Ukraine’s future is bright according to Andy Hunder, President of the American Chamber of Commerce in Ukraine. While US and Ukraine relations have been overshadowed by politicized headlines recently, Mr. Hunder describes the real story between the two countries as a tale of tremendous success for foreign investors, especially those Americans who have dared to take a chance on Ukraine’s quickly growing economy, highly skilled labor force, and fresh new government. Going forward, Hunder says that strong growth in ICT, agriculture, and infrastructure will provide ample opportunity to capitalize on this unique moment in one of Europe’s fastest growing economies
As the President of the American Chamber of Commerce in Ukraine, you help to represent over 600 US and international investors and corporate members in the nation. Can you tell us about your professional experience and how you’re using it in your role with AmCham Ukraine?
The American Chamber of Commerce has been in Ukraine since 1992. We work in three main areas, business to government (B2G), business to business (B2B), and what we call B2U, “Business to Ukraine”. We are getting the message out about Ukraine. We are not an investment promotion office. We do not sell the dream; we tell the story about who is here and what they are achieving. We have many stories to tell. The government understands that in order to attracting the $50 billion in FDI the country needs, we have to look after the companies that are already here. They are the best ambassadors. I travel quite a lot around Ukraine and the more I travel, the more success stories I see. The renewables, IT, and agriculture sectors are growing quickly. Ukraine has $4 billion in ICT export services, mainly going to the United States. We have about 180,000 IT specialists here, which creates tremendous capacity in terms of IT technology development. In agriculture, Ukraine is number one globally for sunflower seed and sunflower oil; the country is big in corn and wheat as well. We’re also seeing the emergence of the manufacturing sector. When I travel the country, I see everything from Oreo cookies to Bentley automobiles’ steering wheels being made. The mood is upbeat. Eighty two percent of our members are planning to expand their business in Ukraine, 81 percent saw their revenues increase last year, and 88 percent are forecasting revenues increasing this year. Of course, Ukraine has a long way to go. The country is still recovering from the 16 percent GDP contraction that occurred between 2014 and 2015, but now we are seeing steady growth of about 3 percent year on year. The Prime Minister is targeting 40 percent GDP growth, which is ambitious, but we think can be done.
What are the key challenges that you see companies that are entering Ukraine facing and how are you helping them navigate them?
The number one challenge is rule of law. We are transitioning the mindset towards a transparent, fair and just legal system, where businesses aren’t valuing special privileges, they are valuing justice. Macroeconomic stability through continuation of IMF program is also critical, as was the establishment of an independent national bank. The IMF program is key not only because of the funding itself, but the signaling it gives to investors and companies about market stability.
Minister for Development of Economy, Trade and Agriculture Tymofiy Mylovanov said that the government plans to open 800 enterprises for private ownership in the near future. What opportunities can investors, and especially American investors, expect to have from privatization efforts?
There are currently 3,500 state-owned enterprises. In my opinion, these enterprises, which include plants, greenhouses, factories, etc., should be given to private entrepreneurs with business expertise, not to the state. The sectors needing privatization are extensive, but we are seeing movement. Companies will be able to sell the assets to private investors and have managers come in and manage the assets. This transition will create new jobs, new taxes, and it will boost the economy.
The Ukrainian government has committed $20 billion to develop the infrastructure, the military, and other areas to move forward the country. Which do you think are the most imperative short-term projects to increase GDP and hit the 3.7 percent growth targets for 2020?
Across Ukraine’s major sectors, the biggest challenges relate to infrastructure. The railroads are not able to move goods at the rate business would like. In order to get from the fields to the global market, you need good infrastructure. For example, if you look at the map of Ukraine there’s a big river through the center of the country that can be an artery for business and trade. To maximize its potential requires legislation, refurbishment of locks, and dredging. The impact of this alone would be significant.
You said that the visit by Tom Cruise to the Ukraine recently was “one of many good signs” that you have seen recently. What other positive signs for Ukraine’s business climate have you noticed?
My agenda is filling up every week with companies that are looking into Ukraine. These are big name brands sending in groups of senior vice presidents and teams looking at the legal, tax, and customs. There has been an overwhelming amount of attention on Ukraine in the US at the moment, but it has been primarily focused on political issues. We need to capitalize on this by breaking through the noise and highlighting what’s really going on for businesses on the ground.
Ukraine has historically been viewed as connector between East and West, meaning primarily Europe and Asia. What role can the country play for US investors?
With Ukraine in the US news nearly every day, the relationship between the US and Ukraine has never been more important. Ukraine boasts a strategically valuable location for businesses. The country is working to improve democratic governance, tackle corruption, and attract investment, and it is making great strides. It has well-educated talents, but most of all, it has the examples of companies who have been successful here and that speaks for itself.
Last year at Davos it was made clear that Ukraine is open for business due all the governmental changes taking place. What is the key message that you would want the American embassy to convey at Davos 2020?
Ukraine has a young, passionate, and dynamic government that is bringing change. We are seeing tangible changes taking place. History is being made here in Ukraine and it is an exciting prospect for business to witness and participate in this moment.
Ukraine’s Industry 4.0 involves the implementation of AI, IoT, and automation. How quickly do you think these goals can be attained?
Ukraine’s Deputy Prime Minister is 28 years old and his one remit is IT. The President and Prime Minister are saying they want the whole country on their smartphones. It can be done; technology is changing and there is an opportunity to leapfrog.
Do you have a final message on why US public and private sector players should take notice of the investment potential in Ukraine?
Ukraine is in the news. Sometimes it is in the news for the wrong reasons, but we encourage people to listen to the companies that are here and hear their stories about conducting business in Ukraine. We have multi-billion-dollar companies operating on the ground, and Ukraine is on the radar of many others in terms of market and revenue growth. That’s not always getting picked up by the media which focuses more on the political. If we continue to make progress toward our goal of 40 percent GDP growth, this could be the fastest growing economy in Europe over the coming years.