The document discusses Ukraine's potential and challenges as an investment destination. While Ukraine has significant natural resources and agricultural capacity, making it one of the largest and richest countries in Europe, it has struggled to realize its economic potential over the last 23 years. External ratings reflect political instability, corruption, inefficient bureaucracy, and other issues that discourage investment. However, Ukraine also has many competitive advantages in industry, energy, education and other areas if it addresses obstacles and makes the most of its opportunities. Significant investment is needed to modernize infrastructure and bring the economy into the top 20 globally.

1. Is Ukraine underestimated by investors?

2. Is there a chance?
Ukraine is one of the largest and resource-richest European countries.
Yet, in the last twenty three years Ukraine has not managed to use its chance to
become an economically successful country.
Governments change, new oligarch groups are created, but lives of ordinary
Ukrainians do not become any easier.
Why is that? Are we aware of our potential? Do we really understand our
challenges and are we willing to address them?
Solution of a problem starts once you become aware that the problem exists.
Prospects emerge when you know your potential.
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3. What is wrong? External Ratings
Ukraine is:
1st in the world in terms of gas consumption per capita
4th in Europe in terms of human rights violation (following Russia, Turkey and
Romania)
39th in the world in terms of GDP
57th in the global country competitiveness rating
43rd in Europe (the last one) in the Index of Economic Freedom 2013
69th in the world in terms of human potential development
73rd in the world in terms of standard of living
82nd out of 142 countries in the rating of competitive countries
83rd in the travel and tourism competitiveness rating
96th out of 184 in terms of the number of taxes (28 tax payments)
96th out of 185 in the Doing Business rating
173rd out of 184 in terms of the ease of paying taxes
144th out of 176 countries in the corruption perception index (data of Transparency
International 2012)
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4. What is wrong? Outward glance
Factors influencing the investment climate in Ukraine
(according to the survey among EBA members)
1. Political factor was named by 26% of the interviewees
2. Fiscal policy deficiencies were mentioned by 25% of the interviewees
3. High level of corruption was indicated by 15% of the interviewees
4. Increased pressure from governmental bodies and excessive market regulation (18%)
5. Customs formalities (13%)
6. Imperfect regulatory framework (11%)
7. VAT refund issues (7%)
8. Judicial system’s non-transparency (5%)
9. Loan raising issues (5%)
10.No effective communications with state bodies and government
International experts' assessment:
• Low energy efficiency of economy (one of the worst in the world)
• According to international experts, Ukraine’s shadow economy accounts for about 50%
• High cost of resources
• Negative outlook of Ukraine’s credit rating (Standard & Poor’s, as of December 2012)
• Unequal conditions for doing business
* Data of European Business Association
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5. Ukraine's potential. Facts
Ukraine's position in Europe and the World:
1st in Europe in terms of its territory (among the countries that lie entirely in Europe -
603,628 km2)
5th in Europe and 29th in the world by population.
Ukraine is one of the richest countries in the world, and in terms of natural
reserves it is ranked:
1st in Europe by explored recoverable reserves of uranium ore
2nd in Europe and 10th in the world by titanium ore reserves
2nd in the world by explored manganese ore reserves (2.3 bln tonnes or 12% of
global reserves)
2nd in the world by iron ore reserves (30 bln tonnes)
2nd in Europe by mercury ore reserves
3rd in Europe (13th in the world) by shale gas reserves (22 trillion cub. meters)
4th in the world by the total value of natural reserves
7th in the world by coal reserves (33.9 bln tonnes)
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6. Ukraine's potential. Facts
Ukraine is an agrarian country:
1st in Europe by tillable acreage
1st in the world by sunflower seeds and oil exports
2nd in the world by barley production and 4th by exports
3rd in the world by black soil area (25% of the world reserves)
3rd in the world by corn production and 4th by exports
4th in the world by potato growing
5th in the world by rye production
5th in the world by bee-farming products (75 ths tonnes)
8th in the world by wheat exports
9th in the world by chicken eggs production
16th in the world by cheese exports
Ukraine can satisfy food demand of 600 million people.
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7. Ukraine's potential. Facts
Ukraine is an industrial country:
1st in Europe in ammonia production
2nd in Europe and 4th in the world by its gas transmission system capacity (outgoing
gas transmission capacity for EU countries is 142.5 bln cub. meters)
3rd in Europe and 8th in the world by the installed capacity of nuclear power plants
3rd in Europe and 11th in the world by the length of railway lines (21.7 ths km)
3rd in the world (after the USA and France) by radar stations and locating devices
3rd in the world by pig iron exports
4th in the world by the exports of nuclear plants' turbines
4th in the world in construction of launch vehicles and their commercial use for placing
useful cargo in the orbit
4th in the world by clay exports
4th in the world by titanium exports
8th in the world by ores and concentrates’ exports
9th in the world by military-industrial sector products
10th in the world by steel production (32.4 mln tonnes).
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8. Ukraine's potential. Facts
Ukraine is a well-educated country:
According to the Human Development Report, Ukraine is one of the countries with
high level of population’s education. Ukraine has 15 thousand PhDs in Economics,
and over 80 thousand Candidates of Science
Ukraine is the fourth in the world by the number of people with higher education, and
the level of education is higher than the average for Europe
9th in the world by the number of foreign students
9th in Europe by the number of internet users
15th in the world by the number of national networks in Wikipedia.
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9. Ukraine's demand for investment
To be competitive and to develop dynamically, Ukraine needs investments.
According to estimates, Ukraine needs to raise at least USD 280 bln of foreign and
internal investments to ensure intensive growth of economy and to reach the level of
TOP-20 countries in terms of GDP in seven years.
According to experts, to modernize its economy and infrastructure, Ukraine will need
USD 250 bln of investments in:
o agriculture - at least USD 75 bln;
o public utilities’ infrastructure - at least USD 80 bln;
o railway modernization - at least USD 25 bln;
o mining industry - at least USD 20 bln;
o iron and steel industry - at least USD 15 bln;
o road infrastructure - at least USD 5 bln;
o other sectors of economy - at least USD 20 bln.
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10. What to do?
Having recognized our challenges and being aware of our potential, we need to
focus on a strategy and its implementation.
Ukraine will not have a breakthrough without international investments, technologies
and expertise. But in order to be attractive for investors we need, by using our
advantages, to offer better conditions for investors and our citizens than those in our
competitor countries.
We need to develop our own plan of Ukraine's future, where to determine
Ukraine’s place in the world, to mitigate our weaknesses and build on our
competitive advantages.
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11. Anatoliy Amelin
+380974879090
anatoliy.amelin@gmail.com