Belgium companies in Ukraine say they are committed to the nation.Like everyone else, Belgian firms took a hit in 2014 when the nation’s economy contracted by almost 7 percent and the hryvnia lost 48 percent of its value against the dollar. But they are not remaining idle. Many have large projects planned.
During the first 10 months of 2014, Belgian investments nearly doubled to 85 million euros over the previous year.
In 2013, Ukraine’s exports to Belgium were 366 million euros, while imports reached 632 million euros. Exports to Belgium last year increased by 6 percent, while imports fell by 25 percent, with total turnover at about 900 million euros.
ACP Ukraine
Volodymyr Yarmola, the regional manager of ACP, a liquid and dry ice carbon dioxide producing company, says that his firm is planning to build two factories. Since building a single factory can take up to five years, ACP needs a stable business environment.
“ACP has a long-term commitment, and we don’t consider the Ukrainian market as a fast-money market,” Yarmola says. “Belgians are very old fashioned in doing business. They are very careful in their approach.”
Today the company exclusively imports carbon dioxide products from ACP’s branch in Poland, and the transportation costs are expensive.
“It’s absolutely clear that we have to build a plant here in Ukraine,” says the 40-year-old Yarmola.
The company launched its Ukrainian operations in 2010 and now has two offices, one in Kyiv and another in Lviv.
The team of 10 employees managed to sell 15,700 tons of carbon dioxide, worth more than 3 million euros, in 2013. In 2014, the company’s annual revenue fell by 17 percent compared to the previous year. Despite the drop, the company managed to occupy more than 10 percent of market share after four successful years of development.
ACP’s clients are predominantly in the beverage industry, including PepsiCo. But the company also serves food-processing and agricultural firms. Yarmola specifically sees potential growth for his company in Ukraine’s agricultural industry, since greenhouses use carbon dioxide.
“The agricultural business will grow in Ukraine,” he said.
Yarmola’s confidence is also encouraged by visible changes in the judicial system. Last year the company won a court case against customs officials who were demanding bribes.
When ex-President Viktor Yanukovych refused to sign a far-reaching political association agreement with the European Union at the end of 2013, the company almost turned its back on the Ukrainian market. No longer, although small steps should turn into bigger ones. “We see the good trend for improvement. But it’s still not enough,” Yarmolenko says, emphasizing that anti-corruption laws need to be further developed.
Puratos Ukraine
Serhiy Solovey, 41, became the CEO of Puratos Ukraine in 2012, four years after it entered Ukraine’s market. The supplier of ingredients to bakeries and chocolatiers, has an office in Kyiv. Its factory in Odessa burned down in 2014 and they are now planning to build a new one. In the meantime, their products are being imported from Belgium.
But the company’s tragedy did not stop Puratos’ ambitions. Just recently it invested 8 million euros into further development, including rebuilding the factory.
Unlike many other companies in Ukraine, Puratos grew in 2014, with 10 million euros in annual turnover.
Solovey thinks that growth could have been even better with tax reform and less bureaucracy and product regulation. “The (state) inspections do not support the business. They are only thinking about how to earn money in their pocket,” he says.
He wants to see reforms similar to those in Poland 20 years ago, when the country experienced deregulation and trimmed down its bureaucracy. Similar actions by the Ukrainian government will attract international businesses, he says.
“We still have a Soviet-type regulation of business. You cannot develop your business properly if you have such kind of regulation or law environment.”
Kyiv Post staff writer Ilya Timtchenko can be reached at [email protected].
Belgium at a glance
Total area: 30,528 square kilometers
Capital: Brussels, home of the European Union and NATO
Population: 11.1 million (2015)
Government type: federal parliamentary democracy under a constitutional monarchy
Head of state: King Philippe
Head of government: Prime Minister Charles Michel
GDP, PPP: $466.4 billion (2013)
GDP per capita, PPP: $41,663 (2013)
Main exports: Machinery and electrical equipment, chemicals, vehicles, metals, diamonds
Ukrainian-Belgian relations
Trade: $943.9 million (2014)
Exports from Belgium to Ukraine: chemical products, machinery & equipment, transport equipment, food, plastics
Exports from Ukraine to Belgium: Vegetable products (57.2 percent), chemical products, base metals, mineral products, textiles
Belgian investment in Ukraine: $102 million (cumulative as of Oct. 2014)
Main investors: TPF (real estate), Schreder (street lights), Sun InBev Ukraine (beer), Puratos (food ingredients), Sibelco (industrial minerals), Melexis (IT), Siniat (Etex-Group) (gypsum extraction and building materials), Reynaers Aluminium (aluminium profiles)
Source: Embassy of Belgium in Ukraine, BBC News country profile, Belgian Foreign Trade Agency, Belgium.be, World Bank
