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United Mining and Chemical Company (UMCC), JSC "First Kyiv Machine- Building Plant" ("Bolshevik" plant) and the President Hotel, among other assets.
Several new classes of state property have been added to the list. Online auctions for oil and gas deposits have already happened and more recently
the country's significant reserves of non- ferrous and rare-earth metals, including unique deposits of beryllium, zirconium, tantalum and rare-earth metals, have come into focus.
“Ukraine’s estimated reserves of lithium are [some] of the largest in Europe. The country also has a real opportunity to enter the global market with pure and ultra-pure metals and other natural resources such as hafnium, cobalt, gold, zirconium, as well as gas and crude oil... Ukraine just needs to harness its mineral resources to thrive. For this to happen, new technologies and large investments are needed,” says Tsivkach.
With China accounting for 80% of rare earth imports into the US, Ukraine could benefit from Washington’s growing nervousness about supplies, mining experts say. Rare earths are essential for production of goods ranging from smart phones to fighter jets, Bloomberg argued in a recent editorial.
Some deals have already been done. With a population of around 35mn people (there is a dispute over the exact size of the population due to labour
Ukraine GDP quarterly growth % y/y
migration and the fact a full census has not been carried out for years), Ukraine is third largest retail market in Eastern Europe. German cash-and- carry firm Metro has already moved in and Swedish furniture store IKEA just opened its first branch in Kyiv.
Maybe more significant is that last
year Ukraine signed off on the largest concession deal in its history: Qatar- based terminal operating company QTerminals won a UAH3.4bn ($138mn) concession to operate the Port of Olvia, as part of the state’s goal to develop its transport infrastructure. Tsivkach says there are another 16 similar concession projects in the pipeline that should generate around $2.4bn of deals in the coming years.
But the privatisation process is going slowly. A modest total of UAH3bn ($111mn) worth of state property was sold in 2020 but the plan for 2021 is to quadruple that to UAH12bn.
The main fly in the ointment to selling off the biggest and most valuable assets is the oligarchs that have stuffed many of these assets with poison pills such as large debts or threats of legal action if anyone else takes control of the asset.
Encouragingly, the head of Ukraine’s State Property Fund (SPF) Dmytro Sennychenko said out loud that the oligarch groups are actively trying
to derail Ukraine’s privatisation programme by using law enforcement
agencies to illegally raid objects slated for sale in comments in January, in
a rare public admission of the main obstacle to privatisation.
“Large-scale privatisation is on the way and is very important for Ukraine, as many large SOEs still have vested interests and privatisation is needed to clean the system and root out corruption,” says Tsivkach.
“If all these changes are made then the privatisation revenues could go up ten-fold to UAH100bn,” says Tsivkach. “President Zelenskiy takes this very seriously. This was one of his initial promises.”
Decentralisation and judicial reforms
Another unsung reform success has been the efforts to decentralise government and make local government more accountable to its community. The reforms to decentralise government are now in their final phase and it has led to local government being more responsive to the local population’s needs and wants.
“Decentralisation has introduced regional competition as the local leaders all want to attract investment,” says Tsivkach.
The improvements in local government have been welcomed by regular Ukrainians but a general overhaul of
the judiciary remains on the to-do list and is another major concern for foreign investors.
“The National Security Council has sig- nalled that it wants to change the system to provide all legal means to protect the Ukrainian people. This is the first time that the change has come from the top,” says Tsivkach. “We have never seen this before – a top-down approach to tackle corruption and vested interests. Also, going after the big fish has never been seen before. The president is willing to change the country.” Fighting corrup- tion remains at the heart of improving Ukraine’s investment climate and it seems that the Zelenskiy administration has finally grasped the nettle after the president make an “oligarch speech” in the middle of March, calling for Ukraine’s
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