LVIV — TRUSKAVETS — LVIV — Theoretically speaking, Ukraine can become one of the world’s biggest foreign direct investment destinations, considering its vast domestic market potential, relatively qualified and inexpensive workers, tangible research and technological potential, natural resources, and the presence of an infrastructure, albeit falling below modern standards. This is a fact no one is prepared to call into question, so what’s our big problem? What is holding back foreign investors? The 10th International Economic Forum, held in Truskavets (an internationally reputed spa in the west of Ukraine) was supposed to give an answer to this question. It was held under the motto “Cross-Border Cooperation. Looking into the Future.” The organizers said this motto wasn’t coincidental, given that Ukraine has 19 oblasts bordering other countries, and that Lviv oblast is next door to the European Union. Hence, intensive cooperation is one of the priorities: it will allow regional economic, cultural, small and medium business growth, upgrade regional communications networks, and improve environmental protection.
According to the World Bank and International Finance Corporation’s statistics, Ukraine places 142nd among 180 countries in the “Doing Business” ranking, and sixth in terms of shadow economy, said Vitalii Antonov, president of Halnaftohaz Concern. He added that “if I were a foreign investor, I would be in no hurry to make investments in Ukraine under such circumstances. Those who make investments perform exploits.” He went on to say that the proposed reforms should be carried out step by step and maintain stability in the country.
Lviv Mayor Andrii Sadovy is convinced that, in order to help investors, Ukraine’s political leadership should empower local governments to supervise local taxes, emergency management, and law enforcement authorities, as well as take measures aimed at increasing the independence of local budgets. Jorge Zukoski, President of the American Chamber of Commerce in Ukraine, said that the direction of economic reforms has been determined in the country, and that President Viktor Yanukovych has prepared a general economic reform. He also claimed that there are partnerships with advanced countries and newly established political stability. In other words, there is an opportunity to carry out a legitimate regulatory reform to improve the situation in key industries. In fact, international experts offer practically the same recommendations concerning the reforms announced by the political leadership, so it is necessary to implement an economic reform on the national level. Zukoski listed the reforms needed in Ukraine and said that it is necessary to create an environment that will resist corruption, protect intellectual property, develop innovative methods, move from consumption to output of competitive products, strengthen rule of law, and enhance the transparency and stability of investments.
Says Krzysztof Hetman, deputy minister of the Polish Ministry of Regional Development: “We’re in phase two of the program of transnational cooperation between Ukraine, Poland, and Belarus. We have 180 million dollars at our disposal and we’re glad that there is a great deal of activity on both sides of the border. A total of 300 program participation applications have been submitted, including more than a hundred from Ukraine and Belarus.” Among the projects scheduled to be considered in December are ones relating to the upgrading of the Polish-Belarusian crossing and the border checkpoints of Ust Luga, Rava-Ruska, Yahodyn, and Krakovets. Hetman believes that this project has both material and sociocultural value, in that it will serve to increase social confidence.
The International Economic Forum in Truskavets was noticeably represented by the western regions of Ukraine; they held three affiliated and four panel meetings. Among the topics on the agenda were regional development in the Carpathians, tourism as an industry of hospitality, and the Euro-2012. Eight investment projects were launched, including one meant to increase the public corporation Zakhidenerho’s export potential by adding Power Unit 9 to the Dobrotvir Thermal Power Plant. Another project envisaged the production of versatile multipurpose vehicles for the municipal sphere, involving the public corporation Electrone Concern. The Enerhoresurs-Invest Corporation submitted a project for the manufacture of polymeric modular sewage disposal plants.
The press service of the Lviv Regional State Administration (LODA) informed The Day that six official international meetings and talks had taken place within the framework of the 10th International Economic Forum. Two memorandums on cooperation had been signed between Lviv oblast and Thuringia, the first one dealing with the training of paramedical personnel, between the Neanderklinik Harzwald GmbH Seniorenpflegebereich and Lviv Medical College, and the second one dealt with the setting up of a powerful logistical center in Yavoriv raion. The head of the LODA signed a framework agreement between the Nordic Environment Finance Corporation (NEFC) and PAT AK Lviv Bank on the financing of municipal facilities in the social sphere, including preschool educational establishments and schools.
Sadovy signed a memorandum with Lars Vestbjerg, of the Danish Business Association, on combined efforts in the creation of a favorable investment climate in the city. This memorandum is aimed at providing jobs and investments in the municipal economy.
Valerii PIATAK, chairman of the board, Institute for Regional Development:
“I attended the forum to hear ranking officials’ policy in regard to investments. I expected this dialog to be fair and straightforward, so as not to remain on paper, in the sense of business-related barriers that must be removed, the struggle against corruption, and the preparation and implementation of investment projects. This forum turned out as I had expected. As for the presence of our political leadership, every participant made up their own mind. Some of those who came to work during the forum probably paid no attention. The presence of top-level officials must have been important for those who wanted to hear a confirmation of their expectations. The previous forum was attended by the president and the prime minister. So what? They made lofty statements, but nothing of what they spoke about ever happened. Therefore, I’d rather deal with the current situation. As far as I’m concerned, this forum went beyond declarations, as rather positive economic and political instruments were presented, I mean a new economic-political package. I think that concrete mechanisms will be realized under this package.”
Lars VESTBJERG, Danish Business Association:
“We have invested 150 million dollars in Ukraine over the past five years and provided over four thousand jobs at 50 enterprises. We believe that the Danish investments have taken a strong root in Ukraine. Four other Danish companies are planning investments in Ukraine, particularly in its western regions, before the end of this year. I can personally use the experience of my company that has been doing good business on the Ukrainian market for twelve years and tell everybody about the big prospects of the Ukrainian market.”
Taras BATENKO, head of the Lviv branch of the Druzhba Gas Pipeline:
“There were rational, interesting ideas as well as criticism voiced at the forum. I was pleased to hear about simplified ministerial procedures in different sectors, instead of the previous red tape — in construction, transportation, and so on. I think that the government has done a good deal of work to stimulate business in Ukraine and attract foreign investments, so that future investors could be aware of stability rather than scared away by constant yearly or even six-month changes [to current legislation].”
Dr. Viktor BORSHCHEVSKY, Ph.D. (Economics), first deputy rector, Lviv Institute of Management:
“Politics in Ukraine have a strong impact on the economy. It’s common knowledge that economic groups are noticeably represented in all political structures. These political structures have enough clout to stimulate or briefly and primitively lobby for some or other economic groups. On the other hand, the economic situation determines the level of political culture, what with current politics being dominated by people who represent big, industrial businesses. Accordingly, small business places second, although it forms the economic culture of our society. How long will this last? My answer is for decades, for we have been through this, under the previous government and the situation remains the same. I could compare the situation in Ukraine to what’s going on in Argentina and Mexico. In civilized countries, politics is separated from business. In such countries outstanding economics experts are duly represented in the political domain, they come up with certain economic models and the politicians relay the signals to the economy.
“With regard to political forums in Ukraine, they are useful, of course, inasmuch as they deal with both new ideas and their implementation guidelines, so as to show those in power that there are [effective] alternative concepts. Another thing is that our political leadership failed to come to this year’s forum. Will they pay heed to such new ideas and old [existing] problems?”
