A real opportunity Ukrainian enterprise may use at the forum in Vienna

Foreign investment is one of the top priorities most complicated tasks facing Ukrainian enterprises. At long last, a breakthrough is in sight. Potential investors seem prepared to meet Ukraine halfway. An international business, investment, and privatization forum, Ukraine and the European Union: in the Twenty-First Century Together, is scheduled in Vienna in late April. What problems will this forum help solve? Below is an interview with one of the forum organizers, Vasyl STOLIAROV, doctor of economics, Meritorious Worker of Science and Technology, senior research fellow at the Research Institute for Finance of the Finance Ministry of Ukraine, Vice President of the Public Engineering Academy of Sciences of Ukraine for Investment Problems.

The Day: How do you view the prospects for Western investment in the Ukrainian industries?

V. S.: Several meetings were held at Austrian banks and the Chamber of Commerce as part of arrangements for the Vienna forum. In fact, the Chamber of Commerce is interested in the forum, and we have received 30 applications from potential investors, firms in West Germany, and 40 applications from companies in the countries of East Germany. There are also a number of serious proposals from France, Italy, and other countries. In a word, they want to work with us, because they adequately assess the powerful production and technological potential of Ukrainian enterprises, comparatively cheap labor pool, and a lot of other factors.

The Day: Which Ukrainian enterprises do you think will interest potential investors the most ?

V. S.: Over the years of operation in the investment market we have become convinced that investors think it best to cooperate with enterprises with new patterns of ownership: joint stock partnerships, private businesses, and funds. Sometimes they prefer small and medium businesses. In such cases, the investor’s experts and people from consulting firms may carry out preparatory work not later than half a year. With big investments the situation is different. Take, for example, the project financing the construction of a steam-and-gas plant at the Crimean nuclear power station. Its first stage envisions $65-70 million and getting it through the red tape took a year and a half to two years.

The Day: How serious will this forum be? What about its program ?

V. S.: The forum was initiated by the Investment and Privatization Relief Fund and our academy. The idea was supported by the Presidential Administration and Cabinet of Ministers. The forum will last three days (plus day of arrival and day of departure). The first day’s plenary session will hear representatives of the recipient government and those of the participants. Main reports of all branches of government will be delivered, focusing on the general characteristics of the economic atmosphere in the member countries. After that round tables will be held: “Financial Market and Portfolio Investment,” “Power Industry, Oil, and Gas,” “Machine Building and Metallurgy,” and “Telecommunications and Communication Systems.”

The Day: Which projects will the Ukrainian side submit to investors ?

V. S.: Primarily those certified by international experts and contained in the UNIDO information network, as well as those presented by our oblasts at the annual EBRD meeting last May in Kyiv. However, there is a chance the list of participants will be expanded. Enterprises, cities, and regions with well worked out projects and business plans could submit them and our national experts could raise their projects to a level answering the requirements of international financial institutions. To do so, one has to apply to the Investment and Privatization Relief Fund.

It is very important that the Ukrainian delegation be made up mostly of highly skilled managers who could deal with foreign partners on a first name basis and have experience in presenting projects. Such people would stand the best chance of getting a contract. In addition, we have to submit precisely the kind of projects to lay the foundations of economic growth at the regional and sector level, which is of vital importance to Ukraine.

The Day: The sad fact remains that many a Ukrainian business manager have become disillusioned about foreign investment.

V. S.: Indeed, without accounting for the “laws” and specifics of forums, taking part yields little result if any, even if one has what seems a good project, with all the required payments made. Lack of interest on the part of investors is easily explained: no expert examination, national and international, of the project; no invitation from a specific foreign partner... We try to cover as many factors as possible, relying on the academy’s and fund’s five-year experience of participation in the preparation of such efforts.

Often at the preparatory stage potential partners meet and find one another when promoting a project, sending out booklets and disseminating other information though computer networks, etc. Thus they come to the forum with specific proposals. Therefore, a good project must be timely represented; investors might visit a given enterprise before the forum, so they will come to the forum to sign the contract. Even now we are showing investors projects we will bring to the forum.

The Day: From your own experience, how many projects find investors during a forum?

V. S.: Effective participation grows from one forum to the next. In 1996, we would feel happy if 20 out of 100 Ukrainian projects submitted, registered with UNIDO, and acknowledged by international experts found potential investors; in fact, even ten would have kept us happy. 10-12 projects carried out would make us feel overjoyed. Now there is greater interest in Ukrainian enterprises. Negotiations are underway concerning the next forum in France this summer. It is expected to focus on enterprises of the agribusiness sector. In addition, we have proposals from German, France, Great Britain, and Italy to participate in quarterly forums organized by these countries.

For more information welcome to contact Messrs. Stoliarov and Hulenko,
Offices #203; 201; 205, 11A Sichnevoho Povstannia St., Kyiv 252010, Ukraine;
Tel. +380 44 290 12 30;
44 290 72 23 (S. Koptseva).
Fax: +380 44 290 67 35.