Business Ukraine 02/2019

Issue 02/2019

FRANCE IN UKRAINE

₴

$ €

Ukraine

WHY CHOOSE

US

YOUR PARTNER IN HEALTH

• The first JCI-accredited clinic in Ukraine • Quality & accessible health care • Safe & comfortable medical facilities • Full-service language assistance for expats • Direct billing arrangements with insurance providers • 24/7 Informational support 20, Drahomyrova Str., 1, Sikorskoho Str. 71G, Lomonosova Str. doctorsam.ua +380 44 393 92 91 international@doctorsam.ua

for om .C

t.

SERVICES

at Doctor Sam medical network

n sio

s

a mp

o .C ce

ten pe m Co

EXCELLENT CUSTOMER SERVICE AND INDIVIDUAL APPROACH TO EACH PATIENT

• Full outpatient care for adults and children (25+ medical specialties) • Family physician/pediatrician home visits • Vaccinations • Diagnostic tests • Pregnancy supervision • Day care treatment • Comprehensive healthcare plans and check-ups • Telemedicine • Parenting school • Mental health care • 24/7 pharmacy (incl. delivery)

BUSINESS UKRAINE 02/2019: France is one of Ukraine’s key EU partners and a major investor, with French companies currently among the largest international employers in the country. This month we explore FrancoUkrainian ties, from today’s investment activities to the ancient bonds forged by the eleventh century marriage of a Ukrainian princess to the French King Henry I.

Is the Russian retreat from Ukraine irreversible?

In the first round of Ukraine’s presidential elections, the leading pro-Russian candidate secured 11% of the vote, representing a drop of more than three quarters compared to the 49% pro-Kremlin Viktor Yanukovych received when he won the Ukrainian presidency just nine years previously. This dramatic decline reflects the scale of the damage done to Russian interests in Ukraine

by Vladimir Putin’s ongoing war. Russian aggression has alienated millions of Ukrainian voters while disenfranchising many more, leaving Kremlin influence in Ukrainian affairs at historic lows. Has the split between the two countries now gone past the point of no return, or is a Russian revival still possible?

Any talk of a Russian comeback certainly seems fanciful in the current climate.

The vast majority of Ukrainians blame Putin for an ongoing conflict that has traumatized the nation, killing over 13,000 and shattering millions of lives.

Unsurprisingly, this has boosted Ukrainian public support for Euro-Atlantic integration while at the same time leading to a collapse in enthusiasm for the rival Russian trajectory. Meanwhile, the Russian occupation of Crimea and the Donbas enclaves has removed the Kremlin’s traditional support base from the Ukrainian electorate. Donetsk, Luhansk and Crimea all voted overwhelmingly for Yanukovych in 2010. In 2019, they did not vote at all.

Demographically, the odds are also stacked against Moscow. Polls indicate that most of the remaining Ukrainian support for pro-Russian candidates comes from elderly voters. These pensioners are being slowly but surely replaced by a new generation of post-independence Ukrainians with no personal memory of the Soviet era whose attitudes towards Russia owe more to the current war than to rose-tinted nostalgia for the shared past.

The elephant in the room, of course, is Volodymyr Zelenskiy. To many of his critics, the Ukrainian presidential frontrunner is a Kremlin Trojan horse who

would undo the nation-building progress of the past five years and return Ukraine to the Russian sphere if given the chance. They point to his defense of the Russian language, his record of belittling Ukrainian national identity, his ties to Russia-leaning personalities, and his undoubted popularity among proMoscow Ukrainians, not to mention the broadly sympathetic reception he has received on Kremlin TV. Zelenskiy’s own deliberately vague policy platform has helped fuel these concerns, but what little he has said suggests that those hoping for a Russian reunion will ultimately be left disappointed. The comedian has spoken unambiguously about the war with Russia, backed the country’s European choice, and committed himself to a reformist agenda that closely tallies with the ideals espoused on Maidan five years ago. If this is the Kremlin’s best hope in Ukraine, it says much about how low Russia’s fortunes have fallen.

Moscow likely sees Ukraine’s October 2019 parliamentary election as a far better opportunity to claw back lost ground. With a number of pro-Russian parties in the running, the Kremlin will be looking to increase its presence in the Ukrainian parliament and could conceivably secure around 20% of the vote. This would be a triumph of sorts, but it will not reverse what remains a deteriorating longterm picture. Putin’s war has shattered the old myths of Slavic fraternity and made Russia a toxic issue in Ukrainian politics. Cultural and social ties between the two countries will likely recover over time, but as long as Ukraine remains a democracy, the chances of the Kremlin resuming its formerly dominant political role appear virtually nonexistent.

About the author: Peter Dickinson is the publisher of Business Ukraine magazine and a nonresident fellow at the Atlantic Council

5

JOURNEY TO

THE NEW HOME OF TURKISH AIRLINES The airline that flies to more countries than any other awaits you in the world’s new aviation center

ISTANBUL AIRPORT

turkishairlines.com

france in ukraine

FRANCE IN UKRAINE Interview: France’s Ambassador to Ukraine Isabelle Dumont reflects on her four-year diplomatic mission to Kyiv during what has been one of the most dynamic and turbulent periods in modern Ukrainian history

About the interviewee: Isabelle Dumont is the French Ambassador to Ukraine You are now approaching the end of your four-year appointment as French Ambassador to Ukraine. What have been the most memorable moments of your four years in Ukraine?

Over the past four years there have been a lot of memorable moments. As it would take way too long to share all of them here, I will select just a few. I have travelled all over the country, especially as part of the annual “Printemps français” (“French Spring”, 10

a month-long festival which showcases French cultural events across Ukraine). However, I have been particularly struck by my visits to the Donbas area.

My first visit in Ukraine as ambassador was to Mariupol. This was a deliberate choice on my part. Since then, I have been back to the Donbas region on several occasions, because one of our most important goals is to support the civilian population. My last visit to : www.bunews.com.ua

france in ukraine

: Mariupol in February 2019 allowed me to see first-hand how soci-

ety manages to stay strong by keeping a sense of community and openness. I very much enjoyed my exchanges with young people and children, which confirmed for me that despite hardships and suffering, there is always hope. I was particularly astonished by their resilience.

The single most memorable moment of my time in Ukraine will forever remain 27 December 2017, when, along with President Petro Poroshenko, I went to the Donbas to witness a prisoner exchange.

I can still feel the emotion of coming back to Kyiv and saying a few words to the families of released captives, just seconds before they could take their loved ones in their arms. Witnessing this emotional moment was a strong reminder of how important our work is.

I was also deeply moved by my visits to Chornobyl. This place remains a tragic symbol and it is impossible to go there without thinking about the victims of 1986. However, today’s Chornobyl site is also a symbol of our bilateral cooperation. As the French Ambassador to Ukraine, I am proud of the role played by French companies in building the Chornobyl New Safe Confinement.

How has your relationship with Ukraine evolved over the past four years and what has surprised you most about Ukraine and Ukrainians?

I had the chance to visit Ukraine as a teenager and, later on, as a diplomat. Therefore, when I was appointed ambassador to Kyiv, I did not feel like a foreigner. Nonetheless, my past four years here have given me greater insight into Ukrainian society.

Ukrainians are incredibly fiery when it comes to fighting for their right to a better future and to defending what they care about. First and foremost, this means their country. They aspire to action and want to participate in the development of their community. There is a peculiar strength here, which is perhaps best conveyed by the ingenuity of the country’s youth. Despite having lived through traumatic events, Ukrainians keep their spirits up and always try to move forward.

Many European countries are still at the stage of discovering Ukraine. How true is this of France, and how have French public perceptions of Ukraine developed since you first arrived in the country in 2015?

The French public is quickly discovering more and more of what Ukraine has to offer. For a long time, Ukraine was a mystery for many people in France. This is now rapidly changing thanks to the tremendous work being done by Ukrainian diplomacy, which is having an impact on French public opinion.

I can tell you from my own experience that many French people who travel to Ukraine for the first time are delighted by their stay here. They often tell me that their visit is much more interesting and impressive than anticipated. There are strong and ancient ties between our countries due to our common passion for things like culture, literature and architecture, and our shared heritage. After all, Anne of Kyiv, daughter of Yaroslav the Wise, was the Queen Consort of King Henry I of France and regent of France from 1060 to 1065.

I am also aware that the French business community is very interested in increasing its presence in Ukraine and believes there is a lot of potential here. Accelerating the privatization process of SOEs in Ukraine will be a good way to attract major European companies in some fields which will strengthen ties between Ukraine and EU countries like France. Ukraine is perceived as having a lot to offer through its geographical situation, its openness to Europe and, of course, the high level of education of its population. Although further efforts are still required to continue economic reforms and the fight against corruption, Ukraine has come a long way since 2014 and the French public is increasingly aware of this.

As a co-signatory of the February 2015 Minsk Accords, France has a key role to play in the search for peace in eastern Ukraine. What is your response to those who argue that Minsk has failed and new approaches towards conflict resolution are now necessary?

To this day, I have not seen any format that provides a better solution to the resolution of the conflict than the Minsk Agreements.

We all want the war to be over and this desire is at the heart of the work that we are accomplishing here, together with our German partners. A lot of this work might not be public, but it is conducted with the aim of finding a fair and peaceful way to end the conflict.

I do not think that changing the format of negotiations, as is sometimes suggested, will help the situation. War is still raging because of the lack of political will to end it. :

“Ukraine is perceived in France as having a lot to offer through its geographical situation, its openness to Europe and, of course, the high level of education of its population” 12

www.bunews.com.ua

2ND LARGEST FRENCH AIRLINE*

PARIS FROM KYIV 3 FLIGHTS PER WEEK KYIV

PARIS-ORLY

PARIS-ORLY

KYIV

DAYS

DEPARTURE

ARRIVAL

DAYS

DEPARTURE

ARRIVAL

wednesday, friday, sunday

04:30

07:00

tuesday, thursday, saturday

22:00

02:10+1 +1: arrival the day after

AIGLEAZUR.COM *DGAC 2017 statistical note

or your travel agency

france in ukraine

French Ambassador to Ukraine Isabelle Dumont is an accomplished musician and has participated directly in Ukrainian cultural life throughout her diplomatic mission (left). Meanwhile, she says her visits to communities close to the conflict zone in eastern Ukraine (right) rank among the most powerful experiences during her four-year posting to Ukraine

: Meanwhile, our joint efforts have created a number of striking

improvements for the civilian population. Successive ceasefires have significantly reduced the number of casualties, exchanges of prisoners have been facilitated, and ongoing discussions are taking place to improve daily living conditions, especially regarding access to energy and water supplies.

Ukrainian businesses are increasingly seeking to enter EU markets. Where do you see the most exciting opportunities for Ukrainian companies in France?

There is definitely room for increasing partnerships between Ukrainian and French companies in the fields of agriculture and food production, in which Ukraine has a lot of interesting assets to offer through its know-how and its abundant resources.

Also, the level of education of the Ukrainian people and its aweinspiring culture can only be an asset. I therefore encourage the development of partnerships between universities and professional sectors with EU countries. Above all, the first step is to fully implement the DCFTA component of the EU-Ukraine Association Agreement in order to access all the economic opportunities this creates.

You are the current chairperson of the G7 Group in Ukraine uniting the ambassadors of all G7 member states. What do you see as your priorities in this role?

The core of the G7 Group’s work in Ukraine is to assist the country on its reform path. We are focused on supporting the rule of law and the fight against corruption as well as backing the necessary reforms in the fields of defense and security, the country’s economic development, and of course, governance and human development. Most of the time, our interactions with the Ukrainian authorities are positive because we are following a common agenda.

Indeed, the G7 Group has established priorities that are in line with the Ukrainian government’s own stated goals.

G7 ambassadors understand that during election periods, it is more difficult to implement reforms. However, Ukraine cannot afford to wait another year without moving the reform agenda forward. It 14

is crucial for the Ukrainian people that their country carries on its deep transformation and modernization in line with its European aspirations. In order to do so efficiently, it is crucial that the country’s 2019 elections remain fair and transparent according to international and OSCE standards.

Based on your personal experience during your time in Kyiv, how can Ukraine’s partners most effectively support the country’s reform agenda?

We have to keep in mind that deep structural reforms such as the ones needed in Ukraine always take more time than initially expected. There have been challenges in the launch of these reforms, and I cannot say that Ukraine has completely overcome all of the obstacles it faces. Nevertheless, we have to remain optimistic and show our support for Ukraine’s willingness to move in the right direction.

In my opinion, Ukraine’s partners must display great perseverance when fighting efforts to undermine the progress that has been made so far. This perseverance can help the country overcome strong resistance to change. Most of all, Ukraine needs to rid its institutions of corruption and conflicts of interest. No amount of reforms will make people’s lives better unless corruption is tackled.

There is much talk of European values in Ukrainian politics and society, but few are able to define exactly what these values are.

What is your personal understanding of European values and what role can they play in Ukraine’s European integration ambitions?

I sense that the European aspirations of the Ukrainian people are based on a common understanding of the core values that should shape the country’s political culture. This means respect for human rights and the rule of law together with fair economic and social development. These principles apply to every individual regardless of ethnicity, religion or gender, and they should be guaranteed by state institutions. The engagement of civil society in public affairs is one of the trademarks of European institutions. We need to keep encouraging this engagement throughout Ukrainian society. www.bunews.com.ua

ІННОВАЦІЙНІ РІШЕННЯ ФРАНЦУЗЬКОЇ ГЕНЕТИКИ ЄВРАЛІС ДЛЯ ЗБІЛЬШЕННЯ ВАШОГО ПРИБУТКУ

ТОВ «ЄВРАЛІС СЕМЕНС УКРАЇНА» 03040, Київ, вул. Васильківська, 14, оф. 513 Тел.: +38 (044) 353-45-73 e-mail: kiev.seeds@euralis.com www.euralis.ua Євраліс. Створюємо насіння і довіру.

france in ukraine

French companies view Ukraine as

long-term investment opportunity Recent growth in strategic investments by French companies in Ukraine points to long-term approach As head of the economic service for Ukraine, Belarus and Moldova at the French Embassy in Kyiv, Vincent Pringault is a busy man. The past year has seen a landmark EUR 550 million purchase of Airbus helicopters by the Ukrainian state along with a flurry of French investment activity in Ukraine encompassing everything from retail and logistics to agriculture and renewable energy.

In the past few months alone, there have been a number of eye-catching headlines highlighting this upturn in French investment activity.

For example, leading French container operator CMA CGM recently confirmed a EUR 20 million investment in Odesa Port, France’s Total Eren unveiled EUR 150 million plans for what promises to be one of Europe’s largest wind farms in southern Ukraine, airline Aigle Azur launched a new Kyiv-Paris service, and French sporting goods retail giant Decathlon opened its first Ukrainian store.

Pringault says these recent investments reflect growing awareness within the French business community of Ukraine’s market potential, and testify to the gradual improvements being made to the country’s business climate. “We are seeing clear examples of French companies investing in Ukrainian infrastructure,” he says. “This is an investment in the long-term future of the country.”

Evidence of this longterm interest can also be seen in the number of CEOs from prominent French companies who have visited Ukraine in recent months, notes Pringault. In many cases, he says, they are coming to familiarize themselves with the country rather than to sign off on specific corporate contracts.

“If French CEOs are

In 2018, Ukraine and France concluded a landmark agreement valued at EUR 550 million for the purchase of 55 Airbus helicopters for use by the Ukrainian police, border guards and emergency services coming to Ukraine without necessarily having deals already in place to sign, it is an indication that the country is becoming more interesting.”

Recent developments in Franco-Ukrainian economic ties benefit from the solid foundations created by existing French businesses in Ukraine. France ranks among the largest foreign employers in Ukraine, with French companies currently accounting for approximately 30,000 workplaces. Pringault stresses that French companies remained in Ukraine during the extreme economic turbulence of 2014-15 and confirms that both veterans and newcomers alike have noted positive changes taking place in the post2014 business environment. He points to the role played by new institutions created over the past five years such as the Business Ombudsman Council and UkraineInvest agency, while also acknowledging that dialogue with government ministries has in many instances become more productive. “As an embassy, we have wide exposure to different sectors of the Ukrainian economy and have noted a marked decline in issues between companies and state bodies. This is leading to shifts in perceptions about Ukraine.

Corruption is still a major concern but it is no longer always the first thing people reference.

Instead, we are hearing questions about the growth potential of the Ukrainian economy. The message that Ukraine has managed to improve its business climate is getting through.”

Inevitably, major challenges remain. Like many of his fellow diplomats, Pringault is cautious of overstating the progress Ukraine has made in tackling correction, and cites the creation of an effective Anti-Corruption Court as a national priority. He also stresses that the improving dialogue between the public and private sectors in Kyiv is not always reflected in the regions of Ukraine, where local priorities may not necessarily include accommodating the interests of international investors. Despite growing investment, Ukraine’s dated and in many cases dilapidated infrastructure represents a significant barrier to economic growth, while the large-scale labor migration of recent years to neighboring EU member states has made it increasingly difficult for companies to recruit qualified employees. Nevertheless, the recent expansion of the French business community in Ukraine reflects growing recognition of the country’s long-term economic potential. As awareness increases, Pringault expects bilateral economic ties to strengthen further.

About the interviewee: Vincent Pringault is head of the economic service for Ukraine, Belarus and Moldova at the French Embassy in Kyiv

16

www.bunews.com.ua

france in ukraine

France ranks among Ukraine’s leading international employers Chamber of Commerce President Jean-Paul Piotrowski reflects of 25 years of French business in Ukraine The Chambre de Commerce et d’Industrie Franco-Ukrainienne (CCIFU) is celebrating its twenty fifth anniversary this year. What have been the key landmarks for the French business community in Ukraine over the past quarter of a century?

The mission of the CCIFU is to participate in the commercial development of relations between France and Ukraine and to support French companies in Ukraine. At present, the CCIFU features 125 members. We have seen growth over the past 18 months, which attests to increasing interest of French companies in Ukraine. French businesses currently employ more than 30,000 people in Ukraine, making France one of the country’s leading foreign employers. These companies are active in a variety of sectors of the Ukrainian economy with a cumulative turnover of around USD 2.5 billion.

How has the French business community in Ukraine responded to the challenges created by the economic and geopolitical crises of 2014-15?

Thanks to the quality of their business models and the competence of their teams, French businesses in Ukraine were able to withstand the 2014-2015 crisis and have continued their development.

Larger companies in particular have weathered the crisis, especially multinational companies whose presence in Ukraine is longterm and part of a broader international strategy. They have remained profitable and many have seen double-digit growth in 2018. In general, very few shutdowns or withdrawals have been observed within Ukraine’s French business community over the last five years.

On the contrary, companies have continued to invest, particularly in the agribusiness sector.

French SMEs have been more affected by the crisis but are now recovering. They are present throughout Ukraine and operate in various sectors of the economy. Their niche market expertise has often allowed them to navigate the difficulties they have faced, and the situation has improved markedly in 2018. Nevertheless, the number of new French SME arrivals is still low.

Which sectors of the Ukrainian economy do you see as the most exciting for French businesses and investors?

First of all, we should underline that French companies are already present in many sectors of the Ukrainian economy. This includes the agribusiness industry, the automobile industry, logistics, distribution, pharmaceuticals and the banking sector. French companies are continuing to invest. One recent example is the opening of the first Ukrainian Decathlon sporting goods store in Kyiv. In terms of new investment, the most promising Ukrainian markets include agriculture, renewable energy, IT, telecoms, infrastructure, and trade.

What are the most common questions you receive from French companies considering Ukraine market entry?

The questions are numerous and cover a wide range of topics. Popular themes include political stability, the situation in eastern Ukraine, administrative formalities and the foreign exchange market, along with taxation, repatriating dividends, and the best ways to find quality partners. Many people simply want to know whether it is possible to work normally and efficiently in Ukraine. We advise companies to come to Ukraine with clear objectives and to rely on existing structures including the economic service of the French Embassy, CCIFU, UkraineInvest and other specialized agencies.

What do you regard as the greatest obstacles to further French investment in today’s Ukraine?

Significant progress has been made in many

areas. However, there are still considerable obstacles. The Ukrainian judicial system must become more effective. The fight against corruption must become more visible. Despite some improvements, administrative procedures remain complex. Access to financing is improving but is still difficult for many companies. Meanwhile, high levels of labor emigration must also be taken into account. The departure of Ukrainian workers to Poland weighs heavily on the labor market. It is difficult to find the necessary skilled employees, while wage pressure is extremely strong. This is having a negative impact on cost-income ratios.

Ukraine has been making slow but steady progress since 2014 in the World Bank’s annual Doing Business survey. What would you identify as the most significant improvements to the Ukrainian business climate during this period?

Many reforms have been put in place during recent years including pensions, education, healthcare, decentralization, tax policy, deregulation, and FX market liberalization. In our opinion, one of the most important initiatives has been the successful reform of the banking sector. Ukraine’s National Bank has restructured the banking sector and obliged banks to meet a number of standards including passing regular stress tests and clarifying their business model. In parallel, new rules have been introduced in terms of transparency, governance, and anti-money laundering. This development resulted in the disappearance of nearly 100 banks (the number of Ukrainian banks has declined from 180 to 80) and the nationalization of the biggest private bank of the country. This has allowed the Ukrainian banking sector to strengthen and to restart lending. The role of the banking sector in the national economy is now more active, both in terms of loans and deposits.

Current measures to protect creditor rights now need to be accelerated to allow banks to ease their credit policies.

About the interviewee: Jean-Paul Piotrowski is the President of the French Chamber of Commerce in Ukraine (CCIFU)

18

www.bunews.com.ua

Jeantet is one of France’s leading and oldest independent business law firms. We deliver customized services with added value. Our firm was established over 90 years ago. Today our team of 180 lawyers work from seven different international offices, while our partner network spans 130 countries.

We offer the services of our excellent team of seasoned Ukrainian lawyers led by Bertrand Barrier and Karl Hepp de Sevelinges. Our areas of expertise include Corporate and M&A, Banking & Finance, Foreign Investments, Private-Public Partnership, and Antitrust issues.

www.jeantet.fr • bbarier@jeantet.org

Paris • Casablanca •

4 Volodymyrska Street, Kyiv, 01001, Ukraine +380-44-2060980

Luxembourg • Geneva • Budapest • Kyiv • Moscow

france in ukraine

French companies keen to benefit from

improving Ukrainian business climate

Credit Agricole sees growing interest in Ukraine as the country’s French business community expands

France’s Credit Agricole has been intricately involved in Ukraine’s international business community for almost as long as the country has had an international business community.

It was the first international bank to enter the newly independent Ukrainian market in the early 1990s, but this was not the start of the Credit Agricole story in Ukraine. The bank was actually present in today’s southern Ukraine during the final decades of the Tsarist era, with a branch office in Black Sea port city Odesa that operated from 1892 until 1920. This longevity has helped foster valuable local knowledge while also inspiring considerable corporate loyalty. “Some of our international clients at the turn of the twentieth century came back to Ukraine and these days they are still with us,” says Credit Agricole Deputy CEO in Ukraine Larysa Bondarieva.

Credit Agricole currently counts many of Ukraine’s

approximately 180 French businesses among its international clientele. The bank has been intimately involved in the development of the country’s French business community as it has evolved from the corporate representative offices in 1990s Kyiv to today’s more diversified landscape, serving as a logical partner for companies seeking expert advice coupled with international standards and Credit Agricole’s range of corporate and retail banking services.

Ms. Bondarieva paints a picture of an expanding French business community that has weathered the storms of recent years and is now looking to expand, with existing companies increasing their investments while newcomers contemplate market entry. “Those who are already operating in Ukraine understand that the most challenging period of 2014-15 is now firmly in the past. They are quite confident about the direction the country is moving in and are ready to invest in the future.”

This confidence is partly rooted in what some French businesses regard as the changing tone of dialogue between the Ukrainian public and private sectors that has become evident since the upheavals of 2014. For many years, interaction with the authorities was notoriously one of the biggest challenges facing any investor in Ukraine, but Ms. Bondarieva sees signs that this is no longer necessarily the case. “We often speak about this with our clients. What we are seeing is an emerging but clear consensus that it is now quite possible to have a productive dialogue with the Ukrainian authorities,” she says.

“This is something French businesses value highly. There is a growing sense of confidence that they will receive support at the state level, or at the very least, they will not have to face any additional obstacles. This represents a significant improvement to the Ukrainian business environment.”

France currently ranks among the largest foreign employers in the country with French companies accounting for approximately 30,000 work places throughout the Ukrainian economy. The Credit Agricole portfolio of French clients natu-

rally has a strong agribusiness component, but other sectors ranging from energy and infrastructure to automotive and retail are also increasingly represented. Ms. Bondarieva points to landmark deals such as the recent opening of French sporting goods giant Decathlon’s first Ukrainian outlet as indications of France’s rapidly diversifying business footprint in Ukraine.

Credit Agricole serves as a business bridge between France and Ukraine, producing an annually updated guide for potential investors and regularly engaging with French companies interested in the opportunities offered by the Ukrainian market. Ms. Bondarieva observes that in recent years she has noted growing awareness about Ukraine among the French business community, fueled in part by the increasing competition French agribusinesses are facing on global markets from Ukraine’s own robust agricultural sector. “Ukraine is definitely appearing more and more often on the French business radar,” she says.

This higher profile is fostering greater appreciation of the potential benefits Ukraine has to offer, while also leading to a more nuanced understanding of Ukrainian current affairs.

“Ukraine is coming to be seen as a strong international player in the agriculture industry and this is naturally encouraging people to investigate opportunities here. Whenever we discuss these opportunities, French executives now tend to be familiar with the key issues facing the country.”

Ukraine’s rising international profile remains very much a work in progress, with Credit Agricole contributing to the process by seeking to foster a better understanding of the country among French businesses. “Ukraine is still something of an unknown quantity to many in France. Our role is to provide an objective and informed impression of today’s Ukrainian realities,” says Ms. Bondarieva. “Yes, there are a lot of opportunities here, but there are also significant challenges to be resolved. We try to explain this and offer the necessary expertise to help companies succeed.”

About the interviewee: Larysa Bondarieva is Deputy CEO at Credit Agricole Bank in Ukraine 20

www.bunews.com.ua

Lactalis in Ukraine focuses on exporting Lactalis sets target of exporting 20% of the company’s total Ukraine production to global markets by 2022

Ukrainian agricultural export revenues reached a new record high of USD 18.8 billion in 2018 as the country continued to expand its geographical reach and enter new global markets. This trend is very much in line with acting Agrarian Policy Minister Olga Trofimtseva’s vision for the development of Ukraine’s agriculture industry from Europe’s breadbasket to supermarket of the world.

French-Ukrainian joint enterprise Lactalis is at the forefront of this process in the Ukrainian dairy industry. Lactalis, which has two internationally certified and EU compliant production facilities located in Ukraine, began placing greater emphasis on exports from Ukraine five years ago. This strategy is paying dividends, with Lactalis ranking among the country’s largest consumer dairy product exporters in 2018, in terms of both volume and value.

Renato Ruszczyk has been CEO of Lactalis Ukraine for the past twelve years and testifies to the often turbulent evolution of the Ukrainian dairy market during this period. “It’s been like a tango.

Two steps to the right, one step to the left,” he quips. Ruszczyk says 22

the company’s current emphasis on exports is designed to capitalize on the strengths Lactalis enjoys in Ukraine, while at the same time offering an alternative to the challenges of a domestic market suffering from problems such as regulatory ineffectiveness along with the large-scale presence of falsified packaging and counterfeit goods. “It is difficult to compete successfully in such a market and win the battle for price as we cannot cut corners,” he reflects.

The answer has been to focus increasingly on production for international markets where domestic headaches do not apply and Ukraine enjoys a number of competitive advantages. Ruszczyk identifies consistent quality as the key ingredient driving the growth of Lactalis exports from Ukraine. The company also benefits from Ukraine’s geographic location at one of Eurasia’s great crossroads, offering relatively convenient access to Asian, African and European markets. “Ukraine enjoys considerable logistical advantages that are worthy of further investigation,” he notes. “From Odesa port we can reach Black Sea countries like Georgia and Tur-

depend on the product assortment Lactalis Ukraine can offer. At present, some of the most robust growth has come in Africa, where Lactalis exports of UHT milk have proved particularly competitive.

The logistical issues of shipping dairy products to distant markets in places like West Africa tend to favor products with longer shelf lives, meaning that the company must take this into consideration as it looks to boost the share of exports within its overall Ukrainian output. “A lot will depend on the assortment of goods we are producing and their suitability to different markets,” explains Myakota. “In practical terms, this means focusing on products with longer shelf lives as we look to expand our reach further geographically.”

As head of the External Economic Relations and Certification Department at Lactalis Ukraine, Vladimir Martynchuk is engaged in the technical details of maintaining the momentum of the company’s growing global presence. A veteran of Ukraine’s border veterinary service, he says the country’s approach to agricultural exports has undergone significant changes as a result of the economic and geopolitical turbulence of the past five years, with mixed results.

Prior to 2014, he recounts, the greatest challenge was securing inclusion on lists of approved exporters compiled by state officials.

In practical terms, this was often impossible due to political considerations and oligarch influence. That is no longer the case, but the relaxation of export restrictions has resulted in a number of entirely new challenges. “Before, nobody could export. Now everyone can,” observes Martynchuk. “This creates opportunities for unscrupulous producers to export cheap and poor quality products. By acting in bad faith, they risk damaging the credibility of Ukraine’s international brand for all of us.”

Nevertheless, he argues that a combination of quality and price factors makes Lactalis Ukraine’s exports globally competitive, and acknowledges that the shifting attitudes of the Ukrainian authorities towards agricultural exports have also brought considerable advantages. “Since 2014, government officials have been forced to recognize that limiting export potential to a select few is not the way to develop the economy. Instead, it is essential to promote exports in order to help boost the country’s trade balance.” This is making life easier for exporters like Lactalis. “The government no longer obstructs us,” says Martynchuk. “In some cases, it even helps.”

france in ukraine

key. Once you are through the Bosporus, the way is open to North African markets.”

As Lactalis expands its export operations from Ukraine, the company must also confront the looming issue of labor migration. Ukraine has seen large-scale outflows of the country’s workforce in recent years, with hundreds of thousands of Ukrainians seeking larger pay packets in neighboring EU member states which are in turn losing manpower to wealthier EU countries further west. As the bottom rung in this labor supply chain, Ukraine finds itself with little choice but to become more competitive on the job market or risk losing more workers. Lactalis has addressed this problem by offering greater opportunities to existing staff members. “We are lucky to have a very loyal team, but even so, we face a lot of recruitment issues in the current environment,” says Ruszczyk. “Our response has been to invest in our employees in terms of training and career enhancement, while putting the emphasis on internal promotion.”

In line with this strategy, the company now seeks to fill 80% of all vacancies from within its existing pool of over 750 employees.

Lactalis Ukraine’s Business Development Director Roman Myakota is charged with navigating the company’s overseas expansion and cooperates closely with Lactalis Group’s global network. He has overseen the rapid expansion of the company’s international penetration in recent years, moving beyond traditional export destinations in the former Soviet Union to enter a growing number of Asian and African markets. Lactalis Ukraine currently exports dairy products to a total of 21 countries including Qatar, Saudi Arabia and the United Arab Empires in the Middle East, alongside attractive Asian markets such as Singapore, Malaysia and the Philippines. Myakota expects to add Cambodia, Chad and Tanzania to the list in the first half of 2019, while noting that China remains the biggest prize on the horizon. Chinese certification procedures are among the toughest he has encountered, but he remains optimistic that the long certification procedure begun in February 2018 will bear fruit during the current year.

Myakota says the company is currently on track to meet ambitious targets that envisage 20% of all Lactalis Ukraine production going for export by 2022. Last year, the figure was 14% of total output, up from 12% in 2017. Securing access to new markets will be crucial to achieving the 20% export objective, but much will also

About the interviewees: (left to right) Renato Ruszczyk is CEO of Lactalis in Ukraine. Roman Myakota is Business Development Director of Lactalis Ukraine.

Vladimir Martynchuk is Head of the External Economic Relations and Certification Department of Lactalis Ukraine.

www.bunews.com.ua

23

france in ukraine

Franco-Ukrainian ties need a tech upgrade

Cooperation between Ukraine and France could benefit from an increased emphasis on innovation

About the author: Andriy Dovbenko is a businessman and venture investor Ever since the proclamation of Ukrainian independence in 1991, France has featured prominently in the imaginations of Ukrainians as a symbol of the country’s aspirations and an economic success story worthy of emulation. Unfortunately, Ukraine’s transition from planned economy to market economy has proven far more painful and lengthy than anticipated, and has been accompanied by a plethora of persistent problems ranging from corruption within the country to outside attempts to influence Ukraine’s post-Soviet transition. Nevertheless, the idea of aspiring to French standards has never lost its appeal. This is no accident. For many Ukrainians, contemporary France continues to serve as a byword for the freedoms and opportunities associated with the wider Western world.

Over the past twenty-eight years, many of the changes taking place on the geopolitical landscape have served to bring Ukraine and France closer together. Ukraine has become more integrated into the European Union, while France has emerged as one of the country’s key partners. This has been the case in both the political and economic spheres. It is also true in terms of culture, and it is fitting that France is scheduled to become one of the first countries to host a branch of the newly created Ukrainian Institute.

Indeed, the entire Ukrainian Institute initiative owes much to the example set by the French Institute.

Economic cooperation is also progressing, with reports of growing bilateral trade as both countries enjoy the benefits of the Association Agreement between Ukraine and the European Union. The agricultural sector has traditionally played a central role in commercial ties and this remains the case, with rising French demand for Ukrainian grains and other agricultural commodities. At the same time, we are also seeing the growth of interest in the innovative segment of the economy. This is where the greatest opportunities for the further development of bilateral ties may now lie.

In my personal opinion, one of the most appealing projects in recent years 24

has been the drive to construct solar energy plants in the area around the Chornobyl nuclear power plant. This concept is attractive for a number of reasons. It is rooted in solid economic arguments, while also aligning well with my vision of a greener approach to energy issues. It is undeniably an initiative with huge symbolic potency that reflects the transition from tragedy to hope. What was once a monument to man’s negligent attitude towards nature can now become a platform for renewal and a monument to more responsible decisions that pave the way for a sustainable future. It is particularly encouraging to note that France has been one of the driving forces behind efforts to develop solar power projects at Chornobyl.

In order to move the Franco-Ukrainian bilateral relationship to the next level, we need to increase the emphasis on hi-tech projects in areas like the renewable energy and IT sectors. Does Ukraine currently have the resources to meet French demand for hi-tech cooperation? Within Ukraine’s IT sector, France often features as a possible destination for relocation and employment, but mentions of France as a potential IT business partner tend to be less frequent. I am convinced this strategy is worth reviewing in order to upgrade the IT relationship between the two countries. Ukraine is ready to supply France with world class IT products instead of merely supplying IT professionals. The same is true in many sectors of the knowledge economy.

Given Ukraine’s acknowledged strengths, the tech sector offers some of the most promising opportunities to develop Franco-Ukrainian economic cooperation and deepen bilateral ties. This direction will also allow both countries to consolidate traditional focuses such as agriculture, as green energy in particular opens the way for the production of higher quality food while also reducing potentially negative factors. Ukraine is already moving in this direction, with the country’s booming IT industry playing an increasingly prominent role in the agribusiness sector. The introduction of technological innovations and IT knowhow to the Ukrainian agriculture industry holds the promise of improved product quality and increasing yields, allowing Ukrainian producers to benefit while helping the country to make the most of its traditional competitive advantages in the agrarian sphere. As a fellow agricultural superpower, France can potentially gain from the kind of technological innovations Ukraine can offer, while also sharing its own valuable and considerable experience.

Ukrainian-French relations have a long history that can be traced back to the eleventh century and the marriage of Yaroslav the Wise’s daughter Anne to French King Henry I. This relationship is in good health and poised to evolve further. It is already clear that as Ukraine continues along the road towards greater European integration, the country will necessarily develop closer ties with the continent’s economic leaders. The main challenge currently facing Ukraine is the need to move beyond traditional focuses such as commodities. This means actively exploring opportunities for mutually beneficial cooperation in knowledge-intensive sectors while promoting the kind of innovation that will bring advantages to the economies of both countries. www.bunews.com.ua

Ukraine’s monthly English-language current affairs publication since 2007

france in ukraine

Navigating Ukraine’s

solar energy boom Jeantet’s Oleksiy Soloviov highlights issues surrounding structuring of solar energy projects in Ukraine

form of the local construction permit for SS2. In a nutshell, the current form does not envisage a line for indicating the licensed sub-contractor. Instead, the form requires you to indicate the licensed contractor, but there are typically none under offshore EPC schemes. There are legal solutions to overcome this difficulty, usually envisaging a contractual split ‘on the ground’, but which is not always acceptable to lenders. We have stressed the urgency of having these construction-related permit forms updated at our recent meetings with the Ministry of Regional Development, the State Construction Inspectorate of Ukraine and other stakeholders. We explained that these forms can be easily updated as a simple step towards improving Ukraine’s position in the World Bank’s Doing Business ranking.

Equipment supply: why a local importation contract is necessary

The Ukrainian renewables sector is booming and the country is seeing more and more solar energy projects. The number of newly commissioned solar plants almost doubled year-on-year in 2018 to reach a total of 1.33 GW in capacity. Supply is mainly driven by medium-to-large projects structured on the basis of Ukraine’s feed-in-tariff (FIT) legislation. Ukraine currently has one of Europe’s highest FIT rates, tied to the euro currency and fixed until 2030.

Ukraine will continue to be very attractive for solar investments in the near future, while a good working knowledge of the legal mechanics of the sector remains key to successful project realization. There are a number of important legal issues surrounding the contractual structuring of solar energy projects that require consideration.

In solar projects, the Ukrainian SPV is expected to support the offshore supplier and acts as the agent of the latter for customs clearance purposes in Ukraine.

In this case, importation to Ukraine needs to be performed under a local importation contract drafted on DAP or similar Incoterms. Indeed, no ‘pure’ DDP contracts are possible until the Ukrainian government enables payment of customs duties by foreign suppliers. Assuming that lenders insist on taking a security over the ‘fully wrapped’ EPC contract, then the local importation contract is presented as an annex to the EPC along with the equipment’s specification.

In this case, the role of the customs broker is important, as it should properly structure the schedule of deliveries. In addition, a separate agreement should be entered into by and between the Ukrainian SPV and the licensed Ukrainian customs broker. For the sake of clarity, this local agreement is mandatory even if there is already a transportation contract signed by the Ukrainian SPV with the logistics operator.

Usually, lenders prefer to take security over a ‘fully wrapped’ FIDIC-based EPC contract signed directly by and between a Ukrainian project company (SPV) and a well-known international developer. The good news is that the Ukrainian legal system is generally open to the use of such offshore EPCs. To govern the contract, parties thereto are free to opt for foreign material law as well as international arbitration instead of the less developed Ukrainian civil law and commercial courts. Although the EPC’s annexes still need adaptation in accordance with Ukrainian construction rules, a prior requirement for the foreign head EPC contractor to have a construction license in Ukraine was removed in 2016. Even from a tax perspective, the use of offshore EPCs does not necessarily mean any risk of permanent establishment for the foreign contractor in Ukraine, since solar projects usually have a relatively short duration.

Offshore EPCs appear not to work perfectly in technically complicated solar projects (keyword ‘SS2 projects’). The problem is concentrated in the outdated

Ukrainian law recently introduced the possibility of signing a so-called ‘preliminary’ PPA with state company Energorynok (soon to be replaced) to give additional comfort to project owners and lenders at the starting phase of solar projects. However, the signing of preliminary PPAs may not in itself fix the FIT. Rather, the FIT is obtained based on a number of construction documents, the most important of them being the technical conditions of connection to the grid, the main annex of the GCA. Indeed, the signing of a valid GCA with the grid operator is crucially important to achieve a commercial operation date.

Another nuance of Ukrainian regulations is that the grid connection is considered a separate construction project in most cases and falls under the responsibility of the grid operator. Ukrainian developers tend to use various legally permitted techniques to motivate local grid operators to be on time with the grid connection, such as grants and sponsorship of the equipment or materials needed to upgrade TX lines and substations.

About the author: Oleksiy Soloviov is a Senior Associate at Jeantet in Ukraine

FIDIC-based EPC contracts: are they fully enforceable in Ukraine?

26

Preliminary power purchase (PPA) and grid connection agreements (GCA)

www.bunews.com.ua

france in ukraine

Guide to taxation issues for French investors in Ukraine

Arzinger’s Yuriy Fedchyshyn offers an overview of Ukraine’s tax environment for potential investors

About the author: Yuriy Fedchyshyn is Tax Practice Counsel at Arzinger law firm French businesses are estimated to have invested USD 753 million in Ukraine during 2018, which represents an increase of approximately USD 33 million compared to the figure for the previous year. The number of French investors interested in Ukraine also continues to grow year by year. In order to take maximum advantage of the investment opportunities that today’s Ukraine represents, it is crucial to have a detailed understanding of the local business climate, regulatory environment, and economic processes. An appreciation of the taxation environment is high on the list of priorities.

French Focuses

France is currently active in a wide range of sectors within the Ukrainian economy. Over the past two years, the priority areas for French investment in Ukraine have included financial services, insurance and retail, as well as the industrial sector and manufacturing.

There are obvious attractions to the information technology sphere, where Ukraine enjoys a rising global profile and is recognized as a regional market leader in Central and Eastern Europe. Pharmaceuticals, agriculture and infrastructure also represent popular Ukrainian investment opportunities for French com28

panies. Our law firm currently has contracts in place with more than ten French clients operating in various sectors of the Ukrainian economy such as retail, construction, the automotive industry and telecommunications.

For any French investors looking to enter the Ukrainian market, it is important to painstakingly analyze both expected gains and possible risks. This balanced approach towards the potential issues you will face can help investors avoid problems further down the line by anticipating them in advance. For example, some time ago, Arzinger law firm represented a group of foreign investors in the indirect purchase of a well-known food manufacturer from a prominent Ukrainian financial group.

As well as conducting the tax due diligence of the target company, we also made it our priority to carefully assess the principle tax issues around the company and develop a complex risk mitigation strategy. This approach went on to play a key role in the success of the project.

Key Taxation Issues

One of the cornerstones of any investment analysis will be the tax system. The Ukrainian corporate income tax system is organized along traditional lines. Company profits are taxed at the level of the company, and distributed profits are taxed again at the shareholder level. However, under certain circumstances, there could be some exceptions or deviations from this standard procedure. Dividends received by Ukrainian resident companies from other resident companies are not taxable for the recipient. At the same time, dividends distributed by a resident company may be subject to advance corporate tax (ACT). Tax is charged at the standard corporate income tax rate of 18% on dividends that exceed taxable profit for the period for which the dividends are paid. The standard withholding tax rate in Ukraine is 15%. However, a tax treaty between Ukraine and France has established reduced rates for dividends (5%/0%), for interest (10%/2%), and for royalties (10%/0%). Capi-

tal gains are taxable as ordinary business income, as there is no separate capital gains tax in Ukraine. The results (gains or losses) from sales of securities are computed separately from the general financial result. Any gains from the sale of securities at the end of the tax year are included in the general financial result and taxed accordingly. Capital losses from sales of securities can be offset against future gains from sales of securities. As for VAT, in Ukraine it applies at the standard rate of 20% to any domestic supply of goods or services and imports of goods into Ukraine. Sales of securities and corporate rights, royalties, dividends, and interest payments are not subject to VAT. The export of goods in Ukraine is zerorated. Meanwhile, pharmaceutical goods are subject to a reduced rate of 7%.

Local Specifics

Along with these general principles, legal uncertainty remains one of the most significant factors in the tax area and this continues to shape the Ukrainian business landscape. One of the reasons for this uncertainty is the absence of implementing regulations or guidelines that could complement the tax code.

Ukraine’s tax code contains a considerable number of generic prescriptions that can be rather ambiguous in nature and allow for various different interpretations. Under such circumstances, to ensure the maximum level of predictability, it is crucial to rely on hands-on experience and legal precedents.

It is also essential to be aware of the specific instruments French investors can use in Ukraine. The two countries have ratified several important bilateral treaties that aim to facilitate the investment process.

For instance, a 1994 agreement guarantees bilateral investment protection and, among other things, provides investors with the opportunity to resolve any legal disputes in the International Centre for Settlement of Investment Disputes (ICSID). This creates an additional and effective mechanism for investment protection.

www.bunews.com.ua

Do you want to setup your business in Ukraine?

Armenia | Belarus | Germany | Kazakhstan | Poland | Russia | Ukraine | Uzbekistan

We offer you all the back-office services you need: Market Research | Business Setup | Accounting Outsourcing and Reporting | Taxation | IT/ERP Systems | Transfer Pricing | Due Diligence and Internal Audit | Legal Services | Compliance Services | Legal Address | Interim Management | Expert Recruiting and Outstaffing

Yuri Donets General Director +380 / 44 / 490 55 28 kyiv@schneider-group.com schneider-group.com

business set-up in Ukraine Scan this QR-Code to learn more about it!

French Chamber promotes role of Ukrainian women in business The new annual “Created by Women” award seeks to recognize the country’s female business leaders Women remain significantly underrepresented at the top of Ukrainian business, but efforts are underway to address this issue. The Ukrainian parliament is currently considering the introduction of quotas for women on the boards of the country’s stateowned enterprises. Parliament itself suffers from a striking gender imbalance, with just 49 female lawmakers compared to 374 male MPs. If passed, this proposed legislation would bring Ukraine into line with a growing number of Western nations that already enforce quotas to ensure greater gender equality in the management of state-owned companies.

The international community is also active in promoting the leadership role of women in Ukrainian business. The French Chamber of Commerce in Ukraine (CCIFU) is at the forefront of this trend and recently launched the new annual “Created by Women” award to promote female business leaders. Open to all, this new prize was unveiled in autumn 2018, with the inaugural winner announced at a gala evening hosted by the Hilton Hotel in Kyiv in early spring 2019. The first winner of the “Created by Women” prize was Lviv businesswoman Ruslana Rymarska, the 36-year-old CEO of Budmo Zdorovi company and the creator of the Smakuli brand of gluten-free and lactose-free cookies.

Rymarska launched her line of healthy snacks in 2016 after becoming aware of an empty niche in the Ukrainian market due to her nephew’s gluten allergy. She stresses that from the very beginning, her goal was to create something that would appeal both to those with specific allergies and to wider audiences interested in appetizing alternatives to junk food. “This segment is growing quickly across the global and I sensed huge potential demand here in Ukraine,” she says. “My own children love to eat sweets but I wanted to be able to offer them something that was healthier.”

Since launching in 2016, Rymarska’s Smakuli brand has enjoyed rapid growth, with an expanding nationwide distribution 30

About the interviewee: Ruslana Rymarska is the CEO of Budmo Zdorovi and creator of the Smakuli brand. She is the winner of the French Chamber of Commerce in Ukraine’s inaugural “Created by Women” award honoring the country’s female business leaders network across Ukraine already in place including eco-stores and supermarkets.

International export efforts are also underway. The first exports to the United Arab Emirates began last year, with negotiations underway to expand throughout the Gulf region and beyond. Rymarska has become an active participant in Ukrainian international trade missions and identifies Canada and Japan as key export market targets for the coming months. She is also exploring the most effective ways of leveraging the global reach provided by amazon and other e-sales opportunities, with plans to recruit new managers to handle the anticipated growth in international orders.

The inaugural “Created by Women” award attracted dozens of entrants active through-

out the Ukrainian economy. Rymarska says she was surprised by the quality of the contest and believes this underlines the public interest in raising the profile of women in Ukrainian business. “I couldn’t believe it when I learned that I had won ahead of so many high-level professionals,” she recalls.

“This award is an indication that I am on the right track professionally and will inspire me and my business to move further.”

Ultimately, she hopes her success can serve as inspiration for other Ukrainian ladies looking to start their own businesses and build careers. “Seeing is believing,” she reflects. “This award underlines the increasingly prominent role of women in the Ukrainian business sphere. Hopefully it will encourage more success stories.”

france in ukraine

www.bunews.com.ua

31

france in ukraine

Ukraine falls in love with French Spring Annual cultural festival brings contemporary French creativity to audiences across Ukraine

For the past sixteen years, spring in Ukraine has meant French Spring. This annual extravaganza was launched in 2004 and has become one of the most hotly-anticpated events on the Ukrainian cultural calendar, featuring a dizzying array of events ranging from musical concerts and cinema to street arts and contemporary dance. All in all, the French Spring 2019 program features around 100 events that are expected to attract a total of approximately 100,000 visitors.

The French Spring concept was born in the early 2000s as an initiative of the French Embassy and the French Institute in Ukraine working with the Alliances francaises to introduce Ukrainian audiences to the best of contemporary French creativity. It proved an instant hit and quickly become a fixture.

Highlights over the years have included the hugely popular open air performances on St. Sophia Square in the heart of ancient Kyiv, with everything from circus troupes to light shows delighting crowds numbering in the thousands. This year’s French Spring season, which runs until 30 April, also began with an open air spectacular on St. Sophia Square courtesy of the Transe Express contemporary circus company, which staged a modern-day fairytale featuring a giant music box against a backdrop of the St. Sophia cathedral complex.

As well as events throughout April in Kyiv itself, the French Spring 2019 season will also take place in eight other Ukrainian cities. The schedule includes programs in Dnipro, Kharkiv, Lviv, Rivne, Odesa and Zaporizhia thanks to the support of the Alliances francaises,

with further events in Ivano-Frankivsk and Chernivtsi made possible by the backing of local francophone partners.

For the first time, this year’s French Spring is taking place with a key theme: colour. Whether natural or artificial, colours are everywhere in our lives and impact everything from our moods to our perceptions of the world around us. As French professor Michel Pastoureau outlines in his Little Book of Colours, colours “convey taboos and prejudices to which we obey without knowing it. They have hidden meanings that influence our environment, our behaviour, our language, and our imagination. Colours have an eventful history that tells the story of the evolution of mentalities.”

As always, performance art in public spaces will be one of the highlights of the French Spring program. This will include the giant luminous silhouettes of Les Quidams’s “Three Totems” (pictured), which will enchant audiences in Zaporizhia, Dnipro and Kharkiv. Meanwhile, the National Opera of Ukraine will host a gala Franco-Ukrainian performance by star dancers Eleonore Baulac and Francois Alu. Cinema will also be on the agenda, as it is every year during the French Spring season, with a host of preview screenings, retrospectives and short film nights staged across the country. French Spring is only possible thanks to the support of sponsors who provide their backing. The general partners of French Spring 2019 are Credit Agricole Ukraine, the Premier Hotel Resorts Group and TBG - Technobud Group.

About the author: Celine Metel is the Executive Director of the French Institute in Ukraine 32

www.bunews.com.ua

34

French can help Ukrainians to boost engagement with one of the world’s fastest-growing communities It’s the Year of Francophonie in Ukraine. What’s on the agenda?

More than 300 million people across the world speak French and there are 32 countries where French has official status. The Year of French Language is a Ukrainian initiative supported by the embassies of countries that are members of the International Organization of the Francophonie (IOF). In addition to supporting the French language, it also aims to promote cultural and linguistic diversity alongside such values as peace, democracy and human rights, supporting education, training programs, higher education and scientific research, and sustainable development.

There are a number of countries with diplomatic representations in Ukraine that have French as an official language. This includes France along with Belgium, Canada and Switzerland. However, more than 30 embassies are IOF members and have signed up to participate in activities within the framework of the Year of French Language in Ukraine. They are joined by more than 100 Ukrainian organizations including schools, universities, libraries, cultural centers, and NGOs. Participants are engaged in a variety of activities in the fields of culture, literature, the arts, education, sports and the economy. The Year of French Language initiative is all about the promotion of French as an important value for the future in all fields of human endeavor. Some highlights of the program include Days of Francophonie in March, French Spring in April, French GoCamps in June, training for teachers, grants for pupils to attend summer camps in France, and grants for studying in France.

English language skills are seen as increasingly important these days and many Ukrainian parents prioritize learning English. What are the main selling points for studying French?

Due to globalization, the English language is now the first foreign language learnt everywhere, not only in Ukraine. The habit in international organizations is to work directly in English. For example, in Brussels, you work in English. But once you are out of the meeting, everybody speaks French.

The French language is a leading language for social interaction as well as being the language of culture and freedom. It is also important to note that the number of French speakers around the world is increasing. Demographic studies indicate that by 2070, around 700 million people globally will speak and work in French. Ministries of Education have to invest now in the development of the French language in order to be competitive in the future. Learning French is an investment which has nothing to do with competition between languages, and especially with English. Ideally, people should try to learn several languages.

The French language is currently the fourth most popular language internationally in terms of online usage. It is the number three language for business and the second most used language in Europe. The French-speaking world is the sixth largest globally in terms of inhabitants and is expected to climb to fourth position by 2050. Francophonie countries represent 14% of Foreign Direct Investment in the world today, while accounting for an estimated 20% of all commercial transactions. English, by itself, is not enough to allow companies to reach all markets. A survey carried out by the European Commission and featuring 2000 European SMEs calculated that the economic shortfall due to a lack of language skills averaged around EUR 110,000 per company per year. In total, this means the estimated loss for www.bunews.com.ua

Europe is nearly EUR 100 billion per year. For all these reasons, Ukrainian parents and kids should choose French as their first foreign language!

france in ukraine

Year of Francophonie in Ukraine

Recent advertising campaigns for French language studies in Ukraine have featured a number of Ukrainian celebrities who are French speakers. What was the message you were trying to convey?

I really want to thank all of the people who took part for having participated in this advertising campaign. The portraits were shown online on social networks, in the Kyiv metro, and on billboards in Ukraine’s biggest cities. The idea was to promote French language studies by showing that Ukrainians who study and speak French come from different walks of life.

The campaign slogan was ‘Et en plus je parle français!’ (‘And I also speak French!’). The adverts featured celebrities such as Gaitana (pictured, left), Fagot, and Irena Karpa, along with ordinary Ukrainians including Rivne musician Yana, Dnipro doctor Maksim, Kharkiv architect Renata, Odesa fashion model Viktoria, and Lviv student Oleksandra, who is studying French in order to pursue a career as a diplomat.

Which aspects of French grammar tend to give Ukrainian students the most difficulties?

Pronunciation, definitely. But this is the same story with all languages. The use of articles is also challenging for many Ukrainians, especially the issue of when to use or not to use an article. These are the most frequent mistakes that Ukrainian learners make when speaking or writing in French.

Are there many French words in the Ukrainian language?

Specially for the Year of French Language in Ukraine, our colleagues from the French Institute and Alliances françaises have backed a social project designed by “Studio Chervony Sobaka” to present words that look alike in both French and Ukrainian languages, but which actually have different meanings. These include “la parole”, which means “word” in French but “password” in Ukrainian. There are actually a lot of such words.

About the author: Fabrice Peutot is the French Language Attache at the French Embassy in Ukraine

35

france in ukraine

Danone design award for women in fashion industry Vinnytsia’s Olga Raikh wins inaugural award for new design talent courtesy of Danone’s “Activia” brand

According to the Danone Ecosystem Fund, women represent 50% of the world’s population and account for 67% of all work hours, but only receive 10% of global income and own just 1% of all property. At the corporate level, Danone backs the UN’s gender solidarity program through policies of non-discrimination and social initiatives. Through its brand “Activia”, Danone was also among the corporate supporters of the “Created by Women” award, launched this year in Ukraine by the country’s French Chamber of Commerce (CCIFU).

Within the framework of the “Created by Women” award, “Activia” organized a contest for young designers in order to promote women’s entrepreneurship and encourage the development of the Ukrainian fashion industry. The contest attracted 70 entrants from across the country who competed for a cash prize of UAH 100,000 to support their business activities. The winner was novice designer Olga Raikh from Vinnytsia. Olga has been designing her own clothes since childhood, initially for her dolls and later for herself. She now plans to use her prize money to invest in the opening of her own design studio in Kyiv.

The General Director of Danone in Ukraine, Nathalie Alquier, expressed her support for the initiative and spoke of the company’s ongoing commitment to promoting gender equality. “We are sincerely happy to see that our brand “Activia” has helped to fulfill the dreams of a very talented young Ukrainian designer. Danone will continue to support women’s entrepreneurship and gender non-discrimination in Ukraine.”

36

Nathalie Alquier, General Director of Danone in Ukraine

www.bunews.com.ua

Authentic French dining

in the Ukrainian capital Citronelle restaurant is a homage to French culinary traditions with a hint of contemporary Kyiv style

Kyiv is currently enjoying something of a restaurant renaissance, with the Ukrainian capital receiving rave reviews for an ever-expanding range of innovative and enticing dining out options. Against this vibrant background of funky new venues, Citronelle stands out for its timeless charm. Although less than a decade old, this intimate and elegant French cuisine restaurant is already a certified Kyiv classic, and it intends to stay that way. “Continuity is important for us,” explains Citronelle founder Mariia Didkovska. “We aim to embrace the same basic dining principles for years to come, never changing our concept but working to develop and improve it instead. From the very beginning, I wanted to create a restaurant where my children would be able to visit in the coming decades and have the same dining experience I did when we first opened seven years ago.”

Since its arrival on the Kyiv restaurant scene in 2011, Citronelle has always had the deceptively simple goal of introducing Ukrainian audiences to authentic French cuisine. The restaurant works closely with French chefs and restaurant industry 38

professionals, who come to Kyiv to offer guidance on different aspects of the French culinary arts. For example, the venue recently welcomed a leading herb specialist from Provence in southern France who shared his expertise and advised on new menu additions. Citronelle also regularly hosts French Michelin star chefs who hold master classes at the restaurant and organize sp ecial evenings for guests featuring their latest creations. These Michelin events are so popular that the venue often begins receiving bookings up to a year in advance.

All this takes places in a cozy environment designed to resemble a members club or an upscale Parisian apartment, with the interior intended to amplify the dining experience. “French cuisine forms the basis of all modern restaurant culture,” explains Didkovska. “Put simply, it is art.”

Citronelle head chef Igor Kramarenko shares this passion for French culinary craft. Kramarenko, who has previously spent time working as a chef in Scandinavia, speaks with genuine enthusiasm about the intricacies of French cooking. “French cuisine is timeless. It is my life,” he shares. As head

chef, Kramarenko oversees a menu that undergoes regular seasonal changes four times per year, with a balance between imported French ingredients and locally sourced produce. Regardless of the seasons, his dishes take their inspiration from traditional French recipes while often incorporating a contemporary twist based on the chef’s vision. “We respect the seasons and we respect tradition,” explains Kramarenko. “The most important aspect of French dishes is the technique.

This is what makes French cuisine the mother of all modern European cuisine.”

Citronelle

23 Bohdan Khmelnitskiy Street Tel.: 067-2171420 Tel.: 044-4993936 Opening hours: Monday-Friday: 08:00 until last customer Saturday-Sunday: 10:00 until last customer

www.bunews.com.ua

france in ukraine

About the interviewees: Mariia Didkovska is the founder of Citronelle.

Igor Kramarenko is head chef of Citronelle.

www.bunews.com.ua

39

Daughter of Kyiv, Mother of France Eleventh century French Queen Anne de Kyiv has emerged as a central figure in modern Ukraine’s efforts to reclaim the country’s past from Russia and underline the Ukrainian role in European history

40

france in ukraine

www.bunews.com.ua

41

42

Anne de Kyiv is a symbol of Ukraine’s ancient ties to France and often overlooked role in European history

The ties between France and Ukraine are ancient and deep. In 1051, Anne de Kyiv, the youngest daughter of the renowned Kyiv Prince Yaroslav the Wise and his wife Ingegerd, daughter of King Olaf of Sweden, married French King Henry I in Reims Cathedral. Queen Anne was the mother of King Philippe I and three other royal offspring. After the death of King Henry I in 1060, Anne ruled France as co-regent until her son came of age. All subsequent French monarchs were her progeny.

Anne de Kyiv was exceptionally highly educated by the standards of her era. She established schools, hospitals and abbeys throughout France. In 1065, she founded the Abbey of St. Vincent in the beautiful town of Senlis, forty kilometers from Paris.

Established in 987, Senlis is a royal French town that traces its roots to the second century during the days of the Roman Empire. In the eleventh century, it had about the same population as Paris, or just under 3000 inhabitants. For Anne, this must have seemed very small and provincial, because her hometown Kyiv at that time had a population of about 30,000 and was one of the most splendid cities in the world. The grade school in this haunting medieval town of Senlis is named in honor of Queen Anne, and there is a statue of the Kyivan princess in front of the Abbey.

Anne’s geopolitical significance lives on.

At a joint press conference with Ukrainian President Petro Poroshenko in Paris in June 2017, French President Emmanuel Macron commented: “There are very long-standing relationships between our two countries, very deep-rooted history, and we have spent some time paying tribute to Anna de Kyiv today. You have shown how important this history is, how deep-rooted our old relationships are.”

Anne is an important figure in Ukrainian history and a symbol of the country’s ancient ties to the rest of Europe. In 2013, Ukrainians from around the world came together to purchase a medieval church in Senlis. Generously raising significant sums of money, they established the Ukrainian Greek Catholic www.bunews.com.ua

About the author: Kateryna Yushchenko is the former First Lady of Ukraine who has played an active role in many community, museum and historical projects including efforts to support the Anne de Kyiv Center in Senlis Church of Borys and Hlib and the Anne de Kyiv Center. The church takes its name from Queen Anne’s fraternal uncles, the martyrs Borys and Hlib, who were the first Christian saints canonized in Kyiv Rus. They were killed in 1015 by their elder brother Prince Svyatopolk I, during a dynastic struggle for the throne following the death of their father, Volodymyr the Great.

The Anne de Kyiv Center is intended not only to be a spiritual meeting place and a museum telling Anne de Kyiv’s story, but also a venue to highlight Ukrainian culture and a forum to promote dialogue on the future of Europe. The Anne de Kyiv Center unites disciplines such as history, literature, philosophy, art, design, music and fashion in an effort to portray the diversity and richness of Ukrainian culture. It hosts frequent art shows, lectures and concerts, bringing Ukraine’s finest artists, sculptors, writers, poets, musicians and singers to Senlis. The Center also aims to serve as a hub where the Ukrainian experience can contribute to a broader dialogue on European values. It builds ties with European

leaders and thinkers, and provides a platform for research into important European and global policy issues. In pursuit of this objective, the Center organizes scholarly roundtables, creative residencies, conferences and publications.

The annual Days of Anna Yaroslavna, held each May in Senlis, serve as a focal point for French-Ukrainian relations. Guests from around the world attend religious services, art exhibits and musical performances, while sampling Ukrainian and French cuisine. Legend has it that Queen Anne herself once hosted similar outdoor festivals for her subjects. This year’s Anne Yaroslavna Days are on 11-12 May in Senlis and Reims.

Meanwhile, friends of the Center organize an annual fundraising banquet every June at St. Sophia Cathedral in Kyiv to support the renovation of the church and the Center’s various cultural and educational programs. This tradition continues, with the 2019 banquet scheduled to take place on 25 June.

In 2015, French historian and author Philippe Delorme published a book about Anne de Kyiv. He spent several years researching documents about her in libraries and historical archives. In an interview with a Ukrainian journalist, he said that he first became interested in Anne after Ukraine’s 2004 Orange Revolution, which thrust the country into the international spotlight after decades in the Soviet shadows. “We French know very little about Ukraine, about your culture and your past. That is why it was interesting for me to research the life of the princess and queen who unites our two countries,” he explained.

Delorme’s comments reflect the enduring appeal of Anne and her ability to spark a dialogue between cultures. Almost one thousand years since her diplomatic marriage, Anne is still building bridges. As Princess of Kyiv and Queen of France, she serves as a symbol of European unity. Meanwhile, the Center dedicated to her is a meeting place to share culture, art and history, and to initiate discussion on issues critical to Ukraine, Europe and the world.

france in ukraine

Ukrainian Queen of France

43

Princess vs Putin How a medieval French Queen from Kyiv became a combatant in Russia’s hybrid war against Ukraine It is no surprise to see history at the heart of the Kremlin’s hybrid war against Ukraine. For centuries, Russian and Soviet authorities sought to rewrite history in order to assert their dominance over the non-Russian lands of the empire, while at the same time eradicating any potential ties to a separate and competing past. This process of retrospective russification has always been a prominent feature of Russia’s relations with Ukraine, which successive rulers in St. Petersburg and Moscow traditionally regarded as a core part of Russia’s historical heartlands. At the center of this historical narrative is the belief that Kyiv is the “mother of Russian cities”, with the medieval Kyiv Rus state the direct ancestor of modern Russia.

Ukraine has always maintained its own claim to the Kyiv Rus inheritance. This has placed post-Soviet Ukraine on a collision course with its Russian rival. The dispute has become particularly fierce in recent years, as Ukraine has sought to distance itself from the so-called “Russian World” and assert its independence.

As the current hybrid conflict between the two countries has unfolded, the legacy of the Kyiv Rus has become one of many active fronts. In 2016, the Russian authorities unveiled a huge statue of Kyiv Rus ruler Volodymyr the Great in Moscow, a city not founded until hundreds of years after Volodymyr’s reign.

Continuing the theme, Russian President Vladimir Putin took the opportunity of a 2017 press conference with French President Emmanuel Macron to stake his claim to Kyiv Rus princess Anne de Kyiv, who entered history as Queen of France in the eleventh century following her marriage to King Henry I. Anne, Putin stated, was a Russian princess.

Putin’s comments caused uproar in Ukraine and sparked a social media firefight that attracted the attention of the international media. Ukrainian President Petro Poroshenko led the criticism, accusing Putin of attempting to steal Ukrainian history, while leading Russian politicians also entered the fray. The incident generated renewed interest in the story of Anne de Kyiv, but this former Queen of France has already long been an important figure in Ukraine’s efforts to restore historical justice. For many years, the Ukrainian community in France has been working to preserve Anne’s legacy as someone who symbolizes Ukraine’s European heritage and the ancient ties between Ukraine and France. These efforts have focused on Senlis, a small town 40 kilometers from Paris with a royal pedigree stretching back a thousand years. Senlis is in many ways the center of Ukrainian cultural life in France. It was here that Anne de Kyiv lived for much of her time as Queen and later as Regent of France, establishing an abbey in the town and contributing to its eleventh century expansion. Her statue now stands in Senlis, with many regarding her as one of the town’s most prominent historical personalities.

From a Ukrainian perspective, Anne serves as a link connecting the country to ancient European history. Her reputation as a learned and educated ruler also underlines the relative sophistication of Kyiv Rus civilization at a time when many European monarchs (including her French husband Henry I) were illiterate. In order to emphasize Anne’s Ukrainian heritage and contributions to France, the Ukrainian community has established the Anne de Kyiv Center in Senlis. One of the principle missions of the Center is to serve as a platform for dia-

logue between today’s Ukraine and the rest of Europe. “We have always been and remain an integral part of Europe. This is best demonstrated by our shared history and culture,” says Anna Canter, one of the co-founders of the Center.

Thanks to donations from Ukrainians around the world, the Center succeeded in raising enough money to secure a small church in Senlis close to the town’s St. Vincent Abbey, which Queen Anne founded in 1065. This has allowed the Center to expand its presence on the French cultural landscape and introduce French audiences to Ukrainian culture through a diverse range of events including art exhibitions, historical discussions, festivals and cinema screenings. The team behind the Anne de Kyiv Center is now looking to broaden the struggle for Ukraine’s past, present and future. They continue to seek funding both in Ukraine and internationally, with more than USD 20,000 collected via donations in 2018. These fundraising efforts should allow the Center to expand its reach. With Ukraine at the cutting edge of the hybrid warfare trends shaping the modern world, the country’s experiences have never been more relevant to wider international audiences. “The Anne de Kyiv Center has every opportunity to become a powerful and independent outpost of Ukrainian cultural diplomacy in France,” comments Natalia Popovych, the co-founder of the Ukraine Crisis Media Center and a longstanding supporter of the project.

Ultimately, Anne’s greatest legacy could end up being as the poster girl for the reintegration of Ukraine into the European family of nations. “One of the most important objectives of the entire project is to reconnect Ukraine with the rest of Europe,” concludes Anne de Kyiv Center co-founder Victoria Dellinger.

About the author: Nguyen Phan Bao Linh is a Project Manager at Republic. Strategic Communications

44

france in ukraine The Anne de Kyiv Center in the French town of Senlis honors the legacy of eleventh century Ukrainian Princess and French Queen Anne de Kyiv, while also celebrating Ukraine’s ancient ties to the rest of Europe www.bunews.com.ua

45

Expert view GREEN LIGHT FOR AUTHORIZED ECONOMIC OPERATORS Recently, Ukrainian Parliament has adopted in the first reading the first Draft Law intended to approach the targets in the customs domain of the EU-Ukraine Association Agreement. In particular, this Draft Law would introduce a number of amendments to the customs legislation, including the concept of Authorized Economic Operator (AEO).

It is a major and long awaited legal regulation. Inter alia, it will provide prerequisites for the recognition of the AEO status and ensure facilitation of customs formalities for highly credible companies. AEO shall be introduced for safety and security authorizations, as well as for customs simplifications and a combination of the two. According to the procedure, the Draft Law is now under consideration of the Parliamentary Committee on Tax and Customs Policy.

Generally, the business community welcomes the Draft Law on AEO. At the same time, its certain provisions still need further refinement.

For example, in 2012 Ukraine’s Customs Code introduced an opportunity of lodging an advance customs declaration prior to actual importation of goods. If the customs authority takes a decision to release the goods, customs clearance is completed shortly after the goods cross Ukrainian border. This instrument had a major positive impact on supply chains of law-abiding businesses – both from cost efficiency and delivery time perspectives.

At the same time, according to the proposed Draft Law, in most cases this option would be available for AEOs only. If the MPs accept this restriction, this may significantly disrupt the established logistic chains of international business and negatively affect the ease of cross-border trade.

The Draft Law also suggests that during the transitional period

Robert Zeldi Head of the Chamber Task Force on AEO Attorney-at-Law EY in Ukraine (three years after the new law becomes effective), only a limited number of AEO certificates сan be granted to qualifying companies which should be “manufacturers” only. These limitations significantly reduce the number of companies, which may qualify for AEO status. It appears that the above restriction is aimed at allowing customs to gain experience in assessing the compliance of the AEO applicants. If so, instead it would be more consistent to select the candidates for AEO among those entities which already have sister companies certified as AEO in the EU countries.

The upcoming parliamentary elections leave no more than half a year for finalizing the Draft Law. If the Parliament fails to approve the AEO Draft Law before October 2019, this would significantly delay introduction of the AEO institute.

Of course, approval of the AEO Draft Law is not the end of the story. Much remains to be done in terms of secondary legislation, which is not drafted yet.

Also, it is worth noting that one of the main aims of AEO implementation is mutual recognition of AEOs with Ukraine’s major trading partners – in particular, the European Union. Though a Mutual Recognition Agreement is possible only after successful implementation of the AEO, it is important to keep in mind that this should be the ultimate goal of the whole process.

The AEO concept is not about facilitations for individual compliant businesses. Rather, the AEO aims to create a secure and compliant global supply chain – this is what Ukrainian authorities must strive for. The American Chamber of Commerce in Ukraine pays special attention to implementation of AEO legislation. This is one of the Chamber Customs Committee policy priorities for several years. Therefore, the Chamber has already established a dedicated Task Force to work on implementation of the AEO with the stakeholders.

THE CHAMBER CUSTOMS COMMITTEE The Chamber Customs Committee has been uniting customs experts from all Member Companies since 2001. The Committee’s mission is to promote the development of the customs affairs, to exchange best practices in the application of customs legislation, and to facilitate the mechanisms for simplifying international trade.

The Committee’s experts have been participating in the improvement of customs regulation in Ukraine for seventeen years. In particular, we were engaged in the development of the new Customs Code of Ukraine of 2012, supported the launch of the “Single Win-

dow” system, and addressed the government authorities with the business community’s proposals regarding the amendments to the customs legislation.

Oksana Shvets Chamber Policy Officer (Tax & Customs Issues) oshvets@chamber.ua

B2G Dialogue PANEL DISCUSSION “MACROECONOMIC OUTLOOK & FORECAST FOR UKRAINE” Macroeconomic outlook & forecast for Ukraine right before elections, inflation and foreign currency exchange indexes’ dynamics, investment trends – acute and timely update for Chamber Members by leading stakeholders of Ukraine’s financial sector: Satu Kahkonen, Country Director for Belarus, Moldova and Ukraine, The World Bank; Goesta Ljungman, Resident Representative for Ukraine, International Monetary Fund; Oksana Markarova, Minister of Finance; Yakiv Smolii, Governor of the National Bank of Ukraine.

INTERNATIONAL CONFERENCE “DIGITAL BANKING – 2019” The Chamber jointly with International Financial Club “Bankir” organized International Conference “Digital Banking – 2019”. During the Conference participants discussed Customer relationship management (CRM), Enterprise resource planning (ERP), Business process management (BPM) – legal support, regulation of banking and non-banking financial services markets, insurance & FinTech, compliance and risks.

SEEDS FORUM 2019 Seeds Forum 2019 gathered Chamber Members and wider business community as well as government authorities to discuss trends and perspectives of seeds industry development in the country. The Chamber organized the event jointly with Association “Ukrainian Agribusiness Club”, Association “Ukrainian Seed Partnership”, Seed Association of Ukraine with support from the Ministry of Agrarian Policy and Food.

ROUND TABLE “AVIATION INDUSTRY DEVELOPMENT: CURRENT STATUS, CHALLENGES, PERSPECTIVES” Meeting’s participants discussed key challenges related to the development and operation of the aviation industry in Ukraine through three main benchmarks: regulatory, legal and business. In focus: current status of the aviation industry and possible ways of resolving its challenging issues.

B2G Dialogue INFRASTRUCTURE COMMITTEE MEETING WITH REPRESENTATIVES OF THE MINISTRY OF INFRASTRUCTURE, SEA PORTS ADMINISTRATION & MARITIME SERVICE Meeting’s participants discussed the necessity of distribution of vice for Marine and River Transport. Amending legislative acts on powers between captain of the port, respective service within State distribution of functions in maritime safety is among the key interEnterprise “Administration of Sea Ports of Ukraine” and State Serests of the Chamber Infrastructure Committee.

AGRICULTURAL AND FOOD & BEVERAGE COMMITTEES’ MEETINGS WITH VOLODYMYR LAPA, HEAD OF THE STATE SERVICE FOR FOOD SAFETY AND CONSUMER PROTECTION Current issues in phytosanitary sphere and improvement of the procedure for issuance of warehouse documents for grains – main topics of the Chamber Agricultural Committee meeting with Volodymyr Lapa. Members of the Chamber Food & Beverage Committee also discussed with Volodymyr Lapa the key provisions of the Draft Law amending legislation on food safety (package law) and risk-oriented approach in conducting state control at the border.

MEETING WITH OLEKSANDR DANCHENKO, HEAD OF THE VERKHOVNA RADA OF UKRAINE COMMITTEE ON INFORMATIZATION AND COMMUNICATION AmCham Ukraine Members met with Oleksandr Danchenko to discuss Draft Law amending the Tax Code in the context of creative industries’ development in Ukraine, which, in particular, implies separation of IT entrepreneurs into a separate group of single taxpayers.

B2G Dialogue DIPLOMATIC INSIDERS CLUB DISCUSSION “2019 BUSINESS CLIMATE: EVE OF ELECTIONS” During the event the Chamber 2019 Board of Directors Members presented investment opportunities and challenges on the eve of elections, key indicators of macroeconomic situation, international donors’ view on the current economic situation in Ukraine and its further perspectives.

MEETING WITH TORSTEN WOELLERT, TEAM LEADER FOR ENERGY & ENVIRONMENT, SUPPORT GROUP FOR UKRAINE, EUROPEAN COMMISSION Chamber Members discussed the progress of implementation of energy reforms in Ukraine, inter alia status of the Third Energy Package implementation in Ukraine, current activities towards improvement of upstream sector, progress in electricity market reforms, including electricity production from alternative energy sources as well as cooperation of business community and the EU Delegation to Ukraine.

KICK-OFF MEETING OF RETAIL & E-COMMERCE COMMITTEE AmCham Ukraine launched new policy platform – Retail & E-Commerce Committee. The Committee brings together interested Chamber Member Companies for discussion of key policy initiatives in retail sphere as well as current challenges and opportunities in related e-commerce.

MEETING WITH IVANNA KLYMPUSH-TSINTSADZE, DEPUTY PRIME MINISTER FOR EUROPEAN AND EURO-ATLANTIC INTEGRATION During the meeting participants discussed the latest amendments to Constitution confirming Ukraine’s path towards EU and NATO and further steps of the Government on its implementation, current issues of country’s foreign policy, and the steps for ensuring positive image of Ukraine on international arena.

Photo by Yelyzaveta Serhiienko/ Press office NBU

B2G Dialogue

MEETING WITH OLEG CHURIY, DEPUTY GOVERNOR OF THE NATIONAL BANK OF UKRAINE AmCham Ukraine Banking & Financial Services Committee Members met with Oleg Churiy to discuss first outcomes of the Law “On Currency and Currency Operations” implementation, with a focus on its effect on currency regulation in Ukraine.

MEETING WITH OLGA TROFIMTSEVA, NEW ACTING MINISTER OF AGRARIAN POLICY AND FOOD Priorities for 2019 as well as acute policy issues of AmCham Ukraine Members in seeds, agricultural and food & beverage spheres – a very productive meeting with Olga Trofimtseva, new Acting Minister of Agrarian Policy and Food.

MEETING WITH SERGIY VERLANOV, DEPUTY MINISTER OF FINANCE Participants of the Meeting discussed the peculiarities of the State Fiscal Service’s reform, recent changes in tax and customs legislation, plans of the Ministry of Finance for this year, and other important for business community issues within the tax and customs spheres.

interview

Turkish Airlines continues

Ukraine flight growth Turkey’s flagship airline is Ukraine’s largest international carrier serving six Ukrainian destinations

About the interviewee: Dincer Sayici is General Manager of Turkish Airlines in Kyiv Turkish Airlines passenger numbers on Ukraine services increased by more than a quarter in 2018. Which routes saw the most growth?

Turkish Airlines is today one of the fastest growing airlines in the world. Flying to more than 300 cities through 124 countries, the airline continues to serve as a bridge between countries around the globe by expanding its network. Ukraine plays a very important role in our flight network.

In 2018, Turkish Airlines carried more than 800,000 passengers to and from Ukraine, which is 28% more than the corresponding figure for 2017. In terms of specific routes, the number of passengers from Kyiv increased by 14% with an average load factor on Kyiv flights of 71%.

56

What are the most popular global destinations for Ukrainian passengers who use Turkish Airlines to transit internationally?

The number of international transit passengers from Ukraine increased by 25% in 2018, with international transit volumes from Kyiv in particular increasing by 14%.

The most popular transit destinations from Kyiv were Maldives, Miami, Antalya, Zanzibar, Ashgabat, Phuket, Seychelles, Hanoi, New York, Guangzhou, Barcelona and Beijing.

In addition to services from the Ukrainian capital, Turkish Airlines also currently flies from five different Ukrainian regional cities (Kharkiv, Kherson, Zaporizhia,

Odesa and Lviv). How did these regional services develop in 2018 and where do you see the most room for further regional expansion?

Turkish Airlines is Ukraine’s number one international carrier in terms of destinations. As you have already mentioned, we currently fly to six Ukrainian cities. We are also adding new flights. In 2018, the airline increased our flight frequencies to Lviv and Odesa to 10 and 21 flights per week respectively. We have also significantly expanded our services to the Ukrainian capital. As of November 2018, flight frequencies to Kyiv increased from 16 to 21. In February 2019, we added a further three additional flights between Istanbul and Kyiv. As a result of these developments, the current total number of Turkish Airlines flights between Istanbul and Kyiv is 24 per week, and the overall number of flights to Ukraine is more than 80 flights per week. We are also pleased to open the new Bodrum-Kyiv route to meet passenger demand. Starting from 13 April 2019, we will operate flights every Saturday, once a week.

What does the recent opening of Istanbul Airport mean for the development of Turkish Airlines services from Ukraine?

Istanbul Airport, which opened in October 2018, is a massive project and undoubtedly an impressive achievement for our brand. It is one of the world’s biggest airports with an anticipated capacity to handle 200 million passengers per year once all building phases are complete. As an airline, the opening of Istanbul Airport will give us the possibility to expand our worldwide activities further. İn 2019, Turkish Airlines plans to launch new destinations such as Usak in Turkey, Bali in Indonesia, Marrakech in Morocco, Sharjah in the UAE, Luxor in Egypt, Rovaniemi in Finland, Mexico City and Cancun in Mexico, Newark in the US, Palermo in Italy, and Port Sudan in Sudan.

www.bunews.com.ua

WEST UKRAINE’S LIFESTYLE GUIDE №122/April 2019

MEET SOFIA STEFANOVSK A SMART, STRONG & BEAUTIFUL

TIME TO CELEBRATE!

HAPPY EASTER AND SPECTACULAR CITY DAY!

The best of Lviv since 2008 WANT TO KNOW MORE? FOLLOW US ON: www.lvivtoday.com.ua www.facebook.com/LvivToday

Ukraine has the world’s fourth cheapest mobile internet

business news

Ukraine has the fourth cheapest mobile internet access in the world according to new research conducted by Cable.co.uk in October and November 2018. The global survey featured 6,313 mobile data plans in 230 countries and assessed the average cost of one gigabyte (1GB) in each country. With an average price of USD 0.51 for 1GB, Ukraine took the number four position globally behind first-placed India, with Kyrgyzstan and Kazakhstan in second and third positions respectively. The survey noted: “Ukraine is a near-triopoly, with three providers (Lifecell, Vodafone Ukraine and Kyivstar) fighting over a saturated market. Like its broadband deals, mobile data in Ukraine is both cheap and plentiful.”

Kharkiv and Lviv continue to lead Ukraine’s regional air travel boom

Kharkiv International Airport reported a 42% year-on-year jump in passenger numbers in March 2019, with a total of 83,400 people using the airport during the period. This marks a sharp rise in growth from the 23% monthly increase registered in February 2019. Meanwhile, Lviv International Airport remains the country’s busiest regional air hub. Lviv saw monthly passenger traffic increase to 134,000 in March, representing a 59.2% year-on-year rise. This growth places Lviv firmly on track to meet the airport’s ambitious annual target for 2019 of 2.2 million passengers, or 38% more than the total in 2018.

French sports retail giant Decathlon arrives in Ukraine

UBER GREEN SERVICE ARRIVES IN UKRAINE Global taxi industry giant Uber launched its eco-friendly Uber Green service in Kyiv on 21 March, making the Ukrainian capital only the second city in Central and Eastern Europe alongside Bucharest to offer the service. Uber Green uses electric cars, with an initial Kyiv fleet of 200 vehicles including Nissan Leaf, Renault Zoe, Hyundai Ioniq, Tesla S, BMW i3, Chev58

rolet Volt, and Chevrolet Bolt models. It operates using the same tariff scheme as Uber Select, with a minimum fare of UAH 55. Uber has expanded rapidly in Ukraine since first entering the market in 2016. The company opened a regional head office in Kyiv the following year and launched the Uber Eats food delivery service early in 2019.

France’s Decathlon opened its first Ukrainian store in late March, becoming the latest international retail giant to enter the growing Ukrainian consumer goods market. The new 2,500 square meter Decathlon store is located in Kyiv’s Petrivka Retail Park. Decathlon, which is recognized as the world’s largest sporting goods retailer, has over 1,400 stores in 46 countries. The new Kyiv outlet will stock a number of “Made in Ukraine” goods. Since 2012, Decathlon has maintained four manufacturing facilities in Ukraine producing a range of items including trekking footwear, hockey sticks, skis and football goalkeeping gloves. Decathlon officials confirmed that they are looking to open a second Kyiv outlet in 2019 followed by additional stores in the Ukrainian capital during 2020. The company has identified Odesa and Lviv as the key targets for regional expansion in 2021. While Decathlon stores are generally around 2000-3000 square meters in size, the company is also considering the option testing smaller formats in Ukraine.

real estate

Kyiv in Cannes

The Ukrainian capital is working to develop its brand presence among international investors

About the author: Anna Nestulia (right) is the founder of Invest in Projects, a B2B property investment agency. She was an organizing partner of the Kyiv delegation at MIPIM 2019 in Cannes As post-Euromaidan Ukraine turns away from the old Soviet comfort zone and looks to broaden its global economic horizons, the country’s participation in major international exhibitions and industry forums is taking on new significance. The Ukrainian capital city is leading by example and recently brought an impressive del60

egation to the annual MIPIM event in Cannes, which is billed as the world’s leading property exhibition.

This was the fifteenth time Kyiv had taken part in MIPIM, with a mix of city officials and property professionals creating a prominent presence that included a large presentation area and a dedi- : www.bunews.com.ua

62

ment gateway to the whole of Ukraine. Key messages in Cannes included Kyiv’s considerable smart city ambitions and the Ukrainian capital’s status as the economic engine of Europe’s last great frontier market.

Kyiv Mayor Vitali Klitschko has a central role to play in these promotional efforts, with the former heavyweight boxing champion serving as the undisputed brand ambassador of the Ukrainian capital. He was on hand in Cannes at MIPIM 2019, where his international celebrity status and towering physical presence helped generate considerable added buzz. While on the French Riviera, Klitschko also received several awards from the Financial Times Group’s fDi Intelligence division on behalf of the city for Kyiv’s efforts to improve the investment climate and reduce red tape.

DLA Piper Ukraine’s Natalia Kochergina, who joined the Kyiv MIPIM delegation for the first time in 2016, believes the role of Mayor Klitschko and his team is a crucial factor in the city’s overall participation, which she assessed as visibly more professional this year than on previous occasions. This investment appears to be producing results. Kochergina noted evidence of growing interest in Ukraine among event participants at MIPIM 2019, citing numerous examples of international hospitality brands looking to learn more about hotel sector opportunities in Kyiv itself and in other Ukrainian cities. “This is a very welcome trend because it suggests that international property market players are now increasingly seeing Ukraine as a place where they can invest money and benefit from an attractive economic environment,” she commented.

Kyiv’s promotional efforts pit it against dozens of competing cities across the globe that can also offer the same kind of emerging market margins no longer available in more developed economies. The Ukrainian capital enjoys a number of specific advantages including its location at the geographical crossroads between Europe, Asia and the Middle East. Kyiv has also witnessed strong population growth in recent years, driving demand for new real estate projects and creating a fertile environment for the smart city innovations that look set to shape the expanding urban spaces of the future.

Toronto-Kyiv complex president and managing partner Yuriy Kry-

vosheya was one of a number of Ukrainian property industry executives who travelled to Cannes as part of the Kyiv delegation. He is bullish about Kyiv’s real estate sector’s investment potential, arguing that the city passed an important stress test during the crisis years of 2014-15 and has since moved from survival mode to growth mode. This progress can now help the Ukrainian capital race forward in its development and move ahead of its emerging market rivals, but this will require significant initiative from city officials and the private sector alike. “Kyiv is one of the largest metropolises in Europe today,” he notes. “It clearly has the potential to attract major international property companies, but whether this happens or not will depend on what we do to make it happen.”

Events such as the annual MIPIM extravaganza in the south of France offer a good opportunity for Kyiv officials and property industry professionals to showcase the city and gauge levels of international interest. Ukraine has often been accused of neglecting its global branding, leading to a situation where the country as a whole continues to suffer from a low international profile. There are signs that this is gradually changing. Many members of the Kyiv delegation at MIPIM 2019 reported encountering higher levels of interest and greater awareness of the contemporary Ukrainian context, suggesting that years of obscurity are finally beginning to give way to greater clarity regarding the investment opportunities and economic challenges Ukraine currently represents.

Headline-grabbing international events hosted recently in Kyiv such as the 2017 Eurovision Song Contest and 2018 UEFA Champions League Final have helped improve awareness by introducing multimillion global audiences to the Ukrainian capital. These showcases go a long way towards dispelling negative stereotypes of Soviet inertia and countering exaggerated security fears regarding the ongoing undeclared war with Russia in the far east of the country. Nevertheless, Ukrainians cannot simply wait for the world to come to them.

On the contrary, today’s Ukraine needs to make up for lost time by engaging in aggressive outreach efforts at every opportunity. This makes initiatives like the Kyiv presence at MIPIM strategically crucial, and it transforms every Kyiv executive and property professional into an unofficial ambassador for the country.

real estate

: cated investment conference focusing on Kyiv’s role as an invest-

“Key messages in Cannes included Kyiv’s smart city ambitions and the Ukrainian capital’s status as the economic engine of Europe’s last great frontier market”

www.bunews.com.ua

63

Kyiv Real Estate Investment Guide

Top ten pointers to consider for anyone looking to enter the exciting but challenging real estate market in the Ukrainian capital city Despite the uncertainties typical for an election year in an emerging market, more and more foreign investors are seriously considering investing in Ukraine in 2019. Kyiv’s property market offers attractive returns, but simply copying and pasting a strategy that works well in a more developed real estate market is not necessarily a recipe for success. To succeed here, foreign buyers will need to shed their stereotypes about Ukraine along with any strong attachments to approaches they may have used in other countries. This article will discuss ten key differences that make Kyiv’s real estate market stand out from other European markets. By recognizing the specifics of the Kyiv market, property investors will be able to maximize their chances of success.

1. Higher Investment Returns

When compared with the low single-digit returns that are the norm in more mature and developed real estate markets, today it’s possible for property investors in Kyiv to achieve gross annual yields of 10-14% when buying investment-grade properties in the city center. Unlike the booming (and perhaps overheated) real estate markets of the US and parts of Western Europe, Kyiv is still currently emerging from a major “down cycle”. Most recently, the Kyiv real estate market suffered the impact of the post-Euromaidan Revolution financial crisis of 2014-15. Prior to that, it was still recovering from the 2008 Global Financial Crisis, which hit Ukraine particularly hard. So in addition to attractive current yields, there’s also much room to grow before prices return to levels seen prior to Euromaidan or the boom years of the mid-2000s.

2. Mortgage-Free Market

Many Western investors, especially Americans, cannot imagine a real estate market without credit, but that’s exactly what you’ll find in Ukraine in 2019. While technically you can find mortgages here, the interest rates on them are typically 20% or above and the terms of these loans make them impractical for most homebuyers. Nor will you find seller financing in Ukraine. You can find some developer financing, but it tends to be shortterm and is not offered on investment-grade properties. To pave the way for the return of mortgages, the National Bank of Ukraine has used tight monetary policy to tame inflation (interest rates are currently among the highest in Europe). Some bankers in Ukraine believe that mortgage financing could gradually return to the market in late 2019 or early 2020 in the form of home equity loans for existing bank clients. Nevertheless, widespread availability of mortgages for the broader market and for foreign investors is likely to be much further away. For the short- to mediumterm, investors should plan to pay “cash” and fund the entire amount of their property investment at the time of purchase.

64

3. Renovations Required Whether you’re going to buy on Kyiv’s primary or secondary market, you should plan to buy with the expectation that you’ll need to renovate your investment property. Currently, apartments in old historic buildings downtown usually offer the best yields and potential for appreciation (just remember to do your due diligence). Such properties are “fixer uppers” and are often shunned by local buyers, hence their attractive purchase prices. Kyiv developers almost always commission new buildings with unrenovated shell and core apartments. Local buyers then often spend the next two to three years (or more) finishing renovation work in these new buildings, creating lots of noise for their neighbors. This makes such properties unattractive for rental tenants.

With rare exceptions, newly renovated apartments in Kyiv usually aren’t investment-grade for a couple reasons: they either offer lower yields due to high sale prices, or the renovation style and quality are not suitable for rental clients. Even if you can overcome the language barrier and have some understanding of cultural differences, renovating an apartment in Ukraine can be a special challenge for foreign investors. Finding a reliable builder-contractor anywhere in the world can be difficult. Ukraine’s fragmented and inefficient building materials and service provider markets can create unwanted headaches and hassles for foreign buyers. Instead of taking on a challenging DIY renovation project yourself, investors should strongly consider finding a trusted provider for the renovation of their property.

4. High Rates of Home Ownership

The homeownership rate in Ukraine is over 90%, which is much higher than the EU average (about 69%) and the US (about 65%). Culturally, in Ukraine there is even a stigma against renting. Many locals will gladly exchange shorter commute times for longer journeys in order to own their home instead of renting. Unlike big cities in developed markets, professionally-managed high rise buildings with rental apartments are relatively rare in Kyiv. So if you’re a property investor who’s interested in long-term rentals, you should plan to target the niche market of foreign tenants who typically prefer to live downtown in housing with European-standard renovations, often in older historical buildings.

5. Supply Issues

The long hangover following the 2008 Global Financial Crisis left an oversupply of new housing in many developed markets that led to plummeting prices and foreclosures. By contrast, new housing construction continued even during Ukraine’s recent 2014-15 recession.

Structural housing deficits remain and are particularly acute in the :

real estate

www.bunews.com.ua

65

: heart of downtown Kyiv, the area preferred by premium and upmarket

rental clients. By some estimates, the average living space per capita in Ukraine is 23 square meters per person, or less than half the EU average of 50 square meters. In a recent interview, Ukraine’s Deputy Minister of Regional Development, Construction and Housing estimated that at current rates of construction, it would take 70 years to make up this deficit and reach the EU average living space. Meanwhile, there are thousands of obsolete Soviet-era buildings which need to be replaced.

In Kyiv alone, there are over 3,000 Khrushchev-era buildings that need replacement (by conservative estimates this represents over 180,000 apartments). This supply deficit creates a pricing “floor” for the broader housing market, so investors shouldn’t come to Ukraine with the expectation of “fire sale” prices.

6. Landlord-Friendly Market

On paper, rental agreements in Ukraine are somewhat “tenantfriendly” and tenants do have some rights, especially when small children are involved. However, Ukraine is generally much more “landlord-friendly” than some US cities and many EU countries. For example, rent control does not exist in Ukraine. There are also no “anti-AirBnB” regulations restricting owners from offering their apartments as short-term rentals.

7. Low Carrying Costs

When compared with real estate carrying costs in more developed markets, the costs for property investors in Ukraine are quite low.

Property taxes are insignificant. Tenants are expected to pay the full cost of utilities and communal charges, but these are also much 66

lower than in the West. Since you probably will have renovated your investment property, your maintenance expenses will be low. Should you need to repair your apartment, the labor costs for such work are also generally moderate in Ukraine. As most investment properties in Ukraine are not financed due to the lack of local mortgages, debt service won’t be part of your carrying costs, either.

8. Lack of Transparency

Unlike many more developed markets, today’s Ukraine lacks a Multiple Listing Service (MLS) featuring detailed property info. Official sale price statistics are also useless since many sellers collude with buyers to create sale-purchase agreements that underreport the value of a sale in order to save on taxes. As a result of these common practices, the sale price information you’ll find on many online Ukrainian real estate portals is often inaccurate at best or intentionally false at worst. It’s also not unheard of for local Kyiv brokers to create an online listing using glitzy photos of an apartment in London or Barcelona just to get the contacts of a buyer lead. It is worth underlining that brokers aren’t required to obtain a license in Ukraine and aren’t subject to a code of ethics. Since buyers won’t find good price information online or in official statistics, they’ll need to find a trusted broker who can provide them with reliable information on recent transactions for the type of properties that they are targeting.

9. Lack of Exclusivity

While in the West it’s typical for sellers to sign exclusive agreements with sales agents to market and sell their properties, this practice is relatively rare in Ukraine. The lack of professionalism of many bro-

real estate

Your Urgent Care Clinic: When You Need Us    

+38 (044) 490 76 00

24/7 Primary & Inpatient Care Online Chat or Video consultations Annual Memberships Convenient Direct Insurance Billing

Kyiv Odesa Lviv Tbilisi Batumi Almaty Astana

kers is one reason that local sellers are reluctant to retain a broker on an exclusive basis to sell their property. But a bigger reason is often just an unenlightened mentality on behalf of many owner-sellers that can work against these sellers (a broker who is not being paid by the seller is not incentivized to get the best deal for the seller, which is something that a shrewd buyer’s broker can use to their client’s advantage). This lack of exclusivity also adds to the chaos of the pricing information that’s available online. Multiple brokers will advertise the same property for sale at different prices and it can be a hassle to determine the actual current offering price.

10. Foreign Buyers vs Local Buyers

Several countries have special rules for foreign real estate investors designed to restrict their investment activity in overheated markets. For example, Hong Kong has enacted an extra 15% on purchases by non-resident individuals and companies, along with extra taxes of up to 20% for these buyers if they sell after holding their property for less than three years. In Switzerland, only 20% of the housing stock in a community can be second homes.

Meanwhile, Australia bars foreigners from buying on the secondary market unless they plan to live there full-time, and foreigners must apply for government permission to buy or build new homes.

By contrast, Ukraine has relatively few special rules for foreign investors. The only outright restriction is that foreigners are prohib-

www.amcenters.com

ited from purchasing land that is designated for agricultural use.

Ukraine does have anti-speculation taxes for all buyers who sell after holding their properties for less than three years, or those who sell more than one property in a calendar year. There is also an extra 18% in tax for foreign buyers if they sell their property after holding it for one year or less, and 5% if selling it within one to three years of purchase. But if you have held your property for three or more years and are only selling one property in a calendar year, then taxes are 1% of the sale price. There are legal strategies to minimize the impact of Ukraine’s antispeculation taxes, but they only make sense for buyers who plan to purchase several properties.

Eyes Wide Open

Hopefully, this article has opened your eyes to some of the important differences between Kyiv’s real estate market and other more developed markets in Western countries. There certainly are historic opportunities to be found on today’s Kyiv market, but taking advantage of them requires an investment strategy that’s adapted to market realities instead built upon wishful thinking.

About the author: Tim Louzonis (tim@aimrealtykiev.com) is a co-founder of AIM Realty Kiev and AIM Realty Lviv, real estate agencies that specialize in real estate for foreign investors and expats. Tim is a long-time expat with Ukrainian roots; he first came to Ukraine as an exchange student in 1993 and returned in 2008. www.bunews.com.ua

67

What is the Business Ombudsman Council?

The Business Ombudsman Council is an independent advocate for businesses operating in Ukraine The BOC investigates complaints from businesses concerning improper

BOC’s services for businesses operating in Ukraine are free of charge

connected with tax inspections or procedural abuse on the part of law enforcers, it can turn to the BOC for help in resolving the situation.

What does the Council NOT do?

The Council is funded by 13 countries through a multi-donor account set up

interests. The Business Ombudsman also does not accept complaints about cases

practices at government agencies. For example, when a business faces problems

at the European Bank for Reconstruction and Development.

What does the Council do?

and all complainants received by the Council remain strictly confidential.

Importantly, the Business Ombudsman Council does not lobby businesses

that are currently going through the courts. Complaints against other private businesses are also not part of the BOC’s remit.

The BOC investigates cases brought to it by businesses, usually problems related

Who can seek help from the Business Ombudsman and when?

owned companies. The decision to support the complainants’ position or not

The Business Ombudsman can be contacted by any company or private

The Business Ombudsman Council is not an executive authority, since its

and local agencies, or state-owned and state-controlled companies.

to illegal actions or inaction on the part of government agencies and statewill be taken once an investigation has been conducted.

recommendations cannot be binding on government agencies. However, the BOC

entrepreneur operating in Ukraine and experiencing problems with state

can and does use the power of its reputation, professionalism and credibility: that’s

how the Council achieved 94% implementation rate for its recommendations by the

What has the BOC done for businesses so far?

end of 2018.

Although the Council also does not assess the quality of individual laws and

Since May 2015, the Business Ombudsman Council has received over

regulations, it does systematize problems and offer government agencies

5,000 complaints and helped Ukrainian businesses recover more than

UAH 13 billion. Since the start of operations, the BOC team has prepared

a package of recommendations for specific sectors of the economy. So far, the Business Ombudsman Council has published 13 sets of systemic recommendations for improving legislation.

more than 2,000 recommendations for government agencies. When surveyed, 97% of businesses said they were happy with the results of working with the BOC.

Contact us:

Follow us:

+38 044 237 74 01

@Business OmbudsmanUkraine

info@boi.org.ua

www.boi.org.ua

2018 at a glance 1792

Direct financial impact:

complaints received

UAH 2 billion

1439 cases closed

TOP-5 most active regions

complainants are 97% ofsatisfied with working

Kyiv

Kyiv Oblast

36% 7%

Kharkiv Oblast

with the BOC

94%

8%

of recommendations to state bodies are implemented

TOP-5 subjects of complaints

Odesa Oblast

7%

Tax issues

Dnipropetrovsk Oblast

10%

61%

Actions of law enforcement bodies

14%

Size of business

Actions of state regulators

27%

7%

Large companies

Actions of local councils

4%

3%

2

TOP-5 industries

29%

29%

Wholesale and Distribution

Manufacturing

13%

9%

Agriculture and Mining

Real Estate and Construction

Individual Entrepreneur

Small/Medium

Origin of investment

Ministry of Justice actions

7%

73%

Systemic reports issued

85%

15%

Ukrainian

Foreign companies

French Spring cultural season opens in Ukraine The sixteenth annual French Spring cultural season got officially underway in Kyiv on 30 March with a cocktail reception at Kyiv’s Premier Palace Hotel followed by a spectacular opening ceremony on St. Sophia Square in the historic heart of the Ukrainian capital.

Since its launch in the early 2000s, the annual French Spring sea70

son has become one of the most hotly anticipated events on the Ukrainian cultural calendar. Over the years, it has expanded beyond the capital city to include events across the country. This year’s French Spring program features a variety of cultural events in Kyiv and eight other Ukrainian cities.

networking events

www.bunews.com.ua

71

What’s On Kyiv magazine celebrates 20 years Since 1999, venerable English-language publication What’s On Kyiv has been covering the best of the culture, lifestyle, society and entertainment scenes in the Ukrainian capital. Friends of the 72

long-running magazine came together in early spring for a special twentieth anniversary celebration co-hosted by The Big Meet at Kyiv’s TSUM department store.

networking events

www.bunews.com.ua

73

and finally

Ukraine must learn from Lviv’s tourism success

When Lviv first began marketing itself as an international tourism destination in the mid-2000s, many cynical observers sniffed haughtily at the upstart city’s outlandish ambitions. Who, they asked, wanted to spend their holidays in Ukraine? More and more people, as it turns out. Over the past fifteen years, Lviv has enjoyed a slowly but surely rising profile, emerging first as an exciting alternative destination before becoming a mainstay in annual Top Ten media lists predicting the next big thing in European city breaks.

This journey from off the beaten track to center stage is now nearing completion.

Today’s Lviv no longer qualifies as undiscovered. Instead, the city is regularly the subject of dedicated feature articles and gushing video reports throughout the international press. The arrival of low-cost air travel market leader Ryanair in late 2018

has plugged Lviv directly into Europe’s travel industry mainstream, and the spring 2019 season is expected to underline the city’s status as the newest member of the continent’s tourism premier league.

Lviv’s rise as a tourism destination is a triumph of imagination over inertia that has allowed the city to overcome the considerable obstacles created by Ukraine’s international image problems. This success should now also serve as a source of considerable inspiration for the rest of the country. Ukraine has vast untapped tourism potential but at present Lviv remains the only city to have made significant progress attracting visitors from beyond the twin comfort zones of the post-Soviet world and the global Ukrainian diaspora.

There are signs that the situation is slowly changing. Tourism has become something of a buzzword in Kyiv’s corridors of power

in recent months, with politicians increasingly citing the tourism industry as a potent and largely unexploited engine of economic growth. Successes such as the 2017 Eurovision Song Contest and the 2018 UEFA Champions League Final have given many in the Ukrainian capital an idea of what increased tourism could offer, while also serving to convince the authorities that Ukraine is more than capable to offering international visitors a memorable time.

Nor is Ukraine’s tourism appeal limited to weekend city breaks. Odesa Oblast’s entire Black Sea coastline could comfortably become an all-inclusive beach holiday paradise to rival Turkey and Greece, while the elegantly aristocratic city of Odesa is more than capable of outshining more traditional Mediterranean party destinations such as Ibiza and Magaluf. Away from the seaside, the unspoiled Ukrainian Carpathian Mountains and majestic Dnipro River are both ideal for eco-tourism and extreme sports activities. Meanwhile, as supporters of Liverpool and Real Madrid discovered last year, there are few lovelier places on earth than Kyiv amid the darling buds of May. As Ukraine seeks to make the most of its tourism treasures, all roads will necessarily lead to Lviv and to the city’s growing band of tourism industry professionals. These relative veterans are unique in today’s Ukraine.

They have a proven track record of developing the requisite tourism infrastructure and providing the kinds of service standards international visitors expect. This Leopolitan knowhow is a national asset that can bring considerable advantages to the country in the years to come. Lviv has already demonstrated that Ukraine can compete as an international tourism destination. The challenge now for the rest of the country is to catch up.

Letters to the editor: editor@bunews.com.ua Advertising inquiries: +38-067-4032762 Business Ukraine magazine is distributed every month 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

74

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

dance spring discount is here

25% OFF

promo-code: BU2019 *discount applies to conference rooms until April 30, 2019

HALLS

ROOMS

ADVANTAGES

4000 sqm 2000 participants 20 themed menus Multimedia equipment Wi-Fi covering Personal event coordinator

264 rooms 58 apartments Pillow menu Ironing board Organic cosmetics

2 restaurants 24/7 bar 24/7 gym SPA Treatment Cinema Bowling

+38 044 205 15 20

info@encorekiev.com

ramadaencorekiev.com

dbihotels.com