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Extracts from Ukraine Business Journal

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    Wage remittances to Ukraine from labor migrants hit $11 billion last year, according to Ekateryna Rozhkova, first deputy head of the National Bank of Ukraine. Assuming this figure is accurate, it means that money sent home by Ukrainians working outside the country increased by 50% since the summer of 2017, when the EU adopted a no visa policy for 90-day stay stays by Ukrainians.
    Voters give President Poroshenko poor marks on the economy, according to a nationwide poll conducted in the second half of December for the International Republican Institute. With Poroshenko facing voters March 31 in a bid for a second term, he comes in third for Best for the economy, with about 8.5% approvals, half those of Yulia Tymoshenko, who leads in the poll preferences. Poroshenko comes in 6th place for Improving social protections of the poor and Fighting corruption in state bodies.
    Overall, public level of pessimism over the economy has changed little over the last four years.Asked if the country is going in the right direction, 70% said no the same as in July 2015. Asked about their household finances, 39% said they had improved or stayed the same virtually unchanged throughout 2018. Asked about joining the EU, 53% were in favor, little changed since March 2014. On joining the Moscow-led Eurasian Customs Union, 13% were in favor, virtually the same as the 14% registered in July 2015.
    Ukraines Air Boom Shows No Sign of Stopping:
    At Kyiv Boryspil, Ukraines busiest airport, Ryanair traffic will prompt the reopening this spring of a second passenger terminal, Terminal F. This month, Laudamotion, Ryanairs new Austrian unit, starts flights from Vienna. In April, Air Malta, which sells tickets through Ryanair, doubles its frequencies to Kyiv, to twice a week. Also in April, Ryan starts flights to Athens, Dublin, Manchester, Sofia, Paphos (Cyprus). In October, Ryanair starts flights to four German cities: Frankfurt-Hahn, Karlsruhe/Baden Baden, Nuremberg and Weeze (Dusseldorf). With this expansion, Ryanair will fly from Boryspil to 26 cities in 10 EU countries.
    Also from Boryspil, French airline Aigle Azur plans to fly three times a week to Paris Orly,starting April 18.
    Banned from Russian airspace, UIA looks south. In recent days, it has received authorization to fly to Addis Ababa, Ethiopia and to three cities in Saudi Arabia Riyadh, Damman and Jeddah. Handling about 500 flights a day, Addis Ababa is the home base for Ethiopian Airlines, a Star Alliance member.
    To the Balkans, Air Serbia starts flights from Boryspil to Belgrade on June 4. In May, Jonica wants to start Ukraines first flight to Tirana, Albania. Reports from Croatia indicate that flights from Kyiv will start this summer to the southern resort island of Bra.
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    From Kharkiv next month, Ernest Airlines starts regular flights to Rome and Milan-Malpensa and SkyUp to Tel Aviv. In May, Buta Airways starts flights to Baku. In September, Wizz Air starts flights to Krakow. A move is underway to name the city airport after Ilya Repin, the 19th century painter who was born in Chuhuiv, Kharkiv region.
    Odesa, the growth laggard of Ukraines top five airports, will see new flights this year. In May, flights start from Baku, on Buta Airways, Azerbaijans discount airline, and from Prague on Czech Airlines. On June 2, SkyUp starts flights from Kharkiv and Kyiv Sikorsky. The real game changer will be rebuilding the 2.8 km runway, a $130 million project. Infrastructure Minister Omelyan predicts the job will be finished this year. In advance, he predicts, Ryanair or Wizz Air will start EU flights to Odesa this summer.
    Southern Ukraines Kherson airport has the best growth prospects for a regional airport in 2019.After passenger traffic grew last year by 69%, to 106,000, airport officials released their development plan to the Center for Transportation Strategies. The airport lists 20 promising destinations and targets Belavia and five discount airlines: Wizz Air, Ryanair, Ernest, Pegasus and Moldovas FlyOne. In addition to talks with Wizz Air and Ryanair, work is underway to create a Kherson-based low cost carrier. Omelyan says four to five passenger jets would be based at the airport, the gateway to a dozen increasingly popular Black Sea resorts.
    Located 100 km northwest of the Kalanchak checkpoint with Crimea, Kherson hopes to draw passengers from the 2 million residents of the peninsula twice the population of Kherson region. Because of international sanctions, Crimea residents can fly from Simferopol only to Russia. Omelyan tells UBN: For Ukrainians in Crimea, Kherson is the best alternative.
    UIA will offer direct flights this summer from Chernivtsi to Milan-Bergamo. About 100,000 people in Chernivtsi region speak Romanian, a linguistic cousin of Italian. Last year, airport traffic jumped by 52%, to 73,000.
    Starting with the May 1 holidays, air travel further decentralizes when SkyUp, Ukraines new discount airline, starts charter service to Antalya, Turkey from seven regional airports: Chernivtsi, Kherson, Kriviy Rih, Mykolayiv, Poltava, Vinnytsia and Zaporizhia. Last year, Turkey hosted 1.35 million Ukrainian tourists, up 13% over 2017.
    To make air travel easier for the 8 million people living within a 300 km radius of Boryspil, a 16-platform bus station will be built this spring next to the Boryspil Express train terminus, at Terminal D. The shortest domestic flight to Boryspil is from Vinnytsia, 300 km to the southwest. The new train to the plane carried 100,000 passengers in its first two months. With this growth, Ukrzaliznytsia plans to expand the single car train to carry 1 million passengers this year.
    On the ground, Mukachevo will become Ukraines rail hub for trains to Hungary, Slovakia and Romania, predicts Minister Omelyan. As a legacy of the Austro-Hungarian empire, European gauge tracks reach Zakarpattias second largest city. Last fall, Hungarian Railways trains started traveling from Mukachevo to Zhony and Budapest. This year, dedicated trains are to start from Mukachevo to Koice, Slovakia. Next will be trains to Satu Mare, northern Romania. Express trains now run from Lviv, through the new Beskidy Tunnel, to Mukachevo in 3h45 min.
    With an expected surge in European tourism to Kyiv this spring and summer, the capital needs more hostels and two and three star hotels, Maryna Rymarenko, partner at DEOL partners, tells reporters. This segment can have a fast payback period from three to five years. However, it should be located in the center of the city, and the cost per square meter is growing. For high end hotels, low occupancies of about 45% depress room revenues and rule out new projects. She said: For the five-star hotels [the average room revenue] was $89, for the four-star hotels it was $70. Compared with other countries, it is too catastrophically lw to talk about the prospects of opening new facilities next year.
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      Tender terms for Ukraines first petroleum sharing agreements since 2012 will be released in two weeks, reports Drilling for web site. Companies will have until mid-May to submit applications. The 12 PSAs are expected to be valid for 50 years. To stimulate investment, winners will have to spend $16 to $36 million in the first five year on seismic research and exploration wells. Foreign companies are encouraged to bid.
      Separately, the government puts up for auction on March 6, 10 blocks for production under a royalty formula. A second auction, of seven blocks, will be auctioned on April 29. Oleh Kirilyuk, director of Ukraines Geological and Mineral Service, described these seven blocks last week in London as more than 2 thousand square kilometers, {with] the estimated resources of more than 2 billion cubic meters of gas. By the end of this year, government plans to auction off rights to 30 onshore blocks. Foreign companies can participate through Ukraine subsidiaries.
      Bulgaria has pledged to build a new 1.4 billion pipeline to pump Russian gas from Turkey to Serbia. Last week, Gazprom, Bulgaria's Bulgargaz, and Switzerlands MET signed contracts for the pipeline, a northern extension to TurkStream. TurkStream and Nord Stream 2 are two bypass pipelines built from Russia around Ukraine.
      Russias new bypass pipelines will cut gas flows through Ukraine in half, calculates the National Bank of Ukraine. Transit revenues will drop in half, from the 2018 level of $3 billion, says Ekateryna Rozhkova, first deputy governor of the central bank. "A reduction in transit volume of almost half will also reduce these revenues by almost half, she tells reporters. Nord Stream 2 and TurkStream will have a combined capacity of 86.5 billion cubic meters, virtually the same as the 87 bcm of Russian gas that flowed across Ukraine last year.
      With a discount window closing in three weeks, Ukrainian owners are rushing to legalize their cars imported illegally from the EU. Although the 90-day discount started November 25, owners of the estimated 250,000 cars now realize it ends on Feb. 22. By Friday, the number had spiked up to 65,000 cars, netting $145 million for the national budget, reports the State Fiscal Service. On Thursday alone, 3,400 cars were legalized. To date, 10,008 cars have been legalized in Kyiv. Illegal imports of used cars has depressed new car sales.
      Determined to cut inflation in half to 5% next year Ukraines central bank retained its key interest rate at 18%, the highest level in Eastern Europe. The interest rate was hiked by two percentage points last year, contributing to inflation falling to 9.8% in 2018. Economic growth this year will be 2.5%, down from an estimated 3.3% last year, predicts the National Bank of Ukraine. High interest rates contribute to a vicious cycle: with interest rates high, local entrepreneurs can only turn to friends and family for business loans; a lack of good paying jobs prompts labor migration; wage remittances currently $1 billion a month fuel demand, pushing up inflation.
      Loans and deposits will grow in 2019, Ukrainian bankers tell the central bank in a survey of 61 Ukrainian banks, accounting for 96% of all banking assets in the country. Three quarters of banks surveyed predict growth of corporate loans and 62% of respondents predict growth of consumer loans. Two thirds predict growth in deposits from the public and from businesses. The value of deposits is the highest in the entire history of observations, the National Bank of Ukraine said, referring to the quarterly survey. The bankers did not predict a change in interest rates this year.
      Ukraines finance ministry will issue $2 billion worth f eurobonds this year, Dmitry Sologub, deputy governor of the National Bank of Ukraine tells reporters. Foreign purchases of Ukraine state hyrvnia bonds hit $194 million in January, almost five times the level for all of 2018, reports the central banks web site.
      Ukraines foreign trade recovered to $100 billion last year, according to the National Bank of Ukraine. Exports were up 9%, to $43.34 billion, while imports were up by 14%, to $56.3 billion, leaving a trade deficit of $13 billion. For exports, the growth champions in dollars were: grain up 11%; and metals up 15%. On the import side, the big growth sectors were: energy -- up 15%; engineering products up 18%; food up 18%; and industrial goods up 21%. With the loss of much of the Donbas industrial area, Ukraines foreign trade last year was 28.5% below the 2014 level of $140 billion.
      If reelected this spring, President Poroshenko promises to improve the rule of law, allowing Ukraine to become one of the top 50 countries in the world for investors by 2022. Currently, Ukraine ranks in 71st place, out of 190 countries, in the World Banks Ease of Doing Business index. In 2014, at the start of his presidency, Ukraine was in 87th place. In an interview with Ukraine TV channel. Poroshenko also promised to make Ukraine self-sufficient in energy. The presidential election vote will be March 31, with a second runoff round on April 21.
      Frances AgroGeneration is selling leases to 27% of its land bank, or 28,500 hectares, the company reports. After the sale of its assets in Ternopil and Zhytomyr, AgroGeneration will operate about 80,000 hectares 10,000 in Lviv and 70,000 in Sumy and Kharkiv. Singapores Kusto Agro Pte.Ltd, owner of Kusto Agro in Vinnytsia, reportedly is buying the farms in Zhytomyr.
      Ukraines food exports to the EU have increased by 50% since 2016, hitting $6.3 billion last year,reports Olha Trofimtseva, Deputy Agriculture Minister for European integration. Last year, the top three products were: grains --$2.2 billion; oil seeds -- $1.1 billion; and vegetable oil --$1.1 billion. The top five buyers in the EU were: the Netherlands -- $1.2 billion; Spain -- $1 billion; Italy -- $739 million; Germany --$667 million; and Poland -- $657 million.
      With food processing growing, Ukraine is moving from Europes breadbasket to supermarket of the world, Trofimtseva tells EURACTIV. She calls for more investment in food processing and agro tech.
      The best aid for Ukraine is free trade, argues Ben Aris, editor/founder of bneIntelliNews. If the West really wants to help Ukraine, it should drop the quotas on imports from the Ukraine or at least greatly expand them, he writes. Business would boom and investment should flow behind very quickly. Noting that Ukraines egg and poultry sector could largely destroy the industry in Western Europe, he says: If quotas are to be lifted it would have to be done in steps. Noting political realities, he adds: Relaxing the restrictions on Ukrainian exports to Europe would benefit everyone, except the European agricultural lobby.
      Ukraines poultry exports jumped by 30% in dollars last year, hitting $507 million, according to the State Fiscal Service. In volume terms, exports were up 21%, to 329,000 tons. Top buyers were: the Netherlands, Slovakia and Saudi Arabia. Last year, Ukraine rose in the world ranking of chicken exporters to 6th place, overtaking Russia and Canada.
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        Through 2023, 4.5 billion in low interest loans have been committed to support 39 infrastructure projects to upgrade many of Ukraines highways, ports, airports, and railroads to EU standards. Largely designed to speed freight and passengers on east-west lines between Ukraine and the EU and to move export goods to the Black Sea ports, the aid is coordinated by the European Commission and is composed of European Investment Bank and World Bank loans and some grants, Infrastructure Minister Volodymyr Omelyan tells reporters.
        The building package includes: 13 highways -- 2.15 billion; nine ports -- 873 million; nine rail -- 851 million; six airports -- 470 million; and two river projects -- 112 million. Several projects will be open to public-private partnerships.
        The rail money will largely be spent on upgrading about 280 km of track leading to Ukraines EU neighbors and electrifying 250 km on two lines feeding Mykolayiv port. Electric locomotives are three times as energy efficient as diesel locomotives. About 45% of Ukraines 22,300 km of track is electrified with overhead wires.
        With EU aid, Hungary is preparing to build a 4-lane expressway to its Zhony crossing with Ukraine, at Chop, Zakarpattia. reports that three Hungarian companies are to build the project, an extension of the M4 east-west highway from Budapest. This could cut the Uzhogorod-Budapest drive to three hours. Hungary has expressways to all of its seven neighbors, but Ukraine. Separately, Poland is building a 4-lane expressway from Warsaw through Lublin to Hrebenne, a Polish border town facing Lvivs Rava Ruska crossing.
        By the end of February, Poland and Ukraine are to reach agreement on trucking permits and rail freight, their infrastructure ministers promise. On Thursday, Volodymyr Omelyan met in Kyiv with his Polish counterpart, Andrzej Adamczyk. With trade booming, Ukraine wants Poland to raise its truck permits from the current level of 165,000 for 2019. As Polish truckers are not interested in cross-border work, the two sides agreed to open Ukrainian rail infrastructure projects to Polish investors. One project would be construction of a multi-modal dry port in Kovel, a rail hub in Volyn region, 90 km east of Chelm, Poland.
        Ukraines GDP grew by 3.4% last year, reports Stepan Kubiv, Minister of Economic Development and Trade. Ukraines GDP grew by 2.5% in 2017 and by 2.3% in 2016. The 2018 growth is the highest since 2011, when growth was 5.5%.
        One quarter of Ukraines 77 banks 20 small and medium entities are unviable, reports the National Bank of Ukraine. After a study of the markets 40 small and medium banks, Ekateryna Rozhkova, the the banks First Deputy Governor, reports: The main problem for small banks is the lack of a development strategy and, as a result, the unviability of the business model. Another important issue is the source of funds to support the banks capital. After the 2014 financial crisis, the central bank closed half of Ukraines banks.
        Investments per ton of liquid steel have doubled since 2014, to $29.10 per ton today, Alexander Kalenkov, head of Ukrmetallurgprom, the metals trade association, tells the Ministry of Industry. The investments largely go for cutting costs and cutting environmental emissions. In one big investment, Metinvest is investing $1 billion in Zaporizhstal, the nations fourth largest steelmaker, largely to builder new converter blast furnaces.
        Thieves steal copper telephone wires from Ukrtelecom at the rate of eight kilometers a day. The company, the largest fixed line operator in Ukraine, reported that almost 3,000 kilometers of cable were stolen last year. Thieves were responding to world copper prices which were $3 a pound for much of last year, 50% above the $2 lows of October 2016. Many thieves were repeat offenders and 30% of replaced wires were stolen, the telephone company says. Last August, Ukrtelecom launched a pilot program to move affected land line subscribers to cell service.
        Russias interference with Ukrainian shipping in the Azov is costing Ukraine $350 million,Infrastructure Minister Omelyan says. Faced with delays costing $10-50,000 a day, shippers are shifting to Ukraines Black Sea ports, shunning Berdyansk and Mariupol, Ukraines big Azov ports. Last week, US envoy to Ukraine Kurt Volker told reporters the Trump Administration is considering imposing sanctions this spring against Russian ships servicing Russias Azov ports. Last week, a EU fact finding mission visited Berdyansk and Mariupol. On Feb. 18, the European Commission is to discuss sanctioning Russia for blocking freedom of shipping in the Azov, a binational sea by treaty.
        Russian interference with merchant shipping on the Azov cost Berdyansk port $4.6 million last year, Port Director Alexander Troshchenko told a visiting EU delegation last week. "In 2018, metal and clay [shipments were completely lost - $840,000, he said. In response, he said the port activated a new grain handling unit and shipped 200,000 tons of grain.
        With $2 billion in American, European and Chinese windpower investment planned for Ukraines Azov Sea coast, Troshchenko pitched visiting EU and European Investment Bank officials for financing for a German-made Liebherr LHM 550 mobile harbor crane to unload and store wind turbine blades. Logistics operator Holleman Ukraine is considering building a warehouse at Berdyansk for windpower equipment. Denmarks Vestas Wind Systems A/S, General Electric Wind Energy and China Machinery Engineering Corporation are already using Berdyansk, the closest port to the three largest wind projects. In the last year, 12 ships with oversized wind turbine cargo docked at Berdyansk.
        Despite Russian pressure on shippers, Mariupol continues with its modernization plan, building a grain terminal capable of handling 2.5 million tons a year, Port Director Alexander Oleinik writes on Facebook. He says half of the foundation has been laid, four of the 10 silos are rising and a rail link is being built. I have no doubt that the amount of grain transshipment in the Mariupol port will increase significantly, he writes of the port, which until last year handled 10% of Ukraines steel exports. Last year, overall cargo was down by 10% as the number of ships dwindled in the second half.
        Visiting European officials, including the foreign ministers of Denmark and the Czech Republic,were lobbied by Mariupol officials last week for aid to rebuild national road N-08, the only road linking the industrial center of the Azov with the rest of Ukraine. Last year, 20% of the 210 km road from Mariupol to Zaporizhia was rebuilt. About $120 million is needed to finish the job.
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          The main economic task of a second presidential term would be overcoming poverty, President Poroshenko told the American Chamber of Commerce Tuesday evening. To get there, Ukraine needs foreign investment and decent paying jobs. If you want to prevent people from going abroad, Ukraine should never again be the country of cheap labor, he said. Ukraine should process more of its farm production, become the country of the biggest number of startups, and should increase tourism seven fold, to 10% of GDP.
          Populist presidential candidate Yulia Tymoshenko hewed a centrist line with the European Business Association Monday evening, saying that Ukraine cannot afford to stop cooperating with the IMF, Bloomberg reports. Calling Ukraines debt burden heavy, she said she would negotiate better terms from the IMF. She promised to find common language with investors before parliamentary elections and lift this burden a little. Tymoshenko and Poroshenko are roughly even in polls leading up to the March 31 election. Volodymyr Zelenskyi, a well known comedian and entrepreneur, is currently in first place.
          Dragon Capital and AVentures Capital have acquired minority stakes in Ciklum, the London-based IT outsourcing company with about 3,000 employees in Kyiv. Andriy Nosok, Dragons Managing Director and Co-Head of Private Equity, said: We believe that ongoing global digital transformation will support increasing demand for IT solutions and services, and that Ciklum is very well positioned to capitalize on this sustainable trend. Michael Boustridge, Ciklum CEO, said: This investment will continue to propel Ciklums rapid growth in delivering cutting edge technologies to clients around the globe. All three companies are privately owned and the investment amounts were not made public.
          Retail trade in Ukraine increased 6.1% in real terms last year, slightly below the 6.5% increase for 2017. The biggest jumps were in Ukrainian-controlled Luhansk up 27% -- and Donetsk up 14%. Fueled partly by remittances from Ukrainians working abroad, retail was one of the three pillars of growth last years 3.4% growth led by agriculture up 8.2%; and construction up 6.3%. Concorde Capitals Evgeniya Akhtyrko writes: We expect real retail to increase 6-7% yoy in 2019. It will be driven by real disposable income growth.
          Consumer confidence of Ukrainians rose in December 2018 to 62 on a 200-point scale, GfK Ukraine reports. Across the board propensity to consume, job prospects, and changes in personal finances rose by an average of 3.5 points in December. Similarly, inflation expectations dropped.
          E-commerce grew by 31% in Ukraine last year, the second fastest rate in Europe, following only Romanias 37%, according to the Better Regulation Delivery Office, or BRDO, a regulatory advisory body funded by the EU. While growing faster than the world average of 24%, Ukraine has plenty of room to grow, Alexander Kubrakov, BRDO IT director, tells reporters. In 2017, online accounted for 3.2% of retail sales in Ukraine, compared to 8.8% in the EU, 10.2% in the US, 17.8% in Britain. To further promote online sales, the BRDO recommends the government allows online stores to email sales receipts, instead of requiring they issue printed paper receipts.
          A high water mark for bricks and mortar retail? The half-built Respublika mall designed to be the largest shopping center in Ukraine was sold at auction Wednesday to Soltex Capital for $28 million. Located at a southern intersection on Kyivs Ring Road, Respublika was to open in November 2014 with 135,000 square meters of leasable retail space. At part of the liquidation of Nadra Bank, the Deposit Guarantee Fund sold through ProZorro.Sale the property, which includes 16 hectares of land, buildings and preliminary lease agreements.
          Riding the e-commerce boom, Ukraines package delivery war heats up:
          Nova Poshta increased package deliveries last year by 20%, hitting 174 million. Points of sale grew by almost quarter, to nearly 3,000 across Ukraine. Deliveries from the United States double and deliveries from Europe tripled, bring international shipments to 2.7 million, or 1.5% of the total. About 21% of Nova Poshtas deliveries come from internet shopping. Nova Poshta has signed a deal to provide warehouse and delivery service in Ukraine for IKEA. This summer, the Swedish furniture retailer plans to open its first store in a showroom city format.
          Ukrposhta, the state company, plans to increase deliveries by 27%, to 28 million packages this year, Director Ihor Smilianskyi tells reporters. He says: Today Ukrposhta delivers more parcels in a day than in all of 2016. Last year, Ukrposhta entered into an alliance with Rozetka, Ukraines largest online store. After launching a mobile app, Ukrposhta delivered 6 million packages ordered online last year. To further democratize e-commerce, Ukrposhta plans to complete the computerization this spring of all post offices in towns with populations over 2,000. With the biggest commercial reach in the nation, Ukrposhta has 11,000 post offices.
          Lviv-based Meest Express plans to increase by 50% the number of reception points in Ukraine, Poland and Kazakhstan, according to Interfax-Ukraine. Rostislav Kisil, president of Meest Group, says there are now 2,600 reception points in Ukraine. Last year, this network was boosted by the purchase of 1,900 locations in PrivatBank and A-Bank branches. Aiming at deliveries from online stores around the world, the company which originated in Toronto, Canada has launched an app -- myMeest.
          A new EU standard postal services law is being drawn up to crack down on incomprehensible postal operators who are just engaged in smuggling, Omelyan told the American Chamber of Commerce on Wednesday. Under the guise of postal companies, they are engaged in illegitimate services.
          To cope with booming air cargo, Boryspil starts work in May on a new cargo terminal designed to more than triple handling capacity to 100,000 tons, Pavel Ryabikin, general director, tells reporters. Ideally, the terminal, will be partially open in time for this years Christmas rush. During the recent Christmas period, the airport was so overwhelmed with packages that it closed for air cargo for two weeks. Given air cargo growth rates, Minister Omelyan predicts this expansion will only be sufficient through 2022.
          To offer a Kyiv region alternative for air cargo, Bila Tservka airport is to win international status in May and is to receive international cargo flights in August, Minister Omelyan tells reporters. Noting the airport is 80 km south of Kyivs Ring Road, near the E95 Kyiv-Odesa highway and near rail lines, Omelyan says the goal is to turn Bila Tserkva into an international multimodal transport hub. Airport director Sergei Kandaurov predicts the airport will handle 15 cargo flights a month this fall. A maintenance hub for four Ukrainian airlines, the airport did repairs last year on 73 aircraft, largely Antonovs. Last year, an EU expert study recommended the government spend $63 million through 2022 to turn the airport into a hub for cargo and discount airlines.
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            Starting today, foreign currency exchange rules are liberalized in a package of laws drawn up under a guiding philosophy: Everything that is not directly prohibited is allowed."
            Replacing laws dating back to 1993:
            - Currency controls are abolished on transactions up to UAH150,000, currently $5,360.- Individuals

            Ukrainians and foreigners

            will be allowed buy foreign currency online up to UAH 150,000 per day.

            - To transfer foreign currency abroad, licenses are abolished and replaced by electronic limits: 50,000 per year for individuals; 2 million per year for companies.

            - For foreign individuals, the limits for sending money abroad without having a bank account in Ukraine are increased 10-fold, to UAH150,000, or $5,360.

            - Ukrainian companies are allowed free use of accounts in foreign banks, except for transferring funds to their accounts

            - The doubling of the deadline to settle export-import operations - to one year.
            Most major banks will offer account holders the option to buy foreign currencies online, Oleh Churiy, deputy governor of the National Bank of Ukraine, predicted to reporters Wednesday. Some already starting Feb. 7. Some maybe later. Asked if the new laws mean the end of Ukraines ubiquitous exchange shops, he said no. After all, they work not only with the population, but also with the "gray" and "black" markets.
            Starting Friday March 1, the central bank cuts the mandatory amount of foreign currency that businesses must sell for hryvnia to 30% of export earnings, from 50% today, Churiy said. Without specifying dates, he said the Bank will eventually abolish this limit and the limit of on repatriation of dividends. As a first step on dividend repatriation, he said the bank plans to raise the monthly limit to 10 million, from 7 million today.
            By sending $1 billion a month home, Ukrainians working abroad maintain the hryvnia exchange rate little changed and offset Ukraines growing trade deficit. This flow far larger than IMF aid and foreign direct investment combined gives the government breathing room to adopt market reforms that will stimulate real investment, experts tell UNIAN in a lengthy analysis. In a race against time, the government must create conditions for creating jobs with decent pay -- or risk losing temporary migrants to permanent residence in the EU, the report warns.
            Presidential candidate Yulia Tymoshenko is making Ukraines labor migration a campaign issue.Depopulation is even bigger challenge than the war, she told the European Business Association on Monday. Each year about 1 million go to work abroad.
            Last year, 7-9 million Ukrainians worked outside the country, half of them living abroad permanently, according to the Social Policy Ministry. Separately, about one third of 40,000 Ukrainians surveyed in December by Rating polling group would like to get a job outside the country. Of these one half would like to earn enough money to come home and start a small business here, Alexey Antipovich, director of Rating, told a migration roundtable in Kyiv last week.
            To retain skiled workers tempted to move to the EU, the Metinvest group raised salaries by 40-45% to the monthly hryvnia equivalent of $1,000-1,200, Alexander Pimkin, the steelmakers personnel director, tells the Ministry of Industry. He lists the social benefits packages tailored to workers, the companys investments in parks and festivals, and concludes: All this is intended to keep employees in their cities, fill their lives with interesting meaning and receive decent remuneration for their work.
            With train passenger traffic to the EU growing and traffic to Russia falling, Ukrzaliznytsia is cutting frequencies on its Odesa-Moscow and Kharkiv-Moscow trains. Starting this week, the trains are reduced from daily to ever other day. Last year, the state railroad dropped direct trains to Moscow from Chernihiv, Chernivtsi, Ivano-Frankivsk, and Kremenchuk. Last year, passenger traffic to Russia fell by 20%, to 773,000 passengers. In the last six months, the state railroad carried 10% more passengers to the EU than to Russia. The Lviv-Przemysl, Poland fast trains ran almost 100% full last year.
            Olha Trofimtseva has been promoted to Acting Minister of Agrarian Policy and Food, replacing Maxim Martyniuk who was appointed Acting Minister two months ago. Trofimtseva earned a doctorate in agricultural science from Humboldt University of Berlin and worked for a decade for German farm companies and institutions. Fluent in German and English, Trofimtseva became well known to foreign investors after becoming Deputy Agriculture Minister for European Integration in September, 2016.
            Farming companies powered last years big jump in grain and bean production, the Statistics Service reports. Production by agro businesses increased by nearly 17%. Family farm production was flat. Overall, production rose by 12.7% to a record 70 million tons. Year over year, the big gainers were: corn up 44% to 36 million tons; barley up 11% to 7 million tons; rye -- up 23% to 400,000 tons; and rice up 8% to 69,000 tons. The big loser was wheat down 6% to 25 million tons.
            Ukraine increased sunflower production last year by almost 16%, strengthening its lead over Russia as the worlds largest producer of sunflower oil. Production increased to 14.2 million tons, according to the Statistics Service. Other oil seeds also increased: soy up 14% to 4.5 million tons; and canola up 25% to almost 3 million tons.
            Ukrainian commercial dairy farm success stories are highlighted in a Dutch government news site article, designed to drum up attendance at Dutch dairy presentations Feb. 19-20 at the Agro Vesna show at Kyivs International Exhibition Center. In Ternopils Skoryky village the dairy farm Ukraine has achieved record annual production of 10,765 liters of milk per cow. Since 2016, the company imported 900 cows from Europe. Last year, built barns for an additional 1,200 head of cattle. In Volyns Zadyby village, Perlyna Turii farm is building a dairy complex this year for 1,800 head of cattle, including 600 imported cows. Nationwide, milk production in Ukraine has been shrinking as farm families give up their cows.
            Ukraines 42 sugar mills produced 15% less sugar during the fall 2018 sugar making season than during the 2017 season, reports Ukrtsukor, the industry association. Due to low world sugar prices, 10% less land was planted in sugar beets than in 2017. Last year, Ukraine produced 1.8 million tons of sugar and exported 584,000 tons, a 2.4% fall from 2017. Top buyers were: Uzbekistan, Azerbaijan and Libya. Top producing regions were: Vinnytsia 424,000 tons; Ternopil 227,000 tons; and Poltava 222,500 tons. In January, Ukraine exhausted its export quota to the EU 20,000 tons.
            The EU may expand its Ukraine import quotas for beef, pork and poultry, Ukraines Agrarian Confederation reports, drawing on comments to the Rada Agricultural Committee by Christian Ben Hell, head of Agriculture section of the EU Delegation to Ukraine. Noting that Ukraines food exports to Ukraine have increased by one third since 2017, he reportedly said: We are doing everything possible to enable Ukrainian products to enter the EU markets. In particular, we plan to expand the quotas for the supply of beef, pork, poultry products.
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              Alfa-Bank, PrivatBank and Monobank, a virtual bank, now sell dollars and euros to account holders online, Interfax-Ukraine reports. Following Thursday foreign exchange liberalization, Alfa-Bank and PrivatBank also are sell foreign currencies at their branches. Purchased currency is instantly available to the client on the account or card for settling payments, placing on a deposit account, or withdrawing cash, says Illia Borovov, vice president for electronic business. Withdrawal of foreign currency from ATMs is not yet allowed.
              After a decade long drought in high rise construction starts in Kyiv, a Ukrainian group wants to build a 100-meter tall hotel and office complex at 107-109 Velyka Vasilkivska, facing the Palace of Ukraine metro station and concert hall. Located midway between St. Nicholas Roman Catholic Cathedral and Ocean Plaza shopping mall, the builders, Ukrzhitlobud, would need a city variance for rising higher than the 27-meter limit on buildings in the historic district. Nashi Groshi news site notes that building permits have been given for hotels that end up being apartment buildings. Of the 11 buildings in Kyiv higher than 110 meters, eight are residential. All were built in the 2000s. The last one, No. 1 Obolon Embankment, was completed in 2013.
              EpiCentre K, Ukraines version of Home Depot, is investing $107 million in creating Ukraines largest ceramic tile manufacturing capacity, Oleksandr Hereha, company founder, tells reporters. This summer, one plant opens near the companys white clay quarry, in Kalynivka, 35 km southwest of Kyiv. Next year, a second plant opens in Kalush, a concrete manufacturing city in Ivano Frankivsk. Tile equipment and expertise are provided by SACMI. This northern Italian company is opening a Ukraine office in Ukraine.
              Kyiv Boryspils 19.4% passenger growth rate last year was the highest of any European airport of its class, 10 to 25 million passengers. According to Airports Council International Europe, runners up were: Moscow Vnukovo -- +18.4%; Budapest -- +13.5%; Warsaw Chopin --+12.8%; and St Petersburg -- +12.1%. By comparison, the average growth rate for non-EU European airports last year was +8.3%. Boryspil handled 12.6 million passengers last year. With more growth expected, Boryspil reopens Terminal F in April.
              UIA, Ukraines flag carrier, carried more passengers +15% -- and more freight +12% -- but lost money last year, Yuri Miroshnikov, company president, tells Liga.Biznes. Without specifying the size of the loss, he blamed Ukraines aviation fuel taxes and Russias ban on Ukrainian airlines flying over its air space.
              Entering sub-Saharan Africa for the first time, UIA launches a flight to Ethiopia this year in partnership with Ethiopian Airlines, which has its hub in Addis Ababa, Miroshinikov tells Liga.Biznes. [Ethiopian] has a good African hub, he said. We plan to operate flights from Kyiv to Ethiopia and further. Together with the local carrier, we expect to give options for connections to other African countries. In 2018, Ethiopia had the worlds fastest growing economy. Of the worlds six fastest growing economies, four were in sub-Saharan Africa: Ethiopia +8.5%; Cte d'Ivoire +7.4%; Rwanda + 7.2%; and Senegal + 7%. Ukraines growth last year was 3.4%.
              Lviv plans to increase air passenger traffic by 38% this year, to 2.2 million people, airport director Tatiana Romanovskaya tells reporters in Kyiv. After boosting traffic by 48% last year, Romanovskaya says she now is negotiating new flights with Qatar Airways, UIA, an Asian airline and a European discount airline. By June, Ukraines busiest regional airport will have flights to 33 cities, including three new ones: Wizz Air to Copenhagen on March 3; airBaltic to Riga on April 1 and SkyUp to Odesa on June 2. The airport is undergoing a $10 million upgrade this year.
              Odesas new runway will be completed by the end of this year, Infrastructure Minister Volodomyr Omelyan, tells reporters, noting this years spending will be $27 million. With two European discount airlines in the final stage of negotiations, Odesa airport could handle 3.5 million passengers in 2021, Omelyan predicts. That would be 2.5 times the 1.4 million carried last year.
              This spring, works starts on Prydniprovye, the new regional airport designed to serve Dnipro, Zaporizhia and Kriviy Rih, Omelyan tells the American Chamber of Commerce. By 2022, the airport could handle 1.5-2 million passengers. This volume would place it among Ukraines top five airports. Dnipro and Zaporizhia airports will stay open. But Omelyan cited Poland, which invested in two large airports 80 km apart. The rival airports cannibalized each others traffic and neither prospered.
              This summer, Vinnytsia starts a two-year, $78 million rebuild designed to make the central Ukraine airport capable of handling Boeing 767s. Resurfacing the runway and installing new lighting are part of the makeover, Mykola Bozhko, of the Infrastructure Ministry, tells reporters. Ukraines 11th busiest airport, Vinnytsia handled 61,000 passengers last year, largely on UIA flights to Kyiv and Tel Aviv and charters to Egypt. SkyUp starts charter flights to Antalya, Turkey on May 1.
              Not to be left out, Poltava, Ukraines 14th busiest airport, is transferring its runway to the Infrastructure Ministry. Located roughly between Kharkiv and Dnipro, Poltava, population 300,000, needs $6 million for a runway upgrade. Last year, the city airport gained international status and reopened. This spring, SkyUp starts charter flights from Poltava to Eqypt and Turkey.
              Albania, Greece and Italy are targets for new, scheduled flights from Kyiv. Italys Ernest Airlines plan to launch flights this summer from Kyiv Sikorsky to Tirana, Rome and Genoa. (On March 21, it starts flights from Kharkiv to Rome and Milan.) On March 31, Wizz Air starts flights from Kyiv Sikorsky to Athens and Thessaloniki. On the same day, Greeces Astra Airlines is to launch Kyiv-Athens service on its BAe 146 regional jets. Two days later, on April 2, Ryanair starts flights from Kyiv Boryspil to Athens.
              Helicopter service from Kyiv and Odesa to Ukraines Black Sea and Carpathian mountain resorts is the goal of an agreement signed last week between the Odesa regional government and a new group, International Transportation Service Group TVS. Under the agreement, the investors would build nine heliports and service vacation destination with Boeing Chinook cargo helicopters converted to carry up to 44 passengers. Flying 300 km/hour, a Chinook could take vacationers from Kyiv to Karolino Bugaz, on the Black Sea, in 80 minutes.
              Kyivs Antonov plans to resume production this year of three jets: AN-178, a 70-seat regional passenger plane; AN-158, the 100-seat version; and AN-178, a medium range military transport. Production can restart due to near completion of a program to replace Russian parts with parts from Canada, China and the US. The state companys financial plan foresees a tripling of income from aircraft sales.
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                With diesel bans spreading through Germany cities, 71% of the 51,500 used cars registered in Ukraine last month were diesels. Volkswagen, Opel, Audi and BMW accounted for about half of the imported used cars. Further depressing prices of Germanys 15 million diesel cars, manufacturers are offering trade in deals, offering new, lower emission for older models. In coming years, diesel bans are expected to take effect for the city centers of Athens, Copenhagen, Paris and Madrid.
                American, Canadian, Australian and Argentine farmers: watch out! ProAg, a Texas-based news site warns in article titled: How Russia and Ukraine Took Over the Wheat Market. Noting that Russia and Ukraine accounted for only 3% of the world trade in hard or durum wheat in 2000, that share is growing to 42% in this marketing year. In a case of trading places, Russia overtook Ukraine by increasing its exports 70-fold since 2000, to 1.3 billion bushels projected for this year. Ukraine is increasing its durum exports 8.5 times to a projected 606 million bushels, within striking distance of the 620 million bushels projected for the US. Durum is largely used for making pasta.
                Black Sea exporters have a transportation advantage for about one third of the worlds wheat imports North Africa and Middle East. Accounting for 16% of world wheat imports, North Africa included the worlds top wheat importer Egypt and the third largest importer Algeria.
                Lack of easily available seismic data is a big obstacle facing foreign investor in Ukraines 42 oil and gas blocks up for auction this year, warns the Petroleum Economist. While efforts have been made to digitize the results of old seismic surveys for perusal by potential investors, much of it remains archived on paper and is not easily accessible, the London-based news site reports, drawing on interviews with participants at the recent oil and gas conference in London. Reserve estimates for swathes of the country's gas-prone acreage, which rely on historic Soviet-era data, may not be accurate, and are better taken as indications of possible rather than proven reserves.
                Headlined Ukraine opens arms to upstream investors, the article approvingly notes free market changes in Ukraines energy laws, the work here of international gas traders, and the nations vast gas pipeline system and storage capacity. But with the presidential election looming this spring, Petroleum Economist predicts: Some investors will prefer to wait until the winners' upstream policies become clear.
                Copying Kyivs UNIT.City, the UFuture Investment Group plans to open similar IT hubs in Lviv and Kharkiv this year and in Kazakhstan next year. By December, Lviv Tech.City is to open with 9,500 square meters of office space and 3,000 square meters of commercial, largely cafes and restaurants, Vasyl Khmelnytsky, founder of UFuture, tells Interfax-Ukraine. Tenants have signed up lease space in the building, on a former factory site in Lvivs southern Frankivskyi district. In Kharkiv, the first phase of the Kharkiv Innovations Campus is to open this year in 3,000 square meters of a larger, modern building. Separately, Khmelnytsky, who was born in Kazakhstan, wrote on Facebook after a visit to the new capital last summer: We've agreed we will help create an analogue of UNIT.City in the center of Astana.
                Privat24 Internet customers bought $1.4 million online and sold $400,000 on Thursday, the first day of the new foreign exchange rules. Similarly, they bought 245,000 and sold 131,000, Maria Strashko, head of Foreign Currency for PrivatBank, tells Interfax-Ukraine. At peak times the banks system processed 20 currency purchase and sale operations per second. Similarly, Oleg Gorokhovsky, co-founder of Monobank, writes on Facebook that his customers opened 6,000 foreign currency cards, instead of the usual 1,000.
                Business complaints largely over tax audits and corporate raiding -- spiked up 39% in the last quarter of 2018, to 427, reports Ombudsman Algirdas Shemeta. Of the complaints, 63% were over taxes and customs levies, 14% were about the actions of law enforcement officers, 6% were about actions of regulatory bodies, and 3% were against local governments. Some business people complain that as a presidential term nears its end, some government employees rush to extort money, fearing it will be their last chance.
                For investors, an online black list of people convicted of corruption and of companies fined for corruption has been created by Ukraine's National Agency on Corruption Prevention. Individuals and companies can also receive good conduct certificates, if there is no record to the contrary
                After four years of losses, Ukraines banks collectively earned a profit last year -- $775 million. In 2016, the banks lost $1 billion. Part of the profits came from expansion of retail lending in hryvnia, which increased by about 30%, says Kateryna Rozhkova, first deputy governor of National Bank of Ukraine. Of the nations 77 banks, 64 were profitable. The most profitable were banks with foreign capital and PrivatBank. The main losses took place at Russian state capital, which underwent severe restrictions.
                Foreign direct investment totaled $2.5 billion last year, reports the National Bank of Ukraine. About $1.5 billion of the total went into the real sector. For an economy the size of Ukraines -- $125 billion foreign direct investment should be five times higher, over $12 billion economists say.
                Mini-privatizations the sale of state properties under $9 million are on track, with auctions selling 187 properties in January. During the rest of 2019, 605 more properties are to go on sale, reports the State Property Fund. Started six months ago, the program has brought $25 million to the state treasury and has released hundreds of properties to the private sector.
                Since September, rents for 301 state-owned plots of farmland have been set through electronic auction, reports the Justice Ministry. Using Blockchain technology, OpenMarketLand has been the electronic platform, often serving to set land lease prices in a transparent way. So far, the government has netted $1.1 million through the new leasing system.
                As fewer and fewer farm households keep cows, purchases of fresh milk from households dropped 12% last year, reports the State Statistics Service. By contrast, processors purchased 1.2% more milk from commercial dairies.
                Couriers with the green box backpacks of Uber Eats are fanning out across central Kyiv, delivering meals for 200 restaurants, largely ones without an in-house delivery service. Glovo, a competing delivery service with yellow boxes, is matching Uber Eats offer of free deliveries in February. Later this year, Uber Eats plans to expand to Ukraines other big five cities: Dnipro, Kharkiv, Lviv, and Odesa. Uber, the online taxi service, entered Ukraine in the summer of 2016. It is now in seven cities: Kyiv, Odesa, Lviv, Kharkiv, Dnipro, Zaporizhzhya, and Vinnytsia.
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                • UKRAINE BUSINESS NEWS
                  Six new shopping centers, containing a record 400,000 square meters of rentable space, are to open in Kyiv this year, according to the Ukraine Retail Center. This would be eight times the new leasable space of last year and a record for the capital, says Daryna Kulaga, a market analyst for Jones Lang LaSalle Ukraine. Although developers often do not reveal construction costs, the six could total around $350 million.
                  By June, these Kyiv shopping entertainment centers are to open: Smart Plaza Obolon 10,000 sq.m; Oasis, Heroes of the Dnipro metro station 13,200 sq.m; Blockbuster Mall, Stephan Bandera Ave. -- 135 000 sq. m; and River Mall, Dnipro Embankment Left Bank --59,682 sq. m.
                  By September, two more are to open: Ocean Mall, next to Ocean Plaza, Lybidska Metro station -- 100,000 sq. m.; and Retroville, on Pravda Ave. -- 80 718 sq. m.
                  In Odesa, Gargarin Plaza is to open by May with 20,000 sq. m.
                  In Lviv, Spartak is to open this spring with 23,000 sq.m.
                  The overall vacancy rate at Kyiv shopping centers fell to 3.7% at the end of last year, Jones Lang LaSalle reports. This is down from 5.6% at the start of 2018. Annual store rents rose to $1,140 per square meter, almost the level of 2013.
                  Ukrainians are among the worlds fastest adopters of contactless, cashless payments systems,Inga Andreeva, general director of Mastercard Europe SA, tells reporters. Last year, Ukraine registered the fourth fastest growth rate in the world for taking to this technology, which typically involves waving a smartphone or digital wrist watch in front of a terminal to pay with Google Pay or Apple Pay. Common in the Kyiv metro system, contactless terminals start working this week in the busiest station of Kyivs suburban elektrichka trains.
                  With 38% of Ukrainians businesses accepting cashless payments, there is room to grow. The EU average is 60%, Mastercard says. Some businesses resist going to credit cards and contactless because it means paying taxes. But 64% of business managers surveyed by Mastercard say they prefer cashless for its simplicity and potential to boost sales. By last September, according to National Bank of Ukraine estimates, cashless payments accounted for 44% of transaction in Ukraine a 13% increase since the start of the year.
                  The shadow economy accounted for 32% of official GDP during the first nine months of last year, the Economic Development and Trade ministry reports. This is 1% point below the level for the same period in 2017.
                  PrivatBank customers can now receive cash from their accounts when they make a bank card or Mastercard purchase at a WG gas station. Cutting the need to find an ATM, customers can receive up to UAH 500 about $18 at any of the 400 WOG gas station mini markets across Ukraine.
                  Foxtrot plans to double online sales this year, to 20%, Valery Makovetsky, chair of the supervisory board of home appliances and electronics chain, tells Interfax-Ukraine. In traditional bricks and mortar, Foxtrot plans to invest $10 million this year reformatting about one third of its 162 stores. Last year, it opened 18 new stores across Ukraine, largely in small cities. Depot Development Group, the umbrella group controlling Foxtrot, also is building or expanding shopping centers in regional cities Chernihiv, Kriviy Rih, Kropyvnytskyi, and Zaporizhia.
                  Danish furniture retailer JYSK plans this year to dynamically expand the network in different regions of Ukraine, Yevhen Ivanytsia, JYSK Ukraine director. tells Interfax-Ukraine. Last year, JYSK expanded its Ukraine store network by one third, to 48. With stores in 20 cities, JYSK expanded into new neighborhoods with three stores in Khmelnytskiy and five in Odesa.
                  Novus, the supermarket chain, opened five supermarkets and a 7,000 square meter warehouse last year in Kyiv, the retailer reports. Founded a decade ago, Novus now has 43 stores, 34 of them in Kyiv and Kyiv region. One year ago, the EBRD opened a $25 million credit line to Novus to open more stores and the logistics center.
                  ATB, the discount shop chain, plans to keep expanding this year, after opening 80 new stores and rebuilding 41 more last year, the Dnipro-based company reports. With 990 outlets, there are ATB stories in 253 cities and towns in 22 regions of Ukraine.
                  Brocard intends to open 5-7 new perfume and cosmetics stores this year in Ukraine, increasing its network to nearly 100, Brocard-Ukraine LLC tells Interfax-Ukraine. Three stores for Dnipro, Kharkiv and Lviv will be in a new compact format: Brocard Niche Bar. Last year, Brocard opened four stores two in Kyiv and two in Odesa.
                  Owners of one of Ukraines largest restaurant groups plan to open 200 new restaurants by 2021, largely in Ukraine, Oksana Serediuk, co-owner of the chain, tells Interfax-Ukraine. Serediuk and her husband, Taras, operate restaurants under the brands Mafia, Casta, Bao, Nam, Georgia, Brilliant Bar and Yakitoriya. This year, the group plans to double its restaurants in Moldova to six. In Ukraine, six are under preparation, including one in Volnovakha, Donetsk, 15 km west of the front line.
                  Dmytro Borysov, the Kyiv restaurant entrepreneur, plans to open 100 fast casual restaurants in Kyiv this year, he tells the Kyiv Post. According to his surveys, 70-80% of Kyiv residents eating out want to pay no more than $5.25 per person. One of his big hits, Bilyi Nalyv, on Kreschatyk, charges 1 or 29 UAH per menu item. In the last year, he has taken this successful formula to Kharkiv, Lviv, Lutsk and Odesa.
                  Coca-Cola has launched a 10.5 million production line in Brovary, Kyiv region. Capable of bottling 40,000 bottles an hour, the line expands the Brovary plant capacity to 100 million cases a year.
                  Ukrainians spend 44% of their income on food and non-alcholic beverages, according to the latest household survey conducted by the State Statistical Survey. The average household cash income during the third quarter of 2018 was $335. The average household was 2.1 people.
                  Real estate developers now are moving from residential to offices and warehouses, says Volodymyr Mysak, head of capital markets for the Ukraine office of Cushman & Wakefield. Offices vacancy rates have dropped to 4.9% and monthly rental rates have increased to $29 per square meter. Similarly, warehouse vacancies are at a cyclical low 3%. Last year, investment in commercial real estate hit $300 million, a 10-year high, he told the Ukrainian Steel Construction conference.
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                  • UKRAINE BUSINESS NEWS
                    With the Presidential election seven weeks away, Ukraines leaders bluntly warned of the dangers of populism in speeches at Dragon Capitals 15th Investor Conference. Recalling past attempts at controlling sugar, meat and gasoline prices, President Poroshenko said these failed experiences taught populist candidates nothing. In a reference to Yulia Tymoshenkos promise to force household gas prices far below market levels, he said: Populism is feeding on poverty and social injustice
                    Prime Minister Groysman warned: Any step in the populistic direction will cost the Ukrainian people dearly. He said EU countries could afford such experiments because they have decades of democracy and high standards of living. Ukraine does not have this choice, he said. Noting that after 2014 we escaped the hands of the populists, he told the investor audience: Our government is pro-business, pro entrepreneurial.
                    To escape poverty, Ukraine needs to grow by at least 5% a year, the Prime Minister said. After growing by about 3.3% last year, Ukraines GDP growth will slow this year to 2.8%, according to consensus forecasts. Vowing to continue free market reforms, Groysman said: For us, a priority is the growth of the economy above 5%. This requires investments. In order for investments to come, we need clear rules and guarantees of the security of these investments."
                    Interest rates could be lowered later this year if inflation stays on track to end the year at 6.3%,Yakiv Smoli governor of the National Bank of Ukraine, told Dragon. Last month, year-on-year inflation was 9.2%, down from 9.8% in December.
                    Within two months, Ukraine hopes to win the second tranche of EU 500 million macro financial aid, Finance Minister Oksana Markarova told reporters at Dragon. At the same time, she is negotiating a new loan guarantee with the World Bank and new low interest loans with G7 countries. In December, the World Bank extended a $750 million guarantee, enough for the government to borrow $1 billion at low rates. Our priority is concessional lending, Markarova said. She aims to use low interest loans to help Ukraine lower its indebtedness to 50% of GDP by 2021.
                    Foreign tourism flows to Ukraine should double to 30 million visitors, President Poroshenko said, hailing the job creation power of tourism. Not only to major cities I dont want any part of Ukraine be in the periphery, he said perhaps thinking of his next stop of the day: Ukraines Danube river port of Izmail, 580 km by plane from Kyiv. Located in Ukraines southwesternmost corner, Izmail is a jumping off point for tourism into the UNESCO-listed Danube Delta Biosphere Reserve, home to 1 million birds in the summer.
                    Izmail airport, closed for a decade, will reopen, Yuro Dimchoglo, deputy chairman for Odesa Regional Council, tells the Center for Transportation Studies. We are planning to relaunch the airport, he said referring to the 1,840 meter concrete strip which handled flights from Kyiv and Istanbul until 2009. This summer, European discount airlines are expected to start flying to Odesa and officials want to develop tourism in Bessarabia. On an Embraer 190 or an Antonov 158, Izmail would be a 45-minute flight from Kyiv, or a 15-minute hop from Odesa, 200 km to the east. While Odesa officials work on lining up the $1 million needed for airport upgrades, they also talk with a local air company, Odessa Aviation, about starting flights.
                    Romanias Complex Delta has completed the biggest dredging in a decade of Izmail port, the removal of 185,000 cubic meters of river silt. For the first time, a foreign company was attracted to the dredging process in the Ukrainian port on the Danube, says Rajis Veckagans, chairman of Ukraines Sea Ports Authority. This year, Ukraines Danube-Black Sea channel is to be dredged. Visiting Izmail port on Tuesday, President Poroshenko said that 40% of the nations trade goes through its ports and that the domestic transport industryshould take an active part in the development of the transport corridor of the Europe-Asia connection." Chinese investors have shown interest in buying the Ukrainian Danube Shipping Company, if the Izmail-based state company is ever privatized.
                    Ukraines long delayed car and truck ferry across the Danube, from Olivka to Isaccea, Romania, should start this summer, Maxim Stepanov, chair of the Odessa Regional Administration, writes on Facebook. He posted photos of Orlivkas newly completed ferry terminal buildings for passport control and the road ramp to the Danube. On Tuesday, President Poroshenko inaugurated the newly rebuilt European route E47, a road that cuts the Odesa-Orlivka drive time to four hours. But to reach Isaccea 800 meters across the river drivers have to make a 2h15, 95 km detour, through Moldova. Ferry service would provide a big shortcut for truckers and tourists.
                    On the opposite end of the country, in Mariupol, work is underway to ease isolation caused by Russias harassment of merchant ships. To remove a rail bottleneck, Ukrzaliznytsia plans to double a final 25 km section of single track on the 480 km Mariupol-Zaporizhia line. This 4.5 million project would allow daily trains to increase from 30 today, to 49 in the future -- 42 freight and seven passenger, Viktor Dovhan, deputy infrastructure minister, writes on Obozrevatel news site. Dovhan also said the state railroad might purchase four more GE diesel locomotives to service the line. Separately, Evhen Kravtsov, Ukrazaliznytsia, promises a completely renovated Kiev-Mariupol night express, referring to a ride that takes 17 hours.
                    Driving investment in rail, cargo at Mariupol sea port was down 27% in January, year over year, to 335,000 tons, the port administration reports. By contrast, cargo was down 10% in 2018, over 2017. After Russian harassment of Ukraine-bound ships proved enduring, some shippers reacted by boycotting the port, Ukraines largest on the Azov. Far from marginal, Mariupol carried the largest volume of metal exports for Ukraine last year 4.1 million tons, just over the 4 million from Odesa.
                    Two Boeing 737-500 jets are undergoing maintenance and painting in Kyiv, a first step toward creating a Boeing maintenance hub next to Sikorsky (Zhuliany) Airport, reports BiznesTsenzor site. Using the same runway as the airport, Kievs Civil Aviation Plant 410 plans to expand beyond servicing Antonovs to service 40 Boeings a year by 2024. Ryanair, Europes largest carrier, has an all-Boeing 737 fleet. Last November, David OBrien, the airlines chief commercial officer, told President Poroshenko that the carrier has a five-year, $1.5 billion investment strategy for Ukraine. It includes basing and maintaining 15 Boeings in Ukraine.
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                    • UKRAINE BUSINESS NEWS
                      South Koreas Posco Daewoo is buying 75% of a 2.5 million ton a year grain export terminal under construction in Mykolayiv. South Korea, a nation of 52 million people, imports almost all its wheat and corn about 15 million tons. This year, Ukraine is to export 47 million tons of grain. Last year, Choi Jeong-woo took over as Posco chairman and the steel giant on a path to become a global grain trader. Posco became a corporate member of President Poroshenkos National Investment Council and sent executives to Ukraine on fact finding visits here. In a deal where investment values were not made public, Ukraines Orexim Group retains minority ownership of the terminal.
                      Ukraine increased food exports last year by 5.4%, to $15 billion, according to the Ukrainian Food Export Board. Grains accounted for about half of exports. India was the biggest buyer of Ukrainian farm products -- $1.8 billion, largely soy and sunflower oil. China came in second -- $1 billion, largely for corn and sunflower oil. The Netherlands came in third -- $643 million for chickens, butter and corn. Spain was in fourth place, with Saudi Arabia close behind with $510 million.
                      Farm exports account for 39% of foreign currency entering Ukraine, Prime Minister Groysman told the Cabinet of Ministers Wednesday. President Poroshenko told the Dragon conference Tuesday that a key challenge for the 2020s is for Ukraine to add value to farm exports by increasing processing.
                      Mergers and acquisitions increased by 78% in 2018 year over year, to $1.8 billion, KPMG reports in its annual Ukraine M&A Review. The number of deals increased by 19%, to 80. Foreign investment increased by 47% to $508 million in 25 transactions. The Ukrainian economy is recovering says the report. Noting the two elections this year, KPMG predicts that foreign investment growth in 2019 will be modest. Ukraine is now on the verge of change, the report says. And if reforms continue, the number of mergers and acquisitions will only increase with the growing number of foreign investors considering access to the local market.
                      Despite the lack of a farm land market, agriculture attracted the highest portion of foreign investment. Saudi Agriculture and Livestock Investment Company, or SALIC, bought Mriya Agro Holding for a reported $242 million. Switzerlands Julius Baer paid $73 million for a stake in Kernel Holdings. Japans Sumitomo paid $45 million for a controlling 51% stake in Spectrum-Agro and Spectrum Agro-Engineering. Noting last years record 70 million ton grain harvest, KPMG says: International investors are even more closely looking at the Ukrainian agricultural sector.
                      Capital investment grew by almost 20% in 2018, Prime Minister Groysman tells the cabinet Wednesday. 957 industrial and industrial facilities were repaired and reconstructed - new products and new jobs." He says the governments investment promotion office, UkraineInvest, is facilitating $2 billion in planned foreign investments.
                      Kyivstar, Ukraines largest mobile telephone company, is testing in Kyiv and Odesa its Narrowband Internet of Things network, or NB IoT. After testing with client businesses this month, it plans to launch the network nationwide later this year. This low power next network offers indoor coverage, low cost, long battery life, and high connection densities for items like gas and water meters. Smart street lights turn on when it gets dark. Smart traffic lights turn red when approaching cars break speed limits. Smart water, gas, and sewage lines detect breaks.
                      Lifecell, Ukraines third largest mobile operator, is partnering with IoT Ukraine to launch IoT networks, first in Kyiv and Lviv, later in Dnipro, Khakiv and Odesa. To cover 90% of Kyiv, the Turkish company is erecting 40 base stations, a network capable of connecting 200,000 sensors. With Kyivgas, lifecells IoT network allows the gas company to read thousands of gas meters. Ericsson, which supplies the radio equipment, estimates that, by 2024, four billion devices will be connected to the Internet around the world. Vodafone Ukraine is testing NB IoT Vodaphone technology, a platform used for 77 million connections worldwide.
                      EU foreign ministers meet Monday in Brussels to discuss aid to Ukraines southeast and sanctions on Russia for interfering with merchant shipping in the Azov. With unanimity needed, EU sanctions are expected to be wrist slaps. For aid, Ukraine has drawn up a wish list for improving road and rail access to its Sea of Azov ports, Berdyansk and Mariupol. With the airports of both cities closed, highways and faster trains would speed freight and bring tourists to the coast. Two weeks ago, Viktor Dovhan, Infrastructure vice minister, visited the area with EU officials. Last week, drew up this 675 million list


                      7 million to upgrade tracks and signals to increase freight and passenger train capacity by 60% on the 480 km Mariupol-Zaporizhia line.

                      15 million for four new GE diesel locomotives and upgrading the locomotive depot at Volnovakha, Donetsk region.


                      40 million to complete rebuilding the 224 km Mariupol-Zaporizhia road into a highway. With completion expected next year, half of roadwork is done.

                      70 million to complete repairing the 143 km Berdyansk highway north to Vasylivka, on the Dnipro River.

                      130 million to complete repairing the 321 km Dnipro-Mykolaiv road. A major artery feeding cargo to the Black Sea, this road takes seven hours to traverse.

                      313 million to repair and rebuild the 419 km Mariupol-Berdyansk-Melitopol-Kherson road. Known as the M-14, this is Ukraines major east-west road running along the north shore of the Sea of Azov. If rebuilt as a highway, it would allow trucks to take cargo from Mariupol to Kherson port in five hours.


                      24 million a dredging ship dedicated to Ukraines Sea of Azov ports

                      16 million upgrade of navigation safety systems, weirs and sea walls

                      60 million a new icebreaker; Ukraines only icebreaker, the Kapitan Belousov, was built in 1954.
                      Preparing for aid talks with the EU, Infrastructure Minister Volodymyr Omelyan asserts Ukraine has the cheapest road repair in costs in Europe: 300,000-600,000 per kilometer.Building from scratch costs 1.5-2 million per kilometer. He tells UNIAN: "This is the cheapest price in Europe. Bulgaria is closest in price to us. It builds autobahns from 3 million."
                      Asked in the Rada last week why Ukraines roads are not in better shape, Omelyan responded: "Unfortunately, the government is not Hogwarts. We do not have a magic wand to repair all the roads of Ukraine that have not been repaired for decades.
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                      • UKRAINE BUSINESS NEWS
                        Plans for LNG terminals proliferate on the coasts of Central Europe, competing with Russias $10 billion Nord Stream 2 gas pipeline, which is crossing the Baltic Sea. LNG landing terminals open opportunities for US and Persian Gulf gas to compete with Russian pipeline gas. Now the worlds largest gas producer, US has started selling gas in Europe.
                        Bending to US pressure, German officials announced Tuesday they will build at least two LNG landing terminals on its Baltic Coast. After talks in Berlin, US Deputy Energy Secretary Dan Brouillette said the US is very excited by the decision. But he also warned that all companies involved in the Nord Stream 2 project remain at risk of US sanctions. Last fall, Angela Merkels government said Germany would build a 500 million terminal, at an unspecified time.
                        Further east, Polish gas giant PGNiG has signed deals with two U.S. LNG companies to buy up to 2 million tons of US LNG a year for 20 years, starting in 2022. The gas will land at winoujcie, Polands new Baltic terminal designed to connect with pipelines to Croatia on the Adriatic.
                        In Lithuania, Foreign Minister, Linas Linkeviius, fresh from a visit to Washington, said Tuesday his countrys Independence LNG landing terminal in Klaipda could serve as a port of entry for US gas to Eastern Europe. He said: We can be in a certain sense a gate, not only in our region, but also in the whole of Europe, which will open up new distances and opportunities for the US to be a serious player in Europe, in the gas market."
                        In the Adriatic, Croatia recently approved building a 237 million LNG landing terminal and regasification plant on Krk, an island in northern Croatia. Golar LNG, a Bermuda-based LNG shipping company, is to deliver the completed project by the end of next year. With Hungary concerned about an eventual cut off of Russian gas supplies through Ukraine, Jnos der, Hungarys president, said recently in Lithuania about the Croatia project: "This way, we could buy gas in the north -- or in the south."
                        Looking beyond Russias pipeline gas, the Financial Times Lex writes Wednesday: Europe could source even cheaper liquefied gas from other sources. The FT calculates that LNG from Qatar and Nigeria could be 20% cheaper than Russian gas. It takes an LNG tanker about four days to go from Qatar to Croatia.
                        While Russian gas transit through Ukraine fell by 7% last year, it spiked up 26% year-on-year in January, to 7.6 billion cubic meters. Today, about one third of Russias gas exports to Europe cross Ukraine. Russian officials say they will not need Ukraines gas pipelines in the 2020s. But recent years show they needed Ukraine as a back up when the Nord Stream pipeline had problems. Russias 10-year gas transit contract with Ukraine expires at the end of this year. Russian officials say they will renegotiate seriously only after they know who will be Ukraines next president.
                        Explaining last weeks firing of the head of Ukraines state gas production company, Prime Minister Groysman tells the Cabinet that he is extremely dissatisfied that UkrGazVdobuvannya actually failed to meet gas production targets for 2020. In his defense, Oleg Prokhorenko, the fired CEO, says regional governments rejected licenses for new fields. He says the production company applied for new licenses 170 times in 2016-2018, but received only 17 permits, far below the 15-20 a year stipulated in the governments production strategy. He said Poltava rejected all 60 applications.
                        Chinas Xinjiang Beiken Energy Engineering Co., a UkrGazVdobuvannya contractor, is working well in Poltava with the gas production company, the Peoples Daily reports in an article headlined: Chinese technology brings welcome changes for Ukraine oil and gas drilling. Noting that Beiken is drilling nine gas wells under a $59 million contract, the Chinese news site says the company has 249 Ukrainian workers and is investing in training since Ukraine is comparatively weak in oil industrial infrastructure with limited drilling technology. Maksym a UGV public relations manager in Poltava, says: Chinese technology has brought welcome changes for us.
                        Over the last two years, Ukrainian companies have replaced 50,000 Russian-made parts for the nations defense industry, President Poroshenko said Thursday, in Kharkiv, a major military production center. Due to this import substitution program, Kyivs Antonov says it will resume jet aircraft production this fall. In Kharkiv, Poroshenko visited Turboatom and said the state turbine make has signed an $18 million deal with Energoatom, producer of half of the nations electricity. On Russia, Kharkivs eastern neighbor, he said that since 2014, the EU share of Ukraines exports has risen to 42.6%, while Russias share has fallen to 7.7%. He said: Russia no longer has levers of influence to put Ukrainians on their knees.
                        Poscos purchase of the big grain terminal under construction in Mykolayiv means billions of dollars and hundreds of additional jobs for the Black Sea port, Yuri Budnik, head of the seller, Onexim Group, writes on Facebook. Writing I dont have the right to disclose the details of the agreement, Budnik said negotiations with the South Korean company took two years. The terminal, capable of handling 2.5 million tons of grain a year, is to open in July.
                        Kherson and Mykolayiv, the two Black Sea ports closest to the Sea of Azov, had the biggest cargo increases of Ukraines 10 largest ports in January, the Sea Ports Authority reports. Because of Russian harassment of Ukraine-bound merchant ships, cargo handled by Mariupol in January was down 27% year-on-year. By contrast, cargo handled by Kherson last month was up 27% y-o-y. Cargo handled by Mykolayiv was up 19%. On Monday, EU Foreign Ministers meet in Brussels to discuss sanctioning Russia for its interference in shipping in the Azov.
                        Turkish Airlines, the busiest foreign airline serving Ukraine, increased its passengers on Ukraine routes by 28%, topping 800,000, the airlines Ukraine director, Dinser Saychi, tells reporters. With the number of flights up 9%, the average occupancy was 71%.
                        Wizz Air was the fastest growing airline in Ukraine last year, recording a 73% increase in flights,to 15,251, according to UkSATSE, Ukraines air traffic control agency. For the other top five: UIA increased its flights by 8% to 61,691; Turkish up 9% to 29,972; Belavia up 10% to 16,003; and LOT Polish up 24% to 15,813. Ryanair launched flights last fall and was not counted in the year-on-year comparisons.
                        Kyivs train to the plane will expand with trains from Kharkiv and Dnipro going directly to the new rail platform at Boryspil Airport, Roman Wepritsky, regional rail head, tells Channel 5. Last year, Boryspil accounted for 61% of Ukraines 20.5 million air passengers. To make airport access easier for Kyiv residents, Ukrzaliznytsia is building a multimodal -- rail, metro, bus and car -- terminal at Vydubichi, the green line metro station. Launched in December, the airport line is a money maker for the state railroad. Each passenger pays the hryvnia equivalent of $2.85 15 times more than the ticket for a comparable suburban train ride.
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