For the first time since national independence in 1991, the Ukrainian government has developed a national export strategy for the country with the help of professionals from the International Trade Development Center and many other non-governmental organizations.
First Deputy Prime Minister Stepan Kubiv and State Trade Representative Nataliya Mykolska presented the strategy for Ukraine’s 2017-2021 export course on March 28 in Kyiv.
Although Russia still remains Ukraine’s main economic partner among individual nations in all categories — export, import and investment — Ukraine wants to diversify its economy to find new markets in the European Union and around the world.
In a year after an EU free trade agreement with Ukraine came into force, the 28-nation political bloc took the biggest share of Ukrainian export goods – 37 percent overall.
But because Ukraine’s currency has lost more than two-thirds of its value since 2014, when Russia annexed Crimea and instigated a war in the eastern Donbas, Ukraine’s exports have plunged compared to 2013 — $67 billion then versus $36 billion in 2016).
Ukrainian businessmen also have not gained much success competing with well developed and competitive international market. They exported only $13 billion worth goods to EU in 2016.
The experts at the Export Strategy Conference in Kyiv said the main problems Ukrainian exporters are lack of innovation, skilled professionals and government’s help in promoting Ukrainian brands abroad.
“The problem was that government only formed an economic policy not strategy that could help businesses to find out whether they are ready to export, where can they find partners abroad and what goods is Europe interested in,” Mykolska said.
Furthermore, Europeans sometimes even don’t know about many goods made in Ukraine. The reason is that Ukrainian firms enter EU retail stores through traders who buy raw material and then repackage it to sell under other brands.
“The government must provide business with an opportunity to get straight to European retailers,” said Mykolska.
Mykolska said the strategy includes 56 tasks that Ukraine’s traders and the government should do to revive Ukrainian trade and economy.
“I know that you are tired of abstract plans that would never be imposed, but this time we created a concrete but flexible plan of actions that would adapt to market changes,” said Kubiv.
The strategy document defines the priority sectors as the food industry, information technology, machinery manufacturing and aerospace industry and tourism.
Dmytro Yablonsky, an expert with the Center for Economic Strategy think tank in Kyiv, said it is the first time Ukrainian government included such a wide range of tasks that should be done.
The Education Ministry should must raise bring education up to top international standards so that the workforce can be more productive.
The Infrastructure Ministry should improve roads as the export and transit of goods needs better logistics than Ukraine can provide now.
The strategy also defined tax reforms and the creation of special tax benefits for business.
It also identifies 75 countries with which Ukraine is currently trading below potential.
Yablonsky said the strategy is “too wide” to be effective.
“It has much interesting data and reasonable advice, but it is not clear how we would implement this 56 steps,” said Yablonsky. “There are many steps but I would also include the concrete numbers that would stimulate exporters. For example, in 2019, Ukraine’s export should be worth $60 billion or so, the expert added.
Mykolska said the main ministry’s main aim is to inspire business for new challenges and show possible ways to improve.
The strategy document will be presented for approval of Prime Minister Volodymyr Groysman’s Cabinet of Ministers in April or May.
