Learning curve is a long one

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01 December 2006

There are many constraints to an increased use of trade finance in Ukraine but, as Simon Pirani explains, with further education of available tools and familiarization, the market has great potential.

Ukraine's trade conflict with Russia is changing its trade finance outlook, Roman Gorokhovskikh, vice chairman of the board of TAS-Kommerzbank, says. "The diversification of trade away from Russia has increased opportunities for banks on both import and export sides," he informs Trade Finance. "Exporters are looking for new markets, and this facilitates a wider use of LCs."

The steep increase in the import price of gas has also changed the market place. "Companies with high energy consumption have started projects to install new production processes with the aim of reducing energy consumption. This involves buying new equipment," he adds.

Ukraine's open economy, and the extent to which it depends on trade, means that the volume of trade finance transactions can grow substantially, Gorokhovskikh argues. But, as in Russia, the market is constrained by misconceptions in corporate management: "First, there is a lack of awareness of possible financing options, and corporates...

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