# CONFERENCE OFFERS PERSPECTIVES ON UKRAINE

 

ByJuliana Kinal

 

Isnow the right time to invest in Ukraine? What are the potential pitfalls, andare they the same as several years ago? Have attitudes toward business betweenUkraine and the United States changed since the first heady days of thetransition to a free market? A gathering of over 70 private businesspersons,with the participation of U.S. Government officials, discussed these and otherquestions on January 10, 2000 at the“Business-to-BusinessConference on Ukraine: A Matter of Perspective.” *Eastern Economist* magazine organized the conference, held inWashington, DC, which reviewed the experiences of foreign investors and factorsinfluencing the business climate in Ukraine, and provided specific guidance forbeing successful in business in Ukraine.

 

Theroundtable discussions began with a panel on the general legal, macroeconomic,trade, and investment climate in Ukraine. The moderator, former U.S. CommercialAttach� to Ukraine Andy Bihun, set the tone of the panel by asserting that nowis the “right time” and the “ripe time” to go into Ukraine. Nestor Scherbey of **CTRMS** (Grand Rapids, MI) continued thistheme by drawing parallels between Ukraine and other developing countries, suchas Mexico and Brazil, giving examples of legislative and tax incentives thathelped attract investment into those countries. He outlined steps Ukraine needsto take to get to that stage, including enforcement actions against governmentcorruption, acceleration of privatization, and governmental trade facilitationefforts. John Hansen, an economic advisor at the **World Bank**, outlined a macroeconomic profile of Ukraine since 1991,concluding that the trend is in an upward swing. Markian Silecky of **The Silecky Firm** (Kyiv) commented onthe main legal issues facing investors: corruption, repatriation of profits,and cultural legal misunderstandings. However, according to Mr. Silecky,legislative changes are taking place that will work Western legal concepts intoUkrainian law and improve the investment climate. Richard Shriver of the **Lviv Consulting Group** (Lviv) spokeabout his firm’s survey of foreign investors, which concluded that the mainproblem for foreign investors is the reliability of the Ukrainian partner. Hecapped off this informative session by providing concrete, experience-basedadvice: avoid absolutes in reference to Ukraine, bring money not preachyadvice, and take a long-term perspective. 

 

Recommendationson how to approach the Ukrainian market from conference participants included:

 

**q**Learn from other businesses’attempts.

q Adopt a long-termperspective, be patient.

q Perform due diligence andfollow up on that research by keeping an eye on operations.

q Set out from the beginninghow you’ll exit if you need to and how you’ll settle disputes if you need to.

qKnow your partner.

qKnow the legal and legislative context of yourbusiness in Ukraine.

qLearn the culture, history, societal norms,bureaucracy, and market conditions.

 

Afterthe first session, the seminar shifted to discuss legal, cultural, andfinancial aspects of doing business in Ukraine. The legal session dealt withtechnical issues of setting up business, dispute settlement, tax issues, andexit strategies. Mr. Silecky moderated a panel consisting of Sarah Carey of **Squires, Sanders & Dempsey** (Wash.,DC), Adam Mycyk of **Altheimer & Grey**(Chicago),and Dr. Irina Paliashvili of the **Russian-UkrainianLegal Group**(Wash., DC). Ms. Carey discussed corporate structure choice andconsideration of the government in a business’ operations in Ukraine, while Mr.Mycyk ran through the legal aspects of setting up a business. Dr. Paliashvilidiscussed different means and venues for dispute resolution and the pros andcons of each: local court settlement, foreign court settlement, internationalarbitration, and mediation. Mr. Silecky wrapped up the session by stressingbuilding in an exit strategy from the beginning.

 

Atthe conclusion of the conference, participants offered ideas on how individualinvestors, the U.S. Government, and the Government of Ukraine can further thedevelopment of a market economy and a more solid investment climate. Allwelcomed the appointments of what appears to be a reformist government, withPrime Minister Viktor Yushchenko at the head, and expressed the hope thatUkraine is at long last creating a hospitable and steady business climate.

 

*For market reports,announcements of trade events, and other information on doing business inUkraine, visit **BISNIS Online** atwww.bisnis.doc.gov/bisnis/country/Ukraine.htm.*

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*Juliana Kinal covers Ukrainefor **BISNIS** in Washington, DC.*