Ukraine’s Economy: Time to Invest
Embassy of Ukraine article
Published on the occasion of the 10th Anniversary of Ukraine's Independence
Ukraine has enormous economic potential. It has a highly educated labour force, fertile agricultural land and a variety of mineral resources. It is also strategically located close to the European markets, Black Sea and the Caucasus region, which makes Ukraine an important transit state.
During the last and current years the tendency of rapid growth of all macroeconomic indicators has been observed. The gross domestic product for 2000 grew by 6%, during January-May, 2001 - by 9%, industrial output - accordingly 12.9% and 18.8%. These rates are the highest among the CIS countries which makes the Ukrainian economy the most dynamic in the region.
Thanks to agricultural reform that was a result of active transformation in the agrarian sector in 2000 with the liquidation of 11000 Soviet-style collective agro-enterprises (the kolkhozes) the gross agricultural output rose by 9% last year. This year it is expected to harvest 35 mln. tons of grains - record amount for the last few years. In order to stimulate the agricultural production the Government of Ukraine has introduced tax incentives for farmers: privileged taxation (one of the lowest in Europe), including the fixed agricultural tax, exemptions from VAT payments and the removal from import tariffs on agricultural machinery.
The basis of the economy’s growth in recent years has been provided by a sound monetary and budget policy of the Government and the National Bank of Ukraine, favourable external economic conjuncture and the activity first of all of domestic investors.
At the same time attracting foreign capital is one of key challenges to the economic reforms and further economic growth in Ukraine. The overall amount of direct foreign investments in Ukraine as of the end of 2000 reached US $3,8 billion and rose by 24% when compared with the previous year.
The Ukrainian government pays great attention to the attraction of foreign investments, improvement of investment climate in Ukraine, transparency and stability of the legal framework. In order to stimulate the inflow of foreign capital to Ukraine’s economy 11 special economic zones and 9 priority development areas with privileges for investors have been established covering 10.5% of Ukraine’s territory.
The most promising branches of Ukraine’s economy from an international investor’s point of view are agriculture and food processing industry, chemicals and fertilizers production, machine-building, aerospace industry, exploration, transport-ation and refining of oil and gas, power generation etc.
One of the major instruments of economic reforms and the attraction of foreign investments is privatization. In recent years state monopoly has been almost broken up, and over 7500 companies emerged in the market as a result. Privatization is being carried out according to new principles, that is, a compulsory preparation of these objects in order to increase their liquidity, settlement of the enterprise debts to the state, formation of the tariff policy and compliance of the state-enterprise relations to the fixed rules.
Majority holdings of the regional energy distributing companies, Ukrtelekom telephone company, petrochemical and metallurgy enterprises are offered for sale in 2001 (total 177 objects).
For more information, please contact:
Alla Okomaniuk, Press Secretary, or
Ihor Zahlada, Counsellor (Trade and Economic Affairs) at the Embassy of Ukraine
310 Somerset Street West, Ottawa, ON K2P 0J9
Tel. (613) 230-2961, fax (613) 230-2400
E-mail: ukrembassy@on.aibn.com
2001 11 06