Business news from Ukraine

UKRAINE, CANADA TO SPEED UP FTA TALKS

KYIV. June 22 (Interfax-Ukraine) – Ukraine and Canada will speed up the talks concerning the formation of a free trade area between the two countries.

Ukraine’s President Petro Poroshenko and Canada’s Prime Minister Stephen Harper discussed the issues of bilateral cooperation during a phone conversation, and agreed to speed up the process of negotiations on the formation of a free trade area, the Ukrainian president’s press service reported.

“Petro Poroshenko and Stephen Harper emphasized that the establishment of the FTA between Ukraine and Canada would become a positive signal for investors and business in the two countries, as well as enhance bilateral relations,” the statement reads.

According to the report, Harper praised the efforts of the Ukrainian authorities and Poroshenko in particular on the path to the reformation of Ukraine. “The prime minister of Canada has assured of his willingness to assist in mobilizing international political and economic support for Ukraine,” the press service said.

Poroshenko thanked Harper for his visit to Ukraine ahead of the G7 Summit. “It was a successful and symbolic visit, which demonstrated solidarity of Canada and the international community with Ukraine,” the head of state noted.

The Ukrainian president informed the Canadian premier about the results of the meeting with the Ukrainian support group, which was established under the G7 leaders declaration, at the level of ambassadors and diplomatic representatives.

SAAKASHVILI PLANS TO TURN ODESA INTO LARGE BLACK SEA HUB

NEW YORK. June 22 (Interfax-Ukraine) – Head of Odesa Regional Administration Mikheil Saakashvili has pointed at out the good potential position of Odesa City as a regional transport, logistic, tourist and IT hub in the Black Sea region, and said he plans to realize this potential.

Odesa has many advantages, in particular, well-educated and talented people, and stunning tourist potential, he said.

“We would provide investors with protection from extortion and blackmail, which have been hindering economic growth so far,” he said at the Ukrainian Investment Day conference organized by Concorde Capital Investment Company in New York on June 19.

Saakashvili added that Odesa airport has also good prospects.

The governor said he plans to create as favorable as possible conditions for business and attracting investment, irrespective of volume. Electronic registration will be introduced, easy land provision will be ensured, and the police, customs and tax services’ operation will be radically changed.

“These will be first pilot projects in Ukraine,” he said.

Saakashvili highly assessed Ukraine’s investment prospects. He said that when he was president of Georgia, his country passed through war and embargo, however thanks to a policy of growth its economy exhibited two-digit figures.

He said Ukraine currently has several advantages: a new generation of people, democracy and a developed civil society, de-communization, a high level of education and a low workforce cost

“Ukraine is Europe’s China,” he added.

CENTRAL BANK PROJECTS ECONOMIC GROWTH AS OF JULY – GONTAREVA

NEW YORK. June 22 (Interfax-Ukraine) – The Ukrainian economy will start recovering as of the second half of the current year, according to Governor of the National Bank of Ukraine (NBU) Valeriya Gontareva.

“We believe that the growth will start in the second half of the year, perhaps as early as this quarter,” she said during a video conference at the Ukrainian Investment Day event organized by Concorde Capital in New York on June 19.

The situation remained stable on the financial market in the past four months, and deposits have started coming back to the banking system, including due to decent interest rates offered by the NBU on its deposit certificates, she said.

Most of Ukraine’s largest banks have already fulfilled their capital increase targets set until July 1, 2015 after last year’s stress tests, she added.

“However, the stabilization won’t be sustainable without GDP growth,” she underlined.

She acknowledged that one of the means to achieve the stability on the market were “draconian” administrative restrictions.

“We’ve agreed with the International Monetary Fund a gradual plan, a road map of how we will be lifting them,” she said.

She also said that targeting inflation is a priority for the central bank. “Right now this year we have a monetary regime of money supply, but our main idea is, of course, inflation targeting, “she said.

At the same time, she said, this transition is possible only under certain conditions, namely, the stable situation in the country. “But we still believe that, as it is envisaged in our EFF [Extended Fund Facility] program, in 12 months we will start to do our inflation targeting, and right now we are preparing instruments for this inflation targeting,” she added.

CABINET SHOULD DRAW UP ALTERNATIVE OPTIONS TO SUPPORT AGRICULTURE IF TAX BENEFITS REVOKED – ULIE

KYIV. June 22 (Interfax-Ukraine) – The Ukrainian League of Industrialists and Entrepreneurs (ULIE) insists on a balanced approach towards revoking tax benefits for farmers and on drawing up alternative options to support agriculture.

“The government should draw up alternative options to support agriculture and synchronously hold talks with the IMF on mitigation of the conditions of cooperation with the fund,” reads a ULIE report, citing League Chairman Anatoliy Kinakh.

He said the government has not offered any alternative ideas on improving the development of agriculture, while state support of agriculture in Ukraine totals dozens of times less than what farmers in the EU receive.

Kinakh said that the alternative to tax benefits, specifically targeted subsidies for farmers, is complicated, as firstly the system should be drawn up and formalized in legislation.

“Then the issue of distribution of subsidies will arouse, and the human factor will play a large role and corruption risks will appear. It is hard to calculate how much money would really go to farmers,” he said.

ARCELORMITTAL INVESTS $1.2 BLN IN KRYVORIZHSTAL, NO PLANS TO SELL PLANT – CEO

KYIV. June 22 (Interfax-Ukraine) – ArcelorMittal, the largest metal company in the world, has invested $1.2 billion ArcelorMittal Kryvyi Rih (former Kryvorizhstal, Kryvy Rih, Dnipropetrovsk region) and the company has no plans to sell the enterprise due to the difficult situation on the metal product markets, CEO Paramjit Kahlon said at a trade union conference held on June 11.

“We’re doing business. Sometimes it brings profit, sometimes – not, there are only losses. If we have losses, it does not mean that everything should be left. The corporation has spent $1.2 billion here,” he said.

Kahlon said that the company still has many projects, and some of them will be realized in the near future.

“What other foreign company spends such money in Ukraine? We do this not to throw once everything. Goods times would arrive, I’m sure in this. Then we won’t doubt and increase wages by 15% or 20%. Now times are hard. The enterprise will be able to survive them with your support,” he said.

When asked about the expected 12% reduction of the mining department workforce, Kahlon confirmed that this would happen.

“I cannot name the figure now, as everything should be checked,” he said.

Kahlon also said that the increase of wages by 8% announced in October, if finally agreed with the head office, would also affect employers with fixed salaries. He also said that increasing salaries for other workers should be discussed.

At the conference ArcelorMittal Kryvyi Rih proposed to representatives of the owner of the enterprise to increase salaries from October 1 by another 8%. It was also proposed that 50% of bonuses for 2015 will be paid by July 7, and the rest will be paid in February 2016.

The trade union of ArcelorMittal Kryvyi Rih insists on an increase of salaries for its workers, taking into account the devaluation of the hryvnia, and the growth of utilities tariffs, prices of food and articles of prime necessities.

EU TO RELEASE REPORT ASSESSING UKRAINE’S VISA-FREE TRAVEL PREPARATIONS BY DEC 15 – KLIMKIN

KYIV. June 19 (Interfax-Ukraine) – The EU will release a full report by December 15 on the preparations made by Ukraine towards obtaining a visa-free regime with the EU, Ukrainian Foreign Minister Pavlo Klimkin has said.

“We have a clear agreement on December 15 as a final date, when the European Union will present a full report on what has been done by Ukraine,” the minister said during an hour of questions to the government on Friday.

Klimkin said that Ukraine and the EU have an agreement on the expert missions which will assess Ukraine’s progress towards obtaining the visa-free regime.