Welcome to the U.S.-Ukraine Business Council

UKRAINE BUSINESS NEWS: SEVEN ARTICLES

1. U.S. VICE PRESIDENT JOE BIDEN TO TRAVEL TO GEORGIA AND UKRAINE
The White House,Office of the Vice President
Wash, D.C.,Mon, June 22, 2009

2.  U.S. COULD HELP UKRAINE RESOLVE PROBLEM ISSUES
OF GAS SUPPLIES TO ITS GAS TRANSIT SYSTEM
Interfax-Ukraine, Kyiv, Ukraine, Saturday, 20 June, 2009
 

3. PM TYMOSHENKO, U.S. DELEGATES DISCUSS ENERGY ISSUES
Yulia Tymoshenko Bloc, Byut, Kyiv, Ukraine, Monday, June 22, 2009

4.  UKRAINE LAND REGISTRATION PROPOSAL PRESENTED AT 
MEETING IN KYIV BY MARKS SOKOLOV & BURD ATTORNEY
Marks Sokolov & Burd, Kyiv, Ukraine, Tue, June 2, 2009

5.  UKRAINE: BUSINESS STARTS EXPORTING TIRES TO UNITED STATES 
Dmytro Kuzmin, Ukrainian News, Kyiv, Ukraine, Tue, June 16, 2009  

6.  UKRAINIAN COMPANIES SALES REVENUE, PROFITABILITY AND
CASH POSITION MOST SEVERELY IMPACTED BY FINANCIAL CRISIS  
Ernst & Young Ukraine, Kyiv, Ukraine, Thursday, June 4, 2009

7.  FIRST INNOVATION FORUM HELD IN UKRAINE 
$120,000 awarded to five finalists to implement their proposals. 
U.S. Civilian Research & Development Foundation, Arlington, VA, April 22, 2009
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1. U.S. VICE PRESIDENT BIDEN TO TRAVEL TO GEORGIA AND UKRAINE

The White House,Office of the Vice President, Wash, D.C.,Mon, June 22, 2009

WASHINGTON, D.C. -The Vice President will travel to Georgia and Ukraine the week of July 20-24. During the visit, the Vice President will meet with the political leadership of each country, as well as opposition figures and civil society representatives.

The Vice President will demonstrate U.S. support for continued democratic and economic reforms and discuss issues of mutual interest in both countries. Additional details on the Vice President’s trip will be released at a later date.

 

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2. U.S. COULD HELP UKRAINE RESOLVE PROBLEM ISSUES
OF GAS SUPPLIES TO ITS GAS TRANSIT SYSTEM

Interfax-Ukraine, Kyiv, Ukraine, Saturday, 20 June, 2009

KYIV - The Ukrainian president's commissioner for international energy security, Bohdan Sokolovsky, has met with U.S. delegates headed by U.S. Special Envoy for Eurasian Energy Richard Morningstar.  The meeting was held at the initiative of the U.S. side, the presidential press service reported
on Saturday.

The participants in the meeting discussed bilateral and multilateral cooperation in the context of ensuring national and international energy security. They focused on the urgent situation with the supplies and transit of Russian gas.

At the request of Morningstar, Sokolovsky briefed U.S. delegates on concrete measures being taken by the Ukrainian president to resolve problems that
arise due to unbalanced mutual relations on the Ukrainian gas market and gas contracts signed on January 19, 2009.

He noted the expediency of raising additional funds to make payments for the gas that should be pumped into Ukraine's underground storage facilities to
ensure gas supplies and gas transit for the current and next autumn and winter seasons.

The U.S. side praised the actions of the Ukrainian president. U.S. delegates also stressed the need to reform Ukraine's gas sector, and said they were ready to help Ukraine in the negotiating process on settling the problem issues of gas supplies to the country's gas transit system.

Morningstar called for the consolidation of efforts in this question by all branches of power in Ukraine and economic entities. The sides preliminarily
agreed they would soon discuss cooperation in the implementation of the Euro-Asian Oil Transport Corridor Project on the basis of the Odesa-Brody
oil pipeline.
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3.  PM TYMOSHENKO, U.S. DELEGATES DISCUSS ENERGY ISSUES

Yulia Tymoshenko Bloc, Byut, Kyiv, Ukraine, Monday, June 22, 2009

KYIV - Ukrainian Prime Minister Yulia Tymoshenko on Friday met with U.S. delegates led by U.S. Special Envoy for Eurasian Energy Richard Morningstar.

During the meeting, the sides discussed issues related to energy security and prospects for the implementation of bilateral energy projects, the Ukrainian government's press service reported.

In particular, Tymoshenko stressed the importance of developing cooperation between Ukraine and the Untied States in the energy sector.
Bloc of Yulia Tymoshenko 2008
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4. UKRAINE LAND REGISTRATION PROPOSAL PRESENTED AT 
MEETING IN KYIV BY MARKS SOKOLOV & BURD ATTORNEY

Marks Sokolov & Burd, Kyiv, Ukraine, Tue, June 2, 2009
 
KYIV - Artem Saprykin, Senior Associate of Marks Sokolov & Burd, LLC, made a presentation at an Interdepartmental Meeting on the Issues of the Free-Market Transfer of Land in the context of improving the IFC index "registration of property." The meeting on May 21 was chaired by Deputy Minister of Economy, Victor Panteleenko, and took place at the Ministry of Economy in Kyiv.
 
The panel considered the following proposals aimed to the improvement of land and real property legislation in the sphere of land relations were
considered:
 
       (1) Establishment of the unified registration system for all rights relating to land and real estate for the entire country including such rights as land, real
             estate, tax liens, land encumbrances, and immovable objects (State Register of Real Estate Rights and Restrictions)
 
       (2) Empowering State Land Cadastre Center to act as the sole registrar of all land and real estate related rights;
 
       (3) Separation of registration of tax liens on land and immovable property from tax liens on the personal property in the State Register of Tax Liens;
 
       (4) Repeal of the Item 2 of the Article 290 of the Commercial Code requiring notarization of all land lease agreements to avoid discrepancies with other
             laws and to simplify the land leasing process.
 
In his presentation, Mr. Saprykin emphasized importance of the Unified State Cadastre as a means of implementing provisions of the Land Code of Ukraine providing that each land plot shall have its unique cadastre number and parameters. 

He further stressed that a single cadastre or an equivalent registration system should contain all data relating to the land plot and real estate (immovable) objects located on that land, such as location, area, coordinates, usage, lease rights, and any encumbrances, which would permit for a single registration system to contain all information on the parcel instead of eight different registers presently used.

During the Meeting, Victor Panteleenko, Deputy Minister of Economy, confirmed that the Ministry and other appropriate authorities will join efforts to implement the necessary legislative changes to enable the free-market transferability of land in Ukraine.

Marks & Sokolov, LLC (operating in Ukraine as Marks Sokolov and Burd, LLC) is a boutique international law firm who handles commercial work in countries around the world including the U.S., Russia and Ukraine. The firm has offices in Philadelphia, Moscow, and Kiev. For more information on land related issues contact Artem Saprykin at asaprykin@mslegal.com. This news update has been prepared solely as a service to business and investment community and does not constitute legal advice.

Marks, Sokolov and Burd, LLC is a member of the U.S.-Ukraine Business Council (USUBC), Washington, D.C., Link: www.usubc.org.
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5.  UKRAINE: BUSINESS STARTS EXPORTING TIRES TO UNITED STATES 

Dmytro Kuzmin, Ukrainian News, Kyiv, Ukraine, Tue, June 16, 2009  

KYIV - The Dnipropetrovsk-based Dniproshyna enterprise has started exporting tires to the United States. Ukrainian News learned this from a statement by the press service of the company. According to the statement, the company has supplied several batches of tubeless tires of six standard sizes to the Midwest Tire Marketing Company in the United States.

"Until 2009 no Ukrainian producer [of tires] has worked with the American market. We were the first to appear on this market," said Olena Ivaniuk, the head of the marketing bureau of Dniproshyna.

She said the US side moved forward with an initiative to sign the contract after the US Congress triggered measures on restriction of imports of tires from China to the United States, since the Chinese tires account for 70% of imports to that country.

In this connection, the US consumers and distributors of tires are actively studying the alternative ways of imports, including in the countries of the Commonwealth of Independent States.
"Before concluding a contract with us, the Americans had monitored the tire factories of the Commonwealth of Independent States," Ivaniuk said.
Oleksandr Naumenko, the director for development of Dniproshyna, said the company has started receiving inquiries for other American traders.
The company has supplied to the United States 204 tires for USD 80,000.

As Ukrainian News earlier reported, the Dniproshyna enterprise, which is the second largest producer of tires in Ukraine, finished 2008 with a loss of UAH 124.701 million. The company trimmed net revenues by 13.3% or by UAH 97.289 million in 2008 over 2007, to UAH 633.292 million.

The Dniproshyna open joint stock company specializes in the production of tires for trucks, agricultural machines, automobiles, motorcycles, and motor scooters. Serverio Trading, Aliatros Trading (both based in Cyprus), Sapphire Worldwide Assets and Laindors Trading (both based in British Virgin Islands) own 17% of shares in the company each.
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6.  UKRAINIAN COMPANIES SALES REVENUE, PROFITABILITY AND CASH POSITION MOST SEVERELY IMPACTED BY FINANCIAL CRISIS  

Ernst & Young Ukraine, Kyiv, Ukraine, Thursday, June 4, 2009

KYIV - The third Ernst & Young’s survey 'Impact of the Economic Crisis on Ukrainian Companies' shows that 73% of the polled companies reported decline in sales revenue, as the most significant change since the beginning of the economic crisis. 70% indicated deterioration of profitability and 64% of the respondents named cash position.

Overall, 117 major Ukrainian and foreign companies working in Ukraine participated in the survey run by Ernst & Young with the support of the European Business Association from 12 to 27 May 2009.

The impact of the crisis on reduction in sales was also noted as the top issue that companies are facing now by 65% of respondents. 63% of the surveyed companies named currency devaluation/inflation among top problems, and 59% of respondents – delayed payments by partners and clients. Meanwhile, during the February survey 84% of the polled named currency devaluation the top issue.

It was reported that Q1 2009 sales revenues declined in 77% of surveyed companies compared with their Q1 2008 results. Cumulatively, 61% of respondents reported more than a 10% decline in quarter on quarter sales volumes from the previous year, while only 8% managed to increase sales volumes at this level.

ALEXEI KREDISOV, COUNTRY MANAGING PARTNER, E&U
Alexei Kredisov, Country Managing Partner of Ernst & Young, said “As the Ukrainian economy continues to backslide in the ongoing economic downturn, most businesses are still adapting to the ups and downs. Most importantly, the third survey results indicate that the crisis has forced respondents to focus on reducing their costs, manage down their capacity, and drive greater efficiencies into their businesses.”

More than half of companies (62%) had to lower production levels in order to meet the change in demand, while only 15% increased their capacity. 23% left their production capacity at the same level.

All companies participating in the survey reported that they are considering undertaking or have already undertaken some form of cost reduction activities: 78% of the respondents reported they are reducing or have already reduced administrative expenses, 62% are reducing marketing and selling costs and more than half are now planning to improve operational efficiency (53%).

ANNA DEREVYANKO, EXECUTIVE DIRECTOR, EBA
Anna Derevyanko, executive director of European Business Association, commented: “The crisis underlined structural skews in Ukraine’s economy. Yes, companies adapt to the new conditions of running business. But between adaptation and new investments, there lies a huge amount of work that should be carried out by our country in order to improve investment climate and renew trust of the world business-community.”

In the foreseeable market conditions, a cost reduction program remains of vital importance to 78% of surveyed businesses. Importantly, within the last three months, almost 20% more companies have realized the importance of customer relationships to their business (78% of the respondents in May vs. 59% in February) and have cited the importance of developing and launching new products or services (52% of the respondents in May vs. 32% in February).

ADLAI GOLDBERG, BUSINESS ADVISORY SERVICES LEADER, E&U
Adlai Goldberg, Business Advisory Services Leader with Ernst & Young Ukraine, says, “In this survey, the significant increases in survey response to customer loyalty, new product development/launch, and client relationship management suggest that Ukraine may have turned the corner on the concept of customer care.”

Since the last survey, there has been a shift toward the hryvnia for planning and budgeting purposes: 42% of businesses reported that they plan to use the Ukrainian hryvnia as a major budgeting currency. The euro is the second most popular currency after the hryvnia, with 36% of respondents reporting they will use it (average exchange rate – UAH10.50/EUR). 18% of respondents plan to use the US dollar for budgeting purposes (average exchange rate – UAH7.65/US$).

No matter how difficult the circumstances are, survey results indicated that optimism remains: 62% of surveyed companies operating in Ukraine expect the economy to stop falling and 72% of respondents expect the economy to enter a phase of recovery in 2010.”
About the survey

The third Ernst & Young questionnaire survey of the Impact of the economic crisis on Ukrainian companies was conducted among companies working in Ukraine from 12 to 27 May 2009.

Overall, 117 companies participated in the survey; 25% were domestic enterprises and the other 75% were foreign companies working in Ukraine (multinational, European and regional). 51% of participants represent small businesses (up to 200 employees); 25% – medium businesses (200-1,000 employees); and big businesses (more than 1,000 employees) accounted for 24%.

Companies that took part in the survey work in the retail and consumer products sector (20%), financial services (20%), pharmaceuticals (14%), real estate and construction (13%), and other areas.
 
ABOUT ERNST & YOUNG 
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 135,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve potential.

In Ukraine Ernst & Young established its practice in 1991. Ernst & Young Ukraine now employs more than 530 professionals providing a full range of services to a number of multinational corporations and Ukrainian enterprises. For more information, please visit www.ey.com/ukraine. Contact: Natalia Partach, Ernst & Young Senior PR Specialist, Natalia.Partach@ua.ey.com.

Ernst & Young Ukraine is a member of the U.S.-Ukraine Business Council (USUBC), Washington, D.C., Link: www.usubc.org
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7.  FIRST INNOVATION FORUM HELD IN UKRAINE 
$120,000 awarded to five finalists to implement their proposals. 

U.S. Civilian Research & Development Foundation, Arlington, VA, April 22, 2009

KYIV - The U.S. Civilian Research & Development Foundation (CRDF) and the Ministry of Education and Science of Ukraine hosted the first Innovation Forum in Kyiv on March 31, 2009.  This event showcased emerging technologies in Ukraine, providing the participating teams with exposure to potential investors and partners.

The Forum was the concluding event in the STEP Business Partner Grant Competition. Eleven teams -- all semifinalists of the STEP Business Partnership Grant competition -- "pitched" their plans to commercialize to an expert panel of judges.  Semifinalists participated in an intense three-day STEP Technology Entrepreneurship Development Program in early March where U.S. and Ukrainian business professionals provided personalized training and coaching to aspiring entrepreneurs.

Eric Novotny, Senior Vice-President of CRDF, and Maksim Strikha, Minister of the Ministry of Education & Science jointly awarded $120,000 for five of the finalists to implement their proposals. The five funded projects will engage 18 former weapons researchers.
Below is a detailed description of the winning projects:

[1] HOMER: Vascular Microsurgery – New Technology and Instruments
Reconnecting small bodily vessels, blood, nerve, etc. is challenging with current technology because of the technique required and the time necessary to perform this type of surgery. The Ivano-Frankivsk National Medical University team, headed by Vasyl Krysa, and “VALAR” company are working on the creation of the newest instruments for micro-surgery of vessels, with the end result of this project being the creation of experimental surgical instruments able in clinical conditions to lay anastomosis on vessels of small diameter, which will be fast and seamless.

[2] We Tune the Immune System to Cure Tuberculosis
Treatment of multidrug-resistant Tuberculosis (TB) is 100 times more expensive than treatment of drug-susceptible TB, requiring intensive clinical management for prolonged time (18-24 months) and more toxic treatment course. The Lisichansk Regional TB Dispensary team and the Ekomed LLC propose an herbal treatment that appears to accelerate the effectiveness of drugs in the treatment of Tuberculosis, helping reduce treatment duration to less than 4 months and enhance by 2-10 times the efficacy of TB drugs.

[3] Making Superalloy Scrap Recycling Highly Profitable
Recycling super-alloy scrap is expensive and complex because of the presence of more than 20 alloying elements in different contents and variations. The scientists from Physical and Technological Institute of Metals and Alloys and the Pratt & Whitney company have attempted to address this problem by developing a method to subject super-alloy materials to deep oxidative refinement at elevated temperatures in a solid state. This will help provide a practical option for the reclamation of virtually all valuable elements.

[4] Smart Technology That Saves Fuel and the Environment
This innovative technology aims at reducing drag of various vehicles or any elements moving in fluids. The flow-control concept developed by Nina Yurchenko raises the operational efficiency under conditions of minimized energy outlay. The combined research team of the Institute of Hydromechanics, National Academy of Sciences, and of the National Aviation University of Ukraine is working on engineering solutions to improve the airfoil performance with the primary goal to reduce fuel consumption and environment pollution by aircraft and automotive vehicles.

[5] Smart Solution to Manage Power
Ultra capacitors, also known as electrochemical double layer capacitors (EDLC), are high-power energy storage devices, which can be used in a variety of applications. Within the scope of this project, the Institute of Sorption and Problem of Endoecology (ISPE) of NASU and ApowerCap Technologies company are aiming to develop new nanoporous carbon materials to be applied in electrochemical systems for energy recuperation. The activated carbon in
EDLC is one of the key materials that influence cell performance. It also constitutes about 20%-30% of its final cost. Recent developments in new carbon materials allow achieving high surface area, purity and low surface contamination by functional groups.

In addition, two panels were arranged during the Forum to provide information about technology entrepreneurship, the venture capital industry, and how to successfully launch a business. All presentations are available in English and Ukrainian.

The U.S. Civilian Research & Development Foundation (CRDF) is a member of the U.S.-Ukraine Business Council (USUBC), Washington, D.C., Link: www.usubc.org.

LINK: http://www.crdf.org/newsroom/newsroom_show.htm?doc_id=892752