08 June 2012

Dmitry Firtash: Ukraine requires a decentralized economy and infrastructure investments

020363Each hryvnia invested in the regional infrastructure may yield 3 to 4 hryvnias of external investments, said Dmitry Firtash, President of the Federation of Employers of Ukraine at a meeting with Rivne regional administration and local businesses owners.


“Regions must have incentives to promote local economies. It requires decentralization of economic control leverage and provision of local communities with additional resources and authority. Where there is no money, there is no solution to a problem. Regional governments lack funding to buy themselves an extra box of staples, what serious questions can we talk about?”


According to the FEU President, a common practice for the EU countries is leaving up to 50 % of the collected taxes with local self-governments. “In Germany, 70 percent of taxes remain at regions’ disposal while in Ukraine as little as 20-21 percent of collected levies end up in communities’ budgets,” stressed Mr. Firtash. He further reminded that in 1990s China launched an economy decentralization program following which about 75 percent of all government’s expenditures are channeled into regional development and infrastructural upgrade. “Today China is the world’s most powerful economy,” said Mr. Firtash.


He also suggested that local communities might allocate additional resources to the infrastructure development to enhance the industrial potential and create adequate conditions for attracting external investments. “Entrepreneurs are willing to invest, they want to have a clear understanding of their investments repayment period. When an investor is building a new plant from scratch and has to take care about connecting the facility to roads, water supply and electric power lines, all these costs will have to be borne by such an investor. If local authorities had extra resources to create the necessary infrastructure, this could bring about more investments from outside. I am sure that each hryvnia invested by regions in their infrastructures will yield 3 to 4 hryvnias worth of outsourced investments,” pledged Mr. Firtash. He also pointed out that infrastructural projects implementation secures sustainable business functioning.