Ellen Berends-Vergunst of the Dutch Embassy told the Post that despite obstacles, relations between the Netherlands and Ukraine hold great promise.
Ellen Berends Vergunst is the Deputy Head of Mission and the Head of the Economic Department with the Embassy of the Kingdom of the Netherlands in Ukraine. Berends-Vergunst told the Post in this interview that despite such obstacles, as a continuing lack of transparency in Ukraine’s business environment, business relations between the Netherlands and Ukraine hold great promise for development, especially in the sectors of agriculture, medical technology, transport and logistics. She said that one fact, which testifies to the development of fruitful relations between the two countries, is the Netherlands’ position as Ukraine’s fifth largest investor last year.
KP: When did your interest in CIS countries begin? Do you enjoy working in Ukraine?
EB: As a student, I specialized in Russian history and spent a year at the university in Moscow. It was 1981, the middle of the Cold War, and there were hardly any international students. This experience impressed me so much that I became a career diplomat and have always preferred countries in political and economic transition.
I was fortunate enough to work in the Soviet Union when Perestroika began, in Eastern Europe when the [Berlin] Wall fell, and Vietnam when it started economic reforms, as well as South Africa after apartheid collapsed. In summer this year, I shall be posted as ambassador to the Democratic Republic of Congo — an even younger democracy than Ukraine.
My husband Nicolaas and I came to Kyiv in 2005 and have enjoyed our stay tremendously. There’s always so much happening here.
KP: Please provide a general description of the present situation in business relations between the Netherlands and Ukraine. What are the main trends in business relations between the two countries, and what are the main obstacles or problems in doing business? What have been the major achievements?
EB: Happily, business activities between the Netherlands and Ukraine are flourishing. In fact, over the last years, the Netherlands has consistently been among the top five foreign investors in Ukraine. Trade between Ukraine and the Netherlands is growing rapidly, too. Just imagine, exports from the Netherlands to Ukraine have grown faster than to any other country in the world. In this year alone, six large trade missions from the Netherlands will visit Ukraine, and Dutch companies are actively participating in trade fairs and exhibitions all over the country. In last week’s Flowers & Hortech fair – a co-production by Ukraine and the Netherlands – as many as 42 out of 100 companies were Dutch.
Of course, there are problems for Dutch and other foreign businesses in Ukraine. These have to do with a lack of transparency in the Ukrainian business climate and with problems concerning legislation and its enforcement. The government has a crucial role to ensure a predictable, level playing field for all business in Ukraine, domestic and international.
KP: Is the investment climate in Ukraine attractive for Dutch companies? If yes, please explain in what way. If no, please outline the main problems.
EB: There are plenty of risks involved in doing business in Ukraine – this country is not for the weak-hearted – but at the same time, it offers large potential for profits as well. So yes, the investment climate is attractive for Dutch companies, but it could be still more attractive. Reforms are urgently needed to further improve the business climate, an enormous challenge for the government… I am convinced that Dutch and other foreign direct investments would step up immediately. Think of the legal environment and judicial system, VAT refunds, the joint stock company law, permits and inspections, and many other topics.
KP: What business sectors in Ukraine are most attractive for Dutch companies, or in what sectors are Dutch companies more willing to invest in Ukraine?
EB: We’ve seen a lot of Dutch activity in transport and logistics, in agriculture and in energy and energy efficiency. The Ukrainian economy is a very dynamic one, so new opportunities arise quickly, as for example, in the IT sector, banking or insurance. In general, many sectors are of potential interest to Dutch investors.
KP: How much in investments have been made in Ukraine by the Netherlands lately? What is the investment forecast for the nearest future?
EB: In 2006, the Netherlands invested 1.1 billion euros in Ukraine, which amounts to 7 percent of total investments in Ukraine. As I mentioned before, the Netherlands is now the fifth largest foreign investor in Ukraine. Only six years earlier, in 2000, the Netherlands invested around 270 million euros in Ukraine. This might seem relatively low, but the Netherlands was even the third largest foreign investor in Ukraine at that time. This shows how much the overall level of investment is increasing.
KP: Approximately, how many Dutch companies are now operating in Ukraine? Which of them have been the most successful here?
EB: In Kyiv alone, we know of about 100 companies that have a strong Dutch connection. But Dutch companies are not obliged to register at the embassy, so it could easily be more. For Ukraine as a whole, the figure will probably be close to 500 companies. But again, we don’t know the exact number. What we do know is that a large and visible number of Dutch companies are present, and that this figure is growing rapidly.
KP: Could you say a few words about the programs your country runs to stimulate business relations between the Netherlands and Ukraine? We know that there are subsidies in the Netherlands intended to encourage Dutch companies to enter the Ukrainian market.
EB: There are indeed programs and subsidies to stimulate Dutch business activity with, and within, Ukraine. Let me give you a few examples.
There are subsidies for joint cooperation projects between Dutch and Ukrainian companies, there’s a program that enables retired Dutch managers and experts to share their knowledge and experience with their Ukrainian colleagues, and there’s a facility that finances feasibility studies to prepare the ground for investments by Dutch companies. Recently, we introduced a government-to-government program hat was met with great enthusiasm on the Ukrainian side. We attach, in short, enormous importance to close economic relations with Ukraine.
KP: What about the prospects that exist in business relations between the two countries and a forecast regarding how you think business relations will develop in the nearest future? What sectors of Ukrainian business do you think will be most attractive for your country, and what trends will determine the presence of Dutch companies and business organizations on the Ukrainian market?
EB: Living in Ukraine for a few years has taught me many things, one of which is to be very careful with predictions. The economy is developing fast and sometimes in unexpected directions. Nevertheless, I see a number of sectors that offer great opportunities for Dutch business in the near future.
I mention, for example, the fields of agriculture, medical technology, transport and logistics, but also the politically and economically ‘hot’ environmental and energy issues. Regardless of the development in individual sectors, I am confident that close and fruitful business relations between Ukraine and the Netherlands will continue to grow in the future. The reason is simple: Everybody benefits from it.
