In 2002 the Investment Fund for Central and Eastern Europe participated in 28 new business projects in co-operation with Danish companies.
Furthermore, the Fund injected additional capital into 11 existing projects. IØ’s total investments in new and existing projects amounted to DKK 412 million.
Compared to the year before there was an increase in the number of new project investments, but a decline in the total amount invested.
The new projects are estimated to create employment for approximately 4,300 local employees.
The investments are more widely spread than previously, when almost every other investment was made in Poland.
22 of the new projects are in the 8 countries entering the EU. The Danish companies make use of their last chance of getting IØ to participate in their investments in those countries. After the countries have been “invited” into the EU, it has been decided that IØ cannot participate in any new projects in the countries in question.
– In the past years IØ has prepared moving the main part of its activities east. In August the Fund opened an office in Moscow. Despite the fact that we expect a small decline in the activity level in the short term, we already sense a growing interest from Danish companies to invest in the remaining East European countries, which in future will be neighbours of the EU, says Sven Riskær, Managing Director of IØ.
In 2002 the Baltic States accounted for 10 of the new projects, whereas Poland and other Central European countries entering the EU accounted for 12.
IØ’s average investment of capital and loans in the new projects was DKK 11 million.
IØ moves focus south and east
IØ faces a significant reorientation of its investment activities in connection with the EU enlargement. IØ has decided to no longer invest in the eight Central European countries that have been “invited” into the EU. IØ will continue and gradually phase out its involvement in existing projects and expects to terminate its portfolio of 138 projects over a period of 5-8 years. Until now, more than half of IØ’s investments have been made in the eight future EU countries.
In the countries that were not “invited” into the EU there is still an important task to be performed. They have not come so far in their transition to market economy, and the Danish companies still have a need to share the risk with IØ as a financial institution, and a need for the advice IØ can provide by virtue of its expertise and experience. By promoting foreign investments in those countries, IØ may also contribute to their integration into the common European economy in the long term.
In the years to come IØ will make a special effort to assist Danish companies establishing projects in the Balkans. The many conflicts there have had a deterrent effect. But with the situation stabilising, the groundwork has been laid for economic progress, which could also benefit the countries which have not been involved in the conflicts.
An example of a new project from 2002 is a project with Chris Wine International. The Danish partner plans to start production of quality wine from Romania. This implies training and education of the managers and employees of the project company.
Chris Wine is one of the biggest wine companies in Scandinavia. The company has bottling facilities in Denmark and France, where it also operates vineyards.
Until now only nine projects with IØ participation have been established in Romania. One of the reasons is the slow Romanian transition process. Now the country hopes to obtain membership of the EU during the next accession round, which will require a faster pace of reform and economic growth. New foreign investments might contribute to that.
Moreover, IØ expects that the majority of new projects will be established in Russia and the Ukraine in the years to come. In 2002 IØ opened an office in Moscow.