President of Ukraine Petro Poroshenko lately visited two dynamic Southeast Asian (SEA) nations: Malaysia, which saw a Ukrainian head of state for the first time in 25 years, and Indonesia, with the first presidential visit in 20 years. The question is, on the one hand, was not the visit too late in coming, and whether any space is still left in the markets of these countries for Ukraine? On the other hand, in what fields can Ukraine expect investments from Malaysia and Indonesia? The Day turned to the chairman of the Ukraine-ASEAN Association of Business Cooperation, the first Ambassador of Ukraine to Indonesia and Malaysia and former Ambassador of Ukraine to China Ihor Lytvyn for answers to these questions and his opinion about the prospects of cooperation with these countries.
“‘DIPLOMATIC COVERAGE’ OF MAJOR NATIONS IN SOUTHEAST ASIA AND OCEANIA IS THERE. THE REAL QUESTION IS HOW IT BENEFITS US”
Why did it take so long to organize visits to Malaysia and Indonesia?
“This question can only be answered by people who have led the Ministry of Foreign Affairs and the foreign policy department of the Presidential Administration of Ukraine in recent years. Perhaps the chief reason is the lack of Orientalists in both these bodies, and as a result, their proneness to underestimate the importance of Southeast Asia (SEA) in the foreign policy of Ukraine. On the other hand, one should not say that Ukraine did not pay attention to SEA for a long time, it is not so. Since I left my post in the region where I served as Ukraine’s ambassador to Indonesia and non-resident ambassador to five other ASEAN nations, Ukraine has opened separate diplomatic missions in Malaysia, Singapore, and Thailand (in addition to Indonesia). One should also mention the foundation of the Ukrainian embassy in Australia, traditionally serving New Zealand as well. The Philippines and the Sultanate of Brunei have non-resident Ukrainian ambassadors who are based respectively in Japan and Singapore. The Embassy of Ukraine in Vietnam de facto represents our national interests in neighboring Cambodia and Myanmar as well. That is, we do have adequate, so to speak, ‘diplomatic coverage’ of major SEA and Oceania nations now. How it benefits our country, primarily in economic terms, is another issue. I understand that such a stark approach is not entirely correct, because improving efficiency of bilateral trade and economic and other cooperation with a particular country is not exactly the embassy’s responsibility. Those responsible are relevant ministries, departments, and other central and regional authorities, chambers of commerce, business associations and other industry organizations. Most of them do not understand in the slightest what effective, aggressive export policy is, they cannot work (and worse, do not want to learn to) with Asian countries in accordance with traditions, canons, and requirements of professional activities aimed at Ukrainian export expansion in the region. Thank God, we had the Office of Export Promotion finally established at the Ministry of Economic Development this year. It gives hope that our export potential will now find support from the state as we seek its effective realization in SEA. The office is already working, and this is clearly reflected by presidential visits to Malaysia and Indonesia, whose results in the economic field give a clear answer to your question: is any space still left in the markets of these countries for Ukrainian goods? Yes, it is there, and it is still quite large.”
“IT WAS A SUCCESSFUL VISIT, WHICH WORKED FOR THE FUTURE AND HELPED TO RESOLVE URGENT ISSUES”
What results have been achieved during the visit, and when should we expect specific results from the signed documents?
“It was a successful and productive visit, which worked for the future and helped to resolve urgent issues. Given the political interests of Ukraine, this visit secured:
♦ unity of our country’s and the leading ASEAN countries’ positions on issues of international and regional security;
♦ solidarity of both parties (Ukraine and Malaysia) on the need for a fair and comprehensive investigation into the Flight MH17 tragedy and inevitable punishment of all those responsible for this crime, ranging from immediate perpetrators to those who gave murderous orders;
♦ confirmation of Malaysia and Indonesia’s unflinching stance in support of sovereignty and territorial integrity of our country;
♦ understanding on the need to continue close coordination and cooperation with both ASEAN leaders at the UN.
“Regarding national interests in the economic field, including trade, investment, and industrial cooperation, our achievements are enough to provide the necessary treaty basis for broad promising areas of cooperation (several bilateral documents of intergovernmental, interdepartmental, and corporate nature were signed) and specific projects whose implementation can significantly strengthen the export position of Ukraine in SEA and modernize our own infrastructure, especially in transportation, energy, and logistics.
“How quickly will the signed documents start having effect? Some of them, like the agreement on avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income or the agreement on mutual legal assistance in criminal matters (both with Malaysia) or the Ukrainian-Indonesian statement on visa liberalization can be considered as having immediate effect since they are clear and practical in nature. Meanwhile, foundational documents regulating the basic principles of cooperation in the defense sector or in agriculture (with Indonesia) require implementation through specific contracts, including for the supply of Ukrainian goods to Malaysia and Indonesia, and through them, to the whole region of SEA. And vice versa, from SEA to Ukraine.”
“‘GREEN PRODUCTS’ ARE THE KEY TO WINNING THE MARKET WITH THE LARGEST MUSLIM POPULATION”
What do we really need to do to enable Ukrainian products to enter the markets of Malaysia and Indonesia, which can become a bridge to SEA for our country?
“I was fortunate to speak at two business forums that were held as part of the presidential state visit to Malaysia and Indonesia. I witnessed, both formally and informally, the signing of corporate agreements between Ukrainian companies and companies from Malaysia and Indonesia in such important and promising areas as information technology, agribusiness, pharmaceuticals, and infrastructure cooperation. Not even waiting for their return to Ukraine, representatives of Ukrainian business who constituted the economic delegation during the presidential visit exchanged specific business proposals with their new partners regarding supplying to Malaysia and Indonesia Ukrainian grain and oilseeds (corn, milling wheat, soybeans), which enjoy stable demand in the region (only in the 2015-16 marketing year, Ukraine exported 3.9 million tons of grain and oilseeds to the region as a whole), Ukrainian medicines etc. This is the answer to the question what we should actually do to enable Ukrainian goods to enter the markets of ASEAN, particularly Malaysia and Indonesia. Business has already started to do what it needs to do, because the relevant framework has been established by our states.
“Ukraine is quite successfully competing with exporting countries that have traditionally dominated the global supply of grain products, such as the US, Argentina, Australia, Canada. Why is this so? There are several reasons for it:
♦ quality and consumer standards of our products are very high, and most importantly, they are GMO-free;
♦ strict compliance with stringent international norms on sanitary and quarantine security;
♦ very competitive prices;
♦ large volumes and reliability of supply, despite the complicated logistics.
“There is a major opening for Ukrainian agricultural products in the region because of the extensive halal industry development program, which calls for a global solution to the issue of supplying the Muslim world with an exclusive range of foodstuffs, medicines, etc., which meet halal requirements. First of all, they include so-called ‘green products,’ which Ukraine produces in quantities enabling it to become a major import source for the world’s largest Muslim country Indonesia and other similar countries in SEA.”
“NOW IS THE BEST TIME EVER TO INVEST IN UKRAINE”
What do we need to do to attract investments from these two countries to Ukraine?
“In order to attract investments from Malaysia and Indonesia to Ukraine, we need, just like before and as is the case with any other country, to establish and get working an appropriate mechanism for attracting and supporting (through terms of use, security, and return) foreign investment, which we have been talking about for 25 years already. Well, peace on our soil, clear and unchanging rules, and steady economic development would help as well.
“President Poroshenko believes that now is the best time ever to invest in Ukraine and he spoke about it at the forums involving business circles of both countries he visited. The president’s reasoning is quite clear: Ukraine has a fairly cheap skilled labor force, the economy is being reconstructed and denationalized, while the privatization program covers hundreds of companies in important industries. That is, it all sends an appeal: come and buy our assets, which are fairly cheap, invest in modernization of production facilities, and by using cheap labor of highly professional Ukrainian specialists launch competitive industries and provide competitive services from the territory of Ukraine. And our partners, including Malaysia, have confirmed their willingness to explore involving the largest local oil company PETRONAS in the extraction of hydrocarbons including shale gas in Ukraine, as well as Malaysian companies’ participation in the construction of motorways and affordable housing in Ukraine, and opportunities for local businesses to participate in the privatization of Ukrainian state-owned enterprises in the energy and infrastructure industries. Now, the implementation of all these agreements depends, as always, on little things like complying with our commitments, especially given our experience in implementing agreements reached during the visit of the Malaysian prime minister to Ukraine in 2003. We have become, for example in the field of arms trade, more independent from cooperation with the so-called ‘big brother’ [Russia. – Ed.], and so the aggressor nation will not be able to direct our foreign orders as it did before. They and we will have to fight for every profitable export order fair and square now, undercutting the competition on all counts, especially on the quality and clarity of contract execution and payment for them.”
Do you see any real projects in Ukraine which Malaysians or Indonesians can invest into?
“I had an opportunity to attend several presentations of business projects in Kuala Lumpur which would be very useful for Ukraine, in particular a water purification project. Malaysian businesspeople are willing to invest in establishing such facilities and monitor their operations on the regional and national scale. Potential investors are also interested in our projects in the field of creation and/or modernization of transportation and logistics infrastructure, including ports on the Black Sea, processing industries (construction of oilseed crushing facilities) etc. Projects are many, and as I said before, a lot of interesting investment opportunities have been put up for privatization. We do have a future, and SEA people see it!”
“EXPORT POTENTIAL FOR OUR ARMORED VEHICLES IS VERY SIGNIFICANT IN SOUTHEAST ASIA”
By the way, back in 2004, I interviewed the ambassador of Malaysia to Poland, who was also the non-resident ambassador to Ukraine, and he said then: “Induct the An-70 to your armed forces, bring it to our exhibition in Langkawi, and we will buy it.” What do you think about the prospects of selling Antonov aircraft to Malaysia, whether such a niche still exists, and by the way, what are the prospects for Ukrainian armored gunboats in Indonesia, known as the Land of Thousand Islands?
“As far back as 2000, when I was the ambassador of Ukraine to China and went to the Zhuhai Airshow, Chinese Director of the General Administration of the Civil Aviation Liu Jianfeng asked Ukraine to sell two An-70. Unfortunately, Ukraine was unable to sell those unique planes abroad either then or later. I am not really aware whether there are prerequisites for exporting An-70 to any Asian countries now, but I doubt it is a realistic option at the moment. As for selling armored gunboats to Indonesia, our cooperation in equipping the Indonesian navy with Ukrainian shipyards’ products goes back almost 20 years and has prospects for further growth in volume and in range. The recent presidential visit to Indonesia has opened new prospects for bilateral cooperation in this field.”
What are the prospects for the sale of our armored vehicles, including new builds, to these markets?
“Export potential for our armored vehicles is very significant in SEA, particularly in Malaysia, and it is not only about fighting vehicles, but also about special purpose vehicles, like impulse fire extinguishing systems, which will stay in demand given the constant threat of wildfires there.”
