Ways to stimulate foreign investment in Ukraine took center stage at the 4th Kyiv Post CEO Dinner in the Hyatt Regency Hotel on May 23.
The event was sponsored by DHL Express Ukraine and S&P law firm, formerly Syutkin and Partners.
Ukraine is clearly starved for investment, getting only $4.4 billion last year, with cumulative stocks dwindling to less than $50 billion since 1991 independence. This has left Ukraine a laggard among European countries, with economic output likely to be less than $100 billion this year for 44 million people.
Yet the nation has so many promising and underdeveloped parts of its economy – from agriculture to information technology and manufacturing, among others — that investors are expected to come, given the right conditions.
To create those conditions, Ukraine needs to protect businesses from corruption and unlawful treatment. Fairly or unfairly, Ukraine’s image abroad has suffered from Russia’s war, domestic political fights and a steep devaluation of its hryvnia in recent years.
Some progress has been made, nonetheless, in changing the perception of Ukraine as a high-risk country to one that has stabilized and whose economy is back on the growth track.
Support from the International Monetary Fund, the European Union and other international institutions and governments has been key in helping Ukraine map its turnaround. The IMF, for instance, has lent more than $8 billion out of a potential $17.5 billion in loans by the end of 2018, allowing Ukraine to achieve macroeconomic stability. But aid to Ukraine is conditional. The IMF has stressed the need for Ukraine to make deep structural changes, including creating an anti-corruption court, introduce a market for agricultural land sales, cut the deficit in the pension fund and selloff many of its 1,800 state-owned enterprises.
Another bright sign: business is going well for many existing companies. Theoretically, the success of existing businesses should attract newcomers to the market, but that is not happening in large numbers in Ukraine.
Participants touted the need for Ukraine to better showcase its success stories and promote its opportunities. More positive news in the media about the country and the companies that prosper, with support from the government, would be very helpful, some participants said.
International events can be a catalyst for improving Ukraine’s image abroad, with the Eurovision Song Contest serving as the latest example. Ukraine hosted the 42-nation international song contest, an annual tradition since 1956, with daily events from April 30 to the final show that ended early on May 14.
The event drew thousands of foreign tourists. Some first-time visitors expressed pleasant surprise by the attractiveness of Kyiv and the young, vibrant nation they found, helping to dispel unflattering stereotypes.
Word of mouth among businesspeople, however, is often more persuasive than any national promotion campaign. Therefore, it’s crucial for Ukraine’s businesspeople and international missions to spread positive stories.
But, in the end, no amount of advertising and marketing will have a lasting effect if the actions of government officials don’t match their words. While Ukrainian officials have been good at making promises, they’ve been less successful at keeping them.
Law enforcement agencies have been oppressive and restrictive, harming private sector development.
Taxation and legal protection of businesses were popular topics, including poor administration of the tax system and reports of corruption. As many investment discussions do, rule of law and protect property rights are seen as prerequisites for Ukraine to attract significant investment.
Participants in the 4th Kyiv Post CEO Dinner included:
Oleksandr Danyliuk, finance minister of Ukraine;
Vadim Sidoruk, country manager at DHL Express Ukraine;
Nataliya Osadcha, partner at S&P;
Yulia Kovaliv, head of the Office of the National Investment Council;
Ulyana Khromyak, deputy director at Ukraine Invest;
Pavel Gorbunov, deputy general director at SOCAR Energy Ukraine;
Tom Reed, CEO at JKX;
Vasily Bovdilov, general manager at Unilever;
Haim Kapelnikov, CEO at Avis;
Petro Rondiak, head of the management board at Winner Group Ukraine;
Isabelle Dumont, ambassador of France to Ukraine;
Anna Derevyanko, executive director of European Business Association;
Andriy Samusenko, head of supervisory board at Mondelez Ukraine.
The Kyiv Post was represented by:
Mohammad Zahoor, publisher and chairman of the ISTIL Group;
Luc Chenier, CEO;
Alyona Nevmerzhytska, commercial director
Bermet Talant, staff writer; and
Oleg Petrasiuk, staff photographer.
See coverage of previous Kyiv Post CEO dinners here:
1st Kyiv Post CEO Dinner guests talk about how business can help government, April 27, 2016
2nd Kyiv Post CEO Dinner guests discuss cloud computing, July 5, 2016
3rd Kyiv Post CEO Dinner guests debate foreign aid to Ukraine, Sept. 28, 2016