Ukrainian Ambassador to Indonesia Vasyl Hamianin has invited Indonesian investors and business people to invest and assist in reconstructing the country following the ongoing war with Russia. Numerous public and private infrastructures – including factories, bridges, buildings, airports, and seaports – were destroyed during the war, which started in February.
“Of course, I hope it will happen soon after the war ends. When this happens, I am confident that this will lead into a real competition among companies to help rebuild the country. I hope Indonesia will participate in this big competition,” he told Indonesia Business Post in an interview on March 24, 2022.
Indonesia is Ukraine’s largest trading partner in Southeast Asia. In 2021, Indonesia and Ukraine had a trade balance of US$1 billion. Ukraine exports wheat, iron and silk products, while Indonesia exports, among others, electronic products and palm oil.
Hamianin said he had met with influential and prominent business groups and industrial groups who had visited Ukraine prior to the war. In the meeting, he discussed some of potential investment opportunities in Ukraine and the benefits for potential investors.
Advantages
According to the ambassador, the first advantage is that Ukraine has signed a free trade agreement with the European Union. Businesses will be able to export their products more efficiently to Europe and other countries due to the deal. A product that can be delivered to Ukraine, processed there, and branded and sold everywhere in the region.
“Our excellent traditional markets are not limited to Europe, Asia, Africa, North Africa, Turkey, and the Middle East. We have many clients,” Hamianin said, citing palm oil as an example.
The Indonesian commodity can be transported to Ukraine, processed there, and sold as Ukrainian products. However, the investor may be from Indonesia.
Secondly, Ukraine has cheaper labor cost compared to other European countries but with a very high level of professionalism.
“When Ukrainians left for Europe due to COVID-19 pandemic, they worked in various professions and fields. These people came to work on sectors such as making furniture and they did well,” said Hamianin.
Another advantage factor is Ukraine’s geographical location that makes the country has reliable logistics, and has many natural resources that can be utilized.
Investments in Bali
According to Hamianin, there are several Ukrainian investors in Indonesia, who wish to remain anonymous. Apart from palm oil processing, their investments include sports and culture.
“As far as I know, I can inform my friend in Bali, who lives in Bali. He owns Liga Tenis, one of Bali’s largest tennis clubs. The club is trendy among his friends,” he said.
Several Ukrainians in Bali are also investing in producing healthy food, healthy drinks, vitamins, and tea in the resort island. “It’s not a large investment, but still, the company is owned by Ukrainian, established by Ukrainian,” he said.
Prior to the Russia’s invasion to Ukraine, Hamianin reported that some Indonesian businesspeople had studied the possibility of working together with Ukrainian partners. They were studying on investing in specific ingredients for medicine, drugs, agricultural products and food processing products.
Agreement
Indonesia and Ukraine signed a preferential trade agreement in 2013. Both countries agreed to prioritize certain goods and services. “This is not a free trade agreement but will provide a mutually beneficial outcome for both sides,” Hamianin said.
A trade and investment commission between both countries was in the process of deep discussion before the war broke. Due to the conflict, the commission could not meet in Jakarta during the first half of 2022. The commission has agreed on specific directions to promote trade and investment most acceptable to the two countries.
“It is like we talk about trade. It seems simple, but we still recognize that every position requires approval, credentials, etc.,” the ambassador said, adding that establishing trade mechanisms in each field, including co-production, is crucial.
Indonesia and Ukraine are also planning to hold a business forum that will serve as a mechanism or instrument for businesspeople from both countries. The government will explain regulation, rules, and a more concrete mechanism to ensure the development of trade and investment.
On February 24, 2022, Russian President Vladimir Putin deployed his military to invade Ukraine. The invasion caused Europe’s largest refugee crisis since World War II. Over 8.8 million Ukraine citizens fled the country. Thousands of civilians, including women and chidren, were reported killed in the war.
The Russia-Ukraine war is very likely to dominate talks in the G20 Summit in Bali, where Indonesia is the chair. Indonesian President Joko “Jokowi” Widodo had visited Ukraine and Russia in the end of June 2022, to meet with Ukrainian President Volodymyr Zelenskyy and Putin, respectively.
