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.
