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  • Germany’s Used Diesel Cars Flow to Ukraine
  • Banks Make First Profits Since 2013
  • Online Auctions Sell State Properties
  • Make Market For Farmland Rents
  • First New Highrise in a Decade Proposed for Kyiv
  • Boryspil: Europe’s Fastest Growing Airport in its Size in 2018
  • Foreign Exchange Freedom Starts Today
  • Agro Businesses Power Crop Growth
  • Sunflowers Up, Sugar Down
  • Oil & Gas Tenders Advance
  • Central Bank Wants to Cut Inflation in Half This Year
  • Banker Survey: Loans to Grow
  • Foreign Trade Hits $100 billion
  • Food Sales to EU up 50% Since 2016
  • €4.5 Billion to Upgrade Roads, Railroads, Ports and Airports in the 2020s
  • GDP Grew by 3.4% in 2018
  • Dragon and AVentures Invest in Ciklum
  • Retail Up
  • E-Commerce Up More

With diesel bans spreading through Germany cities, 71% of the 51,500 used cars registered in Ukraine last month were diesels. Volkswagen, Opel, Audi and BMW accounted for about half of the imported used cars. Further depressing prices of Germany’s 15 million diesel cars, manufacturers are offering trade in deals, offering new, lower emission for older models. In coming years, diesel bans are expected to take effect for the city centers of Athens, Copenhagen, Paris and Madrid.

After four years of losses, Ukraine’s banks collectively earned a profit last year — $775 million. In 2016, the banks lost $1 billion. Part of the profits came from expansion of retail lending in hryvnia, which increased by about 30%, says Kateryna Rozhkova, first deputy governor of National Bank of Ukraine. Of the nation’s 77 banks, 64 were profitable. The most profitable were banks with foreign capital and PrivatBank. The main losses took place at Russian state capital, which underwent severe restrictions.

Foreign direct investment totaled $2.5 billion last year, reports the National Bank of Ukraine. About $1.5 billion of the total went into the real sector. For an economy the size of Ukraine’s — $125 billion – foreign direct investment should be five times higher, over $12 billion economists say.

Mini-privatizations – the sale of state properties under $9 million – are on track, with auctions selling 187 properties in January. During the rest of 2019, 605 more properties are to go on sale, reports the State Property Fund. Started six months ago, the program has brought $25 million to the state treasury and has released hundreds of properties to the private sector.

Since September, rents for 301 state-owned plots of farmland have been set through electronic auction, reports the Justice Ministry. Using Blockchain technology, OpenMarketLand has been the electronic platform, often serving to set land lease prices in a transparent way. So far, the government has netted $1.1 million through the new leasing system.

After a decade long drought in high rise construction starts in Kyiv, a Ukrainian group wants to build a 100-meter tall hotel and office complex at 107-109 Velyka Vasilkivska, facing the Palace of Ukraine metro station and concert hall. Located midway between St. Nicholas Roman Catholic Cathedral and Ocean Plaza shopping mall, the builders, Ukrzhitlobud, would need a city variance for rising higher than the 27-meter limit on buildings in the historic district. Nashi Groshi news site notes that building permits have been given for ‘hotels’ that end up being apartment buildings. Of the 11 buildings in Kyiv higher than 110 meters, eight are residential. All were built in the 2000s. The last one, No. 1 Obolon Embankment, was completed in 2013.

Kyiv Boryspil’s 19.4% passenger growth rate last year was the highest of any European airport of its class, 10 to 25 million passengers. According to Airports Council International Europe, runners up were: Moscow Vnukovo — +18.4%; Budapest — +13.5%; Warsaw Chopin –+12.8%; and St Petersburg — +12.1%. By comparison, the average growth rate for non-EU European airports last year was +8.3%. Boryspil handled 12.6 million passengers last year. With more growth expected, Boryspil reopens Terminal F in April.

Albania, Greece and Italy are targets for new, scheduled flights from Kyiv. Italy’s Ernest Airlines plan to launch flights this summer from Kyiv Sikorsky to Tirana, Rome and Genoa. (On March 21, it starts flights from Kharkiv to Rome and Milan.) On March 31, Wizz Air starts flights from Kyiv Sikorsky to Athens and Thessaloniki. On the same day, Greece’s Astra Airlines is to launch Kyiv-Athens service on its BAe 146 regional jets. Two days later, on April 2, Ryanair starts flights from Kyiv Boryspil to Athens.

Starting from February 7, foreign currency exchange rules are liberalized in a package of laws drawn up under a guiding philosophy: “Everything that is not directly prohibited is allowed.”

Replacing laws dating back to 1993:

– Currency controls are abolished on transactions up to UAH150,000, currently $5,360.- Individuals

– Ukrainians and foreigners

– will be allowed buy foreign currency online up to UAH 150,000 per day.

– To transfer foreign currency abroad, licenses are abolished and replaced by electronic limits: €50,000 per year for individuals; €2 million per year for companies.

– For foreign individuals, the limits for sending money abroad without having a bank account in Ukraine are increased 10-fold, to UAH150,000, or $5,360.

– Ukrainian companies are allowed free use of accounts in foreign banks, except for transferring funds to their accounts

– The doubling of the deadline to settle export-import operations – to one year.

Most major banks will offer account holders the option to buy foreign currencies online, Oleh Churiy, deputy governor of the National Bank of Ukraine, predicted to reporters Wednesday. “Some already starting Feb. 7. Some maybe later.” Asked if the new laws mean the end of Ukraine’s ubiquitous exchange shops, he said no. “After all, they work not only with the population, but also with the “gray” and “black” markets.”

Starting Friday March 1, the central bank cuts the mandatory amount of foreign currency that businesses must sell for hryvnia to 30% of export earnings, from 50% today, Churiy said. Without specifying dates, he said the Bank will eventually abolish this limit and the limit of on repatriation of dividends. As the first step on dividend repatriation, he said the bank plans to raise the monthly limit to €10 million, from €7 million today.

Olha Trofimtseva has been promoted to Acting Minister of Agrarian Policy and Food, replacing Maxim Martyniuk who was appointed Acting Minister two months ago. Trofimtseva earned a doctorate in agricultural science from Humboldt University of Berlin and worked for a decade for German farm companies and institutions. Fluent in German and English, Trofimtseva became well known to foreign investors after becoming Deputy Agriculture Minister for European Integration in September, 2016.

Farming companies powered last year’s big jump in grain and bean production, the Statistics Service reports. Production by agro businesses increased by nearly 17%. Family farm production was flat. Overall, production rose by 12.7% to a record 70 million tons. Year over year, the big gainers were: corn – up 44% to 36 million tons; barley – up 11% to 7 million tons; rye — up 23% to 400,000 tons; and rice – up 8% to 69,000 tons. The big loser was wheat – down 6% to 25 million tons.

Ukraine increased sunflower production last year by almost 16%, strengthening its lead over Russia as the world’s largest producer of sunflower oil. Production increased to 14.2 million tons, according to the Statistics Service. Other oil seeds also increased: soy – up 14% to 4.5 million tons; and canola up 25% to almost 3 million tons.

The EU may expand its Ukraine import quotas for beef, pork and poultry, Ukraine’s Agrarian Confederation reports, drawing on comments to the Rada Agricultural Committee by Christian Ben Hell, head of Agriculture section of the EU Delegation to Ukraine. Noting that Ukraine’s food exports to Ukraine have increased by one third since 2017, he reportedly said: “We are doing everything possible to enable Ukrainian products to enter the EU markets. In particular, we plan to expand the quotas for the supply of beef, pork, poultry products.”

With $2 billion in American, European and Chinese windpower investment planned for Ukraine’s Azov Sea coast, Troshchenko pitched visiting EU and European Investment Bank officials for financing for a German-made Liebherr LHM 550 mobile harbor crane to unload and store wind turbine blades. Logistics operator Holleman Ukraine is considering building a warehouse at Berdyansk for windpower equipment. Denmark’s Vestas Wind Systems A/S, General Electric Wind Energy and China Machinery Engineering Corporation are already using Berdyansk, the closest port to the three largest wind projects. In the last year, 12 ships with oversized wind turbine cargo docked at Berdyansk.

Tender terms for Ukraine’s first petroleum sharing agreements since 2012 will be released in two weeks, reports Drilling for web site. Companies will have until mid-May to submit applications. The 12 PSAs are expected to be valid for 50 years. To stimulate investment, winners will have to spend $16 to $36 million in the first five year on seismic research and exploration wells. Foreign companies are encouraged to bid.

Separately, the government puts up for auction on March 6, 10 blocks for production under a royalty formula. A second auction, of seven blocks, will be auctioned on April 29. Oleh Kirilyuk, director of Ukraine’s Geological and Mineral Service, described these seven blocks last week in London as “more than 2 thousand square kilometers, {with] the estimated resources of more than 2 billion cubic meters of gas.” By the end of this year, government plans to auction off rights to 30 onshore blocks. Foreign companies can participate through Ukraine subsidiaries.

Determined to cut inflation in half – to 5% next year – Ukraine’s central bank retained its key interest rate at 18%, the highest level in Eastern Europe. The interest rate was hiked by two percentage points last year, contributing to inflation falling to 9.8% in 2018. Economic growth this year will be 2.5%, down from an estimated 3.3% last year, predicts the National Bank of Ukraine. High interest rates contribute to a vicious cycle: with interest rates high, local entrepreneurs can only turn to friends and family for business loans; a lack of good paying jobs prompts labor migration; wage remittances – currently $1 billion a month – fuel demand, pushing up inflation.

Loans and deposits will grow in 2019, Ukrainian bankers tell the central bank in a survey of 61 Ukrainian banks, accounting for 96% of all banking assets in the country. Three quarters of banks surveyed predict growth of corporate loans and 62% of respondents predict growth of consumer loans. Two thirds predict growth in deposits from the public and from businesses. “The value of deposits is the highest in the entire history of observations,” the National Bank of Ukraine said, referring to the quarterly survey. The bankers did not predict a change in interest rates this year.

Ukraine’s foreign trade recovered to $100 billion last year, according to the National Bank of Ukraine. Exports were up 9%, to $43.34 billion, while imports were up by 14%, to $56.3 billion, leaving a trade deficit of $13 billion. For exports, the growth champions in dollars were: grain – up 11%; and metals up 15%. On the import side, the big growth sectors were: energy — up 15%; engineering products –up 18%; food up 18%; and industrial goods – up 21%. With the loss of much of the Donbas industrial area, Ukraine’s foreign trade last year was 28.5% below the 2014 level of $140 billion.

If reelected this spring, President Poroshenko promises to improve the rule of law, allowing Ukraine to become one of the top 50 countries in the world for investors by 2022. Currently, Ukraine ranks in 71st place, out of 190 countries, in the World Bank’s Ease of Doing Business index. In 2014, at the start of his presidency, Ukraine was in 87th place. In an interview with “Ukraine” TV channel. Poroshenko also promised to make Ukraine self-sufficient in energy. The presidential election vote will be March 31, with a second runoff round on April 21.

Ukraine’s food exports to the EU have increased by 50% since 2016, hitting $6.3 billion last year, reports Olha Trofimtseva, Deputy Agriculture Minister for European integration. Last year, the top three products were: grains –$2.2 billion; oil seeds — $1.1 billion; and vegetable oil –$1.1 billion. The top five buyers in the EU were: the Netherlands — $1.2 billion; Spain — $1 billion; Italy — $739 million; Germany –$667 million; and Poland — $657 million.

With food processing growing, Ukraine is moving from “Europe’s breadbasket” to “supermarket of the world,” Trofimtseva tells EURACTIV. She calls for more investment in food processing and agro tech.

The best aid for Ukraine is free trade, argues Ben Aris, editor/founder of bneIntelliNews. “If the West really wants to help Ukraine, it should drop the quotas on imports from the Ukraine – or at least greatly expand them,” he writes. “Business would boom and investment should flow behind very quickly.” Noting that Ukraine’s egg and poultry sector “could largely destroy the industry in Western Europe,” he says: “If quotas are to be lifted it would have to be done in steps.” Noting political realities, he adds: “Relaxing the restrictions on Ukrainian exports to Europe would benefit everyone, except the European agricultural lobby.”

Ukraine’s poultry exports jumped by 30% in dollars last year, hitting $507 million, according to the State Fiscal Service. In volume terms, exports were up 21%, to 329,000 tons. Top buyers were: the Netherlands, Slovakia and Saudi Arabia. Last year, Ukraine rose in the world ranking of chicken exporters to 6th place, overtaking Russia and Canada.

Through 2023, €4.5 billion in low interest loans have been committed to support 39 infrastructure projects to upgrade many of Ukraine’s highways, ports, airports, and railroads to EU standards. Largely designed to speed freight and passengers on east-west lines between Ukraine and the EU and to move export goods to the Black Sea ports, the aid is coordinated by the European Commission and is composed of European Investment Bank and World Bank loans and some grants, Infrastructure Minister Volodymyr Omelyan tells reporters.

The building package includes: 13 highways — €2.15 billion; nine ports — €873 million; nine rail — €851 million; six airports — €470 million; and two river projects — €112 million. Several projects will be open to public-private partnerships.

Ukraine’s GDP grew by 3.4% last year, reports Stepan Kubiv, Minister of Economic Development and Trade. Ukraine’s GDP grew by 2.5% in 2017 and by 2.3% in 2016. The 2018 growth is the highest since 2011, when growth was 5.5%.

Dragon Capital and AVentures Capital have acquired minority stakes in Ciklum, the London-based IT outsourcing company with about 3,000 employees in Kyiv. Andriy Nosok, Dragon’s Managing Director and Co-Head of Private Equity, said: “We believe that ongoing global digital transformation will support increasing demand for IT solutions and services, and that Ciklum is very well positioned to capitalize on this sustainable trend.” Michael Boustridge, Ciklum CEO, said: “This investment will continue to propel Ciklum’s rapid growth in delivering cutting edge technologies to clients around the globe.” All three companies are privately owned and the investment amounts were not made public.

Retail trade in Ukraine increased 6.1% in real terms last year, slightly below the 6.5% increase for 2017. The biggest jumps were in Ukrainian-controlled Luhansk – up 27% — and Donetsk – up 14%. Fueled partly by remittances from Ukrainians working abroad, retail was one of the three pillars of growth last year’s 3.4% growth – led by agriculture – up 8.2%; and construction – up 6.3%. Concorde Capital’s Evgeniya Akhtyrko writes: “We expect real retail to increase 6-7% yoy in 2019. It will be driven by real disposable income growth.”

E-commerce grew by 31% in Ukraine last year, the second fastest rate in Europe, following only Romania’s 37%, according to the Better Regulation Delivery Office, or BRDO, a regulatory advisory body funded by the EU. While growing faster than the world average of 24%, Ukraine has plenty of room to grow, Alexander Kubrakov, BRDO IT director, tells reporters. In 2017, online accounted for 3.2% of retail sales in Ukraine, compared to 8.8% in the EU, 10.2% in the US, 17.8% in Britain. To further promote online sales, the BRDO recommends the government allows online stores to email sales receipts, instead of requiring they issue printed paper receipts.

 

The original English version is from our partner UBN – Ukraine Business News. For more information and news archive, go to: www.ubn.news.