Ton Huls, the Chief Financial Officer of Mriya Agro Holding, says Ukraine should put away bureaucratic hurdles to attract foreign investors and entrepreneurs
On April 6, the Netherlands will vote yes or no to a deeper cooperation between Ukraine and the EU.
The destiny of Europe's biggest nation is potentially in the hands of the citizens of the Netherlands. The future of nearly 46 million people now depends on whether the Dutch decide to support Ukraine's association with the European Union.
This is exactly why, Ukraine Today with the cooperation of Euromaidan Press has launched #DUTCHINUA project. Our goal is to gather the views and opinions of the Dutch businessmen and entrepreneurs who work in Ukraine. As well as provide analysis by the experts from the Netherlands who can assess the influence of the referendum on the future of Ukraine and the E.U. as a whole.
Tom Bell: Joining us here on Ukraine today is Ton Huls, the Chief Financial Officer of Mriya Agro Holding.
We have this Dutch referendum on the treaty with EU coming up in April. As a Dutch businessman you've been here for 12 years. So, what is it like - living and working in Ukraine?
TH: I enjoy it. I think it's a very dynamic country. People are very nice, the overall education of the people is very high and they are very keen to learn, which makes working people, and specifically with the Ukrainian people, very interesting.
TB: With the vote coming up, there's a lot with skepticism in The Netherlands about what sort of benefits this Association Agreement with Ukraine could have. So what sort of benefits for businesses have you seen as a financial officer?
TH: What we see as a benefit is that it would be much easier for us to buy the innovative products from the Dutch agricultural market and implement it in Ukraine. Right now there has been a lot of restrictions on licensing every different kind of breed which you want to plant in Ukraine and today this is significantly reduced. So it's much easier to select breeds which really accommodate to Ukrainian soil conditions much better than if you have to just take one of the three of four which are available.
TB: Because of the black soil?
TB: And what's so special about the black soil itself?
TH: It's a very nutritious and very good quality soil which is good for growing agricultural products. The return on this soil is much higher than if would have sand or other clay type of grounds.
TB: So what sort of businesses are there in The Netherlands that could actually take advantage of this opening of the Ukrainian market?
TH: The first ones are the Dutch companies that produce seeds for agriculture; second, the ones that produce agricultural equipment - both the primary agricultural equipment, for potatoes or potato industry, but also the primary processing sector, the people who are building big stables, everything related to chicken breeding, sunflower seed crushing is an industry which is in need of development in Ukraine and in need of investments.
TB: Is there any particular parts of the Ukrainian sectors that need improving? Is it technical or financial?
TH: It's a combination of all - of investments in the companies, in the technologies and production industry, but also an improvement of investments into the knowledge of the people - of how to work and be a farmer in the 21st century, because a lot of Ukrainian experience is outdated.
TB: Some of them date back to the Soviet times. They're still using these machines from the 90s. Would it make a big difference if you had these Dutch processing machines come over to Ukraine?
TH: Yes, it would make a big difference, but you need the whole chain. Using old tractors to plow & sow and using new ones for harvest makes no sense. You need not only the equipment, but also the engineers and agronomists from Holland to give training to people on how to improve the whole process from soil preparation to harvesting.
TB: A lot of Dutch investors might be worried about investing in Ukraine because often in the news abroad you only hear the bad news, like the recent vote of no confidence in the Parliament that didn't get through in the end. But as a chief financial officer, how do you actually plan for these different sort of events and turbulence in the market?
TH: The honest answer for Ukraine is that if you look at the last 15 years, there was a very big stability in turbulence. We as a company do not plan it because there is a constant turbulence according to European norms, but the turbulence that is there on the political side does not have an influence on business. It's not really correlated, it's mainly ignored. When I came in 2004, I saw the Orange revolution, I saw Yushchenko being replaced by Yanukovych, and I saw the economic crisis and economy's boom in 2007. But overall there is a very stable line upwards for the Ukrainian economy.
TB: What about the future in the agrarian market - what do you see?
TH: I see that Ukraine is a very good place for Europe to expand its need for agricultural product, specifically for countries for Holland, which have very limited space. We sometimes make a joke and tell that we have some cows, 2000 of them, which for us is not our primary business. But in Holland if you had 2000 cows, you would probably be the largest cow farmer in The Netherlands.
TB: You know a lot of Dutch businessmen in Ukraine. From the other people that you speak to, how is their experience of being in Ukraine?
TH: If you look at the Dutch people, there are two groups of them. People that come to Ukraine, love it, and never leave, like me. There are others - some work in the agricultural industry and other industries. And there are others that come as an expert for one of the big Dutch companies, hate it, and are very happy when their assignment of 3-4 years ends and they leave. It looks as if Ukraine is either a country which you either love or hate. There is not a lot of people who are neutral in the middle.
TB: Talking about investment concerns. Corruption is always in the press, and the Dutch Liberal and Eurosceptic parties who are involved in campaigning against the Association Agreement saying that there are a lot of corruption in Ukraine and it actually could affect the Dutch taxpayer's money. In your opinion, how does it affect business?
TH: I think the way to do business in Ukraine is very bureaucratic. So you need to accept that you need to follow the bureaucratic rules, and that is already difficult for a lot of West European Dutch businessmen who want to come here and do something. They come here as an entrepreneur. Most entrepreneurs are not really good administrative people. So they come here and start doing something. They don't understand that the Ukrainian economy and legal system is very precise and very bureaucratic. So a lot of the problems here are originated from the fact that a lot of the people that come to invest here do not comply with local legislation and think "let's start and I'll organize my documents later," like I would do in Holland, France, or England. In Ukraine it doesn't work. Before you start, you need to make sure that all your documents are in order and your licenses are in place, and then you start.
TB: But it's a bit of a daunting step if you're new in a country and you're not really sure about the market?
TH: Yes, but that means you need to get the advice and you need to follow the advice. There are a lot of international law firms active here, and accountant firms. They give you advice. Follow it. And don't think that I don't need that, thank you for your advice, I'm going to do it differently.
TB: Interesting that you say that because often this advice comes from the private sector. As you said, you have these law firms and various accountants. What about the government level, is there much cooperation between the Dutch and Ukrainian embassies, do you know?
TH: I'm not really involved. I know that there are regular meetings taking place and I know that if I would have a problem, the Dutch embassy is open to assist a Dutch businessman that has a specific problem with the political environment. But we try to solve businessman problems ourselves without using the embassy.
TB: You were here during the Orange revolution in 2004 and the Euromaidan Revolution that finished in 2014. What was it like, as a foreign national, being in those times in Ukraine?
TH: It was a very big difference. The 2004 Orange Revolution was a peaceful revolution, where you really felt the spirit of "we're going to change the country" without it being aggressive. We went to Maidan when there were tents on street without any problems, we didn't have any fear. But in 2014 it was much more aggressive from the beginning, people were wearing helmets, masks. It was a much more aggressive revolution against establishment.
TB: But has Ukraine and the Ukrainian mentality changed a lot since then? Have you seen more businesses springing up, more entrepreneurs?
TH: I think that specifically in the 2014 Maidan revolution the Ukrainian population made a very clear choice that they consider themselves a West European country and they want to be part of the West European culture and society and not so much to the East European Russian-driven society. The problem is that all that followed the Maidan Revolution, what happened with Crimea and what is still happening in the East makes Ukraine a very difficult country for people who do not know it to invest in it. So you don't see a lot of new investments coming to the country since the Maidan revolution.
TB: What about investment not just from private businesses, but organizations such as the European bank for reconstruction and development?
TH: They are very active in Ukraine and are financing projects, and now they are starting to finance smaller projects. Before that there were very clear guidelines to look only at the big projects, big companies, and today they are looking at the medium-sized, because they also understand that the real growth of the economy is not coming from the top-20 biggest companies in the country, but from the middle-class companies that need to bring up the economy.
TB: Mr. Huls, thank you very much for joining us on Ukraine Today. That was Tom Huls, who is the Mr. Huls financial officer for Mriya Agro Holding.