Creative industries have a chance to save the Ukrainian economy, including through exports – experts say

Creative industries have a chance to save the Ukrainian economy, including through exports – experts say
July 08, 2015.

Kyiv, July 8, 2015. Intelligence, hard work and creativity – each is part of a formula for successful business in Ukraine and the key to the success of Ukraine’s economy under current conditions. This opinion was expressed by Alexander Savchenko, economist and president of the International Institute of Business at a roundtable discussion at Ukraine Media Crisis Center.

In Savchenko’s view, human capital should be looked for in innovations, creativity and services: “The spheres of industry and agriculture now mean poverty. This year GDP will fall by 10%, inflation will be 50%, the dollar at year-end – if there is no default – will be 28 hryvnias, real incomes will fall by approximately 30%.”

For the following year, the expert predicts GDP growth at a level of 1-2%, inflation at 15%, and the currency rate will be no more than 30-32 UAH. But according to Savchenko, devaluation also has a positive effect, because although it is damaging to the domestic market, it is at the same time opening opportunities for exports.

“Twenty-five percent of the global duty-free market is opened for us. If Ukraine signs an agreement with the United States, it can export freely not only to the EU, but also to the US and Canada. Fifty percent of the world market will be open for Ukrainian businesses,” he said. And a business that has no connections with government officials will have an advantage. The IT sphere is among them. “It is estimated that Ukrainian exports from the IT-sphere are worth 42-45 billion hryvnias,” said Victor Valeyev, Director of the IT Association of Ukraine.

According to Oleksandr Tkachenko, Director of 1+1 Media, one way for the Ukrainian economy to survive is to develop export potential, particularly the creative economy. As for the television industry market, two areas look promising for our country. The first area is the production of new formats and ideas. The advantage here is that there are enough success stories of profits of tens of millions of dollars. Secondly, Ukrainians should pay attention to the export of services such as movies, TV serials and commercials to customers. But here entrepreneurs are dependent on the state, and there is a need for tax credits.

“Tax credits will promote not only film studio construction, but also increase employment rates in Ukraine. According to our modest estimations, profits can reach 100 to 200 million dollars” emphasized Oleksandr Tkachenko, who added that it is impossible to improve the economy without the help of exports. However, according to Valery Geyets, Vice President of the National Academy of Sciences of Ukraine and Academician of Ukraine, producers have to take a chance and develop export potential over the next 2 to 3 years, otherwise the country will no longer survive on benefits.

Kostiantyn Kozhemyaka, founder of HUSS publishing and Ideologist of the Chernozem creative economy portal, explained that Ukraine lacks broad cooperation in its creative industries, despite the country’s high intellectual prowess and strong creative abilities. Another obstacle is the yet unsolved problem of intellectual property rights. “We need changes at the levels of psychology, social behavior and self-employment, and the initiative should not come from officials, but from below. This is what is called ‘Generation Z,’ the creative class, ” said the expert.

Yehor Stefanovych, Director of the Department of Secretariat of the Cabinet of Ministers, declared that the Cabinet has taken a new turn regarding open data. “Ukrainian enterprises and companies in exporting computer services receive about 2 billion, which is a growth of 40 times. No industry in Ukraine has such growth,” said Yuri Antanyuk, Head of Epam Systems Ukraine. According to Antanyuk, the creative economy is very important and promising for Ukraine. But there will be more chances for its development if the state does not interfere and does not frequently change the rules of the game.

Yulia Savostina, founder of the project Made In Ukraine, for the past 3 years has been talking to 1,500 Ukrainian producers, in order to explore and promote home producers. The conclusion is that our entrepreneurs were hiding from Ukrainians, despite the fact that in all areas – from a toothbrush, to clothes and furniture – they can replace imported products. On the wave of patriotism, their influence has risen along with profits, and home manufacturers are already having a hard time meeting the demands of Ukrainians.

Regarding the import of Ukrainian goods, there still remain a number of obstacles, the first of which being logistics. “We have no company in the country that is willing to undertake obligations to export goods at a normal price, even for festivals, not even mentioning routine jobs,” emphasized Yulia Savostina. Besides, the issue of customs is important, as currently it is almost impossible to legally establish the sale of Ukrainian goods in Europe. The issue of financial circulation must be solved. According to Savostina, the laws here must be simplified. Otherwise, Ukrainian producers cannot transparently work abroad, having only one option – to trade in Internet shops.

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