Turkish citizens are the most likely to start a business in Ukraine – 396 companies, or 12.9% of the total. Citizens of Uzbekistan are next, owning 312 companies (10.1% of the total). Polish citizens round out the top three, with 224 firms or 7.3%.

The top 10 also includes citizens of the United States, Kazakhstan, Germany, Azerbaijan, Israel, the United Kingdom, and China. It should be noted that one company may have more than 1 owner.

Almost half of the total number of companies with foreign owners were registered in Kyiv – 1 517. Citizens of Uzbekistan most often set up businesses in the capital – 175 companies.

Lviv region is next, with 460 businesses: foreigners from Poland most often settle here (105 companies). Odesa region is also in the top three, with 273 companies. Turkish citizens are the most likely to set up companies – 99 businesses in this region. 

The largest number of companies with foreign owners are engaged in wholesale trade (30.7%), real estate operations (6.7%), and computer programming (5.8%). 

“TENS1MA”, with an authorised capital of UAH 1.28 billion, has become the largest business opened by foreigners since the beginning of full-scale operations. It is owned by an Armenian citizen.

The second position is occupied by JSC “Closed Non-Diversified Venture Corporate Investment Fund “Jugen” with an authorised capital of UAH 700 million. The ultimate owner is a US citizen.

“LFS” LLC, founded by a Polish citizen, rounds out the top three. The company has UAH 300 million of authorised capital. 

by Opendatabot 

Opendatabot – is a service for monitoring the registration data of Ukrainian companies and the court register to protect against raider attacks and control counterparties.

The service combines data from open state registers and provides complete information about a person or company.

Today, the bot is used by more than 4 000 000 citizens, one in four of them daily. Most of them are lawyers, business owners, and journalists.

The post Citizens from more than 100 different countries opened businesses in Ukraine during the great war appeared first on The Ukrainian Review.

From November 21 to December 14, 2023, Slovak carriers blocked trucks passing through the sole crossing point with Ukraine, “Vysne Nemecke-Uzhhorod.

Romanian farmers blocked the movement of Ukrainian trucks through the “Siret” crossing point. On January 15, the blockade of the “Vikovu-de-Sus” crossing point began. On January 18, Romanian farmers initiated a blockade of the “Diacove – Halmeu” checkpoint. However, as of January 20, the operation of these crossing points has been unblocked.

On December 12, 2023, Hungarian truck carriers joined the blockade but did not impede the movement of trucks, limiting their protest activities.

Also, in November 2023, Bulgarian farmers demanded compensation for the war in Ukraine. In Sofia, farmers protested, urging the government to provide subsidies for their losses.

Polish protesters agreed not to block Ukrainian crossing points until March 1. But on February 9, 2024, they resumed blocking the Ukrainian border.

As of February 12, Polish protesters are still blocking the movement of freight vehicles towards the Yagodyn and Rava-Ruska border crossing points.

Reasons for the Blockade

We interviewed Michal Potocki, a journalist from the Polish legal and business daily newspaper ‘Dziennik Gazeta Prawna,’ to discuss the reasons behind the border blockade by farmers and carriers.

About the farmers’ blockade:

“Farmers have been protesting for almost a year. The first protests began in March 2023. The main reason cited by the farmers was that they had an agreement for Ukrainian grain to transit through Poland to other countries. However, a significant portion of that grain was getting lost somewhere in Poland along the way. Neither the Ukrainian nor the Polish authorities were interested in implementing any monitoring of this transit.

Both Ukrainian and Polish companies were profiting from this [grain, – ed.]. It was advantageous for the Poles to buy cheap Ukrainian grain, while Ukrainians found it profitable to sell this grain in Poland rather than in Turkey or other countries.

In April 2023, the Polish government began blocking Polish-Ukrainian grain trade, leading to a full-fledged political conflict and misunderstandings. There was no willingness to find a compromise.

Then, other products came into play. On one hand, the Polish government agreed in 2022, following the full-scale invasion, to open the EU market to Ukrainian products and carriers. Initially, there were humanitarian conditions (Ukraine being a victim of Russian aggression, requiring as much assistance as possible). However, at that time, no one anticipated (neither in Poland, nor in Brussels, and probably not even in Ukraine) that the war would last so long. Everyone hoped it would end fairly quickly and not have such a significant impact on the EU internal market. It turned out differently. Since it has been going on (the war, – editor) for quite a long time, this impact is very noticeable.

In Poland, by the way, the farmers’ market is quite fragmented, while in the Ukrainian market, large farm holdings dominate. So, losing 10% of the market for a large holding is one thing, but for a small farmer from the regions, it could be economically devastating. That’s why all these farmer protests began, which practically have the potential to erupt again and again until today.”

About the blockade of carriers:

Until February 24, this market was also quite regulated. Ukraine and Poland were mutually issuing permits for cross-border movements for our carriers. After February 24, the EU eliminated these permits, essentially opening the market for Ukrainian carriers. In this regard, Ukraine practically became a member of the EU, except that Ukrainian carriers did not have to adhere to all EU standards. As long as there was hope that the war would not be prolonged, Polish carriers said, ‘Okay.’

However, since the war has been lasting for quite a long time, they also started to feel the consequences, especially those who traded with Ukraine. Competition became quite noticeable for carriers. This does not apply to the entire carrier market; primarily carriers from the eastern regions of Poland, who traded with Ukraine before the invasion, are involved in these blockades.

The second problem is the ‘eCherga’ system, which is useful for those who transport goods far from the border (you stay in Ukraine until you reach, for example, Kharkiv and return, you already have a place in the queue). Since many Poles trade not with Kharkiv, but with Lviv, theoretically, they could import goods in one day and return. However, the ‘eCherga’ does not allow this possibility because the queues are not fast.

The third problem is that many Polish carriers employed Ukrainian drivers, some of whom returned to Ukraine after February 24, while others cannot currently cross the border. Polish drivers are also afraid to travel to Ukraine due to the war. As a result, carriers lost a portion of the Ukrainian market, and Ukrainian carriers entered the Polish market as competitors.

Politicians from the pro-Russian far-right party Confederation also got involved, finding a very successful moment from their perspective where they could gain popularity. This was before the October elections and continues to this day, as we are soon approaching the next electoral campaign. We have local elections at the end of March and early April, followed by European Parliament elections in June. So, this campaign continues to this day: they see an opportunity to earn popularity through these protests.

Another problem was that before and after the elections, the old government did not feel motivated to do anything about it. Because why negotiate and compromise when you are packing your things and leaving the offices.

Therefore, there are many different factors at play here. There are objective reasons, but there are also political ones.”

We also discussed the reasons with Stepan Cherniavskyi, People’s Deputy of Ukraine, Servant of the People faction, Committee on Agriculture and Land Policies in Verkhovna Rada of Ukraine:

“One of the arguments from the side of Polish carriers is that Ukrainians are allegedly taking their jobs. Poles have long held the dominant position among carriers in Europe, having the largest fleet among European colleagues, accounting for about half of the entire block. Now, they are dissatisfied with the high competition that has arisen since the start of the full-scale war. At that time, a document at the level of an agreement between Ukraine and the EU, known as the ‘Transport Visa,’ was approved for Ukrainian carriers. Now, Poles demand its cancellation and the return of special permits for Ukrainian carriers. However, the thing is that Poland cannot unilaterally cancel the agreement ratified between Ukraine and the EU. Poland not only demands a return to the old permit system, that is, canceling the ‘Transport Visa,’ but also wants to strengthen transport regulations. Some of the points are practically unrealistic. Poland is the key gateway for Ukraine’s exports to Europe. Ukrainians constitute about 85% of those who cross the Ukrainian-Polish border to bring goods into Ukraine or export them.

In the conditions of war, blocking the border is both immoral and counterproductive when the western border has become the real ‘lifeline’ for the entire Ukrainian economy. It is a mockery of the Ukrainian agro-sector, which is already suffering and on the brink of bankruptcy. The embargo on the import of Ukrainian grain and the border blockade are, in fact, nothing but tools of a trade war that Poland is waging against Ukraine. And this is happening at a time when Ukraine, among other things, is defending it from Russia”.

“Ukraine is a country that just wants to take, take, take, and give nothing in return. This infuriates us; we have helped them so much, and the gratitude we receive is that we cannot sell our wheat or corn,” – says Roman Kondrov, one of the organizers of the blockade, speaking to Politico.

However, as reported by Politico journalists, the issues raised by Polish farmers ‘have nothing to do with Ukraine: farmers want subsidies for corn production, lower agricultural tax in 2024, and maintain preferential loans for liquidity.'”

Consequences of Border Blockade

Tetiana Popovych, the head of the marketing department of the wholesale agricultural products market Shuvar in Lviv, may provide valuable insights into the consequences of the blockade. From her point of view, blockade leads to several consequences:

“Economic Consequences for the Agricultural Sector:

For Ukraine: Ukraine is one of the world’s largest grain and sunflower oil exporters. Blocking the export of these goods can lead to significant financial losses for Ukrainian farmers, who may already be facing internal challenges such as military conflict or economic difficulties.

For the EU: Dependence on Ukrainian agricultural exports means that the blockade can result in a shortage of certain products in EU countries, leading to price increases and possible disruptions in supply chains.

Humanitarian Consequences:

Food Shortage: If the blockade continues for an extended period, it could lead to food safety issues in some regions of the EU, especially those heavily reliant on imports from Ukraine.

Impact on Consumers: Rising prices for essential food products can significantly affect household budgets in the EU.

Impact on the Global Market:

Global Consequences: Ukraine is a significant player in the global agricultural market, so blocking its exports may have consequences far beyond Europe, affecting global prices and supplies.”

Also about the consequences we asked Stepan Cherniavskyi:

“Every day of the blockade means colossal losses, and the question arises of who will compensate for them. Ukrainian entrepreneurs have lost their contracts and clients in European countries because the goods were not delivered on time. This also includes spoilage of goods. However, these losses already exist, not only for Ukrainian entrepreneurs but also for European companies operating in Ukraine. According to some estimates, the Ukrainian economy has lost over 1.5 billion euros due to the blockade of western borders.

Indeed, due to the blockade of checkpoints, the volumes of Ukrainian agro exports by road have decreased by 40%.

For Ukraine, these are losses not only economically but also for national defense. Our military forces have already felt the consequences of the actions of Polish protesters.

Ukrainians can already feel the consequences of border issues, leading to a 3-5% increase in the prices of imported goods. Prices for this group of goods may continue to rise. However, this does not affect basic products, such as items for traditional Ukrainian dishes. Eggs, milk, vegetables, and grains – all of these are supplied by the domestic market. But if the situation does not change, there is a likelihood that some goods may become more expensive or scarce”.

What is being done to end the blockade

The newly appointed Minister of Agriculture of Poland, Cheslav Sękorski, signed an agreement with Polish farmers. The agreement introduced financial demands of the protesters, including the initiation of subsidies for corn production, maintaining agricultural taxes at the 2023 level, and increasing preferential loans for liquidity. However, it did not include restrictions on imports from Ukraine.

Despite the lifting of the blockade, protesting farmers stated that the “most important” demand now is to “restrict the inflow of goods from Ukraine.” EU 

Commissioner for Agriculture Janusz Wojciechowski announced that he would demand restrictions in the EU on certain goods from Ukraine, such as sugar, eggs, and poultry.

On January 24, protests by farmers took place throughout Poland. They demanded an end to the “uncontrolled import of agricultural products from Ukraine and other non-EU countries that do not meet European standards.”

The Ministry of Agriculture of Romania and representatives of major agricultural organizations reached an agreement that satisfied several demands of the farmers.

The government pledged to fully subsidize all agricultural excise duties until 2026 and immediately implement provisions for subsidized interest loans.

“The Ministry of Development of Communities, Territories, and Infrastructure of Ukraine is in constant communication with Polish counterparts. Several meetings have already taken place not only with Poland but also with representatives of the European Commission to find compromise solutions. The Ministry of Infrastructure of Poland has agreements with protesters until March 1. Therefore, ongoing substantive work is being carried out to prevent the blockade from resuming after this date. Today, online queues, which previously took several weeks, are now counted in a few days, and in some cases, there are none.

The biggest problem now is veterinary and phytosanitary queues. These are goods, mainly agricultural products, subject to separate control by Poland. Waiting time online for border crossing for such trucks can reach 20 days. The Ukrainian government continues to seek ways to improve border crossing indicators, and most importantly, minimize any queues.

On its part, Ukraine has implemented all previously agreed measures. Pilot projects have been launched at two border crossings. Meetings at the government level are regularly held for negotiations. I hope that the Polish side will also work on everything agreed with the protesters, and from March 1, the blockade will not resume,” – explains Stepan Cherniavskyi.

Is the blockade threatening the security of the EU?

“Thus, the issue of agrarian protests goes far beyond the topic of the Ukrainian border’s blockade by Polish protesters. Political and economic factors are involved, affecting a large category of voters in most EU countries. On the one hand, European farmers’ protests aim to address the increasingly stringent technical and environmental requirements for growing crops and animals for the EU market. The ‘Green Deal’ leads to higher production costs and, consequently, price non-competitiveness in the market, especially for small farms that dominate Poland.”

In this case, Ukraine becomes a supplier whose participation allows EU governments to partially ignore the demands of their voters, as Ukrainian producers do not receive subsidies or privileges and do not require them from the EU (Ukraine is not yet a member of the EU). Thus, the EU does not face a deficit in agricultural products and does not spend extra money on stimulating or supporting the industry.

It should be understood that the primary demand of the protesters — to stop duty-free imports of grain from Ukraine until 2025 — will not have the desired effect as demanded by farmers in the EU. If EU legislation is not violated and agricultural producers from Ukraine and the EU are placed on equal terms, Ukrainian products will remain at the same level of competitiveness, and the situation will not change. Blocking Ukrainian exports to the EU in the short term may impact the EU market by increasing prices for processed agricultural products for the end consumer, inflation, and increasing government spending to cover the economic consequences of the protests. From the political point of view, these protests may affect the electoral field of certain countries as a bargaining chip ahead of the upcoming elections, but only in the short term. However, these protests will not change the market in the long term but may change the geopolitical situation. 

Agricultural exports currently constitute the lion’s share of Ukraine’s budget revenue from exports, so blocking the border is consciously or unconsciously playing along with the aggressor. Politicians in the EU need to decide what is more important for Europe: short-term political gains or a new direct border with Russia that is several thousand kilometers long. Let’s consider that Russia has territorial claims to certain EU countries and will not stop at Ukraine. And what do we conclude: that farmers’ protests and the ban on agricultural export from Ukraine will negatively impact the security situation in EU countries, especially those with direct borders with Ukraine,” – Viktor Shatov, International Lawyer and entrepreneur.

NB! All data in the article is accurate as of February 16, 2024.

***

The blockade of the Ukrainian border by farmers and carriers is an extremely important and serious issue for both Ukraine and EU countries. It is crucial to make joint efforts for the prompt resolution of this problem.

Anya Ostymchuk

The post Blocking of the Ukrainian Border by Farmers and Carriers: Causes and Consequences appeared first on The Ukrainian Review.

Main examples: «Nova Post» delivery company, «Ukrposhta» state post and delivery company, «Monobank», «Lviv Croissants» bakery network, and many others.

On the other hand, many businesses within the country were forced to close. But there are companies that continue their work at the level of millions of investments. In this case, it is worth mentioning the construction companies, which are largely considered possible growth drivers for post-war Ukraine.

How do Ukrainian businesses survive during the war? We asked representatives of the construction industry, delivery, and agricultural producers.

Why does Ukrainian business go west?

According to research by the Ukrainian research company «Gradus», about 50% of Ukrainian businesses need to relocate or have already done so due to certain circumstances. The most popular is the desire to keep one’s business (38%) and expand the client base (30%). In this regard, 17% of enterprises expanded outside of Ukraine, and 11% completely moved abroad. 77% entered the market of the EU and other European countries. The leader is Poland, where 63% of enterprises are developing or will do so. The most common reasons for such a choice are demand for products, developed infrastructure, and convenient legislation.

“AcademyOcean’s” research of Ukrainian IT companies operating abroad after February 24, 2022, which they shared with us, shows that 33.5% of companies have already or will soon start working abroad.

Ukrainian business chooses the EU the most, because it is, in general, one of the largest global sales markets with a population of 500 million people, with which it can compare only to the US market. But European countries, firstly, are logistically closer (and it is easier to deliver, for example, fresh food products there), and secondly, they are historically and mentally closer to Ukraine.

Ukrainians have registered more than 10,000 companies in Poland since the beginning of this year. Including 9,829 companies — after March 1, reports “Business Insider Polska”.

You can read more about the areas in which Ukrainian companies operate and invest in the EU and European countries by following the link.

Invest despite the war

The State Statistics Service provides the following data regarding the last pre-war year: during 2021, 11.4 million square meters were commissioned housing, which became the highest indicator in the last 30 years. Construction companies actively developed and increased sales. This trend would have continued to this day, if not for the war.

“After the full-scale Russian invasion, many developers practically suspended work on construction sites due to physical security risks: some for several weeks, and some did not resume, as in the eastern regions. As a result, already in 2022, the total area of commissioned housing was 7.1 million square meters, which is 38% less than in 2021. Builders in the east and south of Ukraine experienced the biggest crisis, where volumes fell by 70-90% compared to the previous year”, — Ukrainian Forbes.

Every war ends. After the end of hostilities, the role of the construction industry in the processes of restoration of industrial facilities, housing, transport, and social infrastructure will be crucial. Considering the scale of the destruction and the requirements for reconstruction, Ukraine can be called one of the largest construction sites in the world. It is the construction industry that can become one of the drivers of the revival of Ukraine after the end of hostilities.

“We have built more than 25 objects — this is a total of more than 500,000 square meters. It is worth mentioning that during the war we do not slow down: over the past year, we commissioned 113,000 square meters, which is approximately 1,700 apartments”, — Vasilis Boumbouras, CEO of Gefest Construction Company.

Construction companies are large taxpayers and have large workforces. Such companies help many related sectors of the economy stay afloat.

What challenges faced Ukrainian construction companies? The main is a shortage of labor force.

“In the first months of the war, we faced a serious shortage of materials. Obviously, the reason is that many companies ceased to operate and didn’t even deliver those materials that were already paid for, they did. Now we have dealt with this shortage because the company buys them with a margin of 2-3 months because no one can be sure this will never happen again. Another big problem is that we are understaffed, we are lacking a workforce. The reason for that? Some people have joined the army, this is now the number one priority for our country, some are too scared to go to construction sites, and there are also those who have already gone abroad with no guarantees for their return”, — Vasilis Boumbouras.

Currently, the construction market in Ukraine is experiencing a crisis and a certain imbalance. This is due to the fact that the supposedly safer western regions received an impetus to continue and expand construction. The regions adjacent to the territories with active hostilities are now in a difficult situation.

The rise in real estate prices in Ukraine is due to objective factors: inflation, rising dollar and euro exchange rates, and rising prices for building materials (sometimes 40%, and sometimes doubled). At the same time, a decrease in the volume of new housing commissioning is predicted. This is due to the fact that, as a rule, the commissioning of housing in 2022 was the result of a 2-3-year construction cycle.

Let’s not discount the fact that developers expect transparent and understandable legislation, which, in turn, will simplify the flow of investment into the construction sector after the end of the war.

“There are some difficulties related to the legislation, but I am sure that soon we will come to a transparent market that will allow us to attract international partners”, — Vasilis Boumbouras.

Development of the delivery market: how Nova Post enters the EU markets

Nova Post is an international Group of Companies that provides the full range of logistics and related services to private clients and businesses. The parent company has been helping Ukrainians to send and receive parcels and cargo for 22 years. Every year the company delivers over 315 million parcels both within Ukraine and worldwide.

“Nova Post started developing business abroad as early as 2014, entering the Moldovan market. Currently, Nova Post has a network of 19 branches and 220 post lockers throughout the country. Following our clients after the full-scale russian invasion, Nova Post entered the European market in October 2022 and Poland became the first EU country to welcome Nova Post branches. There are now 33 branches operating in the 22 largest Polish cities: Warsaw, Kraków, Wrocław, Lublin, Gdańsk, Rzeszów, Poznań, Lodz, Katowice, etc. Nova Post in Poland gave work to 200 employees. Most of our employees are Ukrainians who speak Polish and Ukrainian”, — reported the company’s press service.

Nova Post not only employs internally displaced persons from Ukraine but also brings investments to EU countries, thereby positively influencing the delivery market in EU countries.

“In less than a year of operating in Poland, Nova Post invested over €2 million in business development. We invested over €175 000 into the development of business in Lithuania. In less than 3 months, we invested over 250,000 euros in business development in the Czech Republic and hired 13 employees: the majority of our employees are Ukrainians who speak Czech and Ukrainian. The company’s investment budget for 2023 for Romania is €600,000. In June 2023, Nova Post opened its first branch in Berlin. Nova Post invested about €500,000 in business development in Germany by far. Till the end of this year, we are planning to open 10+ branches in 12 German cities. So, the total investment budget for the development of the network in Germany is €5 million”.

Do not forget that large companies entering the EU markets, upon successful completion of this stage, increase their capitalization, and profits and pay more taxes to Ukraine.

“Nova Post is a responsible corporate company. This is the group of companies, which is one of the largest private employers in Ukraine with 42,000 people. Along with this, the group of companies is one of the top 20 largest taxpayers in the country. For 6 months of 2023, the volume of taxes paid amounted to ₴5.1 billion (approximately €126 million), which is 75% more than the year before”.

The entry of a major Ukrainian player in the delivery sector with its software and high delivery standards has a positive impact on the European market.

Ukrainian grain business and problems of entering EU markets

Ukraine is a traditional exporter of grain and agricultural products. Many countries in Africa and the Middle East depend on Ukrainian grain. With the beginning of full-scale aggression against Ukraine, Ukrainian seaports were blocked.

“The Ukrainian grain market is one of the largest worldwide. In the trade year 2022/2023, Ukraine was the sixth-largest wheat-exporting region. Around five percent of total wheat exports came from Ukraine in that period. Furthermore, the country accounted for nearly 40 percent of global sunflower meal exports and 35 percent of sunflower oil”, — says Statista.

In the summer of 2022, the practice of ships leaving under the so-called “grain deal”. But the Russian side did not stop provocations and shelling. It also took a long time to check ships sailing to/from Ukrainian ports. On July 17, 2023, the Russian government announced that it suspended participation in the deal.

Currently, the Ukrainian ports of the Danube are regularly attacked by kamikaze drones. This poses a threat to grain exports from Ukraine.

We turned to Mykola Stryzhak, President of the Association of Farmers and Private Landowners of Ukraine, for comment regarding what other problems Ukrainian exporters of agricultural products have.

His statement: Ukraine must enter new markets and support mid-level businessmen and farmers at the state level.

“No one is waiting for us in those markets, local farmers see us as big competitors. Indeed, what they lack, they buy from us, but when we have a crisis, for example with cabbage, where do we get it from? From Europe! We need to sell where there is a need for these products and find ways and methods to sell there”, — Mykola Stryzhak.

It is important that Ukraine creates added value of raw materials by processing them into goods and products.

“We should not sell grain; we should sell value-added products. For example, it will be two or three times more expensive to sell compound feed. In addition, there will be new jobs. This will be less production, that is, one ton of corn will yield half a ton of compound feed. Therefore, we will save on transport, because we will have to transport not two ships, but one”, — Mykola Stryzhak.

Thus, Ukraine first needs to ensure the safety of production and transport routes for the export of products and goods to the country. Secondly, to ensure a transparent legal system in which business will operate and in which investments will be made. Thirdly, investing in the processing of raw materials will bring both additional income and the creation of new jobs.

Stanislav Kinka

With the participation of Tetiana Stelmakh

The post How Ukrainian businesses survive during the war and expand investments in house and abroad appeared first on The Ukrainian Review.

As Michael Landesmann writes for The Vienna Institute for International Economic Studies, once the intensity of the military conflict subsides, Ukraine holds the potential to mirror the recovery and growth experiences of EU Central and Eastern European (EU-CEE) countries. However, this path requires substantial support and active engagement from the European Union and other Western allies. It is equally important to address and overcome Ukraine’s past institutional and political economic deficiencies that have hampered its progress.

21-22 June 2023 the Ukraine Recovery Conference took place in London, UK. Ideas about the economic reconstruction of Ukraine were presented here at the break-out session named “Economic transformation: Transparency and reform for private sector-led growth“. We listened to the speeches of the participants and recorded for you the most interesting (in our opinion) parts.

Yulia Svyrydenko, First Deputy Prime Minister of Ukraine:

“Our victory and reconstruction are just the beginning of a long journey and we understand it very well. Ukraine started as a country that was a recipient of international aid and we’re very grateful for the fact that you provide us with this aid that helps us to keep the macroeconomic stability but we are absolutely sure that we will become a global contributor.

We will try before this conference to have an internal discussion inside the Ukrainian government and presidential office and to develop nine sectors that we have outlined in our vision as the key to Ukraine’s transformation.

In 10 years, we would like to be a reliable source of energy for Europe and one of the leaders in the green industry. Secondly, we think that our agricultural sector will be able to provide food for more than 600 million people. Ukraine’s critical material resources will become the basis for the development of high-tech products.

We would become the fastest-growing country in the region. And the scale of Ukraine’s reconstruction will be unprecedented. The development and modernization of Ukrainian infrastructure will make Ukraine an integral part of the EU network.

And our strong army and military-industrial complex will ensure security in the region on NATO’s eastern border. Of course, all this needs strategic investment and strategic investors that should come to Ukraine.

The basis is the trust of our partners and the stability of our country. Of course, we understand perfectly well that we must provide security, so that businesses and people can have trust and develop without any fear.

No doubt that the biggest guarantee can be NATO membership. And Ukraine will definitely become a member [of NATO]. And we must ensure access to a larger market. And without any doubt, access to the EU market is the best guarantee for this.

And, of course, in addition to this, we need to have a comprehensive reform agenda, the result of which will support investors at every stage, from the idea of investing and setting up a business in Ukraine to its successful operation in Ukraine.

We’re in constant dialogue with investors, and we understand their needs and are already working on them. Investors need smart governance and clear rules of the game.

As an example, just this year the government ran a competition and appointed an independent supervisory board of big state-owned companies like Naftogaz, UkrPost, and others. 

We need an enhanced business climate for achieving this aim. We have started huge deregulation, going through a thousand different regulations and canceling hundreds. Businesses ask for access to capital and clear and competitive fiscal policy. Here we’re already working on the creation of the Ukrainian Development Fund, which is going to provide equity capital to many important investment projects. We also need a modern labor market and access to specialists, and we have already started to work out the amendments to the law to provide comprehensive draft reform.

So we are systematically working with the world’s best economists on this issue and policies to ensure that all these needs are addressed in the Ukrainian business environment, in law, regulation, and public service. And we are taking the commitment to transform Ukraine into the most convenient and quickest country for doing business.”

Rostyslav Shurma, the Deputy Head of the Office of the President of Ukraine:

“Everybody knows the agricultural sector of Ukraine and we see the huge potential of the dozens of billions of investments. And the same can be said about critical minerals such as lithium, uranium, graphite, titanium, iron, and others. Obviously, as a result of that, we expect that Ukraine will become a construction boom country for a decade. In total, this is all about the investment ticket for hundreds of billions. But now, what do we need to do and change for this to happen? There are two things before we speak about the reforms that perhaps are much bigger than all the reforms together. The first one is NATO, and the other one is the EU.

Why NATO? Let’s put ourselves in the place of business. Would you invest billions now while you are at risk of being your asset fully destroyed? Obviously, we do implement the war risk insurance and we do believe that it will cover the first projects, maybe the first dozen of projects, maybe for hundreds of millions, for billions. But we will not be able to implement such a big program with war risk insurance. The only and the best war risk insurance is NATO.

The second one is the European Union and first of all it is the market of the European Union. Obviously the Ukrainian recovery will be a good market specifically for the construction, for the infrastructure companies, but the main value of all these segments of all these ideas is about the access with the competitive products to the European market. 

Now what homework should we do in Ukraine to make ourselves competitive? The first one perhaps will be about the law enforcement agencies and judicial reforms. I think this is perhaps the most complicated topic because I think nobody has a clear answer to it. Let’s be frank. There are many roadmaps and many action plans. Some of them are already being fulfilled for two, or three years ahead, but still we are not there yet.

But what are the good signs? The good signs, I think, are the results, for example, for the NABU, the recent case for catching the head of the Supreme Court of Ukraine on a bribe. I think this is very vivid evidence that the anti-corruption infrastructure works in Ukraine. Because I can hardly imagine any other country in the world where as well corruption exists in the courts where this type of operation would happen.

What do we plan to do in the courts fundamentally? We plan to segment it into two big categories. Everything which is immaterial, we want to convert to digital courts because we have a good track record with our digital public services, and the courts will be one of them as a next.

Everything which is about material, commercial, and administrative courts will be under very tough supervision and analysis of the fair practices there in the courts. As for the law enforcement agencies, I think quite quickly, just after this conference, you will see the next steps that we will take. I think it’s about the weeks.

But finally, what we want to implement, that there is only one window of communication for the business. There are no four, five, or seven agencies that are visiting the business on the different matters and the bribes as a result of this contact. There will be only one with the opportunity to communicate on all the matters.

The number two block is about digitalization. So everybody knows about the progress that we have done with the “Дія” and with the digitization of public services. We plan only to enhance the speed of the public services that we will provide. Because the logic is very simple. If there is no physical contact with the bureaucrat, there is no risk of corruption.

And there is one more important step that I believe that we will take. I cannot tell you definitely what we will do, because it is still under discussion, but under very deep and serious discussion with the whole team, with the President, with the Prime Minister, we want to be the first fully cashless economy.”

If you want to know more about the thoughts and ideas expressed at the conference, follow the link: https://vimeo.com/838387259

Alina Kuvaldina

The post The economic transformation of Ukraine: what steps are needed appeared first on The Ukrainian Review.

Main examples were: “Nova Poshta” delivery company, “Ukrposhta” delivery company, “Monobank” , “Lviv Croissants” street food, and many others. We decided to investigate how the appearance of Ukrainian businesses on the international scene affected the general atmosphere, workplaces, and sales market.

Why does Ukrainian business go abroad?

According to research by the Ukrainian research company “Gradus”, about 50% of Ukrainian businesses need to relocate or have already done so due to certain circumstances. The most popular is the desire to keep one’s business (38%), expand the client base (30%), and have logistical problems (28%). In this regard, 17% of enterprises expanded outside of Ukraine, and 11% completely moved abroad.

Most — 77% entered the market of the EU and other European countries. The leader is Poland, where 63% of enterprises are developing or will do so. The most common reasons for such a choice are demand for products, developed infrastructure and convenient legislation.

“AcademyOcean’s” research of Ukrainian IT companies operating abroad after February 24, 2022, which they shared with us, shows that 33.5% of companies have already or will soon start working abroad.

We asked Andriy Zhariy, CEO of the “Aurum Group”, what he thinks about this.

“I believe that there are two obvious factors for Ukrainian business to enter foreign markets. The first is a reorientation from the CIS markets and the significantly narrower (compared to the pre-war) domestic market to the larger markets of Europe and North America. The second is a more democratic attitude towards Ukrainian goods in the countries of our Western partners, which sometimes even turns into assistance, including at the legislative level”.

He also added that Ukrainian business chooses the EU the most, because it is, in general, one of the largest global sales markets with a population of 500 million people, with which it can compare only to the US market. But European countries, firstly, are logistically closer (and it is easier to deliver, for example, fresh food products there), and secondly, they are historically and mentally closer to Ukraine.

Andriy Zhariy expressed his opinion about what is currently happening with entrepreneurs who are currently in the territory of Ukraine.

“Today, the domestic Ukrainian market has narrowed significantly compared to pre-war times, and although the number of represented businesses has also decreased, competition has not decreased, and therefore, I do not think that opening a new business today in conditions of uncertainty is appropriate. However, opening a business may be justified in view of the post-war prospects, when millions of Ukrainians will begin to return home, and already formed and approved international investment plans for the restoration of Ukraine will begin to be implemented”.

Oleksandr Yavtushenko, head of the Secretariat of the Public Council under the Ministry of Digital Transformation of Ukraine, added to the words of the previous expert. He said that the war and the decline of the economy of Ukraine led to a decrease in the purchasing power of the population and a decrease in orders. This forces business owners to look for new sales markets abroad. In addition, competition in the domestic market has become too great (due to a decrease in demand), which also stimulates going abroad. For Ukraine, the markets for the provision of medical services, sales of essential goods, food products and natural monopolies remain unequivocally profitable.

“This is a question of risks and profitability of management. As soon as the war ends and the risks become lower, the attractiveness of the market will prevail and, thanks to proper risk management, most businesses will return to Ukraine. This applies primarily to businesses owned by Ukrainians, but major international players will also gradually return”.

He also explained why there is an outflow of personnel from Ukraine. According to him, the main reason is not the relocation of Ukrainian business abroad, but the lack of work in Ukraine and the search for safe living conditions for himself and his family while the war continues in Ukraine.

What are the consequences for us and for them?

Research by the “AcademyOcean” company showed that 41.1% of businesses that have moved abroad are planning or are already hiring foreigners to work for them, thereby creating jobs.

Andriy Zhariy said that the development of Ukrainian business abroad is primarily beneficial for Ukraine, because the sales (export) markets of Ukrainian goods and services on the territory of other countries are expanding. This will provoke the receipt of foreign exchange, the creation of new jobs, an increase in tax deductions to the budget of Ukraine, etc.

He also added that Ukrainian entrepreneurs have a positive influence on the international market. The creation of new businesses in the EU countries means the creation of new jobs, tax deductions, and ultimately the formation of GDP. That is, at the macro level, this is positive for these countries. 

“I’m not talking about the fact that in some countries consumption has increased significantly due to refugees from Ukraine, and this is an additional development for local business. However, apparently, certain industries have experienced increased competition from enterprising Ukrainians, but in the long term this is also a plus, because in general it makes the economy more efficient and competitive”.

Oleksandr Yavtushenko explained in more detail about the competition:

“Ukrainian business can be competitive in some industries, especially in those where it has technological advantages or cheap labor. However, at the general level, the competitiveness of Ukrainian business may be limited due to risks. Caused by the war, a very weak economy and a lack of investment in equipment modernization and technological renewal”.

Ukrainians have registered more than 10,000 companies in Poland since the beginning of this year. Including 9,829 companies — after March 1, reports “Business Insider Polska”.

Every fourth company is engaged in construction (most often construction and finishing works). 16% of newly created businesses are IT companies, 7% are transport and logistics companies (taxis, cargo transportation, warehouses).

“Business Insider Polska” writes that Ukrainians fill precisely those niches where Polish specialists were lacking.

However, the “Gradus” research shows us that there are certain difficulties that Ukrainian business faces in the EU. Firstly, there is high competition, bureaucracy, language barrier and difficulties in finding qualified accountants. Despite this, 83% of the surveyed business owners believe that Ukrainian enterprises can be competitive on the international market.

Zhariy predicted that after the end of the war, the start of the implementation of many infrastructure and investment projects in Ukraine, on which there are already firm agreements with foreign countries and businesses, is expected. The volume of declared investments exceeds the volume of direct foreign investments received in Ukraine over the last dozen years.

This will lead to a significant increase in the country’s GDP, a significant increase in the number of enterprises, and an improvement in the welfare of citizens. The de-occupied regions will be in the fairway for the dynamics of investment, infrastructure development and recovery, but it is unlikely that in other central or western regions there will be a shortage of new entrepreneurs or investors.

Yavtushenko added that agriculture, IT technologies, export, tourism and infrastructure projects could become the leading industries. However, with regard to the outflow of business to the de-occupied territories, this will depend on many factors, including the political and economic stability in these regions, the availability of infrastructure and market, and the readiness of the business itself to return to these territories after a long absence.

The story of one Ukrainian business that went abroad

Volodymyr Polo, CEO of “AcademyOcean” company, agreed to tell the story of his company’s departure abroad, after the start of a full-scale war. Further from his words.

“AcademyOcean” is a smart platform for employee training, with a world record user-friendliness rating of 9.8 out of 10. The platform is based on the latest scientific methods for adult learning, so we consult with global HR, L&D experts and academics. Such as: Nigel Pine, Donald Taylor, Dave Ulrich and Robin Hoyle.

“Our platform is used by clients in 30 countries, from the USA to Singapore, and has over 400,000 students. The “AcademyOcean” team operates in 7 countries and has 27 people who speak different languages ​​to provide the best customer support”. 

A third of the company’s clients are Ukrainian businesses. When the war started, they had a hard time. Someone stopped working, someone put the business on hold. Among their clients, there were many businesses that entered new markets and started hiring employees there. Therefore, they also needed to look for opportunities in order not to lose their business. Therefore, they entered six new countries. For example, in Singapore and Norway. And also expanded the team.

Since the beginning of the full-scale war, the number of clients among Ukrainian companies has doubled. Also, despite the war, many good processes took place within the company. For example, their team has doubled in size and received funding and support from 7 Wings and Google for Startups. Also, the war partially affected the geolocation of workers.

“Another positive factor is that during the war, we realized that we have influence and opportunities to help other Ukrainian businesses grow and develop. This is how a number of social projects and initiatives emerged. How “Coaching for Ukraine”. The “AcademyOcean” team invited influencers in HR and L&D to hold webinars for Ukrainian colleagues and share tips on working in global markets, employee support and mentoring. The project was supported by the Ministry of Culture and Information Policy of Ukraine and the most famous job search sites in Ukraine, Robota and Work.ua”.

Volodymyr said that in Europe he was pleasantly surprised by the kindness of local businesses that actively helped the company. Poland was a pleasant surprise. In understanding the digital training of employees, the country is 2-3 years ahead of the Ukrainian market. Among the obstacles, the most important were the language barrier to which it was necessary to adapt and weak digitization, which complicated simple processes for Ukrainians.

“The global market is very attractive, but the entry threshold there is much higher than in the local market. After all, it needs a new adaptation of the product, new marketing, new sales scripts. Therefore, we asked our business partners and familiar businesses that successfully work with the markets we are interested in to advise us on the specifics of working with this market”.

Also, the CEO of the company believes that the main advantage of Ukrainians on the international market is their ability to survive the apocalypse:

“During the war, we showed that we can work no matter what. Neither blackouts nor work from storage prevented Ukrainian business from growing. The Ukrainian IT industry is already a brand. For example, even before the war, the national IT industry became one of the largest exporters of IT services in Europe, growing by 25-30% annually. Today, the technology (ICT) sector accounts for more than 40% of the country’s total exports, “Opendatabot” research shows”.

Netpeak Group — a group of companies, which includes “AcademyOcean” together with the Ukrainian company Genesis, purchased a marine drone for the new high-tech Ukrainian fleet. One such device costs 10 million hryvnias.

Tatiana Stelmakh

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