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