When John Denton first visited Ukraine weeks into Russia’s full-scale invasion, he knew that for the country to survive, businesses needed to stay alive. Denton is the secretary general of the world’s largest business organization, the International Chamber of Commerce. Active in 170 countries, the organization enables $17.5 trillion worth of economic activity every year, accounting for 22% of the world’s gross domestic product (GDP).Denton has been a vocal supporter of Ukraine’s businesses and the country’s economic recovery, which is crawling back from the massive 29.1% fall in 2022. The International Chamber of Commerce will attend the upcoming Ukraine Recovery Conference (URC) in Rome on July 10-11, alongside governments and major players in the global private sector. In a sit-down interview at the Kyiv School of Economics (KSE) on June 12, Denton told the Kyiv Independent how the International Chamber of Commerce has supported businesses in Ukraine, how investors can mitigate risks, and why doing business in Ukraine is worth it despite the wartime challenges. “There needs to be a more nuanced understanding of risk in Ukraine. It's not one risk quota for the whole of the country. It helps people understand that there are investable opportunities,” Denton said.
Secretary General of the International Chamber of Commerce (ICC) John Denton attends the “Ukraine and Europe: Toward a Common Future” panel at the Kyiv International Economic Forum in Kyiv, Ukraine, on Nov. 7, 2024. (Ukrinform / NurPhoto via Getty Images)
The International Chamber of Commerce has been active in supporting Ukraine’s economic front in partnership with the Ukrainian Chambers of Commerce. This includes the Center of Entrepreneurship, which supports small and medium-sized businesses (SMEs) as well as refugees. Denton believes Ukraine’s recovery needs a strong private sector and access to global markets. To help build up trust and encourage foreign investors, he announced that the International Chamber of Commerce will cut arbitration costs for foreign investors involved in reconstruction-related disputes in Ukraine during his last trip to Ukraine in November 2024. *This interview has been edited for length and clarity.*Kyiv Independent: This is your fourth trip to Ukraine. What is your current assessment of Ukraine's business climate?
John Denton: The reality is challenging, but Ukraine is not a monolith. There are different opportunities. I drove from Warsaw through western Ukraine, and you can sense that there's a level of vibrancy in the economy there.
The more challenged regions need focus. It's hard to attract opportunities and to keep people. At the same time, people are there, paying taxes, keeping businesses running, even in complex places. They need support and want visibility.
It's going to be much harder to rebuild Ukraine if the economy is not functioning. We've always seen the private sector and the functioning of the economy here as the economic front. One dimension is just keeping tax flows moving and businesses running. The other is morale. It's devastating if you have a collapsed economy plus military challenges.
Subscribe to the NewsletterUkraine Business Roundup
Subscribe
The Kyiv Independent: What would you say to investors who are standing by on the sidelines, waiting for the war to end before putting their money into Ukraine?
John Denton: They've got to make commercial decisions in the best interests. You have to make certain your risk appetite matches the risk that's available.
There's a different level of risk for the allocation of capital in this place. Existing businesses here tend to understand that a little better. The investment you're seeing in Ukraine is coming from existing businesses that understand the terrain. They're reinvesting in the economy, and those investments are often very successful.
You can't completely de-risk, but you can take away some of the extraordinary risks.
The danger with waiting too long is do you then have the relationships in place to participate in the rebuild? That's going to be one of the challenges.
There's a lot more that can be done to facilitate de-risking. You can't completely de-risk, but you can take away some of the extraordinary risks.
We can help export agencies understand that their participation is really important to allow companies to close deals here. Some of them can only provide coverage up to 97%. That (missing) 3% matters. At the URC, we're helping export agencies understand this and problem solve risk coverage.
Read also: Ukraine’s long-awaited weapons tech investment boom is finally kicking off
Kyiv Independent: What are the barriers to foreign and domestic investment in Ukraine, and how are you helping break those down?
John Denton: There's just the reality that there's a war going on. It inhibits one's decision-making, but it doesn't mean you don't make the decision.The other is that there are issues with the application of the rule of law here. We've come up with a solution which I know the Ukrainian government is very happy with – if people are worried that that's an inhibitor, we will use the International Chamber of Commerce Court of Arbitration. You can be 100% sure of the independence.
There's still a perception of corruption. Many say the country is different than five years ago or before the war. That's true. But sentiment clouds upfront decision-making.
The other thing is, do we actually have clear investment frameworks? Has the government articulated key priorities? Do you want to attract investment only into the most complex areas of Ukraine, or are you neutral as to where it is? There is a risk of mixed messages.I think the government and the private sector here are working on all those areas. We're seeing better presentation and understanding of projects capable of attracting capital.
Ukrainian authorities restore residential buildings destroyed by Russian forces in the suburbs of Kyiv, Ukraine, on Aug. 1, 2023. (Sergii Kharchenko / NurPhoto via Getty Images)
Kyiv Independent: Have we seen any results yet from the decreased arbitration costs?
John Denton: It’s too early to tell. There's certainly a lot of interest in it. It's creating an ecosystem of confidence around settling disputes.
Kyiv Independent: The Ukraine Recovery Conference is taking place in Rome next month. Is reconstruction being taken seriously despite there being no end to the war in sight? What can we expect from the International Chamber of Commerce at the conference?
John Denton: There is increasing interest from the private sector about how to manage the risks that will be involved in the reconstruction of Ukraine. And that's why we're involved.There is a particular challenge with export finance that needs to be thought through. We will be using the URC as a great convening space to do that. The other is more broadly around identifying the inhibitors to private sector engagement in this process and coming up with a roadmap to actually remove those barriers.The URC creates space for these discussions. We hope this starts more aggressively, not just on future reconstruction, but reconstruction now. To rebuild on a broken system is much harder than if we have a functioning private sector and economy now.
Note from the author:
Hi, it’s Dominic, thank you for reading this story. Investment and the role of the private sector in rebuilding Ukraine is going to be a hot topic at the upcoming Ukraine Recovery Conference in Rome this July. For now, many investors are holding back their money, but John Denton makes a good point that it's important to invest now to keep the economy alive. To help us keep you up to date with all the latest news from Ukraine, please consider becoming a member.
Read also: Ukraine must look beyond the EU for its agricultural future
From The Kyiv Independent - News from Ukraine, Eastern Europe via this RSS feed