A long-awaited Chinese takeover at the Motor Sich aerospace firm looks increasingly uncertain. Ukraine’s antimonopoly committee may prevent the controversial and long-discussed Chinese acquisition, according to Forbes. Ukraine’s western partners, and especially U.S. officials, have been outspoken in their opposition to a planned majority takeover at the company, one of the world’s leading manufacturers of helicopter engines and parts, by a state-owned Chinese firm. In December, officials told the Kyiv Post that the deal was under review until the end of February 2020, so a decision is expected soon.
U.S. officials still strongly oppose Chinese involvement in Ukrainian aerospace manufacturing. In June 2019, Ukraine’s government proposed that state-owned defense conglomerate UkrOboronProm and its Chinese counterpart Beijing Skyrizon Aviation – and junior partner Xinwei – could manage 25–50% of Motor Sich shares in a joint management. But Pentagon and NATO officials have repeatedly warned against the Beijing interest in Motor Sich: they believe that Chinese investment in Ukraine may be a double-edged sword for the country and its allies. There are also concerns that this Chinese acquisition could be helpful to Russi
China, Russia and Germany topped the list of Ukraine’s trade partners in 2019, with Beijing taking a firm lead. Ukraine increased its export and import numbers overall for trade in goods in 2019 compared to 2018, but the trade deficit for goods increased too, according to the State Statistics Service. Agriculture products remain Ukraine’s largest export. Through 2019, Ukraine exported $3.6 billion worth of goods to China and imported $9.2 billion.
The government predicts real wage growth of 8-9% in Ukraine through 2020, UNIAN reports. Sergey Nikolaychuk, the deputy minister of economic development said: “Adjusted for inflation, its rate will remain at a level close to last year… last year the real salary growth rate was at 9.8%.” Ukrainian President Volodymyr Zelensky has made living standards and earnings a priority and pledged to bring Ukrainian wages ($460) close to the level of neighboring Poland ($1,200), which is a member of the European Union.
Nikolaychuk also said that his office expects $3 billion in foreign direct investment through 2020. The best-case scenario, he added, could see that amount increase to $5 billion, UNIAN reports. The Ukrainian government has set itself the ambitious task of achieving 40% GDP growth over five years. To achieve this, officials admit they would need to attract $50 billion in investment throughout that period. At the same time, according to legal experts, the country loses $40-50 billion each year from tax base erosion as tax authorities still struggle to prevent the shifting of profits abroad.
The largest inflow of that investment is expected in agriculture, tech, infrastructure, energy, chemicals and the pharmaceutical industries, a bullish economy minister Tymofiy Mylovanov has said, according to Interfax-Ukraine. “I would single out these sectors… where we expect investments,” he said during a Monday presentation on economic strategy. In each sector, investment inflows of $5-10 billion are expected, the minister predicted.
Ukraine will cut back on state-backed gas production by 2% and open up the market to 28% more private production in 2020. At least, that’s what the state-owned energy giant Naftogaz predicted today in a statement, as reported by Interfax-Ukraine. Production of natural gas by Ukrgazvydobuvannia (a fully-owned subsidiary of Naftogaz) in 2020 will amount to 14.6 billion cubic meters, which is 2% less than in 2019. Production by private companies will meanwhile increase by 28.3%, to 5.9 billion cubic meters, the firm predicts. Ukraine is currently holding open tenders for gas exploration and extraction opportunities throughout the country. Somewhere around a trillion cubic meters remains untapped, experts have estimated.
The Ukrainian cigarette market has taken a hit, falling by 15% in 2019. The country produced 51 billion cigarettes in 2019, Interfax-Ukraine reports. This sounds like a lot but is still 15% less than in 2018. Country General Manager of Imperial Tobacco in Ukraine Rastislav Cernak said: “Compared to European countries, the decline in the volume of the cigarette market was indeed proceeding rapidly.” Excise tax on cigarettes was increased by 29% in 2019.
State road agency Ukravtodor will spend $4.6 billion on upgrading or repairing Ukraine’s dilapidated roads and highways through 2020. Throughout the coming year, some Hr 113 billion will be allocated to the much-needed construction and repairs throughout the country, Yuriy Golik, an adviser to the head of Ukravtodor told Liga.net.
The new terminal at Odessa Airport is fully open for business and receiving all flight transfers, Avianews reports. The airport has finally completed the transfer of all airline flights to its new terminal, which is now serving all arriving and departing travelers. Construction started on the new terminal back in 2012. The modern upgrade is intended to replace the 8,000 square meter, Soviet-era predecessor. It is 29,000 square meters and can accommodate up to four times as many passengers.
In April 2020, new low-cost Ukrainian airline Windrose will launch flights between the major regions of Ukraine, Avianews reports. Soaring above the dilapidated roads and rickety railways, Windrose has an ambitious number of connections planned. The schedule will include flights from the capital Kyiv to western Lviv in under an hour. Passengers can also fly Lviv-Odesa in an hour, Lviv-Kharkiv in 2.5 hours, and Dnipro-Lviv in an hour.
