Israeli Ambassador to Ukraine Michael Brodsky expects the growth of Israeli investments in the IT sector of Ukraine after the adoption of the law on Diia City. “I believe that after the adoption of the law on Diia City new investments may come to Ukraine. We are already talking about a deeper participation of Israeli capital, Israeli companies in the IT market in Ukraine, as there are prerequisites for this. Now, together with the entry into force of Diia City, a legislative and tax base is being created. Therefore, I think that this direction today is very promising,” he told Interfax-Ukraine in an exclusive interview.
According to him, services related to the IT sector may also be included in the updated free trade agreement (FTA), the preparation of which will start in 2022.
“The IT sector is one of the main sectors of cooperation between Israel and Ukraine in recent years, as over half of the outsourcing of the Israeli high-tech today falls on Ukraine,” he said.
The ambassador also said “in Ukraine, there are 30,000 or 40,000 programmers for Israeli companies.”
“In other words, imagine that each of these programmers earns on average $3,000 to $4,000 a month at least, or even much more. But even if we take the minimum wages, it turns out that multiply 30,000 or 40,000 by $3,000 is the Israeli contribution to the Ukrainian economy, the contribution of Israeli companies,” Brodsky said.
On the other hand, according to him, “this is a Ukrainian contribution to the economy of our country, since Israel is sorely lacking in programmers.”
“Israeli high-tech is the locomotive of our economy. Income to the state treasury from high-tech is one of the most serious components of the Israeli national budget today. Therefore, if there are people in Ukraine who can help Israeli companies to fulfill their task, then that is great. This brings our countries closer together, and this is an absolutely mutually beneficial situation,” Brodsky said.
According to him, this direction is one of the basic in Ukrainian-Israeli cooperation, along with agriculture, irrigation and medicine. Brodsky said the company Netafim, which develops projects and sales of Israeli technologies in drip irrigation.
“Representatives of several Israeli companies recently visited the regions, and we hope that there will be a continuation, as the topic is relevant for both countries. We feel interest from Ukraine, the president spoke about this when he met our president here,” he said.
With a cumulative rating of 1.74 out of 5, Ukraine ranks 21st in the ranking of the investment potential of developing countries in terms of energy transition, and 48th globally. This is stated in the tenth Climatescope report, which is carried out annually by the analytical center of the Bloomberg agency – BloombergNEF – and covers 136 countries of the world (107 developing and 29 developed).
Analysts note the country’s progress in fulfilling the First Nationally Determined Contribution to the Paris Agreement, according to which Ukraine pledged to reduce greenhouse gas emissions to 60% of the 1990 levels by 2030, but did so much earlier. So, in 2019, according to the draft Ukraine’s Greenhouse Gas Inventory for 1990-2019, carbone dioxide emissions amounted to 332 million tonnes – 37.6% of the 1990 level.
It is also indicated that Ukraine, according to the updated Nationally Determined Contribution, pledged to reduce emissions by 65% by 2030 and increase the share of renewable energy sources (RES) in electromix to 25% by 2035.
The report notes that Ukraine has met the previous target of increasing the share of renewables to 11% by 2020, in particular thanks to financial incentives and benefits from the government.
The analysts also mention “green” auctions, which are expected in 2022-2025.
At the same time, the issue for refusing fossil fuels refers to Ukraine’s promise to abandon coal energy by 2035, which was given by representatives of the Ukrainian delegation at the COP26 climate summit in Glasgow. At the same time, in a comment to the Green Deal portal, Deputy Prime Minister of Ukraine Olha Stefanishyna said that the Cabinet of Ministers did not approve official documents in order to abandon coal generation by 2035, and the Ministry of Energy will have to adjust this date.
Analyzing the transport sector of Ukraine, the experts draw attention to the goal of the National Transport Strategy to achieve a 75% share of electric transport in domestic transport by 2030, a bill regulating the operation of only electric buses on the routes after 2030, as well as a bill that prohibits the import of gasoline and diesel cars to Ukraine from 2030.
Despite the absence of grants or loans for the purchase of electric vehicles, Ukraine intends, with the support of the EBRD, to introduce interest-free loans for these purposes, BloombergNEF says. At the same time, it is noted that in Ukraine since 2016 the import duty on electric vehicles has not been levied and the VAT exemption has been extended until 2022.
The weakest dynamics of development is observed in the housing and utilities services sector. The analysts emphasize that Ukraine is highly dependent on gas for heating buildings, while energy efficiency standards are at the minimum level. At the same time, the “warm loans” program is mentioned.
Investments in research and development (R&D) and precision farming in the long term will allow raising investment in GDP by more than 30 times, professor of the Kyiv School of Economics (KSE) Oleh Nivievsky said during a panel discussion at Interfax-Ukraine on Thursday.
“One dollar of investment in research in the agricultural sector produces an average of $ 32 in national wealth in the long term. Compared to investment in infrastructure, the figure there is up to $ 5 per dollar invested in it. Accordingly, the potential of agricultural R&D is much higher than it might seem,” he stressed.
In addition, according to the expert, for the Ukrainian conditions of investment in agrarian R&D with the simultaneous introduction of precision farming methods, this indicator can be increased by 10%.
The panel discussion on the development of precision farming was also attended by Olha Trofimtseva, the President of the Ukrainian Agri-Food Platform; Serhiy Sychevsky, Bayer business development manager; Dmytro Zaitsev, the head of the precision farming service of Continental Farmers Group agricultural holding; head of the precision farming and telemetry department in Ukraine, Moldova, Scandinavia and the Baltic States at CNH Ukraine Mykola Chornonos; Kyrylo Druzhinin, the director for innovation at Agrain.
“If the technology responds to one of two questions: to make working conditions easier for a person or to improve its results, then it already makes sense to study it. Further, the area of the field is studied, what crops are planted on it, what technology and production culture we have,” Continental representative Zaitsev explained the approach to the introduction of precision farming.
Representative of Agrain agricultural holding Druzhinin, in turn, clarified that the methods of introducing precision farming can differ significantly for agricultural holdings with thousands of hectares in processing and for farmers with a land bank of tens of hectares. According to him, another trend in precision farming will be a reduction in the number of workers in agriculture and a change in the demand for professions: for example, now tractor drivers in an agricultural holding are more likely to perform the functions of operators controlling the autonomous operation of machines.
“The progress that we have in technology is just the space. If you look at machinery as a thing that performs some kind of operation instead of you, you will not see progress. But if you look at it as a way to facilitate work and a means of reducing costs, then we have the fact of a technological revolution that is taking place before our eyes,” Druzhinin emphasized.
According to him, at present, Agrain has practically completed the transfer of equipment to the autonomous processing of fields, when agricultural machines can independently move along the specified navigation lines not only in a straight line, but also turn around in the aisle.
Serhiy Sychevsky clarified that one of the problems of the widespread introduction of autonomous machinery is the small number of innovative machines in Ukraine that is capable of generating data on movement, which can be read and used by equipment from other manufacturers in the future. He cited the estimates of Bayer, according to which in Ukraine now only about 20% of combines and seeders can generate high-quality navigation data for autonomous operation.
“I will make a small emphasis: at the Agritech exhibition in Germany, we will offer a solution that we will also offer in Ukraine. It will allow increasing the number of compatible combines that can generate such information in the fields,” Bayer’s business development manager said.
The representative of CNH Ukraine, Mykola Chornonos, emphasized a significant shortage of personnel capable of developing the direction of precision farming, especially specialists in the field of data analytics and machine learning. During the discussion, the participants supported the opinion that not a single educational institution in Ukraine prepares specialists in this industry, while agricultural companies themselves are engaged in their training “from scratch.”
He also noted the need for the state to determine strategic directions for the development of the agro-industrial complex and initiate development in them.
“If you look, in recent years, there has been an increase in the service orientation of the agro-industrial complex. In fact, all manufacturing companies are switching to service models of cooperation with their end customers. One of the good cases where you can see this transformation is the drone market, which is growing every year. This year if I’m not mistaken, their growth was 700%. Where else can you see this?” Olha Trofimtseva said.
Despite such volumes of market growth, such companies are gradually switching to a service model of work, selling not only equipment, but also services for their maintenance.
ADDED VALUE, AGRICULTURAL RESEARCH, CHORNONOS, CLUB OF EXPERTS, DRUZHININ, INVESTMENTS, NIVIEVSKY, SYCHEVSKY, TROFIMTSEVA, ZAITSEV
Ukraine is waiting for the arrival of investors from Israel and guarantees the protection of their investments, Ukrainian President Volodymyr Zelensky has said.
“Ukraine is waiting for Israeli investors, and the government and I personally guarantee the protection of all their investments. In addition, Ukraine is interested in studying and using Israel’s significant experience in the field of innovation,” Zelensky said during joint statements with Israeli President Isaac Herzog to the media.
He added that Israeli campaigns, in turn, can use Ukraine’s colossal potential as a new European technological hub.
Zelensky noted that today the volume of direct Israeli investments in Ukraine does not meet the potential of the two countries.
“New technologies, innovations, cybersecurity, healthcare, pharmaceuticals, space programs, banking, finance, construction, agriculture are just some promising areas for the development of investment cooperation between Ukraine and Israel,” the President of Ukraine said.
Zelensky also said that the Free Trade Agreement between Ukraine and Israel opens up new opportunities for strengthening bilateral economic interaction. The countries intend to increase trade volumes to the level that had been before the spread of COVID-19.
Investments in the construction sector of Ukraine in the next three years could reach $2 billion, the founder and president of City One Development, Valeriy Kodetsky, told Interfax-Ukraine, commenting on the results of CC Forum Monaco Global Investment in Sustainable Development held in July.
“The world business positively evaluates the initiated reforms in the construction sector of Ukraine. However, the main measure will be not only nominal reform, but its real effectiveness. Forum participants predict that Ukraine will be able to attract up to $2 billion in the next three years with an annual progress of up to 20%,” Kodetsky, who was the only representative of Ukraine at this event, said.
According to the expert, the participants of the CC Forum estimated the investment potential of the Ukrainian construction industry at no less than $50 billion. At the same time, “powerful foreign investors” are primarily interested in the creation of new factories and production facilities, participation in large infrastructure projects and the implementation of projects in the commercial and residential real estate segments.
One of the important directions for the development of domestic development, according to Kodetsky, may be the reorientation of business processes towards the creation of a high-tech closed cycle for the production of modern construction equipment and materials that correspond to global trends in environmental safety and energy conservation.
“Thanks to foreign partners, for 10 years Ukraine can fully provide itself with everything necessary not only for the development of the construction sector, it is capable of reaching a new technological level. This is primarily about setting up the production of building materials through the introduction of energy-saving environmental technologies,” he said.
According to the expert, the annual demand of the Ukrainian market for float glass is more than 100 million square meters and almost 100% is covered by imports, and 80% of this volume is used in the construction sector.
Kodetsky said that in the near future, thanks to foreign investors, the construction of a float glass plant could begin, which could potentially satisfy up to 30% of the domestic construction market. The volume of foreign investments in this production could be more than $80 million with a payback period of five or six years. The profitability of the plant will be over 30%.
According to his forecasts, over the next two years, the growth of float glass production may reach 3-5% annually. The expert said that the estimated cost of domestic float glass will be 15-20% lower than exported, which will allow developers to redirect the released funds to improve the quality of construction projects, increase the level of builders’ wages, etc.
“The establishment of high-tech closed production processes will reduce the cost of building materials by 25-30%. Part of these costs can go to improve the quality of projects in various segments of real estate,” he said.
At the same time, the expert drew attention to the fact that effective reforms in construction will significantly reduce the “corruption burden” on developers, and the released financial resources could be reassigned to social responsibility programs, as well as to increase salaries in the construction sector.
“According to our calculations, salaries in construction as one of the main driving spheres of the Ukrainian economy in the next two years may grow by at least 30-40%,” Kodetsky said.
The president of City One Development recalled that now more than 1 million of our fellow citizens are forced to work in the construction sphere in Eastern Europe. Moreover, the “net” earnings of a builder, depending on qualifications, are on average 30-40% higher than in Ukraine. He believes that an increase in wages by at least a third can return up to 200,000-300,000 compatriots to the domestic construction market.
“The development of construction now depends on the effectiveness of the implemented reforms and the creation of opportunities for attracting foreign investment. It is the construction sector that can become a driving force for sustainable economic and social development of our state,” Kodetsky said.
In turn, Tetiana Shulha-Zabelska, Managing Partner of the Residential Estate Development Community (RED Community), said in a commentary that the main goal of the CC Forum was to determine the main directions of sustainable development of society and business in the face of the existing challenges of counteracting global diseases and epidemics, changes climate, migration and the like.
“As for the investment attractiveness of Ukraine, global business leaders almost unanimously consider Ukraine one of the countries with the greatest development potential and attractive for long-term investments,” she said.
According to Shulha-Zabelska, most of the investments (more than 40%) will be spent on the development of large-scale projects to create technology parks and facilities for the production of modern building materials. About 35% of the funds raised can go to infrastructure facilities, and 25% of investments will directly relate to commercial and residential real estate projects.
“The Ukrainian strategy for attracting foreign funds should be inextricably linked to global trends in sustainable development, the implementation of global trends in the construction industry, an increase in jobs with an increase in the income of citizens of the country,” she said.
City One Development is an investment and development company that provides a range of services in the field of creation and development of real estate facilities.
Founded in 2017, the RED Community brings together over 30 leading residential developers.
Naftogaz and event organiser dmg events announced the launch of a major gas sector event in Ukraine. The Ukraine Gas Investment Congress, taking place from 20-22 October 2021 under the patronage of the Ministry of Energy of Ukraine and with the support of the Ministry of Environmental Protection and Natural Resources of Ukraine, will bring together industry leaders from around the world to discuss energy transition, technology, and industry transformation, along with key trade flows and delivery strategies.
The event is ideally timed to address Ukraine’s efforts to strengthen links with the European Union and achieve energy independence by 2030. As the importance of European energy security increases, the event will provide a platform for government ministers, energy industry leaders, investors, and technology innovators to examine opportunities to modernise Ukraine’s resources.
These are quickly becoming an attractive investment proposition, with attendees able to consider a well-developed midstream infrastructure that facilitates the monetization of new developments at scale, asset backed trading, and extensive Europe export potential, with the largest underground storage capacity in Europe and transit capacity of 90bcm.
The Energy Strategy of Ukraine 2035 aims to create a highly competitive energy market which encourages foreign direct investment and underpins rapid infrastructure development and integration with the EU’s systems. The Gas Investment Congress provides a forum for value-add partners to contribute capital and technological expertise to secure growth opportunities and financial returns.
Naftogaz СЕО Yuriy Vitrenko said: “Ukraine, and with it Naftogaz, have a key role to play in providing energy security for Europe. With the second largest gas reserves on the continent, Ukraine has the single largest growth opportunity in natural gas production in the EU. As the Gas Investment Congress shows, the investment opportunities in the gas sector are enormous.”
Christopher Hudson, President of Global Energy, dmg events, commented, “We very much look forward to joining forces with Naftogaz to host this event in Ukraine. By bringing together energy industry leaders, policy makers and investors, the Ukrainian Gas Investment Congress will present Ukraine’s natural gas opportunities and attractive investment climate to the world.”
Anyone wishing to attend can register their interest at:
https://www.ukrainegasinvestmentcongress.com/register-your-interest-to-attend/
ENDS
About Naftogaz:
State-owned Naftogaz is the largest national oil and gas company of Ukraine, owning 38,000 km of gas pipelines and 30 billion cubic metres of storage capacity. Naftogaz’s strategy of hydrocarbon resource base development aims to double Ukraine’s gas reserves in the next 10 years.
About dmg :: events:
dmg is one of the leading global event organisers, working across several key industries. Its energy portfolio includes some of the biggest events in the sector, such as Gastech, ADIPEC, and the Global Energy Show.
For media enquiries, contact:
jpryanykova@be-it.com.ua / +38 098 3099953 – Julia Pryanykova
philip.boyes@projectassociatesltd.com / +44 7860 955581
conor.meade@projectassociatesltd.com / +44 75 3819 6545
