According to the survey of the European Business Association conducted in the FH of 2019, the index of the investment attractiveness of Ukraine appeared to be rather negative — in particular it totaled 2.85 point out of 5 possible. The last year figure was higher — 3.07 points — e. g. neutral investors sentiment towards the business climate of the country. You can find the reasons and the possible variants of the current situation resolving in the interview of APK-Inform Agency with the Head of the Posco International, Kyiv Office, Choi Hayoung.
— According to the decree of the President of Ukraine, the head of Your company jointed the National Investment Committee. How do You estimate the investment climate in Ukraine and current risks for the investors?
Speaking of the investments, first that I want to tell - money like silence. But when there is a destabilization in the country, of course, nomebody wants to invest. Unfortunately, for now the political situation is also rather unstable in Ukraine, which is definitely a perspective country. Our company plans to work further here and we hope for the changes to take place with the new political power in Ukraine. I as a person who lives and works in this beautiful country for a long time always hope for the better. I’d like to confess that I had some problems to attract our Korean colleagues, smart and experienced in dealing with the countries with unstable economy or political situation, to work here in Ukraine. We invited them to visit the country and to chat with the companies that managed to find and settle the niche on the Ukrainian market. It was difficult to persuade them, to prove them that their worries were excessive and Ukraine has reliable and loyal partners. I want to address to the Ukrainian government — You need to explain clearly and simply to the foreign investors all the possibilities that you have, and should try to convey to the investors that the further change of the government will not influence the existing partnership. The foreigners need to be given the straight and transparent support and then they will bring you the investments.
I want to remind that Daewoo Group started to work in Ukraine since 1994. At that time, we were the largest investor among the companies that were doing business in Ukraine. It was the automobile plant ZAZ in Zaporizhia oblast. In 1998 when the economic crisis stroke, the Daewoo Group came apart and Daewoo International was founded. And since 2010, we jointed the POSCO International and named the joint company POSCO Daewoo. Since March 2019, we decided to rename the company into POSCO International.
(POSCO is the third largest steel company in the word and it is first to be the most competitive producer of steel around the globe. Now there are 3 organizations in Ukraine which promote interests of Posco International — Kyiv Office: project management and metal trade; LLC “Posco International Ukraine”; grain trade; grain terminal in Mykolaiv; storage and transshipment of grain).
— The investment in grain terminal was Your first financial investment into the agricultural industry, wasn’t it? What are Your future plans in this area?
Yes. In June 2017, the legal entity POSCO International Ukraine was launched, which operates in terms of grain business only. Before, even if we had the office in Ukraine, we had no projects in agrarian sector. When we decide to enter this market, it was agreed to build the grain seaport terminal because the grain trade does not guarantee the success itself. So, after the finalizing of the terminal construction we will have the third organization in Ukraine. We haven’t decided the name yet. I want to tell that while we were developing the project the world has changed slightly: the market is different and the competition is more severe. Nevertheless, we are proud of our brisk development in such a short time. Well, if we look at the leading world market players — these are companies that operate on the market for years. In particular, we negotiate the logistics matters. But should it be the land logistics or river — it is to be decided. But we definitely do not plan to stop.
— What can You say about the work in the agrarian business in Ukraine for those 9 years that You’ve been here?
It has been well said that the first step is always the hardest. For example, we had such a trouble with the first contract, when Ukraine faced a depression. It took me many affords to persuade other managers to operate in grain sector in Ukraine, apart from metal and chemicals, because Ukraine is agrarian country and the market is highly perspective. Eventually they agreed and in the end of 2010 we signed the first grain contract with one of the affiliated company of “Khleb Ukrainy” (“Bread of Ukraine”). And after the New Year the company had a change of management which did not want to keep on the deal. And while everyone was celebrating the Christmas Eve I was searching for the grain, as we had the obligations to customer. As a result, I found the grain from Australian supplier. We hardly fulfilled this first contract. I had to persuade both my colleagues and partners to return to this market for nearly a year. My colleagues were ready to work with me, but they beware working with Ukraine. After all these, we eventually started to work. At first, we operated with small consignments of the grain. The entering of the Chinese market was a historic move for us and Ukraine. We actively cooperate with China in terms of the rice deliveries. Also, we were first to deliver the commercial batch of Ukrainian corn to China. Since then business perks again. Now we deliver nearly 30% of the total corn volume to China annually.
— Apart from the negative experience with the state company, have You had any other obstacles in doing business in Ukraine?
In the beginning of 2019, our company, as many others, was in a very unfortunate circumstance similar to the one that happened to “AgroInvestGroup”, which performed on the market for a long time and had great trust from the large transnational trading companies. And again, we return to the issue of the state guarantees. We are hedging in any possible way, including multiple inspections of the future partners. However, anything can happen, and it hits hard the reputation of the whole country.
— What in Your opinion can improve the business climate in Ukraine? What should be done in order to avoid such situations?
First of all, there must be the transparency and the openness of the business operations. As long as the large companies have their trade house in third country, the situation is not going to change. Of course, somewhere it is possible to receive reliefs, preferences, good terms. So, it is necessary to create such conditions for the Ukrainians, so that they will launch the trade houses in their country. I hope that Ukrainian government would come to this and will stimulate this process. It is an additional possibility to preserve the jobs and human resources inside. Turning to my experience, I should say that it is very difficult to find qualified specialists. Staff is everything. By the way, it is rather hard to find young people to work in our company. Most of our employees are of middle age and older. On this occasion, I want to give one more small advice to the Ukrainian business and government: you need to make more advertisement of your country. It is necessary to present the country more in different sides of the world, to make the country recognizable everywhere, because for example in Asia people know little about Ukraine. The country should be displayed not from the business side only. It is also necessary that the foreigners know not only the bad that happed or still happening. However, the foreign businessmen who invest large funds want to see the decency. Ukraine as Korea has advantageous geographical location. Herewith, your advantage lies in many profitable resources.
Interviewed by Anna Platonova, APK-Inform Agency