BUSINESS IN BRIEF (07/23/00)

BUSINESS IN BRIEF

Congressional committee hears testimony on business

WASHINGTON - Kempton Jenkins, president of the Ukraine-U.S. Business Council, testified before the European Affairs Subcommittee of the U.S. Senate Foreign Relations Committee on June 28 on "Treatment of U.S. Business in Central and Eastern Europe." Mr. Jenkins reported that the council's members - 40 major U.S. corporations - have had varied experiences in Ukraine that illustrate both the potential of this entire rich market and the barriers and frustration of bringing the potential to fruition." He presented a partial list of complaints in Ukraine, which involve DuPont, Monsanto, Dow crop protection companies; United Technologies - Otis Elevator; and Honeywell Boryspil project. In his testimony he also reported on some success stories: John Deere's $2 million facility; Cargill's $50 million sunflower seed plant; and Coca Cola's presence in Ukraine. When asked if he favors the U.S. government granting most favored nation trade status to Ukraine he replied, "absolutely yes," adding that it is very unfortunate this has not already been done. (Eastern Economist)

Pioneer Seed settles with Ukrainian government

WASHINGTON - Sources in Washington reported that the claim of Pioneer Seed against the Ukrainian government has been settled. It was reported that an agreement regarding the payment of the final amount due on the claim was reached on June 27 in Kyiv. Pioneer could receive the final payment on its $2 million claim in July. Pioneer received the first payment of $400,000 last December. (Eastern Economist)

Kherson plant designs corn harvester

KHERSON - AT Kherson Combines launched production of an experimental corn-harvesting combine for China. Via a joint project between Kherson and Gao-Chen of China, combines will be assembled from Ukrainian and Chinese parts. After the Chinese test and approve the combine, the Kherson plant could receive an order for 500 combines before the next corn harvest. (Eastern Economist)

Laser developed to treat sowing seeds

KHARKIV - A unique laser by Barva-agro has been invented by the Institute of Laser Biology and laser medicine specialists at Kharkiv University. The laser allows seeds to be treated prior to sowing. The compact and convenient machine has attracted both foreign and domestic attention. Many interested specialists took part in the 14th International conference called "The Laser in Medicine and Biology," which was held at Kharkiv University. (Eastern Economist)

Antonov to reconstruct Mriya aircraft

KYIV - The Antonov Aviation Design bureau plans to reconstruct the AN-225 Mriya cargo aircraft, capable of lifting 275 tons of cargo, stated the company's spokesman, Andriy Savenko. Mriya will receive new engines from the Zaporizhia Motor-Sich plant, he added. The bureau plans to provide most of the $16 million (U.S.) needed for the reconstruction. The Mriya was used to carry the Soviet space shuttle, Buran, however, the project was terminated due to lack of funding. (Eastern Economist)

Chinese delegation has interest in AN-70

KYIV - The Chinese military delegation that recently visited Ukraine expressed an interest in the AN-70 transport aircraft. The delegation visited the Antonov Aviation plant and inspected the aircraft. After the AN-70 was rejected by Britain and Germany as a military transport plane, Antonov announced it will search for partners in Oriental markets. The issue of cooperation between Ukraine and China in the aircraft industry was also discussed during the June visit of Li Peng, head of the Standing Committee of the Chinese National People's Congress. Mr. Peng stressed that the Chinese aircraft market is very competitive. AN-70 designers boast that their aircraft is more effective than that of its competitors, which together with a considerably lower price makes the AN-70 very attractive for developing economies. (Eastern Economist)

Number of unprofitable enterprises is up

KYIV - For the five months of the current year, the number of unprofitable enterprises in Ukraine increased by 1.5 times, from 40 percent to 59 percent in comparison with last year said Anatolii Kinakh, president of the Ukrainian Union of Industrialists and Entrepreneurs, on July 5. He added there were losses of 7.3 billion hrv and debts of 263.5 billion hrv - roughly two times the gross domestic product (GDP). The meeting approved a program of activities for 2000-2002 and basic directions for attracting investment to Ukraine. (Eastern Economist)

International trade club meets in Sevastopol

SEVASTOPOL - The second meeting of the International Trade Club took place on June 29 in Sevastopol. Representatives of over 20 embassies were informed about the economic and recreational opportunities of the city. They visited Sevastopol's ports, the fishing corporations InterRybFlot, PivdenRefTransFlot and Atlantyka, and the Foros sanatorium. The city administration is seeking investments in the tourism and recreation industries as a result of the meeting. The first meeting of the club took place in the fall of 1996. (Eastern Economist)

IFC presents Ukrainian business survey

KYIV - The International Finance Corp. presented its survey of Ukrainian small enterprises on June 29. The survey was conducted between December 1999 and February 2000, and involved over 900 entrepreneurs from 12 Ukrainian cities. The survey showed that entrepreneurs face numerous obstacles in their activity, the most significant of which are: high tax rates, 83 percent of respondents; many different taxes, 68 percent; low product demand, 46 percent; frequent changes in the tax reporting system, 39 percent; a large number of activities subject to licensing, 38 percent; and frequent inspections by government bodies, 38 percent. According to the study, each small business undergoes an average of nine inspections annually. (Eastern Economist)

Ukrainian-Austrian trade commission meets

KYIV - The issue of economic cooperation with Austria was discussed at a meeting of the Ukrainian-Austrian Commission on Trade and the Economy. Representatives of both sides noted significant progress in bilateral economic relations. In the first quarter of this year trade volume grew by 30 percent compared to the same quarter of 1999. Both sides discussed investment issues, including construction of Billa supermarkets and Radisson hotels. Improvement of cooperation in the tourism sector was noted. (Eastern Economist)

French to upgrade Odesa water system

ODESA - The French firm Syez Lyonnaise des Eaux, which provides water supply service to the city of Budapest, several districts of Paris and Bordeaux, will implement a systematic reconstruction of the Odesa water supply system over the next 10 years. The total value of the project, which will begin next January, is $130 million (U.S.). The company will sign contracts for water supply with all consumers, supply them with water meters and perform all calculations. The city of Odesa will continue to be the owner of the existing and new assets. (Eastern Economist)

Lviv bus plant to sell 100 buses to Kyiv

LVIV - The director of the Lviv Bus Plant, Stepan Davydiak, and the Kyiv Mayor Oleksander Omelchenko signed an agreement on June 13 for the supply of 100 LAZ buses worth 29 million hrv to the city of Kyiv. They also signed a protocol of intention for the period of 2001-2003 under which the Lviv plant will launch the production of 18-meter-long buses and the city will buy 200 of them. In April and May, Kyiv bought 20 buses made by LAZ, each one costing 290,000 hrv. Mr. Davydiak said the plant has also reached an agreement to supply its buses to Donetsk for five years. He added that the Kyiv deal increases LAZ's share of Ukraine's domestic bus market to 35 percent. The plant also intends to supply its buses to transport companies based throughout the Lviv Oblast. (Eastern Economist)

Parmalat seeks to join Ukrainian market

KHARKIV - The Italian company Parmalat, which specializes in diary products, is interested in the Ukrainian market, said company representative Salvatore Luchezano in the Russian city of Belgorod, located 75 kilometers from Kharkiv. Three years ago Parmalat bought the Belgorod milk factory, which also processes milk from Ukraine. Parmalat is interested in the larger consumer market in Kharkiv, but there are customs barriers in the way. If these are overcome by the treaty on friendship and cooperation between the two cities, then Belgorod will soon sell milk to Kharkiv. (Eastern Economist)

Number of millionaires is growing

KYIV - Forty millionaires are officially registered in Ukraine, with revenues ranging from 1.5 million hrv to 4 million hrv, stated Serhii Lekar, who is in charge of personal taxation at the State Tax Administration. In previous years few people reported secondary income. This year over 2 million citizens have reported income additional to their main source of income. As a result of the campaign for declaration of individual income the state budget received 19 million hrv. The tax collectors also received a significant amount of funds for penalties. For late declaration or undeclared income, 18,000 entrepreneurs were fined a total of 2 million hrv. (Eastern Economist)

Variah aircraft carrier off to China

MYKOLAIV - The heavy aircraft carrier Variah, which stood for 12 years in the Mykolaiv Black Sea shipyard and was sold to the Macao company Chong Lot in 1998 for $20 million, was launched from Mykolaiv and will be shipped to China. It was built in 1988 and was destined to be the flagship of the Soviet navy. The vessel was designed to carry 56 aircraft and was equipped with missiles able to carry nuclear warheads with an attack range of 500 kilometers. The construction of the Variah was halted in 1992 at 70 percent completion. In 1998 the National Agency for Reconstruction and European Integration announced a tender for the sale of the Variah on the condition that the vessel not be used for military purposes. The vessel will be turned into an entertainment center. (Eastern Economist)

Beijing and Kyiv sign cooperation agreement

KYIV -The capitals of Ukraine and China have signed a protocol on cooperation which provides for opening a China-Beijing center in Kyiv and a Ukraine-Kyiv center in the Chinese capital, the vice-chairman of the Kyiv City State Administration, Volodymyr Yalovyi, announced on June 16. The protocol notes that the main areas of cooperation between the two capitals include construction, trade, transport equipment, waste-processing and environmental protection. Kyiv's and Beijing's companies and city administrations will define individually in which joint projects they will participate within the parameters of the cooperation agreement. (Eastern Economist)

Raiffeisenbank in top 10 Ukrainian banks

KYIV - Raiffeisenbank Ukraine representatives announced on June 8 an increase of 5.2 million euros in capital after obtaining a US $10 million (U.S.) loan from the European Bank for Reconstruction and Development. This brings the bank's total capital to 74 million hrv, which ranks it among the top 10 banks in Ukraine. The bank was registered in March 1998 and started operation in August. It currently has 400 medium and large-sized companies as clients. In 1999 the total assets of the bank increased fourfold and the loan portfolio was 210 million hrv. (Eastern Economist)

Librarians look to new technologies

SUDAK - Nearly 1,000 librarians from 34 countries are winding down a five-day conference called "Crimea 2000, Libraries and Associations in the Transient World: New Technologies and New Forms of Cooperation." One of the key Ukrainian sessions, on Libraries in the Knowledge Society, was sponsored by the British Council and the Renaissance Foundation and presented by librarians from Kyiv, Mariupol, Vinnytsia, Chernivtsi, Donetsk and Kharkiv. Under the direction of its first deputy director, Yakov Shraiberg, this is the seventh such conference organized by the Russian National Public Library for Science and Technology with the support of Russian, Ukrainian and Crimean ministries of culture, several Russian and Ukrainian libraries, including Vernadskyi Library in Kyiv and the Soros Foundation in Russia and Ukraine. According to Vice-Chairman Yevgenii Kuzmin, Crimea 2000 is the third most significant meeting of librarians in the world. (Eastern Economist)

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