In this page: FDI in Figures | What to consider if you invest in Ukraine | Protection of Foreign Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment Opportunities Are Fewer | Finding Assistance For Further Information
On February 24th 2022, Russia initiated a military conflict on the Ukrainian territory, which profoundly upsets the current political and economic context in both countries and will have substantial ramifications on the investment climate. For the ongoing updates on the developments of Russia-Ukraine conflict please consult the dedicated pages on BBC News.
According to UNCTAD's World Investment Report 2022, after a divestment of USD -36 million in 2020 due to the combined effects of the COVID-19 pandemic, macroeconomic difficulties and geopolitical tensions, FDI flows to Ukraine increased to USD 6.5 billion in 2021. The stock of FDI was about USD 62 billion in 2021. Multinational companies hold assets in steel, information and communication technology, pharmaceuticals and agricultural commodities. Arcelor Mittal is the largest investor, with assets of USD 6.5 billion (UNCTAD). In 2022, Russia’s invasion of Ukraine and the subsequent protracted war deeply deteriorated business climate. Insecurity, political and economic uncertainty, supply chain disruptions and infrastructure destruction lead to capital outflows. According to the National Bank of Ukraine data, FDI stock as of the end of September 2022 amounted to USD 53.7 billion. Most investments are made in manufacturing, wholesale and retail trade and repair of vehicles, mining, financial services and real estate. The main investors in Ukraine are Cyprus, the Netherlands, Switzerland, the UK and Germany (National Bank of Ukraine, 2021).
Despite the war, the government has launched a drive to attract foreign investment of up to USD 400 billion in various sectors including technology, the agro-industry, clean energy, defence, metallurgy and natural resources (Financial Times). In addition to political instability, investors pointed out before the war that the underlying inefficiency and corruption in the justice system were among the main obstacles to investment. Other serious obstacles are the complexity of laws and regulations, poor compliance with contracts and poor governance. However, the country has a large internal market, proven agricultural potential, energy and mineral resources and a strategic geographic location, making it a transit hub and a gateway to Europe and Eurasia. In addition, the current government appears to have been actively engaged in reforming the investment climate. In June 2018, a new law aimed at more transparency entered into force, and in 2021, new tax reductions, import customs duties exemptions, preferential land ownership rights, as well as measures to improve the rule of the law were introduced. A National Strategy to increase FDI, developed by EY, was also adopted. In 2022, the government announced it would offer tax credits, simplify and speed up regulatory procedures and cancel 500 different permit requirements to open projects to new investors (Financial Times).
Before the war, progress had been made in terms of obtaining building permits, connection to electricity, protection of minority investors and cross-border trade. Ukraine had also simplified and reduced the costs of the registration procedure for representative offices of foreign business entities. However, the war significantly worsened business climate. Ukraine ranks 75th (out of 82 countries) in the latest The Economist’s Business Environment ranking, and is forecast to drop to the last place by 2026.
|Foreign Direct Investment||2020||2021||2022|
|FDI Inward Flow (million USD)||-36||7,320||848|
|FDI Stock (million USD)||52,091||65,746||51,118|
|Number of Greenfield Investments*||46||78||31|
|Value of Greenfield Investments (million USD)||2,254||2,333||975|
Source: UNCTAD, Latest data available.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
|Main Investing Countries||2020, in %|
|Main Invested Sectors||2020, in %|
|Wholesale and retail trade, repair of vehicles||15.9|
|Mining and quarrying||9.7|
|Financial and insurance activities||9.2|
Source: National Bank of Ukraine, Latest data available.
The key assets of the Ukrainian economy in terms of FDI include:
The weak points of the Ukrainian economy in terms of FDI include:
|Country Comparison For the Protection of Investors||Ukraine||Eastern Europe & Central Asia||United States||Germany|
|Index of Transaction Transparency*||9.0||7.5||7.0||5.0|
|Index of Manager’s Responsibility**||2.0||5.0||9.0||5.0|
|Index of Shareholders’ Power***||6.0||6.8||9.0||5.0|
Source: The World Bank - Doing Business, Latest data available.
However, the Ukrainian government does not usually financing foreign direct investment projects, and the issuance of government guarantees are rare.
The Government of Ukraine operates 1,600 state-owned companies (with around 1,700 more being inactive), of which more than half are small and inefficient and rely on government subsidies to function as they wouldn’t be able to be in direct competition with private firms. These companies are not restricted to network industries with natural-monopoly segments (e.g., electricity, gas, water supply, and railways), and they operate in a wide range of manufacturing, agricultural, and financial services markets. Ukrainian law defines certain segments of the electricity, gas, and transportation sectors as natural monopolies, while the postal services, railways, alcohol production, and water distribution markets are all legal monopolies.
The Antimonopoly Committee of Ukraine (AMCU) is the Ukrainian state authority for protection of economic competition.
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Latest Update: September 2023