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.
The number of unemployed in Ukraine in the first two weeks of quarantine increased by 500,000-700,000 people, over the next two weeks, in April, by another 500,000-600,000 people, to 2.5-2.8 million people, the Ukrainian Chamber of Commerce and Industry (UCCI) has said.
“According to the estimates of the Ukrainian Chamber of Commerce and Industry, the unemployment rate today is 13.7-15.4%. This is the highest rate in the last 15 years,” the press service said citing president of the chamber Hennadiy Chizhikov.
This figure does not take into account the number of labor migrants who returned to Ukraine after the start of pandemic, he added.
About 4 million people were employed in the “stopped” industries, he said.
“A survey of companies conducted by the Chamber of Commerce and Industry shows that 26% of them plan to reduce staff, another 30% have not made a final decision,” the expert said.
According to the agency, the total amount of support for businesses through tax exemption in March and April stood at UAH 9.3 billion, of which UAH 900 million was support for small businesses, which suffered the largest losses during quarantine.
“The estimated losses of only two sectors – beauty salons and passenger transportation – amount to about UAH 1.5 billion over a month and a half of quarantine. Losses of the entire businesses “in quarantine” are many times more,” he added.
As reported, according to the State Employment Service, on April 13 the number of registered unemployed amounted to 387,500 people, over the week this figure increased by 36,200 people.
The Ukrainian Chamber of Commerce and Industry (UCCI) has pointed out a large growth in addresses of enterprises, which are trying to explain their ordinary problems and the non-performance of obligations by force majeure, although after analyzing documents the Chamber decides not to issue force majeure evidence certificates to them.
“We consider unacceptable attempts by a large number of entrepreneurs and enterprises that try to invoke force majeure circumstances to avoid obligations to partners – be it a Ukrainian or foreign business or individuals. In these cases, we refuse to issue force majeure evidence certificates,” the press service of the UCCI said, citing President of the UCCI Hennadiy Chyzhykov.
According to the press release, the UCCI analyzes the terms of the contracts in relation to liability for failure to meet obligations and the grounds for exemption from them, in particular, in the event of force majeure.