Zelensky promotes investment in state enterprises, drawing little interest

The Ukrainian
government is ready to sell 500 state enterprises, Ukrainian President Zelensky
told the World Economic Forum in Davos on Jan. 22. Investors acquiring a
Ukrainian state enterprise worth at least USD 10 mln will gain a tax holiday
for two years, and will be free from the profit tax for five years, he said. In
a newly announced Investment Nanny program, those investors bringing more than
USD 100 mln will be assigned a separate contract with the state and a personal
adviser, he added. “The very state will protect you,” he said. “You will have a
manager that speaks five languages and this manager will work with you 24/7,”
he said.

Zenon Zawada: Zelensky’s Davos address is widely
being perceived as impotent and ineffective, with his critics pointing to the
mostly empty seats in the hall where he spoke. Even the most generous tax breaks
and best investment advisers are unlikely to attract investors to a country
with as uncertain a future as Ukraine. That’s especially the case when it’s
entirely unclear how Zelensky will choose to deal with the war in Donbas, which
remains as intense as at any point in the last four years.

From our viewpoint,
the notion of an investment nanny is an embarrassing admission that effective,
widescale reforms won’t be possible in the short term. Instead, the Zelensky
administration should be focused on improving the rule of law and reforming the
judiciary, a sphere that isn’t getting the needed attention. Meanwhile, its
efforts to combat corruption are inconsistent, with certain bodies being
heavily targeted, like the State Customs Union, and many others being ignored.
Influential officials and individuals are avoiding criminal prosecution. Most
recently, on Jan. 21, the scandalous judge Serhiy Vovk was cleared of all
criminal charges. Without widescale and consistent efforts in the spheres of
rule of law, even a 24/7 multilingual investment nanny won’t be able to
accomplish much.