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Ukraine: Eastern Europe’s Greatest Market Brussels, 27 June, 2007
Ukraine: introduction • The second largest country in Europe • Strategic position at the crossroads between Europe and Asia • The largest Eastern European consumer market with 47 million people • 69% of the territory of Ukraine is adapted for the agricultural use • Rich in natural resources (coal, iron ore, gas, stone, salt etc.) • 32 active airports, flights to 45 countries • 20 seaports and 10 river ports • 4 out of 10 European transport corridors run through Ukraine Industry/GDP: 27% Agriculture/GDP: 10% Investment/GDP: 19% Exports to: Russia 18%, EU 29% Imports from: Russia 40%, EU 32% (data from Dec 2006, source: Institute for Economic Research and Policy Consulting)
Ukraine: Investment advantages • Rapid Growth Rate • 7% in 2006; 6,5% forecasted for 2007 • potential for high investment returns • Sizable Domestic Market • rapid growth in purchasing power and consumer spending • Retail trade turnover has increased by 20% over the past five years • Real income accounting for price factors has increased by 24% for 2006 • Strategic market access • geographical location and bilateral/multilateral agreements make Ukraine an ideal manufacturing base for Middle East and Russian markets • soon open access for the Ukrainian-based exports to the 150 members of WTO • Low Labor Costs and Highly Qualified Human Capital • one of the lowest salary levels in CEE for hard working and loyallabor force - less than 70 USD (in agriculture), 150-160 USD (in construction) and 170 USD (in transport) • In 2005, Ukraine was ranked 5th in number of certified IT specialist by Brainbench • Rich in Resources • 6th in the world production capacities of metal and mining • 40% of the global production of manganese ore is located in Ukraine • 1/3 of the world’s “black soil” is found in Ukraine
Ukraine: FDI dynamics Cumulative FDI inflowsin USD billion, as of Jan 2007 FDI distributed by the main sectors of Ukrainian economy, as of Jan 2007 Source: Ministry of Economy, Ukraine
Alternative and renewable energy: a promising sector for investment • The sector includes: alternative (rape, biodiesel) and renewable (wind, sun, water) sources ofenergy - Sector capacity: 100 mln tons of the conditional fuel • Biomass potential: 22 mln tons • Territory: 42 mln hectares of arable land for rape production • Hydropower potential of the Transcarpathian region: 2-3 GWt • Investments needed for sector in 2003-2010: $ 2,57 bln. Special Governmental support program exists Law on bio-fuel development adopted in June 2007 Kyoto Protocol: 150 mln tons of pollutants saved annually • Competitive advantages: - availability of land - low-cost labor
Information Technology:a promising sector for investment • Total market size - about $ 2,2 billion • Growth rate in 2006: 28% in comparison: Russia – 18 %, Poland – 15 %, Kazakhstan – 33 %. • 4,000 companies and appx. 47,000 workers involved • Competitive advantages include: • Qualified and relatively low cost skilled labor • Highly-ranked technical schools • Medium-high innovation level: Technological Activity Index – 0.600 (ranked 39 among 117 countries) • Ukraine rated 5th in 2005 in terms of the number of certified IT specialists by Brainbench
Other sectors with investment potential • Logistics • Construction • Financial Services • Social Investments • Agriculture