UkraineInvest Your Investment Matters Ukraine is INNOVATION & OPPORTUNITY June 2020 Kyiv, Ukraine
UkraineInvest Your Investment Matters About UKRAINE
Ukraine THE BASICS 3 GDP (PPP) $390 billion (2018) Government Currency Ukrainian hryvnia (UAH) Unitary Parliamentary Presidential Kyiv Ukraine Real GDP Exchange 603,700 km2 rate growth 42 M (2019) USD/UAH 26.7 (June 2020) ↑ 3.3% (2019) Foreign relations Economy 17 FTAs with 46 countries (EU, EFTA, Major industries: : energy, metallurgy, chemical industry, Canada, Israel, etc. Strategic goals: manufacturing, massive high-tech industrial base, world European and Euro-Atlantic Integration) player in agriculture, fast developing IT sector
Predictable & stable EMERGING MARKET Ukraine’s economy has been steadily growing for 4 years GDP Growth , , % EBA Investment Ease of Doing Business Attractiveness Index Index (comparing to respective period in previous year) (index, as at year end) by WB 64 3.1 71 3.0 76 2.9 3.3 3.3 80 81 2.5 2015 2.3 2.6 96 2016 2017 2018 2019 2015 2016 2017 2018 2015 2016 2017 2018 2019 2020 -9.8 “UKRAINE IS OPEN FOR BUSINESS because of THE SUCCESS OF REFORMS ” Sources: World Bank, State Statistics Service of Ukraine, Dragon Capital EBRD President Suma Chakrabarti, in Davos 2019
Sovereign credit RATINGS 5 GROWTH B3 2020 B B 2019 Caa1 B B 2018 B- B- Caa1 2017 Caa2 B- B- 2016 Caa3 B- B- CCC CCC Caa3 2015 CCC CCC Caa3 2014 UkraineInvest Your Investment Matters
Ukraine is responding TO 6 GLOBAL TRENDS 17 FTAs with 110+ R&D Ukraine is Top-5 46 countries centers in Ukraine Over 130,000 supplier of organic nic including DCFTA owned by new engine ineeri ring ng products to EU multinational graduates annually with EU corporations Invest st
Invest st Ukraine’s COMPETITIVE ADVANTAGES
Ukraine competitive 8 ADVANTAGES - LABOR 2 1 Competitive Labor Costs Skilled Human Capital Average Salary*, USD Top European Countries by Number of (as of Dec 2019) Engineering Graduates, thousand people 130 Ukraine Ukraine Ukraine 520 Serbia 105 570 France Romania 1230 Germany 93 1295 Hungary 75 Turkey Slovakia 1315 71 UK 1315 Poland Poland 66 Czech Republic 1460 Spain 56 Italy 48 *salary includes employee social security tax, personal income tax 39 Romania and/or other employee taxes, if any
Ukraine competitive 9 ADVANTAGES - LABOR Shrinking Work Force in CEE 3 - historically low unemployment rates - dependence on seasonal workers from Ukraine (~2 mln Ukrainians temporarily work in Poland) - migration of CEE natives to Western Europe PROBLEM of work force availability in CEE Unemployment Rate, % (as of Oct 2019) Sources: http://www.tradingeconomics.com
Ukraine competitive 10 ADVANTAGES - UTILITIES Natural gas, EUR/gigajoule Electricity, EUR/KWh 0.0921 10.85 0.0861 9.37 9.14 9.14 0.0821 0.0801 8.60 7.78 7.50 0.0767 0.0757 7.16 0.0656 Ukraine Serbia Romania Hungary Slovakia Poland Czech Romania Hungary Slovakia Ukraine Serbia Poland Czech Republic Republic Sources: https://ec.europa.eu/eurostat; http://www.nerc.gov.ua/; https://tradingeconomics.com (data for 2019)
Ukraine competitive 11 ADVANTAGES - TAXES CPT Rate, % VAT Rate, % 18 Ukraine 20 Ukraine 15 Serbia 20 Serbia Romania 16 Romania 19 Hungary 9 Hungary 27 Poland Poland 23 19 Slovakia 20 21 Slovakia Czech Republic 21 19 Czech Republic Sources: https://ec.europa.eu/eurostat; http://www.nerc.gov.ua/; https://tradingeconomics.com
Ukraine competitive 12 ADVANTAGES - TAXES Payroll tax rates 34 35 35.2 32 25 24 22 22 22 19 19.9 18 17.15 15 10 10 13.4 14 11 2 0 Serbia Romania Hungary Slovakia Poland Czech Ukraine Republic Social Security Tax Social Security Tax Personal Income (Employer) Rate, % (Employee) Rate, % Tax Rate, %
Key sector OPPORTUNITIES
INNOVATION TECHNOLOGIES 15 % create their own product in Ukraine 15 % work as an in-house center work as an in-house center for the parent company for the parent company 70 % provide IT services to a wide range of clients
INNOVATION TECHNOLOGIES 15 in Ukraine tech > 4,000 companies The ITC industry is now a major driving force of Ukraine’s economy 3 nd largest export service 2 the industry IT service providers with offices in Ukraine 21 IT industry has grown nearly in the 2019 Global Outsourcing-100 40 times over the last fifteen years – from total value of venture $110 million in 2003 $510 M capital deals in 2019 to about $4.5 billion in 2018 software developers (the 184k+ number is expected to rise to 250k by 2025) Fortune 500 companies have 100+ chosen Ukrainian IT services
LARGE IT COMPANIES 16 In Ukraine Kyiv 300 300 + Kharkiv 40 40 K+ K+ 40 400 + 25 25 K+ K+ Lviv 250 50 + 20 20 K+ K+ Odesa 150+ 150+ Dnipro 8 K K+ 170 + 9 K+ K+ From more concentrated to less IT clusters IT specialists IT companies
Key Sector opportunities - 17 AGRIBUSINESS Opportunities Land reserves 33 mln ha of arable land Huge reserves unused - Production Sunflowers seeds 1 Efficiency upgrade - Production & export Modern management practices of Sunflowers oil New equipment High quality seed and inputs Logistics and distribution - Export of rapeseed 3 Growth potential - Export of honey № 3 in world food production by 2020 Potential for tripling of outputs. Huge export potential - Export of corn 4 - Production & export of barley Value added Food processing potential - plant oils - beverages - dairy products Ukraine’s Place in the Global Food Market - frozen foods
AGRI-INVESTMENT 18 in Ukraine 2015-2019 1.8 $ billions $ 670 $ 350 $ 280 $ 280 $ 180 25 2.5 k million million million million million Seed oil Farming Food Agri-logistics Seeds New production New jobs production production production facilities since 2015
Key Sector opportunities - 19 MANUFACTURING Opportunities 60 K Manufacturing ground-base for Europe, Asia and Middle East markets engineers, specialists and workers employed in automotive 17 FTAs with 46 countries – industry swift integration into the 150+ global value chains launches of Ukrainian rockets since independence Highly skilled and cost in 1991 competitive workforce 115 Wide selection of greenfields companies licensed and brownfields to manufacture medicine Key figures Availability of industrial parks 15+ OF UKRAINE`S with preferential fiscal MANUFACTURING regime and other local global fashion brands investment incentives have production facilities in Ukraine
MANUFACTURING INVESTMENT 20 in Ukraine 2015-2019 1.8 $ billions 29 K 36 $ 1,030 $ 355 $ 140 $ 100 $ 40 million million million million million new jobs created production since 2015 Metallurgy Furniture Automotive Sports Other facilities production equipment
Key Sector opportunities – 21 21 OIL & GAS Opportunities Deregulation in oil and gas sector Competitive tax regime for oil and gas production Open access 123.2 to geological data Annual production Attractive gas transmission tariff for upstream companies 41.9 Single payment Years of for license production 19 10.3 Launch of e-auctions 10 for oil and gas E&P licenses 5 and PSA tenders Proven reserves
Major foreign companies 22 IN UKRAINE’S GAS SECTOR Trading Services E&P
Invest st Ukraine’s GROWTH AGENDA
Ukraine’s GROWTH AGENDA 24 Attracting $50 Billion FDI in 5 years EoDB KEY DRIVERS LAND MARKET REFORM PRIVATIZATION & CONCESSIONS
Investment climate 25 IMPROVEMENT PASSED LAWS During the work of the Verkhovna Rada of Ukraine of the 9th convocation , a number of important laws aimed at unlocking Ukraine’s investment potential were adopted FINANCIAL SERVICES TECHNICAL ENERGY SECTOR INVESTMENT BARRIERS TO TRADE Amber mining Law on unbundling legalization of Naftogaz Law on authorized Split’ law* economic operator PUBLIC Law on the joint transit Law on protection of AGRI-FOOD PROCUREMENT regime and introduction of the rights of financial the national electronic services consumers Demonopolization Law on improvement transit system of alcohol industry of public procurement Law on reducing pressure on business by market surveillance authorities INFRASTRUCTURE Concession law *’Split’ law dissolves the National Commission for State Regulation of Financial Services Markets and splits up its regulatory functions between the NBU and the National Securities and Stock Market Commission. The law was welcomed by Ukraine’s international partners and will ensure transparency, reliability, and effectiveness of nonbank financial sector
Investment CLIMATE INFRASTRUCTURE 26 IMPROVEMENT Law on railway transport Law on inland waterways Law on the Incentives of ENERGY SECTOR the Production and Use of Liquid Biofuels Initiatives to stimulate natural gas production INVESTMENT Launch of large privatization INITIATIVES A number of Gambling legalization investment related legislative initiatives are high on the agenda of the Ukrainian Land market reform Government and Parliament AGRI-FOOD
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