Business Ukraine 07/2019 by Business Ukraine magazine

Issue 07/2019

TURKEY IN UKRAINE

From roads to renewables - how Turkey is building business bridges across the Black Sea

BUSINESS UKRAINE 07/2019: Ukraine and Turkey are currently experiencing a strengthening of ties in areas as diverse as tourism, defense, politics and trade. The Black Sea neighbors hope a Free Trade Agreement will help take the relationship to the next level. ON THE COVER: Turkish company ONUR Construction is playing a crucial role in efforts to modernize Ukraine’s road network. Turn to pages 18-19 to learn more.

Kyiv Not Kiev: Why Spelling Matters in Ukraine’s Quest for an Independent Identity Ukraine has spent much of autumn 2019 in the international headlines, with the Trump impeachment scandal and the promise of progress in the Russo-Ukrainian peace process combining to keep the spotlight firmly on the country. This spike in media attention has helped revive outside interest in all things Ukrainian, with mixed results. Many journalists have clearly struggled to make sense of Ukraine’s Byzantine political swamp, while others have found the Steinmeier formula remarkably un-German in its baffling inexactitude, leading to the usual litany of bad takes and outright falsehoods. At the same time, however, editors from some of the world’s biggest media outlets appear to have decided this was the right moment to update the Ukrainian entries in their editorial style guides. A number of global heavyweights have thus adopted the Ukrainian-language derived “Kyiv” as the official spelling for the country’s capital city, replacing the Russianrooted version “Kiev”. The trend began with the Associated Press in late August. Since then, the likes of the Wall Street Journal, the Washington Post, and the BBC have all followed suit. The recent rush to Ukrainianize spellings is not only a response to Kyiv’s sudden newsworthiness. It represents the latest chapter in a long-running campaign to secure recognition for the Ukrainianlanguage versions of Ukrainian place names. This, in turn, is part of a much broader post-Soviet process to assert an independent Ukrainian identity following centuries of foreign domination. Ukraine’s efforts in this direction initially failed to gain much traction. For example, the Ukrainian authorities first endorsed “Kyiv” as the official English-language spelling way back in the mid-1990s, but beyond the rarefied environment of diplomatic protocol, the international community simply shrugged and stuck with the more familiar “Kiev”. This underwhelming response was symptomatic of the ignorance and indifference shaping outside perceptions of Ukraine’s attempts to consolidate its fragile statehood during the first few decades of the country’s independence. Indeed, prior to the outbreak of the Russo-Ukrainian War, many people wondered what all the fuss was about and typically dismissed efforts to strengthen Ukrainian identity by promoting the “Kyiv” spelling as the ravings of a nationalist fringe. Others saw it as an act of pure presumption on Ukraine’s part. Somewhat unfairly, they asked why there was no similar clamor to rebrand “Moscow” as “Moskva” or “Rome” as “Roma”, ignoring the obvious imperial imposition evident in Ukraine’s case but markedly absent in other Anglicized European place names. A far more meaningful comparison would be the post-colonial name changes in

Asia, such as the switch from Ceylon to Sri Lanka or the change from Bombay to Mumbai. However, few seemed to regard Ukraine’s complex imperial legacy as similarly straightforward or deserving of the same consideration. All this changed when Putin invaded. It is no coincidence that international attitudes towards the “Kyiv vs Kiev” debate have undergone a radical transformation since 2014. Like so many other aspects of Ukrainian identity politics, Russia’s attack has electrified the issue of place names, infusing it with entirely new meaning among domestic audiences and encouraging the outside world to think again. With Russian tanks parked in the Donbas and Moscow propagandists openly questioning Ukraine’s right to an independent existence, the continued use of Russian-language transliterations for Ukrainian towns and cities became not only absurd but also grotesque. As a result, the pre-2014 trickle of institutions and media outlets embracing the “Kyiv” spelling became a flood. In addition to the international press, the list of post-2014 converts includes dozens of airlines and airports, numerous academic dictionaries and textbooks, and the hugely influential United States Board of Geographic Names. Ukraine’s #KyivNotKiev campaigning will necessarily continue, but we may have already reached the tipping point. “Kyiv” has now become the standard spelling in much of the English-language world, while those still clinging to “Kiev” risk accusations of outmoded thinking. Not everyone is cheering this triumph of Ukrainian transliteration. Critics have long dismissed Ukraine’s post-independence name games as a populist sideshow that distracts from the far more urgent tasks of fighting corruption and building a functioning economy. Changing the names of streets and cities will not put food on the table, they argue. This kind of bread-and-butter thinking is understandable in what remains one of Europe’s poorest societies, but it also misses the larger point. To appreciate the true significance of the “Kyiv vs Kiev” debate, you must step back and view it against the monumental backdrop of Ukraine’s nation-building journey. Prior to 1991, generations of russification had succeeded in robbing Ukraine of an independent identity, both at home and on the international stage. It will take many decades to undo this damage, but establishing Ukrainian place names for Ukrainian places is an essential early step along the road to recovery. The international media’s recent adoption of the preferred “Kyiv” spelling is a welcome and meaningful contribution to this process, but the fact that this only happened following 14,000 deaths and the start of a new Cold War underlines the sheer scale of the task facing Ukraine.

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

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TURKEY IN UKRAINE Turkish Ambassador to Ukraine Yagmur Ahmet Guldere believes strengthening economic ties and growing cooperation between Turkey and Ukraine reflect the win-win nature of the relationship between the two Black Sea neighbors

About the interviewee: Yagmur Ahmet Guldere is the Ambassador of the Republic of Turkey to Ukraine You are now approaching the one-year mark of your ambassadorial posting in Kyiv. What has surprised you the most about Ukraine so far? Before taking up my posting as ambassador here, I was already covering Turkeyâ&#x20AC;&#x2122;s relations with Ukraine as deputy director in Ankara. As a result, I was already familiar with Ukraine and I would not say that I have encoun14

tered any huge surprises. Nevertheless, I can confirm that the domestic agenda in todayâ&#x20AC;&#x2122;s Ukraine is quite vibrant. In 2019, the country has seen both parliamentary and presidential elections. A big transformation has taken place, and Ukraine is going through this period of change under very difficult circumstances. Seeing this effort firsthand is indeed a special experience, and we all wish success to Ukraine in this endeavor. : www.bunews.com.ua

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: Negotiations over a long-awaited Turkey-Ukraine free trade agreement are reportedly now in their final stages. What are the key issues that have yet to be resolved? Free trade agreement negotiations between Turkey and Ukraine have been going on for practically a decade. We have clear instructions from the political leaderships on both sides to conclude the talks, but there are still some outstanding issues to be resolved. I will leave the specifics of these talks to our negotiation teams, but I will share one personal observation with you. There are areas where our economies complete one another, and areas where we are competitors. This is absolutely normal. Since we already have a fairly sizable bilateral trade turnover of USD 4 billion, some sectors from both sides of the negotiating table feel concerned about the potential implications of this free trade agreement. These concerns are entirely valid in their own context and perspective. However, they also remind me of the opposition some people voiced back in 1995 when Turkey first established a customs union with the EU. At the time, the anti-customs union lobby in Turkey was saying our economy was not ready and we would be devastated and so on. Indeed, early on, there were some challenges, but todayâ&#x20AC;&#x2122;s Turkey is now an economic powerhouse that exports high-tech goods to all corners of the world. This was possible partly thanks to the competition triggered by the customs union with the EU. With this experience in mind, I think we all need to see the bigger picture regarding the Turkish-Ukrainian free trade agreement, and to consider the positive results it will bring. I am sure that we have perfectly capable negotiating teams that can draft a win-win agreement for all of us. Bilateral trade volumes between Turkey and Ukraine reached USD 4 billion in 2018. Many predict further strong growth following the conclusion of a free trade deal. Where do you see the greatest opportunities for an additional strengthening of economic ties between the two countries?

Concluding a free trade agreement (FTA) between Turkey and Ukraine is not an end in itself, but rather an instrument to facilitate the further growth of economic cooperation. We have plenty of existing areas of long-term trade cooperation such as steel, agriculture, automotive and textiles. With the correct adjustments and specific boosts to bilateral trade such as an FTA, we can increase these figures and achieve a turnover of ten billion dollars, as has been stated by our respective presidents. However, the challenge is not only to increase existing trade patterns, but also to diversify. Free trade will surely help in both these directions, while also encouraging investors from both sides to explore new opportunities.

The Turkish business community in Ukraine is expanding rapidly and is now one of the largest international communities in the country. What does this increasingly prominent Turkish business presence mean for the future development of bilateral cooperation? The Turkish business community in Ukraine is indeed significant. We have more than one thousand Turkish companies in Ukraine representing close to USD 3 billion in investment. These companies are here because they believe in the bright future of Ukraine, just as we do. Overall, they provide jobs for thousands of Ukrainians and generate hundreds of millions of dollars in exports, in addition to meeting domestic consumption demands. Turkish business people have set up companies all around Ukraine and I am particularly happy to observe that they have integrated into Ukrainian society very well. Lviv and Odesa jazz festivals are two examples where sponsoring Turkish companies have provided new color to existing cultural endeavors. We also recently opened the first Turkish wind energy plant near Odesa, which was the first foreign-funded facility of its kind in Ukraine. So in short, the Turkish business community in Ukraine is a perfect reflection of the win-win strategy President : Zelenskyy talked about earlier this year in Turkey.

â&#x20AC;&#x153;We have more than one thousand Turkish companies in Ukraine representing close to USD 3 billion in investment. These companies are here because they believe in the bright future of Ukraine, just as we doâ&#x20AC;? 16

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turkey in ukraine

Ambassador Guldere pictured together with Turkish aviation officers at the Antonov Plant in Kyiv during a September 2019 official visit to Ukraine by Turkish Minister of Internal Affairs Suleyman Soylu

: Defense sector cooperation between Ukraine and Turkey recently received a boost with the establishment of a joint venture to produce military drones. How do you see this defense sector partnership developing? The defense sector is an area where Turkey shines as of late. We have been working hard to boost our capabilities, both through domestic R&D and through partnerships with other countries. Ukraine is one of our closest partners in this regard. I can comfortably say that combining our capabilities in this sphere will have great results. The joint drone project you mentioned is an example to this. When I look at all the active joint work currently underway in this field between companies from both countries, I am certain this drone company will be the first of many more joint projects that lie ahead. Turkey has deep historic connections with Crimea and the Crimean Tatar community stretching back for many centuries. What role does this play in the formulation of Turkish policy towards Russia’s annexation of Crimea and Ukraine’s territorial integrity? Turkey’s official policy of non-recognition has been clear and consistent since 2014. We fully respect Ukraine’s internationally recognized borders. As for the Crimean Tatars, they are one wing of the big Turkish family. Many Tatars have traditionally looked towards Anatolia when they have had difficulties in the past, sometimes migrating to Turkey in large numbers. Today, about three mil18

lion Turkish citizens have Crimean Tatar roots. Therefore, neither Crimea, nor Crimean Tatars are foreign to us. With this background in mind, we are actively trying to assist our Crimean Tatar brothers in Ukraine, in coordination with the Ukrainian authorities.

From trade to tourism, ties between Ukraine and Turkey have grown notably stronger over the past five years. How are perceptions of Ukraine evolving in the Turkish media and among the Turkish public? I can clearly say that the word “Ukraine” never provokes a negative reaction in Turkey. Elements such as Roxolana (the Ukrainian wife of famed sixteenth century Ottoman Sultan Suleiman the Magnificent – Ed), the Crimean Tatars, growing tourism, and our two countries being neighbors across Black Sea all have a role to play in shaping attitudes. Both Turks and Ukrainians are kind and curious people. It is no surprise that almost two million citizens in total from both nations visited each other’s countries last year. With tourism comes a sense of greater closeness and understanding. This, in turn, triggers interest in the language, culture and history of each other’s nations. After familiarizing ourselves with these elements, the other is no longer the other, but becomes a partner and a neighbor. I believe this is what is happening between our peoples today, and expect this trend to grow even stronger in future. www.bunews.com.ua

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ONUR Construction is at the forefront of ongoing efforts to transform Ukraine’s vast road network When Ukrainian President Volodymyr Zelenskyy spoke to Dnipro officials this summer about the need for road repairs in the region, he warned them not to make excuses and instead advised them to work with Turkish company ONUR Construction. “Give the job to them and complete this work by the end of the year,” he commented. This hat tip from Ukraine’s new head of state attracted considerable attention, but it actually reflected widespread recognition of the crucial role played by ONUR in the ongoing transformation of the Ukrainian road network. Since entering the Ukrainian market in 2004, the Turkish company has constructed over 1,300km of international-class roads, earning a reputation for quality in a country that has long been plagued by associations with crumbling infrastructure. Ukraine is an important part of the ONUR empire, currently accounting for around 20% of a global portfolio that includes projects on three continents. The company’s activities in Ukraine extend from transport infrastructure construction to the production and supply of concrete and other construction materials, with additional recent expansion into the agriculture and energy sectors. Nevertheless, ONUR remains best known to Ukrainians for its involvement in the country’s ongoing road revolution. Business Ukraine magazine spoke to ONUR Construction’s Regional Manager Emre Karaahmetoglu about the company’s fifteen years in Ukraine and asked about the expansion opportunities created by the new government’s ambitious infrastructure upgrade plans. ONUR has built a reputation for reliability in a country where road construction standards have often been notoriously low. Indeed, in the World Economic Forum’s 2017-18 Global Competitiveness Report, Ukraine ranked 130th out of 137 countries in terms of road quality. Why has ONUR succeeded in Ukraine where others have failed? The first thing to understand is that ONUR is a global company with the same high standards implemented globally. This has led to success in many countries, and it has brought us success in Ukraine. As specialists in road construction, we adapt our work to the latest technologies, using high-quality materials and the most up-to-date machinery and equipment. If any company wishes to remain sus-

tainable, it must invest in the research and development of its chosen sector. ONUR continuously works on research, testing, inspecting and evaluating road construction technologies in accordance with the specific characteristics of every country where we are present. This leads to successful adaptation and high quality products. We employ specialist staff and qualified personnel who work in line with our company ethos. Crucially, we also pay particular attention to customer satisfaction.

Ukraine is Europe’s largest country with a road network of approximately 170,000km. Much of this network is in a state of disrepair and requires a major overhaul. This represents tens of billions of dollars in construction and renovation contracts. How big a role can ONUR play in the modernization of the country’s roads? ONUR has been active in Ukraine for over 15 years and has a portfolio of successful projects. The company will continue to participate in the modernization of Ukraine’s road network as long as there is demand for the services we provide. If Ukraine continues to invest in the country’s roads, ONUR will continue investing in Ukraine, both in terms of road construction and in other business sectors. ONUR has already proven itself sustainable in the Ukrainian construction sector. We are confident this will influence the company’s further growth and development in the country.

What are ONUR’s largest current projects in Ukraine? At the moment we are engaged in a number of highway projects in Poltava, Zaporizhia and Lviv regions. I am also proud to say we met our targets on a series of projects in the Zaporizhia region in recent months, often working within narrow timeframes and in challenging conditions. This included the reconstruction of the Zaporizhia International Airport runway in less than 45 days. The Ukrainian parliament has recently adopted a new law on concessions that potentially opens the way for public-private partnerships (PPPs) focusing on roads, airports, seaports and other key elements of Ukraine’s national infrastructure. What could this mean for ONUR’s future activities in the country?

The Ukrainian economy’s current growth trend can help drive the modernization of the country’s infrastructure. We are now seeing rising demand in Ukraine for high quality, fast and efficient trade routes. This will surely encourage private investment into key infrastructure. Now that the Ukrainian parliament has adopted what we consider a realistic law on PPP concessions, we are confident successful public-private partnerships will follow. This will attract international investment, fuel further economic growth, and lead to the construction of modern roads, ports and airports. As a company, ONUR has been actively promoting the implementation of public-private partnership projects in Ukraine for several years. We welcome the new concession law, and will be looking to partner in concessions projects associated with our specialized business sectors.

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The Turkish company leading Ukraine’s road revolution

ONUR has been active in Ukraine for more than one-and-a-half decades. What do you regard as the most important landmarks in the company’s growth on the Ukrainian market? If I could sum it up in one sentence, I would say that we have come to regard Ukraine as our local market, while Ukraine has accepted ONUR as a local company. We have established a high degree of trust by meeting all our commitments with a sense of respect for our clients. Based on your own experience, what is your advice to international companies considering entering the Ukrainian market? International companies should already be monitoring the steady growth of the Ukrainian economy. There are numerous interesting business opportunities in today’s Ukraine. This is one of Europe’s largest countries with strong industrial foundations and a big appetite to develop further. Given the current focus on boosting the country’s prosperity, we would advise any professional international company to consider entering Ukraine and contributing to this process.

About the interviewee: Emre Karaahmetoglu is Regional Director of ONUR Construction in Ukraine www.bunews.com.ua

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Turkish Airlines sees Ukraine passenger volumes rise 17% in 2019 Turkey’s flagship carrier has been present in Ukraine for more than a quarter of a century Turkish Airlines passenger volumes from Ukraine grew more than a quarter in 2018. How does 2019 compare so far? During the first nine months of the current year, the volume of passengers carried to and from Ukraine increased by 17% compared to the same period in 2018. Ukraine plays a very important role in the airline’s flight network. The first flight from Kyiv was launched in 1993, and today Turkish Airlines has more than 70 flights a week (passenger and freight) from 6 Ukrainian cities: Kyiv, Odesa, Kharkiv, Lviv, Zaporizhia, and Kherson. Turkish Airlines is currently the only foreign carrier operating from Kyiv on wide-body A330 aircraft, providing passengers with the best flight experience possible. Generally speaking, Turkish Airlines is currently one of the fastest-growing airlines in the world with flights to 316 cities in 126 countries and an expanding network. During January-September 2019, the total number of passengers carried was around 56.4 million. International-to-international transfer passenger volumes increased by 3.9%. The new Istanbul Airport was unveiled in late 2018 and immediately took its place as one of the largest and most innovative airports in the world. What does the opening of the Istanbul Airport mean for Ukrainian passengers flying with Turkish Airlines? Istanbul Airport will indeed be one of the world’s biggest airports, with a current capacity of 90 million passengers per year and a 200 million passenger capacity once all phases are complete. The opening of Istanbul Airport has given Turkish Airlines the possibility to extend its activities further. In 2019, Turkish Airlines has launched new destinations such as Denpasar in Indonesia, Marrakech in Morocco, Sharjah in the

U.A.E., Luxor in Egypt, and Mexico City and Cancun in Mexico. The airline is planning to launch flights to Rovaniemi in Finland in December.

Turkish Airlines launched a new weekly flight service from Kyiv to Turkish tourism hub Bodrum in April 2019. How has this route performed so far, and do you see potential for more flights arising from the growing number of Ukrainian tourists choosing Turkey as their holiday destination? The Bodrum-Kyiv direct route was launched in April 2019 and operated every Saturday, once a week. We are very pleased with the opening of this new summer direct destination to meet Ukrainian passenger demand. We always aim to provide Ukrainian passengers with the best service and best possible flight experience during their trips.

In addition to Kyiv’s Boryspil International Airport, Turkish Airlines also currently flies from five different regional airports in Ukraine (Kharkiv, Kherson, Zaporizhia, Odesa and Lviv). What regional trends have you identified in 2019 and where do you see the strongest growth potential in the coming years? During the last five years, Turkish Airlines has launched a number of new routes. This has included Kherson in 2014, Zaporizhia in 2015, and Kharkiv in 2017. One of the carrier’s main priorities has been to increase flight frequencies from its current destinations in Ukraine in order to provide more connections to and

About the interviewee: Dincer Sayici is General Manager of Turkish Airlines in Kyiv

from Ukraine within our worldwide network. In 2018, weekly flight frequencies to Lviv and Odesa increased to 10 and 21 flights respectively. In November 2018, flight frequencies to Kyiv increased from 16 to 21, and in February 2019 three additional frequencies were added between Istanbul and Kyiv. This means that the total number of Turkish Airlines flights between Istanbul and Kyiv is now 24 per week, and the total number of flights to Ukraine is more than 70 per week. With one of the youngest fleets in Europe including the new B787-9 Dreamliner, which joined the fleet for the first time in 2019, Turkish Airlines will continue to host passengers with safety and comfort. Turkish Airlines currently ranks as the largest international airline operating in Ukraine in terms of passengers and flight destinations. With the Ukrainian air travel sector enjoying an unprecedented boom and new airlines entering the Ukrainian market every month, how do you intend to maintain your leading market position? Ukraine has always been a country of importance for Turkish Airlines in terms of passenger volumes as well as cultural exchange. This is reflected in increasing passenger and cargo traffic potential. As one of the largest foreign carriers in Ukraine in terms of destinations and cargo capacity, Turkish Airlines is proud to offer high-end services to its Ukrainian guests, and we are grateful for their trust and continued support.

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Renewable energy insurance insights

Investors should insure against the unexpected as they flock to Ukraineâ&#x20AC;&#x2122;s renewables sector speed for wind farms. Fortunately, there are insurance solutions to mitigate against the risks associated with the uncertainties related to weather conditions at the plant site. By using reliable weather station and satellite data, insurers can measure the loss of potential income for a particular client and realize insurance payouts. These tailor-made and transparent solutions are currently gaining growing popularity among renewable energy investors around the globe.

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Taking into account the high value and delicacy of renewable energy conversion equipment, investors should carefully consider the risks associated with transporting equipment to the future site of their renewable energy plant. We recommend insuring solar panels, wind turbines and other relevant parts against both damage and theft during the transportation stage. Most goods have insurance coverage while warehoused or otherwise in storage, and while in transit until they reach the investor.

Construction Risk Insurance About the author: Orcun Gomec is Managing Partner of EUROP Insurance Brokers Turkish civil engineer Orcun Gomec is Managing Partner of EUROP Insurance Brokers. He received his MBA in the Netherlands and has been offering advice on insurance matters to current and prospective investors in Ukraine for more than a decade. One of the fastest-growing investment focuses in todayâ&#x20AC;&#x2122;s Ukrainian economy is the renewable energy industry, with attractive market terms and favorable geographical conditions combining to make Ukraine a regional renewables hotspot. In this article, Mr. Gomec offers potential investors insights into the insurance products available for anyone preparing to enter the booming Ukrainian renewable energy market.

Policital Risk Insurance

The situation in eastern Ukraine since 2014 has shown how necessary it is for investors to protect their businesses from all sorts of unforeseeable risks related to political violence. This is the first type of insurance cover any renewable energy investor who is looking at Ukraine should consider during the planning phase of their investment. We strongly advice investors to factor full cover political violence programs into their investment feasibility analysis. Political violence insurance programs cover a full spectrum of risks such as terrorism, vandalism, anarchy, protests, insurrection, uprisings, war, civil war and invasion, currency inconvertibility or non-transferability, expropriation, nationalization and confiscation. Some types of breach of contract and contract frustration risks are also insurable via this product. Political violence insurance pays damages for two forms of losses: harm to insured tangible assets, and loss of income due to damage to resources incurred due to political violence.

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The construction of a renewable energy project begins long before the equipment arrives at the site. Once equipment delivery is complete, assembly and construction moves to a new stage with even higher risks. During the construction phase, there are a number of variable risks depending on the type of renewable energy source. For solar plants, the biggest risks are from losses due to flooding, storms, hail and theft. For wind farms, the main risks relate to the poor performance of the construction contracting company. Improper construction of the foundation or columns, together with mistakes during installation and connection of systems to power grids, can cause significant losses. Meanwhile, lightning ranks as the greatest single natural hazard during the construction phase of wind farms. To address the above risks, we recommend investors purchase Construction/ Erection All Risks insurance. This product covers material damage to the project, namely due to natural hazards, theft, vandalism, and fall impact, along with damage caused by improper handling and improper use. Liability to third parties for property and health damage in connection with construction or erection is also insurable via this product.

Property Insurance Coverage

After the construction and commissioning of a new renewable energy project, we advise investors to purchase protection against external physical impact, equipment breakdown, and loss of profit. The best vehicle for this is coverage through a property insurance package. This type of product is purchasable annually and renewable at the end of each term. To cover losses from internal breakdowns, it is necessary to expand the coverage of a property insurance contract with a Machinery Breakdown Insurance policy. Unlike the sole property cover, this extension protects against equipment breakdowns, for example, due to personnel errors and equipment installation defects. Another extension that comes highly recommended covers loss of income and profits following the realization of property and due to machinery breakdown. With this type of extension, investors can receive compensation not only for damage to their assets, but also for the loss of income resulting from a particular insurance case. www.bunews.com.ua

AXOR INDUSTRY: Eco-Enterprise and Ukraine’s No. 1 Hardware Manufacturing Plant AXOR INDUSTRY is the industry’s only full-cycle plant in Ukraine, producing window and door hardware. All production processes are fully automated, and designed to ensure maximum human and environmental safety. For example, this includes a rational waste utilization and water “rehabilitation” system. A fully equipped and certified in-house laboratory guarantees the quality of finished products. AXOR INDUSTRY products are currently available in almost 20 countries of the world including Baltic and other ex-Soviet states, Eastern and Central Europe, Central Asia, and South America. Growing demand for AXOR products and expanding commercial supply in international markets necessitated a substantial increase of the manufacturing plant’s production capacity in 2018. The installation of additional production lines or equipment at almost every manufacturing site increased the plant’s production output several-fold. Constantly expanding geography of AXOR hardware proves that Ukrainian product quality is competitive on both domestic and international markets.

MIROPLAST: One of Ukraine’s Top UPVC Profile Manufacturers & Open to New Markets MIROPLAST and its WDS products are all about satisfying demand for high-quality energy- efficient windows and doors. The company’s current output maxes out at 4,500 tons of UPVC profiles monthly – enough to cover 50% of domestic demand for plastic windows. Headquartered in Dnipro, Ukraine, MIROPLAST has established a foothold far beyond the borders of its home country – in Asia, Europe, and even South America. Our current focus is to keep ramping up exports of UPVC profiles and ready-made windows and doors. To ensure reasonable prices, prompt delivery, and reliable supply, we cultivate long-term relationships with leading construction companies and window manufacturers. Exports are a major growth direction for us, so we continue to seek partnerships with foreign architectural and construction companies, as well as UPVC window and door manufacturers looking for premiumquality products and excellent services.

UDK LLC: Autoclaved Aerated Concrete – Ten Years Together “UDK” LLC is one of the leading producers of autoclaved aerated concrete in Ukraine. The company was established in Dnipro in 2007, with the first products appearing on the Ukrainian market at the end of 2009. Production capacity currently amounts to 470,000 cubic meters per year. Production specializes in Autoclaved Aerated Concrete blocks with high construction and heat-insulation properties, with marking by density D400 and D500 and classes of strength C 2,0 and C 2,5. Production of Autoclaved Aerated Concrete blocks is economical due to the low density of the blocks, together with minimal waste of raw materials and energy resources. In construction, economy is attained due to the low density of the product, its large dimensions, and the consequent lower application of building mortar.

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“We are in a golden age of

Turkey-Ukraine relations”

TUID Chairman Burak Pehlivan on the strengthening relationship between Turkey and Ukraine

About the interviewee: Burak Pehlivan is the Chairman of the International Turkish-Ukrainian Business Association Anyone engaged in Turkish-Ukrainian business relations will likely have encountered Burak Pehlivan. As Chairman of the TurkishUkrainian Business Association TUID, forty-one-year-old Pehlivan is a well-known and high profile member of Ukraine’s international business community who has been tireless in his efforts to help build business bridges across the Black Sea. Under his stewardship, TUID has emerged as one of Ukraine’s largest and most active international business associations, winning numerous international awards and expanding in line with the impressive growth of the 26

Turkish business community in Ukraine. He sees clear parallels between Ukraine’s current situation and Turkey’s own economic evolution over the past few decades, and believes the untapped potential that first attracted him to Ukraine continues to offer exciting opportunities for the Turkish business presence in the country to develop further. Pehlivan’s initial introduction to Ukraine came during the mid2000s and was part of a wave of expansion as a new generation of Turkish businesses looked to enter Central European and former : www.bunews.com.ua

Company Profile: Arkas Ukraine

Arkas Ukraine has been active in the Ukrainian container market since 2002. Our main office is based in Odessa and our representation office is located in Kiev. Our main business is Liner Container Sea Transportation and Agency. Arkas Holding Agency Group, operates with 3 companies in Ukraine, Arkas Ukraine founded in 2002 representing Arkas Line, Tarros, Grimaldi and ESL; Overseas Transport Ukraine as the agent of Hapag-Llyod since 2008 and Car Consulting Ukraine which provides physical condition inspection of the imported and exported vehicles carried by Ro-Ro vessels of Neptune Lines and EML since 2007. Arkas Holding Logistics Group is represented by Arkas Logistics Ukraine as a forwarding company which is serving the logistics needs of Ukrainian importers and exporters since 2008 with services such as forwarding, sea transportation, truck and rail carriages, warehousing, project cargo and intermodal services. Arkas Ukraine is the agent of 3 container operators (Arkas Line, Tarros Line and Grimaldi Line ). It is providing weekly vessel services for it’s clients to/from Port of Odessa. Main cargoes carried are all agricultural products, sunflower products, mineral ores, poultry, dairy products, solar energy equipment, ceramic products, metal goods, chemical products, fruits and vegetables, beverages. And since 2014 Arkas Ukraine is the husbandry agent of Ethiopian Shipping Lines which is serving in tramp bulk cargo shipping. Each month or two a vessel is hosted for metal product loadings of around 23.000 metric tonnes per call. Arkas Ukraine is representing the Group’s own container line Arkas Line, which is ranked 15th in the world with 52 vessels and a carrying capacity of 96.387 teus and a total annual carriage volume of 667.934 liner teus in 2018 and 413.369

liner teu in 8 months in 2019. Arkas Line has been producing services for the Ukrainian market with Turkish flagged vessels and regular weekly services for nearly 20 years. The other container agency company of the Group in Ukraine since 2008 is Overseas Transport Ukraine. The company is the agent of Hapag Lloyd, the world’s 5th largest shipowner in the container market. Hapag Lloyd has 237 ships, a carrying capacity of 1.7 million TEU, and a total carriage volume of 11.9 million TEUs per annum all over the world. Arkas has a 30-year trust-based partnership with Hapag Lloyd. Arkas Holding Agency Group’s 2019 container volume is targeted to be 21.000 TEUs as Arkas Line and 50.000 TEU as Hapag Lloyd (includes only the full containers ). 2018 was our a record year for our company with 64.000 teus in total and 2019 we again are heading to break a second record with a volume of 71.000 teus an increase of 11%. Car Consulting inspections volumes in 2019 is targeted to be 17.000 car units per annum. The total size of the Ukrainian container market was around 680.000 teus in 2018 and is expected to grow up to 750.000 teus in 2019. As a Turkish company in Ukraine, Arkas Ukraine competes with the leading companies in the world as in every country. The number of container lines operating in our sector in Ukraine is approximately 15. Each year the number of players are decreasing due to the consolidation in the world’s container market. The first 5 of these container operators in Ukraine dominate 75% of the market. Hapag Lloyd is ranked #6th and Arkas Line is ranked # 8th in Ukraine. Considering the total targeted volume of 71,000 TEUs, Agency Group in Ukraine will have a 9.4% of market share by the end of 2019.

Current Service Structures:

IBX: Kumport Istanbul – Marport Istanbul – Constanta – Odessa – Kumport Istanbul (weekly service) BMX: Pireaus – Kumport Istanbul – Novorossiysk - Odessa – Kumport Istanbul – Gemlik – Pireaus (weekly service)

turkey in ukraine

“We need free trade in order to boost overall trade. We do not want to eat all the cake. We want to make the cake bigger” : Soviet markets. When he decided to establish his own business

towards the end of the decade, Ukraine seemed a logical choice. Since relocating to Kyiv in 2009, Pehlivan has spent the past ten years in the Ukrainian capital. His involvement in the wider world of Turkish-Ukrainian business relations originally stemmed from his enthusiasm for Ukraine, which led to him becoming a prolific and groundbreaking blogger about the country. “All in all, I wrote over 1,500 blogs for the Turkish media about different aspects of life in Ukraine,” he recalls. “In many cases, I was the first person ever to write about these subjects in Turkish.” The recognition this brought eventually resulted in an invitation to become involved with TUID, paving the way for his election as Vice Chairman of the organization in 2011. Pehlivan says he no longer has enough free time to keep up his blogging career, but he maintains a strong social media presence with thousands of followers on Facebook, Instagram, YouTube, Twitter and LinkedIn. These platforms have allowed him to consolidate his position as one of the public faces behind Turkey and Ukraine’s strengthening economic ties. The Turkish business community in Ukraine has experienced considerable growth since 2014, with numerous new investments coming at a time when many Western businesses have continued to adopt a “wait and see” approach towards the changes taking place in post-Maidan Ukraine. Pehlivan believes there are a number of factors that have helped Turkish businesses to feel at home in Ukraine, not least the similarities with their own experiences. He points to the parallels between today’s Ukraine and Turkey during the transitional years of the 1990s and early 2000s, when the country faced challenges that would be all-too-familiar to Ukrainian audiences, including perceptions of widespread corruption, rule of law issues, and a lack of international business experience. The signing of a customs union agreement with the EU in the mid1990s proved to be a pivotal moment in modern Turkey’s emergence as an economic success story, but Pehlivan stresses that many in the Turkish business community were initially skeptical over the move, fearing that they would not be competitive enough. The changes that this EU customs union helped facilitate meant that when Ukraine reached its own watershed moment in 2014, Turkish businesses were in a position to take advantage of the new opportunities presenting themselves, while also being relatively unaffected by the transitional turbulence that put so many others

off. “Turkish companies were ready in 2014 and had the appetite to enter Ukraine. Over the previous fifteen years, they had become competitive internationally and gained valuable experience. Ukraine was a good fit at the right time.” Pehlivan estimates that Turkish investments in Ukraine since 2014 total around USD 1 billion, while annual trade between the two countries topped USD 4 billion in 2018. He talks of a “golden age” in Turkish-Ukrainian business relations, and speaks of the growing Turkish presence in diverse sectors of the Ukrainian economy ranging from renewable energy to retail. As economic ties strengthen, there are other signs of a closer bilateral relationship. The two countries concluded a landmark agreement in 2017 whereby Turkish and Ukrainian citizens can visit each other’s countries using internal identification documents rather than international passports. One and a half million Ukrainians visited Turkey in 2018, while around 300,000 Turks came to Ukraine. “I can recall a time before daily flights. Now there are more than 200 flights between Ukraine and Turkey every single week,” Pehlivan observes. With Ukrainians and Turks increasingly in contact with each other, perceptions about Ukraine are evolving. “Five or six years ago, I would still encounter people within the Turkish business community who thought Ukraine was essentially like Russia. Now there is growing recognition of how different the two countries are, and of the dramatic changes that are taking place in today’s Ukraine. Personal experience plays a big role in this process. When people come to Kyiv, for example, they quickly appreciate that Ukraine is part of Europe, not only geographically but also culturally and socially.” The biggest issue on the bilateral agenda remains a free trade agreement. This potential Turkey-Ukraine FTA has been years in the making and is tantalizingly close to conclusion, with politicians from both countries repeatedly stating that it will be signed in the near future. The last remaining sticking points revolve around certain strategic areas and specific industries, but Pehlivan is eager to focus on the bigger picture of what the FTA could mean for trade volumes as a whole. He argues that a free trade deal with Ukraine could have a similarly positive effect on the Turkish economy as the 1990s customs union with the EU, albeit on a smaller scale. The results will be beneficial for both countries, he stresses. “We need free trade in order to boost overall trade. We do not want to eat all the cake. We want to make the cake bigger.” www.bunews.com.ua

Ukraineâ&#x20AC;&#x2122;s monthly English-language current affairs publication since 2007

Esan Celebrates 25 Years in Ukraine

Founded in 1942 by Dr. Nejat F. Eczacıbaşı, Eczacıbaşı Group is a prominent Turkish industrial group with 39 companies, two of which are joint ventures, with over 12,300 employees in 2018. Esan (Esan Eczacıbaşı Industrial Raw Materials Co.) was founded by Eczacıbaşı Group in 1978 to provide high quality raw materials to the ceramics industry. By the end of 2018, Esan took the 104th place (proudly occupying 2nd place in the mining industry) among Turkey’s largest 500 industrial company rankings (İSO 500) by the Istanbul Chamber of Industry. Esan has reached over USD 400 mln revenue in 2018 and has an employment volume of 2,500 people, who work in 10 facilities and 40 quarries in Turkey producing feldspar, clay, kaolin, lead, zinc and gold.

As a company whose 80% revenue comes from exports, Esan has accelerated its development in the global arena after the commissioning of its representative offices in Ukraine, Italy and China. Esan aims to continue its exploration and mining operations worldwide along with its commercial activities. Therefore, offices in Kosovo, Esanmet in Portugal, Macedonia and Kazakhstan were opened as well. Esan is one of the first Turkish companies in Ukraine, beginning operations in the country 25 years ago. Esan Ukraine was the first company to introduce Ukrainian Clay to the European market at the beginning of the 1990s. With 25 years of experience, Esan has earned the trust of primary mining companies and suppliers of raw materials all around Ukraine.

Our business is focuses mainly on supplying raw materials such as Clay, Kaolin, and Feldspar for Ceramic Industries in Ukraine, Turkey and Italy, totaling around 400,000 tons per year. Esan Ukraine has re-started mining Investment activities in 2019 in coordination with TUID, UkrInvest, ProZorro and its own network. The company is looking forward to new opportunities and mining investments in Ukraine with its young and dynamic crew. Esan is the leading producer of Sodium Feldspar in the world and is among the top industrial raw material producers in Europe. The Esan Balya Plant is Turkey’s deepest lead and zinc mine, with a depth of 850 meters from surface and total tunnel and mirrors length of 93km. Balya’s average annual production is 1,500,000 tons, which makes Esan Turkey’s largest lead exporter. Esan has also expanded its portfolio in order to provide diverse services to the sectors in which it operates by trading various industrial minerals in addition to its production. Today, it trades about 150 commercial products. In line with its corporate values, Esan is committed to work in an environmentally and socially sensitive manner in all activities and works to create value for today and tomorrow with the guidance of United Nations Sustainable Development Goals. It creates economic value through local employment and local purchasing practices in all operational regions. Esan has concentrated on training processes of all employees and with its awareness-raising efforts. Esan aims to be a leader not just for Turkey but also globally in the mining sector in occupational health and safety. With a sustainability approach, it aims to contribute to the environment beyond compliance with legislation. For this purpose, it makes various investments from solar panels to reforestation and afforestation. In addition, many corporate social responsibility projects prioritizing women and children help contribute to local communities. Esan supports the empowerment of women by providing opportunities for their sociocultural development. Moreover, schools in Esan’s operational regions receive funding to improve physical conditions and upgrade facilities such as laboratories and libraries. This support extends to providing stationery supplies to children and various extracurricular training held by Esan employees.

turkey in ukraine

Ukraine’s energy infrastructure upgrade creates tender opportunities for Turkey Ukrenergo roadshow in Ankara provides Turkish companies with investment insights

Ukraine’s power grid is undergoing an unprecedented modernization, and Turkish companies are welcome to participate in the multi-billion dollar process. This was the message in September as Ukraine’s national power company Ukrenergo held a roadshow at Ankara’s Sheraton Hotel hosted by Turkish-Ukrainian Business Association TUID and sponsored by ONUR Group. The event aimed to help familiarize Turkish construction and engineering companies with the opportunities currently emerging across the Black Sea as Ukraine embarks on an historic upgrade of the country’s energy infrastructure. In his opening remarks, Ukrenergo COO Volodymyr Kudrytskyi said Turkish companies were viewed as reliable potential partners for Ukraine’s ambitious ten-year, USD 3 billion energy grid upgrade. Meanwhile, TUID Chairman Burak Pehlivan highlighted the advantages of a stronger Turkish presence in major Ukrainian infrastructure tenders. “More Turkish companies participating in Ukrenergo tenders 32

will mean more competition. Turkey will win and Ukraine will win.” Ukraine’s energy industry is presently in the midst of a major transformation as the country seeks to replace Soviet-era infrastructure and liberalize domestic energy markets, with a number of reforms already implemented and major construction projects in the pipeline. Speaking to Anadolu News Agency following the recent Ankara roadshow, Ukrenergo supervisory board chair Sevki Acuner noted that forthcoming Ukrainian energy sector tenders are set to be transparent processes supported by international financial institutions such as the World Bank and the European Bank for Reconstruction and Development (EBRD). “I encourage all (Ukrainian) state-owned enterprises to broaden their competitive procurement base to achieve the best available prices and highest quality. The more transparent the competition, the better the procurement outcome,” commented Acuner of the tender opportunities opening up in the Ukrainian energy sector. www.bunews.com.ua

turkey in ukraine

Turkey and Ukraine team up for new drone joint venture Recently established company Black Sea Shield aims to build on Turkish and Ukrainian technological strengths in the sphere of UAV development Turkish-Ukrainian defense sector cooperation received a boost in August 2019 with the launch of a new joint venture that aims to build on the two countriesâ&#x20AC;&#x2122; respective aerospace industry www.bunews.com.ua

strengths. Newly formed company Black Sea Shield will focus on the development of unmanned aerial vehicles (commonly known as UAVs or drones), engine technologies, and guided munitions.

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turkey in ukraine

About the interviewee: Haluk Bayraktar is CEO of Baykar Defence and Chairman of the Board of Black Sea Shield. He is pictured here with Ukrainian President Volodymyr Zelenskyy at Baykar’s research and development facilities during President Zelenskyy’s official visit to Turkey in August 2019

: : The joint venture brings together Ukraine’s UkrSpetsExport,

which is part of the country’s state-owned military manufacturer UkrOboronProm, and Turkish drone specialist Baykar Defence, in what is the first international partnership of its kind for both parties. Black Sea Shield will develop drones and other aerospacerelated technologies for use by the Ukrainian and Turkish militaries. Initial projects include the Akinci heavy strike combat drone, which is set to come with a 20-meter wingspan and the ability to carry over a ton of ordinance thanks to the craft’s powerful Ukrainian engines. The establishment of Black Sea Shield is the latest stage in a developing relationship between Ukraine and Turkey in the defense sector, and came following several years of talks over the supply of Baykar Defence drones to the Ukrainian Armed Forces at a time when other countries refused to supply Kyiv. This led to the sale of six Bayraktar TB2 drones to Ukraine, with delivery taking place during the first few months of 2019. Since the drones arrived in Ukraine, a delegation of 40 Ukrainian military personnel has been receiving training in Istanbul on every aspect of the Bayraktar TB2 model, from piloting to maintenance. Baykar Defence CEO and Black Sea Shield Chairman of the Board Haluk Bayraktar says that it was during the course of long-running talks over the Bayraktar TB2 deal that the numerous synergies between the Turkish and Ukrainian aerospace industries

first became apparent. “Ukraine has a huge history in aviation,” he offers, pointing to the country’s ties to early flight pioneers such as the Kyiv-born father of modern helicopters, Igor Sikorsky, and the strong manufacturing traditions of Ukraine’s flagship aviation brand Antonov. Bayraktar identifies Ukraine’s strength in the production of turbine and piston engines as a particular advantage as Turkey looks to improve its capabilities in this area. “There are many complementary areas of the Turkish and Ukrainian aerospace industries and this creates a solid basis for cooperation. Such kinds of partnership are particularly effective in the high tech sector, and will allow us to develop concepts and projects that bring benefits to both countries.” The new Ukraine-Turkey joint venture Black Sea Shield will be based in Turkey, where Baykar Defence has the largest UAV manufacturing facilities anywhere in Europe and the Middle East. Since its foundation as a tech startup in the early 2000s, Baykar Defence has expanded from an initial team of just seven to today’s workforce of 700. Bayraktar hopes partnership with Ukraine will help the company reach the next level in its development and remain at the forefront of the rapidly evolving military drone sector of the aviation industry. “The focus of our strategy is to make sure we are in a position to be competitive in the future,” he offers. “Partnership with Ukraine is crucial for us in a sector where the future is particularly bright.” www.bunews.com.ua

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

Ukraine’s $50 billion challenge Philip Morris, a tobacco company, Ukraine’s fifth largest taxpayer, set a legal precedent last year by signing a dispute settlement with the government over a longstanding tax dispute. The dispute settlement, recognized under international legislation, is now being challenged by law enforcement authorities.

Unilever, Europe’s seventh most valuable company that owns over 400 brands, is suffering from fraudulent action by a counterparty, seeking to extort €1.5 million through a counterfeit contract. For over a year, the company has been trying to protect its interests in court and in criminal proceedings that are not moving forward. Serious doubts are being cast about the integrity and impartiality of the law enforcement agencies and the organization charged with providing an independent examination.

Andy Hunder, President of the American Chamber of Commerce in Ukraine, Treasurer of AmChams in Europe Ukraine is striving to attract $50 billion in foreign direct investment (FDI) by 2024. Freshly appointed Prime Minister Oleksiy Honcharuk recently announced his government’s highly ambitious five-year economic growth plan to get Ukraine to that number. It’s a grand objective indeed, but doable only if Ukrainian authorities take good care of the international businesses already operating in Ukraine. The multinationals operating on the ground are the best investment ambassadors Ukraine has. They relay their stories, the good, the bad, and the plain ugly of doing business in Ukraine.

Many share positive accounts about their business growth in Ukraine. Many do not. I raised examples of obstacles companies are encountering, most commonly around the rule of law, at a meeting with Prime Minister Oleksiy Honcharuk that was attended by 500 business leaders on October 4 in Kyiv. The key concerns from business are not new. The rule of law, fair justice, macroeconomic stability, a predictable tax policy, secure investment, and property rights, including intellectual property rights, top their lists.

Shell, a global energy giant, runs a relatively small network of petrol stations across Ukraine. The company is being chased by Ukrainian courts, accused of concerted anti-competitive practices. It is fighting allegations of price collusion on the retail fuel market and has been disproportionally fined.

McDonald’s, the world’s largest restaurant chain by revenue, has been unable to open a restaurant in Boryspil airport, Ukraine’s gateway to investors, for many years. I challenged the prime minister to review such cases, inviting him to lunch for a Big Mac meal at the airport as soon as the golden arches go up there.

The business community has some other specific concerns. President Zelenskyy’s team are now disappointingly pushing for a retroactive decision in the renewable energy sector. Over $1 billion of FDI has been pumped into Ukraine’s solar and wind industry. Any retroactive decision is a bad signal for investors, damaging trust in the country. There are other positive signs. A whopping 3,500 Ukrainian enterprises like chemical plants, greenhouses, and factories are stateowned; they are managed, or frequently mismanaged, by state-employed managers. Ukraine’s parliament has given the green light to sell off many of these businesses to private investors. Privatization could give a significant boost to the economy. We strongly support this effort. American actor and film producer Tom Cruise visited Ukraine earlier this month, scouting for new locations to shoot his next action film. Another good sign, one of many that I am seeing. American and international businesses are looking at Ukraine as a potential destination for their operations. But in the short term, all eyes are on the International Monetary Fund, seen as a seal of approval for foreign investors. If there is no cooperation with the IMF, then attracting $50 billion investment will be mission impossible indeed. Source: Atlantic Council

Meeting with the Prime Minister of Ukraine Oleksiy Honcharuk On October 4, member companies of the American Chamber of Commerce in Ukraine, the European Business Association, and the Union of Ukrainian Entrepreneurs met with the Prime Minister of Ukraine Oleksiy Honcharuk. Prime Minister Honcharuk presented the new program of the government. Business community voiced the need to further accelerate reforms in Ukraine with no turning back. â&#x20AC;&#x153;Take good care of the companies already operating in Ukraine, and the goal to attract $50 billion of foreign direct investment will be mission possibleâ&#x20AC;?, said AmCham Ukraine President Andy Hunder during his speech. Tymofii Mylovanov, Minister of Economic Development, Trade and Agriculture, Zoriana Skaletska, Minister of Health, Oksana Markarova, Minister of Finance, and Denys Maliuska, Minister of Justice, also participated in the meeting representing the government.

Press Breakfasts with the Delegation of TOP International Journalists Ukraine is changing, and business stands ready to get the message across. AmCham Ukraine President Andy Hunder together with Lenna Koszarny, Chair of the Board of Directors of the American Chamber of Commerce in Ukraine, Founding Partner and Chief Executive Officer of Horizon Capital, Michalis Alexandrakis, Managing Director Ukraine, Caucasus & Moldova, Philip Morris Ukraine, Andrey Stavnitser, Investor, General Director, TIS Group of Terminals, and Tetyana Korotka, Deputy Business Ombudsman, had a press breakfast with international journalists on realities, challenges and opportunities of doing business in Ukraine. Speakers presented Ukraineâ&#x20AC;&#x2122;s business and investment overview to the TOP international journalists from CNN, The Wall Street Journal, The New York Times, Bloomberg, Voice of America, Tabula, Washington Free Beacon, and Deutsche Welle. AmCham Ukraine President Andy Hunder also moderated the press breakfast with the Head of the Verkhovna Rada Dmytro Razumkov on Ukraineâ&#x20AC;&#x2122;s political environment, reform process and legislative plans of the new Parliament.

B2G Dialogue MEETING WITH MAKSYM NEFYODOV, HEAD OF THE STATE CUSTOMS SERVICE AmCham Ukraine members met with Maksym Nefyodov to discuss plans of the recently established State Customs Service, current issues within customs sphere, expected timeline of start of the new authority’s work as well as shared the business community’s expectations.

MEETING WITH YEGOR CHERNEV, DEPUTY HEAD OF THE PARLIAMENTARY COMMITTEE ON DIGITAL TRANSFORMATION AmCham Ukraine members addressed Yegor Chernev with current issues within the IT and telecom spheres. The participants discussed Ukraine’s digital agenda, “State in Smartphone” initiative, national digitalization projects, and respective legislation in the mentioned spheres.

MEETING WITH DENYS MALIUSKA, MINISTER OF JUSTICE AmCham Ukraine leadership met with the Minister of Justice Denys Maliuska to discuss possible ways for further cooperation. Introduction of safeguards against raiding attacks and fraud, development of e-services in the sphere of justice, improvement of the system of execution of judgments, and alternative dispute resolution were among key topics for discussion. DIPLOMATIC INSIDERS CLUB MEETING “BUSINESS SENTIMENT ON THE FUTURE OF UKRAINE” Traditional meeting of the Diplomatic Insiders Club was an opportunity for diplomats to hear the view of the business community on realities of doing business in Ukraine, analysis and forecasts, as well as to discuss opportunities and challenges for companies after parliamentary elections, current macroeconomic situation in Ukraine and vital reforms required for achieving bold economic growth.

B2G Dialogue EXPERT DISCUSSION “AGRIBUSINESS: BATTLE FOR VALUE” Participants discussed key tendencies and challenges on Ukraine’s grain market, opportunities in export of agricultural processing products, impact of currency liberalization on the development and financing of the agricultural sector.

PRESENTATION OF THE LAND REFORM CONCEPT AmCham Ukraine members had an opportunity to discuss key aspects of the Land Reform Concept with Taras Vysotskyi, Deputy Minister of Economic Development, Trade and Agriculture. HEALTHCARE MARKETING HUB SESSION “PATIENT ENGAGEMENT DAY. ADDRESSING THE ACCESS AND ADHERENCE CHALLENGE IN HEALTHCARE TODAY” AmCham Ukraine Healthcare Committee members discussed the importance of the continuous professional development of healthcare professionals, discovered world trends in Patient Support Programs, and legal aspects of their implementation in Ukraine. MEETING WITH JOHN DIDIUK, ESQ., DIRECTOR, INTERNATIONAL PROJECT FINANCE, AT THE OVERSEAS PRIVATE INVESTMENT CORPORATION (OPIC) IN WASHINGTON, D.C. Mr. Didiuk shared with the Chamber members the new opportunities that will be available once OPIC becomes the U.S. International Development Finance Corporation (DFC) as well as provided insights on respective changes.

B2G Dialogue MEETING WITH PAVLO KUKHTA, FIRST DEPUTY MINISTER OF ECONOMIC DEVELOPMENT, TRADE AND AGRICULTURE Members of AmCham Ukraine had an opportunity to discuss strategic plans and key priorities of the Ministry, as well as current issues within labor sphere and business community’s expectations with Pavlo Kukhta.

MEDIA & COMMUNICATIONS COMMITTEE MEETING WITH MYKYTA POTURAIEV, DEPUTY HEAD OF THE PARLIAMENTARY COMMITTEE ON HUMANITARIAN AND INFORMATION POLICY Participants discussed priority Draft Laws for the Parliamentary Committee on Humanitarian and Information Policy as well as legislative plans in media sphere.

ROUNDTABLE DISCUSSION “ACCELERATING BUSINESS PERFORMANCE BY PROMOTING DIVERSITY” AmCham Ukraine HR Committee in partnership with the U.S. Embassy in Kyiv held a roundtable discussion on diversity as a competitive advantage for business, at the America House Kyiv. Participants shared best practices in providing equal opportunities and respect for employees, accepting their uniqueness and creating an inclusive culture. MEETING WITH HALYNA TRETIAKOVA, HEAD OF THE PARLIAMENTARY COMMITTEE ON SOCIAL POLICY AND VETERANS’ RIGHTS PROTECTION The meeting was devoted to the discussion of strategic plans and the most acute aspects of social policy reform, labor market, as well as perspectives of the new Labor Code of Ukraine adoption and business community’s vision on its essential provisions.

Young Professionals Network “Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others”, as Jack Welch once said. AmCham Ukraine relaunched the Young Professionals Network (YPNet) – the platform to develop young leaders from the Chamber member companies through training, mentoring and expanding the network of contacts. The YPNet 2019 season consists of 4 modules – PR Basics, Logistics for Beginners, Excel Basics and Career Development. PARTNERS

GIFT PARTNERS

VENUE PARTNER

6th Anniversary of Women’s Executive Leadership Development Initiative Life is a journey, not a destination. Six years ago, a great journey of AmCham Ukraine personal development and business-networking platform for women began. Since then Women’s Executive Leadership Development Initiative brings together successful, powerful and bright women leaders. PREMIUM SPONSOR

PARTNER

Guests had an opportunity to celebrate another milestone of a new and exciting WELDI journey. Deputy Chief of Mission of the United States Embassy in Kyiv Kristina Kvien and AmCham Ukraine President Andy Hunder shared stories of their life and career journeys, travel hacks, as well as inspired guests to open new destinations.

ANNIVERSARY PARTNERS

GIFTS PARTNER

WINE PARTNER

Welcome Back Business Networking Cocktail At the beginning of the new business season, AmCham Ukraine members, partners, and friends enjoyed a traditional Welcome Back Business Networking Cocktail. All guests had an opportunity to enjoy a warm atmosphere of community, see partners and friends, establish new contacts and open new windows of business opportunities. PARTNERS

Rebuilding Ukraine One House at a Time The â&#x20AC;&#x153;Building Ukraine Togetherâ&#x20AC;? initiative traces its roots back to the volunteerism that saved Ukraine during the Russian invasion of 2014. It has since evolved into a longer-term nationwide drive to bring Ukrainians from different regions together and foster a stronger sense of community among a generation : scarred by the trauma of hybrid war

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: A little over five years ago, the Ukrainian army liberated Kramatorsk, the first

city captured by Russian mercenaries in the early days of the conflict in spring 2014. At the time, the Ukrainian government did not have enough resources to respond to the country’s overwhelming war-related needs, but untold thousands of volunteers across the nation stepped up to fill the gaps. Some joined the military, others went into government, and others worked to reintegrate the country’s 1.5 million internally displaced persons. A group of Ukrainian-speaking activists and development professionals from Lviv, of which I am a part, also wanted to contribute. So we grabbed our hammers and got to work. We decided to rebuild damaged houses in Kramatorsk. In the summer of 2014, Vitaliy Kokor, director of the Lviv Education Foundation, organized the first volunteer battalion in Kramatorsk. After rebuilding the first home, we realized that restoring a home is not as important as standing in solidarity with people who had lived under a military and information blockade for three months. While Kramatorsk was under occupation, Russian media claimed that fascists had seized power in Kyiv and would make the Donbas speak Ukrainian. As Ukrainian-speaking volunteers, we were not surprised that locals treated us cautiously at first. However, this barrier broke on the third day of our weeklong construction project. As we hammered and talked with those who had suffered from shelling, we received invites to share varenyky and borscht with local families. Interestingly, they spoke Ukrainian to us.

Connecting Ukrainians

Even after five years of war, there is still a big gap between east and west Ukraine. Ukrainians do not tend to travel much domestically, and often do not know people from other regions of the country. In 2014, more than 70 percent of Donbas residents had never been outside of their region. This is a disaster for any state, especially one at war and in need of a unifying civic identity. In Kramatorsk, the camp we organized brought young Ukrainians from different regions together. In addition to 50 volunteers from different cities of Ukraine, many locals joined us in Kramatorsk. Not only did we renovate 25 apartments, we were also able to create a unique environment of civic-minded people. We have

About the author: Yurko Didula is a project coordinator at Lviv Education Foundation. The Building Ukraine Together initiative welcomes international volunteers. Please see their website (bur.lef.org.ua) for further information

since created the Building Ukraine Together project to replicate this across the country. The lessons from those early days remain relevant. Every evening in Kramatorsk, we had bonfires, sang songs, watched movies, and talked. Of course, these are utterly normal activities. But at the time, residents were in dire need of a safe place to spend time and process what was happening in their lives. The city’s active youth community played a major role in the volunteer effort. When the camp ended, they decided to create a permanent space where young people could continue to gather. Thus, the Freedom Home youth center (Vilna Khata) was born. Freedom Home now hosts dozens of educational projects, an annual Easter festival, a business incubator, street food festivals, and a local volunteer program for taking care of elderly neighbors. Kramatorsk has come back to life. After Kramatorsk, we realized that we were onto something. We began to do the same thing across Ukraine. Year after year, more cities and towns invited us in. Five years after Kramatorsk, our volunteer initiative has now become the largest volunteer movement in Ukraine with a network of more than 2,500 volunteers. Together, we have restored housing for 220 families and helped 17 cities create their own youth centers. The Building Ukraine Together project, which began with a simple desire to help, has evolved into a national mechanism for aid and community development. Today’s Ukraine is full of ideas. However, there is often a lack of people with the confidence and resources to bring these ideas to life. Nevertheless, our experiences shows that when volunteers from all over Ukraine come together, communities can accomplish more than they thought possible. One recent example is the story of Volodya Frants in Zhytomyr Oblast. After the Revolution of Dignity, Volodya organized a volunteer group in his village that sewed clothes and made meals for the army on the frontlines. Subsequently, Volodya organized a well-attended arts festival in his village. People were thirsty for more, but there was not enough infrastructure to support this demand. With backing from Building Ukraine Together volunteers and local businesses, Volodya was able to transform an abandoned city square with a broken fountain into a concert and festival site.

Investing in Ukraine’s Future

Our engagement with volunteers does not end at the camps Building Ukraine Together organizes. Among the hundreds of young people who come to these camps, many have their own project ideas. Building Ukraine Together gives them special management training with an opportunity to present their business plans to partners and investors who support them financially or in-kind. Young teams get a chance to experiment and implement their own projects. To some extent, the Lviv Educational Foundation works like an angel investor: by investing in many people, we hope that some will succeed and generate social capital. With so little practical training available in the Ukrainian education system, we recognize that we must instead create ‘learning by doing’ opportunities for young Ukrainians. Project teams, often with meager funds, learn to plan, form KPIs, and evaluate their work. Most Ukrainians lack entrepreneurial thinking and fear responsibility, but this is not true of our volunteers. We believe we are changing Ukraine in a profound way. The youth centers that have emerged after Building Ukraine Together camps play a role similar to that of the Ukrainian Catholic University in Lviv. They form an environment of people who trust each other and share common values. In turn, this gives one a sense of belonging and a desire to work for something greater than oneself. We not only dream of a better Ukraine, but we are building it with our own hands. This article originally appeared on the Atlantic Council’s UkraineAlert service

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Ukrainian economy receives international upgrades

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Morgan Stanley has upgraded its Ukrainian GDP growth forecasts for the coming two years as international optimism over the country’s economic outlook continues to strengthen. The US-based financial sector giant now expects Ukraine to record 3.2% GDP growth in 2020, with the figure rising to 3.6% in 2021. This is the latest in a series of international upgrades in recent weeks. In September 2019, leading international credit ratings agencies Fitch and Standard & Poor’s both upgraded Ukraine from “B-“ to “B”.

Ukraine to begin using Bloomberg bond platform

Ukraine’s Finance Ministry and National Bank (NBU) have confirmed plans to begin using the Bloomberg Auction System (BAS) to hold government bond auctions in a move that aims to improve international access to the country’s booming bond market. NBU officials said the decision should help “facilitate the participation of international banks operating in the primary market for Ukrainian government bonds.” Demand for hryvnia-denominated Ukrainian government bonds has reached record levels this year thanks to the country’s improving economic outlook.

China overtakes Russia as Ukraine’s top trade partner

Chornobyl Tourism Upgrade Underway Ukraine is actively upgrading the tourism potential of the country’s Chornobyl zone, with a number of autumn 2019 innovations designed to improve the experience on offer to visiting tourists. The end goal is to help the country make the most of increased international interest generated by the recent globally acclaimed Emmy-winning HBO TV series “Chernobyl”. In a move that will improve connectivity and allow visitors to remain online throughout their tours, mobile communications operator Kyivstar has recently connected the Chornobyl zone to its 4G high-speed internet network. Meanwhile, the Ukrainian authorities have given the green light to tourism on a number of river routes passing through the exclusion zone, subject to 56

a range of safety precautions. The biggest changes have come at the atomic energy plant itself, where tourists will now be able to visit the control room after the partial lifting of longstanding restrictions on access. These developments are part of efforts to transform the Chornobyl site in line with Ukrainian President Volodymyr Zelenskyy’s July 2019 decision to declare it an official national tourist attraction. Zelenskyy spoke of wanting to turn the site of the world’s worst nuclear disaster into a modern tourist attraction that would demonstrate how far Ukraine has progressed since the Soviet era. “Chornobyl has long been a negative part of Ukraine’s international brand,” he commented. “The time has come to change this.”

Figures released by the National Bank of Ukraine (NBU) in late September showed that China was Ukraine’s largest trading partner during the first three months of 2019. The overall volume of Chinese-Ukrainian trade reached USD 2.55 billion during the Q1 period, allowing China to move ahead of Russia (USD 2.34 billion) and ending decades of Russian trade dominance in Ukraine. These figures are the latest indication of Ukraine’s expanding global economic footprint since 2014. In early 2019, Poland overtook Russia as the largest single market for Ukrainian exports.

Ukrainian tech startup Grammarly is USD 1 billion unicorn

Tech trailblazer Grammarly, which was founded in Ukraine in 2009, has attracted USD 90 million in its latest round of funding, driving the company’s overall valuation to above USD 1 billion and earning it official unicorn status. Grammarly is a digital writing tool with more than 20 million daily users that utilizes artificial intelligence to help improve English-language writing skills. It began life ten years ago in Kyiv as a startup created by Ukrainians Oleksiy Shevchenko, Maxsym Lytvyn and Dmytro Lider. The company’s headquarters is now in San Francisco, with additional offices in New York and Kyiv.

opinion

Can Ukrainian tax reform match high expectations? The new government promises to pursue business-friendly tax reform but initial signals are mixed

About the author: Andriy Dovbenko is a businessman and venture investor Discussions about the reform of the tax system are an eternal feature of the Ukrainian political landscape. The country has witnessed repeated changes to the national taxation system, with fiscal services renamed and reassigned, but the debate continues from one generation to the next, often with more questions than answers. This issue has its roots in the nature of Ukraine’s post-independence transition. When Ukraine emerged from the Soviet era, the country’s leaders faced the task of rebuilding the state from planned economy to market economy. The unevenness of this process was understandable. It was necessary to maintain certain elements of the social state while introducing market forces. As time passed, the human factor has become increasingly prominent in this evolving debate, with both committed lawmakers and corrupt officials influencing the development of Ukraine’s tax policies. This has led us to today’s situation, where the taxation system is not able to satisfy the expectations of either business or society as a whole. Tax policy remains one of the key focuses of Ukraine’s reform efforts. Over the past five years, two factors have exerted a dominating influence over the entire reform agenda: the ongoing war in the east of the country, and Ukraine’s dependence on the requirements of the international financial institutions that provide crucial credit support. Against this already complex background, taxation policymakers have sought to strike a balance between creating business opportunities and the need to keep treasury coffers as full as possible. At present, the income tax rate in Ukraine is 18%. Broadly speaking, this is more or less in line with the experience of other European countries. For example, in Hungary and Poland the rate is 19%, while in Switzerland it is approximately 18%. However, the specifics of the tax formula differ from country 58

to country, with the general trend in recent years being to increase the pressure on big business and reduce the use of tax havens. In parallel with this focus on big business, many European countries have also amplified efforts to create a favourable tax climate for small and medium-sized businesses in a bid to boost entrepreneurial activity. In Ukraine, the new government has made numerous cautious statements regarding tax reform that are somewhere along the same lines. The question remains as to whether this is merely in order to maintain the government’s high levels of public popularity. Do these statements reflect a genuine tax reform strategy? Not long ago, Prime Minister Oleksiy Honcharuk noted that he saw no reason to bolster state resources, but instead favoured a gradual reduction of the tax burden. At the same time, the PM allowed himself some criticism regarding tax policies towards big business, claiming that they enjoyed preferential tax treatment from the state. The Prime Minister has made it clear that he does not believe ordinary Ukrainians should continue to pay the bills of oligarchs from their own pockets. Instead, it seems the government is trying to push for larger tax payments in industries where the interests of big business predominate. All this sounds promising. However, the initial innovations of the incoming administration in the taxation sphere leave considerable room for doubt. Many see new regulations governing Payment Transaction Recorders (PTR) as an attack on single tax payers. Formally, at least, this approach is part of broader efforts to remove more and more of the economy from the shadows. In reality, it can also hurt small businesses. A subsequent statement from the head of the State Tax Service claiming that PTR requirements would not involve the purchase of expensive equipment because everything would be available via smartphone did little to convince the doubters. Meanwhile, the head of Ukraine’s Parliamentary Committee on Finance, Tax and Customs Policy, Daniil Hetmantsev, has proposed banning some categories of individual entrepreneurs from such services altogether. These initiatives provoke mixed reactions. On the one hand, they promise the business community more favourable conditions, but at the same time, they lead to the introduction of new restrictions. Nobody expects reforms to be painless. On the contrary, there is a clear consensus among the Ukrainian business community that the rules of the game need to change. Even those who are inclined to resist change understand and appreciate this necessity. Nevertheless, questions emerge when the thrust of reforms falls on the most vulnerable groups within the business community, while big business remains in a privileged position. Why repeat the mantra of a balanced tax reform agenda if, in reality, the new government is unable to move the issue forward from its current dead end? At some stage in the reform process, risks to state budget revenues are virtually unavoidable. This creates political challenges, but it is also the only way to achieve a genuine transformation. Reforms may prove unpopular, but this path is better than pretending that doing business will become easier without potentially painful remedies. www.bunews.com.ua

legal

Investing in Ukrainian healthcare reform The transformation of Ukraine’s healthcare sector creates opportunities for the business community further developments. While the focus will necessarily remain on patients and healthcare providers as the principle beneficiaries of this healthcare transformation, the reform drive also creates significant opportunities for private investment and business development.

Public-Private Sector Cooperation

About the author: Viktoriya Podvorchanska (viktoriya.podvorchanska@asterslaw.com) is a counsel at Asters and co-head of the firm’s pharmaceutical practice. For almost quarter of a century following the fall of Soviet Communism, successive Ukrainian governments largely ignored the growing weakness of the country’s healthcare system. Throughout this period, there was an unwillingness to let go of the Soviet legacy in a definitive manner, and a refusal to acknowledge the post-independence failure to provide unlimited and supposedly free healthcare services to all Ukrainian citizens. In reality, free healthcare in post-Soviet Ukraine was like dark humor – not everybody got it. In 2016, the total value of the Ukrainian healthcare market was estimated at EUR 4.3 billion. Of this amount, almost half came out of patients’ pockets, despite Ukraine’s constitutional commitment to provide free medical services. While half of medical treatments involved payment in one form or another, 85% of healthcare sector activity remained nominally in the public sector, with treatment still overwhelmingly taking place in state hospitals suffering from outdated infrastructure and limited access to modern technologies. Following the summer 2016 appointment of Ulana Suprun as Ukraine’s Acting Health Minister, the Ukrainian parliament adopted legislation in 2017 that cleared the way for the transformation of the Ukrainian healthcare sector. Suprun’s time at the Ministry of Health ended in summer 2019 as the new government under President Zelenskyy sought to appoint its own ministerial team, creating a degree of uncertainty over the future of healthcare reform. Nevertheless, the key principles and objectives of the reform process remain in place. The envisioned transformation of the Ukrainian healthcare system is farreaching and aims to introduce a business-like environment and fair competition to the sector, creating incentives for high-quality medical services. This involves a range of different elements, including the launch of a new financing model through the recently created National Health Service of Ukraine, the introduction of health benefits packages, a drive to make hospitals more autonomous, and much more. Due to a number of factors including deep-seated distrust among both the public and the professional medical community, healthcare reform has proven one of the biggest political challenges taken on by Ukraine since the 2014 Revolution of Dignity. However, these difficulties have not prevented rapid implementation of reform initiatives. Two years since the launch of the first reforms, the achievements are obvious and there are mounting expectations regarding 60

Following the successful first stage of healthcare reform at the primary care level, the process is set to expand to the secondary and tertiary care sectors starting from mid-2020. Public hospitals in those sectors will gain greater autonomy. They will enjoy far more flexibility in areas ranging from managing their own finances and leasing or purchasing equipment, to contracting services from private providers. Overall, the process should finally unlock the huge investment potential of Public-Private Partnerships (PPPs) in the Ukrainian healthcare sector.

E-Health Opportunities

Ukraine’s e-health initiative is an essential component part of the country’s broader healthcare transformation. In essence, it aims to transfer all medical records gradually to the digital sphere. This includes e-registers of patients, healthcare professionals and healthcare institutions, e-prescriptions, personal e-medical histories, and so forth. An e-health platform is already in place to manage primary care contracts and prescriptions for medicines subject to reimbursement. This digitalization trend is now set to develop rapidly in line with the “government in a smartphone” concept promoted by Ukraine’s new President Volodymyr Zelenskyy. E-health uses open source solutions and creates diverse business opportunities in the fields of software development, MedTech, health data analysis and data protection.

Healthcare Management and Training

As public hospitals gain more business freedom and independence, Ukraine is facing significant levels of unmet demand for professional healthcare managers. This, in turn, could open the door for healthcare management outsourcing. It could also create a market for service providers who are able to train or recruit healthcare administrators.

Constructing and Renovating Ukraine’s Healthcare Infrastructure

A significant portion of Ukraine’s current healthcare facilities is in desperate need of renovation and modern equipment. We therefore expect to see an increase in the number medical infrastructure projects and project financing opportunities over the coming years. This is likely to cover renovation of existing infrastructure as well as constructing and equipping new facilities.

Growing Private Healthcare Sector

The private segment of the Ukrainian healthcare industry is continuously expanding. Private healthcare providers are now offering a wider range of services and can access increasingly sophisticated technologies. Ukrainian healthcare reform should contribute further to this growth trend, as the National Health Service of Ukraine is able to cooperate with private and public healthcare institutions on equal terms. This opens the way for private sector healthcare service providers to access transparent and predictable funding from the Ukrainian state. www.bunews.com.ua

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opinion

Building on Ukraine’s

export advantages Value-added production could make resource-rich Ukraine a global export powerhouse

Ukraine’s cost-competitiveness, abundance of resources, and favorable geographical location at a global crossroads make it a potential export powerhouse. However, this is not yet the case. In order to realize the country’s vast export potential, Ukrainian business owners must appreciate the international opportunities available to them, while also overcoming mental barriers that continue to discourage the development of ambitious expansion plans.

From Raw Materials to Value-Added Production

Ukrainians often proudly refer to their nation as a grain superpower, but this dominant position on global grain markets is not necessarily a source of pride. Although nobody would dispute Ukraine’s agricultural wealth, the country continues to export huge quantities of grain while leaving it to others to produce flour, bread, 62

and a host of other value-added products. This makes a mockery of Ukraine’s historic title as Europe’s breadbasket. In reality, the country’s annual bread exports are a tiny fraction of the grain volumes shipped from Ukraine to global markets each year. In contrast, nearby countries including Turkey and Poland both export large volumes of processed products such as flour, pasta and bread. Poland currently earns around USD 1.4 billion per year from bread exports, which is 12 times the income Ukraine generates. Meanwhile, Turkey can count on USD 1 billion annually from flour exports, and a further half a billion from pasta. Ukraine should seek a greater presence in these value-added export markets in order to benefit more fully from the country’s agricultural advantages. This would require major investment in production capacities, as well as a change in mindset. One of the biggest barriers to : www.bunews.com.ua

opinion

: greater agricultural export revenues remains a sense of satisfaction

with the existing order of things. It is difficult to convince agribusiness owners and investors of your vision to conquer the world with Ukrainian bread while everyone is repeating the mantra of Ukraine as a grain superpower. Grain is good but bread is better.

Ukrainian Creativity is Internationally Competitive

Do you listen to the music of Ed Sheeran? If so, you are like many millions of others around the world. The flame-haired British crooner is just one of a galaxy of UK pop stars who generate billions of dollars in export revenues every year for Great Britain. Pop music is a small part of the broader international creative industry, which is fast becoming one of the primary engines driving the global economy. Exporting creativity is far more challenging than shipping raw materials. It requires more thought and analysis. You must understand your target audience and market your wares accordingly, often tailoring and tweaking campaigns to suit individual national markets. Crucially, success also depends on creative excellence. Luckily, Ukraine has no problems in this department. The “Made in Ukraine” trend of the past five years has demonstrated the creativity of Ukrainian producers in a wide range of sectors. However, this has yet to translate into a surge in Ukrainian creative exports. There are some promising examples. Continuing with the pop music theme, Ukrainian groups such as Kazka and solo artists like Anna Korsun (Maruv) have scored massive international hits in the past twelve months, clocking up hundreds of millions of YouTube views. Ukrainian fashion designers have also emerged on the global stage since 2014, with numerous international celebrities sporting Ukrainian labels at high-profile events. Then there are creative Ukrainian companies like startup toy manufacturer UGears, which signed a breakthrough cooperation deal with the Walt Disney Company in 2018. Ukraine clearly does not lack creative talent. The challenge now is to export this creativity to foreign markets.

Understanding Available Opportunities

The intricacies of the export trade are not something we teach in Ukrainian schools, while the lingering Soviet legacy often creates both practical and mental barriers to the expansion of Ukrainian companies into international markets. There is an appreciation of some basic principles. For example, most people understand that one of the key issues underpinning any international commerce is the payment of customs duties. However, not everyone fully grasps the advantages presented by Ukraine’s many free trade agreements. Today’s Ukraine enjoys FTAs with dozens of countries, including the member states of the European Union – the world’s wealthiest trade bloc. This creates opportunities to export goods and services in hundreds of categories without the obstacle of customs barriers.

There are also a number of state agencies and organizations that seek to facilitate the entry of Ukrainian companies into new international markets, including the Ukrainian government’s Export Promotion Office. The services these bodies can offer include participation in official trade promotion visits and in-country networking support. Many Ukrainian companies have yet to take advantage of such opportunities, despite their ready availability.

Leaving the Comfort Zone

Many Ukrainian business owners will tell you that they face enough risks in their daily activities without gambling on international expansion. These well-documented risks include corruption, raiding, and unfair competition. Such thinking means that it is often the most ambitious Ukrainian companies that lead the way to new export markets. Expansion efforts often involve taking on multinational corporations or entering new markets where major global players have yet to establish themselves. In many cases, this courage comes with youth. It is no coincidence that the overwhelmingly youthful IT sector is now one of the leading Ukrainian export industries. Ukraine’s IT companies have learned how to compete against global market leaders and are gaining in confidence as they increasingly move beyond basic outsourcing functions towards software production and other valueadded segments of the industry.

Moving Up Global Value Chains

Did you drink a cup of latte this morning? The Brazilian farmer who grows the coffee beans can expect to get 30-50 kopeks for each cup. The company that roasts the coffee gets up to UAH 3. Most of the money will go to the café, where it then becomes salaries, rent, and taxes. In any international market, you will find the equivalent of farmers, traders, roasters, wholesalers and retailers. For example, Ukrainian producers dominate the global sunflower oil market. The main importer of Ukrainian sunflower oil is India. However, if you visit a Delhi supermarket, you will find Indian and not Ukrainian brands displayed on the shelves. The challenge for Ukrainian companies is to move as far up the production chain as possible. This means facing tougher competition, and often involves meeting stricter regulations and higher consumer standards. However, it also results in access to far greater profit margins. This is why global players tend to occupy niches towards the end of production chains. For example, the first Ukrainian dairy production plant to launch dairy exports to the EU was French multinational Danone. Creating value-added production in Ukraine is not simple. It is all too easy to fall back on excuses regarding the lack of state support and the risks involved in taking out expensive loans in order to upgrade facilities. These problems are very real, but Ukrainian businesses must overcome them if the national economy is to play to its natural strengths. Experts often state that Ukraine’s economic development depends on the country’s ability to attract higher levels of foreign direct investment (FDI), but the role of increasing exports is equally crucial. Ukraine has a number of significant advantages that make the country competitive on global markets. The task now is for individual Ukrainian companies to grasp the export opportunities that already lie before them.

About the author: Stanislav Shum is CEO of content marketing company TopLead 64

www.bunews.com.ua

Ukrainian Legal Industry Professionals Gather for Annual Judicial Forum Members of Ukraine’s legal services industry and representatives of the country’s judiciary gathered at Kyiv’s Hilton Hotel in early October for the eighth annual Judicial Forum. Hosted by the Ukrainian Bar Association together with the Council of Europe and LCF Law Group, this year’s event explored issues relating to judicial reform together with the theme of interaction between the judiciary and other state and non-state bodies including the media.

“When we first launched the forum back in 2012, the goal was to bring judges, lawyers and prosecutors together to discuss key topical issues related to the Ukrainian judicial system,” commented LCF Law Group Managing Partner Anna Ogrenchuk, who served as this year’s Forum program coordinator. “At this year’s Forum, we aimed to highlight the importance of promoting effective interaction between the legislative, executive and judicial branches of power.”

networking events

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ICBAC International Business Community at the National Philharmonic The International Council of Business Associations and Chambers in Ukraine (ICBAC) brought together a veritable United Nations of business community representatives at Kyivâ&#x20AC;&#x2122;s National Philharmonic in September for an evening of culture and networking featuring music from around the world. The highlight of this gala event was a concert by the Kyiv Symphony Orchestra conducted by Alla Kulbaba and accompanied by National Opera of Ukraine soloist Susanna Chakhoian. Founded in 2017, ICBAC aims to serve as a platform amplifying the voice of Ukraineâ&#x20AC;&#x2122;s international business

community by uniting the many national business associations and chambers active in the country. The current ten members of ICBAC are the British-Ukrainian Chamber of Commerce, Canada-Ukraine Chamber of Commerce, French-Ukrainian Chamber of Commerce and Industry, Chinese Commerce Association, German-Ukrainian Chamber of Industry and Commerce, International TurkishUkrainian Business Association, Swedish Business Association in Ukraine, Ukrainian-Austrian Association, Ukrainian Chamber of Commerce and Industry, and US-Ukraine Business Council.

networking events

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Radisson Blu Hotel Renovation: “Rebirth of a Kyiv Legend” Kyiv’s original Radisson Blu Hotel, located in the Ukrainian capital’s historic Golden Gate district, unveiled a new look in early October following renovation works at the hotel that have been underway for the past two years. The ambitious overhaul involved the complete renovation of 254 guest rooms

as well as the hotel’s conference zone, lobby area and lobby bar. When the Radisson Blu Hotel opened in Kyiv in 2005, it was the first international brand hotel to enter the Ukrainian market. Hotel General Manager Jesper Henriksen called the renovation “The rebirth of a Kyiv legend.”

networking events

Kozak Night with Kyiv Lions Club Kyiv Lions Club members and friends gathered at the Equides Club in Kyiv on 5 October for the organizationâ&#x20AC;&#x2122;s annual Kozak Night charity fundraising gala hosted by Pavlo Shylko. The evening raised over UAH 100,000 for Lions Club projects in Ukraine. The Kyiv Lions Club team would like to thank event sponsors including Horizon Capital, UIA, Nemiroff, and Amway for their support, together with Inessa Farran, Elena Thwaites and Argentinian Ambassador to Ukraine Elena Leticia Teresa Mikusinski.

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Turkish Business Community Showcases Ukrainian Art The Turkish-Ukrainian Business Association (TUID) welcomed friends and colleagues to Kyiv’s Taras Shevchenko National Museum in early autumn for the opening of an exhibition by Ukrainian painter Nadiia Martynenko curated by Lesya Kochergina. The event was the latest in a series of exhibitions organized by TUID as part of the business

association’s commitment to promoting both Turkish and Ukrainian artists. Artist Martynenko was born in Ukraine’s Chernihiv region. She is a graduate of Crimea’s Samokish Art College. Her works seek to explore aspects of traditional Ukrainian identity in a globalized contemporary context.

networking events

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and finally

Kyiv’s first capsule hotel

Kyiv’s first capsule hotel officially opened in early October, offering technologically innovative pods for single sleepers and couples alike on Taras Shevchenko Boulevard in the heart of the Ukrainian capital. This is the first in a planned series of capsule hotels under the Monotel brand, and was inspired by founder Anna Osipenko’s experiences of travelling across eastern Asia, where ultra-functional guesthouses of this nature first began appearing many decades ago. Kyiv’s new capsule hotel can accommodate up to thirty guests, with 12 capsules allocated for men, 10 for women, and 4 for couples. There are also gender-separated bathing facilities. Capsules are accessible via a plastic key card and lock from the inside. The futuristic Chinese-produced units offer a wall-towall bed, Wi-Fi internet access, USB ports, TV, adjustable lighting, and digital device charging facilities. In keeping with the space station-like surgical style of the interiors, the hotel has strict rules prohibiting eating and alcohol consumption. Guests are also encouraged to refrain from making too much noise. A further two downtown capsule hotels are planned for Kyiv in the near fu-

ture, with Lviv and Odesa already earmarked as the next Ukrainian targets as the brand seeks to expand nationwide. The team behind the concept hope to benefit from the rising profile of Ukraine as an international tourism destination and the growing availability of budget flights to Kyiv from EU cities. With the Ukrainian capital now regularly appearing in the international media as an up-and-coming tourist destination and as an increasingly fashionable hipster haven, this Instagram-friendly form of accommodation certainly seems to be a timely addition to the city’s hospitality sector. Reserving a capsule for the night is not as cheap as you might expect. With prices for a single berth in the UAH 800 range, this novel Kyiv venue will find itself facing tough competition from a growing number of hostels and other more traditional budget options such as modest hotel accommodation and apartment rentals. Nevertheless, it is certainly something new for the Ukrainian capital and reflects the increasing emphasis on innovation as Kyiv shakes off its provincial inhibitions and grows more comfortable with its status as one of Central Europe’s largest and most vibrant cities.

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

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.

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