Andreas Lier says German businesses bullish on Ukraine
Andreas Lier, president of the 120-member German-Ukrainian Chamber of Industry & Commerce, says his member companies are seeing "the best Ukraine ever," while acknowledging "there's still a long way to go" in Ukraine's development – including more privatization, less regulation, the ongoing need to battle corruption and to make deeper structural changes.
"Things are getting better; waiting on the sideline can be expensive," Lier told the Kyiv Post in an interview on Sept. 27.
And Germany is most definitely not a bystander.
Lier counts 2,000 Germany companies in Ukraine employing 60,000 people, more than half of them in the production of automotive parts in western Ukraine as part of the supply chain to Germany's lucrative automotive industry.
Bilateral trade is expected to rise to $8.5 billion this year, a healthy boost from last year's $7.8 billion.
And Germany's foreign direct investment is going in the right direction. Estimated perhaps conservatively at $1.6 billion, it got a huge boost with the announcement by Bayer of the opening this year of a $200 million corn seed processing plant in Zhytomyr Oblast, 100 kilometers west of Kyiv, and last year's resumption of production in western Ukraine's Kalush by Karpatneftechim, a petrochemicals plant.
Lier, the married father of two sons and a native of Hanover, Germany, has been the association's president since October 2016, four years after he moved to Ukraine to become managing director of BASF Ukraine, the giant international chemicals company based in Ludwigshafen, Germany.
Lier also sees even greener pastures ahead.
He's identified at least $26 billion in investment projects that will take place within the next decade, including $5 billion in natural gas extraction, up to $8 billion in the steel and mining sectors, $5 billion in roads and railways improvements, $690 million in expanding metro lines in Kyiv, Dnipro and Kharkiv, $500 million in airport improvements and another $400 million in the modernization of seaports, among other investments.
His membership sees big opportunities in many sectors, such as agricultural, industrial and consumer goods, including food processing.
He said the CEOs of membership companies have "very positive expectations" for 2019 and are planning for moderate growth as well as increasing employment and salaries.
He took note of Ukraine's leap in the World Bank's doing Business in Ukraine index, to 76th place from its 152nd place in the dark days of President Viktor Yanukovych, overthrown by the EuroMaidan Revolution on Feb. 22, 2014. "You also feel in the country it's completely different," Lier said. "Customers and companies report improvement. It’s a positive story."
One of the more exciting parts of the positive story is the massive changes brought on by decentralization – which now allows 65 percent of income taxes to go directly to local governments.
He said decentralization has spurred local governments to compete for investment. "Authorities listen more and take action," he said.
Of the major regional centers, "each of the cities has its own dynamic: Odesa is a port to the world. Kharkiv is a university, machinery and industrial center. Lviv has its own business cycle in western Ukraine and close to Western and Central Europe."
He said member companies are solving labor shortages in Ukraine by helping with vocational education programs to train workers.
Things are so good that he didn't even bring up Russia's war against Ukraine as an impediment to investment.
He instead talked about the need for Ukraine to promote its image more actively.
"Ukraine has to become more active in self-marketing," Lier said. "It's a very good place to live... Here, of course, the German chamber is also working as an ambassador for Ukraine in Germany and bringing Ukrainian companies to Germany."
The rising wages in Ukraine, coupled with visa-free travel to Germany and the rise in low-cost flights between the nations, have prompted more tourism both ways, he said. "I meet more and more Germans coming over for the weekend and enjoying Kyiv," he said. "We will see this more and more."
In addition to his presidency of the German-Ukrainian Chamber of Industry & Commerce, Lier is an elected member of the board of directors of the European Business Association, which has nearly 1,000 member-companies.
"It's nice to have an impact in a place which is changing, to work for the betterment of people and the country," he said of his community involvement. "It’s about supporting and showing social responsibility toward the people and the country.
"I’m really confident that this move (to Europe) will continue and also the members of our chamber see this movement. There’s a lot of optimism among German companies."
Andreas Lier is the president of the 120-member German-Ukrainian Chamber of Industry & Commerce. He works as the managing director of BASF Ukraine. (Courtesy)