ONUR Group is a Turkish company that focuses on infrastructure construction throughout Eastern Europe and the Middle East. The company started in Ukraine in 2004 and rose to public prominence thanks to a series of successful road, highway and infrastructure projects in Lviv and Odessa. Since then it has expanded to other regions in the Ukraine and diversified into the country’s agricultural sector. Here, the company’s head of delegation and general coordinator Emre Karaahmetoglu explains why the group is optimistic about the Ukraine market and what continues to give ONUR a competitive edge in the country
What can you tell us about ONUR’s history and current and activities in the country?
Our company started in Ukraine in 2004, with a key Odessa highway project, which we successfully completed. We then participated in international contracts in Lviv region, financed by the European Bank for Reconstruction and Development (EBRD), from 2005. Subsequently, we worked on the Kyiv-Chop highway project and won tenders in that region. At the same time, we worked on tramway projects in Lviv and intensively participated in tenders for projects financed from local budgets for the construction of roads in the region.
Today, we are currently working on a project in Kiev which is being financed by the World Bank, and have several projects across many regions in the country, including Lviv, Kiev, Poltava and Zaporizhzhia. In addition, we have many other investments in limestone and sand quarries to supply our activity in construction. In the last two years, we have also started investing in the agricultural sector in Ukraine. While agriculture is very different from construction, we wanted to capitalize on this opportunity as Ukraine is a very rich country in terms of fertile soil.
What has been the evolution of the business environment in your sector since ONUR came to Ukraine in 2005?
Since 2005, there have been difficult times, but also good times. Now, since 2013-2014, we are starting to see that in Ukraine construction is growing, as government policy focuses on putting in funds for more construction projects. This is why we are now enlarging our facilities around the country, to take advantage of the fact that this government is allocating more budget to construction.
What led you to decide to diversify into agriculture in Ukraine?
This is for us a very new sector, and we have been investing in it for two years now. We are trying to acquire as many land leases as possible, and we are investing in equipment. So far, we have about 5,000 hectares of agricultural land in the Lviv region. We mostly concentrate on grain, but if we can increase our land to 10,000-15,000 hectares, we will look into other areas. In addition, we are planning to put in grain silos and elevators to enable us to store grain for export. Thus far, we are still in the planning stage, but we believe that as the country continues to improve, so too will the opportunities in this sector.
What gives you the confidence in Ukraine today to make these types of investments?
ONUR has been in Ukraine since 2004, and therefore has built up a lot of experience compared to other foreign companies. We have worked a lot and we have seen a lot. Since the Maidan, government policy has changed to make everything better. Ukraine is a very young country, and the government is making many changes in the law to open the market for business investment. Ukraine is a big country compared to European countries, and it has very good agricultural land. For that reason, this market is interesting to us. In addition, Ukraine’s location makes connectivity very important, and the government is now focusing on infrastructure development. We see this as a big opportunity, and we believe that in a few years, construction will be the biggest sector in the country.
The government has carried out several reforms, including the implementation of the new ProZorro public procurement platform. What are the principal impacts of these reforms on the way in which you work?
We work closely with government authorities in Ukraine because we are taking part in government projects. When we are awarded a project, we ensure we complete it in a short time and with the best quality. Thanks to ProZorro, the tender system is more open for all companies, including foreign companies. It is a totally transparent system and you can see which companies are participating. For the government, it is important to select the company which provides the best quality at the best price.
To what extent is this leading to greater competition in the construction sector, and what are you doing to maintain your competitive edge?
In the last two years, thanks to the reforms and the strong economic performance of the country, things are going well in Ukraine now and other foreign companies are interested in the country. Last week, there was a local government tender which saw some 50 companies, both foreign and local, putting in bids. I don’t remember this amount of companies being interested in a tender in the past. For us, competition means quality. There is enough room for us and the competition. The most important is ensuring the reputation and quality of those who come into the market. We believe that if good companies come in the construction sector, it will increase the level of the entire construction sector.
According to our experience in other countries, low price is not everything. Some companies don’t know the market and can offer a low price but then can’t deliver the project. Quality and finishing on time is the most important. For that reason, ONUR prides itself on its local knowledge, including knowing where to source material. We manage our supply chain by preparing aggregate and bitumen supply in the summer to ensure that we can operate in the more difficult winter season.
Our policy is to finish on time with good quality. Customer satisfaction is very important to us and is the reason for our strong position in the market. In addition, we see ourselves as a local company. Around 95 percent of our 3,000 employees are Ukrainian, and many of our Turkish staff who come here have married local people. We are joining each other and we are fully integrated in the country. Because we have been here for a long time, we have a strong competitive advantage because we know all of the industrial sectors, the suppliers, and the climate conditions, and this is a big advantage for us in the market.
Do you find that the image that Ukraine has abroad is in line with reality?
I can speak to that from the Turkish perspective. Turkey and Ukraine have very good and very friendly relations. Last year, more than one million Ukrainian tourists came to Turkey. From Turkey to Ukraine, that figure was about 300,000, which is also considerable. Flights between the two countries have more than doubled since the Maidan. The Turkish government and Turkish businesses see Ukraine as a big opportunity. Many Turkish companies are interested in bringing production in Ukraine. I know this because I am also a member of the Turkish-Ukrainian Business Association, and we see many Turkish companies coming and asking about Ukraine, although in many cases, they are waiting for the signing of the free trade agreement (FTA) between the two countries before making the leap. I believe the FTA should be signed this year.
What is your overall evaluation of the Ukraine market?
Ukraine is growing, and there is a greater degree of comfort for individuals and companies alike because everything is going well in the country both economically and otherwise. Ukrainian people are highly educated and there is quality in this market. Ukraine is waiting for investors, but I would say to Turkish companies in particular: don’t wait until the free trade agreement is signed because then everyone will come.