Business news from Ukraine

KYIV INTERNATIONAL ECONOMIC FORUM ESTABLISHES DIALOGUE BETWEEN UKRAINIAN AND FOREIGN BUSINESS

Over 2,000 participants of the fifth Kyiv International Economic Forum (KIEF) were exchanging ideas and experience, finding partners, clients, and investors on October 18–19, 2018 in Kyiv. KIEF has confirmed its reputation as a world-class business event and a powerful platform for dialogue between Ukrainian and foreign business, which plays the role of a generator of new investment projects.
More than 100 speakers—well-known entrepreneurs, economists, investors, representatives of financial organizations and authorities from more than 30 countries have participated in this Forum. More than 150 representatives of both Ukrainian and foreign media—from the USA, Great Britain, Germany, Poland, and France—have covered the Forum.
The Forum was opened by the Prime Minister of Ukraine Volodymyr Groysman. He drew attention to the growth of Ukraine’s GDP for ten quarters in a row and the country’s rise in most global ratings, but he also noted that we can and must achieve even greater growth because Ukraine has a large unrealized potential. Mr. Prime Minister is confident that human capital can help the Ukrainian economy to grow by more than 5% a year. Therefore, one of the Government’s priorities is investment in education and training of professional personnel.
The future of countries, businesses, and communities in the high-tech world, where breakthrough technologies and rapid transformations change the rules of the game on the conventional markets, was the key topic of this year’s KIEF. World-renowned experts from various fields gave their insights and predictions about key changes that will influence the humankind in the coming years, and what countries and businesses need to do to use the challenges of the new era for the better. During the discussions, the issue of human capital was of top priority because innovation requires talents and developed ecosystems, not cheap labor and raw materials.
“Five years ago, when I was inviting foreign investors to Ukraine, I told them about cheap labor and smart people. But today these advantages do not work—technology is more important. There are two challenges facing the manufacturing—robotization and artificial intelligence. To effectively use these innovations and beat the competition, companies need talented professionals. Therefore, it is important to ensure all possible conditions for talents to stay in the country and create successful teams here,” comments the initiator of KIEF and founder of the UFuture Investment Group Vasyl Khmelnytsky.
Foreign investors also pointed out the rich human potential of our country. In particular, José Manuel Entrecanales, CEO of Acciona, which entered Ukraine with large investments in renewable energy this year, noted that “Ukraine has more talent that you would normally find at an emerging market.”
Vasyl Khmelnytsky brought into focus another aspect of the new era: “Today many large companies in Ukraine are introducing innovations. As a result, there will be job cuts. Therefore, the state needs to support small and medium businesses, as they can create millions of jobs and balance the situation in the labor market.”
KIEF also plays an important reputation role—it represents Ukraine to foreign business. The Forum helps Ukrainian and foreign entrepreneurs meet in person, find common language and interests, as well as agree on the development of joint projects. Like in previous years, KIEF was attended by numerous delegations of potential investors, this time from Italy, Spain, and others.
Participants of the panel discussions of KIEF 2018 paid much attention to the global competition and transformations businesses need to undergo in various areas in order to survive in modern conditions. During the Forum, industry specialists and entrepreneurs also searched for answers to current issues of the local economy. Among them were: creating innovation ecosystems to retain qualified personnel inside the country, search for resources to develop transport infrastructure, interaction of small, medium and large businesses, introduction of new technologies in the agricultural sector, etc.
Kyiv International Economic Forum (KIEF) is a permanent platform for the formation of Ukraine’s economic development strategy. It is aimed at organizing a dialogue between experts, business and government, adopting the best international experience, creating a roadmap for development and facilitating the conversion of ideas into real actions. www.forumkyiv.org.

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UKRZALIZNYTSIA TO ELECTRIFY TRACK SECTION FROM KYIV TO BORYSPIL AIRPORT

PJSC Ukrzaliznytsia is holding talks about the electrification of the track section from Kyiv to the Boryspil International Airport, acting Board Chairman of Ukrzaliznytsia Yevhen Kravtsov said on the sidelines of the event devoted to the final stage of the selection of projects at Future of Mobility Lab.UZ edition on October 29.
According to him, in case of passenger traffic growth, the company plans to add a diesel train produced by Kriukov Car Building Works on the Central Railway Station – Boryspil Airport route.
“Depending on the demand in the project launch process, we are planning to increase the number of trains and cars of trains. We have an agreement with the KCBW [Kriukov Car Building Works] for the supply of diesel trains. Perhaps they will be exploited in this section in the future, if there is a demand,” he said.
According to Kravtsov, the project’s payback period is 9-10 years, and the planned load during the first year should be at least 80% of the capacity.
“Now we are coordinating the schedule, since after the launch of this express train, the section between Darnytsia and Boryspil will be one of the most stressful in Ukraine, especially considering the large number of passengers, including commuter traffic. We plan that in the first stages of launching the frequency in the peak hours will be about 30-40 minutes, in non-peak hours – 40 minutes or an hour and a half,” Kravtsov said.
He also said that now Ukrzaliznytsia is discussing the need for night trains with the airport – the need for such trips is being discussed, taking into account the small number of night flights from the airport.
The train will be launched by the end of November, but there is no exact date yet, since there are a number of remarks from Prime Minister Volodymyr Groysman, which should be taken into account, Kravtsov said.
He also said that negotiations are now being completed with the State Aviation Service of Ukraine and UkSATSE regarding the electrification of the section from Kyiv to Boryspil.
“As soon as this is done, it will simplify the issue of using various types of trains on this route,” he said.

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OCCUPANCY OF HOTELS IN KYIV IS 52.4% IN Q3, 2018

The occupancy of Kyiv hotels in July-September 2018 was 52.4%, which is 4% more than in the same period of 2017, such statistics are presented in the study by CBRE Ukraine international consulting company (Kyiv).
“The key performance indicators of the hotel market in Kyiv continued to recover in 2018, especially thanks to the results in April, the month of the UEFA Champions League 2018 final. Thanks to a record high figure in April, when the average occupancy in the market reached 59.4%, the average occupancy rate by the end of the third quarter of 2018 amounted to 52.4% (2.1 p.p. more year-on-year),” CBRE Ukraine said in a report.
According to the report, by the end of the third quarter of 2018, the average price of a room was $106, which is 0.3% higher than in 2017. At the same time, the average yield of a room was 55.5%, which is 4.6 percentage points more compared to the same period of 2017.
According to CBRE Ukraine experts, the increase in profitability of rooms in luxury, upper upscale, upscale and upper midscale hotels was due to a rise in the average price, while the growth of profitability in economy and midscale hotels was due to a high occupancy.
CBRE is the largest consulting company in the real estate field with over 450 offices in the world and about 80,000 employees. The company’s shares are traded on the New York Stock Exchange.
The Ukrainian office of CBRE was opened in January 2008 and is part of the company’s affiliate network.

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H&M OPENS SECOND STORE IN UKRAINE IN KYIV’S SKY MALL

Sweden’s retailer H&M on Thursday opened its store in the Sky Mall in Kyiv, expanding its Ukrainian chain to two stores.
The company’s press service reported that the area of the store is 2,500 square meters.
As reported, the first H&M store in Ukraine with an area of 3,000 square meters was opened on August 18 in Kyiv’s Lavina Mall.
The H&M Group has 47 online marketplaces and over 4,700 stores on 69 international markets jointly with the stores operating under franchise contracts.
According to the unified public register of companies and individual entrepreneurs, the ultimate beneficiary is Stefan Persson (Sweden). The charter capital is UAH 696,900.

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BUSINESSMAN VASYL KHMELNYTSKY’S UFUTURE GROUP TO INVEST IN RECONSTRUCTION OF KYIV SIKORSKY AIRPORT’S TERMINAL UAH 630 MLN

Businessman Vasyl Khmelnytsky’s UFuture Group plans to complete the renovation and expansion of Terminal A, which is the main terminal of Kyiv Sikorsky International Airport (Zhuliany), from 14,000 to 23,500 square meters by May 2019, the project is estimated at UAH 630 million.
“We are building a new [terminal] not to increase the number of passengers, but to create comfort for those who fly,” the businessman said at a press conference on Thursday, explaining that often one time slot at the airport can be shared by seven low-cost airlines.
He says the airport’s throughput capacity, which is about 700 people per hour, can double.
Construction works at the airport began two months ago, Chairman of the airport’s Board of Directors Denys Kostrzhevsky said. The runway will not be closed for the period of the works at the terminal.
“The existing runway is good enough, its warranty is valid. We are not going to overhaul it, sometimes we fix something, improving some processes,” Khmelnytsky said.
Both own reinvested funds of the managing company and loans are the source of financing of the works, Kostrzhevsky said.
Khmelnytsky says that the payback period of investment in the expansion of Terminal A is expected to be from eight to nine years. UFuture invested more than UAH 2.5 billion in the airport’s complex in seven years.
He also said that he was considering the possibility of building a low-priced hotel and hangars next to Terminal A, but it might happen no earlier than the end of its reconstruction.
“Our resources are not unlimited. First, we will build the terminal. I hope we will launch it. It will give us a little more income, and we will make estimates proceeding from this,” Khmelnytsky said.
UFuture Investment Group, headquartered in Brussels, was established in autumn 2017 and united the business projects of Vasyl Khmelnytsky. The group includes the Ukrainian development company UDP, whose specialization is the implementation of large infrastructure projects. In addition, the conglomerate united businesses in such areas as UDP Renewables, the Bila Tserkva industrial park, the innovation parks UNIT.City, and LvivTech.City.
Kyiv Sikorsky International Airport is located in the business center of the capital, seven km from the city center. It is the second largest airport in Ukraine in terms of the number of flights and passenger traffic. The airport has three terminals with a total area being 21,000 square meters. The airport’s runway is able to handle B-737 and A-320 aircraft.
In the nine months of 2018, the airport serviced 2.165 million passengers, which was 57.3% up on January-September 2017. In September 2018 alone, passenger traffic grew by 30.6%, to 307,500 people.
Master-Avia LLC began managing the airport after winning a tender in 2010 and leasing airport property for 49 years.
Khmelnytsky and Kostrzhevsky are the beneficiaries of Master-Avia LLC, according to the state register of legal entities of entrepreneurs, are businessmen. Master-Avia indicates it owns terminals and the apron, while the airfield and the runway are on the balance sheet of municipally owned Kyiv International Airport (Zhuliany).

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LARGE IKEA STORES COULD BE OPENED IN KYIV IN THE FUTURE

Sweden’s IKEA company, the largest furniture and household goods retailer in the world, plans to open stores in Ukraine, including large ones (30,00 square meters) in the future shopping and entertainment centers of Mandarin Plaza, the founder of the company Vagif Aliyev has said. “We have been negotiating with H&M and with IKEA for 16 years… After [the store with an area of] 5,000 square meters [the opening in the Ocean Mall shopping center of which is scheduled for the end of 2019], we will open IKEA [stores with an area of] 30,000 square meters throughout Kyiv in our large shopping and entertainment centers,” Aliyev, who creates a network of 10 shopping and entertainment centers, said at a press conference in Kyiv on Wednesday.
According to him, after the construction of the Ocean Mall shopping center and the Blockbuster Mall shopping center is completed, the developer intends to start implementing the Lesnaya shopping mall (opening in 2020) and the Hippodrome (Yuzhny) shopping and entertainment center, where IKEA can also be opened.
Aliyev said that three or four stores of the Swedish retailer in his mall will have 5,000-7,000 square meters, another three – 30,000 square meters. At the same time, he said that IKEA will not be opened at the Lavina Mall shopping center and the Blockbuster Mall shopping center.
In turn, the representative of IKEA South-East Europe Vladyslav Lalich neither confirmed nor refuted the words of the developer, saying only that the company “really plans to stay in Ukraine for a long time, but develop step by step.”
“We want to combine the opening ceremony of our first IKEA store with the opening of the Ocean Mall shopping center at the end of summer next year. At the time of opening, the store will have 3,600 SKU (product names), but their number will double in half a year,” Lalich said.

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