- Dubai’s DP World Buys Control of Black Sea Container Terminal
- Bank Profits Triple
- Kyiv Boryspil Was Europe’s Fastest Growing Big Airport in 2019
- Kherson Airport Comes Alive
- With Coronavirus Cutting Cargo Flights From China, AliExpress Addicts Face Cold Turkey
Dubai’s DP World, one of the world’s largest port operators, is buying control of TIS Container Terminal in Pivdennii, Ukraine’s deepest and busiest Black Sea port. “The container terminal has entered the world’s largest group, which means it will gain access to innovations, IT solutions, expertise,” Andriy Stavnitser, co-owner and CEO of TIS wrote on his Facebook page. He did not disclose the value on the investment.
Opened 12 years ago in Pivdennii, 45 km east of Odesa city, the terminal feeds 15 container trains leaving every week for Chernihiv, Dnipro, Kharkiv, Kyiv and Ternopil. Last year, TIS increased its container handling 75%, to 220,000. Overall, Ukraine handled 1 million containers, up 18% from 2018. By contrast, DP World handled 71 million containers.
DP World CEO and Group Chairman Sultan Ahmed Bin Sulayem, said of his company’s investment: “We are pleased to expand our presence in Ukraine. DP World praises the growth potential of the TIS Container Terminal…Our strategic partnership will enable the TIS Container Terminal to strengthen its position on the sea map of the world.”
Legal advice was provided by CMS Cameron McKenna Nabarro Olswang in Kyiv. Graham Conlon, managing partner of the Kyiv office, said: “This is the third major joint venture transaction on which we CMS have advised our client in recent times – and certainly one of the highest-profile port infrastructure transactions in Ukraine.”
Separately last month, Qatar’s QTerminals won a 35-year concession to operate Mykolaiv’s Olvia port. Neville Bisset, QTerminals CEO, says his company plans to invest $25 million a year for five years to convert the port into a major grain hub. Facing each other across 400 km of the Arabian Gulf, Qatar and Dubai are rivals and do not have diplomatic relations.
Bank profits nearly tripled last year, hitting $2.5 billion, Kateryna Rozhkova, first deputy governor of the National Bank of Ukraine, writes on Facebook. “A new historic record,” she writes. “I will disappoint critics that these are not super-profits of state-owned banks from government bonds. This is the real profit of the banking sector. If you look at the interest income of state-owned banks, the government bonds invested are only 12%.”
Looking at return on equity, Rozhkova says Ukraine’s ratio of 34.2% outperformed the region. The European average was 7%. In neighboring countries: Hungary – 18%; Romania – 17%; and the Czech Republic – 16%.
With interest rates dropping, big profits won’t last. Rozhkova warns: “Will there always be such high returns? No, due to the slowdown in inflation, interest rates will be reduced and therefore the banks’ interest margins will be reduced.”
Ukraine’s top most profitable banks last year were: PrivatBank – $1.3 billion; Raiffeisen Bank Aval – $195 million; FUIB – $107 million; Ukrsibbank – $106 million; and OTP Bank – $104 million. Of Ukraine’s 75 operating banks, 69 were profitable in 2019.
This year, The central bank plans to conduct stress tests on 16 banks, down from 29 in 2019. The banks are: Savings Bank, Alfa Bank, Ukreximbank, FUIB, Universal Bank, Southern Bank, Tascombank, Megabank, A-Bank, Sberbank, Credit Bank Dnipro, Bank Vostok, MTB Bank, Investment Bank , Pravex Bank, and Forward Bank.
Kyiv Boryspil was Europe’s fastest growing major airport last year, ACI Europe, the European airport trade association, reports from Brussels. Growing by 21.1%, Boryspil was the fastest growing airport with more than 10 million passengers of the 46 European area airports tracked by the association.
By contrast, passenger traffic at EU airports increased by 3.3% last year, down sharply 5.4% in 2018. At non-EU European airports, passenger traffic growth dropped by almost two thirds, to 3% in 2019. In its report, the Council cited “impressive growth posted by airports in Ukraine +22.3%.”
Kharkiv, with 40% passenger growth, and Lviv, with 39% growth, should have been placed 4th and 5th in the ranking of airports handling less than 5 million passengers. It is not clear why they were omitted.
As Wizz Air and Ryanair duel across Ukraine for passengers, Wizz Air representatives will inspect Kherson airport next week, the only Ukraine airport where Wizz Air does not compete with Ryanair. Vitaliy Kucheruk, Kherson airport director tells Uvidpustku that he expects Wizz Air to start flights in late spring. Located 125 northwest of the line of control with Crimea, Kherson airport draws passengers from the Russia-controlled peninsula.
From Kherson, Ryanair recently started flights to Katowice and Krakow. Next month, Lauda, a Ryanair unit, starts flights to Vienna. Ryanair plans to carry 100,000 passengers from Kherson this year, Chiara Ravara, the airlines marketing director, tells the Center for Transportation Strategies. Ukraine’s eight largest airport, Kherson is expected to increase its passenger flow from 150,000 last year to 200,000 this year.
After Wizz Air announced a 6-week suspension of service to Odesa due to the airport’s slow motion runway work, Ryanair Airlines jumped in yesterday, announcing ‘rescue rates’ for Wizz Air passengers. During Wizz Air’s April 26-June 5 suspension, Ryanair will offer €20 to €28 tickets on flights to all of Wizz Air’s destinations from Odesa: Berlin, Budapest, Gdansk, Katowice, and Wroclaw. It is unclear why Ryanair can fly out of Odesa and Wizz Air cannot.
‘European integration offices’ are to open in all regions of Ukraine, with the pilot office opening in May in Kherson, Dmytro Kuleba, vice prime minister for European and Euro-Atlantic Integration, said Thursday in Kharkiv. Funded with a mix of government and EU money, “the offices will be set up to attract investment and promote European values at the regional level and provide training,” reports Ukrinform.
Foreign tourism to Kyiv grew 5% y-o-y in 2019, to two million people, according to the city’s Tourism and Promotion Office. Last year, tourism tax revenues doubled, to $2.5 million. Early last year, Kyiv started to implement a new national law extending lodging taxes paying guests staying at private residences, a measure aimed at Airbnb.
Due to the coronavirus outbreak, Kyiv will not participate in the mid-May China Travel Trade Show in Shanghai. Instead, Kyiv will participate in the Arabian Travel Market in Dubai, from April 19 to 22.
With coronavirus prompting air cargo flight cancellations, Ukrposhta has stopped delivering packages to China. Packages from China still arrive, but with delays. During the first three quarters of last year, Ukrposhta delivered more than 20 million parcels from China. Ukrainian orders through AliExpress grew by 70%, making Ukraine the second fastest growing market for the Chinese online merchandiser. Last year, Ukraine became one of top 10 markets in the world for AliExpress.
- Card Operations Almost Equal (Official) GDP
- Mortgage Rates Approach Affordability
- Sugar Prices Do a U-Turn
- Truckers Snarl Kyiv Traffic, Demanding More EU Permits
- Post Brexit, EU and UK Court Ukraine
Ukraine is moving fast from cash to cards, reports the National Bank of Ukraine. In the last year, the number of card operations increased by 29%, to 5 billion, and by 24% in volume, to the hryvnia equivalent of $146 billion. Moving from ATM cards to payment cards, Ukrainians used 42 million cards to pay for $74 billion in goods and services. For reference, Ukraine’s official GDP last year was $150 billion.
With the government seeking to steer more transactions through official – taxable – channels, Ukraine’s network of point of sale terminals expanded last year by 20%, to 333,800. This number has doubled in five years. In the latest vogue, contactless cards more than doubled in number last year, from 3.9 million, to 8.6 million.
Home mortgage rates should fall below 15% per annum this year, Kateryna Rozhkova, first deputy governor of the National Bank of Ukraine, said Wednesday. “Three reasons why banks do not want to issue mortgage loans are: a moratorium on the recovery of property on foreign currency loans, unprotected rights of creditors, and the non-transparent primary housing market,” said the central bank officer. On Tuesday, President Zelenskiy said mortgages rates should fall to 10%.
Ukrgazbank opens this month a specialized mortgage unit, offering hryvnia loans of up to $200,000 for 20 years at 15.5%, the state-owned bank reports. Requiring a down payment of only 20%, the bank says it wants “to make affordable housing available to most Ukrainian families.” Of the 320 mortgages issued by the bank recently, 40% are for homeowners in Kyiv.
A unit of KfW, German’s state-owned development bank, is investing €30 million in an Eastern Europe technology fund that will be heavily weighted towards Ukraine. DEG will be the anchor investor in the New Da Vinci Capital Technology Fund III. About half of the money will be invested in Ukraine, estimates Robert Grant, the American financial veteran who will head the Fund’s Ukraine operations.
The Cabinet of Ministers decided last Wednesday to set up the Public Debt Management Agency of Ukraine, Prime Minister Honcharuk writes on Telegram. Modeled after similar agencies in Austria, Germany and Sweden, this agency will centralize all public debt transactions. Honcharuk said that through careful management the Finance Ministry was able to save $800 million in debt service expenses last year. In 2019, Ukraine’s state and state-guaranteed debt increased in dollar terms by $6 billion, or 7.7%, to $84.4 billion.
President Zelenskiy meets with the leaders of the European Business Association, the American Chamber of Commerce in Ukraine, and the Union of Ukrainian Entrepreneurs. “We welcome macroeconomic stability in the state, we want it to continue,” EBA Executive Director Anna Derevyanko told Interfax-Ukraine would be one of her messages. “We are for continued cooperation with the IMF.”
Spelling relief for Ukraine, Europe’s largest sugar producer, global sugar prices surged 12% in the first six weeks of this year, reports Bloomberg. Behind the rise, drought cut crops in Thailand, frosts wrecked crops in the US, and Brazil channeled more of its cane crop into ethanol. Facing weak prices, Ukraine’s sugar refiners cut their production last fall by 19%, to 1.5 million tons. Then last week, Indonesia, the world’s largest sugar importer, announced plans to increase imports 11-fold to build a 1.3 million ton stockpile. Commodities trader ED&F Man Holdings Ltd. forecasts that last year’s world surplus will switch to a 10% deficit this year.
Truckers partially blocked major highways into Kyiv Wednesday, including the highway from Boryspil airport. Long haul trucks were parked around the Cabinet of Ministers and the Rada, turning many of central Kyiv’s streets red on Google maps. The truckers demand an end to highway weighing camera systems and to a new online system of allocating EU trucking permits. Fueling much of the anger was Poland’s decision to slash trucking permits for Ukrainians by one third last year, to 180,000.
With truckers often facing multi-day waits to cross into the EU, the main truckers group, the Association of International Road Carriers of Ukraine, demands binational customs stations and talks to increase quotas for permits with Austria, Italy, Poland, Romania, Turkey, and Hungary. Last week, Ukraine and Belarus agreed to abolish the need for trucking permits between the two countries.
Prime Minister Honcharuk responded that talks are ongoing with Poland and that the government will not abandon online distribution of permits. He vowed: “We will not make any compromises and concessions. We will not allow rollback to the old non-transparent schemes.”
Oleksandr Aronets, a Kyiv Region councilman, wrote on Facebook in a less diplomatic tone: “Kyiv is drowning in traffic jams…and they protest against “re-weighing!!!” Yes, break the roads even more, because stupid Ukrainians will pay for road repairs anyway!”
The EU wants to increase trade with Ukraine, Olivér Várhelyi, the EU’s new Commissioner for Neighborhood and Enlargement, said Tuesday on his first visit to Kyiv. “We are open to facilitate as much as we can trade between the EU and Ukraine,” said Várhelyi, a Hungarian lawyer. Referring to “an industrial visa-free regime” or the Agreement on Conformity Assessment and Acceptance of Industrial Products, he said: “We will hopefully be in a position to make big progress still this year, by starting the actual negotiations.”
With EU aid, Ukraine wants to fully synchronize its energy system with the European Network of Transmission System Operators for Electricity, or ENTSO-E, Prime Minister Honcharuk said at a press briefing in Kyiv with EU Commissioner Várhelyi. “By 2023, we plan to fully synchronize the Ukrainian energy system with the European Network,” said Honcharuk. “This goal can only be achieved in close cooperation with the EU.”
Under Brexit, the UK plans to abolish EU duties on Ukrainian seamless steel pipes, reports Interfax-Ukraine. The duties would be abolished next Jan. 1. Other EU trade restrictions affecting Ukrainian goods are under review.
By lowering duties on agricultural imports from Ukraine, the UK government can deliver voters a post-Brexit win, Bate Toms, chairman of the British Ukrainian Chamber of Commerce, writes in a letter to the Financial Times. “The EU treaty restricts EU, and thus still UK, access to Ukrainian food, limited price competition with German, French and other EU farmers,” Toms writes. “Ukraine is the principal available food resource to lower UK food costs and addresses Britain’s future farm needs.
- Chief of Staff Switch: Better Relations with Russia and Trump?
- March 1 Kickoff for $4.5 billion Roadbuilding Campaign
- Diya App is an Overnight Hit
- Germany, France: The Future Face of Ukrainian Labor Migration
President Zelenskiy fired Andriy Bohdan as chief of staff last Tuesday, replacing him with Andriy Yermak. For Ukraine’s six-month-old government, the move is seen as elevating a pragmatist in relations with Russia, improving relations with the Trump White House, and distancing the President from oligarch Igor Kolomoisky.
“Senior appointments in Moscow and Kiev point to tentative thaw,” Reuters headlines in a story reported in both capitals. Reuters notes that Yermak negotiated two prisoner swaps in meetings last fall with Dmitry Kozak, the Kremlin’s new point man for Ukraine policy. In a Ukraine 24 TV interview recorded before his appointment, Yermak said of his Russian counterpart: “We had constructive communication, without which nothing would be possible of what we have already seen.”
The Washington Post wrote: “The shake-up Tuesday also could signal a closer alignment with the Trump administration. The new chief of staff, presidential aide Andriy Yermak, had met with President Trump’s personal lawyer Rudolph W. Giuliani and was mentioned multiple times during Trump’s impeachment hearings and trial.”
Noting the Bohdan had been a key lawyer for Kolomoisky, The Financial Times said his firing is “a step likely to be welcomed by the country’s western backers.” Similarly, Dragon Capital emailed investors: “Bogdan’s resignation would be welcomed by those concerned about his prior ties with tycoon Igor Kolomoisky.”
Concorde Capital notes the deep business experience of Yermak, aged 48, writing: “He chaired the Association of Kyiv Entrepreneurs, founded a media company and produced several films, as well as having stakes in more than a dozen businesses.”
On March 1, Prime Minister Honcharuk plans to fire the starting pistol on an “unprecedented” $4.5 billion road building campaign that is to rebuild and repair 5,000 km of roads across that nation by November. Funded partly by Gazprom’s $2.9 billion payment in December, the massive roads program is to hire 12,000 new workers in a drive to upgrade 4,000 km of roads linking regional capitals.
“We must build in order to destroy – destroy the stereotype that Ukraine and good roads are not compatible concepts,” President Zelenskiy said in a forum turned pep rally for the program, officially called “Knit Together Ukraine.” He said 80% of the work should be for rebuilding highways, not patching potholes. “That startup – pothole filling – should become a thing of the past,” he said. Turning to contractors who game the system, he called on regional officials and Ukravtodor, the state highway agency, to repress “tender trolls.”
In another bureaucratic barrier, only 15 of the 24 regions have submitted their lists of roads to be rebuilt. Others are in the process, but Lviv, Sumy and Zakarpattia “must immediately submit their plans,” the President said. The laggard regions are going through leadership turnovers, he said.
To prevent “the asphalt from being scraped off with the spring snow,” Zelenskiy promised to crack down on overweight trucks. This year, the government is installing 200 Weight in Motion camera systems, designed to nab overloaded trucks, usually on roads leading to the Black Sea ports.
Oleksandr Yaroslavsky, president of Development Construction Holding, the largest building group in Eastern Ukraine, told reporters at the forum that he plans to build this year 100-300 km of roads for $100-300 million. He said he has found a “strategic partner” without specifying it is a foreign or domestic road building company.
This spring, as road building is underway, officials of Ukravtodor, the state highway agency, plan to place up to $800 million in Eurobonds to help finance the work. At the forum, the agency’s new head, Oleksandr Kubakov said: “The country has a chance to get normal roads, to upgrade the main network in two to three years. But, this year, we can show a really unprecedented level, an unprecedented amount of construction.”
The Finance Ministry’s weekly auction pushed the average yield on 14-month dollar bonds down to a record 3.39% per annum. Bidding also pushed average yields on hryvnia bonds down to the 9.5%-10% range. In the auction, the Ministry raised $375 million, selling $202 million in dollar bonds and $173 million equivalent in in hryvnia bonds.
The EU is extending €25 million in aid to the “eGovernment and Digital Economy Support Program,” according to an agreement signed last Tuesday in the Cabinet of Ministers. “Digitization is, first and foremost, a victory over corruption,” Prime Minister Honcharuk writes on Telegram. He repeated the Zelenskiy administration’s goal to digitize 100% of the most popular public services by 2024. He writes: “No officials and queues! The state will be a convenient service for people.”
Diya, Ukraine’s new e-governance portal, topped 1 million downloads in four days after its launch. Almost 650,000 people downloaded the version for Android devices. Almost 400,000 others downloaded for iOS, or iPhones, Oleksiy Vyskub, Digital Transformation Deputy Minister, writes on Facebook.
President Zelenskiy aims to raise the wages to near Polish levels by the end his term, in the summer of 2024. Currently Poland’s average monthly salary of $1,286 is 2.5 times greater than Ukraine’s average monthly salary of $500. Adjusted for Poland’s higher taxes, the real ratio might be 2:1. If Ukraine’s average salary can reach 70% of Poland’s, or $900, many Ukrainians would not be tempted to migrate there for work, Zelenskiy says in a video address. “I really want our average salary to be the same as in Poland,” he says. “Why like in Poland? Because there are already millions of Ukrainians in Poland. And they will return only if there is motivation.”
The high wage countries of Europe – Germany and France – may represent the future of Ukrainian labor migration in the 2020s, writes David Saha, of the German Advisory Group. “The openness of EU countries to labor migrants from Ukraine may increase further,” he writes in a new study posted by Vox Ukraine. “Due to demographic change and their aging populations, many countries including the old member states such as Germany or France will increasingly face shortages of workers and may adjust their immigration policies accordingly… increasing demographic pressures in Ukraine’s neighbors to the West will make labor migration easier in coming years.”
Foreign airlines increasingly fly over Ukrainian airspace, according to the latest figures of UkSATSE, the national air traffic controller company. In January, overflights were up 14.3% y-o-y, to 8,180 – the fastest growing segment for controllers. By contrast, Ukraine’s domestic flights were up by 1.5%, to 1,783, and international flights were up 2.8%, to 11,540. After July 2014 the shutdown of Malaysia Airlines Flight 17 over Russia-controlled Donbas, overflights of Ukrainian territory plummeted and UkSATSE lost half of its budget.
- Inflation Falls to 3.2%
- Interest Rates to Follow in March
- IT Startups Win Attention – and Money
- Wizz Air Looks at Domestic Flights
January inflation was 0.2%, dragging y-o-y inflation down to 3.2%, reports the State Statistics Service. Last year, inflation was 4.1% — less than half the 9.8% recorded in 2018. Pulling down prices, natural gas prices dropped by 21% in January. Two weeks ago, the National Bank of Ukraine lowered its 2020 inflation forecast to 4.8%. The median forecast of economists surveyed by Bloomberg puts 2020 inflation at 4.6%.
The government will continue its low inflation policy because low inflation will allow the central bank to cut interest rates this year, Timofei Milovanov, Minister of Economic Development, Trade and Agriculture, writes on Facebook. Milovanov, a former economics professor in the United States, writes: “Low and controlled inflation is the key to long-term economic growth and a condition for low nominal and real interest rates. In economic history, there are almost no examples of stable economic growth at high rates with significant inflation.”
With Ukraine’s 11% prime interest rate more than three times the inflation rate, analysts predict another big cut in interest rates at the central bank’s next monetary policy meeting – on March 12. Timothy Ash writes from London: “Makes real rates at 11% look very high – lots of room to cut.”
“For Ukraine’s Zelenskiy, GDP Warrants Cloud Economic Good News” headlines a story in Bloomberg. Noting that the GDP-linked warrants have tripled in price since they were issued during the 2015 restructuring, Bloomberg reports: “The government estimates its cumulative obligations for the warrants could exceed $10 billion by maturity in 2040.” Higher GDP, over 3%, means higher payouts. The jump in warrants price to over $1 is part of a wider financial recovery for Ukraine. The article reports: “Ukraine’s currency and foreign bonds handed them the highest returns among all emerging markets in 2019, according to the Bloomberg Barclays Index.”
Prime Minister Honcharuk expects 2020 GDP growth to be 4%. He tells Ukrainska Pravda: “According to our estimates, we can reach 4%.”
“Zelenskiy must not miss his chance to change Ukraine” writes Anders Aslund in the Atlantic Council Ukraine Alert blog site. “Ukraine looks ready for an economic lift-off,” the Swedish-American economist writes. But then he warns: “The government now needs to free the forces of growth by guaranteeing private property rights and thus attracting both domestic and foreign investment.” He sees two problems: cuts in ministerial salaries invites corruption, and lack of a reform leader invites drift. He concludes: “President Zelenskiy needs to stand up and embrace his reforms.”
Foreigners can “soon” apply for Ukrainian e-residency, a status modeled after Estonia’s six year old virtual residency program, Jaanika Merilo, Estonian-Ukrainian advisor to Ukraine’s new Ministry of Digital Transformation and Innovation, writes in the Kyiv Post. She asks: Why would they want to? Taxes, she replies. IT entrepreneurs are taxed in Ukraine at 5% – well below 50% European rates. In reverse, 4,000 Ukrainians are already e-residents of Estonia, getting access to PayPal, securing EU property rights and taking advantage of Estonia’s ease of doing business and declaring taxes. With Ukraine’s new government announcing new digital steps weekly, Estonia often is in the background as a digital role model.
“The Entrepreneur Helping Ukraine’s Startup Talent To Go Global,” headlines a Forbes article about David Gilgur, founder of Vimes Consulting. Last year, Gilgur launched Blue Lake, a British-Ukrainian startup accelerator. Building on a first crop of 17 Ukrainian startups going through the program, Gilgur plans to “have 30 Ukrainian startups per year at the Blue Lake Accelerator in London,” Alison Coleman writes for Forbes.
The new $18-million Ukrainian Startup Fund has issued grants ranging from $25,000 to $50,000 to eight startups. Chosen from finalists at the Fund’s first Pitch Day, on Jan. 25, the winners came from a field of over 1,000 applicants.
Odesa-based Intertelecom is buying a 4G license for over $7.4 million, becoming Ukraine’s fourth carrier to provide the high-speed mobile internet. Valid for a decade, the license will allow the company to provide 4G across Ukraine.
Ukraine, the world’s top sunflower oil exporter, increased exports by 59% during the first half of the 2019/20 season, APK-Inform consultancy reports. Exports totaled 2.1 million tons, up from 1.3 million tons during the same time last year. Last year, Ukraine exported 6 million tons.
Kyiv Commercial Court has lifted a two-week old hold on the privatization of Centrenergo, one of the big five state company sales planned for this year. In Dec. 2018, a separate court ruling froze privatizations of companies with assets over $10 million. Last summer, after the presidential and parliamentary election results, Kyiv judges started to unblock privatizations. With three power stations – Trypilska, Vuhlehirska and Zmiivska – Kyiv-based Centrenergo has the capacity to generate 7,690 MW. The state owns 78.3% of company shares.
Flush from cashing a $2.9 billion check from Gazprom six weeks ago, Naftogaz continues to sue Russia for $8 billion for assets – including offshore oil platforms – stolen by Russia during the 2014 annexation of Crimea. In a case started in 2016, the International Court of Arbitration in The Hague acknowledged jurisdiction. Yuriy Vitrenko, Naftogaz executive director, writes on Facebook that the December settlement with Gazprom does affect the Crimea suit, which is against the Russian state.
Hungary’s József Váradi, co-founder and CEO of Wizz Air, and Infrastructure Minister Vladislav Krikliy discussed in Kyiv on Monday, the possibility of Wizz Air flying passengers between Ukrainian cities. Only two years after returning to the Ukrainian market, Wizz Air is now the airline flying to the largest number of countries from Ukraine – 13. Last year, Ukraine’s the overall air passenger traffic increased by 18.5% – far above the 4.2% worldwide increase. But domestic air travel remains anemic for a country larger than France. Last year, 96% of Ukraine’s 24.3 million air travelers flew internationally.
The first two Ukrainians infected by China’s coronavirus are hospitalized in Yokohama, Japan. The two, a 25-year-old man and a 37-year-old woman, worked in the kitchen of the Diamond Princess cruise ship. A total of 25 Ukrainians work on the ship, which is in an open-ended quarantine in Yokohama harbor.
Ukraine is the third cheapest place to live in Europe, topped only by Macedonia and Kosovo, reports a new survey of 132 countries worldwide compiled by Australia’s Ceoworld Magazine. Five factors were analyzed: cost of living, rent, groceries, eating out, and purchasing power. The five most expensive countries were: Switzerland, Norway, Iceland, Japan and Denmark.
- Farm Land Market by Spring
- Land Sales Will Only Boost GDP in Mid-2020s
- For Now, Agricultural Receipts Soar in Popularity
- Global Warming Cuts Ukraine’s Gas, Coal and Electricity Bills
- Kharkiv Airport Wakes Up
- Next Summer: Fly to Ukraine’s Danube
Adoption of a bill to create a farmland market in Ukraine is two months away, David Arakhamia, head of the ruling parliamentary faction, told journalists Friday. The Rada plans to review each of 4,018 amendments to the bill. Last week, the Rada reviewed 216 and passed one. Oleskandr Kornienko, chairman of Zelenskiy’s Servant of the People party, said Thursday, referring to opposition leaders: “The adoption of the law will slow down the implementation of other reforms, but we know whom to thank for that.” The Rada’s next plenary session is Feb. 18.
The current bill limits land ownership to 10,000 hectares and bans sales to foreigners. After a land market is up and running, the government plans to hold a referendum on foreign ownership. Rada chairman Dmitry Razumkov repeated this policy Friday, saying on TV: “The opportunity to buy before the referendum is limited for foreigners – individuals, just like for companies.“
Ukraine’s shift to a private farm land market will be gradual, probably taking “at least seven or eight years,” Alex Lissitsa, director general of IMC Agroholding, told the annual general meeting of the European Business Association. With the market to start in October, there will be no impact on GDP growth this year, he predicted. Injections of capital into the countryside from land sales will only result in economic growth in 2022-2023, he said.
Without a land market, agricultural receipts – getting credit in the spring against harvests in the fall – are snowballing, reports the Economic Development, Trade and Agriculture Ministry. From a pilot project in 2015, agricultural receipts hit $450 million last year – 60% of the 5-year total. Unable to pledge land titles as collateral for credit, farmers of 37 different crops now use this program. The default rate is only 1.6%.
All deals are registered online in an open Agrarian Receipts Register. “We also plan to update the law ‘On Agricultural Receipts’ to make agricultural receipts even more affordable – cheaper and faster to issue,” says deputy minister Taras Vysotsky. The program is supported by Swiss aid and by the World Bank’s International Finance Corporation. Reflecting growing confidence in the program, 12 ‘international’ agrarian receipts have been issued for a total of $450,000.
With Kyiv temperatures forecast to stay above freezing through end-February, Ukraine is consuming less gas, coal and electricity. Electricity consumption is down 10% this winter, Energy Minister Oleksiy Orzhel told the Rada Friday. “We produce more coal than we are consuming during the heating season.” Partly due to decreased demand, Ukraine’s gas prices in January were down 20% y-o-y. Largely due to warmer Werther, Ukraine consumed 7% less gas in 2019 than in the year before, Naftogaz reports. Low fuel prices help pull down inflation.
Economy and Trade Minister has proposed nearly $1 billion in ‘anti-crisis measures,’ largely to pay for rebuilding infrastructure and improving the energy efficiency of industry. Minister Tymofiy Mylovanov is the latest government official to raise alarms about the EU’s proposed ‘Green Deal.’ In a challenge to Ukrainian industry, this would raise tariffs on imports based on their carbon footprint. Mylovanov wrote on Facebook of his report last week to the Rada Economic Development Committee: “Further increase of exports to the EU is under threat as domestic producers will suffer losses and lose their competitive ability following the introduction of the carbon border tax in the EU.”
To get credit to small and medium enterprises, the EBRD is extending a local currency loan of up to $5 million to Piraeus Bank Ukraine, coupled with €10 million funding under the Bank’s Risk Sharing Facility. Designed to increase the size and length of loans to SMEs across Ukraine, the EBRD will share the risk on individual loans made by Piraeus.
Assuming the IMF deal is finalized in the spring, Ukraine’s foreign reserves could grow by another 22%, to $32 billion, predicts the National Bank of Ukraine. Last year, reserves grew by 22%, to 25.3 billion. During January, they grew another $1 billion, to $26.3 billion. With $32 billion, Ukraine would have enough money to cover five months of imports.
In the latest liberalization of the foreign exchange market, the National Bank is allowing non-resident foreign banks to buy and sell hryvnia and to make settlements in Ukraine’s currency. “Foreign banks will be able to freely settle in UAH with other foreign banks under foreign currency purchase and sale transactions,” reports the central bank.
“The Year of Great Construction” is the slogan Prime Minister Honcharuk is using to galvanize heads of the 24 regions to prepare for the March 1 start to the building season. In addition to submitting lists of roads to Ukravtodor, the highway agency, oblast leaders are to submit by Friday lists of other projects to the Regional Development and Forestry Ministry. “We are launching major construction and major overhaul of schools, kindergartens, hospital reception offices, stadiums and roads across the country,” Honcharuk said. So far, only six regions met the Feb. 1 deadline to submit lists of roads to Ukravtodor, reports Ukrinform.
Kharkiv Airport’s passenger traffic jumped by 55% y-o-y, to 111,600 in January. With Ryanair and Wizz Air firmly established serving Ukraine second’s largest city, there will be direct scheduled flights from Kharkiv to 20 EU cities by March. Today, the most popular destinations are split between work: Dortmund, Gdansk, Krakow, Prague, Vienna, Warsaw, and Wroclaw; and pleasure – Istanbul and Sharm El Sheik. Last year, Kharkiv’s air passenger traffic was up 39%, to 1.3 million.
The cruise business of the Ukrainian Danube Shipping Company lost $2 million last year, despite the fact that the company’s four boats enjoyed “88-90%” occupancy, Oleksiy Khomyakov, acting board chair of the state company, tells the Center for Transportation Strategies. Part of new management, Khomyakov blamed the losses on corrupt deals. Using four Soviet-era cruise ships, Ukrainian Danube offers inexpensive river tours “From the Alps to the Black Sea” – from Vienna to Bratislava to Budapest to Belgrade to the company’s home port in Izmail, in Ukraine’s Danube delta.
Offering a boost to Ukrainian Danube tourism, work starts this year to rebuild and reopen Izmail airport, the second airport for Odessa Region, Infrastructure Minister Vladyslav Krikliy said recently. Located midway between Kyiv and Istanbul – 490 km each way – the airport is to be prepared to receive flights from both cities. Last summer, work started on rebuilding the terminal and its international passport control point. To receive more than daytime flights from turboprops, the runway needs to be extended by 500 meters and modern navigational aids have to be installed.
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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