Why should investors be interested in Ukraine?
Currently the potential investor knows little of Ukraine, less of its market benefits than challenges. The aim of our media-campaign is to turn the tables with such disproportion in information and to deliver the essential messages both to the key business elite representatives and the wide-ranging public.
Ukraine is a transition market economy state, with a significant investment potential and the highest rate of GDP growth in Europe in the last 10 years, caused by the favorable external conditions, increasing demand in the internal market and steadfast macroeconomic factors development.
The key advantages of Ukraine in the market are as follows: the beneficial geopolitical position, with granted access to the 3 strategic regional markets – EU, Russia and Asia. Moreover, via sea lanes Ukraine has means of connection with the Middle East region and 4 out of 10 European transportation routes pass through the territory of Ukraine.
Ukraine is the 4th country with the highest rates of educated population and 5th in the rate of certified IT-specialists, employed in the intellectual services. Which means that Ukraine owns vast labour resources paired with a lower-cost market of labour.
Yet another advantage of Ukraine is its potential in the agricultural industry – approximately one third of the world's fertile soils belong to Ukrainian territory, with 56% of the landmass having been determined as suitable for the agricultural use.
Ukraine is a dynamically evolving consumer market. And by direct actions the state shows its determination to embrace the investors' involvement in that given market and to promote such participation - in the first place, through number of legal initiatives.
In Ukraine investor has an opportunity to purchase a business, real estate, or any other kind of object of ownership (with an exception of farmlands and lands in agricultural use). The state has simplified and lowered the tax requirements and in accordance with a new taxing system the investor has an opportunity to file an electronic claim for VAT refund. Requirements for the minimal capitalisation of companies have been softened down. There is an automatic refund mechanism for exporters and natural persons, receiving dividends from the Ukrainian companies, only get a low 5% taxation (as opposed to the previous numbers – 15% tax).
Several industries, such as light industry, shipbuilding and aircraft construction, farm and construction machinery industries, hotel business and alternative energy industry receive the tax holiday for 10 years.
The Law "On Industrial Parks in Ukraine" is worth a separate mention. Adopted in the first reading, it is based on successful experience of industrial parks construction in the Eastern Europe (such as that of Czech Republic). The Law was drafted with the assistance of the leading international experts via Project LINK (USA) and its implementation has already begun in the several regions of Ukraine. The Law on concessions (private-public partnership in lease and concessions of the state-owned entities) is also aimed at adjusting the requirements to meet the needs of the investor and to make the investment process easier.
What role does the State Agency play in the investment market of Ukraine?
The State Agency for Investment and National projects is a central executive body to safeguard the implementation of the state policy in the sphere of investment activities and National projects management – the projects of strategic importance that provide development of the priority industries in economy of Ukraine.
The Agency bears the primal responsibility for the implementation of the Investment reform in Ukraine, the key principles of which are:
- project management
- personal responsibility
- priority of investment funds over budget
- partnership and cooperation with leading companies of the world
The Investment reform in Ukraine is the complex of mechanisms, projects and institutions, that act combined with a synergistic aim to radically change the procedures of state development projects funding, to make the best use of the limited state resource as means of building partnership with the private capital and to build the infrastructure, necessary for investment allocation and substantial increase in the investment inflow.
The significant investment climate improvement and construction of the system of qualitative investment propositions, prepared in accord with international standards, are expected as a result of the Investment reform.
Another important aspect of the work on implementation of the reform lies in the application of National projects – the key spots of investment resources allocation.
The State Agency is a unique body in Ukraine that carries out the preparation and implementation of the National projects – market-modelled strategic investment projects of first-priority to the state, which allow to instantly allocate the direct foreign investment. The strategic projects of such scope are set forth by the President of Ukraine in the Economic and Investment reforms in Ukraine as their core elements. At the same time the strategy of National projects implementation is free of state funding obligations, allowing for more than 80% of the funding to be received from the market. This way, the free market of investment propositions is created, being under the sole regulation of coinciding interest of state and investors.
National projects are the large-scale economic projects of strategic importance for several industries of the economy of Ukraine and oriented towards solving specific social issues or at radical economic resuscitation of regions in whole. Each of such national projects means a new industry for Ukraine.
In the process of National projects' implementation, the state has taken up the duties on preparing the start-ups (providing funding for the feasibility study development, allocating the construction areas, removing the regulatory obstacles and, in specific cases – issuing the state guarantees).
All of the National projects, presented for the investor's interest, are under provided implementation period and conditions, and will have a thoroughly prognosticated impact on the economy of Ukraine. Most of these projects are carried out in the form of a private-public partnership.
National projects are future-oriented and profitable for the business, because their implementation means systemic changes in the conditions of market access, conduct of business, simplification of the regulatory procedures of allowance obtaining and substantial cuts in numbers of such procedures, and a transparent legal field.
As mentioned before, more than 80% of funding for the National projects, even taking into account their social-oriented nature, will be market-allocated.
Another essential principle in our code of conduct, Anti-corruption, should be mentioned separately. We guarantee a 100% transparency and publicity on all key management decisions, an open process of selection of project managers and obligatory tendering procedures with the relevant pre-announcement.
Among other reasons, the State Agency is unique because due to its work the general algorithm of image promotion of Ukraine was developed.
Road-show aside, among other elements of investment image-building campaign we have also set up the annual International investment forum of the high level as the initiative and under the aegis of the President of Ukraine, with the participation of the state leaders, highest government officials and CEOs of the world companies. This event as a rule will take place in the mid-June of each year, but this initiative is to start with an international investment conference on December 9, 2011, held in Kyiv.
The organization of such International investment forum of the high level is enrooted in the implementation of the Investment reform in Ukraine. The topics on discussion will be linked to the specific economic issues of high interest and priority both for Ukraine and European states, as well as for states, located in the regions, in which Ukraine has substantial competitive advantages or impact on the regional processes.
Moreover, in the few weeks to come, the interactive investment web portal Іnvestukraine.com will be created, offering new services to greatly ease the difficulties any investor might face. These services are the «One-stop shop» and «Project Marketplace».
«One-stop shop» is the unique mechanism of personal assistance, provided for to the investor in the internal Ukrainian market, which could also be seen as an interactive "roadmap" for the investor.
«Project Marketplace» is a separate system, containing investment proposals, included in the National projects or other regional or industry projects. The operation of the «Project Marketplace» will be prepared and carried out at the highest
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