On June 6-7, 2024, the Ukrainian Bar Association held the First Investment Forum. For two days, this event was a platform for discussing promising investment opportunities and solving legal challenges in areas that are important for the further sustainable development of Ukraine.
The first day of the Forum was held online. The event was opened by Mykola Stetsenko, President of the UBA, Managing Partner of AVELLUM. In his welcoming remarks, he expressed confidence that the discussion at the Forum would be useful, contribute to business projects and ideas, and improve foreign investors’ understanding of the business environment in Ukraine.
Andy Hunder, President of the American Chamber of Commerce in Ukraine, also greeted the Forum participants. He noted that foreign businesses continue to operate in Ukraine and support it in the face of a full-scale Russian invasion.
Makar Paseniuk, founding partner of ICU Group, in his welcoming speech expressed the opinion that the First Investment Forum is unique and interesting. He emphasized that finance and investment are impossible without the work of lawyers. “We are interconnected and I think we will be even more interconnected,” added Mr. Paseniuk.
The founding partner of ICU Group also urged the Forum participants to be inspired by the ideas to be discussed at the event.
The first session of the first day of the Forum was titled “Helicopter view: investment climate in Ukraine”. The discussion was moderated by Olga Fedosova, Partner at White&Case (Paris, France). She noted that the discussion would focus on the investment climate in Ukraine and the challenges facing investors. Ms. Fedosova emphasized that despite the full-scale war, the Ukrainian economy is recovering and developing.
Marlena Hurley, Managing Director of Political Risk Insurance and Reinsurance at the International Development Finance Corporation (USA), noted the resilience of Ukrainian business amid the war. She emphasized that her organization is doing everything possible to support key sectors of the Ukrainian economy. Ms. Hurley noted that the corporation offers a function to cover the costs caused by Russian aggression against Ukraine.
Bozhidar Celek, Managing Director and Head of Lazard Central and Eastern Europe, CIS and Turkey, said that the best investors in Ukraine are those businesses that are already in Ukraine, so working with them will bring the greatest success. The expert also believes that it is necessary to work on a separate business insurance in times of war.
According to Mr. Dzhelik, foreign investors tend to rely on those who make technological and environmental assessments on site, so Ukraine should develop this capacity.
Makar Paseniuk, founding partner of ICU Group, stated that most deals in Ukraine are currently being made by local rather than foreign companies. In his opinion, post-war investment in Ukraine will be associated with great risk, so at the first stage it will be mostly adventurers.
Speaking about the attractiveness of investing in Ukraine in the current environment, Mr. Paseniuk noted that only a large, attractive product can change the situation. As an example, he cited green energy, which has attracted $12 billion in investments to Ukraine.
Stefan Weiler, Head of Debt Capital Markets for Central and Eastern Europe, Middle East and Africa at J.P. Morgan, spoke about the project to create a fund for the post-war reconstruction of Ukraine. J.P. Morgan and the investment company BlackRock are helping the Ukrainian government to create this fund.
Patricia Shaughnessy, Professor at Stockholm University, emphasized the importance of Ukraine’s cooperation with the international community to increase the country’s investment attractiveness.
The presentation of the report “Opening Up Investment in Ukraine”, which is the result of joint work of the British Institute of International and Comparative Law and the Ministry of Justice of the United Kingdom, followed.
The report was presented:
The project included:
The final report of the project contains key recommendations on steps Ukraine can take to improve its commercial dispute resolution system, including completion of ongoing reforms, capacity building measures, and establishment of new institutions.
The first day of the Forum concluded with a discussion on common myths about doing business in Ukraine. The session was moderated by Daniel Cousins, Corporate Partner at Linklaters (Warsaw, Poland).
The panelists discussed regulatory obstacles to business, currency restrictions, how the war is affecting business in practice, etc.
Anna Babych, Executive Partner at AEQUO, shared information on the latest legal changes that may affect the investment climate in Ukraine. In particular, she spoke about the instruments used by the Ukrainian government to support and stimulate investment during a full-scale war. Among the latest positive developments in this area, Ms. Babych mentioned amendments to the law on state support for investment projects with significant investments, the adoption of a law on investment insurance against war risks, and the easing of currency restrictions by the National Bank of Ukraine, including permission to repatriate “new” dividends.
Mykola Stetsenko, President of the Ukrainian Bar Association, Managing Partner of AVELLUM, familiarized the Forum audience with Ukraine’s achievements in the fight against corruption. He spoke about the formation of Ukraine’s anti-corruption infrastructure – NABU, NAPC, SAPO, HACC – and its recent successes and achievements. Among the achievements in the field of corruption prevention, Mr. Stetsenko mentioned:
The experts also paid attention to the judicial system. Olena Kibenko, a judge of the Commercial Court of Cassation of the Supreme Court, provided statistics on the average duration of commercial litigation in 2023:
According to Ms. Kibenko, last year commercial courts of first instance issued 127,974 decisions, of which 23,099 (18%) were appealed, and 9,183 (7%) were appealed in cassation. In 16% of cases, the Supreme Court overturned the decisions of the first instance courts and returned the cases for reconsideration.
Volodymyr Sayenko, partner at SAYENKO KHARENKO, and Tatyana Dovgan, partner at CMS Cameron McKenna Nabarro Olswang’s Kyiv office, also took part in the discussion.
The second day of the First Investment Forum was held at the Hilton Kyiv Hotel.
Mykola Stetsenko, President of the Ukrainian Bar Association, Managing Partner of AVELLUM, in his welcoming speech thanked the participants of the first day of the Forum. He also expressed gratitude to the military who are now defending Ukraine from the Russian invasion. The participants of the event observed a minute of silence in memory of those who fell for the freedom and independence of Ukraine.
Mr. Stetsenko noted that the second day of the Forum will focus on best practices in the investment industry. The President of the UBA expressed hope for a fruitful discussion and emphasized the importance of the dialogue between lawyers and business. Mr. Stetsenko said that the Forum will result in a memorandum with the results of each session and relevant recommendations.
The Forum participants were also greeted by Liudmyla Yenina, Director of the Economic Diplomacy Department of the Ministry of Foreign Affairs of Ukraine. She promised that diplomats would do their best to support Ukrainian businesses that continue to operate in the midst of a full-scale war.
Ms. Yenina emphasized the importance of attracting investment and harmonizing Ukrainian legislation with EU legislation. It is necessary to create new platforms and attract private investors, including foreign ones, the diplomat emphasized.
The Foreign Ministry representative spoke about the economic diplomacy tools used by the Ukrainian government to support business, including support for exporters.
The first session of the second day of the Forum was entitled “Ukraine’s Accession to the European Union: What Does It Mean for Business?”. The discussion was moderated by Anzhela Makhinova, Partner of International Trade Practice at SAYENKO KHARENKO. She noted that the discussion would focus on the issues of Ukraine’s European integration from the business perspective, in particular procedural issues. Ms. Makhinova also suggested discussing how open the EU market is for Ukrainian business.
Oleksiy Ryabchyn, Advisor to the Vice Prime Minister for European and Euro-Atlantic Integration of Ukraine, noted that the conditional benchmark for Ukraine’s accession to the EU is 2030. According to him, by that time the country should have gone through the process of adapting its national legislation to the European one. The difficulty lies in the fact that the adaptation of Ukrainian legislation to EU law is a dynamic process that is ongoing. For example, after this year’s elections, the new European Parliament will adopt new laws that Ukraine will also need to adapt to, Mr. Ryabchyn emphasized.
The advisor to the Vice Prime Minister also outlined the nuances of government and business interaction in the process of Ukraine’s European integration, including how businesses can defend their interests in this process.
Inna Khomych, Chief Legal Officer of Nova Poshta Group, noted that despite the difficult military conditions, Nova Poshta continues to develop its business, including opening 5 sorting terminals during the full-scale war.
Ms. Khomych also shared the company’s experience in expanding its business in the EU. Thus, NOVA Group has already entered the markets of 13 European countries. At the same time, the speaker expressed the opinion that the EU is “not very happy” to have a new competitor in the face of Ukrainian business. She spoke about the difficulties and obstacles, primarily bureaucratic ones, that NOVA faces in the European market.
Businesses need to unite to effectively communicate their views to both the Ukrainian government and EU institutions, emphasized Inna Khomych.
Opportunities and challenges for exporting Ukrainian products to the EU, imports of goods from the EU to Ukraine, and other business aspects of Ukraine’s European integration were also discussed:
The second session of the Forum was titled “Reforms in Time of War – What Working Conditions Should Business Expect?”. The discussion was moderated by Andriy Reun, partner at LCF Law Group.
One of the topics of discussion was the incentives and expectations of businesses investing in Ukraine in the context of a full-scale war. The speakers discussed, among other things, the problem of pressure from government institutions, the lack of effective dialogue between business and the state, and corruption risks in their relations.
In particular, Oksana Myronko, Head of Communications at the European Business Association, and Roman Vashchuk, Business Ombudsman, shared their thoughts on this issue. Mr. Vashchuk also said that the Business Ombudsman Council has prepared a declaration on fair and reasonable administration, which contains 12 points.
Oleh Hetman, Coordinator of Expert Groups at the Economic Expert Platform, Member of the Supervisory Board of the Ukrainian Business Council, focused on the new taxation system proposed by the Ministry of Finance of Ukraine in the high-profile National Revenue Strategy for 2024-2030 (NRS). According to the speaker, experts have analyzed the NDS and expressed their comments, which were passed on to the government. He reminded that the Ministry of Finance developed the strategy without any consultations with the public and business.
Mr. Hetman believes that the strategy should not be implemented under any circumstances, as its implementation will worsen the investment climate in Ukraine. He called on business, lawyers and other stakeholders to unite and make efforts to ensure that the NIS remains only on paper.
Artem Yarmola, Deputy Director of Legal Department at FOZZY GROUP, shared his thoughts on whether customs reforms will simplify business. Among other things, he emphasized the need to punish unscrupulous businesses for violating customs rules.
Oleksandr Kryzhanivskyi, Director of Universal Insurance Brokers and Consultants LLC, spoke about the prospects for insurance against military and political risks in Ukraine and opportunities for foreign and national investors in this area.
Ivanna Smachylo, Deputy Head of the State Property Fund of Ukraine, outlined privatization issues in her report. She noted that Ukrainian business is mainly interested in acquiring property complexes, production facilities, etc., while foreign investors are interested in large-scale privatization. The speaker added that in the summer of 2024, “large-scale privatization will be a priority.”
Ms. Smachylo also said that in July this year, the first 108 hectares of state land will be put up for sale on Prozorro.Sale.
In between the sessions, a presentation of the book “Unbreakable Business” dedicated to the work of Ukrainian business during the war was held. The co-authors of the book are Oleksandr Holizdra, beneficiary of the Market.Info communication agency, chairman of the committee of the Public Council at the Bucha District State Administration, and Serhiy Shevchenko, director of the Market.Info communication agency.
Presenting the book, Mr. Shevchenko said: “This book is a chronicle of Ukrainian business during the war. It contains the exceptional experience of companies in strategically important industries: energy, pharmaceuticals, banking, and food. Everyone knows the brands and market leaders.”
The book describes the general priorities of Ukrainian business during the war, work planning and strategy changes, unique cases and emotional stories. The book is available for purchase on the website of the Summit Book publishing house.
The First Investment Forum was then held in the format of parallel sessions dedicated to specific sectors of the Ukrainian economy.
Thus, the participants of the session “Challenges and Opportunities in the Agricultural Sector” discussed investments in the agricultural sector. The panel was moderated by Marian Martyniuk, Senior Partner at MORIS.
The following issues were proposed for discussion:
The experts shared their views on the challenges and opportunities that currently exist in the Ukrainian agricultural sector. In particular, Mykola Gorbachev, President of the Ukrainian Grain Association (UGA), said: “Farmers continue to work. However, the most pressing challenge is that 6 million hectares are mined. Tragedies often occur. It takes more than 700 years to clear the mines. And demining will not happen without business.”
According to Mr. Gorbachev, it is business that will bring solutions and technologies, and it will be attractive for investment thanks to programs and compensation from the state. “Only in this way will we be able to overcome the problem of demining our land,” summarized the UGA President.
This idea was continued by Viktor Dovgan, Deputy Minister of Infrastructure of Ukraine in 2016-2019, Advisor to the Upper Silesian FGSA Foundation. He stated that the most pressing issues now are export logistics.
“The best investor in agricultural export logistics is the Armed Forces of Ukraine. When we gained control of our part of the Black Sea, we immediately received 50 million tons of exports through the ports,” Mr. Dovgan said.
According to him, the state understands the need for investment, and many mechanisms are being prepared to compensate for investments in infrastructure, industrial park models, and road development. Obviously, the energy sector will require the most investment, but Ukrzaliznytsia’s track logistics projects are already needed, and we also need to think about air logistics when the sky is opened, Viktor Dovhan emphasized. He added that these projects are an element of Ukraine’s European integration.
The topic of investing in the agricultural sector was continued by Yuriy Kozak, Director of Large Corporate Clients Department at Raiffeisen Bank. “Agriculture is the main source of foreign exchange for the country. This sector has shown resilience and adaptability the most. At the beginning of the war, banks had to survive, but today we have to think about investing. For example, in new production, in agro-processing plants, in investments and small generating capacities for the agricultural sector,” the speaker noted.
Oleksiy Rashchupkin, managing partner at Altius Capital, noted that 90% of investments in the agricultural sector are domestic investments. According to him, this is due to an important issue in the land market: the specifics of Ukrainian agriculture are leased land, not owned. This is a very incomprehensible instrument for foreign investors, which is why Ukraine lacks large capital investments in this area, Mr. Rashchupkin explained.
In general, the participants agreed that the challenges also point to huge opportunities for investment in the Ukrainian agricultural sector.
Another parallel session of the Forum was devoted to the challenges and opportunities in the field of natural resources extraction. The session was moderated by Maksym Maksymenko, AVELLUM Partner, Head of Real Estate and Infrastructure Practice.
The discussion was attended by:
The speakers discussed, among other things, the recovery of the extractive industry amid a full-scale war and state support for mining. In particular, Yulia Lushpienko and Mykola Kolisnyk discussed the possibility of creating industrial parks for the extractive industry.
Svitlana Romanova spoke about the challenges and opportunities in the field of natural resource extraction. In particular, according to her, these are:
According to Ms. Romanova, Ukrainian business has demonstrated the ability to adapt to extremely difficult conditions, but unfortunately, national legislation is not as flexible.
Yulia Borzhemska delivered a report on “Current regulatory issues in the oil and gas industry”. Among other things, she discussed the implementation of production sharing agreements, current issues of the natural gas market (timing of REMIT implementation, etc.).
“Challenges and opportunities in the energy sector” was the topic of another parallel session of the First Investment Forum. The discussion was moderated by Oleksiy Feliv, Managing Partner at INTEGRITES.
Volodymyr Kudrytskyi, Chairman of the Board of NPC Ukrenergo, said that due to intense attacks on power plants by Russian terrorists, Ukraine is forced to switch from traditional to green generation. “What should replace thermal generation? The generation mix should include highly maneuverable gases, wind and solar, biomass and biogas technologies,” the speaker said.
Speaking about the role of the state in the energy sector, Mr. Kudrytskyi called for refraining from obstruction, additional regulation and the creation of additional state institutions. “The state should complete a set of regulatory packages and contracts and clearly define the rules of credit financing,” added the Chairman of the Board of NPC Ukrenergo.
Olha Kovalchuk, Head of Finance and Investment at Goldbeck Solar, a solar generation giant that entered Ukraine during the war, shared her international experience: “Projects and investments should be guaranteed by insurance projects. There must be appropriate financial structuring and resolution of the issue of corporate power purchase agreements (PPAs). It is very important to amend the Law on State Support for Investment, which should include renewable energy.”
Oleksandr Podprugin, Regional Manager of Notus Energy, a German developer of generation plants, emphasized the main obstacles and limitations of scalable investment projects:
At the same time, he emphasized the readiness of companies to invest and stressed the need to work more intensively with international financial institutions to resolve investment issues.
Yaroslav Kryl, CEO of Hydrogen of Ukraine LLC, focused on the need to create entire ecosystems for the development of hydrogen projects. He shared his experience in attracting grant projects and creating consortia with international institutions. The speaker also shared his thoughts on the study of hydrogen and salt deposits in the subsoil of Ukraine.
In conclusion, moderator Oleksiy Feliv noted that, unfortunately, due to the full-scale war, Ukraine is forced to make great technological leaps, but this is already being done for our civilized future.
The fourth parallel session of the Forum was devoted to the challenges and opportunities in the defense sector. The discussion was moderated by Mykhailo Lukashenko, Partner at AEQUO.
The panelists shared their views on the following issues:
The experts of the session were:
For a photo report from the First Investment Forum, please follow the link.
The Ukrainian Bar Association is grateful for the support in organizing the event:
Interfax-Ukraine news partner
EUROPEAN INTEGRATION, INVESTMENT CLIMATE, INVESTMENT FORUM, REFORMS, UBA
Ukrainian Foreign Minister Dmytro Kuleba and French Foreign Minister Jean-Yves Le Drian discussed tougher sanctions against Russia, Ukraine’s European integration, and treatment of Ukrainian children in France.
“Discussed further sanctions on Russia, arms deliveries to Ukraine, and Ukraine’s EU candidate status. We both welcomed the treatment of Ukrainian children in France under the important initiative led by Ukraine’s and France’s First Ladies,” Kuleba said on Twitter on Monday.
He also congratulated French President Emmanuel Macron on his re-election to office in the regular presidential elections held on Sunday. “I congratulated President Macron and his team on their victory. My French counterpart affirmed that France’s support of Ukraine will grow even stronger,” Kuleba said.
The presidential offices of Slovakia and Ukraine are working on a declaration recognizing Ukraine’s European integration aspirations, said Prime Minister of Slovakia Eduard Heger.
“Slovakia has been a staunch supporter of Ukraine and her European aspirations of Ukraine. This is one of my main messages today in Kyiv. And we are vocal on that in Brussels as well. Presidential offices of both countries are working on the declaration you mentioned,” Heger said in an exclusive interview with Interfax-Ukraine.
He stressed that Ukraine’s European integration aspirations had already been officially recognized many times.
“For now, it is important to use all the provisions the Association Agreement between the EU and Ukraine offers,” the premier added.
He noted that during his visit to Kyiv on Friday, he would talk with Ukrainian interlocutors about the reforms.
“Indeed, transformation and modernization of the country is a prerequisite for becoming a member of the EU and NATO. The reform process in Ukraine is continuing and Slovakia believes it will be sustainable and successful. Btw, the changes are not about the EU and NATO, they need to be introduced be Ukrainians themselves to make Ukraine stronger, more resilient, to the benefit of all the Ukrainians,” Heger said.
The gradual approximation of the regulatory environment and digital development of Ukraine to the level of the European Union as part of integration into the EU Digital Single Market will affect the productivity and economic growth of the country, according to a Tuesday statement on the website of the Ministry of Digital Transformation.
The study entitled “Ukraine’s integration into the EU Digital Single Market: potential economic benefits” was carried out by the Trade+ Center for International Trade Analysis at the Kyiv School of Economics and NGO Ukrainian Center for European Policy and was ordered by the Ministry of Digital Transformation.
The results of the study contain expert assessments and real calculations of the potential profit for the country’s economy from integration into the EU Digital Single Market.
According to the study, the gradual approximation of the regulatory environment and digital development of Ukraine to the EU level within the framework of integration into the EU Digital Single Market will influence bilateral trade: an increase in exports of goods from Ukraine to the EU is expected by 11.8%-17% ($2.4-3.4 billion), services – by 7.6%-12.2% ($302.5-485.5 million).
It will also impact the productivity and economic growth of Ukraine: GDP growth in Ukraine is expected at the level of 2.4-12.1% ($3.1-15.8 billion), the welfare of citizens – by 3.6-7.8%.
It is also expected that the export of goods from the EU to Ukraine will grow by 17.7-21.7% ($4.1-5 billion), and services by 5.7-9.1% to ($191-305 million).
According to the study, an increase in the level of digitalization by 1% will lead to an increase in Ukraine’s GDP by 0.42%.
“Various scenarios of integration into the EU Digital Single Market show that the size of potential benefits will depend on the scale of regulatory and digital transformations in Ukraine. The faster and more efficiently we implement the necessary transformations, the faster we will be able to realize the benefits of integration into the EU Digital Single Market,” Deputy Minister of Digital Transformation for European Integration Valeria Ionan said.
According to the study, the main economic benefits for Ukraine from integration into the EU Digital Single Market are: reduction of transaction and trade costs in trade in goods and services between the EU and Ukraine; growth of business efficiency, economic productivity and GDP of Ukraine; growing well-being of citizens of Ukraine and the EU: better access and lower prices for digital innovative goods and services, consumer protection; development of innovative products and services of digital infrastructure.
In addition, bringing Ukraine’s legislation and standards closer to EU legislation and standards will reduce regulatory differences between Ukraine and the EU in the digital sphere and accelerate Ukraine’s digital development.
Olha Stefanyshyna, Deputy Prime Minister for European and Euro-Atlantic Integration, has opened the first regional office of European Integration in Ukraine in Kherson.
“Today, the ‘decentralization’ of European integration begins from Kherson, which should spread to all regions of Ukraine. The network of regional offices will help create effective platforms for dialogue and cooperation of foreign partners, civil society and local authorities, so that the benefits of European integration are tangible and noticeable in every area, every city and town,” the press service of the Deputy Prime Minister of Ukraine quoted Stefanyshyna as saying.
The key activities of the regional office of European integration are the following: cultural and educational projects, in particular the dissemination of knowledge about the European course of Ukraine among schoolchildren and students; increasing business contacts between entrepreneurs of Kherson region and EU member states; implementation of the Association Agreement; achieving the Sustainable Development Goals, in particular gender equality.
“The European Integration Office in Kherson is the first of the European integration units, which is close to the Crimean peninsula. It is very important that everyone who comes to Kherson region across the administrative border with Crimea can take advantage of European integration, receive advice and practical information about the course of Ukraine in the EU and its advantages and opportunities,” noted Stefanyshyna.
The Deputy Prime Minister also stressed the importance of forming a wide network of regional offices of European integration in Ukraine.
“Kherson region is the first among the regions where offices for European integration will operate, but we already observe interest from other regions of Ukraine. Khmelnytsky, Dnipropetrovsk and Poltava regions are in touch with us today to learn from the successful experience of opening regional offices and extend this example to their regions,” she said.
The Ukrainian government is planning to open European integration offices in all regions, as is evident from the government action program, whose text is published on the Verkhovna Rada website.
“The government will ensure the establishment of European integration offices in all regions of Ukraine, with the primary focus on the southern and eastern regions, to make European integration advantages closer to the people and businesses at the local level,” the document said.
It intends to attain this primarily through fostering cultural and educational projects, contacts, and also economy and infrastructure involving the EU’s investments and financial assistance, it said.
The government is confident that an emphasis on “regionalization of Euro-integration” would help direct extra resources to provinces so that their residents could feel immediate advantages from Ukraine’s course toward integration with the EU, the document said.
The Ukrainian legislation should adopt at least 80% of the EU acts envisioned by the Association Agreement.
“Among the results of these measures would be consistent growth in support from Ukrainian citizens of our country’s integration with Europe,” it said.
The government said it is determined to make dialogue with the EU instrumental in fostering “growth of direct investment in Ukraine from companies from the European Union and an increase in the EU’s financial assistance for Ukraine.”
