Every year Ukraine becomes more and more attractive for investors, providing access to a huge sales market with more than 42 million consumers. Compared to developed countries, not only labor costs are lower, but also raw materials and other materials, in particular – electricity and water.
Foreign direct investments
Over the past few years, many changes for the better have taken place in Ukraine. In particular, major advances include improving ease of doing business and supporting investor-government cooperation. According to the State Statistics Service, in 2018, $ 2.87 billion of direct foreign investment was attracted to the Ukrainian economy, which is $ 0.36 billion more than in 2017.
After reforms aimed at protecting foreign investment, Ukraine has become an even more attractive destination for international investors. In the Doing Business 2019 ranking of ease of doing business, Ukraine ranks 71st in the world, compared to 76th in 2018. Foreign direct investment contributes to economic growth and employment. In addition, Ukraine’s GDP growth in 2018 reached its highest level since 2011, increasing to 3.3%. For European investors, proximity to the EU, low labor costs and its high qualifications make Ukraine one of the most attractive countries for investment.
There are also other factors that contribute to the expansion of investment ties in Ukraine: great potential and an almost unlimited domestic market; geographical location at the intersection of major transport routes between Europe and Asia; relatively inexpensive and at the same time qualified labor force; scientific potential; developed infrastructure (ports, airports, railways, warehouses, communication systems and engineering networks), etc.
The huge potential of the country is also evidenced by the number of tourists, which is increasing every year and, according to the Ministry of Economic Development and Trade of Ukraine, reached 14.2 million in 2018.
Foreign direct investment (FDI) is undoubtedly an important factor in stimulating economic growth in Ukraine. According to the State Statistics Service of Ukraine, inflows of foreign direct investment in Ukraine in 2018 reached 2.87 billion US dollars. Total FDI (equity) in 2018 was estimated at $ 31.6 billion.
To attract investors, several legislative incentives have been introduced in Ukraine, for example, a green tariff, tolling operations, benefits for IT specialists etc. The Ukrainian economy is gradually liberalizing, offering some of the most favorable conditions for investment.
The industries that have shown the most rapid growth in recent years, and therefore are the most interesting for investors, include the information technology (IT) industry, agriculture, the automotive industry, processing industry and renewable energy.
For foreigners who intend to invest in Ukraine, there are several investment options, including:
- opening an investment account in one of the Ukrainian banks and transferring foreign currency to it from abroad;
- direct transfer of foreign currency to the current account of a Ukrainian citizen from abroad;
- sale of foreign currency received on an investment account and transfer of proceeds from the sale of foreign currency in hryvnia to an investment account for foreign investment;
- other methods provided for by the Resolution of the Board of the National Bank of Ukraine No. 280 “On the settlement of issues of foreign investment in Ukraine” (2005).
In general, forecasts for the Ukrainian economy remain positive given the growth in direct investment and exports, as well as the improved business climate. It is expected that this pace of development will continue in the future. However, this does not mean that investors should not carefully weigh the risks specific to each industry. Having everything necessary for business development, Ukraine is becoming more and more attractive for international investors. Despite a few challenges, investors value the willingness of the government and society to take steps to transform Ukraine into a dynamic market economy.