Partners of Vasil Kisil & Partners Discuss Ways to Improve the Investment Climate and Development Prospects for the Banking Sector in Ukraine at the Annual Ukrainian Investment Summit
On May 17-19, 2010, the 6th Annual Ukrainian Investment Summit organized by Adam Smith Conferences took place in London. The event was attended by the Ukrainian business elite, the highest rank officials, global strategic investors, top Ukrainian corporations, large financial institutes, bankers, lawyers, economists and diplomats. Vasil Kisil & Partners Law Firm was represented by its Managing Partner Oleg Makarov, as well as by the Partners Oleg Alyoshin and Denis Lysenko.
This year, the conference topics were rather diverse and covered all the aspects of domestic financial and economic operations. The partners from Vasil Kisil & Partners actively participated in discussions of such relevant topics as ways to improve the investment climate in Ukraine and development prospects for the banking sector and financing facilities, with the stock market being one of them.
In particular, problems of the banking sector provoked heated debates among the event participants. Bank owners differed in their opinions: some of them asserted that loan rates would decline this year down to 8%, while others insisted that 18% is a more likely rate. To date, the average loan rate amounts to 24–25%. It appears from speakers’ reports that there is no crediting in the country, despite advertising and official statements of banks in the press. Actually, funds are available, along with foreign capital, on extremely beneficial terms and at a favorable interest rate, however, there is no mechanism to use such funds to be provided to business. This arises from the policy of the government, which gives no way for development or at least staying at the same level. The government states that the inflation will be the first issue to address. Nevertheless, the facilities to address it are passed over in silence. No clear answer was articulated to the question how the government intended to stabilize the situation, which in fact may present a serious obstacle for investors.
The discussion participants also focused on the investment climate in Ukraine. The speakers demonstrated alternative versions of a reform program, and, actually, were unanimous that the three priority areas to reform include energy, banks and public procurement. These areas need to be immediately reformed to make the situation stable. Moreover, a joint program with the IMF to serve as a hedge, should be developed and implemented.
In general, most attendees were of the same mind that, despite numerous contradictory forecasts and opinions, Ukraine’s economic downfall has stopped, and the apparent stabilization of the banking system and the economy’s real sector gives grounds to take a favorable view of the country’s investment attractiveness.
Oleg Makarov, a Managing Partner with Vasil Kisil & Partners Law Firm, outlined the common ground of his colleagues: “We are optimistic about many industries to activate in the second half of 2010 and believe that a number of both local and large foreign investors will resume project postponed in 2008”.