Insider's view into doing business in Ukraine
Opinion 3 minute read

Insider's view into doing business in Ukraine

31 July 2013

Over 2012, Ukraine made it easier to start business in the country, introduced tax relief measures, and improved property registration procedures, according to the World Bank’s Doing Business 2013 report. We met up with TMF Group’s managing director in Ukraine Pavlo Boyko to talk about applied aspects of doing business in Ukraine and actual experiences foreign investors have in the Eastern European country.

By Maria Ivanova, Interviewing Pavlo Boyko, Managing Director TMF Group in the Ukraine (August 2013)

As TMF Group provides financial reporting, tax and payroll services for foreign investors in Ukraine, we began our interview with the question where in Ukraine a foreign business should invest. “I wish I knew the magic formula Industry X + Country Ukraine = Profit Z. There is no such formula in general,” explained Boyko. If a business has a sound business model and talented leadership there’s no reason for it to be unprofitable in Ukraine, or anywhere else. “We have an 80/20 rule,” continued Boyko. “80 percent of the [business] processes around the globe are the same, and just 20 percent are locally specific.”

“While doing business in Ukraine you have to know your partner,” insists Boyko. “And do your homework.” Prior to entering the market, a company should decide whether the market is as promising as it is thought to be, whether there are scaling opportunities in Ukraine, etc.

Yet, TMF Group’s local experience - the company branched out to Ukraine back in 2006 - shows that energy and banking sectors, telecommunications, real estate, pharmaceuticals, clinical research, agriculture, headhunting, and luxury goods are the areas of Ukrainian market that keep attracting foreign investors. Most attractive at the moment are niche sectors, e.g. engineering in renewable energies, as they are not filled at the moment.

IT is one of the most profitable sectors for foreign investment in Ukraine, according to Boyko. Compared to that of western counterparts, an hour of Ukrainian IT professionals’ work is dirt cheap, which equals instant profit. “Within one week or month the code which those guys could work out is worth much more than the office rent and other investment,” said Boyko.

Despite popular belief, Boyko reckons that corruption is not necessarily an issue in Ukraine. “There are examples - our clients are good examples of that, and there are many more - of companies [in Ukraine] that do not allow those practices,” said Boyko. “It’s possible to do business in Ukraine in a non-corrupt way and be profitable,” he emphasized.

Ukrainians like to grumble, explained Boyko. “We complain about Ukrainian practices, we complain about how corrupt the country is... We like to shock foreigners with some striking examples that, indeed, happen, but talking about them so often makes them [seem like] a rule rather than an exception,” he commented. Negative news travels very fast and its impact might overwhelm the results provided by relevant market research on the country, any climbs up in the international ratings and legislative improvements, he argued.

Negative news can be damaging, but which of the positive ones make the most impact? We asked Mr. Boyko about the possible effects of signing the Association Agreement between Ukraine and the EU. “It’s a signal, … a psychological impulse. That’s definitely so,” he stated.

To conclude our conversation, we returned to the much talked about UEFA European Football Championship EURO 2012. We asked Mr. Boyko about EURO 2012 impact on the investors’ perception of Ukraine. Huge infrastructure projects catalyzed by the championship became the trigger for service providers and construction companies to enter Ukraine, consider it, or participate in tenders, Boyko told us. “That’s definitely a reason for many companies to come,” he said.

Originally Published in Worldwide News Ukraine (August 2013)


Insights and updates delivered to your inbox.

Sign up now