Ukraine on the Rise By Bob Edgren
I just returned from my 16th trip since 2001. This tour I was there for five months. Compared to seven years ago, Ukraine has taken quantum economic leaps, and is still on an accelerated growth pace.
As I walked down the main street Kreshcatyk, there it was right above one of the world’s largest McDonalds, a large maybe 50 foot wide sign, Ernst and Young. This prime location, a former store is now bustling with blue suits and briefcases in a plush atmosphere. It looks quite different. Yet another signal that global investors are discovering the opportunities and high consumer demands of Ukraine.
Okay, how did this boom happen? After the Soviet collapse, like in Russia, smart, clever, and often unscrupulous people in the right place at the right time grabbed many of the country’s valuable assets, be it steel plants, pipelines, TV stations, factories, food, real estate, whatever. All the formerly state owned assets had to find a home and they did. So now, there is a small army of oligarchs, just like in Russia, who made millions acquiring assets a nickel on the dollar. In light all this, the reaction has been fueling a free enterprise and booming economy and most important, a middle class. The influence of Russian oil wealth also is contributing much to this scenario as wealthy Russians are coming down and buying, building, and manipulating whatever they can.
The politics are still ugly and a mess. It is almost a 50-50 split among the pro West and pro Russia constituents, and this can also be geographically defined.
The western part of Ukraine is pro West and the Eastern half favors Russia. So why take a risk? The same reason investors and international corporations have with Russia and China that the return on investment can be enormous.
What’s more and just off the press, Ukraine just cleared a major hurdle towards joining the WTO which will change the playing field dramatically.
Ukraine, I was told by one salesperson in telecommunications, is the 2nd fastest consumer of cell phones in the world. The capital of Kiev six years ago used to be slow paced with streets filled with beat up old Soviet cars, diesel spewing trucks and run down buses.
Now there are daily traffic jams everywhere. The autos are an array of flashy new SUV’s BMW’s, Lexus’, Ferraris, Porsches and Bentleys in a sea of new autos from Nissan, Toyota, Mitsubishi, Subaru, Honda and Chevrolet. As one gazes over Kiev and other Ukraine main cities, there are dozens of tall construction cranes working away on high rises, new glitzy apartments buildings, shiny glass office towers, trendy shopping centers, and new hotels including the Radisson and Hyatt Regency.. This year, McDonalds celebrated its tenth year of in Ukraine and is one of my favorite bellwethers to judge growth of an emerging nation.
In May of this year an announcement was made that in the next five to seven years McDonalds will nearly double the number of locations in the Ukraine from the current 57 in 16 cities to 100.
Looking for tech and IT activity? Ukraine outsourcing has reached some $246 million in 2006 making it the most favored industry destination in East Europe. It grew 47% in 2006 with 30,000 IT graduates arriving into the workforce each year. Banking
From the Ukrainian Observer,” The banking sector has been one of the fastest growing sectors of Ukraine economy of late. Its assets grew by 11.25% in the first quarter of 2007 and by 56.2% in 2006. However, recently the National Bank of Ukraine has been tightening up their lending policies and are more prudent on regulations. Whether any financial crisis will occur is unknown and in my opinion, if the booming real estate prices start to fall, oil wealthy Russians would love to step in and gobble up whatever they can. Oddly, the one neglected main industry that most expatriates shake their head in wonderment about is tourism. Why so many ask, is not this beautiful country and culture not on the top of places to visit? In actuality, I think many of them would prefer it that way and watch newcomers jaws drop as they cruise through the city and countryside. I think there is a general feeling, well I know there is of “Tell everyone back home it is terrible here.” For Investment opportunities in Ukraine, email Bob Edgren at email@example.com