Dutch companies see progress in Ukraine’s economy, but want more of the tedious bureaucracy eliminated.
There are around 250 Dutch businesses active in Ukraine. They span a wide range of industries such as horticulture, construction, retail and banks. Among those that are growing the most are agriculture, energy efficiency and information technology, according to the Dutch Embassy in Ukraine.
They all can be found by visiting: http://orange-directory.com.ua/
“This amount… hasn’t increased but we also don’t see that many companies that have left Ukraine,” said the embassy’s deputy head of the economic department Anneloes Viveen. “Despite all the challenges, they are here to stay.”
The Dutch bank ING is one of them. In Ukraine since 1997, the corporate bank now has around 180 customers. Its country head manager Erik Versavel joined the ING Ukraine team in 2011.
Although customers have suffered from Russia’s war, the corporate banking sector allows clients to be more flexible. Many of them have international support from parent companies and manage their working capital better, Versavel said. Ukrainian companies, however, are generally more dependent on the now-suffering industries of steel, energy and coal production, says the ING head.
His bank has around 30 local corporate clients and its client portfolio hasn’t changed much since 2013, despite the difficulty of repaying hard-currency debt because of the hryvnia’s depreciation.
Onur Anliatamer, chairman of the management board of Credit Europe Bank Ukraine, says that lenders are more cautious. Even with a more stable macroeconomic picture, Ukraine’s legal system severely restricts a bank’s decision-making. “The legal system is quite slow and it takes for us a lot of efforts and time to really take over collateral from the non-performing loans,” the Turkish native says.
Evert Jan Krajenbrink, agriculture counselor at the Dutch Embassy said that stifling government bureaucracy takes up too much time from business.
Unpredictability is dissuading other Dutch companies from coming to Ukraine. Viveen cites the central bank’s currency restrictions and the pervasive black market as some of the obstacles.
Numerous dysfunctional banks create distrust towards financial institutions. Among them, Anliatamer says, are “pocket banks” in which consumer deposits are lent to the bank owner’s businesses. “This is obviously not healthy,” Anliatamer says.
There is progress, however, with more than 60 banks shut down in the last year. It still leaves at least 140 banks. Anliatamer believes that 30-40 banks are a more optimal number.
The lack of a clear vision of how the sector will look like in the mid-term is another obstacle, ING Ukraine’s head said. Investor confidence will not return if there is no clear plan on how the capital and currency controls will be lifted.
“These are the two core items foreign investors look at,” Versavel says.
While Ukraine is still a high-risk country for investments, Anliatamer says it is also potentially a high reward. “If they invest now, the return will be much higher,” he said.
But Russia’s war will keep investors waiting. “They don’t trust Russia… they don’t know if Russia will continue the invasion,” Anliatamer said.
Versavel tries not to call today’s situation a “crisis.” He says that Ukraine has gone through many difficulties since its independence in 1991. “If you look at it like that, it is possible to adjust your business model and not suffer too much,” he added.
Despite all of the hardships, however, “Ukraine is more on the Dutch radar” compared to 2013, Viveen said.
Kyiv Post staff writer Ilya Timtchenko can be reached at [email protected]
