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Issue
IIs
ssu
ue no: 810/10
• JANUARY 19 - 21, 2016
• PUBLIS
PUBLISHED TWICE WEEKLY
FOCUS
ON CHANGING
THE SYSTEM
New Prime Minister Giorgi
Kvirikashvili discusses gambling
reformation for social welfare
PAGE 2
PRICE: GEL 2.50
In this week’s issue...
US Ambassador:
Georgia
Needs Energy
Diversification
PAGE 2
Georgia’s PM Meets
Businessmen, Promises
‘Interesting’ Offers
PAGE 3
Men are rational, women
are adaptive?
ISET PAGE 4
Georgia to Introduce Estonian
Model of Corporate Income Tax
BY TAMAR SVANIDZE
T
he Head of the Georgian
Government
has
announced that the State
is actively working to
establish in Georgia a tax
system similar to the Estonian corporate
income tax model.
The Prime Minister of Georgia, Giorgi
Kvirikashvili, revealed that consultations about this issue are ongoing with
representatives of the International
Monetary Fund and the majority of the
Georgian Parliament.
“The Government has begun work
regarding tax liberalization. This means
corporate income taxation only in the
case of profit sharing. Earnings will be
created within the company and will
be taxed only if considered as distributed dividend. If companies reinvest
their income they will be free from tax.
This will help to attract potential investment resources existing on the local
market,” Kvirikashvili stated.
Estonia’s current system of corporate
earnings taxation is a unique system
which shifts the momentum of corporate taxation from the moment of earning the profit to the moment of its distribution.
Giorgi Kvirikashvili
Discusses Infrastructural
Projects with Governors
PAGE 5
Changes in
Composition
of Board of
Directors of JSC
PASHA Bank
Georgia
PAGE 6
Mexico’s Healthcare Reform
GALT & TAGGART PAGE 7
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2
BUSINESS
GEORGIA TODAY
JANUARY 19 - 21, 2016
Government
Turns its
Attention to
Online Casinos
BY EKA KARSAULIDZE
T
he Parliament of Georgia once again
raised the issue of the dangerous
impact of online casinos and the question of their closure. This time the
initiative belongs to new Prime Minister of Georgia, Giorgi Kvirikashvili. At present
there are no specific details about future regulations, but the government intends to study the issue
in detail.
According to PM Kvirikashvili, the absence of
any regulations for the online casino business has
resulted in serious negative consequences for the
population of Georgia. The authorities plan to
thoroughly explore the online casinos market in
the near future and then begin to work out the
necessary regulations. The PM claimed that if the
regulations are not entirely effective, the government would consider more stringent measures.
However, it is unknown whether, by this, PM Kvirikashvili was referring to the possibility of their
complete shut down or not.
“I want to figure out what options we have and
how far it’s possible to implement them in Georgia.
If it’s physically impossible, then we’ll think about
more stringent measures,” he said. “By all means
we must prevent further destructive impact on
Online casinos are used by around 85%
of all players in the gambling industry,
70% of which are minors
citizens by the online casino market.”
Despite the fact that gambling in general is recognized as one of the most pernicious and intractable addictions, the PM highlighted that future
regulations will concern only online casinos. “In
this issue we separate offline casinos. New regulations will not touch them, as their existence is
important for the tourism and hospitality industry,”
noted Kvirikashvili.
The main reason for the creation of the regulations named the easy availability for juveniles to
online games and casinos. According to some
reports, the number of people using online casinos
in Georgia is increasing by the year. They are used
by around 85% of all players in the gambling indus-
try, 70% of which are minors.
The majority of the population of Georgia actively
supports the Prime Minister’s proposal, which indicates that there are serious problems in this area.
On the other hand, if the closure of the online casinos becomes a reality, it will be considered by some
as a hard interference in business by the Government. However, the main task of the Government
to look after the welfare of its citizens will most
likely be the saving grace in such an argument.
The initiative to restrict access to online casinos
was first sounded at the beginning of 2015, though
at the time the Government did not support it,
arguing that gambling makes a significant contribution to the budget.
Saburtalo to Be Freed from Traffic Jams
BY EKA KARSAULIDZE
S
aburtalo district in Tbilisi is considered
by many as a place where traffic jams
occur most often. To solve this problem,
five options for the improvement of onsite traffic have been presented to Tbilisi
City Hall. To date the government has tended to
focus more on traffic regulation and street infra-
Five options for the improvement of on-site traffic have been
presented to Tbilisi City Hall by Germany Company ‘A+ S
Consult GmbH Forschung und Entwicklung’
structure improvements than large-scale construction. The restriction of vehicles, not only in Saburtalo but in other districts of the capital, need to be
a part of the unified traffic Master Plan of Georgia.
“To study the most challenging aspects of transportation in Tbilisi, we chose a foreign company
which has been engaged in the field for many years,”
said Vice-Mayor of Tbilisi, Lasha Abashidze. “We
intend to make future decisions based on the information and recommendations they presented to
us.”
Germany Company ‘A+ S Consult GmbH Forschung
und Entwicklung’ studied in detail the traffic flow
in the Saakadze Square and 26 May Square areas,
as well as along Pekini, Kandelaki and others surrounding streets. Following this, they presented
the State with five alternative ways to solve the
problem which includes better regulation of traffic, as well as large-scale infrastructure projects.
According to the company’s research, Saburtalo
exceeds the allowable capacity of flow, as a result
of which it experiences reduced speed of movement, traffic jams, noise and polluted air.
“We have proposed five options,” said Christian
Boettger, Head of Transport Department of ‘A+S
Consult GmbH Forschung und Entwicklung’ Company. “It is essential to solve the major problems
with the establishment of new traffic lights at
various points in the studied areas. In addition, to
solve the problem of traffic jams in Tbilisi overall,
the government should create new pedestrianized
areas. We have presented our vision of problems
and a number of solutions and now it is up to the
heads of the capital to decide which version is more
suitable for them.”
Tbilisi City Hall had already announced that they
are leaning towards one version which includes
the establishment of new ‘smart’ traffic lights, safety
islands, public transport development and he introduction of a number of other systems for traffic
regulation.
“I was satisfied that the studies paid attention to
the large area opposite the Holiday Inn Hotel on
26 May Square,” said Shalva Ogbaidze, member of
the City Council. “In the past there were suggestions to install a tunnel there, but I’m pleased to
see that this option has now been excluded and
this area will simply be released to movement in
other ways.”
Government officials, representatives of NGOs
and experts point out that it was important for the
State to abandon large-scale infrastructure projects
in favor of traffic regulation, the changing of traffic
flow and even the limitation of that flow in some
areas – options suggested by foreign experts. Moreover, co-director of Georgia’s traffic Master Plan,
Merab Bolkvadze, highlighted that although the
work on the Plan is at an early stage of development, they fully support such a system and believe
that it is possible to solve problems on the roads
with the correct regulations.
US Ambassador:
Georgia Needs
Energy Diversification
BY ZVIAD ADZINBAIA
U
S Ambassador to Georgia, Ian C.
Kelly, told reporters that Georgia
should not become dependent on
one source of energy alone.
The Ambassador says Georgia
needs to take care of its energy diversification.
“We have expressed our concern over the fact
that Georgia should not become dependent on one
source of energy and should maintain diversification,” Kelly was quoted as saying.
According to the Ambassador, he is satisfied with
the explanations of the Georgian government. “I
think Georgia does have a short-term energy need
and it should talk to all potential energy suppliers,”
the Ambassador said, adding that the government
must be transparent about its energy policy.
When asked how normal it is for Georgia to have
relations with Gazprom, as its territories are occupied by Russia, the Ambassador replied, “The
Georgian government can well realize the existent
challenges.”
A public protest was held on Saturday near the
governmental administration building to rail against
the ‘hidden negotiations’ of the government with
Russia’s energy giant Gazprom. The protesters
accused the government of working against the
state and national interests of Georgia.
BUSINESS
GEORGIA TODAY
JANUARY 19 - 21, 2016
3
Georgia’s PM Meets
Businessmen, Promises
“Interesting” Offers
BY TAMAR SVANIDZE
G
eorgia’s Prime Minister,
Giorgi Kvirikashvili, has
met with representatives
of the Business Association.
It was his first meeting with the Business Association members as Head of
the Georgian Government.
Before the meeting, the President of
Associations of Banks, Zurab Gvasalia,
told reporters that he intended to raise
the issue of amendments to the law
on police eviction at the meeting.
“This a public problem,” he said, “As
it concerns private property.” He added
that the Estonian model of profit taxes
would also be discussed at the meeting.
According to PM Kvirikashvili, the
Government has very interesting offers
for the business sector in Georgia.
“Now we are going through a very
interesting process,” he said. “Every
day we meet with our ministers. We
review projects and prioritize portfolios in order to reveal the main priorities. We believe that the involvement of the Business Association in
this process should be active. We have
very interesting offers for businesses,”
he said.
He went on to speak of his personal
interest in the opinions of those present on the direction of the processes,
emphasizing that ensuring proper
communication with the business sector and engaging the business community in the decision-making process
is his priority. “The main aim of today’s
meeting is communication with the
business sector and the engagement
of businessmen in the economic-profile decision-making process. I would
like to thank you for what you are
doing for our country,” he said.
The PM also expressed his interest
in learning of the strategy and longterm plans of the Business Association. “I want each of you to feel that
you are important in the decisionmaking process,” Kvirikashvili added.
Georgia-Germany Relations Discussed at MFA
BY ZVIAD ADZINBAIA
G
Minister Janelidze underlined the
need to make maximum use of
economic co-operation potential
eorgian Foreign Minister
Mikheil Janelidze met the
Ambassador Extraordinary and Plenipotentiary
of the Federal Republic of
Germany to Georgia, Bettina Cadenbach.
The Minister is said to have positively
assessed the existing close partnership
between Georgia and Germany in the
political, trade and economic, cultural
and other spheres.
Minister Janelidze also underlined the
need to make maximum use of economic
co-operation potential, which means
increased interest of the German business communities in Georgia and a
greater volume of German investments
in the country. “In this context, Minister Janelidze welcomed the efforts of
the German Federal Government to
promote the intensification of economic
relations, and underlined the need to
share Germany’s experience in certain
spheres,” the MFA stated.
Ambassador Cadenbach once again
expressed the readiness of the German
Government to facilitate the further
enhancement of bilateral co-operation
with Georgia, particularly in the economic sector. “The Ambassador once
again reaffirmed Germany’s strong support for the reforms carried out by the
Government of Georgia as well as for
Georgia’s European integration and territorial integrity,” the MFA said.
The talks also included the celebration of the Germany-Georgia Friendship
Year in 2017 and Georgia’s participation
as Guest of Honor in the Frankfurt Book
Fair 2018.
4
BUSINESS
GEORGIA TODAY
JANUARY 19 - 21, 2016
THE ISET ECONOMIST
A 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 economic
growth, 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.
Men are Rational, Women are
Adaptive?
Insights From Georgia’s Consumer Confidence Index
BY YAROSLAVA BABYCH
F
or over three and a half years,
the ISET Policy Institute has
been tracing the trends in the
Georgian consumer sentiments. Every month a team of
callers dial randomly generated telephone
numbers to interview around 330 people
from all over Georgia. The interviewer
first asks the basic questions about the
respondent’s age, level of education,
place of residence, and then follows up
with questions about the current financial situation of the household and the
person’s expectations about the future
economic situation in the country.
The answers form the basis of CCI the Consumer Confidence Index. The
CCI is a very important indicator for
economists. Very low consumer sentiment, for example, means that people
10 Galaktion Street
are likely to spend less, thus depressing
the overall economy.
Few people realize that behind a single
CCI number there is a great deal of useful and sometimes surprising information. The CCI data can be used to informally test some important economic
theories. For instance, the theories of
rational and adaptive expectations.
Here I must disappoint the readers –
the terms “rational” and “adaptive” in
economics don’t mean the same thing
as in our everyday language. Rational
has nothing to do with being sensible or
logical, and adaptive doesn’t mean that
someone is easily adjusting to change.
Without digging deep into theory, let’s
just say that in trying to predict the future,
people with rational expectations are
using all the relevant information available to them at the time. What this means,
is that people will not be always right
about the future, but on average and over
time people’s predictions will be right.
So says the rational expectations theory.
What about adaptive expectations?
People with adaptive expectations form
their predictions of the future based on
the information about the past. To put
it simply, if it has been raining for the
last 10 days, you will expect a rainy day
tomorrow as well.
So what can we say about the expectations of the Georgian consumers? The
CCI index can offer some interesting
insights.
First, let’s look at the correlation between
the CCI expectations index (which asks
questions about what people expect from
the economy in the next 12 months) and
the actual average GDP growth 12 months
into the future. We can observe that the
overall correlation is not very strong
(the correlation coefficient is 0.36. This
is on the low side. Consider that a coefficient of 1 means perfect correlation,
while 0 means no correlation at all).
This, however, is not true for every
group of people. For men, for example,
the expectations about the future and
the actual future growth seem to be more
strongly correlated (correlation coeffi-
*indicates significance of the coefficient on 10% level;
CC =1 indicates perfect positive correlation between two variables;
CC = -1 indicates perfectly negative correlation between two variables;
CC = 0 indicates no correlation between two variables.
Tel: (995 32) 2 45 08 08
E-mail: [email protected]
cient 0.55). For women, this correlation
is almost non-existent.
For insights on adaptive expectations,
we correlate the CCI expectations index
with the actual GDP growth in that
month. A strong correlation could imply
that people are using the current month’s
economic situation to predict what will
will happen in the future.
The correlation seems to be rather
strong for almost all groups, but the
strongest correlation we observe in
women over 35 years old - the coefficient
value is 0.64. (Interestingly, women
younger than 35 demonstrate the lowest
correlation coefficients in both categories).
Does this prove that Georgian men
conform to rational expectations hypothesis, while Georgian women to the adaptive expectations? Not really. The simple
correlations are by no means a formal
test, much less the proof of the rational
and adaptive expectations hypotheses.
Nevertheless, the results, and especially
the differences between the samples of
men and women are interesting, don’t
you think?
BUSINESS
GEORGIA TODAY
JANUARY 19 - 21, 2016
5
Georgian Glass to
Be Exported To Italy
BY ANA AKHALAIA
T
hirteen different types of
glass produced in Georgia
are to be exported to Italy.
A Georgian glass company
in Ksani has signed agreements with the three largest mineral
water-producers in Italy.
The Georgian glass factory was visited
by the experts of the Italian company
Societa di Santa Aerallba in order to
carry out quality control and monitoring
of the production process.
At the initial stage, in total, 25 million
bottles are scheduled to be transported
to the Italian market, and this figure is
planned to increase in the future.
Bottles for export were created with a
special form and material, exclusively
made for the Italian mineral water company, which targets the high-income
segment. Both international and local
professionals developed the design of
the bottle.
Deputy Minister of Economy and Sustainable Development, Ketevan
Bochorishvili, stated that the signing of
the Association Agreement with the EU
has contributed to this new export deal.
“Within the framework of the Association Agreement we have a free and
comprehensive trade regime with Europe.
This is an example of the results we
The JSC “Mina” Ksani Glass Factory, 2014
expect. More entrepreneurs will be able
to get their products onto the EU market
after meeting the appropriate quality
standards,” said Bochorishvili.
Georgian glass products are currently
exported to Turkey and Azerbaijan. The
Ksani glass works company is currently
employing 280 people and producing
more than 60 thousand tons of glass
products for the local and export market.
Giorgi Kvirikashvili Discusses Infrastructural Projects
with Governors
BY ANA AKHALAIA
P
rime Minister of Georgia,
Giorgi Kvirikashvili, and the
governors met at a working
meeting held in the Government Administration to discuss problems within the regions and
current and planned infrastructure
projects.
As the Government Administration
revealed, highlighted topics at the
meeting were the investment potential
of each region, regional development
prospects, and ways of attracting investments to provide for the country’s
economic development. The discussions also focused on the needs of the
PM Kvirikashvili said that the government’s goal is to provide safe drinking
water for all families and significant
steps should be carried out in this direction. He also emphasized the importance
of looking after the country’s youth and
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regional populations, including gasification, roads and drinking water network rehabilitation projects.
the need for youth involvement in the
country’s development processes.
At the Administration meeting, the
PM heard the opinions and suggestions
of the governors about the future plans
and working format, as well as about
the necessary strengthening of communication with the many branches
of government.
The meeting was attended by the
Minister of Economy and Sustainable
Development, Minister of Energy, Minister of Environment and Natural
Resources, Minister of Regional Development and Infrastructure, Secretary
of Economic Council, Head of Government Administration and the Head of
the Department for Relations with
Regions and Local Self-Government
Units.
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6
BUSINESS
GEORGIA TODAY
JANUARY 19 - 21, 2016
Partnership Fund Discussing
Construction of Energy
Efficient Block Factory
BY ANA AKHALAIA
P
lans for an energy efficient
block factory are being discussed by the Partnership
Fund which is working on the
project with Georgian company Ytong Caucasus and German company Xella.
Construction of the factory is planned
in Tbilisi. According to the project, construction of the factory should be com-
pleted by the end of 2016, while the first
certified production is scheduled for
early 2017.
The Ytong energy efficient Air-Bloc is
produced for construction purposes. It
is a high-tech innovative product which
meets international standards of construction and is completely environmentally friendly, as proven by certificates
received from various European institutions.
According to the obtained license,
products will be sold in Georgia and also
exported to Azerbaijan, Armenia and
southern Russia.
According to Chief Investment Officer
of the Partnership Fund’s Investment
Department, Nino Cholokashvili, the
Ytong energy efficient block has a number of advantages compared to other
construction materials. The thermal
conductivity is five times better than the
concrete block and it is also much lighter
which makes it possible to significantly
reduce the number of fittings used in
the construction of buildings and significantly speed up the process of construction.
“The important factor is that the necessary raw materials for production of
the Ytong Air-Bloc are available in Georgia. The project is also attractive in terms
of the high heat-insulation of buildings
built, through which it is possible to sig-
nificantly reduce the utility costs for
heating and cooling,” Cholokashvili said.
The project investment is worth USD
13.5 million. The project is currently
under discussion and negotiations are
ongoing between the partners.
Handcrafted Georgian natural
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0322 93 21 21
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6, Erekle II str (old town)
Changes in
Georgian ‘Livo’ Natural Juices
Composition of
Presented at Berlin Exhibition
Board of Directors
of JSC PASHA Bank
Georgia
BY ANA AKHALAIA
G
eorgian natural juices
company ‘Livo’ is taking
part in the Grüne Woche
international exhibition
in Berlin. Grüne Woche
(International Green Week) was opened
on 16 January.
With the support of the Ministry of
Agriculture, various Georgian companies are presenting their products,
includng wine, Chacha (Georgian pomace brandy), beer, lemonades, juices,
tea, churchkhela, jam, and more, at the
exhibition.
Also on show at the exhibition are
classic examples of traditional Georgian
cuisine with dishes like Khachapuri,
Chvishtari, and Phkhali. To compliment
the tasty offerings, Georgian ensemble
Shvidkatsa will perform polyphonic folk
songs for the guests.
P
ASHA Bank Georgia is pleased
to announce the appointment
of Mr. Chingiz Abdullayev as
Member of the Board of Directors and Chief Financial
Officer of the Board of Directors as of
January 13th, 2016. He is in charge of
supervising Financial Management,
Treasury as well as Administration and
Procurement Departments.
Chingiz Abdullayev started his career
at Baku Stock Exchange as the Head of
Listing Division in 2000. In 2003 he
joined Assurance & Advisory Service of
Deloitte and for the following 10 years
worked at senior positions with KPMG
Russia, Moore Stephens CIS and RSM
Georgia with major focus on financial
institutions, energy, trade and other
industry sectors.
Chingiz Abdullayev joined JSC PASHA
Bank Georgia in 2014 as Head of the
Financial Management Department. He
became a Member of the Board of Directors on January 13th, 2016.
The Board of Directors of JSC PASHA
Bank Georgia consists of three Executive Directors, involved in day-to-day
management of the Bank. Its current
composition is as follows:
Chairman of the Board of Directors:
Shahin Mammadov
International Green Week (IGW) is
taking place for the 81st time in 2016; a
one-of-a-kind international exhibition
for the food, agricultural and horticultural industries. Producers from all over
FOR RENT
Member of the Board of Directors:
George (Goga) Japaridze
Member of the Board of Directors:
Chingiz Abdullayev
PASHA Bank is a Baku-based financial
institution operating in Azerbaijan, Georgia and Turkey, providing a full range of
corporate and investment banking services to large and medium-sized enterprises.
Apartment in Vake
(behind the Vake Swimming Pool) in an ecologically
clean environment with beautiful views.
The 120 sq. m. duplex apartment on the
th
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Price: 900 USD
Tel: 577521020 Tekla (English);
597000109 Dato (Georgian)
the world come to IGW to test market
food and luxury items and reinforce
their brand image.
The opening of the exhibition was
attended by the Georgian Minister of
Agriculture, Otar Danelia, the Ambassador Extraordinary and Plenipotentiary of Germany, Lado Chanturia, and
the Georgian delegation.
‘Livo’ was founded by the Sales Management Company in 2013. Their natural juices are produced in their ‘Citro’
factory in Adjara.
The juices are made from local citrus
and raw fruit by direct squeezing, which
preserves the aromatic taste and the
healthy qualities of the juice.
According to Quality Lab laboratory,
‘Livo’ juices do not contain any genetically modified organisms.
‘Livo’ lemon juice was awarded a gold
medal at the World Food Ukraine international exhibition in Kiev in 2014.
The company’s juices are also sold in
Russia and Estonia.
BUSINESS
GEORGIA TODAY
JANUARY 19 - 21, 2016
7
The Galt & Taggart Research team comprises Georgian and Azerbaijani finance and economic experts who have broad experience of covering the macro and corporate sectors of the two
countries. Our current product offering includes Georgian and Azerbaijan macroeconomic research, Georgian sector research, and fixed income corporate research.
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Mexico’s Healthcare Reform
FOR GEORGIA TODAY BY
DAVID NINIKELASHVILI
S
ector research is one of the
key directions of Galt & Taggart Research. We currently
provide coverage of Energy,
Tourism, Real Estate, Agriculture, and Wine sectors in Georgia. Healthcare is our latest addition, with the full
report to be released in the near future.
We are featuring two cases from the
report for Georgia Today. Today’s article
will provide an overview of Mexico’s
healthcare reform and our next article
will cover Turkey. These two countries
have become global benchmarks for
building universal healthcare (UHC)
systems.
Every government in the world faces
five major healthcare issues: aging population, chronic diseases, rising costs,
quality of and access to healthcare, and
insufficient infrastructure and technology. Mexico has been one of the global
leaders in healthcare reform and has
made a huge leap forward over the last
few years with its UHC system - a healthcare system which provides access to
healthcare for all citizens of a country.
Economic disparity among the population is a problem in Mexico, despite
having the world’s 15th largest economy
(US$ 1.3tn as of 2014) and one of the
highest GDP per capita in Latin America
(US$ 10,230 as of 2014). In 2012, more
than half of the 113mn population lived
below the poverty line, compared with
9.7% of Georgia’s 4.5mn population.
In the early 2000s, half of the Mexican
population was uninsured. Although the
uninsured had access to services offered
by public health facility networks, the
distribution of public funds among population groups and states was inefficient
and inequitable. The uninsured half of
the population received only 1/3 of federal funding for health and there was a
5 to 1 difference in spending per capita
across states in 2003. Every year, 2-4mn
households (9-18% of all households)
suffered from catastrophic healthcare
payments. Public healthcare spending
was below the Latin American average
and was too low to address even the
basic healthcare needs. Out-of-pocket
spending accounted for more than half
of healthcare spending in Mexico, above
that of Brazil, Chile, and Colombia. The
share of private spending was even larger
in Georgia (4.6-5.7x that of public spending) and around 65.0% of medical care
in Georgia was either self-treatment or
provided free of charge from relatives
or neighbourhood doctors.
In response, in 2003 Mexico designed
structural reforms to protect families
from impoverishing health spending and
to completely cover the country’s roughly
12mn uninsured families (about 55% of
all households). Similar to Georgia, the
main challenge for Mexico was the disparity in the allocation of healthcare
financing as well as services among
population groups and states. The Seguro Popular, the new publicly funded
insurance plan, took over in 2004 (Geor-
gia started its insurance reform in 2007)
with the goal of achieving 100% coverage
in 7 years (Georgia introduced it in 6
years). The program was implemented
in stages, taking into account the states’
individual characteristics, and enrolment
was first targeted at the poorest segment
of the population. The Seguro Popular
was financed by both state and federal
governments as well as by beneficiary
families. The federal government contributed a uniform amount for all families. Each enrolled state contributed an
equal amount for every insured family
and family-level contribution was deter-
mined by disposable income. From 2002
to 2013, Mexico’s healthcare spending
per capita increased from US$ 396 to
US$ 664. Over 2002-13, public health
expenditure more than doubled from
US$ 18.3bn to US$ 40.7bn.
Due to improved access to and quality
of care, life expectancy in Mexico
increased over the last decade to 79.8
for females and 75.1 for males as of 2013,
up from 77.2 and 72.3 in 2002, respectively. Mexico also improved its health
resources and by 2013, it had 2.2 physicians and 2.6 nurses per 1,000 persons
(compared to 1.5 and 2.2 in 2002, respec-
tively). However, as of 2013, Mexico had
the lowest number of hospital beds per
1,000 persons among OECD countries
- 1.5 compared to an average of 5.0.
Despite these strides, Mexico’s public
healthcare system faces considerable
challenges, including insufficient infrastructure, poor distribution of resources
among federal entities, and limited
public-private partnerships for infrastructure development. There is also
little focus on wellness and prevention
- only 0.6% of budget disbursements for
the health sector are used for the promotion of health and prevention and
control of communicable and degenerative diseases and injury. The private
healthcare system has challenges as well,
including a deficit of nurses, since wages
and benefits are lower than those offered
by the public sector.
The inefficiency of the system was the
main problem hindering the development of Mexico’s healthcare system.
Mexico’s case shows that increased government funding, equality in funding
allocation, proper timing, and efficient
management were the key contributors
to the turnaround of the country’s healthcare system.
8
BUSINESS
GEORGIA TODAY
JANUARY 19 - 21, 2016
Diaspora Money Transfers Down
by USD 360 Million
BY ANA AKHALAIA
M
oney transfers from
abroad in 2015, compared to 2014, decreased
by USD 360 million,
(25%) and amounted
USD 1 billion 80 million.
According to eugeorgia.info, the biggest share of transfers (40%), due to
the numerous diaspora there, came first
and foremost from Russia, where trans-
fers decreased by USD 277 million (39%)
last year compared to 2014 amounting
to USD 433 million.
It should be noted that, in recent years,
the share of remittances from Russia
has shown a tendency of decline. In
2014 it accounted for half of all transfers.
Greece is in second place in remittances, from where the Georgian diaspora transferred just USD 118 million,
USD 87 million less than 2014, last year
due to the financial crisis.
In third place is Italy, from where money
transfers reduced by USD 12 million and
amounted to USD 109 million.
However, transfers from the US have
increased by USD 18 million, amounting
to USD 100 million; by USD 4 million
from Turkey (USD 69 million); by USD
9 million from Israel (USD 33 million)
due to the visa facilitation; and by USD
2 million from Germany (USD 27 million).
Remittances from Spain have decreased
by almost USD 2 million (USD 27 million), and by USD 10 million from Ukraine
(USD 21 million).
ProCredit Bank Offers Best Interest
Earnings, +1% for Deposits in GEL
G
ood news for ProCredit
Bank customers in 2016: a
higher interest rate paid
on term deposit accounts
in GEL.
In order to make it more attractive to
save in the local currency, the top interest rate earned by private clients on term
deposit accounts is now 12%; or you can
make regular payments into a savings
plan account and earn 11.5% interest.
ProCredit Bank is also offering the top
interest rate of 12% on child deposit
accounts.
The increased interest on these accounts
gives you an incentive to save as your
deposit will earn more interest and grow
faster.
Open a deposit account in local currency and earn an extra 1% from ProCredit Bank!
The German bank for your savings!
BUSINESS
GEORGIA TODAY
JANUARY 19 - 21, 2016
Hotel Intourist
Palace - For
Those Who Know
and Appreciate
the Best!
BY MERI TALIASHVILI
H
otel Intourist Palace is located in the
heart of Batumi city, on the Black
Sea coast, just in front of the wellloved evergreen boulevard and only
100 meters away from the beach. In
its 76 years of existence, more than one million
foreign travelers, businessmen, politicians, diplomats, artists and athletes have visited Intourist
Palace. If you want to feel the splendor and luxury
of the hotel, visit one of Georgia’s most wonderful
resort cities, Batumi. Georgia Today met General
Manager of Hotel Intourist Palace, Mrs. Tugce Turk
Ayag, to speak about this fabulous hotel.
MRS. TUGCE, THE HOTEL INTOURIST
PALACE HAS A VERY LONG AND
INTERESTING HISTORY. WHEN
AND HOW WAS IT FOUNDED?
The 5-storey Hotel Intourist Palace was constructed
in 1939 by famous Soviet period architect Alexey
Shchusev. Where the Hotel now stands was once
the unique St. Alexander Nevsky state cathedral
which belonged to the world’s most famous houses
of worship for its architectural significance and
rare beauty. It is known that the church was founded
on September 25th in 1888 and Russian Emperor
Alexander III and his family were present at the
ceremony. The cathedral was a functioning building from the beginning of the 19th century to 1936,
when it was destroyed by Soviet atheists. The
foundation of the cathedral became the basis of a
new building, Hotel Intourist. The Hotel was chosen as a meeting place for the three allied heads of
government, but at the last moment the meeting
place was transferred to Yalta. During the hotel’s
70-year existence it has undergone a major overhaul and was redesigned twice in 1979-1980 and
2005-2006. The hotel’s distinctive feature is its
original semicircular facade with the view of boulevard and alley which leads to the main colonnades
of Batumi boulevard.
WHAT DISTINGUISHES HOTEL
INTOURIST PALACE FROM OTHER
EXISTING HOTELS IN BATUMI?
Hotel Intourist Palace is a top-class hotel and an
ideal choice for guests of good taste. Here, one will
relax in an elegant and luxurious atmosphere.
Additionally, you will be provided with the most
modern amenities, sports and fitness center. The
hotel’s classic rooms are furnished with wooden
furniture. All rooms are equipped with air conditioning, a mini bar, a safe, a TV and free internet.
The Hotel has an indoor and outdoor pool, sauna,
restaurant, terrace, night club and casino. I cannot
say that other hotels have less service, but the fact
that we are an international brand already means
an advantage.
competition, the amount of work has not decreased
but is in fact unusually high. So, the demand for
the Intourist Palace is high, which is an incentive
for all of us.
IN YOUR OPINION, WHY
SHOULD A VACATIONER
CHOOSE HOTEL INTOURIST?
Because each visitor receives special attention and
high quality service. This approach to our guests
makes our hotel a postcard of Batumi. That is why
the majority of tourists in Batumi express their
satisfaction with Hotel Intourist service the most.
Visitors say this: “Intourist is still Intourist.” Our
goal is to offer comfort, luxury and elegance. The
hotel has 145 rooms. In addition to the standard
rooms, we have the highest standard improved
design and luxury categories- premieres and presidential apartments. In order for you to spend a
pleasant evening or more, our hotel offers a wide
choice of restaurants and bars. Restaurant ‘Tbilisi’
offers delicious dishes in a pleasing and high-class
environment. Banquets, parties, weddings and other
celebrations can also be organized; in cafe-bar
‘Bakuriani’ you will find a beautiful, comfortable
atmosphere and live music. If you want to feel the
rhythm and energy of life, then you can visit our
night club. We provide two conference halls for
any kind of conference and meetings, as ideal for
private negotiations as for large meetings.
MRS. TUGCE, SOME MONTHS
AGO HOTEL INTOURIST PALACE
MOVED TO METRO HOLDING
MANAGEMENT. WHAT INNOVATIONS
WILL THIS CHANGE BRING?
THE SUCCESS OF ANY COMPANY
OR ORGANIZATION DEPENDS
ON THE SERVICE. WHAT DO YOU
DO TO IMPROVE THE QUALITY
OF SERVICE YOU OFFER?
We have gradually rehabilitated and renovated the
hotel inventory, the rooms and the hotel’s restaurants. As I mentioned above, highly skilled trainers
are retraining our staff. We are preparing a new
menu and for the summer season we will offer new
services to our guests, both half board and full
board packages, as well as a variety of tours. Our
great attention is paid to charity: we make a modest contribution to the development of sports and
the arts in Adjara.
We look forward to welcoming you to come and
see for yourself the wonders Intourist Palace can
offer you.
Our service is different. Here, trainers take care of
our personnel’s professional skills, teaching them
with international standards, not local. It is very
important to us that the competition has increased.
Several top hotels have already opened in Adjara.
Intourist Palace welcomes competition if it will be
based on the right principles. Our Hotel by meaning works for the business segment. We have absolutely everything a person could possibly need for
valuable and comfortable relaxation. Despite high
24-hour room service; 24-hour banking service;
Currency Exchange; Cable TV; Minibar; Restaurant Tbilisi; Winter Garden “Bakuriani”; Georgian Wine House;
Bar on Swimming Pool; Swedish Breakfast; Catering;
Conference and banquet halls; Fitness Center; Beauty
Salon; Sauna; Hamam – Turkish Bath; Jacuzzi; Spa
Center; Indoor and Outdoor Pools; Transportation Services; Wireless high-speed internet; Night Club “Discorium”; 24-hour Casino.
9
10
BUSINESS
GEORGIA TODAY
JANUARY 19 - 21, 2016
Georgia Takes Part in New York
Times Travel Show
BY ANA AKHALAIA
T
he Georgian National
Tourism Administration
(GNTA), under the Mini s t r y o f E c o n o m y,
recently took part in the
New York Times Travel Show. Several
Georgian companies were also represented at North America’s largest
fair-exhibition.
The international exhibition in New
York was attended by more than 280
tourism professionals from 150 countries. More than 500 companies were
represented at the Show.
Along with the exhibition, Head of
the National Tourism Administration,
Government to Decriminalize
Economic Crimes
SOURCE:
GEORGIANJOURNAL.GE
T
hegovernmentplans
to decriminalize
economic crimes.
This is one of the
reforms planned by the
executive branch of the government for
economic development. The issue was
considered at a meeting between representatives of the business sector and
Prime Minister Giorgi Kvirikashvili.
“You define our country’s economic
development. That is why we want to
discuss the government’s major trends
with you. We have identified four main
areas. One of them is the creation of jobs
Giorgi Chogovadze, met with the
heads of the world’s tourism companies and associations, a number of
whom expressed an interest in the
Georgian tourism market.
The United States is an important
tourism market for Georgia. According to statistics 31,143 tourists visited
Georgia from the US in 2015. This
was a 10% increase compared to 2014.
ICANN Approves ‘.გე’ Web
Addresses
SOURCE: GEORGIANJOURNAL.GE
and economic development. In this
regard, we have to carry out tax reforms.
Decriminalization of economic crimes
is also very important in order to prevent
imprisonments,” said the PM.
He added that his economic team is
working to promote the development of
start-up businesses and to create a funding mechanism.
T
hrough the decision of the Internet Corporation for Assigned
Names and Numbers (ICANN), Georgia has officially
been given the right to write web addresses in Georgian by means of the modern alphabet (Mkhedruli),
allowing for local web addresses to end with ‘.გე’ (.ge).
The “.ge” domains coordinator, IT Development Center will hold
a press-conference at 14:00 on January 20 in Tbilisi Marriot at
which the procedures carried out by Georgia before the privilege was
granted will be presented.
The Internet Corporation for Assigned Names and Numbers (ICANN)
is a US based non-profit organization, created in 1998, that is responsible for coordinating the maintenance and methodologies of databases,
with unique identifiers, related to the namespaces of the Internet
in order to ensure the network’s stable and secure operation.
BUSINESS
GEORGIA TODAY
JANUARY 19 - 21, 2016
11
Georgia May
be Added to
Germany’s Safe
Countries List
Foreign Minister:
European
Integration Part of
National Identity
BY ZVIAD ADZINBAIA
G
eorgian Foreign Minister
Mikheil Janelidze received
representatives of the diplomatic corps accredited
in Georgia and spoke about
the importance of Georgia’s integration
with the European Union.
“It is not just a core foreign policy priority of Georgia, but it has become a part
of our national identity because of the
sense of belonging to the European system of values,” the Minister said of the
integration process.
According to the Minister, the Georgian
people believe that secure, stable and
democratic development of the country
can only be assured within the European
and Trans-Atlantic area.
The MFA says special attention was
paid to the restoration of Georgia’s territorial integrity as the main challenge
facing the Georgian Government, and,
in this context, the importance of Georgia’s constructive participation in the
Geneva International Discussions. The
Minister also spoke about the need of
confidence-building and engagement of
the international community in the process of reconciliation with Abkhazians
and Ossetians.
During the meeting, Minister Janelidze
highlighted the successes achieved in
the course of 2015, including the Association Agreement signed with the EU,
which involves the Deep and Comprehensive Free Trade Agreement (DCFTA),
the European Commission’s positive
assessment of the Visa Liberalization
Action Plan of Georgia in its final progress report, and the NATO-Georgia
Joint Training and Evaluation Center, all
a significant step forward.
He went on to identify economic diplomacy as one of the Ministry’s top priorities. He emphasized that Georgia has
the potential of being turned into a hub
linking Europe with growing East Asian
markets. In this context the Minister
spoke about the importance of the revi-
I
n order to decrease migrant flow
to Germany, a local government
in Bavaria has requested that the
federal Government expand its
so-called ‘safe countries’ list.
Georgian news agency Interpressnews
released this information based on news
from German publication Süddeutsche
Zeitung.
The initiative means that those arriv-
ing in Germany from Georgia will be
refused asylum as Georgia is now considered to be a safe country.
According to the article, a country
where there is no political persecution
is assessed as safe.
According to Bavaria’s Interior Minister, Joachim Herrman, the list will assist
the Government to make decisions over
asylum-seekers faster.
He added that Armenia, Moldova,
Ukraine, India, Mali, Mongolia, Algeria,
Gambia and Bangladesh should also be
on the list.
It is not just a core
foreign policy
priority of
Georgia, but it
has become a
part of our
national identity
because of the
sense of
belonging to the
European system
of values
PUBLISHER & GM
George Sharashidze
COMMERCIAL
DEPARTMENT
Commercial Director:
Iva Merabishvili
Marketing Manager:
Mako Burduli
GEORGIA TODAY
talization of the historic ‘Silk Road’. The
Silk Road Forum held in Tbilisi in 2015
served this very goal, contributing to the
deepening of cooperation of the Silk
Road countries in the fields of transport,
communication, infrastructure, trade,
energy and industry.
BY TAMAR SVANIDZE
EDITORIAL DEPARTMENT:
Editor-In-Chief:
Katie Ruth Davies
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Zaza Jgharkava, Maka
Bibilashvili, Nina Ioseliani,
Karen Tovmasyan, Dimitri
Dolaberidze, Maka
Lomadze, Tim Ogden,
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Joseph Larsen
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Zviad Nikolaishvili
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Misha Mchedlishvili
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