Peter Dietenberger: Ukraine has great potential

Box about Peter (short presentation) One of the main M & A specialist and lobbyist in Russiaof for European business, Peter Dietenberger, came to Ukraine. We were talking with him about the attractiveness of the domestic market.

Good afternoon, Mr. Dietenberger.

One of your most know and public market entree cases, implemented in the Post-Soviet area, was the launch of the Billa retail network in the Russian market. You have a sound experience in implementing investment projects. How do you think, can the Ukrainian market be attractive for German and Austrian investors now?
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Yes, of course, I think — the Ukrainian market is very attractive for Western European investors, which is why I am in Kiev today. We have specific plans and concrete investment proposals in infrastructure and production projects in Ukraine. Large and strategic investors and companies loves stability, they like transparency some order and a reliable legal structure. So any unforeseen expense like (bribes, corruption, etc.) is considered not only a problem but a NO GO for a lot of key players. It is also important to understand that the top management is mostly foreign in the first few years and any compliance issue can become a legal problem at home as well. These specialists understand perfectly well, that participation in any corruption will endanger their career. It is quite different from being a sole owner making your own decisions and take your own risk. But when you work in a Retail group as «REWE/BILLA», and this means a turnover of 50 billion euros, then first of all you want to see predictability and transparent market conditions. It is the most important thing. The sensations, daily new environment, new laws, national tendencies, instability in the country are the key enemies of business and scare international investors very quickly away.
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How difficult is it to bring a new «start-up» to Ukraine? We know that you have a case of such projects that you can implement here. Is this easy to implement here? And how do you think Ukraine is attractive today?

It seems to me that in Ukraine there is some kind of «European» understanding and mentality. And of course there is the desire to get closer to the rest of Europe. I think everyone wants to live free and live well. But as for start-ups — now it is difficult to convince anyone to invest money in Ukraine. The biggest problem here is the lack of trust in the state. There are promises, there are statements — and there is the real life. And it still scares the big companies.

What package do you think it would be possible to invest in Ukraine in the next 2-3 years? Meaning the financial terms.

I think if Ukraine now begins to implement the agreements reached earlier with the European Union (I mean the abolition of moratorium on the export of timber, the sale of land, etc.), then the total investment will be at the level of 1 billion euros. I'm talking about production and infrastructure, especially in the sphere of infrastructure, timber processing, meat and dairy industry and of agro-industrial complex as a whole. We had an investment project for over 400 Million Euro for building up livestock to provide guaranteed supply for dairy and meat production in Eastern Europe. we are talking about 60 to 70 000 heads for each location and about 50 to 60 million for each dairy production facility. I think that in Ukraine you can successfully implement the same investment projects, of course a bit smaller but same structure. Therefore, I repeat once again, from my point of view, we must focus on infrastructure projects and their development. Trading networks — this is also important, but this is secondary. The main thing is the infrastructure of the country particularly in underdeveloped areas. Starting with roads for the timber and agriculture industry as well as education and social developments and many project which will follow these investments and are a big chance for the build up of the local industry and business community.

So, in your opinion, what are the most attractive sectors of the economy for the investment in Ukraine at the moment?

I do believe that Ukraine is interesting for a kind of investments, service as well as production.
Nevertheless it is vital and equally important for Ukraine to attract Know How and investment. In order to achieve this goal, laws which make theses Investments possible have to be implemented and it would be wise to give investors certain incentives and guarantees in order to attract the to specific areas.
In this way also certain investments important for the Ukraine government and people can be treated privileged.

What, besides the already mentioned situation with corruption, is necessary to change in Ukraine to attract investors?

It seems to me — it is very important for Ukraine to commit and keep promises.
Business can survive in any situation and environment, but it blooms only in an environment of stability and growth . Otherwise it will be very difficult to attract long term investments.

Potential foreign investors are heavily influenced by such news as street riots, nationalist blockade of foreign banking institutions and so on. The authorities must show that they are in full control of the situation. I know the owner of one of the largest milk processing plants in Germany, which refused investing in Ukraine by a situation like this.

I must say that now Belarus occupies a more and more favourite positions in terms of German investment particularly agriculture. The corruption index is rather low, workforce is qualified. Qualified personal is also present in Ukraine, but stability is needed and Investors have to be sure that their business and investment is save and protected by law and not subject to national tendencies Or appetite of some Oligarchs.

Thank you. It would be nice to hear about the positive dynamics concerning Ukraine, except for well-deserved criticism. Can you name the latest successful
investment projects in our country?

The proximity to Europe and the availability of qualified personal, as well as the very well developed infrastructure in banking and other service areas.

Can you name companies from Austria or Germany that are planning to come here in the near future or they are already coming in?

Well, for example — the Austrian company Schweighofer, the world leader in the field of wood processing — would gladly invest in Ukraine if certain circumstances would fit. Companies of the agro-industrial sector, meat and dairy — they are more than ready to go there. We now have a quite diversified portfolio of potential investors. In addition to agribusiness — it's mostly the hightech and IT business which is attracted to Ukraine.

But in Ukraine, at least, is there anyone to discuss all these issues with?

Since we came here and brought investors — we hope that in the next six months there will be proper conditions for European business. We hope that impact of the IMF's financial assistance — tranches come in will prove positive, 1 billion, now another 600 million. This will allow the government to solve «burning» problems and focus on helping investors and creating a investment friendly environment.
If the Ukrainian government will be able to create such an atmosphere it would be a mistake for key players and strategical investors not to occupy this interesting market and use this opportunity.

German business and German investors (and by «German» we mean Austrian companies) are somehow different from other European investors?
Germany is one of the leading export nation in the world which is not only exporting goods but also invests in local build up of Know how and production.
The requirements for german investors are usually quite high and therefor it is usually a start signal for other investors to enter the market.
So yes it is a good sign to get big and medium size business to invest, because it indicates that certain legal and financial foundations are in place.

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