Most attractive sectors for investment

Agribusiness

Ukraine is frequently referred to as being a potential global agricultural superpower. 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. Approximately 25% of Ukraine’s population is employed in the agricultural sector.

The agricultural sector is one of the promising sectors of Ukraine's economy, accounting for over 20% of GDP. Ukraine is among the five largest grain exporters globally and takes first place in the world in terms of export of sunflower oil (58%).

The largest part of Ukraine’s current 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 takes 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.
 

Agri-Tech

Ukraine is also known for its domestic agri-tech manufacturing with major plants located around the country.

Agricultural industry flagship cities already include:

– Kharkiv (various tractor models and engines for self-propelled harvesters)
– Odesa (tractor ploughs)
– Kropyvnytskiy (seeding machines)
– Dnipro and Ternopil (beet harvesters)
– Kherson (corn harvesters)
– Berdiansk (reapers)
– Lviv (agricultural machinery).

Ukraine has the opportunity to develop agricultural clusters that could be promote designing, testing and manufacturing of the latest agri-technologies.
 

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 is ideally aligned with Ukraine’s domestic needs.  As a result, Ukraine today imports additional quantities of natural oil and gas, including anthracite coal just to meet its current demands.

Gas sector. In a major move aimed at structural reform of the gas sector, Ukraine 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 possesses Europe’s third-largest reserves of shale gas, estimated at anywhere from 5-8 trillion cubic meters 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.

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.

Alternative Energy

Ukraine is taking important strides to increase the use of renewable-energy sources and alternative fuels as part of its broader strategy to reduce its reliance on traditional fossil fuels. It has been estimated that Ukraine has the potential to increase its use of renewable energy tenfold, by the year 2030 and reduce its natural gas consumption by 15% over the same period.

The opportunities to invest in Ukraine’s alternative energy sector are exceedingly favorable as the country has diverse reserves of raw material and a well-educated workforce possessing the technical know-how required to develop and introduce the latest commercial advances in this sector. 

As a result, interest in Ukraine’s renewable energy sector continues to grow and the government estimates that the total investment in alternative energy will reach 18 bln USD by the year 2020.

Solar  energy. The government estimates that there is a 4 GW potential for annual solar energy production in Ukraine.

Wind. Today wind power in Ukraine is in the early stage of re-development and modernization. Industry experts have identified promising regions of sparsely populated southern Ukraine as ideally suited for wind power development owing to above average annual wind speeds which makes production economically viable.

Biomass. Ukraine’s agricultural sector is the fastest growing industry of the economy and is expected to generate increasing amounts of agricultural and forestry waste, the key resource needed for biomass based heat and power generation. Government policy is currently focused on developing this renewable energy sector as the cost effective inputs of labor and raw materials are among the lowest in Europe.

Information Technology.

Ukraine’s IT industry is a driving force in the country’s resurgent economy and it is diverse; from cutting edge work in AI, cyber security and nanotechnologies to highly commercial ventures in blockchain, FinTech, big data management, gaming, agribusiness and e-commerce, investment opportunities exist.

The number of IT specialists in Ukraine at over 90,000 and this figure is expected to double in the next 3 years. Ukraine has the largest and fastest-growing number of IT professionals in Europe and the country’s universities and polytechnic institutes graduate over 100,000 new engineers annually.

Ukraine has over 1000 local IT service companies and more than 100 leading global companies with subsidiaries in the country. The impact of IT’s growth on Ukraine’s economy has been dramatic with the combined value of such outsourcing now exceeding 2,5 bln USD on an annual basis. IT outsourcing is Ukraine’s third largest export sector.

Ukraine is also concentrating on creating favorable conditions that would allow IT entrepreneurs to expand further into domestic markets. The opportunities for combining IT skills with such sectors as agriculture, aviation and medicine are just a few examples of the future directions that Ukraine is beginning to grow.
 

Infrastructure

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.
 
Railways

Ukraine’s rail network is one of the most extensive in Europe. 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.

Roads. 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.

Maritime. With the assistance of international donors and the private sector the government is embarking on a 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. 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.
 

Aerospace and Technology

Ukraine is home to several of the world’s leading aerospace design and production facilities. The Antonov design bureau is the leading example and is best known for designing and building the world’s largest transport plane the An-225 “Mriya” cargo lifter.

Ukraine’s other valuable aerospace centers of influence include the Yuzhnoye and Yuzhmash design bureaus in the city of Dnipro, the Ivchenko-Progress aero-engine design bureau and the Motor Sich engine production center in Zaporizhia. Together, these industries and several smaller manufacturers combine to produce some of the most advanced aircraft, satellites and rocket engines in the world.

Ukraine is poised to rebuild its aerospace and technology industries to be compatible with NATO standards and develop products and produce innovations that can be sold in wider markets.
 

Manufacturing

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.

Automotive. 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.

Aviation.  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.

Shipbuilding. Ukraine today ranks among the 10 largest shipbuilding countries in Europe. 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.

Light Industry. 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.

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