4 th Annual Financial Markets Conference Portfolio and Direct Investment in Russia and Ukraine May 4, 2006

1. 4th Annual Financial Markets Conference Portfolio and Direct Investment in Russia and Ukraine May 4, 2006

2. BISNIS - Who We Are ! • U.S. Department of Commerce program since 1992 • BISNIS Mission: Facilitate U.S. - NIS commercial collaboration and success • U.S. and NIS - based Trade Specialists • 6 Trade Specialists in Washington, D.C. • 10 Offices Across Eurasia • Expertise in • Each NIS Country & Russian region • Most Promising Industry Sectors and Issues • Local business needs and available resources

3. BISNISin Eurasia U.S. Department of Commerce Info for Eurasian companies: www.bisnis-eurasia.org Info for U.S. companies: www.bisnis.doc.gov Western NIS Kyiv, Ukraine Chisinau, Moldova Russian Federation St. Petersburg (Hiring) Moscow (Vacant) Nizhny Novgorod Samara Yekaterinburg (Hiring) Novosibirsk Tomsk Khabarovsk Vladivostok (Vacant) Yuzhno-Sakhalinsk Caucasus Baku, Azerbaijan (Vacant) Yerevan, Armenia (Vacant) Tbilisi, Georgia (Vacant) Central Asia Tashkent, Uzbekistan Bishkek, Kyrgyzstan (Hiring) Astana, Kazakhstan (Hiring) Dushanbe, Tajikistan

4. Market Size- 275 Million Belarus – 11m Ukraine – 51 m Moldova – 4m Russia – 145 m Georgia – 5 m Armenia – 3m Azerbaijan – 8m Kazakhstan – 17m Turkmenistan – 4m Tajikistan – 6 m Uzbekistan – 26 m $4.5 billion in U.S-Eurasia results since 1992 Kyrgyzstan – 4 m

5. BISNIS Services for U.S. firms • BISNIS OnLine • Unique Russian-language website • E-mail Updates • Leads • BISNIS Search for Partners • BISNIS Trades & Tenders • BISNIS Finance Link • BISNIS ExpoLink Eurasia • Consultations/guidance (phone, e-mail, in-person) • BISNIS Bulletin (monthly newsletter) • BISNIS OnLine • www.bisnis.doc.gov • www.bisnis-eurasia.org • Country Info • Industry Info • Leads • Events • Finance • Resources

6. U.S. Commercial Service • Presence in 107 U.S. cities • Presence in 145 U.S. Embassies and Consulates • E-mail Updates • Individualized Programs • Gold Key Matching Service • One Year Interactive Promotion • Contact Lists • US Product Literature Centers • Consultations/guidance (phone, e-mail, in-person) • www.buyusa.gov

7. UKRAINE • Surfing the wave • The Yushchenko Effect (One year later)

8. FDI into Ukraine Millions USD

9. Major Developments since 2005 • February 17, 2006: U.S. Grants Ukraine market economy status • In March 2006, Congress passed legislation to graduate Ukraine from the Jackson-Vanik Amendment  Clears path for WTO accession

10. Hot Sectors in Ukraine • Airport/Ground Support Equipment • Automotive Parts/Services Equipment • Building Materials • Computer Hardware, Software, Services • Contraction and Construction Materials • Energy, Power Generation and Distribution • Food Processing and Packaging Equipment • Medical Equipment and Pharmaceuticals • Agricultural Chemicals and Agricultural Equipment • Oil and Gas Field Machinery Data: 2005Country Commercial Guide, US Foreign Commercial Service http://www.buyusainfo.net/docs/x_6979181.pdf

11. But Obstacles Remain • Taxes, VAT return • Non-tariff Barriers (Certification) • Ownership Rights (physical, intellectual) • Soviet Legacy, Bureaucracy • Lack of Capital • Accounting • IPR • Rule of Law • Operating Costs /Effort • Challenges Obtaining Market Information

12. More Practical Information • BISNIS Finance Report • Ukraine: Competing in the global economy – strategy for success • Amcham Kyiv • US-Ukraine Foundation

13. RUSSIA • Press v. Commercial Reality • PBN Co Survey (One year later)

14. RUSSIA • Beware of the “strategic sectors” Oil & Gas Defense Aviation Metals Telecommunications Banking

15. RUSSIA • But know the 4 priority sectors • modern healthcare • high quality education • affordable housing • effective agriculture

16. Best Prospects in Russia Infrastructure Ports and airports Road construction Telecommunications Logistics (cargo terminals, warehouses, reloading terminals, etc.) Natural resource-oriented industries Wood processing, pulp & paper Metals (steel, aluminum, gold, titanium, nickel, other) Oil & gas Diamonds, amber Chemicals Fishing Environmental technologies

17. Best Prospects in Russia • Consumer market oriented sectors • Food processing and packaging • Printing • Medical equipment and pharmaceuticals • Textiles • Retail trade and distribution • Healthcare services • Financial services (asset management, insurance, mortgage) • Hotels and, in general, tourism infrastructure • Industry • Ship-building • Construction (Residential and Commercial) • High Tech (software development) • Machine-building (nuclear power stations, electrical generators, optics, trucks and automobiles, other)

18. Perceptions/Stereotypes and Reality • There are a lot of negative articles in the press about Russia: there must be a reason to it • Russians are crooks • Russia is so far away that transportation costs will eat away my profits • Corruption is pervasive • There is no predictability • I have good buddies in Moscow, I can cover Russia from Moscow • Many have lost their shirts in Russia, I could too

19. More practical Information • www.bisnis.doc.gov • www.buyusa.gov • www.amcham.ru • www.usrbc.org

20. Contact Information Philip de Leon Deputy Director Tel: (202) 482-2109 Fax: (202) 482-2293 Washington, D.C. E-mail: Philip_de_Leon@ita.doc.gov Web: www.bisnis.doc.gov www.bisnis.doc.gov