This is a curated list of the biggest economic news in Ukraine for the past week.
This week, Ukraine Nu interviewed Volvo about the Ukrainian truck market. We took a broader look at the pandemic, we touched on global supply chains and we wrote about the coming meeting between Joe Biden and Volodymyr Zelensky. We also wrote about the week in politics and then we went to Shevchenko Park to play chess.
Let us start with the absolute biggest news of the week. The Ukrainian president Volodymyr Zelensky has submitted a new bill to counter “oligarchization” in Ukraine. Oligarchs hold a lot of power in Ukraine – both financially and politically. But the new bill is aiming to create a list of oligarchs and remove their political influence.
If the bill passes, politicians meeting with oligarchs have to declare it publicly. More importantly the oligarchs on the list will not be allowed to donate – directly or indirectly – to political parties. Many have criticized the bill, especially the opposition parties of Medvedchuk and Poroshenko who are worried that they might be targeted by the bill.
Volvo: The market can grow five to seven times
Volvo Trucks has been in Ukraine for 25 years and has around 100 people working at its headquarters in Kyiv, including technicians and mechanics. They work with seven other private dealers, who have a contract with Volvo Trucks Ukraine, allowing them to service and sell Volvo products around Ukraine.
Yevgeniy says that Volvo Trucks Ukraine had around 19 percent of the market of Western trucks being sold in Ukraine last year. The goal is to reach 20 percent this year and maintain it for the years to come. Yevgeniy points out that Volvo Trucks Ukraine had experienced significant growth since 2017, when the market share was only 13 percent.
“Around 2,500 new trucks are sold in Ukraine every year by Western companies,” says Yevgeniy, “According to statistics in Sweden, that number should be around 20,000 units in a country the size of Ukraine so the market can grow five to seven times.”
Read the full interview with Ivanov Yevgeniy, commercial director Volvo Trucks Ukraine here:
Biden invites Zelensky to Washington
In a little week, US President Joe Biden is meeting with Vladimir Putin – probably to discuss Ukraine among other topics. However, Zelensky and Biden have not met before the meeting, making some people fear that Biden and Zelensky will decide the future of Ukraine next week.
On a phone call Biden invited Zelensky to meet him in The White House after Biden has concluded his eurotrip this summer.
International criticism of reforms
Zelensky’s two judicial reform bills have received some criticism at home and abroad. Now Gianni Buquicchio, the head of the European Commission for Democracy through Law commonly known as the Venice Commission, has criticized Ukraine’s two judicial reform bills.
“The bill (on the High Qualification Commission) does not meet the Venice Commission recommendations and we do not support it,” he said. “The High Council of Justice needs to be vetted before it is entrusted with the setting up of the High Qualification Commission. This is imperative or judicial reform will be doomed,” Buquicchio said.
To sum it up, the fear is that in one bill, a single judge is enough to keep good candidates from becoming judges, while in the other bill, a single judge is enough to keep corrupt judges at the helm.
Read more here:
Supply chains are threatening to break
Last week, the Danish newspaper Jyllands-Posten brought two articles spanning over two pages. In them, they concluded that the supply chains of some of the larger Danish corporations were under so much pressure, that it would damage them financially this year.
“The third wave of the corona virus is hitting the logistic chains. The latest up-tick in rates in May is yet another signal of the growing queueing in the chain. So far, the demand is so strong, that queueing does not look like it is going to get resolved anytime soon. It is only going to get worse,” says Peter Sand, who is a chief analyst with Bimco, a shipping lobby organization.
You can read more here:
Ukraine sells of the first prison
The Ukrainian state has had success with selling off the first prison in a long list of old prisons, that are not living up to modern prison standards. The prison that was sold was closed back in 2018, and the expected price at the auction was 4.8 million dollars, but competitive bidders made the price rise to 13.6 million dollars. The company Development Engineering Service, an architectural company in Lviv, won the auction and bought the prison in Lviv.
The pandemic looks persistent, viewed from the helicopter
In Foreign Affairs, several influential epidemiologists are writing a rather depressing forecast. Their main message is, that the pandemic is far from over – the whole world is still under direct threat of COVID19. Possibly, the threat is even worse now than in the end of 2019, they argue.
“It is time to say it out loud: the virus behind the COVID-19 pandemic is not going away. SARS-CoV-2 cannot be eradicated, since it is already growing in more than a dozen different animal species. Among humans, global herd immunity, once promoted as a singular solution, is unreachable,” they write:
“As a result, the world will not reach the point where enough people are immune to stop the virus’s spread before the emergence of dangerous variants – ones that are more transmissible, vaccine resistant, and even able to evade current diagnostic tests. Such super variants could bring the world back to square one. It might be 2020 all over again.”
Ukraine Nu summarized the bleak outlook of the pandemic and tried to see it through Ukrainian lenses. This can be read here:
A look into the price development in office space
Despite the pandemic, 16 new business centers are planned to be built in Kyiv by the end of next year. Rent prices dropped at the beginning of the pandemic, but that is now changing again. See a rough estimate of prices in this article.
The Rada passes ‘Google Tax’
The Verkhovna Rada has passed a final reading of a new tax regulation that imposes VAT on companies – international companies as well – who operate in the media space in Ukraine and earn money on online advertising.
“We are introducing an additional norm, where we exempt all educational services from taxation. At the same time, both those that are provided in electronic form in Ukraine and those that are provided abroad,” said Danylo Hetmantsev, the Head of the Verkhovna Rada Committee on Finance, Tax and Costums Policy.
Some have been critical of the bill, stating that providers of all sorts would increase prices for the users. One of them, according to Interfax, is Oles Bidnoshyia, a lawyer at Avellum, who said the tax would increase consumer prices by 20 percent.
Finally, it’s chess season
It is Summer again and the chess players have returned to Shevchenko Park in the heart of Kyiv. Ukraine Nu went there, lost a game, got home and wrote a piece about the chess culture in Shevchenko Park and the history of Soviet Union chess.