Monday, February 28, 2005

Hostile Business Environment: one in five private businesses in Ukiraine operate at a loss. by Petro Izhyk

This article covers the annual survey BIZPRO annually creates. It is a very soild, ongoing look into the conditions of small businesses in Ukraine and the feelings and thoughts of the businesses operators. The function of business owners in the Orange Revolution can been seen in the optimism expressed.

Tuesday, February 22, 2005

Ukrainian President disfavors expensive birthday gifts

Ukrainian President disfavors expensive birthday gifts

This is the first break from the traditional rain of birthday gifts for people in power. It will be interesting to see if this trend builds.

Thursday, February 17, 2005

The Kyiv Beet

The Kyiv Beet

I almost forgot about the Kyiv Beet. It certainly was the most reliable source of the truth of life in Kyiv for many years.

Monday, February 14, 2005

The Mainstay of Government, businesses should not factor bribes into the cost of their products.

An interview with Yury Yekhanurov on the role of government, small business, and the need to clear out corruption. Yekanurov has been a long-time leader in building a sound business environment in Ukraine. The role of the single tax system for small business is extremely important in removing the opportunity for government pressure on small business. There is still not a great deal of understanding of the role of small business in the Ukrainian government.

Friday, February 11, 2005

Mind that the president talks to you, not a herdsman for geese.

From Ukraine TV by way of BBC Monitoring and the Action Ukraine Report

President Yushchenko's speech in Donetsk.

I do not like the fact that 50 per cent of Ukraine's economy and two-thirds
of Donetsk's economy is in the shadow. It gives 7.7 per cent to the budget.
Please take back this 7.7 per cent. What can we do with it? How can one
look in the eyes of an invalid, a soldier, a doctor or a teacher? They are
treating our children. They are not treating or teaching the children of
some other nation. We do not want this country to be, excuse me, a country
of morons.

We want it to be a European nation. What salaries do they have? We are
humiliating our teachers and doctors. Their salaries are not European, my
friends. What salary does a teacher need to live decently? The one he is
getting today? I think that many people sitting in the audience cannot live
for 10 days on the [monthly] salary of our teachers or doctors. If we agree
to decrease the share of the shadow economy by at least 50 per cent in one
of Ukraine's criminal regions, and other regions which have about 15 to 20
per cent of the shadow economy follow suit, we can double the national
budget. Let us talk about this.

Where do I think the government should intervene on this market today? This
is the problem of monopolies on this market. Because of the monopolies and
intermediaries, prices of ore and coke are artificially increased by 30-80
per cent. What would I like to say to the local authorities? Friends, there
are two methods to regulate prices. Either a state committee for prices
[which existed in the Soviet Union] or competition. There is no other
option. If we speak about competition, then several participants having
equal rights should work on this market in order to keep prices down. Only
this way can we tackle the problem of wholesale inflation.

Certain structures are openly blackmailing their competitors by not
supplying raw materials. Because of this we lost 500,000 tonnes of steel
last year. Because of this. Also, products are often sold to domestic
consumers at prices 10-15 per cent higher than for export. I have a
question. Does the Antimonopoly Committee work here or not? There is
one. And there is a bloke there who manages this issue. [Voices from the

[Yushchenko] This is the first issue that we should solve. I think that this
is also due to the previous government's miscalculations regarding the
hurried privatization of the Ukrrudprom [state ore industry] state
joint-stock company. We are returning to this issue and we will raise the
issue of Ukrrudprom.

Then the fuel and energy complex. Donetsk Region is the leader in debts for
electricity. Donetsk Region accounts for 24 per cent of all Ukrainian debts.
[Passage omitted: Yushchenko urges Donetsk Region to pay for electricity.]

A couple of days ago we appointed a new minister. I want to tell you that
nobody will take electricity for free. This is my philosophy. I will demand
that every minister, every [regional] administration head make so that there
should be no kolkhoz, nothing for free. Learn to be responsible. [A voice
from the audience] Say who does not pay! This is inadmissible.

Yushchenko] Excuse me, why do you behave like that? Why do you behave
like that? Mind that the president talks to you, not a herdsman for geese.

On investment. I can say that investors are afraid of Donetsk. The
investment figure for nine months, capital growth, is 25 per cent. But this
is one third less than across Ukraine.

Donbass is the energy heart of Ukraine, the mining heart of Ukraine. We have
unique industrial capacities here and, and having such unique possibilities,
to have the speed of capital growth, of its investment part, at two thirds
of any other region, starting from Chernihiv and Sumy, is absolutely
unnatural. Absolutely. This region should lead in this indicator, it should
show the best trends, because there is something to invest in here. But it
is interesting that there is no foreign investment at all in half of Donetsk
Region's towns. [A long pause]

Hopes for the special economic zone and development zones have been in vain.
Seventy-five per cent fewer jobs were created in 2004 than during previous
years. [Pause] Friends, there are 170,000 unemployed people in the region.

Wednesday, February 09, 2005

Ukr. Hryvnia, is it time for appreciation?

There are reports of a rush of foreign funds/investments coming into Ukraine. There should be an increase in the demand for the Hryvnia which might drive it up against the US dollar. As a speculative activity, Hryvnia deposits in Ukrainian banks with quite high rates of interest return might start to make sense with coup[ling of interest return and Hryvnia appreciation. 

Tuesday, February 08, 2005

PM: Deficit twice as large as estimated, requiring dramatic steps. Ukrainian Journal

Ukrainian Journal

The sun is finally shining on Ukrainian governmental spending.

Monday, February 07, 2005

Ukraine Goes After Missile Dealers

Ukraine Goes After Missile Dealers

This might be the start of a flood of scandals.