But many are wary because of numerous obstacles.
Vladyslav Kaskiv has probably the toughest job in the Ukrainian government. He is charged with trying to persuade foreign investors to put their money into a country with a reputation as lawless, corrupt and bureaucratic.
Kaskiv is head of the State Agency for Investment and National Projects of Ukraine, responsible for becoming a “one-stop shop” for foreign investors and getting them interested in a variety of projects.
He took off on an international road show starting in London on Oct. 31 and taking in 16 cities in Europe, the U.S. and Asia before it ends in Shanghai on Dec. 19.
The creators of the road show “InvestUkraine” say it is the first attempt to “sell the whole country.”
That will be a tough task as global investors are bracing for a potential second wave of the economic crisis and looking for safe haven for their money.
Ukraine hardly fits that description. It dropped from 145th to 152nd place in the World Bank’s Doing Business 2012 report for failing to improve tax, customs and regulatory policies.
Consequently, foreign investment in Ukraine since independence in 1991 has been anemic.
Kaskiv said his agency has neither the aim nor the responsibility to change the investment climate. “I’m not an economy minister carrying out integrated solutions,” he said.
Vasyl Yurchyshyn, director of economic programs at the Razumkov center
Showcasing the top-five investment projects to journalists earlier this month, he spoke with the easy manner of a salesman making a pitch.
The projects include the construction of a sea terminal for liquefied natural gas, the creation and implementation of a 4G broadband network in the country’s secondary schools and the building of recreation infrastructure in Carpathians for the Winter Olympic Games, which the government hopes to attract in 2022.
The amount of investment for the projects ranges from $10 million for “Olympic Hope” to more than $600 million for the broadband network.
Kaskiv said he expects to collect at least Hr 3.5 billion (about $400 million) from his efforts.
But critics said there are a number of much simpler and cheaper ways to attract investors.
U.S. Ambassador to Ukraine John Tefft said the road show could bring some positive results, but that the government would do better to look after the firms that are already here.
“Companies who have already invested can be the best promoters of further investment,” he told the Kyiv Post.
“If existing investors are victims of corruption, raider attacks, excessive red tape, unfair treatment and do not receive their rightful VAT returns, they will have little incentive to recommend Ukraine as an emerging market in which to invest,” Tefft added.
Others say the national projects are vague and badly timed.
“The [national] projects are not worked out and they could be rather called ‘the attempts,’” said Vasyl Yurchyshyn, director of economic programs at the Razumkov center think tank. “Rational investors would not be interested by them, especially given today’s strict financial discipline.”
Morhaf Molhim, an adviser to foreign investors in Ukraine, criticized the whole road show for lacking concrete business plans.
“It is all nicely described, but without any details,” Molhim said. “What are the guarantees? Who [in the government] is going to supports the projects?”
Kaskiv said the work of his agency was directly controlled and protected by President Viktor Yanukovych, who personally hired him. Kaskiv is a former opposition politician and activist of the 2004 Orange Revolution, the peaceful democratic uprising that thwarted Yanukovych’s first bid for the presidency.
Thanks to Yanukovych, he said, the national projects avoided numerous bureaucratic obstacles and received direct budget financing.
Kaskiv said he believed his agency “has enough to get the investors interested,” despite the tough global investment conditions. But experts doubt it was a wise decision to go ahead with the road show now.
“The investors, heads of funds are very busy,” Bespyatov said. “If the project is raw, they will hear it out but will not make any decision.”
Kaskiv touted his record so far, saying that the $100 million his agency has gathered so far is more than all other investment agencies during Ukraine’s 20 years of independence.
He announced that a second road show is planned in 35 global finance capitals next year. “The public image effect we receive will be incommensurable with costs,” Kaskiv said at a recent press breakfast in Lypsky Mansion. About a dozen journalists feasted in the restaurant, considered one of Kyiv’s most luxurious.
Kaskiv said the road show would cost $1.5 million. Nashi Hroshi, an non governmental organization that reports on the use of state money, wrote that participants in the trip were flying only business class and staying in 5-star hotels.
Time will tell whether that is a good investment.
Kyiv Post staff writer Oksana Grytsenko can be reached at [email protected].
