Investment online forum “TAVRIAN ONLINE HORIZONS” has been successfully held on April 28, 2020

Kherson Regional State Administration has initiated holding of the investment online forum “TAVRIAN ONLINE HORIZONS” on April 28, 2020. The purpose of the event was to mobilize knowledge and experience of representatives of central executive and legislative bodies, organizations, experts from different states as well as sharing thoughts on economic effects caused by COVID-19 spread in Ukraine and other countries.

Considering current quarantine restrictions, it is the first time for the last 10 years when the international economic forum “Tavrian Horizons” was held remotely.

Yuriy HUSYEV, the Head of Kherson RSA, traditionally opened the forum. His welcome speech was dedicated to necessity of clear anti-crisis plan development and generation of new ideas on overcoming of existing and possible negative economic consequences affecting local business, the regional economy and Ukrainian economy as whole.

Mr. Husyev stressed that we have to be ready to intensify development and implementation of projects and programs that will guarantee fast and efficient recovery of the regional and state economy after the quarantine.

Minister of for Communities and Territories Development of Ukraine Oleksiy CHERNYSHOV paid attention to inevitability of economic consequences and importance of its modeling, development of anti-crisis programs. Thus, Ukrainian government approved a program for SME support. It was allocated UAH 6 bln within the mentioned program. A part of the sum will be disbursed for salary payment for workers and employees with shortened working time in regard to the quarantine measures. In addition, a range of other SME support programs were developed including loan programs. Ukrainian government is also preparing a program which will provide fast creation of new jobs in various sectors for unemployed persons after the quarantine period.

The Minister touched upon development of Kherson region. Mr. Chernyshov stressed that the region is one of the real “magnet” of Ukraine. It has determined development priorities in many spheres and successfully implemented projects. The speaker is confident that Kherson region will be among top 3 Ukrainian attractive regions for investors.

Levan VARSHALOMIDZE, the Secretary of the National Investment Council of Ukraine, expressed his view of quarantine and imposed restrictions. The current situation should be considered as a chance and an additional opportunity for Ukrainian economy growth.

Ukraine attracts attention of international corporations and has support of international organizations.

For its part, the National Investment Council of Ukraine is ready to assist and provide support for investment projects implementation in Kherson region.

Mr. Varshalomidze considers that the real value of investments is determined not by the amount of investments but the quantity of created jobs. Kherson region has а huge investment potential and may become an example for other Ukrainian regions in investment attraction.

Chairperson of the Verkhovna Rada of Ukraine Committee on Economic Development Dmytro NATALUKHA shared his own view of key trends in the world economy and politics. Repatriation of industrial manufacturing is one of them.

The People’s Deputy is sure that Ukraine has a good opportunity to become European hub and certain advantages for economical growth in current situation. Given the high competitiveness of Ukraine in the IT sector, it is advisable to increase and develop information infrastructure, which will improve the economic situation in the country.

The crisis caused by rapid spread of coronavirus showed us low effectiveness of international institutions in such periods. That is why each country has to make every effort to ensure its own stability under all conditions.

Therefore, the priority tasks of the state during the crisis are to ensure the rapid issuance of money in the required amount by national banks, minimize the number of bankruptcies and support the national health care system.

In Mr. Natalukha’s opinion, Ukraine should try to strengthen its position in new economic niches and sectors, support exports as much as possible, create suitable conditions for establishing and development of processing enterprises, ensure preservation of existing and stimulate creation of new jobs. To achieve the above, Ukrainian government and business community must use new opportunities for improving of domestic economy in due time.

The nest speaker Dmytro SENNYCHENKO, Head of the State Property Fund of Ukraine, presented changes in privatization process, in particular transparent useful toolkit available at the official web site of the Fund.

Mr. Sennychenko emphasized that the main purpose in privatization process is finding a competent investor and an effective owner as well as transferring excessive state assets as objects of profitable investments to private business.

In general, government has already transferred 530 enterprises to the State Property Fund of Ukraine for privatization.

During his speech, Mr. Sennychenko presented an “investment menu” with state-owned objects which will be auctioned in Kherson region. Among this objects are the following enterprises:

– the Single Property Complex “Skadovsk seaport”, Ukrainian state-owned enterprise, is a commercial sea port situated on the Northern coast of Dzharylgach Bay of the Black Sea (Skadovsk district of Kherson region);

– OJSC “Kherson cotton plant” which was the largest European producer of cotton fabrics. In February 2011 the enterprise stopped its manufacturing activity;

– PJSC “Kherson plant “Sudmash” which was established on the basis of machine-building shops of Kherson shipbuilding plant, equipped with a modern machine park. It is the leading enterprise in production of hydraulic cylinders, ship fittings and ship equipment;

– separate property that may be interesting for small-sized business;

– objects for social and cultural purposes, etc.

Under the quarantine, preparation of projects for privatization is not stopped, inasmuch as the main aim of the privatization process is to attract investors which will help overcome the crisis.

Taras KACHKA, Deputy Minister for Development of Economy, Trade and Agriculture of Ukraine, noted that economic development under the quarantine is a serious challenge today.

The speaker sees the main recipe for overcoming the crisis in achieving a balance between supporting economic activity and protecting the health of the population. The key to success is coordinated actions of government and business aimed at well-being of Ukrainian society. Some regions of Ukraine has already demonstrated such coordinated cooperation between representatives of the state authorities, local self-government bodies and business.

Business vision and expectations were presented by Gennadiy CHYZHYKOV, President of Ukrainian Chamber of Commerce and Industry.

It is necessary to adapt to unusual conditions for business operation under the quarantine. Ukrainian Chamber of Commerce and Industry gathers weekly information from the regions and sends its propositions on SME support measures to the Cabinet of Ministers of Ukraine.

UCCI has defined the following priorities:

– support for domestic producer;

– attraction of direct investments;

– saving jobs and creation new ones;

– search for new markets for Ukrainian exporters and creation of favorable conditions for their operation.

It is important to find ways for efficient recovery of Ukrainian business after the end of the quarantine. In this regard, the speaker proposed to empower local authorities in business support till 2021.

Mr. Chyzhykov informed about the foreign countries’ experience showing how authority can introduce extremely effective indirect mechanisms for business support by changing local tax rates.

Also the speaker stressed that Kherson region has a significant investment potential in agrarian, energy and IT sectors. It is a driver for green business development.

President of the Association of Taxpayers of Ukraine, Vice-President of Taxpayers Association of Europe, Extraordinary and Plenipotentiary Ambassador Grigol KATAMADZE reminded about the last big meeting of authority representatives with business at the forum LEVEL UP UKRAINE 2020 in Kyiv organized by the Association of Taxpayers of Ukraine (ATU). Many of participants of the forum held in Kyiv took part in investment online forum “TAVRIAN ONLINE HORIZONS”. The forum LEVEL UP UKRAINE 2020 gathered more than 1000 representatives of Ukrainian, European and American business. All propositions of foreign partners were summarized and send to the heads of all regional state administrations with a request to submit their own investment projects. Kherson Regional State Administration was one of the first which provided a package of investment propositions. Grigol Katamadze assured that received propositions will be sent to Europe and the USA immediately after the quarantine.

The second part of his speech was dedicated to reforming the Ukrainian tax, law enforcement and judicial systems and tax legislation. The negative effects of the business climate will only intensify against the background of the crisis caused by the coronavirus spread.

Thus, the current burden on the payroll of 41.5% is a better option than 65% as it was a couple of years ago. But, according to the speaker, Ukrainian business expected bigger changes from its Government.

In this context, the ATU proposes to combine the single social fees and personal income tax, set it at the rate of 32% with a gradual reduction to 20% in next 3 years. During these three years, it is proposed to carry out fundamental systemic changes in tax legislation and Ukrainian tax system, adopt a new Tax Code for Development and establish a moratorium on its changes for 3 years.

Also Mr. Katamadze paid attention to Memorandum between Ukrainian Business Council and faction of the political party “Servant of the People” concluded on July 19, 2019. Today the Memorandum is implemented only for 20%. In this connection, he called for joint efforts to persuade the authorities to accept all propositions of Ukrainian business as soon as possible.

The speaker added that today it is extremely important to reduce the tax burden on entrepreneurs and investors as well as create start platforms for business. Mr. Katamadze convinced that the pandemic reminded us about the need to unite efforts, not to criticize or substitute each other, but to complement and support each other for achieving desired result.

The next question of the forum was PPP development and prospects for infrastructure projects implementation. Vision of the Ministry of Infrastructure of Ukraine was presented by Oleg NOSOV, Head of Privatization and Public Private Partnership Department of State Property Management of the Ministry. He informed about completion of two auctions related to concession of ports “Olvia” and “Kherson” under the quarantine. Also the Ministry formed new concession projects list consisiting of more than 20 infrastructure objects.

Mr. Nosov emphasized that the Ministry of Infrastructure of Ukraine fully supports implementation of PPP projects and hopes for unblocking the lawsuit on the Kherson seaport in mid-May and finalize the signing of the concession agreement.

 

David BEZHUASHVILI, Chairman of the Board of Georgian Industrial Group, also expressed a strong position on the completion of the procedure for concluding a concession agreement.

Mr. Bezhuashvili considers that, in order to overcome the crisis, Ukraine urgently needs to minimize bureaucracy in central authorities, reform the judiciary and the law enforcement system, and take a number of measures encouraging investors to invest in the Ukrainian economy.

The speaker noted that Ukraine does have many promising state-owned facilities to which the PPP mechanism can be applied.

Business sees the current government’s intention to cooperate and implement reforms. Therefore, the GIG is ready to cooperate with the State Property Fund of Ukraine in the future.

 

The Head of the Rivne Regional State Administration Vitaliy KOVAL shared an experience in introduction of measures to counteract the virus spread at the regional level.

The Head of the Rivne RSA paid special attention to importance of allocation production capacities on Ukrainian territory, taking into account quantity of new jobs that will reduce the labor outflow.

Each region should move to a cluster economy built on the local sphere basis, which is the highest priority for the certain region and will launch a fully integrated processing chain.

Extraordinary and Plenipotentiary Ambassador of Ukraine to the Republic of Lithuania Volodymyr YATSENKIVSKYI told about the Lithuanian experience in combating the spread of coronavirus disease and its consequences.

From March 16 to May 11, 2020, a national quarantine was declared in the Republic of Lithuania. Lithuanian authorities have taken a number of steps to overcome the negative social and economic consequences of the crisis. Thus, on March 16, 2020, Lithuanian government approved a plan for stimulating the domestic economy affected by coronavirus prevention measures. It envisages providing a state aid to companies for covering the downtime costs for up to 3 months, payment of EUR 250 for self-employment persons, liquidity support for large and medium-sized enterprises, providing compensation to SMEs affected by the consequences of pandemic counteracting, compensation of loan interest rates on loans and other.

Lithuanian government also developed support programs for municipalities financing of which is planned to be made from Lithuanian state budget for 2021.

According to the First Secretary of the Embassy of Ukraine in the People’s Republic of China Oleksandr SERDECHNUY, China suffered significant economic losses in the first quarter of 2020, in particular in the public catering and foreign trade sector.

In order to minimize the negative consequences, Chinese government has identified three main tasks:

– return of labour migrants;

– creation of appropriate working conditions under the quarantine;

– providing enterprises with working capital.

Within the implementation of the tasks, 350 thousand companies received soft loans. The implementation of infrastructure projects in the country is rapidly recovering.

Today, the governments of both countries are considering the Program of bilateral cooperation between Ukraine and the People’s Republic of China for the period up to 2025 in the framework of the joint construction of the economic belt “Silk Road” and the sea “Silk Road” of the 21st century. The document envisages the use of Ukraine’s infrastructural, transport and logistics capabilities, increase of import of Ukrainian agricultural products to China, development of the Ukrainian tourism and industrial sectors and processing industry.

Within the framework of the second thematic block of the forum, Mykola SOLSKYI, Chairperson of the Verkhovna Rada of Ukraine Committee on Agrarian and Land Policy, gave a comment on draft laws, that has been submitted to the President of Ukraine for his signature, regulating the main aspects related to land reform (in particular, the procedure for transferring land, the priority right of land redemption, changing the land purpose, etc.).

 

Oleksandr PALYVODA, Director of the Department of Agricultural Development and Irrigation of the Kherson RSA, acquainted the participants with prospects of the land market, which will be launched on July 01, 2021, for the agricultural sector of Kherson region. The biggest positive advantages for local farmers will be stimulation of irrigation development, soil fertility restoration and attraction of additional financial instruments.

load the presentation

Mykhaylo SOKOLOV, Deputy Chairman of the All-Ukrainian Agrarian Council, described the biggest issues for agricultural producers, in particular:

  • drought, which led to significant losses of winter wheat crops (the largest losses are observed in the Odessa and Kherson regions);
  • shadow land lease. As a result, the state budget does not receive taxes in the amount of about UAH 30 bln;
  • abolishment of “soy amendments”;
  • improving the monitoring system for risk assessment criteria.

Solving mentioned problems will help significantly increase productivity of the agricultural sector.

load the presentation

Svitlana FOMENKO, Acting Minister of Culture and Information Policy of Ukraine, began discussion on domestic tourism support. Ms. Svitlana noted that tourism sector is still developing in Ukraine, and therefore, the consequences of quarantine measures in Ukraine cause great losses.

For its part, the Ministry together with the profile committee of the Verkhovna Rada of Ukraine has developed a draft law No. 3377, which provides for the provision of tax benefits to the tourism business, in particular:

  • cancellation of the tourist tax by the end of 2020;
  • tax exemption for tourism services transactions from value added tax, land tax, single social fees.

In addition to tax benefits, targeted help should be provided to national tour operators.

The discussion on Ukrainian tourism support and development was continued by the Head of the State Agency for Tourism Development of Ukraine Maryana OLESKIV. Today, one of the main tasks of the Agency is to stimulate domestic and inbound tourism development, constant support the demand for travel in Ukraine, as well as travel culture formation within the project “Is this Ukraine?”

The institution will cooperate with all Ukrainian regions in order to implement defined tasks and address the issues that hinder the tourism sector development.

Ivan LIPTUGA, President of the National Tourist Organization of Ukraine, was the last speaker of the thematic panel.

Mr. Liptuga considers that the main directions of tourism development in Ukraine are the following:

– creation of new tourism products;

– improving the tourism service quality;

– awareness that the tourism sector is one of the highest priorities for the national economy and, accordingly, needs more attention and support from the state;

– tourism legislation improvement in accordance to current reality of tourism business operation.

Undoubtedly, the global crisis has negative consequences for Ukraine’s economy. However, after the end of the quarantine, Ukrainian tourism will have a unique opportunity to meet the needs of domestic tourists and foreign tourists possibly due to the unique nature, cultural heritage and low prices for tourist services.

The Head of Kherson RSA addressed Dhruba Charan PANDA, the Chairman of the Board of Directors of “Delta Wilmar CIS” LLC, and expressed hope for strengthening cooperation in expanding the capacities of PJSC CHUMAK in accordance to the memorandum of cooperation. Let us remind that mentioned memorandum was concluded within the framework of last Kherson International Economic Forum “Tavrian Horizons” held in November 2019.

 

Based on the results of the forum, propositions aimed at stimulating priority economic sectors, SME support and corresponding collaboration with international financial institutions will be developed for further submission to the central authorities.