Throughout the pandemic, Ukraine has forged ahead with its reform agenda aimed at unlocking the country’s vast economic potential. However, it continues to be hampered by bureaucracy and ongoing conflict with Russia in the east. Here, UkraineInvest’s chief executive Sergiy Tsivkach speaks with fDi about early interest in new incentives for investments above €20m, privatisations and the digitalisation drive.

Q: How did foreign investment into Ukraine fare last year?

A: Capital investment from abroad declined to $760m in 2020, but the government predicts between $3bn and $5bn in total FDI this year. Ukraine has laid the grounds to alleviate the consequences of Covid-19 through its reform agenda and we achieved some breakthroughs last year.

After the introduction of a new law on concessions, the Qatari company QTerminals signed a concession for Olvia port worth $124m, which is the biggest since Ukraine’s independence. We have relaunched the privatisation programme and I would urge all international investors to look at this. At least three big privatisations before the end of 2021 will allow investors to come in and start operating in strategic sectors. 

Q: A law supporting significant investments was enacted in February — are investors interested?

A: This law allows those that invest at least €20m within five years to get state support worth up to 30% of that investment. It covers a vast spectrum of sectors and supports Ukrainian and foreign companies alike, so we have a good level playing field. We’ve already received 26 preliminary requests amounting to more than $1.7bn. Half are from Ukraine and rest are from Lithuania, Turkey, Switzerland and even Mexico. Many countries are interested.

By mid-August we will have the secondary legislation which sets the procedure for how to apply.

Q: Bureaucracy is still considered a problem, though. What improvements are being made?

A: Last year, the government launched a digitalisation platform, and the president Volodymyr Zelensky has declared that the country’s public procedures are going paperless. By autumn, around 200 official services will be fully digitalised — less interaction with officials will reduce bureaucracy, as there will be clearly stipulated time periods, and eliminate corruption as there are no options for loopholes. The president and the prime minister, Denys Shmyhal, are fully behind the country’s de-bureaucratisation, de-oligarchisation, privatisations and transition to a proper market-oriented country. This sets a good example for all officials. 

Q: How should investors feel about the country’s political situation?

A: All of our reforms are now focused on long-term effects — this is an important message.

For example, the new law supporting significant investments gives investors the possibility to sign an investment agreement with the government that covers their commitments for 15 years. The government is also working on legislation that allows it to provide the long-term financial commitments that are key to public–private partnerships. So, systems and legal instruments that will overcome political change and any political instability are being introduced.

Q: Where are the biggest investment opportunities?

A: The pandemic has created a unique opportunity to become the link in global supply chains. We need to become a European manufacturing hub and we are working on how to attract investors here to improve our capabilities. Within manufacturing, automotives is one of the fastest growing sectors. 

Of the traditional industries, agri and food exports have grown 9% per annum for a decade, but yields are significantly below those of western businesses. We need to introduce benefits for agri-processing companies because we are ready to become more than just a raw agricultural country. Ukraine also has 117 types of minerals, including lithium and cobalt, and the state geological service has 24 plots to auction for exploration which could attract $10bn in investment.

Q: How is UkraineInvest’s role changing? 

A: First, since the pandemic started, we’re no longer just the main contact for investors wanting advice. We’ve become the focal point of communications between investors and governmental stakeholders, passing on how regulatory policies need to change to be competitive.

Second, as an emerging country, the majority of local investors are not as developed as the international investment community. So, our role is to improve communication, trust and connections between the two.

Third, it is important that the agency unifies procedures to ensure investors receive the same high-quality service throughout the entire country.

Sergiy Tsivkach became the executive director of UkraineInvest in July 2020.

Follow the links to find the full archive of the fDi Diaries and Virus Diaries series. 

If you are a member of the economic development and investment promotion community and would like to be part of the next iteration of the fDi Diaries series, please reach out to fDi@ft.com.