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EXPERT OPINIONS

31.03.2020 Analytics

What are the prospects for the development of foreign and domestic business in Ukraine in the next three years?

Petro Rondiak, the Chairman of the Board of Winner Group Ukraine

At Winner, we have always been optimistic about the prospects of Ukraine. Our investments reflect the long-term intentions for staying in the country. In the next three years, we look forward to implementing the reforms proposed by the current government, especially in the judiciary and the rule of law. Since July 2019, we have already seen a double growth in sales of new cars.

 

Viktor Shevchenko, the CEO of the ZAMMLER logistics group

I see significant prospects for business development in Ukraine and foreign investment inflow in infrastructure projects in particular. Logistics and warehousing are now a priority. Everything depends on various political and economic processes, including the stability of the national currency, as well as the forecaster USD exchange rate. The investment attractiveness of a business is an indicator of profitability and future return on investment. In warehouse logistics, the rental price is not less than $5.5-6 per one square meter. With a stable dollar exchange rate and the rental price of $6 or more, the positive conditions stimulating the enormous flow of investment in the construction of warehouses will be formed. We should add infrastructure – roads and interchanges, and Ukraine will finally start making money on transit cargo shipments to and from east. The tendency for developing business and attracting investments is positive, but at the same time a potential investor should get an understandable project, have a clear algorithm of actions and at least be aware of the volume of investments and understand the terms of their return.

 

Anna Derevianko, the Executive Director of the European Business Association

In my opinion, the prospects are good. There are no radical changes in business. The current government has every intention of harmonizing Ukrainian legislation with EU norms, simplifying the regulatory environment, and improving the entire business environment. There are still some complex basic issues, for example, in the justice system and law enforcement agencies, but these issues have existed before. So, if the government continues its course and supports real transparent investors and entrepreneurs, I believe that the trend for development and improvement of the business climate in Ukraine will continue. There may be discussions about the pace of attracting investmens. If the pace of basic reforms accelerated, the attraction of investment could be more dynamic. However, even if the current pace remains, the economy’s smooth growth and macroeconomic stability must be conducive to business growth.

 

Yaroslav Nitsak, the CEO of Ericsson in Ukraine

Ukraine is confidently moving towards a digital future. Over the last few years, we have seen a rapid leap in telecommunication technology – the extra fast introduction of 3G and 4G. This is a defining step towards the digital transformation of the country. And we still have room for growth.

5G technology is becoming more popular globally. Ericsson now has 24 commercially operating networks. In Ukraine, 5G technology was first tested in May 2019 – Ericsson and Lifecell demonstrated the advanced opportunities of the latest technology. According to the Ministry of Digital Transformation of Ukraine, in the next three years, we can expect commercial implementation of 5G technology, which means automated manufacturing, smart cities, flexible jobs, telemedicine, remote heavy industrial equipment management, etc.

Ericsson has been present in the Ukrainian market for over 120 years. As the world leader in telecommunications, we are ready to continue supporting mobile operators in introducing the latest technologies in the Ukrainian market.

 

Ivan Bechko, the CEO of Kärcher LLC

While answering your question, I should mention many recent positive changes, in particular, in the fiscal and regulatory fields. We can see stable exchange rates and general stability in the banking sector.

Our vision for the near future is based on an optimistic scenario. We believe in positive dynamics in the next three years, given the market growth, the level of wealth of people and positive trends in various economy sectors.

Important factors that will significantly affect the development dynamics are:

— people, especially in the context of retaining qualified staff;

— progress in the fight against corruption;

— judiciary.

As for the plans of Kärcher LLC, we believe in the country and are going to build own modern office center in the next two years, which, in addition to office premises, will include a demonstration and exhibition center, the Kärcher Academy, a service center, a car wash complex.

 

Pavlo Kharchyk, the President of Association of market operators of medical devices

To my mind, it is now a great moment for investing in Ukraine. Today it is a country of active economic development with relatively affordable resources, which boosts the rapid return on investment. As for the medical device market, which is closer to me, I can state that the legislative base is as adapted to the European one as possible, the market is competitive, the state optimally regulates the market. Noteworthy, all this happens with the help of the activities of the AMOMD (Association of market operators of medical devices).

 

Volodymyr Osadchuk, the CEO of COFCO Agri Resources Ukraine

Ukraine is now on the path of rebooting and changing. Today we see many foreign business persons investing in sovereign bonds of Ukraine. We talk a lot about financing but don’t see actions of portfolio investors who are ready to invest in production, technology, and infrastructure. The state, together with local authorities, has to draw conclusions and handle the situation for creating transparency and stability in tax, legal, regulatory, and other areas aimed at protecting producers and investors.

Another factor for business development in Ukraine is competition laws, which will be aimed at creating high-tech production processes, intellectual property, and so on, but with minimal impact on the public or private monopoly companies’ activities.

Recently, many valuable ideas of changes towards attracting and protecting domestic and foreign investors have been declared. We hope that these ideas will be embodied in the legislative and regulatory acts, and every branch of government will make effective decisions to facilitate competitive conditions for attracting investments, as well as safe and transparent business in Ukraine.

 

John Shmorhun, the CEO at AgroGeneration

I see increased interest in Ukraine in many spheres from foreign investors.  There are a number of government projects that are being outsourced such as the Mykolaiv terminal to Qatar, concessions for airports, railroads and roads throughout Ukraine.  Infrastructure projects will stimulate the economy by creating jobs and improving the movement of products.

The agriculture business will only benefit from these investments.  As Ukraine’s exports continue to growth, countries including the EU countries will benefit from high value Ukrainian products.  Brexit will also give Ukraine direct access to the UK which imports much of its food.

I am emboldened by Ukraine’s pace to become a significant player in the global economy.

 

Håkan Jyde, the Managing Director of Scania Ukraine 

Scania as a leading European truck maker has been in Ukraine since 1993, and the past couple of years have been the most successful ones for us during our 27 year history in the country. We remain cautiously optimistic and expect business to improve further, hence we continue our investments in the Ukrainian market in order to be able to properly support our growing base of customers all over Ukraine.

 

Andreas Flodström, the co-founder and the CEO at Beetroot and Beetroot Academy

I’ve been working in the Ukrainian IT sphere for more than 7 years. Throughout my time, I have seen a growing number of investment opportunities. This is a result of Ukraine’s current transition. Old, bureaucratic systems are crumbling and giving way to new, progressive paradigms and European values. Today, people in Ukraine are more open to change. They are actively engaging in building better communities and creating attractive business opportunities for foreign investors. If you dare, now is the perfect window of opportunity to invest in Ukraine, not in 3 or 5 years. It may involve some risks, but the upsides are greater now than years down the road.

The IT sphere is one of the fastest developing branches of the Ukrainian economy and I think it will soon expand even more. In Ukraine, there are many skilled, well-educated, and ambitious tech experts, who continue spurring the country’s economic growth. However, we can also see that business opportunities are mostly concentrated in larger cities like Kyiv, Lviv or Kharkiv, whereas small towns remain underdeveloped. I believe that it is important to step away from this model and focus on the sustainable development of mid-sized cities, nurturing and growing the middle class throughout Ukraine, and providing equal educational opportunities for people in both big and small cities.

Bearing this in mind, here, at Beetroot, we decided to build a network of IT academies that are opening across Ukraine and helping people start careers in IT. We see this as our contribution to the equal development of Ukrainian society while strengthening the IT industry with more talent.

 

Zafer Ozbay, President TUSIB-Union of Industrialists and Businessmen of Turkey and Ukraine

President Volodymyr Zelensky and his goverment encourage foreign investors to invest in Ukraine. There is a huge business potential in all fields. It is good, but there are still difficulties in reality: basic infrastructure needs can’t be provided on time; there is a shortage of qualified human resource; there are still problems in some govermental organizations trying to slow down the realization of investments. Therefore, foreign Investors should not be affraid to work with professional consultancy companies during the preparatory phase and they should analyze all aspects very deeply and carefully before starting the investment.

 

Nadiya Kuziv, the Executive Director of Accountor Ukraine

IT, pharma and agricultural industry will remain the most promising ones. However, the attractiveness level of agriculture for foreign investors will to a certain extent depend on opening up the Ukrainian agricultural land market to foreigners. It is too early to anticipate a certain decision on this issue, as the bill on the land is passing the second reading in the Verkhovna Rada at the moment.

The launch of renewable energy plants built in 2019 and the investments in the infrastructure and the social sphere will ensure the development of alternative energy in the coming years. Since there is no decision on the green tariff so far, the prospects for new investors to enter the Ukrainian market are still unclear.

 

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