President Zelensky’s new government has launched an ambitious plan to attract $50 billion in FDI, tackle corruption, privatize state-owned enterprises, and in doing so catapult Ukraine onto the world stage as a global economic competitor. As Deputy Head of the Office of the President, Yulia Kovaliv leverages her expertise as the former head of the Ukrainian National Investment Council to support the government’s drive toward these economic goals. She is confident that the reforms launched by the government, particularly those in privatization, anti-corruption and land market reform, demonstrate the government’s commitment to deliver for current and future investors
You recently stepped into your role as Deputy Head of the Office of the President, and bring an impressive background in foreign policy and finance. Can you provide an overview of your new role and your current objectives?
For almost three years, I led the office of the National Investment Council, which was focused on bringing FDI to the country. As Deputy Head of the Office of the President I am focused on key economic reforms related to growth, job creation, and bringing new investors. My role within the National Investment Council remains the same and is well linked with my new role. The key focus of the reforms is to increase economic growth and one of the major goals is increasing FDI and supporting the growth of foreign companies that are already working in Ukraine.
Prime Minister Honcharuk announced a goal to attract $50 billion in FDI by 2024. What strategies to you have to support the government in reaching this target?
A key focus of President Zelensky is to improve the investment climate and implement reforms to support economic growth. Eliminating corruption is critical to improving the business climate. We are also looking at the ease of doing business rate, which is an easy benchmark for any investor to look at. Ukraine was named one of the top five countries with a rising ease of doing business rate for the past five years, so we are making progress there. Next is creating room to invest. We have a huge state-owned sector. Currently, this extensive state ownership restricts private sector investors from entering the market. Within its first weeks, the Ukrainian parliament supported new law on concessions that will support private investors and bring capital in to improve the infrastructure, utility and healthcare sectors. We have already launched the first tenders for the concession of seaports in the Black Sea. There has been a lot of conversation about privatization in the past, but it faced major legislative restrictions. Many of those restrictions have been lifted by the new parliament. Additionally, we need to attract foreign capital, as well as foreign expertise, good business conduct, good technology, and the skills to modernize our sectors.
What kind of investment opportunities will be created by the forthcoming opening of Ukrainian land to foreign investment?
A major reform we’re working on is the land market reform. Ukraine is one of the richest countries in terms of black soils in the world, and is in the top five exporters of grains and corns as well. The efficiency of the agricultural sector is increasing year to year. Last year was a record harvest, and this year production is increasing further. More companies are coming to the market. The land market reform abolishes restrictions on land circulation for Ukrainian citizens and business. We predict roughly an increase GDP growth rate of 1.5 percent as a result of the land market reforms, as well as an increase in FDI on a broader scale in the agricultural sector.
How are FTAs and a young and educated workforce helping to further boost the economic outlook?
In 2016, Ukraine signed a trade deal with the EU that totally changed our export portfolio. Five years ago, Russia was Ukraine’s main trade partner. Today, 40 percent of trade is with the EU. We now work more in the Middle East, Asia, and the US, and have signed free trade agreements with Canada and Israel; furthermore, more free trade agreements are being negotiated. These trade agreements make Ukraine appealing for investment in export-focused goods and services, combined with favorable taxation policy. Ukraine is proud of its extremely skilled labor force, which has a 99 percent literacy rate; we are also one of the strongest countries in Europe in math and technical education. The IT sector in Ukraine grew eight times over in the last seven years –now more than 50 R&D offices, including for Boeing, Samsung, and big tech firms, have opened in Ukraine. This focus on education and IT will pay off, helping Ukraine to enable technological hubs, R&D centers, and universities, as well as accelerating ecosystems of innovation to drive the government’s IT and innovation agenda. For example, “State in the smart-phone” is a brand-new government initiative that will allow Ukraine to provide all public services online.
Do you have a timeline for the opening of the land market? How soon do you want to see investors enter into the country?
Reaching consensus on the land market was a big political debate for decades. Now we will debate when the reforms will happen and how they will happen. The start of the reforms is expected in October 2020 with free land circulation among Ukrainians, and it will create a huge step for further rapid development of the agricultural and food-processing sector in Ukraine.
What is the vision in terms of attracting FDI in markets such as Japan, Western Europe, and the US?
We are cooperating with market leaders from all of these countries. Recently, the government signed a multi-billion dollar deal with GE for the supply and renovation of the locomotive fleet in Ukraine. GE, Total-Eren, and Acsiona also work with Ukrainian companies in the renewable energy sector. Strategic investors from the EU recently entered the pharmaceutical market. Ukrainian producers are starting to become certified by multinational companies within their global value chains, which brings them into the global market. That’s where we see a big future.
At the last Davos meeting, Ukraine was declared open for business. What are you hoping to promote at the next Davos?
This is a brand-new Ukraine. It is young. It is very committed, ambitious, and it is delivering. The big thing now is that even within these few weeks of the new government being formed, the entire team has committed to not only giving promises to investors, but also to delivering upon those promises. With our ambitious plan for economic growth, job creation, and fostering FDI, we have a lot of homework on our side. And we are committed to doing it. At Davos we will present the first results. That’s what persuades investors most. The success stories. The investors have to feel the government is a reliable partner and a predictable policymaker.
Transparency is important to restoring Ukraine’s reputation internationally. How does your office support the Prime Minister’s transparency objectives and what would you tell foreign investors regarding transparency?
Transparency is one of the top things investors are talking about when they consider Ukraine: protection of investors’ rights, fighting corruption and the rule of law are crucial. All this needs to be addressed. During the first days in office, we launched the reform of law enforcement agencies, legislation to fight corruption and further reforms of our justice system. Investors are expecting actions rather than promises, and we have a lot of progress to show.
Why should the US public and private investors take notice of Ukraine now?
This is one of the biggest countries in Europe and is rapidly growing. It has massive potential. You can rarely find in one place so much need for investment, a talented labor force, commitment of government, and natural resources. This makes Ukraine a perfect place for investment, and the time to invest is right now.
What role do you see the US playing in the new story of Ukraine?
The success case studies of US companies and other foreign companies in Ukraine are the best way to show how Ukraine is changing. Investors believe other investors. Our investors can tell the story of the successful transformation of the country. The rules are changing. It is easier to do business. Investors’ rights are more protected.
Do you have a final message for US investors and readers of Newsweek?
My last words would be: innovation, opportunity and openness for business. These are the three main pillars that both the government and business community would like investors to consider.