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25 March 2002.

RUSSIA THE NEXT CHALLENGE

Russia is the next big challenge facing Danish trade and industry, and The Investment Fund for Central and Eastern Europe (IØ) has come far in its preparations to pave the way into this extensive market.

In IØ’s Annual Report an evaluation is made of achievements since the fall of the Wall and the creation of IØ 11 years ago. When several East European countries enter into an agreement for admission to the EU later this year, it has been agreed that IØ’s mission in those countries shall come to an end.

The purpose of establishing IØ was to provide an incentive for Danish companies to invest in the former communist states and thereby contribute to the reform process through investments leading to growth and development of market economy. In the past decade Denmark has become one of the biggest investors in Poland and the Baltic States.

When the countries, as expected, are admitted into the EU, it has been decided that IØ will no longer co-finance new Danish investments. Meanwhile, IØ will increase its efforts to help Danish companies establish business in the rest of the former communist states, not least Russia. Therefore, IØ will open an office in Moscow within a few months.

Despite the slowdown in world economy in 2001, IØ reached 25 investments in new project companies in 2001, compared to 26 the year before. The investments are estimated to create 1,250 new jobs in Eastern Europe and to result in Danish exports worth more than DKK 250 million. In 2001 IØ made a profit of DKK 31.4 million.

Facts about IØ
The Investment Fund for Central and Eastern Europe (IØ) was established as a legal entity by Act of Parliament, following the changes in Central and Eastern Europe in 1989, and it offers to participate in Danish companies’ investments in this area. IØ has invested in a total of 307 projects in 16 countries.

IØ offers share capital, loans, guarantees and advice.

The project companies are established as joint ventures, with the Danish company, a local partner and IØ forming a new limited liability company. In some cases the Danish company chooses to make the investment without a local partner.

IØ withdraws once the project company is well consolidated, usually after 6-8 years. The funds made available can then be injected into new projects.

Benefits Environment and Occupational Health and Safety
Studies have confirmed that the Danish investments generally lead to improvements of occupational health and safety and an increased environmental awareness on part of management and employees. IØ has at its disposal funds from the Ministry of the Environment for business investments that imply significant environmental improvements. This special facility, MIØ, injected capital into five project companies in 2001.

Danish International Investment Funds
To simplify and enhance the efficiency of Danish companies’ access to information and financing in connection with international investments, IØ shares its staff and offices with The Industrialization Fund for Developing Countries (IFU) and The Investment Fund for Emerging Markets (IFV). Mr Sven Riskær is Managing Director of all three investment funds, and Mr Johannes Poulsen, Managing Director of Vestas, is chairman of the boards of the three investment funds.

Copenhagen , 25 March 2002

For further information, please contact
J Dan Jensen, Deputy Managing Director, Tel +45 33 63 75 00