Ukraine PM Appeals to Foreign Investors

KIEV, Ukraine -- Prime Minister Yulia Tymoshenko told foreign investors Friday that the new government of this former Soviet republic was ready to pursue necessary reforms and would make only one demand in return: Pay taxes.

Tymoshenko told dozens of business leaders during the final day of the World Economic Forum on Ukraine that the government had balanced the budget, reduced inflation, is canceling bureaucratic hurdles and had created equal tax conditions for all businesses.

Prime Minister Yulia Tymoshenko

"We are ready to open doors for you, to open windows for you, to lay down the carpet so that you come to Ukraine," she said. "We have only one demand for you: Pay our taxes honestly."

The two-day gathering is aimed at attracting foreign investment and bolstering the pro-Western government that came to power after last year's Orange Revolution mass protests.

The peaceful protests captivated the world, but little new foreign investment has come in and the country's economy _ once one of Europe's fastest growing _ is slowing.

Ukraine received $1.7 billion in direct foreign investment last year, a figure economists consider tiny compared to its $65 billion gross domestic product. There are no figures for foreign investment this year, but Tymoshenko acknowledged that investment is down.

"We had a very hard political crisis, very tough presidential elections ... now the situation is coming back to normal," she said.

"Investors are just collecting money, it takes some time but after a short period they will be here with their money," she said.

Tymoshenko proposed investors focus their attention on Ukraine's insurance, space, banking and aircraft-building sectors. Russians have been Ukraine's prime investors.

She also said Ukraine is ready to offer a new list of businesses for privatization, adding that the government believes "only the private sector can be trustworthy and effective owners."

Government officials have been making the rounds of the forum's sessions, promoting the country and trying to explain some of the missteps that have left investors wary.

Addressing what has become one of the new government's most contentious moves, Tymoshenko assured investors that the probes into some of the last decade's murky privatization deals were not the start of a campaign to re-nationalize the properties.

"I ask you not to have any fear about this," Tymoshenko said. "We don't have such a philosophy. We don't have such an ideology. We don't have money in the budget for this."

She noted, however, that many Ukrainians support rescinding some of the past deals that were completed "with very crude violations of the law and very dishonestly."

But she said courts must decide and the government would support allowing the current owners to pay additional money to hold onto the businesses.

At the forum's opening session, President Viktor Yushchenko appealed to investors to come to Ukraine, citing its proximity to the European Union, a highly educated and professional work force and experience in high-technology fields.

"The speeches are great but big businessmen want to see things happen on the ground level," said James Gallagher, senior vice president for Nestle SA's central and eastern Europe division.

On Friday conference participants were also discussing relations with the European Union, which Ukraine wants to join, and with Russia, its giant neighbor, major trading partner and main energy supplier.

Tymoshenko said Ukraine values its relations with Russia, but emphasized the need for the country to achieve energy independence.

Joaquin Almunia, European commissioner on economic and monetary affairs, said a decision to grant Ukraine the status as a country with a market economy could come in the next few weeks.

On Thursday, a senior Ukrainian official said the government's attempt to cap gasoline prices earlier this year had delayed such a designation. The price limits had been endorsed by Tymoshenko.

Yushchenko later ordered his government to let the market decide prices.

Source: AP