Penurious Consumer Puts Producer in Need of Protection
Verkhovna Rada’s Industrial Policy and Entrepreneurship Committee had a sitting on site at Zaporizhzhia’s Auto ZAZ-Daewoo long-suffering joint venture. The reason was more than valid, as the lawmakers had worked out and were introducing two bills titled [in the usual pompous manner leaving much to the reader’s intelligent guess] (1) On Changes in Certain Legislative Acts Concerning State Support of the Motor Industry of Ukraine and (2) On Changes in Certain Legislative Acts with Regard to Stimulating the Output of Automobiles, Buses, and Their Accessories in Ukraine.
Volodymyr Chekalin, Chairman of the Subcommittee on Machine Building, Military-Industrial Complex, and Conversion, stresses that the auto industry is recognized all over the world as one that creates jobs and augments GDP. The decisions we made while on that on-site sitting allow the government to do its best to make the motor industry work for the benefit of Ukraine.”
In 2000, Auto ZAZ-Daewoo showed a threefold output increase. Sales were 102.3% vs. the previous year, with exports increasing 2.5 times, adding to the Tavriya and Slavuta modifications. The Lanos model with 1.3 liter Ukrainian engines was ready for output. Auto ZAZ- Daewoo put out its first shipment of engines. Considering the company’s basic activity, the revenues totaled UAH 60 million, increasing budget payments by 23% to UAH 42.3 million. Despite all these series of coordinated measures, overall business performance remains in the red. Auto ZAZ-Daewoo is sustaining losses trying to honor its commitments under the law On the Stimulation of the Manufacture of Automobiles in Ukraine. Basically, the company wants to retain its jobs (totaling over 20,000), social facilities, collective-agreement payroll, and body-motor development investment opportunities.
The deputies noted that one of the reasons for the company’s bad performance was the inadequacy of the legal framework and lack of proper legal monitoring. Experience shows that, despite changes in foreign auto import procedures, including harsher restrictions in the terms of customs duty and excise rates, “backyard imports” continue to rise. “On the one hand, we are encouraged by a significant drop in the number of foreign vehicles crossing the Ukrainian border on temporary import terms. Here the statistical curve has declined to practically zero,” People’s Deputy Oleksiy Baburin told The Day. “On the other hand, we have evidence that cannot help but cause concern. Official records show that the import of power plants has practically stopped, but car bodies continue to be supplied. Personally, I don’t understand why we need car bodies without engines. Hence the intelligent guess: engines must continue to be delivered using certain unlawful procedures.”
The Industrial Policy and Entrepreneurship Committee decided “to recommend” the Ukrainian parliament “schedule Government Day” sometime during the current legislative session, in order that the Solons could hear the cabinet’s report on whatever progress if any has been made in the motor industry. The goal is to speed up the deliberation and enactment, on a priority basis, of the bill, On Changes in and Amendments to Certain Legislative Acts Concerning State Support of the Motor Industry of Ukraine.
Oleh Papashev, Auto ZAZ-Daewoo chairman of the board, thanked lawmakers for their support, adding that “We won’t survive if we have to rely on our own resources. If the state pays no attention and does not seriously consider the possibility of building a civilized market, Ukraine’s motor industry will cease to exist. This inspires optimism. We are often accused of denying the consumer the opportunity to buy second-hand foreign cars at reasonable prices. However, should one analyze all those ‘reasonable’ prices, one would come up with the average of five or six thousand dollars. If the state helped us sustain the competition, our sales range would expand spectacularly. People would be able to buy our brand-new cars at $5-6,000, models that not only match, but also, in their main specification, exceed numerous foreign analogs. I am fully aware, of course, that domestic popular buying capacity is quite low; this is one of the problems haunting Ukraine. Yet if we can have all our motor industry facilities function normally, budget revenues will increase accordingly, meaning that we’ll have a reliable source to boost payroll, a concrete measure to overcome our poverty .
