Issue no: 1106/158 • • DECEMBER 4 - 6, 2018 • PUBLISHED TWICE WEEKLY

In this week’s issue...

PRICE: GEL 2.50

Continued on page 3

MarketsAs of 30 Nov 2018

STOCKS Price w/w m/m BONDS Price w/w m/mBank of Georgia (BGEO LN) GBP 13.70 8,5% 11,7% GEOROG 04/21 100.49 (YTM 6.52%) 0,3% 1,8%Georgia Capital (CGEO LN) GBP 10.85 7,0% 5,9% GEORG 04/21 104.99 (YTM 4.61%) 0,2% 0,3%GHG (GHG LN) GBP 2.31 7,1% GRAIL 07/22 104.44 (YTM 6.35%) 1,3% 1,6%TBC Bank Group (TBCG LN) GBP 14.96 1,8% 5,9% GEBGG 07/23 98.17 (YTM 6.46%) 0,1% 0,2%

COMMODITIES Price w/w m/m CURRENCIES Price w/w m/mCrude Oil, Brent (US$/bbl) 58,71 0,2% 22,7% GEL / USD 2,6909 +1,1% 0,7%Gold Spot (US$/OZ) 1 220,52 0,2% 0,2% GEL / EUR 3,0445 +0,8% 1,0%

GEL / GBP 3,4313 +0,5% 0,3%INDICES Price w/w m/m GEL / CHF 2,6972 +0,9% +0,3%FTSE 100 6 980,24 +0,4% 0,8% GEL / RUB 0,0401 0,5% 3,1%FTSE 250 18 480,83 0,3% 1,0% GEL / TRY 0,5156 +2,3% +4,2%DAX 11 257,24 +0,6% 0,3% GEL / AZN 1,5856 +0,9% 1,1%DOW JONES 25 538,46 +5,2% +2,7% GEL / AMD 0,0055 1,8%NASDAQ 7 330,54 +5,6% +2,4% GEL / UAH 0,0954 0,6% 0,8%MSCI EM EE 156,16 +1,2% +3,5% EUR / USD 0,8835 +0,2% +0,2%MSCI EM 994,72 +2,6% +6,2% GBP / USD 0,7843 +0,5% 0,3%SP 500 2 760,17 +4,8% +2,9% CHF / USD 0,9979 +0,1% 0,7%MSCI FM 2 527,58 +0,5% +2,6% RUB / USD 67,0901 +1,3% +2,5%GT Index (GEL) 1 582,68 TRY / USD 5,2153 1,3% 4,8%GT Index (USD) 1 208,13 AZN / USD 1,6960 +0,0% +0,1%

Prepared for Georgia Today Business by

BUSINESS PAGE 6

BUSINESS PAGE 7

NEWS PAGE 2

ISET PAGE 4

POLITICS PAGE 15

FOCUS ON NEW MARIJUANA LAWSGov't introduces new restrictions PAGE 2

Pursuing Real Growth: The Importance of This Year’s Nobel Memorial Prize in Economic Sciences

Weekly Entrepreneurial News

Under Zurabishvili Relations with Russia Will Remain Unchanged

HUAWEI Offers Unique Warranty Conditions to Owners of Flagship Models

GWS Showcases Famous Premium Wines of TAMADA Line, TAMADA Grand Reserve & TAMADA Qvevri

@entrepreneur.ge

BY AMY JONES

The IV Eastern Europe Real Estate Forum and Project Awards took place in Kiev, Ukraine, on 26 – 27 November. Seven Georgian real estate companies were victorious

in their categories for exemplary architecture, development, and real estate services.

Each year the event is attended by more than 200 key persons in the real estate market, includ-ing investors, bankers, fi nanciers, asset manag-ers, and professional service providers. This year, the main theme of the event was “residen-tial real estate as a growth driver for the econ-omy of the Eastern European region.”

Talks focused on investments in real estate: their types and the specifi city of the Eastern European region, urbanization and residential development of cities, and effi ciently mixing

7 Georgian Winners at Eastern European Real Estate Awards

residential and commercial property. Winning awards in seven categories, Georgian

companies were the most numerous prize win-ners at the event. Hotel, residential and broker-age projects were all successful. Brokerage Company of the Year was awarded to Colliers International Georgia, a leading real estate ser-vices provider in Georgia.

Soon to be opened in the Kakheti region of Georgia, the Radisson Collection Hotel, Tsinan-dali Estate collected the award of Hotel Project of the Year. Offering 141 guest rooms and suites, visitors will be able to explore Georgia’s famous wine regions using the contemporary hotel as their base.

Image source: medicalsecrets.com

GEORGIA TODAY DECEMBER 4 - 6, 20182 NEWS

Follow the Entrepreneur Georgia Instagram page to get the latest updates from Georgian Entrepreneurs. For doing business with Georgian Entrepreneurs, write us on

business@entrepreneur.ge

Gamarjoba! I’m the Editor-in-Chief of the Georgian edition of Entrepreneur magazine and I’m here to share the top weekly Entrepreneurial news with you:

Ruska Kbilashvili, PR and CSR Manager at Wissol Group, has started her own cosmetic brand Sapovnela, producing soaps, face, eye and body care oils and gels completely free from chemical ingredients and made using goat’s milk, bio oils, butters, cosmetic clay and other healthy natural products. Sapovnela is a new brand and yet it has already received export offers.

Meet Jonathan and Laura Nelms, founders/co-owners of a Georgian restaurant in Washington DC. The

successful ‘Supra’ was America’s most-anticipated new restaurant

according to Eater.com. The couple spent their 5th wedding anniversary in

Georgia and visited Tbilisi and Kazbegi. After making a fi rm decision

to open a Georgian restaurant state-side, they decided to open Supra

with executive Georgian Chef Malkhaz Maisashvili, who they met

during their visit to Georgia.

Apollo 11 comprises a team of 20 ambitious young Georgian

“astronauts” with a mission to export Georgian intellectual resources

globally. Founder Zura Sekhniashvili has capitalized on his personal

expertise and one year ago established a computer

programming service provider which now produces Cloud-based apps for US, UK, German, France, Spain and

Estonian markets in the fi elds of fi nance, pharmaceuticals and charity.

@entrepreneur.ge

BY THEA MORRISON

Georgian Parliament has approved amendments to the Law on Marijuana Con-sumption, which regulates the fi eld and sets some

boundaries to the consumption of can-nabis.

The amendments were prepared by the Ministry of Internal Affairs (MIA) and adopted by Parliament at the third reading last week.

The law implies a number of regula-tions on the use of marijuana and intro-duces some restrictions, in particular with regards to specifi c areas, the age limit and popularization.

Following the changes, the use of mar-ijuana in public places, public transport, schools and educational institutions is prohibited.

The use of marijuana is prohibited for people under 21 in order to protect youth from the harmful effects of the drugs.

Pushing people under 21 to use mari-juana has also become an offence.

“The use of marijuana is prohibited when performing offi cial duties, be the users civil servants or individuals working in the private sector,” the law reads.

This means that for some people, (for example, teachers, doctors, public serv-ants, etc.) who perform responsible duties, the consumption of cannabis will result in their losing their jobs.

In addition, the sanctions have increased for the popularization or promotion of marijuana and other drug consumption.

Image source: CNN

Parliament Adopts Amendments to Marijuana Consumption Law

Driving a car under the infl uence of marijuana is also prohibited.

The MIA announced earlier this autumn that its patrol police offi cers will begin checking drivers specifi cally for the use of marijuana using a special test kit.

The ministry adding their main aim is to “protect juveniles from the harmful effects of marijuana” and uphold public safety.

The amendments took effect immedi-ately after the approval from the law-makers.

Before October 2015, Georgia’s laws on marijuana read that a person is to be jailed for seven to 14 years if found with a large amount of marijuana. The same law determined 50-500g of marijuana as "a large amount.”

In October 2015, the Constitutional Court delivered a verdict and stated that if an individual was caught with up to

70g of dried marijuana, they should not be sent to prison, as the previous pun-ishment outlined.

In 2016, the court stated repeated mar-ijuana users would not be sent to prison.

Georgia’s Constitutional Court ruled last year that no-one would be sent to prison for using marijuana, which meant marijuana consumption was decriminal-ized.

Afterwards, on July 30, 2018, the Con-stitutional Court declared that admin-istrative punishment for the use of marijuana was unconstitutional when consumption does not create any threat to third parties - effectively legalizing the consumption of marijuana.

However, later the court explained that this does not mean legalization of mar-ijuana in the country as the storage, dis-tribution and cultivation of cannabis still remain punishable in Georgia.

GEORGIA TODAY DECEMBER 4 - 6, 2018 3NEWS

Residential projects in Tbilisi were also suc-cessful. Innovative Green Building of the Year was given to LISI Green Town, a residential development next to Lisi Lake that aims to com-bine modern living with high quality building materials chosen for their energy saving and ecological properties. In addition, Residential Project of the Year was awarded to the SEU Development, Jikia House, found in the Saburtalo district of the city.

The Alliance group won two categories. Alli-ance Palace, Courtyard Marriott brought home the title of Mixed-use Project of the Year, whilst Alliance Privilege Batumi collected the award for Sophisticated Architecture. Designed to be the fi rst fi ve-star Marriott hotel in Batumi, the curvaceous white skyscraper is expected to be completed in 2019. The project was visited by Prime Minister Mamuka Bakhtadze last week.

Many architectural projects have drawn criti-cism, for example at the recent architectural Biennale in Tbilisi, as the city is littered with empty new-builds. However, as focus is slowly shifting onto urban planning in the city, Georgia is proving that it has the innovation and creativ-ity to put its real estate on the map for the right reasons.

Continued from page 1

7 Georgian Winners at Eastern European Real Estate Awards

BY SAMANTHA GUTHRIE

In March of this year, My Way Airlines began laying the groundwork for its wide array of fl ight routes, using Tbilisi, Georgia as its hub. Flights offi cially launched in June. Routes included Tbilisi/Batumi-Kharkiv, Tbilisi/

Batumi-Tehran, Tbilisi-Samara, Tbilisi-Athens, Tbilisi-Kiev, Tbilisi-Budapest, Tbilisi-Rome, and Tbilisi-Tel Aviv. There were plans to expand routes to Minsk, Dubai, Urumqi, Moscow, and St. Peters-burg. Those plans were put on hold this week, however, when the company suspended its fl ights to Rome, Budapest, and Kiev until March, and has stopped fl ights to Kharkiv.

The company is owned by Chinese conglomerate Hualing Group, which has already made signifi cant investments in Georgia. In May, My Way reported that it owned two Boeing 737-800s and planned to purchase two additional aircrafts by the end of 2018, but in a statement to Business Media Georgia, Chief Commercial Director Igor Aptsiauri noted that they only had one plane. Aptsiauri, who previ-ously served as First Deputy Director of the Geor-gian Civil Aviation Agency, blamed the routes’ failures on low demand, a poor sales system, and the worsening political situation in Ukraine. Ticket sales were a particular challenge as tickets were only available by phone and in person for several

My Way Airlines Fails to Capture Georgian Market

months, and when routes and prices could be viewed online, they were not listed on the major fl ight aggregator websites.

My Way does not rule out the possibility of resum-ing fl ights in the high season, the spring and sum-mer, and will continue to conduct fl ights to Tel Aviv all winter. Regular fl ights on most routes only started at the end of the summer, losing this year’s high season for travel. Flights were initially planned to start in March. Aptsiauri blames the delay on “pressure from certain companies on state agen-cies,” who dragged their feet in issuing operation permits. Aptsiauri refused to name the companies he accuses of pressuring governmental bodies, but said they are companies “already on the market.” He characterizes the airline industry in Georgia as “unhealthy competition” and says that it is an open secret within the industry that certain companies control the market.

There were rumors last week that Hungarian company Wizz Air, the biggest low-cost carrier operating in Georgia, which conducts fl ights out of Kutaisi International Airport, was being forced out of the country. Georgia’s Ministry of Economy and Sustainable Development rejected the claims, and added that the “disinformation” harms the national business environment. The rumor was started by HUB Georgia, who claimed they had a source who revealed that “the government had been putting pressure on the company, a process suspended due to the presidential elections in the

country,” and that the government wanted to make changes to the aviation market, restricting compe-tition in the fi eld of passenger transportation. Wizz Air itself denied the rumors, saying they have no plans to leave the market, and will instead expand their activities in Georgia.

Approximately 1000 passengers have already purchased tickets for the canceled fl ights, all of whom will receive refunds in line with European regulations and standards.

More than $50 million has been invested in My Way, according to Aptsiauri. In May, he pitched the airline as a much-needed addition to the Georgian market and announced an ambitious fi ve-year busi-ness plan to turn Tbilisi into a regional transit hub between Europe and Asia. Currently, international transit accounts for only 5-6% of Tbilisi Interna-tional Airport’s traffi c, and My Way stated a goal to eventually raise that number up to 40% through increased volume and new destinations. “What we

see from Georgian Airways is they have their own niche market, they have their historical routes,” said Aptsiauri in a May interview with Forbes, “If you look at their development over the last ten years, it’s the same routes, it’s the same frequen-cies, the same fl eet...in the future, we [at MyWay] will also concentrate on connecting and transiting passengers. I think in this way we will … be at some point bigger than Georgian Airways.”

In March, just days after My Way released its plans, Georgian Airways announced 11 new Euro-pean and Russian routes, bringing the number of direct fl ights the company offers up to 21. Davitash-vili tried to differentiate his airline from the com-petition, saying, “Georgian Airways is...generally oriented on day-time fl ights to make our customers feel safer during the fl ight. Additional comfort and fl ight safety are two major priorities that we want to fully accomplish to create satisfaction among our passengers.”

Image source: My Way Airlines

BY THEA MORRISON

In 2020, the Georgian capital Tbilisi can expect an additional 200 new electric buses, said Mayor Kakha Kaladze on Monday while sum-ming up one year's worth of work.

Kaladze stated that at the end of 2019, the existing fellt of old buses will be completely replaced by new ones. City Hall has already purchased diesel-based 10-meter MAN 90 buses, which will start oper-ating from February.

The Mayor noted that a tender for the purchase of 220 units of diesel-engine, 8-meter long buses has been completed and soon the winning company will be revealed.

"In 2019, we are preparing a tender for the purchase

Tbilisi to Have 200 New Electric Buses from 2020

of 240 units of CNG-engine eight and 10-meter long electric buses. As I promised, the process of purchas-ing buses will be completed by the end of 2019," said Kaladze

In the frames of the bus replacement program, a total of 750 buses will be purchased which will replace the old buses completely and increase the total num-ber of buses by 200 units.

Kaladze explained that in 2019, Tbilisi will have a detailed program for buses implemented by the French company "Sistra". He said there will be 11 main tran-sit corridors for buses which will be used by large-capacity buses. The Mayor added the new system will make public transportation more comfortable and faster compared to travel by private vehicle.

Kaladze said more new projects are to come, includ-ing one which will effectively use the potential of the River Mtkvari.

GEORGIA TODAY DECEMBER 4 - 6, 20184

THE ISET ECONOMISTA BLOG ABOUT ECONOMICS AND THE SOUTH CAUCAUS www.iset-pi.ge/blog

The ISET Policy Institute (ISET-PI, www.iset-pi.ge) is an independent think-tank associated with the International School of Economics at TSU (ISET). Our blog carries economic analysis of current events and policies in Georgia and the South Caucasus region ranging from agriculture, to economicgrowth, energy, labor markets and the nexus of economics, culture and religion. Thought-provoking and fun to read, our blog posts are written by international faculty teaching at ISET and recent graduates representing the new generation of Georgian, Azerbaijani and Armenian economists.

BUSINESS

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BY MARIAM LOBJANIDZE AND SELAM PETERSSON

This year has plagued a num-ber of countries with tre-mendous natural disasters and extreme weather events. Greece was challenged with

extensive fi res and South Africa with a shortage of water. As late as November this year, the US was still struggling to tame forest fi res. Something is certainly happening with the climate. These prob-lems arise from society only being con-cerned with growth. The issue is that for far too long, we have been assuming that economic growth has no impact on the climate and, more generally, on nature. It is especially concerning that we have had this point of view when nature pro-vides services of a value of approximately US$ 125 trillion a year according to the 2018 Living Planet Report by WWF. How-ever, this year’s Nobel laureate William Nordhaus proves the importance of con-sidering climate change as a factor that effects economic growth. The foremost reason he was awarded this prestigious prize is his ability to incorporate climate change into long-run macroeconomic analysis. The focal point of this article centers on how Nordhaus considers cli-mate change in his models and his sug-gestion as to which economic instruments countries could potentially use to combat CO2-emissions while pursuing real eco-nomic growth. Before diving into that, we need to go back to the very foundation of Nordhaus’s research, the origin of the neoclassical growth theory.

THE FOUNDATION OF NORDHAUS’ MODELThe Solow neoclassical growth model, in a nutshell, investigates how capital accumulation and economic growth are interrelated. It also examines the relation-ship between long-run living standards and fundamental factors such as, for example, saving rate and population growth. Additionally, it refl ects on the evolution of economic growth rate over time, indicating whether growth will sta-bilize, accelerate or stop. Growth, accord-ing to Solow, derives from putting more capital and labor into the equation, with an economy reaching a steady-state level when product and capital per worker

Pursuing Real Growth: The Importance of This Year’s Nobel Memorial Prize in Economic Sciences

stabilize and the economy grows only insofar as the population grows (or tech-nological progress occurs). Perhaps the most important drawback of the Solow model is that it does not account for fric-tions or limitations along a path of con-tinuous economic development, nor for productive factors other than labor and capital. Nordhaus points out the existence of a market failure associated with nega-tive externalities (additional effects gen-erated from the actions of economic agents who ignore them when deciding how to behave) arising from greenhouse gas emissions and negatively affecting the climate. Individual polluters consider the emission levels they impose on soci-ety as having negligible impacts and, consequently, do not feel compelled to keep them under control. As a result, the global emissions from economic agents accumulate and put pressure on the global climate, which, in turn, can negatively affect economic growth. Nordhaus has worked to expand the Solow model so that it incorporates the relationship between global climate change and growth, allowing researchers to study how gov-ernmental policies could be employed to enhance long-term welfare. To expose the relations and interactions between the economy and climate change, he developed 3 sets of models.

NORDHAUS’ INTEGRATED ASSESSMENT MODELSThanks to his endeavors of combining economic theory with the latest fi ndings in natural science, Nordhaus has devel-oped models that have an interdisciplinary outlook. The inclusion of natural sciences has been crucial, as his models are based on the carbon cycle in relation to fossil fuel burning.

One of his models looks closely at how the infl ux of global emittance of CO2 occurs and how its concentration affects the carbon reservoirs – the biosphere and ocean surface, the atmosphere, and the deep ocean. The other model is desig-nated to study how CO2 as well as other GHG concentrations affect the energy balance between the atmosphere and Earth. To measure how the energy bal-ance changes globally over time, the out-put is set to predict global temperature. Specifi cally, this model is quintessential for the scenarios developed by the UN Intergovernmental Panel on Climate Change. The Panel develops assessment

reports containing scientifi c and socio-economic, as well as technical aspects. They also present which options the international community has to adapt and mitigate to a changing environment.

The icing on the climatic modelling cake is, of course, the economic-growth seg-ment. What this model conceptualizes is the very essence of describing how the global market is effecting emission levels. It – the global market - does so by, for example, using fossil burning for energy use, seen in the model as one of the inputs (burning fossil fuels represent an activity that societies use to produce energy ser-vices). But fossil burning, seen as an externality-generating activity, generates CO2-emissions, thus having a negative impact on the long-run GDP growth. Other inputs, which were included in the Solow model as well, are labor and capital.

Perhaps a mitigating prevention (it depends on the success of the implemen-tation of such a policy) Nordhaus adds yet another layer by exposing how CO2-emissions and the economy are affected by different climate policies such as car-bon pricing. To be able to frame how CO2-emissions not only impact society but also how economic activities have a negative impact on CO2 pathways, Nor-dhaus uses outputs that expose time paths of global CO2-emissions and welfare, damages followed by climate change as well as GDP. The damage-parameter unfolds how much society actually loses due to global warming. It does so by exposing losses in farming, biodiversity,

coastal regions and human health. This function is paramount in understanding how economic activities actually impact society, especially as the end result is a smaller share of the investment and con-sumption resource at hand. In short, Nordhaus’s economic models put a mon-etary value on damages caused by a changing climate. The models also show how much it would cost to prevent and repair such damages.

FINDING A GLOBAL SOLUTION?It is, of course, hard to predict in the long run the real consequences of global warm-ing, but Nordhaus’s models invite us to at least try to encapsulate what might happen for the well-being of future gen-erations if we choose a certain economic pathway today. Based on his models, gov-ernments could analyze what the mon-etary effect could be depending on what policy they implement. As a possible solution, Nordhaus suggests the estab-lishment of an international target carbon price. The consensus of such carbon pric-ing could be established in a Climate Club where participating countries agree to undertake measures in reducing CO2-emissions. Participating countries could choose from three different mechanisms: carbon tax, cap-and-trade, or a combina-tion of the two. To be able to participate in the Club, a minimum level of carbon price could be agreed upon – suggested at $25/ton CO2 - and a similar target goal should be set for other GHG substances. In case of non-compliance, countries

should face signifi cant penalties in terms of increased import tariffs on their goods, coming from Climate Club members. Tariffs should be set in a way that attract countries to become members of the Club.

According to the WorldBank (2018), 51 carbon pricing initiatives currently exist (or will be introduced) around the world. Out of these 51 initiatives, there are 25 emission trading systems (ETSs) and 26 national carbon tax schemes implemented or planned to be introduced. In 2018 alone, these instruments generated a value of US$ 82 billion. Unfortunately, the carbon-pricing schemes currently in place or scheduled to be in place cover just about 20% of global emissions. As this number shows, we currently cannot compensate for the global emissions we encounter today, despite international legally bind-ing treaties such as the UNFCCC’s Kyoto protocol. Perhaps this is a consequence of the absence of major emitters that did not sign the Kyoto agreement. Since, at least currently, we cannot seem to curtail global emissions effectively, we need to further elaborate Nordhaus’s models and understand how different policies effect the economic growth taking natural resources into consideration. Moreover, we need to make sure that the world population and world politicians fi nally understand that ignoring the negative long-term effects of environmentally irresponsible economic policies is a myopic and self-defeating strategy that is already negatively affecting economic growth and human well-being.

Source: Reuters

GEORGIA TODAY DECEMBER 4 - 6, 2018 5BUSINESS

BY THEA MORRISON

Georgia’s Deputy Finance Minister, Lasha Khutsishvili, says that more fi nancial institutions have expressed a wish to participate in the loan annul-ment initiative of the government,

which envisages the pre-New Year abolition of the loans of around 600,000 Georgian citizens who have been blacklisted by the banks.

Khutsishvili explained that around 10 more lend-ing institutions, which refused to participate in the initiative at the initial stage, have now got involved in the process and will provide a list of people to Cartu Foundation, which has expressed its readi-ness to buy the debts of people and pay them off.

He stated the process will be launched from December 15, as initially stated, and will conclude on December 31.

The Deputy Minister explained there will be a special website where people can check if their debts will be written-off.

In addition, people can address the fi nancial insti-tutions to include them on the list of people who are incapable of paying their loans.

The main criteria for a person(s) to be included on the list are that the debt not be more than GEL 2000 and the person is on a black list, which includes those who have not met their fi nancial responsi-bilities for at least one year.

As stated by Georgian Prime Minister Mamuka

Bakhtadze in mid-November, the total amount for debts, amounting to 1.6 billion GEL, would be cov-ered by the Cartu Foundation, which is a fund owned by ruling Georgian Dream (GD) founder and chair, billionaire Bidzina Ivanishvili.

Cartu Foundation and commercial institutions had negotiations and reached an agreement whereby Cartu will take responsibility for the loans of black-listed people in banks whose loans do not exceed GEL 2000. Of the total 600,000 people, 150,000 are socially vulnerable.

The non-governmental sector stated the initiative of the ruling party contains signs of vote-buying ahead of the November 28 elections, adding it was directed in favor of Salome Zurabishvili, the candidate sup-ported by the ruling party, who won. They also called on the Prosecutor’s Offi ce to launch investigation into the case, which is already underway.

The opposition also shares the position of the NGOs regarding alleged vote-buying. They say the authorities “pressure private banks and micro-fi nance companies to sell the debts of people to Cartu Foundation for 1% of the total amount.”

Koba Gvenetadze, the President of the National Bank of Georgia (NBG), stated in late November that the borrowers should not think their debts will be annulled again in future.

“We declared from the very beginning that this is a one-time measure and it will not happen in the future,” he said.

He added the Cartu Foundation and commercial institutions had had negotiations and reached an agreement about the process of the initiative.

Image source: postregistrat.com

More Financial Organizations Get Involved in Debt Annulment Initiative

BY KETEVAN KVARATSKHELIYA

Under the supervision of the CEO of the Partnership Fund Davit Saga-nelidze, the delegation of Georgia participated in the China Import and Export Fair.

The Fair was attended by the offi cial delegations of more than 30 countries, approximately 500 trans-national companies and nearly 3 000 delegates. With the support of the Partnership Fund, about 15 Georgian companies had the opportunity to take part in the Fair.

A variety of Georgian natural products were exposed in the Georgian showroom, including Georgian tea, hazelnut, olive oil, mineral waters, whisky, wine, and other spirits and non-alcoholic beverages.

This was named a signifi cant event for the pro-motion of Georgian products beyond the borders of the country, growth of export and further devel-opment of Georgian-Chinese business relations.

Georgia Increases Exports of Natural Products to China

Source, Image source: imedinews.ge

GEORGIA TODAY DECEMBER 4 - 6, 20186 BUSINESS

Investor Considers Georgia Underserved by Nordic Startups

BY SAMANTHA GUTHRIE

On November 28-29, Deputy Minister of Economy and Sustainable Development of Georgia Genadi Arve-ladze met with advisors

from various committees of the US House of Representatives and the US Senate, US Agency for International Develop-ment (USAID) Assistant Administrator for Europe and Eurasia, the US Trade Representative (USTR), and economic policy aides to discuss international trade and labor issues.

During the meetings, Arveladze under-lined the necessity of expanding trade between the US and Georgia and high-lighted the possibility of launching a free trade agreement between the countries, an opportunity Georgian representatives have been pushing hard for in Washing-ton since the Trump administration came to power. US President Donald Trump has repeatedly stated his preference for

Deputy Economy Minister Holds Meetings in Washington on Georgia-US Economic Relations

bi-lateral trade agreements over multi-lateral or international deals such as the Trans-Pacifi c Partnership and the North American Free Trade Agreement.

At the meetings held at the US Con-gress, Arveladze spoke about the impor-tance of supporting legislative action in the process of deepening economic rela-tions, which is also necessary to expand

bilateral trade relations between the countries. This issue was also discussed during the meeting held at the USTR’s Offi ce. The USTR website notes that trade between the United States and the Caucasus region totaled $1.2 billion in 2017, equivalent to the United States' 87th largest trading partner. To Georgia specifi cally, the US exported $383 mil-

lion worth of goods in 2017 and imported $131 million worth of goods from Geor-gia in the same year. “Investment fl ows to and from the region remain strong due to Bilateral Investment Treaties between the United States and all three countries,” explains the site, recognizing the Trade and Investment Framework Agreement (TIFA) signed between the US and Georgia in June 2007 that pro-vides “a forum to address trade issues and will help bolster Georgia's ambitious program of economic reform and liber-alization.”

During his meeting at USAID, Arve-ladze spoke about the importance of the organization’s projects and programs in Georgia to the country’s economic devel-opment, including two major ongoing programs which are aimed at the devel-opment of agriculture in Georgia and promoting economic security to strengthen the country. One of the main topics of the meeting was the Country Development Cooperation Strategy for Georgia, which will be implemented in Georgia to promote economic develop-

ment in various fi elds over the next sev-eral years.

While in the US, Arveladze also attended the America-Georgia Business Council's 21st Annual Conference on November 29, where he watched several presenta-tions and delivered a speech that focused on the importance of US-Georgia eco-nomic and commercial cooperation and deepening ties in this direction. The opening remarks at the conference were given by Georgian Ambassador to the United States, David Bakradze. Bakradze posted on Twitter that it was “a pleasure participating in [the] 21st annual confer-ence...discussing priorities of US-Geor-gia cooperation in the fi elds of Security and Trade.” He thanked president of the Council Mamuka Tsereteli for his “dec-ades-long commitment to the bilateral relationship.”

During his visit, Arveladze also met with the Deputy Assistant Secretary of State at the US State Department and with the Chair of the US House of Rep-resentatives Committee on International Affairs.

Image source: Ministry of Economy and Sustainable Development

BY AMY JONES

Georgia is becoming ever more present on the radar of foreign investors and startups. The tourism industry’s rapid growth in

the country has become a major factor for why investors see Georgia as “cur-rently underserved” by Nordic startups.

In recent years, Georgia has quickly distanced itself from its image as a for-mer Soviet Republic. Once relatively unknown to tourists, the country’s tour-ism took off in 2012 when tourism jumped from 2.8 million visitors to 4.4 million. In 2017, that fi gure stood at 7.5 million, 18% higher than 2016.

Some Nordic startups are beginning

to focus their eyes on the Georgian tour-ism market. Guide.me hopes to tap into the tours and activities sector, estimated to be worth $150 billion globally with an app that sends tourists location-based push notifi cations about local experi-ences as they walk around a town. Although the project is still in its concept phase, it shows how technology could potentially be used to transform the experience for tourists in Georgia.

Georgia’s booming tourism industry led Estonian investment partner at Change Ventures, Yrjö Ojasaar, to label Georgia “underserved” by Nordic startups. “Many of them [Nordic startups] consider it outside their target region,” he said. Hav-ing visited Georgia four times in the past two years, he considers the local adop-tion of new technologies and solutions to be “very rapid and scalable.”

The Estonian unicorn Taxify is an example of potential success for startups in Georgia. Launched in 2017, Taxify has become one of the leading ride-hailing apps in Tbilisi. They have demonstrated the potential to work together with Geor-gia partners to achieve great results. After a strong launch in Tbilisi, the com-pany also began operating in Baku in spring of the same year.

Tbilisi, as the economic hub of Geor-gia, is an especially attractive market to Nordic startups. Indeed, around one third of all 3.7 million Georgians live in the city, making the capital larger than Stockholm and Copenhagen, and almost twice the size of Helsinki or Oslo, although the economy is still signifi cantly smaller.

As a compact market with relatively cheap living costs, Georgia offers inter-national startups a large amount of con-

venience and potential. As seen in the startup capital Berlin, startups can bring a huge amount of money to the local economy. Although often accused of

being a main fuel of gentrifi cation, they could help modernize the Georgian economy, ensuring that it continues to grow.

TRANSLATED BY KETEVAN KVARATSKHELIYA

On November 28, Georgian Wines and Spirits Com-pany (GWS) showcased premium wines of TAM-ADA line, TAMADA Grand

Reserve and TAMADA Qvevri in the Georgian National Museum. The event was attended by the representatives of GWS Company, more than 30 chefs, sommeliers and partner organizations of the company.

The Brand Manager of GWS Salome Dolidze presented premium wines to the guests.

The premium brand TAMADA of GWS is closely related to art. GWS has been the partner of the Georgian National Museum since 2014. TAMADA is a his-torical brand and comprises a diversifi ed portfolio of dry and semi-sweet wines. “It stands out with a clearly expressed character which is one of the most impor-tant characteristics of the Georgian ‘Supra’,” Dolidze said.

The Executive Director of GWS, Phil-lipe Lespi, also addressed the audience and focused on the excellent reputation of TAMADA on the international market, noting that a famous work of Niko Pir-somani is displayed on the TAMADA bottle label. “Our brand values Piro-

GWS Showcases Famous Premium Wines of TAMADA Line, TAMADA Grand Reserve & TAMADA Qvevri

smani and his works, as clearly seen on the TAMADA bottle label, where his outstanding painting “Feast of Five Princes” is displayed. The fact that TAMADA was exclusively presented on the opening ceremony of the exhibition of the prominent Georgian painter Niko Pirosmani at the Vienna Albertina Museum, dedicated to the 100th year of the artist’s demise, was a great respon-sibility and honor for us. The gala dinner was attended by almost 250 guests,” stated Lespi. The French viticulturist noted with a special pride that it was exactly that day he became familiar with Georgia, as the producer of the premium quality wine.

At the end of the event, the guests of GWS tasted the premium line wines with special courses and discussed the impor-tance of Georgian wines and dishes.

TAMADA was founded 2001, and since then has gained multiple golden medals within the frames of international wine festivals. TAMADA Brand portfolio includes 7 types of wines from Appellation of Con-trolled Origin (Tsinandali; Tvishi; Mukuzani; Napareuli; Kindzmarauli; Khvanchkara; Akhasheni). It unites the unique character-istics of Georgian ‘Supra’.

GWS is one of the oldest and best-known wine factories in Georgia, estab-lished in 1993 in Telavi and created on the “Telavi 2” base, the oldest wine fac-tory founded in 1976. Today, GWS owns 350 hectares of vineyards, the majority

of them 15-25 years old. 280 of them are red grapes and the remaining 120 belong to white varieties. 70% of production is devoted to Georgian traditional grape

varieties, and 30% to international vari-eties. The company produces wine, sparkling wine and high alcoholic prod-ucts, such as Tamada, Old Tbilisi,

Admanti, Vismino and Elibo. Soon, cus-tomers will be able to enjoy wine pro-duced using biotechnology methods from the company’s vineyards.

GEORGIA TODAY DECEMBER 4 - 6, 2018 7BUSINESS

BY MARIAM DIASAMIDZE

Georgian customers wit-nessed the most impor-tant event of the year this week as HUAWEI started selling the Mate20 fl ag-

ship smartphone in Georgia. Soon, the HUAWEI Mate20 Pro will also appear on the Georgian market.

HUAWEI consistently shows it cares more about customer satisfaction than other brands, now offering special guar-antee conditions with the HUAWEI Mate20 to make it even more attractive and tailored to consumer interests.

If you buy a HUAWEI Mate20 series smartphone, the company will give you the chance to get an 18-month warranty service and an additional 6-month ser-vice for the cell phone screen (mean-ing if the phone screen is accidentally damaged, you can replace it free of charge under the additional warranty: the company will reimburse all the costs of the screen and the screen replacement service).

A hotline has been set up - 0322 422216 to answer any questions you might have about the new models of smart-phone, service centers or warranty conditions of HUAWEI. Additionally,

HUAWEI Offers Unique Warranty Conditions to Owners of Flagship Models

the company offers customers a postal service throughout the country that provides free delivery of products from center-to-customer.

HUAWEI products and services are

available in more than 170 countries and are used by a third of the world's population. There are 16 research and development centers operating world-wide in the USA, Germany, Sweden,

Russia, India and China. HUAWEI Consumer BG is one of HUAWEI's three business units, mainly focusing on smartphones, personal computers, tablets and cloud services. HUAWEI

Global Network is based on 20 years’ experience in the telecommunications business and serves to provide innova-tive technologies to customers around the world.

GEORGIA TODAY DECEMBER 4 - 6, 20188 BUSINESS

BY ANNA ZHVANIA

Geostat has published the results of a study of the use of information-communica-tion technologies in enter-prises. According to the

results, 98.6% of Georgian enterprises had access to the internet as of 1 January 2018.

In addition, the DSL connection (xDSL,

Internet Connectivity for Enterprises in Georgia

Source: Geostat

Engurhesi Rehabilitation to Kick Off in 2019

BY KETEVAN KVARATSKHELIYA

One of the most signifi cant projects that is planned to be carried out in Geor-gia in 2019 is the reha-bilitation of Engurhesi,

which represents a major electrical supplier of Georgia, supplying 30% of overall electricity in the country.

The Director of Engurhesi, Levan Mebonia, told Business Media Georgia that “the processes related to the tender for the rehabilitation of hydropower plant project Engurhesi will have to be completed by the end of April 2019”.

The costs of the rehabilitation of Engurhesi will be covered using a loan from the European Bank for Reconstruc-tion and Development (EBRD) and funding from the EU Neighborhood Investment Facility (EU NIF). The total budget of the project amounts to 35 mil-lion Euro, of which 28 million Euro is the EBRD loan and 7 million the EU grant. Financing will primarily be used for the rehabilitation of the Enguri headrace tunnel and penstock, but it will also cover the expenses of the res-toration of the Enguri switchyard, Var-dnili II spillway gates, Enguri river diversion weir and access road, together with implementation of a sedimenta-tion management plan. The main aim

of the project is to promote resilience against climate change.

Another signifi cant purpose of the given project is the amelioration of the effectiveness of the power plant. As a result of the rehabilitation process, the power plant will be able to produce 2% more power. The reconstructions will begin in 2019 and in the interval from March to April of 2020 the Enguri power plant will stop functioning for three months due to the works in the tunnel.

“There will be a partial renovation of the tunnel since three months is not enough time to fully reconstruct 15-kil-ometer long tunnel. We are planning to reconstruct the most needy parts of the tunnel, a 1.5km stretch," states Mebonia.

Source, Image source: bm.ge

ADSL, SDSL, VDSL, etc.) is the most commonly used to secure connection to the Internet - 32.1% of users and fi xed broadband devices (optical fi ber (FTTH)) and cable technologies - 29%.

As of January 1, 2018, 44.4% of those employed in enterprises used a portable computer or smartphone belonging to the enterprise that was connected to the Internet, and the percentage of those companies using the website or website amounted to 40.3%.

ADVERTORIAL

Company ‘Servier’ has been functioning on the Georgian pharmaceutical market for 15 years, having been established in France in 1954 and opening

offi ces in numerous other countries there-after. The General Manager of Servier Representative offi ce in Georgia, Maia Khetsuriani, spoke to us about the achieve-ments and successes of the company.

“These past 15 years of having Servier on the Georgian pharmaceutical market have been interesting, colourful and full of challenges,” she told us. “Since 2003, the company has gone through multiple levels of development. Our company is focused on the patients’ needs and on dis-tributing the best therapeutic treatments for them. A number of scientifi c projects have been carried out with medical soci-ety which brought important benefi ts to the development of different fi elds of medicine in Georgia and to the patients in an increase in access to high quality medicines.”

Maia Khetsuriani goes on to note that Servier-Georgia is associated with high quality, innovation and progress, and high-lights that 94 patients worldwide use Servier drugs every day.

“Servier has kept its strong position on the Georgian pharmaceutical market for 15 years, giving Georgian patients access to effective medical treatment. I believe this is the main feature of the success of the company.”

She also highlights the dedicated Geor-gian team, “outstanding” both in its profes-sional characteristics and united spirit as

Maia Khetsuriani: 94 mln Patients Worldwide Treated with Servier Medicines Daily

it seeks innovation.“Servier has 4 corporate values: Dare to

innovate, taking care of each other and the patients, share for professional growth and commit to succeed. I think the Georgian offi ce of Servier integrates all four,” Khet-suriani notes.

WHAT ARE THE MAJOR STRENGTHS OF THE COMPANY THAT KEEP IT IN PLACE ON THE MARKET AND CONSISTENTLY DEVELOPING? The fi rst and most vital fact is that our company is oriented on the research sec-tor and invests 25% of its income (one of the highest indicators in the pharmaceu-tical sphere) in research and the investi-

gation of new molecules. It has 16 research centres worldwide. In 2002, the company won the Galien Prize in recognition of its’ creativity in Research. As a result, Servier medicines are differentiated by high effi ciency and safety profi le of the treatment. Today, Servier works in fi ve therapeutic spheres: cardiology, endocri-nology, angiology, neurology and already in oncology.

Servier drugs represent an effective weapon in doctors’ hands for managing number of diseases with effective reduc-tion of symptoms, improvement patients’ quality of life and depending on disease reducing risk of life threatening compila-tions. The need for such medical treatment is high for both doctors and patients.

WHY DID SERVIER CHOOSE TO OPEN AN OFFICE IN GEORGIA IN 2003? It’s hard for me to name one major reason. It’s the strategy of the company to develop internationally and establish representa-tions in different countries. The fi rst Servier offi ce to be opened outside France was in London in 1964. After that, multiple offi ces were added annually. Today, Servier oper-ates in 149 countries, with 21,700 employees. The Georgian offi ce, with 42 employees, is one member of this big family.

I’m proud that our offi ce has managed to gain an important position in Georgia and within our company. The proof of it is that with the support of Georgian Medical soci-ety and French Head offi ce, there has been

lots of scientifi c projects conducted. One of the last was held in Batumi: 13 interna-tional experts participated in the Black Sea Phlebology Meeting. It was a combination of experience-sharing for Georgian doctors and recognition of the country and the specialists of this sphere for the further organization of similar meetings.

WHAT HAVE BEEN THE MAIN OBSTACLES DURING YOUR 15 YEARS OF DEVELOPMENT? I don’t believe it’s possible to develop and achieve success without obstacles. When they have already been overcome, there is no diffi culty, and then it is more of a chal-lenge. And there were a lot of challenges during these 15 years.

WHERE AND HOW YOU SEE SERVIER IN THE NEXT 15 YEARS?Servier strives for permanent development, while dare to innovate is main moto of the company. Servier made acquisition of Shire Oncology business and created new sub-sidiary in USA. Servier has signed partner-ships with private and public actors, such as Harvard and University of San Francisco. A new research centre with a bio innova-tion direction has also been established in Boston.

Today, Servier is well-known for its’ pres-ence in Cardiology, Angiology and Endo-crinology. Company objective is to launch one new molecular entity every 3 years and also to become a key player in oncology. Looking to the past what was done and company current dedication, I believe that is real future. Speaking about Georgian offi ce, I am sure we will face new challenges in the changing environment and hope that with the strong values and great will, we’ll reach new levels of development.

GEORGIA TODAY DECEMBER 4 - 6, 2018 9BUSINESS

On 3 December, International Day of Persons with Disabilities, Head of the United Nations in Georgia, Louisa Vinton; Ambassador of Swe-den to Georgia and Armenia, H.E.

Ulrik Tideström; and First Deputy Minister of Justice of Georgia, Mikheil Sarjveladze, visited the Public Service Hall in Tbilisi to see the results of their joint work aiming to adapt Georgia’s public space and services to the needs of people with disabilities.

The guests met with the Public Service Hall management and staff and joined a sign language training for the operators.

“The United Nations fi rmly believes that equal rights and equal opportunities are the founda-tion of sustainable development that leaves no one behind,” said Vinton. “The Public Service Hall is an example of Georgia’s evident progress in building an inclusive environment and public services. However, we still look forward to see-ing more developments in adopting the legisla-tion and policies that will help Georgia move forward in the implementation of the UN Con-vention on the Rights of Persons with Disabili-ties.”

The Public Service Hall is one of the few pub-lic offi ces in Georgia where the physical space has been fully adapted to the needs of people with disabilities, including wheelchair users and people with visual and hearing impairments.

As a next step to an inclusive and equal envi-ronment, the Public Service Hall is now adapting its services. Over 750 operators are undergoing

a specialised training in delivering services to people with disabilities. Twenty operators have been trained in sign language. 50 new signs were created and introduced to the Georgian sign lan-guage to cover all key areas of public services. The fi rst ever public service in Georgian sign language was delivered in November 2018.

In addition, the Public Service Hall has prepared and published guidelines about delivering public services to people with disabilities that can be applied to all public agencies in Georgia.

Many of these initiatives have been implemented with assistance from international partners, including the United Nations Development Pro-gramme (UNDP), Government of Sweden and the European Union.

“Sweden has a long experience of introducing inclusive polices that give people with disabili-ties a greater chance of participating in society on the same terms as others. We are privileged to share this experience with Georgia and assist in creating an inclusive and equal society,” said H.E. Ulrik Tideström, Ambassador of Sweden to Georgia and Armenia.

The International Day of Persons with Disabil-ities is celebrated every year on 3 December. It aims to promote the rights and well-being of persons with disabilities in every aspect of polit-ical, social, economic and cultural life. The 2018 theme of the day, “Empowering persons with disabilities and ensuring inclusiveness and equal-ity,” focuses on the inclusive, equitable and sus-tainable development envisaged in the 2030 Agenda for Sustainable Development.

Building an Inclusive & Equal Society

BY SAMANTHA GUTHRIE

The European Union Monitoring Mis-sion in Georgia (EUMM) hosted a medical security course in its head-quarters in Tbilisi this week, Novem-ber 22-27.

The training course was part of the EU’s Civilian Common Security and Defence Policy missions,

EUMM Hosts Medical Security Course in Georgia

developed for the EUMM’s safety and security personnel by the Swedish Contingencies Agency.

The main goal of the course was to provide par-ticipants with the knowledge, skills and abilities required to prevent and respond to medical emer-gencies in a safe, secure, timely and effective man-ner.

14 students from EUAM Ukraine, EUAM Iraq, EUCAP Somalia, EUPOL COPPS, EUCAP Niger, Civilian Planning and Conduct Capability (CPCC) and the host Mission, participated in the course.

Photo: EUMM

GEORGIA TODAY DECEMBER 4 - 6, 201810 BUSINESS

The state budget for 2019 is currently being discussed in Parliament and must be approved by the end of the year. According to the

revised version (second version), the total budget will be around 13 billion GEL, out of which the Ministry of Envi-ronmental Protection and Agriculture (MEPA) will get 332 million GEL (2.4% of the total budget). Approximately 285 million GEL will go to agriculture devel-opment and the remaining 47 million GEL will be spent on environmental protection.

Compared to 2018, the budget for agri-culture development will increase by around 22% in 2019. More state funds will be allocated to most of the agricul-tural areas except for development of the wine and viticulture sector and development of agricultural coopera-tives. In 2019, these two areas will have a lower budget than they had in 2018.

As in previous years, the biggest share of state funds goes to further support the Agricultural Projects Management Agency (APMA) and the modernization of amelioration systems. It should be noted that in 2019, APMA will fi nance 10 types of projects including 4 new ones. These new projects are: farmer/farm registration, “Imereti Agrizone”, “Reap the Harvest” and a project on technical support and marketing. Specifi cally,

November Agri Review: The Sector at a Glance

“Imereti Agrizone” aims to create a greenhouse cluster in Imereti, while “Reap the Harvest” will support farmers in purchasing harvesting equipment.

DOMESTIC PRICESMonth-on-month prices did not change in the category of food and non-alcoholic beverages. From an annual perspective (October 2018 vs. October 2017), prices of food and non-alcoholic beverages increased slightly by 0.2%. On an annual basis, the sharpest price decreases were observed in the fruit and grapes sub-category for tangerines (-41%), lemons

(-33%), apples (-28%), pears (-25%), plums (-24%) and grapes (-15%). In October 2018, prices for grapes dropped by 15% compared to October 2017 due to a good harvest in 2018. According to LEPL National Wine Agency, this year more than 230,000 tons of grapes have been processed; that is 72% higher than the previous year (134,000 tons).

Positive trends in grape production obviously affected the wine sector. Dur-ing January-October, 2018, Georgia exported 68.3 mln bottles (0.75 liter) of wine, which was 12% higher than the same indicator in the previous year. As

shown in the diagram, on an annual basis, Georgian wine export to Russia increased by 10%, while exports to Ukraine, Kazakh-stan and Poland increased by 34%, 16% and 30% respectively. Meanwhile, Geor-gian wine exports to China declined by 11%.

In order to support the development of the Georgian wine sector and the international reputation of Georgian wine, on November 6, 2018, the Govern-ment of Georgia adopted technical regulations for wine production that determine general rules, permitted pro-cesses, inputs and substances for wine producers. Among other things, the regulation forbids the addition of water into wine and defi nes the physical-chem-ical characteristics, sugar content, acrylic acidity, and mass concentration of non-sugar extract in wine.

INTERNATIONAL PRICESAs international prices, international prices decreased in October 2018. The Food Price Index, measured by the Food and Agriculture Organization (FAO), decreased by 7.4% in September 2018, compared to the previous year.

INTERNEATIONAL TRADEDuring October 2018, Georgia’s agricul-tural exports (including food) amounted to 64 mln. USD, which is almost 30% of total Georgian export value. While com-paring this indicator to October 2017, it is down by 1 percentage point. As for imports, in October 2018, Georgia’s agro imports reached 103 mln USD, which

constitutes 16% of total Georgian imports. Year over year (compared to October 2017), agricultural imports declined slightly by more than 1%.

POLICY WATCHNew fruit processing factory opened

in Shida KartliA modern fruit processor was opened

in the village of Sogholasheni in Kareli municipality with state support. The total investment amounts to more than 1 mln. GEL, out of which 60% is funded by donors and 40% comes from a cheap agricultural loans project supported by the state.

New 5-year USAID Agriculture Program

The United States Agency for Interna-tional Development (USAID) is launch-ing a new program to support agricultural business development in Georgia’s west-ern city of Kutaisi. The program aims to create 3000 new jobs in Georgia.

Source: LEPL National Wine Agency, 2018

Source: Ministry of Finance, Note: Draft budget (second version), which is currently being discussed in Parliament; the share of budget for agriculture has been calculated by the authors.

GEORGIA TODAY DECEMBER 4 - 6, 201812 BUSINESS

BY ANNA KUCIRKOVA

Since the inception of the assem-bly line, manufacturers have continually searched for ways to improve their effi ciency.

In the past few decades, robots have taken over some of the func-tions of human workers, mostly in repet-itive, routine tasks. This has caused alarm for some who are worried about robots taking their jobs.

So how exactly is the robot revolution changing the manufacturing business? Here’s what you need to know.

THE STATE OF THE ROBOT REVOLUTIONLast year, an 11-inch armless robot named Jibo, a so-called “social robot,” became the latest example of a clear phenomenon: Whether we care to admit it or not, exponentially smarter and more capable robots are coming soon. In truth, they’re already everywhere we look: in our planes, in our cars, in operating rooms, next to us on assembly lines, in the mil-itary, and on the last mile.

As more robots appear, new product architecture and more computing power become essential. In 2015, Gill Pratt, who oversaw robotics technology at the Defense Advanced Research Projects Agency (DARPA), said “robot capabili-ties had crossed a key threshold. Improve-ments in electric energy storage and the exponential growth of computation power and data storage had enabled robots to learn and make decisions informed by the experiences of other robots.” Does that sound frightening? Robots learning from other robots? In a sense, it leads to a larger consumer inter-est because the smarter robots are, the more helpful they are to humans. The consumer market will approach $100 billion in the coming years.

Today, most of the world’s robots are used in factories. What’s different is that those robots are smaller, more observant and more cooperative than their prede-cessors. Venture capitalists are fl ooding the robot market, which means we will be seeing more of them in our distribu-tion centers and warehouses soon. And it’s not just manufacturers who are uti-lizing robots. Companies from retailers to hotels are implementing the use of smarter machines.

So, not only will more robots become available, the manufacture of the units, all of their parts, and their internal chips and other technology will greatly affect the robotics industry.

THE CHANGES WROUGHT BY BOTSThe upcoming “robot revolution” will change the global economy over the next two decades, cutting the costs of doing business, as machines take over jobs like caring for the elderly or fl ipping burg-ers.

Robots can already perform manual

jobs, such as vacuuming the living room or assembling machines. The develop-ment of artifi cial intelligence (AI) means computers and robots are improving their ability to “think”. They are on the verge of being able to perform analytical tasks once seen as requiring human cog-nition.

This begs the question: what jobs could eventually be taken over by machines? Bank of America Merrill Lynch’s analysts predict the following jobs to be at risk:

BURGER FLIPPERSA San Francisco-based start-up called Momentum Machines has designed a robot that would replicate the hot, repet-itive tasks of the fast-food worker: shap-ing burgers from ground meat, grilling them to order, toasting buns, and adding tomatoes, onions, and pickles.

MANUFACTURING WORKERSRelatively low-skilled industrial workers in rich countries have become used to competing against cut-price employees in cheaper economies. Replacing work-ers with machines can cut jobs by up to 90%.

FINANCIAL ADVISERSBespoke fi nancial advice seems like the epitome of a “personal” service, but it could soon be replaced by increasingly sophisticated algorithms that can tailor their responses to an individual’s cir-cumstances.

DOCTORSSome 570,000 “robo-surgery” operations were performed last year. Oncologists at the Memorial Sloan-Kettering Cancer Center in New York have used IBM’s Watson supercomputer, which can read 1 million textbooks in three seconds, to help them with diagnoses.

CARE WORKERSMerrill Lynch predicts that the global personal robot market, including so-called “care-bots”, could increase to $17 billion over the next fi ve years, “driven by rapidly ageing populations, a looming shortfall of care workers, and the need to enhance performance and assist reha-bilitation of the elderly and disabled.”

MANUFACTURING ROBOTS RUNNING OFF HUMANS?Should workers be concerned about the infi ltration of robotic workers? While the US and Canada have lost more than 6 million jobs to overseas outsourcing, the majority of job losses in both coun-tries was due to machines replacing humans.

The facts, however, tell us that over the past two decades, infl ation-adjusted US manufacturing production has grown nearly 40%. While there may be fewer jobs, more is getting done. Manufactur-ing employees have better education, are better paid and produce more valu-able products, including technology that allows them to be more productive.

In the past few years, there have been millions of jobs remaining unfi lled in the manufacturing sector. The aging workforce is not being replaced by younger workers. Youth are more inter-ested in other work.

There are other issues to consider as well: Robots are safer. They are reliable. They are more ethical than using exploited labor overseas. They’re incredibly cost-effective, with manufacturers seeing return on investment in 12 months or less. Robots allow manufacturers to focus on innovation. This creates new jobs that require and build a more educated, highly skilled workforce.

So, will a robot take your job? Possibly. But, in return, workers of the future will likely fi nd more meaningful work, for better pay. But there is also a distinct possibility that more white-collar jobs will be taken by robots with AI.

JOBS IN JEOPARDY FROM AIArtifi cial intelligence (AI) will also change the face of employment. Digitaltrends researchers found jobs that AI could handle that we humans would never dream of handing over to a machine.

LAWYERSWhile genuinely bespoke legal work still requires humans, AI can help perform tasks ranging from legal discovery (the pre-trial process in which lawyers decide which documents are relevant to a case) to creating contracts. They can even argue parking fi nes and handle divorce proceedings.

If you want to go into law, study a com-bination of law and computer science. You could advise on how best to turn laws into algorithms or investigate the legal framework around new technolo-gies like self-driving cars.

DATA ENTRY CLERKSGiven the enormous amount of data generated every day by companies and individuals, data entry clerks won’t be going anywhere. But, by its very nature, this repetitive and boring job seems designed for a robotic worker or AI. You can snag job security by learning about data science or how to oversee machines doing the data entry.

JOURNALISTSNews organizations could use bots to

generate sports reports, or they could try to use AI for more in-depth investi-gative journalism. Bots could be the hired researcher human journalists always dreamed of, able to pull up statistics and fi nd interesting patterns in data.

DRIVERSFleets of autonomous vehicles are going to have a huge impact on human service drivers, and autonomous trucks will mean the same thing for long-haul driv-ers. While the technology for autono-mous vehicles is nowhere near perfect, taxi drivers and chauffeurs might want to consider furthering their education in a new fi eld.

CHEFSYou wouldn’t think a robot or AI would do well in a sweltering kitchen, right? IBM’s Chef Watson can generate new recipes from scratch using an astonish-ing knowledge of taste chemistry and fl avor pairings. And robots like Miso Robotics’ burger-preparing Flippy can prepare meals and serve them at speeds human chefs struggle to achieve.

FINANCIAL ANALYSTSAI gives fi nancial analysts a run for their money. Computers can see patterns and initiate trades faster than even the quick-est human analyst. The future for this industry will be in becoming a “quant”: someone able to combine knowledge of the fi nancial sector with computer sci-ence and math are highly sought after to help develop the algorithms which increasingly drive this fi eld.

TELEMARKETERS/CUSTOMER SERVICEChatbots can convincingly deliver a script, just like a human. But, one AI company, Mattersight, uses voice recog-nition to determine the personality type of customer service line callers and con-nect them to humans with a similar per-sonality type.

MEDICSAI has algorithms to diagnose diseases, computers are being used to recommend the best cancer treatment, AI pharma-cists fi ll prescriptions, wearable AI

devices help treat physical disorders, and there are even robots carrying out surgery. But, for the most part, humans will still be needed in medicine. Imme-diate future technology augments human physicians and healthcare workers rather than replacing them.

MANUAL LABORThere’s no doubt that manual labor jobs that once required humans are now to be done by robots. Robots can work nonstop without getting tired. But robots do lack manual dexterity, a skill that requires a human worker. We see this in factory work most often.

FACTORY ROBOTSCambridge Industries Group runs a large factory in China. Their goal is to replace 2,000 of its 3,000 workers with machines in the coming year. Shortly after that, it wants the operation to be almost fully automated, creating what’s called a “dark factory.” They want to switch the lights off and leave the place to the robots.

But during a recent test, one of the packaging line robots stopped working, stopping the entire production line and costing the company thousands. So even CIG acknowledges that replacing humans with machines is not foolproof. There are dozens of companies throughout Asia that hope to replace humans with robots for ultimate cost effi ciency.

Introducing throngs of robots cannot be done overnight. That much is clear from the struggles faced by a $130 billion Taiwanese manufacturer named Foxconn. In 2011, the founder said he expected to have a million robots in his plants by 2014. The challenge proved much more diffi cult than originally thought, and just a few tens of thousands of robots had been deployed within three years.

Chinese robot companies and research institutes have managed to develop industrial robots fi tted with a fork-like appendage that can perform routine fac-tory work at terrifying speeds. But fac-tory bots don’t begin and end with China.

Rethink Robotics in Boston created a pair of fl exible and intelligent industrial machines. The products require very little programming and are equipped with sensors to help them recognize objects and avoid hitting people.

Robots have their place in many man-ufacturing companies all over the globe. It’s time for us to accept them as part of our global economy.

CONCLUSIONWhile many will continue to fear robots and AI for the damage they can do to the job market, when businesses are able to save money with cost effective machin-ery, they have more resources to hire more skilled workers.

The robot revolution is inevitable. Humans in manual labor jobs need to prepare for adding new skills or starting a whole new career.Originally published on iqsdirectory.com. Printed in Georgia Today with the permission of the author.

How the Robot Revolution Affects the Manufacturing Business

GEORGIA TODAY DECEMBER 4 - 6, 2018 13BUSINESS

BY MARIAM MERABISHVILI

The N1 accounting publication Inter-national Accounting Bulletin (IAB) annually displays the world’s best networks and companies. Nomina-tions differ through the directions and

the winners are selected by considering their strongest attributes. The event was traditionally held in London in October.

In 2018, Nexia International nominated Nexia TA for the prestigious IAB competition for ‘Account-ing, Capacity Building Champion,’ highlighting its special contribution to accounting development. Representatives of the world’s top countries were also participating in the award ceremony, but this was the fi rst time the Georgian audit company had been presented. And it won!

“We are very happy to win the competition because this is the fi rst time a Georgian company has won such a prestigious award,” said Gela Mghebrishvili, Managing Partner at Nexia TA. “However, we weren’t ever so surprised because accounting is a very important and strong feature in Nexia TA, for the development of which we work continuously

Nexia TA: The Only Georgian Auditor to Win at IAB

in-house and across the country.”“Our victory in the international arena is very

important for Georgia's representation, and this type of world level recognition is further confi rma-tion that Nexia TA offers clients the best services,” said Davit Lomidze, Managing Partner at Nexia TA. “Such a reward is a stimulus for us to contrib-ute more to the development of accounting and auditing in Georgia and to help our clients make their businesses even more successful, both locally and internationally.”

“We would like to thank the Nexia TA team for their unsparing work and our clients for their trust and loyalty,” said Boris Megrelishvilil, Managing Partner of Nexia TA. “We also want to highlight the head offi ce of the Nexia network, the support of which is very important for us. We are delighted that Nexia International has become the only net-work in the world to have won with two offi ces (Georgia and Tanzania), winning two nominations at the IAB awards 2018. This highlights the strength of the Nexia network in the international arena.”

“This award is international recognition of Nexia TA’s success, achieved in a short period, and is confi rmation that the company is growing and developing in the right direction,” noted Nexia TA Managing Partners.

BY KETEVAN KVARATSKHELIYA

From November 30 to December 1, Rooms Hotel Tbilisi hosted the Tbilisi Interna-tional Night Time Economy Forum (TINTEF).

Mayor of Tbilisi Kakha Kaladze noted the event aimed to defi ne the night economy, acti-vate nightlife by developing hidden and less popu-lar spaces of Tbilisi, promote local culture, engage

Tbilisi Hosts Int’l Night Time Economy Forum

the local population and visitors in the cultural life of the city, create a secure atmosphere and repre-sent Tbilisi from a very diverse perspective.

Kaladze also outlined a major objective of TINTEF to adopt a broad dialogue with the participation of all relevant authorities on the role of urban plan-ning and wise management in the development of a sustainable Night-Time Economy.

International government offi cials, professionals and experts participated in forum, sharing their experience for shaping a sustainable Night-Time Economy.

GEORGIA TODAY DECEMBER 4 - 6, 201814 POLITICS

BY EKATERINE GASPARIAN

To be able to join the West’s military and political struc-tures, Georgia has to upgrade itself in line with its Euro-Atlantic aspira-

tions: educate its population, develop the economy, and, last but not least, address defi ciencies in democratic gov-ernance, as refl ected in its position on the Political Monopolization Index.

Georgia’s foreign policy drift away from Russia and towards the West started almost immediately after independence, when it joined the North Atlantic Coop-eration Council in 1992. The following year, Russia intervened on Eduard She-vardnadze’s behalf in the civil war engulf-ing Georgia by stopping the advancement of Gamsakhurdia’s forces in Western Georgia. Yet, Georgia’s relations with its northern neighbor quickly soured over Russia’s accusations that Georgia shel-tered Chechen rebels, and its own sup-port for Abkhaz and South Ossetian separatists.

GEORGIA ‘GOING WEST’Shevardnadze’s ‘bidirectional’ foreign policy sought to distance Georgia from Russia’s suffocating embrace, and bring it into the orbit of the US and its West-ern allies. With Georgia acquiring a new signifi cance as a potential energy transit corridor, Shevardnadze was warmly welcomed by the Clinton administration. In July 1995, Georgia and the US signed a Bilateral Investment Treaty, paving the way for the construction of oil and gas pipelines across Georgia’s territories.

With Russian military bases still pre-sent on its territory, Georgia was brave enough to declare its NATO aspirations at the 2002 Prague Summit. Two years later, following the 2003 Rose Revolu-tion, Georgia became the fi rst country to acquire an Individual Partnership Action Plan (IPAP). Another break-through moment seemed to have come in April 2008, when the Bucharest Sum-mit resolved that “Georgia and Ukraine

will become members of NATO”. The immediate next step was supposed

to be a Membership Action Plan (MAP). What followed, instead, was the Russo-Georgian war of August 2008, giving at least some NATO members second thoughts as to the urgency of letting Georgia into the Alliance. More than ten years have passed since the Bucharest Summit, but Georgia is yet to receive the MAP. 2018 Brussels Summit resulted in nothing but the usual expression of satisfaction with Georgia’s military con-tribution to the Alliance and its progress in developing its economic and demo-cratic institutions.

STUCK IN LOVESuccessive Georgian governments have been drawn towards NATO as a possible antidote to Russian occupation of the breakaway regions of Abkhazia and South Ossetia, its unilateral decision to recog-nize their independence in 2014-15, and the creeping borderization process that ensued. At the same time, popular sup-port within Georgia for joining NATO, according to NDI opinion polls, is quite volatile. Moreover, when asked about the benefi ts of joining the Alliance, many Georgian citizens see it as a way out of social misery, rather than a means of addressing the country’s security chal-lenges or strengthening its democratic governance.

Thus, we observe a peculiar dualism: Georgia is politically determined to join NATO, but this aspiration is not fully refl ected in the individual perceptions of Georgian people. A similar ambiva-lence appears to be shared by Georgia’s Western allies. On the one hand, Georgia

may have “all the practical tools to become a NATO member”, as recently stated by Secretary General Stoltenberg. On the other hand, however, the Alliance does not speak in a single voice when it comes to further expansion. Some NATO mem-bers (e.g. Germany and France) hesitate to grant Georgia the MAP, as this would imply an open confrontation with Rus-sia.

With all their love for each other, Georgia-NATO relations appear to be stuck.

THERE IS A WAY OUT!One way forward, suggested by Coffey (2018), is to invite Georgia to joint NATO by temporarily excluding the Russian-occupied territories from Article 5 pro-tection. However, the suggestion that Georgia should decide whether it wants to become a member of NATO or give up on its territorial integrity – as implied by Coffey – is a false dichotomy in Geor-gia’s political realities.

Instead, Georgian policymakers should understand that integration into Euro-Atlantic institutions will not be possible without restoring the country’s territo-rial integrity. And, since only an enlight-ened, democratic and prosperous Geor-gia can hope to re-integrate the territories and people it lost in the chaos of the 1990s, domestic policy issues – rather than demands for immediate admission into NATO – should be at the center of Georgia’s policy agenda. In other words, to join the West’s military and political structures, Georgia has to upgrade itself in line with its Euro-Atlan-tic aspirations: educate its population, develop the economy, and, last but not

least, address evident defi ciencies in democratic governance.

DEVELOPING THE PUBLIC EDUCATION SYSTEMSince 2003, Georgia has made tremen-dous progress in eradicating corruption in its education system. This success, however, did not translate into quality improvements, as refl ected in Georgia’s lackluster performance in international science and math tests, such as PISA and TIMSS. The teaching profession is among the least respected, failing to attract the best and the brightest. Public schools and universities are rigidly regulated by the state, but are shielded from social pressure and competition; teacher unions and academic elites stand united against structural changes. With private schools catering for the rich, the Georgian peo-ple are increasingly divided into haves and have-nots, with little social mobility and no equal opportunity at the start.

Radical reforms are long overdue. Such reforms should include increased spend-ing on education at all levels; differenti-ated teacher compensation; greater autonomy for individual teachers and institutions; a special program of incen-tives to recruit young teachers willing to work in remote rural locations; and last but not least, international and social partnerships to help Georgian schools and universities implement new teach-ing methods suited for the 21st century, such as problem-based learning and the ‘fl ipped classroom’ approach.

DEVELOPING THE ECONOMYGeorgia’s economy was growing rather rapidly in recent years, yet, this growth

was far from inclusive, resulting in pov-erty and very high levels of inequality. Almost a half of the country’s population survives in primitive agriculture; a large share of urban population is unemployed or self-employed in low-productivity services; only 15% of Georgia’s total population are offi cially employed. With so many people out of the modern labor market, the Georgian economy cannot catch up even with the least developed countries in the EU.

To get out of this predicament, Georgia must implement bold industrial policies, providing incentives for, and coordinat-ing, private sector investment in specifi c sectors of the economy and geographic regions. This is how Georgia developed the city of Batumi and the mountain resorts in Svaneti and Gudauri. This is how it could start new manufacturing activities with the potential to absorb workers stuck in subsistence agriculture and primitive services. The result would be higher levels of income and economic prosperity for all.

DEVELOPING DEMOCRATIC INSTITUTIONSSo far, Georgia’s democracy has been handicapped by a lack of genuine com-petition, ranking fi rst on the Tbilinomics Index of Political Monopolization among all NATO member states! Georgia’s elec-toral system allows for an easy emergence of dominant ruling parties that tend to ignore the due political process, public and expert opinion.

Georgia has to urgently abolish single-member districts and introduce voting on nation-wide party lists. By doing so, it would take a major step towards a healthier situation in which parliamen-tary elections produce coalitional gov-ernments based on compromise rather than outright domination, a situation in which major policy choices are properly discussed and contested. Operating in a more competitive environment, political parties will be forced to present their views on issues that genuinely concern Georgian people – jobs, social security, education, minority rights and the envi-ronment – as opposed to cheap blame games we have seen them playing on biased television channels in recent months.

* * *By addressing these interrelated chal-

lenges, the Georgian government will acquire the confi dence to stand its ground and engage its people in the breakaway territories. It will be able to think in a more fl exible way and put on the table solutions that are both feasible and politically acceptable for all sides in the confl ict. A more confi dent Georgia may also be able to mend fences with all of its neighbors while at the same time joining the West’s political structures and security arrangements, such as NATO.

ABOUT THE AUTHOR:Ekaterine Gasparian is a recent IR graduate from the International Black Sea University. She is currently a Communication Specialist at Tbilinomics Policy Advisors. This article was submitted for consideration in the Essay Com-petition “NATO, Georgia and current security challenges: the 2018 Brussels summit and beyond” organized by the Bulgarian Embassy to Georgia.

Bringing Georgia’s Realities in Line with its Euro-Atlantic Dreams

A more confi dent Georgia may also be able to mend fences with all of its neighbors while at the same time joining the West’s political structures and security arrangements

GEORGIA TODAY DECEMBER 4 - 6, 2018 15

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BY EMIL AVDALIANI

With the presidential elections now over, it was fascinating to see how many rhetorical twists and political intrigues were used to incriminate the political can-

didacy of Salome Zurabishvili.Though it was clear from the very beginning that

the new president, like the outgoing Giorgi Marg-velashvili, would not have much political power, it was nevertheless stated numerously by various political players that she could do many "negative" things in relations with Russia.

Few, if any, said during the campaign that the new president of Georgia would play a very minor role in the foreign policy decision-making process, that the president's active involvement is precluded by the Constitution, which was changed following the 2012 parliamentary elections.

In fact, even if one suspected that the new pres-ident would make some moves towards Russia, it is still more fascinating that ordinary people, and more so the analysts, did not much voice how mea-gre the probability was that Georgia would do anything to comfort the Russians.

In fact, in this case we have a good example how the human factor matters less than the geopolitical realities that nowadays exist between Moscow and Tbilisi.

For the Russians, Georgia is the southernmost part of the arc which runs from the Baltic to the Black Sea and then to the Caspian. Those lands are 'borderlands" for the Russians, contested by the Europeans and Americans. The Russians have seen in the past 25 years or so how their infl uence has dwindled in Moldova, Ukraine, the Baltic States and Georgia.

The Russians, through their geopolitical mistakes, even reduced the chances of reversing the process. Economically and through soft power measures, the Russians are, unfortunately for them, less attrac-tive, while militarily (hardly an asset when it comes to winning hearts and minds) they are one of the strongest in world.

The Russians and Georgians might enjoy increased

Under Zurabishvili, Relations with Russia Will Remain Unchanged

bilateral trade, increased cooperation on trade routes through Georgia's Abkhazia and Samacha-blo (South Ossetia) regions, but the reality is that any substantial progress in relations with the Rus-sians is contingent upon Georgia abandoning its pro-western course.

For the Russians, the battle in the borderlands is

not only about the military issue, who would sta-tion more troops, Russia or the NATO alliance, but rather it is about the overall civilizational choice of Ukraine, Georgia and Moldova, and Moscow intends to reverse this process.

For the Russians, Georgia's NATO and European Union (EU) aspirations undermine the very basis

on which Russia's power was exercised throughout the last three centuries. In those times, the Rus-sians were simply too powerful economically and militarily in northern Eurasia and thus were able to dominate the South Caucasus, Ukraine and Mol-dova.

This could explain why it does not matter much who becomes President of Georgia. A new leader, and in our case Salome Zurabishvili, would have to concede Georgia's very fundamental policies pursued since the end of the Soviet Union, NATO and EU aspirations, which she will not do because of her European diplomatic background and because of the Georgian public which will not tolerate con-cessions to Russians.

The problem in Georgian- Russian relations is that they have reached a dead-end. For any actual improvement to follow, Moscow would either need to reverse its recognition of Abkhazia and Samach-ablo, which they won’t (at least for the foreseeable future), or Tbilisi would need to have direct nego-tiations with the separatist regions, which the Georgians will not do.

Thus, it can be argued that the Russians have narrowed the space for maneuvering with the Georgians following the recognition of Abkhazia and so-called South Ossetia as independent enti-ties in 2008. Where before 2008, many of the Geor-gian elites thought it probable that there could be a return of territories to Tbilisi in exchange for reversing NATO/EU aspirations, now this thinking is dead. Simply put, the is no hope in negotiating with the Russians beyond some security and per-haps economic issues.

Put in this diffi cult geopolitical perspective, it is very unlikely that Salome Zurabishvili would vouch for any radical moves, even rhetorically. Indeed, following her victory she has already declared that relations with Russia remain stalled and there will be no changes to the existing status quo.

Offi cial Russian reactions to her victory were quite positive, as many in Moscow argued that she would be more amenable. However, as explained above, exasperation at Russian daily behavior on Georgian soil, as well as the wider geopolitical context, preclude the new Georgian president and the executive government from expecting some-thing positive from Moscow.

Opposition Holds Rally, Slams Presidential Election ResultsBY THEA MORRISON

United Opposition, which is made up of several parliamentary and non-parliamentary parties, held a protest rally on Sunday asking for the abo-lition of the presidential election

results.The opposition parties claim they are going to

apply to court to demand the results of the pres-idential elections be declared void.

Grigol Vashadze, the former presidential candi-date of the opposition, who came second in the race after the ruling Georgian Dream (GD) sup-ported Salome Zurabishvili, stated the govern-ment falsifi ed the elections.

He presented a number of ID cards at the rally which belong to already deceased people, claim-ing they were used in the Guria region to falsify the elections.

"We do not recognize the results of the elections. Georgia has no president - the criminal dream

and Bidzina Ivanishvili have a president," Vashadze said. "It was not an election. It was a criminal operation against the Georgian people," he added.

In addition, Vashadze proposed the government set up a working group until December 16, “in order to move the country out of the political cri-sis constitutionally and legally.”

He added that the next steps of the United Oppo-sition will depend on the government’s response.

“We demand early parliamentary elections and fundamental changes to the electoral system, which will completely change the corrupt elec-toral administration – starting with the Central Election Commission. These commissions should be staffed by civil society, opposition parties, and international experts,” Vashadze said.

The ruling party commented on the proposal of the opposition, saying such statements are “com-ical.”

The Vice-Speaker of the Parliament, Gia Volsky, said it is the United National Movement which tries to mislead the people.

The next opposition rally has been scheduled for December 16.