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15 January 2000.

DANISH COMPANIES CONTINUE TO EXPAND TOWARDS EAST

A statement from the Investment Fund for Central and Eastern Europe (IØ) show that Danish companies expand their activities in Central and Eastern Europe with undiminished power. With 41 investments the number of investments almost reached the same high level as in previous years, while the invested amounts went from DKK 344 million in 1998 to DKK 387 million.

27 investments were new projects while 14 were additional capital in existing projects.

The projects are production- or service companies and often related to environmental improvements. Often they are established as so-called joint ventures, where the Danish company creates a new shareholding company with a local partner, which they manage jointly.

The Investment Fund for Central and Eastern Europe normally participate as co-investor during the first 6-10 years and contribute with a.o. knowledge of the country in question and experience from other projects. Once the new company is well consolidated the Fund withdraws and sells its shares. The funds thus made available can be invested in new projects.

Small Investments – Large Effect
In addition to the Fund’s investments in 1999, private investors and other financing institutions invested DKK 3,500 million in the new projects.

“A number of them are “green” projects, which a.o. diminish an excessive use of energy or reduce the pollution, which through the air or through the Baltic Sea also reaches us. When the Investment Fund shows confidence in a project by way of financing and advice then other investors also dare go along”, says the Fund’s managing director Sven Riskær.

The investments in 1999 have been estimated to create 2,500 new jobs in Central and Eastern Europe. Furthermore, they create exports from Denmark worth approximately DKK 600 million equivalent to approximately 1,200 jobs for one year.

The Crisis in Russia Points Up as well as Down
Since 1998 Russia has been hit hard by the international financial crisis and this has influenced the Danish interest in investing in the country. On one hand the crisis and the insecure situation in Russia in general have made many Danish companies wait with the planned investments. On the other hand the devaluation of the Russian rouble has made it almost impossible to export to Russia. Therefore a number of Danish companies have expedited their plans to establish a local production there. In 1999 the Investment Fund for Central and Eastern Europe participated in 5 investments in Russia.

However, as in all the years since the breakdown of communism it is Poland, the East European country closest to us, that attracts the largest share of the Danish investments in the area. Last year 18 investments were made, amounting to DKK 132 million.

The three Baltic countries Estonia, Latvia and Lithuania are also attractive to Danish trade and industry. In these countries IØ participated in 11 investments with a total of DKK 104 million.

The more distant countries in Central and Eastern Europe have not been completely forgotten, though. In 1999, together with a Danish company, the Investment Fund for Central and Eastern Europe made its first investment in Georgia.

Sven Riskær
Managing director