You're reading: ​How to build a new economy in Ukraine?

Representatives of Ukraine's business world and the political elite bumped heads when discussing how to build a new economy at the Yalta European Strategy conference on Sept 17.

Borys Lozhkin, the former chief of staff to President Petro Poroshenko who is now secretary of the National Investment
Council of Ukraine, told the audience that Ukraine can’t reach its
target of 6 to 9 percent annual growth without foreign investment.

“Without it higher than 6 percent we
won’t build effective new economy and without that we won’t have effective
state,” he said.

In order to attract investment from abroad, Lozhkin argues that special laws need to be passed to support foreigners; the
government needs to create large-scale investment projects ($5 billion and
more) for people to invest in and bureaucrats should be told that one of their
goals is to attract foreign investment.

Lozhkin’s former colleague, Dmytro Shymkiv, deputy head of the Presidential Administration, agreed. Skymkiv said that the
government had removed 15,000 bureaucratic procedures in the last three years
and said that now the government should focus on bringing more capital into the
country, particularly to develop the information technology sector.

“We are looking to establish a fund, a
stimulus for start-ups and innovation in Ukraine,” said Shymkiv. He listed
a number of U.S. and E.U. companies that had given capital to Ukrainian start-ups.
“The question is how we can make sure
these companies capitalize in Ukraine and grow in Ukraine. This is a place which can fuel the world.”

The moderator, CNN’s Fareed Zakaria, said
that one of the problems is large countries, like Ukraine, tend to look at
their past and compare their progress relative to time.

“Maybe part of the key is that capital
isn’t looking at your past, they’ve looking at your country compared to others.
In the World Bank Doing Business’s index, Ukraine is doing worse than Russia,
Azerbaijan. That should be the metric – how do you compare with other
countries,” said Zakaria.

Ian Taylor, CEO of Vitol, an energy company
in Ukraine, stood firmly with his argument that until conditions are changed, the investors won’t come.

“Unfortunately, the major energy
companies have all left Ukraine – the Shells and Chevron – because it’s an
incredibly difficult place to operate,” said Taylor. “Get me a
regulator and get rid of all the bureaucracy and regulation.”

Taylor said that the government’s decision to
make the gas pipeline operator Ukrtransgaz subordinate to the Economy Ministry rather than Naftogaz was proof that the “tender process is still
very, very disturbing.”

Yuriy Ryzhenkov, CEO of Metinvest, one of
Ukraine’s largest private steel companies, said that politicians were wrong to
call the steel the “locomotive of the economy.” Not only has it hit
an all -time low after the war in eastern Ukraine and the fall in global steel
prices but it could also be no more than the basis for the new economy, said
Ryzhenkov.

Instead what is needed, according to him,
is to have predictable fiscal policies and state regulators.

“Ukraine has the highest gas
transportation and railway tariffs,” said Ryzhnekov.