Modern economic POTENTIAL OF UKRAINE

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Investment portrait of Nikolayev region

Regulative environment

Nikolayev region is attractive for investment area in the south of Ukraine due to its significant industrial, scientific, and technical potential; advantageous geographical location; developed transportation infrastructure; the high educational level of the population; highly qualified labor force; availability of natural resources; and access to the markets of CIS states as well as Europe, Asia, and Africa.

A program targeting increased foreign investment was carried out in Nikolayev region over 2003-2005.

An exhibition stand called ‘Investment Opportunities of Nikolayev region’ has been prepared as part of the program. It became the regions’s business card during presentations for prospective foreign partners. Also, an investment website of the same name in Russian, Ukrainian, and English was opened as well. Information on the competitive advantages of Nikolayev region, investment proposals from companies and organizations in the region, legislation on investment processes in Ukraine, as well as statistical data are placed on the website.

Information on the economic and investment potential of Nikolayev region, a CD on Nikolayev region on English and Russian, and a disk for presentations were also prepared for organizing meetings, visits, and conferences.

The presentation of the region was conducted during numerous visits of foreign delegations and trips by Nikolayev region delegations abroad with the purpose of creating a favorable image of the region.

Workshops regarding increasing investments in the agriculture industry have been conducted with the participation of district state administration specialists, officials of four municipal committees, as well as the business circles of the region’s districts and towns. Workshop participants were given material on the legislative basis behind attracting foreign investments and the methods regarding the development of investment projects.

The construction of the bridge crossing the Yuznyi Bug River project, which is financed by Japanese loans as part of the official development assistance of the Government of Japan, is supported at present.

Carrying out the measures envisaged by the program made it possible to disseminate information on the export and investment potential of Nikolayev region in the world community and facilitated the formation of a positive image of the region in international business circles.

These measures enabled Nikolayev region to continue its positive trend regarding the volume of foreign investments into the region’s economy. The pattern of foreign investments has significantly improved. Direct foreign investments into the development of local industry (capital, equipment, and transfer lines to food processing and agricultural produce, construction materials, transport infrastructure, etc.) prevail in this pattern.

The total property of foreign investors from 34 countries of the world amounted to USD 80.5 mn as of January 1, 2006.

Infrastructure

There is a well-developed transportation network in the oblast. The Nikolayev-Odessa-Chisinau, Nikolayev-Simferopol, and Nikolayev-Kirovograd, highways among others, cross the region. The availability of waterways and the littoral location of the territory have promoted significant development of sea and river transport.

Five sea ports and a river port fitted with modern equipment operate in the city of Nikolayev. The technical capacity to process freight at the trade port alone reaches 9 mn tons per year. Navigation in Nikolayev is possible all year round.

Nikolayev Airport is among the largest and most technically equipped airports in the south of Ukraine and has the status of an international airport. It possesses a modern runway fit with radio equipment, ground markings, and navigational aids.

Telephone communication in the region is rather well-developed. Individual telephone installation numbers in the region are among the highest in Ukraine.

466 telephone exchanges operate in the region. The development of communication infrastructure continued over 2005, and new facilities were launched into operation. An ATS-60 automated telephone exchange, with the capacity for 1,536 numbers, was put into operation.

Number and examples of companies with foreign investment in the region

There are 71 companies with foreign investments in the region.

The following investment projects were carried out in Nikolayev region over 2004-2005:

OJSC Damen Shipyards Ocean
Dutch investor Damen Shipyards Group has been investing into the development and upgrading of the company since 2001. The company now boasts a 100% loading of its capacities. Production volumes grow from year to year. Wages are regularly paid. Damen Shipyards Ocean is a subject to Nikolayev Special Economic Zone regulation.

CJSC Nikolayev Potassium Terminal
This enterprise deals with the organization and securing of fertilizers and other freight transshipment and transportation by railway, sea, and river. It has successfully operated on the market since the date of its founding and actively cooperates with foreign investors, including in joint investment agreements with the participation of Cyprian investors.

Nikolayev Sea Trade Port, State Company
This company is involved in running the ‘Mineral Fertilizer Transshipping Complex Development’ project with the participation of a Belarus investor.
The port is ranked one of the top five most important ports of Ukraine by production facilities. Nowadays the port processes metals, pig iron, phosphorites, steel, pipes, ores, ferroalloys, mineral fertilizers, equipment, foodstuff carriages, grain, etc.

LLC Avtomagistral (Highway)
The company was created to build the Odessa-Kiev Highway with LLC North-western construction company Center, Russian Federation, as one of founders. The volume of foreign investments amounted to USD 400.7 ths. by the end of the year. It has created 95 new jobs, and road construction for a total amount of UAH 56 mn has already been fulfilled over the period of project implementation.

LLC Agricultural Farm of the Kornatskiy Family
The Russian Federation invested agricultural machinery for the total amount of EUR 662.5 ths. and USD 1,570.55 ths. to the charter fund and 197 jobs were created.

CJSC Lactalis-Ukraine
The company, which was created together with the French Lactalis Group, has consistently raised production volumes of high-quality dairy output since 1996. A significant number of private sector and collective farms in the region are involved in deliveries of milk because of the company’s operation.

LLC Alpi-Smak
This company is carrying out a project to organize the production of confectioneries with the participation of Turkish investors. Production volumes are on the rise, and 15 new jobs were created.

LLC S&T Ukraine
This firm, with 100% Vietnamese investments, is implementing an investment project to construct and launch a plant for the production of polypropylene packaging. At present the premises are being repaired and equipment paid for by the of investor’s resources is being imported. The project is envisaged to create 200 new jobs.

LLC Eurolact
Investing state – Belgium, amount of investments – USD 2,883.960 ths., including USD 20.360 ths. of capital and USD 2,863.6 ths. of industrial equipment for manufacturing of dairy articles. It is planned to create 50 new jobs and produce 9 tons of ready-made output per day.
The project, designed for processing milk whey and the production of lactose (milk sugar) and whey concentrate on its basis, is implemented with the help of Belgian investor BVBA Milk Production Trading.
Building work is coming to an end, as new equipment is imported and installed simultaneously with the production of traditional output. The new direction of production will enable the creation of additional jobs, with the produce being competitive on external markets, and extra income is projected to be approximately USD 5.4 mn annually.

LLC MFH-Selhozpredpriyatiye
The investing state – Turkey, volume of invested capital – USD 81,405 (UAH 431,763.98). The capital is invested into the assembly milling equipment.

Uniqueness of the region (natural resources, climatic conditions, etc.)

As a separate political and administrative unit of Ukraine, Nikolayev region was formed on September 22, 1937. It occupies more than 4.1% of Ukraine’s territory.

The region borders on three other regions of Ukraine (Odessa, Kirovograd, and Kherson regions) respectively in the west, north, and east. The territory of the region includes several dozens of kilometers of the Black Sea coast line and its estuaries. The Dneprovsko-Bugskiy, Bugskiy, Berezanskiy, and Tiligulskiy estuaries create a surprising splashing of water glides deep in the dry land.

The population of the region was 1,229.5 ths. people as of January 1, 2005.

Territory – 24.6 ths. sq. km.

The region’s climate is moderately continental, with a mild winter with some snow and a hot dry summer.

Ordinary black earths prevail in the region’s soil composition in the north, and southern black earths, chestnut, and dark chestnut soils in the south.

From an administrative point of view, the region is divided into 19 districts with the industrial and cultural center in the city of Nikolayev.

The industrial potential of the region is concentrated mainly in five towns.

Nikolayev is a center of gas turbine manufacture, ship building, non-ferrous metallurgy, food, and light industry.

Yuzhnoukrainsk town provides more than 35% of the region’s industrial output through the operation of a nuclear plant.

Pervomaisk is the center for diesel engines, agricultural machinery, sugar, milk cans, and sewing industry production.

Voznesensk is a leather-producing city, and is the leading producer and exporter of leather and leather raw stock.

Ochakov is a resort town with developed transportation structure as well as food and processing industries.

The mineral and raw stock resources in the region are represented by significant reserves of construction materials: construction stone with a broad color grade and high decorative qualities, sawn stone, cement raw stock, etc. Reserves of limestone and kaolin in the region are of industrial importance.

Sea sand beaches stretching for 70 km, springs of mineral water with confirmed reserves reaching 1 ths. cu. m and curative mud with geological reserves exceeding 2 mn cu. m are the main recreational reserves of the region.

There are more than 120 territories and objects of natural and reserve fund in the region, including the Kinburgskaya Sand Bar, Granite and Steppe Pobuzhye, part of the Black Sea Biosphere Reserve, 45 wildlife refuges, 42 natural monuments, and approximately 19 parks.

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