Despite the difficult economic situation in Ukraine, long stagnation, conflicts in theEastern Ukraine, we are now witnessing the implementation of major investment projects into Ukrainian ports infrastructure. Thus, a US based multinational company BUNGE and a Chinese company COFCO Agri believe in Ukraine’s potential and into the prospects which will open up our state to foreign investors. European Business Association congratulates the companies with the completion of the projects and hopes that it will be more than positive signal to other foreign investors. In this connection, please find comments from 2 major investors – EBA member-companies.
Oleg Bigdan, Legal Director at Bunge Ukraine:
Bunge placed its confidence in Ukraine’s
agricultural and infrastructural potential. That is why, our company
has significantly increased its footprints ince its first investment
in Ukraine in 2002. On June 15 we opened one of the biggest
multi-seed crush plants in Ukraine at Mykolaiv port which is one the
largest US investments in Ukraine’s agricultural industry.
This
ambitious project in Mykolaiv region is a subsequent development of
our first success story in building one of the most efficient port
grain terminals at the nextdoor site in 2011. Our total investment in
port infrastructure in the region exceeds $280 million. The facility
would increase the port turnover for additional 1 million tones and
bring significant export proceeds into the country. We are also
playing an important social role in the region creating stable jobs
and investing into skilled labor. The new facility would employ 170
local professionals.
We
support infrastructural reforms of the Governmen to Ukraine,
including focus on preserving and refurbishing road infrastructure.
At the same time we are working together on removing business
impediments. One of such hurdles is ineffective and excessive level
of port fees which significantly undermines competitiveness of
Ukrainian ports with the other Black Sea ports. Business community
and key industry players have been working with the European Business
Association and IFC experts to develop a transparent and economically
justified calculation for port fees and weurge the Ministry of
Infrastructure tosupport this initiative aimed at boosting Ukrainian
exports.
Being
the company that believes in a stable economic future of Ukraine, we
want openness in communication with the authorities, predictability
in the actions of the relevant ministries. Nowadays, thereis a number
of strategically important issues for our business, for which we are
ready to share our best international experience of Bunge and
international financial institutions.
By
2020, investments in the agricultural sector of Ukraine according to
the information of the Ministry of Agriculture are expected to reach
$8 billion. In order to reach this figure, it is important to create
conditions for investors and also create respective infrastructure.
We are ready tosupport the efforts of the President of Ukraine and
the Government of Ukraine in this direction and we believe that
step-by-step Ukraine will be able to win not only leading positions
in the world markets of grain and agricultural products, but will
leverage its positions as the “BreadBasket of Europe”.
Yuriy Vakhel, Head ofLegal and Business Development at COFCO Agri in Ukraine:
Ukraine
is a vast agrarian state due to the fact that it has always been the
breadbasket of Europe. Thus, we believed in Ukraine and were not
afraid to invest, even when fierce fighting was going on in the East.
The situation was, to put it mildly, not very conducive for such
decisions. Nevertheless, the decision was taken and COFCO
Corporation, as the largest operator of the Chinese food market,
opened an opportunity for Ukraine to receive revenue on one of the
largest markets in the world.
For
us this terminal is a joint project between a foreign investor as a
customer and the Ukrainian general contractor, “UkrBud” company.
The responsibility for building permits, project approval and other
formalities, as well as direct construction and the introduction of
the terminal into operation, was encharged to the Ukrainian side. The
use of modern western equipment as well as the tireless work of
experts-builders, professionalism and effective cooperation between
COFCO and Ukrainian contractor has led to a successful result in the
realization of this ambitious project.
The
cost of this project amounted to $ 75 million. Expected payback
period is 8 years. However, this figure is influenced by a number of
factors – competition on the market, the economic situation in the
country, Ukrainian fiscal policy, relations between the state and the
investor.
In
our opinion, the state should give more support to investors who came
in this difficult time. We create job places, buy Ukrainian products
and pay taxes to the budgets of all levels. All this improves
Ukrainian business climate. However, despite that the opposite
occurs. Introduction of additional payments due to which there are
significant increases for stevedoring companies, the lack of
financing for the modernization of port facilities, hydraulic
structures as well as passive policy of the state.
Anyway,
we actively work on the improvements to Ukrainian legislation with
the European Business Association along with other interested
organisations and experts. As for the necessary steps, firstly, we
need to change the size and methodology of calculating port charges.
Secondly, to cancel collecting additional payments – special services
for an access to the berth for port operators. Thirdly, it is
important to eliminate the discrimination in using property of
stevedoring companies.
From
our side, we would like to add that the EBA Logistics Committee,
which unites both BUNGE and COFCO Agri, is working hard to improve
the Ukrainian legislation. We pay attention to all the regulations,
which somehow affect the interests of present and future investors
into Ukrainian infrastructure. For example, we work on developing of
the Methodology for calculating port fees, the Draft Law of Ukraine
“On the inland waterways,” the Draft Law “On railway
transport”, assets privatization, process of the European
integration and other issues.And we strongly invite companies to join
us on the way to reforms.
Materials
prepared by Yuliya Malich, EBA Logistics Committee Coordinator
