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Investment to Ukraine

About Ukraine

Ukraine, a Central European country of over 45 million people, covers a territory of 603,628 km2(233,062 sq mi) entirely within Europe which makes it the largest country of Europe.  Once the most advanced scientific, industrial and agricultural republics of the former Soviet Union, Ukraine has kept its leading position in the intellectual potential and boasts the World’s richest reserves of fertile black soils (chernozem). Ukraine’s strategic location in the very center of Europe and land borders of 4,663 km with seven other European countries and its access to the Black Sea makes it a natural transportation & logistical hub.

About 60% of all Ukrainian lands are considered arable which makes it the largest country on the continent with the greatest potential in agricultural production for foods and renewable bio energy.

Ukraine’s Politics

Ukraine’s President, Prime Minister, Ministers and a large number of the Members of the Parliament are trilingual: speaking Ukrainian, Russian and English for the first time in history of independent Ukraine.  This became possible due to the open democratic elections of 2014 which followed the nation-wide protests against the corrupt pro-Russian President Viktor Yanukovych and his team.

President Petro Poroshenko was elected in 2014 in the first round of the presidential elections. Later in 2014, the new Parliament was elected ending the era of communists’ representation as well as not letting in extreme nationalists. The political coalition was formed shortly after the parliamentary elections and the new Cabinet of Ministers has been put to work with an unprecedented hiring of foreign experts as ministers (making them adopt Ukrainian citizenship), vice ministers and advisers along with the Ukrainian majority of Western-educated professionals.

Ukraine’s political system since its independence in 1991 has not changed significantly. Ukraine now  is a republic under a mixed semi-parliamentary semi-presidential system with separate legislative, executive, and judicial branches.

The Economy

The political situation in Ukraine in 2013-2014 and the military aggression of the neighboring Russian Federation have led to the adoption of the Ukraine’s 2015 State Budget with a deficit of 3,7% of the projected GDP. The inflation rate is expected to be at 20,5% in 2015 according to the National Bank of Ukraine.

Investment Opportunities in Ukraine

Ukraine is still considered a high risk country which only proves a possibility of high returns on investments which are done thoroughly, with strong legal support, professional due diligence and appointment of trustworthy management in the key positions.

A wide range of investment opportunities across industries and throughout Ukraine with full due diligence support by financial and legal professionals can be obtained per your request.

At a glance, investment opportunities and current business projects include but not limited to:

Agriculture | Investment opportunities in Ukrainian agricultural production and agricultural infrastructure

Ukraine boasts over 30% of the World’s reserves of most fertile black soils. The post-Soviet economic decline has affected agricultural production. Arable lands  are still not traded but it should not stop any agricultural venture from entering the market with the biggest potential of its kind in the World. Ukraine is the most suitable location in the World today for organic agriculture and sustainable biodynamic farming which can provide 25-35% savings on operational costs and irrigation needs and over 20% higher yields compared to conventional.
Agricultural infrastructure such as field granaries and port grain elevators are becoming increasingly demanded by the fast developing farming sector and growing international demand for food.
Agricultural modern technologies such as parallel driving and fuel control systems are becoming more popular among Ukrainian farmers who continue to realize the power of efficiency and extra earning against the capital investments in technology.
Our farming experts posses strong practical international experience, global industry recognition and Ukrainian governmental awards particularly in the field of sustainable agriculture, storage efficiency and international trade.

Banking | Investment opportunities in Ukrainian banking sector

Despite the news reports about the troubles in the Ukrainian banking sector, banking remains one of the most attractive sectors in any growing economy. The banks which had absolutely failed to control any financial risks as well as those that had been created as “pocket banks” serving suspicious commercial schemes are among the ones going through the hard times today in Ukraine. Those bankers who could control both appetites for abundant growing potential and manage currency risks have now laid a strong foundation for their further expansion.
Modern retail banking technologies and superior client service practices can still make any new player in the market a winner in a very short period of time.
Our experienced banking consultants can ensure a smooth registration and licensing of a new banking institution or propose a new growing bank.

Financial services: Insurance and Leasing | Investing into Financial Services sector in Ukraine

Ukrainian market is absorbing all types of financial services. Most common are Insurance and Leasing. Opportunities exist for large operator entry, take over of existing companies as well as establishment of brokerage networks across the vast territory of Ukraine.

Software Development | Investing in web media and custom software development in Ukraine

Ukrainian IT brains have been renown all over the World and many  of them have actually returned to Ukraine to start up new Internet ventures and software houses producing some of the most sophisticate web applications and mobile applications used all over the World. Ukrainian software developers mostly work with their Western European or American partners as the R&D and back office support. World leaders in software development outsourcing have opened their branches in Ukraine to elaborate software architecture design projects and brain-intensive R&D assignments.

Health care, Sports and Recreation

Escalating standards of living in Ukraine have still brought no major international operators of spa & wellness clubs, sports gyms, fitness centers, and other recreational services. At the same time, demand for recreational services and health care medical services is continuing to grow while quality supply is not sufficient to fill the mass market.

Real Estate | Investing in hotels, restaurants, residential space  and commercial real estate in Ukraine

Ukrainian real estate prices soared in 2008 and have now been adjusted with the world financial crisis trimming access to financial resources. The buying power decrease however has only temporarily affected the real estate market with a new cycle of development expected by the end of 2009 when Ukraine will also be passing the Presidential elections period which will attract a lot of capital into the country.
Long to mid- term investing in Ukrainian real estate has always been risky but never failed! Lower market today only means a greater opportunity of tomorrow as the economy will revitalize very soon despite the gloomy news reports in the Ukrainian and international press. The important indicators of the Ukrainian economy are still beyond traditional theories of Western economists and thus cannot be based on official statistics and calculations of real GDP.

 

1) Ukraine’s new tax code implemented in 2010 established zero taxation for small businesses for a period of five years and for the hospitality sector and light industry for 10 years.

2) Income tax rate in Ukraine is (01.04.2011 the rate is 23 %, from  01.01.2012 – 21%; from 01.01.2013 – 19 %; from 01.01.2014 – 16 %).

3) Budget deficit in Ukraine is projected to be 3, 08% or 38,6 billion UAH in 2011.

4) Current account deficit in Ukraine is projected to be not more than 3,5%.

5) Ukraine’s GDP was over $300 billion and its per capital GDP was about $6,700 in 2010, and its GDP growth is projected to be over 4% in 2011 for the second year in a row.

6) Ukraine is a leader in GDP growth rate among the CEE nations.

7) Ukraine has a population of more than 45 million, and a labor force of more than 22 million.

Debt & Equity Markets

10)   The market capitalization of the Ukrainian PFTS Stock Exchange is over $25 billion.

11)   More than 800 securities are traded on the Ukrainian PFTS Stock Exchange, and 38 securities are traded on the Ukrainian UX Stock Exchange.

12)   In 2010, the PFTS index rose 70.2% and the UX index rose 67.9%, outperforming all major global indices.

13)   The Ukrainian stock exchanges (PFTS, UX) are projected to increase 30-40% in H2 2011.

14)   The ratio of total market capitalization of Ukrainian companies to their total sales is 30% lower than comparable countries (Russia, Kazakhstan, Central and Eastern Europe, Turkey).

15)   Shares of Ukrainian banks are traded more cheaply than stocks of similar banks in Central and Eastern Europe.

16)   Investors resumed buying several € billion of Ukrainian corporate and sovereign Eurobonds in September 2010.

17)   Ukraine reached an agreement with the International Monetary Fund for a new $14.9 billion loan in July 2010, which Ukraine has begun to drawn down in tranches.

International Trade Organizations

18)   Ukraine is a member of the WTO.

19)   Ukraine plans to enter into a free trade agreement with the CIS in May 2011.

20)   Ukraine plans to enter into a free trade agreement with the EU in 2011.

Investment Ukraine

21)   Ukraine led Europe in 2009 with a 48% growth year-over-year in foreign direct investment projects .

22)   Ukraine received about $6 billion in foreign direct investment in 2010, a 7% growth rate year-over-year.

23)   Ukraine expects to receive $21 billion in foreign direct investment in 2011-2012, 40% of it from foreign investors.

25)   Ukraine’s infrastructure investments for the European Football Championship Euro 2012 include $2 billion for airports, $4 billion for high-speed rail, and over $1 billion for highways and stadiums.

26)   Ukraine plans to develop the Northern European model of highways within 5 years.

27)   At an International Economic Forum in September 2010, German and Swiss companies pledged to invest €185 million in the Kharkov region of Ukraine.

Ukrainian-Russian Economic Cooperation

28)   In November 2010, Russia and Ukraine agreed to a 10-year program on economic cooperation, that included 19 joint projects costing a total of $48 billion.

29)   Ukrainian-Russian trade exceeded $35 billion in 2010 toward a long term target of $100 billion.

30)   In 2010, Ukraine signed a nuclear power plant deal with Russia valued at $5-6 billion.

Privatization in Ukraine

32)   In 2011, Ukraine intends to accelerate the privatization of industrial enterprises, such as telecom providers, power utilities and power distribution companies, chemical manufacturers, and seaports.

33)   In the first privatization of 2011, Austrian investment firm EPIC bought a 92.79 percent stake in Ukraine’s main fixed-line operator Ukrtelecom from the Ukrainian government for $1.3 billion.

Energy in Ukraine

34)   Ukraine produces about 100,000 barrels of oil per day.

35)   Ukraine produces over 20 billion cubic meters of natural gas per year, and has proven reserves of over 1 trillion cubic meters.

36)   Ukraine has five nuclear power stations with fifteen reactors with a total power output of 13.6 thousand MW, 47 thermal power stations with a total power output of 32.4 thousand MW, 6 large hydraulic power stations on the Dnieper and 55 small stations on other rivers.

37)   Ukraine is a member of the EU Energy Community.

38)   Ukraine’s energy strategy is for 20% of energy to come from renewable energy sources by 2020.

39)   Ukraine’s feed-in tariff for renewable energy is nearly twice that of some G8 members.

40)   Ukraine offers VAT exemption for importation of capital equipment used in renewable energy projects.

41)   Ukraine has high average wind speeds, a good solar radiation profile, plentiful biomass raw materials, and numerous dams on the Dnieper River, all ideally suited for renewable energy generation.

42)   The World Bank has pledged $200 million to Ukraine to develop energy efficiency projects, and has pledged to buy 10 million Ukrainian carbon credits.

43)   Ukraine plans to sell 50 million ERUs for $1 billion.

44)   The EBRD has already provided €5 billion for about 200 projects in Ukraine, and continues to provide funding of about €1 billion per year for projects in Ukraine.

45)   Ukraine plans to raise $6.5 billion to modernize its gas transport system.

46)   15 wind power parks with €7 billion in planned investment are in progress in Crimea, Ukraine, and two solar power plants have been commissioned in Crimea, toward a goal of 750MW of wind energy and 1000MW of solar energy in Crimea.

47)   Ukraine plans to build 52 hydroelectric power plants in the Ivano-Frankovsk region.

National Innovation Project

48)   The Government of Ukraine plans to apply the best practices of Silicon Valley, Singapore, and Skolkovo in its National Innovation Project.

49)   Ukraine is planning to construct a Technopark in Borispol, Kiev Oblast.

50)   Ukraine will create a University of Innovation and Nanotechnology.

51)   Ukraine created a new Council of Domestic & Foreign Investors that includes the CEOs of Microsoft and other multinational corporations.

IT Outsourcing in Ukraine

52)   Ukraine has the world’s 5th largest and fastest growing IT outsourcing services market in the world, with revenues in 2011 expected to reach $1 billion

53)   There are over 4,000 IT companies and about 300 ISPs in Ukraine, employing over 100,000 hardware, software and IT consulting professionals.

54)   Ukraine has about 20 major IT educational centers producing about 30,000 IT-graduates annually with bachelor, MSc or PhD diplomas.

55)   The cost of employing a software developer in Ukraine, or outsourcing IT business solutions development to Ukraine, is still about one-half of the cost of doing so in the EU or the US.

56)   The IT industry in Ukraine is trending from system integration and development of “turnkey” information systems to Build-Operate-Transfer (BOT) and IT business solutions adapted for a long-term perspective.

Telecommunications in Ukraine

57)   The telecom services market in Ukraine has annual revenues of more than $1 billion.

58)   There are more than 55 million mobile telecom subscribers in Ukraine (higher than 100% saturation).

59)   Ukraine has an internet penetration rate of greater than 33%, or over 15 million users.

Transportation in Ukraine

60)   Ukraine has 425 airports and 7 heliports.

61)   Ukraine has over 20,000 km of railways, nearly 17,000 km of roadways, and over 20,000 km of waterways.

62)   Ukraine has pipelines for gas – 33,327 km; oil – 4,514 km; and refined products – 4,211 km.

63)   Ukraine has over 150 merchant marine ships, plus nearly 200 additional merchant marine ships of foreign registry.

64)   Ukraine has ports and terminals in Feodosiya, Illichivsk, Mariupol, Nikolaev, Odessa, Yushny, and Sevastopol.

Metallurgy in Ukraine

65)  Ukraine owns 5% of the world’s deposits of minerals, the total value is 11 trillion USD.

Ukraine produces about 30 million tons of iron and steel annually, accounting for about 5% of GDP, and is the world’s third largest exporter of iron and steel.

66)   The metallurgy sector in Ukraine, its largest key industry, includes 14 integrated steel making plants, 7 pipe plants, 10 plants producing metallic articles, 16 merchant-coke plants, 17 refractory production plants, 3 ferroalloy plants, 20 non-ferrous metallurgical works, 35 factories reprocessing ferrous and non-ferrous scrap metal, and other enterprises.

67)   Ukraine has about 27 billion tons of iron ore deposits.

Machine Building

68)   Machine-building is the largest Ukrainian industrial sector, and the largest machine-building subsectors in terms of their employment are instrument-making, tractor and agricultural machinery building, electric engineering, automobile building, chemical and petrochemical engineering, and machine-tool construction.

69)   Ukraine also manufactures science-intensive and highly technological machines and equipment, including the development of the rocket and space industry, aircraft building, production of advanced tankers and large-tonnage vessels, fabrication of turbines for nuclear power plants, highly-efficient gas-pumping installations, equipment for high-voltage power transmission lines, etc.

Automotive Manufacturing

70)   Ukraine produced about 70,000 cars in 2010, and total car production in Ukraine is expected to grow 20-22% in 2011 and reach 271,600 units per year by the end of 2014.

71)   Škoda’s Ukrainian arm Eurocar alone is expected to produce 100,000 units in 2011.

Aircraft Manufacturing

72)   Ukraine is one out of just nine countries worldwide currently designing and building transport aircraft as well as top-class civil aircraft.

73)   The Antonov Aircraft Plant manufactures the An-124 Ruslan, the world’s most power aircraft, and the An-225 Mriya (Dream) aircraft, which has been recognized by the International Aviation Federation as having scored 124 world records.

Shipbuilding in Ukraine

74)   The Ukrainian shipbuilding industry is a complex of colleges, universities and research centers; experienced design bureaus; 9 shipbuilding yards with different capacities and specialisation; and a number of ship repair yards.

75)   Its close geographical location to European Union, combined with availability of up-to-date design bureaus, powerful production facilities of shipyards, experienced labor force, presence of strong national metallurgic industry make the Ukrainian shipbuilding industry very attractive alternative to distant shipbuilding centers.

Agriculture in Ukraine

76)   Ukraine, once “the breadbasket of the Soviet Union”, has the potential to become “the breadbasket of Europe”.

77)   Among all the European countries, Ukraine is a leader in growing of sugar beet, buckwheat and carrot; second place in growing of wheat (after Russia) and of tomato (after Poland).

78)   The market for wheat, barley, sunflower and canola, also grown in Ukraine, has been excellent.

79)   More than 60% of Ukraine is covered in Black earth top soil.

80)   28% of the population work in or are involved in agriculture, and labor is inexpensive.

81)   Ukraine plans to allow the purchase of farm land in 2013.

Chemicals and Petrochemicals

82)   The multi-branch chemical sector of Ukraine includes chemical, petrochemical and chemical-pharmaceutic sub-sectors with over 1,600 enterprises and structural units.

83)   This sector in Ukraine produces mineral fertilizers, non-organic acids and soda; synthetic resins, plastic masses, chemical fiber, man-made caoutchouc and threads; and car and motor-cycle tires, hoses, and consumer goods.

Pharmaceuticals

84)   At the present time there are 58 companies manufacturing drugs in Ukraine, mostly producing lower-priced products, such as generic drugs and vitamins.

85)   Two of the countries giants in the Ukrainian pharmaceutical industry, Kyivmedpreparat and Halychpharm received the Ukrainian Government’s approval to merge and form Arterium Corp, which will be involved in the research, marketing and distribution of new medical products.

86)   Nonetheless, pharmaceuticals imported into the country accounted for 62 per cent of the Ukrainian drugs market; therefore, there is a huge market potential for drug manufacturers willing to establish research, marketing, manufacturing, and distribution in Ukraine.

87)   The compound annual growth rate (CAGR) of generic medicines is projected to be 31% in Ukraine in local currency between 2011 and 2013, and by way of comparison, the innovative drug subgroups will develop on average by 14% per annum.

Fast Moving Consumer Goods

88)   The fast moving consumer goods industry in Ukraine includes over 3,000 enterprises producing textile, knitting, clothing, leather, footwear; basic foods, such as sugar, salt, oil, alcohol, confectionery, etc.; meat and dairy processing, sugar refining, flour milling and cereals production, oil extraction and starch and molasses; and other products.

89)   The FMCG sector In Ukraine has considerable production, research and labor potential, but its production capacities are not fully utilized; thus, vast reserves of the sector are potentially available to strategic investors.

Retail in Ukraine

90)   The Fozzy Group, the largest retailer in Ukraine, increased their revenues by 37.5% in 2010 on a 6% y-o-y increase in retail trading space.

91)   Grocery retailers on the Ukrainian retail market increased their total retail trading areas by 6% y-o-y in 2010 to 2.1 million m².

92)   The Ukrainian ATB-Market retail grocery chain reported the highest growth in operated retail space – a 16% y-o-y increase, after opening 71 new stores in 2010

93)   The Ukrainian retail industry is still unconsolidated, with the top 10 retail operators accounting for less than 25% of the total share, and thus M&A opportunities exist for strategic investors

Hospitality in Ukraine

94)   More than 12 million foreign tourists visit Ukraine each year, to see the Carpathian Mountains, the coastline of the Black Sea, the Dnieper River, vineyards, ruins of ancient castles; ancient churches, cathedrals, and monasteries; world-class opera and ballet, and more

95)  In the Ukrainian resort and hotel industry, demand greatly exceeds supply; there are many resorts and tourist places which are up for sale and many of them have put out proposals for investments

96)   The Government of Ukraine is still seeking investors to build hotels for the one million football fans anticipated to attend the European Football Championship Euro 2012

Political Stability in Ukraine

97)   Ukraine has a popularly elected President who is favored to win re-election in 2015, and a ruling coalition in the Ukrainian parliament headed by the President’s party that is expected to solidify their majority in the next parliamentary election in 2012

Anti-Corruption Law

98)   In March 2011, the Ukrainian parliament, the Verkhovna Rada, passed a tough anti-corruption law that was praised by the EU

Crime Rate in Ukraine

99)   With the exception of software piracy, Ukraine’s crime rate is below that of many industrialized nations

100)  Ukraine has anti-money laundering controls approved by the global Financial Action Task Force (FATF)