In 2003, the Investment Fund for Central and Eastern Europe prepared to move the bulk of its investments further east and south. Now the development accelerates.
A wheel factory in North Eastern Croatia is among the new projects co-financed by IØ in 2003. Even though the war ended 12 years ago, this part of Europe is still affected by high unemployment rates and low standard of living. But the project of the Danish company, Starco, has created direct employment of 40 people so far, and more will be added if the company expands as planned.
IØ expects that Croatia will receive increased attention from Danish companies in the years to come. This coincides with the EU enlargement in 2004, following which IØ will no longer be able to co-finance new business projects in the eight new member states in Central and Eastern Europe. Therefore, in the years to come, IØ will gradually phase out its commitments in the countries in question and move its investment activities further east and south in cooperation with Danish companies.
25 new projects
IØ co-financed 25 new projects in 2003. The activity was influenced by Danish companies realising that this was the last year of IØ participation in the financing of new projects in the eight future EU countries: 17 investments were made in those countries, while the remaining eight were divided on Croatia, Romania, Russia and Ukraine, respectively. IØ’s total investments in new and existing projects amounted to DKK 510m in 2003 compared to DKK 412m in 2002. They were divided on 11 different countries and are expected to create direct employment of 1,800 people.
Since its establishment in 1990, the Fund has contributed to the implementation of significant business investments in the future EU member states from Central Europe: In the eight countries in question, the Fund has supported the establishment of more than 300 different businesses with a total investment volume of DKK 19.9bn. IØ’s share of the investments amounts to approximately DKK 3.3bn, and the projects have created an estimated 32,150 jobs.
Important task in neighbouring countries
In the countries which will now be the new neighbouring countries of the enlarged EU, there are still important tasks to be fulfilled. These countries have not come very far in their transition to market economy, and therefore foreign investments are urgently required to add capital and management. At the same time, the Danish companies view these countries as very appealing targets for outsourcing wage intensive production, but they need to share the risk with a financial institution such as IØ, and they need the advice which IØ can offer by virtue of its expertise and experience.
IØ started preparing for the new challenges as early as 2002 by opening an office in Moscow. In the past year, IØ has furthermore employed an adviser in Ukraine, which, together with Russia, is expected to be among the major Eastern European investment countries for Danish companies in the years to come.
For further information, please contact:
Sven Riskær, Managing Director, tel +45 33 63 75 00