According to the State Statistics Service, the inflow of direct investments (equity capital) in Ukraine in 2018 amounted to USD 2.9 billion.
An amount of foreign direct investments (equity capital) attracted since the beginning of investment in the Ukrainian economy as of 31.12.2018 made up USD 32,291.9 million*.
In 2018, an increase of foreign investments in the Ukrainian economy amounted to USD 685.5 million of direct investments (equity capital).
The investments are directed towards already developed areas of economic activity.
As of 31.12.2018, the most significant amounts of direct investments were directed towards industrial enterprises – 33.0% as well as institutions and organizations engaged in wholesale and retail trade; repair of motor vehicles and motorcycles – 16.7%.
The key investors include Cyprus – 27.5%, the Netherlands – 21.9%, the Great Britain – 6.1%, Germany – 5.2%, Austria – 3.1%, the Virgin Islands (British) – 4.1%, and Switzerland – 4.8%.
An amount of implemented capital investments of Ukrainian enterprises in 2018 made up UAH 526.3 billion, which is 10.5% more than the amount of capital investments for respective period of 2017.
In 2018, the leading areas of economic activity, in terms of implemented capital investments, are: industry – 34.1%, construction – 9.9%, agriculture, forestry and fishery – 12.5%, information and telecommunications – 5.4%, wholesale and retail trade; repair of motor vehicles and motorcycles – 9.0%, transport, warehousing, postal and courier activities – 8.5%, public administration and defense; compulsory social insurance – 7.8%, real estate transactions – 4.0%.
The main sources of funding of capital investments remain own funds of enterprises and organizations at the expense of which 71.3 percent of capital investments were implemented in 2018.
A share of bank loans and other advances in total amount of capital investments made up 6.7 percent.
12.7 percent of capital investments were implemented at the expense of state and local budgets. A share of funds from foreign investors amounted to 0.3 percent of all capital investments, while a share of citizens’ funds for housing construction made up 6.4 percent. Other sources of funding constituted 2.6 percent.
Thus, Ukraine remains attractive for investments, not staying aside from global processes. It is sufficiently integrated into the world’s economy and is sensitive to microeconomic displacements on foreign markets.
In Doing Business 2019 rating, Ukraine has risen by +5 points and took the 71st place among 190 countries. The country has shown the largest growth in such categories as taxation (increase by 110 points, 54th place), international trade (+70 points, 78th place) and protection of investor’s rights (+56 points, 72nd place).
Also, it should be noted that rating agency Moody's Investors Service has increased Ukraine's sovereign rating. It has changed from Caa2 to Caa1, which means the forecast changed from “positive” to “stable”.
So, the change of rating was associated with the beginning of new loan program of the International Monetary Fund.
In addition, Ukraine ranked 81st place among 137 countries in the Global Competitiveness Index rating and raised its position in terms of technology adaptation (from 81st to 77th place) and infrastructure level (from 78th to 57th place);
Rating and Investment Information Agency, Inc. (R & I) has raised Ukraine’s foreign currency raking from CCC to CCC+ and confirmed stable forecast.
The improvement of legal and organizational framework to increase the capacity of mechanisms to ensure a favorable investment climate and to form a basis for preservation and enhancement of the competitiveness of domestic economy is relevant issue for further improvement of investment climate in Ukraine.
A number of positive steps have already been made in this direction:
To simplify the procedure for attracting foreign investments and make it impossible for signs of corruption to appear upon state registration thereof, on 31.05.2016 the Law of Ukraine No. 1390-VIII “On Amendments to Certain Legislative Acts of Ukraine regarding Cancellation of Compulsory State Registration of Foreign Investments” was adopted.
On 23.05.2017, the Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine regarding Elimination of Barriers to Attraction of Foreign Investments”. The law regulates the basic aspects of issuing a permit for the employment of foreigners and a temporary residence permit, which will facilitate the attraction of foreign managers and foreign skilled employees, which is necessary at early stages of development of a subsidiary in Ukraine. Also, the Law grants the right to obtain a temporary residence permit in Ukraine to foreign investors who have a significant participatory interest in Ukrainian enterprises, however are not employed at the enterprise.
On 26.05.2017, Stepan Kubiv, the First Deputy Prime Minister – the Minister of Economic Development and Trade of Ukraine, signed the Investment Promotion and Protection Agreement between Ukraine and the OPEC's International Development Fund in Vienna (Republic of Austria). The agreement provides for the promotion of investment implementations and predictably contributes to an increase in foreign investments in key sectors of the Ukrainian economy.
Respective steps are also being taken to promote sustainable development of the Ukrainian economy and to intensify the investment activities, in particular, in the following areas:
Protection of investor’s rights:
within the framework of the Action Plan for deepening cooperation between the Organization for Economic Cooperation and Development (OECD) and the Government of Ukraine, designed to implement the measures envisaged by the Memorandum of Understanding between the Organization for Economic Cooperation and Development and the Government of Ukraine on deepening cooperation dated 07.10.2014, the measures are being taken on the accession of Ukraine to the OECD Declaration on International Investments and Multinational Enterprises (hereinafter referred to as the OECD Declaration). Thus, the order of the Cabinet of Ministers of Ukraine No. 130-p dated 01.03.2017 approved the draft Agreement (in the form of exchange of letters) between the Government of Ukraine and the Organization for Economic Cooperation and Development on the accession to the Declaration on International Investments and Multinational Enterprises, relevant Recommendations and Procedural Decisions of the Council of the Organization for Economic Cooperation and Development.
On 15 March 2017, S. Kubiv, the First Deputy Prime Minister of Ukraine – the Minister of Economic Development and Trade of Ukraine, signed the Agreement (in the form of exchange of letters) between the Government of Ukraine and the Organization for Economic Cooperation and Development on the accession to the Declaration on International Investments and Multinational Enterprises, relevant Recommendations and Procedural Decisions of the Council of the Organization for Economic Cooperation and Development.
The accession of Ukraine to the OECD Declaration on International Investments and Multinational Enterprises and membership in the OECD Investment Committee will provide the following significant benefits to the country, namely:
- will testify to Ukraine's introduction of international standards of investment activities;
- will facilitate attraction of foreign direct investments through elimination of restrictions on sectors in which foreign investment is prohibited and by ensuring national regime for transnational corporations (hereinafter referred to as TNC) in accordance with the system of development of international standards regulating TNC relations with countries hosting their investments;
- will facilitate the improvement of the competitive environment and influence on the introduction and dissemination of innovations;
- will promote the implementation of the principles and standards of corporate social responsibility in accordance with the OECD guidelines on doing responsible business.
*Note. Data on direct investments as of 01.01-31.12.2018 are calculated based on the NBU’s data, which, contrary to previous years, included reinvested earnings of Ukrainian banks (calculated by the NBU on the basis of data on retained earnings/losses according to participatory interest of direct investor in their capital).
Data are given without taking into account temporarily occupied territory of the Autonomous Republic of Crimea, Sevastopol, and for 2014-2018 – without taking into account some temporarily occupied territories in Donetsk and Luhansk regions.
Ministry for Development of Economy,
Trade and Agriculture of Ukraine
01008, Ukraine, Kiyv city,
Grushevsky str., 12/2