BANK ADVISER DOUBTS COMPETITIVENESS OF UKRAINIAN-MADE DAEWOO CARS

According to Mr. Hansen, from 20 to 30% of the automobiles on the world market are surplus. He also said the Daewoo investment could be used in a more efficient way. In his opinion, Ukrainian-made products could be more competitive if only parts and assemblies, not cars, were manufactured here.

Addressing the round table forum, the president of the state credit/investment company of Ukraine, Volodymyr Kuznetsov, stressed that the government did not have any other options at the time. The proposals made by other investors amounted to the creation in Zaporizhzhia of an «assembly shop» to be used to by-pass Ukrainian customs, Kuznetsov said.

Daewoo, on the contrary, pledged to produce in Ukraine up to 70% of parts which will provide 130 domestic companies with contracts.

Volodymyr Kuznetsov cited Poland where Daewoo has two plants. They were given considerable tax breaks by the government though the whole project was heavily criticized at the time. In 1997, however, production increased by 50 percent, with average wages growing up to $700. By contrast, the Zaporizhzhia AvtoZAZ turned out only 6,000 cars last year with its capacity of 150,000.

Commenting on recent government restrictions on the import of used cars in Ukraine, the official stressed that each year about 200,000 cars are imported in Ukraine. With an average price of $8000-8500 per car, the total amount of import comes up to $1.6-1.7 billion, which is a de facto Ukrainian investment in foreign automobile industries. The amount almost equals the total of direct foreign investment in Ukraine. He also stressed that the lion’s share of car accidents in Ukraine involved foreign cars over five years old. The government has decided to ban the import of such automobiles as of April 1, 1998.

INFOBANC