Investment in Ukraine

Wednesday, October 13, 2021
Investment in Ukraine

Ukraine is an economically developing country, which is rich in skilled human resource and resources.

It is emerging as an important global partner in economic and financial relations. Several emerging companies from the Ukraine are offering diverse types of business opportunities including finance, infrastructure, communications, IT, energy, and tourism. The country has several possibilities for starting a new company. It is highly encouraged by international investors and companies for establishing a base in this rapidly developing country.

Starting a business in Ukraine is highly encouraged by international investors because of its rich cultural and geographical resources. A high level of technical skills, market knowledge and communication skills form the important basic factors for attracting investments and creating more business opportunities. A relatively high level of education results in the growing number of IT and start-ups, which are highly attractive for international investors as well due to their potential scope for private investment. Another factor encouraging investors is the liberalization policies of the government since 2021 which has resulted in opening the economy to global business.

There are several prospects for business investments in Ukraine according to the experts. Insurance and financial sectors are considering the growing demand of their products and services. Some sectors that have shown significant growth in the past years are banking, insurance, energy, telecommunications and information technology. According to the research of the economists and business experts, the total foreign direct investment (FDI) in the Ukraine was USD 53.6 bln in 2021, the highest recorded value. This means that domestic sources of income outstripped the total foreign investments.

The main drivers of the rise of ukraine foreign direct investment are the robust development of the economy and the determination of the government for making it free of harmful influences of the European Union. In particular, the Association Agreement with the European Union offers huge opportunities to invest in the country. According to the terms of the accords, foreign direct investment would be subject to the condition that the local content provided by the foreign companies in the investment is balanced by a corresponding number of domestic jobs. The main purpose of such agreements is to provide the much needed diversification of the economy which also guarantees the retention of the competitive advantage of the nation.
Another great reason for ukraine business to rise is the opening of the economic system to global trading. In particular, the Association Agreement has simplified the procedure for the registration of goods and services which allows both Russian and European investors to enter the country and avail of its beneficial effects. Also, there are several free trade zones throughout the country which has made it easier for both European and American businesses to establish their businesses. Thus, foreign investors are interested not only in those business opportunities that promise quick returns but are willing to invest in long-term projects that will strengthen the economy of the country.

Another important factor for ukraine's growth as an economic partner outside the European Union is the availability of a very friendly financial system. The International Monetary Fund (IMF) and World Bank offer supportive policies towards the country. The fund's Managing Director called for a $1.5 billion loan package for Ukraine. As it became clear that Kiev needs all the financial support it can get, both Russia and European Union countries have offered loans in order to avoid devaluation of the hryvnia. Although, this aspect is a key for ukraine's GDP growth in the future, the current economic boom is too fast to be overlooked by foreign investors.

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