Foreign Investment
Opportunity in Ukraine
Portrait of modern Ukraine
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Ukraine is a European country with significant potential and opportunities. It has well developed machine-building, mining and metallurgical, chemical, petrochemical, transport and agro-industrial complexes. The country takes strong positions in nuclear power engineering, aircraft engineering and the rocket and space industry.
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Ukraine is one of the 6 countries in the world that can provide manufacturing of a plane from designing to building. In 2017 nuclear power plants produced 55,1% of the total electricity in the country.
Ukraine is among the top 12 countries - the largest steel producers. In 2017 the steel manufacturing volume amounted to 61,2 million tons.
Energy equipment, produced in Ukraine, are exported to more than 100 countries of the world.
Over the past 25 years, more than 150 carrier rockets have been manufactured and launched by Ukraine. They put into orbit 370 spacecraft on request of 24 countries.
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On the territory of Ukraine there are 4 out of 10 European transport corridors as well as 170 thousand km of roads, 21 thousand km of railways, over 40 thousand km of pipelines. In addition, there are 13 sea ports in Ukraine, particularly Odessa and Chornomorsk, which are among the largest ports in the world.
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In 2017 93,5 billion cubic meters of natural gas and more than 13,9 million tons of oil were supplied to European countries via Ukrainian trunk pipelines.
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The railways net of Ukraine provides 82% of freight and almost 50% of passenger traffic carried out by all types of transport in the country. In terms of freight traffic, the Ukrainian railroad is ranked fourth in the Euro-Asian continent.
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Along with 18 partner-countries Ukraine is working on the possibility of improving multimodal transportation between the regions of the Baltic, Black and Caspian Seas using rail, road, river, sea and ferry services.
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Having a quarter of the world's black soil reserves Ukraine produces and exports large volumes of agricultural products and food to 164 countries. It ranks 1st in the world as exporter of sunflower oil, 4th - barley and corn, 5th - honey and walnuts, 6th - wheat, 7th - soybean and chicken meat. In 2017 supplies of agricultural products into foreign markets increased to 17,9 billion USD. The share of this sector in shaping the GDP of Ukraine has increased to 18,4%.
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Ukraine is open for further development of trade, investment and cooperative ties with all regions of the world.
It provides the most favorable regime to 175 countries of the world and a preferential import duty with an average rate of 3,99% for 65,7% of goods imported into Ukraine from these countries.
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In its turn, since putting into force on January 1, 2016 of the Agreement on Deep and Comprehensive Free Trade Area between Ukraine and the European Union, Ukraine has received more liberal access conditions to the EU market. As a result, in 2017 Ukraine`s export of goods to the EU grew by 30% and reached a record 17,5 billion USD - twice higher as to other foreign countries. The EU share in Ukraine's total commodity export exceeded 40%.
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Ukraine has world-renowned research innovative developments in the fields of welding materials, nanotechnology, biotechnology, hydrogen energy, artificial intellect and others. Also, 39 industrial parks were initiated in Ukraine for introduction of innovative projects for the period from 30 to 50 years.
Foreign Investment Opportunity in Ukraine
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Ukraine is at the crossroads of trade routes to Asia via the Black Sea, that makes it an ideal location for transit traffic within the framework of international transport corridors.
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Ukraine has 25% of world's black soil and 117 types of minerals. It traditionally takes leading positions in manufacturing and supply to external markets of grain and sunflower oil, metals, pipes, power equipment and other high-tech products of the machine-building complex.
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Since September 1, 2017 the Association Agreement between Ukraine and the European Union has been put into full implementation. Hence, Ukraine has launched unprecedented economic, social and political reforms to accelerate integration with the EU.
The Agreement on Deep and Comprehensive Free Trade Area between Ukraine and the EU is an important part of the Association Agreement.Due to lifting of customs duties and other barriers, Ukraine's trade relations with the EU have been sustainable intensifying. In particular, exports of Ukrainian goods to the EU countries in 2017 compared to 2016 increased by 30% and amounted to 17,5 billion USD. At the same time, the EU has become one of the main trade partners of Ukraine. Its share in the total volume of Ukrainian commodity exports amounted to more than 40%.
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In 2017 the net inflow of foreign direct investment into the Ukrainian economy amounted to 2,3 bln USD. The total volume of accumulated foreign direct investment in Ukraine at the beginning of 2018 increased to 39,1 bln USD.
Most attractive sectors for investment
Agribusiness
Ukraine is frequently considered as a potential global agricultural superpower. Over 70% of the country’s total area is agricultural land. This amounts to just over 42 million hectares, 32 million of them is arable land, suitable for grain and vegetable farming. Approximately 25% of Ukraine’s population is employed in the agricultural sector.
Agriculture is one of the promising sectors of Ukraine's economy, accounting for over 18% of GDP. Ukraine is among the five largest grain exporters globally and takes first place in the world as supplier of sunflower oil (about 60%).
The largest part of Ukraine’s current agricultural output consists of a diverse combination of cereal and forage crops including wheat, maize, barley, sunflowers, sugar beets, legumes, fruits and vegetables.
Ukraine takes a leading position as a large producer of cereal grains, particularly wheat. The entire annual cereal crop can reach as high as 90-100 million tons. The level of profitability of all types of activity of agricultural enterprises has grown to 24,9% and tends to further increase.
Agri-tech
Ukraine is also known for its domestic agri-tech manufacturing with major plants located around the country. The flagship cities of the said industry include:
– Kharkiv (various tractor models and engines for self-propelled harvesters);
– Odesa (tractor ploughs);
– Kropyvnytskiy (seeding machines);
– Dnipro and Ternopil (beet harvesters);
– Kherson (corn harvesters);
– Berdiansk (reapers);
– Lviv (agricultural machinery).
Ukraine provides opportunities to develop agricultural clusters that could promote designing, testing and manufacturing of the latest agri- technologies.
Energy. Ukraine has a diverse endowment of natural energy resources and continues to be a net exporter of electricity and certain types of coal. However the country’s reserves of fossil-fuel energy are not large, today Ukraine s importing natural oil and gas, including anthracite coal to meet its current demands.
Gas sector. As a part of the reform of gas sector, the restructuring of the largest oil and gas company «Naftogaz of Ukraine» is underway. It should be completed by 2020, which will allow transparent and free third party access to the Ukrainian gas transportation system.
Ukraine possesses Europe’s third-largest reserves of shale gas, estimated at anywhere from 5-8 trillion cubic meters. In this regard, projects for the exploration and extraction of this type of energy resources in Ukraine can be of great interest for foreign investors.
Electricity sector. Ukraine’s electricity sector consists of more than thirty power plants, among them fourteen are thermal and another four are nuclear plants. In this regard, projects for the exploration and extraction of this type of energy resources in Ukraine can be of great interest for foreign investors.
Nuclear power. Nuclear power is the main resource for electricity generation in Ukraine. It exactly meets half the country's electricity needs.
At the same time, electricity consumption in Ukraine is expected to double over the next 15 years that requires sustainable investment inflow in modernization of four existing nuclear power plants.
Large volumes of investments are needed to complete the construction of the third and fourth power units of the Khmelnitsky NPP as well as launch own production of nuclear fuel.
Alternative energy
Ukraine is taking important strides to increase the use of renewable-energy sources and alternative fuels as part of its broader strategy to reduce consumption of traditional fossil fuels. According to estimations, Ukraine has potential to increase its use of renewable energy tenfold by the year 2030 and reduce consumption of natural gas by 15% over the same period.
Investment opportunities in Ukraine’s alternative energy sector are most favorable as country has diverse reserves of raw material and well-educated workforce possessing the technical know-how required to develop and introduce the latest commercial advances in this sector. As a result, interest to Ukraine’s renewable energy sector has been steadily growing. By state estimations, total investment in alternative energy sector may reach 18 billion USD by 2020.
Solar energy. The Government estimates that there is a 4 GW potential for annual solar energy production in Ukraine.
Given the large number of sunny days, Ukraine is becoming attractive solar producer, mostly for industrial facilities and the growing sector of agribusiness.
Government of Ukraine has recently announced programme to attract solar energy producers to certain areas of the country, in particular the Chornobyl exclusion zone. Currently, 10 companies from seven countries have expressed interest in developing large-scaled solar power projects in this area.
Wind. Today wind power in Ukraine is in the stage of re-development and modernization. Industry`s experts have identified a range of promising regions as most suitable for wind power development.
Biomass. Ukraine’s agricultural sector is the fastest growing industry of the economy and is expected to generate increasing amounts of agricultural and forestry waste, that are the major resources for biomass based heat and power generation.
Information technology
Ukraine’s IT industry is a driving force in the country’s resurgent economy. It varies from cutting edge work in AI, cyber security and nanotechnologies to commercial ventures in blockchain, Fin-tech, big data management, gaming, agribusiness and e-commerce etc.
Ukraine has the largest and fastest-growing number of IT professionals in Europe and their number is expected to increase to 144000 in 2018.
Ukraine has over 1000 local IT service companies and more than 100 leading global companies with subsidiaries in the country. The IT industry has a significant impact on the Ukrainian economy and in 2018 its growth is expected to reach 25%, total revenues will increase to 4,5 bln USD. IT outsourcing is Ukraine’s third largest export sector.
Ukraine is also focusing on providing favorable conditions that would allow IT entrepreneurs to expand further into domestic markets. Ukraine’s IT sector offers highly skilled experts and qualified education that contribute to further dynamic of the said sector.
Infrastructure
Ukraine’s vast road, rail, air and sea infrastructure along with benefits of its geographic location, makes the country an important transit corridor for trade and travelling activities between Europe, Asia and the Middle East.
Railways. Ukraine’s rail network is one of the most extensive in Europe with a combined total length of 21 thousand km. On an annual basis, the rail network handles 82% of the nation’s freight and almost 50% of the passenger traffic crisscrossing the country.
By carriage volume, the Ukrainian rail network is the 14th largest in the world, the 6th largest rail passenger transporter and the 7th largest freight transporter.
Roads. Ukraine has an extensive highway network of 170000 km that cover the whole territory of Ukraine and includes four international corridors passed through the country and served as important transport routes for both freight and passenger traffic.
The State policy is now focused on fostering a competitive conditions in highway construction in order to intensify implementation of new public-private partnership projects.
Maritime. Ukraine’s maritime transport sector is a multi-functional complex of river and seaports along with related infrastructure that serve Ukraine’s export/import sector. All of the country’s ports along the Back Sea coastline are warm water ports that provide year round access to the Mediterranean and the Atlantic Ocean.
Ukraine is currently undertaking a broad range of initiatives to improve its maritime infrastructure by focusing on developing its legal and regulatory environment, improving port management systems etc.
Aviation transport. Ukraine has 23 major airports (19 Government owned), 12 of them providing international and offering regularly scheduled flights for commercial airlines.
Beginning of functioning of the Open Skies agreements between Ukraine with the United States and the European Union will give additional impetus to the implementation of an ambitious program of airport modernization and expansion throughout the country.
Aerospace and technology
Ukraine is home to several of the world’s leading aerospace design and production facilities. The “Antonov State Company” is known for designing and manufacturing of the world’s largest cargo transport plane An-225 «Mriya».
Among other Ukraine’s aerospace centers there are “Yuzhnoye” and “Yuzhmash” Design Bureaus in the city of Dnipro, SE “Ivchenko-Progress” (aero-engine design bureau) and JSC “Motor Sich” (one of the leading engine manufacturers) in the city of Zaporizhzhia.
Ukraine is aiming to rebuild its aerospace and technology industries to be compatible with NATO standards and develop products and produce innovations that can be sold in wider markets.
Manufacturing
Heavy industry - Machine building. Ukraine’s heavy manufacturing sector is dominated by an extensive network of machine building enterprises. Over 25% of the population is employed by manufacturing companies involved in mining, railway rolling stock, energy, farm equipment, road construction equipment, machine tools, aircraft engines, instrumentation and manufacturing for the light and food industries.
The above manufacturing capacity along with highly qualified educational institutes, have enabled Ukraine to become a global competitor in industries such as automotive, aerospace and shipbuilding.
Aviation. Ukraine belongs to several countries of the world with a full cycle of aviation engineering and takes a leading place in the world market of development and production of transport and regional passenger aircraft. The assembling capacities of the aviation industry`s enterprises of Ukraine allow to manufacture up to 24 planes of Antonov`s chain per year.
Ukraine is also becoming known for its niche market in production of unique ultra-light planes, hang-gliders and paragliders of all designs and models.
Shipbuilding. Ukraine today ranks among the 10 largest shipbuilding countries in Europe. Presently there are over 35 major state companies, engaged into design and construction of a wide range of vessels, that include powerboats, barges, bulk carriers (dry cargo ship), tankers, including liquefied gas carriers.
Ukrainian shipbuilding industry has a strong export potential and plays an important role in development of manufacturing sector.
Light Industry. The industry currently has a wide profile with selective hubs of manufacturing in such areas as pharmaceuticals, electrical equipment, plastic and rubber products, food processing and textiles. The latter two, in particular, have been undergoing a noticeable growth in the last three years.
The clothing industry is also experiencing a similar boom as increasing numbers of European manufacturers establish clusters of garment manufacturing in locations close to Ukraine’s border with EU countries.