What the Business Community Wants from Ukraine’s Next President?
As Ukrainians prepare to elect their next president later this month, whoever wins, either Petro Poroshenko or newcomer Volodymyr Zelenskiy, he will need to focus on attracting FDI (foreign direct investment).
Ukraine has experienced acute political, security, and economic challenges during the past three years. Since the “Maidan” uprising in February 2014 that led to the ousting of the previous president, the country has witnessed several momentous events, including the outbreak of conflict in eastern Ukraine and presidential, parliamentary, and local elections.
Though the president bears responsibility for the nation’s defense, foreign policy, security service, and prosecution service, he should play a key role in attracting investors to launch their operations or manufacturing in Ukraine. Especially since both candidates are successful businessmen, the next president should watch closely that investors are welcomed and treated well.
The business community in Ukraine knows what to expect with another five years of a Poroshenko presidency. If reelected, it will likely be a business as usual approach.
We know much less about Zelenskiy. Although he is a household name, a highly talented TV performer, comedian, and a successful business owner, we don’t know how he may perform as president. His election program, thus far, is extremely thin on any details.
Zelenskiy delivered a message that he is surrounding himself with reformers, the likes of former Economy Minister Aivaras Abromavicius, former Finance Minister Oleksandr Danyliuk, and MP Serhiy Leshchenko. Zelenskiy has focused on assuring us that his views and intentions are aligned with the business community’s priorities, specifically on rule of law, macroeconomic growth, and fighting corruption.
Zelenskiy understands well the topic of intellectual property (IP) intensive industries, as his entertainment business has made him a small fortune. IP-intensive industries with proper copyright, patents, and trademarks enable people to earn recognition and financial benefit from what they invent or create. Such industries account for over 38 percent of the United States’ GDP. This is an area where Ukraine can grow significantly.
Ukraine’s economic growth at about three percent over the past three years is positive, but the country must increase this growth significantly in order to augment national wealth. This can only be achieved by significantly boosting FDI.
Ukraine faces major financing needs in 2018–20 that will require the mobilization of sizable international financing and the capacity to meet the fiscal deficit target of 2.5% of GDP to maintain macroeconomic stability. Debt repayments (to the IMF, Eurobonds, and domestic bonds in foreign exchange and local currency) and financing the fiscal deficit will require 7.7% of GDP per year.
To raise the necessary financing, it is critical to maintain reform momentum and reach an agreement with the IMF. Meeting the fiscal deficit target of 2.5% of GDP in 2018–20 will require careful implementation of reforms in the areas of pensions, education, health, and housing utility subsidies.
More information from the World Bank (pdf)
Source: The World Bank In Ukraine and the American Chamber of Commerce in Ukraine
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