Country Profile 2015
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American Chamber of Commerce in Ukraine 4,6 18 ,1 ,5 10 8 , 7 COUNTRY 1 7 5 , , 9 7 PROFILE UKRAINE AT A GLANCE 3 , 6 2015 1 1 , 5 9 , 6 9 , 8 Uniting Leading Companies from over 50 Nations across the Globe 2 www.chamber.ua www.chamber.ua Dear Chamber Members, The past twelve months have seen changes and challenges in Ukraine that few could have foreseen. As the incoming Board Chair, I am proud of the work of the Chamber to support our Member Companies through these difficult times. At this key point in Ukraine’s development we are ready to work with the Ukrainian Government and its people as they develop on a path of closer European integration, embracing reforms that are the hallmark of successful market economies. The Chamber and its Board of Directors remain focused on the supporting our Members during the challenges that lay ahead in 2015. Over the past year, the Chamber maintained an effective dialog between the business community and the Government of Ukraine despite the rapid changes. The Chamber worked diligently to provide our members with relevant information, high level en- gagement, and access to key decision makers. Our Committees and Working Groups continued to push for the comprehensive eco- nomic reform that Ukraine urgently needs in order to attract and retain much needed domestic and foreign investment. On behalf of the Board of Directors, I would like to express our grat- Graham Tiley, itude for the support and involvement of every one of our Member Chairman of the Chamber Companies. Your efforts and contributions are at the heart of the Board of Directors Chamber’s activities. We continue to work closely together and support each other to the benefit of all our Member Companies. I would also like to thank the Chamber Team who work every day to make the Chamber and our Member Companies a success! Their professionalism and dedication during these difficult times has been inspiring. A special thank you to Taras Kachka, for stepping up to the role of Acting President. Taras brought his expertise and enthusiasm INTRODUCTION to the role, and under his leadership the Chamber has continued to deliver the benefits and services that the Chamber has so suc- cessfully delivered over the years for our Members. A key task for the Board of Directors in 2015 will be to ensure that we select a new President early in the New Year that can lead the Chamber to the next level of performance on behalf of its Members. The Board will work with the new President to strive to create a more prosperous market economy in Ukraine that benefits our Members’ businesses and the overall quality of life for all Ukrainians. My best wishes to you and your business for 2015! 5 www.chamber.ua CONTENT Association agreement between Ukraine and EU .......................... 8 1. AGRICULTURE Agriculture sector overview...................................................................... 10 2. BANKING & FINANCIAL SERVICES Banking sector overview ........................................................................... 12 Insurance market overview ...................................................................... 16 3. ENERGY, ENERGY EFFICIENCY AND ENERGY SAFETY Energy efficiency ........................................................................................... 20 Electricity market of Ukraine ................................................................... 22 Ukraine’s energy independence .............................................................. 25 4. FMCG MARKET Key tendencies of NARTD market development in Ukraine ........ 28 5. HEALTHCARE Comparison of the Ukrainian healthcare and pharmaceutical sector to international counterparts.................... 30 6. HUMAN RESOURCES, LABOR & EMPLOYMENT Labor market overview .............................................................................. 34 6 www.chamber.ua 7. INFORMATION & COMMUNICATION TECHNOLOGIES Ukrainian software and information technology market perspectives ............................................................ 36 IT industry of Ukraine and its role in the global community ...... 38 8. INTELLECTUAL PROPERTY RIGHTS Combating counterfeiting in the tobacco industry ....................... 42 9. LEGAL SYSTEM Legal system overview ............................................................................... 46 Setting up an NGO in Ukraine ................................................................ 48 10. REAL ESTATE Real estate sector overview ................................................................... 52 11. TAXATION Taxation system of Ukraine ..................................................................... 56 VAT accounts .................................................................................................. 60 Corporate income tax: problems and prospects for reform ............... 62 Marketing research in Ukraine: portrait of the industry 2014 .................................................................. 66 CHAMBER MEMBERSHIP DIRECTORY ........................................................................... 68 7 ASSOCIATION AGREEMENT www.chamber.ua BETWEEN UKRAINE AND EU Main quantitative indicators in 2013–2014 Forecasts, possibilities, required steps/reforms Base EU import customs duties: Within 10 years — a deep and comprehensive free trade area with the EU. Over 90% of customs duties will be eliminated (reduced to 0%): 1 Ukraine will withdraw 12,7% 9,2% 4,3% 0,4% For agricultural Extraction Textile Food and drink 98% of import duties goods industry manufacturing production National treatment for Ukrainian EU will withdraw 2 companies seeking to set up 96,3% a business establishment in the EU of import duties 83,1% 41 000 End EU import customs duties (due Over the next 15 years Ukraine will to the Association Agreement): of Ukrainian agricultural goods passenger vehicles were on average preserve safeguards in the automotive are already imported duty-free to the EU imported by Ukraine from EU annually industry aimed at protecting domestic 3 (except for 2014, due to introduction of the vehicle manufacturers Agricultural utilization levy and general political turmoil) goods — 0,3% Fossil fuel extraction industry — 0,4% The Ukrainian economic sectors which 4 Food and drink Out-of-date manufacturing should benefit the most from the free production — 0,0% technologies, with the result that trade area (% growth expected): it is usually impossible to compete Textile with EU-manufactured goods Agriculture — 42,8% manufacturing — 0,0% 5 Food industry — 15,2% The need The need to Cumulative growth for fundamental Light industry — 100% adopt technical Main changes in laws of Ukrainian GDP regulation problems and practices is expected to reach in lieu of state (both administrative 6 standards and judicial) 14,1% “The signing of the Association Agreement is a very important decision taken by Ukraine and marks the beginning of a long path ultimately leading to a higher The need to replace state quality of life. Ukraine will face a number of challenges and will need to adapt a standards (many of which large number of laws and standards to meet the requirements set by the date back to the Soviet era) Association Agreement. We sincerely hope that Ukraine's leadership understands with EU technical regulations the needs to perform necessary reforms and that they will put all efforts into achieving this goal.” Daniyil Fedorchuk, Ph.D, Senior Associate at Gide Loyrette Nouel 8 ASSOCIATION AGREEMENT www.chamber.ua BETWEEN UKRAINE AND EU Main quantitative indicators in 2013–2014 Forecasts, possibilities, required steps/reforms Base EU import customs duties: Within 10 years — a deep and comprehensive free trade area with the EU. Over 90% of customs duties will be eliminated (reduced to 0%): 1 Ukraine will withdraw 12,7% 9,2% 4,3% 0,4% For agricultural Extraction Textile Food and drink 98% of import duties goods industry manufacturing production National treatment for Ukrainian EU will withdraw 2 companies seeking to set up 96,3% a business establishment in the EU of import duties 83,1% 41 000 End EU import customs duties (due Over the next 15 years Ukraine will to the Association Agreement): of Ukrainian agricultural goods passenger vehicles were on average preserve safeguards in the automotive are already imported duty-free to the EU imported by Ukraine from EU annually industry aimed at protecting domestic 3 (except for 2014, due to introduction of the vehicle manufacturers Agricultural utilization levy and general political turmoil) goods — 0,3% Fossil fuel extraction industry — 0,4% The Ukrainian economic sectors which 4 Food and drink Out-of-date manufacturing should benefit the most from the free production — 0,0% technologies, with the result that trade area (% growth expected): it is usually impossible to compete Textile with EU-manufactured goods Agriculture — 42,8% manufacturing — 0,0% 5 Food industry — 15,2% The need The need to Cumulative growth for fundamental Light industry — 100% adopt technical Main changes in laws of Ukrainian GDP regulation problems and practices is expected to reach in lieu of state (both administrative 6 standards and judicial) 14,1% “The signing of the Association Agreement is a very important decision taken by Ukraine and marks the beginning of a long path ultimately leading to a higher The need to replace state quality of life. Ukraine will face a number of challenges and will need to adapt a standards (many of which large number of laws and standards to meet the requirements set by the date back