100 Reasons to Invest in Ukraine
Macroeconomics
1) Corporate tax rate in Ukraine is 25%, compared with 35-41.6% combined federal-state in the US
2) 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
3) Income tax rate in Ukraine is 15%, compared with up to 46% combined federal-state in the US
4) Budget deficit in Ukraine is projected to be 3.5% of GDP in 2011, compared with 10.91% in the US
5) Government external debt in Ukraine is projected to be 25.3% of GDP in 2011, compared with 102.63% in the US
6) Current account deficit in Ukraine is projected to be under 3% for the second year in a row (actually a surplus in January 2011), comparable to that of the US
7) 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
8) Ukraine is a leader in GDP growth rate among the CEE nations
9) 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
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
24) The Government of Ukraine has approved 163 investment projects worth a total of $46.6 billion
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
31) In 2010, Ukraine signed a new gas deal with Russia, saving Ukraine about $3 billion per year
Privatization
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
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
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
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
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
65) 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
MachineBuilding
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
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
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
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 and Tourism
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
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
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)
Sources: Over 100 various sources of information, too numerous to list. No originality of thought in the content herein is claimed.
Author -Johan de Broyer
