Compared to February 2022 the CCI increased by 12.4 percent. The latter was largely caused by the 26.2 percent increase in average monthly nominal wages of employees in the construction sector and by the 7.4 percent increase in the prices of construction materials, which contributed 5.91 and 4.19 percentage points to the total index change, respectively.The following table presents the CCI in October 2023, compared to the previous month and February 2022, as well as the contributions of cost categories to the total index.
Consequently, the EBITDA of the business increased by 12.7% y-o-y and stood at GEL 7.9 million in 3Q23 (up 27.1% y-o-y to GEL 18.2 million in 9M23). The beer business produces beer and lemonade and holds a ten-year exclusive license from Heineken to produce and sell Heineken beer brands in Georgia. The beer business had c.22% market share in 2022. The business’ brands include Heineken, ICY (its flagship mainstream beer brand), Black Lion (the leading Georgian craft beer producer which the Group acquired in 2018), Kazbegi, which was acquired in 2019, Amstel and Krusovice beer, for which the business acquired a licence in 2019, and Kayaki (the Group’s light beer brand).In 2019, the business received a licence to brew commercial batches of Heineken, and locally brewed Heineken beer has been available in stores since August 2019. Starting from the second half of 2019, the beer business relaunched its brands and improved its product mix, which helped it to increase its share in the beer market and allowed the business to achieve break-even EBITDA in the second half of 2019 and positive EBITDA in 2021 and 2022. The business also started to export its beer and lemonade brands to the international markets.
Consequently, EBITDA increased 6.2 times to GEL 2.3 million in 3Q23 (up by GEL 3.0 million to GEL 2.9 million in 9M23). The wine business produces and sells wine locally and exports it to 24 countries. The wine business owns three top-class wineries across Kakheti’s three wine-making regions and is in the top five wine producers by vineyard base in Georgia. The vast majority of the vineyards grow Georgia’s flagship red wine grape, Saperavi.The wine business sold 8.4 million bottles of wine in 2022, with approximately 81% of sales coming from exports. The business has a market share of 4.7% in the Georgian wine export market. The ongoing war negatively impacted the wine business, which had significant exposure to the Russian and Ukrainian markets (61% and 56% of the FY21 and FY22 net revenues, respectively, were generated from sales in these markets). JSC Teliani Valley, Kindzmarauli Marani, LLC, Alaverdi.
Entrepreneur David Chabaloshvili started growing a vineyard in 2016 on an area of 38 hectares, where he has three varieties of vines - Rkatsiteli, Saperavi and Kakhuri Mtsvane. Qvevri wine is produced with grapes harvested during the season.He decided to build a chateau in the same area in 2018, as part of the expansion plan. With the financial support of Basisbank, Chateau Davitiani will be ready to welcome visitors in the summer of this year. The hotel opens an unforgettable view of the vineyard, stretched against the background of the Caucasus Mountains and the picturesque the Alazani Valley.Chateau Davitiani combines traditional Georgian architecture, tower-shaped guest rooms, an outdoor swimming pool and a park of oak trees. The Chateau restaurant offers a wide selection of Georgian and European cuisine. Guests are invited to the chateau’s tasting hall to enjoy the wine made in the cellar."Naturally, it was important for us to have the support of a loyal partner, and that's exactly what Basisbank was, and still is for us: supporting our plans and helping us as we move forward. Again, in partnership with Basisbank, we have an ongoing project to expand the production, bottling and sale of our wines on both local and international markets," David Chabaloshvili, founder of Chateau Davitiani."Basisbank is one of the major supporters of the tourism sector in the country, making significant contribution to its development. Funding the construction of new hotel complexes is one of the priority areas of the bank. We are glad that Kakheti region now has Chateau Davitiani, another remarkable place, in partnership with us and within the framework of the Produce in Georgia project, where guests can relax and enjoy themselves spending quality time. Each new project strengthens the hotel industry and tourism sector, ultimately supporting the development of the country's economy and creating new jobs," Natia Beridze, SME Banking Division Regional Manager.Video story of partnership between Basisbank and Chateau Davitiani:
During the reporting period, the assets of "PSP-Pharma" increased by 10% to 509.4 million GEL. As for "Aversi" assets, it increased by 11.5% to 428.7 million GEL.In addition, last year the profit margin of "PSP Pharma" was 30.5%, while the profit margin of Aversi stood at 28.5%.
The Association claims that participation in the event offers a unique opportunity to Association members and companies with the status of a Virtual Zone Person: to ask questions about problematic issues for them; to engage in the process of sharing important information; to obtain answers to all questions; to get explanations about legal and tax difficulties; to take part in discussions about potential changes in taxation policy and legislation. The chairman of the Association, Shorena Kopaleishvili states that the business discussion will be aimed at analyzing the specific problems faced by the member companies of the association, which will help them solve the problems still existing in the field of taxation."In turn, the information received will assist the Association of Georgian Virtual Zone Persons and its partners in strengthening the advocacy process of companies with this status with a targeted and result-oriented policy," says Shorena Kopaleishvili.Speakers of the discussion are:Shorena Kopaleishvili - the chairman of the Association.David Papiashvili - tax expert and managing partner of Kreston Georgia.The discussion, held online on the Zoom platform in Georgian, will begin on November 7 at 15:00 Tbilisi time. Representatives of companies are welcome to participate in the discussion for free.Those interested in participating in the discussion should register at the following link: https://rb.gy/4a305
The report notes that emissions in Georgia have significantly increased over the last 15 years, particularly from businesses engaged in industry, transport services, construction, and commerce. The report cautions that without urgent actions, industry emissions in Georgia could be 90 percent higher in 2030 than the levels recorded in 2015.Despite recent progress, the institutional and regulatory framework in Georgia still requires significant strengthening to align with EU legislation and standards. Georgia currently lags in translating the legal framework into concrete incentives and opportunities for business investments, as shown by its low ranking among regional peers in the Regulatory Indicators for Sustainable Energy (RISE).The report stresses several key elements important to Georgia’s green transition:· The need for improved incentives and opportunities for business investments in energy efficiency and renewables. For 80 percent of firms, improving efficiency will likely require new investments. However, the other 20 percent of firms, do not need new capital to improve efficiency and these firms alone have potential to contribute to a one-third reduction in total emissions.· The importance of productivity as a driver of energy efficiency at the firm-level,· The importance of information and knowledge spillovers from more efficient firms to less efficient ones when these are in close-by locations and in similar sectors.· Energy prices play a key role in determining the incentives to improve efficiency among firms in Georgia. The results show that when electricity prices increase firms tend to reduce energy consumption. Remarkably, lower electricity demand is not associated with lower output and it is driven by energy efficiency gains. Businesses do not appear to reduce sales nor employment in the shorter term but become more efficient and pass part of their increase costs down to their consumers.· Technology adoption and quality green and general management practices are key ingredients for a successful green transition and both are lacking in Georgian firms. Georgia ranks among the bottom three countries in terms of green management practices among nine benchmark countries (Azerbaijan, Bulgaria, Czech Republic, Hungary, North Macedonia, Poland, Serbia and Slovenia). Green technology adoption is very limited, with many firms maintaining the generators due to frequent power outages, which leads to significant inefficiencies.To support green transition, the report recommends a comprehensive policy package of reforms and programs, including:· Horizontal economy-wide policies centered around price signals and regulations, improvements to the grid infrastructure, and reliability of electricity services.· Information – raising firms awareness about potential benefits of becoming more energy efficient and available energy saving.· Capabilities - helping firms identify opportunities for improvement of management, organization, technology, and skills.· Finance - easing access to financial resources required for upgrading firms’ technology.Benchmarking and diagnostics - the report emphasizes the importance of targeting by using appropriate diagnostic and benchmarking tools to assess specific needs and readiness of businesses to upgrade and invest in energy efficiency.
In particular, during eight months of the current year, VZPs paid GEL 29.5 million in the form of VAT to the budget. During the same period VZPs paid 6.5 million GEL of profit tax. The income tax reached an impressive amount, which amounted to GEL 25.4 million during the analyzed period. If we summarize all taxes, VZP paid GEL 61.6 million to the state budget during eight months of this year.If we take into account tax benefits calculated on these payments, it is clear that the contribution of companies with such status to the real economy of Georgia is much more significant, which means the creation of high-paid jobs, employment of qualified IT personnel in Georgia, and thus a reduction in the outflow of specialists with such important qualifications from the country.Effect of tax incentivesIn this context, it was interesting to hear the opinion of the Minister of Education of Georgia regarding employment and remuneration issues. On October 18, Giorgi Amilakhvari in an interview with public channel, emphasized the importance of employing local Georgian specialists and providing them with remuneration at the level of European standards as priority tasks for the ministry. In principle, one of the components of the mentioned priority is realized in the VZP industry segment.Regarding the statistics of payments to the budget of companies with the VZP status for the last 5 years, we can notice a sharp increase in the dynamics. In 2019, VZP companies contributed a total of GEL 46 million as taxes. In 2020, during the pandemic, this figure dropped slightly to GEL 43.8 million, but from the following year 2021, there was a sharp increase of GEL 67.3 million. In 2022, the figure reached GEL 74 million, and a total of GEL 61.6 million was paid in the first 8 months of 2023, with a significant increase expected by the end of the year. However, it should be noted that this industry was under severe pressure in 2021-2022 because of a sudden and unexpected change in tax policy by the tax authorities. However, there appears to be continued interest in Georgia, so the state should properly evaluate and capitalize on this circumstance.According to these indicators, contributions to the budget of companies with International Companies status using tax incentives lag behind the VZP, but there has been a significant increase over the last 3 years. Thus, if in 2021 International Companies paid 11.8 million GEL to the budget, in 2022 this figure has already exceeded 45 million GEL. In total for eight months of the current year they paid 52 million GEL, which significantly exceeds the absolute figure of the previous year.What benefits do companies receive?Companies with VZP and IC status enjoy almost the same tax benefits in Georgia.In particular, while companies pay a standard 15% profit tax in case of distributing dividends, for companies with VZP status this tax is zero, while international companies pay only 5%. On the other hand, VZP pays the standard 5% and IC pays 0% as withholding tax on dividend distributions.Companies with the mentioned status do not benefit from "VAT" exemptions and, like standard companies, are only exempt from paying VAT if they provide services/products abroad.Income tax on wages is the standard 20% for the self-employed, while ICs pay only 5%. ICs are also exempt from paying property tax, while VZPs pay the standard 1%.The other side of the coinHowever, the development of the segment of companies with VZP status and the entry of new large companies into this sector would be even more active if it were not for the presence of certain loopholes/ambiguities in the tax legislation regulating the industry.To date, approximately 1,200 companies have been granted VZP status in Georgia.The Association of Georgian Virtual Zone Persons, which defends the interests of VZP companies, has repeatedly pointed out the necessity to improve the tax legislation and initiated amendments to the relevant legislative acts. Chairman of the Association Shorena Kopaleishvili holds constant meetings and consultations with the relevant committee of the Parliament of Georgia and representatives of the Ministry of Finance in order to achieve the goals of the Association. According to her, the meetings are quite constructive, and the government is fully prepared to accept the changes, although the issue of time remains a problem.sums are provided by Revenue Service
Additional 0.32mn users subscribed to mobile operators over 2022-1H23, boosted by migrants and tourism recovery. Notably, Magticom retained leading position and attracted c. 54% of new subscribersAdditional 0.32mn users subscribed to mobile operators over 2022-1H23, boosted by migrantsand tourism recovery. Notably, Magticom retained leading position and attracted c. 54%of new subscribers.▪ Mobile revenues have been growing since 2021, driven by subscriber growth and removed tariffrestrictions since Jul-21.▪ Mobile data traffic is the main driver of growth, skyrocketing 7x due to growth of subscribersand data usage per user over 2019-1H23.Mobile data will be the growth catalyst, fueled by increased smartphone adoption and data usage per person. No major growth expected in mobile subscribers.Mobile data traffic per user expected to increase 3x in Central and Eastern Europe (CEE) over 2022-28 amid introduction of 5G.
The airline's activities include passenger and cargo air transportation. Since 2023, Geosky Airlines, under the "Georgian Wings" brand has launched regular passenger flights to Batumi and international flights to Baku.For the first time in Georgian aviation industry, under the joint efforts of Basisbank and Geosky has been financed an aircraft purchased by Geosky, that became the first precedent in the Georgian banking sector.In partnership with Basisbank, Geosky's air fleet was staffed with a completely new French-made helicopter, and in addition to cargo flights, the company is also actively working in tourism and extreme destinations. Among them, it is worth noting the implementation of private flights in the direction of Tusheti, which becomes increasingly popular both among tourists and among local vacationers.The airline is predominantly staffed by highly qualified Georgian aviation and engineering personnel, whose team of professionals makes the greatest contribution to the development of Georgian aviation and the introduction of modern requirements and the highest safety standards. Geosky personel number exceeds 200 employees.It’s noteworthy that Insurance Company being a member of Basisbank Holding is actively cooperating with Geosky and Company’s aircrafts fleet is fully insured by BB Insurance.“Since the founding of the our Airlines, we have been cooperating with Basisbank, that has grown into a partnership, and during this time we have jointly implemented a number of important projects. As you know, aviation is a global industry and we have to collaborate with many international companies. Therefore, it is important to us that international bank transfers are carried out smoothly.Using the example of Geosky Airlines, I can say that the partnership of such a stable bank as Basisbank is important in the process of business development,” Shalva Kiknadze, President of Geosky Airlines.“Basisbank and the aviation market leader Geosky airlines have many years of successful partnership experience. Geosky is a development-oriented Company that is constantly expanding, creating new opportunities and striving to innovations in the aviation market.As one of the largest financiers of Georgian business, we are especially proud that in partnership with Geosky we are facilitating the implementation of large-scale and strategically important projects for the country's aviation industry, and I am confident will continue it successfully in the future” - Gigi Gabunia, Commercial Director of Basisbank.Video story of partnership between Basisbank and Geosky
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The Georgian official was invited to the event as a special guest by Aliyev, the Government Administration said.Their meeting discussed the “strategic” cooperation in trade, economy, energy, transport and logistics, as well as prospects for development of the Middle Corridor - a transportation route network connecting China with Europe through the South Caucasus region - through modernisation of railways and expansion of ports and roads.The meeting noted Azerbaijan was one of the “leading” trading partners of Georgia.The construction of the East-West Highway in Georgia and the Baku-Tbilisi-Kars railway project were also among the discussed topics. The officials said the railway would become a part of the Europe-South Caucasus-Asia railway corridor in the future.The meeting also discussed the Black Sea submarine electricity cable project, intended to connect the grids of the South Caucasus and European Union member states.Garibashvili and Aliyev reviewed security issues in the region and the wider world and expressed hope for a peace agreement between Azerbaijan and Armenia over their long-running conflict over the Nagorno-Karabakh region “very soon”.
European Commission recommends that European Council grants Georgia ca...
The Commission recommends that the Council grants Georgia the status of a candidate country on the understanding that a number of steps are taken.The press conference in Brussels, at which Von der Leyen and European Commissioner for Enlargement Olivér Várhelyi will present the report on EU enlargement to the media, started a few minutes ago.
Georgian PM to feature at European Political Community Summit
Garibashvili will take part in thematic discussions planned at the Summit in a round table format, the Government Administration said.The Government head will also hold “high-level” bilateral meetings within the framework of the Summit that will take place between Thursday and Friday.At the first meeting in October 2022, leaders mainly discussed peace and security issues, with an emphasis on Russia's war in Ukraine and the energy crisis. At the June 2023 edition they discussed joint efforts for peace and security, energy resilience and connectivity and mobility in Europe.
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Garibashvili noted the two countries had achieved “significant” progress in cooperation, reflected in both economic and political dimensions, the Government Administration said.The Georgian official stressed the existing regional projects were a “clear” example of “effective” strategic cooperation, sustainable development and reliable partnership between the two countries that would bring “more economic independence, security and prosperity” to both countries.The officials also reviewed the security environment in the Black Sea region, with Garibashvili emphasising the importance of settling issues through peaceful negotiations.He also extended his gratitude to Erdoğan for his “strong” support for Georgia's sovereignty, territorial integrity, as well as EU and NATO integration.
President delivers her annual report in parliament
According to Zourabichvili, the Georgian government gradually transformed.“Instead of strengthening state institutions, being the cornerstone of democracy, the one-party system and its influence get stronger. Laws adopted in an expedited manner (on covert recordings, abolishment of state inspector, changes in the rule for appointment of judges and foreign agents bill) serve your power’s prolongation instead of serving democracy strengthening and citizens’ welfare. The court reform, vital for the country’s future, is at a deadlock,” President said.Salome Zourabichvili went on to say that the ruling party members speak in unison, and those having different viewpoints, tend to quit the party.“The party influence is evident in the government and parliament. The party turned into a decision-making space. The party chairman announces his standpoint on all political issues in advance, and the decision-making process is vague, not to mention open discussions.You are the government confronting the country’s foreign goal, the people’s mandate. By inviting Gavrilov (Russian MP) in 2019, you raised doubts and questions for the first time, though the actual transformation began in 2021 when the Georgian Dream former Chairman Bidzina Ivanishvili quit politics,” she said.President also recalled the annulling of the document drafted with the engagement of the European Council President and rejection of the EU loan.“You have never stopped the anti-European rhetoric, blaming and insulting our partners. All this finally came to the extent that we expelled the former EU ambassador from the country with reprimands and accusations,” Zourabichvili stated.