Isani s/c #1 51/2, Ketevan Tsamebuli Ave.Isani s/c #4 22, Metekhi St.Isani s/c #6 30 Km. Kakheti HighwayIsani s/c #7 Moscow Ave, Block 2, B. 1Isani s/c #9 90, Ketevan Tsamebuli Ave.Lilo s/c #1 Lilo Settlement, Block 2, B. 8Pavilion #6 4, Abzianidze St., Orkhevi Settlement (Near Customs Department)Pavilion #8 10 b, Airport SettlementPavilion #11 103, Kvareli St.(Metromsheni Settlement)Pavilion #12 10, Akhalubani St.Ponitchala s/c #3 Rustavi highway, KM 30Samgori s/c #1 37, Moskovi Ave.Samgori s/c #2 36a, Trialeti St.Samgori s/c #4 151, Bogdan Khmelnitski St.Varketili s/c #1 Javakheti St. Second Blind-Alley (Near Varketili Subway Station)Varketili s/c #2 3, Micro-District Varketili, B. 310Varketili s/c #3 Varketili Block 10, B. gVarketili s/c #5 Tbilisi International AirportVarketili s/c #6 3, Micro-District VarketiliVarketili s/c #7 12, Shuamta St.Varketili s/c #9 1, Micro-district varketili 3, Near B. 25Varketili s/c #10 Kaloubani St. 9Vazisubani s/c #1 4 Micro-District Vazisubani 1B,Shandor Petofi St.Vazisubani s/c #2 2, Micro-District Vazisubani (Super Market “Smart”)Vazisubani s/c #3 1, Shandor Petofi StDidgoriDidgori s/c #1 97, Block Tabakhmela, plot 516

ATM’S INTBILISI1, Aleksidze St.Agmashenebeli Alley, KM 11. 10a, Akhmeteli St.13, Bakhtrioni St.6, Budapeshti St.Zhvania Square2, Gamsakhurdia Avenue2/4, Godziashvili St.Block 3, Didi DighomiBuilding 11, Dolidze St.1, Vazha-Pshavela Avenue10-12, Vazha-Pshavela Avenue27, Vazha-Pshavela Avenue(near subway station “Sameditsino”)76b, Vazha-Pshavela AvenueBlock 2, Vazha-Pshavela Avenue(near Vazha-Pshavela monument)46-48, Vazha-Pshavela Avenue(near metro station “Delisi”)55, Vazha-Pshavela AvenueBlock 7, Vazha-Pshavela AvenueVashlijvari highway10a, Tamarashvili St.15a, Tamarashvili St.Kostava St. (near the Sports Palace)24, Kostava St.64, Kostava St.Marshal Gelovani Avenue10, Mitskevitchi St.Nodar Bokhua St.183, Nutsubidze St.(II-IV plateau turn)III m/d, Nutsubidze plateau14, Gamsakhurdia St.15, Gamsakhurdia Avenue34, G a m s a k h u r d i a ave.9, I. Petritsi St.28, Saburtalo St.2, University St.36, Phaliashvili St.5, Kavtaradze St.21, Kavtaradze St.2, Kazbegi Avenue15, Kazbegi Avenue.Kazbegi Avenue (near the school #60)26, Kazbegi Avenue(Vake-Saburtalo crossroads)7, Shartava St.Block 1, IV m/d, shandor Petofi St.10, Tchavtchavadze St.34, Tchavtchavadze St.74, Tchavtchavadze AvenueTchavtchavadze Avenue(near to Hospital No. 9)84, Tchavtchavadze Avenue (Legal expertise)Tchavtchavadze Avenue(near to school #55)Didube-Chugureti96, Aghmashenebeli Avenue153, Aghmashenebeli Avenue10th km, Aghmashenebeli Alley1, Beliashvili St.Dighomi, near to Mayakovsky monumentTevdore Mghvdeli St. (near to the RailwayStation)27, King Tamar Avenue7, Robakidze St.8, Tsabadze St.2, Tsereteli AvenueTsereteli Avenue (nearto subway station “Tsereteli”)126, Tsereteli Avenue143, Tsereteli Avenue 144, Tsereteli Avenue 69, Tsereteli Avenue (corner of Vani St.) 7-7a-7b, Tsereteli Avenue 60, Tsereteli Avenue5/12, Ketevan Tsamebuli Avenue39, Chitaia St.17, Tc hitchinadze St. Gldani-Nadzaladevi

2, Botchorishvili St. Gldani, M/D 3.Gldani, M/D 3, Building 86,Near to building 22, Gldani M/D 6Gldani, M/D 7 (Gldani prison # 8)12a, Guramishvili Avenue36, Guramishvili AvenueGuramishvili Avenue (near the subway station “Grmagele”)Guramishvili Avenue (near the subway station “Sarajishvili”)34, Dadiani St.34, Dadiani St.261, Dadiani St.Building 2, 2nd m/d, Dadiani St.22, Dumbadze St. (Mukhiani settlement)1a, Chichinadze St., ZAHESI, near the building 41, block 3, 3rd m/d,Temka near maternity house No. 5, block 1, 11thm/d, TemkaKakheti 2nd turn1, Liban St.Mukhiani turn near the subway station “Akhmeteli”1, Sarajishvili St.8, Kerchi St.146, Tseronisi St.4, Khetagurov St.6, Khizanishvili St.Isani-Samgori1, Abdushelishvili St.Airport settlement10, Akhalubani St.151, Bohdan Khmelnytsky St.6, Gulia St.Building C, block 10, 3rd massif, VarketiliBuilding 310, 3rd m/d, Varketili 3Tbilisi International AirportKakheti highway KM 38.112, Kakheti highway37, Moscow Avenue8, Navtlughi St.Orkhevi settlement (near to CustomsDepartment)Saknavti settlement (Kakheti highway)Building 8, block 2, Saksopmankana settlement103, Kvareli St. (Metromsheni settlement)22, Javakheti St.Javakheti St. Second turnMtatsminda-Krtsanisi23, A. Tchavtchavadze St.37, Vakhtang Gorgasali St.93, Vakhtang Gorgasali St.155, Vakhtang Gorgasali St.48, Zubalashvili St.1, Leonidze St.10, Leonidze St.22, Metekhi St.9, Pushkini St.3, Rustaveli Avenue2a, Sanapiro St.10, Kikodze St.5, Chachava St.37/4, Tsintsadze St.PonitchalaRustavi highway, KM 30Building 2, 3rd m/d, Ponichala settlementOld Tbilisi12, Kaloubani St.DidgoriPlot 516, block 97, village Shindisi, Didgori

ATM’S INREGIONSAbasha6, Jorjikia St.Adigeni24, Tornike Eristavi St.Ambrolauri18, Agmashenebeli St.Settlement AnakliaAspindza31, Vardzia St.Akhalkalaki82, King Tamar Avenue11, Charenta St.71, Tavisupleba St.Akhaltsikhe1, Tamarashvili St.98, Rustaveli St.11, King Tamar St.2, Shalva Akhaltsikheli St.1, Kharischirashvili St.6, Iadze St.Akhmeta2, Kazgebi St.Batumi63, Gorgiladze St.2, Sulkhan-Saba St.46-48, Vazha-Pshavela AvenueKhimshiashvili St.11, Tbel Abuseridze St.80, Javakhishvili St.11, Pirosmani St.10-12, Chavchavadze St.20a, Agmashenebeli Avenue9, King Parnavaz St.62-64-66, King parnavaz St.36, Gorgiladze St.20, Khimshiashvili St.102, Melikishvili St.11/5, King Tamar settlement75, Chavchavadze St.16, Tavdadebuli St.23, Mayakovski St.Baghdati12, Tsereteli St.BolnisiSettlement Kazreti106, Sulkhan-Saba St.107, Sulkhan-Saba St.Borjomi7, Meskhishvili St.147, Rustaveli St.6, Tavisupleba St.Gardabani71, David Agmashenebeli St.89, David Agmashenebeli St.Gori16, Stalini St.40, Sukhiahsvili St.56, Chavchavadze St.26, Stalini St.5, Guramishvili St.43, Ertoba St.39, Stalini St.GudauriHotel “Marco Polo”Gurjaani10, Noneshvili St.King Tamar St.Village ShashianiDedoplistskaro1, Alazani St.23, Rustaveli St.Dmanisi41, St. Nino Street (Municipality)29, Street St. Nino blind alleyDusheti21, Dadiani St.27, Rustaveli St.Vani3, Solomon II St.Zestaponi61, Agmashenebeli Avenue11, Tsereteli St.Village ShorapaniZugdidi45, Gamsakhurdia St.90, Rustaveli St.73, Sokhumi St.7, Paris Commune St.32, Gamsakhurdia St.15, Tsotne Dadiani St.Tetritskaro12, King tamar AvenueTelavi43, Alazani Avenue95, Alazani Avenue16, Erekle the Second St.3, Erekle the Second Square12, Erekle the Second St.Terjola2, Chanturidze St.Tianeti11, Rustaveli St.Kaspi88, Stalini St.11, Rustaveli St.18, Kostava St.Koda, village houseLagodekhi23, Kiziki St.Lanchkhuti10, Ninoshvili St.24 King tamar St., Settlement LentekhiVillage house in settlement ManglisiVillage Nigoeti

Marneuli1, Rustaveli St.72, Rustaveli St.73, Rustaveli St.Martvili14, Tavisupleba St.Mestia52, King tamar St.1, Seti St.MtskhetaBuilding of regional governor’s offi ce17, Kostava St.(near to the Svetitskhoveli Cathedral)11a, Samkhedro St.Mtskheta highway73a, Agmashenebeli St.65, Mamulashvili St.Village TserovaniNinotsminda22, Tavisupleba squareOzurgeti5, Gabriel the episcope St.Village OzurgetiTavisupleba SquareOni16, Rustaveli St.Rustavi21, Kostava St., near to the Municipality14, Kostrava St.Megobroba Avenue3, Megobroba Avenue11, Megobroba Avenue21st km, Red Bridge Highway5, Tashkent St.Village SartichalaSagarejo2, Agmashenebeli AvenueSamtredia11, Stalini St.Sachkhere92, Kostava St.17, Gomarteli St.Senaki14, St. Nino St.20, Ninoshvili St.Signagi2, Rustaveli St.2, Dadiani St.18, Gelati St.Poti12, D. Agmashenebeli St.146, Chavchavadze St.57, Agmashenebeli St.Village PokaKareli3, Ninoshvili St.1, Mgaloblishvili St.Settlement RuisiKeda11, Tbel Abuseridze St.1, M. Kostava St.Kobuleti153, Agmashenebeli St.4, Memed Abashidze St.141, Agmashenebeli St.478, Agmashenebeli St.79, King tamar St., Village Chakvi

PASHA BANK +995 322 265 00015, Rustaveli Avenue, Tbilisi, 0108 , Georgiaoffi [email protected]

CARTU BANK

Head Offi ce39a Chavchavadze Ave.Tbilisi 0162, Georgia Tel: (+995 32) 292 55 92 Fax: (+995 32) 291 22 79 E-Mail: [email protected] Central Service Center39a Chavchavadze Ave.Mtatsminda Service Center1 Vekua St.Vake Service Center24 I. Abashidze St.Saburtalo Service Center14b Pekini St.Isani Service Center50/18 Queen Ketevan Ave./Bochorma St.Kutaisi Service Center4 Paliashvili St., KutaisiBatumi Service Center2 Griboedov St., BatumiGori Service Center10 Stalin Ave., GoriTelavi Service CenterChavchavadze Square, Telavi

ATM’S INTBILISIVake39a I. Chavchavadze Ave., Cartu Bank, Head Offi ce 39a I. Chavchavadze Ave., Cartu Group24 I. Abashidze st., Cartu Bank, Vake Service Center54 I. Chavchavadze Ave., PSP Pharmacy Mtatsminda 1 V. Vekua St., Cartu Bank, Mtatsminda Service Center3 V. Vekua St., Georgian Trade Center 17 Sh. Rustaveli Ave., Sh. Rustaveli Theatre 10 G. Chanturia St., Hotel “Tori”29 P. Melikishvili Ave. 34 M. Kostava St., Laguna Vere Old Tbilisi44 K. Apkhazi St. (former Leselidze St.)6 Kodjori highway, GDS TV Ortachala79 Gorgasali St., Super Market 12 Krtsanisi St., New HospitalSaburtalo 14b K. Gamsakhurdia St., Cartu Bank, Saburtalo Service Center 5 K. Gamsakhurdia St., Kuzanov Clinic48 Vazha-Pshavela Ave., PSP Pharmacy 71 Vazha-Pshavela Ave., close to Vazha-Pshavela Metro station 29 Vazha-Pshavela Ave., Central Clinic of Acad. N. Kipshidze L. Gotua St., Saakadze sq. Good Year Store 10 Al. Kazbegi Ave., M.B.J. 24 Al.Kazbegi Ave., Axis Trade Center Vashlijvari, “Omega” 8 A. Beliashvili St., Maestro TVDidube-Chughureti Vagzali Sq. Trade Center “Tbilisi Central”Trade Center “Passage”8 A. Tsereteli Ave. PSP Pharmacy 128 A. Tsereteli Ave. PSP Pharmacy 89/24 D. Agmashenebeli Ave. “Global TV”99/1 D. Agmashenebli Ave., N. Dumbadze theatre154 D. Agmashenebeli Ave. Danish House 31 Queen Tamar Ave. PSP Pharmacy 7 Ts. Dadiani St.,Trade Center “Karvasla” 39 Ts. Dadiani St., Super MarketIsani-Samgori 50/18 Queen Ketevan Ave./Bochorma St. Cartu Bank, Isani Service Center 42 Bogdan Khmelnitski St., Elita Burji Javakheti St., close to Varketili Metro station Isani “Bazroba”, Gun Store 6/2 Navtlugi St. Currency Exchange Point 91 Queen Ketevan St., PSP Pharmacy 12 Meskhishvili St., PSP Pharmacy Gldani-Nadzaladevi Gldani, A Housing Development, Building 50, PSP Pharmacy 5 D. Sarajishvili St., AvchalaTemka, Avshniani Settlement (close toTemka-Mukhiani Crossroad) 4a Mukhiani Housing Development, Building 14, Super Market “Ori Nabiji”RustaviAuto Market (Exam Center Building)Kutaisi4 Z. Paliashvili St., Cartu Bank, Kutaisi Service Center 26 I. Abashidze St., Parliament of Georgia5 I. Chavchavadze St., “Orgservice”Kutaisi International Airport of D. Agmashenebeli11 Queen Tamar St., Sachkhere, ATM № 111 Queen Tamar St., Sachkhere, ATM № 2Batumi2 A. Griboedov St., Cartu Bank, Batumi Service Center 4 V. Maiakovski St. close to Batumi Oil Terminal 44 K. Gamsakhurdia St.12 M. Abashidze St. Hotel “Alik” Park “Cicinatela”, village Shekvetili Gori10 Stalini Ave., Cartu Bank, Gori Service Center TelaviI. Chavchavadze sq., Cartu Bank, Telavi Service Center60 D. Agmashenebeli St., Super Market “Real”




CURRENT PROJECTS: ECONOMIC GROWTH AND TRADE

USAID’s programs in Georgia aim to foster inclusive and sustain-able economic growth in the country through improved economic gover-nance, increased competitiveness and employment, responsible man-agement of Georgia’s natural en-dowments, increased access to qual-ity education, investments in energy and infrastructure, and support for gender equality and women’s em-powerment.

While Georgia has signifi cant economic advantages, a strategic regional geographic location, prox-imity to international markets, and vast natural resources, the country has faced some challenges in transi-tioning from a state-controlled to a market-based economy. Recogniz-ing the importance of overcoming these challenges, USAID’s activities in Georgia support the underlying systems that will sustain the coun-try’s growth and help Georgia pros-per in the global marketplace.

CURRENT PROGRAMS:NEW ECONOMIC OPPORTUNITIES (NEO) APR 2011 – DEC 2015 CHEMONICS INTERNATIONAL

www.chemonics.comThe NEO project is designed to

improve rural incomes; reduce pov-erty levels; improve food security; address critical, small-scale infra-structure priorities in targeted com-munities; enable targeted Internally Displaced Persons communities (old and new) to sustainably maintain their households; and assist com-munities distressed by natural or other disasters. In 2015 the project will target 10 municipalities and will benefi t at least 70,000 households that are considered vulnerable.

RESTORING EFFICIENCY TO AGRICULTURE PRODUCTION (REAP) ACTIVITY IN GEORGIA SEP 2013 – SEP 2018 CNFA

www.reap.ge The REAP project increases em-

ployment and income in rural ar-eas by providing in-kind grants and technical assistance to small and medium enterprises (SMEs) to sup-port improved agricultural produc-tivity, marketing, and processing. The project facilitates the entry of new agribusinesses and expands the operation of existing SMEs to create new jobs, improve the availability of high-quality inputs and machinery services for farmers, and strengthen markets for agricultural goods and services in Georgia.

DEVELOPING GEORGIA’S AGRICULTURAL ECONOMICS CAPACITY MAR 2014 – JUN 2017 PARTNERSHIP FOR ECONOMICS EDUCATION AND RESEARCH (PEER)

www.iset.ge This project builds upon the com-

prehensive assessment of teaching, training and research needs in the Georgian agricultural sector that

was commissioned by the United Nations Development Program in late 2011. The project will estab-lish a concentration in Agricultural Economics within the International School of Economics at Tbilisi Uni-versity (ISET) Master’s Program in Economics. Selected second year ISET students will complete courses focused on agricultural market anal-ysis, trade in agricultural goods, and agricultural policy. The project will also establish an Agricultural Policy Research Center at ISET’s Policy In-stitute. This new center will develop and communicate relevant research, deliver on-demand consulting ser-vices, training, policy evaluation and analysis, thus contributing to the project’s sustainability. The proj-ect’s aim is to create a pool of well-trained young economists capable of addressing a wide array of issues re-lated to agricultural and rural devel-opment policy in Georgia and the re-gion. Several cohorts of well-trained agricultural economists educated through this project will be employed by the Ministry of Agriculture, other public agencies, NGOs, businesses and international organizations con-cerned with agricultural policy and Georgia’s rural development.

GEORGIA AGRICULTURAL POLICY INITIATIVE (GAPI) JUL 2013 – JUL 2017 U.S. DEPARTMENT OF AGRICULTURE (USDA)

GAPI assists the Georgian Minis-try of Agriculture and the National Statistics Offi ce of Georgia to de-velop an effective agriculture, in-formation system that includes the creation of a policy unit with the capacity to conduct market outlook and agricultural policy analysis. The unit analyzes and disseminates eco-nomic information needed by both public and private sector decision-makers in Georgia.

STRENGTHENING EXTENSION AND ADVISORY SERVICES ACTIVITY (SEAS) IN GEORGIA OCT 2013 – OCT 2015 UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN

www.meas-extension.org The Strengthening Extension and

Advisory Services Activity (SEAS) program supports the Georgian Ministry of Agriculture (MOA) in the development of a public agricultural extension and advisory service sys-tem. SEAS provides technical advi-sors who work closely with the MOA in developing and implementing multi-year strategies to enhance the capacity of the Ministry’s leadership and relevant fi eld employees to pro-vide effective agricultural extension and advisory services. The Activity contributes to USAID’s higher level goal of improving agricultural pro-ductivity and rural incomes through more effective delivery of informa-tion on best management practices to farmers throughout the country.

GOVERNING FOR GROWTH IN GEORGIA (G4G) ACTIVITY AUG 2014 – AUG 2019 DELOITTE CONSULTING LLP

The purpose of the G4G activity is to improve Georgia’s economic gov-ernance and leadership in the areas of the business enabling environ-

ment, water resource management, an energy trading mechanism and Georgia’s Electricity Market Model of 2015. G4G will strengthen the capacity of Government of Geor-gia (GOG) institutions to develop, implement, and enforce reforms, and develop the capacity of private sector and civil society actors to en-gage the GOG on the development, implementation, and enforcement of reforms. Key to the success of G4G will be supporting inclusive and con-structive dialogue among govern-ment, private sector, and civil soci-ety stakeholders.

Municipal Infrastructure and Internally Displaced Persons (IDPs) Infrastructure Rehabilitation Project Feb 2011 – Dec 2015 Gov-ernment of Georgia – Municipal De-velopment Fund (MDF)

www.mdf.ge/eng This project aims to develop and

rehabilitate municipal infrastruc-ture in certain municipalities af-fected by the 2008 confl ict; upgrade the homes constructed by the Gov-ernment of Georgia for persons dis-placed during the 2008 confl ict; and redevelop buildings for use as dura-ble housing for IDPs from previous confl icts.

LOAN PORTFOLIO GUARANTEE FOR BANK REPUBLICSEPT 2005 – SEPT 2015 BANK REPUBLIC

www.republic.ge USAID extended a Development

Credit Authority (DCA) loan port-folio guarantee for lending up to $6,000,000 to Bank Republic to extend commercial credit to the ag-ricultural and non-agricultural sec-tors, or any activity that contributes to improved technology or increased employment in Georgia. Approxi-mately 50% of loans are extended to the agricultural sector.

ENERGY Georgia has implemented reforms

in the energy sector resulting in in-creased power supplies nationwide. Nonetheless, energy services still do not meet the country’s needs. USAID projects help facilitate investment to, improve natural gas transmission infrastructure to increase the avail-ability of gas for households and key economic development zones, and improve electrical power transmis-sion through constructing new pow-er lines, while promoting increased energy effi ciency.

CURRENT PROGRAMS:GEORGIAN NATIONAL ENERGY AND WATER REGULATORY COMMISSION (GNERC) PARTNERSHIP PROGRAM SEPT 2010– SEPT 2015 NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONS (NARUC)

www.naruc.org This project fosters the exchange

of experience and information be-tween the U.S. and the Georgian National Energy and Water Sup-ply Regulatory Commission. The project improves regulatory prac-tices, strengthens the regulatory authority, supports the transition toward European-oriented market mechanisms, and incentivizes the utilities to improve service to cus-tomers.

BLACK SEA TRANSMISSION PLANNING SEP 2010 – SEP 2015 U.S. ENERGY ASSOCIATION (USEA)

www.usea.org This project analyzes the existing

high voltage networks from a region-al perspective to develop technical rules, guidelines, and network infra-structure assessments to accelerate integration of clean and innovative energy technologies.

POWER AND GAS INFRASTRUCTURE PROGRAM (PGIP)MAY 2010 – SEP 2015GOVERNMENT OF GEORGIA (GOG)

PGIP assists the Government of Georgia to undertake strategic interventions in gas and power in-frastructure aimed at enhancing the energy security of the country. Ongoing projects support Geor-gia’s power transmission company to upgrade control and protection switchgear equipment in substa-tions.

ELECTRICITY TRANSMISSION UPGRADE, RECONSTRUCTION AND OPERATION NOV 2013 – JUL 2015 GEORGIAN STATE ELECTROSYSTEM (GSE)

In order to support the strength-ening of Georgia’s power infrastruc-ture, USAID procured substations and stringing equipment for GSE.

ENVIRONMENTA clean and healthy environment

is important not only to protect natural resources for future genera-tions, but also for the health, agri-cultural livelihoods, and employ-ment opportunities of Georgians today. USAID’s programs support environmental education and the sound management and protection of Georgia’s natural endowments to ensure the longevity and sustainable use of its forests, lands, and water systems mitigating impact on our global climate.

CURRENT PROGRAMS:INSTITUTIONALIZATION OF CLIMATE CHANGE ADAPTATION AND MITIGATION IN GEORGIAN REGIONS APR 2012 – OCT 2015 NATIONAL ASSOCIATION OF LOCAL AUTHORITIES OF GEORGIA (NALAG)

http://www.nala.ge This project integrates environ-

mental and climate change con-siderations into policy priorities of local authorities. The project is es-tablishing special commissions on climate change, the environment, and sustainable agriculture within local government administrations to ensure the effective implemen-tation of a broad range of statutory functions by local authorities relat-ed to natural resource management, land use and sustainable develop-ment.

ENHANCING CAPACITY FOR LOW EMISSION DEVELOPMENT STRATEGIES (EC-LEDS) CLEAN ENERGY PROGRAM SEP 2013 – SEP 2017 WINROCK INTERNATIONAL

http://www.winrock.org Enhancing Capacity for Low

Emission Development Strate-gies (EC-LEDS) is a flagship U.S. government-led effort that assists countries in developing and imple-menting LEDS. The program en-hances partner country efforts by: 1) providing targeted technical as-sistance; and 2) building a shared global knowledge base on LEDS. This assistance supports the im-plementation of incentives and financing to generate alternative economic development practices. Regional programs also support this growth through expertise in modeling energy efficiency, green production marketing and other widely accepted practices. Mayors who are signatories to the EU Cov-enant of Mayors commitments will receive preference for assistance to implement lower emission devel-opment.

WASTE MANAGEMENT TECHNOLOGIES IN REGIONS (WMTR) MAR 2014 – MAR 2018 INTERNATIONAL CITY /COUNTY MANAGEMENT ASSOCIATION (ICMA)

www.icma.org The Waste Management Tech-

nologies in Regions activity will improve policy formulation and strategic planning related to waste management at national and lo-cal levels in Georgia; enhance the capacity of targeted municipalities to establish and sustainably man-age waste facilities and services; and support the development of Georgia’s recycling sector. It will develop remediation plans for old and illegal landfi lls, which will im-prove management on thousands of hectares of biologically rich ar-eas. The activity will help reduce environmental pollution, improve sanitation and human health, and increase the quality and quantity of recycled products.

USAID INTERAGENCY AGREEMENT WITH THE U.S. DEPARTMENT OF AGRICULTURE, FOREST SERVICE OCT 2013 – OCT 2016 U.S. DEPARTMENT OF AGRICULTURE, FOREST SERVICE

USAID in partnership with U.S. Forest Service (USFS) will provide technical assistance for natural resource management to Georgian government agencies, including the Ministry of Envi-ronmental Protection, Forestry Agency, Ministry of Agriculture, and environmental NGOs. USFS technical assistance will include training and advisory services on sustainable forest management with resulting benefits for biodi-versity, economic development, governance and institution build-ing objectives.

U.S. Contribution in Georgia’s Development


FINCHANNEL.COM | 16 NOVEMBER, 2015 US US Business in GeorgiaBusiness in Georgia

Registry. Notably, a sharp increase in primary prop-erties (+26.6% y/y, 20.5% of total) fully compensat-ed a decrease in second-ary property registration (-4.8% y/y, 79.5% of total).

Company registration de-

creased 15.0% y/y (-4.6% m/m) to 3,681 units in Octo-ber 2015. Out of newly reg-istered companies, 96.8% were business legal entities, while 3.2% comprised non-entrepreneurial (non-com-mercial) legal entities.

Weekly Market Watch

Investments (or any short-term transactions) in emerging markets involve signifi cant risk and volatility and may not be suitable for everyone. The readers of this document must make their own investment decisions as they believe appropriate based on their specifi c objectives and fi nancial situation. When doing so, such recipients should be sure to make their own assessment of the risks inherent in emerging market investments, including potential political and economic instability, other political risks including without limitation changes to laws and tariffs, and nationalization of assets, and currency exchange risk.

GALT & TAGGARTAddress: 79 D. Agmashenebeli Avenue, Tbilisi 0102, GeorgiaTel: + (995) 32 2401 111Email: [email protected]

WEEKLY MARKET WATCH EXCLUSIVELY PROVIDED TO THE FINANCIAL BY GALT & TAGGART

ECONOMYTrade defi cit

down 9.7% y/y in 10M15, excluding one-offs

According to GeoStat’s preliminary fi gures, the trade defi cit in October 2015 decreased 16.3% y/y to US$ 427mn, as exports fell 30.9% y/y to US$ 188mn, while imports were down 21.4% y/y to US$ 615mn. As a result, in 10M15, exports decreased 24.4% y/y to US$ 1.8bn, imports fell 14.8% y/y to US$ 6.0bn (excluding do-nated c-hepatitis medicine imports of US$ 318mn in 10M15), and the trade defi cit decreased 9.7% y/y

to US$ 4.1bn. Therefore, the adjustment in imports was instrumental in the elimination of external im-balances, easing pressure on GEL. Detailed statistics will be available on No-vember 24, 2015.

Property regis-tration up 0.3% y/y and company registration down 15.0% y/y in Oct-2015

Property registration (commercial and residen-tial real estate) increased 0.3% y/y (-5.2% m/m), reaching 46,516 units in October 2015, according to National Agency of Public

FIXED INCOME

Corporate Eurobonds: Bank of Georgia Eurobonds (GEBGG) closed at 5.1% yield, trading at 104.1 (+0.2% w/w). GOGC Eurobonds (GEOROG) were trading at 101.5 (+0.4% w/w), yielding 5.8%. Georgian Railway Eu-robonds (GRAIL) traded at a premium at 105.4 (-0.4% w/w), yielding 6.7%.

Georgian Sovereign Eurobonds (GEORG) closed at 107.2 (-0.1% w/w) at 5.3% yield to maturity. Source: Bloomberg

Source: Bloomberg

EQUITIESBank of Georgia Holdings

(BGEO LN) shares closed at GBP 18.70/share (-2.04% w/w and -3.66% m/m). More than 211k shares traded in the range of GBP 18.42 – 19.15/share. Average daily traded volume was 44k in the last 4 weeks, less than in the previous month. FTSE 250 Index, of which BOGH is a constituent, has lost 2.28% w/w and lost 0.72% m/m. The volume of BOGH shares traded was at 0.54% of its capitalization.

TBC Bank (TBCB LI) closed the week at US$ 8.60 (+1.78% w/w and

-3.37% m/m). More than 154k GDRs changed hands in the range of US$ 8.20 – 8.80/GDR. Average daily

traded volume was 24k in the last 4 weeks, more than in the previous month.

MONEY MARKETRefi nancing loans: National

Bank of Georgia (NBG) issued 7-day refi nancing loans of GEL

700mn (US$ 291.9mn) with an average yield of 7.5%.

Certifi cates of deposit: NBG sold 183-day, GEL 20mn (US$ 8.3mn) certifi cates of deposit, with an average yield of 10.33% (down

by 3bps from previous issue).Certifi cates of deposit: NBG

sold 183-day, GEL 20mn (US$ 8.3mn) certifi cates of deposit, with an average yield of 10.33% (down by 3bps from previous issue).

Source: NBG*As of latest auction

Source: NBG

W E E K L Y M A R K E T W A T C H E X C L U S I V E L Y P R O V I D E D T O T H E F I N A N C I A L B Y G A L T & T A G G A R T

Source: GeoStat, preliminary estimate for 2Q15Note: 3Q15 fi gure based on rapid estimates

Source: Rating agencies

Source: Bloomberg

Ease of Doing Business # 24 (regional leader)

Economic Freedom Index # 22 (mostly free)

Global Competitiveness Index # 66 (improving trend)Source: World Bank, Heritage Foundaition and World Economic Forum

Source: Offi cial data*Preliminary results of census, previous data is subject to recalculation** As of 10M15

Source: Bloomberg

Source: NBGNote: Index growth means appreciation of exchange rate, decline means depreciation of exchange rate.Source: NAPR



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FINCHANNEL.COM | 16 NOVEMBER, 2015 US US Business in GeorgiaBusiness in Georgia

Invitation to Participate in the Sales Procedures Announced by the Embassy of the Republic of France in Georgia on the Sale of 3933 sq/m Land Plot Located in the Center of TbilisiThe Embassy of the Republic of France in Georgia has announced a Sales Pro-cedures on the sale of land plot located adjacent to the Rustaveli Avenue at 4 Khazina St., Tbilisi, Georgia. The land plot has the following characteristics: cadastral code – 01.15.04.007.010; total area of the land plot - 3933 sq/m. The land plot qualifi es as type 2 recreational zone with the following coeffi -cients: K1= [0,2], K2=[undefi ned] and K3=[Undefi ned].

Please, take into account that the Sales Procedures n will be conducted in ac-cordance with the Rules for Submission of Offers available on the web-page of the Embassy: ambafrance-ge.org, or by e-mail request at [email protected]. The interested Parties shall submit their Expres-sion of Interest in a form and to the addressee(s) envisaged in the Rules for Submission of Offers..

In case of additional questions, please, contact [the consul or hes represen-tative] at the following e-mail [[email protected]] or call at [(00 995 32) 272 14 90] from Monday to Friday from 9:30 AM till 12:30 PM.

The Expression of Interest shall be submitted to the Contact Person indicated above no later than 15th of December 2015.

came under fi re and were publically vilifi ed for tax avoidance in the UK may have reduced their appetite for tax minimization. Thus, when in May 2013 grassroots move-ments, such as UK Uncut, staged sit-ins at 40 Starbucks branches, what followed was a series of lengthy explana-tions by the company’s global CFO, and a decision to pay corporate tax in the UK (for the fi rst time since 2008). We do not manipulate anything, anywhere, insisted the com-pany, but we listen to our cus-tomers.

A more elegant method to exploit reputational con-siderations of businesses is presented by Fair Tax UK. In-stead of naming and shaming companies for tax avoidance, Fair Trade provides positive stimuli for socially responsi-ble and ethical behavior. Com-panies are awarded Fair Tax Mark if they cooperate with Fair Tax experts and meet basic criteria of tax reporting, tax payment and transpar-ency. The incentives for ap-plying for Fair Tax Mark are reputational. Ed Mayo, Secre-tary General of Co-operatives UK puts it well: “All it takes is for consumers, people who are taxpayers themselves, to back the companies that pay what they owe”. Fair Tax found widespread support in the UK as over 50 MPs en-dorsed the idea. SSE, a British supplier of energy, phone and broadband services, became the fi rst FTSE100 company to apply and qualify for Fair Tax Mark in 2015.

In Georgia, the FINAN-CIAL has a practice of recog-nizing businesses for success in areas such as corporate social responsibility (CSR). It might as well be time to rec-ognize those Georgian corpo-rations that contribute their fair share to the society and thus put consumer pressure on those who practice dodg-ing. The Fair Tax UK team will be happy to help us get started.

APPEALING TO TAXPAYERS’ MORAL NORMS: LESSONS FROM NORWAY…

A recent randomized fi eld experiment conducted by Kristina Bott, Alexander Cap-pelen and Erik Sørensenin from the Norwegian School of Economics demonstrates yet another possibility to in-crease the citizens’ tax mo-rale. Based on reports from foreign tax authorities, the Norwegian Tax Authorities (NTA) established that at least 51% of income earned outside of Norway in 2011 never reappeared on Norwe-

gian tax returns, and around 20,000 tax residents were classifi ed as tax evaders in this fi scal year. In collabo-ration with NTA, the NHH team conducted a nationwide randomized fi eld experiment to study the reasons for tax evasion, and the relative im-portance of the probability of detection and moral motiva-tion.

Shortly after sending the pre-populated tax returns for 2012, the NTA mailed eight different treatment letters randomly assigned to people in the pool of tax evaders. A key fi nding was that self-de-clared incomes for 2012 were signifi cantly increased by let-ters containing a moral argu-ment for paying taxes (includ-ing visual aids highlighting the government sponsorship of public services, health, edu-cation and scientifi c research) or a reference to the fact that the tax authorities know that this person has previously misreported. Further, the team found that moral mo-tivation mainly works on the intensive margin (increasing the amounts of self-reported income), whereas the prob-ability of detection works also on the extensive margin, increasing the share of in-

dividuals self-reporting any positive amount of income.

…AND GEORGIA

These and other results have been recently presented at the workshop “How to In-crease Tax Compliance – New Tools and Insights from Be-havioral Economics” orga-nized by the Joint Research Centre of the European Com-mission in Kyiv. The work-shop was attended by Giorgi Tabuashvili, head of the Geor-gian Revenue Service (RS), and ISET Policy Institute’s Lasha Lanchava. Inspired by what he heard, Mr. Tabuash-vili came up with the idea to engage international experts and Dr. Lanchava in piloting and testing the effectiveness of different communication strategies targeting potential tax avoiders in Georgia.

Two communication treat-ments were tried and evalu-ated:

A moral appeal letter that highlights the importance of tax compliance for funding vital public projects such as police, healthcare, education, pensions, etc. (moral treat-ment);

Telephone communication by an RS agent informing taxpayers that they had been selected for monitoring and assistance with fi ling their tax returns properly (telephone treatment).

In line with the literature on tax evasion, these treat-ments were applied to two dif-ferent categories of taxpayers: those who did not pay taxes at all (Group A), and those who paid but are likely to have fi led their taxes incorrectly (Group B).

To estimate the causal im-pact of the intervention on voluntary tax payments it was necessary to make sure that those contacted either by mail or telephone (treat-ment group) are more or less similar to those who did not receive any communication (control group). In principle, the best way to assure such similarity is to randomly assign people to treatment and control groups. Since randomization could not be performed in this case, to establish proper con-trols for each type of treat-ment, Lanchava established control groups using the so-called Propensity Score Matching (PSM) procedure. This statistical technique uses observable character-istics (such as age, number of family members, average income of family members, and value of taxable wealth) to match taxpayers that have not been treated to similar ones among the treated. The results of the experiment are shown it Table 1 which sum-marizes the average effects of the two treatments on the treated (ATT).

As can be seen, the moral and telephone treatments had a positive and signifi -cant impact on tax payments by individuals in group A (those who have not been paying taxes) – by about 64 and 67 GEL, respectively. Interestingly, neither treat-ment had any signifi cant ef-fect on those in group B. The immediate takeaway from this is that the moral and telephone treatments work on the extensive margin, af-fecting those who do not pay taxes at all. One additional observation is that the effect of moral treatment is as good as telephone communication – the two treatment effect estimates are statistically in-distinguishable.

These results provide sup-port for a national strategy aimed at increasing voluntary tax compliance in Georgia. Communication interven-tions of the kind evaluated in our pilot are cost effective and not overly intrusive. Given that communication is costly, our policy recommendation for the Revenue Service would be to focus on Group A tax-payers only.

Finally, there might be scope for the Georgian Ortho-dox Church – by far the most respected public institution in the country – to play a role in elevating the tax morale of the Georgian churchgoer population by more forcefully preaching the message “Ren-der unto Caesar the Things that Are Caesar’s”. This mes-sage may go down particularly well if Caesar – the Georgian tax inspector, in our case, – learns behavioral economics and acquires a human face.

Tax Inspection With a Human Face?Treatment All Group A

(not paying taxes)Group B

(fi ling incorrectly)

#obs ATT #obs ATT #obs #ATT

Moral treatment 103 44.71* 77 64.48* 27 -18.10

Telephone treatment 136 58.20* 100 67.24* 28 14.80

Continued from p. 16Table 1. Average Treatment Effect on the Treated (ATT) Estimates

Notes: * indicate signifi cance level at 1% level

recently signed an agreement with Microsoft to respect in-tellectual property rights. The deal, worth $20 million, is unique in the region, and is just the beginning of a series of measures aimed at intel-lectual property protection that could open up the coun-try for ICT sales and invest-ments in research and devel-opment.

Business opportunities that would follow an U.S. - Georgia FTA also move sig-nifi cantly beyond Georgia’s borders. Georgia’s economic and strategic importance as a transit route for oil and gas supplies has never been so important – the country of-fers the only route from the Caspian Sea to Europe that does not go through Russia. A BP-led consortium is in the process of tripling the capac-ity of gas that is transported across the country, with a pipeline upgrade that repre-sents a $2 billion investment in Georgia alone.

As important as Georgia is in the energy transportation world, the country is not only valuable as a transit route for oil and gas. A ‘New Silk Road’ transit route is quickly emerging between Europe

and Asia - Georgia is support-ing the development of this route through a heavy invest-ment in port, road and rail infrastructure.

The recent Tbilisi Silk Road Forum, which was held earli-er this month, , saw over 500 companies from 34 countries, including the US, visit the country to investigate ways of utilizing Georgia’s location and trade-route potential.

Offering a ‘force-amplifi er’ to these benefi ts, Georgia signed the Association Agree-ment, including a Deep and Comprehensive Free Trade Agreement (DCFTA), in June of last year.

The DCFTA will give Geor-gia free-trade access to the EU for its goods and ser-vices. This further enhances Georgia’s attractiveness for businesses that want to gain access to the EU market and will make Georgia a more comfortable place for West-ern countries to set up busi-nesses with a view to other regional markets.

An FTA with Georgia is also unlikely to create any signifi cant new competition for U.S. companies. Man-ganese makes up more than 80 percent of U.S. imports from Georgia. This is mined and processed in Georgia by a U.S. company and does not

compete with U.S. producers. Politically, opening nego-

tiations on a FTA would send a signal of continued mate-rial support for Georgia at an extremely important time. Georgia’s track record of re-forms to fi ght corruption and improve the business envi-ronment has been widely ac-knowledged.

In a region where human rights and rule of law are often ignored, Georgia has remained a rare bastion of democratization, Westerniza-tion and transparency. Enter-ing into discussion about a Georgia-U.S. FTA would ac-knowledge this success.

At a time when Georgia is at risk, this FTA negotiation would also provide a platform for revitalized bilateral en-gagement and a mechanism to encourage increased U.S. commercial engagement in the region. It would open up opportunities for U.S. compa-nies and boost the argument for Westernization, just when Georgia needs it the most.

This article fi rst appeared in The HILL magazine, a non-partisan American politi-cal newspaper published in Washington , D.C. Since 1994.Williamson is president of the American Chamber of Commerce in Georgia.

Time Is Right for a US-Georgia Free Trade AgreementContinued from p. 15



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us business in georgia - 16 november, 2015

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