WASHINGTON, D.C. – Despite lingering problems, there have been real changes in Ukraine that have made it a welcoming environment for U.S. and other foreign investors.
That was the message brought by Daniel Bilak, the chief adviser on investment of Ukrainian Prime Minister Volodymyr Groysman, during his visit to the U.S. capital at the end of February.
The Canadian-Ukrainian Bilak was appointed in November 2016 as Groysman’s adviser and as chairman of the supervisory board of UkraineInvest, Ukraine’s investment promotion office. UkraineInvest’s mission is to encourage foreign investors to bring their money and know-how into Ukraine.
The U.S.-Ukraine Business Council and its president, Morgan Williams, provided Bilak’s main platform for publicizing UkraineInvest’s work at a working lunch at the central D.C. offices of law firm McCarter and English. One of the firm’s partners, leading American-Ukrainian lawyer Myron Rabij, welcomed Bilak to Washington and emphasized how important his work was for Ukraine.
Bilak said that when he was appointed he decided not to do any “roadshows” about UkraineInvest, because there was little to boast about at that time. But that has changed, he said.
“We’ve completely changed the nature of the dialogue and relationship between the government and business – the business community as a whole and foreign investors in particular,” Bilak said of his achievements.
Bilak said his long previous experience in business – advising major international and Ukrainian clients in the energy, agribusiness, infrastructure and technology sectors about investment and regulatory issues – made him conclude he had to address the problems of existing foreign investors before seeking fresh ones.
Evangelizing for Ukraine
“We had to turn our existing investors into apostles in Ukraine to go abroad and evangelize about the opportunities that we have,” he said.
Bilak said that he was aware there were many problems facing investors. He said that the Ukrainian government wanted to improve the climate for business, but had limited time and resources to deal with a plethora of issues.
He said UkraineInvest is unable to change laws, but can help to navigate the regulatory field with many of what he called “systemic problems,” such as corrupt practices by tax and law enforcement officials – who have seen foreign businesses as easy prey – and other malfeasance and incompetence.
He believes that although many problems still exist, a lot has been achieved: “There’s probably no other country in the world that has done more to transform its society and its economy in this period of time than Ukraine.”
He said that one of the biggest remaining problems was corruption, but that significant measures had been taken in government institutions to curb it and provide a better environment for business: “This sort of fighting corruption is actually very simple – you shine light in dark corners. Corruption does not fester when there’s lots of light being shone on what is happening.”
He cited the ProZorro computerized state procurement system, which decides between bids for government contracts, automated value-added tax reimbursements, and the e-data systems in the Ministry of Finance as examples of relatively simple methods that have proved effective in disabling previously rampant human-driven corruption.
Bilak said that apart from making the business environment more attractive for foreign investors, the measures have saved the Ukrainian treasury $6 billion – six percent of Ukraine’s gross domestic products.
Corruption bottlenecks
By working to address the “bottlenecks” and obstructions caused by systemic problems, including corruption, he said UkraineInvest had contributed to “unlocking $1 billion in fresh investment between 2017 and 2018.”
However, he said unacceptable levels of corruption still existed in areas such as the customs services and ports, and that vested interests still “have their tentacles in various parts of the economy.”
But he said he believed there was diminishing scope for a small number of oligarchs to hold sway over a vast proportion of the Ukrainian economy – one oligarch purportedly controlled 21 percent of the country’s GDP in 2013.
Bilak, a Canadian lawyer who has made Ukraine his home for 25 years, previously served as a senior United Nations Development Program expert advising the Ukrainian government on the rule of law, anti-corruption and regulatory issues.
Bilak counts as among the big successes achieved while he has been with UkraineInvest the decision by American-Dutch sports manufacturer Head to open a large manufacturing plant in Vinnytsia, a city of 370,000 people located 267 kilometers southeast of Kyiv, and for U.S. engineering giant General Electric to sign a far-ranging deal with Ukraine’s state Ukrzalyznytsia’s rail company.
Bilak said he had come to the United States and would be traveling to other countries to reach out to businesses and tell them about the many improvements achieved in the last two years. He said he was meeting with U.S. State Department and Commerce Department officials during his trip, and following up on introductions to potential investors at the U.S. Ukraine Business Council meeting and at a private dinner held by the organization.
