New technologies and innovation through the development of industrial parks

Industrial Park in Bila Tserkva: New technologies and innovation through the development of industrial parks

At European Business Summit 2016 in Brussels Mr. Khmelnytskyi issued the following statement on the strategic development of Bila Tserkva: “Regional development demands not only investment capital but rather it requires modern knowledge and innovation. It is very important to develop not only industry but also educational structures in Ukrainian regions. It creates the basic prerequisites for welfare.” We apply with the question of the prospects arising from this to Ukrainian regional development and the German-Ukrainian economic relationship.

Dear Mr. Khmelnitsky, you create industrial park in Bila Tserkva. It is about 80 km south of Kyiv. Therewith it also opens attractive opportunities for German companies that want to invest in Ukraine. What is the idea behind establishment of the industrial park and why do you think location makes it special?

Like any Ukrainian businessman I am interested in the economic growth of the country where I do business. I am sure that industrial parks are the tool that can rectify Ukrainian economy, ensure growth and development. Ukraine needs investment and industrial parks should create favorable conditions for investors. The idea, as you understand, is not new at all. It worked effectively in Poland, Turkey and Germany at the time. There are still territories in many countries where one or another preferential treatment is in effect. I would not consider Ukrainian industrial parks as a way to compete with neighbors. It is enough to provide the same conditions for investors in Ukraine as, for example, in Poland – and it will be a great step forward to economic development of the country. As for the industrial park in Bila Tserkva, I am sure that a successful combination of several factors like demography, labor force, logistics – distinguishes it among other similar projects.

What are possible perspectives for German companies that are looking for a production site in Ukraine?

We consider that industrial parks open new perspectives for all investors willing to create new production sites in Ukraine. Of course, first off we would prefer those who bring not only money but also new technologies and knowledge. German manufactures are undisputable leaders in quality, technologies and workflow. Currently Ukraine
can offer very competitive prices for skilled labor force, natural resources and raw materials. Everything that is produced in Germany can be produced in Ukraine with much lower costs. Today it is cheaper to set up new production facilities in Ukraine than in China. Therewith, the European market is just over the western border of Ukraine, and distances to Russia and Asia are considerably reduced.

What are location advantages of the Bila Tserkva Industrial Park (eg., logistics, personnel, utilities supply)?

New facilities of pharmaceutical enterprise “Biopharma” in Bila Tserkva constructed for the funds of private investors two years ago
Bila Tserkva city combines multiple factors that make it unique. It is designated to be one of the business hot spots in Ukraine. I would draw the attention to the following points: firstly, geographical location. It is only 1-2 days to European capitals by truck and maximum 3-4 hours to any European airport by plane. It is just a little more than one hour by roadway from Bila Tserkva to the nearest international airport. Odesa and Mykolaiv seaports are 400 km by roadway. Secondly, Bila Tserkva is one of the major logistics centers of Ukraine. It is located on the cross of international road and railway lines. Thirdly, there is great number of professionals from different industries and agriculture. Due to insufficient number of jobs in the city a lot of Bila Tserkva residents have either to migrate or commute to other cities. There is excess of qualified labor force. It is an ideal place for industrial and commercial enterprises. That is why we build our industrial park here. Utilities are available – electricity and water supply are on place; there are two wastewater systems: sewage and drainage; wise logistics – land plot borders with the international highway and railway station. Managing company performs operational management of the park. Otherwise speaking, everything is set up for start of production in the Bila Tserkva Industrial Park.

Can you imagine more innovative approach to project development than classic land lease, take the risk on your own and develop the project together with foreign investors?

In the Bila Tserkva Industrial Park besides land lease we provide a range of services. Of course, we develop required utilities as I have already mentioned. We also provide services to obtain documentation necessary for start of production and its smooth operation. We provide personnel search and training services. Put simply, we are ready to provide pool of services according to the individual needs of each investor. Are we ready to enter into business with investors? Of course, yes. We are in a position to invest up to 25% in new projects at the start up stage. And later, for example, in 5 years the majority investor can buy out this share, if he wishes. We are open and ready to take risk together with our investors.

Alongside with the foundation of industrial park in Bila Tserkva economic development of Kyiv region and Bila Tserkva city should revive. Industrial Park could be an important strategic landmark for the further development of industrial clusters. Which economic sectors may be considered and what opportunities do you see in this regards?

There are a lot of opportunities. The world is global, and there is no product that would be in demand only in one or two countries. Everything that can be produced in Ukraine is possible to sell all over the world where demand exists. Bila Tserkva is unique by possibility to produce wide range of goods from fast moving consuming to machine building goods and electronics. Sufficient capacities are on place for that here. For example, I have invested in Bila Tserkva pharmaceutical enterprise “Biopharma”. We have modernized and expanded it. Initially it was able to sell products only at the domestic market. Now “Biopharma” exports the third part from its sales. And we plan to sell half of “Biopharma” goods at external markets for the coming one or two years. The same can be applicable for any production. I stress once again: production costs here are much lower than in Europe and lower than in China. However it is possible to distribute finished products worldwide. The simplest example is to produce flour, starch and gluten from local wheat. There is demand for such products everywhere and lack of its production in Ukraine.

What is your vision of German-Ukrainian cooperation in five years, and what can be the role of Bila Tserkva Industrial Park at this?

First of all, I intend that German investors and indeed all investors would work comfortable and efficient in Ukraine. As businessman I understand concerns of our potential partners very well. But Ukraine has not another choice than open up for investments and ensure favorable business climate. It is literally question of survival for the country. That is why I hope that in 5 years there will be enterprises of German companies in Ukraine where Ukrainians will work. And they will not just produce goods, but apply high manufacturing and management culture. Since, we need not only material investments but also new knowledge and technologies. And industrial park in Bila Tserkva is small contribution to this matter from me and my business partners. It is immaterial but I believe effective and such that will be useful for investors.