Ukraine

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8:27 AM Friday, December 15, 2017
UBJ.am - Friday, December 8
Chinese-owned Ukrainian bank to finance two-way trade and investment; Rada draws ire of Western reform backers; Black Sea port volumes up;
image/svg+xml Kyiv Lutsk Rivne Zhytomyr Lviv Ternopil Khmelnytskyi Uzhgorod Chernivtsi Vinnytsia Chernigiv Sumy Kharkiv Poltava Cherkasy Kirovohrad Lugansk Dnipropetrovsk Donetsk Zaporizhzhia Mykolaiv Odesa Kherson Simferopol Sevastopol Ivano- Frankivsk
  • US-based AGCO Corporation has decided to expand its line of agricultural machinery in Ukraine, selling Finnish-made Valtra tractors in addition to its Fendt line of tractors. Anton Kostyrko, marketing director of AGCO Eastern Europe told Interfax that this year Ukraine’s market of imported tractors has grown by 17% compared to 2016.
  • A "Buy Ukrainian, Pay Ukrainians" bill violates Ukraine’s free trade agreement with the EU, Maxim Nefedov, first deputy minister of Economic Development and Trade, writes on his Facebook page. As approved in its first reading by the Rada, the bill adds 23 new documents to the procurement process and introduce a local component requirement of at least 20% to tender offers. The EU has sent a letter of complaint.
  • In the Rada’s tug of war over corruption, lawmakers backed away Thursday from a draft law that would have gutted the independence of new anti-corruption agencies. Then, they voted to dismiss Yegor Sobolev, the EU-backed head of parliament's anti-graft committee. Earlier, the EU, the US, the UK, World Bank and the IMF all warned authorities to protect the new anti-graft agency, known as NABU. Business polls repeatedly say that Ukraine’s tolerance of corruption is a big turnoff for foreign investors.
  • Perhaps emboldening politicians, Ukraine has paid $270 million more to the IMF this year than it has received from it, according to Novoe Vremya news site. After a $169 million transfer last Friday to the IMF, Ukraine has transferred a total of $1.27 billion to the IMF this year. With the reform program on a slow track, Ukraine has received from the IMF this year only one tranche, for $1 billion.
  • Ukraine will spend almost 25 % more for defense in 2018 than last year, according to the draft national budget. Of the $3.2 billion, about one fifth will be for arms and military equipment, up 34% over last year. Western military analysts have say this part of the budget is largely a black box, creating opportunities for corruption.
  • The Rada narrowly voted Thursday to extend a ban on farm land sales for one more year. The bill was backed by 236 lawmakers, just over the 226 needed to pass. Since 2001, Ukraine’s more than 40 million hectares of farmland cannot be bought or sold, only leased. This turns off foreign investment, severely restricts bank financing for farming, and keeps yields low. During 2018, the government promises to create conditions for a land market, including a modernized land cadaster and rules on who can and who cannot buy Ukrainian farm land.
  • Sugar exports are up 64% through November, totaling 551,000 tons, according to Ukrtsukor, the sugar producer association. The main markets in November are Turkmenistan -14%; Sri Lanka -14%; Switzerland -12%; Azerbaijan – 11%; and Turkey -10%.
  • Ukraine’s three most modern Black Sea ports handle more cargo, while Odesa’s volume shrinks. At Yuzhny, the nation’s busiest port, cargo through November is up 7% to 39 million tons. At Mykolaiv, cargo is up 5% to 21 million tons. At Chornomorsk, cargo is up 10.6% to 16 million tons. While, at Odesa, cargo is down 5% to 22 million tons.
  • Construction costs in Ukraine rose 12.9% in 10 months, slightly outpacing general inflation which is expected to end the year at 14%. The price rises came in an environment where construction activity was up by 23.4% through October, compared to the first 10 months of last year. Last year, construction costs rose by 9.2% compared to 2015.
  • The Rada’s Energy Committee of recommends that lawmakers vote for two draft bills to resolve the regulatory vacuum due to a lack of quorum at the National Energy Regulatory Commission. With the laws, the Commission’s work on setting power rates will be held up for at least three months. Concorde Capital’s Alexander Paraschiy writes that if the NERC is not unblocked by Dec. 21, DTEK Energy, Ukraine’s leading coal and power holding, stands to lose $100 million.
  • DTEK Energy is boosting Ukrainian coal production to compensate for the loss last spring of mines in separatist-controlled Donbas, Concorde Capital reports. With Ukraine’s largest coal producer is expected to produce 23 million tons of coal this year, it will largely make up for the loss of the mines that produced 8 million metric tons last year.
  • Naftogaz plans to invest $ 5 billion in gas extraction, Yuri Vitrenko, director of business development for the state company, tells UNN. Through October, Naftogaz gas production grew by 2.8% to 13.6 billion cubic meters. Private companies saw their gas production increase by 8.7% to 3.7 billion cubic meters. Through October, Ukraine’s gas imports jumped by 50%, hitting 11.8 billion cubic meters. Prime Minister Groysman has set a 3-year goal for Ukraine to become self sufficient in gas.
  • After Chinese Vice Premier Ma Kai visited Antonov State Enterprise near Kyiv, Chinese officials expressed interest in buying Ukrainian aircraft, according to Ukraine’s Economic Development and Trade Ministry. "China is interested in cooperation on the purchase of airplanes and their joint production using materials and spare parts produced in China," the ministry press service said. "The Chinese side…declared its readiness to work closely with Ukraine in the field of aircraft construction."
  • China’s largest commodity exchange, Bohai, plans to use its new acquisition, the Ukrainian Bank for Reconstruction and Development, to service trade and investment between China and Ukraine. At a press conference in Kyiv Thursday, Bohai CEO Yang Dong Sheng said the Bank will provide a full range of financial services for Ukrainian companies, government agencies and joint organizations of Ukraine and China. Predicting growth, he said: "The UBRD should become a platform for organizing cooperation in the investment sphere between Ukraine and China.”
  • Sales of used imported cars have almost quadrupled this year, hitting 50,300 by the end of November. By contrast, new car sales are by 26% to 73,100. Behind the jumped in imports of used cars is a big cut in import taxes put in place in August of last year.
  • Starting in January, Ukraine’s passport printing capacity at the state printing company will double, reports the parent ministry, Ministry of Economic Development. The difference will be a $2 million investment in equipment for printing of biometric passports.
  • Starting Monday, long distance Russian passenger trains will run on new tracks, bypassing eastern Ukraine, RIA Novosti reports. After Russia’s military attacks on eastern Ukraine in 2014, Russian Railways started to build a double-track electrified bypass between Zhuravka, in Voronezh Region, and Millerovo, in Rostov Region. Adding at least one hour to Moscow-Sochi trains, the new 122 km detour line replaces a 20 km shortcut through Ukraine.
  • Yanair will start weekly flights next summer between Odesa and Barcelona-El Prat Airport, Spain’s second largest airport, after Madrid. Yanair, a low cost airline based in Kyiv, largely flies to Black Sea and Mediterranean destinations. Four airlines offer flights from Kyiv to Barcelona – Azur, UIA, Vueling and Windrose. Most flights from Odesa go south. None go further west than Vienna.

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UBJ a.m. is reported by UBJ Editor in Chief James Brooke, a former New York Times foreign correspondent and Bloomberg Moscow bureau chief. For comments and story tips, Brooke is reachable at james.brooke@theubj.com
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