Business news from Ukraine

Olympic champion Sergei Bubka says he has nothing to do with any business in occupied territories

Olympic champion Sergei Bubka said he has nothing to do with any business in the occupied territories.
“Since 2014, I have not been in the occupied territory. I was born on Ukrainian soil. I have always represented Ukraine around the world with great pride. I have always fought for Ukraine. But now a campaign to destroy my reputation has been launched against me,” he said in a video distributed on Wednesday.
“I, like every Ukrainian, made my choice from the very beginning – to be with Ukraine and to do everything possible in the fight against Russian aggression. Since 2014, I have not been in the occupied territories. I haven’t visited my relatives and I couldn’t even be at my mom’s funeral. I have nothing to do with any business in the occupied territories. My job is to support Ukrainian athletes and Ukrainian sport at the international level,” Bubka said.
“I will do everything so that the current generation of Ukrainian athletes will be able to realize their Olympic dream – to perform at the Olympic Games in Paris next year,” he stressed, adding, “To those who are trying to blacken my name, I would like to say: To fight for Ukraine in sports has always been an honor for me. To fight for the state interests of my country is the highest honor for me.”
Earlier, an investigation by Bihus.info was published, in which journalists suggest that the firm “Firm Montblanc” LLC, owned by Sergey and Vasyl Bubkas, is listed in the Russian registers.

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Ukraine has all prospects to become an attractive investment hub for business – Deputy Head of Presidential Office

Ukraine has a set of advantages for attracting significant investments and localizing modern production of global brands, with only security guarantees and accession to the EU required, Rostyslav Shurma, Deputy Head of the Office of the President of Ukraine, said on the air of the national marathon “United News”.

According to him, Ukraine’s prospects are well illustrated by the example of the dialog with Sweden.

“Sweden has very good not only military technologies, but also, first of all, engineering technologies. This is a very wide range. Therefore, Sweden has the entire range of machine building, a complete portfolio, and this is critically important for the reconstruction of Ukraine, because first of all, we will need a huge amount of equipment – both for infrastructure and for the construction of new enterprises and factories,” the deputy head of the OP noted.

He emphasized that such equipment is sold not only as engineering solutions, but also together with financial packages, which are usually provided through export credit agencies, and this is one of the issues being addressed today during negotiations with the Swedish side.

“We are talking about billions of dollars, but the main focus should be on the private sector. Our task is to create conditions that make it profitable for companies to come to Ukraine. We have very qualified people and a large set of mineral resources. We have all the conditions to carry out full-fledged rising of production from Southeast Asian countries to Ukraine. Two main factors remain: security (victory in the war, security guarantees and further accession to NATO) and EU accession (unimpeded access to markets and financing and a set of reforms that we are currently working on). In fact, this is the formula for big projects, great recovery, and a new economy,” added Rostyslav Shurma.

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Business expectations in Ukraine deteriorated in all sectors in July – survey

The index of business activity expectations (IODA), calculated by the National Bank of Ukraine (NBU), after three months of being on the positive half of the scale (from 50.5 to 51.5 points) in July fell by 2 points – to a mark of 48.8 on a scale of zero to 100.

“Revision of pricing for enterprises in the electricity market, return to pre-war taxation of fuel prices, stopping the “grain corridor”, increased shelling of infrastructure facilities, as well as a significant shortage of qualified personnel adversely affected the expectations of respondents,” the central bank said.

It is indicated that industrial enterprises, after four months of optimistic assessments, expect deterioration of their economic results: the sectoral index in July amounted to 48.2 against 51.0 in June.

Respondents forecast lower volumes of new export orders, as well as worsened estimates of the volume of unfinished production (unfulfilled orders), stocks of raw materials and supplies. At the same time, a slight increase in the volume of manufactured products is expected, while the volume of new orders is forecasted at the level of the previous month.

As noted by the National Bank, the service sector enterprises retained the most restrained assessment of their economic prospects among other sectors of the economy, given the blocking of the “grain corridor,” rising fuel prices and reduced demand due to weak solvency of the population: the sector index amounted to 47.3 compared to 48.9 in June.

For the first time since April this year, respondents were negative about the volume of services provided. They also predicted a decline in the volume of new orders for services, but expected a slight increase in the volume of services in progress. The majority of the surveyed respondents are in a mood to increase prices for their own products and services due to the growth of purchase prices.

Construction companies maintained positive performance for the third month in a row, thanks to a rebound in the construction of roads, bridges, tunnels and pipelines, as well as seasonal factors: the sector index in July was 51.3, although in June it reached 58.6 points.

Builders continue to expect growth in construction output, new orders, and purchases of raw materials, albeit at a slower pace. Estimates for contractor services remained high, and their availability remained at the same level as the previous month.

Trade companies were positively assessed for the fifth month in a row due to market saturation of goods and slowing inflation, but in this sector too, expectations deteriorated to 51.6 points from 52.5 in June.

It is said that respondents continued to expect growth in the volume of goods purchased for sale, rapid growth in the cost of goods purchased for sale on the back of higher prices of suppliers, as well as lower trade margins.

As for employment, expectations improved only for trade, from 47.6 to 50.9 points. Whereas in industry they decreased from 49.3 to 48.0 points, in services – from 50.4 to 48.6 and in construction – from 54.2 to 50.0 points.

The NBU specified that the monthly survey of enterprises was conducted from July 5 to July 24. It was attended by 490 enterprises. Among the respondents, 44.9% were industrial companies, 28.2% – service companies, 22.2% – trade, 4.7% – construction; 33.7% of respondents were large enterprises, 29.0% – medium-sized enterprises, 37.3% – small enterprises.

In addition, 31.8% of surveyed enterprises carry out export and import operations, 9.0% – only export operations, 16.7% – only import operations, 42.4% – do not carry out external economic operations.

USAID to work with U.S. Congress to invest $230 mln in Ukrainian business

USAID will work with the U.S. Congress to invest an additional $230 million of new resources in Ukrainian businesses, particularly to help businesses comply with European Union regulations and export more goods and services to Europe, USAID Chief Samantha Power said.

“USAID will work with the U.S. Congress to invest $230 million of new resources in Ukrainian businesses. This will include everything from technical assistance to businesses that want to scale and expand, technical assistance to help them comply with EU regulations so they can export more of their products and services to Europe and create more jobs for more Ukrainians,” she said at a briefing in Kyiv on Wednesday.

At the same time, she emphasized that businesses cannot grow unless they are provided with affordable capital. Power noted that many financial institutions consider investments in Ukrainian businesses too risky.

“So we are going to expand the use of instruments such as low-interest loans or grants for businesses, first-loss guarantees that will reduce the risk of investing in Ukraine. And we’re going to work together to attract more investment and more private sector participation here in Ukraine, which again is an investment in the resilience of today and also in the economy of tomorrow,” she said.

As Power noted, this new commitment is “just one of many that the United States has made to the Ukrainian people this week.”

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Ukrainian business for first time since beginning of war is optimistic about development for year ahead – survey

Businesses expect business activity to grow in the next 12 months for the first time since the start of the full-scale war: the business expectations index (BII) rose to 104.5% in the second quarter from 91.2% in the first quarter, the National Bank of Ukraine (NBU) said.

“Against the backdrop of the restoration of the energy system, gradual revival of domestic demand and strengthening of the hryvnia, respondents expect growth in the production of goods and services, and are positive about the development of their own enterprises. At the same time, inflation and exchange rate expectations have improved,” the NBU said in a press release on Monday.

It specified that the improvement of assessments occurred at enterprises of all types of economic activities (VED), as well as for all components of the index.

In particular, business forecasts a rapid growth in the production of goods and services in Ukraine in the coming year: the balance of responses amounted to 17.3% against “minus” 16.7% in the first quarter. Growth is expected by enterprises of all areas and types of economic activity, sizes by number of employees and most areas.

Inflation expectations continued to improve: in the second quarter of 2023, expected annual inflation amounted to 15.7%, compared to 20.7% in the previous quarter. According to the survey, 46.6% of businesses surveyed believe that inflation, which fell to 12.8% at the end of June, will not exceed 15.3% in the next 12 months. According to 88.4% of respondents, military actions remain the most significant pro-inflationary factor.

In addition, the National Bank pointed out that the influence of the “exchange rate factor” and “production costs” has somewhat weakened. The new average value of the exchange rate, which respondents expect in 12 months, is UAH 40.43/$1 against UAH 42.18/$1 a quarter earlier. Moreover, the share of respondents expecting the hryvnia exchange rate to remain at UAH 40.00/$1 in the next year increased from 19.7% to 44.3%.

At the same time, the respondents’ assessment of their own current financial and economic situation, although improved, remains negative: the balance of answers amounted to “minus” 11.1% compared to “minus” 16.9% in the first quarter. The situation worsened at construction enterprises, no improvement was reported by energy and water supply enterprises, and a slight improvement was reported by the extractive industry.

However, for the first time in five quarters, the expectations of enterprises regarding the dynamics of their financial and economic condition became positive: the balance of responses became positive – 9.6% against “minus” 2.5% in the first quarter. Improvement is expected by enterprises of all areas of activity and size in terms of the number of employees, most areas and types of activities, the NBU said.

It added that the survey participants have significantly strengthened expectations of increased sales of products, including in the foreign market: the respective balances of responses rose to 14.5% and 10.9% from 2.8% and 2.0% in the first quarter.

Respondents of all types of economic activities expect growth in total sales volumes, but most of all – in construction, processing industry and trade (balance of answers 30.0%, 21.6% and 21.0%, respectively), the National Bank said.

The enterprises of Sumy, Kirovograd and Odessa regions expect a decrease in production, while in Rivne, Ternopil and Khmelnitsky regions the estimates remained the same.

According to its data, against the background of weakening expectations of enterprises regarding the need for borrowed funds in the near future, the share of respondents planning to take bank loans decreased to 30.0% from 35.4% in the first. As before, enterprises that plan to take loans prefer loans in the national currency – 79.2% against 79.7% a quarter earlier.

High interest rates remain a significant obstacle to attracting new loans – 49.7% of responses. At the same time, the influence of the factor “availability of other sources of financing” increased by 5.5 percentage points to 42.0%. The share of companies planning to raise funds abroad remained almost unchanged at 7.3% compared to 7.4% in the previous quarter.

The National Bank noted that for the first time in five quarters, companies provided positive estimates of changes in the level of investment expenditures on machinery, equipment and inventory: the balance of responses improved to 4.5% from “minus” 10.3% in the first quarter. At the same time, pessimistic assessments regarding investment expenditures on construction works significantly weakened: the balance of responses rose to “minus” 2.3% from “minus” 17.8% in the first quarter.

It is indicated that the expectations of enterprises attracting foreign investments with regard to their increase in the nearest year continued to improve: the balance of answers reached 15.3% from 11.0% in the first quarter. The highest expectations are among enterprises of transportation and communications, as well as construction. The share of respondents who plan to attract foreign investment in the next 12 months now stands at 23.1%, up from 21.3% a quarter earlier.

Respondents significantly weakened their forecasts for the reduction of the number of employees at their enterprises in the coming year: the balance of responses improved to “minus” 3.8% from “minus” 16.4% in the first quarter. Respondents of construction and trade enterprises now expect an increase in the number of employees, while negative assessments still prevail in the sphere of transportation and communications, processing industry.

As noted by the National Bank, the survey participants expect an increase in future labor costs per employee: the balance of responses rose to 44.6% from 35.3% in the first quarter.

It is specified that the quarterly survey was conducted in May this year, it was attended by 660 enterprises from 21 regions of the country. Among the respondents 20.9% – wholesale and retail trade companies, 18.2% – processing industry, 13.9% – agriculture, 13?8% – transportation and communications, 7?3% – mining, 5.2% – energy and water supply, 3.0% – construction, 17.7% – others; 32.4% of respondents – large enterprises, 37.4% – medium, 30.2% – small.

IDO – aggregate indicator of expected development of enterprises in the next 12 months. It is calculated based on the results of surveys of enterprises as the arithmetic mean of balances of answers regarding financial and economic condition of enterprises, total sales of own production, investment expenditures on construction works, investment expenditures on machinery, equipment and inventory, number of employees. The index value over 100 means the advantage of positive economic sentiments in the society, below 100 – negative economic sentiments.

President of Ukraine holds meeting with business representatives

President of Ukraine Vladimir Zelensky held a meeting with representatives of business, during which they discussed the topic of state reconstruction, the tax sphere, as well as the creation of a coordination tool.
“The meeting with representatives of business. A lot of pressing topics. Opportunities for the state to stimulate economic activity. The program “єOsel” and business participation. Recovery topics. Tax sphere and opportunities to reform it. Inspections. Law enforcement. Coordination and communication for the sake of problem solving. Useful business proposal to create a coordination tool,” Zelensky wrote in his Telegram channel on Thursday.
The president said that the main priority at the moment is the victory of Ukraine in the war.
“The main priority is always the strength of Ukraine. Thanks to everyone and everyone who adds strength to Ukraine, who keeps and creates new jobs, who strengthens our economy and helps develop our institutions,” Zelensky said.
According to the press service of the Ukrainian head of state, during the meeting Zelensky said that the priority in the reconstruction of Ukraine will be the participation of Ukrainian and foreign business, which worked and continues to work, especially during the war.
“But the doors will be open to many companies. We need hundreds and thousands of companies to come to us,” Zelensky said.
Also during the meeting, the parties agreed on joint efforts to reduce business problems from law enforcement agencies, as well as the prospect of forming a tax sphere and strengthening the effectiveness of bodies that should stimulate economic development and provide support for investments.
In turn, business representatives proposed the establishment of a coordination platform for communication on the protection of business rights and consideration of other issues. Zelensky supported this initiative and also offered to jointly decide on the format of the work.
“It is very important to create a platform on which we would constantly talk. Because we cannot accumulate problems for years: we simply will not be able to overcome them later,” the president stressed.

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