It is generally accepted that the recent Davos 2019 gathering failed to grab international headlines with one clear theme. However, the message from Ukraine House Davos throughout the week was loud and clear – the country is open for business, it is a stable and predictable emerging market that offers profitable investment opportunities, and that investors should get in now, as high-quality assets are severely under-priced, offering terrific value.
Ukraine NOW Invest Day at Ukraine House Davos hosted by UkraineInvest – the government’s investment promotion office that I lead – saw President Petro Poroshenko witness the signing of two deals worth $370 million. These deals certainly highlighted the themes of two of our panel discussions that day – “Making the Planet Great Again: Charging Ahead with Renewable Energy” and our session on the compelling reasons for investing in Ukraine – “Brains and Grains: Driving the 21st Century Global Economy.” (All sessions available for viewing on the website, ukrainehousedavos.com.)
Ukraine NOW Invest Day was also a day of extraordinary and illuminating conversations – both formally during our four panels, and informally with members of the international investment community, representatives of leading multinational and Ukrainian companies, government officials and our expert speakers.
Recognising significant progress in the reform of the energy and electricity markets, the European Bank of Reconstruction and Development arranged a syndicated loan of €150 million loan for the construction of a 250 MW wind farm in the Kherson region of southern Ukraine. The loan will be extended to local developer SyvashEnergoProm LLC, co-owned by Total Eren and NBT for construction of the initial 133 MW phase, with the first power generation expected before the end of 2019.
The international investment community’s growing appetite for accessing opportunities in Ukraine was reinforced by the announcement by Lenna Koszarny, Founding Partner and CEO of Horizon Capital, of a new $200 million private equity fund for Ukraine. The original target of $150 million was quickly exceeded, with investors being turned away when the maximum was reached.
While the three panels I moderated were focused on very different areas, it became increasingly clear that Ukraine must now be viewed in the context of global trends and issues and the opportunities and potential contribution the country offers. What do I mean by this?
The renewable energy panel emphasized that the climate change crisis was a global issue and that Ukraine is a “blessed country” with significant wind and solar resources. Developing these resources will not only benefit the country’s economy but will contribute to solving the global crisis. Inward investment in this sector is attracted by regulatory reform compliant with EU standards, which sees a mass of complicated and conflicting rules replaced with fewer, better and smarter regulations. I was encouraged to learn that with a level regulatory playing field it is possible for renewable projects to outbid conventional generators – as Total has done in India.
The fascinating panel discussion “Whose Identity is it Anyway? Privacy in the Digital Age” emphasized the complex challenges of cyber-security globally. Ukraine is not alone in facing digital sabotage and negative propaganda by fake news, but countering these cyber-attacks has made Ukraine a global center of excellence. To maximize future opportunities, panelists recommended that Ukraine continue to build on its position as the “Silicon Steppe of Europe” and move from being not just a leader in third-party outsourcing, but become a dominant destination for growing new businesses and start-ups.
The “Brains and Grains” panel explored Ukraine’s potential as a destination for manufacturing, adding value to its resources not just exporting them. In this context, there was a very revealing discussion on Ukraine versus China: contrary to popular perceptions, Ukraine has lower labor costs and benefits from higher standards of corporate governance and certainty of legal ownership. The panel also identified the importance of creating the economic and social conditions to keep the “Brains” working in Ukraine and avoid the migration of experienced skilled workers to other parts of Europe.
Our fourth panel was different – a fireside chat between veteran British journalist Andrew Neil and the Klitschko brothers of boxing fame. Mayor of Kyiv, Vitaliy Klitschko, described his very hands-on approach to transforming the lives of his city’s citizens. From combatting corruption by creating an open and transparent administration to ensuring personal safety using CCTV, the mayor’s energy and commitment were palpable. As he said, nothing changes through pessimism; optimism is vital to bringing European standards of life to Kyiv. Volodymyr Klitschko emphasized the value of sport as a lifestyle training tool and shared details of the management philosophy he has developed to help corporate leaders “up” their game.
Both Klitschko brothers are an inspiration. They know that nothing succeeds without hard work and determination, something the rest of us in Ukraine are striving to emulate. But don’t take my word for it – come and see Ukraine for yourself!
