Investors invited to look over Ukrainian property and labor
It is no longer any secret that in 1999-2001 Ukraine resorted to the extensive factor of economic growth: the devaluation reserve accumulated after the 1998 crisis instantly boosted the competitiveness of Ukrainian enterprises by 40%. Moreover, many businesses did not pay taxes and fuel bills, utilizing profits gained exclusively for their own development. Now that the Ukrainian economy has registered a 13% drop in competitiveness, the world market situation is not very favorable to Ukraine either. Thus emphasis should be put on the domestic market as the motor for intensive development. But now the Ukrainian economy, to quote Minister of the Economy and European Integration Oleksandr Shlapak, investment resourses, without which any serious breakthrough in the Ukrainian economy is out of the question. The minister says that while Ukraine needs cheap and long-term money, investors should also bring technologies and an entirely new culture of management.
Meanwhile, Pavlo Haidutsky, deputy head of the Presidential Administration, said there is a “striking picture” on Ukraine’s investment map. Addressing a regular coordination meeting on improving the investment climate, he pointed out that this country’s nine largest cities comprising 15% of the population account for 75% of all foreign investment. He put the blame for this on regional and district administrations, which do not work to make their territories more investment-attractive, thus contributing to the overall unfavorable investment climate in Ukraine.
Also failing to promote the attraction of foreign financial resources are special economic zones and priority-development territories now accounting for almost 5% of this country’s territory. As Mr. Haidutsky noted, out of these privileged entities only those in the Donetsk region have received positive appraisals. The Presidential Administration’s deputy head also drew the audience’s attention to the fact that Ukraine has got a total $4 billion in investment, while Kazakhstan receives this amount every single year, with the total figure of $23 billion. Mr. Haidutsky claimed that investments were the only negative macroeconomic indicator of Ukraine last year.
Mr. Shlapak was forced ex-officio to strike a somewhat optimistic note about the situation. He said it has even improved a little this year (by 15%), still noting that the comparison base is so low that even small investments bring about a sizable percentage which is still unable to meet the requirements of the growing Ukrainian economy.
The inherent funds of Ukrainian enterprises and organizations remain the main source of investments. With them accounting for a total of 66.3%, foreign investments in fixed assets were less than UAH 1.2 billion (4.4%) in 2001. According to the experts who drew up the government-approved program of investment development for 2002-2010, this country requires an annual UAH 50- billion in investment. Should the program be successfully implemented, Ukraine will get UAH 55.8 billion in 2005 and 122.1 billion in 2010. But all this is so far only on paper. To translate these intentions into reality, the government has also drafted a plan of actions to finally convince investors, especially foreign ones, that Ukraine is a stable, reliable, and investment-friendly country, where no money will go down the drain (tell that to those who have been there already — Ed. ).
This is why the Ukrainian Union of Industrialists and Entrepreneurs assembly hall, where the meeting in question was held, was adorned not only with quotations from the foreign investment law which lays down the same conditions for Ukrainian and foreign investors but also with information on the advantages of investing in Ukraine. Among them was the claim about highly skilled, industrious, and cheap (unfortunately — Author ) human resources. It should be noted that the latter factor, which all our governments effectively suppress in their reports, still remains one of the main things that attract foreign investors. Simultaneously, they can hope to acquire Ukrainian businesses at not so high a price. According to SigmaBleyzer, one of the largest foreign investors in the Ukrainian economy ($100 million), which also helps our government attract other investments, “owing to ineffective market conditions, the assessed value of some Ukrainian companies can be far lower, for some time, than their real value.” Hence, the investor should hurry because he has a “rare opportunity,” notes SigmaBleyzer, a knowledgeable company, judging by the life story of its founder Michael Bleyzer who hails from Ukraine.
