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Business news from Ukraine

AGREEMENT BETWEEN UKRAINE, JAPAN ON MUTUAL PROTECTION, PROMOTION OF INVESTMENT TAKES EFFECT – JAPANESE AMBASSADOR

KYIV. Nov 30 (Interfax-Ukraine) – An agreement between Ukraine and Japan on mutual protection and promotion of investment has taken effect, Ambassador of Japan to Ukraine Shigeki Sumi has said.

“The agreement on promotion and protection of investment between Ukraine and Japan comes into effect on November 27,” he said at a press conference in Kyiv.

According to the ambassador, talks between Ukraine and Japan began in 2011, and in February 2015 the agreement was signed by Minister of Economic Development and Trade of Ukraine Aivaras Abromavicius.

The diplomat hopes the agreement will contribute to the economic development of Ukraine.

In addition, Sumi said that Japanese businessmen are increasingly paying attention to the Ukrainian market. According to him, Ukraine’s advantage is its geographical location, the availability of skilled personnel, as well as labor costs. In this regard, the creation of production in Ukraine for exports to EU countries is a most profitable investment.

EUROPEANS SUGGEST THAT UKRAINE DEVELOP VIA INDUSTRIALISATION

Ukrainian diplomats, government officials and businesspeople can predict the situation on the domestic and European markets after the full-scale launch of a free trade area between Ukraine and the European Union as of January 1, 2016, but so do representatives of the EU. Their reasons are: they are interested in a strong domestic market in Ukraine with a fair level of public purchasing capacity and a developed economic sector. To achieve this, the country should use all the capabilities it has available, namely to restore its industrial capacity.

This opinion was expressed by Head of the Delegation of the European Union to Ukraine, Ambassador Jan Tombinski at a roundtable meeting in Kyiv and it correlates fully with what Ukrainian industrialists have been insisting on for a long period of time.

“The European Union can provide Ukraine with the necessary infrastructure and modern production facilities. Currently, many Western countries have moved their industrial capacities to Asia, namely China or other regions. The proximity of Ukraine to the EU, its status as an active partner will attract European investors, here is a unique chance for your country,” Tombinski said.

In his words, although Europeans will only think about successful exports to the Ukrainian market after January 1, 2016, it is important that this market should be capable of paying — with a high level of public prosperity. Thus, the country should utilize all its available resources and develop as an economy.

The European Ambassador in fact repeated the view that has long been circulating in the business environment of Ukraine. In particular, the need for the revival of industry and a modern industry-oriented policy has become one of the priorities stipulated in the anti-crisis program of joint actions of the Ukrainian government and businesses, which was prepared by leading business associations, analysts and community activists in Ukraine. In fact, as of today, this is the only comprehensive economic development plan which has already been submitted to the government and will soon be presented to the European community in Brussels.

Restoration of industrial capacity, manufacturing value-added, high-technology products will guarantee the competitiveness of the economy and exports, according to Ukrainian industrialists. To achieve this, Ukraine should pursue a modern industry-oriented policy, in particular through appropriate government-supported programs. This applies primarily to engineering and car building and the defense industry. Such actions will activate the related industries, which will be able to create jobs for hundreds of thousands of Ukrainians.

“We have got what to offer to the world, of course, provided there is a reasonable state approach to the restoration and development of the industrial sector, support of domestic producers, creation of conditions for long-cycle production,” they underline.

As of now, Ukraine has experienced a 15% decline in production. The development of the industry is hindered by the lack of incentives for the production of goods, and there is a need for better access to loans, as the Central Bank’s current refinancing rate is 22%.

UKRAINIAN BUSINESSES CALL ON PERLIAMENT TO ADDITIONAL IMPORT TAX

Industrialists and entrepreneurs support the cancellation of the existing additional tax on most imported goods at the rates of 5% and 10%. Such a move will boost multilateral trade and domestic production, reduce the import of raw materials and components, and will create preconditions for signing more contracts to produce high quality products at affordable prices.

This, in turn, will stimulate the internal market, create new jobs, and increase the population’s purchasing capacity. Ukrainian entrepreneurs from the most powerful union of industrialists and entrepreneurs —the Ukrainian League of Industrialists and Entrepreneurs (ULIE) and the Anti-Crisis Council of NGOs —have urged the Ukrainian parliament to revisit the issue as soon as possible and eventually cancel the additional import tax.

They stress that this correlates with agreements reached with the International Monetary Fund and the European Union on abolishing this tax by the end of 2015.

Moreover, the fiscal impact of the tax is no longer relevant due to negative effects caused by higher prices of raw materials, technologies, equipment, and components.

The tax was introduced to stabilize the balance of payments of Ukraine and boost budget revenue. However, none of the goals was achieved, and thus there is no reason for keeping the tax.

On the contrary, when manufacturers get access to the required materials and technologies that are critical imports, they can develop production, increase the added value of produce, thus stabilizing prices and being successful in export, being competitive both in Ukraine and abroad. This, in turn, means the development of the economy, an increase in tax revenues to the national budget and, very importantly, the preservation and creation of new jobs.

Obviously, this is a scenario the foreign partners of Ukraine are interested in, as the insolvent market is not what Ukrainian and Western communities would want.

It is worth mentioning that the additional import tax set at 5-10% was introduced earlier this year to make Ukraine’s balance of payments more stable. In general, it involves about 100 commodity groups, except for so-called “critical imports,” i.e. fuel, some medicines and other products.

U.S. INVESTORS GREATLY INTERESTED IN UKRAINE – DTZ

KYIV. Nov 27 (Interfax-Ukraine) – American investors are very interested in Ukrainian markets, while before, most investors were European, Managing Director of DTZ international consulting company in Ukraine (Kyiv) Nick Cotton has said.

“Now I see a greater interest from America, the situation with investment is changing,” he said during the Real Estate Forum in Eastern Europe and Asia in Kyiv.

Cotton said that in 2004-2008, major investments in Ukraine in general, and in the real estate market in particular, mostly came from Europe.

“That is, Americans like news, and there has been a lot of news about Ukraine. I guess this is our opportunity,” he said.

DTZ was founded by Chesshire Gibson in Birmingham (Britain) in 1784. Since December 2011, it has been part of UGL Services, a division of UGL Limited.

The company opened an office in Ukraine in 1994 as the country’s first international consulting company. DTZ’s office is located in Kyiv (the company’s office in Odesa has closed).

AGRICULTURE MINISTRY PLANS SEVERAL MISSIONS ON ACCESS OF UKRAINIAN DAIRY PRODUCTS TO NEW MARKETS IN 2016

KYIV. Nov 27 (Interfax-Ukraine) – The Agricultural Policy and Food Ministry of Ukraine plans to send missions to Kenya, South Korea, Iran, and the Middle East to study existing legislation and the access conditions of Ukrainian dairy products to these markets, Deputy Agricultural Policy and Food Minister of Ukraine Dmytro Shulmeister has said.

The Food and Agriculture Organization of the United Nations (FAO), Agricultural Policy and Food Ministry of Ukraine and business representatives have organized the delegation.

He said that at present, the ministry is working on opening access to the dairy market of Azerbaijan, but he did not say when this could happen.

“A permit has not yet been received, and negotiations are underway. We’ve submitted a list of companies which are ready to export,” he told reporters at the Milk Business 2015 conference in Kyiv on Thursday.

AUSTRIAN GLD INVEST GROUP WILL FOCUS ON AGRICULTURAL INVESTMENT IN UKRAINE

KYIV. Nov 27 (Interfax-Ukraine) – GLD Invest Group development company (Austria) is planning to focus on investing in agriculture in Ukraine instead of investing in real estate, according to managing partner of the company Lehr Clemens.

“We are interested in the agricultural business in Ukraine and the best of what is in Ukraine – agricultural land,” he said at the Eastern Europe and Asia Real Estate Forum n Kyiv.

According to him, GLD Invest Group remains somewhat interested in the real estate market. Until 2008, together with its financial partners, it has invested about $100 million in Ukraine.

“But the trouble is that external investors are more interested in the agricultural market, since it is export-oriented, unlike real estate,” the expert said.

He noted that foreign exchange fluctuations and the subsequent decline in rent rates for commercial premises in Ukraine had a significant influence on the investors’ choice in favoring other markets instead of real estate.

“Right now the rate is UAH 25 per $1, and it was UAH 8/$1. I do not know what the rate will be in a year or two. It is difficult to count,” Clemens said.

GLD Invest Group is an Austrian real estate development company headquartered in Kilb. It designs, builds and leases commercial real estate in Central and Eastern Europe.

Its representative offices are located in Vienna, Budapest (Hungary) and Kyiv.