Morten Munk at Ost Info's dinner with Denmarks Ambassador to Ukraine 09. April 2015

1. Ukraine – on the road towards EU?
Briefing on business conditions in Ukraine!
Is Ukraine on the road towards EU?
9. April 2015

2. Ukraine – on the road towards EU?
Will Ukraine succeed in re-directing its
export flow to the West?
Can EU replace Russia as Ukraine’s primary
trade partner?
Energy?

3. Northern river reversal!

4. The cast
USA - They lost! Followed by the role as the reluctant chess
player – and believing in partnership!
EU/Nato – Neighbour program with democracy, equality,
trade and energy – to share strategic resources (energy
and steel)!
Russia – To re-establish idendity via power (from coast to
coast), ready to use force - a certain eurasian civilisation!
Ukraine - Rule of law, honest government and competent
leadership
9. April 2015

5. The arsenal!
The sanktions - reflects the European and American pain
threshold – not the Russian!
Green men – destabilising and power play!
Capital – financing transformations!
Dedicated flows of information – but the truth is , that people
only read what they beleive in. Both in Russia and in the
West!
The challenge of the West – We have lost the ability of
understanding Russia from the inside.
9. April 2015

6. Ukraine – on the road towards EU?
• The press, reporting war and financial
collapse.
• Financing sources drying out.
• Currency going down the drain.
• Many political signals.
• Many red threads
• Ophill on all channels.
9. April 2015

7. Ukraine – on the road towards EU?
The dominating theses!
To do the right things
To do the right things real fast
To ensure visibility
Self-promotion is the dominating rule both in UA
and the West
9. April 2015

8. Ukraine – on the road towards EU?
Shortly: Caos!
9. April 2015

9. Ukraine – on the road towards EU?
Both actors and observers seem to be
missing the greater picture!
Many opportunities are lost, and the ghost
of non-confidence does appear!
9. April 2015

10. Ukraine – on the road towards EU?
The fight under the carpet has moved out
in the open – but without changing the
rules of engagement!
9. April 2015

11. Ukraine – on the road towards EU?
A summary!
• Putin’s plan – the eurasian costums union.
• The problems of the region started
allready in 2012.
• This is the time when it is decided if
Ukraine will survive as a sovereign state.
• The East-West confrontation is ultimative.
9. April 2015

12. Ukraine – on the road towards EU?
Leaving the key question to be answered:
Will Ukraine succeed?
Will Ukraine succeed in re-directing its export flow to the West?
Can EU replace Russia as Ukraine’s primary trade partner?
What can Ukraine offer to the EU?
Will the Ukrainian people carry the reform
burden and for how long?
The energy ghost!
9. April 2015

13. Ukraine - Business unplugged!
It all started in 2012/13
Currency
Oil
Trade
9. April 2015

14. Ukraine - Business unplugged!
The currency

15. Ukraine - Business unplugged!
The Hryvna – a special case!

16. Ukraine - Business unplugged!
The oilprice!

17. Ukraine - Business unplugged!
And became critical in 2013/14
The customs union
Vilnius - DCFTA
Maidan
Krim
Novorossiya
Sanktions and embargos
9. April 2015

18. Ukraine - Business unplugged!
Status
• A political window of opportunity has opened.
• Ceasefire in the East.
• The gas situation de facto cleared.
• The DCFTA is signed, but a russian ”Njet”.
• The financing is thin, but the new IMF funding & and
reform package is robust and functioning.
• The GDP outlook for 2015 is a drop of 5.5 %.
• The energy prices will by 1. April cover 50 % of costs.
• The currency situation is balancing and the banking
sector is undergoing restructuring.
• De-Oligarchisation has started
9. April 2015

19. Ukraine - Business unplugged!
Business status
• 98% of all ukrainian goods do now have free
access to EU.
• The trade with Russia has dropped drastically.
• The export to EU picks up exponentially.
• DHL volume out of Ukraine grows.
• The business is operating for most.
• The political risk in the regionen is again being
visible.
9. April 2015

20. Ukraine - Business unplugged!
The challenge for Ukraine
– to explore the potential of DCFTA’en.
9. April 2015

21. Ukraine - Business unplugged!
The financials

22. Ukraine - Business unplugged!
Their relations
Den 22. oktober 2014

23. Ukraine - Business unplugged!
The Ukrainian export

24. Ukraine - Business unplugged!
The Ukrainian import

25. Ukraine - Business unplugged!
The future trading structure, enpowered by
necessety – and opportunities:
• EU as the driver (Russia’s oil economy in crises).
• Russian arms sector supplies to be ended.
This requieres:
• Energy efficinecy and modernising of production
are priorities
• Conversion of the millitary production sector
9. April 2015

26. Ukraine - Business unplugged!
What will finance this restructuring?
DCFTA is expected to provide an additional
growth in GDP around
12 % point in the coming 5 years.
9. April 2015

27. Ukraine - Business unplugged!
The tree sectors, creating value!
• Energy – because it is necessary!
• Agriculture – because it is possible!
• Knowledge/IT – because it is available!
9. April 2015

28. Ukraine - Business unplugged!
A target for Danish companies:
Energy efficiency - driven by the individual
companies and households.
Necessary reforms: Naftogaz
9. April 2015

29. Ukraine - Business unplugged!
A target for Danish companies:
Agriculture & food production – driven by the retail
sector
Upgrade of the supply chain
Developemt of prof. suppliers
Necessary reforms: Landowner structure to be
changed
9. April 2015

30. Ukraine - Business unplugged!
A target for Danish companies:
Viden/IT
Reformatting of the supply chain
Inclusion of key competencies.
Products in stead of hours.
Necessary reforms: Business conditions to be
simplified
9. April 2015

31. Ukraine - Business unplugged!
And finally:
Ukraine's unique combination of skills and
low cost being located right on the EU's
doorstep will remain an asset for a long
time to come.
Barriers are decomposing.
Border crossing and administration will be
simplified.
9. April 2015

32. Ukraine - Business unplugged!
A fresh exampel
UA compared with Poland.
20.000 M2 and 1.000 employees
Cost of establishment
Logistics
Feasibility
Pay back period
9. April 2015

33. Ukraine - Business unplugged!
Some specific advises!
9. April 2015

34. Ukraine - Business unplugged!
Energy efficiency on the level of
companies and households.
Conpetent distributors.
Key components/koncepts, that can ensure
profitability.
Financing (Nefco).
9. April 2015

35. Ukraine - Business unplugged!
Agro & Food.
Fix the supply chain
Opgrade of the food processing sektor
Inporter/agent with competencies
or
Own establishment
9. April 2015

36. Ukraine - Business unplugged!
Knowledge/IT, inklusion of key
competencies via own establishment.
9. April 2015

37. Ukraine - Business unplugged!
Summary
• The crises was already there.
• The level now reflects the real situation.
• The transition/reorientation is driven by
both political and economic factors.
• The DCFTA effect is dependent upon
reforms.
• The three sectors are a fair match for DK
• The lowcost status will remain important
9. April 2015

38. Ukraine - Business unplugged!
De three sectors!
• Energy – because it is necessary!
• Agriculture – because it is possible!
• Knowledge/IT – because it is available!
9. April 2015

39. Selected references
Giract

40. Thank you for your
attention!
Questions are welcome!
Aarhus, Denmark +45 70 22 84 55
mm@mafcon.com
www.mafcon.com/dk

41. Ukraine – Business unplugged!
Om at drive forretning i det tidligere
Sovjet!
Kulturelt og strukturelt er regionen ikke på linje med
internationale business standarder, men er præget af
hvad man kan kalde institutionelle mangler og
sammenhænge.

42. Ukraine – Business unplugged!
Og lad det være sagt straks!
Vi er overbeviste om, at succes i det tidligere
Sovjetunionen er meget mere er viden og hårdt,
struktureret og disciplineret arbejde end kunst, blandet
med lidt held.

43. Det starter med en undren og
et spørgsmål….
• Hvorfor er landene så ens?
-Rammebetingelserne: Juridisk, Institutionelt,
Organisatorisk, Bureaukratisk
-“Way of doing business”
-“80–15–5 reglen”
-Hvorfor er det så svært at få succes?

44. Og hvorfor er det så svært…
• Ny zone, nye normsæt - CE, DIN oma er ukurante
 Erkend kravene, forstå dem, vælg en vej
• Kritisk masse en forudsætning
 Store ”igangsætningsomkostninger” og omkostninger til
vedligeholdelse af ”service links”, administration & normer
 Lønsomhed forudsætter volumen
• Kompetencer
 Ledelse og evne til at ”tæmme distancen” kræver noget
andet og mere, end man umiddelbart forventer.
 Det skal ikke være den der har bedst tid, der sættes på
opgaven, men den der er bedst til opgaven

45. Ukraine –
Taler vi Ukraine er der 3 spørgsmål, som
altid rejses
-Korruption
-Sikkerhed
-Hvorfor er det så svært at få succes?

46. Ukraine – korruption
Korruptionen i 4 områder
-Råstoffer og naturressourcer
-Koncessionerede områder (tele, energi)
-Det offentlige som kunde eller
regulerende myndighed (alkohol)
-B-t-B, B-t-C

47. Ukraine – sikkerhed
-EURO 2012 erfaringer
-Mafcon erfaringer
-Klienterfaringer

48. Hvorfor er det så svært?
• Den kulturelle forskel
• Godhed, venlighed og dumhed er synonymer
• Den sproglige barriere
• ”Sovjetunionens 5. P” –paperwork!
Og Bureaukrati er ikke det samme som korruption
Udslidt, nedslidt og til grin, men med
super god datadisciplin !!!
Bliver det nogensinde anderledes?

49. Rammebetingelserne
• Det administrative system fra
Sovjettiden repræsenterer
sammenhængskraften i CIS i dag
• DET BLIVER IKKE ANDERLEDES PÅ DEN
KORTE BANE.....

50. Trosbekendelsen –
”Sovjetoconomy”
• At gøre forretning i det tidligere Sovjet er
anderledes end i den øvrige del af verden
• Landene er forskellige, men
rammebetingelserne er ganske ens og
forandringerne sker langsomt
• Virksomheder & personer skal have specielle
kompetencer for at få succes i det tidligere
Sovjet
• Det tidligere sovjet er ikke for alle!

51. Nye ”papers” til disposition!
• Vesten forstår ikke Rusland.
• Business Alignment
• Business excellence in the CIS
• Outsourcing i CIS