USAID brings greenfields to municipal asset portfolios
Industrial businesses ask many questions when they come looking for opportunities in Ukraine, but one concern is universal and basic: where can I put my factory, and can I do it quickly and without hassle?
In business terms, this question involves the availability of so-called “greenfields”, or land sites where industrial investors can build new factories that will add jobs and revenue to the community in which they locate. Throughout Europe, communities compete to entice industrial businesses to locate on greenfield sites that are complete with infrastructure and the promise of quick start-up. It is the most immediate way for a community to realize economic growth, but the competition with other communities in other European countries is severe. Do Ukraine’s communities have a chance in this rough and tumble globalized competition for industrial investors? Absolutely.
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LED experts are giving advice to an officer of the Pryluky City Executive Committee on the best location for a future industrial site. |
Thanks to USAID’s Local Economic Development Project (LED), Ukrainian communities are now beginning to enter the fray with serious greenfield offerings for potential investors. The positive effects are already evident. In Ivano-Frankivsk, for instance, the city’s economic development strategy, created with LED’s assistance, identified a number of sites for pre-packaged offerings to potential investors. The sites, which have good transport infrastructure and utility hookups, were approved for sale in advance by the City Rada. This meant that an investor could secure title commitment to the landsite within ten days of expression of interest. The effect? Tyco Electronics’ German subsidiary came to Ivano-Frankivsk in late fall of 2005, examined a site and then submitted a letter of intent to purchase it in February 2006 with a view toward building a $6 million electronic manufacturing facility that will employ an estimated 3,000 people.
Of course, municipalities need to offer an array of assets to outside investors in order to close a deal; but land availability is the starting point. For that reason, LED concentrates on land site preparation and presentation in the cities where it works. For Ukrainian cities, this is innovative work. According to Iryna Abramova, Executive Secretary of the Kharkiv Investment Council and participant in LED’s training for foreign direct investment (“FDI”) professionals, “Before joining this [FDI training] program, I perceived work with an investor quite differently. We tried to tell about how clever our personnel are, about educational institutions and factories we had, and you, investors, choose where you would like to invest your money. Preparation of a land plot, installation of utility lines – such things were not discussed at all. We don’t have this in Kharkiv and the Kharkiv Oblast yet… I think this way is very promising and we have to go this route.”
The FDI training in which Ms. Abramova participates will ultimately touch more than 50 cities. Ms. Abramova and her colleagues will learn and be certified for management skills in site development, financial skills in investment project profitability, and sales skills in presenting sites and negotiating their sale.
But training is not all LED does. LED inventories prepared land sites throughout the nation and posts them on its website’s newly-opened Investment Property Data Base, which is linked to other investor website portals. As of early June, 18 property sites were listed, with many more to come. And in all of its partner cities, LED advises on specific land site preparation and aggressive marketing. The ultimate result of this work? Tyco Corporations of the world will take a look and then find what they need here in Ukraine’s communities.
The story as .pdf file
