 |
 he
dominance of a few big players, or oligarchs, in
Ukraine's post-Soviet economy has given the place
a bad name for investors. Some of the usual multinationals
with well-known brand names, such as McDonald's
and Coca Cola, have entered the market (as they
do almost everywhere in the world) and are doing
very well. But many more have stayed away.
Thus, while Russia was attracting tens of billions
of dollars in foreign direct investment, in everything
from retail to manufacturing and energy, Ukraine
was stuck for years at around $1 billion in annual
FDI.
In a recent interview at Ukraine's well-run and
well-regarded Exim Bank, housed in a glass-sheathed
office building in the center of Kyiv, Deputy Chairman
Nickolay Oudovichenko noted that FDI was close to
$5 billion in 2006 and projected to be $6 billion
this year.
"In my opinion, Ukraine is a little under-rated,"
he said, with a smile.
True, the higher figures are due in large measure
to major purchases, such as the $4.79 billion Mittal
Steel Company NV
paid for KryvorizhStal, and a flurry of foreign
bank investments, including Austria's Raiffaizen
Bank's $1b purchase of 94 percent of Aval Bank and
Erste Bank's $52.2m purchase of 51 percent of Prestige
Bank, as well as France's BNP Paribas' purchase
of 51 percent of UkrSibBank for $355m.
Indeed, the banking sector is a good indicator of
the overall economic strength of Ukraine today.
Sergiy Kruglyk, Director of
International Relations for the National Bank of
Ukraine, the country's central bank, noted that
all 174 private banks in
Ukraine are profitable, and that 18 are owned outright
by foreign banks. Another 26 have foreign partners.
|
|
According
to National Bank figures, the total capital of banks
in Ukraine is rising sharply. In August 2004 the
total was $2.9b, whereas in August this year it
was $11b, an increase of 379 percent over the past
three years. Bank profits have grown at a similar
rate, to $120b for the year up to August 2007.
Over the same period, official unemployment figures
show a drop from 3.4 to 2.1 percent. Meanwhile,
GDP grew 2.8 percent in 2005, 5.7 percent in 2006
and is expected to reach 7.5 percent this year.
The stories you hear from expatriate businessmen
tend to point to the same conclusion: companies
that are willing to put up with considerable hassles,
are likely to come away with handsome profits in
the end.
Anna Derevyanko, the dynamic Executive Director
of the European Business Association, which counts
most of the major
foreign investors among its 700 members, said that
foreign companies look to make very high returns
in Ukraine. “Twenty
percent is not a profit here,” she said.
A good example of a successful investor is Norway's
mobile phone operator Telenor. The head of the company's
Kyiv office,
Trond Moe, said his company came to Ukraine because
senior executives saw good prospects for long-term
growth. Telenor started out with local partners
bidding for one of three GSM licenses in 1996. At
first business was very difficult, with only 10,000
phone numbers sold in the first full year of business.
Today, there are 49 million numbers for a population
of something over 46 million. This 112 percent penetration
is due to several mobile phone owners purchasing
more than one number. Moe estimates the real penetration
rate is closer to 70 percent and that there will
be continued growth for two or three years. Then
his company will look to raise earnings through
expanding services. Broad-band "3G" infrastructure,
designed for data-heavy mobile use, is already in
place. |
|
