OREANDA-NEWS. February 04, 2007. A press-conference was held on the subject "Problems and effects of entering WTO for the national car producer" in the room of Ukrinform information agency, reported the press-centre of UkrAVTO.

Initiators and organizers of the conference are Association of car producers of Ukraine "Ukravtoprom" and Civic organization Club of Automobile journalists of Ukraine.

Maxim Morgunsky, President of Club of Automobile journalists of Ukraine, and Mikhailo B. Reznik, President of Association of car producers of Ukraine, were the persons who opened the conference and made reports about the car market of Ukraine and outlined problems of entering WTO for further development of the national car industry.

The main threats of possible stagnation of the car industry of Ukraine were defined by the reporters as follows:

" Weak technical facilities for industry compared to European car producers
" Undeveloped infrastructure of production of up-to-date materials and components for car production
" High cost of financial resources
" High tax load
" Low rating of competitiveness and investment attraction of Ukraine

Anatoliy M. Redzyuk, Head of Committee of technical regulation of Association of car producers of Ukraine, expressed anxiety about influence of the fact that Ukraine entered World Trade Organization on the status of the car industry: "One or two million is a normal production, which has its scientific and technical basis, service network. It is able to stand for itself if it is on several continents and if it has a number of plants in different countries. And production like we have needs care and ability to rise up on its legs".

Yuriy V. Yakovenko, Chief of Automobile and Road machine building Department of Ministry of Industrial Policy of Ukraine, agreed to forecasts of Ukravtoprom: "If we assume that every year our growth rates in the car industry increased by 35-50 percents, then I think that these rates will decrease to 10 or maximum 15 percents, and the same will happen to component producers".

Leaders of the market, UkrAVTO Corporation and Bogdan Corporation, presented the position of national car producers.

Oleg Kh. Papashev, Deputy Chairman of Board of UkrAVTO on car production issues, said: "The most frightening to us in this process is vagueness. Unknown are ratification terms of the agreement of entering WTO, and availability of transition period, and new rate of import duty for import of foreign brand cars and KD-kits". In his comments to the entering conditions Oleg Papashev added: "Everyone knows that Ukraine is an investment unattractive country, and car production is a good example of this. Speaking about Europe and Russia, a lot of car giants already stepped over us in the sphere of car and component production, and created their production facilities in Russia. Why? Because of unacceptable investment conditions. All these factors together with tariff decrease make domestically produced cars manufacture cost higher by 16%-21%, which can lead to stagnation of car production. This, in its turn, will cause dismissal of employees, unemployment, losses of state and local budgets. For example, over 16000 people work at Zaporozhye automobile building plant, and the company itself is the biggest domestic tax payer in the region".

At the press-conference the car producers made their proposals to the government regarding mitigation on entering WTO for industry.

Thus, in order to increase the competitiveness level of products it is necessary to adopt the system of government support for investment activity entities, believes Oleg V. Svinarchuk, President of Bogdan Corporation: "Government support appeared in the law "On stimulation of car production in Ukraine". Today the law is cancelled, markets are opened, duty is not available. Are there costs for support planned in the budget?"

According to Oleg Papashev: "Government should do its best in order to create conditions and possibilities for domestic car building, which are equal to those their European competitors have. It means, first of all, solution of financial issues: decrease of credit resources cost and improvement of taxation system". Together with this, according to Oleg Papashev, "costs for innovation development are to be production costs, but not to be financed from profits". This will make it possible for domestic producers to find financial resources for production modernization and, therefore, keep gained markets and master new ones.

Besides, the car producers noted that they need time for making production modernization and re-concluding global contracts with contractors and suppliers. "We need time to adapt own business processes to new conditions. For example, today ZAZ has 1200 partners. There are annual agreements signed with all of them, and considering that a lot of partners are overseas we need at least 9 months", said Papashev.

Therefore, for optimal business planning in the branch, first of all, new rules have to be introduced at the beginning of the calendar year, and then, approximately one year after entering WTO. That is, starting from December 31 of the year that begins from acquiring membership, or at least from January 1 of 2009.

Participants of the conference expressed hope that a new stage of Ukraine's development will not cause loss of achievements of domestic car producers. Otherwise, there will possibly be losses both at individual industrial companies, and in the whole country.