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Tuesday June 12

First Year of Visa Free: Travel Jumps to EU…Norwegians Start Big Solar Project in Cherkasy…Amadeus Sets up Its Largest Europe Call Center -- in Kyiv…New Chinese-Georgian Airline Starts Flying to Kharkiv
James Brooke
by James Brooke
UBN Morning News is reported and written by James Brooke, a former New York Times foreign correspondent and Bloomberg Moscow Bureau Chief

In the first year of the visa-free regime with the EU, border crossings by Ukrainians to the EU jumped by 15% to 20.3 million, reports Oleg Slobodyan, spokesman for Ukraine’s Border Guard Service. Almost one quarter of crossings were with the new biometric passports. In only 3% of the crossings – 555,000 – Ukrainians tested the new regime by entering the EU without a visa.

Visa free has been accompanied by a dramatic surge in east-west travel links, the Infrastructure Ministry reports. The number of passengers taking trains to the EU exploded last year, increasing 5.5 times, to over 200,000. With trains often running at capacity, Ukrzaliznytsia is launching two new EU bound trains in coming months, one to Hungary and one to Romania. Since 2015, the number of EU cities served by flights on discount airlines from Ukraine has more than doubled, hitting 38. With Wizz Air adding new destinations this summer and Ryanair starting Ukraine service this fall, air traffic to the EU is to keep expanding.

Behind the numbers, there is a marked psychological shift westward, argues the EU Mission to Kyiv. Ukrainians view visa-free travel as the main political event of 2017, according to a public opinion poll by the Ilko Kucheriv Democratic Initiatives Foundation and the Razumkov Center. Myslovo, the dictionary of modern Ukrainian language and slang, chose “visa-free” as the word of 2017. More than 575,000 people have visited the Open Europe information website which explains rules and opportunities for visa-free travel and terms of stay in the EU.

Visa free is conditioned on Kyiv continuing to make free market changes and pushing through anti-corruption measures,  Hugues Mingarelli, EU ambassador to Ukraine, reminded politicians Monday. He said: “While overall Ukrainian citizens are respecting the rules of the visa free regime, it is important that Ukraine continues the implementation of all benchmarks set out in their visa-liberalization process.”

Norway’s Scatec Solar ASA plans to start building later this year two solar projects totaling 83 MW and costing EUR 85 million in Cherkasy region, about 200 km south of Kyiv. The EBRD is providing initial finance and Oslo-based Scatec is seeking additional equity investors. “We are very enthusiastic about securing our first two projects in Ukraine,” CEO Raymond Carlsen says in a press release. Looking to commissioning the two projects next year, he adds: “We see it as a first step to develop a larger portfolio of solar power plants in the country.”

Talking to the Financial Times, Oksana Markarova, the new Acting Finance Minister, says she expects the IMF to allocate the next loan tranche to Ukraine this autumn. “Negotiations on gas tariffs and energy market reforms are now under way and we hope to conclude them soon and expect to get the IMF tranche in the autumn,” she told the London daily.  “The faster we get it, the better . . it proves that we are progressing on our reform agenda [and is] a very good signal for investors.”

Central bank head Yakiv Smoliy predicts that Ukraine will receive its fifth tranche of IMF money this fall. In an interview with Zn.ua, the Governor of the National Bank of Ukraine bases his confidence on last week’s passage of a law creating an anti-corruption court and progress ingas price  talks. Expected to be around $1 billion, the IMF money would unlock additional macro-financial aid from the EU and the World Bank.

The National Bank of Ukraine has filed lawsuits in Swiss and Ukrainian courts against Ihor Kolomoisky, seeking recovery of $385 million from five bad loans made by PrivatBank to Kolomoisky. Until the bank’s nationalization in 2016, Kolomoisky was the bank’s largest shareholder. Kolomoisky has launched lawsuits to challenge the nationalization.

Integral-Bud, one of Kyiv’s largest apartment construction companies, plans to commission almost 50% more apartments this year, hitting 250,000 square meters, Hanna Layevska, the company’s commercial director tells Interfax-Ukraine. Depending on the size, this would be 5,000 new apartments. Last year, real estate professionals estimated that there were about 65,000 unsold new apartments in Kyiv and its suburbs.

in collaboration with CMS Cameron McKenna Nabarro Olswang Ukraine and UBN,  we have created the "Investing and Doing Business in Ukraine 2020 guide”.

The Ukrainian Exchange has drawn up requirements for new software supporting exchange transactions, including clearing of derivatives. Last month, Ukraine’s government expanded its sanctions list, ordering all the Kyiv-based stock exchanges to replace their Russian-made trading software.

A Chinese food safety team is in Ukraine until Friday, studying Ukraine’s cultivation, storage and packaging of sweet cherries. One of the world’s top 10 cherry growers, Ukraine produces 72,600 tons a year, about 10 cherries for each Chinese. With the list of food products approved for export to China growing, Ukraine sold $1 billion worth of food to China last year, 12 times higher the level of 2012.

The average farm salary in Ukraine was $225 a month during the first quarter of 2018, 21.5% higher than the same time last year. With more and more farm labor migrating to Poland for temporary or full time jobs, farm wages are rising. The leading regions are in Western and Central Ukraine: Ivano-Frankivsk up 41%;  Ternopil up 39%; Chernivtsi up 35%; Cherkasy up 35%; and Zhytomyr up 35%.

In the latest industrial company to improve working conditions to dissuade workers from migrating to the EU, Zaporozhye Iron and Steel Works is investing $4 million to install air conditioners in work areas, cafeterias and bath rooms.

Amadeus IT Group, the Spanish-based IT supplier to the hotel and airline industry, has opened in Kyiv its largest support center in Europe. Tasked with supporting Russian-speaking clients of the multinational giant, the Kyiv call center handles about 250 phone calls a day and numerous email queries, Interfax-Ukraine reports. Located in Podil, the center is open 14 hours a day, Monday to Saturday.

Yanair started direct flights between Lviv and Batumi last Friday. On June 19, the Kyiv-based airline will increase frequencies to two times a week, Tuesdays and Fridays.

Myway, a new Chinese-Georgian airline, starts flights tomorrow between Tbilisi and Kharkiv and on Wednesday between Batumi and Kharkiv. Launched last month, Myway plans to fly to Kyiv by the end of the year. Based in Tbilisi, Myway will fly Boeing 737-800s on its Ukraine routes. Myway is owned by Hualing Group, of Urumqi, China. Investing $500 million in Georgia over the last decade, Hualing now employs 3,000 people at eight Georgia projects, including one hotel in Tbilisi and one in Kutaisi.