Why is reform hard in Ukraine?
At a conference sponsored by USAID, government and business discussed investment opportunities in Ukraine
Ukraine is a dynamic European country that is improving its investment climate to compete globally, create new business opportunities and increase foreign direct investment. This was stated by the President of Ukraine Volodymyr Zelensky on December 11 in a video message to the participants of the international conference “Ukraine: an investment haven in times of change”.
According to the press service of the leader of Ukraine, the event, organized by the government office for attracting and supporting investments UkraineInvest with the support of the USAID Competitive Economy of Ukraine Program, gathered about a thousand participants – representatives of the business community from more than sixty countries..
According to the President of Ukraine, despite the challenges, during 2020 Ukraine, with the help of the business community, implemented historic reforms: adopted legislation on the introduction of the land market, increased the transparency of the tax system, supported business with affordable loans, began open privatization, signed the first concession agreements..
Volodymyr Zelenskyy noted the progressive role of the IT industry.
“More than a hundred international companies have their own innovative capacities in Ukraine. We are working with Microsoft, which will invest over $ 500 million in the development of cloud services in Ukraine, ”said President of Ukraine Volodymyr Zelenskyy.
He thanked the UkraineInvest team for organizing the conference and noted: “Ukraine is open to the world as an investment haven in times of change”.
In his video message to the conference participants, Prime Minister of Ukraine Denis Shmyhal noted in his video message that in order to stimulate economic growth, the Ukrainian government continues to cooperate with international financial organizations, in particular with the International Monetary Fund (IMF), the World Bank and other partners.
Target – Top 30 Doing Business Ranking
“At the moment, we are actively discussing with the EU the issue of industrial visa-free travel, agreements on the Common Aviation Space and Ukraine’s accession to the European energy network ENTSO-E,” the head of the Ukrainian government said..
The second priority of the government, the message says, is to improve the business climate in Ukraine to the best world standards. In particular, according to Denis Shmygal, the goal is to get into the top 30 of the Doing Business rating in the near future..
“In our opinion, working to ensure clear and transparent rules of the game in the market is a critical step for investors to feel confident and reliable in Ukraine,” the Prime Minister said..
He noted that during 2021-2022 it is planned to conclude concession agreements in relation to seaports, roads, airports, railways and other infrastructure facilities. Will contribute to the improvement of the investment climate in Ukraine and the expected adoption by the Verkhovna Rada of the law on state support for investment projects with significant investments.
The participants of the event also discussed the Strategy for attracting investments to the Ukrainian economy..
“To compete for investment at the global level, Ukraine needs to apply innovative approaches to promote investment potential. That is why UkraineInvest has brought together the business community from many countries of the world to inform about Ukraine’s steps towards improving the business climate, ”said Serhiy Tsivkach, Executive Director of UkraineInvest.
On the “puzzles” of success
Ellina Shnurko-Tabakova, head of the public organization Council for Information Security and Cyber Defense, notes that in 2019, the IT sector without outsourcing services in Ukraine grew by 45 percent.
“This year, the fall is estimated at 20-35 percent, and some segments of this market have grown by 25 percent. Compared to 45 percent last year, this is also a lot, despite the fact that there is a decline in other sectors of the Ukrainian economy. For investors, the main thing in this case is the financial attractiveness of the Ukrainian market, but also the safety of investments, the ability to operate them, receive income and profits, “says Ellina Shnurko-Tabakova to the correspondent of the Russian service of the Voice of America..
At the same time, she notes that the Ukrainian judicial system is still in the process of reforms, and many of the company’s transactions were carried out outside Ukraine..
“A lot of transactions of the year passed with successful investment results for Ukrainian owners and developers, but not in our country, but in the same United States, where intellectual property is protected and the judicial system operates,” emphasizes Ellina Shnurko-Tabakova.
She believes that most often in Ukraine, ready-made solutions are introduced that do not require special developments..
“Therefore, there is no reason to talk about mass investment attractiveness, the program, for example, for Belarusian IT specialists is a small puzzle in a large mosaic, which still consists of very old pieces,” notes Ellina Shnurko-Tabakova.
Reforms and the image of the country’s attractiveness
Political analyst Kirill Molchanov notes that the volume of direct investment has not changed over the past years.
“The investment level is estimated at two to three billion dollars. Basically, these are investments that have returned from offshore companies, no one invests in real production. And there are tons of explanations why. One of them is the need to settle the conflict in Donbass, money loves silence. The country’s leadership constantly notes that we are at war with Russia, and Russia is a nuclear power, and each investor will predict the safety of keeping money in the context of the continuation of the military conflict, “Kirill Molchanov says to the correspondent of the Russian service of the Voice of America..
Reforms in the judicial and tax systems are another factor, according to him, that affects the image of Ukraine’s attractiveness in the eyes of foreign investors..
“It is necessary to put things in order so that there are fewer raider seizures, order in the tax system so that investors have benefits, create conditions for“ soft offshore ”, free economic zones not only in Donbass, but in theory can give an impetus to investors to profitably invest in other regions country “, – says Kirill Molchanov.