July 14, 2016

Business opportunities in Ukraine

Ukraine is a market with great potential. Improved business climate and the free trade agreement between the EU and Ukraine create new business opportunities. A new roadmap for the energy sector could open for new investments. This was the main message from European Business Association (EBA) and Norwegian-Ukrainian Chamber of Commerce (NUCC) joint networking meeting 16th of June in Kyiv.

At the meeting we had several excellent speakers and experts to talk about hydropower development in Ukraine, business climate and the impact of the Free Trade Agreement between the EU and Ukraine (DCFTA).

The meeting was opened with greetings from Deputy Head of Mission at the Royal Norwegian Embassy to Ukraine, Richard Scarborough. Mr. Scarborough emphasized the importance that Ukraine holds to Norwegain politics and Norway’s commitments to Ukraine. According to him, is the roadmap for hydro power investments presented at the conference an expample of the significant potential for cooperation between the two countries. Ukraine’s Minister of Foreign Affairs, Pavlo Klimkin, visited Norway in the beginning of June and Norway’s Minister of Foreign Affairs, Børge Brende, visited Ukraine early July. The visits illustrates according to Scarborough the close political relations between the two countries.

Opening by Deputy Head of Mission at the Royal Norwegian Embassy to Ukraine, Richard Scarborough.

Opening by Deputy Head of Mission at the Royal Norwegian Embassy to Ukraine, Richard Scarborough.

Roadmap for hydropower
The roadmap for investments in small scale hydro power in Ukraine was presented by Alina Sviderska, partner at EasyBusiess, and Arne Jakobsen, AICE and founder and former ceo of a hydro power firm in Norway. The report was made on request from the Ministry of energy and coal in Ukraine.

Ukraine has, according to Ms. Sviderska, great potential for developing hydropower. The country has many suitable rivers, particular in the West. There were about 1000 hydro power plants in operation during Soviet times. The number is now down to less than 60. The Ukrainian government has committed to increase the share of power coming from renewable resources to 11 percent by 2020. Investing in hydro power can according to Sviderska help achieve this goal.

The roadmap provides a step-by-step guide for investors and concrete recommendation for policy makers on how to improve the business climate. Ms. Sviderska and Mr. Jakobsen point out four key barriers to investments. The two first are political and regulatory risk. Ukraine has today 24 regulatory bodies. One concequence is that it takes time to receive all permits. Moreover, projects are only granted access to green tariffs after the investments are being made. The two latter are land issues and local politics. Mr. Jakobsen stresses that it is important to have good dialog with local politicians and communities.

The roadmap is handed over to the representative from the Ministry of Energy and Coal in Ukraine, Mr. Oleh Zhyshko, deputy head of strategy development in FEC (fuel and energy sector).

The roadmap is handed over to the representative from the Ministry of Energy and Coal in Ukraine, Mr. Oleh Zhyshko.

One of the key recommendations is to create an online single window with geological information and the possibility to apply for all permits. Such a portal was set up with support from Norwegian Water Resources and energy directorate (NVE) in Georgia. Another is to improve financial predictability. This involves among others having clear criteria for access to green tariffs.

The roadmap was handed over to the representative from the Ministry of Energy and Coal in Ukraine, Mr. Oleh Zhyshko, deputy head of strategy development in FEC (fuel and energy sector) and Investment Policy Department.

Improved business climate and trade opportunities
According to Svitlana Mykhailovska, Deputy Director at EBA, it is clear that the free trade agreement between the EU and Ukraine (DCFTA) brings new opportunities to Ukrainian and European businesses. She also presented EBAs investment attractiveness index, which measures businesses perception of the business climate. According to the index has there been a positive trend.

Presentation by Svitlana Mykhailovska, Deputy Director at EBA.

Presentation by Svitlana Mykhailovska, Deputy Director at EBA.

Important reasons are stabilization of the Hryvna (Ukraine’s currency), removal of regulations and the number of permits needed to do business and improvements in the public procurement system. On the 2nd June the Ukrainian parliament (Verkhovna Rada) passed a package of laws aimed at reforming the judiciary system. Weaknesses in the judiciary system have long been a major barrier to investments and business in Ukraine. With the new passed laws Ukraine might have taken the first important steps to change that.

A success story
The owner of the furniture and design company «His», Vadym Klymenko, explained his business model and how they succeded in the European market. The company is designing and selling wood furnitures and is providing a digital plattform for other Ukrainian designers to sell their products.

NUCCs Young Entrepreneurs
Natalia Tatashuk, from one of NUCCs young entrepreneur smart city teams, presented the case for setting up a ferry line along Odessa’s coast. A major challange in Odessa, as many other larger cities in Ukraine, is trafic jams. According Ms. Tatashuk and the smart city team could a ferry line reduce traffic and traveling time and increase comfort. The group is looking at the experiences from Norwegain cities with well developed ferry systems, such as Oslo.

At the networking meeting a memorandum of understanding (MoU) was also signed between National University of Water Management and Nature Resources Use in Rivne (Rivne University) and NUCC. The purpose is to establish contact between Rivne University and relevant education and research institutions in Norway.The MoU was signed by Victor Moshynskyi, headmaster of Rivne University, and Amund Myklebust, managing director of NUCC.

 

Networking

Networking

The meeting gave insights into some of the areas where Norway and Ukraine has great potential for cooperation. The whole meeting can be watched here

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