Ukraine Market Opportunities
The spread of covid-19 began to affect the Ukrainian economy at the beginning of March 2020. This was associated with the postponement of fairs, the cancellation of regional forums, the suppression of traffic, the limitation of a whole range of production, etc. A greater number of Ukrainian citizens working abroad returned to Ukraine.
The most affected sectors due to the pandemic include the tourism and entertainment industry, transport and public catering, on the other hand, retail trade, the healthcare and pharmaceutical industry, the chemical industry and the IT sector showed growth.
Ukrainian exports decreased by 1.7% year-on-year in 2020, and imports decreased by 11%. Ukrainian public debt reached USD 90 billion at the end of 2020, i.e. 63% of GDP. As a result of the pandemic, Ukraine’s GDP fell by 4% in 2020, and economic growth is expected to be in the range of 3-5% in 2021.
In response to the covid-19 pandemic, the Verkhovna Rada of Ukraine already adopted “anti-crisis laws” in mid-March 2020, including measures to support domestic entrepreneurs and residents (moratorium on tax audits, exemptions from payment of fines, exemption from payment of rent if the property cannot be used, etc.).
The “Available loans 5-7-9%” program to support small and medium-sized enterprises became popular, public procurement procedures (ie no electronic auctions) and procedures for drug registration (if they are registered in the EU) were simplified. The National Bank of Ukraine introduced a bank refinancing program.
In mid-April 2020, an “anti-crisis budget” was approved, where compared to the original budget, revenues were reduced by 11%, expenses were increased by 7%, and the government’s reserve fund was strengthened. In May 2020, the Ukrainian government approved a program to support the economy, including measures for individual sectors.
In autumn 2020, additional measures were taken, including the provision of a one-off sum of EUR 235 to support entrepreneurs/natural persons affected by the restrictive quarantine measures.
During the pandemic, access to international financial markets became more difficult for Ukraine, however, the Ukrainian government is supported macroeconomically by the International Monetary Fund, the EU and other international financial institutions, such as the World Bank, EBRD, etc.
Post-COVID-19 opportunities for foreign exporters
Transport industry and infrastructure
In Ukraine, the implementation of the President’s program “Velyke budivnyctvo” (Big Building) continues in 2021, focusing on the reconstruction of an extensive road network. This creates opportunities for Czech technology and technology suppliers for companies involved in these programs and in the construction industry in general. Every year in November, a specialized trade fair for municipal and road technology – Avtodor Expo – is organized.
Other possibilities exist within the framework of the expected transformation of the state railway Ukrzaliznicja (supply of components, modernization of locomotives, etc.) and provision of passenger rail transport between western Ukraine and the Czech Republic. There are also opportunities for cooperation in the modernization of public transport in Ukraine (metro cars, trams, buses, trolleybuses).
According to allcountrylist, Energy represents an important strategic sector that is undergoing a series of reform and modernization steps. The area of energy efficiency and the development of the segment of renewable energy sources is promising in Ukraine, which is also interesting from an investment point of view.
The modernization of the energy infrastructure, including nuclear power plants, is interesting. International financial institutions (EIB, EBRD, etc.) preferentially provide financing for “green” projects. An important trade fair – Power Engineering for Industry is planned for October 2021.
A perspective sector of the Ukrainian economy is the field of digitization, also in connection with the strong IT sector in Ukraine. Digitization development activities are coordinated by the Ministry of Digital Transformation of Ukraine (created in September 2019), the state budget for 2021 allocated USD 10million for the development of the sector.
The electronic service “Diia”, i.e. a mobile application (driver’s license, passport, ID card) and a portal “one window for the provision of electronic services by the state” (company registration, birth certificate, etc.) is very popular and rapidly developing in Ukraine, which already has several million users.
Possibilities for Czech companies exist especially in the area of cooperation with relevant Ukrainian state institutions and companies in the development of various aspects and programs of digitization. To support this cooperation, it is possible to organize bilateral seminars or consultations. Other possibilities for Czech companies exist in the framework of the development of smart cities (introduction of electronic tickets, electronic timetables, multifunctional electronic cards for residents, etc.).
Water management and waste industry
In Ukraine, increasing attention is paid to the construction of modern landfills, waste sorting and processing plants, and wastewater treatment plants in selected cities. Czech companies can establish themselves more as technology subcontractors for Ukrainian general contractors. There is also better availability of financing in the sector (EIB, EBRD, etc.).
Healthcare and pharmaceutical industry
The pandemic has drawn more attention to the healthcare sector and the need for its further development, which has been reflected, among other things, in a significant increase in healthcare spending for 2021 in the state budget. This is connected to the building of new parts of hospitals and the improvement of their equipment with medical equipment and technologies, as well as the demand for medical materials.
State hospitals make purchases through the ProZorro electronic system (the price of the offer is the deciding factor). Private hospitals are more flexible and often buy directly from manufacturers, which creates opportunities for Czech companies.
However, a prerequisite is the existence of a company representative in Ukraine, who participates in negotiations with representatives of private hospitals to purchase equipment and materials. An important trade fair – Public Health – is planned for October 2021.
Agricultural and food industry
In 2020, a law was passed to lift the moratorium on the sale of agricultural land (the moratorium is lifted from mid-2021). The lifting of the moratorium in 2021 is likely to direct investment into the purchase of agricultural land and slow down investment in other segments of agriculture. Restrictions on land sales to foreigners continue to apply.
The covid-19 pandemic has minimally affected the agricultural sector and there are still good export opportunities for food sector equipment, agricultural machinery and technology, biomass energy equipment (agricultural waste), healthy food and various delicacies (dried meat, cheese ). The AGROEXPO exhibition (www.ukragroexpo.com) is being prepared for the turn of September and October.