Dating back to Soviet times, Ukraine’s complex of gas storage facilities is one of the largest in the world, while its pipelines play a key role in bringing post-Soviet gas to Europe. Unfortunately, subsidized energy prices, poor management and corruption meant the country was one of the world’s least energy-efficient before 2014, according analyses by the US Energy Information Agency. 

But while gas has historically dominated Ukraine’s energy sector (and energy security concerns) the last five years have seen its significance fade. The nation’s gas consumption was as high as 76 billion cubic meters still in the early 2000s. However, the removal of gas subsidies has changed the picture. In 2018, consumption was down to 32 billion cubic meters – all of which was supplied from Europe or came from domestic production. 

Nonetheless the road to energy efficiency remains long. Cross-subsidies persist in electricity generation. Moreover, despite public programs aimed at reducing wasteful energy use, such as installing heat or hot water meters, Ukraine spent a whopping 70 times more on utilities than energy efficiency in 2016, according to a report by think tank Carnegie Europe. 

The brightest spot on the map is alternative or renewable energy, with wind, solar and biomass all showing promise and attracting international investments. National investment agency Invest Ukraine forecasts see these going as high as $18 billion by 2020, notably driven by green tariffs meant to increase renewables in the energy mix, from the current 2.6 percent to 25 percent by 2035. Just in 2019, power company Ukrenergo estimates renewable capacity will double from 1.5 to 3 gigawatts. 

DTEK, Ukraine’s largest energy holding, has been particularly active in the field. Recent investments include the construction of new wind farms for which DTEK raised EUR 335 million from German banks, followed a more recent EUR 134 million deal with Chinese company CMEC. 

“It is important to work on new legislation on renewables and switch from feed-in-tariff to a new auction system, the way it is done in EU. DTEK participates in various working groups aimed at elaborating this new approach and turn it into legislation. The industry will only benefit if we bring our legislation on RES in line with the EU trends” commented Maxim Timchenko, DTEK’s CEO. 

The lack of a competitive market is often cited as a key reason why yields in Ukraine continue to lag. According to the Food and Agriculture Organization, a part of the United Nations, yields in Ukraine tend to be about half those of Western peers – Ukraine’s wheat yields were slightly above 4 metric tons per hectare, while Germany and the United Kingdom typically have in excess of 8 metric tons per hectare. 

For now, however, that is not holding back the country’s leading agricultural players from reaching new highs. In addition to the record grains harvest, last year saw impressive growth in poultry, where MHP one of the largest European producers, boosted exports by 30 percent, mostly by increasing penetration of Middle East and North Africa markets. To consolidate its position in Europe the Ukrainian firm bought Perutnina Ptuj, a vertically integrated Slovenian poultry company. 

“This partnership confirms MHP as Europe’s fastest-growing poultry producer and represents a major strategic step in making the company a significant player in the global poultry business,” chief executive Yuriy Kosyuk said. 

Ukraine’s current defense and aerospace capabilities stem from its historical role as part of the Soviet arms industry. Among others, Ukrainian facilities produced tanks (including the famous T-34 that is said to have won World War II for the Red Army), rockets and missiles, small arms and engines that were absolutely critical. 

As a result, Ukraine regularly figured among the world’s top arms exporters, according data compiled by the Stockholm International Peace Research Institute, particularly in the 2009-2013 period. However, since ties with Russian industry started ramping down post-2014, the value of Ukraine’s military exports dropped by 47 percent in 2014-2018 compared to the previous period. As a result, the country’s ranking followed, coming down to 14th place worldwide. 

Nonetheless, companies from communist times continue to play a major role. Motor Sich, based in the south-eastern Ukrainian city of Zaporizhia, is one of the biggest engine manufacturers for helicopters and airplanes. The rocket manufacturer Yuzmash and sister research and engineering institution KB Yuzhnoe, both based in nearby Dnipro, developed key nuclear missiles for Soviet defense, but now partner with over 20 countries, ranging from the United States to Indonesia to develop satellite and aerospace solutions. 

While much of the growth is linked directly to the war in Eastern Ukraine, there are also many cases of international interest in the country’s capabilities. Among others, Boeing has start working with Antonov, producer of the world’s largest plane, to reduce reliance on Russia. Meanwhile, China has shown interest in Motor Sich in hopes to accelerate the development of its own heavy lift helicopter program, with a deal confirmed in February 2019. 

In 2018 Ukraine’s e-commerce sector grew 31 percent year on year – the second fastest growth in Europe, second only to Romania.

In fact, the sector’s growth presents a challenge for retailers, as infrastructure has not kept up pace. In 2018, Ukraine’s largest retailer Rozetka.ua opened five new stores on Kyiv’s right bank, but lacked the warehousing facilities to supply them.

“Ukraine is growing fast enough — this is good — but the problem is that the infrastructure is not keeping up with such growth,” Vladislav Chechetkin, co-owner of Rozetka, told Interfax-Ukraine. “The vacancy of the warehouses is zero. Therefore, if you want a warehouse on the right bank, this means that you have to find (land), get approval, permission to build … is a significant time lag.”

Private medicine in Ukraine has been growing fast, with the number of private health facilities growing from 4,255 in 2016 to 4,991 in 2018, according to the Ministry of Health. The market has grown even faster: over the same two years, total market turnover has gone up some 60 percent, from $0.5 billion to $0.8 billion, according to advisory firm Pro-Consulting. 

Some of the first sizable market deals have followed. Most recently, Dobrobut, one of the largest private medical networks in the capital Kyiv, has expressed interest in buying a 50 percent stake in competitor network Boris, for an amount that experts estimate to be around $30 million. 

Following its expansion to open six new clinics over the past four years (for an estimated cost of $16 million), the deal could make Dobrobut, owned by Cyprus-based Satumco Limited, the leading national player. 

SIDA, the Swedish aid agency, has by itself committed over $28 million just in 2018, much of it going to educational programs.

According to a recent World Bank study, however, the biggest opportunity would be to reform public education, which continues to lag with crumbling infrastructure and demotivated faculties.

“Sensible planning and resource management is essential for the country to build the modern education system it needs to become internationally competitive and prosperous,” the World Bank report needs, advocating that in-depth transformation of the sector could unlock further development for Ukraine.

Once focused on large, cheap and English-speaking India, the industry has been bringing operations “closer to home,” notably to improve communication between head and support offices. As a result, jobs have shifted to such countries as Brazil, Costa Risa, Poland or Ukraine. 

According to Volodymyr Yumashev, a partner at global consultancy Deloitte, Ukraine’s key advantages are the labor availability and costs, as well as proximity to key Western European markets. With a workforce exceeding 12 million advanced degree holders and 1.3 million students in the 2017/2018 academic year, including 247,000 and 104,000 students of economics and technology sciences (two key fields for BPO), Ukraine has one of the highest indicators in the region. Moreover, adds Yumashev, “high-qualified workers in Ukraine have a reasonable level of renumeration.” 

This has motivated such companies as global audit and advisory firm PwC, to open a center in Ukraine, joining the ranks of such firms as AB InBev, Gruma and Nestle. Their Lviv office is 350 strong, supporting the delivery of PwC services such as audit, advisory and tax. 

“The location was selected after thorough analysis. Lviv met all our expectations: access to highly-educated local talent, convenient location, open business environment, significant opportunities for innovation, not to mention the growing role of Ukraine in the regional business community,” said Richard Pollard, Country Managing Partner of PwC Ukraine 

At present, the biggest challenges are getting work permits for foreigners and related bureaucracy, as well as a general lack of information about Ukraine. “The key bottleneck now is in the fact that Ukraine is unknown. Unknown is scary,” Yumashev said. 

If these challenges are overcome, the prospects can be very positive for Ukraine’s role in BPO. According to Yumashev the BPO field will require an additional 265,000 jobs by 2020. “We have the opportunity to get a decent fraction of them,” he said. 

These have been sported by a growing number of global stars. US supermodel Bella Hadid was spotted wearing a shorts-meets-skinny-jeans hybrid from Schnaider in 2017, while last year’s Milan Fashion Week – one of the world’s premiere fashion events – saw actress and model Emily Ratajkowski wearing a dress by Svitlana Bevza.

The best thing, for Bevza, was that Ratajkowski’s decision to wear the dress – typically a well-orchestrated opportunity to promote one’s products – was completely unexpected.

“I’m pleased to see a beautiful girl, who is so popular in the United States, in my dress. How exactly she got this dress I do not know,” Bevza told the Kyiv Post.