- Poland, Ukraine, Slovakia and Hungary Compete for the Booming China-EU Rail Traffic
- Zelenskiy Loses 2nd Vote on Energy Minister
- Real Wages Grew 10% Last Year
- Hotel and Tourism Sector Prepare for Post-Covid Rebound
In a bold bid for China-EU rail traffic, Poland’s PKP Cargo plans to invest $1 billion in a village on the border with Belarus to create what the state company calls Europe’s largest and most modern and largest logistics center. With construction expected to start next year by PKP’s Cargotur unit, the center in Małaszewicze would handle at least two container trains an hour, according to Railway.supply news site.
PKP’s announcement is the latest China-oriented logistics investment planned for the 600 km Brest to Chop fault line that marks the rail gauge break between Soviet broad gauge and EU narrow gauge. Prospects for China-Ukraine container traffic are so good that DHL Global Forwarding Greater China recently produced a promotional video, “Full Steam Ahead for China and Ukraine.”
- In Ukraine, electrification of the 95 km stretches of track between Kovel, Volyn’s rail hub and the Polish border was discussed in an online meeting between Infrastructure Minister Vladyslav Krikliy and local European Investment Bank head, Jean-Erik de Zagon. In a Soviet legacy, a broad-gauge track runs halfway across southern Poland to the Silesian steelmaking city of Sławków. The bi-national plan is to turn Sławków into a rail and road hub for containers in the China-EU trade.
- Slovakia intends to turn its existing rail freight marshalling yard at Dobrá into a major East-West logistics hub. The Czech rail company Metrans already sends trains from China to Dobrá, which is three kilometers west of Ukraine’s border city of Chop, Zakarpattia.
- In Hungary, work has started on a $75 million road and rail hub in Fényeslitke, 25 km south of Chop. Capable of handling 1 million TEU containers a year, the East-West Gate will take advantage of a spur of broad-gauge track that crosses from Ukraine into Hungary.
President Zelenskiy failed for second time in one month to muster enough Rada votes to make Yuriy Vitrenko Energy Minister. Although Zelenskiy’s Servant of the People has a majority in parliament, Vitrenko won only 204 of the needed 226 to be ratified as minister. A reformist opposed to oligarchic influence in the energy industry, Vitrenko failed to win the votes of ruling party parliamentarians affiliated with Ihor Kolomoisky. Cheap electricity prices are keys to profitability of Kolomoisky’s aging and energy intensive metallurgy plants.
Timothy Ash writes: “This is a reflection of Vitrenko’s background as a proven reformer, and strong adherent to market principles, plus also opposition from oligarchic business groups in the Rada…underlines the challenges for Zelenskiy pushing through a pro-reform/market agenda…if Zelenskiy wants to reinvigorate reform he is going to have to reconstitute his alliances in the Rada.”
The IMF mission will extend its online review of Ukraine’s $5 billion program for another 10 days, reports Interfax-Ukraine. “It’s crucial for us to stay within the IMF program,” Finance Minister Serhiy Marchenko told Ukraine 24 TV. “We are in active talks…There are expectations that during this period we will finalize the memorandum.” With a freeze on gas prices scheduled to run until March 31, analysts predict that second quarter is the earliest the second tranche – probably for $700 million – could come.
Real wages rose by 10% last year, compared to 2019, reports the State Statistics Service. In nominal terms – without adjustments for inflation – December’s average salary was up 15.6% yoy. Nationwide, the average monthly salary was $506, almost three times the official minimum wage. Medical professionals enjoyed the biggest jump in salaries last year – 51%. Hotel and restaurant workers saw the worst performance – a 6% salary drop.
Kyiv had the highest salaries – $775 – double the level of Chernihiv, its north eastern neighbor. Chernihiv, had the nation’s lowest – $390. The regions with fastest growing salaries last year were: Ivano-Frankivsk +25.6%; Luhansk +25.2%; Ternopil +23.8%; Chernihiv, Chernivtsi and Sumy +23.4%; Rivne +21.9%; Kirovohrad +20.6%; Lviv +20.2%; Zhytomyr +20.1%, Khmelnytsky +19.4; and Zakarpattia +19.1%.
Ukrainian companies transported 11% less cargo last year compared to 2019, reports the State Statistics Service. Of the 600 million tons, Ukrzaliznytsia carried slightly over half – 305.5 million tons. The state railroad only a recorded a cargo drop of 2.4%. For the other modes of transport: trucks down 22%, to 191 million tons; river barges down 8%, to 5.6 million tons; airplanes down 6.7%, to 100,000 tons; and pipelines down 35%, to 58 billion cubic meters.
Passenger transportation dropped in half last year, reports the State Statistics Service. Of the 54% yoy drop, the biggest was air travel, down 64%. Train travel was down 63%. Car, bus and city transport were down by around 40%. Dragon Capital writes: “The drop in passenger transportation last year was the steepest on record.”
Kyiv Sikorsky, Ukraine’s second busiest airport, saw its traffic plunge by 63% last year, compared to 2019, the airport reports. Heavily dependent on Wizz Air and on charter flights, the airport records that 98% of its 704.500 passengers flew internationally.
Air traffic in and out of Kharkiv, Ukraine’s second largest city, dropped by 51% last year, slightly better than the nationwide drop of 64%, reported the Center for Transportation Strategies. Worldwide, passenger traffic dropped by 60%, hitting the level of 2003, International Civil Aviation Organization reports in a study headlined: „2020 passenger totals drop 60 percent as COVID-19 assault on international mobility continues.” For Ukrainian travel agencies, sales volumes fell by 70%, Pavlo Hryhorash, executive director of the national Association of Travel Agencies, tells Economic Truth website.
The number of Ukrainian tourists traveling abroad during the pandemic dropped by 70% — from 2.5 million in 2019 to 750,000 in 2020, Pavlo Hryhorash, chief executive of Ukraine’s Travel Agencies Association, told the Kyiv Post. Turkey and Egypt were the top two destinations.
Hotel, restaurants, bar and ‘creative industries’ lost about $3 billion since coronavirus control were first imposed, in mid-March, says Kyrylo Kryvolap, coordinator of working group to develop the National Economic Strategy. Maryana Oleskiv, head of the State Agency for Tourism Development of Ukraine, estimates that tourism losses alone add up to over $2 billion.
Facing collapsing demand, two thirds of Ukrainian hotels cut room prices last year, according to a 122 3-star hotels survey by the Association of Hotels and Resorts of Ukraine. Other responses included: upgrading facilities – 63%; and upgrading marketing – 33%.
Ukrainian resort hotels were almost entirely occupied during the Christmas-New Year holidays, Artur Lupashko, founder of the Ribas Hotels Group hotel chain, tells Interfax-Ukraine. Bukovel, the Carpathian mountain ski resort town, was 97% full, he said. Christina Kagui, head of resort hotels for Reikartz Hotel Group, said bookings were slow until the government assured the public that they would not be a Christmas-New Year lockdown. She said: “Official refutation of this information immediately stimulated the growth of bookings in all resorts.”
UIA resume flights between Tbilisi and Kyiv Boryspil. The resumption of twice a week flights comes as Georgia reopened on Monday to all airlines flying to Georgia. Tourism, a key component of Georgia’s economy, was severely hit by coronavirus travel restrictions.
- Ukraine Opens Its Treasure Chest of Minerals
- Ukraine Wants to Cut Electricity Connections to Russia and Belarus
- Red Tape Cutters Advance
- Cabinet Approves Subsidized Home Mortgages
Ukraine’s Geology and Subsoil Service aims to attract $10 billion in investments during this decade to develop a treasure chest of minerals, including lithium, titanium, uranium, nickel, cobalt and gold, Roman Opimakh, head of the agency known as Derzhgeonadr, told reporters. At a conference, Minerals of the Future, Opimakh presented 30 investments sites that are to come up this year for online auctions, the first one on Feb. 15.
Also going up for auction this year are rare earths and rare metals – tantalum, niobium, beryllium, zirconium, and scandium. These are found in the Ukrainian Shield, a 250km belt that runs 1,000 km through central Ukraine, from Rivne in the northwest to Luhansk in the southeast. Details of lots and licenses are posted on UkraineInvest Guide, the English-Ukrainian website of UkraineInvest.
Foreign mining investors are watching the experience of Avellana Gold, Ukraine’s only working gold mine, according to the Global Mining Review, a UK-based news site. Founded by Brian Savage, an American, Avellana had finished the construction of a new gravity plant in 2019, when corporate raiders attacked, aided by corrupt lower courts in Zakarpattia. Avellana prevailed in higher courts, partly with the help of Ukraine’s international business associations and with the support of higher officials. Today, the company is developing its Muzhieva deposit, located 40 km south of Mukachevo and believed to hold 55 tons of gold and 1 million tons of zinc and lead.
Up to €12 billion in public and private funding to go into “European Battery Innovation,” a project approved by the European Commission. With 42 companies enrolled in the project, almost €3 billion is to come from 12 EU countries and €9 billion from the private sector. Focusing on lithium-ion batteries for electric cars and batteries for power storage, “the project will cover the entire battery ecosystem, from raw material extraction, design and production of battery cells and blocks to recycling and disposal in a closed-loop economy,” reports Interfax-Ukraine.
Ukraine needs to disconnect from the energy system of Belarus and Russia and to join the European electricity market, through the European Network of Transmission System Operators, or ENTSO-E, two government ministers said recently. “We urgently need to disconnect from the unified energy system with Belarus and Russia, and connect to the European system,” acting Energy Minister Yuriy Vitrenko, said on Savik Shuster’s Freedom of Speech program. Vitrenko, who faces a confirmation vote in the Rada, added: “This will be one of my main tasks. So that we are private, in Europe, a normal market where there is no monopoly arbitrariness, and where there is a normal transparent price.”
Similarly, Foreign Minister Dmytro Kuleba told Ukraine 24 TV: “Ukraine’s goal is to join the European Union’s electricity supply system in 2023. This means we must cut off from Belarus and from the Belarusian system, and from the Russian one, and fully integrate into the EU system. We are following this path.” Currently only 4% of Ukraine’s electricity production and consumption – parts of Zakarpattia, Ivano-Frankivsk and Lviv regions – is connected to ENTSO-E, through Burshtyn Energy Island. The rest of the electricity network, the United Energy System of Ukraine, is connected to the systems of Belarus and Russia.
With only 40% of last year’s bills not paid to solar and wind energy producers, the government should pay up – or risk further tarnishing the nation’s investment image, the American Chamber of Commerce in Ukraine warned. Charging that the government is in violation of the repayment signed into law last August, the Chamber said more delays “will pose a direct threat to the investment climate in the country.“
The time needed to get electricity hooked up in Ukraine would drop from 270 days to 97, under a draft bill before the Rada, Mikheil Saakashvili, Head of Ukraine’s National Reform Council, writes in the Kyiv Post. By contrast, an electricity hookup in Russia takes 38 days. In the World Bank’s Doing Business ranking, Ukraine ranks in 128th place, out of 189 countries, for speed in getting electricity.
Starting September 1, government agencies would be prohibited from requiring paper documents if the information is already on government computers, under a bill drafted by the Digital Transformation Ministry. “Paperless is our little digital dream,” Minister Mykhailo Fedorov wrote on Telegram. “I recommend to not invest in the copier market.”
A program to subsidize home mortgages was approved by the Cabinet of Ministers. The government will pay the first 7% of the interest payment on a home mortgage loan. Currently, five banks offer mortgages at 10%. Aimed at young Ukrainian families, the program is for 15-year loans of up to $70,000 to buy a house or apartment built after 2015. Buyers must make a minimum payment of 15% of the cost of the dwelling. President Zelenskiy‘s website says: “Mortgage lending will promote economic development and create additional incentives for young Ukrainians to stay and work in their homeland.“
As interest rates dropped over the last two years, the size of mortgages increased by 43%, to $25,000, the National Bank of Ukraine reported recently on Facebook. However, 87% of the loans were for secondary homes, largely dachas. Last fall, the average effective mortgage rate on the secondary market was 14.9%. On the primary, it was 18.2%. The new home mortgage subsidy program is reserved for first time buyers.
Police carried out raids in Kharkiv as part of a multi-national effort to break up ‘Emotet,’ a malware network believed to have caused $2.5 billion in damages to banks and companies since 2014, reports Ukraine’s Attorney General Office. Authorities released photos of bank cards, cash and a room festooned with tangled computer equipment, but did not say if arrests were made in Ukraine. Simultaneous raids in the US, Canada, Ukraine and five EU countries cracked down on Emotet, which cyber criminals used to gain access to a victim’s computer and then to download trojans to steal banking passwords, reports Reuters. “Emotet is currently seen as the most dangerous malware globally,” Germany’s BKA federal police agency stated. “The smashing of the Emotet infrastructure is a significant blow against international organized Internet crime.”
- IFC Takes Key Step for Privatizing Ukrgasbank
- Ukraine Wants to Stretch Out IMF Program
- In a World Hungry for Yields, MinFin Lowers Bond Yields
- Western Temptresses: German and Polish Railroads Beckon Workers from UZ
In a symbolic step toward privatizing Ukraine’s state-dominated banking sector, the World Bank’s International Finance Corporation is extending a €30 million euro loan to state-owned Ukrgasbank, which can be converted into the bank’s equity shares. Ukrgasbank is one of four state-controlled banks, a group that has 60% market share in Ukraine. Last September, Ukraine’s government approved a goal of cutting this market share to 25% in 2025. Andrii Kravets, Chairman of Ukrgasbank’s Board said: “This step comes as a key milestone in privatising Ukrgasbank and curtailing the government’s share of the banking sector.”
“Ukrgasbank will be Ukraine’s first state-owned bank to go private,” the National Bank of Ukraine said in a press release. “The new €30mn loan lays the groundwork for the bank’s transformation.” Kyrylo Shevchenko, the current Central Bank Governor, ran the bank for a decade after its nationalization, building it into Ukraine’s fourth biggest bank, with $5.5 billion assets. “Over the past 10 years, Ukrgasbank has gone from a bank that was saved from bankruptcy in 2009 to an attractive asset for international investors,” Shevchenko said at Monday’s loan signing ceremony. “This partnership between the state and the International Finance Corporation will give customers access to cheaper resources from international capital markets.”
Concorde Capital’s Alexander Paraschiy writes: “Taking into account that Ukrgasbank was best-prepared for an international financial institution entering into its equity, and that the negotiation process with IFC took more than three years and ended up in just a loan, we can conclude that the timing of a privatization, or an IFI entering into another state bank, will be quite long.”
Ukraine wants to extend its $5.2 billion IMF loan program by another six months, to June 2022, reports LB.ua. Approved last June, the program was designed to release the money in five tranches through the end of this year. However, after an initial release of $2.1 billion, the program stalled due to the IMF’s perception that the Zelenskiy Administration strayed from the free market guidelines.
Concorde Capital’s Alexander Paraschiy wrote: “The Fund will demand the full restoration of the recently damaged anti-corruption infrastructure. Therefore, the lb.ua allegations are in line with our assessment that the probability of Ukraine of securing next IMF tranche in 1Q21 is below 50%. A likely delay of the next tranche is not a big risk for Ukraine’s public finances as soon as there is still a high chance for renewed cooperation with the IMF in 1H21.”
The Finance Ministry lowered yields on three of four-hryvnia Government Bonds it offered at auction, the Ministry reported on Facebook. By squeezing the supply of 6-month bonds, it lowered the average yield by 87 basis points to 9.86%. For 1.5-year bonds, the yield dropped seven basis points to 11.68%, and for 2-year bonds, the yield dropped 13 basis points, to 11.81%. For 3-year bond, the yield was unchanged at 12.15%. The Ministry auctioned the equivalent of $268 million, about 60% the volume of the prior week, according to the Ministry’s website.
The Finance Ministry sold last year the equivalent of $13.6 billion worth of bonds, reports the Ministry. About one third of the bonds were in foreign currency – $3.8 billion and €800 million. State banks led the list of top purchasers: Privatbank, Ukrgasbank, Oschadbank, OTP Bank, Ukreximbank, Citibank and Raiffeisen Bank Aval. Top dealers in the secondary market were: Citibank, OTP Bank, Ukrgasbank, FUIB, Raiffeisen Bank Aval, Alfa-Bank, Kredobank and Oschadbank. At the end of December, Ukrainian banks held 52% of the bonds, the central bank held 32.5% and foreigners held 8.5%.
With Argentina and Russia moving to curb corn exports, Ukraine is meeting domestic consumers half way, imposing an export quota of 24 million tons, 8% higher than what pig and poultry producers wanted. High world corn prices are pushing producing countries to make they keep enough at home for domestic needs. Halfway through the marketing year, Ukraine has exported about half of its new quota for corn, its largest export crop, reports the Economic Development, Trade and Agriculture Ministry.
Ukraine’s food exports to the EU slipped by 11% last year, to €6.5 billion, the Ukrainian Agribusiness Club reports on Facebook. Ukraine was tied with China as the third largest source of imported food for the EU. In terms of market share, the ranking was: Brazil – 9%; US – 8%; and China and Ukraine – 5%. Last year, Ukraine fully used its quotas for duty-free export to the EU for 11 product foods: honey, sugar, cereals and flour, starch, processed tomatoes, grape and apple juices, eggs, corn, poultry, and processed cereal products.
Poland, Slovakia and Hungary recruit heavily for Ukrzaliznytsia’s railway workers, leading to a growing labor shortage here, reports the Center for Transportation Strategies. “There are a huge number of job advertisements for railway workers in European countries, most of all in neighboring Poland, reports the story headlined: “How Ukrainian Railway Workers Leave the Country.” “The average age of people who quit and went to work abroad is 25-45 years,” a UZ union representative tells reporter Alina Kostyuchenko. Every year, about 5% of UZ’s 260,000 workers leave UZ before retirement.
“Dmitri lokfuhrer,” or Dmitri, the locomotive engineer, is the poster boy for Deutsche Bahn’s new Ukrainian language recruiting advertisement for Ukrainian train drivers. Featuring a video of Dmitri driving a late model DB passenger train, the announcement offers: assistance with relocation to Germany, up to 1 year training in Berlin or Leipzig, a compensation package, and an open-ended full-time employment contract with Deutsche Bahn. Requirements are higher education and B1, or intermediate, spoken German. Train engineer salaries in Germany are €3,500 a month, or five times the level in Ukraine.
- Biggest Crop Drop in 25 Years
- As World Food Prices Rise, China, Vietnam, Bangladesh Compete For Ukraine’s Food Exports
- Kernel Crushes Sun Oil Record
- Farmers Will Have to Adapt to Changing Climate
Drought, frosts and poorly timed rains caused Ukraine to suffer the biggest drop in farm production in a quarter century – 11.5% yoy, reports the State Statistics Service. Crop farming was down 13.9%. The grain harvest is expected to be down 10%, to 64 million tons.
Dragon Capital writes: “The drop in agricultural production in 2020, which became the sharpest since 1994, was mainly caused by a lower harvest, as late-crop yields were hit by poor precipitation.”
The USDA forecasts that Ukraine’s grain harvest will be down 8% this year, to 64.2 million tons. This will lead to an 8.5% yoy drop in total grain exports to 45.8 million tons, predicts the U.S. Department of Agriculture.
According to the State Statistics Service, animal farming fell by only 2.6%. Chicken were down 9.3%. Cows were down 6.2%. While pigs were up 2%, largely on the strength of investments in industrial piggeries.
With the declines in animals and birds, egg production was down 2.9% and milk production fell by 4.2%. Beef production was down by 17% and poultry was up 4%.
With the corn harvest down 15% yoy and prices at seven-year highs, Ukraine’s government decides this week on a request by pig and poultry producers to limit corn exports to 22 million tons – three times domestic needs. Traders fear this will create more turbulence in the Black Sea market. Russia, fearing unrest over rising food prices, plans to impose a higher export tax on wheat and corn in March.
China nearly tripled its purchases of Ukrainian corn last fall, to 3.6 million tons, according to APK-Inform. Compared to the same October-December period, the EU cuts its purchases by 39%, to 2.7 million. Egypt was the third largest importer of Ukrainian corn, 900,000 tons, down 19% yoy. Overall, China bought 40% of Ukraine’s corn shipments last fall.
Bangladesh will step up wheat purchases from Ukraine on the news that Russia imposing an export tax on wheat, Mosammat Nazmanara Khanum, the top civil servant at Bangladesh’s food ministry, tells Reuters in Dhaka. Russia has only supplied half of the 400,000 tons of wheat it had promised Bangladesh this year.
Vietnam nearly doubled its imports of grain from Ukraine last year, Taras Kachka, Ukraine’s deputy minister of Economic Development, Trade and Agriculture, writes on Facebook. With two-way trade expected to hit $1 billion this year, Kachka writes: “We have agreed to resume work on the FTA agreement with Vietnam.” Kachka and Vietnam’s Ambassador to Ukraine also agreed to establish Vietnam House in Kyiv and a Ukraine House in Hanoi.
With Russia and Argentina imposing export restrictions on wheat, the export price of Ukrainian wheat has hit a six year high, reports APK-Inform. Deputy Economy Minister Kachka writes on Facebook: “Already, the number of requests for cooperation on food security from foreign partners has increased significantly.”
Fueling purchases of Ukrainian food, weather irregularities and Covid-19 supply chain disruptions pushed world food prices in December to the highest level in six years, according to the FAO Food Price Index. “Food around the world was 7.5% pricier than the 2014-2016 average,” reports the UN’s Food and Agriculture Organization.
Ukraine’s Kernel, the world’s largest producer and exporter of sunflower oil, crushed a record 1 million tons of oil seeds Oct-Dec, boosting oil sales by 23% yoy, to 425,340 tons. During the second half of last year, Kernel increased oilseed processing by 5%, to 1.7 million tons, and oil exports by 11%, to 721,580 tons. India and China are the two largest importers.
The EBRD is considering approving next month an $80 million loan to Kernel for the purchase, storage, processing, transportation and export of agricultural goods. As of last June, Kernel’s net debt was $980 million.
Ukraine’s overall exports of vegetables oils were up 5% to a record 6.6 million tons in the marketing year that ended last August. Vegetable oils accounted for 5% of Ukraine’s sea-borne exports, according to Stark Shipping’s Annual Report on the Export of Ukrainian Vegetable Oils.
Climate change poses an increasing challenge to Ukraine’s ambitions to become an agricultural superpower, Anna Ackermann writes in an Atlantic Council Ukraine Blog. “The single most striking and alarming factor about the changing weather conditions in Ukraine during 2020 was the scarcity of rain,” writes Ackerman, a board member at the Kyiv-based Ecoaction Centre for Environmental Initiatives. “The Ukrainian agricultural industry relies heavily on rainfall, but rain was irregular throughout the past year and fell 8% below annual norms.”
Due droughts and “unusually intense spring frosts,” Ukraine lost almost 800,000 hectares of crops this year, Ackerman writes. She warns: “While southern regions of the country slowly adapt to the lack of rainfall and develop sophisticated irrigation systems, droughts are now becoming an increasingly commonplace feature in the agricultural regions of northern and northeastern Ukraine, where such conditions were not previously an issue.”
Oleh Bakhmatyuk, owner of Ukrlandfarming, reported that he has shut down 37 companies and let go 13,000 employees. He blamed “unprecedented legal pressure” from Artem Sytnyk, director of the National Anti-Corruption Bureau. Three years ago, he blamed his problems at Ukrlandfarming and Avangardco on then-governor of central bank Valeria Gontareva. It is unclear how real are the troubles of the group, Ukraine’s largest egg producer. However, ptichki.net website reports that wholesale prices of eggs have jumped 73% over the last two months.
Concorde Capital writes: Bakhmatyuk’s “scapegoating approach can only partially explain all the business troubles that Ukrlandfarming and its related Avangardco (AVINPU, AVGR LI) have had since late 2016…Conducting a clean business would help in that cause, as we don’t see Sytnyk’s campaign as being baseless.”
Ukrainian dairy producers charge that imported milk, butter and cheese are driving them out of business. Facing competition, largely from the EU, only 160 dairy producers survive – about one quarter the number of a decade ago, Vadym Chaharovsky, head of the Union of Dairy Enterprises, tells Interfax-Ukraine. According to the State Customs Service, cheese imports almost doubled last year in dollar terms to $210 million, butter imports increased 2.5 times to $41 million, and milk and cream imports more than tripled, to $12 million.
- China Vacuums Up Ukraine’s Grain
- Low Oil Prices Cut Ukraine’s Import Bill by One Third
- 2020 Was a Lost Year for FDI
- Turks Look at Chornomorsk
- Covid Falls, Restaurants, Stores and Gyms Reopen Today
China’s imports of Ukrainian grain are soaring during this marketing year, the Ukrainian Grain Association reports, citing figures released at an Agro meeting at Ukraine’s Embassy in Beijing. In the first seven months of the grain marketing year, China has imported 6.9 million tons from Ukraine – more than the 6.3 million tons imported during the 2019/2020 marketing year. During the 2020 calendar year, China was the largest importer of Ukrainian grain, buying 20% of Ukraine’s total exports of $9.4 billion, said Serhiy Ivashchenko, acting executive director of the Ukrainian Grain Association.
After the United States, Ukraine was the world’s second largest grain exporter in the marketing year that ended June 30, Taras Kachka, Deputy Minister of Agriculture and Economy, told the International Grains Council last week. Citing USDA figures, Kachka said Ukraine ranked 2nd in barley exports, 4th in corn exports and 5th in wheat exports. After a poor harvest this fall, Ukraine may fall behind. During the first seven months of the current marketing year, exports are down by 6.3 million tons, a drop of almost 19% yoy.
DHL and Ukrzaliznytsia plans to develop China-bound trade from UZ’s left bank rail wagon marshalling yard at Liski, Logistics Manager, an Asia-oriented logistics news site, reports in a story headlined: “Full Steam Ahead for Ukraine & China to Drive Rail Connectivity.” Freight from Ukraine’s neighbors can be consolidated in Kyiv for shipping east in container trains. “There is a lot of excitement for those watching trade developments between China and Ukraine,” says Steve Huang, CEO of DHL Global Forwarding Greater China. “Further to China’s newly-established position as Ukraine’s top trading partner, recent reports have revealed Ukraine’s plans to start negotiations on a free trade agreement with China.”
Ukraine saved $3.4 billion last year on oil imports, cutting its import bill by 36% yoy, reports the State Customs Service. In volume terms, Ukraine cut imports by 5%, to 8 million tons. Top suppliers were: Russia – $1.2 billion; Belarus – $1.2 billion; Lithuania – $400 million.
Industrial production dropped last year by 5% yoy, reports the State Statistics Service. Manufacturing was down 7%. Other big drops were: coal mining down 13%; and electricity generation down 6.6%. On the upside, steel was up 6.5% and cement was up 7%. In 2019, industrial production was down 1.8%, cancelling out a 1.1% growth in 2018.
Net foreign direct investment in Ukraine was the worst in 20 years, Lenna Koszarny Founding Partner and CEO of Horizon Capital, said at a discussion of the draft National Economic Strategy 2030. Looking at negative flows for first nine months, she said: “We hope that net FDI will go to zero.” To get Ukraine on a growth track, she said the government’s goal should be: judicial reform, capital market reforms and investment reforms.
Last year’s remittances from Ukrainian workers abroad totaled $12 billion – almost five times the net direct foreign investment of $2.5 billion. In 2018, net FDI added up to $2.4 billion. Kyrylo Kryvolap, Executive Director of the Center for Economic Recovery, said that since independence, Ukraine’s economy has attracted $50 billion in FDI, while Poland attracted over the same period $240 billion.
Despite coronavirus travel controls, worker remittances are expected to be near last year’s level. Ukraine’s State Border Guard Service reports that 35% of the 11,250,000 border crossings out of Ukraine last year were to Poland. While Ukrainians were largely barred from visiting the EU for tourism in 2020, travel was permitted for work. Outbound crossings were: Poland – 4 million; Hungary – 1.6 million; Russia – 1 million; Turkey – 965,000; Egypt – 730,000; Romania – 626,000; Belarus – 496,000; Slovakia – 336,000; Moldova – 328,000; Germany – 222,000; and UAE – 100,000. Ukraine received 3.4 million foreigners, 30% of the outbound flow.
The sale of large state companies starts this year and will not be reversed, Prime Minister Shmygal vowed at the meeting to debate the National Economic Strategy through 2030. He added: “Investors have liquidity today. Objects for privatization in Ukraine are extremely interesting.” He said planned companies for sale this year include: three regional power generators, five combined heat and power plants, the Bolshevik plant, the Odessa Port Plant, the United Mining and Chemical Company, and the President Hotel.
To promote investment into Ukraine, UkraineInvest is creating up to 70 information offices in Ukrainian embassies around the world, Serhiy Tsivkach, executive director of the Investment Promotion Agency, said at the National Economic Strategy meeting. The agency is working with the Foreign Ministry and the Ukrainian World Congress. Ukraine has 78 embassies and 45 consulates.
Turkish companies are interested in investing in Chornomorsk container terminal and railway and ferry complex, Infrastructure Minister Vladyslav Krykliy reports after meeting with executives of three Turkish companies: Busserk, Çalık Holding, and NIKO Group. One of Ukraine’s busiest black sea ports, Chornomorsk has a car ferry to Derince, near Istanbul.
DTEK Energy plans to launch solar and wind projects in the EU as early as this year, DTEK Renewables CEO Maris Kunickis tells Bloomberg in an article headlined: “DTEK Looks Abroad After Ukraine Backtracks on Green Support” Behind DTEK’s drive to diversify, Bloomberg writes: “In 2020, government only paid for 50% of produced energy to renewable producers. The retroactive cut jeopardizes Ukraine’s goal of having a 25% share of renewables in electricity production in 2035.”
Ukrainians bought two thirds of their long-distance train tickets online last year, reports Ukrazaliznytsia. By buying 12.9 million tickets through the Internet, at booking.uz.gov.ua, travelers had easy access to fares, seat selection and discounts. Two weeks ago, UZ launched ticket sales through Viber and Telegram, facilitated by chatbots. On the first day, 17,000 people took advantage of the new service.
The longest train ride in Ukraine is also one of its five most popular, reports Ukrazaliznytsia. Every day, Train No. 45 sets off from Uzhgorod or Lysychansk, Luhansk, ambling across Ukraine making at least 40 stops and averaging 53 km/hour (33 mph). The train takes 31 hours and 15 minutes to travel 1,653 km, slight longer that the distance from Marseilles to Berlin. Last year, 461,500 people rode the train, most for small segments.
Ukraine imported a record amount of wine last year – $180 million. Top supplying countries are: Italy – $ 29 million; France – $ 27.5 million; and Georgia – $26 million. Over the last decade, Ukraine’s wine production dropped in half, partly due to the loss of Crimea, partly to due to red tape blocking small producers, and partly due to imports. EU exports to Ukraine are expected to increase this year after duties dropped to zero on Jan. 1.
The original English version is from our partner UBN – Ukraine Business News. For more information and news archive, go to: www.ubn.news.
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