in Ukraine: The role of the enabling environment for the basic - - PowerPoint PPT Presentation

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in Ukraine: The role of the enabling environment for the basic - - PowerPoint PPT Presentation

Jan 07, 2024 386 likes •524 views

Promoting economic diversity in Ukraine: The role of the enabling environment for the basic metal and metal processing industry Yaroslav Zhalilo Kiev, March 11, 2010 Where are the bottlenecks? The key factors of crisis in sector: Sharp

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Promoting economic diversity in Ukraine:

The role of the enabling environment for the basic metal and metal processing industry Yaroslav Zhalilo Kiev, March 11, 2010

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Where are the bottlenecks?

The key factors of crisis in sector:

Sharp worsening of terms of foreign trade

Shrinking of domestic market:

decline of demand from the side of main steel products users

deterioration of main steel consumers’ liquidity

cuts of public investment in infrastructure projects

Increasing protectionism in the world

Limited access to “long” finance due to liquidity crisis at world financial markets

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Pre-crisis growth: lost chances?

Average Annual Export Growth in 2000-2008

0% 5% 10% 15% 20% 25% 30% 35%

Belarus Georgia Kazakhstan Kyrgyz Republic Moldova Russian Federation Ukraine New EU members Bulgaria Czech Republic Estonia Hungary Latvia Lithuania Poland Romania Slovak Republic Slovenia OECD countries France Germany Ireland Italy United Kingdom United States Korea, Rep. Emerging Markets Brazil China Turkey

Actual, through new products Actual, through products already exported in 2000 Hypothetical if exports had grown proportionately to world market growth for all products exported

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Poor resources efficiency

Resources Ukraine Developed countries, average Coke (kg/t of iron) 520 320 Iron ore (t/t of iron) 1,8 1,5 Natural gas(m3/t of iron) 79 practically not used Energy (GJ/t of rolled metal) 30 25 Standard coal (t/t of rolled metal) 1,28 0,96

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Low labor productivity

Labor productivity in 1990-2007, tonnes of steel per person 200 400 600 800 1990 355 352 362 358 179 243 1995 475 452 403 552 322 111 2000 575 603 540 723 429 136 2007 661 179 EU Germany Japan Spain Brasil Ukraine

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Constraints to meet competitive challenges

  • High material and energy consumption of steel

production

  • Monopolies at raw materials’ markets of Ukraine,

resulting in higher prices at lower quality

  • Growth of prices and tariffs for the services of state-
  • wned monopolies in 2005-2008
  • Lack of adequate efficient anti-crisis Government

policy

  • Social burden on metallurgical companies
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Structure of rolled metal export from Ukraine in 2007-2009, mln t

11,8 12,6 10,7 7,4 5,7 4,9 9 8,3 6,1 2 4 6 8 10 12 14 half-finished products 11,8 12,6 10,7 long rolled metal 7,4 5,7 4,9 flat rolled metal 9 8,3 6,1 2007 2008 2009

Worsening of value-added structure

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Metal producers managed to adapt to new crisis conditions:

“freezing” of prices for some resources and tariffs

hryvnia devaluation

reduction of product cost

decrease of natural gas consumption

  • ptimization of employment
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Main directions of further development of Ukrainian metallurgy:

increase of the share of higher value-added products

revising the value chain and efficiency improvement

  • f its links

improvement of legal and regulatory environment

development of sales network and clients servicing improvement

improvement of business and managerial skills of personnel both managerial and engineering

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Measures to enhance competitiveness

Support of geographical widening of metal products sales

counteraction to tariff and non-tariff barriers establishment for Ukrainian products

economic diplomacy and trade missions’ activity

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Domestic market extension

development of large steel-intensive infrastructure projects (bridges construction, railroads, public utilities infrastructure modernization)

competition enforcement: anti-monopolist measures at horizontal levels

transparent and competitive public orders and purchases distribution

counteraction to excess import

Measures to enhance competitiveness

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Active development of financial instruments of sectoral support

tax credit for the share of the profit, directed to productive reinvestment

tax preferences for energy-saving equipment import

accelerated depreciation of productive assets

special credit lines for renovation projects financing in Ukrainian state-owned banks

Measures to enhance competitiveness

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Development

  • f

systemic export promotion measures – will directly favor metallurgy as one of the most export-oriented sectors of Ukrainian economy.

Measures to enhance competitiveness