The Ninth Meeting of the OSCE Economic Forum
(Organization For Security And Cooperation In Europe)

Theme: "Transparency and Good Governance in Economic Matters"
Dates: 15-18 May, 2001
Location: Czernin Palace, Prague, Czech Republic
Speech: Michael Bleyzer, President, SigmaBleyzer and Member of the United States Delegation to the OSCE Economic Forum

Prague, Czech Republic...May 18, 2001...Michael Bleyzer, President and CEO of SigmaBleyzer, an American-Ukrainian International Banking Group, which manages the largest private equity fund in Ukraine, the Ukrainian Growth Fund UGF), spoke at the ninth meeting of the Organization For Security And Cooperation In Europe (OSCE) Economic Forum, held in Prague. Bleyzer, in his presentation, told the Forum delegates, "Attracting large sums of additional private capital to all of the transition economies of the former Soviet Union is critical and absolutely necessary to their long-run success in building market economies and democracy. Strong market economies and democracies cannot be built without private capital taking the lead over all other sources of capital."

The theme of the meeting this year was 'Transparency and Good Governance in Economic Matters.' Bleyzer stated very strongly in the meeting, "The absolute key to attracting large sums of private capital, especially Foreign Direct Investment (FDI), needed by transition economics is a set of government policies that create an environment friendly to the flow of private capital. Good governance is the key to attracting private capital and thus the key to success for transition economies."

Mr. Bleyzer served as an official member of the United States delegation to the OSCE meeting as a representative from the private business sector. There were 55 countries at the Forum represented by over 250 delegates. The Bleyzer presentation was during the Third Session of the Working Group A, The topic for the session was "Creating a Business -Friendly Environment and Supporting Small and Medium Size Enterprises". The president of SigmaBleyzer spoke on the subject of "How To Finance A Transition For A Transition Economy" and focused on "Attracting Capital Through Good Governance".

The key points made by Michael Bleyzer during his presentation in Prague were:

(1) ATTRACTING PRIVATE CAPITAL IS CRITICAL..........
"Attracting private capital to finance a transition economy is critical because the transition normally takes place because the previous state of affairs, "the point of departure" is from a "centrally planned economy" that has failed. The "destination point" - a market economy operating in a democracy based on the rule of law is not easy to build when the economy is in ruins."

"Therefore finding private capital to finance the transition process is the key to successful transition. Most transition economies begin attracting capital in a form of debt, initially public, politically motivated, eventually moving to private debt, structuring it as bond offerings. Finally the more successful transition economies move over to equity and more specifically private equity."

(2) DONORS AND RECIPIENTS CREATE NEGATIVE
ENVIRONMENT......."In transition economies a major problem exists because of the culture created by 'donors' and 'recipients' which negatively influences the environment for true investors. The donors "donate" the funds and the "recipients" receive and spend the funds, rarely creating sustainable changes in the economy or society in the process."

"Therefore, the recipient countries are not conditioned correctly for real private investors to enter the market in large numbers. The investors are looking for a very different attitude and environment on the part of the countries and businesses in which they invest - investors are looking for growth, profitability, return on capital, etc."

(3) "ENVIRONMENT NECESSARY FOR PRIVATE
INVESTMENTS..."The environment necessary for private investments can only be created through good government policies, therefore good governance is the key to attracting private capital. Governments must define and implement concrete measures that have been proven to increase the flow of private capital. Governments must liberalize and deregulate business activities, provide a stable and predictable legal environment and improve corporate and public governance and eliminate corruption."

"Bleyzer said the International Private Capital Task Force (IPCTF) was created in early 2000 by an agreement between the Ukrainian government and SigmaBleyzer. The IPCTF studied, and benchmarked the major governmental policies necessary to attract private capital to transition economies."

"The IPCTF report outlined in detail nine government policy areas which directly influence the flow of private capital. The study showed that for a change in government policies to have a truly significant and sustainable positive impact on the flow of foreign direct capital all nine policy areas outlined in the IPCTF report are essential."

"Governments must also implement policies which aim at improving 'Transparency', encourage 'Simplicity' and facilitate 'Predictability' in business activities."

"The final report of the IPCTF which outlines in details the complete findings and recommendations of the study has been published. Copies are available for conference delegates."

(4) UNIFORMITY AND SPECIFICITY AND SPECIAL
CIRCUMSTANCES...... "There has been a lot of discussion at this Forum on the need for specificity and the need to understand the 'special circumstances' of some countries, particularly those in Central Asia. While this topic may be an interesting intellectual exercise, from my point of view it is irrelevant."

"True private capital in large volumes will never come to the transition countries, which do not comply with common international standards for doing business, transparency, accounting standards, independent audit, stable and predictable legal environment, low corruption rates, low barriers to trade and capital movements, etc."

Bleyzer closed by saying "The road to create a capital-friendly environment is pretty clear and very uniform, in terms of its characteristics. As long as everyone understands that, the discussions about more or less specific ways of getting there could take place, but only when the goal is essentially achieved can they count on getting significant amounts of private capital in,"

The final report of the IPCTF study, "Accelerating The Flow Of International Private Capital To Ukraine" and other related documents can be found on www.SigmaBleyzer.com and www.volia.com

FOR FURTHER INFORMATION CONTACT:
E. Morgan Williams, President
Ukraine Market Reform Group
Mobile In Kyiv, 380 44 459 332
E-Mail: morgankiev@yahoo.com
Web: www.ArtUkraine.com
Or Alex Chapko
Head, Public Relations Department
SigmaBleyzer, Kyiv, Ukraine
Tel: 380 44 224 94 87
E-Mail: alexc@sigma.kiev.ua