Investing in Ukraine – How to Get a Great ROI

Posted by on Aug 4, 2017 in Blog | 0 comments

Investing in Ukraine – How to Get a Great ROI


“Why Invest in Ukraine?”

Lots of reasons but primarily because Ukraine will make any investor a decent return on investment (ROI) if you invest smart.



Business anywhere has its risk so if you find a Ukrainian company with competent management, a well-written business plan (including believable financial forecast) then seriously think about investing.

Any business plan also needs to meet your investment needs and agree with your exit strategy.

Here are a few great reasons about why to invest in Ukraine:

Information below in quotation marks is from the UkraineInvest website. See UkraineInvest website for full information.


“The numbers for 2016 show the impact of reforms and stabilization measures that began in 2014.In 2014, the newly elected government came to power with overwhelming support from Ukrainians across the country and high voter expectations. At the core of these expectations were two clear mandates; closer social, economic and political ties to western democracies and their principles of freedom, values, diversity and opportunity and a demand for institutional level reform to address and change systemic corruption that had existed within the system since the fall of the USSR.

Reforms are not always easy and there is often a delay between implementation of reforms and their visible results. While there is still work to be done, as of early 2017, one thing is clear:

More reforms have been accomplished in the last 3 years, than in the previous 23 combined.

In December of 2016, the European Commission issued a report on the reform process in Ukraine.

The press release that accompanied this report carried the headline: “Ukraine is carrying out intense and unprecedented reforms across its economy and political system, while its democratic institutions have been further revitalized.”

Moreover, Ukraine’s reforms have begun to show results: in one year, Ukraine climbed over 30 places, to rank 24th in the world in the Global Open Data Index.


So what do reforms have to do with ease of doing business and facilitating investment? A lot. The reforms that have had the most impact on increasing investment and business development include:

Decentralization has focused on taking centralized power out of Kyiv, and moving it to the regions, where they will be able to be more nimble and responsive to local development opportunities.

Banking Sector reforms to strengthen and re-capitalize the banking sector have led to the closure of over 89 non-performing or at-risk banks, including the nationalization of the country’s largest bank in Dec. 2016.

Privatization creates the opportunity for the sale of hundreds of state-owned enterprises into private hands – benefiting both the government and the new buyers.

Monitoring agencies have been put in place to track and report on reform progress; these agencies provide business and investors with an understanding of the scope of change underway. The most recent report from the National Reforms Council can be read by clicking on the report below.

There are over 8 sectors where reforms have focused and within these sectors, there have been over 25 major reform processes started. A list of some of the major initiatives are below:

I – Anticorruption

1 New anticorruption institutions established in 2015 National Anticorruption Bureau of Ukraine and the National Agency for the Prevention of Corruption                                                                                                                                                                                                           2 Electronic system for mandatory disclosure of assets, income, and expenditures for public official and politicians
3 ProZorro e-procurement4 Single portal to monitor use of public funds
5 Access to and transparency of key government databases                                                                                                                                             6 Media ownership disclosure
7 Introduction of e-petitions and mandatory recording of municipal voting procedures

II – Decentralization

8 Decentralization

III – Financial Sector Reforms

9 National Bank of Ukraine Banking sector reforms and stabilization

IV – Economic Reforms

10 Successfully restructured sovereign debt obligations11 Secured Macroeconomic stability
12 Deregulation – repeal of outdated or unnecessary regulations13 Amendments to Tax Code Designed to Improve the Investment Climate
14 Introduction of reforms regarding governance of State Owned Enterprises

V – Energy Sector Reforms

15 Reform                                                                                                                                                                                                                         16 Diversification of gas imports
17 Naftogaz restructured                                                                                                                                                                                                           18 Introduction of measures to promote energy saving

VI – Justice Sector Reforms

19 Judicial reforms.                                                                                                                                                                                                                 20 Open, transparent and competitive selection of judges to the Supreme Court
21 Introduction of civil society control over selection of judges                                                                                                                                     22 Extension of Legal Aid services
23 Creation of new police patrol service

VII- Health Sector Reforms

24 Procurement of medicines handed to three international organizations                                                   25 Structural Reforms in Health Sector

VIII – Security Sector Reforms

26 Modernizing Ukraine’s armed forces – introduction of NATO standards


COST EFFICIENT – “Kyiv Oblast in Ukraine has the most cost-friendly labour cost levels of all European Regions analysed.” – source: fdi Benchmark

According to the recently released “fDi European Cities and Regions of the Future 2016/17 Rankings” report, Kyiv and several other Ukrainian cities took top spots in the Cost Effectiveness category.


The most compelling argument for cost efficiency for business in Ukraine right now is the exchange rate. For those coming into the country with dollar or euro based budgets, foreign currency goes a long way in Ukraine.

In 2015, the currency was under pressure and jumped from an average of about 11.5 UAH to the dollar in 2014 to almost 22 in 2015. For most of 2016, the rate hovered between 26 – 28 UAH to the USD. Trading Economics forecasts predict the UAH maintaining a 27 – 28 range through 2017.

  1. Economic stability has been achieved and a return to growth is underway.
  2. Prices and Inflation are falling; FX Reserves have increased; Balances are improving.
  3. Since 2015 – production and consumption have returned to positive territory.


Many US and European companies have found it easier to work with developers and outsourcing companies in Ukraine than with other traditional outsource countries because of Ukraine’s close alignment to European cultural ideals, values, norms and mentalities. Additionally, Ukrainians have a well-earned reputation for being able to do the hard work required, no matter what the job.

This cultural alignment has been a key driver (along with the table stakes of getting the job done) behind the accelerating growth of certain spheres of the economy – particularly in IT and manufacturing.

The younger generation of Ukrainians don’t differ greatly from their counterparts across Europe – they are democratic, modern, hard-working, tolerant, creative and resourceful. The additional boost found in Ukrainian employees is a drive for growth that comes from the desire to see Ukraine integrated into the global economy and dialogue.

There is a demarcation between the younger generations of Ukrainians and those who grew up under the USSR and this is playing a part in the trajectory of future growth for Ukraine. As the older generations step back from government and business, younger generations are filling new roles. With their western-looking outlook, they are driving change across the board – from entrepreneurial ventures to civil activism; from politics to fashion – in ways previously not seen in Ukraine.


Ukraine has population of 45 million people, a 99.4 literacy rate and a mandatory 11 years of schooling. Over 70% of people have a secondary degree or higher education.

One of the better legacies that the Soviet Union left behind was the emphasis on the importance of education. In Ukraine, this desire for education has continued and maintains a strong emphasis on areas that are currently driving global economic growth – particularly in the areas of Science, Technology, Engineering and Mathematics (STEM).

As a result, Ukraine is the TOP European country by the number of engineering graduates, with over 130,000 new engineers each year.

There are approximately 16,000 IT graduates each year and Ukraine is home to the largest engineering force in Central and Eastern Europe.

Over 33,500 students graduate yearly in the area of Sciences. (source: World Economic Forum, Forbes)


Ukraine is a country of many languages. Since 2014, use of the Ukrainian language has increased – especially among the younger generation – reflecting an increased pride in the country and its unique history and culture.

Generally, daily conversations can be in Ukrainian or Russian, as most Ukrainians are fluent in both languages.

In addition to Ukrainian and Russian, many Ukrainians speak other languages as well, reflecting the influence of culture and trade from some of its neighboring countries. In the West of Ukraine, Polish, Hungarian and Romanian can be heard; in Odesa, conversations can be heard in Turkish and Hebrew.

Additionally, there has been a marked increase in the number of people speaking English in Ukraine. This correlates with the increased interest in closer social and economic ties with Europe, and a preference for Western values and culture.

10 years ago, it was hard to find English speaking employees. Today, Ukraine is ranked 41st for proficiency in English by Education First.


SECTORS RIPE FOR INVESTMENT                                                                                                                                                    

Throughout modern history Ukraine has been called the “bread basket of Europe”. Today the country is frequently referred to as being a potential global agricultural superpower. Ukraine comes by this reputation justifiably, as its agricultural output is legendary.

Morning field

By European standards Ukraine’s land resources are enormous. Over 70% of the country’s total area is agricultural land. This amounts to just over 42 million hectares of which 32 million is arable land suitable for grain and vegetable farming. In addition Ukraine possesses a significant amount of rich fertile black soil known as “chornozem” representing 30% of the world’s reserves.

These advantages are further leveraged by Ukraine’s favorable geographic location which places it in a temperate continental climate zone with adequate access to water and transportation networks. The sector also benefits from the services of a highly skilled and large labor pool where approximately 25% of Ukraine’s 44.5 million population is employed in the agricultural sector.


Sunflower fields

The largest portion of Ukraine’s present agricultural output consists of a diverse combination of cereal and forage crops including wheat, maize, barley, sunflowers, sugar beets, tobacco, legumes, fruits and vegetables.

Ukraine maintains a leading position as a large producer of cereal grains, particularly wheat. The entire annual cereal crop can reach as high as 90-100 million tons. Assuming a favorable harvest and discounting the 40-50 million tons needed for the domestic market, this still leaves approximately 50-60 million tons available for export on an annual basis. With such outputs, Ukraine currently occupies third place on the world grain export market.

Industry experts predict that by the mid-2020s, Ukraine will be No. 3 in food production worldwide, second only to the U.S. and Brazil.

Another major growth opportunity for Ukraine lies in the area of organic farming where the country’s unspoiled soil allows it to become a major producer of organic food. Many hundreds of thousands of acres are already devoted to organic farming and in time Ukraine expects to become a major exporter to Western Europe to meet the ever-increasing demand for such organics.

Long Term Land Lease – A Path to Purchase

Ukraine’s agricultural land remains one of the best mid to long-term investment opportunities in the world. Although Ukraine’s agricultural land may not be currently bought and sold there is a dynamic and flourishing market in valid leasehold agreements ranging anywhere from 5 to 15 years and sometimes extending to 25 and even 49 years, – the maximum permitted under existing Ukrainian law. Moreover many such leases contain a provision granting the lessee the first right of refusal to buy the land should the current moratorium be lifted during the term of the lease.

Despite the recent decision by Ukraine’s Parliament (January 2017) to extend the existing moratorium on agricultural land sales until January 2018, the present government has pledged to reform the agricultural sector by the end of 2020. The current government’s path to success by 2020 is built on:

The reforms, which would include lifting the moratorium, are motivated by the Government’s desire to minimize social discord and implement a balanced and agreed upon model that is designed and endorsed by all the relevant stakeholders in the agricultural sector.                                                                                                                                                                                                                                                           B) ENERGY

Ukraine has a diverse endowment of natural energy resources and continues to be a net exporter of electricity and certain types of coal.

However the country’s reserves of fossil-fuel energy are not large and neither the location nor the exploitation of these resources are ideally aligned with Ukraine’s domestic needs. As a result, Ukraine today imports additional quantities of oil and gas, including anthracite coal just to meet its current demands.

Gas sector

Until recently the gas sector in Ukraine was a highly regulated industry affecting all the components of the supply chain. Years of distorted state pricing led to the creation of a distorted domestic market and the consequent disincentive for investment in new exploration, production and infrastructure. Following major restructuring reforms 2015-17, the gas market has been stabilized and new investment opportunities are presenting themselves at extreme bottom level entry prices.

In a major move aimed at structural reform of the gas sector, Ukraine also passed legislation in December 2016 enabling the unbundling of the state’s largest oil and gas company, Naftohaz. The major restructuring is designed to be completed by 2017 and will allow transparent third party access to Ukraine’s gas transmission system.

Ukraine also possesses Europe’s third-largest reserves of shale gas, estimated at anywhere from 5-8 trillion trillion cubic metres of which 1.2 are technically extractable today. Ukraine has not banned fracking and the Oleksa basin in western Ukraine is attracting large foreign interest with several companies having already signed multi-year exploration agreements in the basin.

Electricity sector

Ukraine’s electricity sector consists of more than thirty power plants of which fourteen are thermal and another four are nuclear plants. Whereas the government continues to straddle the wholesale power sector as a supplier and owner of the national grid, the distribution sector has been largely privatized with previously state owned Oblenergo companies competing with smaller independent suppliers for the right to supply heavy industry and residential markets alike

The country’s power plants vary in size and capacity and are mostly located near the country’s major coal deposits in south-eastern Ukraine.

Coal sector

Traditional coal production has been decreasing steadily which has necessitated that Ukraine diversify its import supplies from as far away as the USA and Australia.

Nuclear power

Nuclear power is a major resource for generating electricity in Ukraine. The government anticipates that nuclear energy will soon be in a position to meet half of the country’s future electricity needs. In this regard the government took active steps towards this objective by signing a long term agreement with Westinghouse in 2016 in order to provide nuclear fuel for its four active nuclear power plants.

Ukraine’s need for electrical power is expected to double over the next 15 years resulting in the need for substantial and sustained investment over many years to ensure the modernization of its ageing power plants, security of its input supplies and the competitiveness of its varied producers.

Recognizing the strategic importance of this sector to Ukraine’s security, the government began in late 2016 to take steps towards updating Ukraine’s Energy Strategy to 2035.

Reforms in the gas sector and and moves to integrate the Ukrainian electricity market into the EU market have opened new opportunities.

Ukraine has a large manufacturing base which historically was focused on heavy industry. In recent years, this sector has undergone changes and gradually diversified in response to market sector demands. The sector continues to be supported by an extensive network of polytechnic institutes, which annually graduate thousands of engineers across a wide range of disciplines.

Heavy Industry – Machine Building

Ukraine’s heavy manufacturing sector is dominated by an extensive network of machine building enterprises. Over 25% of the population is employed by manufacturing companies involved in mining, railway rolling stock, energy, farm equipment, road construction equipment, machine tools, aircraft engines, instrumentation and manufacturing for the light and food industries. This manufacturing capacity, together with its excellent educational institutes, has enabled Ukraine to become a global competitor in specialized industries such as automotive, aerospace and ship building.


The automotive industry in Ukraine has become one of Ukraine’s fastest growing industries owing to a favorable combination of increasing demand, availability of skilled workers, competitive costs and access to markets.

At the present time Ukraine’s auto manufacturing output is approximately 200,000 vehicles per year. New foreign investors are investing and expanding operations in cluster areas, particularly in Western Ukraine. This manufacturing is concentrated largely in the assembly of foreign passenger cars for the export market, and domestically produced heavy vehicles for the domestic market.

Notable specialized manufacturing includes the production of diesel locomotives and a wide range of tractor models and track vehicles by Kharkiv’s well known tractor plant XTZ.


Ukraine has a long tradition in the aviation industry and is noted for having introduced some exceptional innovations in world aircraft design. Ukraine’s famous “Antonov” design bureau was responsible for designing many notable aircraft including the world’s largest airplane the AN-225 “Mriya”. However, Ukraine’s production of aircraft on a large scale basis has never been realized, in part, because of the fragmentation of the supply chain that occurred following the collapse of the Soviet Union. The Government is now devoting significant attention to redress this condition and is expanding opportunities for public-private investment in this sector.

Ukraine is also becoming known for its niche market in the production of unique ultra-light planes, hang-gliders and paragliders of all designs and models. The Aeroprakt models in particular have become very well-known and have attracted buyers in the United States, Australia, New Zealand and in many European countries.


Ukraine today ranks among the 10 largest shipbuilding countries in Europe. The country’s maritime industry is extremely large and diversified and includes design bureaus, research facilities, shipyards and repair facilities.

At the present time, there are over 35 major state companies that are engaged in the design and construction of a wide range of vessels. These include powerboats, barges, bulk carriers (dry cargo ship), tankers, including liquefied gas carriers.

In turn, these facilities are supported by an extensive network of technical institutes and universities which continuously contribute to a pool of experienced workers with high degrees of specialization. In addition, Ukraine devotes significant resources to the training of merchant seamen who are able to service both the domestic market and foreign companies as well. It is estimated that Ukraine currently has over 100,000 trained seamen in its maritime registry.

Light Industry

Comparatively speaking, Ukraine’s light manufacturing industry is significantly underdeveloped and considerably smaller than the heavy industry sector. However, the industry has great growth potential owing to Ukraine’s highly educated work force and cost efficiency.

The industry currently has a wide profile with selective hubs of manufacturing in such areas as pharmaceuticals, electrical equipment, plastic and rubber products, food processing and textiles. The latter two, in particular, have exhibited a noticeable growth spurt in the last three years.

The agricultural sector is the unquestionable leader in this regard as increasing investments are heading into the ‘value-add’ chain, and creating new opportunities in the canning industry, meat, vegetable and dairy processing. These in turn have stimulated the growth of the food specialty market, as smaller investors are increasingly venturing forward into the under-developed field of specialty products such as artisan breads, confectioneries, jams, alcohol and cottage breweries.

The clothing industry is also experiencing a similar boom as increasing numbers of European manufacturers establish clusters of garment manufacturing in locations close to Ukraine’s border with EU countries.


Ukraine’s vast road, rail, air and sea infrastructure, together with the benefits of its geographic location, makes the country an important transit corridor for trade and travel between Europe, Asia and the Middle East.

The transportation sector is the most developed and extensively utilized of all infrastructure assets. By European standards the transportation sector is a huge conglomerate which encompasses a diverse aggregate of railway networks, roads, seaports and airport facilities, together with their supporting services.


Ukraine’s rail network is managed by “Ukrzaliznytsia” and is one of the most extensive in Europe with a combined total length of over 22 thousand km, of which 45% is electrified. On an annual basis, the rail network handles over 80% of the nation’s freight and 50% of the passenger traffic crisscrossing the country.

By carriage volume, the Ukrainian rail network is the 14th largest in the world, the world’s 6th largest rail passenger transporter and the world’s 7th largest freight transporter.

Ukraine’s rail network is fully integrated with the networks of neighboring countries of Belarus, Moldova, Poland, Romania, Slovakia, Hungary and the Russian Federation. The network also co-manages 40 international border crossings and services 13 sea ports in the Black Sea basin.


Ukraine has an extensive highway network of over 170,000 km which cover the whole territory of Ukraine; this and includes four international corridors which pass through the country and serve as important transport routes for both freight and passenger traffic.

In recent years there has been a noticeable improvement in this sector; state policy focused more attention on the country’s infrastructure and successfully mobilized the resources of international agencies and the cooperation of foreign countries to bring new investments to the highway network.

The current policy on renewing the country’s highway network is outlined in the ‘Ukraine 2020 Transportation Strategy’. The strategy sets out the necessary legislative goals and sector reforms needed to bring Ukraine’s road network up to European standards.

State policy is now focused on fostering a competitive market in highway construction which is stimulating the implementation of new public-private partnership projects. This latest initiative provides new opportunities for foreign investment which will not only have a long term impact on renewing necessary highway infrastructure, but will significantly contribute to the country’s economic revival as well.


Ukraine’s maritime transport sector is a multi-functional complex of river and seaports together with the supporting infrastructure that serve Ukraine’s export/import sector. A competitive advantage for Ukraine is that all of the country’s ports along the Back Sea coastline are warm water ports which provide year round access to the Mediterranean and the Atlantic ocean.

Ukraine’s seaports were originally designed to support the country’s traditional exports of ferrous metals, coal, iron ore and grain. The infrastructure supporting this capacity has aged but provides significant opportunity for investment and redevelopment; the introduction of technological upgrades to service Ukraine’s increasingly diverse import/export requirements is another investment opportunity.

Ukraine is currently undertaking a broad range of initiatives to improve its maritime infrastructure by focusing on improving its legal and regulatory environment, improving port management systems and creating an open market between domestic seaports.

With the assistance of international donors and the private sector the government is embarking on a parallel program of providing increased training for port personnel, introducing modern technologies for loading and unloading together with the privatization of certain port facilities. Investors from Europe, the Middle East and North America currently show considerable interest in the opportunities that Ukraine’s maritime sector has to offer.

Aviation Transport

Ukraine has 23 major airports (19 government owned) with 12 carrying the designation of international and offering regularly scheduled flights for commercial airlines. Major redevelopment occurred in 2012 when Ukraine upgraded and/or built new international airports in Kyiv, Lviv, Kharkiv and Donetsk.

However given the size and the population of the country the air transport sector of Ukraine continues to remain underdeveloped and an opportunity for investment.

In 2015 Ukraine signed an Open Skies agreement with the USA and a similar one with the EU is expected to come into force in 2017. This provides an additional impetus for the government to implement its ambitious program of airport upgrades and expansion throughout the country.

Ukraine’s immediate reform targets for this sector include (i) harmonizing legislation and technical regulations to European standards (ii) creating a competitive market environment for both domestic and foreign carriers, and (iii) developing a regional program of reconstruction of regional airports. Private sector investment and public-private partnerships are expected to drive the majority of such redevelopment.”

 CANADIAN SUCCESS STORIES in UKRAINE                                                                                                                           1. Pharmascience International                                                                                       2. Apotex


“Most of the new businesses coming to Ukraine are either large multinationals, here because the market or business opportunity is too big for them to ignore, or small and medium sized enterprises who come because they have friends or business associates who know or already do business in Ukraine. They have heard the sentence, “You really ought to come see for yourself …” enough times to finally act.
The fact is, there are thousands of foreign based businesses already doing business in Ukraine – and that number grows daily.
The headlines about Ukraine don’t tell the whole story and it is the story behind the headlines that makes Ukraine fascinating.
For those who understand the positive changes of the past 3 years, who have explored the opportunities of today and are willing to take some risks in return for greater rewards in the future, Ukraine is a place to consider.
Ukraine’s transition from a communist state to a democratic, market-oriented, west-ward looking state has not always been easy. However, Ukraine has not given up and in fact, the resolve and determination for a free and fair future for the next generation is a large part of what is driving the current political reforms and continues to create opportunities for business.

Visiting Ukraine to better understand the country should be part of the decision-making process for any investor considering starting a business.
Visas are not required for citizens of many countries for stays of up to 90 days within a 180-day period (for a total of 180 days per year).
A complete list of updated visa requirements and the specifics for citizens of different countries can be found on the website of the Ministry of Foreign Affairs.
Registering a Business

Ukraine is going through dynamic changes and there are serious efforts underway to make Ukraine a more accessible place to do business. Recently, the time to register a business was shortened to just a few days processing.
Ukrainian law provides for the establishment of a wide range of internationally recognized business structures including Limited Liability Companies, Joint Stock Companies, Joint Ventures and Representative Offices, as well as the registration of Private Entrepreneurs.
The decision as to which structure is right for a company should be made in conjunction with a Ukrainian legal adviser who should first understand the business needs and then advise on the best company structure.
A dedicated document service center was opened in 2016 and provides support for a wide range of activities – registration of legal entities, individual entrepreneurs, property registration and information on land management to name a few. Information can be found at This site is in Ukrainian, but online translation can provide those in the initial stages of due diligence with an overview of requirements and services.
For foreign company owners who will be residing in Ukraine or hiring foreign workers, a work permit and temporary residence permit is required.

Work Permits and Temporary Residency

There are a number of documents, and a particular order for document submission that is required for both work permits and temporary residency documents for foreigners.
Additionally, official documents in Ukraine are required to be in Ukrainian and all foreign documents must be translated and notarized.
To facilitate work permits and residency documents, most new businesses entering Ukraine engage a local legal firm for both legal advice, as well as for support with document processing.
Unlike many other counties, assistance with document processing is a standard service offered by Ukrainian law firms, usually for quite reasonable fees.
We recommended that new businesses consider engage a legal firm for advice on the specifics as it relates to particular business needs and goals.

Business Associations

There are dozens of Business Associations in Ukraine representing the wide range of countries who have companies already doing business in Ukraine. These Associations are important resources for the existing business community and they are also a great source of information for those considering Ukraine. The largest Associations include:
American Chamber of Commerce
European Business Association
US-Ukraine Business Council

Other specific country Associations and Chambers include:
British Ukrainian Chamber of Commerce
Canada Ukraine Chamber of Commerce
Danish Business Association
French Chamber of Commerce
German- Ukrainian Chamber of Industry & Trade
Italian-Ukrainian Chamber of Commerce
Norwegian-Ukrainian Business Council
Polish-Ukrainian Chamber of Commerce
The Swiss-Ukrainian Business Chamber
International Turkish Ukrainian Business Association
Ukrainian Agrobusiness Club
Ukrainian Association of Manufacturers
Ukrainian Chamber of Commerce and Industry
Ukrainian League of Industrialists and Entrepreneurs”

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