June Business Calendar

FROM THE REDACTION

On June 1, Georgian parliament started consideration of a bill on licensing and authorization. The bill differentiated the types of licenses (for use, activities, general and special licenses), and there was introduced a “one window principle” according to which the administrative body that issues licenses and authorizations provides confirmation of additional license and authorization terms of other organizations by itself.

On June 2, an auction was held where out of 7 units, that were put up by the Ministry of Economic Development, only one was sold – “The center of professional education and retraining” (205 thousand USD). There was no applications for the rest 6 units among which there was the most expensive one – “Lilo 1” (initial price 4 million 100 thousand USD).
On June 3, Georgian Businessmen Federation, the Association of Young Lawyers, the Association of Young Economists and the Center for Strategic Studies and Development formalized the memorandum on cooperation. The main objective of the memorandum is provision of freedom of Georgian business. Within the framework of the memorandum there envisaged business meetings, elaboration of recommendations and cooperation with corresponding state structures.
On June 7, special representative of the US State Department on commercial and business issues – Frank Mermud who was in Georgia with a formal visit met the representatives of American Chamber of Commerce. The main subject of the talk was business investment environment in Georgia. It was noted that American Chamber of Commerce was displeased with the decision of the Georgian government to liquidate tax arbitration. It was also noted that it is necessary to make conditions for creation of intellectual property and carry out additional arrangements for encouragement of small and medium size business.
On June 8, at the “Expo-Georgia” exhibition center there was held a food industry, alcoholic and non-alcoholic drinks, process and bottling technologies sixth international exhibition “Agro+ Food+Drink+Tech 2005”.
More than 100 local and foreign companies were represented in 90 exhibition booths.
According to the organizers’ statement the exhibition will contribute to revelation of the best companies and inflow of foreign capital to Georgia.
On June 9, the Minister of Economic Development – Alexi Alexishvili and the director of “Gorgian Railway” Ltd. – David Onoprishvili spoke at the common briefing dedicated to the bill on “changes in Georgian railway code”.
The bill, which was submitted for the parliament’s consideration, envisages independent determination of tariffs be the Railway Department. According to Anoprichvili’s statement, the current policy of railway tariffs has become outdated and is not guided by economic calculation.
The bill, first of all, envisages price increase for passenger traffic and goods transportation.
On June 9, in “Sheraton Metechi Palace” hotel the Georgian representative office (MSG) of “Millennium Corporation” held a presentation of the new program. The project having four reference directions will be financed by American “Millennium Challenge” program.
The first project – rehabilitation of the gas-main pipeline (40 million USD will be allocated);
The second project – rehabilitation of roads in Samtskhe – Dzhavakheti region (120 million USD);
The third project – rehabilitation of the infrastructure in the regions (40 million USD);
The fourth project – creation of “Georgian development fund,” the incomes of which will be directed at the needs of agriculture and tourism.
On June 9-10, under the initiative of the Economic Development Ministry’s agency for state investments and export promotion, and the International Financial Corporation (FC), the meetings were held, the aim of which was improvement of Georgian business environment and creation of a necessary investment climate.
At the meeting FC’s research report was presented which was worked out after the inquiry of more than 900 small and medium size companies in 9 regions.
According to the research report, among the main problems local businessmen mention bureaucratizm, licensing and the existing difficulties in permission granting sphere, customs services, etc.
The organizers of the meeting hope that the action plan for improvement of business situation elaborated by them will be taken into account by the government and it will introduce changes in the legislation.
On June 9, at the presentation held at the Ministry of Justice of Georgia the bill “ on bankruptcy and rehabilitation” was presented, which had been prepared with the assistance of the experts of European Bank for Reconstruction and Development.
According to the information of the representatives of the Ministry of Justice, the bill is aimed at creation of favorable conditions for business, attraction of investments, assistance to the privatization process, since in the privatization list there are a lot of enterprises that are in the regime of bankruptcy and rehabilitation.
After certain adjustment and improvement the bill will be submitted for consideration of the Georgian parliament during its autumn session.
Up to 500 small and medium size companies in Tbilisi, Rustavi and Kutaisi were interrogated as result of the study carried out by the Center of Economic Studies (“monitoring of administration barriers, small and medium size enterprises in Georgia”; the study was carried out with the assistance of USAID – GEGI).
European Bank for Reconstruction and Development – EBRD granted 10 million USD credit to “TBC Bank” which is aimed at financing small loans (EBRD will assume 50% of the loans given out to Georgian entrepreneurs).
According to the statement of “TBC Bank’s” management the credits will be given out to entrepreneurs, which will give them an opportunity to improve their circulating assets and export and re-export expenses.
EBRD has carried out a similar program in Moldova as well.
Under the initiative of the Ministry of Georgia, the representatives of UN agriculture and food organization – FAO visited Georgia. The program of silkworm breeding will be worked out and international donors will finance it.
On June 15, Swiss transportation company “SWISS RE” and its exclusive partner “Aldagi” held a meeting in “Tbilisi Marriott Hotel”. According to the statement of the members of the managerial board of the Swiss company, the aim of their visit to Tbilisi is meeting with “Aldagi’s” customers and demonstration of the fact that the Georgian insurance company has a strong support.
It was noted that “SWISS RE” has an increasing interest in the Caucasian region.
On June 20, “Evrazholding”, that won the tender conducted by the Ministry of Economic Development of Georgia on January 19, 2005, gave up purchasing “Chiaturmanganese” and “Vartsikhe” hydroelectric power station and the obligations assumed by it in this relation (“Evrazholding” was to pay 132 million USD by the end of May).
On the official web site the investor explains the above-mentioned fact by the experts’ statement: the enterprises are unprofitable and for this reason it is not worth investing in them – this is “Evrazholding’s” explanation. According to the Government’s statement, there will be new tender terms for “Chiaturmanganese” and “Vartsikhe” hydroelectric power station. The right wing opposition believes that the privatization package was badly prepared and adopted a resolution in which the issue concerning the responsibility of the Prime Minister and the whole economic team is raised.
On June 22, at the Federation of Georgian Businessmen a presentation of Georgian version of Windows XP took place. This is the first product of Microsoft that was made in cooperation with Georgian company UGT. At the first stage, translation of 2700 words is possible, and what is important, the Georgian version will be available and free for all customers that use Microsoft XP.
On June 23, the Minister of Economic Development of Georgia presented a report to the journalists concerning privatization.
According to Alexishvili’s statement, this year the Georgian budget obtained 218 million GEL from privatization. Among the sold units are the biggest enterprises like “Saktelekom” (5 million USD) and “Georgian Ocean and Pump Company” (93 million USD).
According to the Minister, Rustavi metallurgical plant, “Azoti” joint stock company, “Madneuli” joint stock company, Batumi petroleum storage depot and oil refinery, etc. are in process of privatization.
On June 24, Georgian parliament considered the package of amendments to the Tax and Criminal Codes. The Deputy Finance Minister Giorgi Godabrelidze stated in his interview to the press that the term, during which the subjects have a possibility to pay additional repayable sums, would be extended, so that they could avoid criminal prosecution.
According to the new amendments, criminal liability ensues if the sum of the unpaid taxes exceeds 25 thousand GEL.
Non-governmental organizations oppose the above-mentioned amendments.
On June 28, the coalition of non-governmental organizations within the framework of “Protection of civil rights” program considered the new Tax Code. It was stressed that in the last period the volume of smuggling has increased and indices of local production have dropped.
On June 28, in “Sheraton Metechi Palace Hotel”, within the framework of “Georgian-Italian partnership”, which implies cooperation between Georgian and Italian entrepreneurs.
After drawing up a special questionnaire Georgian producers will have an opportunity to enter the program and find Italian partners according to their interests. The partners of the project, that is financed by Italian Ministry of Industry, are the federation of Georgian Businessmen American Chamber of Commerce. The project is implemented with the support of the Union of Entrepreneurs of Italian Kazerta province and with participation of Italian embassy in Georgia.
“Several years ago Italian entrepreneurs did not want to cooperate with Georgia since in 1990s many foreign investors had to leave Georgia. That is why, when I was appointed ambassador I made a bet that I would improve the situation in business” – Italian ambassador to Georgia Fabrizio Romano said. He hopes that the project will be a success and will promote Georgian-Italian economic relations.
Eventually, information bank will be created in which there will be information about up to two hundred Georgian companies, More than fifty businessmen from different companies have already filled up special forms. Among them are: agricultural consortium “Tserovani”, real estate agency “Iberia”, construction company “DTS”, “Tbillvino”, Tbilisi jewelry factory and other small and medium size companies..BORDER=0 ALIGN=left>
In September the partner selection process will be over, and in October Italian investors will visit Georgia that will familiarize themselves with the work of their Georgian colleagues on the spot.
Starting from July some innovations are planned in the communication sector. From July 1, telephone service for subscribers of “Elektorokavshiri” company will become chargeable. Subscribers will pay 2 tetris per minute of telephone conversation. Representatives of “Elektorokavshiri” say that this decision was taken as one of the measures of saving the company from financial ruin.