Stepan Kubiv, First Vice Prime Minister and Minister of Economic Development and Trade for Ukraine, special for Financial Post (Canada)
Ukraine is a trusted friend and partner for Canada. Our relationship spans more than a century of shared family, cultural and political connections. The next step in our ongoing journey together is in expanding our business relationships.
While Ukraine gained its formal independence in 1991, our country is just three years into the rebirth that resulted from the Revolution of Dignity in 2014. Since the Euromaidan, we have set out to build a new European state. We signed a Deep and Comprehensive Free Trade Area agreement with the European Union in 2016, and the Canada-Ukraine Free Trade Agreement (CUFTA) last year — deals that effectively create an uninterrupted duty-free trade zone comprising almost 600 million consumers.
Starting in 2016, our economy has rebounded with 10 consecutive quarters of positive economic growth, including growth of up to 3.8 per cent in the second quarter of 2018.
Even though CUFTA took effect only in August 2017, total Canada-Ukraine goods trade in 2017 grew by 42 per cent to US$349.6 million. A further year-over-year increase of 2.7 per cent was recorded in the first seven months of 2018.
Our trade strategy is combined with an ambitious economic reform program to make Ukraine more attractive to western investment. Since 2014, we have achieved more reforms than at any time since independence. We have deregulated sectors of the economy, streamlined business regulations and undertaken privatization of state-owned enterprises. Reforms are underway to improve creditors’ rights and intellectual property rights. As of July 1, 2018, the total volume of direct foreign investment amounted to US$40.7 billion.
Ukraine is committed to fighting corruption through new legislation, government systems and institutions. The centrepiece of our commitment is the High Anti-Corruption Court, which began in June. International bodies, such as the G7 and the International Monetary Fund, have endorsed the court as a significant step in achieving our anti-corruption objectives.
The next step is expanding our business relationships
These initiatives to improve the investment climate are paying off. Canadian investment in Ukraine increased 20.9 per cent in 2017, and was up 21.6 per cent in the first half of 2018 compared to the same period one year earlier. We are focusing on four sectors: agro-industry, information technology, infrastructure and natural resources. Canadian firms have expertise in each of these sectors and opportunities are opening in Ukraine for potentially lucrative investments. Our trade and investment promotion efforts are therefore concentrated in these business sectors.
Ukraine’s IT industry has transformed rapidly from a fringe economic player to to the country’s third-largest export sector in only five years. In 2017, IT services grew by 20 per cent and exports are estimated to double in the next five years. The IT sector comprised about 61 per cent of Ukraine’s services exports to Canada in 2017.
Our geographic location gives us the potential to be a trade and transportation hub for Europe, the Middle East and Asia. Our road, rail, aviation and marine infrastructure is well developed, but much of it needs renovation, upgrades and modernization, creating opportunities for Canadian investors.
Ukraine is pursuing a goal of energy independence by 2020, opening up opportunities for Canadian companies to help by investing and building infrastructure in both traditional energy segments and for renewables, such as solar, wind and bioenergy. In June, Canada and Ukraine signed a letter of intent on energy co-operation with the International Centre of Regulatory Excellence (ICORE), a not-for-profit organization founded by the Alberta Energy Regulator, to bolster transparency and regulatory excellence.
While it is still early days for new investments, the shovels already in the ground provide an indication that opportunities abound. TIU Canada is constructing a new solar power plant near the village of Kalinovka in the Mykolaiv region. Brookfield Asset Management is a backer of the Innovation District IT Park now under construction in Lviv. Fairfax Financial Holdings Ltd. is a significant investor in Astarta Holding, an agroindustrial holding company. And investment is flowing the other direction as well: Ukrainian investors broke ground in September for the Canada Meat Group Inc. meat-processing plant and cold storage facility in North Bay, Ont.
Ukraine greatly values the support that Canada provides — as a partner for peace, a provider of development assistance through the Canada-Ukraine Trade & Investment Support Project, and shared deep cultural connections. Canada has graciously offered to host the annual Ukraine Reform Conference in June 2019 , and we will welcome the opportunity to describe additional positive momentum.
Ukrainians want a democratic, reliable, and economically strong country. With Canada’s help, we will continue our efforts to deliver it for our mutual benefit.
Source: Financial Post