EBA Personality- Artem Haivoronsky, Director Synergy Consulting
This month, we hear from Artem Haivoronsky, Director of Synergy Consulting, sharing his opinions about the current business climate in Lviv and Western Ukraine, and his suggestions for what could be done to improve things over the next few years.
How do you assess business sector development in the Lviv region so far in 2011 and what are your business development predictions for 2012?
We must always remember that Kyiv does not represent all of Ukraine and not be tempted into making generalizations of economic tendencies countrywide. We can see that the Ukrainian economy is on the rebound but this is largely due the fact the economy hit rock bottom and there is only one way to go, and that is – up. Also, I would say that luck of circumstance has also played a role in boosting Ukraine’s overall economic figures as demand for metallurgy is on the rise and this is helping Ukraine quite a bit. If we take a look at the regions, and Lviv region specifically, we still see the lowest salaries in all of Ukraine and poorest economic growth and most likely this will continue into 2012, as the general economy recovers, so will the regions, including Lviv.
How do you envisage the medium term development of the Western Ukrainian investment environment?
The prognosis in the medium term is rather modest, as it is not looking too far into the future, But there is reason to believe that Euro-2012 will do much to improve the business climate of this region and bring about more jobs in construction and the hospitality sectors, especially. It all depends on how this opportunity is harnessed by businesses and government.
In your opinion what role should Western Ukraine play in the broader Ukrainian economy?
I think that Western Ukraine has a unique heritage and entrepreneurial spirit to share with the rest of Ukraine. An economy mostly driven by SMEs (small and medium enterprises), it is the backbone of western Ukrainian business and a glimpse into what a future business environment could be built upon – one of diversity and the middle class.
Which business sectors present the most interesting investment opportunities in today’s West Ukrainian market?
I think that western Ukraine offers much opportunity in the agricultural, construction, marketing and sales and IT sectors.
What 5 steps would you advocate to the Ukrainian authorities in order to improve the business climate in Western Ukraine?
I think that there are many factors which play a determining role for investors in their decision to invest in a certain country but it cannot be denied that corporate tax rates are one of the most important factors countries are being judged by in their attempts to stay competitive and attract investors. Most industrialized countries have reduced corporate tax rates in order to be more competitive and Canada, for instance announced that it will have lowest overall tax rate on new business investments in the G7 by 2010. And by 2012, it will offer the G7’s lowest statutory tax rate. So taxation rates are very important, but in the Ukrainian case, they do not play a determining role. More importantly than the actual levels of rate are the actual tax policies. This is where Ukraine needs much improvement. So, my top 5 recommendations would be in the area of taxation policy. They include making things:
1. Simple – easy formula
2. Fair – don’t have a heavy tax burden as it will discourage entry and issues with retention
3. Predictable – no radical changes so business can plan for the future with some degree of certainty and confidence
4. Manageable – can’t have taxes being the biggest burdens as this nullifies market entry, and
5. Sustainable – taxes are needed for government purposes, but let this be a fair relationship.
What are the key-obstacles facing companies which seek to run successful business Western Ukraine?
The most important and overarching issues facing businesses wishing to be successful in Western Ukraine over the long-haul is the lack of predictability in taxation policies, selective application, and poor investment into infrastructure. Having these issues addressed for investors, will surely improve the overall climate of Ukraine and of course, the regions.
Will Ukraine in general and Lviv in particular be ready due in time to host a successful Euro 2012 tournament?
It is not for us to comment on whether Lviv will be ready as this is the government of Ukraine’s business. However, at the rate of pace Lviv is going, it appears that things are progressing and moving on the right track.
What are the biggest benefits of EBA Membership for your company?
The biggest benefit has been the opportunity to join a community of likeminded businesses and be able to collaborate, exchange views and forge business relationships. In this regard, the EBA has been very useful.
What do you regard as your biggest business success story to date?
Seeing that we work in the area of human resource management and language training, we see a major shift and strong influx of language training requests as well as recruitment with English. We are seeing that companies operating in western Ukraine, job seekers have come to the understanding that language gives that competitive edge. If only a year ago, English was considered a “nice to have”, today there is a clear understanding that in order to move your career or expand your company, English is a must. And this is very encouraging as we have been working hard to drive this message home.
What are your personal recommendations for anyone who wants to be successful in business?
Every region of Ukraine has its specifics and the same is true for the western region. The recommendations would be to listen, be attentive, take note of trends and opportunities, and simply deliver better.