Business news from Ukraine


Representatives of Ukraine and Slovenia have signed two memorandums: the memorandum of understanding to strengthen economic cooperation and the memorandum of understanding in technical cooperation in the sphere of geodesy.
An Interfax-Ukraine correspondent has reported that after Ukrainian-Slovakian negotiations chaired by Ukrainian President Petro Poroshenko and Slovenian President Borut Pahor on Friday in Kyiv representatives of the delegations of the two countries signed the memorandum of understanding between the Economic Development and Trade Ministry of Ukraine and the Economic Development and Technologies Ministry of Slovenia on deepening economic cooperation.
The sides also signed the memorandum of cooperation and scientific and technical cooperation between the State Service of Ukraine for Geodesy, Cartography and Cadastre and the similar service of Slovenia.

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Ireland’s low cost airline Ryanair is holding talks with five Ukrainian airports on launching flights and hopes to start flying to new destination to Ukraine in 2019, Ryanair CEO Michael O’Leary has said in an interview with the Ukrainian Tourism Newspaper. “Now we are negotiating with five more Ukrainian cities – maybe next summer we will open our flights there. I think we will develop in Ukraine very aggressively and rapidly increase the pace of our presence in the market,” he said.
At the same time, O’Leary expressed regret that the airline cannot yet launch all the destinations from Ukraine that it would like to launch, in connection with the existing restrictions in intergovernmental agreements.
He also said that Kyiv remains the key destination for the airline. When asked if negotiations with the airports of such cities as Kharkiv, Odesa, Dnipro, Kherson and Vinnytsia are being conducted, O’Leary said that the negotiations are being held “almost with all the mentioned cities.”
“I will be very glad if next summer we will be able to offer our passengers flights to such a beautiful city as Odesa, but it is too early to talk about the specifics. Our and Ukrainian negotiators still need to work hard for the successful implementation of this project,” the Ryanair CEO said.

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The Cabinet of Ministers of Ukraine has approved a strategy for developing small and medium-sized enterprises (SME) until 2020, which in particular, envisages the creation of the SME Promotion Office and a network of business support centers. The decision was made on May 10.
The draft action plan of the strategy, a copy of which has been sent to Interfax-Ukraine, includes the implementation of a pilot project on partial securing loans for SME and designing of proposals on the possible schemes of securing these loans.
In addition, the Strategy provides for simplification of the procedure for closing down an enterprise, improving the licensing and permitting system, as well as improving the access of SME to public procurement, according to the document. In particular, the draft plan provides that the state-owned enterprise ProZorro should, by the end of the year, introduce separate sections for the business entity category in the participant registration card in the electronic procurement system, depending on the number of employees and revenues from any type of activity for the year, according to the action plan.
The government also finally abolished the use of seals.

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Ukraine can conclude agreements on the abolition of visas with four Latin American countries in the near future, the Ministry of Foreign Affairs of Ukraine has said.
“We are working to ensure that the geography of visa-free travel is extended for Ukrainians. Today, citizens of Ukraine can travel without visas to 85 countries of the world,” head of the Consular and Legal Affairs Department, Deputy Head of the Consular Service Department of the Ukrainian Foreign Ministry, Serhiy Miniaylo said at the round table talk titled “Ukraine’s European Choice after the Revolution of Dignity: Opportunities and Problems” in Kyiv on Friday.
The representative of the Ministry of Foreign Affairs recalled that not long ago agreements were reached with the UAE and Qatar on simplifying the visa regime.
Minayylo said that there are prospects for concluding agreements on the abolition of visa obligations with Peru, Uruguay, Colombia and Mexico.
“The possibility of drawing up agreements on the abolition of the visa regime in the near future was discussed with the four countries of the region of [Latin America] in detail. These are Uruguay, Peru, and Colombia. There were substantive discussions in Mexico,” he explained.

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The ZAMMLER Group (Ukraine), providing transport and warehouse logistics services, plans to implement a project to build a warehouse complex in three stages near Kyiv with gross area of 60,000 square meters, Director of ZAMMLER Group Viktor Shevchenko has said.
“We expect to take a loan from a Ukrainian bank this year to build a warehouse in three stages. It is economically easier and more expedient from the point of view of the gradual moving of our clients. Now we are actively working on the issue of buying a land parcel for the construction site – after settling this issue it would be possible to talk about the loan in details,” he said in an interview with Interfax-Ukraine.
Shevchenko said that the company is also negotiating with the European Bank for Reconstuction and Development (EBRD) on project financing.
According to him, at present the cost of building a class A warehouse in Ukraine costs about $500 per square meter, while the average purchase price of the finished warehouse after the crisis has not changed and now is $300-350 per square meter.
“But at the same time everything that is offered on the market is more than 10 years old and requires renovation. If the owner of the facility is a developer, then he still cares for it, but if it is a bank, then in the warehouse was repaired two or three years ago. Therefore, it is often necessary to add about $200 per square meter for renovation to the selling price, which results in the same $400-500 per square meter. Besides, you invest them in the old building,” he said.
The ZAMMLER Group incorporates Zammler Ukraine (Kyiv), Zammler Warehouse LLC (Martusivka, Kyiv region), Zammler Fulfilment LLC (Krasylivka, Kyiv region), MLS LLC (Kharkiv), Ningbo Zammler Trading Co LTD (China) and ZAMMLER POLSKA Sp.z o.o. (Poland).
The group provides services in the sphere of transportation by road, by rail, by sea and by air, customs clearance services and a full range of warehouse services.

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In the framework of the “big privatization” program, Ukrainian strategic enterprises will be sold cheaply not to strategic foreign investors but to people close to the authorities, Ukrainian parliamentarian, leader of the Osnova party, Serhiy Taruta has said, commenting on the Cabinet’s approval of a list of 26 large state enterprises for privatization in 2018. “I oppose such privatization, within the framework of which strategic profit-making enterprises like Turboatom are sold, which received a profit of UAH 711 million in 2017. The question arises – why do we sell such enterprises? I believe that this “big privatization” is a big robbery of the country,” Taruta said on the air of the NewsOne TV channel.
The parliamentarian recalled about privatization of the Odesa Port-Side Plant, which in 2016 was twice exhibited for the competition: in July at a starting price of UAH 13.2 billion (about $530 million), and then in December at a reduced price of UAH 5.16 billion (about $200 million), but in both cases the competition did not take place. And the current starting price of the Odesa Port-Side Plant at UAH 1.4 billion ($54 million) proved to be 10 times lower than a three-year-long price.
“Ukrainian strategic assets are sold very cheaply, but due to high risks, strategic foreign investors will not come. Therefore, privatized enterprises will be given to people close to the authorities. Therefore, current privatization is a continuation of the robbery,” Taruta added.
According to the MP, Polish experience can be used for effective privatization.
“We can use the experience of Poland, where first a specialized agency was created, modern management standards were introduced, then foreign experts were involved as advisers, under the guidance of which the state enterprises were first profitable and investment attractive and only then privatized at high cost,” Taruta said.
The parliamentarian also stressed the importance of investor compliance with investment obligations.
“The cost of privatization should not be the main criterion. It is more important for the buyer to keep its obligations to modernize production, preserve the profile of the enterprise and jobs, increase wages and improve the environmental component. There were already many cases in Ukraine when the privatized enterprise was bankrupt then. We need to change the philosophy of privatization, namely, to sell the asset with high investment obligations. In the event of default, reprivatization must take place,” he said.
As reported, on May 10, the Ukrainian government approved a list of large enterprises for privatization in 2018. It includes 26 enterprises: five regional electricity supply companies, Centrenergo, Odesa Port-Side Plant, Turboatom, Zaporizhia Titanium and Magnesium Combine, United Mining-Chemical Company and Sumykhimprom and others.