Business Ukraine 02/2018

issue 2/2018

NETHERLANDS

IN UKRAINE

BUSINESS UKRAINE 02/2018: This month we focus on bilateral ties between the Netherlands and Ukraine ranging from IT and banking to agriculture. The beautiful flowers on the cover page are “Jamala Tulips” named in honor of the Eurovision-winning Ukrainian singer by Dutch floral company StoKolex (photo courtesy of Flower Expo Ukraine 2017).

With special thanks to issue general sponsor Unilever for their support and to Gilles de Valk of the Netherlands Embassy in Ukraine for his assistance.

Western World Must Wake Up to Putin’s Hybrid War Since Russian troops began seizing government buildings in Crimea a little over four years ago, the international community has become accustomed to encountering new acts of Russian aggression on an almost daily basis. Whether it is masked men in eastern Ukraine, a chemical weapons attack in the English countryside, or an attempted coup in the Balkans, the process is always more or less the same: faced by a fresh round of accusations, the Kremlin declares “You can’t prove it was us” and blames everything on “Russophobia”. If the evidence pointing toward Russia is particularly damning, Moscow then insists that those involved were non-state actors operating entirely independently of the government. This is how Putin’s Russia wages war, by attacking in a myriad of different directions while carefully maintaining a semblance of plausible deniability that leaves its victims partially paralyzed and unable to respond effectively to an enemy they cannot conclusively unmask. Few doubt that Russia is behind each new act of aggression, but it is often difficult to differentiate between Putin’s many proxies and the hand of the Kremlin itself. The result is a slow boil conflict in which Russia is able to punch well above its weight against an array of ostensibly more powerful opponents who fail to recognize they are engaged in hostilities at all.

There is nothing to suggest Russia will change tack anytime soon unless forced to do so. To the contrary, each unchecked act of aggression leads to a new escalation as the campaign that began in Ukraine four years ago expands across Europe and North America. Every societal weakness and vulnerability throughout the West is now fair game for Kremlin information offensives.

Ethnic, religious, political, and separatist tensions will be fanned and enflamed at every opportunity. The threat of “little green men” appearing in either the Baltic or the Balkans remains all too real. Meanwhile, many are predicting potentially devastating Russian cyber-attacks on Western infrastructure similar to those developed against Ukraine in recent years.

The only way to stop this hybrid war is to win it. The Western world already has all the necessary tools to tame Russia but currently lacks the requisite unity and political will to do so. The first step toward changing this would be establishing an international consensus on the need to unite against Russia’s global hybrid war campaign. The collective response to the Salisbury chemical weapon attack was encouraging in this regard, but the refusal of some EU states to participate also exposed chinks in the West’s armor.

Nobody is going to declare war on Russia, but the cost of the Kremlin’s aggressive actions needs to rise dramatically. This means exploring ways to progressively cut Russia off from the architecture of international finance while targeting Russian assets in the West in a manner that reflects the Kremlin’s own blurring of the lines between state and non-state actors. It means expanding international initiatives like the Magnitsky Act while at the same time working to reduce Europe’s dependence on Russian gas, even if this brings significant economic costs of its own. It means limiting Russia’s ability to poison the media environment with deliberate disinformation.

These measures will be both painful and unpopular. One of the key tasks facing Western governments will be convincing the public that the gravity of the situation warrants the sacrifices asked of them. Anything less would be courting disaster in the not-too-distant future.

For the past four years, much of the outside world has remained in denial over the scale of the challenge emanating from Moscow. We have now reached the stage where Russian claims of plausible deniability are completely implausible. From Crimea to Salisbury, Putin is waging a hybrid war against the West. The sooner EU and US leaders collectively acknowledge this, the closer we will be to a solution.

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

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25 YEARS IN KYIV WE ARE PROUD TO BE A TRUSTED SERVICE FOR UKRAINE. THANK YOU FOR FLYING WITH US.

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Netherlands in Ukraine Ambassador Hoeks sees potential for further expansion of growing Netherlands-Ukraine trade and says Ukraine can benefit from Dutch expertize in everything from waterways to agriculture

Few members of Kyiv’s diplomatic community have as long an acquaintance with the Ukrainian capital city as Netherlands Ambassador Eduard Hoeks. The Dutch diplomat first came to Kyiv in the early 1980s while serving at the Netherlands Embassy in Soviet Moscow. He then paid several visits to the capital of newly independent Ukraine during the 1990s as part of his role overseeing the Dutch government’s Eastern Europe portfolio, before returning to Kyiv in October 2017 to take up the top position at the Netherlands Embassy. Unsurprisingly, much had changed over this period. “Today’s Kyiv has astonished me with its hustle and bustle,” he says. “It was always a naturally beautiful city but it has become such a dynamic city. There are parts of Kyiv today where you could be forgiven for thinking that you are in Paris or New York.”

He has also noted the profound impact almost three decades of nation building has had on the mood in the country’s capital. Recalling his time in Soviet Kyiv, Ambassador Hoeks speaks of the official pride he encountered in the Hero City status bestowed by the Communist authorities in recognition of Kyiv’s WWII experience. Since arriving once more in the city in late 2017, he has noticed the growing strength of Ukrainian national sentiment. “The feeling of national identity has become much stronger. There is a real sense of national pride and I have the impression this has only been strengthened by the conflict in the east.”

Ambassador Hoeks has specialized in Eastern Europe throughout his diplomatic career and has spent extended periods living in the region.

As well as his posting to Soviet-era 1980s Moscow, he was also Consul General for the Netherlands in St. Petersburg at the time of Ukraine’s 2004 Orange Revolution. As Ukrainians took to the streets of Kyiv to contest a rigged presidential election and demand a European future, Ambassador Hoeks found himself confronted with some novel diplomatic challenges of his own in the northern capital of neighboring Russia. “As a result of events in Ukraine, there was significant sensitivity over any use of the color orange,” he says. “Of course, as orange is the Dutch national : 10

About the interviewee: Eduard Hoeks is the Ambassador of the Kingdom of the Netherlands to Ukraine

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orange ties or displaying any orange in our national celebrations. The Russian reaction to the Orange Revolution was very emotional. It was pathetic and neurotic. They could not believe that a ‘brother’ of theirs would walk out on the family. There was a sense of shock.”

As head of the Netherlands diplomatic mission to Ukraine, Ambassador Hoeks is now closely involved in Ukraine’s ongoing EU integration efforts. He is optimistic that the Netherlands can consolidate its position as one of Ukraine’s leading EU trade partners, and is encouraged to note that Dutch exports to Ukraine grew by 11% in the first half of 2017 compared to the same period of the previous year. Meanwhile, the volume of Ukrainian exports moving in the opposite direction expanded by around 50%.

“We entertain the idea that the EU-Ukraine Association Agreement has played a positive role in this respect and will continue to facilitate growing bilateral trade.”

As commercial cooperation intensifies between the two countries, the Netherlands is also taking on a prominent role in the development of Ukraine’s own domestic trade routes. The Netherlands has initiated the Dnipro Development Initiative as part of efforts to share Dutch expertize and help Ukraine make the most of its waterways as a transportation network. “Ukraine’s rivers carried 60 million tons of cargo in 1990, but that figure had dropped to just 5 million tons by 2015,” notes Ambassador Hoeks. “We think there should be a redistribution from road and rail transport to rivers. Ukraine’s waterways are heavily underused and could benefit from the Dutch experience.”

Ever since the early 1990s, one of the key Dutch focuses in Ukraine has been agriculture. The limited space available to Dutch farmers has traditionally helped to foster an innovative approach to agricultural efficiency in the Netherlands, making the country’s agribusiness sector in many ways the ideal match for Ukraine’s vast but

sometimes inefficient agricultural holdings. This has paved the way for significant investment and cooperation. “Ukrainians appreciate the role of Dutch farmers in terms of promoting both innovation and efficiency,” says Ambassador Hoeks. “Everybody likes to talk about Ukraine’s wonderful black earth but it is under-utilized at present. There are many Dutch farmers actually living and working in Ukraine, bringing Dutch expertise to the country in everything from seed improvements to cattle rearing.”

He sees reform of Ukraine’s agricultural land sale moratorium as a potential gateway to even greater Dutch investment in the sector, but stresses that ending the ban on purchasing land will not remove all the obstacles to a better investment climate. “The problems actually extend to property rights in general. When a farmer is successful, this can spark jealousy and we then see the phenomenon of raids. There have been raider attacks on Dutch farms and this is something we are obliged to warn potential farmers about.”

Ambassador Hoeks sees the country’s rule of law shortcomings as the most important single barrier to attracting greater international investment to Ukraine. “If you asked people in the Netherlands to identify the distinguishing feature of the Ukrainian business climate, they would answer ‘corruption’,” he says. While he recognizes that significant reforms have taken place in the past four years, he argues that many of the causes of corruption remain deeply embedded in Ukrainian society, and says it may take another generation or two before the country can fully overcome this Soviet legacy. “It is not so much an issue of the institutions themselves or the rules and regulations. It is more about the Soviet mentality that is still lingering in many areas. This needs to change in order for the country to make itself more attractive to foreign investors.”

Members of the Dutch business community and other Netherlands residents are probably more

familiar with Ukraine than many of their EU neighbors thanks to the unprecedented exposure to the country they enjoyed in early 2016 when the ratification of Ukraine’s Association Agreement with the European Union became the subject of a hotly contested national referendum. The vote eventually went against Ukraine with a turnout of just over 30%, a result that led the Dutch government to push for additional clauses in the Association Agreement that would meet the concerns of Netherlands voters.

Looking back on the 2016 referendum campaign, Ambassador Hoeks says that while the official issue at stake was Ukraine’s EU Association Agreement, for many Dutch voters the ballot represented an opportunity to express their wariness of Brussels bureaucracy and the perceived threat to national sovereignty posed by the expanding European Union. “The campaign focused on a number of broader issues. People were concerned that the whole idea of a united Europe was developing too rapidly. There were fears that some countries in Central and Eastern Europe had already gained EU membership before they were truly ready. These concerns inevitably had an impact on attitudes towards Ukraine, but in reality the referendum was more anti-Brussels than anti-Ukraine.”

In his current role, Ambassador Hoeks is now able to see Ukrainian society’s European integration efforts up close. He identifies the country’s vibrant civil society scene as particularly impressive. “Compared to my time in Russia, where the NGOs had a very difficult life being harassed in all ways and means, I’m positively surprised by the freedom that Ukrainian civil society has to operate,” he reflects. “I’ve been very impressed by their dynamism, their commitment and by their ambitions. They have good connections, both within Ukrainian society and internationally. There is a lot of networking and experience sharing with NGOs from the EU, including from the Netherlands. I feel privileged that the embassy is able to contribute to their work.”

“Ukrainians appreciate the role of Dutch farmers in terms of promoting both innovation and efficiency”

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Netherlands-Ukraine trade towards a stable recovery

The Netherlands is one of Ukraine’s key EU trade partners and a source of innovation past two years. Trade with the EU has been expanding in both directions, with the EU becoming the number one export partner of Ukraine. Over the past few years, trade between the Netherlands and Ukraine has been growing with substantial amounts in both directions. It is now very encouraging

to see indications that this growth is also continuing into 2018. This suggests that the growth figures we have witnessed from the most recent period are not simply a reflection of the sharp decline in the previous few years.

From Agriculture to Infrastructure About the author: Djeyhoun Ostowar is the Economic Counsellor at the Embassy of the Kingdom of the Netherlands in Ukraine Ukraine is slowly recovering from a period of economic and political turmoil, and this is visible in the country’s external trade and business relations. After contracting by a cumulative 16% in 2014 and 2015, the Ukrainian economy recovered in 2016 and in 2017 by growing with more than 2% each year, with projections for 3% growth in 2018. We believe international support played an important role in the normalisation of the Ukrainian economy. This includes the impact of the EU Association Agreement with its Deep and Comprehensive Free Trade Area (DCFTA), along with financial and technical support for reforms from partners including the EU, the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD), as well as numerous bilateral support programmes.

Bilateral Trade Bounces Back

It is very clear that increased international trade is a key force behind much of Ukraine’s economic growth. Ukraine’s overall export volumes have been steadily growing for the 14

Ukraine represents a complex and challenging but at the same time a promising economic environment for Netherlands investors. There are a number of inhibiting factors to take into consideration such as the slow pace of certain reforms, a difficult business climate, and specific internal and external challenges including the continuing conflict in the east of the country. Nevertheless, there is high potential thanks to a comprehensive reform framework, continued international support, and a significant level of economic normalisation. These current factors stand alongside generally favourable conditions such as Ukraine’s well-educated work force and the country’s famously fertile black soil.

The aforementioned favourable conditions help to make sure that there are a considerable number of foreign companies active in Ukraine, including from the Netherlands, while also guaranteeing significant interest from companies that are not yet present in Ukraine. Key sectors include not only headline-grabbing industries like IT and agriculture, but also logistics, infrastructure, creative industries, health care and others. For example, in April this year, we are planning to launch a consortium of Dutch companies and knowledge institutions in the river and seaport sectors brought together within the

framework of the Dutch government’s Partners in Business (PiB) initiative. This initiative is a follow-up and one of the results of the Dnipro Development Initiative (DDI), launched jointly by Ukrainian Ministry of Infrastructure and the Netherlands Embassy in autumn 2016. It enjoys a high level of interest and engagement by the Ukrainian government, international financial institutions (EBRD, EIB, IFC), international business associations (such as the EBA) and other embassies including the British, Belgian and US embassies. Regional outreach is also a key priority. Later this spring and summer, we are planning to organise a multi-sector trade mission to western Ukraine that will be backed by an in-depth analysis of both strengths and challenges in different sectors of the regional economy, helping us to establish opportunities for business and the development of the Ukrainian private sector.

Regional Focus

One of the things that we at the Netherlands Embassy try to do is to have a very clear regional and sectoral focus that can be sequenced and planned over longer periods.

We recognize that this kind of approach has a higher chance of success. In terms of private sector development and cooperation, we try to be as attentive as possible to our Ukrainian counterparts, in order to ensure that our private sector development efforts are demand-driven while also being as strategic as possible when it comes to stimulating Dutch-Ukrainian business relations. We strive to bring added value to Ukraine by encouraging and developing the fields in which the Netherlands has a strong track-record, including innovation and corporate social responsibility. Dutch companies can play a very important role in this, and there are already many good examples active here in Ukraine. The Netherlands Embassy will keep committing itself to helping both Ukraine and the Netherlands benefit from each other’s opportunities. www.bunews.com.ua

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Unilever marks 25 years in Ukraine Anglo-Dutch consumer goods giant has established Ukrainian production in Kyiv region When Anglo-Dutch consumer goods giant Unilever first entered the Ukrainian market in the early 1990s, the company had three staff members representing ten brands. As Unilever prepares to mark a quarter of a century in Ukraine this May, it now boasts over 200 employees across the country representing some of the most popular and successful consumer brands on the Ukrainian market, with a major production facility in the Kyiv region representing the company’s long-term investment into Ukraine’s future.

Quarter Century of Growth

Unilever brands in Ukraine currently include Lipton, Brooke Bond and Besida teas, Dove, Timotei and Clear personal hygiene products, Axe and Rexona deodorants, Domestos, Cif and Glorix home cleaning products, and much more. The company’s products are currently available via a nationwide network of key stores and consumer outlets. “Twenty-five years ago, we began work in Ukraine with a representative office that only handled imports. Today, we have our own production facility and partner producers operating in Ukraine, while also importing products from ten different countries to the Ukrainian market,” says Country Director Unilever Ukraine Vasyl Bovdilov. “In the last ten years alone we have invested EUR 325 million into the development of our trademarks and brands in Ukraine, and we have ambitious plans for the future.”

Kyiv Region Production Facility

The clearest signal of Unilever’s long-term vision for the company’s presence in Ukraine was the opening in summer 2016 of a production facility in the Kyiv suburbs. Located in the town of Gostomel just outside the Ukrainian capital, the new factory produces Unilever tea brands Lipton, Brooke Bond, and Besida. Raw materials for tea production in Ukraine come from plantations in Kenya, Sri Lanka, India, Argentina, Indonesia and Vietnam. The plant incorporates German and Italian technologies along with the latest Unilever global standards of minimal ecological impact in line with the company’s “Zero Waste to Landfill” corporate policy. The overall investment to construct this production facility was EUR 8.3 million. It began operations in June 2016 following a whirlwind nine-month construction process.

The importance of the Gostomel production facility for Unilever’s Ukraine strategy was underlined by the presence of Unilever CEO Paul Polman, who flew to Ukraine to attend the opening of the new facility. Mr. Polman explained that he personally wanted to be present for what he termed as ‘a landmark event’. “Who says you can’t be agile and entrepreneurial in Ukraine once you’ve made the decision?” he told guests at the official events to accompany the grand opening in summer 2016. “Ukraine is an important strategic market for Unilever, so it is no surprise to see us make this investment.”

Mr. Polman also voiced his confidence in the strong Unilever commitment to the Ukrainian market and consumers, and stressed the importance of international investment in order to create sustainable economic growth. “Foreign direct investment projects like the construction of this plant will be crucial for the continued recovery of the economy.

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Unilever CEO Paul Polman pictured during the 2016 opening of Unilever’s production facility in Kyiv region It is the right decision and a sign of our long-term commitment to Ukraine,” he offered. Following the opening of the Gostomel production plant, Mr. Polman received an invitation in 2017 to become a member of the Ukrainian President’s National Investment Council.

Corporate Social Responsibility

In line with the worldwide Unilever sustainable living plan, the company’s brands engage in a wide variety of corporate social responsibility initiatives. Highlights include 2014’s “Lipton – Amazing City” project which was recognized as Ukraine’s top social advertising campaign. Likewise, the “Lipton Park” project has won plaudits for encouraging careful consumption of natural resources and greater awareness of human impact on the environment. The annual Chestnut Run supported by Rexona brings together opinion leaders, consumers and company employees in support of pediatric cardio surgery.

Unilever’s Clear brand has teamed up with UNICEF and supported the UNICEF Football Cup. In 2014, Unilever together with UNICEF provided aid to over 22,000 children who had suffered due to the conflict in the east of the country.

The distinctive yellow-and-red branding of the company’s flagship Lipton tea brand can also be seen dotted throughout Gostomel on playground areas, beach umbrellas and building facades. This is all part of the Unilever policy of engaging with local communities by providing communal facilities and organizing local activities. In 2016, residents of the town set a new Ukrainian record when over three thousand people took part in a tea-drinking ceremony on Gostomel’s pretty lakeside beach.

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International bank connecting Ukraine to the corporate world ING has been central to evolution of Ukraine’s corporate culture since the 1990s

The ING Bank Ukraine Client Team pictured in the bank’s Kyiv offices Since arriving in Ukraine in the mid-1990s, ING has been instrumental in building corporate bridges between the country and the global economy, both through support for multinationals operating inside Ukraine itself and by helping major Ukrainian corporations gain access to international markets. ING first entered the Ukrainian market in 1994 as a rep office, before securing a full banking license in 1997.

Many of the bank’s corporate clients have now been with ING for more than two decades, representing some of the longest-standing business relationships in today’s Ukrainian financial services sector. This reputation for reliability is something the bank prides itself on. It has also helped ING gain ground in recent years as corporate customers in Ukraine sought access to the bank’s international network and safe haven stability amid the turbulence of the post-Euromaidan economic environment.

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Innovative Role in Ukraine When ING began operations in Ukraine, the country was still very much emerging from the Soviet shadows and remained dogged by negative “Wild East” perceptions that worked to discourage international investment in the country. In those early years of independence, the presence of ING often served as a vote of confidence in Ukraine’s credibility as an international partner. The 1999 restructuring of around USD 1 billion in Ukrainian sovereign debt stands out as a key moment in the country’s economic evolution that saw ING playing a lead role alongside the National Bank of Ukraine in a breakthrough that did much to demonstrate Ukraine’s diligence. This was one of many occasions in the late 1990s and 2000s where ING was at the forefront of groundbreaking developments in the Ukrainian corporate business sector, including an active role in the placement of IPOs for Astarta, IMC and Kernel.

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Opening International Markets More recently, ING has been the first financial institution to reopen international public debt markets to top Ukrainian clients following the extended turmoil in the country’s economy since 2014. This has helped the bank’s corporate clients overcome what was one of the greatest obstacles to financing in recent years. Over the past 12 months, ING was a co-arranger in Eurobond issues for Kernel, MHP and Metinvest, with an aggregate value of USD 3.7 billion. These transactions have gone a long way towards changing perceptions among international investors of Ukrainian risk in the post-crisis environment and have opened the door to new liquidity. “The bank’s reach to global investors along with our strong and long-term relations with Ukrainian clients and expertise made ING the natural first choice for local businesses tapping international markets since the crisis,”says Evgeniy Omelchuk, Head of the Corporate Agri Business Division at ING Bank Ukraine.

Enabling International Investment

Multinationals remain the core client base of the bank in Ukraine with ING providing the financing that has facilitated much of the major international investment into the country since the 1990s.

ING is one of Ukraine’s most capitalized banks and ranks among the country’s top three international banks servicing multinational companies, making it an obvious option for global brands entering the Ukrainian market.

Many of ING’s recent Ukrainian innovations focus on providing added benefits for multinational clients. Launched in summer 2017 for one of the bank’s international clients in Ukraine, the SWIFTNet service is a global channel of communication between clients and the bank. It allows international groups who have centralized payment or operate with banks via Swift connectivity to include Ukrainian subsidiaries into their global payment setup and make fully automated and straight-through payment processing.

The bank’s international reach and regional networks also allow it to offer clients in Ukraine e-banking solutions such as Insidebusiness payments across Central and Eastern Europe (CEE), which helps to manage accounts held in any CEE country from a single point of access. These IT solutions are very much in line with the vision of ING Bank CEO Ralph Hamers, who stated in August 2017, “We want to portray ourselves as a tech company with a banking license.” This culture of innovation has become a top priority for the bank, not only in terms of products, but also in approaches to business in general. This is what ING is doing globally and this is how ING officials in Ukraine say they would like to do business in the ground. “Innovations in products, in processes, and in our way of thinking are fundamentals when it comes to doing business and building long-running relationships with multinationals,” offers Olga Kyrychuk, Head of the International Business Clients Desk at ING Bank Ukraine.

Accent on Agriculture

Looking ahead, ING in Ukraine sees the bank’s current focus on agriculture growing as this strategic sector continues to take on a more important role in the broader Ukrainian economy. At present, agribusiness clients represent between 35% and 40% of the ING portfolio in Ukraine, including major Ukrainian groups and large multinationals. Twenty years ago, the bank started out with risk limits of www.bunews.com.ua

The ING Bank Ukraine Agri Team USD 10-15 million in the Ukrainian agriculture industry, but it now operates with a more than USD 650 million portfolio limit allocated to the sector.

ING has been involved in virtually all of the major syndicated finance deals in the sector in recent years, and is now seeing growing appetite for investment in upgrades of processing and infrastructure facilities as market participants look to capitalize on rising stability. The bank observes considerable potential for further growth in export volumes (grains), in added-value food products involving deeper processing, and in export and interior logistics. “We use the global expertise of ING to introduce best practices of international equity and debt markets to our clients, and help them to implement their core business strategy,” says Oleg Kababchian, Large Corporate Agri Clients Lead Manager at ING Bank Ukraine.

Investing in People

Underpinning ING Bank’s two decades in Ukraine is a team that in many cases has been with the bank since the very beginning. Despite high rates of employee turnover elsewhere in the Ukrainian banking sector, the majority of today’s ING employees in Ukraine have worked at the bank for more than ten years, while a significant number can trace their ING careers back to the 1990s. The bank takes pride in this record but emphasizes a forward-looking HR policy rooted in a highly original Employee Value Proposition – to become what ING officials term as an “Unbanky Bank”. In practice, this means fostering a creative and innovative work environment that allows talent to develop and encourages personal growth while offering staff the chance to gain international experience within the ING network.

The Kyiv offices of the bank in Ukraine are also currently undergoing a major renovation designed to introduce the latest trends and technologies, creating a friendly and healthy workplace environment. This new-look office will reflect the ING Group emphasis on forward-thinking and flexible approaches to work, both within the company and with clients. “The success of any business rests on the people involved. That is why ING focuses on developing talent,” offers Aliona Palchenko, HRD of ING Bank Ukraine.

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Logistics leader optimistic about Ukraine’s roads upgrade Netherlands-based logistics company Raben has been present in the Ukrainian market since 2003 country and the slow pace of post-Maidan reforms makes Ukraine appear as a less-than-deal destination for international investment.

About the interviewee: Boris Khruslov is Managing Director of Raben Ukraine Netherlands-based international logistics company Raben is celebrating 15 years in Ukraine this year. Raben Ukraine offers a full scope of logistics activities in Ukraine including domestic and international forwarding, contract logistics and customs clearance as well as sea and air services. The company employs 500 people throughout Ukraine and maintains six depots in regional capitals (Kyiv, Dnipro, Kharkiv, Lviv, Odesa and Khmelnitskiy) along with around seventy thousand square meters of warehouse area across the country. Raben Ukraine Managing Director Boris Khruslov spoke to Business Ukraine magazine about the company’s 15 years in Ukraine and explained why he believes the country’s ambitious current roads upgrade could help transform both the logistics sector itself and the wider Ukrainian economy.

Raben Group is celebrating 15 years in Ukraine this year. What do you regard as the most striking changes to take place in the Ukrainian logistics industry since you entered the market in 2003?

The ten-year period after we first entered Ukrainian market saw very impressive economic growth. Relatively high incomes allowed most of the Ukrainian business sector to develop some kind of in-house logistics capacity during this period, but many companies seemed to treat this as a “flashy toy” rather than a crucial part of the business process. Third party logistics (3PL) services were popular among foreign businesses but many local companies continued to ignore the potential of these services due to various post-Soviet prejudices. It took considerable time and effort to change this archaic approach to logistics.

The subsequent economic recession that struck the country after the revolutionary events of 2013-14 finally transformed attitudes towards logistics away from the “cargo cult” of the 2000s to the real thing.

How has your client base evolved in Ukraine over the past 15 years?

The scope of our logistics product portfolio enables us to provide services to a wide variety of industries. Nevertheless, FMCG, retail and so-called white goods (household appliances) requiring complex, cross-functional service make up our core customer base. We currently maintain partnerships with over 1000 customers. Our top ten customers are all world-known brand names. Needless to say, it took years to build up this level of trust and mutual confidence.

At the same time, it is also worth noting that the growth of our client base has become much more moderate in recent years. The reasons for this slowdown are obvious – the combined impact of the war in the east of the 20

Ukrainian exporter companies are increasingly looking beyond the CIS and towards EU and global markets. What impact has this had on the Ukrainian logistics sector?

The biggest CIS market for Ukraine used to be Russia, which accounted for almost 37% of Ukraine’s imports in 2013. The trade wars following the political conflict between the two countries have ruined this trend and forced Ukrainian manufacturers to look for alternatives in the West. We need to be realistic and recognize that it will take years to redirect the country’s trade flows entirely towards EU markets. However, we are already seeing some success stories in this direction. The best example is probably Ukrainian confectionary producer Roshen. Another example is Alupol, an aluminum product exported to Poland.

Ukraine is currently investing in an unprecedented upgrade of the country’s road network. What kind of impact will this have on the country’s logistics industry, and what could it mean for the wider Ukrainian economy?

If the Ukrainian road network genuinely undergoes renovations in line with the public statements of Infrastructure Minister Volodymyr Omelyan, it will have a remarkable influence on the logistics sector and on the Ukrainian economy in general. Firstly, the decentralization of national roads authority Ukravtodor will greatly simplify funding allocation procedures for infrastructure improvements. This means that from now on, local authorities will be responsible for road repairs in their respective regions. This will introduce a welcome degree of clarity and will make it clear where to direct future complaints about bad roads.

According to the existing schedule, the main roads leading to and from Ukraine’s European Union neighbors will undergo major repair works this year. This has the potential to improve the investment climate in Ukraine dramatically by making the country much more attractive in terms of transit routes. An improved road network will also attract investments to Ukraine’s major regional centers. It will enable logistics companies to build more and more facilities along routes between regional centers. Companies will be able to enlarge the number of routes they offer domestically and increase their goods turnover. The result will be an overall increase in Ukraine’s GDP.

How do you expect Raben Group’s activities in Ukraine to develop over the coming five-year period?

We will continue working in Ukraine regardless of any setbacks. I want to believe the Ukrainian economy will stabilize soon. This will enable us to invest more actively into new projects. I expect that in five years’ time, the logistics industry in Ukraine will have to adapt to the changing trade realities created by innovations such as the rapidly growing e-commerce sector. With this in mind, I can see a big future for the service sector known as Fulfillment (complex logistics solutions for internet stores).

The geography of business concentration is also going to change. The gradual exodus of big business from urban areas will increase due to over-density, pollution and tough competition. This will lead to changing logistics requirements such as expanded road networks, along with the need for investments in crossdocking operations, warehouses and new technologies. Much work lies ahead, but we are happy to accept the challenge. www.bunews.com.ua

Ulf Schneider Founder and Managing Partner

We provide our international clients with the back office services they need to expand their business into or within Ukraine, Russia, Kazakhstan, Belarus, Poland and Germany. Our services include market entry support, accounting outsourcing, tax consulting, import, ERP systems and support in legal matters with a focus on migration, labor and corporate law. Contact us to receive your individual offer.

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Contact person | Kateryna Kotenko +380 / 44 / 490 55 28 | kyiv@schneider-group.com

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Why Ukraine is becoming a global tech powerhouse Culture of innovation and competitive costs help make Ukraine a tech sector champ In 2017, Ukraine emerged as the offshoring destination of the year according to the Global Sourcing Association. Thirteen companies with development centers located in Ukraine made it into the 2017 Global Outsourcing 100 list by IAOP. Yet another ranking, the Global Innovation Index, included Ukraine in its top 50.

The country is clearly on its way to establishing itself as a major tech powerhouse in the coming decades. There are a number of factors driving Ukraine’s emergence as one of the hottest destinations in the global tech industry that are all worthy of closer inspection.

Strong Technical Education

One thing all thriving tech scenes have in common is universities that turn out large numbers of capable tech talent. Ukraine’s educational system is nothing if not robust: the country’s 402 universities and colleges produce over 36,000 graduates with degrees in technical studies per year.

There are also plenty of so-called “switchers”. This means people who switch from other industries to ICT attracted by its stability and high salaries. Some of them are self-taught while others get the necessary education at the many private tech schools and courses available across the country.

This constant inflow of new tech professionals naturally has a profound effect on the country’s tech talent pool, which has grown by 27% in 2017 alone, according to Ukraine’s largest online development community DOU.UA. The total number of tech workers in the country is now close to reaching 130,000.

It is safe to say that Ukraine’s impressive talent pool has become the number one reason for Western tech companies to set up shop here. “Even though more and more people choose IT-related education, there simply isn’t enough local tech talent coming from universities to meet companies’ needs,” says Jurgen Delfos, CTO at Carerix, a Dutch provider of recruitment software whose development team is based in Ukraine.

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About the Authors: Ihor Tkach is CTO at Daxx. He oversees software development activities for over 80 clients, optimizes client experience, manages technology strategy, and leads all innovation initiatives within the company.

Alex Stoelwinder is Operations Director at Daxx. He streamlines company processes, improves internal and external operations, and ensures customer satisfaction.

Running Costs Still Relatively Low Ten years ago, salaries were the number one factor attracting foreign tech businesses to Ukraine, but this is less so now as Ukrainian tech professionals are currently making about as much or just a little below what is offered in other Eastern and Central European countries. In today’s Ukraine, the average software engineer can expect to make anywhere between USD 20,400 and USD 39,600 per year (excluding taxes).

Nevertheless, the costs of maintaining an office are still more attractive in Ukraine than in Western Europe and the US, with both rent and salaries of support staff being significantly lower. While the Samsungs, Microsofts, and IBMs of this world open their own R&D offices in Ukraine, many smaller companies set up their tech teams here with the help of local technical partners like Daxx.

Ukraine’s simple taxation system is yet another positive aspect. If you register your local office as a business entity eligible for simplified taxation, you will pay a flat income tax of 15%. Corporate income is

subject to an 18% tax. There is also a single social contribution of 22% deducted from each employee’s salary.

Thriving Startup Scene

In its early outsourcing days, Ukraine’s tech scene did not show much innovation. Since then, the situation has turned on its head: now there is Grammarly (which has raised USD 110 million), Readdle, Genesis, bpm online, and Jooble, all on their way to becoming the country’s first unicorns. There is also Looksery, Viewdle, and Maxymiser, acquired

by Snapchat, Google, and Oracle respectively.

A growing number of Ukrainian startups are competing on the global scale since their inception. These include Preply, Mobalytics, Petcube, Allset, and Sixa, to name a few.

Such homegrown success stories cannot but inspire a strong sense of entrepreneurship in the local tech community, as well as lead to an increase in international investor interest in Ukraine. After all, the country has all the necessary components to create the tech giants of tomorrow, including solid technical education, a large pool of engineering talent, and a booming tech ecosystem. www.bunews.com.ua

Lettuce Day at RijkZwaan Ukraine

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Together we can feed the world The Netherlands is the leading EU importer of Ukrainian agricultural products and third worldwide

My first visit after beginning work as Agricultural Counsellor at the Netherlands Embassy in Ukraine in the summer of 2016 was to a potato day. It was to prove the first of many more such potatorelated trips. My travels took me everywhere from practical workshops in the field, to growers and their storage facilities around Ukraine, and then on to the Dutch-Ukrainian Potato Forum in Kyiv.

Some readers might assume that these visits are one of the less interesting parts of my job, but they would be very much mistaken! The simple potato is a hot crop. It plays an important role in providing food security for the entire planet. By 2050, the world population will reach nine billion. In order to feed these people, we need more production but also more efficiency. Agriculture needs to be sustainable, with less use of resources such as water and fertilizers on agricultural land that is itself also changing.

As crops, potatoes are role models because they use relatively little water. In the Netherlands, varieties are under development that can also grow in saline soils. More and more land is becoming saline due to climate change. On Texel, one of the smaller islands of the Netherlands, varieties of different vegetables are undergoing testing for saline resistant qualities. This is potentially an important development for the south of Ukraine, which is getting more dry and salty due to climate change.

The progress in saline resistance symbolises the great potential for bilateral cooperation in agriculture between the Netherlands and Ukraine and demonstrates how we can both benefit. Although the Netherlands is the second largest exporter of agricultural products in the world, the Netherlands cannot feed the world by itself. The Netherlands is a very small country. With a large population living in a small, low-lying delta region where land is at a premium, farms in the Netherlands are some of the most innovative, sustainable, and efficient in the world. This experience is transferrable and can be hugely effective in a Ukrainian context.

The focus of agricultural exports from the Netherlands is more and more on the export of technologies, knowledge, innovations and planting material to support sustainable development of agriculture elsewhere. Ukraine has endless opportunities and fertile soils, while the Netherlands has a lot to offer when it comes to sustainable innovations and knowledge. Cooperation in the agricultural sector is important and it is here that I believe we can benefit on both sides. Why are potatoes such a good example of this cooperation? Dutch seed potato companies have the largest share on the Ukrainian market. The Netherlands Embassy, together with the Ukrainian potato growers association, recently conducted a study of the potential for processing potatoes in Ukraine. Together we support developments in the sector here in Ukraine.

netherlands in ukraine

Ukraine and the Netherlands Many other examples are available in the horticulture and floriculture sectors. In fact, there is a good chance that the vegetables on your plate or in your soup have Dutch roots and grow in Ukraine using Dutch technologies. Vegetable seed companies active in Ukraine are mainly from the Netherlands. They supply growers with the planting material for the traditional vegetables used in Borsch and for standard salad ingredients like lettuce, peppers, tomatoes and asparagus.

April sees the most beautiful and bright exhibition of the year taking place in Kyiv: the annual Flower Expo Ukraine. Last year, the “Jamala Tulip� was baptised at the Expo. A Dutch company chose to name this bright yellow and red tulip in honor of Ukrainian singer Jamala in recognition of her victory in the 2016 Eurovision Song Contest. Every year about half of the exhibition’s participants are Dutch. This reflects the fact that the main supply for the floricultural sector in Ukraine is coming from the Netherlands. As an embassy, we are a proud partner in the Flower Expo Ukraine and other agricultural exhibitions in Ukraine.

Of course, even while we speak about synergies in the agricultural sector it is also important to remember that there are many differences between the Netherlands and Ukraine. Nevertheless, differences in things like the scale of farming in the two countries cannot obscure the prominent role agriculture plays in the economies and everyday lives of people in Ukraine and the Netherlands alike. I am lucky enough to get to see in practice what DutchUkrainian cooperation, innovations and high quality technologies can bring. From soil analyses with handheld scanners, precision farming with GPS, and efficient farm management in the dairy sector with cow signal training, to organic production with support of bumble bees and further development of the potato sector by looking at the opportunity of processing.

We work together on the business and governmental levels, and with our international partners such as the EU delegation, FAO and Agritrade.

In Ukraine, the focus of the Dutch Ministry of Agriculture, Nature and Food Quality is in the horticulture and floriculture sectors, potatoes, dairy, food processing and biomass. If you want to know more about DutchUkrainian cooperation in the agricultural sector and specific projects, you can find the latest news from the agricultural team of the embassy online.

About the author: Carolien Spaans is the Agricultural Counsellor at the Embassy of the Netherlands in Ukraine www.bunews.com.ua

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Western Ukraine’s growing Dutch business community Netherlands investments in the region currently encompass everything from agriculture to IT Greenhouse of Galicia Greenery

The western Ukraine region is the country’s traditional gateway to the rest of Europe. Encompassing Chernivtsi, Ivano-Frankivsk, Lviv, Rivne, Ternopil, Volyn and Zakarpattia oblasts, it is both geographically and culturally closest to the EU, having spent a far shorter period within the Soviet Union than the rest of Ukraine. These factors have helped make western Ukraine a natural focus for international investment into the Ukrainian economy, with Netherlands businesses among those to establish a significant presence since 1991.

Unsurprisingly, the Honorary Consulate of the Kingdom of the Netherlands for western Ukraine is located in Lviv. This reflects tradition, with the first Dutch Consul appearing in Lviv in 1907 when it was part of the Habsburg Empire. Today’s Consulate is part of a diverse Dutch business community in western Ukraine that encompasses everything from IT and logistics to retail and agriculture.

Most international business runs on logistics and Netherlands knowhow is helping Ukraine to make the most of its positioning along many of Europe’s key transit corridors. The Dutch owned and operated E. van Wijk Group has been present in Ukraine since 2004 and has a strong presence in the Lviv region as a logistics provider and DAF Trucks dealer. From its strategic location in Solonka (Lviv region), the company maintains a modern and secure 2500 square meter warehouse along with a young fleet of trucks and temperaturecontrolled trailers which operate along Ukraine-EU routes.

The Dutch have a reputation for agribusiness expertise and this is evident in western Ukraine. The region’s geography makes it most suitable for greenhouse cultivation. The Netherlands-linked Galicia Greenery in Busk, not far from Lviv, is a greenhouse company that produces vegetables for the Ukrainian market. The main shareholder of the company is FoodVentures, which specializes in bringing high-yield, high-quality vegetable production to markets outside the Netherlands. This business model has also proven successful in other former Soviet markets such as Georgia and Kazakhstan. The goal is to produce healthy and safe fresh vegetables throughout the year and sell them directly to local and international retail chains and restaurants based in Ukraine.

As home to a vibrant student population and many of Ukraine’s top universities, Lviv is a natural focus for the country’s booming IT sector. This has not escaped the attention of Netherlands IT investors. Dutch owned and operated Symphony Solutions, an IT company with its HQ in Amsterdam, has its main development center in Lviv. The company focuses on outsourcing projects with a client base drawn from across Europe, the USA and Canada.

Symphony Solutions expanded its Ukrainian presence in 2014 and moved to stunning new offices in Lviv featuring unique interior design capturing the authentic Dutch spirit inspired by the small Dutch village of Zaanse Schans.

This little corner of the Netherlands is one of the most original and impressive office spaces in Ukraine.

Western Ukraine’s IT expertize also makes the region ideal for related consultancy businesses. One example of this is the story of JobsUkraine, which is the work of two Netherlands entrepreneurs who first visited Ukraine as tourists in April 2014. After investigating the opportunities in Ukraine throughout early 2015, they established the company as a recruitment platform for work in the Ukrainian and global IT industries.

The Netherlands is present in western Ukraine’s retail market in the shape of international retail property company Multi, which developed and owns the 69,000 square meter Forum Lviv shopping center together with two Ukrainian real estate partners.

Looking ahead, the western Ukraine region offers huge scope for further Netherlands investment, particularly in technology and innovation driven sectors where the Netherlands already enjoys global leadership positions. An in-depth multi-sector analysis of the opportunities in western Ukraine is planned in order to capitalize on the opportunities for Netherlands business and to help develop the Ukrainian private sector through knowhow and partnership. Today’s Netherlands business community in western Ukraine is dynamic, but there is undoubtedly considerable untapped potential for the coming years and room for further expansion of contacts and interaction.

About the authors: Andriy Hrynchuk is Honorary Consul of the Netherlands in Lviv.

Uliana Ryfiak is assistant to the Honorary Consul of the Netherlands in Lviv 26

Dutch flower company names tulip after Ukraine’s 2016 Eurovision Song Contest winner Jamala Tulips by StoKolex (image from photo gallery of Flower Expo Ukraine 2017)

Few compliments can compare with having a flower named in your honor, but this is exactly what happened to Ukraine’s Eurovision Song Contest winning singer Jamala last year. Dutch company StoKolex bestowed the honor on the Ukrainian diva at the 2017 Flow Expo Ukraine event in Kyiv, christening a new type of tulip featuring warm orange and red coloring as the “Jamala Tulip”.

Jamala shot to international fame in 2016 with the emotionally charged ballad “1944”, which recounted the horrors of the WWII-era mass deportation of the Crimean Tatars by the Soviet authorities. The singer, who is herself a member of Ukraine’s Crimean Tatar community, captured the imagination of Eurovision Song Contest viewers with www.bunews.com.ua

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Introducing the Jamala Tulip

her haunting performance, becoming the second Ukrainian artist to win the competition. Her triumph sparked renewed debate over the politicization of Eurovision, with many observers seeing obvious parallels between the historic references in Jamala’s song and the current Russian occupation of Ukraine’s Crimean peninsula.

StoKolex company representatives Arno Klijbroek and Martin Kolken said they thought the singer was an ideal match for the flower, given how they both shared the same strength and brightness. The Netherlands-based company specializes in growing and exporting flower bulbs. Their primary focus is tulips but they also deliver daffodils, hyacinths, irises and lilies.

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Brovary bakery challenges Down syndrome stereotypes Netherlands-backed initiative seeks to integrate people with Down syndrome into Ukrainian society

March saw the opening of a new bakery in the Kyiv satellite town of Brovary that marks the latest stage in an ambitious initiative aiming to improve the lives of people with Down syndrome while challenging stereotypes about mental disability in Ukrainian society. Mental health remains a taboo subject in today’s Ukraine, with mentally disabled people often excluded from society or institutionalized. The 21.3 Bakery aims to change this by creating possibilities for people with Down syndrome and other special needs to gain employment and interact more meaningfully with society.

The 21.3 Bakery is part of the broader Perspective 21/3 initiative that takes its name from the three copies of the twenty-third chromosome associated with Down syndrome. There is also a 21/3 school called Radist (Ukrainian for joy) in Kyiv which has been operating since 2010, while plans are advancing for a network of 21.3 cafes that will eventually provide the lion’s share of job opportunities for people with Down syndrome. The ultimate goal is to create a self-sustaining education and employment ecosystem capable of financing itself and reducing the project’s current reliance on support from donors to a minimum.

The 21/3 initiative is the brainchild of husband and wife team Arenda and Andriy Vasylenko. Andriy is the Country Director in Ukraine for Netherlands bakery company Zeelandia. He has received full support from his Dutch employers every step of the way. Zeelandia has provided financial backing for the 21/3 Perspective school and technical support for the 21.3 Bakery as part of a corporate social responsibility commitment that was written into the company’s foundation document in Ukraine when Zeelandia first entered the Ukrainian market back in 2003.

Andriy has first-hand experience of raising a child with Down syndrome in Ukraine. He recalls the moment when his son Petro was born in 2003 and doctors immediately tried to take the child away to an institution. “At the time, 70% of children born with Down syndrome were handed over to institutions right after birth,” he reflects. Andriy sees significant improvements in attitudes towards Down syndrome in Ukraine and points to the fact that over 95% of parents with Down syndrome babies in Kyiv region last year chose to raise 28

their child within the family. Nevertheless, huge challenges remain. Andriy says children with Down syndrome remain isolated from Ukrainian society and are effectively “invisible”, adding to the stigma and misunderstanding surrounding the condition. Indeed, the word “Down” is a commonplace term of abuse in contemporary Ukrainian culture.

The 21/3 Perspective initiative has a three-pronged approach focusing on schooling, employment and independence. Andriy expects the new bakery to offer some training and job opportunities for Ukrainians with Down syndrome, but the main employer will be the planned 21.3 cafes, where the workforce will be 30% to 50% drawn from people with Down syndrome and other special needs. In preparation for their future entry into the workforce, the curriculum at the 21/3 school prepares special needs students by placing the emphasis on teaching them practical skills. This has meant the production of entirely new textbooks in collaboration with some of the world’s leading specialists including Oxford University. Meanwhile, a restaurant-style kitchen at the new bakery will help students to gain practical experience. “We want to create a sustainable model and show that it can work,” says Andriy.

By providing employment opportunities for people with Down syndrome, Andriy hopes to boost their quality of life and foster a greater sense of independence while also bringing them into contact with members of the public.

“We want to demonstrate that people with Down syndrome have prospects and can contribute to society,” he says. “They have enormous empathy and they are cheerful. Yes, they do have disabilities, but we want to concentrate on their abilities instead.”

Andriy recognizes that the café concept must compete against deeply engrained social stigmas and says market research has shown most Ukrainians respond negatively towards any associations with Down syndrome. Nevertheless, he sees reason to believe the concept can gain acceptance over time. “I have already witnessed enormous changes in social attitudes towards Down syndrome in the past fifteen years,” says Andriy. “We now want people with Down syndrome to have more contact with the public in order to show they can play a role. We want to break down the old stereotypes.” www.bunews.com.ua

Where: “Golf Stream” Kiev Golf Club

When: 3 June 2018

The Tulsun Foundation works to improve the lives of disadvantaged children throughout the Kyiv region. This summer the Foundation is hosting a day of fundraising fun at Kyiv’s Golf Stream Golf Club. The program will include a Charity Golf Tournament (with the support of the Ukrainian Golf Federation and participation of the Ukrainian National Golf Team), golf master-classes for newcomers and kids, and a range of social activities. Non-playing guests and families can join the fun in a special Lounge Zone offering a range of food and beverage refreshments together with live music.

All are welcome! Money raised will go towards building a sports complex for visually impaired and hard of hearing Kyiv region kids.

Charity Golf Tournament

Participation fee before 30 April: EUR 250 Participation fee after 30 April: EUR 300

Registrations and other inquiries:

Golf Master-Classes

Participation fee before 30 April: EUR 70 Participation fee after 30 April: EUR 100

Lounge Zone

Entrance fee before 30 April: EUR 30 Entrance fee after 30 April: EUR 50

Tel.: +38-093-3810062 Email: tulsun.foundation@gmail.com

Helping disadvantaged Kyiv kids find their future profession Netherlands-backed charity offers children career support and work experience The Tulsun Foundation is a Kyiv-based charity with Netherlands backing that seeks to provide disadvantaged Ukrainian kids with the skills and vision to build a better future for themselves.

The name “Tulsun” is a combination of tulip and sunflower, the distinctive signature flowers of the Netherlands and Ukraine. This floral theme is particularly appropriate as officials at the Tulsun Foundation say their aim is to help Ukrainian orphans and children from troubled family backgrounds blossom professionally as they enter adulthood.

The Tulsun Foundation was launched in September 2016 as the Corporate Social Responsibility (CSR) initiative of ControlPay, an international freight audit company based in Kyiv and owned

by Dutchman Karel Kinds. ControlPay remains the main sponsor of the Foundation, while Mr. Kinds combines his role as CEO of the freight audit company with the position of Chairman at the Tulsun Foundation. This CSR engagement in Ukraine reflects Mr. Kinds’ ongoing commitment to the development of the country, which also saw him take on an active role in support of the EUUkraine Association Agreement during the campaigning ahead of the spring 2016 referendum on the subject in the Netherlands.

The Tulsun Foundation is involved in a diverse range of activities designed to improve the lives of Kyiv region children growing up as orphans or temporarily removed from troubled family environments. This includes a “Ready for School” project to kit kids out with all the necessary uniforms and equipment at the start of each academic year, along with a similar initiative to prepare children for the winter season with new clothing. Meanwhile, the “Saint Mykola” New Year holiday project sees Tulsun Foundation activists and representatives from numerous participating partner companies responding to individual festive season gift requests from over three hundred disadvantaged kids. Each summer the Tulsun team organizes sporting event fundraisers such as the coming Kyiv golf tournament, while also hosting interactive sports master classes. In summer 2017, the Foundation welcomed members of the Netherlands national female volleyball team to Ukraine for four days of volleyball master classes that provided disadvantaged children with valuable insights into the dedication and drive required to achieve a breakthrough in the international sporting arena. More Netherlands 30

Olga Rudych is CEO of the Tulsun Foundation. Karel Kinds is Chairman of the Tulsun Foundation and CEO of ControlPay female volleyball stars are now set to visit Kyiv in summer 2018 to build on the success of last year’s inaugural event.

The Foundation’s flagship initiative is entitled “My Future Profession”. Launched in April 2017, it aims to provide Kyiv region kids with the opportunity to gain hands-on experience of different professions and then receive targeted support and training to help them prepare for possible future careers in their chosen fields. “Kids growing up in orphanages are often cut off from the wider world and do not know a lot about the range of career options open to them. It can be very difficult for them to adapt to adult life after growing up in an institutionalized environment. We aim to show them that the world is a big place full of different opportunities and help them to identify tangible career goals,” says Tulsun Foundation CEO Olga Rudych.

Children are able to spend to time gaining work experience at a number of participating Kyiv region businesses including everything from IT and logistics companies to hotel chains. The next stage of the process involves conversations with the kids and evaluations with psychologists to identify the most suitable career directions for each individual. Coupled with their own experience in genuine working environments, this helps the kids to form a vision of how they would like to see their career trajectory evolving. The Tulsun Foundation then offers them training and professional development opportunities tailored to enhance their particular interests and skillsets, with plans underway to add an additional layer of practical support at the job hunting and recruitment stage. “The key element to the entire project

is the child’s desire to pursue a career that is right for them. Our goal is to work with kids to identify what they want to do in their professional lives and then to help them achieve their goals,” says Ms. Rudych.

The “My Future Profession” project depends on the involvement of partner companies and is open to new expressions of interest from any Kyiv region businesses that would like to get involved.

Ms. Rudych stresses that the level of participation, including the number of children any potential participating company can take on and the period of work experience they can offer, are flexible and subject to a tailored approach to suit the circumstances of each individual company. Likewise, the Tulsun Foundation handles all the administrative processes, logistical issues and sundry costs of bringing children to workplaces to gain professional experience. “Companies do not need to invest any money in order to participate. They need only invest their time and their energy,” says Ms. Rudych. “Businesses should bear in mind that their participation in their initiative can genuinely change lives and open up entirely new horizons for children who might otherwise not be able to realize their full potential.”

Tulsun Foundation

Companies wishing to participate in the “My Future Profession” initiative by offering work experience to disadvantaged Kyiv kids should contract the foundation directly.

Email: tulsun.foundation@gmail.com Tel.: +38-093-3810062

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www.bunews.com.ua

Dutch arts duo inspired by urban Kyiv Kyiv contemporary art focus IZOLYATSIA to present urban exhibition by Netherlands double act

The Donetsk-Kyiv arts institution IZOLYATSIA will launch an ambitious international exhibition in April featuring the work of Dutch duo Vinca Kruk and Daniel van der Velden, who together form the Metahaven collective. Filmed in Beirut and Kyiv, Metahaven’s “Hometown” describes a fictional city where nothing is certain except for permanent uncertainty. Between derelict buildings, street markets, interrupted real estate projects and slaughterhouses, the protagonists reveal their attachment to their hometown, having somehow interiorised its contradictions.

Working with Ukrainian and Lebanese cast and crew, Metahaven continues their series of “truthfuturist” films initiated with “The Sprawl” (Propaganda about Propaganda) and “Information Skies”.

Business Ukraine magazine spoke to Dutch duo Vinca Kruk and Daniel van der Velden along with exhibition curator Kateryna Filyuk about what we can expect from this exploration of modern urban themes.

Vinca Kruk and Daniel van der Velden:

Why did you decide to film the movie in Kyiv and not in any other city or country?

We made the decision to film in Kyiv intuitively because of our connections with the Ukrainian fashion designer Yulia Yefimtchuk and with the people that work with her. We had just three days to shoot, so we had very little time to explore the city properly.

How do you see the connections between Kyiv and Beirut?

The idea of living with contradictions, of a geographical location where various spheres of influence overlap and collide, is something that connects both cities and countries.

What kind of engagement or reaction do you expect from Ukrainian public?

We will see. We hope for an enthusiastic reaction.

Where else will you present your movie?

After Kyiv, the film will have a premiere in Amsterdam in autumn 2018, and it will go to Beirut as well.

Exhibition curator Kateryna Filyuk:

Why did you decide to participate in this exhibition?

For me it is a pleasure and an honour at the same time to work with artists of such expertise. I have been familiar with their work for some time and find it a lucky coincidence that they shot their last film in Kyiv and IZOLYATSIA has been able to contribute to the process from the early stages. This project is quite special because the film takes the form of an immersive installation and will be the only exhibit in the show.

Which Dutch best practices in education for curators would be useful to adopt in Ukraine?

I completed the De Appel Curatorial Programme in Amsterdam, one of the best programmes in the world for emerging curators.

What is appealing in Dutch education for the arts is the flexibility and freedom as well as very good practical skills and professional networks.

Graduates have both theoretical and practical knowledge, and are familiar with “the rules of the game”, whereas Ukrainian young art professionals often learn this on their own after graduation.

What global art scene developments do you see having the biggest impact in Ukraine in the coming years?

We are witnessing a boom in the creative industries everywhere in the world, simply because basic labour conditions are changing. Automation is in full swing and the economy has to adjust accordingly. In Ukraine, the economic prerequisites are a little bit different. Nevertheless, hubs and various start-ups in the creative sector become more and more prominent due to the efforts of energetic young people who want to do things differently.

“Hometown” Exhibition by Metahaven IZOLYATSIA Foundation

8 Naberezhno-Luhova, Kyiv 26 April – 3 June

About the author: Anna Medvedeva is the Senior Officer (Programmes and Public Diplomacy) at the Embassy of the Kingdom of the Netherlands in Ukraine 32

www.bunews.com.ua

Netherlands Embassy explores innovations together with Ukrainian legal and business communities For more than 20 years, The Hague has been home to the International Criminal Court and a city of justice innovations. This has helped The Hague to earn a reputation as the unofficial global capital of legal industry. In this context, back to 2005, The Hague Institute for the Innovation of Law (HiiL) was established with financial support from the Dutch Government and The Netherlands Organisation for Scientific Research. In 2016, HiiL published a report entitled: “Justice Needs in Ukraine – Legal Problems in Daily Life” for the consideration of the justice sector.

In an effort to move from analysis of Ukraine’s justice sector needs to practical problem solving action, the Embassy of the Netherlands in Kyiv recently hosted a networking meeting of industry professionals.

On 9 February 2018, representatives of the Ukrainian legal industry and the country’s business sector joined officials from international organizations at the embassy in Podil for an event entitled:

“Innovation in the legal industry - how to build access to justice and improve the investment climate in Ukraine”. During the meeting, HiiL officials presented their findings on Ukraine’s justice needs and discussed innovative approaches to address these needs. Meanwhile, Ukrainian innovators pitched their own ideas on how to make justice journeys more pleasant and discussed them with members of the expert community.

As part of the event, Denis Ivanov of Pinky Solutions shared his innovative approaches on how to improve access to justice in e-commerce. Natalia Vladimirova presented PatentBot, a platform recognized by Product Hunt (Silicon Valley) as the Bot of the Year in 2017. This chat-bot allows people to register trademarks in 15 minutes via Facebook Messenger. Mykola Smyrnov highlighted the key idea behind EasyTender, which is to help businesses with tenders and defend their rights in the public procurement sphere.

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Sharing Hague justice principles with Ukraine

About the author: Anna Medvedeva is the Senior Officer (Programmes and Public Diplomacy) at the Embassy of the Kingdom of the Netherlands in Ukraine www.bunews.com.ua

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Dutch Urban Design in Demand

Dutch expert Markus Appenzeller coming to Kyiv for annual urban architectural festival

Every year, the CANactions International Architectural Festival brings together thousands of high-profile urban design professionals aiming to make a difference to the environment they live in.

The next edition of the festival will take place on 20-21 April in Kyiv. It will address issues of international cooperation and global trends in urban development. The challenges of shaping and changing Ukrainian approaches in architecture, urbanism, research and education will be discussed during workshops, along with the presentation of international best practices that might contribute to better city life.

One of the key speakers at the festival will be Dutchman Markus Appenzeller, who works as Managing Director of MLA+, an international architecture, planning and strategic consultancy firm with a major office in Rotterdam. Markus spoke to Business Ukraine magazine about his expectations ahead of the festival in the Ukrainian capital.

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What motivates you to participate in this event?

Curiosity, since Ukraine in general and Kyiv in particular to me is terra incognita. I also have an interest in post-Soviet cities. I am interested in their similarities and in how different kinds of governmental, societal and economic circumstances are leading to diverging development.

How can Dutch expertise contribute to the festival?

The Dutch have a longstanding tradition of complex urban processes, partially due to the need to organize the omnipresent water and partially because the Netherlands is a multicultural and open society. This experience is extremely helpful in places that are starting to face higher degrees of complexity due to diversifying urban populations and the need for more complex urban regeneration.

What are the major challenges in architecture and urban development in Ukraine and how would you address them?

They are threefold: firstly, adjusting and regenerating Ukraine’s cities in a way that allows them to become unique and escape from the unifying model of the socialist planned economy. In achieving that, they also become more competitive in a globalizing world. Next, reconfiguring urban space so that there is less public and more private or semi-private space.

Lastly, developing a more diverse architectural inventory with more typologies, more space for individuality and a richer architectural language.

Business Ukraine magazine also spoke to CANactions Architectural Festival director Valentyna Zotova about the coming Dutch participation in the Kyiv festival.

Was this the first time you encouraged Dutch experts to participate in the festival?

The friendship between CANactions and the Netherlands began from the festival’s very first year. Dutch architecture and the country’s booming urban development scene feature plenty of amazing examples, case studies and personalities whose experience we try to import and mentally translate. Ultimately, we encourage the Ukraini-

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View of the Podil riverside district, the Kyiv neighbourhood that is the focus of the CANactions architectural competition: “Concept of New Public Space for New Podil in Kyiv, Ukraine”. Podil is also the neighbourhood that hosts the Embassy of the Kingdom the Netherlands in the Ukrainian capital

an professional community to implement the Dutch experience here.

What makes you think that Dutch architectural expertise is useful in the Ukrainian context?

The Strategy Spatial Planning approach that is now popular around the world originates from the Netherlands. As Ukraine is trying to move towards implementing this approach into the country’s urban planning systems, the Dutch experience is particularly worth exploring for the authorities and the wider professional community.

Which Dutch best practices for the improvement of public space are most interesting for contemporary Ukraine?

There are numerous spheres I could mention including cycling culture, inclusive public spaces, business-administration-communities collaboration, and smart implementation of new technologies taking into account heritage issues and common good aspects. I also hope that one day in Ukraine we will have large-scale infrastructural projects prioritizing pedestrians and public transportation while demonstrating a respect for nature that prioritizes it over the interests of motorists.

About the author: Anna Medvedeva is the Senior Officer (Programmes and Public Diplomacy) at the Embassy of the Kingdom of the Netherlands in Ukraine www.bunews.com.ua

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Talking bout my generation – Ukraine launches 4G Based on experience across Europe, 4G is set to be the catalyst for a host of new, entertainment focused mobile internet services, the like of which would have been unimaginable just a few short years ago.

Ukraine was, however, the last country in Europe to be without 4G. There are reasons for this, which I may focus more attention to in a future article.

4G push for Ukraine’s economic growth

About the author: Andy Hunder, President of the American Chamber of Commerce in Ukraine, Member of the National Reforms Council under the President of Ukraine, and Treasurer of AmChams in Europe Executive Committee.

I remember the day clearly – sending my first SMS, twenty years ago when I was working for Ukraine’s (then) largest mobile operator, Ukrainian Mobile Communications (now Vodafone). Ukraine had just launched its first digital mobile communications GSM network. I was presented with a new mobile handset that could easily fit in my trouser pocket and I could dispose of my belt clip on which my existing bricksized handset used to hang.

Last month, the three mobile operators offering services in Ukraine, Vodafone, Lifecell and Kyivstar launched a 4G standard on their networks in Kyiv and a handful of other Ukrainian cities.

4G stands for “fourth generation”, meaning that it will be the fourth generation of mobile wireless communications. To put that in context, 1G is characterized as the mobile technology of the first mobile phones in the early 1990s, 2G gave us the system capable of carrying text messages between users, while 3G brought along with it the ability for users to browse the internet on their phones. 4G improves the performance of all those activities.

The difference between 3G and 4G is that 4G means you can do everything 3G can but faster and smoother than ever before. Web pages load quicker, you can download content within seconds and streaming video and music is free of buffering. These include video calling and wide area wireless voice telephony.

3G also allowed mobiles to let users receive and send emails, get map and SATNAV directions, and download music and videos very quickly on their handsets. 4G can do all this but smarter and faster.

While the first Ukrainian cities begin to discover 4G, it’s high time to assess the opportunities that its launch will bring to Ukraine. As 4G works at a lower frequency than 2G and 3G, it can easily penetrate walls and other constructions, thereby providing better all-round coverage. The World Bank described high-speed Internet as a key driver of economic growth, creating jobs and improving interaction between people.

The growth of internet penetration by 10% increases GDP per capita by 1.38%. This occurs because the high-speed Internet helps to improve the efficiency of business processes. There is also evidence that the increase in penetration of broadband Internet in the OECD countries by 1% ensures growth of business productivity by 0.13%. As the Internet exerts a big influence on growth rates, driving economic growth, and positively affects people’s integration, interaction and living standards, 4G is definitely an important step towards Ukraine’s economic well-being, which can and, obviously, will make a strong contribution to GDP growth.

Recharging Ukraine’s mobile telecom

Apart from 4G, Ukraine needs other drivers which can take the mobile telecom industry to a qualitatively new level. In such a case, integration into the EU Digital Single Market is vital. It will help to adopt and apply mobile telecom networks the same rules as European mobile telecom operators are obliged by. The harmonization of Ukraine’s mobile telecom-legislation with the European one and the liberalization of the communications industry – that is exactly what Ukraine want and strive to achieve. To make it happen, respective Ukrainian authorities should also conduct bilateral negotiations with EU mobile telecommunications operators with a view to a mutual reduction of wholesale rates to the level established in Europe.

The Mobile Telecom Committee of the American Chamber of Commerce in Ukraine, uniting leading telecom operators, is actively working to create favorable conditions for Ukraine’s mobile telecom industry and opportunities for the development of new digital services. We will continue pushing our efforts to make Ukraine moving with the times. And the first step is the 4G launch. We congratulate mobile telecom operators with the 4G launch. Let’s enjoy the speed and uninterrupted connectivity of 4G together.

35

Expert view

Maksym Savchenko Chamber Mobile Telecom Committee Expert Regulatory & Digital Policy Manager Kyivstar

Telecom Market is Waiting for Support From January 1, 2017, the state regulation of the rate for international

Victor Ivanov Chamber Mobile Telecom Committee Expert Senior expert License & Radio Frequencies department Vodafone Ukraine

Rental Fee for the Use of Radio Frequency Resource

traffic for Ukrainian operators has come into force. The National Com-

The level of rental rates is established in Ukraine based only on the current profit-

tions and information, by its Decision set the maximum termination rate

ranges:

mission, which provides the state regulation in the field of communicafor incoming international traffic at 0.1 euros / min.

Should be noticed that the Decision is contradicting the provision of the Law On telecommunications and the Law On prices and pricing.

The regulator declared two goals that it wants to achieve with this Decision: - -

to reduce of roaming tariffs;

to increase of international calls to Ukraine.

The first aim was copied the EU regulation and looked strange given that

the roaming tariffs of Ukrainian operators are the lowest not only in EU, but also in Eurasia in general.

The next aim seemed unreal from the start. Over-the-top (OTT) apps such as WhatsApp, Facebook Messenger, and BlackBerry Messenger are driving force over the last years. It has affected ongoing decline voicetraffic throughout the entire world.

At the same time, throughout the EU the price that mobile network op-

erators can charge one another for terminating calls made to their own

customers is regulated on the basis of cost. In order to compensate these losses and losses associated with RLAH a number of telecom regulators (e.g. French regulator ARCEP) made decisions that specifically set the

exemption from the regulated price for calls originated from outside the EEA. This means, for example, that Ukraine MNOs pay a much greater

wholesale price for calls to French mobile customers than UK MNOs do.

Eventually we have the situation when Ukraine MNO has to pay to EU

MNO twice more IMTR. Such a distortion led to the fact that the MNOs revenue in 2017 declined roughly on 47 mln euro and due to this the State Budget lost 9.5 mln euro.

Telecom market is still waiting for NRA to start supporting national op-

erators and revise this controversial political Decision as stipulated by the national law.

ability of local networks according to the types of radio communications in specific 1) In Ukraine, the highest rental rate is set for the radio frequency resource to provide mobile communications.

2) The rental rates for radio frequency resource for multimedia radio access systems (2.5-2.7 GHz) and digital TV (“digital dividend” 694-862 MHz) are unreasonably low compared to mobile telecommunications, despite the promising outlook of these ranges for 4G implementation.

The current situation on rental payments for the use of radio frequency resource in Ukraine:

• in fact, the rental payment for the use of radio frequency recourse is an additional tax on the market;

• the income gained from the rent cannot be used for the sphere of radio frequency resource usage (primarily, for the radio frequency monitoring);

• an exorbitant rental rate is a deterrent to the introduction of new mobile technologies in Ukraine;

• an exorbitant rental rate impairs the investment climate and image of Ukraine

(there is no rental payment for the use of radio frequency resource as an additional tax either in Europe or in the CIS countries);

• the rental rate should be balanced, especially for frequency ranges standardized under 4G.

Retaining the current approaches for the formation of rental rates for radio frequency resource usage for mobile technologies will lead to the following:

1) blocking of the development of the modern mobile technologies in Ukraine that will require a significant radio frequency resource;

2) further removal of significant financial resources from mobile operators;

3) deterioration of the business climate that will complicate the fulfillment of social

functions by local mobile operators in order to provide the population of Ukraine with the necessary telecommunication services, particularly, the mobile Internet access, primarily in depressed regions and territories with low population density;

4) the loss of opportunities by local mobile operators for conducting effective eco-

nomic activities and, consequently, the transfer of the specified additional costs to the

end users of mobile services as well as the necessity of constant increase of tariffs for subscribers.

It is necessary for mobile communication development that Ukrainian government has cancelled an annual indexation of the radio frequencies rental fees.

Expert view Challenges for the Telecom Industry in Ukraine Selcuk Simsek Chamber Mobile Telecom Committee Expert Chief Financial Officer lifecell

Enabling Ukrainian Telco’s to Compete Internationally Ukrainian mobile operators are reliable and consistent investors, forming

more than 1.5% of GDP, contributing to the development of new technolo-

gies and services for Ukrainian people and adding more then 16,6 billion UAH directly to the budget from 3G and 4G tenders.

Following direction of Ukraine and EU integration together with visa-free

regime development, such services as roaming, international calls and international traffic transit are becoming more and more important for all

Ukrainian subscribers. Unfortunately, Ukrainian mobile operators are facing additional tax burden, decreasing the intention to provide such international services and discriminating us comparing to foreign operators.

Receiving a revenue from the international calls, roaming services and

traffic transit (export of services) Ukrainian operators are forced to lose

the share of VAT credit. As a result, it increases abovementioned international services price for Ukrainian citizens and making Ukrainian operators none-competitive on transit market, as international operators

doesn’t face a “non-refundable VAT” issue. The opportunities for Ukrainian operators to export this high-tech service and bring in foreign exchange revenues into the country is negatively impacted.

We propose to make necessary and logical changes to the 185.1, 195.1.3 and 198.5 paragraphs of the Tax Code of Ukraine, providing Ukrainian operators the possibility to compete on international market. Such changes will lead to:

- the emergence of the opportunity to become the main traffic transit hub in Eastern Europe;

- increase the investment attractiveness of the industry; - increase foreign exchange income of the country;

- reduction of the barrier for Ukrainian subscribers to communicate with the world;

- development of digitalization of Ukraine;

We are looking forward for an early solution of this issue in cooperation with responsible authorities.

The mobile telecommunications sector in Ukraine is one of the key driv-

ers of innovation and the development of the digital economy, and its players are big taxpayers. However, every day they face a number of issues that should be solved as soon as possible.

Taxation regime on telecom market should be adjusted to current re-

alities and promptly reviewed. The Chamber proposes to change the

rules of discriminatory taxation of telecommunications services export, to abolish the “Tax on Luxury” introduced already 20 years ago as a

“temporary solution” to fill the Pension Fund, as well as the abolition of mandatory indexation of the tax of Radio Frequency Resource. Thus, reducing the tax burden on the mobile operators’ market will increase the competitiveness of Ukrainian telecommunication operators and lib-

eralize the international communications services market and roaming for Ukrainians staying in the EU countries, as well as increase the volume

of export operations and, accordingly, proceeds earnings from foreign exchange to Ukraine.

Another issue with the damage of telecommunication networks has become more acute: the cables, wells of cable duct telecommunication, telecommunication equipment break down every week. This is a flagrant problem and, unfortunately, theft and damage of cable networks and

other telecommunications equipment often have more serious conse-

quences than causing significant cost for telecommunication operators and lacking services for their clients - they violate the proper work of medical institutions, impede the timely response of law enforcement and other state bodies, and therefore contain strategic risks for the country.

Volodymyr Delbin Chamber Policy Officer vdelbin@chamber.ua

B2G Dialogue Meeting with Nina Yuzhanina, Head of the Parliament Committee on Tax and Customs Policy

Meeting with Yevgen Kapinus, State Secretary of the Ministry of Finance of Ukraine Representatives of the Chamber Member Companies met with Yevgen Kapi-

nus, State Secretary of the Ministry of Finance of Ukraine. Participants discussed a number of important tax and customs issues, in particular further work of the System of Tax Invoices Blocking, old VAT refund, work of the tax-

payer’s e-cabinet and “Single Window” System.

Chamber Members met with Nina Yuzhanina, Head of the Verkhovna Rada of

Ukraine Committee on Tax and Customs Policy. The meeting was devoted to a detailed discussion of the Draft Law “On the National Bureau of Financial

Security”. Experts of the Chamber Member Companies supported the need for creation of an analytical body and noted positive changes to the legislation envisaged in the Draft Law as well as agreed to provide comments and suggestions thereto.

Round Table “Transformation of Personal Data Conference “Ukraine’s Growth and Profit Potential in 2018” Protection System in the Context of European Integration & Development of Digital Economy in Ukraine” The Chamber held a Round Table “Transformation of Personal Data Protection System in the Context of European Integration & Development of Digi-

tal Economy in Ukraine” where together with representatives of the National Bank of Ukraine, Head of the Personal Data Protection Office of Secretariat of Ukrainian Parliament Commissioner for Human Rights, State Service of Special Communications and Information Protection of Ukraine, and Ministry of

Justice of Ukraine discussed new requirements for the processing of personal data in the EU member countries, their impact on Ukrainian business, and

implementation of Ukraine’s obligations on personal data protection in the context of European integration.

The Chamber jointly with its Member Company KPMG Ukraine held a Confer-

ence “Ukraine’s Growth and Profit Potential in 2018”. During the Conference, such important issues as current Ukraine’s investment profile, start-ups development in Ukraine, investment demand VS supply, and key aspirations for

inbound M&A in the future and current issues were discussed. In the course of

discussion report “M&A Landscape in Ukraine” was presented by the leading KPMG Ukraine experts where they shared key findings on Ukraine.

B2G Dialogue Meeting with Yuliya Kovaliv, Head of the Office of the National Investment Council, Andriy Ivanchuk, Head of the Parliament Committee on Economic Policy, and Maksym Nefyodov, First Deputy Minister of Economic Development and Trade of Ukraine

The American Chamber of Commerce in Ukraine met with Yuliya Kovaliv, Head

Laws #6723 and #6746, privatization and concession of state enterprises,

odov, First Deputy Minister of Economic Development and Trade of Ukraine.

During the meeting, Andriy Ivanchuk also announced submitting of the Draft

of the Office of National Investment Council, Andriy Ivanchuk, Head of the Verkhovna Rada of Ukraine Committee on Economic Policy and Maksym Nefy-

Discussion was focused on the recently adopted Law “On Limited Liability and

Additional Liability Companies” and other issues related to state economic policy. In particular, issues related to antimonopoly legislation, such as Draft

consumers’ rights protection and anti-competitive actions of state bodies were discussed.

Code on Procedure of Bankruptcy to the Verkhovna Rada, aimed at update of existing procedure and introduction of provisions on bankruptcy of individual.

Meeting with Pavlo Kovtonyuk, Deputy Minister of Health of Ukraine

Members of the new Working Group on Health & Medical Services Providers estab-

be financed from the state budget under a specific budget program and provided to

ment of private sector in healthcare reform. On January 1, 2018, the laws launching

2018. During the period of 2018-2019, it will cover certain other medical services, in

lished within the Chamber Healthcare Committee met with Pavlo Kovtonyuk, Deputy

Minister of Health of Ukraine. The main topic of discussion was focused on involvethe healthcare reform became effective. One of the changes, provided by these laws,

is setting out the list of medical services, medical devices and medicinal products to

patients free of charge.

This program will be launched on the primary medical care level starting from July 1, specific healthcare institutions as a pilot project, and it will be fully implemented on all levels of medical care starting from January 1, 2020.

Meeting with President Petro Poroshenko and Prime Minister Volodymyr Groysman On March 12, 400 representatives of Ukraine’s business community from 3 business as-

growth and progress in Doing Business rating, highlighted the necessity of investments’

Prime Minister of Ukraine Volodymyr Groysman and Ukrainian state authorities. The

economic growth and development.

sociations – American Chamber of Commerce in Ukraine, European Business Association,

and Ukrainian Entrepreneurs Union – met with President of Ukraine Petro Poroshenko,

meeting was devoted to discussion of the reforms progress, recent legislative initiatives on exit capital tax, and Draft Law “On Currency”.

At the beginning of the meeting, President Petro Poroshenko signed the recently adopted Law of Ukraine “On Limited Liability Companies”. Also, the President of Ukraine quoted the interactive survey conducted by the American Chamber of Commerce in Ukraine dur-

ing its Annual Members Appreciation Reception in February, according to which almost

64% of attendees felt growth of their business in Ukraine in 2017, and almost 83% are planning to expand their business in Ukraine in 2018.

Prime Minister Volodymyr Groysman stressed on the importance of Ukraine’s economic

protection, deshadowing and demonopolization of the Ukrainian economy, as well as necessity of adopting the package of Draft Laws that are of the top-priority for enhancing

President of the American Chamber of Commerce in Ukraine Andy Hunder during his speech raised the issues of strategic importance to the business community - full-scale implementation of judicial reform, fight against corruption, cooperation with the IMF,

implementation of healthcare reform in regions, further deregulation of the oil and gas

industry, and issues that are critical for business regarding gray grain market and waste management. Also, Andy Hunder voiced the problem of corruption: 89% of respondents

of the Chamber Survey believes that combating corruption is a priority for improving Ukraine’s business climate. That is why the creation of the Anti-Corruption Court and the fight against corruption is the #1 priority for 2018.

WELDI Business Breakfast “Philosophy of Current Fashion Trends and Personal Style” Right before the International Women’s Day, the American Chamber of Com-

merce in Ukraine gathered participants of Women’s Executive Leadership Development Initiative for festive business breakfast. Anna Danevych, ideologist and speaker of the educational project DARE TO DRESS. SMART TALKS shared the most recent fashion trends and told how to define personal style.

*WELDI - Women’s Executives Leadership Development Initiative is a personal development & business-networking platform of the American Chamber of Commerce in Ukraine that brings together successful, goal-oriented, and modern women leaders.

PREMIUM SPONSOR & GIFT PARTNER

GIFT PARTNER

CERTIFICATE PARTNERS

St. Patrick’s Day Business Networking Cocktail In the whole world St. Patrick’s Day commemorates Saint Patrick and cel-

ebrates the heritage and culture of the Irish in general. On this day the Chamber Members put green clothes on and raised their glasses of traditional green beer to get into the atmosphere of the most famous and favorite Irish holiday.

During the official part of the celebration, new Members of the American

Chamber of Commerce in Ukraine were introduced to the entire Chamber Membership and presented with Membership Certificates.

PARTNERS

Upgrading the Breadbasket Infrastructure improvements and greater efficiency are helping Ukraine feed the world

Ukrainians have waited particularly long for the arrival of spring this year, but there is already considerable optimism that 2018 will mean more record-breaking harvests for the country’s buoyant agricultural industry. The past few seasons have produced bumper crops and seen Ukrainian producers make significant new inroads into international markets, helping the country regain its reputation as Europe’s principle breadbasket while establishing its credentials as an agribusiness superpower on a global scale.

Larysa Bondarieva, Member of the Board at Credit Agricole Bank in Ukraine, responsible for Corporate Business, SME and agri-agro, believes these gains are part of broader evolutionary processes at work within the Ukrainian agriculture industry. Based on the dynamics she is currently witnessing inside the industry, she sees scope for significant further production growth and additional export market shares. However, the ambitious current infrastructure upgrade of the agriculture sector must continue to gain ground if Ukraine is to realize its potential to feed the world.

Maintaining Grain Gains

Ukraine’s annual grain harvest in 2017 was slightly above 62 million tons, which represented a marginal drop on the 2016 figure of 66 million tons. Despite this minor annual decline, both these 48

totals represent good results, while the historic high in 2016 indicates the vastly improved efficiency evident throughout the sector.

Ms. Bondarieva points to telltale signs like the increasing availability of locally developed seeds that combine high quality and cost effectiveness. This has coincided with an increasing readiness to invest in good quality seeds alongside better crop protection and fertilizers. “Agricultural producers are no longer looking to cut corners because they recognize this may affect both the quality and quantity of their grain,” she notes.

Ms. Bondarieva also sees growing evidence of professionalism within the industry, commenting that while planning for the coming planting season would once typically take place in January and February, it is now generally well underway during the previous October, or as soon as the harvest is gathered. “We are witnessing an industry-wide shift towards greater efficiency,” she says. “If you prepare in advance, you are going to be better equipped for the coming campaign. You are able to buy seeds at reasonable prices instead of waiting until the last minute. Ukrainian farmers realize that better preparation will bring better results. What we are currently seeing is part of a longer term evolution towards a more effective business model.”

If maintained, this improved efficiency will lead to even bigger har-

Transportation Challenges

Ukraine is experiencing rising agricultural production at a time when the country’s population is slowly shrinking. This negative demographic trend means that any additional agricultural produce is likely to be destined for global markets. One of the key challenges currently facing the country’s major agricultural groups and Ukraine’s strategic partners is transporting these growing harvests from the fields to the consumer.

Ukraine’s ports have experienced a fourfold expansion in transshipments over the past decade, helping to boost export potential while also forcing down tariffs and making Ukrainian agricultural products more globally competitive. Ms. Bondarieva says Ukraine’s port infrastructure upgrade will continue in 2018, with up to eight major projects expected to proceed.

She also predicts greater focus on Ukraine’s inland waterways.

The country’s extensive river networks accounted for just 4% of agricultural traffic in 2017, with roads accounting for 32% and railways leading the way with 64%. However, the current dominance of road and rail transportation may soon be subject to revision. “Rivers currently have a small market share but this percentage is growing and I would expect to see more interest in the exploitation of Ukraine’s waterways over the coming season. The experience of mature European markets like France and the Netherlands offers pointers of how agricultural groups can make far greater use of waterways. We are already noticing clients looking to develop storage and transportation infrastructure close to Ukraine’s major rivers.”

The nationwide overhaul of Ukraine’s highways is unlikely to lead to greater volumes of agricultural produce transported via lorry.

Instead, weight restrictions introduced with bulky agricultural freight specifically in mind will serve to cancel out any possible benefits from improved road surfaces. The damage caused by overloaded vehicles carrying agricultural produce is among the factors contributing to the poor state of Ukraine’s major highways, making it hard to envisage any significant increases in this direction.

Ukraine’s railways currently enjoy the lion’s share of the country’s agricultural traffic, but as harvests have become larger in recent years, there have been notable failures to meet peak demand. One of the results of this shortfall has been the growth of private railway wagon fleets, with the number of privately owned wagons doubling since 2015 to around 4,000, which is more than one-third of the approximately 11,000 wagons maintained by the state-owned national freight carrier. Ms. Bondarieva expects the number of wagons in service to continue rising in 2018 and notes the need for

more modern locomotive engines. She says the recent USD 1 billion agreement signed between Ukraine and General Electric subsidiary GE Transportation will help overcome the current problem of outdated engines.

Global Market Expansion

agriculture

vests and greater grain gains in the years to come. Ms. Bondarieva says that annual grain harvest totals in excess of 80 million tons are achievable via a combination of higher quality inputs, good storage practices and improved machinery. In order to move beyond the 100 million ton mark, substantial additional investments would be required to finance the irrigation of Ukraine’s rain-starved but fertile southern regions. This is likely to become feasible in the medium term as investors seek new ways to tap into the riches of Ukraine’s fabled breadbasket.

Much of the financing for Ukraine’s agricultural infrastructure upgrades has come from abroad, with China among the most active participants in the process. This is no accident – Beijing has committed itself to a strategic multi-billion dollar package of investment projects in Ukraine, with many of the most eye-catching initiatives focusing on boosting the country’s ability to provide Chinese markets with agricultural produce. “Chinese investment into seaport infrastructure projects and Chinese engineering are playing increasingly prominent roles in the Ukrainian economy as part of efforts to strengthen the connection between Ukrainian production and Chinese consumption,” says Ms. Bondarieva. “This ties in with the broader Chinese strategy in the Black Sea region that also involves investments in Romania and Russia.”

In addition to China, the other single largest market for Ukrainian agricultural exports is India. Both countries boast populations in excess of one billion and both are high on the list of importers of Ukrainian agriculture. India is the leading importer of Ukrainian sunflower oil, while the 16% growth in Ukrainian imports registered in 2017 is set to increase to 20% in the current year.

Ukraine’s successful expansion into the hotly contested Chinese and Indian domestic markets is part of the country’s increasingly global approach to agricultural exports. No longer able to rely on the old comfort zone of the former Soviet world, Ukrainian exporters have carved out new niches and proved themselves more than a match for many more established market participants.

During a recent business trip to Western Europe, Ms. Bondarieva spoke to EU producers who admitted that Ukraine was now able to compete successfully against them in North Africa. There had been some indications of Ukraine’s improving competiveness in recent years, but it was now clear to EU rivals that this was a long-term trend. “Ukrainian exporters are seeing the benefits from their earlier investments into improved product quality and better infrastructure, while the country is also geographically well positioned for North African and Middle Eastern markets in particular,” she notes. “These are the fruits of the progress made since 2014. Further success will now depend on the ability of Ukraine’s agribusinesses to maintain both quality and efficiency.”

About the interviewee: Larysa Bondarieva, Member of the Board at Credit Agricole Bank in Ukraine, responsible for Corporate Business, SME and agri-agro www.bunews.com.ua

49

Ukraine’s new debt restructuring opportunities

Success stories point to effectiveness of new legislation but timeframe concerns remain

About the author: Gabriel Aslanian (gabriel.aslanian@asterslaw.com) is a counsel at Asters law firm with a focus on Banking & Finance practice.

The idea behind Ukraine’s new financial restructuring legislation was to implement the best global regulatory and taxation practices used to revive the banking business. A growing number of the restructuring success stories based on the new law are helping to demonstrate the viability of the relevant procedures.

Late 2017 saw the completion of a high-scale restructuring project in accordance with the Law of Ukraine “On Financial Restructuring”.

The overall timeline of the project from late 2016 when the law came into force was subject to several months of delays as the project team awaited the creation of the formal restructuring bodies and their development of the new law’s implementation rules.

As the completed project was the first large debt restructuring under the new law involving a state-owned bank, it is possible to draw conclusions based on the experience gained and the general context in which the new law is applied.

The main conclusion, undoubtedly, comes from the fact that adoption of the new law has greenlighted long-term debt restructuring for state-owned banks. This conclusion is backed by the provisions of the new law expressly providing for various debt restructuring mechanisms (including, among others, a decrease in interest rates, transfer of assets to the creditor on account of full or partial recovery of indebtedness, etc.). This approach by the legislator makes it safe for the management of the state-owned bank to use any of the restructuring mechanisms prescribed by the law and secures flexibility in developing the future relationship between the bank and the debtor. In fact, the bank management is protected from any future prosecution for following the direct prescriptions of the law.

Another notable matter to factor in while planning debt restructuring within the framework of the new law is the actual timeline of the relevant procedure and subsequent steps needed to imple50

ment the newly agreed structure. The statutory term for completing the procedure under the new law is 90 days upon commencement.

This term may seem sufficient at first sight. However, note should be taken that the procedure under the new law is rather strict for contemplating quite formalistic and lengthy steps. This includes appointment of an independent expert to assess the viability of the debtor and any related group’s business model. This can only take place at the first meeting of creditors, while there is no way to expedite the convocation and convening the creditors’ meeting even if there is only one creditor involved. It also covers completion by an expert of a comprehensive financial and legal due diligence check of the debtor and related business group’s business, along with an appraisal of their assets with subsequent development and presentation of a long-term business model for the debtor. The overall negotiation of this business model with the creditor, along with its adjustment or modification based on the creditor’s feedback, and subsequent conversion into a legal document called a “restructuring plan” supplemented with an impressive set of agreements needed to implement the agreed structure makes the mentioned 90-day term extremely demanding.

Finally, the 10-day term prescribed by the law for harmonizing existing agreements of the debt restructuring parties with the parameters set forth in the restructuring plan may also require significant efforts.

It is important to recognize that hundreds of different agreements may have accumulated over a lengthy period of cooperation between the creditor and the debtor. In most cases, such agreements will be subject to amendment in line with the restructuring plan. Given that no agreements are signed without prior due diligence as well as obtaining all authorizations, statements and confirmations, this part of the work should be properly planned and organized during the earlier restructuring stages.

Quite predictably, the homework preceding signing the full set of documents for a restructuring project should be done in parallel with drafting and negotiation of the restructuring plan. In case any of the parties have doubts about their ability to meet the minimum statutory restructuring term, the new law allows them to extend it to 180 days.

However, it appears that in most cases even an extended term may be insufficient to have more than one creditor involved in a restructuring procedure.

Initially, the drafters’ and legislators’ idea standing behind passing the new financial restructuring legislation was to implement in Ukraine the best regulatory and taxation practices used to revive the banking business in some other countries of the region. Although the new law was not considered a regulatory breakthrough by the market when it was passed, it has definitely superseded initially pessimistic market expectations. There are some practical matters to be considered while choosing whether to implement the debt restructuring regulations in accordance with the new model. However, the growing number of restructuring success stories based on the new law are proving the viability of the relevant procedure. Besides, demand for debt restructuring remains huge in Ukraine, which means a promising future and a sizeable market share for the new law.

Ukraine’s online advertising boom attracts attention Global group IAB aims to take the Ukrainian digital advertising sector to the next level IAB officials have spoken about the “unprecedented growth” of the Ukrainian digital market over the past few years. How would you characterize this growth?

Just look at the All-Ukrainian Advertising Coalition numbers. According to their annual report, all segments of digital advertising are up, with mobile advertising in particular demonstrating tremendous growth. According to the Ukrainian Internet Association, the market volumes for online display advertising increased by 40% during 2017 in UAH terms. All-Ukrainian Advertising Coalition data shows that TV advertising rose 29% over the same period, while the figures for print and radio advertising are 18% and 20% respectively. Digital advertising has had higher growth rates than other media for a while in Ukraine, but the digital share of advertising budgets now represents a substantial part of the overall media pie, reaching almost 30%.

About the interviewee: Yaroslava Antipina is CEO of IAB Ukraine The global Interactive Advertising Bureau (IAB), which focuses on media and marketing in the digital economy, recently launched in Ukraine. “Ukraine has witnessed unprecedented growth in its digital advertising marketplace in recent years. With the formation of IAB Ukraine, this industry now has a central convening point to enhance collaboration,” commented IAB Executive Vice President Dave Grimaldi on the launch. Business Ukraine magazine spoke to IAB Ukraine CEO Yaroslava Antipina about the group’s vision for the booming Ukrainian digital advertising marketplace.

What attracted IAB to set up a Ukraine office?

IAB Ukraine is acting under IAB license. Each country applying for a license must prepare a business plan. We were able to demonstrate the readiness of the Ukrainian market to implement IAB standards and be a part of an international professional network.

Ukraine is forty-fifth country to join the IAB Global Network – I think we waited long enough!

What are the key goals of IAB as an organization in Ukraine?

IAB Ukraine’s aim is to establish unique and transparent standards for digital advertising in the country while conducting research and developing Ukraine’s digital advertising market.

Who are your founding partners?

IAB Ukraine’s founding members include Google Ukraine, sales house and advertising network Admixer, the representative office of market research company Kantar TNS, media investment group GroupM and advertising agency Publicis One, online trading platform OLX Group, media holding Media Group Ukraine, and Ukrainian news website obozrevatel.com.

52

Which sectors of the Ukrainian digital marketplace currently generate the most advertising revenue?

It would be more accurate to talk about advertising billing rather than revenue. Based on annual digital advertising market analysis

by Admixer, the food and beverages sector was the leader in 2017 with a share of 19.7%, followed by hygiene and cleaning products with 11.7%. Meanwhile, cars made up 10.9% of the market.

Which sectors of the Ukrainian digital marketplace offer the best prospects for revenue growth?

I would have to say pharma. In 2017, the pharma sector led the way in terms of the number of active advertisers even though its market share was only 7.4%, earning it fifth place according to Admixer. This means pharma companies are ready to try and are actively taking their first steps towards digital advertising.

What impact have recently imposed restrictions on Russian websites in Ukraine had on the Ukrainian digital advertising marketplace?

Most small businesses felt the impact briefly because of their earlier dependence of advertising via Russian social media platform VKontakte and other popular websites subject to bans. The bigger advertisers quickly redistributed their digital budgets to other platforms. Many Ukrainians continue to use these banned websites via VPN technologies, but Ukrainian advertisers can no longer reach this audience.

How much traffic does a Ukrainian site need to attract before it can realistically hope to start generating advertising revenue?

You can start monetizing your website any time you want. The amount of revenue you will receive depends on the topics you raise, the volumes of traffic you generate, and the geographical breakdown of your audience. The CPM rate (“cost per thousand”) in Ukraine is very low so if your website is reaching audiences in other countries, you will likely receive higher revenues. If you generate video content, you can also earn more as video advertising rates are higher.

WEST UKRAINE’S LIFESTYLE GUIDE

The best of Lviv since 2008

opinion

Ukraine cannot wait until 2019

for anti-corruption reform progress US-based Friends of Ukraine Network joins chorus urging Kyiv to maintain Maidan momentum When hundreds of thousands of Ukrainians took to the bitterly cold streets of Kyiv in early 2014 to push back against the corrupt and brutal Yanukovych regime and its rejection of a Ukraine’s Euro-Atlantic future, they expressed an unwavering desire for a democratic, prosperous and secure nation.

After Yanukovych fled Ukraine, the United States, European Union, International Monetary Fund, World Bank and other international partners responded to Ukraine’s calls for help with increased diplomatic backing. They provided significant resources including technical assistance and macroeconomic support to stabilize a weakened government and economy. They also condemned Russian military aggression and imposed sanctions on Russia.

Despite this unwavering support, the promise of a new Ukraine that arose from the Revolution of Dignity is now in jeopardy. It is under threat from Russia’s destabilization efforts, and from the domestic elite that seeks to reinsert itself politically and economically while stalling critical anti-corruption reforms.

These same domestic forces have held Ukraine back independence in 1991.

Clearer Commitment to Combating Corruption

The Ukrainian government needs to make a far stronger and clearer commitment to combating corruption. This is the only way this nation of over 40 million will prosper and integrate into the Euro-Atlantic community. That is why the American Friends of Ukraine Network (FOUN) has recent joined the chorus of international partners and Ukrainian civil society groups in calling for decisive action by President Poroshenko, the Ukrainian government and parliament in the fight against corruption. Effectively combating the scourge of corruption will better enable Ukraine to counter the significant challenges posed by the existential threat of ongoing Russian aggression.

Ukraine cannot afford to wait until after Presidential and Parliamentary elections in 2019 move forward with reforms and create a more Western marketoriented economy. In the FOUN statement, we “applaud that Ukraine has done more on reform in many sectors over the last four years than in the previous two decades.” However, we also emphasize that the Ukrainian government needs to show “greater leadership and commitment to combat the pervasive, long-standing corruption that exists in public and private life. This was a principal demand of the Revolution of Dignity and remains a top priority of the people of Ukraine.” We are particularly concerned about Ukraine’s anti-corruption infrastructure and stalled efforts to establish an independent Anti-Corruption Court. While new anti-corruption institutions, including the National Anti-Corruption Bureau (NABU), the Specialized Anti-Corruption Prosecutor’s Office (SAPO) and the National Agency on Corruption Prevention (NACP), are now in place, this architecture is incomplete. Instead of further progress, the work of existing institutions faces obstruction and anti-corruption activists find themselves targets.

Investors Demand Rule of Law

Ukraine’s economic growth is a victim of these stalled reforms. This is another

reason why Ukraine urgently needs to build transparent and independent anti-corruption architecture. In addition, Ukraine must protect property rights which are fundamental for attracting foreign direct investment, and create a business environment that encourages domestic investment, particularly for Small and Medium-sized Enterprises (SME).

On the economic front, last October’s Ukraine Economic Update by the World Bank highlighted the need to address deep and fundamental challenges to Ukraine’s economy. It pointed out modest economic growth, poverty levels higher than pre-crisis levels, and widening fiscal deficits in 2018 and beyond.

Its recommendations were clear: over the next two years, Ukraine needs to boost economic growth to 4% as a catalyst to improve living standards and reduce poverty. To achieve these economic goals, “it will require progress on an ambitious package of reforms, including in land markets, the financial sector, anti-corruption, and privatization, to stimulate investment and productivity.”

Wanted: Political Will

The verdict is out on whether the Ukrainian government is willing to adopt the necessary reforms to transform their country. Recently, the EU announced additional macroeconomic support for Ukraine. The EU was right to tie new assistance to reforms, urging Ukrainian authorities “to take forward the reform drive with renewed vigor, to build a fairer, more stable and more prosperous country in the interest of all Ukrainians.” The strongest supporters of Ukraine within the EU are now urging the Ukrainian government to implement key anti-corruption reforms.

In the current situation, half measures will not do. Ukraine could slide backwards, reversing the gains of the last four years and, in the process, lose US and other international support. They need not look far for reform models. Similar processes were at the heart of Polish and other Central European economic success stories dating back to the 1990s. Ukraine’s international partners have expressed their willingness to continue to their support as long as Kyiv is willing to implement key anti-corruption reforms

Ukrainians Deserve Better

Despite deep concerns in Washington about a potential Ukrainian economic collapse in early 2014, Ukraine’s economy and its people were resilient. They remain resilient today, even as they face formidable external and internal challenges. However, this resilience is not enough. As former US Secretary of State Rex Tillerson said in December 2017, “It serves no purpose for Ukraine to fight for its body in Donbas if it loses its soul to corruption. Anti-corruption institutions must be supported, resourced, and defended.” We could not agree more. Ukrainians have survived decades of corruption, poverty, weak governance and Russian meddling. They deserve better. Supporters of Ukraine need to urge Kyiv to intensify its reform efforts and closely monitor this effort. This is nothing short of essential for the peace and prosperity of the people of Ukraine.

About the authors: Clifford Bond is a former Coordinator of US Assistance to Ukraine at the US Embassy in Kyiv and former US Ambassador to Bosnia and Herzegovina. Orest Deychakiwsky is a former Policy Advisor at the US Helsinki Commission. Jonathan Katz is a former Deputy Assistant Administrator at the Europe and Eurasia Bureau of USAID. 54

www.bunews.com.ua

Tenants vs Landlords in Ukraine Top tips for anyone thinking of renting, letting and investing in Ukrainian property If you are unfamiliar with Ukraine, renting an apartment for the first time in Kyiv or buying an investment property in the country can seem risky. Does reality match this perception? Tenant rights can be a key concern for foreign investors from EU countries or US states where these rights can be quite strong and fraught with risk for landlords. This article discusses tenant and landlord rights in Ukraine and provides real world broker tips for renting, letting and investing in Ukrainian property as well as an overview of legal issues connected to these rights.

Tenants Should Be Practical

Unlike most Western countries, Ukraine does not have a strong legal system where plaintiffs and defendants can reliably expect swift and expeditious justice. With this reality in mind, in many cases using Ukraine’s court system to resolve disputes between tenants and landlords is not a particularly practical solution that can be worth the time and expense involved.

When it comes to rental agreements between tenants and landlords, it is best to think of these documents as a “gentleman’s agreement on paper” for a personality-based transaction. For example, if you are a tenant looking to rent a flat in Kyiv, instead of approaching this transaction with a legalistic mindset based on your tenant rights according to Ukrainian legislation, it may be more pragmatic to rely on your intuition and a solid pre-rental checklist. Firstly, go with your gut. Do you like the owner or does he or she leave you with a funny feeling? If you are a little unsure about the owner and think that he or she could become a problem, it might be best to consider the owner as an additional expense if you think you are otherwise getting a good deal.

Secondly, before signing a rental agreement, make sure that you or your broker checks the online registry for scans of the apartment’s ownership documents to make sure that the owner’s info matches that of your potential landlord. These checks can be done online for a nominal fee. Just keep in mind that brokers in Ukraine are not legally bound to perform these checks and not all Kyiv brokers are overly concerned with their reputation and will not always go through the trouble of checking ownership documents, even if they tell their client that they did. If ownership documents for the flat of your potential landlord are unavailable online, this could be a potential red flag, so be careful.

Thirdly, sometimes landlords will engage a representative to act on their behalf. In this situation, check that the owner’s representative has a valid power of attorney, that this individual is included in the rental agreement, and that the owner’s representative provides his or her passport for inspection. Note that if you or your organization plan on renting an expensive flat in Kyiv (and perhaps paying several months’ rent in advance), then it is also a good idea to check whether the apartment you are considering is pledged as collateral, has any liens against it, or is subject to any court decisions in Ukraine’s legal system. Your broker can check whether a flat is pledged as collateral in the online property registry. A notary 56

can check whether a property has any liens against it, while verifying whether a property is subject to court decisions can be a bit trickier to check but can be done by a capable lawyer.

Guard Against Scammers

If you are renting an apartment in Kyiv, you must watch out for potential scam artists. It may seem obvious, but do not ever pay for an apartment before viewing it. Do not accept copies (instead of originals) of ownership documents from someone claiming to be an apartment’s owner. Insist that the owner bring his or her passport to a lease signing. You do not want the actual owner of an apartment to show up after you have already paid the first and last month’s rental fees. Oftentimes, disreputable brokers and owners can even collude in such scams. In such cases, “Ivan Ivanovich” the broker then disappears across the Dnipro to Kyiv’s Left Bank and is never heard of again.

The scene is ripe for scammers. A majority of brokers in Ukraine use emails without their first name and surname, while “disposable mobile phone numbers” are cheap and easily obtained. Sometimes scams of tenants are so convoluted that they can be hard to imagine. One acquaintance of mine shared his experience of renting a flat in Obolon. After signing an agreement, he moved into the property only to discover that all of the household appliances (refrigerator, TV, etc.) had been replaced with much cheaper versions. It is worth mentioning that your risk of becoming the victim of a tenant scam drastically increases as your budget decreases and as you move further outside of Kyiv’s center, but everyone should be careful.

Rental Contract Tips for Tenants

As outlined above, it is sensible for tenants in Kyiv to consider their rental agreement as a written expression of their verbal agreement with their landlord. However, in order to avoid misunderstandings in the future, certain areas should be specifically defined in your rental agreement, which should also be a dual language agreement. For example, it can be a good idea to include a clause stating something like, “upon mutual agreement the tenant’s deposit can be used as the last month’s rent.” In Ukraine, there is no legal requirement for landlords to put your security deposit in escrow, and often a landlord may not have the money available to return your deposit when you move out. Many rental agreements allow tenants to move out by giving 30 days of notice before leaving, but it is also worth seeing if you can include a clause that obliges the landlord to return any pro-rated, unused rent.

Some landlords may try to include clauses that require tenants to pay for deep cleaning and repainting their apartments. Make sure that you or your broker resist the inclusion of such unreasonable terms. It is also a good idea to get a signed receipt from your landlord each time you pay the rent (if you are paying in cash), since there have been numerous cases when unscrupulous owners demanded repayment of the rent because they knew that the tenant did not receive a receipt. If your landlord requires any

real estate

payments other than rent (damages, increase of fees), then contact a lawyer for advice.

Tenant Rights and Obligations

Tenant rights in Ukraine are pretty standard. These rights include the right to lodge others for permanent residence with the consent of the landlord. Tenants also have the right to lodge others for temporary residence, with prior notification of the landlord.

Consent by the landlord is not stipulated but Ukraine’s Civil Code contains provisions that require the tenant to evict those persons permanently residing with him from the premises within seven www.bunews.com.ua

days from a demand for eviction by the landlord. A tenant has the preferential right to sign or extend the lease agreement for a new term, and he has the right to sublease the property (with the landlord’s consent).

Tenant obligations in Ukraine are also straightforward. These include not renovating the flat without the landlord’s consent. The tenant is obliged to make timely rental payments and payments for utilities/communal charges (unless otherwise specified in the rental agreement). The tenant is expected to specify in the agreement those persons who will be living with the tenant (such persons have similar tenant’s rights and obligations regarding use : 57

: of the property). The tenant should carry out maintenance of the

housing (unless otherwise stipulated in the agreement).

One tenant obligation in Ukraine that can have tricky real world consequences is that tenants are obliged protect the housing and maintain it in good condition. In practice, this means keeping it in the same condition that is was at the time the rental agreement began. Kyiv landlords are not always reasonable when it comes to taking into account the effects of normal “wear and tear” on their apartment and may try to aggressively overcharge you for “damage” that did not result from your negligence. As a tenant, the best way to mitigate this and other possible risks is to use your intuition before you sign a rental agreement with a landlord. Ask yourself, “does this person seem reasonable?”

If a conflict with your landlord does arise, it is always better to negotiate with him or her to resolve it. Negotiations with your landlord can be based on the non-disclosure of your dispute (in order not to damage your landlord’s reputation) and not reporting your dispute to the tax authorities (it is not a secret that Ukrainian landlords often do not pay taxes on their rental income). If your dispute with your landlord goes to court, then it won’t be cheap. It is necessary to pay the court fee (at least 1% of the amount of the claim) and for the work of your lawyer. Additionally, the court process will take a lot of time. This could mean at least half a year.

Tips for Landlords and Would-Be Owners

In everyday conversation, most landlords generally get about as much sympathy as bosses and just a touch more than politicians.

But consider this - in Kyiv a nicely-renovated small flat in the center that rents for USD 600 per month can be worth USD 100,000 to USD 150,000. Meanwhile, in Ukraine it is rare that a tenant pays first and last month rent fees as well as a security deposit. In this situation, a negligent tenant could potentially cause far more damage and lost income to a landlord than could be covered by the prepaid last month’s rent. Negligent expat tenants are an even bigger gamble. Expats can just leave Ukraine, leaving landlords with zero legal recourse to recover their losses. Ukraine’s expat scene abounds with tales of such rogue renters who left without paying considerable debts.

Often landlords will insist that tenants are not allowed to smoke in their apartments or live with people who are not listed in the rental agreement, but these things and other tenant behavior can be hard to control. On paper, landlords in Ukraine do have certain rights. For example, a rental agreement may be terminated by a court if a tenant fails to pay the rent for six months, unless the lease sets out a longer period.

In the case of short-term rentals, termination can occur if the tenant fails to pay more than twice. Terminations are also possible in case of destruction or damage to the property by the tenant or other person for whose actions he is responsible. In such cases, eviction from the housing in the event of termination of the lease agreement can only be by a court decision. As

a practical matter, in Ukraine there’s a greater risk of a tenant not paying or damaging a property and disappearing than there is of him or her continuing to live at the property while acting in bad faith.

Background checks of potential tenants that include proof of employment and employer information can be a good idea for landlords. In Kyiv, one way to filter out potentially unsavory tenants can be to insist on rental payment via bank wire transfer. Many Kyiv landlords do not declare their rental income for tax purposes, while many international organizations are required to pay for housing by bank transfer for their employees. With this in mind, Kyiv landlords with nice flats in the downtown area who insist on payment by bank transfer can often demand a 5% to 10% premium over market rental rates, which could be more profitable for them depending on their tax structure.

Registration Issues

If you plan to rent your property in Ukraine to a foreign citizen who will be registering in your apartment for his/her residence permit, then always include a clause in the rental agreement that provides for the right to cancel the tenant’s registration upon termination of the lease agreement. In the agreement, it should also be noted that in the event that the tenant’s residence permit is cancelled, he or she must immediately notify the landlord and the landlord may then terminate the lease. Otherwise, a landlord may be accused of assisting a foreigner who is illegally staying in Ukraine. Additionally, as sponsor for your tenant’s place of residence, you can demand a power of attorney from your tenant’s employer to unregister them from the place of registration. Having implemented these simple steps, the owner of an apartment can safely register a foreign citizen as a tenant and there are no negative consequences for doing so.

The Bottom Line for Tenants, Landlords, and Investors

For investors who are considering buying investment properties in Kyiv, you should be aware that while rental agreements in Ukraine can be moderately “tenant-friendly,” most risks can be mitigated by carefully screening your tenants. It is also important to note that tenant rights in Ukraine do not resemble the strongly tenantfriendly rights found many EU countries and US states. Like most things in Ukraine, whether you are a tenant who is considering signing a rental agreement with a Kyiv landlord or an owner who is considering letting out his or her property, never forget to take into account the “human factor” and make this the chief basis for your decision-making.

Special thanks to attorneys Vasyl Cherednichenko and Tetiana Yashchenko at the law firm ExpatPro for their contributions to this article. Please note that this article is not intended to replace qualified legal advice. You should also bear in mind that your specific circumstances may differ from the assumptions used here.

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

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Ukraine’s G7 allies seek balance

between criticism and support

The G7 Support Group is a unique initiative that reflects Ukraine’s strategic importance to the Western world - but is it an effective tool to support reforms?

Since the historic events of 2014 set Ukraine on a path towards Euro-Atlantic integration, the country’s international partners have aligned themselves into a variety of formats to support the Ukrainian reform process. One of the most significant initiatives has been the creation of the Ukraine Support Group, which brings together the embassies of all G7 member states in Kyiv.

This “dream team” of Ukraine’s Western partners includes the US, Germany, Canada, the UK, France, Japan and Italy.

The Support Group has already played a prominent role in support of key reforms including e-declarations, healthcare reform and pension reform. This role is likely to increase in the coming months as Ukraine’s leaders struggle to strike a balance between the political practicalities of looming presidential and parliamentary elections and the need to maintain the country’s reform momentum.

Unique to Ukraine

The G7 Support Group concept is unique to Ukraine. It is a prototype that some regard as a kind of diplomatic experiment. Established during Germany’s 2015 chairmanship of the G7, it is specifically designed to support reforms in Ukraine. Many see this initiative as evidence of Berlin’s commitment not only to peace in eastern Ukraine via Chancellor Merkel’s role in the 60

Minsk agreements, but also to the country’s successful transition. It is perhaps worth emphasizing that goal of the Support Group initiative is not to address the ongoing conflict in Ukraine. “The G7 Support Group is not about security, not about Donbas, and not about Crimea, but about reforms,” one of the diplomats interviewed for this article underlined.

The public dimension of the Support Group’s activities is largely visible through statements on specific reforms in Ukraine. Less public aspects of Group’s work include meetings with key actors in the reform process in Ukraine and directly with the Ukrainian President. These presidential meetings have not been particularly numerous so far. The Support Group met with President Poroshenko four times during the Japanese chairmanship in 2016, and just once during the Italian chairmanship in 2017.

Since January, Canada has taken on the rotating chairmanship of the G7. This has led to significant expectations in Kyiv due to the high levels of bilateral partnership between Ukraine and Canada since the Revolution of Dignity and the beginning of Russian aggression in Ukraine. It is also worth recalling that Canada initiated Russia’s ejection from what was then the G8 back in 2014 in direct response to Russian aggression in Ukraine.

Since the first days of its chairmanship, Canada has been demonstrated a desire to significantly strengthen the role of the Support Group. According to

Keeping Criticism Constructive

Canada has identified five priorities for its chairmanship. Unsurprisingly, the fight against corruption leads the list, along with support for economic growth, effective governance, human capital development, and Ukraine’s defense capabilities. If we analyze these stated priorities, we will see that they closely mirror the Ukrainian government’s own stated agenda until 2020.

Although all five priorities are important, individual diplomats informally name the establishment of an Anti-Corruption Court as the key priority for the current year.

Efforts are underway to review the Support Group’s style of work. Some G7 ambassadors have grown concerned that the initiative has evolved into a rapid response group with a clear anti-corruption focus. According to the diplomats, the Support Group is neither a rapid response team nor an exclusively anti-corruption initiative. G7 diplomats are also keen to avoid accusations of taking sides. “In previous years, we have sometimes become victims of the rival agendas of the government and civic society,” stated one G7 ambassador. Nevertheless, it is sometimes difficult to maintain this position. Whereas there was once a clear dichotomy between the government and the country’s political opposition in the discourse with Ukraine’s international partners, G7 ambassadors today see the authorities increasingly at odds with civic organizations, which, obviously, is a rather disturbing trend.

There is also a desire to establish new parameters for communication with President Poroshenko, with efforts to establish a strategic dialogue rather than simply reacting to specific issues. There is reason to believe this approach would win favor on Bankova. The Presidential Administration has often expressed surprise over bilateral issues appearing on the agenda within the “G7 plus Ukraine” format. Meanwhile, sources within the Ukrainian government stress the importance of moving beyond the student-teacher format of relations and structuring meetings on an equal partnership basis.

To ensure a more substantive reform dialogue, G7 ambassadors should also consider proposing a format of monthly meetings with the Prime Minister, who, as the head of government, holds the reform portfolio.

The Support Group’s activities are most visible in its statements in relation to developments in Ukraine. These statements tend to be negative, often criticizing a perceived slowdown and backtracking of certain reforms. This presents perception challenges, as does the relatively high frequency of such statements, which has at times threatened to devalue the G7 position. “The purpose of our statements is not to criticize the authorities of Ukraine, but to promote reforms,” said one G7 ambassador.

There is a strong argument for moving towards discreet diplomacy and reserving public statements for exceptional situations. Joint G7 statements should remain in reserve and should represent a manifestation of extreme concern from the collective West. Instead of immediately publishing statements, it would be advisable to hold closed doors meetings with the relevant stakeholders and discuss the situation. The principle is simple: first dialogue, then statement. An example of this approach would be the meeting with In-

terior Minister Arsen Avakov on 2 February organized by G7 ambassadors after the appearance of the so-called “National Militia” on the streets of Kyiv.

Approaches towards engagement with civil society are also coming in for renewed consideration. There are suspicions among some in government that civic organizations and ambassadors tend to operate in a coordinated way, leading to unhelpful perceptions of the Support Group as an instrument of certain activists. In reality, the dialogue between G7 embassies and Ukrainian civil society defies such simplifications. For example, some G7 diplomats argue that civil society representatives should focus on communicating with Ukrainians in the regions rather than prioritizing engagement with Western embassies.

geopolitics

representatives of other G7 countries, efforts are underway to achieve a certain “institutionalization” of the Group. Under German leadership, the Support Group served in many ways as a platform for informal communication.

However, since January 2018, G7 ambassadors now meet every two weeks on Wednesdays. Furthermore, regular meetings have been set up at the expert level between diplomats from G7 embassies. As one of the G7 ambassadors commented, G7 ambassadors now enjoy higher levels of coordination in Ukraine than in any other country globally.

Envoys and Appointments

Last year saw efforts to strengthen the Support Group through the introduction of special envoys for specific areas of Ukraine’s reform agenda. After talks with President Poroshenko, Chancellor Merkel announced this initiative at the G7 summit in Taormina. However, several countries including the US and the UK remained skeptical about this idea. In the end, only Germany appointed a special envoy, with former Saxony Prime Minister Georg Milbradt taking on the role. According to some sources, Chancellor Merkel personally selected Milbradt and identified decentralization reform as his key focus. He has visited Ukraine at least five times since summer 2017 and is actively lobbying for the adoption of a package of 17 bills on various aspects of decentralization by the Ukrainian parliament. In a recent interview with Deutsche Welle, Milbradt claimed that if this package of bills does not secure approval in the near future, the window of opportunity for decentralization reform could close for the next four years.

Given the modest response to the idea of establishing special G7 envoys, Canada is instead looking to introduce the position of G7 coordinator for reforms for Ukraine for the duration of its chairmanship. Ottawa is currently engaged in selecting a candidate for this role. The G7 coordinator for Ukraine could contribute to closer interaction between the global Group of Seven and the Support Group at the Kyiv level. This coordination is crucial in order to ensure that there is no impression in Kyiv of the existence of two parallel agendas for Ukraine: one taking shape in the Western capitals, and the other within G7 embassies in Kyiv.

Coordinating the positions of the G7 Support Group with other major international actors and donors is equally important. While the European Union is represented by the participation of the EU Ambassador during meetings of G7 ambassadors, it is also vital to consider the positions of Norway and Switzerland – both important Ukraine donors who are neither members of the G7 nor EU member states. By consolidating their voices, the G7 Support Group and fellow leading donor nations can make sure they continue to play an important role in the context of the reform program.

The author would like to express her gratitude for the interviews conducted during the preparation of this article to Ambassador of Canada to Ukraine Roman Waschuk, Ambassador of the Republic of France Isabelle Dumont, Ambassador of Japan to Ukraine Shigeki Sumi, Deputy Ambassador of Germany Wolfgang Bindseil, representatives of the US Embassy in Ukraine, and representatives of the Presidential Administration of Ukraine.

About the author: Alyona Getmanchuk is Director of the New Europe Center www.bunews.com.ua

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Ryanair to launch Ukraine flights in October Ukraine’s Infrastructure Minister hails arrival of low-cost airline as historic breakthrough Ryanair has confirmed plans to begin flights from Ukraine in October 2018 in a move that will significantly improve Ukraine’s connections to EU destinations and create a far more competitive air travel market for Ukrainians. The low-cost airline will fly from Kyiv to ten European destinations (Barcelona, Bratislava, Gdansk, Krakow, London Stansted, Poznan, Stockholm, Vilnius, Warsaw and Wroclaw) and from Lviv to five cities (Dusseldorf, Krakow, London Stansted, Memmingen and Warsaw).

Historic Moment

Ukrainian Minister of Infrastructure Volodymyr Omelyan toasted the news as a major breakthrough for the country’s air travel industry. “Ryanair’s entry to Ukraine is the most important event for the national airspace in the past 20 years,” he commented of the 23 March flights 62

announcement. “Europe’s largest low-cost airline will begin its operations at Boryspil International Airport (Kyiv) and Lviv Danylo Halytskyi International Airport (Lviv). For Ukrainians, Ryanair’s arrival offers new opportunities to travel cheaply and safely. For the country, it means the development of the aviation industry. For business, it points to a free and competitive market, with rules of fair play. For visitors, you can fly to Ukraine at the lowest fares and discover its openness, beauty and business opportunities.”

The arrival of Ryanair in Ukraine follows the collapse of a similar agreement in 2017 despite an initial public announcement amid much fanfare.

On that occasion, management at Kyiv’s Boryspil International Airport balked at the terms demanded by the low-cost airline, derailing the deal at the last minute and leading to acrimonious exchanges that saw Ryanair

travel industry

officials question Ukraine’s reliability as a partner. The debacle earned Ukraine considerable negative publicity in the international press.

Booming Air Travel Industry

Ryanair enters the Ukrainian market at a time when the country’s air travel industry is experiencing record growth. Rising incomes and the advent of visafree EU travel have both helped to fuel impressive increases in passenger volumes at airports across the country over the past year, with nationwide growth in 2017 averaging around 30%. The low-cost carrier is one of numerous airlines flocking to Ukraine. Iraqi Airways was among the latest to touch down, with new Baghdad-Kyiv flights beginning in April. Meanwhile, Swiss International Airlines returned to the Ukrainian market in March with a Kyiv-Zurich service and Polish airline LOT continues to add destinations in order to meet growing demand from the rapidly expanding Ukrainian diaspora in Poland.

More Ukrainian Destinations Planned

Ryanair flights will strengthen ties between Ukraine and the EU while also opening the country’s tourism industry up to far wider potential audiences. www.bunews.com.ua

Kyiv and Lviv are both gaining increasing attention as attractive up-and-coming city break destinations but they currently suffer from a lack of low-cost air travel options. Talks are reportedly already underway for further Ryanair flights to additional Ukrainian regional airports, with airline officials speaking of expanding to four or five further Ukrainian destinations over the coming few years. Kherson may be next in line, with flights to the southern Ukrainian city offering the prospect of access to the Black Sea region.

Possible Data and Maintenance Centers

Ties between Ryanair and Ukraine may soon also go beyond flight services.

Ryanair chief executive Michael O’Leary has expressed an interest in establishing a data center and a maintenance center in Ukraine to take advantage of the country’s strong IT and engineering skills coupled with competitive labor costs. Relocating these aspects of the airline’s operations to Ukraine would certainly seem to make sense - more than half of the staff at Ryanair’s present data center in Poland’s Wroclaw are Ukrainian nationals, while many of the technicians at maintenance centers in both Poland and Lithuania are also Ukrainians.

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British thriller writer inspired by Ukraine Alex Shaw was once a Kyiv expat – now his books bring contemporary Ukraine to global audiences British novelist Alex Shaw is one of the few English-language authors to achieve international recognition for stories set in contemporary Ukraine. The former Kyiv expat has scored a string of successes with novels revolving around the escapades of Aidan Snow, a fictional former British Special Forces soldier with an affinity for all things Ukrainian. Shaw was first inspired to write while living and working in 1990s Kyiv. Despite leaving Ukraine some years ago, he has maintained his links with the country, using Ukrainian backdrops to great effect in his literary endeavours and visiting the country at every opportunity together with his Ukrainian wife. “I grew up in England,” he says, “but in my heart I feel Ukrainian.”

Shaw is a member of the ITW (The International Thriller Writers organisation) which boasts Lee Child as its President, and the CWA (Crime Writers Association). His Aidan Snow novels, partly set in Ukraine, have become international Kindle bestsellers and been nominated for the ITW’s “best original ebook” award. Shaw spoke to Business Ukraine magazine about his new book deal and discussed the challenges of writing Ukrainian spy stories at a time when the hybrid war realities in the real world are often stranger than fiction.

You have recently changed publishers. What will that mean for the Aidan Snow series?

My previous English language publisher, Endeavour Press, recently went into voluntary liquidation. Both former managing partners subsequently offered me publishing contracts with their new companies.

However, I knew it was time to see what other opportunities were open to me, so I contacted six different publishers and two agents.

Within a matter of days, I was extremely surprised to receive two confirmed offers and happily accepted a deal from HQ Digital, an imprint of HarperCollins Publishers. They will republish all three initial Aidan Snow books (Cold Blood, Cold Black and Cold East) in September.

Where did you first take your literary inspiration for the Aidan Snow character?

I am not going to fib. When I first started writing Aidan Snow, he was me. We were both British expats living in Kyiv, we both even lived in the same flat and worked at the same place. However, unlike Aidan Snow, I was not in the SAS (“Special Air Service”, a Special Forces unit of the British Army). Aidan initially appeared in 1996 when I started trying to write my first book. As this was a hobby and I did not know if I could do it, the novel took twelve years to complete. Thankfully, the rest of my books have been a little quicker to write. Like me, Aidan loves Ukraine and feels an affinity for its people. He is outraged by external Russian aggression and internal corruption. In giving him these opinions I have tried to make him seem less like a cardboard cut-out action hero and more like a real, living person.

How do you research the Ukrainian elements of your novels?

Much of my research has come from first-hand experience of my time in Ukraine and from speaking to family and friends who live in the country. I also tend to write “on location” meaning that I will sit in the place where a scene takes place and write it. This may sound like 64

cheating but it does, I feel, add more authenticity. Of course, I also make extensive use of the many available online resources and tools like Google Earth/Streetview.

How important it is for you to provide an accurate portrayal of security and espionage issues in today’s Ukraine and to what extent are you comfortable employing poetic license to fit your storylines?

Security and espionage issues have changed dramatically since I started to write about Ukraine. I have attempted to keep up to date by speaking to local contacts and friends within the international security community and inside Ukraine itself. I think it is extremely important that my depiction of the SBU and other security organs is realistic but at the same time, that it is not sugar coated. Sometimes authors can also make the mistake of including too much detail into their work. This slows the narrative and can bore the reader. I am very much aware of this potential pitfall.

I have used poetic licence not so much with the storylines but with my central SBU character, Director Gennady Dudka. In my books, he is in charge of the SBU’s Anti-Corruption & Organised Crime Directorate, a branch that no longer exists under that name as far as I am aware.

He has held this position for twenty years - something I know is not realistic as each new head of the SBU appoints new directorate chiefs.

Despite all that, Dudka is an exceptionally fun character to write. He anchors each of the novels and is a fan favourite, which is why I have kept both him and his position unchanged. He has also appeared in his own short stories.

Since 2014, Ukraine has served as a laboratory for Russia’s entire hybrid war arsenal, including everything from “little green men” and social media troll offensives to cyber-attacks and fake news. Is this phenomenon something you have tried to introduce into the plots of your novels?

My thrillers Cold East and Cold Shadow both sought to address Russia’s aggression towards Ukraine and the whole issue of the “little green men”. The opening scene of Cold East has Aidan escaping from DNR forces who are equipped with Russian military hardware. This will be something that I shall also look to reflect in future works.

What kind of impact has Ukraine’s position at the epicentre of Russia’s hybrid warfare activities had on perceptions of the country within the world of international thriller writers - is Ukraine now playing a larger role in plotlines and becoming a more common backdrop to stories?

When I first started to write about Ukraine no one else was doing so. Since 2014, I have noticed more thrillers have started to mention Ukraine in passing. I hope that some of these books may serve to inform their readers a little about Russia’s actions within Ukraine. I am not at all anti-Russian, but I am very nuch anti-Russian aggression and anti the architects of this aggression. I hope that one day the Russian people will say enough is enough. I would much rather have readers wanting to read about Ukraine for positive reasons.

literature

Facts are often stranger than fiction. Which real-life events during the past four years of hybrid warfare do you think publishers would have rejected as being too far-fetched to be believable?

I think the idea of Russia illegally annexing Crimea from Ukraine would have sounded highly improbable as recently as five years ago, especially as Russia had vowed to protect Ukraine after she gave up her nuclear weapons stockpile (as per the 1994 Budapest Memorandum – Ed.). The fact that the world stood by and watched this happen is even more farfetched. Nevertheless, it did happen and the world has since rewarded the Russians by allowing them to host the 2018 World Cup.

International perceptions of Ukraine are often distorted both by historical and contemporary disinformation. Is this something you ever find yourself having to address when setting the scene for Ukraine-based elements of your books?

Readers have traditionally viewed Ukraine and Russia as part of the same family, almost interchangeable in fact. If they are family, it is Ukraine which is the older brother and not Russia. Prior to 2014, I think it was safe to say that many in eastern Ukraine did feel closer to www.bunews.com.ua

Russia, but the question is whether they actually wanted to be Russian or leave Ukraine. In my opinion, they did not. This is the one biggest pieces of disinformation I have had to counter.

Will Aidan Snow be returning to Ukraine in your coming books?

Aidan Snow will always, one way or another, return to Ukraine. I am currently writing a new series and have just penned a scene that takes place in central Kyiv.

When you began writing the Aidan Snow novels, Ukraine was still very much off the international radar. The country is now regarded as one of the world’s geopolitical and military hotspots. Does this make it easier to generate audience interest in stories with Ukrainian plotlines?

Readers now seem to know where Ukraine is and what has happened to the country. In fact, my books have recently sold very well in Germany because of this growing awareness. Although having said that, one review did state that ‘Cold East’ was an advertisement for the Ukrainian Tourist Board. Now that did make me laugh!

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Klitschko Leads Kyiv Real Estate Delegation in Cannes The Ukrainian capital city enjoyed high-profile representation at the annual MIPIM international property exhibition in Cannes in mid-March. Kyiv Mayor Vitaliy Klitschko led the city’s 2018 delegation, accompanied by 63 local officials and entrepreneurs.

One of the key themes at this year’s MIPIM event was the growing importance of cities as investment engines, with many analysts stating that perceptions of individual city attractiveness now often take priority over the appeal of both specific projects and entire countries. Investors are increasingly looking at cities in the context of their overall economic growth potential, risk management and long-term prospects. This trend makes it crucial for other Ukrainian cities such as Odesa, Kharkiv and Dnipro to follow Kyiv’s lead and present their own city brands at key industry events like MIPIM. Among the positive signs at this year’s event was the interest on display from international companies that left the Ukrainian market a long time ago but are now looking at the possibility of returning. This trend was the clearest indication that Ukraine is gradually regaining the trust of international players.

Aleksandr Popov, the CEO of Archimatika and a participant in the Kyiv Stand at MIPIM, commented that the event is evolving into a competition between cities for investors, which in turn allows individual cities to improve the quality of urban living. “A modern city is a complex ecosystem and any investor needs to be convinced that this specific environment offers the most advantageous conditions,” he observed.

Many of the larger investment funds present in Cannes in March remained 66

skeptical about Ukraine due to the perceived risk associated with negative factors such as the ongoing external aggression and inadequate justice system. Nevertheless, Kyiv Investment Agency deputy director Georgiy Yasinksiy said he believes Kyiv remains an interesting investment option despite failing to enter the ranks of the top priority global destinations for international capital. “In order to convert this interest into real foreign investment inflows, we need to see reforms at the national level,” he commented. “The country should improve public-private partnership mechanisms, introduce changes to the tax system with a focus on administrative simplification, and address concerns about the justice system to make investors feel that their long-term investments are secure.”

Toronto-Kyiv managing partner Yuriy Kryvosheya said his experiences in Cannes convinced him that there is a good chance for Kyiv projects to attract significant capital by adopting a proactive approach. “It is important to help investors to structure the deal and to make the initial teaser, which can then be approved by the board at a higher level. At MIPIM, we felt that people were ready to roll up their sleeves, so to speak, and do the necessary homework in order to look at projects in Ukraine. Many are not yet ready to take on the risks associated with Greenfield projects. However, given the excess of liquidity and low rates of return in their home markets, numerous international investors are ready to consider projects in Ukraine that offer the opportunity to generate immediate income.”

(Article author: Anna Nestulia)

networking events

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Kyiv Socialites Toast Arrival of Aloft Hotel

Networking group The Big Meet welcomed over 200 guests to Kyiv’s recently opened Aloft Hotel in mid-March as the spring social season got underway in some style.

This new Marriott venue, which opened for business at the end of February, is located close to the Olympic Stadium and Palace of Sports in central Kyiv. Aloft Hotel has a musical focus and plans to host regular performances and other thematic evenings.

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networking events

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Swiss Photographer Brings Post-Revolutionary Kyiv into Focus Events in Kyiv during the winter of 2013-14 dominated the global news cycle and captured the world’s imagination. Even after Ukraine dropped out of the international headlines, Swiss photographer Catherine Gfeller remained fascinated by the transformations taking place in Ukrainian society. Last year she decided to find out more about how the Revolution of Dignity had shaped Kyiv and left its mark on the city’s inhabitants. The Swiss snapper visited Kyiv in May 2017 and met with eight different writers who each took her to their favorite Kyiv spots and shared stories about everyday life in the Ukrainian capital. The result was the “Voices in Kyiv” multimedia exhibition, which opened at the Taras Shevchenko National Museum in the heart of the city in March.

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Gfeller’s signature creations feature multiple layers of photographs presented in a collage format. This somewhat chaotic interpretation of typical urban landscapes seeks to echo the hustle and bustle of city life while placing the viewer in the center of the action. The results often feel closer to artistic compositions than traditional photography, while the horizontal framing is reminiscent of a movie storyboard. Iconic images of Maidan appeared in the exhibition alongside more mundane portraits of Kyiv public transport and roadside flea markets. Gfeller found working in Kyiv to be both challenging and inspirational. “For me it is a city of strange combinations which is both recognizably European and unmistakably exotic at the same time. It is also very colorful. I am like a painter in that I love color, so Kyiv was a real visual feast.”

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Spring Kyiv Networking Season Underway Fryday gathered Kyiv’s international and local business communities in a posh setting and enjoyed a pleasant evening of networking at D.Fleur Nightclub on 16 March. The international network of professionals will organise yet another opportunity for its members to meet and mingle at Radisson Blu Hotel in Kyiv’s riverside Podil district on 13 April.

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networking events

Georgian Master in Ukraine: ArtAsters Presents David Sharashidze Exhibition Ukrainian law firm Asters, jointly with the US-Ukraine Business Council (USUBC), welcomed guests on 15 March to the opening of an exhibition by David Sharashidze, a well-known Kyiv-based painter of Georgian origin. Georgian Ambassador to Ukraine Gela Dumbadze commented at the opening ceremony: “2018 marks the one hundredth anniversary of the establishment of diplomatic relations between Georgia and Ukraine. It is rather symbolic that this year we have the opportunity to present an exhibition of artworks by the Ukrainian-Georgian artist David Sharashidze. David’s artworks present a unique amalgam of Georgian and Ukrainian culture.”

Asters Senior Partner Armen Khachaturyan added: “David is part of a long tradition of Georgians who over many centuries have contributed to a common Ukrainian-Georgian spiritual heritage by absorbing cultures, traditions, and national characteristics to create a shared understanding and support for each other during difficult times. Georgians like David who have found a second homeland in Ukraine have added many bright colors to the Ukrainian cultural palette.” The exhibition was hosted at the Asters offices in the Leonardo Business Center close to the National Opera House in central Kyiv.

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review

Citronelle offers gastronomic tour of France in downtown Kyiv

If you are in a hurry, Citronelle may not be the best dining option for you. This French restaurant in the heart of historic Kyiv bills itself as a “slow food restaurant” and it is not hard to see why. Everything about Citronelle, from the venue’s intimate interior and abstract artworks to its intricately crafted dishes and imported tableware, seems deliberately designed to serve as the antithesis of generic fast food culture.

It is the kind of place where dining is an experience to be savored by all the senses.

Opened in 2011, the restaurant is the work of Maria Didkovska (pictured above). Every summer, she takes the Citronelle team on a French gastronomic adventure where they hunt down dish ideas, sample new ingredients and generally seek fresh inspiration across the country. This geographically diverse approach is immediately evident in the Citronelle menu, which offers a culinary tour of France complete with handy regional references alongside every dish. The nourishing and potent onion soup is from Lyon, while the spicy tomato soup is a Nice creation. The grilled octopus is from Champagne, while the highly rated “Pot-au-Feu” veal cheeks with vegetable ratatouille are from Alsace. Abso-

lutely everything on the menu is French, while much of it is imported. The venue also strictly adheres to the seasons of the French culinary calendar, with dishes like snails and truffles only available at certain times of the year.

Citronelle has a number of partners in France who provide menu ideas and come to Ukraine to conduct training weeks for kitchen staff. The restaurant also regularly welcomes Michelin Star chefs to Kyiv for special evenings where guests can enjoy a range of exclusive culinary delights. Following each such occasion, Ms. Didkovska and her team are careful to incorporate any popular new creations into the standard menu. One of the most recent additions is the sensationally smooth lemon tart with Chantilly cream and lemon sorbet from Toulouse.

Despite sitting in the very center of Kyiv, Citronelle is a cozy place with seating for just 62 guests that feels far from the hustle and bustle of big city life. It is located directly opposite the National Opera House in a building that was once home to a leading ballerina and served as a popular spot for Tsarist era society gatherings. This cultural tradition lives on in Citronelle’s own

live music evenings, with jazz concerts at the venue every Friday from 20:00. In a bid to encourage the cultural life of the city, the restaurant also offers free glasses of sparkling wine to guests who come to dine following a trip to the nearby opera.

The arrival of spring in the Ukrainian capital will mean the return of the Citronelle summer terrace, which significantly boosts the venue’s capacity while providing an excellent vantage point to watch the passing ebb and flow of central Kyiv. An extensive champagne and wine card adds to the appeal of the summer terrace, making it a popular spot for unrushed afternoons and lazy evenings of Gallic bonhomie.

Citronelle 23 Bohdan Khmelnitskiy Street Kyiv 01030 067-2171420, 044-4993936

Opening hours: Monday-Friday: 09:00 until last customer Saturday-Sunday: 10:00 until last customer

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

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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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