Archive for March 21st, 2013

h1

Odessa International Investment Forum 12 – 13 April 2013

March 21, 2013

Some things are almost guaranteed to be anticlimactic.

The Odessa International Investment Forum 2013 has every ingredient necessary to produce a complete lack of  climax – similar to that of an 80 year old impotent male surrounded by lithe and lustrous young beauties who then discovers he has left his Viagra in his hotel room.  Whilst attractive opportunities abound, none will be taken up.

In short, the FDI this forum seeks to encourage will largely be as flaccid as the aforementioned 80 year old male’s appendage – particularly if ignoring the possible time-line manipulation of already announced Chinese FDI and Cypriot investment that is really Ukrainian investment via a Cypriot front belonging to the local patriarchy.

Quite simply, a dramatic increase in FDI that is not already known about is highly unlikely to be forthcoming.  Especially so via a forum organsied by a City Administration that is so crooked it could not lay straight in bed – and is  widely known to be so.

The main objective of the forum is quoted as being “to foster effective cooperation between investors and regional authorities, increase the direct communication of national authorities, and make sure the market allows entrepreneurs to promote and attract private capital for new and ambitious projects”.

All of which would seem quite correct prima facie – until the costs of engaging with – or alternatively paying for the lack of engagement with – the regional authorities are taken into account.

It would be a bit of an overstatement to say I was “pally” with the last Mayor, and now UDAR MP, Eduard Gurvitz – but I certainly had no problems getting to see him if I wanted to.  To many he was known as “Eduard 6 zeros Gurwitz” apparently – but in my interactions with him I was never asked to pay anything, let alone a figure with 6 zeros – and neither did I make any money with 6 zeros at the end from my interaction with him.

However, if that image seems bad, then the current City Administration has a far, far worse reputation – not only for corruption but also incompetence – so much so in fact, that if I ever needed anything from the Odessa City Administration at its highest levels, I would probably go over their heads and have instruction sent down to them to assist me.  A very unsatisfactory state of affairs for all concerned if that were to ever be necessary.

A competent administration would be a bonus.  An honest one, a fairy tale.  However, dishonest but competent at least gives some conviction that the additional costs of doing business via them would produce anticipated results.

Within this investment forum, there is a framework to specifically highlight the need for investment and development in transport infrastructure, energy and modernisation of regional industrial parks.

Hmmm – transport infrastructure?  What about the maintenance and proper repair of the current infrastructure?  This hole in the road appeared only last week in Odessa:

hole in the road

Infrastructure is vital for economic growth and social well-being, and yet who would invest in transport infrastructure when the existing infrastructure is maintained on the cheap via opaque maintenance contracts within Odessa City Administration?

What returns do I get from a Public Private Partnership when the work is carried out with substandard materials, carried out by substandard contractors owned by family, friends or associates of those in City Hall through which bogus invoicing is approved?

How many times would I invest in laying a new road, to have it dug up for electrical work and then resurfaced.  Dug up again for telecoms work and again resurfaced.  Then for water, then gas, then for drainage and then for repair when the road is decimated due to snow and ice clearance each year?  Such is the incompetence of City Hall.

Even if all work was done at the same time, and due care and attention paid when clearing the roads of ice and snow, such is the corruption of City Hall, I could very well still pay for all the above digging up and resurfacing mentioned above even though it didn’t happen.

To invest in anything with the current City Administration I would only be confident of quality materials, quality of work, value for money and thus my ROI, if I was to stand and supervise the work myself – not something many potential investors are prepared to do.  More importantly I would need to have confidence in those who run City Hall and any due diligence worth its salt would severely shake that confidence before I signed on any dotted lines.

That is not to say all local government in Ukraine is as bad as that of Odessa.  It is just that any due diligence on the local government of Odessa specifically, will scare off the vast majority of investors.

Naturally this would be a very long entry if I were to look at all the areas this forum is to address, however, one final note regarding the moderinisation of industrial parks.

As I have written before, China is already busy in this area within Odessa.  Given the quite considerable investment of the Chinese and their first choice of locations, my first question would be why they passed over the industrial parks that Odessa City Administration is now trying to get others to invest in.

China is not short of investment capital, they send their own construction companies and they are used to dealing with corrupt officials.  They also have a new and efficiently staffed consulate in Odessa to provide diplomatic reminders to the local fiefdom when it steps out of line in their projects.  Further, they are also quite adept at picking the best opportunities thrown at them.

So why did they pass over the outstanding opportunities?

Anyway – enough – you all know what I am saying without the need to labour the point(s) further.

Suffice to say, the Odessa International Investment Forum will probably be quite well attended – it is the biggest on the south coast after all.  The outcome I expect to be nothing short of…..nothing really.  Nothing particularly noteworthy anyway.

%d bloggers like this: