Mykola Siutkin, the founder of S&P Investment Risk Management Agency identified and substantiated the most favorable factors for investment in Ukraine based on the extensive experience of the company.
It’s no secret that developed countries with a sustainable economy cannot meet the needs of the business. Instead, emerging markets can offer low-cost labor and leverage space to expand production, help reduce operating costs and increase profits. At the same time, many advanced markets are located outside Europe, which complicates many business processes and increases business costs.
In Europe, developing countries include almost all those once belonged to the USSR. However, their political environment, geographical location, and the pace of reforms towards European integration greatly vary.
In this article, I want to draw your attention to the benefits of Ukraine, which has always been and still remains one of the most unique and attractive markets in Europe.
The Attractiveness of Ukraine from an Economic Perspective:
1. The largest area in Europe: 603,628 km².
2. Favorable geographical location: the country is located in the central part of Europe; it borders seven countries and has access to the sea.
3. Population — 43 million people.
4. Land area — 60 million hectares, agricultural land – 42 million hectares.
5. The cost of labor is much lower than in the EU. The average salary is 12,264 UAH (about $503), while the minimum salary is 4,723 UAH (about $193).
6. The population is highly educated: the country has 652 higher education institutions with more than 1.5 million students enrolled.
7. Short-term return on investment: from 3 to 7 years.
8. Projects have high profitability — for example, the profit of construction projects is commonly 15-17% per annum (according to the forecasts of the Ministry of Finance for 2020).
The Attractiveness from a Business Opportunity Perspective:
1. The government adopted new laws “On Concessions” and “On Public-Private Partnership”. They allowed businesses to partner with the state on the most interesting investment projects.
2. They introduced a procedure whereby the government of Ukraine publishes a list of previously state-owned subjects of a concession. All interested companies can take part in the competition.
3. Every investor has the right to initiate a concession by submitting a concession proposal for a certain object.
In the first month after the adoption of the Concession Law, QTerminals (Qatar) and Risoil S.A. (Switzerland) became the first concessionaires to receive the Olviya and Kherson seaports on favorable terms for a long-term concession.
4. The legislative 20-year moratorium on the sale of agricultural land will be lifted soon. By April 2020, the Parliament will pass a law on the land market (the bill has been already passed in the first reading).
5. Since 2020 (if the law is adopted), investors will be able to purchase 42 million km² of agricultural land, most of which is black soil.
6. The number of state-owned entities currently subject to privatization has significantly increased. To date, such objects have been exclusively state-owned and could not be privatized.
7. Many progressive reforms have been implemented and many of them are coming soon. They have significantly reduced business risks and streamlined business processes. The tax reform with the automatic VAT refund system, an e-account for tax administration is a great example.
8. The procedure for opening and operating representative offices of foreign companies has been simplified.
9. The government has developed and already approved the Investment Atlas of Ukraine that contains more than 70 proposals for privatization or concession of large objects:
PYLYPETS — a mountainous area in the Ukrainian Carpathians and popular ski resort.
JSC DNIPRO CHP — electric power capacity — 61.6 MW, thermal power capacity — 500 Gcal/h, including 187 Gcal/h from ROU boilers. The heating unit of the CHP plant consists of 18 boilers, 6 ROU, condensate, network, and feed pumps.
JSC PRESIDENT-HOTEL — a 4-star hotel in the central business district of Kyiv built in 1990 and reconstructed in 2012.
JSC ODESA PORTSIDE PLANT — Ukraine’s leading nitrogen fertilizer production and handling company. The plant’s share of total ammonia and urea production in the country is 23% and 18%, respectively, making OPP the largest urea producer in the country and the second-largest ammonia producer in the country.
PJSC SUMYKHIMPROM — production of mineral fertilizers, coagulants and additives to cement, acid, titanium dioxide and pigments, and other types of chemical products.
SE UKRSPYRT — the largest producer of high-quality alcohol in Ukraine. The enterprise’s products are irreplaceable in the manufacture of alcoholic beverages, pharmacy, medicine, perfume, wine, confectionery industry, animal breeding, and other sectors of the national economy
SE ELEKTROVAZHMASH — the only enterprise in Ukraine, which develops and produces powerful turbogenerators, hydrogenerators, large DC machines and traction electrical equipment for urban and railway electric transport, turbogenerators for thermal and nuclear power plants, electric motors.
HOTEL DNIPRO — a 4-star 12-floor hotel located in the downtown of Kyiv near the government square. Hotel Dnipro was established in 1964.
Find a detailed list of objects open for concession and privatization by scanning this QR code:
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