HARD WORK IN HARD TIMES
Ukraine Economic Development Forum in Washington
Kyiv Post, Kyiv, Ukraine, Friday, October 16, 2009
WASHINGTON - The First International Forum on the Economic Development of Ukraine gathered at the Newseum, the internationally known museum of news, in Washington, D.C., on Oct. 15. The event was held in conjunction with the second bilateral trade and investment relations meeting between the Ministry of Economy of Ukraine and the Office of the U.S. Trade Representative (USTR) on Oct. 14. It was organized by the U.S.-Ukraine Business Council.
The forum, aimed to encourage new investors to Ukraine, brought together a high-ranking delegation from Ukraine headed by Vice Prime Minister Hryhoriy Nemyria and the Minister of Economy of Ukraine Bohdan Danylyshyn, former U.S. ambassadors, experts in economics and representatives of the U.S. businesses either already active in Ukraine or still considering this endeavor.
While tax, pension and other structural reforms are being discussed by the government officials, some U.S. businesses have been making good money, providing jobs to Ukrainians and supplying quality products.
“Ukraine is a great laboratory for learning new skills,” said George Logush, vice president of Kraft Foods, the current market leader in chocolate, coffee and salted snacks in Ukraine. The company is an excellent example of the business which started to develop in Ukraine at the time of depression in 1994-1996 and used the opportunity to become successful. Logush stressed that does not matter which crisis is in the country, Ukraine still has well-educated people to hire, and they are very hard-working.
Even though Kraft Foods came to Ukraine at the most difficult time of 1990s, the company expanded rapidly geographically and was not afraid to introduce new products. “We were learning by doing, it was richness of experience,” said Logush, inspiring the audience and giving practical advice in terms which myths and mistakes U.S. businesses should avoid in Ukraine.
He advises despite of the crisis, to continue advertising, hire strong staff, bring new product to the market and learn local consumers. “We expect new growth. We must be prepared to a new crisis after that,” said Logush, who believes that while crises come and go, it is necessary to work anyway.
Not all of the participants of the forum share such optimism. “We have already heard many plans and promises. Is there a political will [for changes]?” Jaroslawa Zelinsky Johnson from Chadbourne & Parke LLP told the Kyiv Post..
ANALYSIS BY EDILBERTO SEGURA
A thorough analysis of the necessary changes was done by Edilberto Segura. He highlighted that to accelerate economic development, the Ukrainian authorities will need to bring stability and predictability to the legal and judiciary system, introduce measures to deal with corruption, diversify exports (the traditional sources of export growth as metals and chemicals are unlikely to continue at the high rates of growth of the past), make energy sector transparent, improve public administration, and, in general, create better business environment for investors.
AMBASSADOR WILLIAM TAYLOR
“Ukraine was wounded by both world-inflicted and self-inflicted wounds,” said former U.S. Ambassador to Ukraine, William B. Taylor, describing political and judicial issues, lack of unity between the president and the prime-minister. “After the new elections there is a great opportunity for a new president to fix self-inflicted wounds,” Taylor said. He also ensured the audience that “friends of Ukraine can help to heal the wounds,” highlighting that the United States cars about the crisis in Ukraine.
Nemyria and Danylyshyn promised that Ukraine will be able to implement a number of reforms after the presidential elections, including diversification of exports, making the energy sector transparent and others.
Among the potential for future development, mentioned by the experts: cooperation with Japanese companies to develop methane hydrate, a source of energy found in abundance at the bottom of the Black Sea (Dr. Ariel Cohen, Heritage Foundation), implementation of the important structural reforms – pension and tax reforms (Danylyshyn), development of IT sector (former U.S. Ambassador William Green Miller), development of infrastructure and using coming EURO 2012 to advertise Ukraine worldwide (Martin Raiser, World Bank; Jorge Zukoski, U.S. Chamber of Commerce in Ukraine).
The participants of the forum were greeted by Rep. Illeana Ros-Lehtinen (R-FL). A panel based in Kyiv participated in the Forum through state-of-the-art Live TV Link: Martin Raiser (World Bank), Ceyla Pazarbasioglu (IMF), Andre Kuusvek (European Bank for Reconstruction and Development), Jose Manuel Pinto Teixeira (European Commission’s Ambassador to Ukraine), and other experts. The participation of Yulia Tymoshenko announced earlier was cancelled.
The company Vanco’s presence was noticed at the Forum. Houston-based Vanco Energy Corporation was attracted to Ukraine by the hydrocarbons exploration in the Black Sea in 2005. However, after the agreement had been signed, it was revoked and terminated by the Ukrainian government in 2008.
The company didn’t give comment and the company’s corporate office did not return the phone call. Observing such stories, foreign investors feel unsafe, they expect more stable legal system to invest their money. They hope that such forums will keep the issues on agenda and finally the Ukrainian government will have to make decisions to protect investors.
Olexandra Kuzhel, head of the Ukrainian State Committee for Regulatory Policy and Entrepreneurship, highlighted in her comments to the Kyiv Post, that her visit to the United States was very productive and became an excellent opportunity to explain the position of her committee on many issues, for example, the issue with the “recycling fee,” currently opposed by the U.S. Chamber of Commerce.