Digest of Economy & Markets, International Support, Politics & Culture
Markus CIUPEK
Dr.-Ing. | ?? ????Entrepreneur & Investor Empowering Manufacturing in Ukraine ???? | Co-Owner, Time & Space Ukraine | Mentor & Resilience Expert | Public Speaker | Author | Connecting ????????????Businesses
Welcome to our 19th edition of "Ukraine Through My Eyes."
Our Newsletter continues to grow, with more and more readers joining us each week – thank you for your continued support.
In this week's "Topic of the Week" Tetiana Babych, PhD focuses on the remarkable resilience of Ukraine's economy, even during war. Despite the challenges, citizens from over 100 countries have opened businesses in Ukraine since the full-scale invasion, highlighting global confidence in Ukraine's future.
We have compiled this week 15 topics that we believe will capture your interest:
Please enjoy this edition! Your feedback is invaluable to us. We look forward to hearing your thoughts and suggestions.
Wishing everyone a safe and peaceful start to the new week!
Слава Укра?н? - Разом сильн?ш? - до перемоги!
??? Yours sincerely, Markus Ciupek
The Data on Foreign Companies Brave Enough to Open Businesses During Wartime
Citizens from more than 100 different countries have opened businesses in Ukraine during the war. Since 2022, when Ukraine became the epicenter of international attention due to Russian aggression, the country has simultaneously turned into an important platform for global entrepreneurs. Even at the height of the war, when the country's economy faced enormous challenges, Ukraine was able to attract foreign investors and entrepreneurs from more than 100 countries. This phenomenon highlights the resilience of the Ukrainian economy and demonstrates confidence in its future.
Since the beginning of the full-scale war, foreigners have founded 3,075 companies in Ukraine. Citizens from 101 countries have opened businesses in Ukraine despite the ongoing conflict.
Turkish citizens lead in establishing businesses in Ukraine, with 396 companies, or 12.9% of the total number. Citizens of Uzbekistan follow with 312 businesses (10.1% of the total), and Polish citizens round out the top three with 224 businesses (7.3%).
Citizens from the USA, Kazakhstan, Germany, Azerbaijan, Israel, Great Britain, and China also made it to the top 10. Note that one company may have more than one owner.
The largest number of foreign-owned companies is engaged in wholesale trade (30.7%), real estate operations (6.7%), and computer programming (5.8%).
There are several reasons why entrepreneurs choose Ukraine even in such difficult times. First, the country has significant potential in the fields of IT, agro-industry, and renewable energy sources. The Ukrainian IT industry remains competitive on the world stage, offering high-quality services at relatively low prices.
Secondly, Ukraine has a strategic geographical location. It serves as a bridge between East and West, making it an essential link for businesses seeking to access the markets of Europe, Asia, and the Middle East.
Starting a business during a war may seem risky, but many entrepreneurs see it as an opportunity. While many large companies focus on survival, small and medium-sized enterprises can find niches and develop their projects. Additionally, the Ukrainian government actively supports entrepreneurship, implementing various initiatives and programs to attract foreign investors.
Entrepreneurs undoubtedly face challenges, including security risks and economic volatility. However, for many, these challenges emphasize the need for quick adaptation to new conditions and the pursuit of new opportunities. The Ukrainian market is flexible and ready for change, which makes it attractive for investments even in a crisis period.
Ukraine is also working to improve the business climate by implementing reforms in the areas of justice, tax policy, and deregulation. These efforts contribute to creating favorable conditions for the development of entrepreneurship.
The number of companies newly created by foreigners in Ukraine during the war is much lower than in other European countries. For example, in 2023, 9,600 new companies were registered by foreigners in Poland, and 7,200 in Romania.
Globally, the leaders in terms of the number of newly created companies in 2022 were:
Sugar Prices in Ukraine are Falling: Export Difficulties Affecting the Market
In Ukraine, sugar prices have fallen to UAH 26.5-27.5/kg due to export difficulties. In August, only 3-4 thousand tons of sugar were exported, significantly less than the 100 thousand tons exported two months ago. This decline is attributed to the closure of export markets in Europe and challenges with implementation at the international level.
It is expected that the volume of sugar reserves in Ukraine will increase in the future as domestic production rises. However, due to the closure of European export markets, Ukrainian manufacturers will need to seek new sales markets.
Source: All-Ukrainian Agrarian Council, 15/08/2024
The Finnish Peikko Group Invests in a Factory for Composite Structures in Bila Tserkva
The Finnish Peikko Group Corporation has signed an agreement with the Bila Tserkva Industrial Park (IP) to construct a turnkey plant for concrete joints and composite structures. The plant, which will produce products for the Ukrainian market, is part of long-term projects and initiatives in the post-war renewal of Ukraine.
Peikko Group Corporation is the first Finnish company to invest in Kyiv and Bila Tserkva during the full-scale invasion. The plant is expected to be operational by the end of the first quarter of 2025, with recruitment beginning earlier. The company did not specify the amount of the planned investment, but it will be announced after construction is completed. At least 30 jobs are expected to be created at the plant.
CEO Topi Paananen cited recovery and participation in the reconstruction of the war-torn country as reasons for investing in Ukraine. He encouraged other Finnish companies to take controlled risks in Ukraine to demonstrate their commitment to the country's development and to employ local people.
Andriy Ropytskyi, director of Bila Tserkva IP, stated that Peikko brand solutions could positively impact the pace of construction and recovery in Ukraine under the current conditions.
The company plans to use these solutions during the construction of facilities in industrial parks, creating a synergistic effect and serving as an example of win-win cooperation between companies.
Source: Peikko Facebook, 16/08/2024
Ukraine Introduces a New Automated Customs Clearance System at the Border
The State Customs Service of Ukraine has completed the implementation of a new automated customs clearance system at every vehicle checkpoint. A crucial component of the new system is its integration with the automated risk management system, which has already proven effective in previously installed modules.
According to the State Customs Service, these advancements allow for the incorporation of new features designed with European integration in mind, thereby improving communication with EU customs systems.
Source: The State Customs Service of Ukraine, 16/08/2024
Internet Providers and Mobile Operators Will Be Able to Book Up to 100% of Employees
Ukraine's top priority is to ensure reliable internet and communication services for its people during the war. This requires personnel who can quickly restore communication after any Russian strikes on energy infrastructure, power generators, and replace batteries at stations.
To support this, the Ministry of Digital Transformation of Ukraine has made modifications to the process for scheduling staff for mobile operators and internet providers, which the government has approved.
The most important requirement is that all businesses must meet NCU regulations and hold the status of "crucial significance."
Previously, several decisions were made to stabilize mobile communication and internet services, including updating the NTU requirements. Booking employees for mobile operators and internet providers is another essential step to ensure that operators and providers can meet these requirements, keeping Ukrainians connected.
Source: The Ministry of Digital Transformation of Ukraine, 16/08/2024
Watermelons Help Reduce Inflation in Ukraine
Watermelon prices have decreased by 60% since August 2023, according to EastFruit. Watermelons account for slightly more than 0.2% of the index calculation basket, according to the State Statistics Service. As a result, this rapid price drop has lowered Ukraine's overall consumer inflation index by 0.12%.
Last year, Ukraine produced 216,000 tonnes of watermelons. This year's harvest began at the end of June. Currently, watermelons are priced at UAH 12.90/kg in the largest retail chains, while the wholesale price has already dropped to UAH 3–8/kg.
Source: EastFruit, 12/08/2024
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A "Dry Port" Becomes Operational in Transcarpathia: What Makes It Unique?
The company "Terminal Chornotysiv" LLC has opened a new multimodal terminal, known as the "dry port," in the Berehiv district of Transcarpathia. This terminal serves as a logistics hub designed for the transshipment of various cargoes, including agricultural products, oil, and petroleum products, for further transportation to recipients worldwide.
The terminal is strategically located near the border with Hungary and Romania and is currently expanding its production processes. The total investment made so far is approximately UAH 282 million. The company's production area covers 14.1 hectares, and it plans to significantly increase the volume of goods transshipment by 2025.
Source: Viktor Mykyta, Head of Zakarpattia OVA, 14/08/2024
The Cabinet of Ministers Allocates UAH 2.7 Billion for an Experimental Project to Restore 4 Front-Line Villages
The Cabinet of Ministers has decided to allocate UAH 2.7 billion for a project to restore front-line settlements, which is expected to accelerate the return of residents and strengthen the local economy.
As Prime Minister Denys Shmyhal specified, the villages included in this project are Yagidne in Chernihiv Oblast, Posad-Pokrovskyi in Kherson Oblast, Tsirkuny in Kharkiv Oblast, and Trostyanka in Sumy Oblast.
According to the representative of the Cabinet of Ministers in parliament, Taras Melnychuk, the funds are allocated from the fund for the liquidation of the consequences of military aggression and will be managed by the Recovery Agency.
Source: The Cabinet of Ministers of Ukraine, 14/08/2024
How Much Money Has Been Allocated for the Reconstruction of Ukraine in 2022-2024?
Russia has destroyed or damaged over 215,000 facilities, primarily affecting housing, industry, and energy. The World Bank estimates that the total reconstruction cost will be $486 billion.
Regional military administrations have received over 16 billion hryvnias, but this is only a fraction of the total amount needed. The most significant allocations were made in the Mykolayiv, Sumy, and Dnipropetrovsk regions. In regions like Donetsk and Luhansk, active hostilities make it difficult to assess damage and carry out recovery work. Despite these challenges, efforts are underway to restore critical infrastructure and provide assistance to the affected population.
Source: Liga.Business, 16/08/2024
The EBRD Allocates 70 Million Euros for the Development of the Nova Group in Ukraine
The funds will be used to build more than 600 bomb shelters, expand and upgrade the network, and enhance the safety of both staff and customers.
In addition, the funding will help sustain around 3,500 jobs, including those held by members of the armed forces, and will increase the number of jobs available to women and internally displaced people.
The EBRD is providing flexible financing terms, including the option to receive funds in euros or hryvnias, along with a 10% loan guarantee against first losses.
Source: EBRD, 15/08/2024
The First Regular Tranche Under the Ukraine Facility Program
The first regular tranche under the Ukraine Facility program was provided to Ukraine by the European Union on Tuesday, August 13. The total amount is €4.2 billion. These funds will be allocated to budgetary initiatives, humanitarian causes, and social activities. Ukraine is using only its own funds to cover military costs.
The EU's contribution consists of a €1.5 billion grant and preferential financing worth €2.7 billion. In 2024, the EU is expected to provide approximately €12 billion in financing. If all benchmarks are met by the end of the third quarter, Ukraine could receive the next tranche before the end of the year.
Source: The Ministry of Economy of Ukraine, 13/08/2024
The Deputy Minister of Energy Detained for a $500,000 Bribe
Oleksandr Hale, the Deputy Minister of Energy, was the organizer of a corruption scheme uncovered by the SBU and NABU. Along with three accomplices, he promised to secure the removal of equipment from the Donetsk area in exchange for $500,000 from the director of a coal company in Western Ukraine.
The equipment on the eastern front is owned by a government enterprise. The official began demanding payment for its removal. The money was scheduled to be transferred in installments, but one of the accomplices was arrested as the third tranche was being sent.
All four individuals were charged under Part 4 of Article 368 of the Ukrainian Criminal Code. Hale faces up to 12 years in prison.
Source: Security Service of Ukraine, 12/08/2024
The Government Adopts a Resolution on the Launch of the Electronic Urban Cadastre at the State Level
The Ukrainian government is implementing the digitization of construction services, with the Urban Cadastre system set to become operational within a month. This initiative aims to enhance transparency and combat corruption. Previously, cadastres were only available within local self-government bodies, and most urban planning documentation existed in paper form.
The electronic system will consolidate all urban planning information, documents, and approval procedures, thereby accelerating construction and infrastructure development processes. This digitization effort is being carried out in cooperation with the Ministry of Development of Communities, Territories, and Infrastructure of Ukraine and the Ministry of Digital Transformation, with assistance from the "Support of Digital Transformation" project, financed by USAID and UK Dev.
Source: The Ministry of Digital Transformation, 13/08/2024
Fitch Downgrades Ukraine's Rating to Limited Default
The international rating agency Fitch Ratings has lowered Ukraine's long-term foreign currency issuer default rating from "C" to "RD" (restricted default) due to the start of the restructuring of Eurobond payments. This downgrade occurred because of the initiation of debt restructuring for $750 million in Eurobonds that were due on August 1.
Fitch also maintained Ukraine's national currency debt rating at "CCC-". The next review of the rating is scheduled for December 6, 2024.
Source: Fitch Ratings, 15/08/2024
Ukrainian Polar Explorers Publish a Book About Antarctica
Ukrainian scientists from the National Antarctic Science Center (NASC) have released the first Ukrainian-language encyclopedia about Antarctica, titled "Antarctica: Six Essays for Those Who Want to Know More," available online.
The book explores the icy continent and highlights the contributions of Ukrainian researchers to its study. It includes information on the geography, geology, flora, and fauna of Antarctica. Separate chapters are dedicated to the history of the continent's discovery and exploration, as well as the protection of its natural environment. The book also provides detailed insights into the Ukrainian station "Akademik Vernadskyi" and the work conducted there by Ukrainian scientists.
The book is freely available for reading and downloading online at the provided link.
Source: National Antarctic Science Center Facebook, 12/08/2024
An international art exhibition dedicated to technologies and the future was presented in Kyiv
The M17 Centre for Contemporary Art hosted the show, which featured the creations of seven artists examining human growth, artificial intelligence interaction, and fantastical realms.
Foreign artists' works are hardly ever on display in the capital's art centres because of martial law. This time, visitors will have the chance to view the works of artists residing abroad from Ukraine as well as those from China, Japan, Germany, and the USA.
"Gardens of Dreams" will be open from Tuesday to Sunday, 11:00 a.m. to 8:00 p.m., till September 29. In M17, str. V. Antonovych, Centre of Contemporary Art, 102-104.
Source: M17 Centre for Contemporary Art, 14/08/2024