UKRAINEINVEST ISSUES THE BUSINESS WEEK, A FREE ON-LINE PUBLICATION CONTAINING A WEEKLY SUMMARY OF IMPORTANT BUSINESS NEWS IN UKRAINE, FOR 19 FEBRUARY, 2018.
- Chinese buyers are cancelling corn purchases from the U.S. and switching to Ukraine as Beijing tightens controls on processing genetically modified strains, Reuters reports from Beijing. Chinese grain mills are having a harder time getting permits to process GMO corn, forcing traders to turn to non-GMO shipments from Ukraine. “It is hard for U.S. corn to come in now due to the GMO issue. Getting the GMO processing permit is very difficult,” one corn trader in eastern China told Reuters. “I had only ordered 7,000 tons of U.S. corn, but had to cancel the order, and turned to Ukraine.” Of China’s 2.83 million tons of corn imports last year, U.S. supplied about one quarter and Ukraine supplied about two thirds.
- Ukraine’s corn exports to China are expected to rise by 25% this year, to 2 million tons, UkrAgroConsult forecasts. In the last week, three Panamax ship cargoes were sold to China, with ADM, Ameropa and Nibulon said to be among the sellers. Ukraine’s grain crop was down 7.3% last year, to 61.3 million tons, according to the State Statistics Agency. Wheat held steady at 26.1 million tons. But, due to irregular rains, corn was down 14.1%, to 24.1 million tons, and barley was down 12.3%, to 8.3 million tons.
- In its first two years of investigations, the National Anti-Corruption Bureau of Ukraine has returned to the state almost $10 million and prevented the theft of about $75 million, NABU reports. Repayments were the result of court orders and voluntary decisions.
- Bankrupcty for Zaporizhia Automobile Plant, or ZAZ, is a matter of days, reports UkrAVTO, the owner since 2002. Once Ukraine’s largest car manufacturer, ZAZ sales last year dwindled to 1,673, or 2% of the new cars sold in Ukraine last year. Only a decade earlier, in 2008, ZAZ produced 258,000 cars, or 41 percent of the cars sold in Ukraine that year. A post-Independence joint venture with Daewoo Motors failed when the South Korean car maker folded in 2001. Since then, ZAZ has had on and off assembly partnerships with Chevrolet and China’s Chery Automobile.
- Imports of used cars tripled last year, to 72,900, just below the level of new car imports, 80,500, the State Fiscal Service reports. New car imports were up 28%. Used car imports jumped largely because import duties were cut in August 2016. Last year, about $2,800 was paid on each imported car, 28% less than the 2016 average.
Banking & Finance
- ICU’s investment group has increased its assets in management to more than $500 million, ICU managing partner Makar Paseniuk tells Interfax. Over the last five years, the average annual growth of assets under management has been 25%. He said: “The growth is due to the positive investment result, the launch of new products, and M & A transactions.” A major manager of private pension funds, Paseniuk said he looks forward to more business through pension reform and to the creation of a commodity exchange in Ukraine. He said: “Ukraine with its potential is now one of the best countries for investment».
- GDP growth in the last quarter of 2017 was 1.8%, the State Statistics Service reports. With this figure, Ukraine’s economic growth slowed every quarter of last year: Q4 2016 was 4.5%, Q1 was 2.5%, Q2 was 2.3%, and Q3 was 2.1%. The National Bank of Ukraine forecasts a reversal this year, with the GDP growing at 3.4%.
- Ukraine recorded a $2.6 billion trade deficit last year, a reversal from a $540 million trade surplus in 2016, the State Statistics Service reports. Exports increased by 16% to $52.3 billion. Imports increased by 23% to $55 billion. In trade with the EU, exports grew 27%, to $20 billion. Imports grew 19% to $23.3 billion. In trade with CIS countries, exports increased.
- Usage of “counterfeit cement” has dropped in Ukraine, the International Cement Review reports citing Ukrcement, the cement producers association. Defined as “non-factory cement and cement of unknown origin,” counterfeit cement fell from 21.5% in 2014 to 8% in 2017.
- Austria and Ukraine will hold a trade and investment forum in Kyiv in midMarch, during a visit to Ukraine of Austria’s President Alexander van der Bellen. On Thursday, at a press conference in Vienna with van der Bellen, President Poroshenko invited Austrian energy companies to participate in a tender to manage Ukraine’s massive gas transportation system. Although Vienna is only a twohour flight from Kyiv, this was the first time that Poroshenko visited Austria during his nearly four-year presidency. He said bilateral trade increased by 17% during 2017. Austria last year expanded its honorary consulate in Lviv, a former Habsburg empire city still known to German speakers as Lemberg.
- A $30 million, 36 MW solar power plant will be built with EBRD and World Bank loans at Ternovytsa, midway between Lviv city and the Polish border. The European Bank for Development and Reconstruction and the World Bank’s Clean Technology Fund will loan the money to ZinoviyKozitsky, a local energy entrepreneur, to build the plant on a brownfield site, an abandoned chemical plant. Later, the plant’s capacity is to double to 72 MW. Earlier, the EBRD financed construction of two Kozitsky wind power stations near the Lviv region town of StarySambir.
- Belgium’s Upgrade Energy will build a 25-30 MW solar power plant in Zhytomyr region, the region’s press service reports. Land leases have been signed in the Irshansk area, about 160 km west of Kyiv. Design work has been started by Irshankaya SES, a company with investment by Estonia Energy Invest.
- Ukraine’s two Danube River ports, Izmail and Reni, are to be dredged this summer, reports Ukraine’s Seaports Administration. With an estimated cost of $1.3 million cost, foreign and national dredging companies are invited to participate by March 12 in a ProZorro electronic tender. Increasingly appreciated as Ukraine’s waterway to the heart of Europe, the western Odesa region ports report handling combined cargo of 316,500 tons in January, up five times yoy. Chinese companies are interested in Ukrainian Danube Shipping Company, which could be privatized this year.
- To promote biotechnology in Ukraine, the US-Ukraine Foundation is offering $25,000 in prizes to 40 Ukrainian biotech students, researchers and entrepreneurs. Winners will be encouraged to travel to the US to engage with the American biotech community through educational exchanges, conferences and trade shows. The top four winners will receive $2,500. The next four will be invited to participate in a biotech forum in the US, with travel paid by the Foundation. The Foundation’s Biotechnology Initiative was launched last fall thanks to a gift from Irene Hoffman, a Ukrainian-American biotechnology entrepreneur in North Carolina.
- To attract Ryanair, but placate Ukraine International Airlines, Kyiv’s Boryspil Airport has adopted a policy of discounting airport passenger fees and landing charges for new passengers and new flights. Discounts are to start at 80% and then be phased out over the next five years, or the airport reaching an annual passenger flow of 20 million, whichever comes first. Last year, the airport handled 10.6 million passengers. With this discount policy effective Feb. 1, Infrastructure Minister VolodymyrOmelyan believes the stage is set for the arrival this year of Ryanair.
- Ukraine International Airlines, the nation’s largest carrier, has expanded its fleet by leasing its 34th Boeing 737. UIA has an all-Boeing fleet, with the exception of five Brazilian-made Embraer regional jets.
- Italy’s Ernest Airlines intends to launch this spring three new flights to Italy from Kyiv and Lviv, according to Ukraine’s Center for Transport Strategies. Ernest would fly from Kyiv Zhulyany to Bologna and from Lviv to Rome and Milan–Malpensa. The flight to Malpensa would supplement Ernest’s existing flight from Lviv to Milan-Bergamo, according to a company announcement at the BIT Milano 2018 International Tourism Exchange.
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