From Zone of Disaster to Zone of Promise?

A presidential decree has established a special economic zone in Transcarpathia. Another decree provides special treatment of investment activity in the region.

As reported by the KIA-UNIAR News Agency, a special Transcarpathian economic zone will operate for thirty years and cover 700 hectares. Tax privileges and a special tax regime are being set up in the zone: specifically, there will a complete exemption from charges to the State Innovation Fund. Special treatment for investment activity is to be for a 15-year period.

Commenting on the decrees, Deputy Minister for the Economy Leonid Minin told The Day that they will help attract investment to Transcarpathia and foster the development of small and medium business. The minimum investment requirement is $250,000, and investors are to be exempt from the profit tax for two years. Mr. Minin further said that real changes in the oblast can be expected only after the relevant laws are approved by Parliament. Such laws, he adds, are being eagerly awaited by investors, and once they are adopted, the process will start immediately, for there are already plans to invest in wood processing, machine-building, tourism and recreation, as well as hotels. Leonid Minin is confident that the law will pass, because Deputy Speaker Viktor Medvedchuk is interested in it.

Serhiy Oksanych, President of the Ukrainian Investment Business Association, thinks that the special economic zone and investment regime in Transcarpathia will have a positive impact on the economy of a region which suffers not only from natural disasters, but also from unemployment. These decisions can be opposed only by the opinion, popular among our business communities, that current practice in this country for the authorities to give today and take back tomorrow.

Serhiy USTYCH, Transcarpathian State Administration Chairman, is also upbeat about the presidential decrees: "There is not one iota of politics in our Free Economic Zone, everything is according to classical schemes tested in the outside world."

Eduard MATVIYCHUK, Oblast Council Deputy, adds, "Based on the most conservative calculations, this area requires $40 billion in investment to bring its infrastructure into conformity with the name of the Free Economic Zone. It seems that most likely we will be developing a transshipping point near Chop. For over four years, however, such functions have been performed by the Chop Autoport. Perhaps the authorities simply want to legalize preferential treatment for this organization. Thus, this project will not essentially benefit Transcarpathia as a whole. It will benefit only the officials, investors, bureaucrats, etc., who stand behind those entities."

Victor ZHERDYTSKY, People's Deputy and leader of a non-faction parliamentary group representing mountain settlements, has this to say: "The decree On Special Treatment for Investment Activity in Transcarpathia is very positive. However, the other decree, On the Transcarpathian Special Economic Zone, is not definitely positive, for 737.9 hectares is not an area which will have a substantial impact on the whole oblast. It will affect positively only residents of the zone. The people will be eager to get to the promised land, while the rest of Transcarpathia will decline."

The Day's experts have also expressed their concern that wood processing and local industrial enterprises which use wood will be also granted privileges under the investment regime in Transcarpathia. Thus, a new threat looms for the region's mountain forests, where clear-cutting caused the recent disaster. And this is at the time when nobody is talking about privileges for forestry, which also badly needs investment.