Investment Yeast

This year, a giant investment flow of $300 million may pour into Sumy region’s economy.

This year, no glass skyscrapers will be built in Sumy, nor huge shopping and entertainment centers that cannot be fully inspected even in several days. In December, you won’t see wide highways in Sumy region. But huge capital investments, comparable to the projects described above, Sumy region will receive in another area that cannot be seen with the naked eye.

The largest industrial enterprises of the region will receive direct foreign investments for developing their own production totaling $300 million, or UAH 2.4 billion. This money will be transformed into modern industrial machines, conveyor lines and cutting-edge technologies. To understand the scale of this figure, it’s enough to know that Sumy region has received $362 million in direct foreign investments throughout its entire history.

In Sumy Regional Administration, for some reason, they don’t focus much attention on this phenomenon, explaining the reasons for the “warming” in Sumy region’s investment climate by two factors. The first is the “single window” mechanism, which gives investors government support at all stages of investment project implementation from obtaining local government permission for land lease to commissioning the facility. About a dozen large companies use the “single window,” quickly overcoming bureaucratic obstacles that take many others months to fight. The second factor is the existing economic successes of investor companies already working in Sumy region for some time.

Rapid investment development across many parameters helped Sumy region rise in the comparative rating of Ukrainian regions. Industrial indicators in Sumy region rose from 22nd place in 2010 to 11th place in 2011 and 6th place in the current year. The industrial production index in Sumy region is 104.3%, while across Ukraine – 100.7%, there are successes in processing industry (109.9%) and mechanical engineering (129.9%), the food industry remains stable. There are some problems in light industry (81%), which in Sumy region is actually represented by one enterprise (Romny Shoe Factory “Talanprom”), in the chemical industry (93.1%), since “Sumykhimprom” has not yet ramped up production to full capacity, and in the extractive industry (95.2%), the basis of which is “Okhtyrkanaftogaz.” The volume of sold products this year is UAH 6.716 billion (for comparison: for the same period last year – UAH 5.411 billion).

Sumy region’s agriculture ended up in seventh place instead of last year’s 10th place (103.1%). Our agronomists supplied to the market 22,000 tons of meat (105%), 122,600 tons of milk (102.9%) and 102.9 million eggs (100.4%). Financial services in Sumy region — 11th place, road transport — 10th place, consumer market – 14th place, retail trade turnover – 9th place. The local construction sector continues to stall — only 17th place in the regional ranking.

For further stable forward movement, the region’s economy lacks at least two crucial parameters — professional workers and decent wages. In Sumy region, as before, a terrible demographic situation is observed — the number of deaths exceeds the number of births by 1.8 times (across Ukraine — by 1.4 times). Many residents of the region leave to seek happiness elsewhere — mainly abroad. By migration indicators, Sumy region is in 19th position. Not surprising, since the region’s social indicators deserve only a place at the end of the second ten among other regions, and a few years ago Sumy region was almost last in social provision for its citizens. The average wage level in Sumy region is UAH 2,319 (across Ukraine – UAH 2,847), placing the region in 16th place, by wage growth rate — in 14th place. Such data was announced at a press conference by First Deputy Governor Viktor CHERNYAVSKY.

Considering the listed shortcomings, owners of industrial giants should show foresight and, as is now fashionable to say, social responsibility for the region where they work, investing money in raising wages for their employees, in retaining good specialists in Sumy region who are striving to go abroad where they pay significantly more. In addition, it is extremely necessary to provide decent social guarantees so that people feel comfortable at their workplaces and go to work with pleasure. Then the result won’t be long in coming. We can cite the example of work process organization at the best world companies, such as Google. A rest room for staff with huge aquariums, calm music and comfortable chairs, where you can come during the workday to take a half-hour nap; free lunch in the corporate cafeteria; in summer, a trip to the sea with the whole family; payment of sick leaves, benefits and bonuses for production achievements or in case of special circumstances. Of course, this is an ideal option, but this is what enterprise managers who call themselves European industry leaders, trade unions, and workers themselves should strive for!

This year, successful investment projects will continue to develop in Sumy region, such as “Kraft Foods Ukraine,” “Kerameya,” “Guala Closures,” “Tekhnologia.” Large investments are expected at industrial leaders — “SNPO named after Frunze” and “Nasosenergomash.” Oil producers from “Okhtyrkanaftogaz” will invest about UAH 100 million in equipment and drilling new wells. Romny Curtain-Tulle Factory, which annually demonstrates 20% production growth, has already purchased a new state-of-the-art machine worth 0.5 million euros and is expanding production capacity. Local pharmaceutical enterprises will develop rapidly – “Kusum Pharm” and the giant “Farmak,” which surprised Viktor Chernyavsky, who visited the construction site in Shostka on the territory of the former “Svema.” Where not long ago one could film horror movies with sets of concrete ruins, there is now a modern construction site. “Farmak” plans to launch medicine production in 2013. Konotop “Motordetal” plant, which annually commissioned new production areas, will soon fully complete construction of a new piston ring production shop.

Recently, one of the richest Ukrainians, Chairman of the Federation of Employers of Ukraine Dmytro FIRTASH, during his visit to Sumy region, announced Napoleonic plans for modernizing “Sumykhimprom.” When the billionaire resolves legal issues with the state, he will build a new sulfuric acid shop in Sumy and significantly increase production of titanium dioxide and mineral fertilizers. Project price — over $100 million.

New serious investors may come to the region. Portuguese company “Cabelauto Group” this year plans to place a logistics base at “Svema,” and then — high-voltage cable production. Negotiations are underway with a Chinese company that wants to produce packaging for herbicides and produce organic-mineral preparations. The Chinese are already being predicted a site at “Svema,” but for some reason the administration doesn’t reveal the name of the Asian pioneers. There are several candidates for the property complex of Sumy airport — the investor is expected to invest serious funds in setting up a logistics center. This year, local farmers intend to build five new grain storage facilities in the region totaling UAH 40-50 million.

These are the largest investment projects being implemented in Sumy region. There are many smaller ones. “Many negotiations are being conducted with potential investors – of course, not all will yield results, but some negotiations will definitely end successfully,” summarizes Viktor Chernyavsky.

Direct foreign investments in Sumy region