Business news from Ukraine

UCCI PRESIDENT CHYZHYKOV: WE HAVE 73 OFFICES IN UKRAINE AND 55 REPRESENTATIVE OFFICES ABROAD

Hennadiy Chyzhykov has been reelected as President of the Ukrainian Chamber of Commerce and Industry (UCCI) for another five years. He gave his first interview after the appointment to his next tenure to the Interfax-Ukraine New Agency.
– What are your plans for the next tenure? Will you continue reforming the UCCI? What goals will you pursue?
– I believe that the better we understand our businesses, the better we can protect them. The Ukrainian Chamber of Commerce and Industry is an organization based on trust, we aspire to become a voice of the small and medium-sized businesses. We create a comfortable communication platform on the basis of the UCCI, we help to find partners and get assistance during the entry to new markets, as well as promote the implementation of legal initiatives.
Our goals for the next five years are really ambitious, but the main thing is that our member community has expressed confidence and support for them. The main goals include support for small and medium-sized businesses, strengthening of cooperation with the authorities at all levels and influence on the state export policy, development of regional export centers, simplification of the use of arbitration instruments during protection of the interests of Ukrainian exporters, support for business digitalization.
However, our main aspiration is to make the UCCI even more comfortable for businesses, an organization within reach. So that at the thought of having a lack of some knowledge an entrepreneur could come to us at once knowing for sure that the UCCI is his or her organization which can help. We have a very strong team. We have 73 offices in Ukraine and 55 representative offices abroad, we are a member of the largest international business organizations (including Eurochambres, WCF, ICC and many others). Such a strong representation makes our organization influential. Thanks to an opportunity to unite our efforts we can find solutions to complicated problems, as well as build a system of communication with all parties involved.
Almost 90% of our members are small and medium-sized enterprises. Large enterprises are already able to find solutions for increasing export on their own, while smaller companies need the UCCI’s assistance. The entrepreneurs can see that the foreign market is very competitive, but they already start to understand that there is nothing scary there. A free trade area with the EU, as well as external trade in general drives and attracts Ukrainian businesses. Our strongest side is exactly external economic activity as we have a lot of experience in it. It would be fair to say that the UCCI today is the only organization which supports exporters at all stages of the production and movement of goods – from the moment of streamlining them with the technical regulations of certain markets to the receiving of payment for them. No other institution in Ukraine possesses the same instruments of assistance to exporters “under one roof.” The UCCI specialists know where certain products are in demand, what standards they should meet for admission to certain markets, how to check a customer’s paying capacity, and how to protect your rights if a foreign partner violates his or her obligations. For example, the export support centers at all Chambers of Commerce and Industry can answer the question “Where should we supply our products?” They also have information about technical regulations for the goods supplied to certain markets.
The UCCI is also an important arbitration instrument of support for businesses at both national and regional levels. If any disputes occur with foreign partners, the case may be considered at the commercial arbitration court in Kyiv – the decisions of the International Commercial Arbitration Court (ICAC) under the UCCI are valid in 110 countries of the world. We also see the future in mediation.
Some 70% of Ukraine’s export earnings is ensured by the member enterprises of the Chamber system. In a word, the UCCI builds its work in a consistent and serious manner with a long-term perspective.
– At all times the UCCI has been considered as a semipublic organization. Does it still remain the same?
– Not exactly. According to the legislation of Ukraine, chambers of commerce and industry are non-governmental non-for-profit self-regulated organizations. The Chamber carries out two functions: we protect the interests of businesses and, following the international practices, we provide a range of services important to businesses [in particular, issuing of ATA carnets, goods origin certificates, etc.].
At the same time, the chamber of commerce and industry cooperates with all agencies that have influence on business activities. We present ourselves as both local and global organization, we interact with the authorities at the national, regional and internationals levels.
Over 400 years of its existence the Chamber institution has proved its effectiveness. Many people don’t know that the first Chamber appeared in Ukraine 165 years ago. That is why we call ourselves an organization with a history and a clear vision of the future. In our activities we focus on business requests. We have an agenda that is formed by our members. We summarize their position, analyze the situation, voice their questions of interest and send this message to the government. As a representative of businesses we are an integral part of the processes that are going on in the country.
Despite the supposed independence of businesses from political processes, in fact the political process influences the volumes of trade and Ukrainian export. Therefore, we also present the interests of businesses at high-level international meetings, cooperate with the embassies, our experts are included to intergovernmental commissions.
– Today Ukraine and the whole world live in a new reality, including economics. What effect will the pandemic and the following inevitable economic recession have on Ukraine’s export potential in the global trade system?
– All signs point to the fact that export will face big challenges. As we can see, the pandemic is leading towards the protectionism, the closing economies. Economic crises always result into a drop in production.
Today businesses are facing a choice of a model on which the future of the country’s economy depends. There is an objective reality: a decline in sales on the majority of markets that are traditional for our goods export. However, new promising areas open. The demand for food will be growing in the world, and we should refocus our export from raw materials to end products. In the current situation it is hard to preserve export of products with a long value-added chain: farming equipment, power and transport engineering products.
The demand for Ukrainian goods is growing in the EU. We can see a huge potential in Central Asia, as well as Africa and on other continents. We are well aware that producers need government support, including a stronger credit policy and active cooperation on the foreign markets.
Generally speaking, much depends on the pace with which businesses and the country in general will realign their production with regard to the new reality. The faster they make decisions, the shorter will be the adaptation and revival period for the economy.
– Some experts say that there is a trend towards the withdrawal of the production facilities from the regions with unreliable epidemiological situation (China, Southeast Asia) to other countries. What measures should be taken in Ukraine to receive a part of these production facilities?
– I wouldn’t say so. The pandemic has demonstrated us that the virus knows no borders, nobody is insured against it. Here is another question. Everything depends on how fast Ukraine can develop an open and comfortable investment environment. First of all, it depends on our homework and the ability to create “an investment trend” for Ukraine. I should say that foreign businessmen have been taking interest in placing orders in Ukraine more actively during online talks in recent months.
In addition to the available advantages of Ukraine, we hope to obtain another one soon – the right to export industrial goods to the EU without additional certification. The preparations for the signature of the so-called “industrial visa-free regime” are underway. At the beginning of 2020, the UCCI has started preparing enterprises for the introduction of European certification. Before the quarantine, a series of seminars on the introduction of European technical regulations began.
As to the agreement, our experts continue the work on it jointly with their Ukrainian and European colleagues. A parallel process of revising quotas and duties on agricultural products in line with the EU-Ukraine Association Agreement is also in progress.
– Small and medium-sized businesses suffer from the pandemic and the quarantine first of all. What steps should the government take to support them? Is it taking such steps, and what is your organization’s part in this process?
– They talk a lot about losses of small and medium-sized businesses due to the pandemic. Why? It’s because around 60% of the population are involved in them. This problem exists not only in Ukraine, small and medium-sized businesses all over the world are suffering losses today. We can see that all countries, depending on their possibilities, have focused on the support for their entrepreneurs. The government of our country has also approved the support program, however, the economies are different, and therefore the scale of assistance also differs.
The UCCI works according to the rapid response principle. We put forward our proposals regarding the support for businesses at various stages of the development of the anti-crisis plan, and most of them were approved. We continue this work.
Our goal is to create equal conditions for businesses inside the country and maximum preferences for them abroad. We also see our specific task in opening new markets for small and medium-sized businesses. Despite the difficult situation, the borders are not closed!
We continue actively providing businesses with the consulting services. Last month alone the UCCI held almost 20 various remote webinars which brought together more than 1,000 participants. Those were forums, conferences, including international ones, with the participation of Ukrainian and foreign officials and businesspeople.
– What should we expect in Ukraine? What kind of trends will appear in the post-crisis world?
– We should move from the general to the specific. We say that Ukraine is a part of the global economy. One of the results of this pandemic, as we already see, will be the fact that many economies will close. Each economy will count on its own resources more and more, which means that there will be losses in trade, and we should be prepared for this.
In addition, the development of local goods and services will be prioritized, emphasis will be paid on customization. As I have said, a trend towards food products will prevail. Everyone has got tired of a negative pattern during the quarantine, so I hope we will also create a trend for positive thinking, solidarity and cooperation.
– What are we going to inherit from coronavirus and the crisis forever?
– The habits, which have been developed, like online trade, will remain. According to our polls, this is true, as it is really one of the ways to overcome the crisis. Export will remain important for our economy as it is one of the most important directions of growth and support for the economy. Small businesses will focus on online platforms as the majority of citizens have got used to them during this time.
– What should businesses do in this situation?
– We speak mainly about the economy without paying attention to fact that such crises, as we are witnessing now, significantly change the way of thinking and approaches. A person takes the center stage.
The entrepreneurs have realized that it is hard to work without mutual trust. A customer-oriented approach is one of our future trends. I think during the economic crisis we will become even more aware of the role of small businesses as a basis for creating jobs and self-fulfillment of each person.
Ukraine is approaching the moment when businesses will have more mutual trust, develop joint projects, and this will help both small and medium-sized businesses to survive. So, the reverse side of our problems will be changes in us, the Ukrainians. And the role of small businesses will become even more important.

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OFFICE REAL ESTATE MARKET IN KYIV IN 2019 EXPANDED BY 100,000 SQ M

New supply on the office real estate market in Kyiv in 2019 was around 100,000 square meters and record-hitting 255,000 square meters of areas are announced to go live in 2020
“Over the past four years, the Business Expectations Index in construction has grown significantly (137.9 points) and has broken an eight-year record. Thus, the new supply almost doubled compared to 2018 and amounted to about 100,000 square meters, and the total supply of office space in Kyiv amounted to 1.8 million square meters,” CBRE Ukraine (Kyiv), the consulting company, said in a press release.
According to developers’ announcements, in 2020 a record number of areas should enter the market – about 255,000 square meters. Moreover, in 2021 an additional 250,000 square meters is expected to go live and in 2022 some 250,000-300,000 square meters.
“The shortage of quality space in Kyiv resumed the activities of developers, as evidenced by an increase in the volume of new supply by 70% year-over-year in 2019. Despite such a sharp increase in the volume of new space, it is expected that the bulk of it will be absorbed by IT and the flexible office segment, due to pent-up demand for large quality areas,” CBRE Ukraine said.
Thus, the average vacancy rate is likely to remain at the same level or show a slight increase in the best areas on the market.
“If in the next two to three years, demand will correspond to the supply, then significant fluctuations in rental rates are not expected,” CBRE Ukraine said.

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VON DER HEYDEN GROUP OPENS OFFICE IN UKRAINE

Von der Heyden Group, an international investment firm on the European real estate market (Valletta, Malta), has opened its first regional office in Kyiv and plans to invest EUR 50 million in commercial and residential property in Kyiv and Lviv during its preliminary phase.
“Von der Heyden Group… has opened new offices in Kyiv in Q4 2019 to establish multi-million euro investments in Ukraine. The group… will invest around EUR 50 million in commercial and residential properties in Kyiv and Lviv during its preliminary phase, aiming to increase this to up to fourfold in its mid-term portfolio expansion in a favourable market,” the company said in a press release.
According to the report, the Von der Heyden Group has appointed a local expert team, formed to expand the group’s real estate portfolio led by Dmitry Havrylenko who assumes the role of Chief Executive Officer in Ukraine. Havrylenko until recently held the position of National Director and head of the Ukrainian office of global investment management firm, Jones Lang LaSalle (JLL). Ex-Head of Capital Markets at the Kyiv office of Jones Lang LaSalle (JLL) Tatyana Yarmolitskaya joined the Von der Heyden Group as Investment Director. Ex-Associate with the tax practice of leading Ukrainian law firm, Arzinger, also joined the team as Legal & Tax Director.

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UKRAINIAN ARCHITECTURAL COMPANY OPENS OFFICE IN NORWAY

The Ukrainian architectural company Archimatika (Kyiv) has opened the office Archimatika Norge AS. in Oslo, Norway, the company said on its Facebook page.
“We are pleased to announce that Archimatika has opened an office in Oslo – Archimatika Norge AS. Our Norwegian department consists of nine experienced architects, but it will have all Archimatika resources in Kyiv with more than 250 architects, designers and engineers,” the company noted.
According to the report, Archimatika Norge AS will provide services of urban planning, designing of residential, office, commercial real estate, territory planning, research, technical supervision, development of technical documentation and supervision of construction projects.
Currently, the office in Norway has already taken up several projects at various stages, including, in particular, territory planning and preparation of documents.
Archimatika was founded in 2005 by architects Dmytro Vasilyev and Oleksandr Popov.
According to the company, more than 7.6 million square meters of residential and public buildings were designed during its operation. The project portfolio at the design stage as of December 2019 consists of more than 3.5 million square meters.
The company employs 270 people. Currently (December 2019), the company has three offices in Kyiv, Moscow, and Oslo.

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OFFICE ABSORPTION IN KIEV GROWS BY 70% – COLLIERS

The total absorption in the high-quality office real estate market in Kyiv in July-September 2019 increased by more than 70% compared to the same period in 2018 and amounted to near 46,000 square meters, according to a press release of Colliers International (Ukraine), the international consulting company.
“In general, during the first nine months of 2019, the volume of transactions amounted to about 131,000 square meters, which already exceeds the results of entire 2018. According to the results of the third quarter, IT industry companies (48%) had the main share of the total absorption, as well as companies from industry and energy (33%),” Colliers said.
According to the company, new offer in the third quarter amounted to 10,000 square meters, or some 15% of the declared for commissioning in the second half of 2019.
According to Colliers, developers announced five facilities with a total area of about 57,000 square meters for going live by the end of 2019.
“A significant part of the office space under construction already has signed preliminary lease agreements. This trend is one of the indicators of increased demand and the formation of the landlord market. Given the shortage of high-quality office space, the vacant space of facilities with a good location and concept is quickly absorbed by the market,” Colliers said.
According to company analysts, rental rates in Kyiv offices in the third quarter remained at the level of the previous quarter. In particular, the range of base rental rates in Class A business centers amounted to $22-30 per square meter, in the class B centers it is $14-21, and in the class C centers it is $9-13.
Modest growth is projected during the first half of 2020.

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ITALIAN ERNEST AIRLINES OPENS NEW OFFICE IN KYIV

Italy’s Ernest Airlines has opened an office in Kyiv in Podilsky district, an Interfax-Ukraine correspondent reported on Friday.
The company’s new office will also host a call center.
Along with this, the airline announced the opening of a new Ernest Airlines base at Sikorsky Kyiv airport (Zhuliany) in April 2020, the launch of five new routes between Ukraine and Italy: Kyiv-Venice, Kyiv-Bari, Kyiv-Trieste, Lviv-Bologna and Milan-Odesa.
Thanks to the new office in Ukraine, Ernest Airlines plans to strengthen and expand cooperation with Ukrainian travel agencies and tour operators.
As reported, Ernest Airlines plans to invest EUR 100 million in Ukraine in two years and to deploy two aircraft in Kyiv in 2020.

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