Innovations for food

The 41st International Economic Forum has concluded in Davos, where Ukraine’s President Viktor Yanuko­vych persuaded foreign investors to “switch on” Ukraine. As a result, on the third day of the Davos platform a number of encouraging statements regarding the prospects of Ukraine’s European integration were voiced. In particular, our neighbors talked about their readiness to help us in transitional processes. For example, Poland’s President Bronislaw Komorowski stated that Poland is interested in spreading freedom, democracy and free markets to adjacent eastern countries. “We believe in freedom, democracy and free markets, and paid a high price for them. But we do not want this to end. Therefore we are interested in the integration [of our neighbors] with the EU and cooperation with NATO,” he said at the seventh Ukrai­nian lunch in Davos, dedicated to the Euro-2012. In particular, Komorowski stressed, Poland believes in the big potential of Ukraine’s growth and has the intention to participate in its realization. “Ukraine is a country of hope. It has a big chance and we would also like to take part in its realization,” the Polish president said. According to him, the recent energy laws and a number of other actions of the Ukrainian government show that it has moved from words to deeds.

Great Britain also expressed interest in cooperation with Ukraine. In particular, Prince Andrew, Duke of York, who is the Special Representative for Internatio­nal Trade and Investments in this country, said that British business is interested in co­operation with Ukraine in the sphere of agriculture. The prince stressed that he was ready to promote bilateral cooperation which will be useful for Ukraine as well. As a result, President Yanukovych and British Prime Minister David Cameron discussed the issue of bilateral cooperation.

How useful were the recent visits of Ukraine’s president to Japan and the Swiss Davos Forum for Ukrainian business? Did they improve the dialog between domestic entrepreneurs and foreign investors? Dr. Rainer LINDNER, executive director of the Eastern European Economic Relations Committee shared his view on these and other issues in his exclusive interview to The Day.

The Day also asked the president of the Ukrainian National Committee of the International Chamber of Commerce (ICC Ukraine), the head of the Coordination Council for Raising Competitiveness at the Cabinet of Ministers of Ukraine Volodymyr SHCHELKU­NOV, and a member of the delegation, the director of the Ukrainian engineering company M&D Engineering and head of the commission for technologies and security at ICC Ukraine Oleh SHKITELIOV about further prospects of developing econo­mic relations between Ukraine and Japan and their personal impressions from the recent negotiations in Japan.

VOLODYMYR SHCHELKUNOV: WE PLAN TO USE THE EXPERIENCE OF JAPANESE COMPANIES AS EFFICIENTLY AS POSSIBLE AND TEACH OUR BUSINESSMEN TO USE BETTER STANDARDS

“The possibility of cooperation in the energy sphere attracted special attention from the Japanese party, particularly for projects in the sphere of renewable energy. In the course of work meetings with top managers of Tokyo Electric Power, Bank of Tokyo-Mitsubishi, Sumitomo and other major Japanese companies, ICC Ukraine representatives informed the corporations about the [ongoing] work in the sphere of alternative energy. During the negotiations the president of Sumitomo Corporation Motoyuki Oka expressed interest in his company’s participation in the renewable energy projects.

“Representatives of Japan’s private sector expressed special interest in participating in the construction of a terminal for supply of liquefied gas on the territory of Ukraine. There is also interest in using concession schemes in projects on railway mo­der­nization. The Japanese could set up their own cutting-edge equipment on a line taken in concession, which would improve its economic activity and allow the realization of investment projects.

“It should be also noted that since Japan is a country which has to import food products, investments in Ukraine’s agrarian sphere are also within the sphere of its interests.

“A number of meetings were also held with companies working in the sphere of health care, where discussions went beyond the typical talk of supplying complex Japanese medical systems and complexes to Ukraine, also addressing the realization of comprehensive projects in the sphere of medical consulting — a connection between health institutions, suppliers, state bodies and financial institutions. As a result, an agreement was reached about reciprocal visits of Japan specialists to Ukraine in spring this year, to help to establish coope­ra­tion between state-medical equipment suppliers-financial institutions, since the Japanese healthcare system is considered to be one of the most efficient in the world.”

How quickly can this be done?

“The results of such visits usually can be evaluated not earlier than a few months thereafter, since it takes time to transform initial agreements into practical actions, we need at least two or three visits to elaborate terms of agreements and specify proposals. It should also be noted that economic activity of most Japanese companies is already planned for next year so the Ukrainian side will have to make efforts to realize common projects. Everything will depend on the competitiveness of our proposals. We hope the provided political support will help in establishing cooperation, since, as it is known, in Japan business and state governance are closely connected.”

Will Ukraine be able to adopt Japan’s experience in the sphere of innovations?

“Integration of Japanese experience in the domestic economy is a rather long process. In this regard the ICC Ukraine closely cooperates with the organization Nippon Keidanren, which unites the biggest Japanese companies, and the Ukrainian-Japa­nese Center. A number of expert activities are planned, with the intention to use the experience of Japanese companies as efficiently as possible and to teach our businessmen to work based on better standards.”

Did the visit to Japan help improve dialog between entrepreneurs from the two countries?

“In Japan the spheres of business and state governance are closely intertwined — the government elaborates important economic decisions together with the heads of major companies; thus, this visit headed by the president, of course, will denote a clear direction regarding the cooperation of Japanese business with Ukraine.

“It should be noted that in 2010 a substantial intensification of cooperation took place in business between Ukraine and Japan. Thus, in the first six months of 2010 the amount of direct investments in Ukraine from Japan increased by 8.1 percent compared to 2009 and constituted 127.51 million US dollars. The amount of bilateral trade between Ukraine and Japan in 2010 increased by more than 1.5 times compared to 2009. Ukrai­nian export increased by one third, mainly owing to the growth of supplies of ore, ferric concentrates, ferroalloys, aluminum and titanium. This shows both the lack of practical activity in the wide economic field of cooperation and fantastic business opportunities. One should only understand the specificity of holding business in the East and work persistently and hard. Further cooperation between Ukrainian and Japanese businesses is possible only if the initiated cooperation on both diplomatic level and on the actual level of business circles is confidently continued. This year’s visit of president to Japan enabled organizing a number of important contacts on the state level for Ukrainian business circles, but fulfilling the set tasks is the job not only for the state but also for business representatives. ICC Ukraine, in its turn, will also take an active part in this direction, in particular, by organizing round tables and common business forums.”

RAINER LINDNER: UKRAINE COULD BE A KIND OF “WORKSHOP” FOR EUROPE

“In my opinion, Friday was the most important day for Ukraine du­ring the Davos Forum. I’d call it ‘the Ukrainian day.’ There were many meetings, discussions, debates and statements regarding Ukraine and the future of its economy.

“I suppose one can call the meeting of the two heads of neighboring countries — Ukraine and Poland, regarding the preparation of the Europe soccer championship, one of the most important events of the forum, as both Poland and Ukraine not only showed they are ready to hold this event by themselves, but also invite investors to participate in final pro­jects in preparation for the championship.

“In addition, many famous western businessmen met at Davos Forum and talked to their Ukrainian partners about Ukraine’s economic potential, investment climate, and talked to the president about reforms which were not yet realized but are very needed to improve the business environment. One could tell the president of Ukraine what the business community still disliked and which problems were to be solved.”

What where the problems investors mentioned most often?

“Generally, these were traditional things we Europeans don’t understand in Ukraine. As always, the corruption level, reforms in the financial sphere, in particular, taxation, and protectionist tendencies in the economic policy of Ukraine. These things, of course, hinder the work of investors. Therefore business repeatedly stressed that they should be overcome and then Ukraine will get a good investment image on the international business arena.

“Sweden’s foreign minister Carl Bildt voiced an interesting statement to the effect that Ukraine could be Europe’s China — an industrial area with good and attractive opportunities for investors. Actually, Ukraine can become a kind of workshop for Europe.

“This prospect impressed the president of Ukraine. Yanukovych said that it is good that Ukraine is seen as an environment with such economic and investment possibilities.”

Do you think the results of this year’s forum in Davos can have a positive impact on the integration of Ukraine in the EU?

“Certainly, they asked such questions regarding the duration of the negotiation process. And the European party stated that, in fact, it was ready to complete the negotiation process late this or early next year at most. But they are waiting for specific steps from the Ukrainian side.

“In my opinion, it is important to discuss Ukraine’s possibilities in Europe during such meetings. A market which will give the economy more than the pro-Russian orientation is the carrot here. EU representatives mentioned this often.”

OLEH SHKITELIOV: THE JAPANESE PREPARE A PROJECT FOR A LONG TIME, BUT THEN REALIZE IT VERY QUICKLY

“The political constituent plays a considerable role in relations of businessmen. If the climate between counties is cold, some quotas and obstacles for bu­si­ness relations appear at once. When there is a signal about warming up from heads of states, business immediately co­mes together.”

Which spheres do you think are the most attractive for the Ukrainian-Japanese cooperation?

“Among other things, there is the building of waste-processing plants. Ukraine has a big problem with this. Japanese don’t throw away their waste but build islands of it (!). In this sphere Japan achieved much more than we, our neighbors and even the Europeans, who simply burn their waste.

“Japan also imports a lot of chemicals manufactured in Ukraine. This country doesn’t possess a big territory. The density of building in Japanese cities is crazy: one cannot squeeze in a matchbox. And they are interested to locate their production facilities outside the country.

“To sum up, it is very difficult to name the spheres where the Japanese wouldn’t want to be present in Ukraine. They are ready to take an active part in the projects we suggest.”

How quickly can cooperation between Ukrainian and Japanese businesses be arranged?

“It is never quickly with the Japanese. They prepare very slowly but then act very promptly. They are getting ready for a project’s realization for a long time but then realize it quickly.”

How exactly can Ukrainian-Japanese cooperation help the country?

“We buy hi-tech equipment and as a result — get technologies. It’s not a secret that Ukraine doesn’t manufacture equipment for the food industry: meat pro­ces­sing, and packing factories, and dairy factories. We buy something from Germany, something from the US, and some­thing from France. But experience shows that Japanese equipment is much more reliable, it is less whimsical, causing less downtime.

“One can state many examples like this, almost in every field of our economy. But most importantly, Japanese equipment and technologies can make Ukrainian business more productive, which is certainly beneficial for the state.”

What can drive away Japanese ca­pi­tal from Ukraine?

“Political instability, poor realization of plans on cooperation stated by the government and business, no VAT return, ‘redistributions’ in the form of raider attacks and a non-transparent judi­cial system.”

Did investors mention this to Yanu­kovych during the meeting in Japan?

“Yes. They very frankly asked questions regarding the licensing system, whether in the near future single investment windows between Japan and Ukraine can be formed, but in a way these questions are settled not in a few years but in a few months. They also asked about the issue of double VAT taxation, and quotas, particularly for grain crops.”