Business-minded national deputies from Ukraine hosted at UIA (02/07/99)

Business-minded national deputies from Ukraine hosted at UIA

by Alexandra Isaievych Mason
Special to The Ukrainian Weekly

NEW YORK - The United States Information Agency (USIA) hosted a delegation of nine parliamentarians from Ukraine on January 23-31. The visit was part of the USIA International Visitor Program - Freedom Support Project known as Congressional Economic and Business Initiatives.

The delegation included business leaders elected to the Verkhovna Rada during the last elections and was divided into two groups according to interest in either security or business/economic issues.

The deputies from the business and economic issues group met members of Ukrainian American business community on January 29 at the Ukrainian Institute of America. Chaired by Walter Baranetsky, a former banker with JP Morgan and a member of the institute's board of directors, other representatives of the business community at the meeting included: economist and banker Bohdan Kekish; Leonard Mazur, founder and CEO of Genesis Pharmaceutical and current president of the Ukrainian American Professionals and Businesspersons Association of New York and New Jersey (UAPBA); Myron Hnateyko, retired healthcare industry executive; Jaroslaw Kryshtalsky, consultant and former official of the New York Stock Exchange; Zwen Goy, formerly a Wall Street economist and currently the UIA treasurer; Alexandra Isaievych Mason, economist and secretary of the UAPBA; Gene Kotlarchuk, an attorney currently working in corporate finance and consulting; and Walter Nazarewicz, retired president of Pfizer's chemicals division and current president of the UIA.

The parliamentarians included Mykhailo Kovalko, chairman of the Parliament's Fuel and Energy Committee, member of the National Democratic Party faction; Oleksii Kostusev, chairman of the Fuel and Energy Committee's Subcommittee on Energy Savings, member of the Socialist Party, former head of the privatization committee in Odesa, and chief economist of a joint venture; Oleh Shevchuk, first vice-chairman of the Construction, Transportation and Communications Committee, member of the Green Party faction and vice-chairman of the party, former deputy director for marketing and customer relations of the state telecommunications monopoly Ukrtelekom; and Oleksander Rzhavskyi, member of the Youth and Sport Committee, a politically non-aligned member of Parliament, former director of a private bank.

The meeting with representatives of the Ukrainian American business community focused on the progress of economic reforms in Ukraine, the creation of a favorable business climate in the country, and the encouragement of foreign investment.

The parliamentarians said they firmly believe that Ukraine will not revert to an anti-market path. Economic reforms, although slow at the start, have been gathering pace, they underlined.

The deputies also pointed out that the new Verkhovna Rada is more pragmatic and aims to accelerate work on economic legislation in constructive cooperation with executive branch authorities. The parliamentarians said they see a need for a reduction of the tax burden on the economy and of various privileges for many groups that lead to increases in tax rates for everyone.

The deputies went on to note that foreign governments, the media and businesses often exagerate the prevalence of corruption in Ukraine. While admitting that corruption does exist in Ukraine, they feel that it is not pervasive and that government officials are being increasingly restricted in their actions by numerous legal safeguards. However, some problems will continue as long as the wages of government employees are low. The infrastructure for safeguarding laws and protecting businesses is gradually being built up and now includes the National Bureau of Investigation modeled on the United States' FBI.

According to the deputies, many of the problems encountered by foreign businesspeople in Ukraine happened in the early 1990s, when the business and legal infrastructure was in its infancy. Currently, many professional services are available to those interested in starting a business, among these services are lawyers, consultants and auditors who can help those unfamiliar with Ukraine's business climate to avoid the many pitfalls that befell early investors. The deputies advise foreign investors to find a reliable business partner in Ukraine and to properly formalize all agreements.

The deputies also expressed the opinion that the key to breaking through the slow and sometimes inefficient bureaucratic system is to accelerate the inflow of foreign business. A large inflow would force the government to speed up the implementation of reforms, and would create a larger constituency for the adoption of business-friendly legislation. The deputies felt that Ukrainians living outside Ukraine, besides promoting the entry of foreign business, could help Ukraine by supporting those Ukrainians who go into business and work to revive the economy. Those who are building the new economy in Ukraine, but do not want to get involved in power struggles, need special support and much help.

The deputies also spoke about the need to promote ideas that will help build unity among Ukraine's people. Unity is especially needed now in order to unite fragmented political forces in this year of the presidential election. Ukraine currently has 67 parties, although only nine are represented in the Parliament. Only 10 to 15 parties are actually functional. Despite frequent calls by politicians to merge parties with similar views, the process of unification is very slow.

The Verkhovna Rada, they stated, is looking forward to becoming more involved in directing the economic reform process when the presidential decree powers expire in June. For the deputies the direction is very clear: develop production facilities based in Ukraine and export. In order to do that, initially Ukraine needs to import foreign technologies that will help it to build up its own production facilities. The deputies emphasized that there are numerous opportunities in Ukraine, including the new Donetsk special economic zone that offers a five-year tax holiday for foreign direct investments of several million dollars or more.

The Ukrainian American representatives at the meeting questioned the investment opportunities and the business environment in Ukraine and expressed concern about the upcoming U.S. State Department certification to determine whether Ukraine has made sufficient progress in implementing economic reforms and resolving investor dispute. Only if certification is granted will Ukraine be able to receive the full amount of U.S. foreign aid allocated for 1999.

Ukrainian American businesspeople, they added, are greatly concerned about accessing reliable business information on Ukraine and building reliable business relationships.

The deputies listed a number of projects and organizations that have been created to address this problem, including an Internet project called Business Ukraine that is currently building a website that will feature investment information about Ukraine.

Community members suggested that the Verkhovna Rada should use its website more actively as a tool for informing the world about developments in Ukraine. They identified a need to promote success stories to the outside world in order to counterbalance the negative stories about political infighting and corruption.

The meeting concluded with a mutual consensus that there is a need to build a better mechanism for obtaining accurate legal, financial and tax information about reform developments in Ukraine.

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