First investors’ forum in Kyiv

Ukraine in general, and its capital city Kyiv in particular, faces a number of economic challenges. The number-one task is to enlist as many investors as absolutely possible. The Kyiv City State Administration (KMDA) came up with the idea of gathering such prospective investors at one of the city’s most expensive hotels to launch what they believed were the most attractive investment projects.

According to the organizers of the First Investors’ Forum (KMDA and the Efektyvne Upravlinnia [Eeffective Management] Foundation), among those present were 300 business people from 15 countries, including Qatar, China, India, the US, Canada, Austria, the UK, Luxembourg, the Czech Republic, Hungary, Kazakhstan, Italy, Cyprus (this small island republic being one of Ukraine’s most active foreign inland investors), Russia, and Ukraine. They were mostly into construction, transport, IT, and finance businesses, considering the organizers’ agenda.

KMDA offered anchor projects and four sectoral ones: “Top Quality Transport and Utilities Infrastructure,” “IT Innovative Ideas,” “Business and Tourist Centers,” and “R&R Projects for Kyivites.” This includes the construction of the Kyiv City international business center and the fourth Metro line toward the microdistrict [city community] of Vyhurivshchyna-Troieshchyna, multi-storey intercepting and underground parking lots, and Ukraine’s first Bionic Hill innovation park.

“All these projects offer fresh opportunities for Kyiv and other cities and regions of Ukraine, because Kyiv is not only the capital city, but also a tangible part of the economy of Ukraine,” said Natalia Izosimova, chairperson of the Effective Management Foundation.

A total of 22 projects were launched, with another 122 added to the forum’s database. KMDA estimates point to over UAH 125 billion’s worth of the projects.

“This investors’ forum is an opportunity to demonstrate to the rest of the world that Kyiv is holding the door open for [foreign inland] investment, that this city has a great deal of potential and lots of business opportunities. This forum will help establish a dialog between those ‘upstairs’ and business people. I’m sure this will help us strengthen the capital city’s economy and implement the ‘Strategy of the Development of Kyiv City until the Year 2025.’ This capital city is receiving one half of the investments in the Ukrainian economy, and it is Ukraine’s [foreign inland] investment calling card,” said Kyiv Mayor Oleksandr Popov, adding that Kyiv boasts a unique cultural heritage, including architectural and archaeological sites, and that preserving this heritage is a matter of principle. He went on to say that tourism would be the key to the capital city’s business progress.

Kyiv Mayor Popov signed six cooperation and investment-intended memoranda during the forum, totaling over 30 billion hryvnias. Four of these, worth 21 billion hryvnias, will be implemented by the KMDA jointly with the State Agency for Investment and Management of National Projects of Ukraine (in other words, by using central budget money), including the Kyiv City, Air Express, and Clean City projects, as well as Kyiv’s ring road, from Stolychne to M-03 Kyiv-Kharkiv-Dovzhansky highways, part of the Kyiv-Boryspil major highway.

Ukrainian Development Partners and BEG Ingenierie Ukraine promised Kyiv another nine billion hryvnias. Mayor Popov signed an eight-billion-hryvnias cooperation memorandum with UDP, concerning the construction of a Bionic Hill innovation park, to be built in Sviatoshyn city district, on an area of 147 hectares, including business centers, a university with its own research center, production facilities, homes, daycare centers, a grade school, a keep-fit complex, a shopping and amusement center, and a R&R facility.

BEG Ingenierie Ukraine and KMDA plan a wholesale project in Kyiv’s Desniansky city district, complete with a vegetable storage facility, shopping and exhibit pavilions, offices and homes. This project is expected to collect UAH 1.440 million’s worth of investments. The project’s first phase is expected to be completed in 2015.

“Some of the results of our painstaking investment-attracting effort are clearly apparent today. A total of 150 such projects have been worked out and business partners found to help carry out the most important ones. This is proof that Kyiv is prepared to accommodate such investors, and that these businessmen are prepared to invest in Kyiv’s economy,” said Mayor Popov, adding that the investors’ forum had been expected to provide 25 billion dollars to help Kyiv’s development, but that they had already received about 50 billion dollars.

There is one big question that remains unanswered: How will all these investors benefit from projects like Kyiv infrastructures, Metro line, parking lots? Mayor Popov promised to answer this question in two months, after all technicalities will have been agreed upon. Popov admits that the city budget may assume the responsibility for recompensing the investor: “This could happen in case of tariff policy amendments, involvement in other related projects, or integration of all finance sources.”

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Interestingly, there were no Ukrainian big-time businessmen among the participants in this investors’ forum, save for Rinat Akhmetov (Ukraine’s wealthiest man, according to Forbes) who was seen in the audience for 15 minutes and then made himself scarce. Ditto Vadym Novinsky, chairman of the board, Start Holding. Which of the projects submitted interests one of Ukraine’s largest investors’ groups remains anyone’s guess. Most likely construction, considering that this company mostly supports projects dealing with steel, oil and gas, shipbuilding, agriculture, and real estate.