Modern economic POTENTIAL OF UKRAINE

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Investment portrait of Khmelnitskiy region

Foreign trade

In January-April 2005, enterprises based in the region exported to 51 countries worldwide (including 11 CIS countries and 21 European Union member-states). As compared to the respective period of last year, commodity shipments destined to the CIS shrank by 3.2%. Meanwhile, exports to other countries of the world rose by 28.3%. CIS-bound exports in the period contributed 44.0% to the gross export volume, shipments to other countries - 56.0%. The corresponding figures in January-April 2004 were 51.1% and 48.9%, including a 41.9% share of supplies to the European Union.

Investments

Accretion of foreign investments in the last year made nearly USD 20 mn (by comparison the total of foreign investments as of January 1, 2001 was only USD 15.4 mn).

In the last five years, the rate of foreign investing into the regional economy was 1.5 times higher than the Ukrainian average. Yet, foreign investments hold some 2% of the investment structure of the region, whereas the national Ukrainian figure is close to 5%. According to the Institute of Reforms non-government analytical center, Khmelnitskiy region is 18th in the investment rating and 11th in rate of increasing foreign investment.

Representatives of 28 countries of the world invested in the regional economy. The largest amounts came from Lichtenstein – USD 25.6 mn, Cyprus – USD 6.3 mn, and British Virgin Islands – USD 6.3 mn. These three countries have aggregate 57.3% in total volume of direct investments in the regional economy. Investments from the Russian Federation and the USA add up 8% each, Germany – 6%, Ireland – 3%, and the rest – 18%.

Companies with foreign investments

• Prettle-Kabel Ukraine is a company with Ukrainian and German capital. Main production includes bundled electrical cables for cars and household appliances. The company’s clients are car-making giants like Volkswagen, Bosch and Siemens.
• Nail, Ltd. is a company with Ukrainian and Dutch capital. Its main output are nails that meet demand in Ukraine and European countries.
• Podolye Cement is one of the largest cement producers in Europe. The controlling stake in the enterprise belongs to an Irish company. The plant supplies output to markets in Ukraine and Russia.
• Ukrainian-British JV Klust is successfully trading construction materials. It is one of the largest enterprises of its kind in the region.
• The Ukrainian-German company “Arsenyuk & Shtefanik” is famous all over Ukraine and is involved in sales and technical service for Renault cars.

Priority directions for investment activities

• Re-equipping of enterprises in energy sector with new technological facilities,
• Replacement of worn-out public utility facilities, and
• Further development of social field.

Investment drawing activities of the regional state administration

The administration has approved the office of a foreign economic activities counselor to chair the regional state administration as an independent department.

The program of foreign economic and investment activities development is being drafted and foresees preparation of investment passports in the region, including information about investment projects.

This program also provides an action plan, which should encourage the development of top priority investment projects to the region. The plan includes:

• assistance to entrepreneurs in developing their investment projects;
• search of foreign investors through direct contacts between local and foreign investment agencies;
• participation of the region in international economic and investment forums;
• fairs of investment projects from Khmelnitskiy-based enterprises to be held at the region’s territory and welcome potential foreign partners.

The administration pays a lot of attention to developing interregional cooperation. Agreements on collaboration have been signed with the respective administrative units of Poland, Russia, Belarus, Romania and Georgia. The administration has also received proposals on partnership from regions in Austria, Lithuania and Australia.

Meetings with participants of foreign business delegations are being held regularly, as well as negotiations about new investment projects, in particular:

• Schafer company (Germany) is interested to cooperate with SpetsKomunTrans – a Khmelnitskiy municipal public utility enterprise in regards to utilization of waste. The project value is EUR 160 ths., and the agreement of supplies of equipment should be signed in the short-run.
• Czech-based company Pelikan and TransKorekta company reached an agreement to start construction of the industrial mill, which will process used lubricating oils, upon facilities of an enterprise in Khmelnitskiy region. The plant will be built upon state-of-art Swiss technology of re-cracking, which was engineered specifically for this project by European standards. Similar enterprises have already been constructed and are successfully running in the European Union. As a result of the processing of used industrial lubricating oils by the newest technology, the plant’s output will include machine lubricating oils of a high quality. Such articles enjoy high demand on local and foreign markets. The project is estimated at USD 15-20 mn. Production capacity of the plant is 25 ths. tons a year. This is a pilot project.
• Aksioma company of France is interested in setting up a powerful wood-working production taking into account demand of the Ukrainian, CIS and European markets. The cost of equipment to be supplied by the French party is around EUR 7 mn.

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