EBA Western Ukrainian AGMM Conference

14/ 12/ 2018

Listen to online Stop   This year, at EBA Western Ukrainian Office we decided to stimulate the awareness of the great investment opportunities provided by regions for international community and initiated the “Safe&Sound. Business Opportunities of Western Ukraine” conference as part of the Annual General Membership Day 2018.  We invited the representatives from the EU and foreign Embassies to learn more about the region by presenting best practices and success stories in IT and automotive industries at the conference.  Among our invited guest speakers were: Daniel Kramer, Deputy Head of Sector of the Trade Section of the EU Delegation to Ukraine, Cathy Cottrell, First Secretary for Energy Policy and Head of the Commercial Section of the British Embassy, Dmytro Pankratov, Business Coordinator of the Embassy of Norway in Kyiv; Roman Matys, Head of Investment Policy Department of Lviv Regional State Administration; Dmytro Sherenhovskyi, Head of the Academic Department of the Ukrainian Catholic University; Yuriy Reznyk, Director of Klingspor.  The moderator of the meeting was Anton Podilchak, Head of EBA Western Ukrainian Office Regional Coordination Council, Managing Partner at Advice Group.  Anton Podilchak asked the guests speakers and attendees to comment on how potential investors perceive Ukraine, what is the image of Ukraine from the point of view of foreign representatives, and what is the situation with the investment climate in Lviv region.  Daniel Kramer, Deputy Head of Sector of the Trade Section of the EU Delegation to Ukraine, commented on the image of Ukraine:  Everyone in the EU is aware that Ukraine is full of potential. It has skilled workforce, it is a huge country, it has big population, industrial tradition etc. This is the common knowledge in the EU. But the question that always arises why it doesn’t attract more investment. What we see that is a lack of rule of law and corruption. That is the biggest issue now. It infects the investment climate.   Talking about security, according to surveys and to my personal experience it is not the top among the issues for investors, but it is still matters a lot. Since the martial law we had several calls from European companies from European member states asking us what is the situation, and whether they should invest. We said to them that from Kyiv it doesn’t seemed to have an impact. Looks like more an internal politics. The level of risk did not change.   Lviv and this region, of course, is far from Donbas and far from Crimea, but investors perceive Ukraine as the whole. Here in Lviv region the situation is better with rule of law, but investors see you as one country.   The EU is here for you and the Association Agreement will help your business. We have a lot of new projects for SMEs. Do not hesitate to contact me to help SMEs with innovations and to connect businesses with the EU.  Cathy Cottrell, First Secretary for Energy Policy and Head of the Commercial Section of the British Embassy, added how she sees Ukraine:   In a context of Brexit, Ukraine is the priority country for the UK and not because it is strategical country, but also because we see a great business opportunities here.   Me and my team invite British companies who would like to work here in Ukraine and we will have more personnel at the Embassy to develop relationships here, if needed.   People do not know that here are lots of opportunities. We should give them successful examples to overcome that negative stories that coming to the news every day. Remember that you have a team in the Embassy who can help you to find partners in the UK.  Dmytro Pankratov, Business Coordinator of the Embassy of Norway in Kyiv, also noted:  Business expect transparent, open system and predictable environment. Unless we make sure that environment is predictable, the courts are working, business will be very careful in entering markets of Ukraine. Potentially Ukraine is very interesting market for Norway, for example such spheres as energy, agriculture has great potential. Traditionally fish and food are more or less stable.   Markiyan Malskyy, Partner of Arzinger Law Firm, Honorary Consul of the Austrian Republic in Lviv:   In the last 15 years, a lot has changed. I remember how we lived 15-20 years ago. Would a normal Ukrainian easily get a foreign passport, would you be able to register your car easily, would you get a child in a good school without bribe? I believe that we should be more positive in what we have. For example, Ukraine is one of the most open countries in the world.  Once I met a representative from Lichtenstein and he said that he was fed up with that corruption. I was surprised that we talk about corruption is such country, I think that we must accept that corruption is simply everywhere, in different forms and means, in different situations. If we look at Ukraine, we can see that it is the most successful countries combating small corruption in a short period of time. We have to start with the small steps. You cannot do reforms overnight. You cannot through out all the judges and ask new to come. Because people who are decent and intelligent work for international companies. They would not leave SoftServe tomorrow and come to work as a judge.   We live in a time of constant transformation. Who we are today that doesn’t mean that we will be the same person tomorrow. All our practices could be inapplicable tomorrow. All business should be ready for this. We don’t think strategically. As a representative of Austria here in Ukraine very often I hear that somebody from the army goes and asks EU that we need some socks, gloves, clothes etc. I think that global community expects want to hear that we have one of the best army in the world, military equipment in the front of the border, we are 100 percent save for their investments. We receive help from foreign partners for which we are very grateful, but our internal problem is our problem and we should solve it. We will get enough advices, assistance, but we should solve it. We are the one who should improve our country. Furthermore, we should provide the maximum level of trust. Trust is something that brings investment to a country. If investor doesn’t trust us, he will not be here. Trust is the main argument for today.  Dmytro Sherenhovskyi, Head of the Academic Department of the Ukrainian Catholic University, commented on the security situation in Ukraine:  Nevertheless, security matters. This is an important issue and we have a number of data conducted together with the European Universities for example with Birmingham University, where we tried to identify the situation in Ukraine. There are the cases from Balkan states, Afghanistan or Iraq showing that sequences matter. First should be stability present in the country, then economy development and political development. What is interesting in Ukrainian case that all these researches show that being free child state during the post conflict or conflict period is the best chance for local community and business sector to influence. The state system is the most vulnerable at one point of time, but it is also the most open for the transformation.   The most urgent issue and there is a data showing that that influence on the situation is a lack of recognition that private sector can influence. The second thing is the lack of understanding of what business communities and NGOs can actually do.   What should be done? We should have success stories and show that business community have legitimacy over the business environment and make these reforms and push these reforms. This is very vital thing for the country that face conflict. The business should incorporate state building and peace building objectives into their operational agenda here in the country. This factor will also help a lot.  Roman Matys, Head of Head of Investment Policy Department of Lviv Regional State Administration, gave some statics and insights for 2016-2018 period concerning the investment in Lviv region:  Before we started to implement the Strategy “Lviv Region – European Factory” nobody talked about automotive industry here. But this year Lviv hosted Automotive Forum for the second time with the representatives from more than 15 countries. We organized Business Process Operations Forum for the first time in Ukraine to promote moving share centers from other countries to Lviv region.   Everybody think about the automotive sphere only as a cable production but that is wrong. We change our priority from mass production to automated production and R&D. If we meet a company that would like to set up here with more than 1000 employees, we can propose only 2 production sites without hard competition for talents. All others are occupied.  The main things that help us to attract investors are favorable business environment, comfort in doing business and support from the local authorities. Special department which accompanies the investor act as a barrier against corruption and give investors understanding that authorities are concerned about doing business comfortably in the region. We work with CRM system and can easily track all the stages and task that should be done.   During 2016-2018 in Lviv region 240 new enterprises were opened, 25000 workplaces were created, promotion of business opportunities in Lviv was made in 105 countries, 8 international events were organized, 383, 6 mln dollars of investments were involved to region.   Yuriy Reznyk, Director of Klingspor, commented on doing business in Ukraine from business prospective:  We are a German company from abrasive materials manufacturing. This year we celebrated 125-year anniversary worldwide. We have only 4 production companies worldwide and one of them located here in Ukraine. We set up our Ukrainian company 10 years ago. After 2 years at our head office we decided to implement a new big project – production of diamond cutting blades. We are the only company who produce this type of project. We slowly remove some parts of production from France to Ukraine. We do not have any claims worldwide concerning our product. We are stable plant as for the mother company. We plan to invest more into new equipment to continue our development in Ukraine.  Svyatoslav Belei, Head of Integrity & Compliance Department at ABB, also added concerning situation in Ukraine:  We talk a lot about security and rule of law, but such situations have never stopped ABB global company. We have business in India, in Israel. The only problem in Ukraine for us is the judicial system. It is good to bring such companies as ABB with brilliant compliance practices. The situation has improved significantly during the last 10 years of my experience. The tendency here in region is getting better and better. The more foreign investments we will have here, the more positive practices we have the better will be the climate tomorrow or already yesterday.  Taras Kytsmey, Co-owner of SoftServe, commented on the situation in IT sphere in Ukraine:  The environment that we have today is very beneficial for IT Industry. We have results. We can argue a lot, but we have proven that the industry is growing. Maybe IT has some specifics. We are exporting services. We deliver them through the internet. We do not need certificates, plants etc. Our people working from around the globe, but they live in Ukraine.  Today we have more than 120 000 IT Engineers in Ukraine. The industry is growing for about 20% per year. We are building great synergy locally in Ukraine with other IT companies. We are building together IT Park, one IT House for software engineers with attractive price. We are competing, but we are building the environment based on trust. The same approach we use in work with our clients. Our main clients are located in the USA and EU and this is together with our clients. And we see that such values as openness, transparency and trust bring us to results.  As the meeting summary Anton Podilchak stated that the key to success for investors is not only to have money, capital, resources but also good local partners, that each of us should think positive and should not send mixed messages to global community, try to stick to the best practices and everything will be great. The more positive we talk about the environment the more positive it becomes.

This year, at EBA Western Ukrainian Office we decided to stimulate the awareness of the great investment opportunities provided by regions for international community and initiated the “Safe&Sound. Business Opportunities of Western Ukraine” conference as part of the Annual General Membership Day 2018. 

We invited the representatives from the EU and foreign Embassies to learn more about the region by presenting best practices and success stories in IT and automotive industries at the conference. 

Among our invited guest speakers were: Daniel Kramer, Deputy Head of Sector of the Trade Section of the EU Delegation to Ukraine, Cathy Cottrell, First Secretary for Energy Policy and Head of the Commercial Section of the British Embassy, Dmytro Pankratov, Business Coordinator of the Embassy of Norway in Kyiv; Roman Matys, Head of Investment Policy Department of Lviv Regional State Administration; Dmytro Sherenhovskyi, Head of the Academic Department of the Ukrainian Catholic University; Yuriy Reznyk, Director of Klingspor. 

The moderator of the meeting was Anton Podilchak, Head of EBA Western Ukrainian Office Regional Coordination Council, Managing Partner at Advice Group. 

Anton Podilchak asked the guests speakers and attendees to comment on how potential investors perceive Ukraine, what is the image of Ukraine from the point of view of foreign representatives, and what is the situation with the investment climate in Lviv region. 

Daniel Kramer, Deputy Head of Sector of the Trade Section of the EU Delegation to Ukraine, commented on the image of Ukraine: 

• Everyone in the EU is aware that Ukraine is full of potential. It has skilled workforce, it is a huge country, it has big population, industrial tradition etc. This is the common knowledge in the EU. But the question that always arises why it doesn’t attract more investment. What we see that is a lack of rule of law and corruption. That is the biggest issue now. It infects the investment climate.  
• Talking about security, according to surveys and to my personal experience it is not the top among the issues for investors, but it is still matters a lot. Since the martial law we had several calls from European companies from European member states asking us what is the situation, and whether they should invest. We said to them that from Kyiv it doesn’t seemed to have an impact. Looks like more an internal politics. The level of risk did not change.  
• Lviv and this region, of course, is far from Donbas and far from Crimea, but investors perceive Ukraine as the whole. Here in Lviv region the situation is better with rule of law, but investors see you as one country.  
• The EU is here for you and the Association Agreement will help your business. We have a lot of new projects for SMEs. Do not hesitate to contact me to help SMEs with innovations and to connect businesses with the EU. 

Cathy Cottrell, First Secretary for Energy Policy and Head of the Commercial Section of the British Embassy, added how she sees Ukraine:  

• In a context of Brexit, Ukraine is the priority country for the UK and not because it is strategical country, but also because we see a great business opportunities here.  
• Me and my team invite British companies who would like to work here in Ukraine and we will have more personnel at the Embassy to develop relationships here, if needed.  
• People do not know that here are lots of opportunities. We should give them successful examples to overcome that negative stories that coming to the news every day. Remember that you have a team in the Embassy who can help you to find partners in the UK. 

Dmytro Pankratov, Business Coordinator of the Embassy of Norway in Kyiv, also noted: 

• Business expect transparent, open system and predictable environment. Unless we make sure that environment is predictable, the courts are working, business will be very careful in entering markets of Ukraine. Potentially Ukraine is very interesting market for Norway, for example such spheres as energy, agriculture has great potential. Traditionally fish and food are more or less stable.  

Markiyan Malskyy, Partner of Arzinger Law Firm, Honorary Consul of the Austrian Republic in Lviv:  

• In the last 15 years, a lot has changed. I remember how we lived 15-20 years ago. Would a normal Ukrainian easily get a foreign passport, would you be able to register your car easily, would you get a child in a good school without bribe? I believe that we should be more positive in what we have. For example, Ukraine is one of the most open countries in the world. 
• Once I met a representative from Lichtenstein and he said that he was fed up with that corruption. I was surprised that we talk about corruption is such country, I think that we must accept that corruption is simply everywhere, in different forms and means, in different situations. If we look at Ukraine, we can see that it is the most successful countries combating small corruption in a short period of time. We have to start with the small steps. You cannot do reforms overnight. You cannot through out all the judges and ask new to come. Because people who are decent and intelligent work for international companies. They would not leave SoftServe tomorrow and come to work as a judge.  
• We live in a time of constant transformation. Who we are today that doesn’t mean that we will be the same person tomorrow. All our practices could be inapplicable tomorrow. All business should be ready for this. We don’t think strategically. As a representative of Austria here in Ukraine very often I hear that somebody from the army goes and asks EU that we need some socks, gloves, clothes etc. I think that global community expects want to hear that we have one of the best army in the world, military equipment in the front of the border, we are 100 percent save for their investments. We receive help from foreign partners for which we are very grateful, but our internal problem is our problem and we should solve it. We will get enough advices, assistance, but we should solve it. We are the one who should improve our country. Furthermore, we should provide the maximum level of trust. Trust is something that brings investment to a country. If investor doesn’t trust us, he will not be here. Trust is the main argument for today. 

Dmytro Sherenhovskyi, Head of the Academic Department of the Ukrainian Catholic University, commented on the security situation in Ukraine: 

• Nevertheless, security matters. This is an important issue and we have a number of data conducted together with the European Universities for example with Birmingham University, where we tried to identify the situation in Ukraine. There are the cases from Balkan states, Afghanistan or Iraq showing that sequences matter. First should be stability present in the country, then economy development and political development. What is interesting in Ukrainian case that all these researches show that being free child state during the post conflict or conflict period is the best chance for local community and business sector to influence. The state system is the most vulnerable at one point of time, but it is also the most open for the transformation.  
• The most urgent issue and there is a data showing that that influence on the situation is a lack of recognition that private sector can influence. The second thing is the lack of understanding of what business communities and NGOs can actually do.  
• What should be done? We should have success stories and show that business community have legitimacy over the business environment and make these reforms and push these reforms. This is very vital thing for the country that face conflict. The business should incorporate state building and peace building objectives into their operational agenda here in the country. This factor will also help a lot. 

Roman Matys, Head of Head of Investment Policy Department of Lviv Regional State Administration, gave some statics and insights for 2016-2018 period concerning the investment in Lviv region: 

• Before we started to implement the Strategy “Lviv Region – European Factory” nobody talked about automotive industry here. But this year Lviv hosted Automotive Forum for the second time with the representatives from more than 15 countries. We organized Business Process Operations Forum for the first time in Ukraine to promote moving share centers from other countries to Lviv region.  
• Everybody think about the automotive sphere only as a cable production but that is wrong. We change our priority from mass production to automated production and R&D. If we meet a company that would like to set up here with more than 1000 employees, we can propose only 2 production sites without hard competition for talents. All others are occupied. 
• The main things that help us to attract investors are favorable business environment, comfort in doing business and support from the local authorities. Special department which accompanies the investor act as a barrier against corruption and give investors understanding that authorities are concerned about doing business comfortably in the region. We work with CRM system and can easily track all the stages and task that should be done.  
• During 2016-2018 in Lviv region 240 new enterprises were opened, 25000 workplaces were created, promotion of business opportunities in Lviv was made in 105 countries, 8 international events were organized, 383, 6 mln dollars of investments were involved to region.  

Yuriy Reznyk, Director of Klingspor, commented on doing business in Ukraine from business prospective: 

• We are a German company from abrasive materials manufacturing. This year we celebrated 125-year anniversary worldwide. We have only 4 production companies worldwide and one of them located here in Ukraine. We set up our Ukrainian company 10 years ago. After 2 years at our head office we decided to implement a new big project – production of diamond cutting blades. We are the only company who produce this type of project. We slowly remove some parts of production from France to Ukraine. We do not have any claims worldwide concerning our product. We are stable plant as for the mother company. We plan to invest more into new equipment to continue our development in Ukraine. 

Svyatoslav Belei, Head of Integrity & Compliance Department at ABB, also added concerning situation in Ukraine: 

• We talk a lot about security and rule of law, but such situations have never stopped ABB global company. We have business in India, in Israel. The only problem in Ukraine for us is the judicial system. It is good to bring such companies as ABB with brilliant compliance practices. The situation has improved significantly during the last 10 years of my experience. The tendency here in region is getting better and better. The more foreign investments we will have here, the more positive practices we have the better will be the climate tomorrow or already yesterday. 

Taras Kytsmey, Co-owner of SoftServe, commented on the situation in IT sphere in Ukraine: 

• The environment that we have today is very beneficial for IT Industry. We have results. We can argue a lot, but we have proven that the industry is growing. Maybe IT has some specifics. We are exporting services. We deliver them through the internet. We do not need certificates, plants etc. Our people working from around the globe, but they live in Ukraine. 
• Today we have more than 120 000 IT Engineers in Ukraine. The industry is growing for about 20% per year. We are building great synergy locally in Ukraine with other IT companies. We are building together IT Park, one IT House for software engineers with attractive price. We are competing, but we are building the environment based on trust. The same approach we use in work with our clients. Our main clients are located in the USA and EU and this is together with our clients. And we see that such values as openness, transparency and trust bring us to results. 

As the meeting summary Anton Podilchak stated that the key to success for investors is not only to have money, capital, resources but also good local partners, that each of us should think positive and should not send mixed messages to global community, try to stick to the best practices and everything will be great. The more positive we talk about the environment the more positive it becomes.