Business Ukraine winter 2020/21

Winter 2020/21

DNIPROPETROVSK REGION

INVESTMENT GUIDE

CUSTOMIZED SERVICE, INNOVATIVE AND STRATEGIC SOLUTIONS

BUDAPEST

KYIV

PARIS MOSCOW GENEVA

Jeantet is an independent French business law firm, present in 6 countries around Europe, that delivers customized services with added value.

CASABLANCA

Jeantet combines its excellence in legal expertise, in both advice and litigation, along with its entrepreneurial culture, to contribute to the success of its clients’ projects.

www.jeantet.fr

Contact: 4 Volodymyrska street, Kyiv, 01001 bbarrier@jeantet.org +380-44-206-0980

BUSINESS UKRAINE MAGAZINE - WINTER 2020/21: Dnipropetrovsk region is one of Ukraine’s economic engines with major industrial and agricultural sectors alongside a growing tech industry. The region’s investor appeal is set to be considerably enhanced by the reconstruction of Dnipro International Airport, with work now underway to transform the Soviet-era facility into a state-of-the-art air hub.

Russia in retreat as Soviet collapse continues Three decades since the collapse of the Soviet Union, the process is still far from over. Officially, of course, the USSR ceased to exist in 1991. In reality, Moscow has never come to terms with the loss of empire and has spent the past thirty years fighting to reverse the verdict of history. This struggle between Russian revanchism and the nation-building efforts of the former Soviet republics has shaped the political landscape of the post-Soviet world for a generation, but there are signs that the tide may now be turning decisively against the Kremlin.

2020 proved disastrous for Vladimir Putin and his dreams of informal empire.

It was supposed to be a year of triumphant posturing dominated by events marking the seventy-fifth anniversary of the Soviet victory over Nazi Germany.

Instead, Putin spent much of his time hidden away from the public as Russia struggled with one of the world’s most severe coronavirus outbreaks. There was also little to cheer in the wider neighborhood as Russian interests in the post-Soviet space experienced a series of setbacks.

In Central Asia, unrest in Kyrgyzstan led to the collapse of a pro-Russian government. This sparked fears of a further decline in Kremlin influence in a region where Moscow already finds itself competing against the growing presence of China.

In Moldova, the pro-Russian incumbent was handily defeated by a pro-Western candidate in the country’s presidential election. Moldova’s new president-elect Maia Sandu is exactly the kind of politician Moscow fears. An English-speaking Harvard-educated economist, she seeks to pursue membership of the European Union and has called on Russia to withdraw its occupation forces from the Kremlin-backed breakaway Moldovan region of Transnistria.

The most stunning blow to Russian interests came in the South Caucasus region, where Turkish backing allowed Azerbaijan to wage a victorious six-week war against Kremlin ally Armenia. Putin was eventually able to broker a peace agreement which allowed Russia to deploy a peacekeeping mission to the war zone, but this face-saving gesture could not disguise the fact that Moscow had been forced to accept the presence of a rival power in a region where Russia had previously reigned supreme for over a century. Turkey’s involvement in the Azerbaijani-Armenian War was a watershed moment in post-Soviet history that transformed the balance of power in the South Caucasus and shattered illusions regarding Russia’s ability to dictate military outcomes within the boundaries of the former USSR. If events in Azerbaijan came as a shock to Russia, developments in neighboring Belarus struck even closer to home. The protest movement that has emerged in the four months since Belarus’s flawed August 9 presidential election may not be overtly geopolitical in nature, but the pro-democracy demands of the protesters are nevertheless anathema to Moscow, which remains haunted by the Soviet collapse and views people power movements as a direct threat to the Kremlin’s own authoritarian model.

Opposition leaders in Belarus have bent over backwards in their attempts to convince Russia it has nothing to fear, but there is little doubt in Moscow that a democratic Belarus would inevitably turn towards the West if not physically prevented from doing so. Putin has therefore reluctantly intervened to prop up Belarus dictator Alyaksandr Lukashenka, providing financial lifelines and

teams of advisers while also publicly promising to deploy Russian security forces if necessary.

There is a sense of sad inevitability surrounding Putin’s support for Lukashenka. Kremlin policymakers appreciate that by backing the deeply unpopular and increasingly violent Lukashenka regime in Minsk, they are turning millions of previously sympathetic Belarusians against Russia. However, in the civilizational contest for hearts and minds that is playing out across the post-Soviet world, Moscow simply has no answer to the infinitely more appealing prospect of European-style democracy. This leaves the Kremlin with few viable options other than the use of force.

Russia’s inability to sell itself as an attractive alternative to the West has been most immediately apparent in Ukraine. During the 2013 debate over Ukraine’s proposed EU Association Agreement, Moscow made almost no attempt to promote the relative advantages of closer ties with Russia. Instead, the Kremlin embarked on a unilateral trade war and blustered about dire consequences, while at the same time backing an inept anti-EU campaign that included playground homophobia and silly scaremongering over same-sex unions. As Ukrainians prepared to make the most meaningful geopolitical decision of the entire post-Soviet era, Russia had nothing to offer except anti-Western nonsense and thinly veiled threats.

The poverty of Russia’s present position is no secret to Putin. Unable to offer a coherent vision for the future, he has responded by fighting over the past. However, while rose-tinted Soviet nostalgia and WWII mythology play well inside Russia itself, they are no match for the everyday aspirations found elsewhere in the USSR among populations where relatively few share modern Russia’s sense of wounded imperial pride.

The foreign policy defeats that have beset Moscow over the past year fit into a broader pattern of Russian retreat dating back to 1991. Landmarks along the way include EU and NATO membership for the Baltic nations, and Ukraine’s two post-Soviet revolutions. The recent Azerbaijani-Armenian War and Belarus’s ongoing national awakening may also deserve places on the list.

This retreat will continue until Moscow learns to shed its imperial outlook towards the post-Soviet world. Russia’s reliance on force has succeeded in establishing pro-Kremlin enclaves in Ukraine, Georgia, and Moldova, but it has also alienated tens of millions of post-Soviet citizens who represent Moscow’s natural allies. Building mutually beneficial partnerships is not something that comes naturally to the Kremlin, but it is a skill Russian policymakers must learn if they are avoid many more years like 2020.

Peter Dickinson Publisher Business Ukraine magazine

Celebrating three decades of support for economic development in Ukraine

This year, UKRSIBBANK BNP Paribas Group celebrates 30 years of successful development and growth together with its customers in Ukraine. Throughout this time, the bank has been actively supporting the Ukrainian economy, improving customer service, and implementing the best practices of BNP Paribas Group, with its 200 years of expertise as a global financial services leader.

“Working in a constantly changing world, we have created a bank offering high standards of financial services that makes a positive impact on the surrounding environment and society. We strive to support clients in the implementation of their projects, improve their banking experience, and offer technological solutions,” says Laurent Dupuch, the Chairman of UKRSIBBANK BNP Paribas Group.

“For us, being a successful bank in today’s world means taking responsibility for a better future for everyone.

First and foremost, we need to play our role as a bank excellently. This involves managing customer assets, financing projects, and providing a full range of products and services, while also taking into account the impact this has on the future of society. In this way, we can contribute to the economy and promote business development.

Meanwhile, by implementing the bank’s Corporate Social Responsibility (CSR) projects, we can also help to create a better life for future generations,” comments Mr. Dupuch.

Many companies seem to regard CSR as a straightforward charity activity, but this is simply not true. All responsible companies need to look at their actions from a global perspective and think about the effect they are having on the development of society in general. Every business should ask themselves: “Is our activity sustainable? Does it have a positive impact on the environment and society?”

In pursuit of sustainable development, UKRSIBBANK, as part of BNP Paribas Group, has launched the Engagement program, which is aimed at supporting entrepreneurs, young Ukrainians, community needs, and environmental protection through the promotion of alternative energy.

UKRSIBBANK actively implements sustainable development projects, introduces responsible credit systems including consumer loans, develops a cashless economy, and offers digital solutions for both individual customers and corporate businesses.

Laurent Dupuch

Chairman UKRSIBBANK BNP Paribas Group

In an effort to accelerate energy transition towards more sustainable models, the bank invests in energy efficiency projects implemented by customers. UKRSIBBANK deals with the transition to renewable energy sources and supports customers working in the field of environmental protection.

Another important program for UKRSIBBANK relates to the issue of gender equality. Today less than 30% of business owners and top managers at Ukrainian companies are women. “Of course, this figure should be higher. The bank has developed and launched the “Women in Business” program, conducting seminars and meetings to help women entrepreneurs become more confident in their projects. In addition, the bank participates in the UN HeforShe initiative, which provides various activities that aim to support women in their personal and professional development,” explains Mr. Dupuch.

As the bank that serves about 30% of the IT market in Ukraine, UKRSIBBANK helps to create a favorable environment for the development of the IT sector. The bank constantly interacts with IT associations, conducts projects for startups and, together with Radar Tech, has launched the Popcorp accelerator to develop fintech solutions.

In addition to all this, the bank consistently acts as a responsible and progressive employer, prioritizing the development of its more than 5000 employees. This year, the bank received the Top Employer Award in Ukraine and Europe. It is the only bank and one of only six international companies in Ukraine to have been recognized with the status of Top Employer.

france in ukraine

FRANCE IN UKRAINE

From ship-building contracts to IT acquisitions: 2020 has been a busy year for Ukraine’s French business community nesses will be somewhat limited. Many have managed to implement suitable countermeasures or, in the case of retail companies, increase sales through different channels such as the internet.

Which segments of Ukraine’s French business community have suffered the most severe impact from the pandemic, and which sectors have escaped serious damage?

I would say that the companies least impacted by the turbulence of 2020 have been those operating in the agricultural and IT sectors. Meanwhile, the nonfood retail segment has probably suffered the most negative impact. This is logical, given their reliance on the foot traffic of customers visiting stores. With the Ukrainian authorities ordering shops to remain closed for an extended period in the second quarter of the year, and then once again introducing weekend closures during the autumn months, this has made it very difficult for retailers to conduct business. The weekend shutdowns have been particularly unfortunate for the sector as Saturdays and Sundays are typically the busiest shopping days of the week.

About the interviewee: Bertrand Barrier is the President of the French-Ukrainian Chamber of Commerce and Industry (CCIFU).

The French business community in Ukraine has traditionally been one of the largest in the country, with an array of global brands and corporations operating alongside entrepreneurs and private investors.

Despite challenging pandemic conditions, French companies have remained active in Ukraine during 2020, with a number of major agreements concluded at the bilateral level. French-Ukrainian Chamber of Commerce and Industry (CCIFU) President Bertrand Barrier spoke to Business Ukraine magazine about the French business community’s response to the coronavirus crisis, and explained why he thinks the Ukrainian IT and agriculture sectors are likely to be the best bets during the post-pandemic recovery period.

2020 has been a uniquely challenging year for businesses worldwide. How has the French business community in Ukraine responded to the novel circumstances created by the coronavirus pandemic and the lockdown measures imposed by the Ukrainian authorities?

Safety and security are, of course, the most important considerations, and the French business community has been careful to comply with the rules adopted by the Ukrainian government in response to the pandemic. We have seen how all French companies active in Ukraine, regardless of their size, have adopted a range of remote working tools, for example. Generally speaking, the French business community has adapted extremely rapidly to the new realities. Some businesses were hit harder than others by the shutdown, but it seems from the conversations that we have with our members that the impact on most busi12

The obstacles to business created by the coronavirus crisis has dominated the headlines since March. However, some businesses have managed to invest or expand despite difficult economic circumstances. What have been the most significant developments for the French business community in Ukraine during 2020?

Perhaps surprisingly, French businesses have been quite active in Ukraine this year, with some exciting and significant developments. Highlights include the sale of twenty patrol boats to Ukraine by Ocea, a large French shipbuilder, and the commencement this summer of phase one of the Mariupol Drinking Water Plant with participation of French companies Beten and Stereau. Both of these developments are multi-million euro projects. I should also mention a significant investment into the IT sector by Alten, a French multinational technology consulting and engineering company, which in September 2020 acquired Archer Software, a Ukrainian company with 150 developers.

You mentioned the Summer 2020 signing of a EUR 64 million agreement between France and Ukraine to modernize water supplies in Ukrainian Azov Sea port city Mariupol. What does this partnership mean for broader cooperation between France and Ukraine?

The financing of the water treatment plant in Mariupol is a true landmark deal in the history of French–Ukrainian cooperation, and it is not a oneoff. It is worth underlining that France has now entered into three major intra-governmental agreements with Ukraine in the past few years, all of which involve significant sums of money. The first major step in this expanding cooperation was the 2018 purchase of 50 Airbus helicopters by Ukraine in an agreement valued at EUR 550 million. This was followed by this year’s patrol boat cooperation and the partnership regarding the drinking water plant in Mariupol. I would like to add that there are also many more interesting projects currently in the pipeline. For example, negotiations are ongoing over the possible supply of French locomotives to Ukraine’s national railway operator Ukrzaliznytsia. Talks are also tak- : www.bunews.com.ua

Today we serve large international companies wherever they operate in the world. Yet we remain agile and personal, like we have been since day one.

Experience a different perspective

Find out more at mazars.ua

14

france in ukraine

Countering the coronavirus crisis with a communications upgrade: the French-Ukrainian Chamber of Commerce and Industry (CCIFU) has adapted to pandemic-related restrictions in Ukraine by developing innovative broadcast-quality online events as slick substitutes for traditional business forums and networking. The format has proven so successful that it will likely remain a regular feature of the chamber’s activities once restrictions are lifted.

: ing place regarding construction of a second water treatment plant. The French government has placed a special emphasis on developing ties with Ukraine in recent years. These major projects are the result of this initiative and stand as proof of France’s readiness to broaden bilateral cooperation.

There has been some cautious optimism in the final months of 2020 regarding the development and coming availability of coronavirus vaccines.

However, few expect the international business environment to return to pre-COVID conditions in the short-term. How do you expect the ongoing pandemic to shape the business climate in Ukraine during 2021?

It is difficult to say with any degree of certainty at this stage, even though it seems clear that the first six months of the year are most likely to witness a continuation of the kind of disruption we have already seen in 2020. While it currently looks like the situation in EU countries may normalize sooner rather than later due to the development of various vaccines and their roll-out on the market, Ukraine is not expected to receive any vaccines at least until late spring 2021, which will probably mean that the Ukrainian government will want to maintain the same kind of measures they have been using so far in order to contain the spread of the virus. Naturally, we are all hoping to see an improvement of the situation in the second half of 2021.

There has been a lot of talk since spring 2020 of international investors shying away from emerging markets due to the mounting crisis conditions in the global economy. How much interest are you currently seeing from French companies that are considering Ukraine as a potential investment destination?

In addition to the important strategic projects I mentioned earlier, we are also seeing that, despite the pandemic situation, French businesses are still interested in Ukraine. Some sectors see more interest than others, of course. In September, a large French group (Alten) acquired a Ukrainian software company.

This reflected the growing levels of interest in the IT sector, which remains attractive. In fact, I would not be surprised if IT becomes the hottest sector in the Ukrainian economy during the coming years in terms of international mergers and acquisitions. After all, Ukraine has more than enough tech talent, and the www.bunews.com.ua

way the business is regulated in Ukraine is very favourable for those looking to make money. This year, the French business community in Ukraine created a local branch of the La French Tech initiative, which is an association that aims to bring tech sector players together and build relationships with French tech companies. Needless to say, there is also plenty of interest in the Ukrainian agricultural sector, where France is quite an important player.

Although nobody knows when the current coronavirus-related restrictions will be relaxed, thoughts are already turning towards the post-pandemic environment. How can the Ukrainian authorities improve the business climate and boost the country’s economic recovery in 2021?

It is not news that international investors are looking for security and protection of their investment. With this in mind, Ukraine needs to ensure that businesses and investors can rely on the rule of law and have access to a fully functioning and unbiased court system. A series of recent rulings by Ukraine’s Constitutional Court have cast doubt upon the entire anti-corruption system established by landmark reforms over the previous six years. This is not the kind of thing that instils a sense of confidence in the Ukrainian judiciary. Uncertainty regarding basic rule of law issues remains the main obstacle that prevents Ukraine from attracting greater volumes of international investment. Difficulties in the renewable energy sector are also sending out negative signals to the international investment community, with the terms previously agreed by the government now being retroactively revised. Investors want transparency and they expect stability. The rules of the game need to be clear and should not be subject to change whenever a new administration comes into power, otherwise it becomes impossible to make long-term plans.

Which segments of the Ukrainian economy are likely to be the most attractive to French investors in 2021?

In my opinion, the most exciting segments of the Ukrainian economy will be the agriculture and IT industries. Both of these sectors have particular appeal for French investors. They have huge growth potential, are internationally competitive, and are also less vulnerable than others to any negative impact from the ongoing pandemic.

15

French bank plans to maintain personal touch as pandemic boosts industry digitization drive Credit Agricole reports boom in digital banking but branch network remains crucial

About the interviewee: Carlos de Cordoue is the CEO and Chairman of the Management Board at Credit Agricole in Ukraine

Few members of the Kyiv expat community have experienced an introduction to the Ukrainian capital quite like French banking sector executive Carlos de Cordoue. He touched down in Kyiv in mid-March to take up his post as the new CEO and Chairman of the Management Board at Credit Agricole, arriving at almost the exact moment the country was introducing an unprecedented lockdown of everyday life. The subsequent coronavirus crisis conditions have made for a novel first year, but Cordoue has managed to settle in Kyiv and has also visited many of his bank’s regional branches throughout Ukraine. He is now upbeat about the prospects for 2021 as thoughts turn towards Ukraine’s post-pandemic recovery.

16

Coronavirus Challenges No economy in the world has escaped the negative impact of the coronavirus crisis, but Cordoue says he’s been encouraged by the relatively limited scale of the damage in Ukraine. “We currently expect to see an annual GDP decline of 5% to 6%, which is comparatively good by European standards,” he notes. This is partially down to the makeup of Ukraine’s economy and the prominent role played by lockdown-resistant sectors such as agriculture and IT. Indeed, Cordoue notes that high commodity prices have meant 2020 has actually been a good year for many in the Ukrainian agricultural industry, while the IT sector has also managed to expand despite the economic gloom elsewhere.

Credit Agricole’s branch network is fundamental to the bank’s continued success in Ukraine. Branches continued to operate throughout 2020 with no staffing changes, and there are no plans for any cutbacks in the coming year. “We are seeing a new wave of digital banks appearing in Ukraine and there is a battle for market share, but we believe personal relationships with clients are still very important for the banking industry,” says Cordoue. “Ultimately, banking is all about trust. If you cannot establish relationships built on trust, you will become weaker. At some point, you will lose clients. This is why we maintain our branch network in Ukraine, to stay in close contact with our clientele.”

Distance Working

Digital Upgrade

While today’s Ukrainian economy has proven less vulnerable to the shocks of the global coronavirus pandemic than it might have been in previous years, the unprecedented lockdown measures introduced in the country since spring 2020 have nevertheless tested the ingenuity of the Ukrainian business community. For Cordoue, one of the first major issues to address was an intensive transition during a two-week period in late March and early April that saw 80% of the Credit Agricole team in Ukraine (excluding employees of the bank’s branch network) switching to distance working. While he marvels at the organizational and technological achievement of moving to a home working model relatively seamlessly, Cordoue also notes the longer-term implications of this dramatic shift in employer-employee relations. “We have managed to make things work, but having so many staff members working from home creates a whole new world of management challenges that we are only just beginning to come to grips with. This will require considerable thought and a lot of training in order to learn how best to work with colleagues who are not necessarily always going to be working alongside you in the office.

Ultimately, we will need to establish a different kind of relationship with employees based on a contract of trust.”

In parallel to this personal approach, Credit Agricole has also spent 2020 upgrading its digital services. By pure good fortune, the bank was already in the process of developing a major new banking services app when the pandemic first began to unfold in the early months of the year. This next generation digital tool was unveiled in June and has proved a big hit among the bank’s customers, with usage and transaction volumes far outpacing previous levels as more and more clients handle their day-to-day financial affairs via their smartphones.

Cordoue marvels at the adaptability of the Ukrainian market and praises the progressive attitudes of Ukrainians towards new technologies. He argues that this natural Ukrainian appetite for innovation has been amplified by the necessities of the coronavirus crisis, and believes the shifts in user habits within the banking industry over the past year are here to stay. “Digitization has long been a trend throughout the entire banking industry, but the pandemic has accelerated this process. A lot of people who were not previously inclined to favor digital tools have been forced to use them and have grown much more comfortable with the technologies involved. Now that they are accustomed to the added convenience this offers, there is no going back.”

Banking on Branches

Post-Pandemic Outlook

Cordoue does not see the current levels of home-working as sustainable, but believes the trend towards distance working has now established itself as a viable alternative to office-based work and is here to stay. He anticipates that during the post-pandemic period, the percentage of Credit Agricole staff working from home at any given time will decline to around 20%. In anticipation of this long-term shift, the bank is already looking to reduce overall office space and has established flexible work spaces at its Kyiv headquarters. At the same time, he underlines the importance of regular contact between colleagues and stresses that there remains no substitute for face-to-face interaction.

This faith in the value of individual engagement and the personal touch is also evident in Credit Agricole’s continued commitment to a nationwide network numbering 150 branches. While other banks are moving increasingly towards digital banking, Cordoue remains convinced that

Looking ahead, Cordoue expects Ukraine to rebound strongly from the coronavirus crisis during the coming year. He speaks enthusiastically about his encounters with Credit Agricole clients across Ukraine, and notes approvingly that many are young entrepreneurs with a strikingly European mindset and globally competitive products. Cordoue sees the production of value-added goods as a particularly interesting focus for financing within the Ukrainian agricultural sector, where Credit Agricole remains among the market leaders.

Meanwhile, the bank plans to continue the current emphasis on developing its digital services portfolio while maintaining an extensive nationwide network of branches. “We want to offer our clients the most advanced digital options, but at the same time we think a physical presence is crucial for the long-term future of the bank in Ukraine. This is the key to competing.”

france in ukraine

He also identifies the health of the Ukrainian banking system as a key factor behind the country’s ability to avoid the worst of the coronavirus crash. Since Ukraine’s 2014 Revolution of Dignity, the country’s banking industry has undergone an extended period of reform and heightened regulation led by the National Bank of Ukraine, with around half of all banks forced to cease operations. Cordoue says this has helped create solid macroeconomic foundations and left Ukraine far better prepared than during previous crises. “Great work has been done in cleaning up the banking system over the past six years. I think the economy is much stronger and more resilient today than it was back in 2014 or in 2008.”

“We believe personal relationships with clients are still very important for the banking industry” www.bunews.com.ua

17

About the interviewee: Dominique Piotet is the CEO of UNIT.City and President of La French Tech Kyiv 18

france in ukraine

French tech initiative seeks closer ties

with Ukraine’s booming IT industry April 2020 saw the official launch of the La French Tech Kyiv community in the Ukrainian capital

The global coronavirus crisis has caused economic pain across the globe and Ukraine has been no exception. Nevertheless, some industries have proven less vulnerable to the negative impact of the pandemic than others. Currently available data indicates www.bunews.com.ua

that Ukraine’s tech sector has performed better than most during 2020. While the stellar growth rates of the past decade have inevitably suffered a slight decline, the industry remains on track to post yet another year of impressive expansion.

: 19

france in ukraine

“Ukraine needs to develop a more business-friendly tech ecosystem.

We see lots of tech-focused startups, but they must also be business-oriented.

This is where French tech companies can make a positive contribution” : The rise of the Ukrainian IT industry has been one of the country’s most compelling economic success stories since Ukraine first gained independence, but it’s a story that has yet to enjoy the recognition it deserves among international audiences. “It’s still a surprisingly well-kept secret,” says Kyiv-based French tech industry executive Dominique Piotet. “What really surprises me is that most people outside Ukraine don’t realize the powerful potential of the Ukrainian tech industry. I’m constantly amazed by the quality of the talent I encounter here. I’m amazed by the quality of the companies and the products they develop.”

Piotet hopes to play a role in the process of raising international awareness of Ukraine’s IT appeal. After spending seventeen years at the heart of the global tech scene in Silicon Valley, he first arrived in Kyiv eighteen months ago to take up the post of CEO at UNIT.City, Ukraine’s flagship innovation park and one of the largest in Eastern Europe. Piotet is now also president of La French Tech Kyiv, a community that launched in April 2020 with the aim of building business bridges between French and Ukrainian tech sector companies.

La French Tech Kyiv is part of the global La French Tech network, a non-profit initiative with French government backing that brings together a network of regional branches across France itself along with communities in almost 100 cities around the world. While this year’s Ukraine launch was a welcome step, the crisis conditions created by the coronavirus pandemic did not make for a convenient backdrop. “The La French Tech concept is all about bringing people together and organizing networking opportunities, so from that perspective, it’s been a slow start,” says Piotet.

With limited scope for physical meetings, the community has relied instead on digital events and online initiatives. Despite these obstacles, the response from within the tech community has been enthusiastic, with over 50 companies joining La France Tech Kyiv during the first half-year.

This is just the beginning. Based on the experience of Le French Tech communities in neighboring countries across Central and Eastern Europe, Piotet believes it is entirely realistic for membership in Kyiv to expand to 500 or more companies. Alongside the growth of the community, another priority for 2021 is creating opportunities for French tech companies to visit Ukraine and see the potential of the country for themselves. Coronavirus-related restrictions on international travel have served as a major obstacle to

20

this kind of engagement, but Piotet is convinced that when it comes to the Ukrainian IT scene, seeing is believing. “We need to be able to travel again. Paris is only three hours away from Kyiv. It is easy to fly between the two cities. I see huge potential benefits from bringing French tech companies to Ukraine,” he says.

Piotet appreciates that successful examples of cooperation are the best advertisements for further Franco-Ukrainian tech sector cooperation. He points to a number of specific cases including French video game giant Ubisoft, the company behind such global blockbusters as Assassin’s Creed. Ubisoft has been present in Ukraine since 2008 and currently maintains a team of more than 800 developers in the country. This is the kind of brand association that the Ukrainian IT industry needs to advertise. It would help, Piotet notes, if Ukraine’s own tech unicorns continued to identify themselves as Ukrainian even after relocating to the US. Ultimately, he says, the challenge is to create a new narrative around Ukraine that moves beyond geopolitical posturing and post-Soviet stereotypes. “We have to change the story. When people talk about Ukraine, they tend to talk about corruption, about Crimea, and about war. This needs to change. I hope La French Tech Kyiv can make a positive contribution to the process.”

It remains impossible to predict when an easing of lockdown conditions will allow for the resumption of regular connections between France and Ukraine, but there will be no shortage of ideas on the agenda when networking opportunities finally do arise.

Piotet identifies a number of sectors that might be of particular interest to French tech companies. He has been impressed by the progress of Ukraine’s FinTech segment and the growth of online banking services in the country. He also notes the rapid evolution of technological solutions in the Ukrainian agricultural industry.

As two of Europe’s leading agricultural superpowers, Ukraine and France have a shared interest in farming-related tech and could benefit from greater cooperation in this sphere.

As well as offering their own know-how, Piotet believes French tech companies can also bring additional business savvy to the equation. “Ukraine needs a tech industry ecosystem that welcomes investments and is business-friendly,” he says. “We see a lot of Ukrainian startups that are primarily tech-focused, but they must also become more business-oriented in their approach. This is one of the areas where greater cooperation with the French tech sector can be helpful.” www.bunews.com.ua

france in ukraine

Protecting French investments in Ukraine French businesses can look to everything from arbitration options to a new Insolvency Code

About the authors: Kateryna Gupalo is a Partner of White Collar Crime at Arzinger.

Markian Malskyy is a Partner and Co-Head of International Litigation and Arbitration at Arzinger.

Anton Molchanov is a Counsel and Head of Insolvency at Arzinger.

International investors exploring opportunities in emerging economies like Ukraine are typically interested in maximum protection for their investments. Despite well-documented ongoing issues related to the country’s law enforcement and judiciary, Ukraine has significantly improved investment protections in recent years.

In the current pandemic conditions, most businesses around the world are facing liquidity and solvency challenges. In cases involving defaults by Ukrainian business partners, the country’s recently introduced Insolvency Code provides a set of effective remedies to put legitimate pressure on debtors and increase repayments. This includes the management of personal debt liability before creditors in cases where the debtor company delays filing for insolvency or fails to inform shareholders of ongoing distress.

It covers management, shareholder, and stakeholder debt liability for wrongful trading such as entering into contracts and obligations which will never be performed due to financial difficulties.

The Code also provides creditors with the option of claiming a majority share of funds paid or assets disposed by the debtor within three years of the insolvency process. At the same time, legitimate debtors who have suffered financial setbacks due to the pandemic can benefit from a general moratorium on insolvency protecting them from aggressive creditors. However, this only applies to debts that matured after 11 March 2020.

22

French nationals doing business in Ukraine can take advantage of international arbitration options. For example, the bilateral investment protection treaty signed

by France and Ukraine in 1994 provides a number of guarantees for French investors. If the Ukrainian authorities attempt to illegitimately constrain, expropriate, or otherwise pressure French investments in Ukraine, or if the Ukrainian judiciary displays gross inefficiency in resolving claims against the state authorities, French investors may be able to initiate an investment arbitration against Ukraine. They can also make use of amicable negotiations with the state in order to seek resolution to investment disputes by brokering a settlement agreement before the issue escalates to the arbitration level.

French businesses active in Ukraine also have a range of choices available to them in terms of international commercial arbitration. By choosing reliable, flexible, and efficient dispute resolution mechanisms to resolve commercial conflicts, creditors are able to bypass the need to refer disputes to the courts. While pursuing arbitration claims, the creditor may also use the leverage of interim injunctions, or freezing orders, in support of the arbitration process, which will allow them to arrest the debtor’s assets in Ukraine.

Experience demonstrates that in many cases, a situation that initially appears to be a commercial dispute over non-performance of a

contract is actually a case of fraud of the part of the contractor. This includes the fraudulent misappropriation of property or funds.

In such cases, it is recommended not to limit any search for resolution to litigation or arbitration mechanisms, but to initiate criminal proceedings as an additional tool.

This approach is particularly suitable for any cases involving a Ukrainian company which either has no assets at all, or which loses its assets during litigation – presumably in order to avoid material liability. As anyone who has engaged in legal proceedings of this nature will testify, it is not enough to simply win a lawsuit. It is far more important to be able to enforce the relevant judgment. After all, if the company in question has no assets, then even a favorable court decision on debt payment will bring no benefit other than moral satisfaction.

French businesses and other international investors should note that unlike in many other jurisdictions, the injured party in Ukraine is endowed with a broad scope of powers and authorities, and can be an active participant in criminal proceedings.

Accordingly, any company that claims to have been a victim of fraud can not only initiate criminal proceedings, but can also directly monitor the investigation progress and influence its further development. For instance, they may submit a request to the investigator calling for witnesses to be interrogated, and can then attend subsequent interrogations and ask questions. Moreover, they may file a motion with investigators for temporary access to evidence and documents as well as property and funds.

It is worth underlining that there are no restrictions regarding the nationality of the initiator of criminal proceedings in Ukraine. This means that it can be both a Ukrainian subsidiary representing a French investor, or the French investors themselves. This depends on who has been subject to alleged wrongful actions. French businesses active in Ukraine can therefore use this approach if faced with a situation where they feel that the best option is to initiate criminal proceedings. www.bunews.com.ua

EXPAND AND INTENSIFY. STEP UP YOUR PRESENCE IN UKRAINE WITH OUR BUSINESS SERVICES

WWW.CCIFU.COM.UA

france in ukraine

Building Franco-Ukrainian business bridges

The French-Ukrainian Chamber of Commerce and Industry has been active in Ukraine since 1994

Maud Joseph is Director of the French-Ukrainian Chamber of Commerce and Industry (CCIFU) The French-Ukrainian Chamber of Commerce and Industry (CCIFU) was first established 26 years ago in Kyiv during the early years of Ukrainian independence. It has since grown to become one of the largest and most prominent international chambers of commerce active in Ukraine, with a membership of over 140 French or French-run businesses. The CCIFU membership brings together a diverse range of companies ranging from small businesses to many of France’s most famous global brands.

The activities of the chamber are focused on enhancing business cooperation between France and Ukraine. Traditionally, this has involved hosting an array of events including everything from forums and conferences focused on specific economic sectors, to networking opportunities and festive gatherings such as the popular Beaujolais Nouveau evening, which has become 24

one of the highlights on the Kyiv international community’s annual social calendar.

This emphasis on face-to-face communication and bringing people together has made 2020 a particularly difficult year for the French chamber in Ukraine. Due to restrictions imposed in response to the coronavirus pandemic, CCIFU officials have had no choice but to cancel a long list of planned events and create improvised alternatives. “This year’s health crisis has forced us to shift our habits. As a result, we have had to evolve as an organization in terms of the way we work and the way we think. Our priority throughout has been to support our members,” says CCIFU Director Maud Joseph.

The CCIFU response to the new realities of the pandemic began almost as soon as lockdown conditions were first introduced in Ukraine, with a Major Businesses GM Committee meeting taking

place via Zoom on March 20. Over the following ten days, CCIFU representatives hosted a series of webinars for members offering crisis management tips along with practical advice on legal and fiscal issues arising from the lockdown.

It has been a year of digital innovation. CCIFU conference events have been live streamed on Zoom, YouTube, and Facebook. Meanwhile, the chamber has launched its own series of podcasts in order to share experiences related to the coronavirus crisis and exchange opinions about doing business in Ukraine.

Some CCIFU events have been able to proceed in a modified manner. The second annual “Created

by Women” award, which promotes the role of Ukrainian women as business leaders, took place in a hybrid format during summer 2020 with a limited number of attendees and a virtual audience. This format has since been adopted for other CCIFU events.

The chamber is ending 2020 on a high note with a new initiative. The “More France” series of events running in early December across Ukraine aims to boost the sales and visibility of French brands ahead of the Christmas holiday season. It is expected to become a regular feature in the years ahead.

As this unusual and most challenging of years draws to a close, it is possible to look back on lessons learned and new skilled honed. “One thing we learned in 2020 was that some committee meetings actually work better in digital format, with attendance tripling in a number of instances,” says CCIFU Director Maud Joseph. She now expects many of the innovations introduced in response to the pandemic to remain in place during 2021. “The hybrid format for events will continue. We have also managed to produce TV-quality coverage of CCIFU conference events, which is helping to enhance the experience of digital participation.”

The chamber also has ambitious plans for a major business forum in France dedicated to showcasing business opportunities in Ukraine. Maud is eager to push on with this concept and believes it is the most realistic way to attract new French investors to Ukraine. She hopes progress can be made as soon as international travel restrictions are relaxed, but accepts that this may not be until the second half of 2021. For now, the focus remains on adapting to the existing environment and providing as much value as possible for the CCIFU membership. www.bunews.com.ua

france in ukraine

French Chamber celebrates Ukraine’s female business leaders Members of the French business community in Ukraine joined Ukrainian and international partners at Kyiv’s UNIT.City tech hub in 2020 for the second annual “Created by Women” award. This award is the initiative of the French Chamber of Commerce in Ukraine (CCIFU) and aims to promote the role of entrepreneurial women in the Ukrainian economy.

This year’s “Created by Women” award winner was Yevheniya Nikolaychuk, co-founder and managing partner of a chain of wine bars representing Ukrainian winemakers.

26

www.bunews.com.ua

Mazars unveils brand transformation as global expansion continues In October 2020, international audit, tax, and advisory firm Mazars unveiled its new branding in Kyiv as the firm continues to expand globally. The evolution of the Mazars brand comes amid a period of sustained growth. Mazars officials in Ukraine explained that while the founding principles remain the same, it is a very different firm today than ten years ago, having doubled in size and established a presence in over 90 countries and territories worldwide. This international expansion is reflected in the increasingly diverse geographical spread of the firm’s revenue sources, with more than one-third of fee incomes now originating outside Europe despite Mazar’s European roots in France. For example, Mazars

28

now has over 4,000 staff and 30 offices in China serving around 140 major listed companies. Meanwhile, Mazars in Ukraine has doubled in size over the past four years. Mazars also works with nearly 2000 Public Interest Entity (PIE) clients around the world, including around 30% of listed companies in France. At the same time, Mazars cooperates with over 50,000 private businesses worldwide ranging from startups and family businesses to mature multinationals. The scope of services on offer has also evolved, with Mazars developing its consulting, tax, legal, and financial advisory services to accommodate the latest technologies and innovations while remaining committed to the firm’s core values.

france in ukraine

www.bunews.com.ua

29

30

dnipropetrovsk region

Dnipropetrovsk Region 2021 Investment Guide Dnipropetrovsk region is one of Ukraine’s main economic engines. With just over three million residents, it accounts for around 7.5% of the country’s overall population but generates over 10% of Ukrainian GDP. This strong performance reflects the quality and diversity of the regional economy. Dnipropetrovsk region is best known for its extensive mining, metallurgical, and manufacturing industries. It is also Ukraine’s number two agricultural region in terms of cultivated land. Located in the heart of the country’s fabled breadbasket, the region boasts some of the world’s most fertile farmland.

Dnipropetrovsk region has undergone many reinventions over the centuries.

It was once part of the sparsely populated steppe borderlands on the eastern fringes of medieval Europe known to history as the “Wild Fields.” The region then emerged in the sixteenth and seventeenth centuries as a base for the rising power of the Ukrainian Cossacks, who sought but ultimately failed to carve out an independent state for themselves between the competing interests of Russian Czars, Turkish Sultans, Crimean Tatar Khans, and the Polish Crown.

Following incorporation into the Russian Empire, Dnipropetrovsk region’s considerable raw material wealth made it a key focus of nineteenth century industrialization. Mines and metallurgical plants soon dotted the landscape, sparking an economic boom and leading to unprecedented population growth as the predominantly rural population flooded into the region’s rapidly expanding cities. The dramatic rise of heavy industry in Dnipropetrovsk region sparked considerable international interest and attracted a wave of investment from Belgium, France, Germany, Italy and beyond. The region’s industrial importance was such that direct train services were eventually introduced connecting the city of Dnipro (then known as Ekaterinoslav) with Brussels.

This emphasis on heavy industry continued into the Soviet era, but was eventually joined by a new focus on rocketry. During the second half of the twentieth century, Dnipro became one of the unofficial capitals of the Soviet space program. Vast plants produced many of the USSR’s space rockets and intercontinental missiles, while an array of local universities and institutes prepared future generations of aerospace engineers. Throughout this period, Dnipro was a closed city subject to tough restrictions and an additional veil of secrecy that would not be lifted until the Soviet Union collapsed in 1991. It www.bunews.com.ua

was during this time that Dnipro earned the nickname “Rocket City.”

In the post-Soviet era, Dnipropetrovsk region has been at the center of Ukraine’s political and economic life. The second president of independent Ukraine, Leonid Kuchma, built his career in Dnipro, while two-time Ukrainian prime minister Yulia Tymoshenko also grew up locally. Meanwhile, the city is the hometown of leading Ukrainian oligarchs including Viktor Pinchuk and Ihor Kolomoiskiy.

In the national emergency that erupted following Russia’s February 2014 invasion of Crimea, Kolomoiskiy accepted the role of Dnipropetrovsk Oblast Governor. Soon after taking office, he famously mocked Russian President Vladimir Putin and offered bounties for the capture of Russian “little green men”, the term used to describe Kremlin troops operating in Ukraine without any identifying insignia. These bold actions at a time of grave uncertainty helped galvanize Ukraine’s fightback against Russian aggression, paving the way for the volunteer miracle that ultimately saved Ukraine and derailed Moscow’s plans to partition the country.

Dnipro’s prominent role during the decisive spring months of 2014 has had a major impact on perceptions of the city, which has come to be seen as a bastion of Russian-speaking Ukrainian patriotism and resistance to Kremlin imperialism.

Today’s Dnipropetrovsk region is one of Ukraine’s most attractive investment destinations. The region hosts a dynamic tech cluster that benefits from strong traditions of technical education at local schools and universities. Unrivaled access to the Dnipro River also brings considerable advantages, while new laws passed in late 2020 to reform the country’s river transportation regulations look set to generate further traffic along this most ancient of Ukrainian waterways. Growing cargo volumes on the Dnipro River will give additional impetus to the ongoing development of riverside port infrastructure including processing, storage, and loading facilities.

Perhaps the most important infrastructure project currently underway in the region is the redevelopment of Dnipro International Airport. After years of neglect, work has now finally begun on what promises to be a complete overhaul that will result in a modern international air hub. This is expected to dramatically enhance Dnipropetrovsk region’s international appeal and open the region up to the outside world.

31

Dnipro International Airport

landmark reconstruction project

The redevelopment of Dnipro airport aims to provide the entire Dnipropetrovsk region with a major economic boost Work began in autumn 2020 on one of Ukraine’s most strategically important infrastructure initiatives - the complete reconstruction of Dnipro International Airport. The project is being undertaken in public-private partnership (PPP) format between the Ukrainian state and businessman Oleksandr Yaroslavsky’s DCH Group. It aims to transform Dnipro’s existing air travel capacity and create a stateof-the-art international gateway to serve the entire region. The new-look airport is expected to become fully operational within two years and should dramatically improve Dnipropetrovsk region’s international connectivity.

“In Kharkiv, we built everything from scratch and developed the airport 32

step by step, and now we are receiving awards and recognition in international ratings. We will be happy to apply our knowledge and experience in Dnipro,” comments DCH Group President Yaroslavsky.

“The new terminal complex in Dnipro is being built by a private investor and this airport is an example of a productive and profitable public-private partnership,” says Kirill Khomyakov, the head of Ukraine’s State Agency for Infrastructure Projects, commenting on the role of Yaroslavsky’s DCH Group in the Dnipro International Airport project. “The investor began work in parallel with the construction of the runway. Preparatory work is currently underway for the construction of terminal facilities with a capacity of up to 1000

passengers per hour. With stable financing, construction of the new airport will take three years.”

A comprehensive upgrade of Dnipro International Airport has been under discussion for a number of years. The current airport facilities have seen little modernization work since the 1991 collapse of the Soviet Union. As a result, the airport has become hopelessly inadequate for a city with over one million inhabitants and a rising international profile. The renovation project that is now underway envisages the construction of totally new runway and airport facilities. The Ukrainian government will be responsible for financing and managing the construction of a 3200 meter runway along with other airfield facilities including apron, taxiways, landing facilities, and more. Meanwhile, DCH Group will build new terminal facilities and associated technical infrastructure.

Yaroslavsky’s DCH Group is a logical partner for the Ukrainian authorities, having previously cooperated with the state in similar fashion to reconstruct Kharkiv International Airport during the run-up to www.bunews.com.ua

dnipropetrovsk region

Work on the reconstruction of Dnipro International Airport began in autumn 2020. This architectural sketch gives an idea of how the main terminal building will look once complete

the UEFA Euro 2012 European football championship, which Ukraine co-hosted together with Poland. This record of prior PPP cooperation gives grounds for optimism. “DCH Group has successful experience of public-private partnership with the construction of Kharkiv International Airport, so we are confident that both parties will fulfill their obligations and deliver a modern new airport in Dnipro,” comments Konstantin Yarosh, the Chief Engineer at NS-Dnipro, the project’s main contractor.

For DCH Group, the Dnipro International Airport project is evidence of growing engagement in the airport industry. Preparations for the current reconstruction work have been underway for the past two years, while DCH Group’s involvement in the project will continue with management of terminal facilities following the airport’s anticipated entry into service in the second half of 2022.

Volodymyr Vasilchenko is the Director of DCH Group’s New System AM, which serves as the management company of Kharkiv International Airport. He says the Group’s approximately USD 70 million com- : 33

The redevelopment of Dnipro International Airport represents a major infrastructure upgrade that will transform the Dnipropetrovsk region’s connectivity to the wider world : mitment to the Dnipro airport project reflects a broader investment strategy. “DCH Group has long-term interests in the Ukrainian aviation industry and can offer considerable airport management expertise.

The reconstruction of Dnipro International Airport is part of ongoing engagement in strategic sectors of the Ukrainian economy.”

The new Dnipro International Airport terminal facilities will be developed in line with plans produced by Kyiv-based architectural and engineering design company UVT Group, which is recognized as Ukraine’s leading aviation architecture specialist and is also the company behind the recently revamped Zaporizhzhia International Airport. According to Vasilchenko, the plans for Dnipro International Airport incorporate a combination of maximum functionality alongside stylish design.

Despite the general disruption to the Ukrainian economy caused by the global coronavirus outbreak and subsequent restrictive measures imposed to help contain the pandemic, construction of the new airport is currently on schedule. As building work continues, the project is expected to provide a significant boost to the regional economy.

DCH Group officials plan to source as much of the necessary building material as possible from the Dnipropetrovsk region, including the Group’s own Dnipropetrovsk Metallurgical Plant (DMZ).

While the construction phase of the airport looks set to bring economic benefits to Dnipropetrovsk region, the real dividends are expected to emerge once the new facility becomes fully operational. Local author-

34

ities have enthusiastically backed the project and see it as the jewel in the crown of a wider infrastructure upgrade that will make the region significantly more accessible and economically attractive to investors.

Additional aspects of this infrastructure overhaul include ongoing improvements to Dnipropetrovsk region’s river transport capacity and significant modernization of the regional highway network connecting major regional cities such as Dnipro and Kriviy Rih. However, the most strategically important element of this upgrade remains the reconstruction of Dnipro International Airport. Indeed, a new ring road bypassing Dnipro and connecting to the Zaporizhzhia highway that is currently under construction will feature a major interchange specifically to accommodate the anticipated increase in traffic flows to and from the airport once the new terminal and runway facilities enter service.

The new airport will play a significant role in opening up the Dnipropetrovsk region for international cooperation. The current lack of a modern airport creates difficulties for the local business community in terms of meeting potential investors and business partners from Europe and Asia, not to mention North America. This hampers the development of cooperation and creates artificial barriers to joint projects. With the redeveloped airport complex set to be able to accommodate planes capable of serving on long-haul routes, the way will be open for direct connections to a host of international destinations across Europe and beyond.

The reconstruction of Dnipro International Airport should also have a

dnipropetrovsk region

DCH Group President Oleksandr Yaroslavsky says the Group’s successful experience of reconstructing Kharkiv International Airport is now being applied to the Dnipro International Airport project considerable and sustained positive impact on the local Dnipro economy, particularly in the districts immediately adjacent to the airport complex itself. This will likely include the appearance of numerous businesses looking to meet demand created by the airport. Local authorities expect the redevelopment to lead to the arrival of a new generation of hotels and restaurants in the surrounding area. There will also be new opportunities for logistics facilities and warehousing, conference venues and associated services, retail parks, and car rental companies.

At present, Dnipro International Airport services around 300,000 passengers per year. Once the new airport enters service and additional airlines begin introducing fights to Dnipro, this figure could quickly rise to around one million passengers per year. While ambitious, such rapid growth would be very much in line with the broader trends witnessed at regional airports elsewhere in Ukraine during recent years, until the sudden pause in domestic and international travel early in 2020 due to the coronavirus pandemic.

From 2016 onward, Ukraine witnessed a boom in air travel that reflected the vast untapped potential of the country’s airports. The advent of visa-free travel for Ukrainian citizens to the European Union’s Schengen Area in June 2017 was a watershed moment for the country that provided a massive boost to the aviation industry. With record numbers of Ukrainians flying to EU destinations, new international carriers began entering the Ukrainian air travel market on an almost weekly basis, while some of Europe’s biggest budget airlines rapidly expanded the services they offered from a range of Ukrainian destinations.

The chief beneficiaries of this boom were the airports that had already undergone reconstruction as part of Ukraine’s preparations to co-host the Euro 2012 football championship: Kharkiv International Airport, www.bunews.com.ua

Lviv International Airport, and Kyiv’s Boryspil International Airport.

The progress made by Kharkiv International Airport, which is managed

by DCH Group, is illustrative of the wider trends within the Ukrainian air travel industry. It also helps explain the optimistic expectations surrounding the reconstruction of Dnipro International Airport.

Prior to the sudden freeze in travel early in 2020 in response to the coronavirus outbreak, Kharkiv International Airport had experienced an unprecedented period of sustained growth in passenger numbers alongside steadily increasing flight services from an expanding number of domestic and international carriers. Beginning in 2016, new passenger records were consistently established by the airport on a month-to-month basis. Meanwhile, annual passenger figures grew by 39.4% in 2019 alone to reach a new yearly high of 1.35 million. This impressive performance catapulted Kharkiv into the ranks of Europe’s fastest-growing airports.

In research by Airports Council International (ACI) Europe covering the third quarter of 2019, Kharkiv International Airport took fourth place in the category of European airports serving up to five million passengers annually, with a growth rate for the period of 42.1%.

The team behind the reconstruction of Dnipro International Airport are hoping results will be no less impressive than Kharkiv’s stellar performance once the new airport begins welcoming flights within the next few years. The project has been long anticipated. It will make a major impact on the Dnipropetrovsk regional economy, while serving as a business bridge connecting Ukraine’s industrial and agricultural heartlands to the wider world. As a high-profile example of an ambitious public-private partnership, the new-look Dnipro International Airport will also serve as a reference point for other investors to follow as Ukraine looks to continue the country’s infrastructure upgrade.

35

Interpipe Steel

INTERPIPE – A UKRAINIAN INDUSTRIAL COMPANY Interpipe is a vertically integrated company combining the in-house steel production with further manufacture of steel pipes and railway products

The list of our production facilities consists of five highly efficient mills in the Dnipro region close to main roads and seaports.

INTERPIPE STEEL – STATE-OFTHE-ART ENVIRONMENTALLY FRIENDLY STEEL MILL Our innovative electric steel melting complex Interpipe Steel with the annual capacity of 1.32 mln tons of round steel billet was built in 2012.

INTERPIPE AT A GLANCE: • a TOP-5 manufacturer and TOP-3 exporter of railway products in the world

The new high-tech Interpipe Steel mill is equipped with full-fledged technologies of environmental protection, ensuring the virtually absolute absence of detrimental impacts upon the ecological situation in the region.

• a TOP-10 seamless pipe exporter in the world • 60% of freight trains in Europe use Interpipe wheels

Complete decommissioning of the open hearth furnace enabled the reduction of gross emissions of polluting substances to the atmosphere by 2.5 times (comparing with the open-hearth furnace production method).

• Every third building in Dubai was built with Interpipe pipes • deliveries to more than 80 countries all around the world • employs more than 11 thousands workers

Interpipe Steel is equipped with the upto-date outgassing and gas purification system to decrease the dust content in the emissions. The closed-loop water supply system ensures complete avoidance of the industrial waste water discharge to the Dnipro River. The arc steel-melting furnace has a dog-house enclosure, ensuring noise reduction to the general city level.

We control quality at all stages of production – from steel melting to finished goods’ delivery. The company invests into production and strengthening its R&D to provide customers with products ready for their specific operational conditions. The current investment portfolio of the company is USD 100 mln.

Interpipe Steel provides our customers with high quality round steel billets of 400 grades for multifarious applications. The state-of-the-art high-tech equipment has been installed and is used along the entire technological process.

The portfolio of Interpipe customers includes oil and gas companies, construction groups, leading machinery enterprises, railway operators, and railcar manufacturers of the CIS, Europe, America, and Asia.

Learn more about Interpipe:

For our clients’ convenience, we have sales offices in Ukraine, Europe, the Middle East, the CIS, and North America.

interpipe.biz

www.linkedin.com/company/interpipe/

HIGH QUALITY PIPES FOR VARIOUS APPLICATIONS Interpipe produces a wide range of seamless and welded steel pipes: • For oil and gas production and transportation

including premium connections and steel grades for sour service. Our latest development is a proprietary premium flush joint UPJ-F for operations in deep, extremely deviated, or horizontal wells un-

Interpipe products are involved in major oil & gas projects worldwide in all OCTG applications – upstream, midstream, and downstream. Our engineers develop products fitting peculiarities of specific production fields, such as the Permian Basin and Eagle Ford Shale in the United States, and Gunashli in Azerbaijan.

As a part of the customer-producer cooperation, our R&D department developed solutions for tough environments,

Etihad Towers in the UAE are constructed with Interpipe pipes

INTERPIPE CONTINUOUSLY INVESTS INTO WHEEL AND WHEELSET PRODUCTION

Ultimate line of freight wheels is highly demanded in Europe

DEVELOPING LOCAL COMMUNITIES We gather thousands of people at Interpipe Dnipro Half Marathon to promote the healthy life style The company has been the main partner of Interpipe Dnipro Half Marathon for five years in a raw. In 2020, the event took place online on November and gathered 2,186 runners in 22 countries on four continents.

Learn more about Interpipe:

Interpipe has an impressive portfolio in civil construction. At the Middle East, Interpipe has become the No.1 choice for steel pipe products in various applications, including steel structures, fire-fighting, heating, ventilation, chilled water, and gas distribution systems.

Interpipe is one of the key suppliers in the mechanical engineering segment. The company strives to build long-term collaboration with its customers. We produce a wide range of pipes for manufacture of hydraulic cylinders, bearings, farm machinery, and downhole equipment.

Now we are moving into the segments of sophisticated products with a high added value for all rolling stock types, including passenger, metro, and complex locomotive wheels.

As a major employer in the region, Interpipe supports educational institutions and establishes new educational facilities at local schools and universities. In 2018 and 2020, Interpipe arranged two stateof-the-art mechatronic laboratories at the National Technical University “Dnipro Polytechnic”.

Interpipe is actively involved into developing local communities.

Interpipe creates an engineering ecosystem The company organized Interpipe TechFest, which is a major engineering show in Ukraine devoted to the popularization of STEM among children and adults. It has been held in Dnipro since 2016 and gathers 15-17 thousands guests annually.

• For structural and mechanical engineering use

Each year, we pose and meet new challenges. In 2016, we started to produce finish-machined axles for European and American markets and launched the assembly of wheelsets at Interpipe NTRP. In 2017, we began to manufacture the Ultimate line with high operational characteristics for freight transportation. At present Interpipe has launched a new investment project to boost the production of fully machined axles and to double the production of wheelsets for the in-house assembly.

Interpipe produces railway wheels, axles, tires, and wheelsets under KLW brand.

Our product portfolio includes more than 250 types of railway wheels for locomotives, passenger and freight wagons, metro, and EMU/DMU vehicles. Our axles and wheelsets can be used for Standard, Russian, and Iberian gauge railroads.

Interpipe has years of experience in partnership with the following railways: Polish State Railways, Austrian Federal Railways, and Bulgarian State Railways, as well as Ukrainian, German, Slovenian, and Indian railways.

der high pressure and temperature, certified according to ISO 13679 CAL IV.

To promote technical education and keep students interested, Interpipe hosts mechatronics competitions at the Worldskills Ukraine – a part of the biggest international professional skill competition.

The festival has a number of thematically separated exhibition zones for adults and children, including Space, Industry, Engineering Education, and Open Air Lectures. interpipe.biz

Creating comfortable local spaces Interpipe helps to develop industrial cities – Nikopol and Novomoskovsk. For instance, one of the main projects covers the renovation of the Nikopol embankment. The company has been improving this recreation area for 4 years already.

We have restored 2 km of lighting and completely renewed the pedestrian zone. www.linkedin.com/company/interpipe/

dnipropetrovsk region

Good news for Dnipropetrovsk region

Ukraine revives Dnipro River traffic

Landmark new legislation promises to transform the transportation role of Ukraine’s River Dnipro

Dnipropetrovsk region is poised to emerge among the main beneficiaries after Ukrainian MPs voted in December 2020 to adopt a long-awaited Inland Water Transport Law that is designed to dramatically enhance the transportation role of the River Dnipro and return its historic status as a major trade route. The new legislation will bring Ukrainian river transportation regulations into line with European Union standards and open the waterway up to international investment, while also reducing bureaucratic regulations and removing a series of earlier restrictions. This should lead to a major increase in annual river freight traffic, which is expected to rise to 300 million tons per year within the coming five years.

The new legislation has been under discussion for 12 years. Adoption of the law now opens the way for the transformation of Ukraine’s waterways as a viable alternative to the country’s often overloaded road and rail infrastructure. Ukrainian Infrastructure Minister Vladyslav Kryklii hailed the economic and ecological advantages of the move. “Thanks to the implementation of this law, we will be able to revive river transportation, which remains the cheapest and most environmentally friendly way to deliver goods.” The minister added that the promised boost in river cargo would also have a positive impact on the condition of Ukraine’s road network, which would 38

benefit as heavy loads are increasingly diverted to the Dnipro River and other waterways.

The Dnipropetrovsk region’s strategic location straddling the Dnipro River, together with its strong agricultural and industrial sectors, mean that the region is now likely to witness a surge in river transportation-related investment. Dnipropetrovsk officials have already noted strong investor interest in infrastructure projects tied to the Dnipro River. The region is seeing port infrastructure being built at a rapid rate, with businesses investing in elevator facilities and processing plants. With Ukrainian exporters currently expanding their global footprint, the Black Sea access offered by the Dnipro and other major Ukrainian rivers will prove particularly attractive.

The international business community in Ukraine has long lobbied for reform of Ukraine’s river transport sector and welcomed adoption of the new law. “This is a historic moment for business and industry in Ukraine,” commented Andy Hunder, President of the American Chamber of Commerce in Ukraine. “It took more than a decade to finally open up Ukraine’s main transport artery, the Dnipro River, and the country’s other rivers for transportation. It’s a big win as the law cuts red tape and reduces unjustified regulatory and bureaucratic barriers. The new law will help attract foreign direct investment and develop cargo flow on Ukraine’s rivers.” www.bunews.com.ua

AXOR INDUSTRY: Eco-enterprise and No. 1 hardware manufacturing plant in Ukraine AXOR INDUSTRY is the only full-cycle plant in Ukraine producing window and door hardware. All production processes are fully automated and designed to ensure labor safety and protect the environment. This includes waste utilization, a wastewater treatment system, and ongoing workforce training programs. Production processes and products are subject to 24hr quality control via the plant’s world-class certified laboratory.

AXOR international expansion

Today, AXOR INDUSTRY products are available in almost 30 countries globally including Eastern and Central Europe, Asia, and South America. In 2018, growing international demand for AXOR products led to a substantial increase in the plant’s manufacturing capacity, with additional production lines and equipment boosting production several-fold. AXOR stands out on the market for its unique approach and provision of not only products but also services. As a result, the geography of AXOR products continues to expand year after year, proving that Ukrainian production can be globally competitive.

32 Truda Avenue, Dnipro, 49041, Ukraine https://axorindustry.com/ https://www.facebook.com/AxorIndustry

https://www.instagram.com/axor_live/ infoaxor@axorindustry.com Viber chats +38 067 554 27 77

dnipropetrovsk region

Dnipropetrovsk region welcomes innovative Eurointegration Office New center aims to boost institutional and personal connections between Ukraine and EU countries

Bringing Dnipropetrovsk region closer to the EU: (Left-right) Head of the EU Delegation to Ukraine Matti Maasikas, Deputy Prime Minister of Ukraine for European and Euro-Atlantic Integration Olga Stefanishyna, Dnipropetrovsk Oblast Governor (2019-2020) Oleksandr Bondarenko, and Director of the Dnipropetrovsk Region Eurointegration Office Marko Markovych pictured in early December 2020 at the official opening of the Dnipropetrovsk Region Eurointegration Office in Dnipro Early December saw the opening of the Dnipropetrovsk Region Eurointegration Office in Dnipro. This is one of the first platforms of its kind to open in Ukraine, and aims to serve as a one-stop-shop facilitating closer ties between residents of Dnipropetrovsk region and their counterparts in the European Union. Key focuses will include academic exchanges for students and educators, along with training and cooperation opportunities for local small- and medium-sized businesses. In addition to EU initiatives, The new Eurointegration Office will also act as a hub for grants and international engagement opportunities with Canada, the US, and other partner countries.

The recently opened Eurointegration Office is one of the many contributions to the Dnipropetrovsk region made by outgoing Dnipropetrovsk Oblast Governor Oleksandr Bondarenko. At just 33 years old, Bondarenko was one of Ukraine’s youngest ever governors when he was first appointed to the position in September 2019. He went on to serve as governor of the region for over a year before stepping down in December 2020.

Despite his relatively tender age, Bondarenko brought impressive academic credentials and a wealth of professional experience to the role of governor.

40

Originally a Kharkiv native, he graduated from the prestigious Kyiv-Mohyla Academy in the Ukrainian capital before continuing his education at the Kellogg School of Management at Northwestern University in Chicago. Other notable entries on Bondarenko’s CV include participation in the Young Leaders Exchange Program of the US-Ukraine Foundation in Washington DC. Meanwhile, his professional record included everything from executive roles at multinationals to managerial experience in the rough and ready world of Ukrainian startups.

Drawing on his own private sector experience of interacting with Ukrainian state organs, Bondarenko sought to use his governorship to promote a more customer-friendly service culture in a system known for its often excessive bureaucracy. One of the tools Bondarenko developed was performance-related pay for the 22 district administration heads within Dnipropetrovsk region. He pioneered a new scheme linking the salaries of district heads to quarterly reviews of Key Performance Indicators (KPIs) including the speed of handling administrative processes and the district’s ability to attract new taxpaying companies. www.bunews.com.ua

Agrotek LLC was founded in 2002 as an agricultural machinery supplier to the Ukrainian market. In 2009, Agrotek became a partner and official dealer of global agricultural industry brand John Deere. Over the years of its development, the company has built a network of 10 dealerships across the southeast of Ukraine with a headquarters in Dnipro.

Today, Agrotek’s main focus is the supply and maintenance of John Deere equipment. Other activities include the sale of agricultural and truck tires, along with the supply of irrigation systems and agrochem-ical soil services.

The company’s strategy is to be closer to the customer and provide them with a range of products and services that meet the needs of modern agricultural businesses. Agrotek actively invests in a network of service centers

and infrastructure to give clients access to the technologies that will boost the effectiveness of their business.

In 2019, Agrotek unveiled a state-of-the-art John Deere service center in Dnipro featuring fully equipped service area, training facilities, and large exhibition area. At more than 2000 square meters in size, it is currently the biggest center of used John Deere equipment in Ukraine. The service center is also eco-friendly and features solar panels.

Cutting edge maintenance equipment, worldclass facilities, and highly experienced staff are the hallmarks of Agrotek. This commitment to the highest international standards is the reason Agrotek is officially recognized among the top five John Deere dealers in Europe and the CIS, and leading John Deere dealer in Ukraine.

Agrotek LLC, Head Office 48 Shoseyna Street, Pidgorodne town Dnipropetrovsk region, Ukraine, 52001 +38 056 790 09 32 www.agrotek.in.ua agrotek@agrotek.org.ua

World-Class Trams Produced in Dnipro

office@tatra.od.ua

Ukrainian company Tatra-Yug offers some of the leading trams in Eastern Europe with production at the Yuzhmash Machine-Building Plant in Dnipro. The company has 27 years of experience in tram production. TatraYug trams successfully operate in most Ukrainian cities and the company is expanding internationally. Egyptian port city Alexandria now boasts a fleet of Ukraine-made Tatra-Yug trams, while the company won an international tender in summer 2020 to supply the Romanian city of Craiova with 17 state-of-the-art low-floor trams (pictured).

The company’s design bureau has developed eight models, with seven in serial production. Current capacity is 100 tram cars per year. Tatra-Yug has a range of international quality certifications (ISO 9001: 2015, ISO 45001: 2018, ISO 14001: 2015) and offers a full spectrum of competitively priced tram models meeting European standards. Production involves up to 300 different Ukrainian companies, including 80 enterprises in Dnipro.

Thanks to Tatra-Yug, Ukraine is one of ten countries currently offering a full cycle of tram production.

Investing in eco-friendly

Ukrainian

industry UMG Investments is pioneering the use of modern industrial recycling technologies in Ukraine

The Dnipropetrovsk region economy has experienced a challenging year in 2020, but there have been moments of progress to report alongside the complications created by the coronavirus pandemic. One of the most encouraging developments was the official launch in October 2020 of Ukrainian Mineral Fertilizers, a Kriviy Rih-based company that uses state-of-the-art eco-friendly industrial recycling technologies to produce nitrogen fertilizers.

The recently unveiled Dnipropetrovsk region facility is the latest investment of UMG Investments. Founded by SCM in 2006 to manage commodity assets, UMG Investments now operates as an investment company with interests in a range of economic sectors and total assets valued at above USD 500 million.

The new Ukrainian Mineral Fertilizers production complex was constructed from scratch and involved an overall investment of more than USD 11 million.

It features cutting-edge technologies from German-Japanese mechanical engineering giant Hosokawa Alpine, and is more advanced than most similar facilities located in the neighboring European Union.

This emphasis on ecologically sustainable business models and readiness to invest heavily in technology are both very much part of the UMG Investments philosophy. Such thinking is still relatively novel in Ukraine, but UMG Investments CEO Andriy Gorokhov believes it is simply a matter of sensible longterm business strategy. He points out that while Ukrainian ecological regulations are not currently as stringent as those in place within the EU, we are likely to see increasing convergence over the coming decades. It therefore makes sense to establish facilities now that will meet the future requirements of what is expected to be a significantly more regulated market.

Adherence to the higher standards of the European Union also means greater access to EU markets. Gorokhov says the quality and ecological purity of Ukrainian Mineral Fertilizers production is a major factor for foreign clients. : 44

About the interviewee: Andriy Gorokhov is the CEO of UMG Investments

dnipropetrovsk region

45

www.bunews.com.ua

UMF products in demand: the new Dnipropetrovsk region plant has already sold its entire ammonium sulfate production until the end of January 2021. UMF is scheduled to reach full capacity of 100,000 tons per year in 2021

: “They tend to be very strict in terms of ecological issues and want to make sure the fertilizers they use do not contain any harmful additives,” he notes.

Ukrainian Mineral Fertilizers is the second new project for 2020 in the UMG Investments recycling portfolio. In April 2020, the company entered into an agreement with Effective Investments over the acquisition of a minority stake in a Lviv region enterprise producing high-protein feed additives for farm and domestic animals. This partnership aims to create the first independent processing plant of animal by-products in Ukraine.

Work has also been underway during 2020 on another Dnipropetrovsk region initiative that seeks to convert the greenhouse gases generated during the coal mining process into a source of heating and electricity. So far, UMG Investments has invested around USD 2 million in a pilot project at a coal mine located close to Pavlograd in Dnipropetrovsk region. At present, the power it generates is being supplied back to the mine itself. If this pilot project proves to be a success, there are plans to scale the operation up over the next five years, with output rising from today’s 1.5 MW capacity to 6.5 MW, along with the addition of a second facility.

“The project has great potential to make a positive ecological impact on the surrounding region, which is something we are passionate about,” says Gorokhov.

“We have also started looking for partners in a new area for UMG Investments: secondary plastics. We are ready to invest above USD 2 million in enterprises and projects for the processing of polymer waste. As more and more European countries require packaging manufacturers to use up to 30% of recycled plastic, this market is expected to become the fastest-growing segment of the plastics processing market. Global trends also indicate a positive outlook for Ukraine. From 2019 to 2027, the plastics processing market is expected to grow by 6.6% annually in terms of profit, and by 8.8% in terms of volume. Our country is already moving towards the implementation of extended producer responsibility. The number of sorting stations is growing every year, and the practice of separating household waste into different categories is gradually increasing among the population. These trends create the prerequisites for an expansion of the production capacity at existing Ukrainian enterprises and entry into global markets for recycled plastic. We are looking for companies that 46

process all types of thermoplastics for finished products or intermediate raw materials such as flexes, pellets, and fibres.’’

With industrial recycling still a relatively untapped niche in Ukraine, Gorokhov believes there is huge scope for further investment. He says that awareness of the potential offered by the reprocessing of industrial byproducts is now growing within the Ukrainian business community. This is opening up new avenues for cooperation. “In many industries we are seeing a readiness to enter into long-term agreements with partners like us in order to build the facilities necessary to recycle industrial waste and byproducts. As this culture becomes more and more widespread, it creates new chances to invest.”

While Gorokhov continues to seek out new investment opportunities across Ukraine’s industrial sectors, he has also had to come to grips with the turbulent business environment created in 2020 by the global coronavirus outbreak and accompanying lockdown restrictions. Despite the novel nature of the pandemic itself, Gorokhov notes that the crisis conditions it has created are actually nothing new for Ukraine. Indeed, this is the third major crisis that UMG Investments has been forced to navigate during its fourteen-year history. It follows the 2008 global financial meltdown and the economic crash that accompanied the height of the crisis with Russia in 2014. “We have all the relevant professional experience and a good understanding of how to deal with crises of this nature,” he says.

Like many business gurus, Gorokhov believes the current crisis conditions also create a whole new range of opportunities for ambitious and confident companies. He talks about adopting the mentality of a startup and stresses the importance of boosting organizational agility in order to pivot when necessary in response to the rapid changes taking place in the business climate. The companies that are best able to adapt to the new market conditions will reap a whole range of rewards, he argues, including greater market share, closer relationships with clients, and a significantly enhanced reputation. “If you have proven yourself able to manage your business successfully in the present economic environment, then it is reasonable to assume you will be able to handle future crises in a similar manner. This generates considerable confidence.”

The coronavirus crisis also opens up windows of opportunity for possible ex-

pansion, says Gorokhov. Many international investors have responded to the pandemic by shelving plans to enter the Ukrainian market and turning to more stable if unspectacular options. Meanwhile, the unfavorable economic conditions created by the coronavirus outbreak have reduced the number of domestic competitors on the market. “Such circumstances actually make this one of the best times to invest. Valuations are lower and competition is not high, making it possible to implement investment projects that might otherwise have been unavailable.”

Throughout 2020, Gorokhov has been an active participant in the evolving public debate over the priorities for Ukraine as the country looks to get back on track following an extended period of pandemic disruption. So what is his recipe for economic recovery? “That’s a good question! If anyone could provide a comprehensive and convincing answer, I think they would deserve to be at least nominated for a Nobel Prize,” he quips. “We have invested in eleven companies and this provides us with insights into all the major industries in Ukraine. We also sell to 40 markets worldwide so we get a clear sense of the current sentiment elsewhere around the globe.”’

As Gorokhov discusses the challenges facing Ukraine on the road to recovery, he comes back time and again to the need for a clearer vision of the country’s future economic direction. “I consider it vital for Ukraine to establish a single vision and a single economic strategy for the country. If the government is able to identity the economic sectors that are Ukraine’s top priorities, they can then move forward towards identifying what these sectors lack and what they need in order to make progress. We can then look to establish the kind of cooperation between the state and the private sector that can help Ukraine travel from point A to point B in the country’s economic development. It is already clear that the road ahead is long, but we currently lack a coherent vision of the target model.”

The UMG Investments CEO also acknowledges the importance of international investment as one of the principal engines of Ukraine’s desired transformation towards developed economy status. Since achieving independence in 1991, Ukraine has steadily fallen further and further behind its neighbors in Central Europe due to the country’s comparative inability to attract Foreign Direct Investment (FDI).

This is no accident, according to Gorokhov. “Ukraine’s relations with international investors are subject to the same basic principles as the interactions in our everyday lives. When you meet somebody new, you have to decide whether you want to develop a relationship with that person. If you find that you have a lot in common, you might decide to invest in the relationship, but if there are significant differences, you are more likely to keep your distance.” He believes Ukraine still often lacks the credibility to convince international investors that the country is a reliable partner. “The kind of investment Ukraine needs rewww.bunews.com.ua

dnipropetrovsk region

“I consider it vital for Ukraine to establish a single vision and a single economic strategy for the country” quires long-term commitments of five, ten, or twenty years, and involves fixed assets. You cannot then take these assets to Japan, Britain, or France. You must stay in Ukraine. So this requires high degrees of trust and understanding towards the local business climate.”

One factor currently preventing greater levels of trust from developing is Ukraine’s rocky relationship with the International Monetary Fund. In spring 2020, the Ukrainian authorities secured a new IMF program that was seen as essential for the country’s economic stability. However, a number of subsequent government decisions and court rulings have targeted the conditions set by the IMF and threatened to derail further cooperation. Gorokhov says this has sent out alarming signals to potential investors. “Everyone, including the Ukrainian government, understands that the position of the IMF acts as an indicator for the wider investment community. It is ridiculous for a country that is looking to attract investment to step on the gas and then slam on the brakes in this manner. If we want to establish a reputation for trustworthiness, then we need to treat to the conditions established by the IMF like the Biblical ten commandments.”

Ukraine’s relatively low international profile also undermines the country’s efforts to attract investors. Gorokhov was one of a number of Ukrainian business leaders who participated in the Ukraine House initiative, a promotional platform which took place on the sidelines of the World Economic Forum in Davos in January 2020. He is well aware of Ukraine’s reputation problems and is a strong believer in the need to showcase the country more proactively on the international stage. “I believe it is critically important. If we don’t pitch ourselves and give international audiences a chance to get to know us better, then they will get their information from elsewhere. Unfortunately, much of the available international media coverage of Ukraine tends to be negative. So initiatives like Ukraine House in Davos are a very good tool to promote Ukraine as an investment opportunity.”

As someone who spends much of their professional life moving in international investment circles, Gorokhov remains cautious about future prospects but sees some indications that Ukraine’s message may be starting to get through.

“Investors increasingly regard Ukraine as a European country with a European mentality. This is very good news. There is also great interest in the rapid development of the Ukrainian IT sector, which illustrates the talent that Ukraine has to offer and underlines the country’s ability to integrate into the global tech and digital economy. Most of the investors I come into contact with are not yet ready to invest in Ukraine, but they want to keep track of new opportunities and are eager to maintain warm relations with the country’s business community. If we are able to create the right business climate and establish greater levels of trust, investors will come and they will bring money, technology, and development.”

47

Biosphere corporation is a leading manufacturer and distributor of household and hygiene products and a key player on the away-from-home market of professional goods and private labels.

Led by Dnipro-born Andriy Zdesenko, the company has evolved since 1997 from a local startup to an international giant with turnover close to USD 250m (2020 forecast), delivering its goods into thousands of households in 30 countries in Eastern Europe, Central Asia, Africa, South America, and the EU. A product portfolio of about 2000 items makes for 1.3 million products purchased worldwide daily.

Biosphere corporation unites a family of 13 own and 10 distributed brands: Freken BOK, Smile, Smile Baby, Vortex, Novita, Superfresh, Lady Cotton, PRO service, TORK, Selpak, and many others that are leaders in their segments.

Biosphere corporation employs 3000 people and operates 5 modern production facilities. The first and largest factory is an award-winning facility located in Dnipro. Disney, Universal, McDonald’s and other key partners audit the factory annually to ensure world-class safety and quality standards.

In 2020, Biosphere’s first baby diaper brand Bambik appeared on the shelves.

Entering this crowded category with a high-quality “Made in Ukraine” product was a major personal ambition of company founder and CEO Andriy Zdesenko.

The story of the Bambik launch was full of inspirational initiative and crosscountry teamwork. It has already featured in the Ukrainian edition of Forbes magazine.

Biosphere’s sustainability strategy is a cornerstone of business development.

The company recycles 100% of its production waste, ensures decontamination of all water resources used in production, and works on eco-friendly products and green initiatives.

Biosphere’s Polygreen factory turns 800 tons of polyethylene waste into valuable resources every month. Recycled granules are used in the production of garbage bags and pet care bags in Dnipro. Biosphere has Ukraine’s biggest recycling factory and considers and waste management critically important for society, consumers, and business partners.

In 2020, Biosphere launched its GoGreen initiative featuring 100% biodegradable garbage bags, organic cotton sponges and buds, flushable cotton wet wipes and toilet paper.

A DNIPRO-BORN PLAYER WITH GLOBAL AMBITIONS

“ The development strategy of Biosphere

Corporation is defined by our mission and values. Our motto is ‘We Create Value’, and we use cutting-edge production equipment to create innovative value-added products.

Biosphere is constantly searching for new markets. We embrace creative marketing and communications while ensuring strict control of quality and productivity. After 23 successful years of growth, we remain flexible and dynamic in our approach as we seek to maximize our strengths on global markets. The trust of our customers and support of our partners speak for themselves. We are aware of our responsibility as a market leader and aim to make a positive difference by influencing consumer culture.”

Andriy Zdesenko Founder & CEO Biosphere corporation

Dnipropetrovsk region

investment overview

The economic engine of southeastern Ukraine offers an array of industry, infrastructure, tech, and agricultural opportunities for international investors 50

Photo: Sergey Nazarov

The Dnipropetrovsk regional economy has traditionally been associated with heavy industry. Since Ukraine first entered the industrial age in the mid-nineteenth century, the region has been part of Ukraine’s industrial heartlands. For over one hundred and fifty years, it has been home to a host of major mining, metalurgical, and other industrial manufacturing enterprises.

Much of this early industrial growth was the work of international entrepreneurs attracted to southeastern Ukraine by the region’s wealth of natural resources. One of the most prominent contingents within this international influx was a large Belgian community. Belgian companies and industrialists established many of the Dnipropetrovsk region’s biggest enterprises and were responsible for landmark developments such as the electric tram system of public transportation in the city of Dnipro.

This international involvement in the industrial sector is still very much evident today. Global steel and mining giant ArcelorMittal has had a major presence in the region’s second-largest city Kryvyi Rih for the past fifteen years. :

dnipropetrovsk region

The Dnipropetrovsk region in southeastern Ukraine ranks among the country’s most diverse and internationally competitive investment destinations.

The region is home to many of Ukraine’s most important industrial enterprises and is also a key agricultural area, while a prominent Soviet-era role in the USSR’s space and rocket industries has helped fuel the growth of vibrant tech and IT sectors.

This investor appeal is becoming increasingly recognized. Early in 2020, the region featured in the European Cities and Regions of the Future 2020/21 report produced by the Financial Times, occupying ninth position in the “Mid-Sized European Regions of the Future – FDI Strategy” nomination.

A glance at key economic data helps to explain the region’s rising profile.

Dnipropetrovsk region is currently one of Ukraine’s leading exporters and occupies second place nationally in terms of exports. It plays a prominent role in the Ukrainian economy, accounting for more than 11% of total economic output in 2019.

www.bunews.com.ua

51

dnipropetrovsk region

Dnipropetrovsk region benefits from an advantageous geographical position in Ukraine’s industrial and agricultural heartlands while enjoying excellent access to the Dnipro River : Officials at ArcelorMittal Kryvyi Rih recently confirmed plans to invest a further USD 700 million over the next three to four years in new projects with an ecological component.

While heavy industry continues to play a central role in the Dnipropetrovsk regional economy, other sectors of the economy are also becoming increasingly significant. The tech industry is a good example of this diversification. Ukraine’s IT industry has experienced exponential growth in recent years and is now one of the country’s leading exports, with Dnipropetrovsk region at the forefront of this progress.

The region’s biggestr city, Dnipro, has emerged over the past decade as one of the largest IT hubs in the country and generally ranks fourth behind Kyiv, Kharkiv, and Lviv. Around 400 IT companies currently operate in the city, employing approximately 12,000 IT professionals. These companies work predominantly with an international client list based in the European Union and the United States.

Dnipro’s IT industry and wider tech sector benefit from the city’s historic associations with the Soviet missile and space exploration programs, which helps to guarantee a steady flow of highly qualified graduate recruits. During the Soviet era, Dnipro served as a design and production hub for space rockets and military missiles, earning it the nickname “Rocket City.” A number of major industrial enterprises form the legacy of this period, while efforts continue to revitalize the industry.

In common with the rest of Ukraine and the wider world, the Dnipropetrovsk region economy has been hard-hit this year by the global coronavirus crisis.

However, with key sectors such as heavy industry, agriculture, and tech being relatively insulated against the negative impact of the pandemic, the decline has been comparatibly modest.

Indeed, this year’s pandemic conditions have not prevented continued investment and growth in some sectors. For example, major Ukrainian agriculture and transport company Nibulon has completed the construction of a new high-capacity transshipment terminal on the Dnipro River in Dnipropetrovsk region. This innovative USD 22 million project features state-of-the-start technologies and has created more than one hundred new work places.

There are likely to be significant further investments in riverside infrastructure during the coming years. Dnipropetrovsk region boasts a strategic location straddling the Dnipro River and surrounded by the black earth of Ukraine’s fabled argicultural heartlands. This leaves the region well-placed to become a major beneficiary of current efforts to boost river traffic on the Dnipro and revive the role of the waterway as a key transport route for agricultural and industrial commodities.

Discussions are also continuing over ambitious plans to establish an inland river transport corridor linking the Baltic and Black seas via Poland, Belarus, and

52

Ukraine. This route would include the Dnipro River, with the Dnipropetrovsk region again poised to gain as a logistical hub.

Infrastructure is currently one of the key focuses for the region as it seeks to make the most of its advantageous geographical location. As well as the development of river-related infrastructure, the local government has also allocated around UAH 1.3 billion in 2020 for the reconstruction of approximately 150km of roads in the region. In addition to this funding, the Dnipropetrovsk Regional Administration and the European Bank of Reconstruction and Development (EBRD) have signed a EUR 50 million agreement to finance the upgrade of regional highways.

Arguably the most eagerly anticipated infrastructure project in the region is the redevelopment of Dnipro International Airport. This public-private partnership is currently at the preliminary phase. Once completed, it is expected to transform the region’s international accessibility. The Ukrainian authorities will finance the construction of new runway facilities, while the development of new terminal buildings and surrounding infrastructure will be handled by DCH Group, which is the company behind the successful redevelopment of Kharkiv International Airport prior to the Euro 2012 European football championship in Ukraine.

The current emphasis on improving Dnipropetrovsk region’s road, river, and air transport connectivity bodes well for the region’s future growth. This infrastructure upgrade will cement Dnipropetrovsk region’s status as a key industrial and transit hub for Ukraine, creating significant investment opportunities in the years ahead.

About the author: Olexii Ivanchenko is Deputy Executive Director at UkraineInvest

www.bunews.com.ua

Olvia construction company implements some of Ukraine’s most ambitious industrial construction projects and offers punctuality, reliability, and a rapid return on investments

WORLD-CLASS CONSTRUCTION SOLUTIONS The coronavirus pandemic and ensuring economic crisis are shaping today`s business climate and making efficiency more important than ever. Today we are talking about tender purchases of large industrial companies in Ukraine. How can companies make construction tenders work more efficiently? We discussed this issue with the director of Olvia construction company, Vyacheslav Glushenko. Vyacheslav, you have been running a large construction company for about 20 years. Please tell us a few words about yourself and Olvia.

I can say without exaggeration that we are among the largest and best construction companies in Ukraine. Olvia focuses on large and complex industrial construction projects. Our strengths include quality, punctuality of project delivery, and consideration for existing production.

In the last three years alone, the company`s specialists have: • Constructed more than 75,000 m3 of concrete construction; • Manufactured and assembled more than 20,000 tons of metal structures; • Adapted and installed about 30,000 tons of equipment; • Laid more than 3,000 tons of technological pipelines and over 20km of hydraulic pipelines; • Stretched about 650km of cable products.

Over the past 20 years, Olvia has built more than 218,000 m2 of industrial facilities, more than 270,000 m2 of retail space, and more than 315,000

m2 of administrative and residential complexes.

Today, the company employs over 1,100 employees and has more than 600 units of construction equipment. As General Contractor and General Designer, we are currently completing modernization of sinter plant No. 2 for ArcelorMittal Kryvyi Rih. This is the largest environmental modernization in metallurgy in Ukraine over the past 3 years. Taken together, Olvia`s record represents a vast and diverse body of experience.

EFFICIENT IMPLEMENTATION OF LARGE INVESTMENT PROJECTS Olvia participates in tenders with dozens of other contractors. We work on projects of varying complexity in industrial and civil construction. At the tender stage, we often see that in order for a company to participate, it is enough to have more than three years of experience and the necessary permits.

These criteria do not account for many key factors, leading to comparisons between companies of different scales and different levels of qualification. In practice, this means that cheaper companies can become engaged in work despite the fact that they cannot ensure the required quality nor meet the established deadlines. These companies may turn out to be 3-5% cheaper, but do they achieve their goals?

Were these savings justified?

CUSTOMERS NEED TO SEE TRUE COSTS OF CONSTRUCTION Every customer wants to identify the best possible commercial offer. This is understandable. But is the cheapest offer also the most efficient? We believe that an investor is primarily interested in a quick

return on investment. This includes reducing costs from equipment downtime. To implement this in a timely manner, it is necessary to have a team of professionals, technical equipment, and funding.

At Olvia, we recognize that the construction of a facility is only an intermediate stage in a long process.

We are responsible for achieving the ultimate investment goal. We help the entire chain of departments work consistently towards the final result.

For example, any project and supplied equipment requires an actual linkage at the facility and may need optimization. We undertake coordination and find solutions to these issues.

Years of experience have shown that price is not always the key factor. Sometimes it is better to pay extra for work and get a quality and reliable product. This solution will prove more effective than any initial savings made at the stage of choosing the contractor offering the minimum price. An enterprise with experience, qualified personnel, and a high level of production culture along with modern and safe technology cannot be the cheapest. A successful construction company must provide a quality product with a long-term guarantee. If these conditions are met, the company can be considered a reliable partner. That is why we see it as the main task of Olvia construction company to generate income for the investor as soon as possible as well as maximizing cost reductions from equipment downtime..

build.olvia.com +38 (056) 787-37-79

Olvia construction company is a general contracting company with design and service in industrial construction: metallurgy, agro-industrial complex, ports, airports, mining and processing plants

Dnipropetrovsk region’s forgotten history as an international investment destination Industrialists from across Europe flocked to Czarist Ukraine during the late ninteenth century

Today’s Ukraine is often portrayed as a faraway land of unexplored investment opportunities, but this depiction is not entirely accurate. In reality, international investors entering the twenty-first century Ukrainian market are actually treading a well-worn but long forgotten path that was first established over one hundred and fifty years ago, when wave upon wave of industrialists from across Europe and North America turned Czarist Ukraine into one of the great engines of the industrial revolution.

Southeastern Ukraine’s emergence as the industrial heart of the Czarist Empire can be traced back to the last years of the eighteenth century. The first major landmark was the foundation of Luhansk in 1795 by Englishman Charles Gascoigne, who founded a metalwork factory near a Zaporizhian Cossack settlement in eastern Ukraine. However, the process did not really begin to gain pace until the second half of the nineteenth century following the discovery of significant iron ore deposits in the region. This sparked 56

a rush of industrial expansion and international investment that many at the time likened to the “gold fever” which had drawn millions of European immigrants to California on the west coast of the United States three decades earlier.

From the very beginning, Belgians played a prominent role in this process. When viewed from a contemporary perspective, the scale of the Belgian presence in Ukraine during the period was remarkable. In the early years of the twentieth century, there were eleven Belgian coal-mining companies operating in Czarist Ukraine, while 24 individual coalmines belonged to Belgian entrepreneurs. Belgians also led the way in the development of the Ukrainian metallurgical industry. The Dniprovskiy Steel Plant, which was 90% Belgian-owned, was one of the largest in the region and served as a showpiece of Czarist industrial achievement.

Much of the most intensive industrial activity in the region centered on the city of Dnipro, which at the time was known as Ekat-

There was certainly no shortage of potential passengers. The remarkable extent of the Belgian presence in Czarist Ukraine is visible in the number of diplomatic missions established in the country. Prior to the outbreak of WWI in 1914, there were a total of eight Belgian consulates in today’s Ukraine located in Kyiv, Kharkiv, Berdyansk, Dnipro, Mykolaiv, Mariupol, Odesa, and Sevastopol.

This extensive diplomatic presence reflects the dramatic growth of European economic involvement in Ukraine during the decades leading up to the First World War. The 1917 Russian Revolution put an end to the first era of international investment in Ukraine. On the eve of the revolution, Dnipro had been home to thousands of expat industrialists and professionals, but few remained following the establishment of the Soviet Union. This cosmopolitan chapter in the history of Dnipropetrovsk region was subsequently censored. The Soviet authorities sought to take full credit for the industrialization of Ukraine and were understandably reluctant to acknowledge the key role played by an earlier generation of foreign capitalists.

Since the collapse of the USSR, this forgotten history has slowly begun to come back into focus as Ukrainians began to explore the many aspects of their country’s past that were previously suppressed by the Soviet authorities. Diplomatic missions to Ukraine have also contributed to this process by highlighting the contributions their countrymen once made to industrialization. The first books on the subject have been published, and a number of exhibitions have been staged. Nevertheless, this process of rediscovery is still in its early stages.

The sheer scale of nineteenth and early twentieth century international investment in Ukraine still often comes as a surprise to modern Ukrainian audiences raised on tales of Soviet industrial achievement. For people accustomed to viewing miners and industrial workers as the archetypal heroes of the Communist regime, it is challenging to think of a time before the Soviet era when many of the great factories and enterprises of Ukraine were owned and managed by Westerners.

Ultimately, this earlier period of international investment can serve as a source of inspiration. It is widely accepted that Ukraine’s future prosperity will be heavily dependent on the country’s ability to attract international investment. Achieving this objective will not be easy, but it is encouraging to learn that it has already happened once before.

dnipropetrovsk region

erinoslav. Dnipro’s convenient location on the mighty river that gives the city its name, along with its position close to Ukraine’s ore deposits and coalfields, made it a natural hub for Ukraine’s industrial development. As the industrial boom gathered momentum, the city itself grew at a rapid pace.

Foreign capital was central to the industrialization of today’s Dnipropetrovsk region. The first metallurgical plant in Dnipro opened in 1887 and relied heavily on financing from French bank Societe Generale. This initial French investment attracted additional French industrialists to the city, leading to the appearance of a range of French-run machine-building factories in Dnipro.

A prominent Belgian contingent soon joined this French community.

A pair of brothers from the Belgian city of Liege, Charles and George Chaudoir, established a joint stock company in 1889 and soon began work on three large metallurgical plants in Dnipro. Six years later, a metallurgical society appeared in Brussels to funnel further investment into the industrialization of Ukraine. By the dawn of the twentieth century, the Belgian capital had emerged as a focal point for European investment into the emerging Ukrainian industrial powerhouse.

The Belgian connection to Ukraine grew stronger in 1897 with the creation of the Ekaterinoslav City Railroad joint stock company, which was behind the installation of Dnipro’s first electric tram services. This initial tram route was a huge novelty at the time. It remains a central element of the city’s public transport network today. Belgian companies would also be responsible for the introduction of tram services in many other Ukrainian towns and cities including Kyiv, Kremenchuk, Sevastopol and Odesa. This helped create a legacy that in many cases is still evident.

The tram business eventually grew to become the second most profitable segment after metallurgy for Belgian companies operating in Ukraine. It was by far the most publicly prominent aspect of Ukraine’s Belgian ties, with low ticket prices allowing passengers from all backgrounds and income levels to take advantage of this affordable and convenient form of public transport.

As the international presence in Czarist Ukraine grew, a regular train service was established to provide a direct rail connection with Western Europe. Naturally enough, the route chosen was Brussels to Dnipro. This continental train, known at the time as “The Nord Express”, entered service in 1896 and involved a change of trains in Warsaw. The trip took a total of 65 hours, making it one of the longest European train journeys of its day.

The Dnipropetrovsk region economy was shaped by an unprecedented wave of international investment in the second half of the nineteenth century that drove the industrialization of Czarist Ukraine www.bunews.com.ua

57

Dnipropetrovsk Region

Tourism Guide

Dnipropetrovsk region has a growing number of quality riverside resorts offering stunning nature and traditional beach-style holiday options, but visitors can also enjoy everything from unique Ukrainian heritage sites to modern technological marvels

58

dnipropetrovsk region

A spectacular solar sea on the Ukrainian steppe Dnipropetrovsk region is home to one of Europe’s largest solar power farms. Developed and operated by DTEK Renewables, the Nikopol Solar Power Plant is located on the site of a former quarry close to the Dnipro River in the deep south of Dnipropetrovsk Oblast. It features a grand total of around 750,000 panels covering an overall www.bunews.com.ua

area equivalent to approximately 560 football pitches. The 246MW plant took over a year to construct and first entered service in spring 2019. It has since emerged as an unlikely tourist attraction and Instagram favorite among social media users looking for the ultimate in futuristic backdrops.

59

The home of Ukraine’s UNESCO-recognized folk art The village of Petrykivka in the north of Dnipropetrovsk region is the home of Petrykivka painting, a distinctive style of Ukrainian decorative folk art that features on UNESCO’s Intangible Cultural Heritage of Humanity list. The Petrykivka school of folk art has evolved over hundreds of years and is believed to have originated in murals used to decorate the interiors of traditional Ukrainian village homes.

Although the style now takes its name from the village of Petrykivka, it was once a common feature throughout much of rural Ukraine.

Petrykivka art typically features bright colors and bold floral patterns, with stylized depictions of crops, animals, and fruits also common. Although initially a form of wall painting, Petrykivka art is now often used to decorate everything from plates and trinkets to works of art and items of clothing.

Academic efforts to document and study the Petrykivka style first began to gain momentum in the early twentieth century. By the mid-

60

dle of the century, the genre had begun to evolve in Kyiv and other major Ukrainian cities. From the 1950s onward, Porcelain vases decorated in the Petrykivka style became a popular Soviet gift to visiting dignitaries such as Richard Nixon, Mao Zedong, and Fidel Castro.

Following the collapse of the USSR, Petrykivka art became closely associated with the cultural identity of newly independent Ukraine.

In 2012, the Ukrainian Ministry of Culture officially recognized Petrykivka art as part of the country’s cultural heritage. One year later, it gained similar recognition on a global scale from UNESCO. Petrykivka artworks in all shapes and sizes are now a staple of souvenir shops and craft market stalls across Ukraine. However, there is no doubt that the village of Petrykivka itself remains the unrivaled focus of this uniquely Ukrainian folk style. Today, the village houses the Petrykivka Center of Folk Art, which brings together many of the most celebrated practitioners of this ancient Ukrainian art.

dnipropetrovsk region

Lasting resting place of Ukraine’s most celebrated Cossack hero Dnipropetrovsk region is Cossack country, so it is only fitting that it should host the grave of perhaps the most celebrated Cossack hero of them all. Ivan Sirko was a larger-than-life figure who rose through the ranks of the Cossacks to become Otoman (military leader) of the Zaporizhian Host in the seventeenth century. He would eventually become one of the great personalities of Ukrainian folklore.

Sirko is buried in the village of Kapulivka, close to the Dnipro River at the southernmost point of Dnipropetrovsk region. The site features a memorial rock dating back to the early decades of the eighteenth century. Sirko is among the very few Ukrainian leaders from the Cossack era whose last resting place is known today, a fact which lends his grave considerable added national and historical significance.

Praised and lionized for his military prowess in many Ukrainian folk songs and poems, Sirko rose to power during a particularly turbulent period in Ukrainian history. Throughout the middle years and into the second half of the 1600s, Ukrainian Cossack forces were involved in a diverse array of military campaigns amid a series of often rapidly changing alliances with Poland, Russia and the Ottoman Empire in what was to prove an ultimately failed attempt to create an independent country of their own. During this time, Sirko is said to have fought over fifty battles against the Ottoman Empire and never ended up on the losing side. His legend loomed so large in his own lifetime that Tatars used to invoke his name in order to frighten naughty children. www.bunews.com.ua

Perhaps the greatest tribute ever paid to Sirko was his appearance as a central figure in Russian artist Ilya Repin’s epic painting “Reply of the Zaporozhian Cossacks to Sultan Mehmed IV of the Ottoman Empire.”

This iconic late nineteenth century artwork depicts a jovial group of Ukrainian Cossack chiefs led by Sirko who are evidently enjoying themselves as they compose an outrageously abusive and irreverent reply to an ultimatum from the Ottoman Sultan Mehmed IV calling on them to submit. Although it was painted centuries after the events it claims to portray, the picture has come to define this period in Ukraine’s history.

It is widely credited with capturing the untrammeled spirit of an age where the Cossacks sought to defy the various imperial powers encircling the fledgling Ukrainian state.

Tradition names Sirko as the principle author of the celebrated letter to the Sultan. While there is no concrete historical evidence that this highly unorthodox piece of diplomatic correspondence ever actually existed, it has become a symbol of the famously freedom-loving and egalitarian philosophy espoused by the Ukrainian Cossacks. Whether rooted in fact or fantasy, the version of the text that has been passed down to later generations undoubtedly includes some of the most memorable insults ever addressed to a head of state, such as, “What the devil kind of knight are thou, who cannot slay a hedgehog with your naked arse?”

61

Borderland bastion of a forgotten frontier The ruins of Kodak Fortress are located on the southern outskirts of Dnipro overlooking the mighty river that gives the city its name. In truth, there is almost nothing left today of this formerly formidable fortification. Visitors can expect to encounter little more than some remaining earthworks that hint at the impressive scale of the old fort. Nevertheless, the site has emerged in recent years as a popular tourist spot which retains much of its historic aura as a strategic location on what was once one of the great European frontiers.

Kodak Fortress was first build in 1635 as an outpost in the southeasterly borderlands of the Polish-Lithuanian Commonwealth. Designed to serve as a barrier against the rising power of the Ukrainian Cossacks, the fortress was seized and destroyed by the Cossacks within days of its completion in the summer of 1635. Undeterred, the Poles rebuilt and dramatically expanded the fortress. It then fell

62

to the Cossacks once again in 1648, before eventually being razed to the ground in 1711 by Russian Czar Peter the Great in line with the provisions of the Treaty of the Pruth with the Ottoman Empire.

During the Soviet era, the Communist authorities attempted to remove all traces of the fortress as part of wider efforts to eradicate evidence of a previous Polish presence in the region. A quarry was duly established at the site of Kodak Fortress in the 1930s, and the fort’s former fortifications were systematically destroyed over the subsequent decades. This act of historical vandalism by the Soviet authorities was not entirely successful, and the memory of Kodak Fortress managed to emerge intact from the ruins of the USSR. This picturesque riverside site now serves as a symbol of a European historical legacy that significantly predates any Russian involvement in Dnipropetrovsk region.

www.bunews.com.ua

Kytayhorod

Carychanka

Rudka

Hrechane

Petrikivka Novomoskovsk

Bulakhivka

Verhnodniprovsk Zhovtooleksandrivka Pavlohrad Kam'yanske

Zhovte

Vilnohirsk

Petropavlivka Dnipro Synelnykove Stari Kodaky

Zhovti Vody Bratske

Vasylkivka

Verbivske Hruzke

Rubanivske

Soď€ yivka

Kryvyi Rih

Topyla Starozavodske

Kapulivka

Marhanets

Nikopol

www.chamber.ua

HOW COVID BELTED OUR MEMBERS’ BUSINESSES BUT NOT THEIR HEARTS I vividly remember looking out of my twelfth-floor apartment window in early 2020 and seeing gray smoke continually towering from the cemetery up on the hill. This seemed somewhat out of the ordinary, so I made a couple of calls trying to ascertain what could be fueling the smoke. A dark thought came to mind, envisaging the 1960’s brutalist white concrete Baikove crematorium exhaling uninterrupted smoke.

The next morning the smoldering continued. Eventually, I resolved to venture out and investigate, passing the red brick wall as I climbed the hill. I breathed a sigh of relief when I saw that the smoke was being generated by graveyard gardeners burning leaves, sweeping up the foliage and dead tree branches within the burial grounds. My concern was misplaced, but it reflected the very real anxiety that hung over everyday in Ukraine during the first weeks of spring 2020.

A day before, on Friday the thirteenth of March, we had closed the offices of the American Chamber of Commerce in Ukraine and set out to work online. Ukraine was preparing to go into lockdown. A few weeks earlier, a bus carrying Ukrainian evacuees from Wuhan in China, the epicenter of the deadly outbreak, had been met by crowds of heated demonstrators in Ukraine’s central Poltava region.

Members of the public had hurled stones as the coach approached the Novi Sanzhary health spa.

Many people were petrified as the Covid virus began to spread globally. No one knew exactly what to expect. By mid-March, we had all come to understand that COVID-19 was deadly serious. Ukraine’s healthcare system, which has been underfunded and riddled with corruption for many years, seemed particularly unprepared to cope with a killer pandemic.

As news of the government’s lockdown plans, emerged, top management from our member companies started calling immediately, asking what we should do.

General managers soon realized that they would not achieve the business results they had planned for the year. However, it soon became clear that the immediate priority was what we could all do together to help the community we live in. How could businesses help the vulnerable, and, most importantly, what could we do to support Ukraine’s front line workers and doctors?

It was heartwarming to see the immediate generosity of the business community coming together, helping both financially and providing in-kind goods to hospitals. From the very beginning of the pandemic, the Ukrainian business community played a significant role in helping Ukraine’s vulnerable. This help saved lives.

Since those first days of coronavirus lockdown in March 2020, I have conducted over 120 video interviews with the General Managers of leading companies in Ukraine. I have asked how they responded to the pandemic, and sought their

insights into the importance of leadership during times of crisis. The videos are quite inspirational. All videos are available online on our website.

A key message from the interviews was the overwhelming focus on empathy.

Many re-evaluated values, allowing them to focus on what was truly important.

Their response to COVID was all about understanding colleagues, sharing feelings, and showing compassion, as expressed in the beautiful Ukrainian word “Spivperezhivanniya”, which succinctly captures these sentiments. Most importantly, although business leaders understood that their business plans were shattered, they continued to assist those in need.

In November 2020, we marked the annual thanksgiving holiday. This year’s event took place online, without the traditional Thanksgiving dinner at the Kyiv’s Hilton Hotel. We presented our annual Thanksgiving Award to Ukraine’s 29-year-old Deputy Prime Minister, Mikhail Fedorov, for his work in reducing bureaucracy and transforming Ukraine into a digital society. An award also went to Paul Niland, a Kyiv-based Irish writer and businessman, for launching Ukraine’s first-ever suicide prevention hotline, Lifeline Ukraine. Mental health has always been a taboo topic in Ukraine, especially among the male population, who are often reluctant to discuss vulnerabilities such as mental health. The 7333 Lifeline that Paul set up has a strong focus on PTSD (post-traumatic stress disorder), which is so important as Ukraine’s soldiers defend the country from Russian aggression for the seventh year in a row.

AmCham Ukraine just held our first ever online Annual General Meeting. It was bizarre conducting an AGMM via Zoom while sat at home in slippers. This is the current reality of life in a time of global pandemic. We do, however, very much look forward to coming back to in-person networking events. Hopefully we will soon be meeting once again with Ukraine’s business leaders in Kyiv and other cities while dressed in our Sunday best.

We can now see the light at the end of the tunnel with a Covid vaccine coming through, although it is still a very dark and long tunnel ahead. Ukrainian businesses have endured a uniquely challenging year of unprecedented restrictions and setbacks, but it is heartening to report that a mood of corporate social responsibility and community spirit has remained constant throughout.

On behalf of our team at the American Chamber of Commerce in Ukraine, I am very grateful to all who continue to support those in need. I wish you and your loved ones a Merry Christmas and a healthy and safe New Year 2021.

Andy Hunder President, AmCham Ukraine

www.chamber.ua

www.chamber.ua

www.chamber.ua

www.chamber.ua

www.chamber.ua

www.chamber.ua

www.chamber.ua

www.chamber.ua

www.chamber.ua

www.chamber.ua

www.chamber.ua

www.chamber.ua

Ukraine’s legal services industry and COVID Asters Senior Partner Armen Khachaturyan reflects on a year of pandemic challenges

About the interviewee: Armen Khachaturyan is a Senior Partner at Asters What impact has the pandemic had on your day-to-day work?

Asters was among the first Ukrainian law firms to react to the COVID-19 outbreak. In early March, weeks before the official announcement of quarantine in Ukraine, we restricted international travel for all employees, limited their participation in external events, and switched scheduled client meetings in our offices to an online format.

Our employees have been working remotely since mid-March 2020.

We were well prepared for the introduction of these changes as we had already installed and tested everything ahead of the pandemic restrictions as an emergency precautionary measure. Implementing remote mode for 230 employees was still a challenge, but everything went rather smoothly, both technologically and psychologically.

After the first lockdown was formally lifted, we continued to work in what we call “smart quarantine mode�. This means that while distance work remains the norm, a certain number of employees (initially the quota was fixed at 30) can access the office with all necessary safety measures in place, including masks and disinfection procedures.

78

What kinds of legal issues has the pandemic created for the business community in Ukraine?

Due to the massive business disruption caused by the coronavirus crisis, labor and employment law advice has been in high demand. Various businesses have opted to impose temporary unpaid leave, shorter working hours, and redundancy lay-offs. This all needed to be neatly documented.

A lot of development projects and transactions were put on hold. Business planning and performance under existing contracts was complicated or delayed. As a result, many debt financial instruments required re-profiling, with both debtors and creditors in need of urgent legal assistance.

When parties could not reach a compromise on amendments to their debt facilities and other outstanding commitments, they brought legal actions to resolve their commercial disputes. But this represented another problem. When the first coronavirus lockdown began, dispute resolution procedures in the courts stalled. Court hearings were postponed and some were arranged online. It took some time for the Ukrainian judicial system to adjust to the new realities. Even in November, the courts seemed to be extremely overloaded. This was also a

How has the Ukrainian legal services market reacted to these changes?

The unexpected pandemic forced Ukrainian law firms to consider how best to survive and preserve their business. Many law firms responded to the spring lockdown with temporary reductions in employee compensation or even lay-offs of both lawyers and administrative personnel.

At Asters, we acted very cautiously. This meant choosing a step-by-step approach towards cost-cutting measures, with implementation tied to specific economic triggers. Given the unprecedented circumstances of 2020, the firm’s overall performance has been above our expectations.

Consequently, we have managed to keep the financial and benefit packages of our employees intact. We have also continued to look to the postCOVID-19 future and have strengthened a number of practices with important hires in recent months.

Inevitably, lockdown restrictions have changed some of the practical aspects of legal work. Prior to spring 2020, remote work was a rare exception for law firms. However, the experience of 2020 has revealed that remote work can be as efficient as office work. It also has obvious advantages, such as the absence of time spent commuting, which can contribute to a more balanced lifestyle.

Having staff work from home can create savings in office rental expenditure. More and more law firms are now experimenting with a combination of flexible work spaces and home working. This trend is likely to survive the coronavirus pandemic. We are also seeing a dramatic increase in the use of communication technologies. Video and data services are taking over from telephone conferences. This is making e-security technologies a particularly hot product to buy.

Inevitably, distant work is not flawless. It raises concerns over the ability of companies to maintain team spirit and teamwork. This is most evident with tight deadlines when close coordination and rapid communication are essential. However, even these issues are not insurmountable given the right technological solutions and management skills.

What trends have you noticed on the legal services market in 2020?

It seems that the recent merger trend has been put on hold due to the uncertainties created by the pandemic. Instead, the market has seen a number of spin-offs. For example, in May 2020, AVELLUM and AGA Partners announced that after joining forces during the preceding year, the two firms would separate but continue as an alliance. More recently, in September 2020 a boutique law firm splintered off from AEQUO. Law firms were forced by the pandemic to update their business development and marketing plans. While most offline events were put on hold or canceled due to lockdown restrictions, marketing essentially moved online. The lockdown also gave a boost to the use of video content by Ukrainian law firms. Online broadcasts have become the most popular and accessible tool for productive discussions of the hottest topics during this turbulent period.

One of the consequences of the COVID-19 outbreak has been growing demand for high-quality online education programs. We addressed this demand by taking the EBA Legal School (a joint project of Asters and the European Business Association) online. This move allowed www.bunews.com.ua

the Legal School to become even more inclusive, as representatives of 1017 EBA member companies from all over Ukraine could now participate.

legal

frequent factor in arbitration proceedings. In July 2020, the Ukrainian parliament passed the first reading of a new Law on Mediation aimed at introducing alternative dispute resolution options in Ukraine to ease the pressure on the courts.

Asters celebrated its twenty-fifth anniversary in 2020. What have been the most striking changes in the Ukrainian legal services market during this period?

The most notable change is the relative maturity of the Ukrainian legal market. When our firm was founded in 1995, there were just a few law firms in Ukraine that could work with international clients, and there was practically no competition.

The transition to free market economy required new laws and new law practices. Everything came quickly through intergovernmental assistance, study programs, NGOs, and international law firms which served as a model regarding the professional style and workaholic mentality that shaped the first generation of post-independence Ukrainian legal practitioners. Within a relatively short period, many Ukrainian legal startups were investing in continued self-education, practical training, and degrees from top US and European law schools. Fluency in English and a strong knowledge of Western and Ukrainian law provided unprecedented opportunities for ambitious young professionals.

In the early 2000s, competition started to pick up quickly with new international firms coming to Ukraine and a large number of Ukrainian firms either spinning off from international strongholds or being set up from scratch by entrepreneurs. Challenges also came from the economy, which faced one crisis after another.

Maturing local law firms soon became strong competitors for their international colleagues. The Ukrainian legal market is now dominated by local law firms, which is exceptional for the CEE region. It is also striking to note that the legal services market is now one of the most competitive segments of the Ukrainian economy.

One thing has remained constant throughout all these years - foreign investors still struggle to understand the Ukrainian business and legal environment without qualified legal advice. From the very beginning, Asters has acted as a bridge between international businesses and Ukrainian business realities.

How do you see the Ukrainian legal services sector developing in 2021?

Forecasting the economic and political situation in Ukraine has always been similar to reading tea leaves. The added complications of the pandemic mean that it is now even harder to make any meaningful predictions. The latest announcements regarding coronavirus vaccines certainly give cause for hope that we will see the restoration of normality in the not-too-distant future. However, even in the best case scenario, collective immunity as a result of mass vaccination will probably take a year or so. Consequently, business planning for 2021 should take this into consideration.

The controversial recent decision by Ukraine’s Constitutional Court undermining the country’s anti-corruption reforms calls into question a number of important commitments that Ukraine gave to its international partners as part of the country’s Euro-Atlantic integration process. The actions of the Constitutional Court are a reminder that the Ukrainian government will have plenty of urgent issues to address in 2021 in addition to the pandemic itself. The situation in the legal services sector, and throughout the Ukrainian economy in general, will depend heavily on the ability of the country’s leaders to handle these challenges efficiently.

79

hospitality

New digital platform for Ukrainian hotels seeks to boost domestic tourism industry DBI Hotel Management’s YUME tool aims to set new standards in the Ukrainian hospitality sector The coronavirus crisis has caused economic chaos around the globe, but few segments have been as hard-hit as the international hospitality industry. The Ukrainian hospitality sector has been no exception, and has had to contend with lockdown closures along with restrictions on travel and limitations on public gatherings since mid-March 2020.

DBI Hotel Management CEO Irantha Duwage says 2020 has been a period of unprecedented improvisation and innovation. With a growing Ukrainian portfolio including the Ramada Encore Kyiv and Hotel Number Twenty One in the Ukrainian capital’s riverside Podil district, DBI Hotel Management has responded to the coronavirus crisis by transforming the way it operates. This has made it possible to continue hosting large numbers of clients at a time when Ukrainian public discourse has been dominated by talk of the need for social distancing.

The transformation at DBI Hotel Management has involved everything from extensive staff training to the implementation of intensive cleaning protocols. UV lighting has been introduced to sterilize hotel and conference facilities, and new meeting formats have been launched that allow participants to maximize engagement while maintaining the option of keeping their physical distance. “The Ukrainian business community has nothing to worry about. We have learned a lot since March 2020 and have invested heavily in creating the safest possible environment for our guests,” says Duwage.

Steps have also been taken to protect staff from the negative impact of the coronavirus crisis.

While major hotels with large teams are particularly vulnerable during sharp downturns in occupancy, it is also vital to retain trained personnel in order to bounce back once the economic climate improves. Duwage says that thanks to the generosity of the company’s owners, DBI Hotel Management has been able to keep its entire workforce on board and avoid any enforced staffing reductions. He also acknowledges the role played by corporate partners, who have shown their support by booking events at DBI venues whenever possible. “This kind of backing for the hospitality industry makes a real contribution to the coun-

80

About the interviewee: Irantha Duwage is CEO of DBI Hotel Management try’s economic recovery,” says Duwage. “It has a huge knock-on effect for service providers and suppliers that ripples on throughout the wider Ukrainian economy.”

With a full team of personnel in position and a range of coronavirus-compliant measures in place, DBI Hotel Management is already looking ahead towards the post-pandemic period.

However, Duwage is hoping for more than simple recovery. Instead, he has developed a digital platform that aims to establish new standards within the Ukrainian hospitality industry and set the benchmark for service quality in hotels across the country.

The YUME Hotels (pronounced “You-Me”) platform has been developed by Ukrainian IT engineers to combine the twin functions of management and marketing tool. It aims to help individual hotels manage day-to-day administration tasks while also adhering to an agreed set of brand standards that will provide customers with peace of mind regarding

the kind of quality they can expect to encounter when traveling across Ukraine. These standards include super-fast WiFi, clean and crispy linen, quality bathroom amenities, comprehensive TV viewing options, and a seamless check-in experience.

Duwage says the end goal of the YUME hotel community initiative is to create a credible nationwide network of quality standards for Ukraine’s hospitality industry. He believes that the timing is right, and points to the millions of Ukrainians who spent their vacation time in Ukraine over the past year as a result of coronavirus-related restrictions on international travel. This experience has highlighted the vast tourism potential of the country. Looking ahead, it can serve as a springboard for growth.

“We believe local tourism will be one of the engines for the development of the Ukrainian hospitality sector,” says Duwage. “Many Ukrainians have never really explored their own country, but there is so much beauty on offer and so many fascinating places to visit. One of our ambitions is to help Ukraine’s hospitality sector realize this untapped domestic tourism market.”

In the past, skepticism over hotel quality has served as one of the main barriers preventing local residents from choosing to spend their holidays in Ukraine. By offering a brand that guarantees reliable service standards throughout Ukraine, Duwage hopes to help overcome these doubts.

The YUME platform will also serve as a gateway for international visitors. Duwage speaks with undisguised enthusiasm about the tourist appeal of traditional Ukrainian destinations including Odesa, Lviv, and fairytale fortress-city Kamianets-Podilskiy. Meanwhile, he notes that seaside resort regions such as Kherson in southern Ukraine have much to offer but remain off the international tourism radar. This represents an enticing opportunity for post-coronavirus growth. “We want to raise the bar for hospitality services throughout Ukraine and introduce these regions to wider audiences,” says Duwage. “By offering recognized and reliable brand standards, we believe we will encourage many more people to explore Ukraine.” www.bunews.com.ua

tech

Connecting Ukrainian startups with corporate partners Kyiv’s Sector X acceleration hub aims to build bridges between businesses and tech talent

As Ukraine’s booming IT industry garners increasing international attention, there is also growing interest in the country’s vibrant startup scene. Ukraine has already produced a number of high-profile tech sector success stories such as Grammarly and GitLab. However, the vast majority of promising Ukrainian startups currently relocate at the earliest opportunity to more appealing business climates in the US or nearby EU countries. The big challenge now is to harness the country’s untapped innovation economy and persuade Ukrainian startups that they can realize their potential without leaving.

Sector X is a Kyiv-based acceleration hub that seeks to improve the Ukrainian tech ecosystem by bringing startups and potential corporate partners together for mutually beneficial cooperation. Located at Ukraine’s flagship UNIT.City innovation park, the hub launched the largest platform in the region in 2018 and unveiled the new initiative with corporate partners in February 2020. Initial corporate partners include L’Oreal Group, Foxtrot, Farmak, British American Tobacco, Parimatch Tech, and JKR Investment Group.

Sector X offers startups a range of paid and unpaid programs that are available in both online and offline format. A key focus is the industrial track program, which sees startups specially selected and paired with corporate partners seeking specific solutions.

The program envisages mentoring from senior corporate management alongside a comprehensive program of support in developing a road map towards the launch of pilot projects.

The Sector X team say this approach offers participating corporate partners the opportunity to test out various novel solutions designed to streamline their business processes, while the startups themselves benefit from practical insights into the implementation of their innovations in a competitive business environment. In the best case scenario, corporate partners may eventually become clients or investors in the startup.

Sector X is the only acceleration hub of its kind in Eastern Europe. While there are a large number of incubators and accelerators 82

offering standard two- to four-month programs across the region, this Kyiv-based hub is currently developing programs that last for up to one year. The people behind the Sector X model hope this longer time-frame will facilitate a more thorough elaboration of startup ideas and encourage greater synergy between startups and corporate partners.

This initiative comes at a time when the startup ecosystem in Ukraine is still in the early stages of development. There is undoubtedly an abundance of raw talent, but the current business climate for startups is in urgent need of investment and clients in order to grow and put down roots. This is the main objective of the Sector X initiative and explains why the project focuses on attracting corporate partners from the Ukrainian and international business communities.

With so much depending on finding the right corporate partners, Sector X officials have adopted a proactive approach to building partnerships with companies and individual executives who demonstrate an appetite for innovation. It is vital to identify challenges requiring the kind of solutions that startup culture is best-equipped to provide. The next task is then to find a good fit from within the Ukrainian startup community.

Since the launch of Sector X, 60 Ukrainian startups have graduated from the hub’s pro-

grams. While the number of applications is high, the selection process is quite competitive. An ability to produce realistic and commercially viable ideas, as well as the existence of a prototype product, are considered important. Other factors that are typically taken into consideration include the niche a startup intends to work in, the composition of the startup team, and the technical credibility of the innovation itself.

As of October 2020, two startups have received considerable investments from the hub’s corporate partners. Meanwhile, a number of pilot projects are awaiting launch, and five of the hub’s startup alumni have received grants of between USD 25,000 and USD 50,000 from the National Startup Fund of Ukraine.

The Sector X hub is still in the early stages of development. Officials currently speak of achieving a significant impact on the broader Ukrainian startup scene over a three- to four-year period. By that time, the hub should have established a significant portfolio of successful startups and expanded its stable of corporate partners. The real challenge, however, will be convincing Ukraine’s startup talent to build their businesses here rather than following the well-worn path to more developed but increasingly crowded locations in the European Union and North America. www.bunews.com.ua

energy

US supports development of Ukrainian nuclear energy American cooperation plays a crucial role as Ukraine’s nuclear energy sector diversifies Ukraine’s national nuclear energy generating company Energoatom has long enjoyed support from the US Department of Energy and US State Department. The company is now preparing to deepen ongoing cooperation with international partners including America’s Westinghouse and Holtec.

In early October 2020, I met with a host of US officials and senior experts in Washington DC, including US Assistant Secretary of Energy Theodore Garrish and Nuclear Energy Institute President Maria Korsnick. These meetings proved inspiring and helped to convince me once again that cooperation in the energy sector is among the top priorities of the strategic partnership between Ukraine and the United States.

One of the main topics during recent discussions with our American partners was the progress being made by Energoatom towards independence from external suppliers of energy resources and services. This includes ongoing efforts to diversity supplies of nuclear fuel. It also relates to the final stages of construction of a Central Storage Facility For Spent Nuclear Fuel (CSFSF) in Ukraine.

It is difficult to overestimate the support Ukraine has received from the country’s American partners on these two issues. This support has come from US officials, nuclear industry experts, and commercial companies. It has been ongoing for an extended period dating back many years.

Since 2005, Westinghouse has officially provided Ukrainian nuclear power plants with nuclear fuel. However, many of Ukraine’s nuclear scientists can remember the first visit of the company’s specialists to independent Ukraine, which was to the Khmelnytskiy Nuclear Power Plant in 1992. Six years later in July 1998, representatives of the US State Department then signed a Memorandum of Understanding with officials from Ukraine’s Ministry of Energy regarding the provision of assistance to Ukraine in the process of identifying alternative suppliers of nuclear fuel for Ukrainian nuclear power plants.

Even at this relatively early stage in bilateral cooperation, the US Department of Energy provided funding for the International Nuclear Safety Program, which enabled Westinghouse specialists to help their Ukrainian colleagues implement safety systems, develop emergency procedures, and replace key information and computing systems.

Thanks to cooperation with Westinghouse, all of Ukraine’s nuclear power plants now have simulators and safety operator support systems. Perhaps most important of all is the Ukraine Nuclear Fuel Qualification Project (UNFQP), which the US government allocated more than US 70 million to implement.

The project was designed to ensure the compatibility of Westinghouse fuel assemblies with those produced by Russia’s TVEL Fuel Company for VVER-1000 reactor cores. At present, 13 of the 15 operational VVER-1000 reactors are located in Ukraine.

In June 2000, US Department of Energy and Ukrainian Ministry of Energy officials signed an executive agreement and selected Unit No. 3 at the South Ukraine Nuclear Power Plant for the

trial operation of Westinghouse nuclear fuel. This was to prove the starting point of a long journey that would eventually make Ukraine the only country in the world to successfully diversify supplies of nuclear fuel during uninterrupted operation of power units at nuclear power plants with VVER-1000 reactors.

Ukrainian President Volodymyr Zelenskyy recalled this during an official address on September 30, 2020. President Zelenskyy was overseeing the signing of a new contract between Energoatom and Westinghouse for the supply of nuclear fuel to VVER-440 reactors in Ukraine. The document concluded in September should represent the final stage along the road towards the diversification of nuclear fuel supplies for Ukrainian nuclear power plants.

In March 2008, Energoatom and Westinghouse Electric Sweden signed a commercial contract for the supply of nuclear fuel covering the 2011-2015 period. This agreement addressed the annual reloading of Units No. 2 and No. 3 at the South Ukraine Nuclear Power Plant along with Unit No. 5 at Zaporizhzhia Nuclear Power Plant. At the end of 2014, the parties signed a supplementary agreement by which Westinghouse guaranteed its readiness, if necessary, to increase nuclear fuel supplies to all 13 of Ukraine’s VVER-1000 reactors. In 2018, this contract was extended until 2025. Then, in December 2019, the “pilot” Unit No. 3 at the South Ukraine Nuclear Power Plant became the first to receive official permission from the State Nuclear Regulatory Agency for regular commercial operation using Westinghouse fuel. Between 2014 and 2019, Ukraine received 24 batches of nuclear fuel from the US company. Meanwhile, seven batches are expected to be delivered during 2021.

Nuclear energy experts agree that diversification of nuclear fuel supplies is a strategic priority if Ukraine seeks to maintain today’s more the 50% share of nuclear power in the country’s overall energy generation balance during the coming decades. This is why Ukrainian nuclear scientists seek to deepen cooperation with American partners. Cooperation with US officials and the country’s nuclear power industry does not only offer significant financial support along with experience and technological know-how. It also boosts Ukraine’s credentials as a country with a powerful nuclear energy sector that adheres to international energy security strategies.

This is why cooperation with Holtec International is regarded as so important. In 2005, a contract was signed for the design, licensing, construction, and commissioning of a Central Storage Facility For Spent Nuclear Fuel in Ukraine with an envisaged 100-year storage lifespan. Holtec not only drew on the company’s existing successful international experience of spent fuel storage, but also developed a unique, two-barrier modification for the Ukrainian storage facility. Containers with two walls will provide additional safety guarantees designed to last for a century. The first batch of spent nuclear fuel is due to arrive at the facility in spring 2021.

Meanwhile, cooperation with our American partners continues. Preparations are currently underway for the supply of American fuel for VVER-440 power units. Atomenergomash, which is separate division of Energoatom, is now working to establish production capacity at its own facilities for components to suit all types of fuel produced by Westinghouse. The companies signed an additional letter of intent in September 2020 regarding this planned production cooperation.

About the author: Herman Halushenko is Vice President for Development at Energoatom 84

www.bunews.com.ua

economy

Ukrainian e-commerce enjoys coronavirus boom Ukraine’s digital retail and logistics companies have seen a sharp rise in demand during 2020

About the authors: Anton Waschuk is the Economic Leadership Program Coordinator at Western NIS Enterprise Fund. Dmytro Boroday is the Principal at Horizon Capital.

In recent years, e-commerce has been viewed in Ukraine as a particularly reliable investment with strong growth potential. In 2020, the coronavirus crisis has played a key role in fast-tracking this anticipated growth. The future for the segment now looks bight, but e-commerce market leaders continue to voice concerns over regulatory challenges that could create obstacles to the further expansion of the booming sector in the post-pandemic period.

Despite much talk about the rapid growth of e-commerce in Ukraine, reliable figures for the industry as a whole remain hard to come by. This shortfall is due to a lack of marketing firms and governmental agencies conducting publicly available and comprehensive market analysis. However, a combination of expert estimates and niche analysis can help establish a general overview of the e-commerce sector in today’s Ukraine.

Prior to the pandemic, the global average for e-commerce as a percentage of total retail sales was around 14%, with the world’s biggest economies leading the way. The figure for Ukraine was just 7%, representing an annual market of USD 3.1 billion with steady 1% year-on-year growth.

The Ukrainian e-commerce sector saw a massive spike in sales following the introduction of lockdown restrictions in March 2020. Interestingly, the sharp increases witnessed during the second quarter did not last, with a swing back towards physical retail in the July-September period. As a result, only 25% of initial gains were consolidated. Nevertheless, the overall expansion of retail market share over the year has been striking.

The largest beneficiaries of the pandemic were digital retailers of sports gear, groceries, household goods, and electronics. The e-commerce sector also saw an increase in employment as companies struggled to meet rising demand.

The growth in e-commerce during the pandemic produced an economic spillover effect for Ukraine’s logistics companies. The clear victor in this logistics boom was Nova Poshta, which accounts for over 50% of the home delivery market and supports Ukraine’s largest e-commerce players, Rozetka and Prom. Smaller players such as JustIn and Ukraine’s state-owned enterprise Ukrposhta also reported significant upturns in demand.

The strong growth in digital retail sales during 2020 has generated considerable confidence in the sector, but senior management at Ukraine’s leading e-commerce companies say they still face a range of obstacles.

One obvious concern is dwindling spending power. Although e-commerce comfortably outperformed other retail sectors in terms of sales growth, Ukraine’s general economic contraction as a result of the pandemic could lead 86

to a longer-term reduction in consumer confidence. As household budgets decline, so do disposable incomes.

The are specific fears over the impact of Ukrainian government efforts to impose tighter market regulations on the sector. In particular, a requirement for all businesses to issue cash receipts is expected to have a noticeable impact on e-commerce. This new regulation may cause serious disruption to the sector.

Larger retailers will face the potentially daunting issue of documenting the origin of all goods. Meanwhile, smaller sellers, many of whom operate at least partially in the economic shadows, will now have to expose their businesses to full scrutiny and issue proper receipts for all transactions.

Not all recent changes to Ukraine’s legislation governing the e-commerce industry have been unwelcome. Prior to the pandemic, regulatory barriers on the e-commerce sale of healthcare products and pharmaceuticals had kept market penetration at just 1%. With the coronavirus crisis gaining ground across Ukraine in spring 2020, the government reacted swiftly and passed a number of laws allowing logistics companies to ship medications in order to meet the needs of rural populations.

These changes have led to the speedy expansion of this e-commerce niche.

During the past year, a number of specialized healthcare e-commerce providers such as Liki24 and Doc.UA have launched, while existing players have invested heavily in their medical services in order to meet growing demand and provide for rural as well as urban markets. The positive impact on the sector of this coronavirus-related relaxation of restrictions will remain long after the pandemic has passed.

Looking ahead, post-pandemic success will depend to a significant degree on infrastructure improvements across the country. One key requirement is greater warehouse capacity. More staff training is also necessary, along with the expansion of customer support services.

Individual logistics companies are stepping up to the challenge and are already looking to increase their delivery fleets in order to reach rural areas. Efforts are also underway to modernize existing sorting centers and improve the overall efficiency of services. Both Ukrposhta and Nova Poshta have committed to playing a role in the upgrade of Ukraine’s e-commerce ecosystem. They will be aided by a number of financial initiatives in support of the sector, including a recently announced EUR 112 million multi-year Logistics Development Project backed by loans from the European Bank of Reconstruction and Development and the European Investment Bank.

When compared to other emerging markets, the e-commerce segment in Ukraine is currently outperforming most of its peers, with relatively high digital penetration rates despite the large size of the country. The factor that makes Ukraine stand out most within its category of emerging economies is the country’s burgeoning e-commerce ecosystem. Ukraine enjoys relatively high internet penetration and a strong pre-existing logistics network when compared to its neighbors in Eastern Europe and comparative economies in Latin America.

Additionally, Ukraine’s strong tech sector has helped to fuel the growth of a robust internet banking segment. This is creating high levels of consumer confidence in e-payment formats.

Over the past year, Ukraine’s e-commerce companies have risen to the challenge of the coronavirus crisis and responded rapidly to the opportunities created by the pandemic. Savvy e-commerce businesses are now looking ahead to a post-pandemic environment and working to make sure the rising demand of 2020 can be converted into consolidated gains in terms of retail market share. www.bunews.com.ua

real estate

The growing appeal of historic central Kyiv

Ukrainians have typically favored new properties but attitudes are changing amid gentrification

For many years, it was an unwritten rule in the Ukrainian real estate business that newer meant better. However, it is now becoming increasingly clear that the property market in central Kyiv is following the same gentrification trend seen in many other historic districts throughout Europe and the United States.

Several years ago, it was very hard to find any local with means who was interested in living in the heart of Kyiv. Instead, they would typically voice complaints about safety, dilapidated entrances, odorous lifts, leaky pipes, and other inconveniences. Back then, real estate in the center of the Ukrainian capital was primarily of interest to the expat community. This was particularly the case among European expats, who often insisted on renting or buying in undervalued downtown buildings.

Whereas locals saw lousy buildings that reminded them of their Soviet youth or the hardships of the early post-Soviet years, Europeans were amazed that such treasures were hiding in plain sight. Based on their own personal experience of cities like Vienna and Paris, these European expats tended to regard buildings with four-meter ceilings, grand staircases, and elaborate facades as being way out of reach for all but the mega-rich. Consequently, they were more inclined to tolerate things like dirty entrances and older lifts, considering it a small price to pay as long as the apartment itself was clean and spacious.

While Ukraine’s expats were coveting apartments in older buildings, locals with money to spend were typically buying and renting in the shiniest new buildings they could find, even if this meant moving some distance from the city center. However, in recent years there have been growing indications that local attitutes towards real estate are moving closer to expat perspectives.

One reason is unreliable developers. Many new buildings take far longer than promised to finish, while there have been instances of developers going bankrupt with multiple properties under construction. Meanwhile, many Kyiv residential buildings that were new just a decade ago now look old and stale.

There are also infrastructure issues, with some new residential buildings lacking parking spaces and other basic conveniences.

Additionally, new buildings are often built in clusters that not only ruin views for most inhabitants but also suppress future sale prices by constantly increasing supply. In contrast, the supply of properties in the historical center of Kyiv is almost static, making them a better investment.

Kyiv itself is changing. Traffic congestion is getting worse every year, meaning

that someone who initially anticipated a daily commute of 45 minutes may now find themselves spending twice as long in the car every day. This is a very persuasive argument for considering downtown locations.

There are also signs that attitudes are shifting. A new generation of younger Ukrainians with no real ties to the Soviet past is now beginning to make an impact on the Kyiv real estate market. They are less likely to share the early post-Soviet obsession with newness that guided older generations of Ukrainians. Instead, they tend to value the charm and convenient location of older properties in the historic center of Kyiv.

While skeptics of this trend remain, one only needs to think about every other historical center in Europe and ask if any of them are as rundown and filled with dilapidated apartments as today’s Kyiv. When living in Moscow more than eight years ago, I also heard that Muscovites didn’t like the city center for all the same reasons cited above, but now a friend who lives there with his family tells me that his office is around the corner from his apartment, and along the way he can drop his kids off at school. Throw in some supermarkets and decent eateries, and you could even imagine these urban elites even foregoing ownership of cars, which was unthinkable several years ago.

Experience on the ground indicates steadily growing demand for downtown Kyiv properties. Over the past year, we have been approached by numerous local clients who were desperate to buy something on prime locations in the heart of Kyiv such as Yaroslaviv Val and Reitarska. After not finding enough supply on the sales market, they would even call around to rental places and ask if the owners would consider selling.

One such client made an offer to buy a renovated four-bedroom place for USD 4000 per square meter, while the owner had bought the place the year before at USD 1800 per square meter. In the end, the owner refused to sell, knowing that he was unlikely to find another great deal in a similar location, and confident that any future price would be even higher.

The current global pandemic might put a pause on such extravagant offers for now, but this trend will only accelerate in the years ahead. The center of Kyiv currently seeing makeovers of many streets with new bike paths, freshly planted trees, and cars being prevented from taking over sidewalks. This gentrification is transforming the historical center of the Ukrainian capital and providing a higher quality of life to its residents, with inevitable consequences for the real estate market.

About the author: Sean Almeida is CEO of Vestor.Estate real estate agency and has been resident in Kyiv since 2012 88

www.bunews.com.ua

How Ukraine’s Orange Revolution shaped twenty-first century geopolitics

The unprecedented wave of mass protests that swept Ukraine in winter 2004 transformed the country’s post-Soviet destiny and set the stage for today’s Cold War confrontation between Russia and the West Ukrainians marked the Day of Dignity and Freedom on November 21, continuing a seven-year tradition that seeks to place the country’s 2004 Orange Revolution and the 2014 Euromaidan Revolution in a broader historical context. This might also be something for the international community to consider. While Ukraine’s two people power uprisings are recognized as important milestones in the country’s post-Soviet 90

journey, their impact on the wider region has yet to be fully appreciated.

This lack of clarity is perhaps understandable. Indeed, few events in modern European history have been subject to quite so much deliberate distortion.

Ever since the Euromaidan protest movement first emerged in Kyiv in late November 2013, it has been a favored target of Russian information warfare. For the past seven years, Moscow has promoted false narratives about the uprising

:

geopolitics

www.bunews.com.ua

91

: in order to undermine its pro-democracy credentials and justify the subsequent Russian invasion of Crimea and eastern Ukraine.

While the legacy of the Euromaidan Revolution has been buried under an avalanche of Kremlin disinformation, the earlier Orange Revolution has been increasingly forgotten. At first glance, the peaceful protests of winter 2004 appear to lack the geopolitical drama of the events which were to unfold one decade later. However, this is deceptive. While independent Ukraine’s first great people power revolution did not lead directly to Russian military aggression or spark any immediate shifts in the European balance of power, it remains a watershed moment that marked the end of the early post-Soviet era and set the stage for the Cold War climate that defines today’s international relations.

A New Ukraine To appreciate the significance of the Orange Revolution, it is important to look beyond the political failures that followed the uprising. The protests of late 2004 initially succeeded in preventing Kremlin-backed candidate Viktor Yanukovych from stealing the Ukrainian presidency and made possible the election of his reformist rival, Viktor Yushchenko. However, Yushchenko soon found himself beset by infighting and was unable to lead Ukraine decisively towards Euro-Atlantic integration during what proved to be a hugely frustrating five-year term in office. This paved the way for Yanukovych to mount an unlikely comeback and win the 2010 presidential election race.

Nevertheless, the Ukraine of 2010 was a very different proposition to the country Yanukovych had first sought to rule six years earlier. Thanks to the Orange Revolution, Ukraine’s media landscape was no longer subject to the kind of smothering government censorship that had existed prior to 2004. In its place was a lively if imperfect form of journalistic freedom that reflected the competing interests of the country’s various oligarch clans. Once he became president, Yanukovych was unable to put the genie of a free press back into the bottle. Instead, his attempts to reverse the gains of the Orange Revolution helped spark the 2014 uprising that led directly to his downfall.

The Orange Revolution also had a profound effect on the way Ukrainians perceived themselves and their national identity. For the first thirteen years of independence, the political, cultural, social, and economic boundaries between Ukraine and Russia had remained blurred. Most people on both sides of the border continued to regard the fates of the two notionally separate countries as inextricably intertwined. This changed dramatically in 2004 when millions of Ukrainians mobilized in defense of free elections.

The protests served as a national awakening, establishing Ukraine’s democratic credentials and setting the country on a path that diverged sharply from the increasing authoritarianism of Vladimir Putin’s Russia. In the sixteen years since the Orange Revolution, Ukraine has staged eight national votes without ever witnessing a return to the kind of political oppression and

rampant vote-rigging that remains routine elsewhere in the former USSR. This success has helped strengthen notions of European identity among Ukrainians and deepened the sense of psychological separation from authoritarian Russia.

Fury in the Kremlin Given Ukraine’s vast size and strategic importance, these changes alone should be sufficient to secure the Orange Revolution’s place in the wider history of Eastern Europe. However, in order to appreciate the true geopolitical impact of post-Soviet Ukraine’s big democratic breakthrough, it must be viewed in the context of Russia’s reaction.

On the eve of Ukraine’s fateful 2004 presidential election, Russian President Vladimir Putin was so confident of his ability to influence the outcome that he actually traveled to Kyiv and lectured Ukrainians on the need to back his chosen candidate. It was to prove a spectacular miscalculation, arousing indignation among many previously apolitical Ukrainians who sensed their country’s newfound independence was under threat.

Within weeks of Putin’s ill-judged visit, the Orange Revolution was underway.

The Kremlin’s initial response to events in Kyiv was a mixture of indignation and disbelief. As the scale of the disaster became apparent, the mood turned to bitterness over Ukrainian treachery and anger at what was seen as a grave betrayal on the part of Russia’s European and North American partners.

Moscow regarded the West’s vocal support for the pro-democracy protests in Ukraine as nothing less than an act of international aggression. As far as the Kremlin was concerned, this was a direct attempt to interfere in Russia’s internal affairs and confirmation of the Western world’s implacable hostility.

The implications for Russian foreign policy were to prove far-reaching.

During the first four years of his presidency, Putin had sought to expand cooperation with the West, albeit while also seeking to reestablish Russia’s position among the world’s leading powers. The Orange Revolution brought this era of often awkward entente to an abrupt end. In the aftermath of the revolution, Russia adopted a strikingly nationalistic course in domestic affairs, while becoming increasingly confrontational on the global stage.

Russia Declares Information War One of the earliest signals of this change came in the information sphere.

Within months of Ukraine’s democratic uprising, Moscow unveiled plans to launch the Russia Today TV channel. The Kremlin’s decision to enter the world of English-language international TV news broadcasting was widely interpreted as a direct response to Russia’s resounding defeat in the information war that had raged around recent events in Ukraine. By the end of 2005, Russia Today was on the air and reaching audiences around the world. The channel soon became a bastion of anti-Western messaging that allowed Russia to express its open hostility towards the post-1991 international order.

The 2004 Orange Revolution brought the era of awkward entente between Vladimir Putin’s Russia and the West to an abrupt end 92

Inside Russia, the Orange Revolution occasioned a sharp change in mood as Moscow sought to make sure the sudden outbreak of democracy in Ukraine did not prove contagious. This expressed itself in a curiously defiant form of state-sanctioned nationalism which embraced a sense of continuity with the Soviet past while downplaying the crimes of the Communist era.

Weeks after the Ukrainian uprising, the Kremlin launched a nationwide campaign encouraging Russians to display orange-and-black St. George’s ribbons in honor of the Soviet victory over Nazi Germany. With images of rebellious Ukrainians sporting orange ribbons still fresh in everyone’s minds, the loyalist symbolism of this jingoistic counter-gesture was hard to miss. It also proved to be a taste of things to come. Since first appearing in spring 2005, St. George’s ribbons have established themselves at the heart of an increasingly fanatical victory cult as the Putin regime has sought to justify its own authoritarianism via ever more extravagant forms of WWII reverence. What began life as a reaction to the orange ribbons of Ukraine’s revolution has become the ultimate symbol of the entire Putin era.

At around the same time, Russia began cracking down on potential sources of domestic opposition. Having noted the involvement of Ukraine’s civil society in the grassroots activism that made the Orange Revolution possible, the Kremlin started pressuring Russian NGOs with international ties and labeling them as “foreign agents.”

With Ukrainian students also playing an important role in the revolution, the Kremlin urgently sought ways to bind young Russians more closely to the regime. This resulted in the creation of Nashi, a pro-Putin youth movement that was formed in April 2005 and enjoyed close ties to the Russian establishment. Within two years, Nashi claimed to have recruited over 100,000 members and had drawn unflattering comparisons with the Soviet-era Komsomol and the Hitler Youth.

Escalating Aggression It took a little longer for Moscow to demonstrate its dissatisfaction on the international stage. Putin did not give full voice to the changing tone in Russian foreign policy until two years after the Orange Revolution, when he articulated his opposition to American dominance in a famous February 2007 speech to the Munich Security Conference.

From that point onward, Russian acts of international aggression would grow progressively bolder. Months after Putin’s Munich speech, Moscow launched a cyber and information attack on nearby Estonia that served as an early introduction to the Kremlin’s hybrid warfare tactics. In summer 2008, Russian tanks rolled into Georgia. Six years later, the target was Ukraine. Ever since the 2014 invasion of Ukraine, Russia and the Western world have been locked in a confrontation that many regard as a new Cold War.

geopolitics

Moscow regarded the West’s vocal support for the Orange Revolution as an act of international aggression and proof of the democratic world’s implacable hostility There was nothing inevitable about any of this. Putin’s commitment to restoring Russia’s great power status was always likely to fuel an increase in international tensions, but it did not necessarily have to result in today’s climate of hybrid hostilities. The point of departure in this deteriorating relationship between Russia and the West was the 2004 Orange Revolution, which set the tone for everything that has since transpired. Indeed, it is no accident that while Moscow’s own actions have grown more and more belligerent, the Kremlin has continued to accuse Western countries of plotting a so-called “color revolution” inside Russia. Even the term itself is a backhanded compliment that hints at the enduring influence of Ukraine’s Orange Revolution on Russian policy-making.

For the past sixteen years, Russia has been haunted by the prospect of its own Orange Revolution and has gone to extraordinary lengths to prevent people power movements from gaining any momentum in the region. This was a key factor behind the decision to attack Ukraine in the immediate aftermath of the 2014 Euromaidan Revolution, and it is the main reason why Russia is currently backing dictator Alyaksandr Lukashenka in his struggle to suppress a pro-democracy uprising in neighboring Belarus. Moscow’s readiness to accept the extremely high foreign policy costs of these interventions is an indication of the importance Russia attaches to protecting Putin from popular protest.

Geopolitical Turning Point Without the Orange Revolution, it is entirely plausible that the recent history of Eastern Europe would have followed a completely different trajectory. In this alternative reality, Ukraine might well have remained within Russia’s exclusive sphere of influence, allowing Putin to gradually consolidate his hold over the former Soviet Union. In time, the Kremlin would have found itself once more in control of a powerful authoritarian empire capable of rivaling the economic might of the democratic world. Knowing what we do about Putin’s revisionist attitude towards the outcome of the original Cold War, there is every reason to believe he would have used this greatly enhanced position to mount a geopolitical challenge far more comprehensive in scope that today’s spoiling tactics.

The fact that this didn’t happen is down to the millions of ordinary Ukrainians who took to the streets in November 2004 and demanded to be heard.

Their courage has long since been forgotten, but the uprising they led has left its mark on the wider world and been instrumental in shaping today’s escalating showdown between Russia and the West. As the archetypal “color revolution,” Ukraine’s 2004 Orange Revolution lives on in the nightmares of the Russian elite and deserves far more recognition as one of the great geopolitical turning points of the early twenty-first century.

About the author: Peter Dickinson is the publisher of Business Ukraine magazine and editor of the Atlantic Council’s UkraineAlert Service www.bunews.com.ua

93

The battle

for borshch

Ukraine lays claim to traditional soup dish amid ongoing identity war with Russia Borshch has recently emerged as the latest battleground in Ukraine’s struggle to assert an independent national identity and shake off centuries of Russian domination. In early October 2020, the Ukrainian Ministry of Culture moved to add the hearty soup to its list of intangible elements of Ukrainian cultural heritage. Ultimately, Ukraine hopes to secure international recognition as the historic home of borshch via inclusion on UNESCO’s cultural heritage list.

This campaign is another step in Ukrainian efforts to distance itself from Russia, whose narratives on history, culture, language, and even the culinary arts often overshadow or overlap Ukraine’s on the world stage.

Last year, an official Russian government twitter account incensed many Ukrainians by describing borshch as one of Russia’s “most famous and beloved dishes and a symbol of national cuisine.” Some quipped that the Kremlin was clearly not content with seizing Crimea, and was now also attempting to steal one of Ukraine’s most celebrated national dishes.

In the battle for borshch, Russia is unlikely to accept defeat graciously.

The day after the Ukrainian Ministry of Culture’s decision to brand the dish as part of the nation’s cultural heritage, Moscow indicated it was not pleased with Kyiv’s culinary initiative. An article in Russian government publication Rossiyskaya Gazeta called the move “a new cause for an international scandal.”

Russia has a long history of passing aspects of Ukrainian culture and heritage off as its own. This has included everything from folk dances to Christmas carols. During centuries of rule over Ukraine, Russia has also seized vast quantities of artifacts from Ukrainian churches, monasteries, palaces, and archeological sites for display in Russian museums, where they are typically presented as elements of Russia’s own national story.

Rival Claims to Kyiv Rus Part of the problem lies in an intertwined history stretching back one thousand years that connects the two modern countries. Both Ukraine and Russia trace their roots to the early medieval Kyiv Rus state, which flourished in the tenth to twelfth centuries. While today’s Ukraine is home to the capital city and many of the most important sites of the Kyiv Rus epoch, subsequent centuries of czarist imperial rule over Ukraine allowed Russia to control the historical narrative virtually unchallenged.

This state of affairs lasted until the fall of the USSR. As a result, Russia’s 94

claim to be the successor to the Kyiv Rus has traditionally enjoyed widespread acceptance, while Ukraine’s rival interpretation has remained shrouded in obscurity.

Since achieving independence in 1991, Ukraine has sought to push back, reclaiming various aspects of its identity from Russia as part of a broader nation-building journey. Following the onset of Russian aggression against Ukraine in 2014, this process has become a matter of national security. With the Kremlin’s historical pretensions towards Ukraine playing a central role in Russia’s hybrid war against the country, Ukraine’s ability to assert an alternative and independent identity has been anything but academic.

These efforts have included the Ukrainian Foreign Ministry’s highly successful CorrectUA social media campaign, which began in 2018 and encourages English-language international media outlets to adopt the Ukrainian language transliterations for Ukrainian place names. This has helped to persuade many of the world’s most high-profile media brands such as the Associated Press, BBC, Financial Times, Washington Post, and Guardian to switch their spelling of the Ukrainian capital city from “Kiev” to “Kyiv”.

Geopolitical Divorce of the Century The Ukrainian struggle to escape Russia’s shadow extends far beyond the spheres of history and national identity. Over the past six years of hybrid hostilities, it has made an impact on virtually every sphere of daily life, from business and the media to culture and religion.

Ukraine’s single most significant nation-building achievement since 2014 has been securing the right to create an independent national Orthodox church of its own. This late 2018 breakthrough undermined the authority of the Moscow Patriarchate in Ukraine and struck a major blow against one of the last great bastions of Russian influence in Ukrainian society. The Russian Orthodox Church responded in dramatic fashion by breaking ties with the Ecumenical Patriarch of Constantinople, who traditionally serves as the unofficial leader of the Orthodox faith. Moscow has subsequently lobbied the Orthodox world’s other patriarchates in a bid to prevent the newly formed Orthodox Church of Ukraine from achieving further international recognition.

As Ukraine and Russia go through what is an increasingly painful geopolitical divorce, bilateral economic ties have also suffered. With import and

society

Borshch has been a staple of Ukrainian cuisine for centuries. Kyiv officials now hope to make the connection official by securing UNESCO recognition of the soup’s Ukrainian roots. (Photo: Elizabeth Dickinson/@liza__dickinson/Nelly Manasyan) export volumes between the two countries plummeting to record lows, China has overtaken Russia to become Ukraine’s largest trading partner.

The European Union has also cemented its position as the biggest market for Ukrainian exports, with relations benefiting from the free trade component of the landmark EU-Ukraine Association Agreement signed in 2014.

Once regarded by many as virtually indivisible, the physical boundaries between Ukraine and Russia have hardened considerably since 2014. Direct flights between the two countries were suspended in 2015 and rail services have been dramatically reduced. Meanwhile, many of Russia’s most famous showbiz performers have been denied entry to Ukraine, either in response to their public support for Russian aggression against Ukraine, or as a result of unsanctioned visits to Russian-occupied Crimea.

In an attempt to limit the Kremlin’s ability to wage information warfare inside Ukraine, Russian TV channels have been blocked, along with access to popular Russian social media sites. There have been parallel efforts to increase the presence of Ukrainian-language content on the Ukrainian media landscape. Ukrainian-language content requirements in all forms of media have brought Ukrainian films, sitcoms, music, and

publications to the forefront at the expense of their Russian-language counterparts. This has helped fuel a recent boom in the Ukrainian music and film industries.

Reclaiming Ukraine’s National Identity The current campaign to claim borshch as Ukrainian is part of this broader process. It is a legally challenging undertaking, given the difficulties of defining borshch (also spelled borscht, borsch, borsht, or bortsch) and its diverse geographical footprint. The soup dish is popular throughout Eastern Europe and can be found in a dizzying array of varieties in Ukraine alone. However, there is no doubt that it occupies a special place in the country’s national lore.

Just as champagne comes from France and Parmesan cheese is Italian, Ukrainians see borshch as theirs and are now seeking official international recognition. It may seem like a storm in a soup bowl, but this initiative reflects the grand historical processes currently underway in a country that is determined to reclaim its national identity and emerge from centuries spent in the international shadows.

About the author: Mark Raczkiewycz is a Kyiv-based journalist, editor and translator. His work has appeared in RFE/RL, Ukrainian Weekly, Financial Times, Bloomberg, WSJ, The New York Times, Irish Times, Kyiv Post and Netflix www.bunews.com.ua

95

Kyiv hosts flagship annual judicial forum in COVID-compliant format The Ukrainian capital hosted the two-day Annual Judicial Forum in November 2020, with this year’s event taking place in a mixed COVID-compliant format featuring a combination of both online and offline elements.

This yearly forum is traditionally one of the highlights on the Ukrainian legal industry calendar, bringing together a range of leading judges, legal sector professionals, international experts, and state officials. It is organized by the Council of Europe’s “Support for the implementation of judicial reform in Ukraine” project, together with the Ukrainian Bar Association. For the seventh consecutive year, LCF Law Group was the general partner of the forum. This year’s event featured 46 speakers who contributed both in person and via video link from around the world. Meanwhile, the event attracted over 400 participants online.

96

networking events

www.bunews.com.ua

97

Asters and Tabletochki Fund raise over UAH 1 million to fight children’s cancer with DobroRun On the eve of its 25th anniversary in autumn 2020, Asters joined forces with Ukraine’s Tabletochki Fund to stage the DobroRun charity fun run.

The main concept behind the DobroRun initiative was inclusiveness: anybody could participate at any place and time worldwide. DobroRun united over 1,265 individual participants from 21 Ukrainian regions and 16 countries. The initiative raised over UAH 1.1 million for the Tabletochki

98

Charity Fund, which will be used to purchase vital medicine supplies for Ukrainian children fighting cancer. “DobroRun united over a thousand Good Samaritans from Ukraine and many other countries in a noble mission,” commented Asters Senior Partner Armen Khachaturyan. “We are grateful to all those who shared these precious moments with us and joined in expressing our support for those who are most in need.”

networking events

www.bunews.com.ua

99

lifestyle

Ukrainian DJ Miss K8 climbs 2020 global ranking

Ukrainian DJ and producer Miss K8 jumped 15 places in the 2020 edition of DJ Magazine’s influential Top 100 DJs ranking, confirming her status as one of the rising stars of international club culture. The Kyiv-born dance music diva took fifty-four place in this year’s poll, up from sixty-ninth position in 2019.

Miss K8, whose real name is Kateryna Kremko, is one of a number of young Ukrainians who are currently making waves on the global dance music scene. She released her first single back in 2012 and made her debut in the Top 100 DJs ranking three years later, occupying ninety-forth position in 2015. She has remained a fixture in

the Top 100 DJs list ever since.

Kremko’s DJ style is described as “hardcore techno” and she claims to be best known for “dropping bass like an earthquake.” She responded to news of her improved position in the Top 100 DJs poll by posting thanks to her fans on Facebook. “My highest position so far. I’m very grateful for your strong support!” she commented.

Her success in 2020 follows on from a memorable 2019 which saw Kremko become a mother for the first time. She continued performing until she was 28 weeks pregnant, and was back behind the decks just three weeks after giving birth. Despite earning an extravagant reputation

as the “queen of hardcore,” the glamorous Ukrainian says she’s spent much of the coronavirus lockdown period enjoying Netflix and devoting time to her baby.

DJ Magazine is a British monthly publication dedicated to electronic dance music and DJs. It was founded in 1991 as the UK rave scene gravitated towards inner city clubs such as Manchester’s Hacienda and London’s Ministry of Sound. The magazine has published its Top 100 DJs poll every year since the early 1990s, with the annual ranking adopting a public voting format in 1997. It is now regarded as one of the world’s biggest music polls, regularly attracting over one million voters.

Letters to the editor: editor@bunews.com.ua Advertising inquiries: +38-067-4032762 Business Ukraine magazine is distributed quarterly free of charge at a wide range of leading business centres, embassies, international organizations, hotels and restaurants throughout Kyiv.

Registration: KV 15006-3978PR Published by: Open Borders Media Director: Susanna Dickinson

100

No reproduction, use or adaptation of contents, logos, titles or designs is permitted in any manner without the prior written consent of the publisher.

The opinions expressed by individual authors and contributors each month in Business Ukraine magazine do not necessarily reflect the position of the publishers. The publishers of Business Ukraine do not accept legal responsibility for the goods and services advertised within the publication.

www.bunews.com.ua