The European Times - Ukraine by The European Times

UKRAINE

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uKraine INTRODUCTION • • • •

• • • •

national Capital Kiev top Base for Business ukravit ukrLandFarming miratech

Foreword by Viktor Yanukovych, president of ukraine 5 Dynamic nation Focussing on eu and Global integration 6 minister outlines major improvements in tax system 11 minister highlights ambitious regional-Development programmes 12 • high-Quality Food products for Global markets 13 • ambassador to Belgium highlights investment opportunities 14 • Crucial eastern partnership summit in november 15

• • • •

GOVERNMENT

DNEPROPETROVSK

• stable, multi-party Democratic republic

BUSINESS & INVESTMENT OPPORTUNITIES • open Door for Foreign investors • Dynamic association helping to improve the Business Climate • strong advocate for the Business sector • upgrading the Business Climate • ministry Bringing tax and Customs systems up to eu Levels • making sure ukrainian market is open and Competitive • Getting the economy Back on track • europe Clinic • Belgian-ukrainian Chamber ideal partner for Developing relations between Belgium and ukraine • tax attorney highlights advantages of ukraine’s tax system

20 32 33 34 36 37 38 40 41 42

46 46 48 50

DONETSK Donetsk Getting Greener and Diversifying Dynamic industrial hub Diversifying its economy new energy saving technologies Bahmutskyy agrarian union

• Development and Growth in Dnepropetrovsk, ukraine’s industrial heartland • Dnepropetrovsk export Leader open to the World • Krivorizhindustrbud • DmKD • heidelbergCement ukraine • agro oven Corporation • pavlograd Chemical plant

52 53 55 56

59 60 61 62 63 64 66

LVIV • • • • • • • •

Lviv, Gateway to ukraine Lviv: eu’s Gateway to ukraine Citadel inn hotel & resort Concern electron Group energoresurs-invest Corporation Frutica Galka Lvivgaz

68 69 72 73 74 75 76 76

KIEV • Kiev: Gateway to ukraine for investors and Visitors 44 • the Birthplace of ukraine 45

special thanks to:

international manager: aukje oostendorp – regional Director: mihai petrut – Country manager: Laurentiu Liferi – project manager: Zlatina rakshiev – project Coordinators: ivana Carapic, Vojko mladinic, akmal soliev international Business analysts: magdalena placek, Livia Czerovszki – editorial: emily emerson-Le moing – Design: martine Vandervoort, Johny Verstegen, Walter Vranken, Dirk Van Bun

UKRAINE

the european times po Box 685 66 – London eC1p 1Xp – united Kingdom – phone: +44 (0)208 371 2356 – Fax: +44 (0)208 371 2410 – info@european-times.com – www.european-times.com

the european times is a trading name of Crystal mediacorp Ltd this guide is protected by copyright. all rights reserved. this publication, or any part thereof, may not be reproduced, stored electronically or transmitted in any form, without the prior written permission of european times. every effort has been made to ensure information contained in this publication is correct and up-to-date. The authors and publisher accept no responsibility for any errors it may contain, or for any loss, ﬁnancial or otherwise, sustained by any person using this publication.

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uKraine

IVANO-FRANKIVSK • ivano-Frankivsk Focusses on Job Creation • natural Beauty, significant resources and tourism appeal • pamibro • Knyagynyn

78 79 81 82

ZAPOROZHYE • Zaporozhye: Long history as industrial, agricultural and trade hub 84 • Zaporozhye iron-stone enterprise 86

KHARKIV • Kharkiv Developing thriving activities in many sectors 88 • City of success for investors 89 • Kharkiv: hub for trade, industry and research 90 • ukraine’s second-Largest City Kharkiv serves as ideal Business Base 91 • Kharkiv: Your Business Base in ukraine 92 • Kharkiv Business Group Welcomes international investors 93 • Family Leisure Club 94 • Kharkov tractor plant 95 • electrotyazhmash 96

KHERSON • Kherson region the territory of health 99 • Kherson: Green and Growing Fast 100

NIKOLAEV • nikolaev: Centre of agriculture and industry 102 • nikolaev ports add to Dynamic region’s investment appeal 104

ZHYTOMIR • Zhytomir achieving impressive Growth rates 106 • rapidly Growing economy in northern ukraine 107

LUGANSK • Lugansk: thriving industrial region Welcomes eu partners • industrial hub with Wellestablished Global trade ties

109 110

Viktor Yanukovych, President of Ukraine

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introduction sector

Foreword by Viktor Yanukovych, president of ukraine Interest in Ukraine has been rising during recent years, and

our country is attracting the attention of a growing number of foreign partners and investors.

ukraine’s considerable investment appeal is based on the country’s strategic location at the crossroads of trade routes between West and east, unique natural resources with great development potential, a diverse cultural heritage, and highly educated, hardworking and hospitable people. ukrainians deeply respect their european roots and have sincere faith in their european future. that is why ukraine’s journey towards european integration continues to be a top priority in the state’s domestic and foreign policies. We will continue to implement decisive measures to ensure the transformation and modernisation of our country so that ukraine can meet european standards in every area. We expect that our relations with the european union will reach a whole new level of signiﬁcance once the Association agreement between ukraine and the eu is signed. We also believe that ukraine and the eu will establish even stronger political and economic ties in the future. ukraine considers the association agreement to be the impetus for a complex programme of internal transformations in the country’s political, economic and social spheres. We also believe that this agreement will form the basis for improvements in our national legislation which will bring it closer to eu standards. We are strongly committed to working with our eu partners to ensure that the association Agreement results in beneﬁts for both sides. ukraine is open to foreign capital, ideas and investments. our economy is stable and based on clear and transparent rules. We are creating all the necessary conditions for attract-

ing foreign investment, launching partnerships with foreign companies and investors concerning large-scale projects, and creating new business links between ukraine and markets in the eu and worldwide. in recent years, the government of ukraine has been improving the country’s business climate signiﬁcantly, including through reducing taxes on companies. in other words, we have already laid the foundations for promising new economic relations between ukrainian companies and their counterparts in europe and beyond. ukraine’s successful implementation of the euro 2012 programme, unprecedented in its volume of investments and number of projects, demonstrated the country’s readiness and ability to implement complex infrastructure projects in cooperation with foreign investors. most of these projects were in our regions. We are strongly promoting regional development as we believe this will bring about greater competitiveness, unique investment opportunities, and resource-development potential, all of which will greatly beneﬁt the country as a whole. We are currently implementing various types of reforms in our regions to enhance these regions’ attractiveness for foreign investors and partners. i hope that readers in europe and worldwide will take the opportunity of this special edition of the european times magazine to learn about the unique strong points, investment potential and opportunities in all ukraine’s regions. We welcome the chance to cooperate with partners all over the world. Viktor Yanukovych, president of ukraine

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uKraine

Dynamic nation Focussing on eu and Global integration

Though ruled by the Russian Empire and then the Soviet Union for decades, Ukraine

has always retained a strong national identity, a spirit of independence and a sense of being a part of Europe. Today, Ukraine is a very internationally oriented democratic

republic whose government is headed by a President and a Prime Minister; the countryʼs

legislative branch is the Parliament, or Rada. As it continues to adopt international

standards and to pursue ambitious development goals, Ukraine is committed to serving as a productive member of the global community.

the transition to an open-market economy was very difficult for Ukraine but the country has turned the corner and is rapidly developing economic activities in many fields, from agriculture to tourism and from manufacturing to renewable energies. in addition, ukraine is boosting its regional and global exports and raising its international profile.

Giant step towards eu integration ukraine is focussing on strengthening its ties with the eu in view of eventually joining the eu community. ukraine’s relations with the eu are based on the european neighbourhood policy (enp), the eu’s foreign-policy instrument for neighbouring states. ukraine is

also a target of the eu’s eastern partnership initiative, which aims to prepare countries on the eu’s eastern borders for integration into the community. Besides ukraine, these countries are armenia, azerbaijan, Belarus, Georgia and moldova. an association (and free-trade) agreement between the eu and

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sector

Independence Square in Kiev

ukraine is currently under discussion. If signed, it will create signiﬁcant new opportunities for investors in the ukrainian economy. in september 2013, ukrainian president Viktor Yanukovych urged the ukrainian parliament to adopt new laws to help ukraine meet eu legal standards so that a formal signing of the trade agreement would be possible in november 2013, and the rada complied. on september 18, the Ukrainian government ofﬁcially approved a draft of an association agreement with the eu. ukrainian prime minister mykola azarov commented, “By signing the association agreement, we are paving a path towards european standards of living.” russia, which depends on ukraine for a range of goods, particularly food products, is opposed to ukraine’s eu integration. the Kremlin has been encouraging ukraine to join the Customs union of russia, Belarus and Kazakhstan, with the goal to creating a eurasian economic union modelled on the eu by 2015. anti-russian feelings in ukraine remain strong, however. in July, on a visit to ukraine, russia’s president putin offended ukrainians by saying ukrainians and russians are a single people and that ukraine had

ﬂourished under Soviet rule. In fact, during the 1930s ukraine experienced a severe famine, which ukrainians now call the “holodomor”, or “extermination by hunger”. most ukrainians see themselves as part of europe.

strong government support for eu free-trade agreement in a ukrainian independence Day speech at the end of august this year, president Viktor Yanukovych called ties with the eu “an important stimulus for ukraine to become a modern european state.” During his participation in the 68th session of the un General assembly in new York in september, the president described european integration as the “deﬁning vector of development” for ukraine, adding that an agreement on association and free trade with the eu would be “an important instrument for increasing the prosperity of ukrainian citizens.” The President has conﬁrmed his plans to sign the agreement at the upcoming eastern partnership conference to be held in Vilnius, Lithuania in november. an issue still to be resolved is the imprisonment of former ukrainian prime minister Yulia tymoshenko, whose

trial was monitored by eu observers on october 21. ukraine has great potential to make signiﬁcant contributions to the EU in many spheres. one of ukraine’s advantages is its historic role as an inﬂuential trade and cultural crossroads linking east and West and, in the modern era, joining the former soviet union to the eu. in fact, ukraine shares borders with eight countries: Belarus, hungary, moldova, poland, romania, russia, slovakia and poland. ukraine also has coastlines on the Black sea and the sea of azov, and includes the Crimean peninsula, or Crimea.

Long history as trade hub ukrainians are very proud of their country’s long history as an economic and cultural powerhouse. in the 10th and 11th centuries, what is now ukraine was the centre of the first eastern slavic state, Kyivan rus, the largest and most influential state in europe in its day. eventually Kyivan rus became part of the polish-Lithuanian Commonwealth but it remained faithful to its cultural and religious roots and retained a strong sense of independence. a new ukrainian state, the Cossack

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hetmanate, flourished from the mid-17th to the mid-18th centuries, but then most of the state became part of the russian empire. after the russian revolution, ukraine was brieﬂy independent again between 1917 and 1920, but then was forced to become part of the soviet union. in the soviet era, ukraine served as a key source of food and other products for other soviet states. in 1991, when the soviet union collapsed, ukraine became independent yet again, although its government was plagued by corruption and inefﬁciency. After the peaceful mass demonstrations known as ukraine’s “orange revolution” in 2004, a reform government took charge under Viktor Yushchenko. in 2010, Viktor Yanukovych became president of ukraine through an election that met international standards.

symbolic value of euro 2012 ukraine’s hosting of the euro 2012 Games proved that the country was determined to become part of the international community. although many doubted ukraine would be ready for euro 2012, the country managed to complete many major new transport and tourism infrastructure for the event and, more importantly, drew the world’s attention to ukraine’s ongoing transformation into a diversiﬁed, export-oriented economy operating according to eu and global standards. ukraine continues to evolve. the country was a traditional agrarian society for centuries until soviet rule brought rapid modernisation, industrialisation and migration to cities. important regional differences developed in ukraine during the soviet era. in general, western ukraine was more agrarian while the eastern part of the country was more industrialised. With the advent of a

Kiev City

market-based economy, every region of ukraine has been actively developing its own individual economic strengths and investment potential.

Vast agricultural and other natural resources ukraine has always been known for its fertile farmland and high-quality agricultural products. most of the country’s land is level “steppe” with cultivated areas alternating with forests and crisscrossed by many rivers, including the Dnieper, which is one of the longest rivers in europe and the main source of ukraine’s hydropower potential. ancient settlements along the Dnieper and its tributary, the ross, are regarded as the cradle of ukrainian civilisation. adding to its advantages for agriculture, ukraine has a moderate climate, particularly in comparison to that of the rest of the former soviet union. ukraine’s winters are mild, with regular snowfall but no severe frosts; the average

winter temperature in ukraine varies from -20° C in the north to -5° C in the south. summers in ukraine are hot and dry, with occasional showers and thunderstorms. this means that ukraine’s fertile black farmland receives adequate rainfall during the spring and autumn growing seasons along with plenty of sunshine in summer. ukraine’s thriving farms grow wheat, corn, buckwheat and other grains, all kinds of fruits and vegetables, sugar beets and other crops. ukraine also has vast natural resources in addition to its agricultural ones. these include iron ore, coal, manganese, natural gas, oil, salt, sulphur, graphite, titanium, magnesium, kaolin, nickel, mercury, timber and hydropower. making the most of these resources, ukraine has developed a dynamic industrial sector, which is concentrated mainly in and around the country’s biggest cities, particularly Kiev, the national capital, and Zaporozhye, Dnepropetrovsk, Dneprodzerzhinsk, odessa, Kharkiv, Lviv, nikolaev and others.

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Bridge in Kiev

ukraine’s factories produce everything from planes and ships to lorries and buses, motorcars and locomotives, computers and electronic equipment, precision instruments and agricultural machines, tVs, chemicals, textiles and consumer goods.

rich and diverse cultural heritage ukraine has a diverse culture, which is one of its major attractions for tourists. according to ukraine’s 2001 census, the country’s population totals around 46 million, of which around 77.8% is ethnic ukrainian, 17.3% russian, 0.6% Belarusian, 0.5% moldovan, 0.5% Crimean tatar, 0.4% Bulgarian, 0.3% hungarian, 0.3% romanian, 0.3% polish, 0.2% Jewish, and 1.8% other groups. The country’s ofﬁcial language is ukrainian, and russian is the second language. romanian, polish, hungarian and english are also widely spoken.

main religions practiced in ukraine (now that soviet restrictions on religious activities have been lifted), include ukrainian orthodox, ukrainian Greek Catholic and ukrainian autocephalous orthodox. the roman Catholic, protestant and Jewish faiths are also represented. in spite of this mix of cultures and religions, ethnic clashes have traditionally been rare in ukraine, although some tension exists in Crimea between Crimean tatars and ethnic russians. modern ukraine is well known for its highly educated population. Literacy is almost universal and education is compulsory for all children aged 7 to 16. ukraine’s institutions of higher learning include several universities and specialised schools, of which many are international institutions. the most prestigious universities are the university of Kiev, founded in 1834, and Lviv state university, the country’s oldest highereducation institution, founded in 1784. Just as ukraine has long served as a trade hub linking east and West, its culture is a blend of many inﬂuences,

from the Byzantine to the renaissance (which reached ukraine via poland), russian and other european and international cultures. Western ukraine is considered to have closer ties to european cultures, particularly polish culture, while eastern ukraine is considered more closely tied to russian culture, although these distinctions are gradually disappearing. even during the soviet era, ukraine preserved its rich cultural heritage, which includes colourful folklore, literature, painting, music, theatre and handi-crafts. Famed ukrainian writers are 19th-century poet-playwright ivan Kotliarevsky, romanticist poet-painter taras shevchenko (whose Kobzar poems celebrate the ukrainian language), ivan Franko, Vasyl stefanyk, pavlo tychyna, Lina Kostenko, Vasyl symonenko and many others. ukraine’s arts history includes prehistoric and early Greek paintings as well as religious iconography. taras shevchenko is considered the father of modern ukrainian painting, which features works based on histori-

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Cathedral of Saint-Sophia and Related Monastic Buildings, Kiev-Pechersk Lavra

cal themes and landscapes as well as realism and impressionism. in the early 20th century, Kazimir malevich and Vladimir tatlin were leading representatives of the avant garde, while mykhailo Boichuk and his followers sought to provide art for the masses by combining ukrainian traditions with european models. the collapse of the soviet union gave ukraine’s artists a chance to join the international artistic mainstream.

arts, music, dance and theatre ukrainian folk art is especially diverse, particularly in the Carpathian mountain regions of western ukraine. examples include intricately designed ukrainian easter eggs, called “pysanky”, and embroidery. ukraine is also known for its life-size female stone sculp-

tures, called “babas”, carved by turkic nomads between the 11th and 13th centuries. ukraine’s architectural heritage ranges from 6th-century-BC Greek temples to the 11th-century Byzantine Cathedral of saint sophia in Kiev and 18thcentury churches whose architectural style, called “Cossack Baroque”, is a blend of ukrainian, Byzantine, and European inﬂuences. Kiev’s Church of saint andrew and Lviv’s Cathedral of Saint George reﬂect French rococo styles, while ornate wooden churches illustrate typicall ukrainian construction techniques. ukraine is also known for its music and dance, including a vast collection of traditional folk songs dating back many centuries and colourful folk dances, which grew out of rural lifestyles. the oldest dances in ukraine

are the “khorovody”, agricultural dance games associated with the cult of the sun. today, numerous ukrainian dance troupes keep traditional folk dances alive. ukraine also has several opera houses and ballet theatres. ukrainian theatre includes puppet plays based on folkloric themes as well as modern theatre and unique films. Filmmaker oleksander Dovzhenko, known as “the first poet of cinema,” gained international recognition for his silent films in the 1920s. Serhii Paradzhanov’s 1964 Ukrainian film “tini zabutykh predkiv” (“shadows of Forgotten ancestors”), won numerous international awards. today’s ukraine is determined to keep its unique culture alive while continuing to forge stronger international ties and develop a dynamic modern economy.

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Introduction sector

minister outlines major improvements in tax system Oleksandr Viktorovych Klymenko,

Minister of Revenue and Duties,

discusses his priorities for this recently formed ministry.

European Times: What is the mission of the Ministry of Revenue and Duties? Oleksandr Klymenko: this ministry was created to serve as an effective taxation and collection administrator as part of the government’s effort to improve ukraine’s business climate. our mission is to bring taxation and customs-duties processes up to a whole new level of quality. European Times: What are some of your major projects so far? Oleksandr Klymenko: one of the important reforms we have completed is the one that allowed us to establish shared responsibilities with the ministry of Finance, which handles overall budget planning while the ministry of revenue and Duties handles administration, services and supplying revenues for the state budget, with a focus on services. the second major initiative was an analysis of all tax-collection processes, which revealed many problems which needed to be dealt with. We formed a partnership with leading consultants pricewaterhouseCoopers to improve the effectiveness of our tax collection. We put the emphasis on service and informed all players of our new priorities. We have successfully made the transition from ﬁscal body to a service-

Oleksandr Viktorovych Klymenko, Minister of Revenue and Duties

oriented organisation, in line with the european trend. European Times: What changes have you made in the tax-collection system? Oleksandr Klymenko: We are simplifying reporting and administration, streamlining the tax-collection process, moving towards harmonisation of tax and customs, and stepping up the ﬁght against corruption. We instituted electronic tax payments, and now 98% of payments are made electronically compared to 39% in 2011. We have also opened 476 service centres around the country and last year we opened a centralised ofﬁce for tax-payment support for major players. thanks to reforms like these, ukraine has managed to raise

its position in the World Bank’s paying taxes report, a component of the Bank’s Doing Business report, by 18 points. my goal is for ukraine to be one of the top 100 countries in this ranking two years from now. European Times: What is your personal message to potential investors in Ukraine? Oleksandr Klymenko: ukraine is strategically placed to join east and West, and this country is changing rapidly for the better. all the improvements we are making are bringing ukraine even closer to the eu. i welcome all investors to come here and see ukraine’s potential for themselves. They will always ﬁnd a reliable partner in the ministry of revenue and Duties.

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uKraine introduction

minister highlights ambitious regional-Development programmes Gennady of

Temnyk,

Regional

Construction,

Minister

Development,

Housing

and

Communal Services, discusses Ukraineʼs

ment goals.

regional-develop-

European Times: What are the main tasks of your ministry? Gennady Temnyk: We serve as a liaison between ukraine’s central government and regional governments, and we determine ukraine’s policies concerning regional development. We have signed an agreement with mayors and regional associations and are about to sign an agreement with villages and village associations. ukraine’s current government is fostering more autonomy for the country’s regions and we are helping local leaders prepare for this. European Times: What are your ministry’s activities concerning the construction sector? Gennady Temnyk: We oversee the sector, including its technical regulation, and we conduct inspections of buildings to ensure that the right standards are met. We are also helping to develop laws and standards for ukraine’s construction sector, and by the end of 2015 all our construction regulations will be in line with the eu’s. We make regular tours of projects in progress to see how we can improve them. European Times: Can you talk about the investment potential of Ukraine’s regions?

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Gennady Temnyk, Minister of Regional Development, Construction, Housing and Communal Services

Gennady Temnyk: ukraine is in the process of learning about international practices and standards in the private sector, and we are trying to make sure that all our leaders and enterprises are committed to learning about all the practices available and choosing the right ones which ﬁt the Ukrainian model. We currently have projects with the World Bank, the eiB and the eBrD to develop urban infrastructure, including heating systems, and with the european Council on local self-governance and democracy. as for investors, ukraine offers many opportunities and we need the support of international companies and organisations, particularly concerning infra-

structure. We have not yet achieved the levels of energy-efﬁciency we need, for example, and we need FDi and outside funding to help us modernise our energy systems. my role as minister is to help create the right environment for investors to enter the ukraine utilities market. this will result in the modernisation of our systems, new technology and know-how, and signiﬁcant energy savings. European Times: Why should foreign investors come to Ukraine? Gennady Temnyk: We are working hard to create the right business climate and we are very ready to work with international partners.

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high-Quality Food products for Global markets Mykola Prysyazhnyuk, Minister of Agrarian Policy and Food, discusses new trends in this key sector of the Ukrainian economy.

European Times: What are some recent developments in Ukraine’s agriculture sector? Mykola Prysyazhnyuk: We have seen growing recognition of the importance of the agriculture sector to ukraine’s economic development, and we are also seeing more emphasis on integrating rural development with the growth of the agriculture sector. European Times: What types of projects are you promoting? Mykola Prysyazhnyuk: We want to attract investments which will boost ukraine’s export output as well as the quality and added value of our agricultural products. We also want to see investments in infrastructure and logistics. the ministry’s task is to ensure the necessary conditions to facilitate export activities. one priority is to upgrade equipment and technologies, since these are crucial for the agriculture sector. We have created a good regulatory environment for producers of technical equipment here in ukraine and have launched a number of measures to provide ﬁnancing and mitigate any investment risks for agricultural projects. We have developed these regulations with the help of the eBrD, the american Chamber of Commerce, the eiB, the World Bank and other partners. another of our priorities is to attract investors who want to distribute their products in the domestic market, since ukraine has 46 million consumers, and ukrainians prefer local food products. ukraine imports only 10% of its food products, and these are mainly exotic fruits and vegetables as well as ﬁsh which we cannot produce here. European Times: Why should an international investor in agriculture choose Ukraine? Mykola Prysyazhnyuk: ukraine is a World trade organisation member and offers very liberal trade conditions. once ukraine signs a free-trade agreement with the

Mykola Prysyazhnyuk, Minister of Agrarian Policy and Food

eu, there will be even more reasons to invest here. the eu is already ukraine’s top market for food products, and we are working to enter new export markets. our exports rose 42% in 2012 alone. in addition, the quality of ukrainian products is getting better and better and our location is ideal for regional and international trade. ukraine has very rich and productive farmland and yields are naturally high, which means that ukraine is the perfect choice for the production of organic agricultural products. We have new regulations on organic food products and have designated zones where all agricultural production is organic. I would like to see Ukraine’s ﬁne agricultural products exported to every country in the world.

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ambassador to Belgium highlights investment opportunities European Times: Which sectors offer the most potential for investors? Ihor Dolhov: our agricultural sector has enormous growth potential, and once the association agreement is signed it will be even more attractive for investors. in addition, in 2014 we will begin to offer public-private partnerships concerning the ownership of agricultural land. ukraine also has a very successful chemicals industry. in addition, our regions are playing a more and more important role in the national economy, and they are working on their own to provide investment incentives and partnerships with foreign investors.

Ihor

Dolhov,

Ukraineʼs

Ambassador

Belgium, discusses his countryʼs investment appeal.

European Times: What is Ukraine doing to make itself more investor-friendly? Ihor Dolhov: signing the association agreement with the eu, which creates a Deep and Comprehensive Free trade area, will be a big step forward for ukraine. We have already done a big job in implementing new legislation which meets eu standards, and with this agreement we will further improve the business climate in ukraine. We hope that this agreement will be signed and immediately put into practice. We will start its implementation the day after it is signed. ukraine already feels very close to the eu thanks to our shared history and culture, as well as our economic ties. European Times: What are Ukraine’s most important attractions for investors? Ihor Dolhov: We have many sectors with growth potential, as well as qualiﬁed labour. Another plus is our strategic location. Western ukraine is in particular attractive for investors, since it has easy access to the eu. another advantage is our transport infrastructure. We have good sea ports, rail system, gas-transport system, well-developed roads and electrical-power grid which support exports.

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“Ukraine already feels very close to the EU thanks to our shared history and culture as well as our economic ties.” European Times: Are Ukraine’s small and mediumsized enterprises open to foreign investment? Ihor Dolhov: the majority of ukraine’s medium-sized enterprises are privately owned, and they welcome foreign investments that would assist them in implementing new technologies and modernising their production. European Times: What is the Embassy of Ukraine doing to improve the image of Ukraine? Ihor Dolhov: We are constantly working on improving ukraine’s international image by promoting our country’s products, investment potential and tourist appeal. We also foster networking between investors and companies in Belgium and Luxembourg and their ukrainian counterparts. representatives of Belgian and Luxembourg authorities accompanied by a business delegation, are regularly invited to big international investment forums and exhibitions that take place in ukraine, such as the international annual Business Conference ‘aBC: ukraine & partners’, regional meeting of the World economic Forum and others. ukraine will host the World Bass show, a traditional Belgian show, in 2014. This reﬂects our efforts to strengthen our ties with Belgium and Luxembourg, as well as with the entire eu.

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Crucial eastern partnership summit in november One of the most signiﬁcant events

during

Lithuaniaʼs

Presidency of the EU Council this

year will be a summit meeting of the Eastern Partnership countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine)

held in Vilnius November 28 and 29. The EU oﬃcially launched

the Eastern Partnership Initiative in May 2009 to encourage greater trade, visa liberalisation, institutional

coordination

cooperation between

countries and the EU.

and

these

the proposed association agreement between the eu and ukraine is a major issue to be decided at this year’s summit. potential stumbling blocks to the signing of this landmark agreement are that ukraine must prove it has met eu-required reforms in certain areas, and some eu leaders still object to ukraine’s imprisonment of its former prime minister Yulia tymoshenko. most observers agree that ukraine has worked very hard to meet eu criteria. on october 21, radoslaw sikorski, poland’s minister of Foreign affairs, commented, “it appears that ukraine has achieved considerable success during recent months in its efforts to implement eu-mandated reforms. this is very important. however, several authoritative eu members await a

resolution of the timoshenko issue before approving the association agreement with ukraine.”

potential stumbling blocks minister sikorski cited the netherlands, the uK and sweden as three countries not willing to approve the agreement until Yulia tymoshenko is released from prison. he added, “ukraine’s efforts have been so positive that it would be a tragedy if ukraine fails just 100 meters before the ﬁnish line. Nevertheless, I have a strong impression that the eastern partnership has a chance for success in Vilnius.” in a joint statement about the importance of this year’s eastern partnership summit,

poland’s Foreign minister sikorski, along with his counterparts in Lithuania (Linas Linkevicius) and the uK (David Lidington), explain, “the possibility of ukraine signing its association agreement, including a Deep and Comprehensive Free trade area, and moldova and Georgia initialling agreements, will be important milestones towards redeﬁning and strengthening the eu’s relationship with our eastern european partners. as they continue to grow they need to continue to implement further reforms. Liberalised economies, open and inclusive politics, and respect for the rule of law are all key building blocks for prosperity in the eu from which our eastern partners and others can beneﬁt. We are ready to support partner countries in their efforts to implement reforms and the association agreements.”

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uKraine

Government

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Government

stable, multi-party Democratic republic Government Building

the judicial branch is headed by the supreme Court of ukraine (with 95 judges organised into civil, criminal, commercial, and administrative chambers, and a military panel), and the Constitutional Court (18 justices). supreme Court judges are proposed by the supreme Council of Justice (sCJ, a 20-member independent body of judicial ofﬁcials and other appointees) and appointed by presidential decree. Judges are initially appointed for ﬁve years and, if approved by the SCJ, serve until mandatory retirement at age 65. Constitutional Court justices are appointed by the president, the supreme Court and the Verkhovna rada (six appointees each) for nine-year, non-renewable terms. other courts include the Courts of Cassation, the Courts of appeal and local courts.

Key leaders type of government ukraine is a multi-party democratic republic. the country achieved its ﬁnal independence from the Soviet Union in 1991 (having earlier declared its independence in 1918). its constitution was adopted in 1996.

organisation the government of ukraine is led by a democratically elected president, who is Chief of state, and by a prime minister, who is the head of Government. the prime minister is assisted by a First Deputy prime minister and by other Deputy prime ministers. the president nominates a Cabinet of ministers. the national security and Defence Council develops national-security policies and advises the president, while the presidential administration drafts policy statements and also advises the president. the legislative branch is the unicameral supreme Council (Verkhovna rada) with 450 members. half of the members are chosen from representatives of political parties that have gained 5% or more of total votes in national elections, while the remaining members are elected in single districts.

ukraine’s current president is Viktor Yanukovych, who was elected in 2010. he was born in 1950 in ukraine’s Donetsk region. he served as the Governor of Donetsk from 1997 to 2002 and was ukraine’s prime minister from november 2002 to December 2004. he was an unsuccessful candidate in the 2004 presidential election but continued to lead the party of regions and served as prime minister for the second time from 2006 to December 2007. Viktor Yanukovych was the top vote-getter in the ﬁrst round of the January 2010 presidential election and won the second round of the election with 48.95% of the vote against Yulia tymoshenko’s 45.47%. ukraine’s prime minister is mykola azarov. Born in 1947 in Kaluga, russia, the prime minister earned a degree in geological and mineralogical sciences and was a professor at moscow state university. he was elected a member of ukraine’s parliament in 1994. Later he held many other key government posts. From 1996 to 2002, he was the head of the state tax administration of ukraine and a member of the national security and Defence Council. he was First Deputy prime minister of ukraine and minister of Finance from november 2002 to February 2005 and from august 2006 to December 2007 and served as acting prime minister from December 2004 to January 2005. as a member of

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uKraine sector

President Viktor Yanukovych and Prime Minister Mykola Azarov during Ukraineʼs Independence Day celebration

parliament, he has headed the Budget Committee and the Committee on Finance and Banking, among other tasks. he became prime minister in march 2010. the prime minister is assisted by the First Deputy prime minister, currently serhiy arbuzov, who was born in 1976 in Donetsk and has a phD in economics. he has held several key posts in the banking sector, and became Chairman of the national Bank of ukraine in December 2010. he was appointed First Deputy prime minister in December 2012. other current Deputy prime ministers are Yuriy Boyko, oleksandr Vilkul and Kostyantyn Gryshchenko.

elections Presidents are elected by popular vote to serve ﬁve-year terms and can be elected for a second term. presidential elections in ukraine were last held in January 2010 (with a runoff election in February) and will next be held in october 2015. Members of Parliament are also elected for ﬁve-year terms. the last parliamentary elections were in october 2012; the next ones will be held in the fall of 2017.

Cabinet ministers minister of agrarian policy and Food: mykola prysyazhnyuk minister of Culture: Leonid novohatko minister of Defence: pavlo Lebedev minister of economic Development and trade: ihor prasolov minister of ecology and natural resources: oleh proskuriakov minister of education and science: Dmitry tabachnik minister of energy and Coal industry: eduard stavytsky minister of Finance: Yuriy Kolobov minister of Foreign affairs: Leonid Kozhara minister of health: raisa Bohatyriova minister of revenue and Duties: oleksandr Klymenko minister of industrial policy: michael Korolenko minister of infrastructure: Volodymyr Kozak minister of internal affairs: Vitaliy Zakharchenko minister of Justice: olena Lukash minister of regional Development, Construction and housing and Communal services: Gennady temnyk minister of social policy: natalia Korolevska Minister of Youth and Sport: Ravil Saﬁullin

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• Dynamic Association Helping to Improve the Business Climate • Ministry Bringing Tax and Customs Systems up to EU Levels • Making Sure Ukrainian Market is Open and Competitive • Getting the Economy back on track

Business & Investment Opportunities

“Ukraine’s business community is pushing for an open door to the EU.” Anna Derevyanko, Executive Director of the European Business Association

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uKraine

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Kiev City

open Door for Foreign investors With the highest GDP growth in Europe for many years, Ukraine has attracted the attention of

investors from all over the world. Ukraine oﬀers a highly-skilled workforce, low labour costs, many well-developed industrial operations in a wide range of sectors, exceptionally fertile

farmland, and a strategic location linking East

and West. Crossed by four major trans-European transport corridors, Ukraine also oﬀers easy

access to the Middle East and other global markets by sea and air.

adding to all these advantages, ukraine’s current economic reform plan prioritises attracting foreign investment. While ukraine’s ranking on the World Bank’s “Doing Business report 2013” remains low – 137 out of 183 countries – this represents a rise of 15 positions compared to the country’s ranking in 2012. the ukrainian government is well aware that more needs to be done to alleviate such problems as complex tax and customs codes, corruption, poor corporate governance and other issues, but every year improvements are being made. Ukraine already offers a level playing field for foreign investors, in line with its World trade organisation commitments. meanwhile many investors who have gotten in on the ground floor in Ukraine are flourishing, and vast opportunities are available in all sectors. the proposed free-trade agreement between ukraine and the eu will significantly increase ukraine’s investment appeal. “We have to move towards european integration,” said ukrainian president Viktor Yanukovych during an international economic conference in Yalta, Crimea, in september, reaffirming the ukrainian government’s commitment to signing the association agreement with the eu in november. Commenting on pressure from russia for ukraine not to sign the agreement, former British prime minister tony Blair

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Business & investment sector opportunities

said, “We should stick with you and help you on that journey.” ukraine has already received strong support from international funding organisations, particularly the european Bank for reconstruction and Development, which is the biggest single foreign investor in ukraine to date. the eBrD has ﬁnanced more than 300 projects in Ukraine and has committed to investing €1 billion per year in the country through 2014. the eBrD invests in public as well as private sector projects.

trend towards regional investment incentives regional and local governments in ukraine are increasingly creating their own incentives to draw investors. each part of the country has its own unique specialties and strengths, while all need the ﬁnancing, knowledge, technologies and job creation which foreign investors can provide. to attract more FDi, regions are offering building land, streamlined bureaucratic procedures, one-stop-shop investor support and the potential for public-private partnerships. to highlight ukraine’s investment opportunities, business groups organised an investment-oriented ukraine road show in London in February 2013, the ﬁrst investment event for ukraine in the uK. Designed to provide networking opportunities between uK business leaders and their ukrainian counterparts, the road show was hosted by the ukrainian Business Centre in London, Business Federation Kiev and investment holding pro Capital.

investment-oriented road show highlights projects During the event, current investment projects by seven fast-growing, medium-sized ukrainian companies were presented in depth, giving participants a look at the diversity of ukraine’s economy today. the companies were Cherkassy autochemistry plant, which is building a new factory; interra, an agricultural leader stepping up its soybean cultivation; Lanet, an internet-services provider which is currently expanding; teplocom, which is involved in a project to modernise the food industry; aK engineering, which has developed innovative technologies for housing construction; premier Wood, a lumber processor; and ukr spets holding, a manufacturer of steel-panel radiators. all these high-potential companies are seeking foreign investors to help them achieve their future goals.

international companies sending representatives to the road show included royal Bank of Canada, Gryphon, nsBo and other companies, as well as high-net-worth individuals. at the event, robin henshall, head of natural resources for nsBo, explained why his company is interested in ukraine. he said, “the reason i am here is that i perceive ukraine to be a country with high potential and great natural resources. We are interested in the oil, gas, metals and coal sectors, as well as agriculture, and these are all activities in which ukraine has traditionally been strong. ukraine is also a large country in territory and has a very strategic location, as well as highly motivated and educated professionals. ukraine has all the necessary ingredients for a successful future.” Citing opportunities in ukraine’s agriculture sector, ruslan romanenko, Ceo of interra, pointed out at the road show, “By 2030 the population of the earth will have grown rapidly and demand for food will have doubled. ukraine should use this opportunity, because it has the best black soils in the world. however, a low level of mechanisation remains a problem for ukraine and a lot of farming work is still done by hand. the effectiveness of Ukraine’s agricultural sector can deﬁnitely be increased through new investment in mechanisation.”

Key sectors for investors investment-promotion agency invest ukraine points out that the top sources of FDi in ukraine up to 2012 were Cyprus, Germany, the netherlands, russia, austria, the uK, France, sweden, the British Virgin islands, and the united states. eu countries accounted for 79.9% of all FDi in ukraine up to 2012. the main sectors chosen by foreign investors were ﬁnancial services, making up almost one-third of all FDi; manufacturing, also almost one-third of the total and including metal products, foods and beverages, chemicals, machine-building, and utilities-services provision; real estate, accounting for around 12% of FDi; retail services, around 10%; construction, around 6%; transport and telecommunications, around 3.8%; agriculture, around 1.6%; the hospitality sector, around .9%; and healthcare, around .3%. ukraine’s agriculture sector, currently accounting for only a small percentage of the country’s FDI, deﬁnitely shows investment potential. ukraine has some of the most fertile soils in the world along with ample rainfall and water resources for irrigation as well as a temperate climate. in addition, the variety of growing conditions in ukraine allows for the production of a wide range of crops. in an address at the World economic Forum meeting held in new York in september, president Viktor Yanukovych pointed out, “ukraine has a developed and competitive agriculture sector, which is showing steady annual growth of 5%, twice the average of eu member states.”

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uKraine

Kiev

adding to ukraine’s appeal for agriculture investors, its soil is so rich that toxic fertilisers, pesticides and other chemical treatments are used sparingly if at all, making ukraine ideal for organic agriculture. moreover, according to the World Bank and the eBrD, only around 40% of ukraine’s agricultural potential is currently being exploited. invest ukraine points out that ukraine’s agriculture sector particularly needs investment in new technologies and new infrastructure, including processing and storage facilities.

major investment by China China is one new investor in ukraine’s agriculture sector. in September 2013, China’s ofﬁcial Xinjiang Production and Construction Corps signed an agreement with ukrainian agricultural ﬁrm KSG Agro to give the Chinese enterprise the use of 100,000 hectares of ukrainian farmland and to increase this to 3 million hectares eventually. the initiative makes ukraine China’s leading overseas farming venue; China is increasingly investing in agricultural projects worldwide in order to keep pace with its rising domestic food needs. the ukraine project has a timeline of 50 years and will focus on growing crops and raising pigs.

thanks to the country’s highly trained human resources. in fact, many european and us companies rely on ukrainian enterprises for back-ofﬁce support, and global software-outsourcing leaders have established a presence in the ukraine market. at the recent World economic Forum meeting, president Viktor Yanukovych commented, “ukraine is ranked among the top ﬁve countries in Central and Eastern europe concerning exports of iCt technologies. obviously, opportunities to invest in ukraine are not nearly exhausted.” ukraine also offers investment opportunities in healthcare, sports and recreation facilities as well as in tourism, and the ukrainian property market continues to draw FDi. other sectors with strong prospects in ukraine include machinebuilding. ukraine is already a leader in the production of machinery, automobiles and airplanes, and is one of only six space-equipment-manufacturing countries in the world. the energy sector is another attractive target for foreign investors and a potential driver of the ukrainian economy. ukraine produces about 20 billion cubic metres of natural gas per year, and has about one trillion cubic metres of proven natural-gas reserves. the country also has huge potential to develop hydropower and other renewable energies, and ukraine’s “green” energy tariffs are some of the most attractive in the world.

The ﬁnancial-services sector is another opportunity singled out by invest ukraine. Banking, insurance and leasing services are in increasingly high demand throughout ukraine, and foreign banks are already entering the market.

national projects include opportunities for ppps

software development is another growth sector for ukraine

To ensure that foreign investment in Ukraine ﬂows into

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Business & investment sector opportunities

areas where the country most needs investment support, investukraine and the ukrainian government have singled out several “national projects”. most of these projects offer opportunities for public-private partnerships (ppps). priority projects are to develop a liquid-natural-gas terminal on ukraine’s Black sea coast; an effort to produce around 2,000 mW of energy from renewable resources; six “quality of life” projects, including an affordable-housing development and the “Clean City” initiative to build modern wasterecycling and water-treatment plants; “open World”, the creation of a 4G national communications network throughout ukraine’s educational system; the “City of the Future” urban-development plan for Kiev; the “new Life” maternity and child healthcare project; and olympic hope 2022, ukraine’s bid to host the olympic Games. ukraine obviously offers a huge variety of potential investment opportunities. although the ukraine market remains a challenge in many ways, there is a real advantage awaiting investors who enter the country now.

one-stop shop investor services investukraine has positioned itself as the ideal local partner for foreign investors. a department of the state agency for investment and national projects of ukraine, investukraine provides a wide range of services to streamline the investment process, including a one-stop shop, an extensive database on investment opportunities in Ukraine, promotion of speciﬁc projects and more. investukraine has assembled a highly experienced team of professionals and has opened branch ofﬁces throughout the country.

ukraine’s main investment attractions, according to investukraine, are the following: ●

a large domestic market of 46 million with high potential and a low level of competition in many sectors.

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steady and sustainable GDp growth.

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Global success in many sectors; ukraine is one of the world’s top exporters of steel, rice and wheat, among other products.

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a strategic location with easy access to markets in europe, russia, Central asia and the middle east.

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highly developed transport infrastructure, including ports on the Black sea and the azov sea, four out of 10 european transport corridors, 22,000 km of railroads, 170,000 km of roadways, and more than 2,000 km of waterways.

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shares borders with four eu countries (poland, romania, slovenia and hungary).

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highly educated, skilled human resources and low labour costs.

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one of the world’s top sources of iCt specialists.

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rich natural resources, from minerals to fertile farmland. an open, liberal trade regime which may soon include a free-trade agreement with the eu.

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highly developed foreign trade.

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excellent r&D potential thanks to world-leading research centres and universities.

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an improving business climate, which includes a reduction in corporate taxes to 16% by 2014, a reduction in Vat to 17% by 2014, ﬁve-year tax exemptions for enterprises in targeted sectors (hotels, renewable energy, light industry, shipbuilding and agricultural-machinery manufacturing), a new e-tax system, new anticorruption legislation, the recent creation of a Council of national and international investors to promote private investors’ interests, and a range of new, cutting-edge high-tech industrial parks. ukraine’s rating in the World Bank’s “ease of Doing Business” survey for 2013 jumped 15 points compared to the previous year, making ukraine the leader in eastern europe and Central asia in improving its business climate over the year and one of the top three countries in the world.

investukraine is the investor’s essential source for information on the country’s ambitious “national projects”, all of which have signiﬁcant investment appeal. These priority projects are “new energy”, which includes “LnG ukraine”, the creation of an LnG sea terminal, and “energy of nature”, which covers renewable-energy projects. another national project is “new Life Quality”, which includes “new Life”, an initiative to improve maternal and paediatric care; “Clean City”, to encourage investment in waste-treatment systems; “Clear Water”, to provide high-quality drinking water; “open World”, which includes setting up a 4G network in the national education system; “City of the Future”, which focuses on urban development; and “timely assistance”, to set up a modern system for emergency-response services using Gps technology.

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the “new infrastructure” national project includes “air express”, to create high-speed rail service between Kiev and Borysil international airport; “industrial parks”, to set up industrial zones; and “technopolis”, to develop high-tech infrastructure. the “olympic hope” national project aims to create sports and other infrastructure to support ukraine’s 2022 olympic Games bid. Finally, the “increasing production of Competitive agricultural products” national project includes “Grains of ukraine”, to upgrade the grain sector and boost capacity and exports; “revived Cattle-Breeding”, to ensure high-quality beef and dairy products; and “Green markets”, to develop a network of wholesale markets for agricultural products. investukraine can provide detailed information on any of these projects. ukraine has attracted foreign investment in many industries, including ﬁnancial services, manufacturing, metal products, foods and beverages, chemicals, machine building, utilities (electricity, gas and water), real estate, retail sales, construction, transport, telecommunications, agriculture, tourism, healthcare and others. investukraine promotes the advantages of ukraine’s high-potential sectors.

infrastructure and public-private partnerships (ppps) ukraine’s advantageous geographical position makes it an ideal hub for trade between europe, asia and the middle east. the country is crossed by major transport corridors totalling over 5,000 km. ukraine’s transport infrastruc-

ture includes around 170,000 km of highways, 21,000 km of railways, 45 civil airports, 18 seaports, several inland waterways and other transport facilities. in 2011, ukraine’s transport infrastructure handled some 7 billion passengers, 657 million tonnes of freight and 151 million tonnes of transhipments. most freight in ukraine is transported by rail while most passenger trafﬁc is by car. Large-scale infrastructure projects are underway, including the reconstruction of pivdennyi port, upgrades and construction of a number of roads, improvements in international airports and more. the government aims to implement eu standards throughout ukraine’s transport infrastructure and is looking to publicprivate partnerships to help ﬁnance major projects, bring in new technologies, and improve the transport network overall.

Financial services the ukrainian banking system includes a central bank (the national Bank of ukraine, or nBu) and 175 commercial banks. the top 20 banks handle around 70% of total banking-sector assets. Compared to other countries of Central and eastern europe, the share of state and international capital in the sector is relatively moderate. international banking groups account for around 42% of total banking assets in Ukraine. The international ﬁnancial crisis hurt Ukraine’s ﬁnancial sector, but in 2011 corporate lending grew by 13%. retail lending has declined, however, as a result of more conservative credit-risk management and low disposable income. Customer deposits make up the main source of lending (55% of total liabilities in 2012) due to the limited

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Business & Investment sector Opportunities

liquidity of international capital markets and the eurozone debt crisis. the ukrainian banking system is well capitalised (with a 15% ratio of equity to assets and 19% tier 1, well above the nBu-required minimum of 10%). The proﬁtability of Ukrainian banks is gradually recovering due to ongoing cost optimisation programmes and a decline in loan loss-provision charges. the level of non-performing loans is substantial, however, equalling around 42% of the total loan portfolio as of January 2011. the nBu plays an important role in the sector’s development, concentrating on maintaining the stability of the national currency, decreasing foreign cash turnover in the economy, and encouraging banks’ lending activity. regulation of the banking sector is considered transparent and consistent. since 2012, all commercial banks are obliged to implement international Financial reporting standards (iFrs). the banking sector still offers signiﬁcant growth opportunities. The insurance sector included 442 companies in 2011, most of them in the non-life segment, which accounted for around 94% of gross written premiums that year. the national Commission for regulation of Financial services markets of ukraine (nCrFsm) is responsible for licensing and supervising insurance companies. unlike in other Cee markets, none of the players in ukraine has a dominant market share. Life insurance is underdeveloped, with the top 10 companies

accounting for 87% of premiums in 2011. risk insurance is driven by motor and property insurance, with the top 10 providers accounting for 34% of the market. subsidiaries of international insurance companies made up around 22% of the insurance sector in 2011 in both life and non-life segments. there are no state-owned insurance companies in ukraine.

mining With its vast mineral resources, ukraine has long been known for its productive mining sector. the highly developed sector specialises in a wide range of processes involving both ferrous and non-ferrous metals, from mining and raw-materials enrichment to the production of metals and alloys. ukraine produces iron ore and other ferrous metals, including steel, pig iron and alloys of iron with other metals (such as stainless steel and other types of alloyed steel), as well as aluminium, copper, zinc, titanium, nickel, magnesium, platinum, gold, silver and other non-ferrous metals and alloys. the share of non-ferrous metals in ukraine’s GDp totalled less than 5% in 2010, while the ferrous-metals segment has traditionally driven the ukrainian economy and still has substantial growth prospects thanks to the country’s immense iron

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resources. Ferrous metallurgy has accounted for around 20% to 25% of ukraine’s GDp and around 30% to 35% of its exports in recent years. in fact, ukraine’s mining companies export around 80% of their production on average and Ukraine was one of the world’s top ﬁve iron exporters and the sixth-biggest steel exporter in 2011, when the country exported 34 million tonnes of iron ore and 26 million tonnes of steel. ukraine’s mining sector is estimated to need around

€15 million in investment by 2020 to overcome the existing technological gap. production facilities require extensive modernisation, including in environmental-protection processes.

agriculture agriculture generates around 20% of ukraine’s GDp and will continue to drive the economy. ukraine is the world’s number one exporter of sunflower oil and one of the top five grain exporters; it produces around 50 million tonnes of grain each year. ukraine has exceptionally fertile soil, with 25% of the top-quality black earth in the world, as well as favourable weather conditions and the largest area of agricultural land in europe (around 43 million hectares, of which 32.5 million hectares are used for crop production). ukrainian agricultural holdings generally achieve greater efficiency than their counterparts in other countries thanks to low production costs (linked to an inexpensive labour force and low land-rent rates) and exceptionally fertile soil, which allows for little or no use of fertilisers. opportunities for investors, according to investukraine, are the construction of around 20 million tonnes of grain-storage facilities as well as projects to boost production, particularly of grains, oil seeds, dairy products, eggs and livestock. organic agriculture is another growth area. Large, vertically integrated agri-businesses account for around 15% of ukraine’s agricultural land. industry consolidation is expected, especially given land-law liberalisation. investors can acquire small farms as well as existing

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Business & Investment sector Opportunities

agri-businesses in ukraine. the tax regime is favourable and no special licensing procedures are necessary.

Food processing

are required for food products of animal origin and dairy products must be certiﬁed. All traded food products must be labelled according to set standards. Food safety is controlled by a number of governmental authorities, and the industry is subject to consumer-protection legislation, pricing regulations and other laws.

ukraine’s dynamic food-processing sector achieved around €17 million in turnover in 2011, or around 15% of ukraine’s total industrial turnover that year. the sector employs around 13% of the country’s working population and accounts for around one-quarter of total exports and 10% of imports. Food processing has been less affected by the economic crisis than other manufacturing sectors in ukraine and achieved an average 5% annual growth between 2008 and 2011. ukraine’s main processed-food exports are cheese, confectionaries, vodka and beer. as ukraine moves towards a free-trade zone with the eu, massive new food-processing opportunities will be created. the food-processing industry is already among the top three FDi targets in ukraine. national regulations on ukraine’s food products cover quality, safety standards, veterinary and sanitary requirements for facilities and individuals engaged in food production, and storage. to produce, process or sell food, an operational permit for facilities used for such activities must be obtained. Food processing is subject to state testing. Veterinary documents

iCt Ukraine is the world’s ﬁfth-biggest provider of outsourced iCt services thanks to a high level of professional competence in iCt and low labour costs. Following a dramatic

Vodka

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uKraine

downturn caused by the global ﬁnancial crisis, the Ukrainian iCt market grew by 40% in 2010 and by 35% in 2011. ukraine was the fastest-growing iCt market in the Cee region before the ﬁnancial crisis and the ICT sector still has strong investment potential. Global iCt leaders have already entered the ukraine market.

ukraine’s total FDi is in the construction industry and real estate. the ukrainian construction sector now accounts for around 3% of the country’s GDp and offers huge potential for growth because of a need for more and better housing as well as business facilities.

healthcare healthcare in ukraine is dominated by state institutions but public healthcare is regarded as inferior to private healthcare, and opportunities for investment in private healthcare services are increasing. according to recent studies, around 30% of ukrainians would switch to private healthcare if they could afford it. most are willing to pay about 10% of their incomes for healthcare. ukraine now has around 400 private healthcare providers, including universal clinics, specialised clinics, regional health centres providing outpatient services, specialty medical centres, laboratories, and diagnostics centres. mergers and acquisitions are a good way to enter the private healthcare market.

Construction and construction materials Ukraine’s construction industry beneﬁts from ample supplies of resources for the production of construction materials. the industry grew by an average 25.2% per year between 2002 and the ﬁnancial crisis in 2008, then recovered quickly from the crisis and grew by 11.1% in 2011. around 17.7% of

oil and gas ukraine has a thriving oil and gas sector regulated by the ministry of energy and Coal industry. the major player in the market is national joint-stock company antigay of ukraine. ukraine has a considerable oil and gas resource base. according to the state service for Geology and mineral resources of ukraine, possible hydrocarbon resources in the country total approximately 9.3 billion tonnes of equivalent

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Business & Investment sector Opportunities

fuel and proven reserves total 3.5 billion tonnes of equivalent fuel. the country produces about 20 billion cubic metres of natural gas per year, and has around one billion cubic metres of proven natural-gas reserves. Ukraine also has ﬁelds of shale gas with estimated reserves of one billion cubic metres. antigay and its subsidiaries extract more than 90% of the total volumes of gas and oil in ukraine. the country’s overall production of oil and gas condensate was 3.3 million tonnes in 2011. ukrtransnafta handles oil transport in ukraine, while ukrtransgaz handles gas transport and distribution. Both companies are subsidiaries of naftogaz. in september 2013, naftogaz signed an agreement with German electric utilities company rWe as part of ukraine’s effort to diversify its gas imports and to strengthen national and european energy security.

renewable energy ukraine’s vast energy resources include renewable energies. ukraine’s “green” tariff for electricity produced from renewable sources, launched in 2010, has stimulated growth in the renewable-energy sector, which includes solar, wind, hydro and biomass energies. the state purchases electricity from more than 50 companies producing energy from

renewable sources. at the end of 2011, ukraine had 117 mW of wind-energy capacity, 104 mW of hydropower and 68 mW of biomass energy, while solar-energy capacity rose from 3.5 mW to 188 mW in only a few years. Both solar- and wind-energy facilities are being developed rapidly in ukraine, and a recent eBrD report says that ukraine’s renewable-energy sector has exceptional foreign-investment appeal. FDi in the sector between 2011 and 2016 could total €5 billion.

retail sales Despite having the sixth-largest population in europe, Ukraine’s per capita retail sales are signiﬁcantly lower than in russia and Western europe. that is changing however; retail sales grew by 20% between 2003 and 2008 and continue to increase. the retail-sales sector now ranks third in total foreign-investment inﬂows to Ukraine.

Waste and water management ukraine urgently needs upgraded waste and water-treatment facilities and infrastructure. according to the ministry of regional Development and Construction, ukraine needs new accounting and control systems for waste disposal, better

Wind-driven generator on the ridge of Meganom Cape

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uKraine

management in the sector, public-awareness campaigns concerning recycling and waste management, modern plants to process solid wastes, new landﬁlls, and upgraded systems to supply clean drinking water.

machine building machine building has long been a cornerstone of ukraine’s economy. ukraine is a traditional leader in the production of machinery, automobiles and airplanes, and is also one of the world’s six space-equipment-manufacturing countries. in addition, ukraine is the third-largest passenger-car market in eastern and Central europe after russia and poland. ukraine’s companies produce machinery and equipment

for virtually all types of industrial activities, and machine building accounted for 10% of the country’s GDp in 2011. the most developed sub-industries are railway machine building, heavy machine building and machine building for agriculture. the majority of manufacturing companies are based in eastern ukraine near the country’s main supplies of steel. ukraine’s vast reserves of iron and its well-educated labour force add to its advantages in the machine-building industry. most companies in the sector are part of large, vertically integrated industrial holdings. they mainly produce for export, with russia and other Cis states being the principal markets, although exports to europe and other markets are increasing. ukraine’s top exports in the industry are railway cars, locomotives, turbines and engines. ukraine’s machinebuilding industry consistently performs well and is expected to attract over €70 million in new investment up to 2030. manufacturing of agricultural machinery has particularly strong growth prospects.

Chemicals the chemical industry is another principal sector of the ukrainian economy. it includes more than 200 associations and enterprises and produces around 20,000 major chemicals products. the sector’s output has risen steadily over the past decade, and in 2011 ukraine’s production of synthetic ammonia and chemical fertilisers increased by 26% and 29% respectively, while the production of plastics in primary forms and of pulp, paper and paper products rose by 15% and 58% respectively compared to 2010.

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Business & investment sector opportunities

pharmaceuticals

testimonials by foreign investors

ukraine’s pharmaceuticals industry is also growing and achieved sales of around €2.7 billion in 2011, in spite of the country’s low per capita consumption of medicine. the pharmaceuticals market has significant potential for further growth thanks to the currently low level of total healthcare spending in ukraine compared to other countries in Central and eastern europe, along with the expected rise in consumer spending as the economy develops. imported medicines account for around 70% of the ukrainian pharmaceuticals market, but local producers increased their share from 24% in 2008 to 29% in 2011. Around five leading companies control pharmaceuticals distribution in ukraine, and around 10 retail chains account for around 15% of the country’s retail pharmaceuticals market. There is definitely room for competition.

Foreign investors already active in ukraine praise the country as a business base. as investukraine reports, morgan Williams of the us-ukraine Business Council says, “there are many business opportunities in ukraine for companies looking for long-term returns. the government’s reform programme, designed to improve the local business environment, is essential to the future development of the market and the prosperity of the nation.” steven Fisher, of Citibank ukraine, comments, “ukraine represents compelling opportunities for Citibank to further our investment in the country. With steady GDp growth and expected large-scale investments in various industries, ranging from agriculture to iron-ore production, we are forecasting additional expansion of our ﬁnancial activity within the infrastructure sector.”

tourism and hospitality ukraine has huge unrealised tourism potential thanks to its wide variety of attractions, from ski resorts in the Carpathian mountains to beaches on the Crimea and Black sea, along with medieval cities and castles, many cultural festivals, handicrafts and extensive eco-tourism activities. Signiﬁcant investment is needed in tourism infrastructure in ukraine, from hotels and resorts to tourism services. the country’s hotel sector developed rapidly beginning in the 1970s but many hotels were substandard. a hotel-ratings system exists in ukraine, but many hotels choose not to participate in it. to get the tourism sector off the ground, ukraine needs investment in new hotels, tourism infrastructure and hospitality services, and it also needs investment in bringing its existing hotels, motels, camping sites, health resorts and tourist camps up to international standards.

Walter Gordon, of Coca-Cola ukraine, adds, “ukraine is one of the most vibrant marketplaces we operate in. sure, we have had to overcome obstacles, but we are really glad to see the ukrainian business environment improving. i am quite confident that through the strength of our brands and dedication of our employees, Coca-Cola will continue to generate serious profits in Ukraine for a long time to come.” patrick Van Daele, shell ukraine, says, “When shell looks at ukraine it sees abundant potential. the ukrainian business dynamic, though not without challenge, offers secure opportunities and direct rewards. For shell, ukraine’s vast domestic potential justified our investment into a mutually beneficial relationship. We now work hand-in-hand to bring ukraine closer to total energy self-sufficiency.” as these investors and others have learned, ukraine offers significant potential in many sectors and welcomes international partnerships. investukraine is ready to help foreign investors and companies make the most of opportunities in ukraine today.

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uKraine

Dynamic association helping to improve the Business Climate employees nationwide the eBa has a strong voice promoting dialogue between the business community and the government. European Times: Can you outline recent trends in Ukraine’s business sector? Anna Derevyanko: We have seen some major new foreign investment, for example in the energy sector. shell, which has been in ukraine for some time, has made new investments in the Kharkiv region. We are also seeing strong growth in the iCt sector, particularly concerning outsourced iCt services. Kharkiv has been a magnet for new iCt investment thanks to its highly qualiﬁed workforce, while Lviv is attracting iCt investors as well. the tourism sector continues to grow and the eBa is helping to promote ukraine’s many tourist attractions. We are working indirectly to promote tourism to ukraine via events and via our international speakers European Times: How has Ukraine’s hosting of EURO 2012 affected the economy? Anna Derevyanko: With euro 2012, ukraine showed the global community that it is capable of hosting major events, and our infrastructure has been greatly improved, from Kiev’s international airports to new hotels, roads and bridges. this has in turn supported growth in exports. euro 2012 helped draw the world’s attention to the fact that ukraine has huge potential in many areas, from agriculture to tourism, from energy to transportation.

Anna Derevyanko, Executive Director of the

European Business Association, discusses the organisationʼs priorities.

European Times: What role does the EBA play in Ukraine’s private sector? Anna Derevyanko: the eBa is dedicated to contributing to ukraine’s sustainable development and to helping all players work together to make the country a better place for business. With 965 member companies and a total of more than one million

European Times: How important is the EU market to Ukraine’s private sector? Anna Derevyanko: ukraine’s business community is pushing for an open door to the eu even though this means harmonising standards to meet eu criteria. the eBa’s rapid growth shows that the local business sector is targeting eu markets and realises that there is strength in numbers. our lobbying efforts concerning customs regulations have had great results, and we are cooperating very well with the new ministry of revenues and Duties, concerning tax legislation. European Times: What is your personal message to potential investors? Anna Derevyanko: We are waiting for you! Come and love this country, come and win with this country, come and grow with this country! We are here to help you!!

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Business & Investment Opportunities

strong advocate for the Business sector

Gennadiy Chyzhykov, President of the Ukrainian Chamber of Commerce and Industry

Gennadiy Chyzhykov, President of the Ukrainian Chamber of Commerce and Industry (UCCI), discusses how the UCCI can assist international investors.

European Times: What are the main tasks of the UCCI? Gennadiy Chyzhykov: the uCCi promotes the integration of the national economy into the global economic system, advocates favourable conditions for ukrainian entrepreneurs and foreign investors, helps companies ﬁnd business partners, and works to attract potential investors in ukraine. the uCCi is a member of the association of the european Chambers of Commerce and industry and the international Chamber of Commerce and World Chambers Federation, and works with many other organisations around the world. our chamber has more than 10,000 members and is the largest business organisation in ukraine, and i hope that we will double our membership by 2020. We want our voice to be heard in government so that the private and public sectors can work together to make our economy more competitive internationally. European Times: What services do you offer? Gennadiy Chyzhykov: our services include organising business meetings, workshops and other events; participating in international conferences; providing information about business issues; preparing legal documents and offering consulting services on legal and regulatory issues; carrying out quality and quantity controls; issuing certiﬁcates of origin and ata carnets; translating documents; ensuring the protection of intellectual property; and handling trade disputes. European Times: What are some of your current projects? Gennadiy Chyzhykov: We are strengthening our contacts with chambers in asia, africa, the middle east and Latin

america which we believe are potential new markets for Ukrainian exports. We are also promoting the diversiﬁcation of ukrainian exports to focuss more on value-added products, including high-tech machinery and equipment, and we are helping small and medium-sized enterprises to become more competitive in the global marketplace. We are also promoting exports of ukrainian services, particularly in the iCt sector. and, we are advocating even more investment in ukraine’s agricultural production processes to help position ukraine as the world’s top agricultural producer. European Times: What is your message to potential investors and partners in Europe? Gennadiy Chyzhykov: more than 20% of ukrainian exports are to eu countries, and the eu-ukraine Free trade agreement will create vast new opportunities. ukraine’s government has been working hard to improve our business climate and will continue to do so. ukraine offers many high-potential business possibilities in a variety of sectors, and i strongly believe in the bright future of the ukrainian economy and the ukrainian people.

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National Bank of Ukraine

upgrading the Business Climate in the most recent move to improve the business climate, ukraine has eased business start-up procedures by reducing minimum capital requirements, streamlining construction permits, and simplifying tax compliance through a new electronic ﬁling system for value-added-tax payments. In addition, the investment-promotion agency investukraine, part of the state agency for investment and national projects, now offers one-stop-shop services, from information to legal advice, consultancy support and assistance with project integration. according to the us government’s portal export.gov, which outlines possibilities for us companies and investors in global markets, the main challenges of doing business in ukraine include corruption; time-consuming bureaucratic procedures; unpredictable enforcement of laws; lack of local ﬁnancing; and the language barrier. In spite of these hurdles, export.gov recommends ukraine as a high-potential market for us companies.

Although Ukraineʼs ranking in the World Bankʼs “Doing Business” survey is still low, the Ukrainian

government is steadily improving the business

climate through new legislation to protect investors and new incentives for investment in a variety of

sectors. Ukraine encourages foreign investment and in turn, investors are able to purchase

businesses and property (agricultural land being the exception), repatriate revenues and proﬁts, and count on protection against nationalisation.

the portal cites ukrainian businesses are eagerly looking to ﬁnd international partners to help them upgrade their technologies, improve energy efﬁciency, boost production capacity and enter new markets. export.gov also notes that ukraine’s private sector is thriving and growing in spite of challenges.

making it easier to do business against the backdrop of increased global competition for FDi, the government of ukraine is well aware that it needs to improve the ukrainian business climate. a series of recent reforms are designed to make ukraine more competitive as an investment target. the reforms, which are overseen by the state agency for investment and national projects, focus on promoting high-quality project management, personal responsibility, international-standard corporate governance, partnerships with international

companies and investors, and streamlined procedures. new laws either recently implemented or under consideration by the parliament cover industrial parks, national projects, corruption, investment activity, administration of state guarantees, and the application of international accounting standards, among others. the state agency for investment and national projects also oversees ukraine’s “national projects”, a series of ambitious initiatives in many areas that are designed to promote economic development and improve quality of life. each is designed to stimulate the growth of a new industry in ukraine, from liquid-natural-gas exploitation and processing to waste-recycling. investors in “national projects” can count on different levels of support from the government of ukraine, including financing of feasibility studies, assistance with paperwork, and state guarantees in some cases. the government of ukraine considers public-private partnerships to be the ideal foreigninvestment mechanism for these major projects. the online business portal Business in ukraine is another provider of one-stop-shop support for companies doing business in ukraine. Business in ukraine points out that foreign investors can launch all sorts of enterprises in ukraine, including branches of global networks, limitedliability companies, representative offices, joint-stock companies, businesses in free zones, joint ventures with local companies, and public-private partnerships. the site adds that once a business is established and has obtained the necessary licensing, it can engage in contracting, providing services, and manufacturing (subject to certain restrictions). Businesses need to rely on high-quality financial services, and they are available in ukraine. the banking system includes a number of retail and commercial banks (including branches of foreign banking groups), which can provide essential business support, with many being a part of the global sWiFt network. Western union also has a funds-transfer service between ukraine and other countries. World-class legal services are also available now in ukraine, including from Kiev-based law firm Baker & McKenzie, which has prepared a comprehensive guide to doing business in ukraine to assist investors.

of sectors, including siemens and nestlé. the eBa plays an essential role in improving ukraine’s business climate through lobbying, education, information and other activities.

european Business association a key partner

the eBa focuses on promoting closer relations between ukraine and the eu. For example, meetings with eu ofﬁcials in Brussels for a delegation of Ukranian businesses took place recently. one happy participant, olga Balytska, senior associate, DLa piper ukraine, comments, “ukraine is in the process of creating a proper business environment, and meetings like those the eBa set up are essential for our country. We can learn from the experiences of european countries as ukraine pursues its own development.”

the european Business association is a key partner for eu investors who are either considering doing business in the ukraine market or already operating there. eBa member companies in ukraine are active in a wide range

ukraine’s dynamic private-sector leaders, as well as the government, are committed to upgrading the country’s business climate and welcome the support of foreign investors and partners.

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ministry Bringing tax and Customs systems up to eu Levels Ukraineʼs Ministry of Revenue and Duties was established to provide a single entity to manage

the countryʼs taxation and customs-duties activities. As Oleksandr Viktorovych Klymenko,

Minister, points out, “The creation of this ministry was part of President Viktor Yanukovichʼs drive to improve Ukraineʼs business climate.

With this ministry, the business sector now has a centralised source of information about taxation and customs policies and processes.”

the ministry’s tasks are to collect taxes, customs duties and social payments; provide services to individuals and businesses; and bring revenues to the state budget. to ensure balance and transparency, the ministry of Finance develops customs and tax policies and handles overall budget planning while the ministry of revenue and Duties focusses on implementation and providing services.

Coordinating with eu on tax fraud the ministry of revenue and Duties has already made great progress in simplifying tax reporting, upgrading services and fighting corruption. On a visit to the Brussels Press Club in June this year, oleksandr Klymenko voiced his support for the european Council’s plan to coordinate different countries’ efforts to fight tax fraud and tax evasion. He said, “ukraine plans to implement control mechanisms for transfer pricing. this will strengthen control over tax assets being diverted offshore and to low-tax jurisdictions.” he also noted that the ministry of revenue and Duties recently signed an agreement with the European Anti-Fraud Office concerning tobacco-smuggling from ukraine to poland, hungary, slovakia and romania. at the Brussels meeting, the minister outlined the positive changes ukraine has already made in its tax system. the tax

136

Oleksandr Viktorovych Klymenko, Minister of Revenue and Duties

rate has been reduced from 25% to 19% and will be lowered to 16% in 2014, while the Vat rate will also be reduced from the current 20% to 17% next year. in addition, thanks to the Ministry of Revenue and Duties’ simpliﬁcation of tax-reporting procedures, including its introduction of an e-payments system, the average time it takes an entrepreneur in ukraine to complete tax-related paperwork has been reduced from around 650 hours to 300 hours per year. this is not far from the european average of 267 hours. Customsclearance times have also been reduced from an average 24 hours to four hours. through its efforts to streamline ukraine’s tax and customs systems and bring them up to eu standards, the ministry of revenue and Duties is enhancing ukraine’s investment appeal and strengthening its ties with the eu.

www.minrd.gov.ua

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Business & investment sector opportunities

making sure ukrainian market is open and Competitive European Times: What are some of the AMCU’s current projects? Vasyl Tsushko: the amCu has instigated and helped to develop a crucial legislation on competition, the national Competition Development programme for 2014 to 2024. the amCu is also very active in educating the general public about the need for a competitive market characterised by openness and transparency. We publish thousands of reports on our website, in print, on television and on radio to inform the public about the amCu’s goals and activities. We also host conferences and other events to foster discussion of competition in ukraine. European Times: How is the AMCU helping Ukraine meet EU standards? Vasyl Tsushko: one of our tasks is to make sure the allocation of state aid meets eu criteria. in march 2013, the government of ukraine approved an action plan for institutional reform concerning the monitoring and control of state aid to economic entities as well as a draft law on state aid. these regulations are designed to limit the negative impact of state aid on competition and international trade in Ukraine and to ensure a level playing ﬁeld for all participants.

Vasyl Tsushko, Chairman of the Antimonopoly

Committee of Ukraine (AMCU), discusses the organisationʼs goals and activities.

European Times: What are the AMCU’s major responsibilities? Vasyl Tsushko: the amCu plays a key role in maintaining a competitive, open market in ukraine. the principal tasks of the amCu are to ensure compliance with ukraine’s laws and policies on competition; oversee economic activities of sectors and companies; support the development of fair competition; and make sure government procurements are handled in a competitive manner.

European Times: What are your goals for the AMCU in the near future? Vasyl Tsushko: We want to step up our controls on violations of ukraine’s laws on competition; make sure the national Competition Development programme moves forward; increase ukraine’s participation in international discussions about competition policies; and continue to upgrade ukraine’s competition legislation to bring it in line with the best european and international standards. European Times: What is your personal message to potential foreign investors in Ukraine? Vasyl Tsushko: ukraine has rich natural resources, fertile land, educated and hard-working people, and a government committed to improving the business climate and ensuring fair competition. ukraine is making great progress and foreign investors will ﬁnd many opportunities here.

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uKraine

Getting the economy Back on track The

EUʼs

outspoken

Association

increasingly

support

for

Agreement

with

Ukraine is very good news for

the

Ukrainian

economy.

At a meeting with Ukraineʼs President, Viktor Yanukovych, at

the UN in New York in September, José Manuel Barroso, President

of the European Commission, and

Herman

President

Van

the

Rompuy,

European

Council, both expressed their determination to move forward

on the agreement, which is set to be signed end of 2013.

to encourage ukraine to sign in spite of increasing pressure from russia, eumember states announced in september that the eu will offer ukraine all the agreement’s beneﬁts, including trade liberalisation, as soon as the agreement is signed. previously, ukraine would have had to wait for all 28 eu parliaments – and its own – to endorse the agreement, a process that could last a year or more.

immediate access to eu market this means that as soon as the agreement is signed, ukraine will gain unrestricted and entirely tariff-free

access to the eu, the world’s largest single market. at the same time, the ukrainian market will become fully and completely open to eu products. eu exporters to ukraine will no longer face hurdles like “protected” sectors. the agreement would also be a prelude to ukraine joining the eu. When president Viktor Yanukovych addressed the un General assembly in september, he stressed ukraine’s “eu membership aspirations.” stefan Füle, the eu’s enlargement Commissioner, points out that ukraine should not have to choose between Brussels and moscow. he says, “We

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master reGio

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Business & investment opportunities

want our partners to have good relations and cooperation with russia.” in December last year, the eu set 11 benchmarks for reform that ukraine needs to meet in order to sign the accession agreement, and stefan Füle recently praised Kiev’s “unprecedented” progress in meeting these goals. Clearly, eu leaders are holding the door open to ukraine. this welcome, along with the pressure from russia for Ukraine not to strengthen its EU ties, reﬂects the potential of the ukrainian economy. even though ukraine continues to face many challenges, everyone agrees that its economy will inevitably expand.

history of strong GDp growth ukraine’s GDp growth was the highest in europe for many years; ukraine has one of the largest consumer markets in Eastern Europe (around 46 million consumers); it is ﬁfth in the world in its total number of iCt specialists; it has an exceptionally strategic location linking east and West; it is crossed by four out of the ten major european transport corridors; and it has around one-third of the world’s most fertile farmland. ukraine also has a highly skilled work force, low labour costs, limited competition in many sectors, and vast growth opportunities. to stimulate growth throughout the country, ukraine has decentralised its economy. the country now has major industrial hubs as well as ﬂourishing agricultural centres in its fast-growing regions, which have begun to offer their own incentives and support for foreign investors. ukraine has also been diversifying its export markets.

snapshot of the economy ukraine’s services sector was its top GDp contributor in 2012, accounting for 56.8%. next came the industrial sector, with 32.8% of the total GDp, and agriculture, accounting for 10.4%. of ukraine’s 22 million-strong labour force, around 15.8% are employed in the agriculture sector, 18.5% in industrial operations, and 65.7% in the services sector. the leading agricultural products in ukraine are grains, sugar beets, sunﬂower seeds, vegetables, beef and milk. the country’s main industrial products are coal, electrical power, ferrous and non-ferrous metals, machinery, transport equipment, chemicals and processed foods. ukraine’s exports are mainly commodities, ferrous and non-ferrous metals, fuel and petroleum products, chemicals, machinery and transport equipment, and food products. top export markets for ukraine are russia (27%), turkey (5.8%), and italy (4.6%). ukraine’s exporters have been receiving strong support from the World Bank for over a decade as part of the Bank’s country-development programme for ukraine. ukraine’s main imports are commodities, energy, machinery and equipment, and chemicals. russia is the source of 30.5% of all ukraine’s imports, followed by Germany (9%), China (8.9%), Belarus (5.5%), and poland (5.3%).

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Bringing european medical expertise to ukraine Europe Clinic has brought the best of European

Leading contributor in the former soviet union ukraine has long been an economic powerhouse. it was the second-most-productive member of the former soviet union after russia, producing four times the output of the next-ranking soviet republic. ukraine’s farms generated more than one-fourth of soviet agricultural output and provided substantial quantities of meat, milk, grain, and vegetables to other republics. in addition, Ukraine’s diversiﬁed heavy industry supplied unique and raw materials to industrial and mining sites in other regions of the former ussr. While the transition to a free-market economy has been difﬁcult for Ukraine, especially given its continuing dependence on russia for energy supplies, the country is determined to strengthen its economy and decrease its reliance on russia.

speeding up reform process international lending institutions are advising ukraine to step up the pace and scope of its reforms, and the current ukrainian government is working at complying. ukraine’s economic growth slowed in the second half of 2012 but observers agree that ukraine still has positive long-term prospects if the reform process continues. meanwhile, the country’s GDp is expected to rise by 0.3% in 2013 and by 2.1% in 2014, according to an estimate by 20 economists in a Bloomberg survey carried out in september this year. ukraine must face economic contraction, a widening current-account gap, declining foreign reserves and trade restrictions from russia. moody’s investors service cut ukraine’s debt rating by one level to Caa1 in september, seven steps below investment grade, citing growing political and economic risks and a lack of progress on an international bailout. the imF’s current stand-by agreement with ukraine has been stalled because of a lack of progress on reforms. the challenges ukraine faces are great, but, as the many foreign investors operating in ukraine prove, this is a country with undeniable economic growth potential, making it attractive for companies that take a long-term view.

medical expertise to Ukraine. Based in Belgium, Europe Clinic oﬀers world-class medical services

in Brussels, using state-of-the-art technologies combined with luxurious VIP care. europe Clinic provides its services in an innovative facility designed by celebrated architect antoine pinto, who is responsible for luxury developments all over the world, including the biggest thalassotherapy centre in europe. in addition to providing high-quality care, europe Clinic is investing in ukraine’s healthcare development. Dirk Lambrechts, General Director, explains, “since we believe in win-win Dirk Lambrechts, General Director solutions, we are both treating patients here in ukraine and investing in improving the skills of local medical professionals and in upgrading diagnostics. We want to give back to this country.” europe Clinic is partnering with other healthcare institutions in ukraine as the healthcare sector evolves. Dirk Lambrechts says, “We know that 2013 will be the year of health reforms in ukraine, and we have been asked to accept ukrainian doctors for internships in cardiology thanks to our excellent reputation. We want to continue to improve the healthcare systems in Belgium and in other markets and to promote international healthcare cooperation. We all need each other.” Europe Clinic Avenue de Frè 206 - 1180 Brussels - Belgium Tel: + 32 2 614 2222 admission@europeclinic.com - www.europeclinic.com

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master reGio Business & investment opportunities

Belgian-ukrainian Chamber ideal partner for Developing relations between Belgium and ukraine The

Belgian-Ukrainian

Chamber

Commerce (BUCC) — an independent, private,

non-governmental and non-proﬁt organisation founded in Belgium in 2010 — is playing a

key role in stimulating business ties between Ukraine and Belgium.

the Belgian-ukrainian Chamber of Commerce (BuCC) – an independent, private, non-governmental and non-profit organisation founded in Belgium in 2010 – is playing a key role in stimulating business ties between ukraine and Belgium. the organisation’s mission is to “develop relations between Belgium and Ukraine in the fields of industrial, commercial, agricultural and cultural exchanges,” says olga Bukavyn, president of the BuCC. the Chamber’s membership list is a who’s who of leading Belgian and ukrainian companies as well as business leaders and government officials in both countries. The Chamber is helping to raise Ukraine’s profile in Belgium and to draw Belgian investors’ attention to the many business opportunities ukraine offers. the Chamber can help set up business meetings, make contacts between potential partners, offer help with legal documents and much more. Furthermore, the BuCC can also act as a partner for Belgian companies already active in Ukraine. The Chamber is the first official Chamber of Commerce, promoting both countries’ values and expertise. “the Belgian-ukrainian Chamber of Commerce hopes that the association agreement between ukraine and the eu will be signed this november at Vilnius eastern partnership summit to open the way to a swift establishment of a deep and comprehensive free trade area. the importance of an agreement which opens markets and promotes the european values should not be underestimated,” olga Bukavyn says. the european integration of ukraine is in the air, so the association agreement and the accession of this 46-million easterneuropean state to the free-trade zone cannot be treated as spontaneous. the businesses both in ukraine and in the eu have a long interaction on the common pan-european rules and practices, as they are looking forward to get a new boost for the industries and commerce in terms of the liberalised movement of capitals, goods, services and people, which enables access to

Olga Bukavyn, President of the Belgian-Ukrainian Chamber of Commerce

the new markets and resources. ukraine has made a big step towards the global economy and free trade back in 2008 as it entered the Wto, now this year it should make the second and very much awaited step in the same direction. it should be noted that the Belgian-ukrainian Chamber of Commerce has been strong supported by the Belgian authorities and the ukrainian diplomatic representation in Belgium. The Belgian-Ukrainian Chamber of Commerce (BUCC) www.ubcc.eu - info@ubcc.eu

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uKraine

tax attorney highlights advantages of ukraine’s tax system Werner

Niemegeers,

tax

attorney based in Belgium, recently trade

participated

mission

Ukraine

and discusses the countryʼs investment potential.

ukraine, which is often spoken of as europe’s bread basket, can play a crucial role in supplying the world’s future food needs and offers exceptional opportunities for european investors. ukraine has long been known for its fertility – even the country’s name, ukrayina, is feminine – and ukraine’s “guardian angel” is the statue of Queen olga in Kiev’s Freedom square; she ruled when Kiev was the capital of russia. For the russian people, ukraine is still regarded as the “mother country”. this long history of cultural and economic significance is the foundation for Ukraine’s growth potential today. ukrainians are working hard to enhance ties with europe while still remaining attached to their russian roots. While ukraine is still experiencing growing pains as it completes the transition to a free-market system, it offers virtually limitless opportunities for foreign investors. The potential profit margins definitely make any bureaucratic hurdles worth the effort. ukraine’s agriculture sector in particular can serve as a key economic driver for the country and a source of food products for eu markets. ukraine’s tax system is investor-friendly. only taxpayers who spend more than

142

Werner Niemegeers, tax attorney

183 days a year in the country or have their principal business interests there must pay income tax. Ukraine has a ﬂat income-tax rate of 15% with a higher 17% rate for taxpayers who earn 10 times the minimum monthly wage.

Zero tax for start-ups new start-up companies pay zero tax for five years if the company achieves annual turnover of less than €270,000 and employs at least 20 people. some hotels, light-industry operations and aviation enterprises can even be granted this tax holiday for 10 years, and renewable-energy companies can enjoy an 80% exemption from the taxable base for 10 years. To facilitate financing, Ukrainian tax law provides that financial aid loaned by a parent company to a subsidiary company will be totally exempt from tax if the loan

is repaid within 12 months. moreover, ukraine has concluded treaties with many countries (including Belgium) to prevent double taxation. Flemish entrepreneurs have a legal framework for the repatriation of proﬁts earned in Ukraine. proper legal guidance and good preparation are crucial for achieving success in ukraine. Good initial familiarisation, maintaining contacts, and knowledge of russian are all essential, but investors can make a killing in ukraine.

Consulta WERNER NIEMEGEERS Oude Houtlei 2 - 9000 Ghent - Belgium Tel: +32 9 221 0961 Werner.niemegeers@consulta.be www.consulta.be

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• Gateway to Ukraine for Investors and Visitors • National Capital and Top Base for Business

Kiev

“Kiev has a thriving and diverse economy.” Oleksandr Popov, Head of Kiev City State Administration

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uKraine

Kiev: Gateway to ukraine for investors and Visitors investors. We also aim to make Kiev europe’s greenest capital.

Oleksandr Popov, Head of Kiev City State Administration, discusses

the Ukrainian capitalʼs recent accomplishments and future development plans.

European Times: Can you introduce our readers to Kiev? Oleksandr Popov: Kiev has been inhabited since prehistoric times and has a long tradition as a cultural and trade hub. In the ﬁrst years after independence, ukraine suffered severe economic problems, but Kiev has led the way towards a path of dynamic development. today, Kiev has a thriving and diverse economy based mainly on food, printing, construction and mechanicalengineering industries. Kiev is the home of several industrial giants and hosted eurovision in 2005 and euro 2012.

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European Times: How are you promoting economic growth? Oleksandr Popov: We have launched a development strategy, Kiev 2025, which aims to improve quality of life and foster economic growth as well as preserve the city’s historical and architectural identity. Kiev will focus on its role as a ﬁnancial and business centre rather than as an industrial base. new policies will promote small and medium-sized enterprises as well as large ones and will upgrade the business environment to enhance Kiev’s attractions for

European Times: What is the city doing to attract foreign investment? Oleksandr Popov: Kiev City state administration recently organised an investment forum which brought together 300 business leaders from 15 countries, representing the construction, transport, ICT, and ﬁnancial services sectors, among others. this forum established a dialogue between the public and private sectors and promoted Kiev’s role as the gateway for investment in ukraine. Kiev is already the target of half of all investments in the country. i signed six cooperation agreements during the forum for a total of €2.87 billion. We have designated 150 projects and found business partners for the most important ones. this is proof that Kiev welcomes international investors and that investors recognise the city’s potential. European Times: What is Kiev doing to attract tourists? Oleksandr Popov: For euro 2012, Kiev built 20 new hotels and two new airports. We will continue to improve our tourism infrastructure and will add new cultural, sports and other facilities. Kiev will host many festivals this year as well as the world gymnastics championships next year and the euro 2014 basketball championship the following year. i invite european travellers and investors to come here and see for themselves that Kiev is love at ﬁrst sight!

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sector Kiev

the Birthplace of ukraine © Romantiche | dreamstime

The city of Kiev is Ukraineʼs oﬃcial capital as well as the hub of a thriving, diverse region. The Kiev region is strategically

located in the northern part

of the country and is crossed

by many rivers, including the great Dnipro. Covering around 28,000 sq km, or around 4.7% of Ukraineʼs total land area, the Kiev region is divided into 25

administrative districts and has 10 cities, 14 towns, 29 villages

and 1,134 rural settlements. The region has a population

of around 18 million, with 42% living in rural areas.

Kiev

Kiev is considered the birthplace of ukraine. archeological traces of prehistoric cultures, which ﬂourished along the Dnipro and other rivers have been found throughout the region. in fact, the city of Kiev was called the “mother of russian towns” in the middle ages and was the main base of ukrainian Cossacks. in later centuries Kiev was the centre for resistance movements against foreign invaders. Kiev was also a hub for literature and arts, and the city remains ukraine’s main culture centre today. Kiev has many cultural venues, including museums, theatres, concert halls, educational institutions and historic landmarks. Kiev is also ukraine’s leading location for scientiﬁc research, particularly research institutions in

the agriculture sector, and for higher education and healthcare.

exceptionally fertile farmland the Kiev region is known worldwide for its exceptionally fertile black farmland, and cultivated areas account for around 60% of the region’s total territory. Kiev also has vast minerals resources that include peat, brown coal, sand for glass production, limestone, brick and tile earth, granite and amber. the Kiev region not only has an internationally successful agriculture sector but also one of the most developed industrial sectors of any region in ukraine. the region has a highly developed transport infrastructure, which includes

around 8,000 km of roads (including major highways connecting ukraine to Cis and eu markets), 800 km of railways, and an international airport serving as the main gateway to ukraine for tourism and leisure visitors. the Kiev region also has two other airports as well as the main gas pipeline connecting siberia to the eu. the Kiev region’s economy is highly developed and diverse, and has attracted signiﬁcant foreign investment. thriving sectors besides agriculture include food processing, machine building, energy, wood products and paper, light industry, petrochemicals, metallurgy, construction and chemicals. Kiev now has around 345 medium-sized and large industrial enterprises, many of them national leaders in their ﬁelds.

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uKraine

national Capital Kiev top Base for Business The Kiev region has proved to be one of Ukraineʼs most attractive destinations for domestic and international investors. Kiev is a centre for both agriculture and industry and is the home of thriving, internationally active companies in a wide range of sectors. With its extremely fertile farmland, Kiev has more than 2,000 agricultural enterprises, from small holdings to large-scale farms. the main crops produced in the region are wheat, maize, sugar beets, potatoes and other vegetables. Livestock production, dairy farming and egg production are other leading agricultural activities. many of Kiev’s agricultural companies are leaders in their ﬁelds and have implemented the latest equipment and technologies. in the industrial sector, the region’s companies produce a variety of products, from minerals to processed foods. the Kiev region’s main industrial sectors include machinery and equipment, chemicals, healthcare products, paper products, processed foods, metal and mineral products and others.

hub for research and education Investors in Kiev benefit from the region’s many research and higher-education institutions, which have made Kiev the main source in ukraine for highly skilled human resources. many of the region’s research activities are involved in the agriculture sector and include the Myronivka Scientific Research Institute on Wheat, the ukrainian academy of agrarian sciences, and the Institute of Mechanisation and Electrification of Agriculture. Investors in the region benefit from highly developed transport infrastructure, which includes a dense network of road and rail connections leading to destinations throughout ukraine as well as to Cis and eu markets. in addition, ukraine’s main international gateway is Kiev’s Borispol international airport. the region also has two other airports, and it is crossed by the pipeline connecting siberia to the eu. Kiev is also known for its high quality of life. as ukraine’s hub for culture, the arts, education and research, Kiev is one of the most international urban centres in the country. regional and city leaders in the Kiev region welcome the chance to partner with foreign companies and investors.

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number one provider of Crop-protection solutions Ukravit, established in 1999, provides high-quality crop-protection products for the agriculture sector. Since 2011, the company has been manufacturing its products in its own plant “Agrochemicals Factory Ltd.” in Cherkasy, and is now Ukraineʼs biggest provider of crop-protection solutions. Ukravit has its own quality-control laboratory confirmed with the certificate for the quality management system ISO 9001, to ensure that its products always meet the highest standards. Ceo Vitaliy ilchenko explains, “since we launched our production facilities, we have grown steadily and now we have the number one position in our field. ukravit offers more than 100 products in the ukrainian market. this is a full range of products for the chemical crop protection of cultivated plants: herbicides, seed-treatment products, fungiVitaliy Ilchenko, CEO cides, insecticides, growth regulators, fertilizers with microelements and also the pest control solutions. ukravit manufactures around 6,000 tonnes of different products per year and aims to increase its production capacity five-fold over the next five years. ukravit sells its products through a network of 20 distributors all over the country and since 2011 exports them to Georgia and moldova. Vitaliy ilchenko says, “one of the advantages of being a local producer is that our products are adapted to the ukrainian climate and market, which is growing rapidly and constantly upgrading its standards. We will continue to support ukraine’s agricultural development by creating new products and helping to bring new technologies and greater production capacity to the ukrainian agriculture sector. the company stands for highquality products at affordable prices.” Kompaniya Ukravit LTD Degtyarivska st. 25/1, 04119 Kyiv Tel: +38 0444 94 3826 ukravit@ukravit.com.ua, www.ukravit.com.ua

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uKraine

ukraine’s Largest agricultural Group unveils sector’s potential for Growth and investment success Ukrlandfarming PLC (ULF), Ukraineʼs largest agricultural

group,

demonstration largely

serves

the

unharnessed

nationʼs

agricultural

the

vast

best and

potential.

With 532,000 ha of premium cropland under

management, largely black earth, ULF is the largest cropland operator in Ukraine and eighth largest in the world.

uLF also holds a controlling stake in avangardco ipL, a London-listed group ranked as the largest producer and processor of chicken eggs in all of eurasia and second largest in the world. ‘‘our success builds on more than just scale,’’ explains oleg Bakhmatyuk, who founded both ukrlandfarming pLC and avangardco ipL and currently serves as uLF’s Chairman and Ceo. ‘‘it builds on the extensive vertical integration we have achieved within individual segments,’’ he explains. the vertical integration enables the group to embrace entire industries. the best example of how that works is uLF’s egg segment operated by avangardco ipL. avangardco ipL effectively covers the whole value chain of the egg-farming industry, from layer breeding to egg processing and feed production. Each link in the chain is a proﬁt centre contributing its earnings to avangardco ipL’s consolidated bottom line, which represents a proﬁt margin earned off an entire industry. ‘‘our success,’’ further explains oleg Bakhmatyuk, ‘‘also builds on extensive complementarities that exist between individual business segments, generating powerful synergies.’’ While the synergetic effects of uLF’s unique horizontal integration may not always be captured by standard metrics, their impact is crucial to the performance of contributing segments.

Oleg Bakhmatyuk, Chairman and CEO

For example, the profit margin earned by the Crops segment strongly depends on the cost at which it receives inputs from Agricultural Services (AS), which, in its turn, reflects the large discounts secured by as from input vendors as a big buyer. another powerful synergy binds Crops and Cattle. any grain waste and inferior-quality grain, discarded to meet customers’ stringent specifications, is used as fodder by the Cattle segment instead of being wasted. sugar beets grown by uLF to make sugar serve as the best partner of corn in crop rotation boosting corn yields by up to 25%.

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Kiev

Ukrlandfarming PLC: Key Facts (as of 2012)

RANKING: ●

No.1 cropland operator in Ukraine

●

No.8 in the world operating 532,000 ha

●

● ●

●

● ●

●

No.1 corn producer in Ukraine with 1.4 million tonnes produced in 2012 No.1 producer of planting seeds in Ukraine with a market share of 25% No.1 egg producer and processor in Ukraine and Eurasia No.2 in the world with 22.5 million layers No.2 sugar producer in Ukraine with 232,000 tonnes produced in 2012

‘‘uLF’s business model,’’ continues oleg Bakhmatyuk, ‘‘includes several critical assets that dramatically enhance our ability to control the supply chain.’’ uLF owns 1.7 million metric tonnes of modern grain-storage space, which enables the group to preserve the crop once harvested, store it until shipment and deliver to customers while meeting their strict quality standards. as part of the group’s successful efforts to gain access to the vast grain market of China, uLF has upgraded to us quality standards for corn recognised as the world’s most stringent and required by China of all eligible corn importers. ukrlandfarming is the only privately held ukrainian company certiﬁed to sell corn to China. ‘‘innovation is another critical component of our success,’’ continues oleg Bakhmatyuk, ‘‘we use state-of-the art cultivation techniques and practice precision farming.’’

No.1 distributor of agricultural services (seeds, fertilisers, crop protection products and machinery) in Ukraine selling to 8,000 clients

precision farming is a modern farming concept that only highly-advanced agribusinesses can practice to the extent that it requires the use of satellite imagery and geospatial technologies.

No.1 cattle operator in Ukraine with 67,000 head, 19 meat plants and 2 leather plants

‘‘and last but not least,’’ concludes oleg Bakhmatyuk, ‘our success builds on our most valuable asset, which is our people.’

No.1 producer of beef with a market share of 16% No.1 producer of raw milk in Ukraine with a market share of 3.7% 1.7 million metric tonnes worth of grain storage capacity

SEGMENTS: ●

Crops

●

Agricultural Services

●

Eggs

●

Cattle

●

Sugar

EXPORTS:

Exporting to more than 40 markets mainly focusing on MENA, EU and Asia, recently approved to export corn to China and egg products to the EU

ukrlandfarming pLC employs 22,000 permanent staff and during sowing and harvesting campaigns, the group hires temporary workers bringing the total headcount to 30,000. ukrlandfarming pLC continues to grow. in the next 2 years, the group intends to reach 8.6 billion eggs in annual output while doubling its production of core crops from 2 million metric tonnes per year as of 2012 to nearly 4 million tons in the next ﬁve years. apart from that, uLF pursues plans of becoming a global grain trader by building grain pipelines from ukraine to its key markets in the middle east, north africa, the eu and China. ukraine will continue to leverage its unique geographical situation at the crossroads of major trade routes with broad sea access, and uLF will continue to grow along with ukraine’s agriculture sector. UKRLANDFARMING PLC 121-v Prospekt Peremogy st. 03115 Kiev Tel: +38 44 393 4093 secretar@ukrlandfarming.com.ua www.ulf.com.ua

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master uKraine reGio

true Win-Win partnerships between supplier and Customers Founded in 1989, Miratech is headquartered in Stockholm but has its main development centre in Kyiv. The companyʼs service network, including R&D centres, serves customers in 560 cities and towns. This year the IAOP named Miratech one of the worldʼs best outsourcing providers and placed it on its “Global Outsourcing 100” list. Building reliable and enduring relationships with clients is a high priority for Miratech. To learn the companyʼs secrets to establishing successful partnerships, EPTʼs correspondent Ivana Carapic talked with the representatives of two of Miratechʼs key clients. Kyivstar, Ukraineʼs biggest telecom and mobile-services provider, has been working with Miratech since 2005. More than 200 Miratech engineers are involved in providing application and infrastructure-support services for Kyivstar. Kyivstar also chose Miratech to design and install a virtual-desktop infrastructure solution involving 8,000 equipment items at more than 600 locations; it was the biggest project of its kind in Ukraineʼs history.

Mr. Kai Gulbrandsen, Kyivstar’s Chief Technical Ofﬁcer, shares his experience working with Miratech. “We are a big company with a highly professional staff, quality business, and good processes. We want to deal with companies that provide quality products as well. at the same time, the services should be affordable. miratech has helped us a lot by developing services and applications, and in other areas.” highlighting miratech’s responsiveness as well as its quality, Kai Gulbrandsen adds, “miratech specialises in outsourc-

ing. in the past, i have worked with a variety of companies, and miratech seems to be one of the most professional players in ukraine for doing this kind of business. they are very ﬂexible and easier to do business with than multinational companies. it is important that miratech has a strong local presence, and knows the local environment. From this point of view, miratech is a great partner. i think that the beneﬁt of doing business with this company is that it is a trustworthy company that believes in providing high quality to its customers. What we like about miratech is that you can be sure that the quality is good and i am impressed that miratech is trying not just to meet clients’ expectations, but to exceed them a little bit.”

Prominvestbank, the oldest and biggest bank in Ukraine, began working with Miratech in 2012. Now more than 80 regional Miratech engineers support 2,000 work spaces at 60 Prominvestbank branches.

Mr. Hanif Younus, Director of Operational Technology at Prominvestbank, talks about his experience. “We are represented almost all over ukraine. We started our cooperation with miratech with it-infrastructure support services for our regional branches. Later, we called on miratech for additional services, such as service-desk outsourcing and a new banking platform, as well as network organisation in terms of ip telephony in the regional branches.” hanif Younus says that prominvestbank is very happy with miratech’s performance. he says, “speaking on behalf of my team, we are extremely satisﬁed with the professionalism of miratech, which is at the european level. as a part of our agreement, i personally meet with the Ceo every month or

150

two, just to review our operations and to discuss any issues. i also receive a weekly progress report, which i read and comment on from time to time. this weekly report allows me to monitor the situation, to see when and how i need to improve it. Due to our cooperation with miratech, we have reduced our it staff from over 300 to 27 people. here at Prominvestbank we are very sensitive to cost efﬁciency, and I can say that now we have achieved really big cost savings. on the miratech side, 80 it specialists are constantly supporting our business.” Prominvestbank will deﬁnitely continue its partnership with miratech. hanif Younus says, “When you outsource something, you always worry if those people can deliver and if everything will be done properly. however, in the two years we have worked with miratech, there have been no problems that make me worry about the service. it is a pleasure to work with this company. the bigger it becomes, the more professional it is. it never stops improving its services.”

the european times

• Donetsk Getting Greener and Diversifying • Dynamic Industrial Hub Diversifying its Economy

Donetsk

“Donetsk was the ﬁrst region in the country to build its own wind park.” Alexander Fomenko, Deputy Governor of Donetsk

the european times

uKraine

Donetsk Getting Greener and Diversifying Donetsk Business Centre and Cathedral

Alexander Fomenko, Deputy Governor of Donetsk, discusses the regionʼs investment appeal. European Times: What are your responsibilities as Deputy Governor? Alexander Fomenko: my main mission is to attract as much Foreign Direct investment as possible and to stimulate the development of a diversified economy which will create many new jobs. i also oversee foreign-trade activities, agriculture and construction. i am very proud of the fact that in 2012 Donetsk managed to attract €335 million in FDi, putting us in third place as an FDi target in ukraine after Kiev and Dnepropetrovsk. European Times: What are Donetsk’s leading economic sectors? Alexander Fomenko: the main sectors are the metallurgical industry and machine-building. industrial development in Donetsk is only around 150 years old; it began

152

when deposits of coal were found here. heavy industry dominates our economy. now our task is to promote economic diversiﬁcation. European Times: What new sectors are you targeting? Alexander Fromenko: We would like to develop more small and mediumsized enterprises and to see growth in agriculture and services, including consultancies. the region also has the potential to develop renewable energies; Donetsk was the ﬁrst region in the country to build its own wind park. around 10% of ukraine’s total population lives in Donetsk and we need to ensure adequate food for our people, which is why we are developing agriculture. this region has fertile soil for farming as well as easy access to the vast russian market. We also need to improve our ecological situation because of the pollution from heavy industry dating from the soviet years.

the pollution levels per capita here are among the highest in europe. European Times: What are you doing to meet these challenges? Alexander Fomenko: We are modernising all our industrial operations and encouraging all companies to follow the model of some of our leading companies, like siemens, which has implemented the latest environmental-protection technologies. they are very energy-efﬁcient and do not cause pollution at all. We would like to be chosen as the eastern european base for a20, a global organisation working to promote an environmentally friendly industry, since this would highlight our efforts to clean up and protect our environment. to attract more investors to the area, we have created a one-stopshop service, called open power, and an agency of regional Development, which offers all kinds of support. We welcome foreign investors to Donetsk!

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Donetsk

Donetsk: Dynamic industrial hub Diversifying its economy Donetsk

cessing, manufacturing of electronics and consumer goods, and other industrial activities. Industrial enterprises in Donetsk beneﬁt from the region’s vast minerals resources, strategic location, well developed infrastructure (including ports, airports, road systems and rail networks), and skilled human resources. the region also has many research institutions and universities, several of which have established partnerships with institutions in the eu and beyond.

The Donetsk region, a key industrial centre for Ukraine, is located

in the southeastern part of the country and was established as an oﬃcial region in 1932. Covering around 26,500 sq km, or around

4.4% of Ukraineʼs total land area, the region is Ukraineʼs biggest. It

Donetsk is well known for its extensive natural resources, which make up around 12% of the total exploitable natural resources in ukraine. Donetsk’s resources include coal, rock salt, limestone, clay, kaolin, mercury, asbestos, gypsum, chalk, building stone, iron ore, rare earths, feldspar, potash, nepheline, graphite, semiprecious stones, around 1,400 cubic metres of natural gas, gold, and fertile farmland. exploration for deposits of hydrocarbons, copper and other resources are on-going.

has a population of around 5 million.

Deep-water port at mariupol

the region has 28 cities, 17 towns, 134 villages and 1,122 rural settlements. its main urban centres are Donetsk city, with a population of around 1 million; mariupol, with a population of around 500,000; makeevaka, with a population of around 400,000; and Gorlovka, with a population of around 370,000.

the region’s deep-water port in mariupol, which has a cargo-handling capacity of around 12 million tonnes per year, offers streamlined connections to markets throughout the Black sea and mediterranean regions and beyond. Donetsk also has an international airport with world-

With the discovery of coal in the region, Donetsk began to develop a dynamic industrial sector dominated by coal mining, metallurgy and machine building. however, in the present day, Donetsk’s companies are also involved in steel production, chemicals, petrochemicals, food pro-

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uKraine sector

Business Centre and Cathedral in Donetsk

class passenger and cargo facilities, and other airports at mariupol and Kramatorsk. to add to its investment appeal, the Donetsk region has created two special economic zones (seZs). these are the Donetsk seZ, now home to a variety of manufacturing enterprises, and the azov seZ, which specialises in transshipment services as well as repairs and other services for sea-going vessels. investors in these zones can count on a number of tax, customs and other advantages as well as the region’s direct access to markets throughout ukraine (around 50 million consumers), russia (around 150 million consumers) and beyond. over 70% of Donetsk’s manufactured goods are exported, and the region accounts for around 20% of ukraine’s total exports. Donetsk has long been a top source of industrial exports from ukraine, and beginning in around 2000, Donetsk city has developed many activities for marketing agricultural products, including commodities exchanges, wholesale markets, credit unions and others. Donetsk

also has a well developed ﬁnancial-services sector and other world-class business services for local and foreign enterprises. Current goals for the region’s leaders include supporting the growth of small and medium-sized enterprises, diversifying the regional economy, and further developing the high-potential energy sector, particularly renewable energies. Donetsk already has a wind-energy park, the ﬁrst in Ukraine. In its future industrial development, the region is putting the focus on environmentally friendly production processes. Donetsk is also expanding its agriculture sector to provide adequate food supplies for its fast-growing population. the Donetsk region welcomes the participation of foreign companies and investors in its rapidly developing economy. to improve the local business climate and attract FDi, Donetsk has created a one-stop-shop service for investors, called open power, as well as the agency of regional Development.

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master reGio

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Donetsk

Leader in seed-oil sector has ambitious Growth plans duction and aims to boost its exports signiﬁcantly, in particular to turkey, the middle east and China.

Looking for partners for cutting-edge new plant NEST has over 200 employees in its plant, ofﬁces and grain elevators. the company continues to make major investments in new facilities and technologies, and last year it completed an upgrade of its oil plant in the Mykolaiv region in order to boost efﬁciency. NEST has grain elevators in Donetsk and Lugansk as well as logistics facilities in other locations. in the second phase of its current development plan, nest aims to build a new oil-extraction plant in eastern or central ukraine. Dotsenko Vasily says, “We want to raise around €15.2 million in investments for this project, either from a private partner or from a european investment Fund. We are working very closely with ernst & Young, which has put together a business plan for us and is actively involved in the process of identifying potential investors for our second processing plant.”

New Energy Saving Technologies (NEST) brings innovative practices to Ukraineʼs

seed-oil industry. Founded in 2008, the company is involved in the full range of activities

the

seed-oil

sector,

from

cultivation to production and processing.

Ceo Dotsenko Vasily anotolievich explains, “For the past four years, nest has been growing steadily every year thanks to our dynamic young management team and our positive mindset towards challenges. We try to eliminate corruption and excessive bureaucracy, implement fast decisionmaking processes, and grasp opportunities when they arise.” he adds that nest exports around 70% to 80% of its pro-

nest’s future goals include launching an ipo and listing on the Warsaw stock exchange. Dotsenko Vasily says, “We want to diversify our production, introduce new energysaving machinery, and improve our technical processes. We hope to increase our capacity to 200,000 tonnes of oil per year over the coming two years and to expand into other sectors, including the grain sector.” the company has positioned itself as the ideal local partner for investors looking to enter the ukraine market. as Dotsenko Vasily points out, “nest is a developing enterprise with great prospects, and we have extensive experience in our ﬁeld and justiﬁably high ambitions. Ukraine’s seed-oil sector has only reached around half of its potential and there is much room for growth. Look at an investment in nest as step number one into a great future. Do not be afraid to invest in ukraine.” New Energy Saving Technologies (NEST) 3 Ulʼrikha, Donetsk

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uKraine

Dynamic enterprise Demonstrates potential of agriculture sector Bahmutskyy Agrarian Union (BAU) serves as a benchmark in Ukraineʼs agro-industrial sector. This dynamic vertically integrated

enterprise launched in 1997 has built its strong reputation through a keen understanding of local and international markets, ambitious development strategies and a solid ﬁnancial base.

Ceo Yuriy petrovich aknyevskyy explains, “Vertical integration allows BAU to survive market ﬂuctuations. our market-oriented model has proved very successful and our management structure allows me to make decisions particularly rapidly.” in fact, Bau covers every stage of the agriculturalproduction process, from growing crops (sunﬂowers, wheat and barley) and producing animal feeds to raising livestock and manufacturing high-quality food products. Bau plays a key role in driving forward ukraine’s agriculture sector. it is ranked number three in the production of pork and is the only company in the country working with the prized Large White breed. to transform its poultry and

pork, Bau operates its own meat-processing facility in Gorlovka, which is one of the ﬁve biggest plants of its kind in ukraine, producing some 16,000 tonnes per year. Bau operates six production facilities with a total capacity of around 50,000 tonnes and has storage capacity of around 30,000 tonnes.

Boosting brand recognition Bau is moving forward step by step towards its ambitious development goals. From 2008 to 2010, the company worked to boost market share and to expand and improve its production. now Bau is also strengthening its position in the market-oriented economy and continuing to improve its ﬁnancial results and indicators. Yuriy petrovich aknyevskyy explains, “our strategic vision is to become a national brand. our shchiry Kum brand now has a 5% market share and we want to increase this to 15% or 20%.” Bau currently sells 40% of its products through its own distribution channels. For european investors and companies looking to enter the ukraine agriculture and food-processing sectors, Bau has positioned itself as an ideal partner. Yuriy petrovich aknyevskyy points out,

156

Yuriy Petrovich Aknyevskyy, CEO

“our production facilities are competitive, our credit portfolio is one of the best in ukraine, and we always operate with high-quality standards. We have stringent controls at every stage of production and our Gorlovka plant is equipped with the latest european technologies and equipment. We use only fresh, superior-quality meat in our products, and we are certiﬁed ISO 2001 and haCCp.” Building on its strong foundations, Bahmutskyy agrarian union will continue to strengthen its position in the ukrainian and international markets. PrJSC “Bahmutskyy Agrarian Union” Village Novoluganskoe, Artemovsk Area 84573 Donetsk region Tel: +38 0627 44 3663 bas@bas.donbass.com www.kum.com.ua

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INVEST IN GERMAN REAL ESTATE ●

Invest in top real estate opportunities now

●

Good yield and high stability

●

Nice value potential in the strongest economy in Europe german retail INVESTMENT

GOOD REASONS TO INVEST WITH GRI ●

●

Neighbourhood Shopping Centres in attractive locations Excellent Cash-Flow 5.5% (paid out monthly)

- 7.5%

●

Triple A tenants with long leases

●

Strong German economy

●

Security, Stability and strong Capital Growth

A STRONG GERMAN ECONOMY (DEMAND FOR SHOPPING CENTRES) Germany is one of the most sophisticated and efficient industrialised countries in the world. Gross National Product grew by 0.7% in 2012, due to ever growing export, a healthy local economy and increased consumer spending.The purchasing power of the German consumer is unrivalled. In 2011 purchasing power per capita in Germany increased by another 3.8% (at 19,648 Euro it is the highest in Europe). Job security contributes to further positive economic growth. It is expected that the German economy will grow by 2.1% in 2014.

EXPECTED RETURN ON INVESTMENT

Carefree investment, it’s possible.

Triple A tenants allow for an annual cash flow of between 5.5% and 7.5% (depending on the project). Investors are paid monthly. Increasing rents and property values should be reflected in the resale price of the project at a rate of 2% annually (average).

CONTROL AND ADMINISTRATION A reputable company that is familiar with local circumstances will execute and control the administration. German Retail Investment (GRI) will, as the trustee, supervise and guide this management company. Every quarter the investors will receive from German Retail Investment (GRI) a concise but detailed report, adequately informing them about their investment.

WHAT WE OFFER German Retail Investment acquires, together with or on behalf of investors, “Neighbourhood Shopping Centres” in powerful and vibrant cities in Germany. Louis Pasteurstraat 21 - B3920 Lommel - Phone: 0032 11 71 76 05 - Mail: info@dr-investment.nl Website: www.dr-investment.be

Please feel free to contact us to schedule an appointment.

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uKraine

• Export Leader Open to the World

Dnepropetrovsk

“It is one of the leading regions of the country, with a powerful industry, highly developed transport and ﬁnancial infrastructure.” Dmitry Kolesnikov, Governor of Dnepropetrovsk

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master reGio

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Dnepropetrovsk

Development and Growth in Dnepropetrovsk, ukraine’s industrial heartland Ukraine is not only Kiev! The local government of Dnepropetrovsk state, led by Governor Dmitry

Kolesnikov,

working

assure

that this message reaches across Europe and beyond. In this interview, the Governor describes his administrationʼs efforts to boost investment and diversify the stateʼs economy while improving living standards and the quality of life. Dmitry Kolesnikov, Governor of Dnepropetrovsk

European Times: For those of us unfamiliar with it, would you please brieﬂy describe Dnepropetrovsk state? Dmitry Kolesnikov: our state has a population of about 3.3 million. it consists of 22 districts and includes 13 cities of oblast’ subordinance, the largest and most important of which are Krivoy rog, Dnepropetrovsk and pavlograd.

Among the priority areas we have identiﬁed are mining, the metallurgical complex and mechanical engineering, as well as agriculture. We have launched large-scale development projects in various ﬁelds, from the development of infrastructure to attracting investment to modernise the complex social and environmental problems of the region. this includes modernising housing and communal services, enhancing medical and health-care services, and solving environmental problems.

Dnepropetrovsk state covers 5.3% of ukraine’s territory and is home to 7.3% of the population. it is one of the leading regions of the country, with a powerful industry, highly developed transport and ﬁnancial infrastructure, favourable geographic location, rich natural resources and fertile land.

European Business Times: What are your goals for the next 2-3 years, and how do you plan to achieve them? Dmitry Kolesnikov: Economic development must, ﬁrst of all, be reﬂected in the improvement of quality of life. Such is the task set by our president, who has introduced social initiatives focussed on the support and development of a new generation – children and young people.

European Business Times: What areas do you see as engines for growth in the state? Dmitry Kolesnikov: We, along with the participation of international experts, have developed a comprehensive development strategy, a road map, for the region that is based on a detailed analysis of the area’s potential and possibilities, its strengths and weaknesses.

therefore, we are making major investments in the social sphere: this year we will renovate and build 30 kindergartens. We are also implementing a number of projects in the ﬁeld of education, such as ‘New Dnepropetrovsk – the new standard of education’, which has been recognised as one of the most systematic and successful of its kind.

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uKraine

Dnepropetrovsk export Leader open to the World of its mineral fertilisers, and 24% of its tyres. the region’s gold, molybdenum and tungsten resources are being explored. Dnepropetrovsk’s leading industrial sectors are steel, aerospace, mining, automobiles and parts, metallurgy, machine building, chemicals, appliances, electronics and food processing. Dnepropetrovsk is known for its advanced industrial standards, and many of the region’s leading enterprises have obtained international quality certification. along with its industrial sector, Dnepropetrovsk has a prosperous agricultural sector, which includes over 3,400 farms and over 1,700 agricultural enterprises. Leading crops are cereals and vegetables, while the region also produces meat, dairy products and poultry. Following land reforms, Dnepropetrovsk has significantly boosted its agricultural production. Dnepropetrovsk is one of Ukraineʼs most developed regions, known for its successful industrial enterprises, export activities and cultural attractions. Located in southeastern Ukraine, Dnepropetrovsk was established as an official region in 1932 and now contains 22

administrative districts, 21 cities, 27 towns and 1,440 rural settlements.

Dnepropetrovsk City, the regional capital, is located on the Dnipro river and has a population of over one million. other main cities in the region are Krivoy rog, Dneprodzerzhinsk, nikopol and pavlograd. the region’s well-developed industrial sector, known for its steel production since the early 20th century, accounts for over 15% of ukraine’s total industrial output per year. Dnepropetrovsk is also the country’s top source of minerals. Local companies supply over 80% of ukraine’s total iron production, all its manganese ore, 36% of its cast iron, 33.6% of its steel, over 75% of its steel pipes, 13% of its ﬁnished coal, 15%

highly developed foreign trade Dnepropetrovsk is one of ukraine’s export leaders, exporting its products to more than 100 countries. to keep its products on the move, the region has developed modern transport infrastructure, which includes extensive road, rail and airtransport connections. thanks to its diverse products and proven international competitiveness, Dnepropetrovsk has attracted signiﬁcant foreign investment and now has over 500 successful FDi projects in diverse economic sectors. The region is the home of numerous scientiﬁc organisations, research facilities and higher-education institutions that provide support and skilled human resources for many high-tech activities. Dnepropetrovsk’s competence in aerospace technologies, for example, is demonstrated by its production of the Zenith and Cyclone spacecraft. Dnepropetrovsk has a long history of partnerships with international organisations, including in the eu. For example, several projects were conducted in the region through the tempus/taCis programme, while Dnepropetrovsk national university, the region’s top higher-education institution, has strengthened its ties with its counterparts worldwide.

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Dnepropetrovsk sector

Frankfurt, moscow, tel aviv, istanbul and other destinations. the city is known for its lively cultural life, many parks and gardens, high-tech industries, educational institutions and industrial operations. the 18th century preobrazhensky Cathedral, located on Zhovtneva square in the heart of Dnepropetrovsk City, is one of the region’s best known landmarks. russia’s Queen Catherine the Great attended the ceremony when the cathedral’s cornerstone was laid. the Dnepropetrovsk Chamber of Commerce and industry is ready to serve as the ideal local partner for foreign investors looking into opportunities in the city and surrounding region. the Chamber provides a wide range of services to help ensure successful business operations for its member companies. in april 2013, Dnepropetrovsk hosted a meeting of the assembly of european regions (aer), which involved representatives from 20 european countries. at the meeting, the city’s leaders introduced european visitors to Dnepropetrovsk’s high-quality mass-transit system, environmental initiatives, aerospace centre and recent infrastructure projects, all of which meet eu standards. ranked among ukraine’s top regions in international competitiveness, Dnepropetrovsk continues to focus on developing its industry and trade activities. the regional government is very pro-business and welcomes foreign investors. in a move to diversify the regional economy, Dnepropetrovsk is currently developing its services sector, which has already attracted FDi in such areas as business services and real estate. Dnepropetrovsk also wants to promote its tourism appeal. the region has many cultural attractions and is known for its traditional decorative painting and elaborate embroidery. Dnepropetrovsk also has unspoiled forests and rivers, including the Dnipro, as well as over 100 nature reserves.

Diverse tourism attractions Dnepropetrovsk City is the gateway to the region. most travellers arrive through Dnepropetrovsk international airport, which offers direct connections to Vienna,

55 Years of Construction experience Krivorizhindustrbud has 55 years of experience

as a general contractor and has completed a wide range of projects, including industrial buildings, residential developments, healthcare facilities,

shopping malls, social centres and more. Its clientele includes the Ukrainian government and leaders in the mining and metals sectors.

the company has seven specialised divisions focusing on different aspects of the construction business. nikolai Fedorovich, Chairman of the Board, explains, “We handle the full range of construction services, from design to the production of materials (including reinforced concrete) to actual construction and installation of heating and plumbing systems. We always strive to surpass our customers’ expectations in our delivery times and quality standards.” OJSC “Krivorizhindustrbud” Ordzhonikidze st. 10 50051 Kryviy Rog Tel: +38 0564 09 2734

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uKraine

Leading industrial enterprise Completing major upgrade PJSC “Dneprovsky Iron and Steel Integrated Works named after F.Dzerzhinsky”

(DMKD), Ukraineʼs biggest industrial enterprise, is looking to expand its market share. The company was privatised in February 2004 and is now part

of the global ISD group. DMKD specialises in providing world-class businessto-business services and produces over 5.5 billion tonnes of sinter, over 3.2 billion tonnes of pig iron, over 3.55 billion tonnes of steel and over 3.8 billion

tonnes of ﬁnished steel per year. The company is the exclusive supplier of rolled billet axles for railway transport in Ukraine and worldwide.

Maxim Zavgorodnii, CEO

DmKD’s production facility is now upgraded with the latest equipment and technologies and continues to be improved through an extensive project launched by isD with the support of international partners Duferco (switzerland), siemens (austria) and Danieli (italy). thanks to this upgrade, DmKD can meet global standards and offer longer-than-usual warranties. Ceo maxim Zavgorodnii, who has been with isD for 14 years, explains the decision to modernise the plant. he says, “We are shifting our focus from B2B to B2C. to improve our production, we decided to make major investments in our operations, equipment, technologies and human resources. When we complete this investment drive in march 2014, we will boost our market share in

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the B2C segment to one million tonnes per year.”

supplying global markets Like all industrial manufacturers, DmKD must cope with fluctuating prices for both raw materials and sales of final products, but the company’s international reach helps it meet these challenges. around 80% of DmKD’s production goes to the middle east, egypt and turkey, while the remainder is sold in ukraine, russia, india and other markets. “our products for construction are sold mainly in ukraine and russia, but we also sell to Canada and the us,” mr. Zavgorodnii says. DmKD has its own shipyard in Gdansk, where it operates a plant producing hot rolled billets. the shipyard helps the company ensure efficient international distribution of its products.

DmKD will continue to invest in the future. mr. Zavgorodnii explains, “We will continue to develop steadily and to further improve our technologies. We aim to implement higher environmental-protection standards in the near future for both air and water protection. We also aim to step up our partnerships with local cement companies; already our waste products go into the construction of every road in our region. next year our company will celebrate 125 years of operations. this longevity demonstrates our commitment to quality over the years.” PJSC DMKD Kirova st.18-b 51925 Dneprodzerzhinsk Dnepropetrovsk region Tel: +380 056 923 2237 kanc@dmkd.dp.ua www.dmkd.dp.ua.

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master reGio

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Dnepropetrovsk

heidelbergCement number one in ukraine for building materials HeidelbergCement is the global market leader in aggregates and one of the worldʼs biggest manufacturers of cement, concrete and other building materials, including ready-mix concrete and concrete construction elements. Today active in more than 40 countries, HeidelbergCement entered Ukraine in 2001 and now produces more than 4 million tonnes of cement there annually. on top of cement, heidelbergCement’s priorities in ukraine include the production of ready mixed concrete and aggregates. Cement production is performed locally by heidelbergCement ukraine, pJsC with plants at Kryvyi rih, Dniprodzerzhinsk and, novoamvrosiyivske. heidelbergBeton ukraine, LLC is taking care of ready-mixed concrete and operates plants at Kryvyy rih, Lugansk, Dnipropetrovsk and odessa. Finally, aggregates are produced by heidelbergGranit ukraine, LLC which operates quarries in the regions of Dnipropetrovsk and Kiev. the presence in attractive regions with an integrated product portfolio has allowed the company to become the leading player on the ukrainian building materials market today the company employs 1,300 people in ukraine and has paid around €74.3 million in taxes, making the company a key driver of the ukrainian economy. silvio thiede, Chairman of the Board explains: “since the very beginning of heidelbergCement’s activity in ukraine the company has followed a strategic policy of long-term investment directed to the improvement and development of its ukrainian operations and implementing the very best global industry practices.” Direct and easy access to the vast know-how and direct contacts with foreign professionals made it possible to introduce changes locally much faster and to signiﬁcantly improve the competitiveness of the cement plants. heidelbergCement in the ukraine got the opportunity to use the world’s most modern technologies and management systems. the company has already invested around 100 million euro, half of which were directed to improve workers’ health and safety and environmental protection. always ahead of the curve, the heidelberg technology Center generates competitive advantages for heidelberg-

Cement in sustainable cost leadership, product portfolio, research and development. silvio thiede comments, “We have developed a new type of concrete which can be used to repair airport runways and will harden in only two to three hours. this is just one example of our efforts to create new solutions for the construction industry worldwide.” the company aims to play an active role in the cities and communities where its production sites are located by maintaining an open dialogue with neighbours, local citizens and any other stakeholders. as part of its long-term commitment to ukraine the company has invested more than €1.9 million in Csr projects there to date. it also focuses on human-resources development. silvio thiede says, “We do not just want to give people jobs; we want to develop highly qualiﬁed specialists.” heidelbergCement’s success story in ukraine is a lesson for other potential foreign investors. silvio thiede says, “ukraine is deﬁnitely worth the investment. There are quite a lot of interesting growth opportunities here and we recommend to invest in modern technology and training. We found that ukrainian workers are honest, hard-working and motivated. all employees here appreciate companies which can provide jobs, stable salaries and attractive perspectives for the future.”

HeidelbergCement Ukraine, PJSC Barykadna,15a st., 49000 Dnepropetrovsk Tel: +38 056 238 7500 (01) oﬃce.ukraine@heidelbergcement.com www.heidelbergcement.ua

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uKraine

agriculture Leader puts the Focus on Quality Agro

Oven

launched

illustrates

Corporation,

years

the

ago,

potential

Ukraineʼs agriculture sector. The

dynamic,

integrated involved

vertically-

enterprise a

wide

range

of activities, from growing

crops and raising livestock to

food-processing

distribution.

With

and

around

5,000 employees, Agro Oven is also a major player in the Ukrainian economy.

Victor Zavorotniy, president, explains that agro oven grows grain on around 20,000 hectares of land and produces 60,000 tonnes of poultry products and 7,000 tonnes of pork products per year. the corporation also operates its own distribution chain, Dom myasa. he says, “We have an extensive distribution network throughout ukraine and we also export to saudi arabia, moldova, Vietnam, iran, Georgia, azerbaijan and armenia. By the end of 2013 we will be distributing our products in russia.”

top poultry producer agro oven is one of ukraine’s top three poultry producers and its equipment and technologies for poultry production are the most modern in the country.

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Victor Zavorotniy points out, “We have implemented european equipment and technologies from the netherlands, Germany, France and italy as well as innovative practices from the us. We are now at stage two of a major expansion

programme for our poultry production. our goal is to boost our capacity from the current 60,000 tonnes of poultry meat per year to 200,000 tonnes. We already have all the necessary infrastructure in place and now need to build more buildings for feeding poultry.” the company sells most of its pork products in the local market, around 60% through its retail stores and 40% to meat-processing facilities. “agro oven’s meat is available in all big and small retail stores all over the country,” Victor Zavorotniy points out.

Focus on human resources agro oven is committed to developing its human resources. it operates its own in-house centre to train spe-

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Dnepropetrovsk

cialists to meet the highest international standards, and provides grants to employees who wish to be trained abroad and come back to work in the company. Victor Zavorotniy says, “We place a priority on hiring people trained in the company and the children of our employees. We also hire the children of farmers who rent us their land. We are playing a key role in creating jobs for people living in rural areas.” Victor Zavorotniy has ambitious growth plans for agro oven. he says, “We know that we have the capacity to increase our production totals, expand into new markets, and produce more raw materials for meat-processing plants. these are our priorities. We are interested in long-term solutions, not short-term ones.” around 25% of the company’s meat goes to meat-processing facilities, with 37% to retail chains, 10% to agro oven’s own retail stores, and 47% to other outlets. now agro oven is concentrating on increasing its exports. Victor Zavorotniy explains, “our main export markets will be the Cis countries, the middle east and the eu. the quality of our products is

very high and we are able to provide our products at lower costs than european producers can offer. We are very interested in establishing partnerships to supply european markets with our products.”

open to international partnerships in fact, agro oven welcomes international partnerships in many areas as it continues its drive to employ cutting-edge practices and the latest equipment and technologies. Victor Zavorotniy says, “We are very, very focused on quality. We make major investments in our equipment and technologies, including our quality-control systems, because we are determined to keep our quality high. there is always a human factor and we understand that we need to control our processes very well to avoid human mistakes. We also choose our partners really carefully after in-depth research. We always work with the best and most reliable suppliers, for example from the US, where there is no Asian bird ﬂu.” thanks to its commitment to high standards, agro oven has earned a

stellar reputation in ukraine and in its export markets. Victor Zavorotniy says, “Quality is the reason our brand name is so strong in the ukrainian market and beyond. For example, the influential magazine poultry international singled out agro oven as one of the leading poultry producers in ukraine, and the eBrD has named us one of the most reliable companies in the country.” Victor Zavorotniy praises the ukrainian government for its low-interest-rate loans for the agriculture sector although he would like to see tax reductions for agricultural enterprises. he concludes, “the ukrainian government is doing its best to help the agriculture sector and as soon as it has the financial means, it will do even more. ukraine is a very beautiful country, rich in natural and human resources, which is still in the development phase. Come here and see for yourself everything this country offers.” Agro Oven, ul. Quay 53, Office 3 49022 Dnepropetrovsk Tel: +38 0562 33 4590 infomanager@agrooven.com.ua www.agrooven.com.ua

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se riC ‘pavlograd Chemical plant’: an emerging Green player in europe’s industrial Chemicals market Times have been changing in Ukraine, and pioneering, vertically-

integrated enterprises such as SE RIC ʻPavlograd Chemical Plantʼ (SE

RIC ʻPCPʼ, Pavlograd, Dnepropetrovsk Region, Ukraine) are changing with them. Led by General Director Leonid N. Shyman, production volume at SE RIC ʻPCPʼ has increased 3,700% over the past 10 years.

Now proﬁtable, the industrial groupʼs annual revenue averages

between €90-100 million, productivity has increased 4,200% and the average employee salary 3,400% – double the national average.

applying advanced approaches and practices of business management and having highly qualified staff, 70% of which have a graduate degree and scientific degree, SE RIC ‘PCP’ has developed 59 high technologies in hard rock mining and military industries within the past 10 years, which allow a rapid development of businesses adopted by the enterprise. a keystone of ukraine’s military-industrial complex for 85 years, se riC ‘pCp’ may remain a state-owned company but it is solely and independently responsible for financing and managing its growing range of industrial, manufacturing, and research and development (r&D) businesses. a perfect example is ukrainianFrench private Joint stock Company ‘sofrachim’, which was created and successfully operated in the market over the past 22 years. The energy efficiency of its operations is key to the success of se riC ‘pCp’. as Leonid n. shyman points out, the

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group uses around 85-87 grams of equivalent fuel per dollar of production volume as compared to an average 350 grams for peers in Germany and 220-240 in Denmark. Yet more impressive, the 34-fold increase in energy efﬁciency has coincided with a dramatic rise in production volume: an increase of 3,700% over the past ten years. “if previously we were spending 34 cents worth of energy per 1 dollar of production, today we spend about 2 cents,” Leonid n. shyman elaborated. Key to these achievements was the installation of waste-heat recovery and solar-thermal energy systems, along with solar-photovoltaic (pV) systems and generators capable of using natural gas, diesel or bio fuel to produce electricity at each of its production sites. Though they can justiﬁably take pride in their accomplishments to date, the se riC ‘pCp’ management believes this is only the beginning. While exports

Leonid N. Shyman, General Director

now account for around 16% of the total annual revenue, the se riC ‘pCp’ management believes that the expertise and experience of its employees, coupled with innovations and investments in infrastructure, equipment and processes, has resulted in the creation of a vertically integrated group of industrial companies doing business in 19 regions of ukraine and capable of expanding in markets across the european union and beyond. SE RIC ʻPavlograd Chemical Plantʼ Zavodsʼka st. 44 51402 Pavlograd Dnepropetrovsk Region Tel: +38 05 63 21 1000 dirphz@pkhz.dp.ua www.ric-phz.com.ua

the european times

• EU’s Gateway to Ukraine

Lviv

“Lviv is safe, fast-growing and ready to welcome foreign investors.” Viktor Shemchuk, Head of Lviv Regional State Administration

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uKraine

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sector

Lviv, Gateway to ukraine accessibility and business attractiveness in ukraine. We are currently working on a development strategy up to 2020 and preparing for the olympic hope 2022 event. to avoid the problems experienced with euro 2012, we aim to build infrastructure that will be used at least until 2025.

“Lviv is ranked one of the top 10 regions in Eastern Europe in foreign-investment appeal.”

of accreditation; one out of seven people here is a student! We also have a strategic location at the crossroads of the main transport routes joining ukraine and the eu, and we have one of the most modern airports in europe. We want to develop our airport to its full potential, including increasing its cargo ﬂow. Lviv is also a tourism centre as well as an advantageous investment target. We are committed to opening Lviv to the world.

European Times: Why should investors choose Lviv? Viktor Shemchuk: Lviv is ranked one of the top 10 regions in eastern europe in foreign-investment appeal, and we are doing what we can to make conditions even more attractive. Lviv has potential in many sectors, including tourism, and we are improving infrastructure, including building Ukraine’s ﬁrst toll motorway through a public-private partnership. We are also developing 12 technical parks next to key roads or railways. another plus is Lviv’s highly skilled, low-cost workforce. We have many projects in the works for which we are seeking partners, including one to develop a reservoir for recreation that will be europe’s biggest.

European Times: How is the region’s economy performing? Viktor Shemchuk: Lviv’s economy has been growing steadily and now the region is ranked number two in business

European Times: What is your personal message? Viktor Shemchuk: Lviv is safe, fastgrowing and ready to welcome foreign investors.

Viktor Shemchuk, Head of Lviv Regional State Administration, discusses Lvivʼs investment appeal. European Times: What makes Lviv special? Viktor Shemchuk: the Lviv region, on a long european border, is a gateway to ukraine. it is around the size of Belgium but with around one-third of Belgium’s population. Lviv has thriving high-tech, agricultural and industrial enterprises and has earned a reputation for its high level of development. the region’s GDp totalled €40 billion per year. the Lviv region includes the city of Lviv as well as nine other cities and 40 small towns. We have a long history of ties with europe and we are branding the region as the ‘unknown europe’ for this reason. We have 22 institutions of higher learning with the highest level

the european times

Lviv

Lviv: eu’s Gateway to ukraine Lviv City Centre

number three as a potential business base and fourth in high-quality human resources. a study by international auditor KpmG also ranked Lviv as one of the top iCt and business-processoutsourcing locations in the world, and Lviv City as ukraine’s number three iCt centre. For investors, Lviv offers all kinds of advantages. it has highly skilled human resources available at low costs and a well-developed education sector, which includes 22 higher-education institutions. Lviv is also the location of several prominent research institutions and scientiﬁc organisations, including ukraine’s national academy of science.

Lviv is a bridge between the EU and Ukraine. Located in western

Ukraine, in an area known as Galychyna, Lviv borders Poland and has traditionally been very closely tied to Europe both culturally

and economically. Highlighting its European and international outlook, Lviv hosts the International Economic Forum as well as more than 10 international exhibitions every year. Lviv has a land area of around 21.8 sq km, or around 3.6% of ukraine’s total territory, and a population of around 2.7 million. it has 20 administrative districts, 9 cities, 40 towns and 1,859 villages. over 60% of the population lives in urban areas, including in the regional capital, Lviv City. Lviv is the home of cutting-edge iCt companies, textiles and garment plants, energy providers, machinery-manufacturers and many other types of thriving enterprises in the industrial, agriculture

and services sectors. it is known for being one of ukraine’s most highly developed regions. Lviv is making the most of its strategic location on ukraine’s eu border to develop even more trade, business and investment links with eu markets.

top european city of the future a 2011 survey of “european Cities and regions of the Future” conducted by the uK’s Financial times ranked Lviv

highly developed transport infrastructure Lviv is set on key international transport routes and it has a modern airport that is steadily being expanded to serve as a leading global passenger and cargo hub. the region is crossed by several railway lines with connections to Berlin, trieste, Warsaw, Gdansk and other destinations. a high-speed rail link to Krakow is in the works. Lviv’s road network is also well developed, and the region is crossed by major gas and oil pipelines. Lviv is currently marketing itself as a new tourism destination with the label “unknown europe”. Lviv City, known as the “pearl of europe”, has a historic city centre classified a unesCo World heritage site. the city was a major trade hub connecting east and West for centuries, and italy’s finest architects were brought

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uKraine sector Lviv

Taras Shevchenko monument in Lviv

there during the renaissance to build opulent homes for wealthy residents. today, many of these landmarks remain, lining cobblestone streets in the city’s ancient heart. ruled by many different nations over the centuries, Lviv has always been a cultural melting pot, which it remains today.

offering the best of “old europe” without the crowds, Lviv saw a 40% increase in tourism visitors in 2010 alone, the highest increase in tourism arrivals of any city in europe that year. Last year Lviv hosted visitors attending euro 2012. the region also has well-known spa facilities; spas in truskavets, morshyn and skhidnycia attract many visitors from the eu. other tourism attractions in Lviv include the Carpathian mountains, an area ideal for eco-tourism; more than 4,000 historic monuments; four popular ski resorts; and several national parks. Lviv’s dynamic government is currently focussing on infrastructure development to support the region’s rapidly growing economy. one project is for a major highway to be built through a public-private partnership. already known as one of ukraine’s most popular choices for FDi, Lviv is stepping up its incentives for foreign investors and welcomes international partnerships. Just one effort to draw investors is a current project to build 12 technical parks adjoining major roads or rail lines. the regional economy is quite diverse and includes flourishing enterprises in a wide range of sectors, from mining to tourism.

Lviv Centre

the european times

Lviv Opera

one of ukraine’s top 10 industrial centres Lviv is also ranked among ukraine’s top 10 industrial areas, accounting for around 3% of the country’s industrial production. Lviv’s industrial operations are known for maintaining eu and international standards. Leading industries are food processing, mining, mechanical engineering, wood, paper, light industry (including manufacturing textiles and consumer goods), construction materials, petrochemicals (concentrated in the Borislav area, one of the oldest petrochemicals hubs in europe), chemicals, and energy production and distribution. the region has extensive minerals resources, which include coal, natural gas, oil, sulfur, peat, salt, mineral water, raw materials for the production of cement, limestone, slate, clay and others. Lviv also has a well-developed agriculture sector.

and european associations, including the Carpathian euroregion, eurocities, european Cities marketing, oWhC (organisation of World heritage Cities), and energie-Cités. Lviv actively seeks foreign investment to help its companies modernise their production processes, implement new technologies and access new markets. sectors with particularly strong investment appeal include industry, transport infrastructure and communications, energy, tourism and food processing. Lviv has created two special economic zones (seZs), Yavoriv seZ and Kurortopolis truskavets seZ, both offering tax breaks and customs advantages. Lviv’s very business-friendly leaders welcome the chance to work with partners in the eu and beyond.

Lviv has long been one of ukraine’s leading exporters, and it has established trade ties with over 120 countries. most of Lviv’s exports go to russia, poland, slovakia and the UK. Lviv offers a world-class ﬁnancial-services sector, one of the most developed in ukraine, as well as a stock exchange and commodities exchange. to strengthen its regional ties, Lviv participates in a number of regional

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uKraine

Lviv’s only Five-star hotel Citadel Inn, Lvivʼs ﬁrst and only ﬁve-star hotel, combines a very

traditional setting – in the tower

of a modernised 19th century fort – with the highest international

standards. This 100% Ukrainian boutique property with only 26

guestrooms puts the focus on personalised services.

amenities include free Wi-Fi internet connections, free parking, breakfast included in the room rate, a one-hour free sauna and business support, including free use of a laptop computer. the hotel also arranges weekend leisure activities for its guests, from hot-air balloon rides to rafting and bicycle excursions. For business travellers, the hotel is a great unique place for conferences up to 120 guests. it has a conference hall for up to 50 persons and a small meeting room for 10. the Citadel inn’s restaurant, Garmata, whose chef is ranked the best in the city, is particularly popular. the restaurant’s name means ‘cannon’ and it has real cannons which can be ﬁred on special occasions. Set on the third ﬂoor of the hotel, Garmata also offers spectacular views of the city.

Roman Shuptar, General Manager

‘the best of everything’ Deﬁning the Citadel Inn’s unique character, General manager roman shuptar says, “the hotel’s setting in an historic tower is unique, and we also have a lovely terrace open in summer, a restaurant with a great view, and most of all excellent customer service. We understand that Lviv is still building its brand as a tourism destination, so it is our job to help enhance that brand by offering the best of everything. We do everything to make our guests feel as comfortable as at home.”

the Citadel inn attracts both business and leisure travellers although most of its guests have come to Lviv on business. as a small hotel, the Citadel inn does not cater to big groups but rather to travellers looking for special style and ﬁrst-class service. Roman Shuptar points out, “We have many guests who have been coming here since we opened in 2009. We also have many regular corporate clients to which we offer special prices and discounts. now we are looking to join the international preferred hotels group as the group’s ﬁrst property in Eastern Europe. The standards for joining are very high and being a member will help us reach more international travellers.” roman shuptar plans to add even more special touches to the Citadel inn, including a ‘menu’ allowing guests to choose what kind of pillow they want and other pleasant things to make our guests feel really important for us. he says, “We want our guests to wish to come back!”

Citadel Inn Hotel & Resort 11 Grabovskiy str. Lviv 79000 Tel.: +380 32 295 7777 reservation@citadel-inn.com.ua www.citadel-inn.com

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Lviv

From nano-technologies to trams, enterprise Focuses on innovation

Concern Electron demonstrates the potential of cutting-edge technological development in Ukraine. The innovative enterprise,

based in Lviv, stands out as well for being Ukraineʼs ﬁrst joint-stock company. According to Yuriy Bubes, President for the past nine years, Concern Electron is “a peopleʼs company, with some 21,000 shareholders.”

Following streamlining, the Concern electron group now has 15 dynamic subsidiaries, one of which is a joint venture with a German investor to produce heaters distributed throughout the european, american and Cis markets. thanks to its expertise and advanced technologies, the Concern group works with a range of partners to manufacture world-class products that meet clients’ speciﬁcations. During the soviet years, Concern electron was a top supplier of tVs and related products. today, the group has developed a diverse portfolio of state-ofthe-art products of many kinds. Yuriy Bubes explains, “We produce nanotechnological materials, Gps systems, optical materials, polymer products, tools, household appliances, plastic casings for tVs in a partnership with

panasonic, and, most recently, trams for the city of Lviv involving a new technology we developed with a German partner. We plan to get more involved in the production of electric vehicles and transport systems.” Concern electron’s tram was launched in Lviv in June.

Concern group includes eight r&D institutes technological development and applied science are priorities for Concern electron. the group now includes eight r&D institutes as well as Carat, which develops technologies and manufactures cutting-edge materials for optoelectronics, quantum electronics and optics. Carat is ukraine’s only producer of mono-crystals.

Concern electron serves as a benchmark in the local manufacturing sector and has positioned itself as an ideal partner in ukraine. Yuriy Bubes says, “our products are very attractive for foreign markets thanks to our ability to offer high quality at lower prices. Concern electron is a diversiﬁed company looking for new partners for further development. We are a good company to invest in thanks to our well established production facilities, positive credit history, modern machinery and technologies, and, most of all, our skilled, highly trained people, who are our greatest asset.” Concern electron will continue to set ambitious new goals for itself. as Yuriy Bubes points out, “two years ago, no one believed that Concern electron could produce a tram. today, we have been contacted about our trams by other cities in ukraine and in Finland and russia.” to potential partners, he adds, “support us; we will be advantageous for you!” Concern Electron Group Storozhenka st. 32 79018 Lviv Tel: +38 032 239 5295 oﬃce@electron.ua www.electron.ua

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uKraine

innovative energy enterprise offers Full range of services

Energoinvest, founded in 1996, illustrates the investment potential of Ukraineʼs energy sector. Launched

with the support of the State Innovation Fund, the company was created to manufacture high-quality insulation materials which meet EU standards.

Ceo ivan opanasovich nironovich says, “We have gradually expanded into supplying heating, water and other products and services, and we have made major investments in new equipment in order to do this. We have also branched out into other activities. today, we are involved in all the vital systems households require, including water supplies, sewerage treatment and water treatment. We have also developed expertise in construction and assembly.” energoinvest has established an innovative research and development department with a staff of 50, and the company has had many of its designs licensed. energoinvest also operates its own production facilities and workshops. ivan opanasovich nironovich explains, “to provide endto-end solutions, we buy some products from other suppliers but we try to provide most of our solutions from our own products. thanks to our competence in construction and assembly as

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well as in manufacturing and research, we can implement any project for any customer concerning heat and water supplies.”

expanding in ukraine and internationally

tional standards. ivan opanasovich nironovich points out, “our products have to adhere to speciﬁc standards, including iso standards, and our quality system ensures our compliance with these requirements.”

the company operates all over ukraine, which accounts for around 80% of its business, and has expanded throughout the region and in the eu, including in the uK. “We aim to continue our regional and international expansion while also growing in ukraine. the ukrainian market is still undeveloped and we see many opportunities here,” ivan opanasovich nironovich says conﬁdently.

the company aims to build a new production facility and is looking for an international partner to work with energoinvest in a joint venture to complete this high-potential project, which is budgeted at around €14 million. to potential partners and investors, ivan opanasovich nironovich concludes, “Come visit ukraine, see it for yourself and get to know it better. Do not be afraid to work with us. You will maximise your investment and open new markets.”

energoinvest’s competitive edge is based on its extensive experience, strong track record in all its markets, innovative materials, complete range of products and services, and commitment to meeting interna-

Energoresurs-Invest Corporation Zelena st. 131, 79035 Lviv Tel: +38 0322 25 5437 info@energoresurs.com www.energoresurs.com

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Lviv

innovative Fruit enterprise expanding its exports

Frutica is a well-known name in Ukraineʼs high-potential agriculture sector. The company was founded in 2005 to produce berries and has steadily expanded its operations and product portfolio ever since. Today, Frutica not only

grows strawberries, raspberries, blueberries and rare berries like stevia and rumumbura; it also transforms its crops into high-quality food products and freezes and distributes its fruits in local and international markets. Fruticaʼs main crop is strawberries, of which it produces around 500 tonnes per year and freezes around 300 tonnes.

anatolij Kljuchko, co-founder, explains, “my partner martin haller and i launched Frutica and our farm operation, agrofrutica. then we created Galprost to handle freezing, storing and exporting a portion of our crops. Frutica, which handles distribution, is the parent company. i have a 40% share in the enterprise and oversee agrofrutica and Galprost, handling production and processing, while martin haller has a 60% share and oversees sales, distribution and ﬁnancing.” The partnership has proven to be an outstanding success. the partners have reinvested in the company to expand their product lines and implement cutting-edge new technologies. one innovative new product is based on frozen berries from which water has been extracted using Belgian equipment. “this system allows us to sell our products in europe as well as ukraine,” anatolij Kljuchko points out. Frutica also supplies major food enterprises like Danone (France), iprona (italy) and agrana (ukraine). around 80% of Frutica’s production is exported, including to China, and the company plans to enter the us market.

Quality and food security Frutica places a high priority on quality and food security and always adheres to eu standards. the company

organises regular inspections at every stage of the production process and operates its own laboratory for testing. in fact, quality gives Frutica its competitive edge. anatolij Kljuchko says, “our european clients know that they can trust us to provide high quality. We are also a transparent business, and our client base continues to grow.” a current goal for Frutica is to produce strawberries on 100 hectares while also keeping the quality of the fruit very high, with natural, concentrated flavour. “We need around €3 million in financing to reach this goal. As always, we will acquire all our equipment and materials from europe,” anatolij Kljuchko says. anatolij Kljuchko is very positive about the future of Frutica and of agriculture in ukraine. he explains, “ukraine has talented human resources as well as rich farmland. the agriculture sector definitely has enormous potential.” Agro Frutica Byshkiv LLC Lesi Ukrainky, 89 b 80333, Byshkiv Zhovkva district, Lviv region Tel. +38 03252 69524

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uKraine

Dynamic producer of Beverages meets highest international standards Galca, operating since 1937, produces a wide

range of beverages based on high-quality raw materials.

reliable Gas Company upgrading its network

In September 2013, Lvivgaz will celebrate 150 years of service. The company distributes gas to

individual, industrial and corporate customers the company’s product line includes coffee, chicory-based drinks and herbal teas. Galca invests around €1 million per year in its equipment and technologies and achieved €30.63 million (us$40 million) in turnover in 2012, with continued strong growth expected this year. next year the company will celebrate its 20th anniversary as a successful joint venture with uK group eD&F man Coffee. Galca illustrates the potential of foreign investment in dynamic ukrainian enterprises. Ceo Borys Dubovyy explains that Galca exports 25% of its production, mainly to the eu, and that he aims to expand the company’s presence in european markets. he says, “We are certiﬁed ISO 9002 and HACCP, and we perform stringent checks at every stage of production to keep our quality high.” the company also has strong potential in the fast-growing organic-foods market since all its products are additive-free.

and builds new pipeline infrastructure.

General Director Vladimir Zlenko says, “We employ almost 5,000 people and we continually work to improve ukraine’s gas system. For example, according to federal regulations, we are installing gas meters for all customers by 2017.” Vladimir Zlenko points out that he is able to make decisions very rapidly and that he ensures that Lvivgaz focusses on customer service. as he explains, “We know that the quality of our services is very important. this company has only been privately run for 20 years and we are steadily making progress in bringing our standards up to european levels. We are currently designing a one-stop shop service.”

Galca welcomes new partnerships to help support its growth plans. Borys Dubovyy points out, “Galka is a small company which is very open, ﬂexible and able to make rapid decisions. We invite you to visit our company and, most importantly, try our products.”

Lvivgaz welcomes the chance to work with new customers and partners. along with its 150 years of experience, the company offers regulated gas prices, unlike trading companies in the market whose prices fluctuate. Vladimir Zlenko concludes, “We are improving our services every day and if european customers come to us for their gas needs, we will not let them down.”

JV “Galka” Zapovitna st. 1, 79019 Lviv Tel: +38 032 240 9192 info@galca.ua - www.galca.ua

Lvivgaz Zolota st. 42, 79039 Lviv Tel: +38 0322 33 2094 www.lvivgaz.lviv.ua

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• Ivano-Frankivsk Focusses on Job Creation • Natural Beauty, Significant Resources and Tourism Appeal

ivano-Frankivsk

“Investors can be certain of returns here.” Mykhailo Vyshyvaniuk, Governor of the Ivano-Frankivsk region

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master uKraine reGio

ivano-Frankivsk Focusses on Job Creation Mykhailo

Vyshyvaniuk,

Ivano-Frankivsk

region

Governor (head

the

Ivano-Frankivsk Regional State Administration),

discusses his regionʼs economic-development strategies.

European Times: Which sectors you are working to expand in Ivano-Frankivsk? Mykhailo Vyshyvaniuk: We already have many industrial activities in the region, including oil and gas-extracting operations and other energy projects. in fact, every economic activity is represented here except coal-mining and steel production. to further diversify our economic activities and create new jobs, we are promoting investment in strategic sectors which will add value and include environmentally friendly technologies and innovations. We are currently putting the emphasis on the tourism sector. ivano-Frankivsk is one of the top three holiday destinations in ukraine, and our most successful investment project over the past decade is Bukovel, ukraine’s biggest ski resort, which is very popular among domestic and foreign tourists. our region offers favourable conditions for machinebuilding and electrical engineering thanks to our strong education system and engineering traditions. We also provide free industrial facilities and other advantages for investment in these sectors. agriculture and food-processing cooperatives are two other activities we are promoting since these would boost the economic development of our rural areas. We see great potential in ivano-Frankivsk’s agriculture sector, particularly dairy farming and meat production. We are working to improve our waste-management and other services with the help of international partners. European Times: What are some of the region’s recent major projects? Mykhailo Vyshyvaniuk: our priority investment projects are aimed at improving logistics, access to the region, and tourism and sports infrastructure. these projects include new roads and a new border crossing on the ukraine-romania border, the reconstruction of ivanoFrankivsk international airport, the construction of windpower stations, and others.

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Mykhailo Vyshyvaniuk, Governor of the Ivano-Frankivsk region

European Times: Why should investors choose Ivano-Frankivsk ? Mykhailo Vyshyvaniuk: investors can be certain of returns here. We need their know-how and technologies and we are very ready to help them establish businesses that will bring them profits. our local authorities will provide everything investors need, from initial information about business options to support for administrative requirements. our investors’ one-stop shop facility is always ready to provide assistance on all matters, from initial paperwork to a company’s first exports and beyond. We also offer tax breaks and free building land for investors who create jobs and contribute to the local economy, and we are streamlining Vat procedures for our companies. other resources for investors available at the regional investment portal are a roadmap with various business and legal information, a database of investment property and investment projects, up-to-date analytical resources and more. We are also establishing investment sites with appropriate infrastructure. Khryplyn investment and industrial park in ivano-Frankivsk was one of ukraine’s first successful industrial parks, and electrolux and tyco economics have established production facilities there. European Times: What changes would you like to see in Ivano-Frankivsk over the coming three years? Mykhailo Vyshyvaniuk: i hope that ivano-Frankivsk will be contributing even more to the economy of ukraine and will be even more closely tied to the eu.

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ivano-Frankivsk

Natural Beauty, Signiﬁcant resources and tourism appeal the region’s capital is ivano-Frankivsk City, a charming urban centre with a population of around 250,000. it has a thriving education sector, modern business services and a historic city centre with tourism appeal. it is the home of several world-class institutions, including ivano-Frankivsk national medical university, one of the leading medical universities in ukraine, as well as prykarpattya national university and the ivano-Frankivsk national technical university of oil and Gas. The city’s diversiﬁed economy is based on food-processing, construction, mechanical engineering, light industry, trade and tourism. other main urban areas in the region are Yaremche, rohatyn, Vorokhta, Kolomyia, tysmenytsia and Kosiv. Ivano-Frankivsk in western Ukraine has developed a dynamic economy based on industry, agriculture, timber-processing and tourism. It is known for its great natural beauty, varied topography

(from the rugged Carpathian Mountains to fertile farmland), vast mineral resources and diversiﬁed industrial sector.

the region covers around 13,900 sq km, around 40% of which is forests. in fact, ivano-Frankivsk contains around 10% of ukraine’s total forest areas. the region shares a 50-km border with romania and has always perceived itself as being european as well as being ukrainian. it is part of the Carpathian euroregion association, which includes poland, romania, hungary, slovakia and ukraine. in ukraine, ivano-Frankivsk is often known by its traditional name, prykarpattya, which dates back to the middle ages.

Well-developed transport links to the eu and beyond ivano-Frankivsk has a well-developed transport infrastructure, which includes train connections to Berlin, Budapest, Bratislava, Warsaw, Krakow, minsk, moscow, prague and st. petersburg. ivano-Frankivsk international airport offers ﬂights to destinations throughout ukraine, europe and beyond. exporters in the region also enjoy easy access to the e40 (Venice – Kiev) and e85 (Baltic sea – Black sea) european transport corridors.

mountains are always a backdrop in ivano-Frankivsk. ukraine’s highest mountain, 2,061-metre mount hoverla, is in the region, along with many other mountains, many of which are the sites of popular ski resorts. ivano-Frankivsk is also crisscrossed by a number of rivers, including the Dnister, the region’s largest river, and the prut, a tributary of the Danube. thanks to its many rivers, ivano-Frankivsk has considerable hydropower potential waiting to be exploited.

high-potential agriculture sector the ivano-Frankivsk region has a moderate, continental climate with temperate summers and mild winters (except in the high mountains, where snowfall is heavy), and its agriculture sector has traditionally been very pro-

791

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sector

ductive. regional leaders have targeted the agriculture sector for investment and growth, and production of crops and livestock has been expanding steadily. authorities are promoting especially investment in livestock production, dairy farming and food-processing facilities. one prominent new investment in ivano-Frankivsk’s agriculture sector is a feed mill in rohatyn being built by ukrLandFarming. the mill, set for completion by late 2014, will produce 20 tonnes of feed per hour and will employ around 100 people. ukrLandFarming is the largest domestic agro-industrial holding company in the ukraine.

Diverse industries, from oil and gas to timber ivano-Frankivsk’s leading industrial sectors are oil and gas, petrochemicals, chemicals, machine building,

metallurgy, woodworking, light industry and food processing. ivanoFrankivsk has significant oil and gas resources and operates a refinery and a pipeline. Chevron is one international investor reportedly interested in launching projects in the region, particularly if the eu association agreement is signed. ivano-Frankivsk national technical university of oil and Gas and the region’s Central research Laboratory are involved in research activities in the oil and gas sector and help local companies implement worldclass standards. the region has also developed an oil and gas technology park designed as an ideal base for petrochemicals companies. other natural resources found in the region include lignite, peat, rock salt, potassium salt, sulphur, gypsum, marble, sandstone, clay, mineral water, and small deposits of iron, manganese

ore, copper, zinc, silver and gold. ivanoFrankivsk’s varied exports include oil and gas equipment and instruments, ethylene, vinyl chloride, dyes, cement, sulphur, fur garments, lumber, wood products, chemicals, plastics, carpet and ﬂoor coverings, textiles and clothing.

Building on considerable tourism appeal in a move to diversify the economy, ivano-Frankivsk is currently building on its natural beauty and cultural heritage to develop a modern tourism sector. the region is already the home of many resorts and spas, including Yaremche, a resort in a picturesque canyon along the prut river, which is known as the tourist capital of the Carpathians. Vorochta is a popular ski resort, and spa resorts include Gorianka, Cherche, sheshory and Burkut, all known for their healing mineral water from natural springs. a new ski resort is being developed

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Ivano-Frankivsk

packaging Leader meets highest eu standards Pamibro was created to ﬁll a packaging gap in

the Ukraine market. When the company was created in 1996, there were no modern packaging manufacturers in Bukovel that will employ around 3,000 people and is expected to draw around 15,000 visitors per day. ivano-Frankivsk is now looking to attract more investment in tourism facilities and services, including health tourism and eco-tourism. ivano-Frankivsk’s prykarpattya university has created an institute of tourism to train high-quality human resources for tourism and other hospitality-sector projects. adding to the region’s appeal for visitors, it has a rich cultural heritage of traditional music, handicrafts and the visual arts. ivano-Frankivsk hosts major cultural festivals year-round, including the ukrainian international Festival of ethnic music and Land art, based in picturesque hutsul but with events held all over the country. the Carpathian spring arts festival is held in ivano-Frankivsk City every year in may. the region’s historic landmarks include the 16th century Church of the holy spirit in rohatyn and many wooden churches featuring traditional ukrainian architectural styles. the Carpathian narrow-gauge train is another popular tourism attraction.

increasingly popular FDi target thanks to its varied resources and location on the border of the eu, ivano-Frankivsk has attracted considerable foreign investment, and the regional government is working hard to bring even more FDi there. the business climate continues to be improved, and one-stop-shop services for investors have been created in all main urban areas. in addition, the region plans to streamline its Vat procedures, a move that is certain to attract the attention of investors. the association Agreement with the EU is set to bring a new ﬂow of foreign investment to ivano-Frankivsk.

the

country,

Pamibro

purchased equipment from Germany and trained its employees to operate it.

in 2008, the company took a major step forward when it built a brand-new plant with cuttingedge technologies and full automation. illya shutak, Chairman of the Board, explains, “our modern plant allows us to meet all eu criteria, including for environmental protection. ukraine’s government has supported us all the way.” a focus on innovation is keeping pamibro at the forefront of its sector. “almost everyone in the company is involved in research,” illya shutak points out. the pamibro plant increased its productivity by 60% in 2012 and has doubled its capacity in 2013. another new plant and production line are planned. pamibro welcomes the chance to partner with europe. illya shutak says, “We already work with many european enterprises because all our raw materials come from europe. We only buy from companies certified environmentally friendly.” this year the company will produce 75 million tonnes of packaging and hopes to raise that to 200 million tonnes by 2017. Pamibro is definitely keeping pace with Ukraine’s fastgrowing economy. Pamibro S.Striltsiv st. 52А/3 Broshniv-Osada Settlement 77611 Ivano-Frankivsk Region Tel: +38 0347 44 7250 office@pamibro.com, www.pamibro.com

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master uKraine reGio

a 135-Year history of producing Fine Vodka Knyagynyn, with a 135-year history, is one of

Ukraineʼs best-known brand names. The company

began as a small manufacturer of alcohol and has steadily expanded over the years to become a

thriving producer of top-selling vodka. In 2003, Knyagynyn began to expand its product portfolio signiﬁcantly and now oﬀers a wide range of

vodkas with diﬀerent ﬂavours and proofs. Tours

of the companyʼs bottling facility have become a popular tourist attraction in Ukraine.

Ceo nina harakava explains that the state-owned enterprise aims to expand throughout ukraine and recently opened a new branch in suma to cover markets in the eastern part of the country. While the government’s recent increase in alcohol prices has cut into Knyagynyn’s sales, the company still has a bright future thanks to its strong reputation for producing superior vodka. she says, “Knyagynyn’s products are known for their high quality. We do not use any kind of chemical additives. We employ different types of berries and plants, including Carpathian balsam, to give our products their special tastes. We have around 30 products in our portfolio and they are so pure that they will not give you a headache in the morning!”

ready to conquer export markets around 80% of Knyagynyn’s products are sold in the ivano-Frankivsk region with the rest sold in western ukraine. in august 2013, the company will begin exporting its products to russia, the Czech republic and slovakia. nina harakava is confident that as soon as Knyagynyn’s vodkas appear in the eu and other new markets, demand for them will rise quickly. she says,

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“Customers in our export markets will taste our vodkas and begin buying them because of their superior quality, especially for the price. We already test our vodkas for seven levels of purity and for export we will add two more levels.” to continue its growth, Knyagynyn plans to invest in new technologies and equipment and will continue to explore new products and markets. nina harakava says, “We are proud of our brand name and of the fact that our products have won many awards over our 135 years of history, which we showcase in our museum. my message to european companies and investors is that we are open to new partnerships and we can guarantee the quality of our products. and to our customers in our new markets, i invite them to try our superior vodkas.” Knyagynyn Knjagynyn st. 44 Ivano-Frankivsk Tel: +38 0342 71 3527 lgv@knyagynyn.com.ua www.knyagynyn.com.ua

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â&#x20AC;˘ Long History as Industrial, Agricultural and Trade Hub

Zaporozhye

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master uKraine reGio

Zaporozhye: Long history as industrial, agricultural and trade hub Zaporozhye, in southeastern Ukraine, is a major

industrial and agricultural centre covering some 27,200 sq km, or around 4.5% of Ukraineʼs total

territory. Its southern border includes a 300-km coastline along the Azov Sea.

Zaporozhye has a long history dating back to the palaeolithic age when settlements ﬂourished along the Dnipro river. In the middle ages, the area that is now Zaporozhye was crossed by an international trade route travelled by people from many cultures, and the region remains a global trade hub. as Zaporozhyskaya Sech, the region was Ukraine’s ﬁrst independent territory. modern Zaporozhye’s capital is Zaporozhye City, a picturesque urban centre along the Dnipro. it has many parks and gardens, and its archaeological museum on Khortitsa island, once a Cossack fortress, showcases treasures from the area’s long history. ukraine’s sixth-largest city, Zaporozhye City has more than 780,000 residents and is home to a hydropower plant, car manufacturer ZaZ and aircraft-engine manufacturer motor sich.

highly developed transport infrastructure the city is served by Zaporozhye international airport, while Dnepropetrovsk international airport is only an hour’s drive away. the Zaporozhye region has a highly developed transport infrastructure, which includes rail and road links to destinations throughout ukraine and beyond. in addition, the Dnipro river is a major transport artery for freight trafﬁc, and Zaporozhye river Cargo port specialises in processing industrial shipments. the region also has a port at Berdiansk on the azov sea, which can handle most types of cargo and is served by a railway connecting it to destinations throughout ukraine. During the soviet years, Zaporozhye was transformed into a major industrial centre that included the Dnieproges power plant, built in the 1920s, the most powerful hydropower station in europe at the time. after the second World War, the region revitalised its industrial sector, particularly metallurgy, and new types of industrial operations were created.

184

Oleksander Mikolayovich Pekluschenko, Governor of Zaporozhye

ukraine’s top steel producer today, Zaporozhye is ukraine’s leader in industrial production, with globally competitive companies in the steel, automotive, metallurgy, machine-building, power and foodprocessing sectors. the region now produces nearly half of the stainless steel and ball-bearing steel manufactured in ukraine, as well as a third of the cold-rolled steel sheets and about half of the transformers. Zaporozhye also produces the Zaporozhyets mini-car and manufactures products from titanium, aluminium, ferro-alloys and other materials. the region’s industrial enterprises export around 400 products to markets in around 70 countries. Zaporozhye iron and steel Works is ukraine’s top player in the metallurgy sector and is ranked one of the biggest

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sector Zaporozhye

steel producers in the world. Zaporozhye aluminium plant (ukraine’s only aluminium plant), Zaporozhye Ferro alloy plant and Zaporozhye titanium and magnesium integrated plant are other prominent metallurgy companies. the region also has a massive machine-building industry which produces aircraft, automobiles, gas turbines, transformers and much more. in addition, Zaporozhye has a thriving chemicals industry which includes national leader Berdyansk JsC azmol.

in new equipment, technologies and management practices. privatisation has transformed the regional economy by creating a number of enterprises, which have proved successful in the open market, including thousands of small and medium-sized private companies.

Zaporozhye is also the home of major power plants, both thermal and nuclear, and is ukraine’s leading power producer. Zaporozhye nuclear power plant has a capacity of 6,000 mV and has been equipped with the latest technologies, including environmental-protection systems. Zaporozhye also has two thermal-energy plants.

With its central location, highly developed industrial and agricultural sectors, advanced transport and communications systems, and many high-potential economic opportunities, Zaporozhye offers signiﬁcant attractions for investors. the regional government continues to upgrade the business climate and streamline investment procedures.

prosperous agricultural and food-processing sectors In addition to heavy industry, Zaporozhye has profitable agriculture and food-processing sectors, which produce sunflower seeds, livestock, grains, beer, vodka, cooking oil, processed meats and many other goods. slavutich Brewery is one of eastern europe’s top beer producers, and its trademarked slavutich brand has won many international awards. pologi oil-extraction plant and the melitopol and Zaporozhye meatpacking plants are also highly successful. to keep its economy on the move, Zaporozhye has made significant investments in its communications infrastructure and

top target for FDi

in 2011 alone, FDi in Zaporozhye rose by 2.6% over the previous year, placing the region number three in ukraine in FDi totals. investment projects in 2012 included the modernisation of the motor sich plant and an upgrade for the region’s gas-transmission system. a study of the region’s minerals resources was also launched last year. For investors, Zaporozhye also offers high-quality human resources thanks to Zaporizhzhya state technical university, which includes the Berdyansk college of machine construction, the tokmak mechanical school, Zaporizhzhya college of radio electronics, and Zaporizhzhya electro technical college. Zaporozhye has opened its doors for investors looking for promising ventures in ukraine.

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uKraine

the Largest producer of iron ore in ukraine has more than 40 Years of successful experience in the mining industry Chairman of the trade union is also a member of the company’s Board of Directors in order to keep these close ties between labourers and management.

Focus on eastern european markets

Zaporozhye Iron-Stone Enterprise is bringing Ukraineʼs high-quality iron to Eastern European markets. The production of the closed joint-stock company is 4.5 million tonnes of iron ore per year.

Chairman Mr. Aleksandr Furman comments on the work of the plan, “Zaporozhye iron ore is ranked among the best in the world

for quality. It can go straight to metal production after minimum crushing. We oﬀer quality iron ore at very attractive prices.” half of the company’s iron ore is exported, mainly to the Czech republic, slovakia, poland and austria, and the other half is delivered to ukrainian steel mills. a slovakian partner controls the export operations of the company. aleksandr Furman and his team are in charge of the ukrainian market. Zaporozhye iron-stone enterprise has around 50% market share of sinter in the sector and is well known among steel producers in eastern europe. explaining the long track record activities of the company, aleksandr Furman says, “We are constantly updating our technologies

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and inviting ukrainian companies to see our activities of learning and improving the equipment and processes.” Zaporozhye iron-stone enterprise is making every effort to improve the safety of work in the extraction of iron ore and improve working conditions for its employees. For these reasons it has received the state prize for development and implementation of high-performance environmental technologies in mining. “We have a mutual understanding with our workers and for the purpose of regulation of labour relations, we sign a collective agreement annually.” the

a challenge for the company is the high cost of transporting iron ore from ukraine to international markets. While the producers of iron ore from australia and Brazil have the opportunity to transport by sea, Zaporozhye iron-stone enterprise transports its ore by train, which is very costly. rail transport is complex, given different sizes of rails in ukraine versus Western europe. For the moment, the company will continue to focus on eastern europe, where its customers are very satisﬁed with its ore products. While Zaporozhye’s iron ore has a high concentration of silica and thus requires additional processing, it costs much less than iron ore from australia and Brazil. aleksandr Furman’s message to all european readers about the company is, “We have very qualiﬁed and skilled human resource, as well as a strong positive image in the ukrainian market and abroad. our customers know that we offer quality, timely delivery of products and very competitive prices.” ZAPOROZHYE IRON-STONE ENTERPRISE Vasilievskyi District, M. Belozerka Village Veselovskoe Highway, 7km 71674 Zaporozhye Region Tel: + 38 061 756 7341 www.zgrk.com.ua info@zgrk.com.ua

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• Kharkiv Developing Thriving Activities in Many Sectors • Kharkiv: Hub for Trade, Industry and Research • City of Success for Investors • Ukraine’s Second-Largest City Kharkiv Serves as Ideal Business Base

Kharkiv

“When investors come here, they will be surprised at all the many opportunities Kharkiv offers.” Mikhail Dobkin, Governor of Kharkiv

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uKraine

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sector

Kharkiv Developing thriving activities in many sectors Mikhail of

Dobkin,

Kharkiv,

current

recent

Governor

discusses

projects

development plans.

the

and

European Times: What are some recent developments in Kharkiv? Mikhail Dobkin: our main economic sectors today are agriculture and machine-building, and both have great investment attractions. according to one international survey, Kharkiv is currently exploiting only around 25% to 30% of its agricultural potential, for example, and we are actively seeking international investors to help us boost our agricultural production. We are also focussing on spurring on the growth of the machinebuilding sector as well as of the energy sector. in order to maintain a strong position in the global market, we collaborate with more than 40 companies worldwide. Kharkiv also has a strong scientiﬁc base; many of our companies have implemented high-technology production processes and are continuously improving. in recent years Kharkiv has built many new facilities of all kinds, including new kindergartens, cultural venues, a new stadium and new airport facilities for euro 2012. European Times: What are you doing to attract more businesses and investors to Kharkiv? Mikhail Dobkin: our goal is to provide the right conditions for innovative new ideas and new business partnerships. the government of Kharkiv’s management structure has been highly rated by interna-

Mikhail Dobkin, Governor of Kharkiv

tional agencies, and the european Business association has said that Kharkiv offers one of ukraine’s best environments for foreign investors. our local government is supportive of the business sector and is ready to help investors start enterprises here and make them successful. here in Kharkiv and throughout ukraine, we are working to fight corruption and ensure transparency in local government operations. our new “one Window” service is an example of this. It guarantees a level playing field for all investors. European Times: How do you expect Kharkiv to evolve over the coming five years?

Mikhail Dobkin: We will continue to support the development of the private sector and to improve our business environment in order to attract more investors and international partners. We welcome the chance to cooperate with european and other foreign enterprises. Kharkiv’s leaders are committed to giving investors all the support they need. our goal is to make Kharkiv one of the best business locations in europe and ukraine, and to achieve this we are concentrating on developing our human resources and improving our infrastructure. When investors come here, they will be surprised at all the many opportunities Kharkiv offers.

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master reGio

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Kharkiv

City of success for investors European Times: What about the city’s attractions for business and leisure travellers? Gennady Kernes: Kharkiv has many cultural, shopping and entertainment venues and offers a high quality of life. the city is constantly evolving and my goal is for Kharkiv to be ranked among the top 100 cities in the world by 2030. more and more international conferences are being held here, and the city has produced three nobel prize winners. European Times: Why should international investors choose Kharkiv City? Gennady Kernes: Kharkiv is constantly expanding its international relationships, and we are committed to meeting eu and international standards in every sphere of activity. according to a recent study, Kharkiv is the most attractive investment target among ukraine’s 18 regions. my mission is to maintain the flow of investment into Kharkiv City. For example, we are building a new eu-standard administration centre for investors which will provide transparent, one-stop-shop services. it will also streamline bureaucratic procedures, including permits.

Gennady Kernes, the Mayor of Kharkiv City, discusses the cityʼs attractions for investors.

European Times: What are some recent developments in Kharkiv City? Gennady Kernes: euro 2012 and the upcoming euro 2015 have resulted in a lot of new construction here, but we have also built new it parks, museums and infrastructure, all of which meet eu standards. We did not stop with euro 2012! For example, we have remodelled our main city park, which was recently named the best park in europe by an italian agency.

European Times: What are some of the city’s other attractions for investors? Gennady Kernes: We have a youthful, highly educated population, 47% of whom are younger than 35, along with many high-potential sectors, including agriculture, machine-building, services and tourism. We also have a very dynamic, fast-growing private sector. Kharkiv has already attracted investment from all over the world, and we are partnering with the eBrD, the World Bank and others to ensure ﬁnancial services and a business climate which protect investors. in addition, Kharkiv is a wellestablished trade hub with a strategic location and a highly developed transport infrastructure by road, rail, air and waterways. European Times: What is your personal message to potential investors and tourists all over the world? Gennady Kernes: i invite them to Kharkiv so that they can discover for themselves what we have to offer. seeing is believing. Kharkiv is the city of success!

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uKraine

Kharkiv: hub for trade, industry and research Terminal South Station Kharkiv

Kharkiv continues to play a leading role in ukraine’s international trade and economic development, and accounts for around 6% of ukraine’s annual industrial production. Leading industries include machine building, energy, electrical engineering, pharmaceuticals, light industry, mining, construction materials, chemicals, food processing and others. Kharkiv also has a thriving agriculture sector. the region covers around 31,400 sq km, or 5.2% of ukraine’s land area. Kharkiv has 27 administrative districts and 20 cities. the capital is Kharkiv City; other cities include Lozova, izyum, Kupyansk and Chuguyiv.

Kharkiv, in north eastern Ukraine, was settled

by Ukrainian Cossacks and Russian farmers in

the 17th century, when the area was known as Slobidska. The region grew rapidly thanks to its

strategic location on key trade routes linking East and West as well as North and South, an advantage Kharkiv continues to enjoy. Todayʼs

Kharkiv is a thriving trade hub connecting

economies throughout Eastern and Central Europe as well as the Black Sea, Caucasus and central Russian markets.

By the beginning of the 20th century, Kharkiv had grown to become an economic powerhouse for ukraine thanks to its prominence in trade, mechanical engineering, heavy industry, banking, higher education and science. Between 1919 and 1934, Kharkiv City was Ukraine’s ofﬁcial capital. Kharkiv has a rich cultural heritage and has produced many renowned artists, writers and composers.

Kharkiv’s geography is a combination of steppe and hilly plains, with very fertile farmland areas and extensive forests, many of which are nature preserves. the region is crossed by many rivers, including one of ukraine’s largest, the siverskyy Donets, which feeds three of the biggest reservoirs in ukraine. the Dnieper-Donbas and the siverskyy DonetsDonbas canals also cross the region.

natural resources Kharkiv has extensive natural resources, which include natural gas, oil, lignite and hard-coal deposits, sand, clay, chalk, limestone and timber. the shebelinkske, Krestyshchenske, and Kegychivske gas pools are found in Kharkiv. the region has developed advanced transport infrastructure and serves as the rail hub connecting eastern ukraine to six adjacent regions. Kharkiv also has an international airport and is crossed by several major transport corridors, including the Kiev-to-rostov and the moscow-to-simferopol highways. the region has long been known for its advanced research activities. Kharkiv’s scientists have garnered worldwide recognition in physics, astronomy, mathematics, chemistry, biology and electronics, and were the ﬁrst in Europe to split the atom. the most powerful radio telescope in the world was also invented in Kharkiv, a forward-thinking region, which illustrates the talents and entrepreneurship of modern ukraine.

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Kharkiv

ukraine’s second-Largest City Kharkiv serves as ideal Business Base Sergii Chernov, Head of the Kharkiv Regional Council

launched in Kharkiv in the last two years alone.”

hub for education and scientiﬁc research one of Kharkiv’s draws is that it has long been known for its world-class educational and research institutions. For investors, this means the availability of the highest-quality human resources in a wide variety of industries. sergii Chernov explains, “We have more than 25,000 scientists and more than 3,000 students. Kharkiv is ukraine’s capital of education and research, and we are creating good opportunities for our young people to keep them in the region.” Kharkiv is playing a major role in changing Ukraineʼs international

image for the better. Sergii Chernov, Head of the Kharkiv Regional Council, explains, “Visitors to Kharkiv during EURO

2012 now know what Ukraine and the region can oﬀer. Investors are particularly interested in Kharkiv, Ukraineʼs second-largest city, because of its strategic location on a key transport route

to the EU and because of its strengths in science, technologies, agriculture and education.”

the Kharkiv regional Council is working hard to improve the region’s business climate and enhance its attractions for investors, and was instrumental in pushing forward new tax legislation in ukraine that favours exports. sergii Chernov singles out opportunities in Kharkiv’s agriculture, healthcare, energy, machinebuilding and other sectors. he says,

“We understand the importance of collaboration, both locally and internationally. We demonstrated our competence during euro 2012, and we are ready to continue to improve. We have a very strong and dynamic private sector and we are attracting a steady flow of investors, including in small projects. around 170 new investment projects have been

Kharkiv has many new projects in the works that will make it even more desirable as an investment target, including a nuclear-science institute developed with a us partner. this project alone illustrates international recognition of Kharkiv’s expertise in cutting-edge ﬁelds. Khakiv is also building on its vast natural resources to stimulate the development of even more projects, including in the energy sector. sergii Chernov explains, “Kharkiv has 40% of the gas supplies in ukraine and is very open to collaborating with foreign partners.” Kharkiv’s leaders are committed to continuing to improve the region’s investment appeal. sergii Chernov points out, “my goal is to show even more people around the world that ukraine is an independent country with vast potential and that Kharkiv is an ideal business base in ukraine.”

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uKraine

Regional Council Building

Kharkiv: Your Business Base in ukraine

Kharkiv, home of 40% of Ukraineʼs gas reserves as well as the countryʼs second-biggest city, is a dynamic industrial, trade, cultural and research hub with outstanding investment appeal. The

regionʼs capital, Kharkiv City, is creating a new one-stop-shop centre for investors, which will provide all kinds of business support as well as transparent, streamlined procedures for business creation.

in april this year, a study by Kiev international university ranked Kharkiv ukraine’s most attractive region for international investors thanks to its natural resources, infrastructure development, manufacturing capabilities, business climate, the transparency and efﬁciency of government authorities, control of corruption, and business optimism.

international conference highlights region’s investment appeal highlighting its international perspective on economic development and its openness to global partnerships, Kharkiv hosted an international conference on “innovations, investments, Kharkiv Initiatives” in September in 2013 for the ﬁfth straight year. the event has become one of the top international business meetings in ukraine. in 2012, more than 400 representatives from 17 countries attended the conference, which is organised each year by the Kharkiv regional state administration, Kharkiv City Council, the state agency

for investment and national projects of ukraine, and pricewaterhouseCoopers. Kharkiv has already attracted signiﬁcant foreign investment in many sectors. the region’s leading industrial sectors are manufacturing machines and equipment; developing and producing aerospace products and technologies; electronics; pharmaceuticals; chemicals; energy; wood products; and food processing, among others. Kharkiv also has a productive agricultural sector. Kharkiv launched a “special regime of investment activities” around 10 years ago to promote investment in targeted sectors, including machine-building, metallurgy, energy, gas and water transmission, metal and metal waste processing, waste treatment and other activities.

World-class research institutions investors in Kharkiv can count on high-quality human resources as well as solid scientific research. The region has long been known as a hub for education and research in ukraine, and Kharkiv’s piatykhatky technology park has been developed as an ideal base for high-tech companies. according to investment-promotion agency investukraine, Kharkiv’s most competitive sectors with investment appeal include manufacturing machinery for the energy sector, including projects to generate energy as well as improve the efficiency of energy use and transmission; aviation and aerospace, thanks to the region’s research and production facilities in this field as well as its history of international aviation partnerships; manufacturing complex machinery and equipment; pharmaceuticals; research and development centres; agriculture; and food processing. Kharkiv welcomes more international business ties.

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Kharkiv

Kharkiv Business Group Welcomes international investors many initiatives in place to assist businesses and the local business climate continues to improve. European Times: Can you describe the EBA’s main activities and services? Irina Konovalova: We serve member companies here in the region. We host regular meetings, round-table discussions and social events for our members. We also have committees and a working group that brings together companies with the same interests so that they can work together to identify any problems and ﬁnd solutions. We invite 25 to 30 top managers here every month to discuss business issues. European Times: Do you partner with local government? Irina Konovalova: the eBa has developed strong links with the regional government, Kharkiv City Council, the state tax administration, the Kharkiv Chamber of Commerce and industry, and various foreign consulates. Kharkiv’s government is extremely open and cooperative. We also work closely with local universities because we want to share our european business style and experiences with them. Foreign companies doing business here sometimes have problems with taxes, customs and legal procedures, so we have committees to help them overcome obstacles. We also try to involve foreign companies in regional projects.

Irina Konovalova, Regional Manager of the European Business Association (EBA) of Kharkiv, discusses the organisationʼs services for the regionʼs business sector.

European Times: What are the EBA’s main goals? Irina Konovalova: The EBA ofﬁce in Kharkiv was founded in 2004 to serve as the ideal local partner for local and international companies active in the region. our government is committed to supporting private-sector development, which is why there are

European Times: What is the EBA doing to keep investment ﬂowing in? Irina Konovalova: We have several educational projects designed to enhance the professional skills of our member companies’ management and personnel. We also provide updates on the latest research of interest to the business sector. We focus on implementing the best international standards into the ukrainian private sector. European Times: What is your personal message to potential investors? Irina Konovalova: We had a huge investment boom here in Kharkiv in 2012 which involved the construction of new hotels, a stadium, a golf club and an airport. in addition, our roads were upgraded. the government is attracting a lot of businesses to the region and we are convinced this trend will continue. i urge investors to come here and see for themselves what we have to offer. Welcome to Kharkiv!

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UKRAINE

Innovative Book and Media Club Growing Fast plus a free book when they join the club. Members choose their books from the Family Leisure Club catalogue, which is constantly being expanded. The company partners with the Ukraine postal service, Ukrainian authors and publishing professionals in other countries who recommend books which might interest the club’s readers.

Family Leisure Club brings high-quality books and other

leisure products to the Ukraine market

around

and

the

customers

region.

The

company, founded in 2000, is now a fully owned subsidiary of

AG.

Germanyʼs CEO

explains,

Bertelsmann

Oleg

“We

Shpilman

handle

the

entire value chain in terms of

book production, publishing and distribution. We publish 16 million copies of books

in Ukraine and have around

a 30% share of the national consumer book market.”

Oleg Shpilman, CEO

Family Leisure Club distributes its products through mail order, 82 club shops located throughout Ukraine, and the Family Leisure Club website. The company now has 1.8 million club members in Ukraine, 500,000 in Russia, and 150,000 in Belarus. Its headquarters are in Kharkiv, which offers easy access to the Russian and Belarus market as well as to Ukraine. “Our 12,000-sq-m distribution centre in the Dergachevsky district in the Kharkiv region is the biggest book-distribution hub in the country,” Oleg Shpilman says.

Extensive catalogue of books to choose from The club’s members agree to buy at least four books per year and can count on a special discount on three books

194

While Family Leisure Club focusses on printed books it is also expanding into other leisure products. Oleg Shpilman points out, “One of our main challenges is piracy, so we are creating a Virtual Library, where books are placed online for a short time and are password-protected. We have developed a very strong and growing market, and our customers are loyal to us. We get many new customers through word-of-mouth advertising. We are continually looking for new products which might interest our members, including cosmetics, and we have formed a partnership with Bottega Verde.” Family Leisure Club aims to continue to expand its customer base, not only in Russia, Belarus and Ukraine but also internationally. Oleg Shpilman says, “Our goal is to serve Russian-speakers worldwide, and we welcome more international partnerships.” He adds, “Our company is very transparent and has an excellent track record. Investors should not be afraid to do business in Ukraine, which has enormous potential in many sectors.” Book Club “Family Leisure Club” Gagarina ave 20-A 61140 Kharkiv Tel: +38 057 783 8888 support@bookclub.ua www.bookclub.ua

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Kharkiv

Leading equipment manufacturer expanding its export markets

Kharkov Tractor Plant is making an important

market,

growth. The company produces a wide range

production to markets throughout the CIS

contribution to the Kharkiv regionʼs economic of tractors and other industrial equipment, and achieves around €100 million in sales per year. The plant produces for the domestic Ceo Vladislav Gubin points out that Kharkov tractor plant produces tractors with a capacity of 125 horsepower up to around 300 horsepower. the company also manufactures a frontloader and recently began to produce a cutting-edge ts10 bulldozer to be used for construction and road projects. he says, “the most important sphere for us is the agricultural sector, but we also produce equipment which can be used for utilities projects for municipalities.” modern production processes using toyota technologies Kharkov tractor plant continuously upgrades its production processes and will launch a new system in march 2014 which the company developed in partnership with Kharkiv polytechnical institute. Kharkov tractor plant has its own design and technical division and is

particularly

large-scale

farming

operations, and exports around 80% of its

region – particularly Russia, Georgia and

Kazakhstan – as well as to Africa and, more recently, Cuba.

currently standardizing its work stations using a Japanese system from toyota. in fact, the company is partnering with toyota extensively in its current plant upgrade. Vladislav Gubin explains, “using toyota systems, we are increasing our production capacity and making our operations more efﬁcient. We are also adopting energy-saving technologies. representatives from toyota regularly visit our plant to train our specialists in operating these new systems.” Vladislav Gubin says that Kharkov tractor Company’s growth strategy involves producing 1,000 tractors per year. the company also aims to export to eu markets while also boosting its exports to countries in africa and elsewhere. he says, “We will be equipping our tractors with new

engines and transmission systems which meet the highest eu and international standards. We are also developing new cabins for our tractors.” Kharkov tractor Company aims to produce even better products in the future while remaining very competitive on prices. as Vladislav Gubin points out, “this is a transparent company and we provide good working conditions for our employees. We always fulﬁl our orders on time and have good relationships with our customers. We invite prospective customers, investors and partners to visit our factory and see for themselves what we are accomplishing here.” JSC Kharkov Tractor Plant 275 Moskovsky Prospect, 61007 Kharkiv Tel: +38 057 715 1322 www.xtz.ua

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master uKraine reGio

World-Class Generators and electrical Components for Global markets State Enterprise Plant “Electrotyazhmash” has been

manufacturing

top-quality

electrical

products since 1946, and was the only company

in the Soviet Union capable of producing traction

electrical

equipment.

Today,

the

dynamic enterprise, based in Kharkov, plays a leading role in Ukraineʼs economy; it achieved approximately €87 million in sales volume for the ﬁrst part of this year and plans to reach

€158 million by the end of 2013. In 2012 sales totalled approximately €135 million.

Vladimir Glushakov, Director, explains that electrotyazhmash has not only successfully made the transition to a free-market economy but is also holding its own in an increasingly competitive global market. he says, “We produce turbogenerators, hydrogenerators, large electric machinery and traction electrical equipment. the electrical equipment can be manufactured quickly but each turbo and hydro generator takes over a year to produce. today the company’s production capacity allows the manufacturing of 7-8 turbogenerators, 5-6 hydrogenerators, including generators of more than 500 mW every year. We design every generator individually to meet the customer’s individual speciﬁcations.” electrotyazhmash’s generators have earned a stable and good reputation for quality and reliability, and the company has won many international tenders. Dmitriy Kostyuk, First Deputy Director, says, “We have won tenders in competition with siemens, the World Bank and General electric thanks to our combination of quality and attractive prices.” the company also produces motors for electric transport which can operate in temperatures from minus 50° C to plus 50° C (-58° F to +122° F). electrotyazhmash is the only enterprise of its kind in the Cis (the Commonwealth of independent states) region and is looking forward to strong continued growth in the future. it has launched an approximately €8 million development plan

196

during the ﬁrst half of 2013. Annually, Electrotyazhmash plans to increase investments to purchase new equipment. one of its goals is to contribute to ukraine’s drive to reduce its reliance on nuclear power and to further develop its hydropower potential.

Boosting exports, including to the eu electrotyazhmash also plans to boost its exports. it already sells its products in 50 countries, with most of its electricalequipment exports going to the russian market and part of it to pakistan while most of its hydropower-products exports go to mexico and turbogenerator exports go to india. in addition, electrotyazhmash recently exported 200 electric motors to the company ‘Luganskteplovoz’ for the further manufacturing of diesel locomotives for mongolia. Dmitriy Kostyuk aims to increase the company’s exports to eu markets. he says, “the Cis countries are our company’s main partners nowadays. however, i note that we are open for cooperation with any other companies in any country. electrotyazhmash strives to nurture and expand the geography of partnership, that’s why the eu countries are strategically important and attractive markets for us. For instance, we actively work in the markets of

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Kharkiv

Latin america, india and asia. thanks to our proven performance and attractive prices, we can offer many advantages to international partners.”

productive international partnerships electrotyazhmash already works with components suppliers in Finland, Germany, the us and italy and has acquired generators from siemens and General electric. “thanks to this state-of-theart equipment, we are able to double our production capacity in our eight production facilities,” Dmitriy Kostyuk says. the collapse of the soviet union led to a crisis in electrotyazhmash, but it has strongly rebounded through reinvesting all proﬁts back into improving its production performance. Vladimir Glushakov says, “Companies from the former soviet union sometimes have a bad reputation for inferior reliability, but that is deﬁnitely not the case for Electrotyazhmash. our customers know we work to very high standards, and our products are much stronger than the industry average.” electrotyazhmash also excels at customer service and offers a 40-year service life on its products. Vladimir Glushakov points out, “We even provide a repair contract for new equipment that allows for free repairs over a certain period. not many companies give their customers such advantageous conditions.”

top-quality human resources electrotyazhmash has more than 6,700 employees and operates its own design centres, one focussing on electric machines and the other on turbogenerators, hydrogenerators and traction electrical equipment. it puts the focus on attracting high-quality human resources, including ukraine’s best young engineers. “We offer good working conditions and high salaries,” Vladimir Glushakov explains. electrotyazhmash’s location in Kharkov is deﬁnitely an advantage in attracting talent thanks to the city’s well-developed infrastructure, strategic location, many educational institutions and advanced research centres.

ambitious growth plans Dmitriy Kostyuk points to the fact that electrotyazhmash possesses huge potential, still for its complete usage investments are needed. he says, “Currently the company doesn’t receive third-party funds, and invests only its own funds. For further progress and fulﬁllment of growing demands to the products quality and manufacturing terms, the company requires investments. With adequate investment and new technologies, we know we can compete equally with global leaders in our ﬁeld.” along with promoting its own products, electrotyazhmash aims to serve as an example of the potential of ukrainian companies to be competitive in international markets. Vladimir Glushakov concludes, “We are committed to establishing a positive international image not only of our company but also of Kharkov and ukraine.” state enterprise plant ‘electrotyazhmash’ specialises in the development of powerful hydrogenerators, hydrogenerator-motors, turbogenerators for thermal power plants and nuclear power stations, electrical motors for rolling mills, mine hoists, water pumps of irrigation channels, traction electrical equipment for railway and urban transport. sep ‘electrotyazhmash’ manufactures products for customers all over the world: for european countries, russia, india, Kazakhstan, panama, mexico and others. State Enterprise Plant “Electrotyazhmash” 299 Moskovsky ave., 61089 Kharkiv Tel: +38 0577 27 5001/02 etm@spetm.com.ua, www.spetm.com.ua

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uKraine

• Kherson: Green and Growing Fast

Kherson

“Foreign investors should know that we welcome them and are ready to cooperate with them.” Mykola Kostyak, Governor of the Kherson region

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Kherson sector

Kherson region the territory of health Ukraineʼs Kherson region — known for its clean,

green, unpolluted environment — aims for its agriculture,

tourism

and

renewable-energy

sectors to be key economic drivers.

mykola Kostyak, Governor, explains, “agriculture, including livestock production, and health tourism are without question our most interesting sectors for investors today, and we can offer agricultural land and building land for tourism projects. We started two green-energy projects in skadovsk in 2012 and we are also building new tourism infrastructure on Kherson’s azov sea and Black sea coastlines.” Kherson has signiﬁcant potential to develop its agriculture sector, especially organic production, and is already ukraine’s top rice-producing region. in fact, ukraine is ranked the 16th-biggest rice producer in the world and much of that rice is grown in Kherson.

Mykola Kostyak, Governor of the Kherson region

successful export-oriented projects

should know that we welcome them and are ready to cooperate with them.”

mykola Kostyak welcomes international investors. he points out, “two of Kherson’s successful export-oriented agriculture projects are Chumak, which produces ketchup, and agrofusion, which produces tomato paste. Concerning health tourism, we have around 200 health centres, among them there are 150 centres for children, and we attract around 800 health-tourism visitors per year. in 2011 skadovsk was named as ‘City of national importance’.

Kherson already has investors from austria, France, Greece, Czech republic, the us and russia as well as from ukraine. Mykola Kostyak says, “We are deﬁnitely looking to attract more investors from the eu, for example France and the netherlands. one plus for Kherson is that our roads are among the best in ukraine. our favourable climate allows us to keep our roads in better condition than in other parts of the country.”

Kherson’s government is doing everything possible to provide a business-friendly environment for investors and has signiﬁcantly streamlined procedures for starting a business. the Governor says, “We are attracting investors who would not have come here ﬁve years ago before we improved our business climate. new investors include Dunapak, Danone and various agricultural, infrastructural, commercial and entertainment projects. Foreign investors

Kherson’s economy has evolved with the support of foreign investors and has now entered a new phase. mykola Kostyak explains, “ten years ago we needed the know-how and practices brought to us from eu countries such as the netherlands. today, we have developed technologies and practices ourselves and we are exchanging these practices and experiences with eu countries. i invite eu investors to come to Kherson – region of unlimited opportunities.”

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uKraine

Kherson is a green region focussing on developing its agriculture, innovative industry, tourism and renewable energy. It is located in southern Ukraine

bordering the Black Sea and the Azov Sea. Covering around 28.5 sq km, Kherson makes up around 4.7%

of Ukraineʼs total territory. It has 18 administrative

districts, 658 settlements and three main cities: Kherson City, the capital, Novaya Kakhovka and Kakhovka. Kherson City is known for its many parks

and gardens as well as for its lively cultural scene and services for the private sector.

Kherson: Green and Growing Fast thanks to fertile soil, one of the warmest climates in ukraine and low use of chemical fertilisers and insecticides, Kherson’s agriculture sector has excellent investment potential, particularly for organic agriculture. the region is already ukraine’s number one producer of rice and a top producer of tomato products. Kherson has ample water resources for agriculture thanks to the Dnipro and ingulets rivers, two of ukraine’s main waterways, and 17 other rivers as well as the sivash and Kakhovla reservoirs. Kherson’s agriculture sector is already drawing FDi. in July 2013, global dairy-products giant Danone announced that it was investing in a new distribution centre in Kherson adjoining Danone’s existing operation there, Danone Dnipro. the plant, set to open in november 2013, will store and distribute products from three Danone plants to markets throughout southern ukraine.

Well-developed transport infrastructure includes two ports adding to the region’s investment appeal, Kherson has a well-developed transport infrastructure which includes

100

two ports, at Kherson City and skadovsk, as well as road, rail and air connections. Kherson City is a rail hub for ukraine’s main rail link to moscow and other destinations. Kherson has become a very successful exporter of a range of products, including machinery, equipment, transport vehicles, wines, fruits and vegetables and others. Kherson’s leading industries are food processing, machinery manufacturing and oil reﬁning. Other thriving industrial sectors are energy, the production of glass and porcelain, milling of grains into ﬂour, light industry, manufacturing construction materials, paper production and chemicals. recent projects in the region include several new initiatives in the renewable-energy and tourism sectors, including new tourism infrastructure along Kherson’s Black sea and azov sea coastlines. Kherson recently hosted an international business conference sponsored by usaiD, which highlighted the investment appeal of the region’s highly developed agro-industrial enterprises. Kherson welcomes foreign investors.

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• Nikolaev: Centre of Agriculture and Industry • Nikolaev: Ports Add to Dynamic Region’s Investment Appeal

Nikolaev

“Our region is responsible for 10% of all the wind power in Ukraine.” Gennadiy Nikolenko, Deputy Governor of Nikolaev

101

the european times

uKraine

nikolaev: Centre of agriculture and industry Gennadiy Nikolenko, Deputy Governor

Nikolaev,

discusses projects underway in

one

Ukraineʼs

most

rapidly developing regions.

European Times: What makes the Nikolaev region unique? Gennadiy Nikolenko: our region is multinational, home to around 110 nationalities. Leading companies here include sandora, Lactalisnikolaev, nikolaev marine auction port, nikolaev aluminium plant, Delta-pilot, nika-tera seaport, and oktyabrsk seaport. the region is also the base for Zorya-mashproekt, which produces 100% of all the gas turbines manufactured in ukraine and works with russia’s Gazprom and other international partners. in the agriculture sector, we have agrofusion, which manufactures many tomato products, mainly for export, and is ukraine’s leading producer of tomato paste. nikolaev and ukraine’s Kherson region are considered to have exceptional conditions for growing tomatoes, according to the World Bank. European Times: What are some of the region’s current projects? Gennadiy Nikolenko: our region is responsible for 10% of all the wind power in ukraine. We are actively developing our renewable-energy sector

1102

Gennadiy Nikolenko, Deputy Governor of Nikolaev

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nikolaev sector

to attract more investment. We launched 15 solar-energy plants in the ochakovskom district in 2011 and 2012, each with a capacity of 2.5 mW. this considerably strengthened our power potential. now we plan to develop three wind farms in Berezanskom, in the ochakovskom district, to further increase our power resources. in addition, we have built a 29-mW solar-power plant in Voznesensk and we are building solar plants in Berezanskom, Kazankovskom, snygyrevskom and Bashtanskom. nikolaev produces around 300 mW of energy from renewable sources, and we aim to increase that total to 700 mW from solar and wind power. Developing our renewable-energy sector will not only add to the region’s power resources but will also attract considerable investment, create new jobs, develop our infrastructure and support important social projects. European Times: How is the region contributing to Ukraine’s national development plans? Gennadiy Nikolenko: nikolaev is playing an important role in ukraine’s development strategy. in 2013 and 2014, for example, we are expanding our shipbuilding activities and building a new bridge and a bypass around the city of nikolaev that will greatly improve traffic flows and environmental protection. We have been partnering with the Japanese company Jica in this project. We are also developing our rail infrastructure. We want to build on nikolaev’s strategic location to position the region as a transport hub which will handle more than 50 million tonnes of cargo. European Times: How are you protecting the environment and agriculture while pursuing industrial growth? Gennadiy Nikolenko: ukraine is a european country and we have adopted strong environmental-protection legislation, including penalties for violators, in both the agriculture and industrial sectors. these two sectors work together to achieve economic growth. our environmental legislation helps us to minimise the negative inﬂuences of different economic sectors on each other and on the environment.

For example, we can use land unsuitable for agriculture for operations like shlamokbranillsche, which processes industrial wastes into water which can be used in our nikolaev aluminium plant. We can also treat industrial wastes to clean up the environment.

“Our most important asset is our people. We welcome European investors and are ready to partner with them.” European Times: Why should international investors choose Nikolaev? Gennadiy Nikolenko: one of nikolaev’s strong points is its exceptional transport infrastructure by road, rail, water, airlines and pipelines. a distinctive characteristic of our infrastructure system is our river transport on the Dnepr, south Bug and ingul rivers, which join the Dneprovsko-Bugskiy navigable waterway connecting the Baltic and Black seas. nikolaev also has significant research potential thanks to our three universities (V.a. suhomlinskiy university, and universities specialising in agriculture and shipbuilding), which attract many foreign students. many of our graduates are now working on major international projects. nikolaev also has great tourism potential, including north prychernomorya, beach resorts on the Black sea (such as Koblevo, rybakovka and ochakov), canyons, rivers, salt lakes and health spas benefiting from our natural springs and from the therapeutic soil of the tylygulskogo and Beykushskogo estuaries. nikolaev is also known for its pure, unpolluted agricultural lands where high-quality products are grown. our most important asset, however, is our people. We welcome european investors and are ready to partner with them.

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nikolaev ports add to Dynamic region’s investment appeal Nikolaev in southern Ukraine on the Black Sea

is one of Ukraineʼs top regions for agriculture, industry and transport. Covering some 24,500

sq km, the region makes up around 4.1% of

Ukraineʼs total territory. It is crisscrossed by around 85 rivers and streams.

nikolaev’s seaport is ranked the top port on the Baltic sea and one of the biggest in eastern europe. the port was the soviet union’s leading shipbuilding centre, and shipbuilding remains one of nikolaev’s main industrial activities. the region’s transport infrastructure is highly developed and includes regional and international connections by rail, road, air, and inland waterways as well as by sea. the navigable Dnipro, south Bug and ingul rivers join the Dneprovsko-Bugskiy waterway connecting the Baltic and Black seas in nikolaev. nikolaev has varied geographical features made up of steppe, forests, marshes and farmland as well as a sea coast. it also has many artiﬁcial reservoirs used primarily for irrigation of agricultural enterprises. thanks to its fertile soil, mild climate and ample water resources, nikolaev has developed a prosperous agriculture sector and, along with its neighbour Kherson, it is one of ukraine’s top exporters of tomato products.

Crossroads for international trade by rail, road, sea and air an ancient crossroads for regional and international trade through its ports and trade routes, nikolaev has always had a very international culture and is very oriented towards global partnerships. the region has 19 administrative districts and ﬁve cities, including Nikolaev City, the regional capital, as well as Yuzhnoukrainsk, pervomaysk, Voznesensk and ochakiv. nikolaev’s natural resources include materials for construction (clay, limestone and others), forests and fertile farmland. the industrial sector is dominated by machine building, shipbuilding, non-ferrous metallurgy, aluminium, food processing, dairy products, ﬁshing and light industries.

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nikolaev’s Zorya-mashproekt plant produces 100% of all the gas turbines manufactured in ukraine and partners with Gazprom and other international enterprises. the region is a leader in ukraine in energy production, including renewable energies. nikolaev produces 10% of the wind power generated in ukraine and is building new windpower plants in addition to several solar-power facilities. tourism is another fast-growing activity thanks to the region’s beaches, resorts on the Black sea, lakes, rivers, unspoiled forest reserves, mild climate and many natural mineral spas. the region also offers high-quality human resources, many research centres and world-class educational institutions. nikolaev’s business-friendly government is ready to partner with international companies and investors.

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• Zhytomir Achieving Impressive Growth Rates • Rapidly Growing Economy in Northern Ukraine

Zhytomir

“Zhytomir offers many opportunities to investors and we welcome you to visit us.” Sergei Rizhuk, Governor of Zhytomir

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Zhytomir achieving impressive Growth rates Zhytomir - Dam on the Teterev river

Sergei Rizhuk, Governor of Zhytomir, discusses his regionʼs ﬂouring business and trade activities. European Times: What are some recent developments in Zhytomir’s economy? Sergei Rizhuk: Zhytomir has welldeveloped industrial and agricultural activities which are very profitable. our leading sectors besides agriculture are heavy engineering, machine-building (including agricultural machine-building), the metals industry, consumer-goods manufacturing, food-processing, and minerals and mining. the region as a whole has achieved an average 15% to 21% annual economic growth for the past four years, and we expect our growth rate for 2013 to be over 15.5%. this

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makes Zhytomir ukraine’s secondfastest-growing region. in the agriculture sector, we raise a wide variety of crops, such as wheat, rye, barley, cereals, rapeseed, flax and sunflowers. other regions in ukraine grow mainly wheat and corn, so our diversity is an advantage. Zhytomir has thriving export activities and has formed business partnerships with 99 countries. thanks to the region’s healthy economy, we have been able to make significant investments in social projects. European Times: Which sectors offer the greatest potential for foreign investors?

Sergei Rizhuk: our current priorities in the agriculture sector are to develop our livestock production, organic farming and crops production. one of the region’s advantages is that it has a great variety of land, including 1 million hectares of pasture and farmland suitable for organic agriculture. We also want to see growth in our mining, construction materials and other industrial sectors, as well as new activities such as flax-processing, recycling and renewable energies. our minerals resources include titanium as well as titanic iron-ore, which is found only in scandinavia, California, africa and Zhytomir. We also have unique peat bogs and our construction industry benefits from our indigenous materials. our oberbeton plant produced all the materials for the construction of the euro 2012 stadium and other projects and employs cutting-edge technologies. European Times: Why should foreign investors target Zhytomir? Sergei Rizhuk: our region has already formed many international partnerships and has the potential to increase its economic growth four or five-fold over the coming 10 to 15 years. over the past three years alone, we have tripled our total production and are looking to triple it again. We are located only 130 km from Kiev, which means we have a large market for our food products, and we built a new highway to Kiev for euro 2012. We also have a good highway to Warsaw. Zhytomir offers many opportunities to investors and we welcome you to visit us.

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Zhytomir

rapidly Growing economy in northern ukraine Zhytomir, an ancient land where Palaeolithic settlements ﬂourished,

is known for its great natural resources, including minerals, forests and fertile farmland. Located on Ukraineʼs northern border, the region

that is now Zhytomir was part of the Grand Duchy of Lithuania in the 16th century and then became part of Poland. It has always enjoyed strong ties to European cultures.

Zhytomir Region

Ofﬁcially founded in 1937, Zhytomir covers 29,900 sq km, or around 4.9% of ukraine’s total land area, making it one of the biggest regions in the country. its capital is Zhytomir City; other cities are Baranivka, Berdychiv, Korosten, malyn and novohrad-Volynskyi. the region has a varied geographical mix made up of the slovechansko-ovruchskyi mountain range, forests and fertile farmland. it is crossed by several rivers, all part of the Dnipro river system.

15.5% GDp growth in 2013 Zhytomir has been growing rapidly and has averaged around 15% to 21% annual growth over the past four years. regional leaders expect Zhytomir’s GDp to increase by more than 15.5% in 2013 and to grow ﬁve-fold

over the next 15 years, making the region the second-fastest-growing in ukraine. Zhytomir has tripled its production capacity over the past few years thanks to the implementation of new technologies and production processes; capacity is expected to triple again. the region has a very diverse agriculture sector, which includes a variety of crops (wheat, rye, barley, cereals, rapeseed, ﬂax and sunﬂowers) as well as livestock production and dairy farming. Current goals include increasing organic farming in the region’s one million hectares of farmland, producing new types of crops, and boosting crop and livestock production. Leading mining,

industrial sectors include construction materials

(including cement plants), renewable energies and food processing. minerals resources found in the region range from coal and peat bogs to precious stones and limestone. titanic iron ore is also found here, among just four locations on the globe. Zhytomir has already formed many global partnerships and welcomes international investors. the region has a well-developed transport infrastructure, which includes a new highway to Kiev (only 130 km away) and a modern highway to Warsaw. Connections to odessa, minsk, moscow, saint petersburg, and on to Western and Central europe are efficient thanks to road, rail and air links. Zhytomir has positioned itself as a very attractive business base and investment target in ukraine.

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• Industrial Hub with Well-Established Global Trade

Lugansk

“We expect that Europe can help our region improve its standards and production capacity.” Vladimir Pristyuk, Governor of Lugansk

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Lugansk

Lugansk: thriving industrial region Welcomes eu partners European Times: Why should investors target Lugansk? Vladimir Pristyuk: the region has many cities with universities, which means that highly qualified human resources are available anywhere. Lugansk also has extensive natural resources, including coal. our private sector is well developed and very open to working with investors and partners from the eu and beyond. many of our companies are already exporting their products worldwide and welcome investors and partners which can help them upgrade their technologies and boost their production capacity. We are currently negotiating with european funding organisations for support for modernising our power and heating infrastructure. another advantage of the Lugansk region is that our local government is eager to assist new investors. We have already attracted many investors from poland, austria, russia and Germany.

Vladimir

discusses

Pristyuk, his

Governor

regionʼs

strengths

openness to investors from the EU.

Lugansk, and

its

European Times: How would you describe the Lugansk region? Vladimir Pristyuk: Lugansk is a thriving industrial region ranked third in the country in economic development. We now have more than 3,000 companies operating here. Lugansk is also very international and is the home of some 120 nationalities. thanks to this international environment, our region has established extensive global business connections. the region’s economy is diverse and includes coal mines, manufacturers of trains and machinery, food production and more. to highlight the region’s advantages and attract more investors, we are working hard to create a Lugansk brand.

European Times: What is the regional government doing to strengthen Lugansk’s ties to the EU? Vladimir Pristyuk: We are sending our students to europe on exchange programmes so that they will learn about the european approach to business. in addition, since Lugansk is rather far from the eu border, we are emphasizing improving our transport infrastructure. as a further service to investors, we are currently creating a one-stop-shop centre designed to streamline the investment process. European Times: What will be the effects on Lugansk of the proposed trade agreement between the EU and Ukraine? Vladimir Pristyuk: if the agreement is signed, eu investors will come here and see our highly trained workforce, well-established infrastructure and legislation which protects investors. europe is interested in ukraine for its agricultural and other resources, and we are looking for partnerships and technologies. We expect that europe can help our region improve its standards and production capacity. We urge investors to come here and see for themselves what Lugansk can offer.

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industrial hub with Wellestablished Global tradeties and is served by rail and road links to destinations through ukraine, russia and beyond. the region shares borders with the Belgorod, Voronezh and rostov regions of russia.

rich and varied natural resources Lugansk’s rich minerals resources include over 4 billion tonnes of coal as well as limestone, clay, gypsum, and other products used for construction. the region also has natural gas, gold, silver and other mineral deposits. Leading industrial sectors are coal mining, petrochemicals (including oil reﬁneries), machine building, metallurgy, chemicals (including the production of fertilisers), timber, textiles and energy production. Lugansk, on Ukraineʼs southeastern border, is a

prosperous industrial centre which has forged many

international

partnerships.

Ranked

Ukraineʼs third-fastest-growing region, it has around 3,000 companies and is home to many nationalities. Lugansk is sometimes referred to

as the “China of Ukraine” for its high growth rate and its exceptionally productive workers.

the region’s modern economy dates back to 1790 when a cannon factory began to melt iron and produce cannons in what is now Lugansk. Gradually more industrial enterprises were launched in the area and a comprehensive road and rail transport infrastructure was developed to support them. By the late 19th century, the region was known for its production and repairs of railway locomotives, carriages and equipment. smokehouses, breweries, distilleries and tanneries began to operate as well. From this strong foundation grew Lugansk’s contemporary industrial sector, which exports its products worldwide. Lugansk was ofﬁcially created in 1938. It is strategically located on major transport corridors connecting europe and the Caucasus region. Lugansk has 23 administrative districts and 37 cities, and its capital is Lugansk City, one of ukraine’s biggest urban centres. Lugansk City has its own international airport

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the region’s leaders aim to attract investors and international partners in a wide range of projects, including water-treatment and water-transmission facilities, heating systems, renewableenergy production, highway construction and new transport infrastructure. Lugansk is also partnering with poland in the €200-million-“agrogorod” project, one of eastern europe’s most ambitious agro-industrial developments to date. Lugansk has many universities and a large pool of skilled human resources. its private sector is dynamic and is committed to adopting the latest technologies and international standards. to help attract more foreign investment, the region’s government continues to improve transport infrastructure and is creating a one-stop-shop investor service. it also regularly hosts international investment forums promoting Lugansk’s signiﬁcant growth potential.

Upcoming Projects:

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