The city of Donetsk is at the centre of Ukraine's Donetsk Oblast region, both geographically and metaphorically. It is the largest city in the region as well as the administrative centre and is also the region's leading destination for FDI. According to greenfield investment monitor fDi Markets, between 2003 and 2011, Donetsk accounted for 70% of all new projects launched by foreign companies in the region.

However, with more than 50 cities in Donetsk Oblast, there are many other commercial and industrial hubs. In the north, the city of Kramatorsk is an important industrial centre specialising in non-ferrous metallurgy, manufacturing and machine building. To the south is the sea port city of Mariupol, another centre for industry. Additionally, not far from Donetsk are the automobile centres of Yenakiieve and Khartsyzk, two cities with a deep involvement in the automobile repair and construction businesses. The agriculture sector also has a strong presence across the region. Farms in the north and south specialise in livestock farming, while in the centre arable farming is more prevalent.

Advertisement

Lyudmila Bortok, a TV journalist working in Donetsk, says that the level of FDI received by each of Donetsk Oblast's cities is roughly proportional to their size. "Donetsk is number one" for investment she says, "followed by Mariupol and Horlivka". But, according to Ms Bortok, business opportunities are rife in smaller cities such as Khartsyzk, Druzhkovka, Kramatorsk and Yenakiieve, thanks to the large number of gigantic industrial plants and manufacturers concentrated there.

Adding appeal

In 2010, Donetsk Oblast, together with neighbouring Lugansk Oblast and the Russian region of Rostov, created the 'Donbass Euroregion', a crossborder union that aims to facilitate better economic, industrial, social, ecological and humanitarian co-operation. This has added another dimension to Donetsk Oblast's FDI appeal, making it a gateway to Russia. Since the Euroregion was established, the volume of trade between the three regions has increased significantly. According to data compiled by the Donbass Euroregion Secretariat, exports from Rostov to Ukraine increased by 68% in 2011 compared with 2010's figures, while imports were up by 44%.

This is not the only way that the authorities in Donetsk Oblast are trying to attract investors. In September 2012, the Agency of Investment Development of Donetsk Region launched an online database of investment projects to showcase its investment potential. The list contains 143 projects that would bring to the region an aggregate of $3.1bn. 

Some city officials are also developing their own initiatives to help boost FDI. “We understand that it is hard to attract business if the city is unattractive. That is why we made a lot of effort to make our surroundings more pleasant,” says Ruslan V Trebushkin, the mayor of Dimitrov, a small city in the east of Donetsk Oblast. In 2009, Mr Trebushkin launched the Clean City initiative, which saw many of Dimitrov's 50,000 residents forming volunteer teams to help clean up the area.

More recently, the city authorities have also taken over a dilapidated sports complex, Olympus, which it is renovating in partnership with local transport company Dimitrovpogruztrans. “The whole project will be completed by 2015," says Mr Trebushkin. He hopes that the initiative will help promote the city and cause investors to take notice of it.

Success stories

Artyomovsk, an industrial city 85 kilometres north of Donetsk, has set an encouraging example for the region's industrial cities. It has created a business-friendly environment that has helped it attract a number of multinational companies.

“We have 15 foreign companies working in our city. And if a potential investor has any doubts, I just tell them to check our portfolio,” says Alexey Reva, the mayor of Artyomovsk. Among the businesses with operations in the city are French building materials company Lafarge and Swiss glass manufacturer Glas Troesch, which opened a $3.7m plant in Artyomovsk in May 2012.

“In the 1990s we were trained by USAid on how to do business with Western companies. We follow that,” says Mr Reva, who stresses that the city's success hinges on its pro-business approach. “We are open for business day and night. We are working with embassies and chambers of commerce, and, when possible, we engage ourselves in the international promotion of our city,"

Mariupol, the second largest city in Donetsk Oblast, has also been successful in attracting FDI and is the second most popular destination for FDI in the region. Home to a sea port, an important railroad junction and an airport, the city has strong transport links and much of the investment that it receives is connected to these. But the mayor of the city, Yuri Khotlubey, is keen to diversify the type of investment it attracts and, in particular, is trying promote the value of municipal projects. 

“There are investment opportunities connected with the city itself," he says, adding that the city is keen to develop more public-private partnerships, "for example, in water systems or passenger transport in the city."

Similar to his counterpart in Artyomovsk, Mr Khotlubey is keen to promote the city's pro-business approach, as he knows that this is what will win investment. “We are helping investors with issues connected to red tape," he says. "There is no alternative for us than creating jobs and we will not see that happening if we do not provide good conditions for investors. We all understand that here."