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The 3rd Tourism and Hospitality Conference within Welcome to Georgia! National Tourism Awards

On June 4th the 3rd Tourism and Hospitality Conference within Welcome to Georgia! National Tourism Awards was held at the Biltmore Hotel Tbilisi. 

The Conference was opened by Co-Founder/Managing Partner of the Project, Maryna Chayka. She welcomed guests and promised very interesting competition year for Nominees of the Welcome to Georgia! National Tourism Awards 2018. The first Vice Prime Minister/Minister of Economy and Sustainable Development of Georgia Dimitry Kumsishvili, CEO of Partnership Fund Davit Saganelidze, head of Georgian National Tourism Administration George Chogovadze also addressed the guests with the welcome speeches. They spoke about the importance of tourism for the development of our country, in general, as well as for Tbilisi, as one of the major tourist destination in the country, and emphasized the role of each company in contributing to this field.

During panel discussions, the representatives of government and private sector discussed the challenges and opportunities in tourism and hospitality industry, top market suppliers and field experts made presentations on international standards and safety for hospitality industry, and on the importance of digital marketing in tourism. Even more, the organizers of the Welcome to Georgia! National Tourism Awards introduced to the guests new Jury Board, new categories and a lot of other interesting news about the Project. The participants of the Conference had an opportunity to arrange B2B meetings with each other to communicate and to establish useful business connections

More than 350 representatives of respective industry, government officials, international and local experts and media were attending the 3rd Tourism and Hospitality Conference.

The Tourism and Hospitality Conference within Welcome to Georgia! National Tourism Awards Project is an annual business event held in Georgia since 2016 and is unique business platform, where different companies and organizations have an opportunity to exchange information, communicate and catch up with the latest trends and challenges in the spheres of tourism and hospitality, and in Georgian business industry in general.

Project supported by: the Ministry of Economy and Sustainable Development of Georgia, Tbilisi City Hall and Partnership Fund, Co-organizers: Georgian National Tourism Administration and Bank of Georgia. Project’s Independent Auditor – “BDO in Georgia”, General Sponsor – Alliance Group. BUSINESS GEORGIA is a media partner since the establishment of the project.

For more detailed information about the Project, please visit website www.awards-tourism.com

 

 

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Tech Startup STYX Wins Seedstars Tbilisi 2018

STYX a tech company from Georgia won Seedstars startup competition on May 29. Ten best startups from Tbilisi were invited to pitch in front of an investment panel and compete to be crowned the most promising seed-stage startup of Seedstars Tbilisi 2018 in Tech Park.

STYX is a tech-enabled logistic company that instantly connects shippers with carriers via mobile app and SAAS platform. “We found the way that help carriers grow their businesses on their own terms. Shippers do not get inflated prices and can track their freight 24/7”. Using STYX website and app is free for everyone, company only charges carriers when they earn money.

STYX does not participate in pricing. The startup will join the global Seedstars Family and take part in the regional and global Seedstars Summits that include our tried and tested bootcamp and investor forum. It’s a catalytic platform for high growth emerging market startups.

 

Mydoc.chat and gamasin.ge took third and second places respectively.

 

BUSINESS GEORGIA is a media partner of Seedstars startup competition.

 

Tax system

Georgian tax model – benefits for local and international businesses

According to the Doing Business Report commissioned by the World Bank,Georgia ranks 9th in the world in 2018 by ease of doing business. Moreover, Georgia is a country with the fourth smallest tax burden in the world, according to the Tax Misery Index Ranking by the Forbes Magazine, which is perfect rating for developing country.

The Government of Georgia is dedicated to a fair and transparent tax environment, protection of business interests and reliable tax administration system which is collected on both state and local levels here.

The country has only six taxes of which five (personal income tax, corporate income tax, Value added tax, excise tax and import tax) are on the national level and one – property tax is a local tax. Personal income tax, dividend and royalty is 5% and the most important, the country doesn’t have payroll, social security, capital gains, wealth or inheritance tax.

According to the Economic Liberty Act, Government is not allowed to increase national tax rates (except excise tax) or number of taxes without national referendum.

As for the individuals who are just starting economic activities in Georgia, they are required to register with the GTA prior to their start-up and obtain a Tax ID. Georgian citizen non-entrepreneur individuals may use a Personal ID and foreign citizen non-entrepreneur individuals have to register with the GTA prior to filing their annual personal income tax returns and obtain a Tax ID.

According to Tax Code of Georgia, if a company produces goods intended for export market, it can apply for a license about “Internal Processing Regime” to the Ministry of Finance. This license will grant the company a right to import raw materials without paying import/customs tax and VAT on these materials.

Furthermore, the Tax Code of Georgia gives an opportunity to the companies to use accelerated depreciation on capital assets (including full deduction during first year) and loss carry forward for corporate profit tax purposes (10 years).

Nowadays, Georgia has Double Taxation Avoidance Treaties with 52 countries and there’s no restrictions on currency convertibility or repatriation of capital and profit.

According to Global Corruption Barometer of Transparency International, 0% of interviewed reported paying bribe to the tax administration and World Economic Forum’s Global Competitiveness Report named Georgia among low tax rate countries, this information with all the above-mentioned data emphasize the simplicity and reliability of Georgian tax system for any interested person.

Author: Tamar Devdariani © BUSINESS GEORGIA

Art Business

Doing Art Business in Georgia

Despite that in the past art was mostly perceived much like a hobby, in modern world artists have real opportunities to follow their artistic skills and transform their intentions into art-based businesses. As these activities are somehow linked to the economical welfare of the country, unfortunately there still exists states where art is hardly considered as a money earning business and unfortunately Georgia is among them.

Art is a diverse range of human activities which intends to be appreciated for their beauty and emotional power, including music, theater, film, dance and other performing arts, as well as literature, architecture, painting and many more. Some of them mentioned above are more successful in developing countries like Georgia than the others. For instance, if we are talking about material privileges, architects have wider prospects than painters or musicians here, as long as this kind of art, roughly speaking, is more practical and useful for so-called “real-businesses” to fulfill their plans than the others.

Statistically, according to the National Statistics Office of Georgia’s survey, the number of students enrolling for the bachelor’s programs to the faculty of Arts and Science grew almost 1.6 times in 2011 and 2015 years and every year, hundreds of young people are becoming students of Tbilisi State Academy of Arts of Georgia, which is the leading higher art institutions of Georgia offering high quality educations corresponding to modern requirements.

Giving a person education has become easier today than teaching them how to realize this knowledge and transform it into something materially beneficial for them and we usually lack the culture of teaching people how to make business with the profession they are perfectly good at.

This circumstances are still problematic in Georgia and so, graduate students mostly give up their profession. According to the survey conducted by Friedrich Ebert Foundation in 2016, 31% of young people are partly employed by their profession and 35% of them have lost connection with their first profession and had to fit different types of working activities.

Of course these numbers aren’t promising for so many students which enroll rather non-profitable faculties of Georgia like Art, but lately some events gave stimulus to creative young people to realize their handmade works or artistic services taking part in exhibitions with lower expenditures. For instance, painters now can post their works in e-auctions and this is one of the options of turning your creativity into a career in many countries.

Unfortunately, this kind of innovations stay unknown for older Georgian artist who try to sell own works or services in the streets, parks, etc., and there are no firm activities of gathering all of their artworks together. But even one glimpse around these artists is enough to see that usually tourists are the ones who are mostly interested in getting this kind of art.

Following the information given by FactCheck analysts of Georgia, the number of people living below the absolute poverty line grew by 0.5% in 2016 year and reached almost 21.3% of whole population and we can’t blame society about not paying enough attention to the art while living conditions are deplorable even for bigger number of population.

Even if modern Georgian writers will publish their books, only few readers can afford to “take a risk” while saving money for getting books to read a new authors works than worldwide known classical writer. We see also many talented musicians who strive for foreign countries and it’s obvious, whilst even winning some musical competitions doesn’t give them much chances to try career in mother land.

We can say that one of the most underrated fields of art in Georgia are film and theater, strangely even those international awards-winning Georgian films and animations are hardly seen on television, internet or cinemas and the reason for that, which is often mentioned even by artists themselves is that the media doesn’t pay enough attention to promoting our countries cultural achievements whilst in 21st century media became the strongest weapon in any direction you are aiming for.

So, as long as Georgian society realizes how strongly our indifference  and ignorance affects art-makers whose career will always be directed to the foreign cultures, till the schools and universities will not approach more practical direction of developing students’ entrepreneurial skills, above-mentioned statistics about poverty will be under strong necessity of improving and country will always have issues with developing any fields of art and art business in Georgia.

Author: Tamar Devdariani © BUSINESS GEORGIA

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Georgian mineral and freshwater exports are growing annually

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Georgian mineral waters are very famous not only in Georgia but in foreign countries also. Especially this product is realized by summer because hot weathers make bad effect to people, so consumers need minerals to be strong enough. And it’s no surprise that entrepreneurs are preparing for this season and for exporting in all over the world. The bestselling mineral waters of Georgia are: Borjomi, Nabeghlavi and Likani.

Georgia had mineral water export growth in every year from 2010 to 2014 years. Witch had acted good for Georgia’s economy. The export of mineral water was increasing by 12% -25% annually until the opening of the Russian market, after the opening of the Russian market in 2013, the export of waters increased by 45%, and in 2014 the figure was $ 137 123 million. In 2014, the Mineral waters took fourth place in the export products list.

In 2015, due to the crisis in the Russian market, export indicators continue to decline.

  • 2010 – Export to $ 36 Million, increase by 33%
  • 2011 – Exports Increase $ 47 million, increase by 23%
  • 2012 – Exports amounted to $ 59 million, increase by 20%
  • 2013 – Exports amounted to 106 million, increase by 44%
  • 2014 – export $ 137 million, increase by 22%

From 2015 mineral and freshwater exports from Georgia are growing annually. According to the National Statistics Office of Georgia, in January-April 2017, 45.8 million liters of mineral and fresh water have already been exported, which is 18.4% more than the same period last year.

Below are the figures of mineral water export (2010-2017)

 

Photo: Lake Shaori. Racha, Georgia. 

             © Tamuna Ubiria 

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Construction sector of Georgia is growing rapidly

Construction & Building is the global business of creating physical infrastructure such as residential buildings, highways, bridges, factories, airports and power plants. Normally the job is managed by the construction manager, supervised by the project manager, design engineer or project architect.

While these people work in offices, every construction project requires a large number of laborers, carpenters, and other skilled tradesmen to complete the physical task of construction.

In Georgia, in the first quarter of 2017 there were 58416 employees in construction business, followed by second and third quarter 67351 and 71394. From the 2011 to 2017 years there isn’t much difference in employment in construction business. Tbilisi is the leader city in a construction employment than other cities. In 2016, 59.6% of employed people were in Tbilisi. There were 814 employed persons, representing 1.1% of all employed people in Georgia.

But there is too much difference in compensation figures of employees. From 2008 index of reimbursement has permanently went up. For example, in 2008, 2009 and 2010 the average reimbursement was GEL 634, but in the first and second quarter of 2017 it was GEL 1,951 – 2,011.

According to the National Statistics office of Georgia Business construction turnover past few years isn’t stabilized. It has raised rapidly. In 2013, 2014 and 2015 turnover was 3,244, 3,807, and 5,287 million GEL.

 

Overall, investment rates have fluctuated during the time depicted on the graph. It raised in 2014 and in contrast, lowest rates of investment were in 2009 and 2011.

Its important to mention that in 2017, 10 495 construction permits have been issued throughout Georgia.

As for the completed constructions in 2017, 2,2 million square meters of space has been completed. The number of completed constructions increased by 1.3% in 2017.

In the first three quarters of 2017, construction sector investment was USD 241 million. And in 2017 the figure was 86% more than in 2016.

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Georgia’s Export and Import in 2017

According to the data released by the state statistics office of Georgia, in 2017 Import reached USD 7.9 billion, while exports of Georgia was USD 2.7 billion. It was largest figures for the last three years both for export and import. The lowest rate of export from Georgia was USD 2.1 billion in 2016.

The trade turnover with the EU-member states stood at USD 2.84 billion in 2017 and USD 2.78 billion in 2016, a 2% increase compared to 2016. For the last three year’s maximum rate of import was in 2016, USD 2.21 billion and export in 2017, USD 0.64 billion.

Horizontal bar chart shows statistics of export and import of Georgia, between 2012 and 2017. Values are shown in billions of US dollar.

Additionally, in 2017 Trade turnover with the Commonwealth of Independent States (CIS) was USD 3.54 billion, while in 2015 and 2016 was USD 2.8 billion and USD 2.71 billion. Georgian exports to CIS countries were up by 60% y/y to USD 1.18 billion and imports increased by 19.2% to USD 2.36 billion.

 

Georgia’s largest trade partners in 2017:

  1. Turkey – USD 1.58 billion
  2. Russia – USD 1.18 billion
  3. China – USD 1.18 billion
  4. Azerbaijan – USD 1.18 billion
  5. Ukraine – USD 569 million
  6. Armenia – USD 489 million
  7. Germany – USD 478 million
  8. The United States – USD 389 million
  9. Bulgaria – USD 334 million
  10. Italy – USD 286 million

 

Georgia’s 2017 top trading partners by exports:

  1. Russia USD 394 million
  2. Azerbaijan USD 272 million
  3. Turkey USD 216 million
  4. Armenia USD 208 million
  5. China USD 207 million
  6. Ukraine USD 124 million
  7. The United States USD 121 million
  8. Iran USD 76 million
  9. Switzerland USD 71 million
  10. Uzbek USD 64 million

 

Georgia’s 2017 top trading partners by imports:

  1. Turkey – USD 2.37 billion
  2. Russia – USD 788 million
  3. China – USD 732 million
  4. Azerbaijan – USD 609 million
  5. Ukraine – USD 455 million
  6. Germany – USD 433 million
  7. Armenia – USD 281 million
  8. The United States – USD 267 million
  9. Italy – USD 217 million
  10. Romania – USD 191 million

 

Georgia’s 2017 top exported products:

  1. Copper ores and concentrates USD 419 million
  2. Ferroalloys – USD 306 million
  3. Re-export of motor cars – USD 234 million
  4. Wine – USD 170 million;
  5. Medicines – USD 140 million
  6. Non-denatured ethyl alcohol and spirits – USD 126 million
  7. Mineral waters – USD 95 million;
  8. Hazelnuts – USD 83 million
  9. Chemical fertilizers – USD 76 million
  10. Raw or semi-processed gold – USD 70 million

 

Georgia’s 2017 top imported products:

  1. Oil and oil products – USD 696 million
  2. Cars – USD 474 million
  3. Petroleum gases – USD 350 million
  4. Medicines – USD 346 million
  5. Copper ores and concentrates – USD 338 million
  6. Mobile and other wireless phones – USD 204 million
  7. Cigarettes – USD 102 million
  8. Wheat – USD 98 million
  9. Automatic data processing machines – USD 96 million
  10. Trucks – USD 72 million
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Georgian Hazelnuts future and its global market share

Protein rich hazelnuts are sweet tree nuts that grow in temperate zones and its mainly cultivated in Turkey, which produces about 60% of the world’s total production. Hazelnuts are used in products like, hazelnut oil, chocolate bars, spreads and coffee.

Georgia is considered as one of the largest suppliers of hazelnuts in the European market. In 2009-2012 Georgia was fifth among the exporting countries with the exception of the hazelnut export to the EU. Although Georgia is considered one of the biggest suppliers of nuts in the European countries, it does not take part in determining the price of the market.

According to FAO’s 2016 report, Georgia is the fourth in the world’s hazelnuts production share.

  1. Turkey – 59.9 %
  2. Italy – 12.2 %
  3. USA – 4.4 %
  4. Georgia – 4.3 %
  5. Azerbaijan – 3.4 %

Samegrelo-Zemo Svaneti, Guria and Imereti are the largest producers of nuts at the country level. These regions produce more than 80% of the hazelnuts in Georgia.

However, this statistic may soon change. Last year in Samegrelo, farmers weren’t able to harvest even half of what they got in 2016 and the prognoses are disappointing.

According to the National Statistics Office of Georgia, the income received from the hazelnut in three months amounted to $ 17 million, while last year it was $ 32 million. The price of hazelnut in Georgia is low and varies from 3 to 5 GEL. In the world market, its price is 6 dollars.

The National Food Agency issued a statement that the damage inflicted by the pesticide amounted to GEL 63 million. That’s why the government started a special program against Stink bug this year.

In June 2017 , hazelnut plantations were given a chemical treatment against the pests. In total, an area spanning 351 villages in the regions of Samegrelo, Guria and Adjara, 53,000 hectares of land was treated, including local plots of land of residents and corn fields. Local residents were given 230,000 liters of treatment and 21,000 traps for the insects.

“The first step is to improve the quality. The main reason for export reduction is the low quality and productivity.” Said Alexander Motserelia, Chairman of the “Nut Production and Exporters Association”.

Horizontal bar chart shows statistics of exported nuts from Georgia, between 2009 and 2017 (Jan-Nov). Export value is shown in millions of USD.

Overall, export rates have fluctuated during the time depicted on the graph. It peaked in 2014 and the lowest rates of exported nuts from Georgia were in 2009 and 2010.

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Georgian tea – with its old history & new investment opportunities

Tea is the oldest Chinese culture, known in 1753 by a well-known Swedish botanist Carl Lynne, first described as a scientific name (Thea). Tea is one of the best soft and most common flavors in the world and has many medicinal properties.

The Georgian tea has a 170 years of history, starting in 19th century, when the first bushes appeared in Guria. In 1864, Mikhail Eristavi first presented a sample of Georgian tea at the Russian International Exhibition in Saint Petersburg, which laid the foundation for Georgian tea worldwide.

Later in 1920s, Georgian tea-growing was recognized as a special area of economic activity. The Tea and Subtropical Cultures Research Institute was founded in Anaseuli, West Georgia, where new varieties of the tea were cultivated, focusing on tender shoots and special aromas. In 20th century, Georgia drastically increased the volume of the tea production and it was a main supplier of the Soviet Union for decades.

Nowadays, Georgia is exporting its tea to the world. According to the official information, tea plantations are still around 19 K ha, out of which 2.4 K are exploited and the rest are covered with thorn birds.

“A couple of years ago, Georgian Tea Program was launched by Georgian Government which aimed to restore tea plantations. Approximately, one thousand hectares have been rehabilitated under the program. The state help for Georgian tea and support for agricultural cooperatives will be continued, tea leaf processing technologies will be further improved and developed that will later strengthen its positions in the international tea markets and increase its export”, said Levan Davitashvili, the Minister of Agriculture of Georgia.

The main exporting country of Georgian tea is Mongolia, where 435 tons (286 900) Georgian tea has passed till 2015.

The chart gives information about Georgia tea export statistics. It is clear from the chart that 2011 and 2012 was the best years for Georgia for last 7 years.

The value of USD 15.4 million tea was Exported and USD 45.2 million was imported from 2010 to 2016.

In addition, Georgia is starting to export 2 kinds of tea species to China, which was imported from China to Georgia many years ago. The reason is that this types of tea bushes no longer exist in China. However, China is also planning to cultivate tea plantations in Georgia, as they are strongly contented with quality of Georgian tea.

Construction of Anaklia Deep Sea Port Has Been Launched

The Port of Anaklia is located on the shortest route from China to Europe, a route that has become a major focal point of Chinese investments in infrastructure. Cargos will travel fast between Chinese and European Markets by Port of Anaklia.

586 million USD will be invested in the first phase of construction and The total volume of investments is USD 2.5 billion. The Consortium was founded by TBC Holding and the famous American development company Conti International LLC, which implemented projects in infrastructure and capital construction.

The first step of construction will be finished in 2020 December. And they are planning to receive first cargo in 2 years from starting construction. At the end of the construction they are aiming to handle 100 million tons of cargo per year.

In 24th December, Prime Minister of Georgia, Giorgi Kvirikashvili with other members of cabinet went to Anaklia to join works.

“This is the place where Europe meets Asia, Georgia is being represented as a country of international cooperation, stability and peace. I want to once again congratulate you, the entirety of Georgia and all our friends, because this place today lays the foundation of a new Georgia”, Prime Minister of Georgia, Giorgi Kvirikashvili said.

In addition to the Anaklia Port, JSC Anaklia City (principle shareholders are TBC Holding and Conti International) is developing a Special Economic Zone on about 2,000 hectares. The new Special Economic Zone will complement the Port’s activity and transform the Anaklia project into development of a brand new city-scale economic driver for Georgia, regional business and trade hub on a crossroad of Europe and Asia.

Deep Sea Port Technical/Engineering Information

52-Year Concession

Growth to 100MM Ton

Phase 1: 7MM Ton Capacity Port – Construction complete within 3 years of groundbreaking

Creation of a port capable of accommodating Post-Panamax Size Ships

 

ADC has completed a concept design for Anaklia Port and Free Industrial Zone. The design will bypass competing ports in the region with superior connections to existing rail and road infrastructure, state-of-the-art equipment and communications infrastructure, berthing for 10,000 TEU vessels, flexibility for multiple cargo and vessel types, and eco-friendly practices. Capital expenditures for each phase of the Port have been estimated according to the Conceptual Design.

 

Major port design aspects are the following:

Optimized land footprint (less than 40% of total 1,000 hectares).

Flexibility for multiple cargo and vessel types (Panamax, Handymax, Aframax).

Maximized facility throughput (intermodal, modern STS cranes, automation).

Minimized waterfront (dry bulk and liquid piers on breakwater).

Eco-friendly sustainable practices.

Read more information about the port:

http://www.anakliadevelopment.com/