The Financial - 18.02.2013


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The Financial - 18.02.2013

  1. 1. Money Transfers In January see on page 4 | World Economic Climate Improves, Survey Shows see on page 12prime Ads How can Georgia stimulate Institutional Trust innovative entrepreneurship? Daan Harmsen, GeoCapital and Efficacy Read on p. 23 Read on p. 6 Frank Klobucar, GORBI 18 February, 2013 News Making Money Georgian website World Economic Climate New Flow of Improves, Survey Shows Russian Tourists The FINANCIAL to Georgia T he world economy The FINANCIAL residents. is showing signs of The number of Russian brightening after By Madona Gasanova tourists in Georgia during the six months of stag- F same period of 2011/2012 was nation, according rom September 119,053. to a global survey of economic 2012 till February “41% of Russian residents experts by the International 2013 the number come to Georgia to visit friends Chamber of Commerce (ICC) of Russian tour- and family,” Rusudan Mamat- and the Munich-based Ifo in- ists in Georgia in- sashvili, Head of the Planning stitute for economic research. creased by 72% compared to and Development Department the same period of the year at Georgian National Tourism Administration (GNTA), told before. During the past five The FINANCIAL. Continued on p. 12 months Georgia has hosted 204,495 Russian visitors, of which almost half are friends and relatives of Georgian Continued on p. 4 New Labour Code Terminates Business Activities “Annulment of Contract” in Decline since The FINANCIAL Parliamentary Elections A The FINANCIAL Registry Service. Experts say ccording to the that the reason for the decrease new version of S in registering business is due to Labor Code dis- ince the parliamen- the unstable political situation. crimination (gen- tary elections, com- Besides the elections and der, racial, eth- panies operating on relatively unstable political nic, religious, etc.) made by the Georgian market situation, another reason for the employer shall be prohib- have reduced their companies’ relative inactiv- ited not only during the labor activities. The business sector ity is that the current govern- relations (while the employee has become comparatively pas- ment intends to revise all of works), but also during the sive in recent times, a fact that the projects that were started pre-contractual relations. In is confirmed by the latest statis- under the previous govern- such a case, if a person makes tics. An almost 20 percent de- ment, experts say. a complaint, the burden of crease was observed in register- proof shall be placed on the ing business in 2012 compared employer. to 2011 according to the Public Continued on p. 6 Continued on p. 14 More Than 15,000 Companies Participating in Preliminary European Business Awards Statistics The FINANCIAL has established itself as the ul- Showing By Mariam Papidze timate platform for outstanding Reduction in businesses in the EU. Designed T to celebrate exceptional results Imported Shoes he  European Busi- ness Awards  is a across a variety of categories, the EBAs are a global showcase European awards for the best in the business. The FINANCIAL programme started By Mariam Papidze in 2006. Since then the European Business Awards T Continued on p. 8 he number of pairs of shoes imported in Georgia in 2012 CURRENCIES was 7,874,000, Industrial Feb. 16 Feb. 9 with a total value of USD 393,830,000, according Production Up By 1 USD 1.6568 1.6561 to the National Statistics Of- fice of Georgia. 0.7% in Euro Area 1 EUR 2.2097 2.2213 100 RUB 5.5018 5.4915 1 TRY 0.9372 0.9358 See on p. 17 See on p. 15 © 2013 The FINANCIAL. Intelligence business publication written expressly for opinion leaders and top business decision-makers
  2. 2. CMYK 2 HEADLINE NEWS & ANALYSIS FINANCIAL financial news 18 February, 2013 | Current prices on gasoline and diesel  18 February, 2013, Georgia Prices in GEL Prices in GEL Prices in GEL Prices in GEL Prices in GEL Super 2.22 Premium 2.17 API Super 2.25 Eurosuper 2.22 Super Unleaded 98 2.25 Euro Super 2.25 Gasoline prices presented by Euro Regular 2.05 API Premium 2.20 Premium Avangard 2.15 Premium Unleaded 96 2.18 Efix Euro Premium 2.16 BusinessTravelCom 18 February, 2013 Regular 2.03 API Diesel 2.25 EuroPremium 0.00 Euro regular 2.04 Euro Regular 93 2.05 Hotel and Airticket Booking: Euro Diesel 2.26 Euro Regular 2.08 Euroregular 2.00 Regular Unleaded 93 2.02 Efix Euro Diesel 2.22 Regular Energy 2.05 Eurodeasel 2.17 Euro Diesel 5 10 PPM 2.25 Euro Diesel 2.08 2 999 662 | Diesel 2.02 ISSUE: 7 (336) CNG 1.10 Diesel Energy 2.05 Diesel L-62 2.02 © 2013 INTELLIGENCE GROUP LTD Copyright and Intellectual Property Policy Khachapuri Index is exclusively provided The FINANCIAL respects the intellectual to The FINANCIAL by ISET property of others, and we ask our colleagues to do the same. The material published in The FINANCIAL may not be JANUARY 2013 KhachapuriIndex reproduced without the written consent of the publisher. All material in The FINANCIAL is protected by Georgian and international laws. The views expressed in The FINANCIAL are not necessarily the views of the publisher nor does the publisher carry any responsibility for those views. KHACHAPURI Obsolete and new be wrong. Therefore nobody, including Byn- jolfsson and McAfee, dares to predict the end Permissions INDEX: GEORGIAN labor markets of labor yet another time. Nonetheless, it is CONSUMERS ENJOY clear that many jobs which were recently con- If you are seeking permission to use As it turned out, many labor markets dis- sidered to be solid sources of income might The FINANCIAL trademarks, logos, service marks, trade dress, slogans, screen shots, copyrighted designs, PRICE STABILITY appeared in the course of history. There is no market for blacksmiths and wheelwrights any- soon become obsolete. Last time that I was in Germany, my parents surprised me with their combination of headline fonts, or other more, but the frequent surnames “Smith” and new vacuum cleaner robot – the robot vacuum Florian Biermann is an assistant profes- cleans the whole house automatically, one just brand features, please contact publisher. sor at ISET. He got his Ph.D. in mathematical “Wright” in England suggest that in the past, “” is the copyrighted symbol used by these were common professions. In Georgia has to switch it on. Will there be demand for economics at the Hebrew University of Jeru- cleaning personnel in 10 years? I myself was The FINANCIAL salem in Israel one still has gatekeepers who open and close railway crossing gates, but it is likely that this a bit worried when I read about a software The cost of cooking one standard Imeretian which constructs mathematical proofs au- FINANCIAL (The FINANCIAL) is regis- job will disappear in the next years. In devel- tered trade mark of Intelligence Group khachapuri in January 2013 averaged 3.44 tomatically. Will there be demand for math- GEL, which is about 0.3% higher compared to oped countries, the railway crossing gates are ltd in Georgia and Ukraine. Trade mark opened and closed automatically, without a ematical economists in 20 years? registration by Sakpatenti - Registration previous month and 1.7% lower compared to January 2012 (i.e. y/y). human being actively involved. date: October 24, 2007; Registration N: 85764; Trade mark registratrion by Kh-index finding are very similar to those On the other hand, also new labor markets emerge. For example, before the raise of com- What if labor Ukrainian State Register body - Regis- tration date: November 14, 2007. official estimates. According to GeoStat data, annual inflationstands at -1.6%. In other puter technology, there was hardly a market for computer programmers. becomes obsolete? words, Consumer Price Index is currently ADVERTISING lower (by 1.6%) than at exactly the same time If demand for human labor really declines in 2012. On average, prices have not changed Will there always be for these fundamental reasons, we run into various problems. First of all, the biggest part demand for labor? All Advertisements are accepted subject compared to the previous month either. Geo- to the publisher’s standard conditions Stat’s estimate of monthly inflation for Janu- of the economic output (about 60%) is dis- of insertion. Copies may be obtained ary is a miniscule 0.2%. tributed to the people as wages. How will we from advertisement and marketing In y/y terms prices of food and non-alcohol- Unemployment is a common phenomenon distribute the fruits of the production process department. ic beverages declined by 2.7%. Housing, water, in most market economies. Economics has when work input and performance cannot be TO GET the ADVERTISING RATE CARD electricity and gas commodity group also expe- different explanations for unemployment, like the criterion anymore? please contact marketing at: rienced significant decrease in price (down by market frictions and qualification mismatch. Secondly, for most people labor has more Yet the most common and most fundamental functions than just being the source of income. 6.5%). These declines were partially balanced see financial media kit online reason for unemployment is usually identified What will ordinary people do when they are out by modest rise in a few other categories: health (up by 2.7%) and Restaurants and ho- to be too high or too rigid labor costs, which not needed in the production process any- tels (up by 3.1%). Overall, considering bigger in most cases are made up primarily by wages. more? Not everyone is an artist or a Bohemian DISTRIBUTION who has plenty of rewarding options how to weight of food category in consumer basket, gen- Is this explanation convincing? Would the de- eral price level declinedin annual terms. mand for blacksmiths and wheelwrights go up spend time. For many people, their work struc- The FINANCIAL distribution network Ever since May 2011, when inflation peaked if their wages would go down? Nobody would tures their days, and their workplaces are of- covers 80 % of key companies operating in Georgia. 90 % is given the state of frenzy in the global commod- make such a contention. But if the demand for ten hotspots of social interaction. Unemployed distributed in Tbilisi, Batumi and Poti. ity markets, inflation has literally come to a entire professions can virtually disappear, how people tend to degenerate and to lose social Newspaper delivered free of charge to halt: since early 2012, monthly inflation rates can we be sure that there is always enough de- connectivity. more than 600 companies and their are fluctuating around the zero trend, in the mand for labor in general? As I see it, economics does not have an an- managers. [-0.9%; 0.9%] range. Annual inflation rates swer how to tackle such a situation. Let’s just A hypothesis as old To be included in the list please contact are fluctuating in the [-3.3%; 0.6%] range. hope that we can go on for another 200 years distribution department at: Thus we can say that Georgian consumers are without labor demand running short! enjoying stable (even lower) prices. as capitalism contact Us THE ISET KHACHAPURI eDITOR-IN-cHIEF Economic Lesson of Starting with the industrial revolution, people feared that the demand for labor might INDEX zVIAD pOCHKHUA the Week: The future vanish. In the early 19th century, a violent political movement called “The Luddites” in- The ISET Policy Institute (ISET-PI, www. of labor E-MAIL: vaded factory halls in England and destroyed is an independent think-tank as- Phone: (+995 32) 2 252 275 the machines. They felt that the ongoing auto- sociated with the International School of According to standard economic theory, la- mation of production processes would make it Economics at TSU (ISET). ISET-PI designed hEAD OF mARKETING bor is a good like any other, traded on the labor difficult for them to sell their labor at reason- a simple and robust way of tracking inflation lALI jAVAKHIA market. Like with all other markets, the price able prices. Given the rudimentary technol- and the differences in the cost of living across E-MAIL: for labor, which is the wage, ensures that sup- ogy available in the early 19th century and the Georgia’s major cities. Unlike traditional ply meets demand. When there is a shortage enormous productivity gains which occurred “consumer baskets” used for monitoring price Phone: (+995 577) 74 17 00 of labor, the price of labor goes up, and more ever since, from today’s point of view their inflation, our “basket” includes only those in- people offer their labor on the market. When concerns seem rather funny. The demand for gredients that are needed to cook one Imere- consultant there is an abundance of labor, a decrease in labor did not fade in the last 200 years. Yet tian khachapuri (cheese, butter, flour, yeast, mamuka Pochkhua they were right that in principle, there is no eggs, and milk) and energy inputs (gas and E-MAIL: the price of labor prevents unemployment. Economics recognizes that there is not just mechanism in a market economy which en- electricity). We conduct a monthly survey of Phone: (+995 599) 29 60 40 the major markets in Tbilisi, Kutaisi, Batumi one market for labor, and whenever necessary, sures that there will always be (sufficient) one considers special labor markets which demand for labor. In their book “Race against and Telavi to measure the differences in the head of distribution department cost of living across Georgia and to track the Temur tatishvili are usually defined by the special kind of la- the Machine”, MIT economists Erik Bryn- bor traded. In this sense, we speak of “labor jolfsson and Andrew McAfee look at this old monthly fluctuations in the prices of all rel- E-MAIL: evant ingredients. Phone: (+995 599) 64 77 76 market for medical doctors”, the “market for question in light of the computer revolution. unskilled labor’, or the “market for university The argument that we will run out of labor de- Copy Editor: graduates”. mand is centuries old but always turned out to Author: Florian Biermann . Iona MacLaren Communication manager: Eka beridze Khachapuri Index (Kh-Index) and Consumer Price Index (CPI) Phone: (+995 577) 57 57 89 4 162 Photo Reporter: KHATIA PSUTURI 4 Kh-Index 160 3 158 Mailing address: 17 mtskheta Str. 3 156 Kh-Index Tbilisi, Georgia 2 154 CPI OFFICE # 4 PHONE: (+995 32) 2 252 275 fax: (+95 32) 2 252 276 2 CPI 152 E-mail: 1 150 on the web: daily news: 1 148 0 146 Apr/12 Aug/12 Jun/11 Aug/11 Oct/11 Oct/12 Jul/11 Sep/11 Nov/11 Jan/12 Mar/12 Jun/12 Sep/12 Nov/12 Jan/13 Feb/12 Jul/12 May/11 Dec/11 Dec/12 May/12 Intelligence Group ltd. 2013
  3. 3. CMYK FINANCIAL HEADLINE NEWS ANALYSIS 3 | 18 February, 2013 publicity Advertiser: VTB Bank. Contact FINANCIAL Ad Dep at
  4. 4. CMYK 4 HEADLINE NEWS ANALYSIS FINANCIAL financial news 18 February, 2013 | New Flow of Russian Tourists to Georgia Number of panies and 30% - foreign. About one fifth - 19% - travelled by car. tourists from The majority of Russian residents - 54% - travelled to Georgia alone. Ap- northern proximately 34% visited the country neighbour with other family members. Just 10% arrived in Georgia with friends. increased by 72% The number of Russians who had organized their trip themselves was since victory of 72%, 15% of trips were arranged by friends/relatives, and just 4% were Ivanishvili organized by companies or people’s places of work. Tbilisi with 67% and Batumi with The FINANCIAL 40% are the most popular destina- By Madona Gasanova tions for Russians in Georgia. Other popular destinations within Georgia F include Mtskheta - 9%, Kutaisi - 8% rom September 2012 till and Kobuleti - 6%. February 2013 the number The Russian websites www.kom- of Russian tourists in Geor- and ran gia increased by 72% com- online surveys on their respective pared to the same period of sites asking readers to vote on wheth- the year before. During the past five er they would like to visit Georgia. months Georgia has hosted 204,495 From 30 January to 7 February a total Russian visitors, of which almost half of 3,672 visitors voted on the kom- are friends and relatives of Georgian mersant website. 56.94% said that residents. they would like to visit Georgia while The number of Russian tourists in 43.06% said that they would not. Photo by Outdoorukraine.jpg Georgia during the same period of The website ran a 2011/2012 was 119,053. survey with the same question. In “41% of Russian residents come to struggled to meet the expectations Russians are the second largest - stayed in private accommodation. As total 1,554 of the webpage’s visitors Georgia to visit friends and family,” that swept him to power in October, group of foreign nationals among the for hotels and guest houses, 14% and voted. Out of them 31.21% confirmed Rusudan Mamatsashvili, Head of the ending the nine-year political domi- guests of Radisson Blu Iveria. Ameri- 5% of Russian visitors respectively that they would want to visit Georgia Planning and Development Depart- nance of President Mikheil Saakash- can guests make up around 19%, tak- stayed there. It should be noted that while the majority of voters - 68.79% ment at Georgian National Tourism vili and his party. Many voters ex- ing first place. in comparison with the nationals of - said ‘no’. Administration (GNTA), told The FI- pected his election to be followed by “The number of Russian guests other countries, Russian travellers From October to December 2012, NANCIAL. “Leisure and recreation is immediate financial relief and a turn- increased by 12% from October 2012 rarely stay in paid accommodation 62 Russian companies were regis- the main purpose of foreign nation- around in relations with Russia. compared with the same period of last while in Georgia. tered in Georgia. The number for the als when visiting Tbilisi. Thirty-two Leading Georgian hotels, Radisson year. The majority of our guests visit According to research conducted same period of the previous year was percent of Russians visited Georgia Blu Iveria and Tbilisi Marriott Hotel the country for business,” said Alex- by GNTA from May 2011 - April 2012, 48. Against the background of a signif- for leisure and recreation while 5% have, however, seen an increase in ander Kvaratskhelia, Cluster Director the average duration of stay of Rus- icantly increased number of registered travelled for business,” Mamatsash- guests of Russian origin. of Sales and Marketing at Tbilisi Mar- sian tourists in Georgia is 26 days. Russian companies the total num- vili said. “The number of Russian guests at riott Hotel. This figure is high compared to other ber of new businesses in Georgia has To restore relations with Geor- our hotel has doubled since October The leading guest nationalities by countries. A significant share of visi- dropped since the 1 October elections. gia’s northern neighbour was one 2012 in comparison with the previous numbers at Tbilisi Marriott Hotel are tors - 16% - visit Georgia for just a sin- The amount of registered companies of the main promises made by Bid- year,” said Nina Asatiani, Director of US, British, Russian, German, Ukrai- gle day. About one fifth - 21% - remain from October till January 2012 was zina Ivanishvili, currently holding the Sales and Marketing at Radisson Blu nian, Azerbaijani and Armenian. in the country for more than a month. 10,001, while for the year before it was seat of Prime Minister. Russia has Iveria. “The total number of Russian Tbilisi Marriott Hotel has 127 rooms, Russian residents spend on average 14,071. This statistical data was pro- taken steps to resume the import of guests at the Hotel in 2012 was 5,857. while Courtyard by Marriott has 118. GEL 790 during visits to Georgia. vided to The FINANCIAL by the Na- Georgian-produced wine and mineral During the whole year the Hotel host- According to GNTA, more than half Forty-two percent of Russian trav- tional Agency of the Public Registry. water, originally banned by Russia in ed the largest number of Russians in of Russian travellers - 52% - visited ellers used air travel as the mode of The total number of companies reg- 2006. October, when their number reached the homes of friends or relatives while transport to reach the country, out istered in Georgia in 2012 was 43,934 Some think Mr. Ivanishvili has 869,” said Asatiani. in the country. Almost a quarter - 23% of which 12% used Georgian air com- while in 2011 it was 54,081. Cooking Money to Become Transfers In Compulsory January Part of I n January 2013, the volume of money transfers from abroad con- School stituted 94.1 million USD (156.1 million GEL), which is 9.7 million Curriculum USD (16.2 million GEL), or 11.5 percent more than the same amount for January 2012. 93.2 percent of total money transfers from abroad fall on those 11 big donor The FINANCIAL countries, from which the volume of such transfers exceeded 1 million USD C in January. In January 2012 the share of ooking lessons will become a compulsory part of the school these 11 countries constituted 91.4 per- curriculum in UK, with chil- cent of the total volume of money trans- dren as young as eight learning fers. how to cook nutritionally bal- In January 2013, 9.5 million USD (or anced food. 15.7 million GEL) were transferred from Those are the plans under the new draft Georgia instead of 6.9 million USD (or national curriculum, which would also see 11.5 million GEL) in January 2012. secondary school pupils learning a range of In the reference month, the structure cooking techniques. of remittances by electronic wire sys- Although “food technology” is part of the tems is shown on the graph below. design and technology syllabus at the mo- Advertiser: Radio Commersant. Contact FINANCIAL Ad Dep at   Volume Structure of money ment, it is not an independent part of the of money transfers by the national curriculum. transfers biggest donor in January, countries % “For the first time ever cookery will 2013
Million be a compulsory part of the curriculum US Dollars from Key Stages 1 to 3”, A spokesman for January, January, the Department for Education said. “The 2012 2013 Total      new design and technology curriculum is 94.1 100.0 100.0 Russia about giving pupils the knowledge needed 48.7 49.4 51.7 Greece for their daily lives. Given the obesity is- 12.7 13.5 13.5 sues that face our children today, it is vital Italy 8.3 9.7 8.8 that they know as much as possible about healthy eating and what constitutes a bal- biznesis personaluri radio USA Ukraine 5.1 6.6 5.4 3.8 3.8 4.1 anced diet. Turkey 2.2 2.0 2.3 “It’s also important that they can devel- Spain op an interest and understanding of good 1.8 2.7 1.9 United Kingdom food. By bringing this into the curriculum, 1.7 1.2 1.8 Israel we want to encourage children to develop a 1.3 1.1 1.3 +995 32 2505 955 Germany love of food and cooking that will stay with 1.1 0.9 1.2 Azerbaijan them as they grow up.” 1.1 0.6 1.1
  5. 5. CMYK FINANCIAL HEADLINE NEWS ANALYSIS 5 | 18 February, 2013 publicity Advertiser: Eristavi Law Group. Contact FINANCIAL Ad Dep at
  6. 6. CMYK 6 HEADLINE NEWS ANALYSIS FINANCIAL financial news 18 February, 2013 | Business Activities in Decline since Parliamentary Elections The FINANCIAL corruption, collusion and nepotism as promised, while maintaining a By Mariam Papidze light regulatory touch, and a low-tax S environment, then strong capital in- ince the parliamentary flows into the private sector should elections, companies op- restart,” he said. erating on the Georgian Fifteen out of twenty companies market have reduced their asked to comment about the dynam- activities. The business ics of business activities since the sector has become comparatively parliamentary election, preferred to passive in recent times, a fact that keep silent. is confirmed by the latest statistics. “We would prefer that any com- An almost 20 percent decrease was ments that we make focus purely on observed in registering business in our project and/or the retail market. 2012 compared to 2011 according to Therefore we prefer not to comment the Public Registry Service. Experts on this issue,” said Tim Wilkinson, say that the reason for the decrease Managing Partner at Redstone Asset in registering business is due to the Management. unstable political situation. “I do not have reliable informa- Besides the elections and rela- tion about declining companies’ tively unstable political situation, activities in Georgia,” said Mamuka another reason for companies’ rela- Shurgaia, CFO at SRG Investments tive inactivity is that the current gov- LLC. “Accordingly, I cannot give ernment intends to revise all of the you any examples regarding this is- projects that were started under the sue and cannot confirm whether this previous government, experts say. information is correct or not. At our “Declines in foreign investments, company such a thing has not hap- export and import have been statisti- pened,” he added. cally confirmed, and are supposedly “At Magticom we are seeing an the result of a cautious attitude in re- increase in activity since the elec- sponse to the recent political chang- tions,” said David Lee, the President es,” said Paata Sheshelidze, economic of Magticom and Chairman of the expert and President at New Eco- Eurasia Partnership Foundation. “I nomic School - Georgia. “It seems to think that the political challenges will be largely a decline of the activities of Georgia was a corrupt police state investors are from the Netherlands, “Another problem is that binding result in caution with regard to new those companies who were involved and that businesses here were liv- China and Japan. In the case of our contracts signed with the previous long-term investments until the poli- in various projects of the previous ing in fear. During the lead-up to operations, USD 20 million worth of government are not being honoured cies of the new government become government. Governmental interfer- the elections, foreign financiers and investment for 2013 has been can- by the new government; the phrase clearer and co-habitation becomes ence in business is changing due to investors stopped providing funds celled, which would have employed “review of previous contracts” is less fraught. However the recent the new government - a number of for Georgian commercial activity. over 300 people in development and used to delay payment for an unac- progress in the Deep and Compre- fields are now financially dependent The winning party informed foreign 150 people permanently,” he added. ceptable period, causing distress to hensive Free Trade Agreement, the on government funds or budgets. press that the UNM was raising pri- “Service companies that provide companies owed large sums of mon- improving trade relations with Rus- The way out is economic liberty, tax vate armies for a civil war in Same- support to large infrastructure and ey. Bad debts left by the previous sia and the new agricultural develop- cuts and reduction of state costs. It is grelo, and that turned a lot of inves- construction projects are hit very government are not being settled by ment plans are big ticket items that important that the Georgian Lari is tors off. After the elections, business hard, as many hydro projects have the new government either, despite should quickly improve confidence guaranteed by gold, which will elimi- has been stagnant in some sectors. been suspended by the new govern- promises to do so,” he said. in many sectors,” he added. nate inflation,” he added. Anything related to large scale in- ment. One friend who owns such a “There is a macro-economic risk “We are making huge gains in “The United National Movement frastructure or construction is at a company has had to sack half his that the government honouring its our Satellite TV business and de- government’s narrative was that complete standstill,” he said. staff this week; his firm is well estab- huge public spending promises will mand for internet continues to grow Georgia was modern and forward- “Investment activities dependent lished and has been operating suc- drain the budget, and additional strongly, particularly in the regions. thinking, cheaper to operate in than on foreign investment have mostly cessfully for a decade. Another friend taxes will be levied on business to As the agricultural investments this Europe and less corrupt than Bul- halted, apart from those businesses in the same situation is considering pay for it, which will be very nega- year “take root” there should be real garia/Romania,” a US businessman backed by Russian investors. In our closing his business, dismissing his tive. The old concept of needing an growth in the regions. I see more up- in Georgia, who wants to remain case, investors who had signed our twenty local staff and relocating to intermediary to meet with ministers side than downside right now, prob- anonymous, told The FINANCIAL. term sheets for substantial labour- the EU. A third friend in the same seems to be making a comeback, lems are being addressed. Business- This person is currently holding ne- intensive investment projects have sector sees no further potential for which in such a small country is es need to plan and feel confident of gotiations on multimillion projects backed out of investment deals, cit- growth in his Georgian business and unnecessary. It damages efficiency the future and the new government with the Government. ing unacceptably high sovereign is investing in Kazakhstan to secure and is a recipe for corruption. If the is doing a lot to make this happen,” “The winning party declared that risk and political uncertainty. These the future of his company,” he said. Government can tackle high-level Lee added. Institutional Trust and Efficacy Frank Klobucar ception is how trusting the Kazakhs are of their fect change on a national level. We asked re- Kazakhstan 19% 81% newspapers. Ukrainians were the least trust- spondents in each country to agree or disagree GORBI ing of every institution, and gave their police a with the statement, “I can influence my na- Moldova 14% 86% particularly low score (3.58). tional government.” In total, only about 15% Russia 9% 91% Georgians are generally untrusting of most agreed in any sense, the rest affirming their of their national institutions, such as the me- lack of efficacy. Ukraine 14% 86% dia, though not so much as some other ex- Newspaper TV/ radio Police Russians had the least faith in their democ- soviet countries. In this recent poll conducted Armenia 5.64 5.93 5.73 racy, with 9% feeling they could influence their With a real and recognized democratic tran- by Georgian Opinion Research Business In- government, while Armenians had the most, sition of power, Georgians may have begun ternational, we asked respondents about their Azerbaijan 5.90 6.87 7.20 at 21%. Georgians had essentially the same to think of themselves as members of a true trust in a few broad categories of public insti- Belarus 5.57 5.76 6.04 low efficaciousness as Russians, only 10% democracy. With the release of thousands of tutions in their respective countries, includ- agreed with the statement. However, keep in prisoners, and the nearly inevitable jump in ing newspapers, TV and radio, and the police. Georgia 4.93 5.32 6.75 mind that this poll was conducted prior to the crime rates, Georgians may start doubting the This trust was measured on a ten point scale, most recent elections; Georgia is a constantly police’s ability to keep them safe. So stay tuned Kazakhstan 6.1 6.55 5.86 where one represents absolute distrust and changing place, and several of these numbers - over the coming months GORBI will continue ten means the respondents trusts the institu- Moldova 4.97 5.59 3.96 may have already begun to change. to conduct our regular polling, and we’ll begin tion “completely.” In the asking, we discovered to see just how these recent changes will affect Russia 4.67 5.14 4.46 that Georgians trust their media, both print “I can influence Georgia’s public trust and efficacy. Visit our and broadcast, less than every other surveyed Ukraine 4.65 5.11 3.58 my national website at for more articles and ar- country save for Russia and Ukraine. chives. government” On the other hand, the police enjoy a well- So if people don’t like their public institu- above-average level of faith from Georgians, tions, why don’t they take democratic action to Agree Disagree most likely as a result of the massive overhaul change them? Aside from the fact that even in Armenia 21% 79% under President Saakashvili and the resultant the most democratically developed country in disappearance of low-level corruption. Only this survey still suffers from “one man show” Azerbaijan 18% 82% Azeris trust their police more, but then again, syndrome and other major speed-bumps to Belarus 18% 82% Azeris trust everyone more, being the most democracy, it seems that the vast majority of confident in all their institutions. The only ex- citizens don’t feel that it’s even possible to af- Georgia 10% 90%
  7. 7. CMYK FINANCIAL HEADLINE NEWS ANALYSIS 7 | 18 February, 2013 publicity Advertiser: Archi Group. Contact FINANCIAL Ad Dep at