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Ukraine in the new business format through foreigner’s observation and why could you overestimate the role of external advisers


24.04.2020 (№ LDaily #1)

Ukraine in the new business format through foreigner’s observation and why could you overestimate the role of external advisers

Realities, hopes and deep-rooted corruption: how do the European lawyers estimate business processes in Ukraine.

The encouraging and at the same time bribing the evidence and openness conversation with Bartlomey Pshiborovski, the legal adviser of SPS Tax & Law about prospects,  the dark and light sides of the Polish and Ukrainian business.

LDaily: Bartek, you as the European lawyer, what do you think about business processes in Ukraine. How do you estimate them?

B.Pishiborovski: It won’t be a secret if I tell that now in many spheres of activity it is difficult to do with success business in Ukraine. Many of my clients who had decided to open firms in Poland traded often earlier with Russia when opportunities closed to do business there. They began to look for the alternative directions for sale of the products. The market of Ukraine at the moment is too small (Ukrainians have not a lot of money for consumption and the population tries to save) to offset a loss of the market of the Russian Federation. On the one hand, Ukraine adopts laws which, at first sight, reform system but a question, as always, is in nuances which often worsen the  daily business.

LDaily: What of all existing problems are the most urgent? What is  not characteristic to the Polish business and vice versa?  

B.Pishiborovski: Corruption. This is the word which answers many questions. All problems of both the Ukrainian and foreign firms begin with it. It would be possible to write the book how to resolve this issue, but I can tell, relying on the experience of Poland as fought against it at us. It is necessary to resist really to various schemes which exist. In Ukraine, many people don’t know how to do real business because they have earned the money in a grey zone which connected under unclear schemes for many years. People resolved too many issues but not the specific law; always, when a certain official has too much power – there will be a temptation for corruption.

I consider that first of all, the simple, clear legislation in which there will be no place on free interpretation is necessary. In Ukraine there are a lot of young, smart people who didn’t connect under “money laundering schemes” and who are ready to change the country. It is necessary to employ them in various services. They shall receive a good patch and have the prospect of development. Then, step by step, the situation will change.

  1. The uncertainty in tomorrow brings to the fact that businessmen don’t want to do long-term plans and concentrate on today. If there are means, they diversify risks and often open the entities abroad.
  2. The “raiding” is not clear for the Polish entrepreneurs. It is difficult to explain that on Monday someone is the owner of the firm but on Friday he solves nothing anymore because another founder appears in the register.
  3. For the Polish firms, it is difficult to understand the restriction on currency transactions. Their entrepreneurs got used to easy access to currencies and money without restrictions.

LDaily: In your opinion, are there  preventing actions  which could secure the company against similar problems?

B.Pshiborovski: From the point of view of the Polish entrepreneurs, it is necessary to check precisely the business partners, to ensure transactions, to work only on an advance payment. 90% of all problems arise because the Polish firm ignored one of these points.

LDaily: How do you consider, does “the culture of business” take root in Ukraine?

B.Pshiborovski: I have practically only those clients about whom I can tell that they have a culture of business, often very high. Firms which do the international business quickly acquire the good practice of conducting business activity.

The mentality of businessmen in Ukraine constantly changes and I am sure that it is only a matter of time and experience in trade with other countries when it reaches the European standard (and in many cases — has already reached (smiles).

LDaily: Are external consultants services widespread in the Polish business environment ? Isn’t such practice especially popular in Ukraine and applies only its large companies?

B.Pshiborovski: Medium and big business always use services of lawyers and tax consultants. Small firms often come to us when a mistake already made which it is necessary to solve and it was possible to avoid. But from this point, they continue to use services of professionals because they already understood that it is better to pay 50 euros for consultation than to make one more mistake for 30 000 euros. By and large, the tendency to using services of lawyers grows.

LDaily: What is the most perspective in Ukraine and Poland  business direction from the point of view of the foreigner?

B.Pshiborovski: It seems to me that there are several areas in which Ukraine can be the interesting partner for foreign firms. First, it is the IT services.The Ukrainian information scientists are very talented people and have knowledge of high level. Besides, for this purpose like services the customs, transport, etc.It isn’t necessary, that is all points which are a problem in other areas leave.

Secondly, food and agricultural products and semi-products are high-quality also cost cheaper than in Poland; the most important is  to receive all necessary certificates for their sale in the territory of the EU. Besides, there are many other quality Ukrainian products which, in the case of good marketing and the price, can win in comparison with the Polish.

Rather Polish perspective products:the IT area develops  very well (including, computer games) and, probably, this tendency will extend. Also, Polish products which appeared the  export hits are furniture, windows (Druteks, Oknoplast), plumbing fixtures (Kolo, Cersanit) and also buses, trams (Solaris, PESA), footwear (CCC), KGHM (production of silver and copper). Success to these firms didn’t come in one day. He proved that in many fields of business the former country connected in the past with the USSR can compete in the world markets. I am sure that within several years we will speak also about the Ukrainian firms in the same context.

LDaily: It would be desirable to hear from you a personal experience about basic distinctions of business in Ukraine and Poland: what especially does  attract in Ukraine and what does push away?

B.Pshiborovski: The most important distinctions and what pushes away from investments into Ukraine are, certainly, the fact that in Poland:

  • there is no concept “raiding”;
  • corruption at a low level is the state actively and really counteracts it;
  • there are no currency restrictions;
  • there is no restriction of 90 days for transaction closing;
  • cheap money (in comparison with Ukraine) and availability of different types of financing;
  • rather stable legislation;

— a bad infrastructure in Ukraine (at the moment).

Ukraine attracts the fact that it is possible to find an educated, hardworking labour power, at very competitive rates. The country slowly but changes and there is a hope that in some areas will reach Poland soon.

LDaily: What,  would you advise to the investor doubting investment into Ukraine and the investor who reflects on “entry” into Poland?

B.Pshiborovski: I would advise the investor very carefully to check the partner and to diversify all possible risks but not to be afraid to come into Ukraine because there are areas in which it is possible to earn money.

To the Ukrainian investor, I would advise not to be afraid of investments into the EU, to make the realistic business plan and not to have complexes.At the same time to be ready to the competition (on market conditions) from other entrepreneurs.

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