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Ukraine: DCFTA-driven investment opportunities for Dutch business
Over the recent years, Dutch investors have found in Ukraine a large market, qualified and affordable work force, and expanding business opportunities. With 315 Dutch companies now working in Ukraine, the Netherlands has become Ukraine’s second largest investor. Ukraine continues to struggle with economic downturn and barriers for private entrepreneurship, but as the Free Trade Area between the European Union and Ukraine entered force in 2016, Dutch business is set to discover growing sectors for investment and improving conditions for operating in the country.
Difficult times for trade and investments
Recently published trade and investments stat between the Netherlands and Ukraine for 2015 leaves not too much space for optimism: Dutch exports to Ukraine hit another low and almost halved if to compare with 2013; the investments have been actually kept frozen as well.
Unfolding political crisis and military conflict in the East, economic recession, inflation, and decreased purchasing power of the local residents complicate market conditions for businesses in Ukraine. Exporters especially struggle from the falling global prices on metal products and wheat, while importers lose profits due to the devaluated national currency.
The armed conflict that has been going on in Ukraine for more than two years has broken the links between the businesses that found themselves on the opposite sides of the contact line. The conflict also has forced firms to relocate to the more secure parts of the country or to move abroad and contributed to the general economic downturn in the country.
Despite the recent upside shift of Ukraine in the World Bank Doing Business rating (it jumped from the 112th position to the 96th one), the general administrative pressure on business nevertheless remains high creating a bulk of legal and regulatory barriers that private businesses in Ukraine deal with on virtually all the stages of business life cycle: when a business is registered and a location is constructed and connected to electricity, when obtaining permits and going through administrative procedures, importing and exporting goods, paying taxes, and closing a business.
Another significant barrier for business is corruption. The high level of corruption in the country is attributed to the bureaucracy and unclear regulations as well as to personal discretion of government officials that interact with businesses. One out of every four Ukrainian business owners associates corruption with the tax authorities in the country, and one out of three entrepreneurs believes the situation with corruption deteriorated in 2015.
Association Agreement and DCFTA: a roadmap for business-friendly reforms
Against the background of all these hardships Ukraine started implementation of the most ambitious international agreement in its history with the EU — the Association Agreement — that in turn creates so called Deep and Comprehensive Free Trade Area (DCFTA). There are many ‘pro’ and ‘contra’ arguments about the effects of this trade agreement both for the EU and Ukraine (often politically motivated), but our strong opinion is that we have to perceive the DCFTA first and foremost as a complex roadmap of the reforms that are to be undertaken in Ukraine for aligning its legal framework for economy with the best European practices with the support of the EU.
The matter is that DCFTA goes far beyond a classic free trade agreement about simple reduction of customs duties. It foresees of course (like any other trade agreement) gradual opening of the markets to signing parties by removal of duties1 and other restrictions for trade but the most benefits for ordinary business will come from Ukrainian regulations approximation with the EU ones that bring EU standards of doing business and investments protection to the Ukrainian legal playing field.
Looking from a practical point of view, the most important benefits for Dutch business working in and trading with Ukraine will come from the following DCFTA outcomes:
(a) Ukraine obliges to achieve conformity with EU technical regulations and food safety standards, metrology, accreditation, conformity assessment procedures and the market surveillance system eliminating main non-tariff barriers to trade,
(b) Elimination of excessive administrative regulation put on business (often motivated by corruption), e.g. business registration, getting permits and licenses, paying taxes, going through customs clearance, access to public tenders and many others,
(c) Unification of staff relocation from Ukraine to the EU and back,
(d) Protection of fair competition and investments, including intellectual property rights, as well as
(e) Unlocking free flow of capital. Specifically, Ukraine is to cancel restrictions on foreign currency circulation, trade credits, portfolio investments, and financial loans and credits.
Competitive advantages of Ukraine in times of turbulence
All the abovementioned reforms indeed require deep reforming of many sectors of Ukrainian public administration and even the separate sectors of national economy, and even by optimistic estimations, it will still take years for Ukraine to reach the EU-like investment climate. But business decisions often engage from mid- to long-term horizons for investments planning in a certain country and have to take the relative competitive advantages into account. Ukraine also has its advantages as a destination for foreign capital and they may be identified as the following:
First, and very much known yet, Ukraine is a big destination to invest into and trade with. This is a large European country with perfect geographical location, climate, vast natural resources and qualified workforce. Despite population real incomes decline over recent years Ukraine nevertheless remains the 6th largest consumer market in Europe inhabited by 43 m of people.
Second, following the sharp devaluation of Ukrainian national currency — hryvna, Ukraine competes today for a status of one of the most cost attractive destination for manufacturing projects deployment globally, as labour, energy, raw materials and other production costs became significantly cheaper in U.S. dollar terms. For example, the average salary in Ukraine hit the bottom of USD 192 per month that is almost as twice less than in China and significantly below CEE and Western Europe level.
Third, Ukraine has a strategic location in terms of trade with the EU as it takes only 2 truck days to deliver goods from Ukraine to the most European markets. That is especially advantageous for industries with short supply chains and fast production cycles, for example agriculture, textiles and small machine building.
The most prospective sectors in Ukraine to invest
Looking at sectoral breakdown of Ukrainian economy, several specific sectors can be defined that bring significant reward even in a short-term horizon and those with significant investment potential that may be unlocked by successful reforms.
Agriculture:
The first thing that comes to mind when talking about Ukraine agriculture-wise is 33% of the world’s reserves of the most fertile black soils and 41 million hectares of farmland. Arable lands are still not traded but it should not stop any agricultural venture from entering the market with the biggest potential of its kind in the world. The sector was the only one that demonstrated sustainable growth in output enjoying substantial cost advantages due to very fertile soil, lower rent fees for land (annual land rent fee in Ukraine is around 80 euro per ha, while in the Netherlands it’s 900 euro), wages and privileged taxation regime, as well as competitive logistics.
One of the drivers of agriculture sector growth in Ukraine stems from its orientation to export markets that allows it not to be dependent from stagnating domestic demand. 2013/2014 marketing year became record for Ukrainian agriculture as Ukraine has been ranked as #1 exporter of sunflower oil globally and #3 world largest grains exporter following the USA and EU.
Meanwhile agriculture in Ukraine still crucially needs modern technologies for increasing productivity that for many goods is as twice low as in the developed world and leaves lots of niches for the Netherlands that possess the world’s best technologies in agriculture and food processing.
In the long-term perspective, Ukraine also can be considered as very attractive location globally for organic agriculture providing 25–35% savings on operational costs and irrigation needs and over 20% higher yields compared to conventional ones.
IT sector
One may be thinking that Ukraine is an outdated economy relying on archaic post-Soviet technologies. But there is one relatively new sector in the country that can be confidently named as Ukraine’s bridge towards global futuristic economy — that’s a sector of information technologies (IT). This rapidly evolving industry is not only bringing a hard currency in the country but has every chance to stand as one of tomorrow’s IT hubs on the global high tech map.
Today Ukraine is ranked as #1 IT country in Europe with fast growing number of IT professionals — around 90,000; and it has expansive plan to double to over 200,000 by 2020. Despite of that the costs of Ukrainian IT specialist’s remains very competitive if compared internationally.
1,000 + of IT service companies are working in Ukraine today. Having evolved from IT outsourcing business and offering a wide range of engineering capabilities, most companies have already switched to agile development over the past few years.
The export volume of Ukraine’s software development and IT services reached at least $2.5 billion in 2015 or 4% from total exports from Ukraine, growing at 30% over the last 10 years with a prospective to reach $10 bn by 2020. The US market is the main destination for Ukrainian IT with an estimated 80% volume of exported services.
Ukraine is home to over 100 R&D subsidiaries of global companies from a variety of industries, including telecoms, software, gaming and e-commerce. A significant part of these global companies entered the Ukrainian market indirectly, through M&A, joint R&D with an outsourcing component, or outstaffing service companies, while a number of them as EPAM, Global Logic, Luxoft have direct business presence in Ukraine benefiting from high quality of IT staff, proximity to European markets and comparatively low costs IT products development.
Pharmaceuticals
Another sector with a huge untapped potential in Ukraine is pharmaceutical. Demonstrating 6% growth in average over the last five years the pharmaceutical market nevertheless remains significantly unsaturated if compared to Ukraine’s peers from CEE. In 2014 combined healthcare spending reached $7.3 bn that was at least 7 times lower than in Hungary.
Domestic pharmaceutical industry was demonstrating strong trend of substitution of imports after foreign companies increased their presence in Ukraine by purchasing existing players or entering greenfield projects. As a result of their efforts in medicines quality improvement (almost all Ukrainian companies are GMP2 certified) as well as marketing and rebranding efforts the sales of domestically produced medicines have been increasing and reached 76% from total in mid-2015. Additional space for profitable investments in the sector comes from high fragmentation of Ukrainian pharmaceutical market where #1 player still only has 5% market share and top-10 companies account for one-third of total pharmaceutical retail sales.
The ongoing reforms in the healthcare system also will benefit the shift from the public sector to the market-based services, including the modernization of clinics, attraction of private capital and more transparency of state-run tenders. Finally, significant upside potential remains in pharmaceutical products sales to the hospital segment (while now many payments for medicines go in the out-of-pockets mode) as medical insurance demand continues to grow and public healthcare spending recovers.
Green energy and energy efficiency
Ukraine today is also a very promising market for energy investments. Having heavily monopolized traditional generation (large power stations owned by the state or local businesses) the renewable energy sector offers a reasonable alternative for investments due to bright resource potential and state-supported renewable energy promotion schemes.
In terms of potential Ukraine is ranked 30th among the world’s top 40 renewable energy markets experiencing double-digit inflow of FDI into the renewable sector prior to 2014. However, only around 3 per cent of Ukraine’s energy consumption stems from renewable sources, and most of that is from water power. This share (according to national renewable energy action plan) should reach 11% renewable energy target for the total energy mix by 2020 and even this number is considered as quite conservative by market professionals.
The Government offers quite attractive feed-in tariffs for green energy in Ukraine nominated in EUR that correspond to average level of the EU similar ones and are one of the highest in Europe for solar installations. In mid-2015 numerous obstacles for foreign investors like local component requirement, land plots allocation, connection to electrical grid as well as numerous permissions were abolished making investment projects into renewables less costly.
Ukraine also has huge potential in thermo-modernization of outdated housing stock. With implementation of new stimulative regulation in residential energy efficiency and rising the energy tariffs to population to market-based levels a new huge market for thermo-modernization of residential buildings $2 bn worth is expected to be opened.
Transport logistics and infrastructure
As mentioned earlier, Ukraine is a strategic location between Europe and Asia linking the EU with Russia and Central Asia and hosting four out of ten Pan-European transport corridors. In terms of size Ukraine is the largest market in Europe (excl. Russia) for rail freight transportation and the 4th one for passenger transportation. Ukraine has a robust infrastructure for sustaining an export-oriented economy — close to 170,000 km of roadways, some 22,000 km of railways, 13 sea ports along mainland Ukraine, over 20 passenger airports — and only 2 truck days to the most European cities.
In the meantime, the quality of trade and transport-related infrastructure in Ukraine was quite poor in 2014 according to WB Logistics Performance Index standing in line with Russia and Romania and being much less developed than Poland, Turkey, Spain, UK and the U.S. Therefore, significant investments are required to be made in the nearest future to satisfy the demand for transportation services by the economy.
Demand for the freight transportation services is mainly driven by grain exports, metals and chemicals which even under current bad economic conditions lack free capacities of sea ports. For example, demand for grain transportation for exports may increase from current 33Mt to 60Mt in 2020 while the limit of exciting capacities of national seaports was estimated as 55Mt.
Another promising directions of foreign investments into transport logistics in Ukraine may be: (1) development of in-land waterways (rivers) infrastructure; (2) renewal of cargo fleet (railcars and locomotives) which are about 90% obsolescent and require spending about USD 2 bn, and (3) rehabilitation of roads which are part of the international corridors and comprise bottlenecks to the existing infrastructure with USD 4.5 required level of investments. Indeed, the very much needed reforms in transportation sector aimed at de-monopolisation of the sector are strongly required to unlock these possibilities and they currently have been launched as part of Association Agreement agenda.
To summarize, Ukraine’s political choice to make an Association Agreement with the EU has set up the country on the way to the harmonization with the European practices and regulations that already became a significant driver of the reforms undertaken by Ukraine. This will make investment in Ukraine easier for Dutch businesses allowing them doing business in a comfortable and secure way by replacement of numerous barriers that impede foreign investors from launching investment projects in the country today.
As a country Ukraine has a number of objective competitive advantages that are to be taken by investors into account while considering it as a place to produce goods not only for Ukrainian domestic market but also for the EU market. Competitive costs for labor and inputs and close proximity to EU borders offer good chances for Ukraine to enter into the value added chains of European companies and compete with its CEE neighbors. The selected sectors of Ukrainian economy like IT, agriculture and green energy have the real potential today to compete even globally while other sectors with huge demand for investments (pharma and transport sector) may be the following booming clusters after fair treatment of investors is introduced in practice.
Iryna Fedets, Research Associate, the Institute for Economic Research and Policy Consulting,
Dmytro Naumenko, Senior analyst, NGO “Ukrainian Centre for European Policy”
Difficult times for trade and investments
Recently published trade and investments stat between the Netherlands and Ukraine for 2015 leaves not too much space for optimism: Dutch exports to Ukraine hit another low and almost halved if to compare with 2013; the investments have been actually kept frozen as well.
Unfolding political crisis and military conflict in the East, economic recession, inflation, and decreased purchasing power of the local residents complicate market conditions for businesses in Ukraine. Exporters especially struggle from the falling global prices on metal products and wheat, while importers lose profits due to the devaluated national currency.
The armed conflict that has been going on in Ukraine for more than two years has broken the links between the businesses that found themselves on the opposite sides of the contact line. The conflict also has forced firms to relocate to the more secure parts of the country or to move abroad and contributed to the general economic downturn in the country.
Despite the recent upside shift of Ukraine in the World Bank Doing Business rating (it jumped from the 112th position to the 96th one), the general administrative pressure on business nevertheless remains high creating a bulk of legal and regulatory barriers that private businesses in Ukraine deal with on virtually all the stages of business life cycle: when a business is registered and a location is constructed and connected to electricity, when obtaining permits and going through administrative procedures, importing and exporting goods, paying taxes, and closing a business.
Another significant barrier for business is corruption. The high level of corruption in the country is attributed to the bureaucracy and unclear regulations as well as to personal discretion of government officials that interact with businesses. One out of every four Ukrainian business owners associates corruption with the tax authorities in the country, and one out of three entrepreneurs believes the situation with corruption deteriorated in 2015.
Association Agreement and DCFTA: a roadmap for business-friendly reforms
Against the background of all these hardships Ukraine started implementation of the most ambitious international agreement in its history with the EU — the Association Agreement — that in turn creates so called Deep and Comprehensive Free Trade Area (DCFTA). There are many ‘pro’ and ‘contra’ arguments about the effects of this trade agreement both for the EU and Ukraine (often politically motivated), but our strong opinion is that we have to perceive the DCFTA first and foremost as a complex roadmap of the reforms that are to be undertaken in Ukraine for aligning its legal framework for economy with the best European practices with the support of the EU.
The matter is that DCFTA goes far beyond a classic free trade agreement about simple reduction of customs duties. It foresees of course (like any other trade agreement) gradual opening of the markets to signing parties by removal of duties1 and other restrictions for trade but the most benefits for ordinary business will come from Ukrainian regulations approximation with the EU ones that bring EU standards of doing business and investments protection to the Ukrainian legal playing field.
Looking from a practical point of view, the most important benefits for Dutch business working in and trading with Ukraine will come from the following DCFTA outcomes:
(a) Ukraine obliges to achieve conformity with EU technical regulations and food safety standards, metrology, accreditation, conformity assessment procedures and the market surveillance system eliminating main non-tariff barriers to trade,
(b) Elimination of excessive administrative regulation put on business (often motivated by corruption), e.g. business registration, getting permits and licenses, paying taxes, going through customs clearance, access to public tenders and many others,
(c) Unification of staff relocation from Ukraine to the EU and back,
(d) Protection of fair competition and investments, including intellectual property rights, as well as
(e) Unlocking free flow of capital. Specifically, Ukraine is to cancel restrictions on foreign currency circulation, trade credits, portfolio investments, and financial loans and credits.
Competitive advantages of Ukraine in times of turbulence
All the abovementioned reforms indeed require deep reforming of many sectors of Ukrainian public administration and even the separate sectors of national economy, and even by optimistic estimations, it will still take years for Ukraine to reach the EU-like investment climate. But business decisions often engage from mid- to long-term horizons for investments planning in a certain country and have to take the relative competitive advantages into account. Ukraine also has its advantages as a destination for foreign capital and they may be identified as the following:
First, and very much known yet, Ukraine is a big destination to invest into and trade with. This is a large European country with perfect geographical location, climate, vast natural resources and qualified workforce. Despite population real incomes decline over recent years Ukraine nevertheless remains the 6th largest consumer market in Europe inhabited by 43 m of people.
Second, following the sharp devaluation of Ukrainian national currency — hryvna, Ukraine competes today for a status of one of the most cost attractive destination for manufacturing projects deployment globally, as labour, energy, raw materials and other production costs became significantly cheaper in U.S. dollar terms. For example, the average salary in Ukraine hit the bottom of USD 192 per month that is almost as twice less than in China and significantly below CEE and Western Europe level.
Third, Ukraine has a strategic location in terms of trade with the EU as it takes only 2 truck days to deliver goods from Ukraine to the most European markets. That is especially advantageous for industries with short supply chains and fast production cycles, for example agriculture, textiles and small machine building.
The most prospective sectors in Ukraine to invest
Looking at sectoral breakdown of Ukrainian economy, several specific sectors can be defined that bring significant reward even in a short-term horizon and those with significant investment potential that may be unlocked by successful reforms.
Agriculture:
The first thing that comes to mind when talking about Ukraine agriculture-wise is 33% of the world’s reserves of the most fertile black soils and 41 million hectares of farmland. Arable lands are still not traded but it should not stop any agricultural venture from entering the market with the biggest potential of its kind in the world. The sector was the only one that demonstrated sustainable growth in output enjoying substantial cost advantages due to very fertile soil, lower rent fees for land (annual land rent fee in Ukraine is around 80 euro per ha, while in the Netherlands it’s 900 euro), wages and privileged taxation regime, as well as competitive logistics.
One of the drivers of agriculture sector growth in Ukraine stems from its orientation to export markets that allows it not to be dependent from stagnating domestic demand. 2013/2014 marketing year became record for Ukrainian agriculture as Ukraine has been ranked as #1 exporter of sunflower oil globally and #3 world largest grains exporter following the USA and EU.
Meanwhile agriculture in Ukraine still crucially needs modern technologies for increasing productivity that for many goods is as twice low as in the developed world and leaves lots of niches for the Netherlands that possess the world’s best technologies in agriculture and food processing.
In the long-term perspective, Ukraine also can be considered as very attractive location globally for organic agriculture providing 25–35% savings on operational costs and irrigation needs and over 20% higher yields compared to conventional ones.
IT sector
One may be thinking that Ukraine is an outdated economy relying on archaic post-Soviet technologies. But there is one relatively new sector in the country that can be confidently named as Ukraine’s bridge towards global futuristic economy — that’s a sector of information technologies (IT). This rapidly evolving industry is not only bringing a hard currency in the country but has every chance to stand as one of tomorrow’s IT hubs on the global high tech map.
Today Ukraine is ranked as #1 IT country in Europe with fast growing number of IT professionals — around 90,000; and it has expansive plan to double to over 200,000 by 2020. Despite of that the costs of Ukrainian IT specialist’s remains very competitive if compared internationally.
1,000 + of IT service companies are working in Ukraine today. Having evolved from IT outsourcing business and offering a wide range of engineering capabilities, most companies have already switched to agile development over the past few years.
The export volume of Ukraine’s software development and IT services reached at least $2.5 billion in 2015 or 4% from total exports from Ukraine, growing at 30% over the last 10 years with a prospective to reach $10 bn by 2020. The US market is the main destination for Ukrainian IT with an estimated 80% volume of exported services.
Ukraine is home to over 100 R&D subsidiaries of global companies from a variety of industries, including telecoms, software, gaming and e-commerce. A significant part of these global companies entered the Ukrainian market indirectly, through M&A, joint R&D with an outsourcing component, or outstaffing service companies, while a number of them as EPAM, Global Logic, Luxoft have direct business presence in Ukraine benefiting from high quality of IT staff, proximity to European markets and comparatively low costs IT products development.
Pharmaceuticals
Another sector with a huge untapped potential in Ukraine is pharmaceutical. Demonstrating 6% growth in average over the last five years the pharmaceutical market nevertheless remains significantly unsaturated if compared to Ukraine’s peers from CEE. In 2014 combined healthcare spending reached $7.3 bn that was at least 7 times lower than in Hungary.
Domestic pharmaceutical industry was demonstrating strong trend of substitution of imports after foreign companies increased their presence in Ukraine by purchasing existing players or entering greenfield projects. As a result of their efforts in medicines quality improvement (almost all Ukrainian companies are GMP2 certified) as well as marketing and rebranding efforts the sales of domestically produced medicines have been increasing and reached 76% from total in mid-2015. Additional space for profitable investments in the sector comes from high fragmentation of Ukrainian pharmaceutical market where #1 player still only has 5% market share and top-10 companies account for one-third of total pharmaceutical retail sales.
The ongoing reforms in the healthcare system also will benefit the shift from the public sector to the market-based services, including the modernization of clinics, attraction of private capital and more transparency of state-run tenders. Finally, significant upside potential remains in pharmaceutical products sales to the hospital segment (while now many payments for medicines go in the out-of-pockets mode) as medical insurance demand continues to grow and public healthcare spending recovers.
Green energy and energy efficiency
Ukraine today is also a very promising market for energy investments. Having heavily monopolized traditional generation (large power stations owned by the state or local businesses) the renewable energy sector offers a reasonable alternative for investments due to bright resource potential and state-supported renewable energy promotion schemes.
In terms of potential Ukraine is ranked 30th among the world’s top 40 renewable energy markets experiencing double-digit inflow of FDI into the renewable sector prior to 2014. However, only around 3 per cent of Ukraine’s energy consumption stems from renewable sources, and most of that is from water power. This share (according to national renewable energy action plan) should reach 11% renewable energy target for the total energy mix by 2020 and even this number is considered as quite conservative by market professionals.
The Government offers quite attractive feed-in tariffs for green energy in Ukraine nominated in EUR that correspond to average level of the EU similar ones and are one of the highest in Europe for solar installations. In mid-2015 numerous obstacles for foreign investors like local component requirement, land plots allocation, connection to electrical grid as well as numerous permissions were abolished making investment projects into renewables less costly.
Ukraine also has huge potential in thermo-modernization of outdated housing stock. With implementation of new stimulative regulation in residential energy efficiency and rising the energy tariffs to population to market-based levels a new huge market for thermo-modernization of residential buildings $2 bn worth is expected to be opened.
Transport logistics and infrastructure
As mentioned earlier, Ukraine is a strategic location between Europe and Asia linking the EU with Russia and Central Asia and hosting four out of ten Pan-European transport corridors. In terms of size Ukraine is the largest market in Europe (excl. Russia) for rail freight transportation and the 4th one for passenger transportation. Ukraine has a robust infrastructure for sustaining an export-oriented economy — close to 170,000 km of roadways, some 22,000 km of railways, 13 sea ports along mainland Ukraine, over 20 passenger airports — and only 2 truck days to the most European cities.
In the meantime, the quality of trade and transport-related infrastructure in Ukraine was quite poor in 2014 according to WB Logistics Performance Index standing in line with Russia and Romania and being much less developed than Poland, Turkey, Spain, UK and the U.S. Therefore, significant investments are required to be made in the nearest future to satisfy the demand for transportation services by the economy.
Demand for the freight transportation services is mainly driven by grain exports, metals and chemicals which even under current bad economic conditions lack free capacities of sea ports. For example, demand for grain transportation for exports may increase from current 33Mt to 60Mt in 2020 while the limit of exciting capacities of national seaports was estimated as 55Mt.
Another promising directions of foreign investments into transport logistics in Ukraine may be: (1) development of in-land waterways (rivers) infrastructure; (2) renewal of cargo fleet (railcars and locomotives) which are about 90% obsolescent and require spending about USD 2 bn, and (3) rehabilitation of roads which are part of the international corridors and comprise bottlenecks to the existing infrastructure with USD 4.5 required level of investments. Indeed, the very much needed reforms in transportation sector aimed at de-monopolisation of the sector are strongly required to unlock these possibilities and they currently have been launched as part of Association Agreement agenda.
To summarize, Ukraine’s political choice to make an Association Agreement with the EU has set up the country on the way to the harmonization with the European practices and regulations that already became a significant driver of the reforms undertaken by Ukraine. This will make investment in Ukraine easier for Dutch businesses allowing them doing business in a comfortable and secure way by replacement of numerous barriers that impede foreign investors from launching investment projects in the country today.
As a country Ukraine has a number of objective competitive advantages that are to be taken by investors into account while considering it as a place to produce goods not only for Ukrainian domestic market but also for the EU market. Competitive costs for labor and inputs and close proximity to EU borders offer good chances for Ukraine to enter into the value added chains of European companies and compete with its CEE neighbors. The selected sectors of Ukrainian economy like IT, agriculture and green energy have the real potential today to compete even globally while other sectors with huge demand for investments (pharma and transport sector) may be the following booming clusters after fair treatment of investors is introduced in practice.
Iryna Fedets, Research Associate, the Institute for Economic Research and Policy Consulting,
Dmytro Naumenko, Senior analyst, NGO “Ukrainian Centre for European Policy”
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Ukraine: DCFTA-driven investment opportunities for Dutch business
