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UK Ambassador: reform can drive up investment into Ukraine
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16 May 2011
The UK is the seventh largest investor in Ukraine, with 2 billion pounds of investment since 1992 and exports of over 400 million pounds last year. There are more than 100 UK companies operating in Ukraine, and the UK is continuing to make new investments in the country. Even so, Ukraine remains relatively unknown in the UK.
Summarising the main attractions of Ukraine for British companies considering investing there, Turner pointed to the enormous development potential of a country bigger than France with a population of 45 million, but with a relatively low GNP. “The key question is the extent to which it (the Ukraine government) will allow the conditions required to develop economically. A number of reforms are necessary,” says Turner. In addition to the conditions stipulated by the IMF for loans, Turner also highlights those being negotiated to agree closer cooperation with the EU, in particular signing up to the Deep and Comprehensive Free Trade Agreement (DCTFA). “If this were brought to a conclusion it would provide a stimulus for economic development,” says Turner.
Turner goes on to make the comparison with Poland, which had a similar wealth level in the early 1990s. He cites with approval how Poland then pushed through deep seated reforms which were painful and difficult including abandoning subsidies, but resulted in improved economic growth. “The latest IMF figures show that by 2010 GDP figures for Poland were four times those of Ukraine, and the Polish economy was three times larger. It made those fundamental reforms and undertook integration with Europe. If Ukraine were to take those same measures it too would see strong economic growth,” suggests Turner.
Are there any signs that the situation is improving under the government of President Yanukovych? Has there been any noticeable impact from anti-corruption legislation? Has the provision of IMF loans had any positive impact on government tendering policies and fiscal policy? Turner confirms that there are indeed good things that have happened – greater macro-economic stability, inflation is down, there are promises of action in various spheres including VAT, the land moratorium, transparent public procurement. The government has also reduced the number of regulatory bodies, and the compliance regulations for sectors such as building. Inevitably though, there is also a ‘but’. “But there are also continued reports from companies of problems with the rule of law, with customs, corruption, and some changes have been repealed, and many of those that have been announced do not take place. The aforementioned grain quotas and plans for an export monopoly create uncertainty and have the potential to have a negative impact,” Turner adds. The Ambassador concludes with another but… “But I am not negative about the prospects for investment, and I am happy with the changes that have occurred, and hope their effects will feed through to the overall economic climate.”
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