Canadian Prime Minister Justin Trudeau and Ukrainian President Volodymyr Zelenskiy toast before a dinner during the Ukraine Reform Conference in Toronto, on Tuesday, July 2, 2019. (Andrew Lahodynskyj/THE CANADIAN PRESS)

Ukraine – open for business?

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Daniel Bilak is on a mission.

The former Torontonian, who now calls Kyiv home, wants to rebrand Ukraine.

“What we really want to do is to get the message across that there is new Ukraine,” Bilak says, taking a short break from his regimen of shaking hands and making introductions at a busy conference room at the Ukraine Reform Conference hosted at the Royal York Fairmount Hotel in downtown Toronto.

“We want to break down stereotypes, we want to break down people’s views of Ukraine as this sort of basket case, failed state nation that the Russians and many Western media promote.”

Hobbled by war and corruption

Ukrainian servicemen sit on an APC during military drills near Urzuf village not far from the city of Mariupol, eastern Ukraine on Nov. 29, 2018. (Sega Volskii/AFP/Getty Images)

It’s a tall order for a country that has undergone two revolutions over the last fifteen years, stood powerless as Russia annexed Crimea in 2014, and is in the midst of fighting a deadly civil war in eastern Ukraine with Russian-backed rebels and regular Russian troops.

To say nothing of corruption, nepotism and other internal ills that have plagued Ukraine since its independence in 1991.

But Bilak, who heads UkraineInvest, the Ukrainian government’s investment promotion agency, is not daunted by the challenge.

“In many respects Ukraine’s problems are no different than any of the countries in Central and Eastern Europe,” says Bilak, dressed in a “vyshyvanka,” a traditional Ukrainian collarless embroidered shirt. “We are a country in transformation, we are a country that has done more to reform itself than any other country in the world in the last five years.”

Building new institutions

It’s important to note that the new Ukraine is being built from scratch in the last five years, he says.

“In the previous 23 [years], the elites took advantage of the post-Soviet breakdown and the development of the new era and developed systems where they were able to acquire many of the resources of the state,” Bilak says.

Ukraine never had its own national institutions and is racing against time to create all these institutions that most Western democracies take for granted, he says.

“We never had a national government, we never had a national parliament, we never had a truly national church, we never had a judicial system that was truly Ukrainian – it was always somebody else’s,” Bilak says. “So we have to build all these institutions from scratch.”

‘Brains and grains’

Dmytro Kostyk, CEO of Kodisoft, shows the interactive restaurant table developed and built by the Ukrainian high-tech company at the Ukraine Reform Conference in Toronto on July 4, 2019. (Levon Sevunts/RCI)

Bilak has reasons to be optimistic.

Depsite a war on its eastern border, despite the fact that its trade with Russia, once its main trading partner, has “shriveled to nothing,” Ukraine’s economy has been growing for 14 consecutive quarters.

“2014 was a massive market correction if you like in terms of the economy,” Bilak says, referring to the ouster of former President Viktor Yanoukovich in a wave of Western-backed popular protests and Russia’s annexation of Crimea and the war in the Donbas region that followed.

“We lost 20 per cent of our GDP, we lost 60 per cent of the value of our currency, but we kept our greatest assets, which are our brains and grains.”

Over the last five years, the Ukrainian economy started to become driven not by metallurgy and coal production, which was one of the main industries in the rebel-controlled parts of the Donbas region, but by agribusiness, Bilak says.

Ukraine has become an agricultural powerhouse and is among the top grain producers, and agriculture now represents about 20 per cent of the country’s national output, he says.

“What really took off was IT, and it’s not just information technologies but innovation technologies,” Bilak says. “We’re no longer viewed as just an outsource place, we’re producing really cutting edge innovation technologies.”

From Snapchat filters and the popular online grammar corrector Grammarly, to 3D metal printing, Ukraine is home to many innovative technologies, says Bilak.

“Ukraine is one of the leading countries developing Bitcoin, artificial intelligence, machine to machine learning, natural learning process: we’re on the cutting edge,” says Bilak. “This is a point of relevancy that we now have with investors in other countries.”

Canadian investments in Ukraine

Manufacturing, infrastructure, energy, agribusiness and creative industries are the sectors of the Ukrainian economy that can attract Western investment and become drivers of Ukraine’s economy he says.

Several Canadian companies are already investing in this potential thanks to the Canada-Ukraine Free Trade Agreement, Bilak says.

This list includes TIU Canada, which has installed over 30,000 solar panels in Ukraine and plans to expand its investments further, Black Iron, which is investing in an iron ore production facility in Eastern Ukraine, and Brookfield Asset Management, a global Canada-based alternative asset manager, which is building an IT development centre in Western Ukraine, Bilak says.

‘Need to see concrete measures’

Ukrainian President Volodymyr Zelenskiy listens to Canadian Prime Minister Justin Trudeau at the Hotel Fairmont Royal York During the Ukraine Reform Conference in Toronto, on Tuesday, July 2, 2019. (Andrew Lahodynskyj/THE CANADIAN PRESS)

But Bernard Masnyk says he is not ready yet to invest in Ukraine.

Masnyk, who owns Nexal Aluminum, an aluminum manufacturing company based in Mississauga, Ontario, says he came to the Ukraine Reform Conference because as a Ukrainian-Canadian he is interested by the developments in the ancestral homeland.

“Particularly with the last presidential election there is a lot of optimism in the air,” Masnyk says, referring to the election of comedian-turned-politician Volodymyr Zelenskiy as the country’s new president in April. “I would like to see what’s going on, I would like to have a better feel for the events.”

Zelenskiy, who made his North American debut, at the conference urged Ukrainian-Canadians to invest in their homeland, promising to continue and deepen Ukrainian reforms.

As Ukraine heads into parliamentary elections on July 21, Masnyk says he will be watching carefully for any signs that the new government is serious about deep structural reforms before investing his hard-earned money in Ukraine.

“In our view the major problem with Ukraine or the Ukrainian government is the justice system,” Masnyk says.

Until the judicial system significantly improved, people will have no confidence that their investments in Ukraine are safe, Masnyk says.

“We need to see concrete measures such as credible prosecutors, judges and so on, and, perhaps, would like to see a few judges behind bars or tried,” Masny says. “We need to see some concrete activities. Otherwise words are cheap.”

Political risk insurance

Yevhen Nyshchuk, left front, Minister of Culture of Ukraine and Roman Waschuk, Ambassador of Canada to Ukraine sign the bilateral Audiovisual Co-production Treaty between Canada and Ukraine as Canadian Prime Minister Justin Trudeau and Ukrainian President Volodymyr Zelenskiy look on at the Hotel Fairmont Royal York during the Ukraine Reform Conference in Toronto, on Tuesday, July 2, 2019. (Andrew Lahodynskyj/THE CANADIAN PRESS)

The hardest part of his mission is overcoming the perception of Ukraine as a dangerous or unsafe or risky place to do business, says Bilak.

What Ukraine really needs from Canada is for Export Development Canada, the government’s export credit agency, to offer political risk insurance for Canadian businesses willing to invest there, he says.

“If we can take the political risk off the table, Canadian companies can compete like they do anywhere else in Europe,” Bilak says.

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