Business news from Ukraine

39% OF UKRAINIAN ENTERPRISES POSITIVELY ASSESS IMPACT OF EU ASSOCIATION AGREEMENT

Some 39.3% of representatives of Ukrainian enterprises believe that their enterprises have significantly/insignificantly benefited from the Association Agreement between Ukraine and the European Union, according to a poll by the Institute for Economic Research and Policy Consulting.
According to a poll presented at an online presentation on Friday, in 2020, the largest number of enterprises assessed the impact of this document positively, since in 2018 this figure was 28%, in 2017 – 31.6%, and in 2016 – 28%.
At the same time, 50.7% of the respondents believe that the agreement did not affect their enterprise, and 5.6% believe the enterprise has lost significantly/slightly.
The lowest level of positive assessments of the impact of the agreement is among exporters. Some 22.7% of exporters indicated that the enterprise won, 62.4% that the document did not affect the enterprise, and 4.7% indicated that the enterprise lost.
Among the importers, 44.4% of the respondents believe that the enterprise won, 47.9% that the agreement did not have impact on the enterprise, and 3.8% that the enterprise lost. Some 45.1% of exporters and importers have positive expectations, 45.9% do not expect the impact of the agreement, and 4.9% expect a loss.
Big business feels more of the positive impact of the agreement. Among the representatives of large enterprises, 46.5% note that the enterprise won, 44.2% that the agreement did not have the impact on the enterprise, and 3.5% that the enterprise lost. The positive impact of the agreement is also indicated by 36.6% of the surveyed medium-sized enterprises, by 39.2% of small and by 39.4% of micro enterprises. The level of positive ratings increased among businesses of all sizes compared to 2016. The fact that the agreement did not have the impact on the enterprise is indicated by 50.9% of medium-sized, 49.5% of small and 52.7% of micro enterprises. Some 5.4% of the respondents of medium-sized enterprises said that the enterprise has lost. The same opinion is shared by 4.8% of respondents of small and 3.8% of micro enterprises.
The trade sector felt the greatest positive impact of the Ukraine-EU Association Agreement (43.2%), and the least number of positive assessments was among the agricultural enterprises (21.7%). At the same time, in the service sector, there is the highest share of respondents who point to a loss caused by the agreement (10.4%). Compared to 2016, the share of positive assessments of industrial and trade enterprises increased by almost 1.5 times, at the same time, the level of positive assessments of agricultural and service enterprises almost did not change.
The leader among the positive assessments of the impact of the agreement is Lviv region, where 55.1% of the respondents indicated that their enterprise benefited from it. Almost every second respondent gave positive assessments in Rivne (48.3%), Ternopil (48%) and Chernivtsi (47.6%) regions. The smallest number of positive assessments is in Kherson region (18.2%), where only every fifth respondent indicated a benefit from signing an agreement.
In Rivne, Ivano-Frankivsk, Volyn, Donetsk, Sumy and Vinnytsia regions, there are no respondents who felt a negative impact on their enterprise. In more than half of the regions, negative assessments of the impact of the agreement are less than 4%. And in Kherson region, there is the highest share of respondents who believe that their company has lost from the agreement (13.6%).
Some 44.9% of the respondents believe that their company will benefit from the agreement within the next five years, 24.3% that it will not have impact, and 5.6% that the company will lose.
The least positive expectations are among enterprises that are engaged only in export (34.1%). Almost every second representative of import enterprises (48.1%) or simultaneously export and import (48.6%) has positive expectations. Among the exporters, there is the highest proportion of respondents who do not expect the impact of the agreement on the company (28.2%).
The highest expectations of a positive impact of the agreement are in Cherkasy (62.5%), Lviv (60.3%), and Ternopil (60%) regions. The smallest number of enterprises that expect positive results are in Kirovohrad (30%), Zaporizhia (31.7%), and Chernihiv (34.5%) regions.
The poll was conducted in 2020 by the project “Support for the Public Initiative for Fair and Transparent Customs” with the support of the European Union, the International Renaissance Foundation and Atlas Network. More than 1,000 representatives of enterprises were surveyed from micro to large enterprises, engaged in export and/or import. Most of the respondents are micro and small enterprises, representatives of industry and trade.

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INDEPENDENT NATIONAL BANK OF UKRAINE IS CRITICAL FOR SUPPORT FROM EU – OPINION

The independent and professionally governed National Bank of Ukraine (NBU) is critical for macro-financial support from the European Union and other international partners, Head of the EU Delegation to Ukraine Matti Maasikas has said.
“A strong, independent and professionally run NBU is critical to Ukraine’s financial stability, banking sector reform, investment, economic development to benefit Ukraine’s citizens, and macro-financial support from the EU and other international partners,” he wrote on Twitter on Thursday.

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UKRAINE TO INTRODUCE ZERO DUTY ON WINE IMPORTS FROM EU FROM 2021

Zero duty on the import of wine from the EU will be introduced from 2021 in accordance with Ukraine’s commitments to zero import duties on a number of goods within a seven-year period after the signing of the economic part of the Association Agreement with the European Union, the Development Director of the Ukrainian Horticultural Association, the international consultant to the UN FAO, Yekateryna Zvereva, has said.
“From 2021, a zero duty will be introduced on the import of wine into Ukraine (from the countries of the European Union). At the same time, the situation in the wine market is not the best today – wine import to Ukraine increased by 25-30% compared to last year,” she wrote in a column to the Interfax-Ukraine agency.
She clarified that at present the duty on the import of wine from the EU is EUR 0.3-0.4/liter.
With reference to the data of the State Statistics Service, Zvereva reported that in 2019 Ukraine exported $11.9 million worth of wine. At the same time, Kazakhstan became the largest foreign market for Ukrainian winemakers, where products worth $1.3 million were delivered. In addition, one of the largest markets remains Germany, where $1 million worth of wine was exported.
At the same time, according to the expert, import of wine last year amounted to $ 146.7 million.
In addition, in the first half of this year, according to the State Customs Service, Ukraine exported $6.1 million worth of wine, while imports amounted to $67.9 million, the expert said.

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UKRAINE AND EU SIGN AGREEMENTS TO FINANCE SOME PROJECTS

At the 22nd Ukraine-EU Summit, Kyiv signed three agreements with the European Commission and three agreements with the European Investment Bank (EIB) aimed at financing various projects.
In particular, an agreement to finance the EU4ResilientRegions programme for EUR 30 million was signed between the Ukrainian government and the European Commission.
According to the document, the EU4ResilientRegions programme aims at enhancing the resilience of eastern and southern Ukraine to the negative impacts of the ongoing conflict, including to hybrid threats and other destabilizing factors. The action will also address most recent destabilization factors such as the COVID-19 pandemic and its social and economic impact. In response to the conflict in eastern Ukraine and the illegal annexation of Crimea and Sevastopol, this action will aim to enhance Ukraine’s overall resilience, notably to hybrid threats.
The Civil Society Facility programme for EUR 20 million was also signed between the Ukrainian government and the European Commission. The programme focuses on social innovation and active citizenship as core principles for civic engagement and the premises for sustainable democratic societies. It aims to support the capacity of civil society organizations to engage in policy dialogue, to act as governance actors and to drive the country’s social and economic development.
In addition, the Climate package for a sustainable economy (CASE) programme for EUR 10 million was signed between the Ukrainian government and the European Commission.
This programme supports Ukraine in the implementation of measures towards a climate neutral, clean and resource-efficient economy. This includes support in areas such as circular economy and waste management, energy efficiency, emission-free urban transport as well as support to climate mitigation and adaptation.
In addition, this agreement provides for the creation of a joint resource center for climate innovation between Ukraine and the EU and the implementation of “green” measures within the framework of the National Transport Strategy until 2030.
All three documents were signed by Deputy Prime Minister of Ukraine for European and Euro-Atlantic Integration Olha Stefanishyna and Member of the European Commission for European Neighbourhood Policy and Enlargement Negotiations Olivér Várhelyi.
Three agreements with the EIB were signed.
Minister for Communities and Territories Development of Ukraine Oleksiy Chernyshov and Vice-President of the European Investment Bank Teresa Czerwińska signed an Agreement between the Government of Ukraine and the EIB on financing the Energy Efficiency of Public Buildings in Ukraine project. The loan will enable the installation of modern equipment in buildings, such as meters and energy consumption control systems, the modernization of heating, ventilation and lighting systems, and upgrades to exterior surfaces (facades, roofs, slab insulation, basement ceilings, replacement of windows and doors).
Also a EUR 30 million loan provided for by the guarantee agreement Logistic Network (Ukrposhta modernization and digitalization) was signed by Ukrainian Infrastructure Minister Vladyslav Krykliy, CEO of Ukrposhta JSC Ihor Smelyansky and Vice-President of the EIB Lilyana Pavlova.
The loan will allow Ukrposhta to start modernizing its logistics network with three new sorting hubs, 20 postal depots and IT infrastructure. The beneficiary is to return the loans within 20 years.

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INVESTOHILLS VESTA, EU, US CREATE $100 MLN SEED FUND TO INVEST IN UKRAINIAN BAD DEBT MARKET

The financial company Investohills Vesta, together with investors from the European Union and the United States, has created the Investohills Helianthus $100 million seed fund to invest in the Ukrainian market of distressed debts, the company said on its website.
According to the report, the first issue of shares of the relevant fund (in the amount of UAH 1 billion in June 2020) was approved by the National Securities and Stock Market Commission and distributed among investors.
Investohills Vesta will manage the fund’s activities in the interests of foreign investors, as well as provide them with a range of services in the field of redemption and collection of bad debts, litigation, storage and management of distressed and collateralized assets.
“The Ukrainian bad debt market is interesting to foreign funds specializing in such investments. But they are stopped by Ukraine’s specifics: weak protection of creditors’ rights at the level of legislation and the judiciary. Investohills Group and the fund… has offered a full cycle of support for investment-attractive deals with bad debts,” the founder and managing partner of the financial company, Andriy Volkov, said.
According to the release, on August 19, 2020, the fund closed its first deal, having bought out a portfolio of troubled assets of VTB, Rodovid and Financial Initiative banks from the Deposit Guarantee Fund for UAH 1.314 billion.

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INCREASE IN DUTY-FREE QUOTAS FOR UKRAINIAN HONEY COULD HELP EU REDUCE DEPENDENCE ON CHINESE SUPPLIES

The renewal of the Association Agreement between the European Union and Ukraine next year can give a new impetus to the development of the Ukrainian honey industry, strengthen the country’s position in the EU market and reduce its dependence on the supply of Chinese honey, which now forms about 40% of the total supplies in this direction, national consultant to the Food and Agriculture Organization of the United Nations (FAO) Hanna Burka has said.
Now the Ukrainian honey market depends on supplies to the European Union, whose share in the total volume of Ukrainian honey exports exceeds 80% (in 2019 – 86%, in 2018 – 80%, in 2017 – 74% ). The EU countries are considered the largest honey importers in the world and about 40% of honey needs are met by imports, she said on her Facebook page.
“The signing of the Association Agreement between Ukraine and the European Union, within the framework of which a deep and comprehensive free trade zone began to function, contributed to an increase in purchasing countries and an increase in the export of Ukrainian honey, and, accordingly, the flow of foreign exchange earnings into the country,” Burka wrote.
So, in 2017, Ukraine exported 47,100 tonnes of honey to the EU, in 2018 – 41,000 tonnes, and in 2019 – 45,000 tonnes.
“A year after the signing of the Agreement, the number of enterprises that had the right to supply honey to the markets of the European Union increased to 52, and by the end of 2019 it was 72,” the FAO consultant said.
In addition, the share of Ukraine in the import of honey to the EU countries also increased, if in 2013 it was 10%, then in 2019 it reached 22% (in 2018 – 20%, in 2017 – 23%). Accordingly, Ukraine became No. 2 supplier of honey to Europe, with China ahead.
“During the FTA, Ukrainian honey exporting companies are actively using the possibilities of duty-free tariff quotas. Both the main and additional preferential quotas for honey were used in the first days of the month. Despite the fact that the extra-quota volume is subject to an import duty of 17.3%, the export volumes of Ukrainian honey continue to increase. The current export volume is seven-eight times higher than the annual volume of the total quota, which confirms the interest of European partners in Ukrainian honey,” Burka said.
According to her, it is obvious that the current volume of the quota (in 2017, the main quota was 5,200 tonnes, in 2018 – 5,400 tonnes, in 2019 – 5,600 tonnes, in 2020 – 5,800 tonnes; additional 2,500 tonnes was not revised) does not suit both the demand of Europe and the possibilities of the Ukrainian honey industry.
“The next Ukraine-EU negotiations should be aimed at both increasing the duty-free quota and reducing customs tariffs. As an example, the EU-Mexico cooperation model can be used, for which the preferential quota is 30,000 tonnes at a rate of 8.6%,” said the expert.

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