Ukraine’s economic health depends on exports - so it needs to get this sector right.
One panel of the Kyiv Post Nov. 19 Tiger Conference is devoted to the theme of “Capturing New Markets.” The speakers will examine ways that Ukraine can engineer an economic turnaround through nourishing exports, developing new markets, taking advantage of free-trade agreements, improving products and boosting the role of small and medium-sized enterprises.
Daniel Bilak, managing partner of the Kyiv office of CMS Cameron McKenna, will moderate the morning discussion. He will be joined by Natalie Jaresko, founding partner and CEO of Horizon Capital; Jean-Jacques Herve of Credit-Agricole Bank; and Pavlo Sheremeta, former economy minister. The conference takes place at Kyiv’s Hilton Hotel.
Ukraine’s problems are numerous, including obsolete technology and products with low-added value. Stifling bureaucracy and embedded corruption add to the woes.
But there is hope.
The association agreement with the European Union, which includes a major trade deal to start in 2016, opens up new opportunities for Ukrainian producers in the 28-nation bloc’s huge economy – collectively on par with the United States economy in size with $17 trillion in gross domestic product.
Some local businessmen, such as Ukrlandfarming’s Oleg Bakhmatyuk, say the country should look into emerging markets, for instance Afghanistan and China, to find demand.
Jaresko thinks government should put the emphasis on supporting small and medium enterprises. With respect to exports, companies need a deeper understanding of what it takes to be successful in various markets, she said.
Sheremeta, the former economy minister, said that emerging markets are less demanding, but more distant while EU markets are closer but harder to penetrate.
Promoting the “Made in Ukraine” brand and providing the exporters with cheap government-backed loans should be part of the strategy, Sheremeta said, along with boosting the quality of the labor force.
Timothy Ash, the London-based head of emerging market research for Standard Bank, said “Ukraine makes many products which could be competitive globally, but getting rid of red tape and bureaucracy is so important. Government needs to be as radical as it can be – think big, ambitious, and find the international best practice.”
Agriculture is a cornerstone. “Ukraine needs to think how it is going to get an efficient, export-oriented agriculture sector – and work back from then, in terms of designing an optimal farm structure and ownership … and price & regulation and trade regime around agriculture,” Ash siad. “The moratorium on the sale of agricultural land needs to end, that is clear.”
Herve, a board member of French bank Credit Agricole, said the EU needs more inexpensive, high-quality cattle feed that Ukraine can provide. The successful future of the nation’s agriculture sector lies with the vertically integrated holdings that have self-sufficient production cycles and do not have to rely as much on external suppliers, according to Herve. However, smaller companies also have a huge potential.
He said the agricultural sector is too labor intensive – with up to 4.2 million people employed. Herve also said agriculture production could also contribute to alternative energy projects involving ethanol and biomass, since Ukraine is in urgent need of reducting its dependence on Russian natural gas supplies.
Kyiv Post staff writer Olena Gordiienko can be reached at [email protected].
