Our friend Steve Edger alerted us to this from the latest edition of The Economist.  Many of the problems Ukraine is facing are due to the political stalemate.  Nothing will change until one of the troika now dominating Ukraine, emerges with the power to rule without compromise. Of course, we are hopeful that this is someone who reforms Ukraine to make it more economically feasible for development and investment.

We will have to wait. Just hope not too long. Ukraine and her citizens could miss out on  many opportunities in the near future. Investors in the post financial crisis climate will be a lot more discerning and will only commit to projects and regions that have solved many of the problems that are still extant in Ukraine.

The Viktor and Yulia Show….continued!!

The squabbling “Orange Revolution” leaders are failing to push through the longer term reforms that the economy needs.

A COUNTRY in default, engulfed by social protests and political chaos, crumbling to bits. This has been the West’s nightmare image of Ukraine. It was the first country to ask the IMF for a bail-out, its currency was in free fall, its economy is contracting at an annual rate of 9%. Yet the main activity in Kiev today seems to be putting up summer terraces outside cafés, not tents for demonstrators. In front of the main government building, a dozen bored protesters call on Yulia Tymoshenko, the prime minister, to come out “to the people”. Even in the industrial east, where output has fallen by as much as a third, the mood is subdued.

One reason is that trust in the government is so low and the experience of crisis so extensive that Ukrainians see little point in taking to the streets. At a time of hardship, working on a vegetable patch is preferable. A protest called by Viktor Yanukovich, leader of the opposition Party of the Regions, attracted relatively few people. There is no money to pay demonstrators. Stirring up his eastern heartland could annoy Mr Yanukovich’s business backers, who have been cutting jobs and wages.

Another reason for relative calm is that after several years of growth many Ukrainians have enough savings to get by for a few months. Some unemployment has been avoided by involuntary holidays and pay cuts. And though the main exporting industry, steel, is struggling, farming (which employs a quarter of the workforce) is doing well. Petro Poroshenko, a businessman, suggests that food production could become an engine of growth.

“Either the country is more resilient or the adjustment started earlier than we thought,” says Ceyla Pazarbasioglu, head of the IMF mission visiting Kiev. After a 40% devaluation, the hryvnia has stabilised. The trade balance went briefly into surplus for the first time in years. The rate of economic decline has slowed. “There is a feeling that we have touched the bottom,” Viktor Yushchenko, Ukraine’s president, says in an interview. On April 17th the IMF mission said it would recommend the release of the second tranche of Ukraine’s $16.4 billion loan.

The banks have undergone a stress test and the biggest will be recapitalised. For all the political cacophony, the government has pushed through the fiscal measures required by the IMF, including increased duties on alcohol and tobacco and higher gas tariffs for rich households. In the short term, Ukraine needs to cut its budget deficit. In the longer term its big problem is the structure of public spending rather than low tax revenues, argues Pablo Saavedra, an economist at the World Bank. Its unreformed social system and its red tape, both inherited from Soviet days, are crushing burdens. Ukraine devotes a third of GDP to social spending. Less than 2% of GDP goes to infrastructure investment. It takes 47 permits to open a business and three years to close it. All Ukrainian politicians, including Ms Tymoshenko, Mr Yanukovich and Mr Yushchenko, admit to corruption and lack of structural reforms in Ukraine—and blame each other. “We have been engaged with elections rather than with reforms,” says Anatoly Kinakh, who has served in several governments.

Now Ukraine is in the middle of a new election cycle. Mr Yushchenko’s presidential term expires in January and the campaign is under way. Political turmoil is nothing new in Ukraine, but when commodity prices were high and foreign credit cheap it had little impact on the economy. No longer. Ukraine nearly botched its agreement with the IMF partly because some members of Mr Yushchenko’s Our Ukraine block refused to vote for fiscal cuts. Mr Yushchenko says that “half of my own block has been bought by Ms Tymoshenko, while the other half cannot support her economic methods”. He blames Ms Tymoshenko for sacrificing the ideology of the 2004 orange revolution to political expediency and populism. She says that he has sold out to vested interests.

Mr Yushchenko certainly has ideology and vision. He talks of building a nation-state and taking Ukraine into NATO and the European Union. “Six times in the 20th century we have declared our independence and five times we have lost it.” Yet on vision, rhetorically at least, there is little difference between Ukrainian politicians. Ms Tymoshenko talks eloquently of European integration and the need to consolidate a country historically divided between east and west. “First of all we need to build Europe in Ukraine, because a country can only enter the EU if it has the same blood group, otherwise it will get rejected as an alien body,” she says in an interview. Even Mr Yanukovich, once backed by Moscow, now subscribes to the notion of European integration.

In truth, none of Ukraine’s politicians has risen to the promise of the orange revolution. Ms Tymoshenko’s actions sometimes smack of populism. When inflation rose last year, she imposed temporary controls on grain exports, for example. She has done little to promote long-term reforms. But it was thanks to her intervention both that the IMF loan was unblocked and that a breakthrough was made in the gas-price stalemate with Russia in January. In contrast, Mr Yushchenko’s influence has been mostly disruptive despite his avowed liberalism. He has vetoed many government plans, including privatisations.

The problem goes deeper than animosity between two old allies. It is rooted in a flawed change to the constitution in 2004 that reduced the power of the president but stopped short of turning Ukraine into a parliamentary republic, fudging the responsibilities of president and prime minister. “Whoever wins the presidential election will next day run into the same problems,” says Ms Tymoshenko.

Inevitably, all three main leaders insist they will run for president, including Mr Yushchenko, despite a poll rating in low single digits. But Ms Tymoshenko’s popularity has also suffered recently. Even Mr Yanukovich, who now leads in the polls, has seen his popularity dented. Many Ukrainians feel that none of the three familiar faces is capable of taking the country forward. Tired of the mudslinging, 20% would either vote against all candidates or simply not turn out.

To hedge their bets many businessmen are now betting on other candidates, including Arseniy Yatseniuk, a 34-year-old who has already served as foreign minister, economics minister and central-bank governor. Mr Yatseniuk’s rating has doubled in a few months and he is now catching up with Ms Tymoshenko. Her preferred option would be to change the constitution before the election and choose the next (symbolic) president in parliament. But she does not mind if Ukraine reverts to full presidential rule. “It does not matter to me what the head of the executive power is called: a prime minister, a chancellor, a president or a hetman.”

A bigger question is what kind of Ukraine will emerge from the crisis. And that will be determined not by elections, but by the willingness of political leaders to push through structural reforms.

What the real number will be in anyone’s guess. Suffice to say that Ukraine’s economy is taking a beating. The bright side is that the recovery will probably be just as dramatic.

PRESIDENTIAL SECRETARIAT FORECASTS UKRAINE GDP RECESSION AT 8-10%

The Ukrainian Presidential Secretariat forecasts a recession of the Ukrainian gross domestic product (GDP) at 8-10% in 2009.

According to an UNIAN correspondent, top deputy President’s Chief of Staff Oleksander Shlapak said this to a press conference on Monday.

According to him, a consensus-forecast has been announced lately, in line with which, the most optimistic forecast of the GDP dynamics belonged to the Economics Ministry of Ukraine, which forecasted a recession at 3%.

At the same time, O.Shlapak stressed that a number of scientific institutions and experts forecasted a GDP recession in 2009 at 15-17%.

(from www.unian.net)

Everthing’s On Sale
Maryna Irkliyenko, Kyiv Post Staff Writer

Heads up from our friend Phil Coffman, who is also concerned about new regulations regarding visas and registrations of foreigners. Like many here, he is making alternative plans if the Ukrainian Government makes it too difficult to live and work in this country.

New Rules designed to weed out criminals, undesirable foreigners

There may a glimmer of good news for expatriate entrepreneurs living and working in Ukraine… or planning to. The article below states that Ukraine and the EU will sign a deal to begin neogitations about visas, and although this could take some time to work out, we are hopeful that it will smooth the way for investors, businessmen and tourists to travel here as well as Ukrainians to travel more easily Western Europe.

Our biggest concern however, is that negotitations will drag on and many of us might be forced to leave Ukraine until a deal is reached. Ukraine would surely suffer as a result.

Recent changes to visa rules, as well as registration requirements are making everyone a bit angry and frustrated. Today for example, MBS Ltd. staff checked  with local OVIR office in Odessa on registration for American expatriates who own or direct companies & businesses, pay taxes and contribute to the economy here. The response was that ONLY 3 month registrations would be issued at the current time versus the the 1 year registrations that were issued previously. Moreover, the registrant would have to go through the exact same lengthy process each time they registered.

Our friend George Georghiou forwarded this to us.

The economic policies described below should do wonders for the Russian economy.  Sarcasm aside, Putin’s well intentioned (whatever one thinks of Putin, he believes he is a Russian patriot) restrictions-like all protectionist policies designed to help domestic industry-will backfire as the productivity that technology provides will not be available. That will be the effect of tariffs.

It is no surprise that xenophobic Russia employs protectionism. This fits into a historical pattern of encouraging development periodically, and then squashing it just as it bears fruit. A vast nation like Russia with an incredible array of resources should be the richest nation in the World, but protectionist and other anti-growth policies keep it underdeveloped. The excuse of protecting domestic companies and jobs is always used, though an examination of nations that allow competition shows that it increases wealth, tax revenues, and creates a greater numbers of jobs.

Our hope is that Ukraine does not adopt these restrictions. Given the cultural similarities between Russia and Ukraine, as well as the shared oligarchic influences in both governments, we would not be at all surprised if Ukraine went down the same road. It would be even more damaging to Ukraine since it does not have the same resources of Russia and must rely more on the industrial, service and consumer sectors of the economy.

 Restrictions and tariffs on farm equipment and machinery in a nation sitting on an under-utilized agricultural sector with the best farm land in the World, would damage a nation that has already suffered through ill conceived socialist collectivization decades ago.

Putin’s Tariffs Stall Russian Growth for Caterpillar

By Melita Marie Garza and Paul Abelsky

April 20 (Bloomberg) — Prime Minister Vladimir Putin’s trade measures are starting to keep Deere & Co. combines and Caterpillar Inc. trucks out of Russian wheat fields and coal mines, dimming the companies’ prospects for expansion abroad.

Deere and Caterpillar, reeling from the longest U.S. recession in a quarter century, were the companies most affected by loan restrictions and tariffs of as much as 25 percent that Putin imposed this year, according to a U.S. Chamber of Commerce survey of the top 50 American businesses operating in Russia.

Putin is trying to boost Russian industries with tariffs on everything from drugs to farm equipment as declining oil revenue saps the nation’s economy. The policies are hurting sales by Caterpillar, Deere and Agco Corp. in a market where revenue was forecast to rise as much as sixfold in the next decade.

“The new tariffs kicked these guys in the knees when they were down,” Larry De Maria, a New York-based analyst with Sterne, Agee & Leach Inc., said in a telephone interview. “Russia was supposed to be a $3 billion market in 2008 with potential to grow to $20 billion, possibly in as little as a decade.”

Emerging-market sales likely fell so far this year for Deere and Caterpillar, which reports first-quarter earnings tomorrow, De Maria said. Caterpillar is expected to report profit excluding certain items of 5 cents a share, the average estimate of 20 analysts surveyed by Bloomberg. The company earned $1.45 a share a year earlier.

“We are really going to struggle this year in Russia,” Ken Harding, Caterpillar’s regional execution manager for the Commonwealth of Independent States, said in a telephone interview.

‘Low’ Expectations

Caterpillar’s “expectation is low” that it will sell any of its 60-ton trucks, used for quarry and construction work, in Russia this year after selling eight last year, Harding said.

Starting in January, Peoria, Illinois-based Caterpillar and other foreign makers of off-highway trucks faced duties of 25 percent, an increase from 5 percent last year. BelAZ, a Belarusian equipment producer that dominates the region’s truck industry, isn’t subject to the tariff and will benefit, Harding said.

Caterpillar declined 59 percent on the New York Stock Exchange in the 12 months through April 17. Deere fell 56 percent, and Agco dropped 64 percent.

Deere, the world’s largest maker of agricultural equipment, and Duluth, Georgia-based Agco are being hurt by a program that gives Russian farmers a 20 percent discount on loans from Russia’s Central Bank if they buy domestic machines.

Loan Program

The deal is for loans made through OAO Sberbank, Russia’s largest lender, and Rosselkhozbank, the Russian Agricultural Bank, which both have local offices that farmers rely on for financing, Michael Considine, director of EurAsia issues for the Washington-based Chamber of Commerce, said in an interview.

“If a Russian farmer had the cash to buy a Deere combine, it would cost substantially more because of the tariff increase,” Considine said. “And if you didn’t have the money, you could just forget about it because you’d only be able to get the money to buy something made in Russia.”

Putin undertook the measures after a December visit to Rostov, Russia-based Rostselmash, the country’s leading combine maker.

Putin’s press secretary Dmitry Peskov wasn’t available for comment. Valeriy Khromthenkov, a Russian official in Washington with oversight of agricultural issues, declined to comment. A spokesman for Finance Minister Alexei Kudrin, who also is deputy prime minister, wasn’t available to comment.

‘Dramatically Reduced’

Agco’s sales are “dramatically reduced” in the region, because borrowing for a foreign tractor is now almost impossible, Greg Peterson, Agco’s head of investor relations, said in a telephone interview.

In its first-quarter earnings announcement in February, Moline, Illinois-based Deere said sales will decline in Central Europe and the Commonwealth of Independent States for the year. Ken Golden, a spokesman for Deere, declined to comment.

“Our main problems have been the lack of state subsidies on loans combined with insufficient operating cash and the general economic downturn, not the import tariffs,” Alexander Altynov, the general director of AgroSnab, an official John Deere dealer in Russia, said in a telephone interview.

Market Decline

Altynov predicted the foreign machinery market in Russia will decline as much as 75 percent this year.

Deere was expected to post second-quarter profit excluding certain items of $1.08 a share, the average estimate of 17 analysts in a Bloomberg survey.

The U.S. Trade Representative has worked with the U.S. combine harvester industry and at a meeting in Moscow in March expressed concern about the tariff, Nefeterius McPherson, a spokeswoman for the trade representative, said in an e-mail.

The tariff runs counter to Russia’s G20 pledge to avoid protectionist measures and is contrary to a November 2006 bilateral agreement that Russia will maintain a 5 percent tariff on combines until it joins the World Trade Organization, McPherson said.

The ruble’s 31 percent decline against the dollar since July also has made foreign products more expensive. Russia’s Economy Ministry estimates that imports have tumbled more than 30 percent in the first quarter of this year.

Last month, Russia allocated 25 billion rubles ($746.7 million) to OAO Rosagroleasing, the nation’s largest farm- equipment leasing company, and 45 billion rubles to state-run Rosselkhozbank as part of a 3 trillion-ruble stimulus package.

Rosagroleasing spent the money on Russian-made equipment, including 5 billion rubles on OAO KamAZ trucks, Agriculture Minister Yelena Skrynnik told Putin during a meeting on April 17, according to a transcript on the government’s Web site.

Farm Equipment

Russia’s Union of Farm-Equipment Producers, known as Soyuzagromash, asked the government last week to extend the 15 percent import duty on combines to all farm equipment. The tariffs may boost domestic market share for farm machines to 60 percent, the union said.

“The government wants both to help the domestic producers and keep the state funds allocated to the agricultural sector inside Russia,” said Mikhail Pak, an analyst with IFC Metropol in Moscow.

Putin’s efforts may hurt U.S. companies’ operations in the rest of the world, said De Maria, of Sterne Agee.

“There is a worry that these measures could spread to China and other emerging-market countries,” De Maria said. That “would be a blow to the Deere brand and others, stifling their growth strategy as local companies build share.”

(from www.bloomberg.com)

“Best kept secret in Europe!”  That is the cornerstone behind the founding of MBS Ltd.  Our philosophy is that we can help companies navigate and mitigate the pitfalls and obstacles of doing business here, to take advantage of the many opportunities. This requires vision, and a LONG TERM perspective. For those individuals and companies that have that, the rewards will be great as Ukraine is a “virgin” market, untapped and ready to be reshaped.

We believe Ukraine will at some point, break free from current restraints and “leap frog” over many of its more developed neighbors like Poland. With MBS Ltd. and very soon BOZONGO.COM, investors and entrepreneurs will have the tools they need to realize their goals here.

Hard-Core Investors Staying Put Despite Endless Crises

KIEV, Ukraine — Weak competition, high profits still make nation a promised land for some businesses. No matter what Ukraine throws at them, a small, hard-core group of foreign investors – from giant multinational corporations to lone expatriates – weathers the turbulence.

A conveyor line at the Trostyanets chocolate factory in Sumy Oblast, the biggest Kraft Foods factory in Ukraine.

They stay through crisis and boom times, “blue” and “orange” politicians, a hryvnia worth 4.6 to the dollar and a national currency that trades closer to 10.

They stay put when other foreigners get scared away by headlines of rampant corruption, a sea of bureaucratic red tape and political chaos. Who are these determined businesspeople? Do they make a lot of money here? If so, how do they manage to swim in Ukraine’s muddy waters?

“Ukraine is the best kept secret in Europe,” insisted George Logush, vice president of Kraft Foods International and area director for Ukraine, Eastern Europe and Central Asia. “The European media did a wonderful job, focusing on negative things and rarely showing positive aspects. [To them, I say]: ‘Thank you for sheltering this market for us from the competitors.”

Kraft Foods Ukraine is part of Kraft Foods, the world’s second-largest food and beverage company. It is one of the most successful investors in Ukraine, known by Ukrainians for Korona and Milka chocolate, Jacobs coffee, Lux potato chips, holding a leading position in all three categories. In 14 years, Kraft invested more than $150 million into Ukraine’s economy and increased its business by 100 percent, Logush said, a feat that “would not be possible in very many countries.” Today, the Kraft group boasts annual revenue in Ukraine of about $400 million on domestically-produced products, and more on imports, such as coffee.

The company arrived in 1995, when the economy was still reeling from the collapse of the Soviet Union four years earlier. The hryvnia, the new national currency, had not yet arrived. In its place, until 1996, Ukrainians used the karbovanets, a coupon-like form of payments.

One of the keys to Kraft’s success, Logush said, has been the company’s ability to take advantage of hard times to introduce new product lines. “Now we launch biscuits,” Logush said. “Crisis is the time when you can shake up the established order, because it’s being shaken anyway.”

Yet Kraft remains one of a relatively small number of multinational corporations and foreign investors who have ventured into Ukraine, a vast and largely untapped market of 46 million citizens.

The nation has attracted a mere $35 billion in foreign investment since independence. By comparison, nearly $200 billion has poured into neighboring Poland, a European Union member with eight million fewer citizens than Ukraine, since the Soviet Union’s collapse.

Many investors have stayed out because of corruption, red tape and political squabbles between ex-Prime Minister Victor Yanukovych’s “blue” forces and the “orange” ones led by the now-dissolved alliance of President Victor Yushchenko and Prime Minister Yulia Tymoshenko.

Jorge Zukoski, president of the American Chamber of Commerce, said Kraft’s success is shared by many foreign investors brave enough to tiptoe into the market. They stay, Zukoski said, because they’re generating higher profits than they might in other nations. By establishing themselves first, companies such as Kraft grew fast, faced limited competition and can look forward to high growth rates ahead.

Zukoski said it helps to be in a place for the long run.

“At the end of the day, the large strategic and institutional investors that we represent see the current global financial crisis as a short-term blip on the radar screen. They look at Ukraine as a 50- to 75-year play and understand that there are very few countries left in the world that have the potential to drive future growth for their companies.” Despite the challenges and difficulties, chamber members keep striving for a Ukraine that is “competitive and well-positioned when global growth resumes,” Zukoski said.

But for some investors, the headaches of doing business in Ukraine are simply too much. And, while normal economic cycles are manageable, sometimes Ukraine’s off-the-charts corruption is not.

“The crisis did not affect our business in Ukraine as much as the corruption,” said Hanan Mor, owner of an investment company, in an interview with Israel’s Calcalist newspaper. “That is why we are stopping any business initiatives in this country.”

But the cheerleading and individual success stories cannot hide the fact that, by many measures, Ukraine’s business climate remains unfavorable. The list of grievances is long: unstable legislation, corruption, red tape, non-transparent taxation system, raider attacks, abuse of intellectual property and auctioneer rights.

Politicians are aware of the problems, even if they seem unwilling or unable to improve the situation. As parliamentarian Nataliya Korolevska told an investors’ conference in February: “As the world investment capital reaches $1.5 trillion, Ukraine has to do everything to participate in the process under competitive terms.”

Hard-core investors say instability is part of the game.

“I’ve been here for 15 years and this country has never been stable. I wouldn’t advise anybody to stay out of Ukraine, just because they want to wait for the next election,” said Glen Willard, a 15-year business veteran in Ukraine and founder of Willard, an advertising and public relations company.

Willard admitted that the worst part of doing business in Ukraine is its unpredictability. “Other than that, business is not easy anytime, anywhere,” Willard said: “So just get over it.”

Kraft’s Logush also said Ukraine is not for the squeamish.

“If you need to find an excuse to leave the country, you’ll find it,” Logush said. “Particularly, in terms of political instability, I think people are just extremely shortsighted and purposely blind. How long has democracy been in Ukraine?”

American businessman Paul Waters is one of hundreds of expatriates who have thrived on the Ukrainian market. Since arriving 17 years ago, Waters appears to have done a little bit of everything in Ukraine and he has no intention of leaving. From steel trading to the construction business, software and solar panel systems development, Waters said that “Ukraine has been very kind to me. I could be sitting on my boat in California fishing. But in Ukraine, I am enjoying everything. It’s not a Disneyland, it is real,” Waters said.

Waters did, however, confess that it took him awhile to get accepted. He also was cheated several times by Ukrainian partners.

“When I arrived, there were all these Soviet bosses, running businesses and, certainly, they were not as open to our ideas,” Waters said. Ukrainian companies still lack efficient administrators, but they have plenty of highly educated people, computer wizards and other professional standouts to choose from, according to Waters.

Seasoned foreign investors have had success in the financial, insurance and telecommunication sectors, as well as food production and construction, according to Konstantin Stepanov, chief analyst at Sokrat investment group.

The leading individual foreign direct investment in Ukraine’s all-important metal sector came from the $4.8 billion re-sale of the former Kryvorizhstal steel mill in Kryviy Rih, the nation’s largest steelmaker, to ArcelorMittal Steel in 2005. The sale followed a scandalous purchase by a group led by Ukrainian billionaires Rinat Akhmetov and Victor Pinchuk, who bought the steel mill for six times less than what ArcelorMittal, the world’s largest steel company, paid in an open auction.

So, 18 years after independence, Ukraine still represents a big gamble with big potential payoffs – and terrible downsides. It’s a high-risk, high-reward game, Logush admitted. But many are betting that emerging economies will get out of the crisis more quickly than developed ones.

“Which of them will [foreign investors] gamble on first? The ones with the greatest multiplier effect, the largest scales, like China and Brazil. But they always want to spread the risks,” Logush said. “I think those who’ll go into the Ukrainian economy will do very well.”

(from the Kyiv Post)

Is it time for investors, entrepreneurs and foreign residents to leave Ukraine? Just at the point in history where Ukraine was starting to open up and grow beyond the limited expectations of those that do not wish to see her strong and independent, along comes another idiotic decree from the government in Kyiv.

Do the “powers that be” in Ukraine believe that making it more difficult and expensive for people to work, live and do business in Ukraine is in the best interest of this nation? Is Ukraine still Soviet?

Ukraine limits labour market for foreigners

The Ukrainian government has introduced severe limitations on the accessibility to the country’s labour market for foreigners – especially as concerns foreign managers, Polskie Radio reported.

“This is a huge slap in the face for Polish investments. Without Polish managers, controlling investments in the country will become practically impossible,” stated Marian Przezdziecki, Deputy Head of the International Society of Polish Companies in the Ukraine (MSPPU).

The legislative changes, going into effect in May, are meant to increase the number of spaces on the labour market for Ukrainians, claims Ludmil Denisova, the Minister of Labour and Social Policy of Ukraine.

According to the decision made by Prime Minister Yulia Tymoszenko’s government, on May 1, the number of required documents for obtaining a work permit in Ukraine will be greatly increased. Not only will an employer need to prove the necessity of hiring a foreigner, but the employee will have to provide notarized copies of educational and professional documents as well as sworn statements proving that one holds no debts or a criminal record.

The Ukrainian daily Kommiersant-Ukraina highlights the fact that the most important changes in the regulations affect managers and directors claiming that current regulations allow foreigners to have work permits for as long as the contract requires. The changes will limit work permits to a three year period for managerial positions and one year for lower-level positions.

Violating the new regulations will incur heavy fines – current law dictates a fine of about 100 USD, but new regulations increase the number to 1500 USD.

Polish Labour Minister Denisova added that, according to new regulations, foreign workers found to violate the laws will be deported from the country at the cost of their employer.

“Whoever thought up this law does not know exactly what they are doing. No foreign company working in the Ukraine will hire anyone to high-level positions that does not have the proper experience or high-tech knowledge necessary in, for example, our firm. And finding such people [in the Ukraine] is a problem,” stated Zyslaw Krowiak, financial director of Cersanit, the Polish manufacturer of sanitary facilities that recently opened a factory in the country.

There are currently about 400 Polish companies located in the Ukraine with about 700 million USD invested in the country at the end of 2008.

From Polskie Radio

Real estate prices have declined almost everywhere. This article from www.unian.net  indicates the sharp reduction in prices in Kyiv. From anecdotal evidence gathered by staff of MBS, we have concluded that prices have fallen even further due to the factors mentioned below. Moreover, the feeling among the public is that prices will continue to fall further. People whom we have spoken with…and whom are in the market for residential real estate…are waiting until AFTER this summer. The consensus is that the Ukrainian economy will be still be bumping along the bottom, but people will have even more serious cash flow constraints than now.

Kyiv apartments fell in price twice

During a year, prices on flats at the secondary market in Kyiv fell twice. According to the information of the Union of Real Estate Experts of Ukraine, the record fall in prices took place in the segment of one-room flats, Delo daily reports (#60 dated April 14).

In the first quarter of the year 2008, 1 square meter in one-room flats in Kyiv cost $3333, while in the first quarter of the current year, the price fell to $1878. The prices on two-room flats fell by 39%, three-room – by 38%.

Realtors believe the main reasons of the abrupt fall in prices are the reduction of mortgage crediting and the devaluation of hryvnia. In their opinion, prices on one-room flats have already reached the bottom. They expect that the native real estate market will recover by 2010, after the presidential election.

The partners, staff and associates of MBS Ltd. wish you, your family, friends and colleagues a HAPPY PASSOVER, GOOD FRIDAY and EASTER!!!!