Euro­pean Union Am­bas­sador Hugues Min­garelli: How to con­duct busi­ness in Ukraine

Kyiv Post Legal Quarterly - - Contents - HUGUES MIN­GARELLI

In his mas­ter­piece "Le père Go­riot," the French writer Honoré de Balzac (17991850), per­haps in­flu­enced by the few years he spent in this coun­try, was ex­plain­ing how the for­tune of his main char­ac­ter, a grain trader, stemmed from his abil­ity to un­der­stand how to con­duct busi­ness in Ukraine.

This was more than 150 years ago, so need­less to say that the is­sue of do­ing busi­ness in Ukraine is not a new one! To­day a real game-changer for im­prov­ing

the busi­ness cli­mate is the am­bi­tious Euro­pean Union-ukraine As­so­ci­a­tion Agree­ment.

From the har­mo­niza­tion of tech­ni­cal reg­u­la­tions – mov­ing away from old bur­den­some Soviet stan­dards to sim­pler and more in­ter­na­tion­ally recog­nised ones – to the re­form of the pub­lic ad­min­is­tra­tion and of the ju­di­cial sys­tem, the EU works hand in hand with Ukraini­ans to help make this coun­try more busi­ness friendly. The first-year an­niver­sary of visa-free travel to the Schen­gen area – cov­er­ing 30 Euro­pean states – is also a step in that di­rec­tion, re­mov­ing con­straints to the move­ment of busi­ness peo­ple, and al­low­ing them to find part­ners and niche mar­kets.

Do we see re­sults?

Cer­tainly not as fast as one would ex­pect, but trade sta­tis­tics show that Ukraine is be­com­ing more in­te­grated in EU mar­kets. Ex­ports from Ukraine to the EU now rep­re­sent more than 45 per­cent of to­tal Ukrainian ex­ports and have re­turned to 2014 pre-cri­sis lev­els. An ex­pan­sion in ex­ports of this mag­ni­tude has not been achieved with any of Ukraine's other trad­ing part­ners glob­ally. Ev­ery week brings ex­am­ple of EU com­pa­nies in­vest­ing in Ukraine or a Ukrainian man­u­fac­turer or start-up open­ing doors to the EU mar­ket. And this fi­nally starts to be vis­i­ble in the For­eign Di­rect In­vest­ments sta­tis­tics.

Yet, while ac­knowl­edg­ing such pos­i­tive trends we should cer­tainly avoid com­pla­cency. In that sense I would like to stress two mes­sages.

First, we, for­eign­ers, are of­ten per­ceived as too crit­i­cal, not giv­ing enough credit to the re­forms car­ried out by the gov­ern­ment and par­lia­ment.

But there is a sim­ple rea­son for that. Ukraine is a Euro­pean coun­try en­dowed with great as­sets, from fer­tile lands to a skilled work­force, from ge­og­ra­phy to in­dus­trial her­itage. This may also be a curse, be­cause it means that in the eyes of ob­servers, Ukraine is a sub­ject of per­pet­ual frus­tra­tion, as we tend to look at it not as it is, but as it should and could be, namely a mod­ern and pros­per­ous Euro­pean coun­try.

We can never re­peat this enough: there is no ob­jec­tive rea­son why Ukraine can­not be an eco­nomic pow­er­house in the re­gion and be­yond. It should not be sat­is­fied with 2-3 per­cent growth of the gross do­mes­tic prod­uct while its GDP is still only two-thirds of what it was when the coun­try re­gained its in­de­pen­dence more than 25 year ago. Ukraine is climb­ing up the World Bank Do­ing Busi­ness in­dex rank­ing, but so far - do­ing it rather slowly when com­pared to its neigh­bors like Turkey, Be­larus, Ge­or­gia or Ro­ma­nia.

Sec­ond, the busi­ness cli­mate is one thing, but its per­cep­tion by for­eign in­vestors is an­other. And per­cep­tions, even if sub­jec­tive, re­ally mat­ter and in­flu­ence busi­ness de­ci­sions.

Im­age and brand­ing is crit­i­cal for any coun­try and even more for Ukraine, which is fight­ing ex­ter­nal ag­gres­sion and faces threats like in­for­ma­tion war, fake news and dis­in­for­ma­tion cam­paigns, all aimed at de­ter­ring for­eign in­vest­ment and erod­ing trust in the gov­ern­ment.

We all have anec­dotes of col­leagues, fam­ily and friends con­cerned about the se­cu­rity sit­u­a­tion in Kyiv and the rest of the coun­try. Un­for­tu­nately this is trans­lat­ing into real dam­age for the coun­try via lost in­vest­ments op­por­tu­ni­ties, and also scar­ing off peo­ple from vis­it­ing beau­ti­ful sum­mer­time des­ti­na­tions across Ukraine.

The EU helps ad­dress this chal­lenge through the East Strat­com Task Force, a team that tar­gets the spread of false in­for­ma­tion with the aim of dis­cred­it­ing Ukraine on the in­ter­na­tional scene. We also launched the "Mov­ing For­ward To­gether" cam­paign in Ukraine, to ex­plain the ben­e­fits of closer EU – Ukraine eco­nomic as­so­ci­a­tion with the help of suc­cess sto­ries, in­clud­ing from en­trepreneurs. The Ukrainian au­thor­i­ties are also ac­tive, and even though the task is end­less, it will re­main a top pri­or­ity.

In this sense, the Do­ing Busi­ness in Ukraine is­sue of the Kyiv Post was and re­mains a great source of in­spi­ra­tion for Ukrainian and for­eign com­pa­nies alike, of­fer­ing a much needed an­a­lyt­i­cal snap­shot of the sit­u­a­tion on the ground. En­joy read­ing!

Hugues Min­garelli is the Euro­pean Union Am­bas­sador to Ukraine.

Pivnich­niy Mist (North­ern Bridge), the north­ern­most of the five bridges that cross the Dnipro River in Kyiv. (UNIAN)

Ukraine ranks about 32nd in pop­u­la­tion among na­tions, with 42 mil­lion peo­ple, but usu­ally ends up far lower in three key in­ter­na­tional rank­ings that mea­sure ease of do­ing busi­ness, com­pet­i­tive­ness and in­no­va­tion.

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