From metalworker to millionaire investor — not many people follow Vasyl Khmelnytsky’s career path.
Today Khmelnytsky, 52, is pouring money into information technologies, solar power, and a range of small-sized businesses. He touts himself as an “investor in Ukraine’s future.”
The millionaire’s highest-profile investments are in Unit City, an industrial park for tech people, and UDP Renewables, a solar power station builder. But he also organizes the annual Kyiv International Economic Forum, and owns Sikorsky International Airport in Kyiv (formerly Zhuliany), the Ocean Plaza mall, and investment group UFuture. He also co-owns pharmaceutical plant Biofarma.
While Khmelnytsky is a successful businessman, he has also dabbled in politics, which hasn’t always burnished his reputation.
At one point, he was a lawmaker for the Batkivshchyna Party. Then, in 2007, he switched to the Party of Regions of fugitive former President Viktor Yanukovych, something he called an “unavoidable move” to save his business at the time. He left the Party of Regions just before the EuroMaidan Revolution, four years ago.
While his critics still bring up that association with the pro-Russian political force, Khmelnytsky feels he has nothing to be ashamed of.
“I adapt to the conditions around me. We all adapt to the environment around us,” Khmelnytsky told the Kyiv Post. “If it’s better, we’re better too, developing good habits and killing the bad ones. That’s life.”
Khmelnytsky claims he never wanted to be in politics in the first place, and when the opportunity arose, he quit. These days Khmelnytsky says he doesn’t follow the news from parliament and prefers to focus on developing his investment activities across Ukraine.
Multimillionaire Vasyl Khmelnytsky (L) walks towards his private helicopter, passing solar panels of the UDP Renewables power plant in Kyiv Oblast on Sept. 26, 2017. Khmelnytsky plans to invest up to $200 million in the Ukrainian renewable industry. (Kostyantyn Chernichkin)
First million
Despite being out of politics and owning no media to promote his interests, Khmelnytsky says people still question his integrity. The millionaire thinks it’s because Ukrainians are used to connecting financial success with fraud.
“Everyone asks about my first million,” he said. “And people can’t accept I could earn the money honestly. For them, it’s easier to just pretend that it was stolen.”
Meanwhile, he said, his critics are mostly “ineffective people.” He says he doesn’t take their criticism personally, but thinks Ukrainians’ perception of entrepreneurship in general is distorted.
“They think running a business is bad, involves dishonesty,” he said. “They should know it’s vice versa — cool and honorable.”
“I earned my first million myself, with my own hands. Literally,” he added, telling the story of how he went to Russia’s St. Petersburg to be a laborer on construction sites.
After that, he got into the oil-production industry. He worked with a group of builders who worked on the side maintaining oil derricks in Russia. His team repaired the derricks, which sometimes doubled their oil output. For this, the owners of the sites paid Khmelnytsky’s group with oil.
The builders founded a company and started processing the oil and selling it in Russia, they set up a branch in Ukraine to sell it here too. Khmelnytsky was the head of this Ukrainian branch, which separated off from the group in 1994 to run independently.
And that’s how he earned his first million, he claims.
With this money, Khmelnytsky started building his business empire, investing in traditional sectors first, such as real estate and infrastructure, and later in pharmaceutical production, renewable energy, and IT.
At various times Khmelnytsky has owned shares in Ukraine’s fourth-largest steel maker Zaporizhstal, telecoms operator UMC (later MTS and now Vodafone Ukraine), utility company KiïvEnergoHolding, bank Khreshchatyk (now bankrupt and liquidated), and soft drinks producer Rosinka.
“It’s easy to say that someone just steals rather than gets up early, always learns a lot, and makes big mistakes but doesn’t cry over them,” Khmelnytsky said.
“Today I invest in the future. I don’t want to make excuses about the past, it’s meaningless.”
Khmelnytsky’s wealth stands at $114 million, according to estimates by Ukrainian magazine Novoye Vremya.
Good old farming
One of the spheres in Ukraine that has immense potential to bring in investment money and enrich Ukraine’s future is “good old agriculture,” Khmelnytsky said.
“But it needs a better strategy,” he added.
Ukraine is one of Europe’s leading exporters of corn, wheat, and sunflower oil. But Khmelnytsky argues the country should stop merely selling raw materials abroad, and instead set up its own factories to process them into value-added goods.
So just as Ukraine stopped exporting sunflower seeds and started making oil out of them — creating new jobs and bringing extra money to the state budget — the same should be done, for example, with wheat, to make cereals, flour, pasta and other wheat products for export, Khmelnytsky said.
Foreign and local investors understand that value-added agriculture production could be a lucrative field, but Ukraine’s poor business and investment climate puts them off. It is still more profitable for them to buy raw materials in Ukraine, ship them to an EU country, and process them there, according to Khmelnytsky.
“Ukraine just needs to create and nurture the right conditions to keep those investors inside the country, to make them process products here,” he said.
Vasyl Khmelnytsky talks with the Kyiv Post on Oct. 19 during the annual Kyiv International Economic Forum. (Kostyantyn Chernichkin)
Regional development
Ukraine is a large country and there’s plenty of room to grow its economy beyond its industrial centers and big cities. So another way to increase the state’s wealth is to develop these regions, Khmelnytsky believes.
However, not all regional development is good regional development, he said.
“What do mayors do today? They build roads and playgrounds,” he said. This is politically driven development, designed to appeal to voters. Instead, decisions should be driven by economic considerations, he said.
The very first things that have to appear in a town or a small city are factories of all sizes and businesses, “no matter how tiny.” These will create jobs, people will spend more money, and towns will have larger budgets, Khmelnytsky argues.
“And when you get a budget surplus, go ahead and build those roads and playgrounds,” Khmelnytsky said. “Anyway, it’s a dangerous idea that we just need good roads: Greece took loans and built roads to its beaches. And now what? Now they need to give the money back.”
Good roads are needed, he said, but to connect enterprises, not just to protect the public’s cars. First set up businesses, then worry about upgrading the roads, he said.
“It’s cool to drive along a good road to Odesa, but for this kind of money one could have first set up 500 small factories and that would have been much better for the region and the country as a whole,” he said.
“Building roads and playgrounds, as well as malls and hotels — that’s not for me. There should be firms to create jobs, to pay taxes, and to export more goods proudly labeled ‘made in Ukraine.’”
The Kyiv Post’s technology coverage is sponsored by Ciklum and NIX Solutions. The content is independent of the donors.
