Ukraine as manufacturing hub

Ukraine as manufacturing hub
Boosting value and
reaching global market

33
Introduction
As a result of changes in global geopolitical and international trade contexts, Ukraine emerged on investors’
radars as one of the key manufacturing hubs in Europe. Its beneficial location, well qualified labor force,
affordably priced utilities, extensive transport infrastructure, and profound background in manufacturing
make the country very attractive for export-oriented businesses.
Historically, Ukraine had one of the strongest expertise in machine building among Eastern European and
CIS countries. Designed and manufactured in Ukraine, sea vessels and railcars, motor vehicles and aircrafts
were used domestically and exported across the world. Ukraine is known as designer and producer of
a number of record-breaking machines like AN-225 Mriya – a famous aircraft with the highest carrying
capacity and one the largest wingspan in the world. Up till now, expertise remains one of the principle
advantages of Ukraine.
In 1991, Ukraine gained independence and followed the course of economic reforms. Liberalized markets
and free-trade agreements with 46 countries (the last one signed with Israel in January, 2019) resulted in
the growing significance of Ukraine as a regional hub and improved its access to the global supply chain.
Figures speak for themselves: export volumes in 11 months of 2018 grew by almost 10% and reached
$43 billion, with exports to the EU taking over 42%. Now Ukraine is committed to further strengthen its
position in the European and global manufacturing industry.
For investors, opportunities are vast – from automotive spare parts production and food processing
to shipbuilding and aerospace industry. Since 2014, over 150 new plants and factories were launched
in Ukraine, 83 of them with participation of foreign investors. Some 58 more are under construction.
We believe it is just the beginning.
Office of National Investment Council, supported by European Bank for Reconstruction and Development,
provides a platform for public-private dialogue bringing together representatives of business community
and key multinational companies, international financial institutions and Ukrainian Government. We are
open for investors who plan to expand their business and add Ukraine on the map of production facilities.
This report provides a brief outline of the whole variety of investment options in manufacturing. We hope
it will be a useful tool to get the broad picture of the industry and its subsectors and make the right choice.
Yuliya Kovaliv
Head of Office,
National Investment
Council of Ukraine

2019 | National Investment Council | Manufacturing44
Market overview:
Why Ukraine

5
Macroeconomic overview
Strategic geographic location, developed transportation network, high-skilled labor force, low production
cost: all of these make Ukraine a great manufacturing hub.
Since 2016, Ukraine’s economy has been steadily recovering. Following 16.4% cumulative economic de-
cline in 2014-2015 caused by Russian aggression in the Eastern part of Ukraine, GDP grew by 2.4% in 2016,
2.5% in 2017 and expected to grow by 3.4% in 2018.
Based on the intense economic reforms and inherent competitive advantages, Ukraine is expected to
achieve higher rates of economic growth in the coming years. Its big promising market and integration
with EU has great opportunities for increase in consumption and investments, particularly in manufacturing.
Real GDP rate
Period: 2012-2020
Score: %, y-o-y
Real GDP rate
Period: 2012-2020
Score: %, y-o-y
Source: State Statistics Service of Ukraine, Ministry of Economic Development and Trade
Source: International Monetary Fund
2012
0.2 0.0
2.4
2.5
3.4
3.0
3.8
-6.6
-9.8
2013 2014 2015 2016 2017 2018 2019F 2020F
5
0
-5
-10
2012 2013 2014 2015
2016 2017 2018 2019F 2020F
Ukraine Eastern Europe European Union
Market overview: Why Ukraine

6
Ukrainian economy has been growing 12 quarters in a row
Reforms and regulatory policy in financial sector resulted in dramatic reduction of both external and
internal economic imbalances. Inflation has been successfully slowed down as well.
International reserves have been increased substantially to USD 20.82 billion updating a 5-year record.
They are sufficient to meet government’s obligations and cover current operations of National Bank.
International reserves
Period: 2014-2018
Score: billion USD
Inflation rate
Period: 2014-2020
Score: %, y-o-y
Source: National Bank of Ukraine
Source: National Bank of Ukraine, International Monetary Fund
7.53
13.30
15.54
18.81
20.82
2014 2015 2016 2017 2018
2014 2015 2016 2017 2018 2019F 2020F
24.9
43.3
12.4 13.7
9.8 7.3 6
Market overview: Why Ukraine

2019 | National Investment Council | Manufacturing 77
Ukraine
in international
ratings

8
Ease of doing business by World Bank
The Ease of doing business ranking is developed by the World Bank Group. Higher ranking normally
indicates better, usually simpler, regulations for businesses and stronger protections of property rights.
Ease of doing business
Period: 2014-2019
Rate: out of 190
Ease of doing business (compared to other developing countries)
Period: 2016-2019
Rate: out of 190
Source: World Bank, Doing Business Reports
Ukraine in international ratings
Source: World Bank, Doing Business Reports
96
83 80 76 71
2017 2018 2019201620152014
112
41+ position
since 2014
56№ in Starting
a business
30in Dealing with
Construction
Permits
№
Ukraine India Bulgaria Greece
83 80 76 71
130 130
100
77
38 39
50
59 60 61
67 72
2019201820172016

9
Global Innovation Index
EBA Investment Attractiveness Index
Global Innovation Index is the result of a collaboration between Cornell University, INSEAD, and the World
Intellectual Property (WIPO). Index provides detailed metrics about the innovation performance of 126
countries and economies around the world.
Investment Attractiveness Index is the European Business Association’s research project which reflects
the status of Ukrainian business climate based on expert evaluations provided by top-managers from
member companies.
Period: 2016-2018
Rate: out of 126
EBA Investment Attractiveness Index
Period: 2012-2018
Rate: out of 5
(compared to other developing countries)
Period: 2018
Rate: out of 126
Source: World Intellectual Property Organization
Source: European Business Association
Source: World Intellectual Property Organization
56
2016
50
2017
43
2018 Ukraine
43
India
57
Romania
49
Greece
74
2012
2.18
I
2.19
II
2.14
III
2.12
IV
2016
2.88
I-II
2.85
III-IV
2017
3.15
I-II
3.03
III-IV
3.1
I-II
2018
3.07
III-IV
20182013
2.12
I
2.17
II
2.39
III
1.81
IV
2014
2.72
I
2.74
II
2.65
III
2.5
IV
2015
2.51
I
2.66
II
2.56
III
2.57
IV

10
Human Capital Index
The World Economic Forum’s Human Capital Report ranks 157 countries on how well they are developing
and deploying their talent.
Human Capital Index (compared with other developing countries)
Period: 2018
Rate: out of 130/130/157
Source: World Bank, Global Human Capital Report
Ukraine
50
India
114
Bulgaria
42
Greece
48
No. 50 position out
of 157 countries

Location
and infrastructure

12
Location and infrastructure
Ukraine is the largest country in Europe by area, and 7th by population. Its favorable geographic location
makes the country a natural transportation link between Europe, Russia and Central Asia
603,000 km2
42.3 million people
Area: Population:
Poland, Slovakia, Hungary,
Romania, Moldova, Russia
Borders:
the Black sea and
the Sea of Azov
(borders with Turkey,
Bulgaria, Georgia,
Russia)
Seas:Key economic sectors:

13
Transportation network
Ukraine has the most extensive railroad network in Europe handling a substantial part of passenger
and freight traffic. Country’s road network is no less extensive, it covers all the territory and makes
deliveries possible to any point of destination. Low cost, developed deep-water ports and upcoming
reconstruction of river waterways will help maritime transportation become worthy alternative to its rail
and road counterparts.
Country Year
LPI
Rank
Customs Infrastructure
International
shipments
Logistics
competence
Tarcking
& tracing
Timeliness
Germany 2018 1 1 1 4 1 2 3
Italy 2018 19 23 18 21 24 18 17
Poland 2018 28 33 35 12 29 31 23
Hungary 2018 31 27 30 43 38 26 32
Romania 2018 48 80 51 48 47 41 39
Croatia 2018 49 39 46 58 45 61 47
Bulgaria 2018 52 42 64 41 55 59 65
Ukraine 2018 66 89 119 68 61 52 56
Moldova 2018 116 124 141 90 122 142 82
Logistics Performance Index 2018 by World Bank
Eurasian Hub, Trade
Hub to the EU,
Middle East and Asia
World Trade
Organization
Member
Association
Agreement with
the European
Union, Deep and
Comprehensive Free
Trade Agreement
with the EU
Free Trade Agreements with: EU, EFTA, Canada, Georgia, Israel, Macedonia,
Montenegro, totally covering 46 countries. On-going negotiations with Turkey

14
Roads
Port infrastructure
Railway
443,000km of road network
169,500km of public roads
8,600km of international road routes
19European road routes
13sea ports
263berths with 40 km length
Draught up to 19m – port Yuzhny, 14m – port Chernomorsk, 13m – port Odessa
2,100km of inland waterways
20,900km operational length of railways
3,800locomotives
168,000freight wagons
3 international railway corridors pass
through Ukraine
E85
E40
E58
E50
E58 E81
E50
E50
E50
E95
E40
E85
E85
E40
E373
E101
E101
E101
E373
E372
E573
E50
E50
E471
E40
E95
E95
E38
E95
E58
E58
E58 E58
E58
E50
E40
E40
E40
E40
E50 E50
E97
E97
E87
E87
E583
E583
E584
E581
E105
E105
E105
E105
E504
E584
Odessa
Lviv Kyiv Kharkiv
Dnipro
Donetsk
Roads Railway Sea port

15
Port infrastructure
Ukraine holds a leading position with the most powerful port potential within the Black Sea region. In
Ukraine, there are 13 sea and river ports with capacity over 230 million tons, as well as great potential
for greenfield projects along the coastline.
The most important Ukrainian deep-water ports Odessa, Chernomorsk and Yuzhny are located in the
north-western part of the Black Sea and account for over 62% of the entire freight turnover of Ukrainian
commercial ports. These ports offer the best access routes and ensure 11.5 – 19.0 m draught. Other
ports in Ukraine handle vessels of considerably lower draught. Major container terminals in Ukraine are
also located in the ports of Odessa, Chernomorsk and Yuzhny.
In 2018, about 135 million tons of cargo with over 73% of exports were transshipped through
Ukrainian ports.
At the mouths of the largest Ukrainian rivers, Dnipro and Yuzhny Bug, there is another cluster of
commercial seaports, namely Mykolaiv, Kherson, Olvia. They handle both bulk and general cargo.
Founded in 2013 as a result of the maritime industry reform in Ukraine, the Ukrainian Sea Ports
Administration (USPA) works to efficiently manage state property in seaports, to create mechanisms
for attracting investments in port infrastructure, to accelerate its development and ensure stable
business performance.
Currently, USPA invests in two vital projects:
dredging of Yuzhny SP approaching canal, which will allow to load vessels up to 260,000 tons
reconstruction of Bug-Dniprovsky-Lyman Canal (BDLC) to increase draught to 13.5 m for vessels in
sea ports in Mykolaiv region
Reni
Izmail
Yuzhny
Odesa
Illichivsk
Bilhorod-Dnistrovsk
Mykolaiv
Olvia ( exOktiabrsk)
Kherson
Skadovsk
Genichesk
Berdiansk
Mariupol
Yevpatoriia
Sevastopol
Kerch
Feodosiia
Yalta
Source: Ministry of Infrastructure of Ukraine
135 million
tons
of cargo transshipped
by ports in 2018
800,000
of TEU
transshipped by container
terminals in 2018
19 meters
maximum draught
in Ukrainian ports

16
Railways
Ukraine’s railway is a backbone of Ukrainian transport system and Ukrainian economy in particular.
With almost 20,900 km of rail tracks, Ukraine ranks 2nd in the CIS and 7th in Europe by traffic volumes.
Ukraine’s railway is №4 in Europe and Asia after China, Russia and India. The workload of Ukrainian
railway is 3-5 times bigger than that of other European countries.
The country ranks 2nd in the CIS and 4th in Europe in terms of passenger transportation. About 47%
of the railway operational network is electrified, compared to 51% in Russia, 47% in China, 29% in India
and 18% in Belarus. Track width is 1,520 mm.
The territory of Ukraine is crossed over by three Rail Transport Corridors – № 3, № 5 and № 9. Going
along the Danube river, Pan-European Transit Corridor № 7 is linked to Ukraine through the ports of
Izmail and Reni. Currently, the length of Ukrainian national rail transit corridors is 3,162 km. Moreover,
transport along with the international transit TRACECA (Transport Corridor Europe-Caucasus Asia)
corridor has been further developing.
Odessa
Lviv
South Western
Southern
Odesa
Near-Dnipro
Donetsk
Uzhgorod
Chernivtsi
Ivano-Frankivsk
Ternopil
Lviv
Lutsk
Rivne
Zhytomyr
Khmelnytskyi
Vinnytsia
Kyiv
Chernigiv
Cherkasy
Sumy
Kharkiv
Poltava
Kropyvnytskyi
Mykolayv
Kherson
SimferopolSevastopol
Dnipro
Zaporizhzhia
Luthansk
Donetsk
Source: Wikipedia
20,900 km 58 % 340 Mt
operational length
of railways
share of railway
transportation in
cargo turnover in
Ukraine
freight
transportation
volume
locomotives
freight railcars
3,800
168,000

17
Roads constructed and repaired
Period: 2010-2018
Score: km
Source: Road Agency of Ukraine
Ukraine has significant potential for motorway development due to its location on the intersection of
multiple transport corridors. There are two corridors of the Trans European Transport Network which go
in Ukraine’s direction:
In November 2018, Ukraine was included in the indicative maps of the European transport network
TEN-T which means that transport infrastructure of Ukraine should integrate with the EU infrastructure
and its developed links in the near future. Speed, quality, safety of multimodal transportation in Ukraine
will comply with European standards.
Ukrainian public motorways are state-owned. The State Road Agency of Ukraine (Ukravtodor) is
responsible for their functioning and quality. Ukravtodor is in charge with 123 thousand km of motorways,
the rest is managed by regional authorities.
the Rhine-Danube Corridor passes through the waterways of the Rhine and the Danube, with an
important branch from Munich to Prague, Žilina, Kosice and to the Ukrainian border;
the Mediterranean corridor running from the Iberian Peninsula towards the Hungarian-Ukrainian border.
E85
E40
E58
E50
E58 E81
E50
E50
E50
E95
E40
E85
E85
E40
E373
E101
E101
E101
E373
E372
E573
E50
E50
E471
E40
E95
E95
E38
E95
E58 E58 E58 E58
E58
E50
E40
E40
E40
E40
E50 E50
E97
E97
E87
E87
E583
E583
E584
E581
E105
E105
E105
E105
E504
E584
Odessa
Lviv
Kyiv
Kharkiv
Dnipro
Donetsk
2010
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2011 2012 2013 2014 2015 2016 2017 2018
3 800
2 008
927
626
312
102
1 601
2 100
569
Source: Wikipedia
Roads

Qualified labor
force and utilities
at competitive costs

19
Labor force and utilities
Average monthly salary in Ukraine
Period: 2010-2018
Score: UAH, EUR
Source: National Bank of Ukraine, State Statistics Service of Ukraine
Ukraine has a very well-developed higher education system, represented by state and private universities,
academies and colleges, public science and research institutions, etc. This system also encompasses
post-graduate and PhD programs.
Providing a full-cycle education process and offering diverse career prospects, a large network of
educational institutions is mainly located in major cities such like Kyiv, Kharkiv, Odessa, Dnipro, Lviv,
Zaporizhya. There are 520 higher education institutions in Ukraine, 277 of which are universities and
academies.
There are over 1.6 million students with 390,000 graduates annually. Keeping a strong focus on technical
disciplines, Ukraine remains the main generator of engineering labor force in CEE region.
Abundant and well-educated staff at a relatively low cost is an attraction for investors. This is also
proven by the number of R&D offices and laboratories launched in Ukraine in the last years.
International companies operating and expanding business in Ukraine require highly skilled personnel
and set high standards for the entire local labor market. Over the past 10 years, command of English
has become more widespread, becoming an integral part of the education system and for many – a key
focus in personal development.
The average monthly salary in manufacturing industry is significantly below regional peers in CEE. At the
same time, proximity to the large EU market makes Ukraine a competitive alternative to Southeast Asia
and Eastern European countries.
99.7 %
literacy rate
50 th
Human Capital Index out
of 157 countries
70 %
secondary or
higher education
317
universities
0 0
2000
jan.10
jan.11
jan.12
jan.13
jan.14
jan.15
jan.16
jan.17
jan.18
apr.10
apr.11
apr.12
apr.13
apr.14
apr.15
apr.16
apr.17
apr.18
jul.10
jul.11
jul.12
jul.13
jul.14
jul.15
jul.16
jul.17
jul.18
oct.10
oct.11
oct.12
oct.13
oct.14
oct.15
oct.16
oct.17
oct.18
50
4000
100
6000
150
8000
200
10000
250
300
12000 350
UAH EUR
EURUAH

20
Average monthly salary (net)
Period: 2017-2018
Score: EUR
Source: OECD, International Monetary Fund, ONIC analysis
Source: State Statistics Service of Ukraine
Unemployed population
Period: 2014-2018
Score: thousand people
0
100
200
300
400
500
600
2014
512.2
9.3%
2015
490.8
9.1%
2016
390.8
9.3%
2017
354.4
9.5%
2018
341.7
8.6%
Austria
Croatia
Bulgaria
Bosnia and Herzegovina
Belgium
Czech Republic
Cyprus
Estonia
Denmark
France
Finland
Greece
Germany
Italy
Hungary
Latvia
Kosovo
Lithuania
Luxembourg
Republic of Macedonia
Moldova
Norway
Netherlands
Poland
Portugal
Romania
Serbia
Slovakia
Slovenia
Turkey
Spain
Ukraine
0 500 1 000 1 500 2 000 2 500 3 5003 000 4 000
% – Unemployment rate

21
According to British MoveHub, Ukraine is the
most affordable country in Europe in terms of
living costs and is in top-10 cheapest countries
globally, with only Egypt and Pakistan being
more affordable.
Four-person family monthly costs
Period: Jan 2019
Score: EUR
Source: Numbeo
Source: Numbeo
Source: Numbeo
Bulgaria, Sofia
Croatia, Zagreb
Czech Republic, Prague
Estonia, Tallinn
Ukraine, Kyiv
Poland, Warsaw
Romania, Bucharest
Lithuania, Vilnius
500.000.00 1,000.00 1,500.00 2,000.00 2,500.00
Cost of living index
Period: Jan 2019
Score: index (lower – cheaper)
Bulgaria, Sofia
Croatia, Zagreb
Czech Republic, Prague
Estonia, Tallinn
Ukraine, Kyiv
Poland, Warsaw
Romania, Bucharest
Lithuania, Vilnius
Germany, Munich
France, Paris
Netherlands, Amsterdam 81.03
84.95
73.98
48.45
39.59
43.03
29.83
53.17
48.61
51.49
40.51
The first Ukrainian university (then – collegium) was founded in 1632 by
Metropolitan Peter Mohyla. The institution offered a variety of disciplines:
foreign languages, philosophy, mathematics, astronomy, history, etc. Due to its
high-profile faculty, the collegium received the status of a higher educational
establishment. Currently, Kyiv-Mohyla Academy is well-known all over the
world and is a part of numerous international university unions, such as the
European University Association
No. 392
Kyiv is ranked
among 438 European
cities by cost of living

22
Ukraine has comparatively cheaper utility rates among EU countries. Electricity tariffs are lower than in
the EU. The price of electricity for the industrial consumers in Ukraine is 0.053 EUR/kWh, while in Eastern
Europe the second lowest price is offered in Czech Republic and Bulgaria amounting around 0.07 EUR/
kWh, followed by Romania – 0.o86 EUR/kWh..
Up until 2014, Ukraine had some of the lowest prices for natural gas in Europe. However, followed by
the beginning of the Russian aggression in Eastern Ukraine, the Government decided to gradually switch
from Russian to European gas suppliers. Consequently, this led to the growth of prices. Nevertheless,
current natural gas prices in Ukraine are still below the European average. Ongoing investments into the
development of gas upstream in Ukraine are expected to result in reduction and stabilization of gas prices.
Natural gas price
Period: 2017-2018
Score: EUR/Gj
Electricity price
Period: 1H 2018
Score: EUR/kWh
Source: Eurostat, State Statistics Service of Ukraine
Source: National Energy and Utilities Regulatory Commission
0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.10
Bulgaria
Austria
Czech Republic
Estonia
Ukraine
Poland
Romania
France
Slovenia
Lithuania 0,0815
0,078
0,093
0,086
0,086
0,053
0.088
0,073
0,099
0,074
0.00
2.00
4.00
6.00
8.00
10.00
12.00
Croatia
8.53
8.88
Estonia
9.26
10.19
Hungary
9.21
8.57
Ukraine
8.27
7.80
Poland
9.34
10.39
Romania
8.80
8.51
Lithuania
10.96
9.41
Slovenia
10.76
10.49
Slovakia
9.64
9.41
Czech
Republic
8.61
7.99
Bulgaria
8.53
7.29
2017 2018

23
Fuel price
Period: Jan 2019
Score: EUR/l
Source: European Commission
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
Croatia Estonia Hungary Ukraine Poland Romania LithuaniaSloveniaCzech
Republic
Bulgaria Slovakia
Euro 95 Diesel

Ukraine’s
manufacturing
subsectors

25
Ukraine’s
manufacturing subsectors
Manufacturing accounted for almost 14% of GDP in 2018, and the industrial production growth is expected
to be 1.8%. Major manufacturing sectors include heavy industry (machinery, automotive, metallurgy and
mining), light industry (textiles, wood processing, chemicals) and high-technology (aerospace).
Ukraine is a major producer of heavy machinery and industrial equipment for different industry sectors
such as metals and mining, agriculture, chemicals and transportation. Supported by a well-developed
network of technical and research institutions, local manufacturing has a strong scientific and technological
background. Heavy industry plays an essential role in the Ukrainian economy, with metals, mining and
machine accounting for almost 48% of total exports.
However, subsectors, such as food and wood processing, and chemicals are outperforming Ukraine’s
heavy industry in export sales with 51%.
With more than 2,300 enterprises and over 85,000 people employed, light industry has a great potential
for development. The sector has been steadily growing three years in a row. Products are exported to 150
countries all over the world, more than 80% of that volume being supplied to the EU countries.
Industrial production rate
Period: 2012-2020
Score: %, y-o-y
Industrial production rate, sector breakdown
Period: 2010-2018
Score: %, y-o-y
Source: State Statistics Service of Ukraine, Ministry of Economic Development and Trade
0.7
-4.3
-10.1
-13.0
2.8
0.4
1.8
3.9 4.5
2012 2013 2014 2015 2016 2017 2018E 2019F 2020F
20
-20
0
Mining Manufacturing Agriculture
2012 2013 2014 2015 2016 2017 2018

26
Ukraine’s
Export dynamics has been on the rise due to the growing prices for commodities of Ukraine’s origin
on the world market and increasing export of services. The introduction of the Free Trade Agreements
with the EU and intensified restrictions in trade between Ukraine and Russia led to the gradual shift
in Ukraine’s exports. European Union has become the largest trade partner of Ukraine - the share of
the EU in Ukraine’s foreign trade has reached 37.5%. This trend will strengthen in the future, due to
reorientation of Ukrainian economy towards the Western partners.
Top-5 sectors contributing to GDP (nominal)
Period: 2010-2017
Score: % of GDP
Export dynamics by destination
Period: 2010, 2016, 2018
Score: %
0%
10%
20%
30%
40%
50%
2010 2011 2012 2013 2014 2015 2016 2017
Wholesale and retail Manufacturing Agriculture Transportation and warehousing
2010
European Union
Russian Federation
Other countries
26
48.5
59
55.4
25.5
31.9
37.5
9.1
7.1
2010
2016
2018

27
Metallurgy
Ukraine is one of the major players on the world metal market. Represented by various industrial groups,
metallurgy offers full processing circle, from mining and raw material enrichment to production of
metals and alloys.
Strong position on the global market is mainly caused by the significant export orientation – about 60%
of the total output goes abroad. Globally, Ukraine ranks №12 on the list of top steel producers and №4
on the list of net steel exporters.
Major steel producers
Period: 2016-2017
Score: million tons
Source: World Steel Association
More than 800 entities, including 19 large iron and steel works, 12 pipe-rolling plants, 10 refractory
plants, a number of ferroalloy plants
21 million tons of steel produced annually
Largest deposit of iron ore reserves (19.8 billion tons)
2016 2017
Rank Mt Rank Mt
China 1 807.6 1 831.7
Japan 2 104.8 2 104.7
India 3 95.5 3 101.4
United States 4 78.5 4 81.6
Russia 5 70.5 5 71.3
South Korea 6 68.6 6 71
Germany 7 42.1 7 43.4
Turkey 8 33.2 8 37.5
Brazil 9 31.3 9 34.4
Italy 11 23.4 10 24.1
Taiwan 12 21.8 11 22.4
Ukraine 10 24.2 12 21.3
Ukraine’s
1

28
Largest industrial groups:
Metinvest
the largest industrial group in Ukraine, major owner of iron ore deposits;
Major exporters of steel in the world
Period: 2017
Score: million tons
0
10
Japan Russia Ukraine Brazil IndiaTaiwan Iran BelgiunSouth
Korea
20
30
40
50
60
70
31.2
24.9
13.8 13.0 12.0
7.5 4.7 4.4 4.0
China
60.9
ArcelorMittal
a multinational industrial company which operates an in-house mining and
enrichment plant at its Ukrainian steel mill, ArcelorMittal Kryvyi Rih. The
largest steel producer in the world;
Ferrexpo - a large iron ore pellet producer with mines in Ukraine and sales
operations around the world. The company has been mining, processing
and selling high quality iron ore pellets for over 40 years. Listed on the LSE
and is a constituent of the FTSE 250 Index.
Zaporizhstal - an integrated iron and steel enterprise of Metinvest, which
holds leading positions in steel production in Ukraine. The design capacity
of steel works allows to produce about 6.3 million tons of sinter, 4.2 million
tons of iron, 4.07 million tons of steel, about 3.7 million tons of hot-rolled
mill products, and about 1.2 million tons of cold-rolled mill products;
Ukraine’s

29
Heavy machinery is one of the leading industries in Ukraine. The majority of machinery engineering
enterprises are located in the Eastern and South-Eastern parts of Ukraine, regions with major
concentration of raw materials and developed industrial infrastructure.
Machines and equipment are exported to 80 countries, including EU, India and China, with total value
amounting to USD 3.9 billion (10m 2018).
Machinery production
Period: 2013-2017
Score: billion USD
Motorsich – one of the world’s leading companies engaged in development,
production, repair and maintenance of aircraft gas turbine engines and industrial
gas turbines. Exporter to more than 100 countries;
Sumy NVO – one of the largest machine-builders in Europe, manufacturing
equipment for oil, gas and chemical industries. Owns specialized plants equipped
with the most advanced equipment and modern control facilities;
Turboatom - one of the world’s largest designers and manufacturers of steam
turbines, hydro turbines, hydro valves for HPP and pumps. Its production capacities
allow to produce steam and hydro turbines with total designed capacity of
8 million kW and 2 million kW, respectively per year;
HARP (Kharkiv Bearing Plant) – one of the major European manufacturers of
bearings and the only Ukrainian manufacturer of bearings for railway transport.
HARP is a recognized leader in research and manufacturing of ball bearings and one
of the leading suppliers to enterprises of transport engineering and railway industry;
Zaporozhtransformator - the largest enterprise in the CIS countries and Europe
producing oil-immersed power transformers and electric reactors, having
manufacturing capacity 60,000 MVA per year, concentrated within a single plant site.
The first Ukrainian steam turbine for nuclear power
plants was constructed and put into operation in 1958
by Turboatom. Since then, the plant has constructed over
2,000 turbines. Turboatom’s steam turbines are installed in
45 countries. The Ukrainian company supplies over 14%
of total turbine power capacity and ranks 4th among the
turbine construction companies across the world
Majors:
2014
10.21
2015
6.20
2016
6.22
2017
7.38
27,000
EMPLOYEES
6,000
EMPLOYEES
5,400
EMPLOYEES
3,000
EMPLOYEES
Ukraine’s
Heavy machinery2

30
Some of the most reliable and well-known
multi-purpose trucks KRAZ are designed and
manufactured at KRAZ factory in Ukraine. More
than 800,000 trucks have been made since 1961.
Currently, KRAZ is supplying machinery for both
civilian and military automobile industry
Ukraine’s automotive industry has become one of
the fastest growing manufacturing sectors, owing
to a favorable combination of increasing demand,
availability of skilled workers, competitive salaries and
integration into the European supply chain.
Ukraine has a good potential for significant development of the automobile industry. It has established
metal, tires and plastics production, significant number of qualified personnel and constant increase in
demand of finished goods.
Since 2015, 13 plants producing automotive parts have opened in Ukraine with the foreign investment
involved (including 7 plants by German companies and 5 by those from Japan):
Bader (Germany) – In June 2018 the manufacturer of leather seats and other automotive
parts for Audi and BMW cars opened additional production capacities in Lviv region. The
number of employees is about to expand from 660 to 1,200;
Leoni (Germany) – In September 2017 the manufacturer of auto parts opened its second
Ukrainian plant in Kolomyia, Ivano-Frankivsk region. Initially, the number of jobs at the
plant is 700, with a possible further expansion to 5,000;
Kromberg&Schubert (Germany) – In 2015, the automobile wiring system manufacturer
working for European brands (Mercedes, Audi, BMW, Volkswagen) opened its second
Ukrainian plant in Zhytomyr region. 3,200 jobs were created
Flex (USA/Singapore) – In January 2018, the world leader in contract manufacturing
opened a new production line at a plant in Mukacheve, Zakarpattya. The total number of
employees is 3,000
Fujikura (Japan) – started its first factory of electrical equipment and spare parts in
Lviv in 2016
Rapidly growing auto parts manufacturing clusters produce components for major European and
global auto brands
Since 2000, more than 20 global automotive companies have established production in Ukraine with
more than 30 new plants and 40,000 jobs created
Domestic production enjoys a market revival in heavy industry trucking, buses, trolley cars, farm
tractors and related farm equipment
$6
MILLION
$20
MILLION
$12
MILLION
25 %
of total Ukrainian
spare parts exports
for German
automotive industry
Ukraine’s
Heavy machinery3

31
Ukrainian railcar manufacturing has been growing extensively during the last four years. Due to an
ambitious rail fleet renewal program by Ukrainian Railways (Ukrzaliznytsia), railcar production increased
almost 5 times to 12,000 railcars per year to fulfill the demand. Following the development strategy 2021,
Ukrzaliznytsia plans to purchase and construct more than 35,000 gondola cars.
Railcar manufacturing
Period: 2015-2018
Score: railcars
Source: State Administration of Railway Transport of Ukraine
Kriukiv Railcar Building Works (KVBZ) – the largest railcar building enterprise in Ukraine. It designs
and produces a wide range of rail vehicles, including passenger high-speed trains, coaches, metro
cars, freight cars and military vehicles
Dneprovagonmash – the second leading Ukrainian railcar design and building enterprise with the
production capacity of more than 4,000 cars per year. The plans employs 4,000 people to design and
manufacture 150 models of freight cars, including flat cars, gondola cars, hoppers, container carriers, etc.
Largest plants:
2017 2018E20162015
1.054
2.811
6.831
12.000
The first Ukrainian high-speed electric
train Tarpan was built in 2012 by KVBZ
and launched in January 2013. Ever since,
Tarpans have successfully transported
over 12 million passengers
Ukraine’s
Railcar manufacturing4

32
Ukraine has a well-developed sea and river shipbuilding. The major enterprises are located in the Southern
part of the country. The main center for marine shipbuilding is Mykolaiv where there are 3 major enterprises
producing wide range of ocean and sea vessels. The second center is Kherson with two shipyards producing
various types of sea and river vessels, port cranes and equipment. Capital repair and production of small
vessels is carried out in Odessa, Chernomorsk and Mariupol.
Shipbuilding industry in Ukraine is focused on competitive export-oriented manufacturing. Its potential
gets international marine companies involved into the development of the industry, because Ukraine has
one of the largest marine industrial complexes in Europe, which includes:
8
shipyards with high-capability
equipment which allows
full-cycle construction of
modern vessels of all types
11
floating docks for
maintenance and local repairs,
supported by experienced
engineering and other staff
5
marine engineering enterprises
which produce about 20% of
marine equipment, including
gas turbine engines
Ukraine’s
Shipbuilding5

33
Ukraine is one of the few nations with a well-developed aerospace industry, building civil,
military and cargo aircrafts as well as supplying space technology. 17 specialized entities are
involved in various aerospace programs. Since Ukraine gained independence in 1991, Ukrainian
launch vehicles conducted 876 launches.
Ukraine has one of the world’s best expertise in aerospace
Majors:
Home to the world famous Antonov design bureau known for designing the world’s largest airplane,
AN-225 “Mriya”
Serial producer of AN-178, a short-range medium-airlift transport A key supplier of turbine engines
for aerospace industries worldwide
Manufacturer of space launch vehicles, spacecrafts, as well as of space management, orientation
and trajectory measurement systems
Participant of the Sea Launch program alongside with USA, Russia and Norway
Constructor of an expandable rocket carrier Zenit-2 used extensively in space launches from the platform
5 types of satellites were designed and produced in Ukraine
Currently, the National Space Agency of Ukraine is working on further Sich series satellites and
prospective Ukrselena series designed for Moon missions
Antonov State Company – a leading Ukrainian aerospace manufacturer. Antonov built over 22,000
aircrafts, thousands of its planes are currently performing flights all over the world;
YUZHMASH (Yuzhny Machine-Building Plant) – a full-cycle producer of spacecraft, missile systems
and space launch vehicles. The plant owns quite strong in-house capacities including metallurgical,
assembly, testing, welding, casting, forging and machining. The company has mastered and implemented
a number of unique technological solutions. YUZHMASH does business in 23 countries.
AN-225 “Mriya”, an aircraft with one
of the highest carrying capacity and
one the largest wingspan in the world,
was designed by the Antonov Design
Bureau in Ukraine in 1980. At the
time of a massive space program
being unfolded by the Soviets,
AN-225 was used as an air-carrier
for Buran space shuttle
Ukraine’s
Aerospace&aviation6

34
There are 49 industrial parks registered in Ukraine.
Industrial park targets:
Creation of favorable conditions for
manufacturing
Adaptation of new technologies
and approaches
Development of local infrastructure
Investment attraction
Creation on new workplaces
Support for small and medium
businesses
LAND:
for industrial usage only;
land owned by state or
local community can be
sold to park participants
ACTIVITY:
R&D and
manufacturing
PERIOD:
>30
years
AREA:
15 to
from
700 ha
Industrial park framework:
Advantages for industrial park participants:
Funding of park infrastructure projects by Budget Fund
for Regional development
Industrial park participants are excluded from the share
participation in the development of local infrastructure,
which is up to 10% of construction value
Exemption of import duties for equipment, materials
and spare parts not produced in Ukraine and imported
for the purpose of the development of industrial park
and business set-up within industrial park
Other government support:
Exemption from payment of import duties for the purpose of investing on the basis of signed
contracts or as a contribution to the authorized capital of an enterprise with foreign investments
Up to 0% import duties for goods originating from the member-states of the WTO, or from countries
with which Ukraine has concluded bilateral or regional agreements on the most-favored-nation
regime, including EU and Canada
Exemption from import payment for equipment, which use renewable energy sources
Providing the minimal rental rate for the lease of land and communal property by local authorities
Support by local authorities for obtaining all permits and other documents necessary for the project
implementation
Allocation of funds from local budget to finance development and construction of engineering
networks in industrial park
Odessa
Lviv
Kyiv
Kharkiv
Dnipro
Donetsk
Ukraine’s
Industrial parks7

Regulatory
framework

36
Regulatory framework
General overview of LLCs in Ukraine
Participation interests cannot be publicly traded, are not deemed to be a security under Ukrainian law
Setting-up an LLC
The most common forms of corporate entities used for doing business in Ukraine are limited liability
companies and joint stock companies. Other types of corporate entities (such as additional liability
companies, full liability companies and private enterprises) are rarely used in sizeable business operations.
Business set-up
LLC
LLC is a private company in which the investors participate
through ownership of so-called participation interest,
expressed as a percentage of the LLC’s total equity capital
An LLC can be
registered online
There is no state fee
for the registration
State registration is completed
within 24 hours upon submission
of all the required documents
Preparatory stage, including drafting
documents of incorporation can be
completed within 2 weeks
An LLC can be entirely owned by
foreign investors (there are very limited
restrictions on foreign ownership of
companies in certain sectors such as
media and agricultural business)
Rules regarding ownership

37
Management
The highest authority of an LLC is a general meeting of its participants
The executive body of an LLC is a general director or a board of directors, headed by the general director
A foreign national can be appointed to the position of a director, subject to obtaining by such
foreign citizen of the employment permit with the Ukrainian state employment authorities and tax ID
number with the Ukrainian tax authorities. These procedures are not burdensome and usually takes
up to 1 month
Management bodies are accountable to participants of an LLC and subject to fiduciary duty
It is possible to institute a supervisory board in an LLC upon the relevant decision of its participants
Flexibility of corporate governance
All principal issues related to operation of a private
company are to be governed by the charter or
corporate agreement rather than by law
Charter or shareholder agreement may provide rules applicable to
disposal of shares to other shareholders or third-parties, execution
of pre-emptive rights or waiver of pre-emptive rights, etc.
Shareholders’ agreements may provide for
drag-along and tag-along clauses

38
Ukrainian law provides for private and public JSCs; whilst
shares in the capital of a public JSC must be admitted to
trading on at least one stock exchange and can be issued
to the general public, a private JSC may issue shares only
by way of private placement
Capital requirements
The minimum amount of authorized share
capital for the year 2019 is 5,2 mln UAH,
approximately USD 183,4 thousand.
The founder must pay at least 50% of
authorized share capital for the company to be
legally allowed to carry out its business activities
The founders may use cash,
property, proprietary and
non-proprietary rights, securities
(except for the promissory notes
and debt securities issued by
the JSC) to pay for the shares in
authorized share capital
Shares
JSCs can issue ordinary shares and preference shares
Ordinary shares- give their owners rights to distribution of company’s income via dividends, to
participate in the company’s business operations and to receive a portion of its property in the
event of winding-up of the company
Preferred shares- give their owners priority rights over the owners of ordinary shares and voting
rights on a number of issues as specified by law or the company’s charter and/or shareholder’s
agreement. There are several classes of preferred shares, granting specific rights to their owners
JSCs
in Ukraine

39
JSCs are regulated by the National Securities and Stock Market
Commission, the issue of any shares, including in the capital of
a private JSC, must be registered with the Securities Commission
Majority of the principal issues
related to operation of a JSC are to be
governed by the charter or corporate
agreement rather than by law
Shareholders may enter into shareholders
agreement to regulate (i) voting at the
general shareholders meeting (ii) sale
and purchase of shares agreed instances,
pursuant to the agreed terms procedures
(iii) deadlock resolution mechanisms (iv)
procedure for exercising pre-emptive rights
or waiver of the pre-emptive rights
Management
The highest body of a JSC is a general meeting of shareholders, which must be held at least once a
year as a matter of Ukrainian law
The executive body of a JSC is a board of directors or a sole director
A foreign national can be appointed to the position of a director, subject to obtaining by such
foreign citizen of the employment permit with the Ukrainian state employment authorities and tax
ID number with the Ukrainian tax authorities. These procedures are not burdensome and usually
takes up to 1 month
Institution of a supervisory board is statutory required for the JSC with 10 or more shareholders.
If the JSC at least 50% owned by the state or state-owned entity, the supervisory board must have
at least 2 independent directors
An internal audit body - supervises the activities of executive body and audits company’s financial
operations
Flexibility of corporate governance

40
General overview and rates
Taxation
54 out of 190
Ukraine ranks
countries in Taxation in Ease of
Doing Business ranking
Residency rules and taxable income
residents- legal entities incorporated in Ukraine and operating under Ukrainian law;
non-residents- legal entities incorporated in a foreign jurisdiction and operating under the laws of
a foreign jurisdiction.
residents are taxed on its worldwide income received or accrued within the reporting period.
non-residents are taxed on its income received form the commerce and business activities in Ukraine
and on non-business income received form Ukrainian sources.
Deductions and depreciation
generally, all expenses are deductible if they constitute expenses under the financial accounting
standards, however some limitations may apply to certain expenses
depreciation applies to all capital assets, including fixed and intangible property, expect for land,
fixed assets under conservation, non-business assets and goodwill
companies are subject to corporate income tax (18% standard rate), value added tax
(20% standard rate, 7% reduced rate), and payroll related taxes: personal income
tax (18%), unified social contribution (22%), and military duty (1.5%)
in addition there are 2 local taxes
and 2 local mandatory fees
(rates vary based on a region)
additional rental payments and excise
tax are applicable to hydrocarbon
extraction, the tobacco and alcohol
businesses, and car dealers

41
Withholding tax
standard rate of withholding tax in Ukraine is 15 per cent, however it may be considerably reduced
by virtue of one of the 74 effective double-tax treaties
withholding tax generally applies to dividends, interest, royalties, income (except for capital gain) on
the sale of real estate and on profits from the sale of securities
payments for freight services are subject to the withholding tax at a general rate of 6 per cent
interest payable under a syndicated loan through the organizing bank may be subject to reduced
withholding tax rates under the relevant double tax treaty with the jurisdiction of residence of each
participating bank.
Algeria Estonia Jordan Mongolia South Africa
Armenia Finland Kazakhstan Montenegro Spain
Austria France Korea (ROK) Morocco Sweden
Azerbaijan Georgia Kuwait Netherlands Switzerland
Belarus Germany Kyrgyzstan Norway Syria
Belgium Greece Latvia Pakistan Tajikistan
Brazil Hungary Lebanon Poland Thailand
Bulgaria Iceland Libya Portugal Turkey
Canada India Lithuania Romania Turkmenistan
China (PRC) Indonesia Luxembourg Russian Federation
United Arab
Emirates
Croatia Iran Macedonia Saudi Arabia United Kingdom
Cyprus Ireland Malaysia
Serbia and
Montenegro
United States
Czech Republic Israel Malta Singapore Uzbekistan
Denmark Italy Mexico Slovakia Vietnam
Egypt Japan Moldova Slovenia
Double taxation regime
Ukraine has tax treaties with the following countries:

42
General overview
lend use rights can be obtained through one of the following avenues: (i) entering into long term
lease agreements, (ii) acquisition of a company, holding land property or land use rights, (iii)
accusation of the real estate, that would entail automatic acquisition of the accompanying land plot
Land lease agreements
Getting Land
long-term lease
agreements for period
up to 50 years
are available
there is no specific
requirements for
leasing land from
a private entity or
individual
leasing land from the state
or local community would
require prior decision of the
state body or the body of
local self-governance.
Registration formalities
the newly allocated land plots are subject to registration with the state registry. Such registration
can be done online within a 14-business day term
land lease agreements as well as other agreements on use of land are subject to registration with the
state registry of rights to immovable property. Such registration can be done online by submitting
a scan copy of the agreement

43
Banking Financial services
Professional services on
the capital markets
Alcohol manufacturing
and retailing, tobacco
products retailing
Educational services
Business activities in the
sphere of electricity
Television and radio
broadcasting
Production of industrial
explosives
Production and repair of
firearms
Pharmaceutical
production,
pharmaceutical import
and retailing
Construction of certain
categories of buildings
Telecommunications
activities
Veterinary practice
Activities of the banks of
umbilical blood and other
human tissues
Medical practice
Production of hazardous
chemical substances
listed by the Cabinet of
Ministers
Fire safety services
Cultivation of plants listed
as narcotic substances
and precursors thereof
Commercial fishing in
waters outside Ukraine’s
jurisdiction
Intermediary services for
job placement abroad
Travel organizing
activities
Issuance of lottery
Activities on the natural
gas market
Transportation of oil and
oil-products through
mainline pipelines
Foreign economic activity
Transportation of
passages and hazardous
freight, international
transportation of
passengers and cargo
Business activities related
to manufacturing and
supply of interception
equipment
Centralized water supply
and water transportation
Generation of thermal
power, transportation and
supply of thermal power
Security services Disposal of wastes
Production of veterinary
drugs
As a matter of Ukrainian law, there are 33 types of business operation subject to mandatory licensing:
Licencing
143 to 84
Since 2014, the number of permits
for business reduced from
Procedure for obtaining a licence:
possible to
file for licence
online
licenses are issued in
a 10-business-day
term as of the date of
application
application package includes
filled-in application form,
ID documents of the company’s
director and documents listed
in the licence requirements for
specific business activity
Ukrainian law mandates that the
list of documents stipulated in
respective licence requirements is
exhaustive and licensing authorities
cannot demand submission of any
additional documents or information
in case of acquisition of a Ukrainian
company, or restructuring thereof, it’s
licences and permits remain in force,
provided that the company continues
to comply with their terms after the
acquisition is completed

Further sector
reforms

45
IMPROVING UKRAINE’S POSITION IN DOING BUSINESS RANKING BY WORLD BANK
IMPROVEMENT OF CUSTOMS CLEARANCE PROCEDURES
FURTHER IMPROVEMENT OF CONSTRUCTION PROCEDURES
Implementation of the Law on Improvement of Customs Procedures and Introduction of
the “Single Window” at customs (the Customs Single Window Law) which was adopted
by the Parliament in October 2018
Abolition of share contribution to the development of infrastructure
Adoption of the Law on Authorized Economic Operators (AEO)
Further sector reforms
In order to systemize actions needed to improve Ukraine’s position in Doing Business ranking,
in January 2018 the Government approved Action Plan on Implementing Best Practices of Good
and Effective Governance as reflected by the World Bank “Doing Business” ranking. The plan is
being implemented on a rolling basis and encompasses deregulation and liberalization measures
across various sectors such as business set-up, enforcement of contracts, landing and financing,
investment protection, resolution of insolvency, procedure for receiving permits for construction,
international trade, accounting and taxation. The plan needs to be updated based on the current
position of Ukraine in the ranking, and further priorities of the country. They include deregulation,
including regulation for business set-up, implementation of Insolvency Code adopted in 2018,
improvement of procedures related to connection to the grid, etc.
The Law provides for overall digitalization of customs paperwork and launch of a unified
e-database which can be accessed remotely by various controlling agencies. The database will
allow to proceed with inspection procedures online, on a risk-assessment basis. According to
the Law, customs officials are required to use e-system for documentary exchange and cannot
demand submission of papers which can be filed online. Customs clearance procedures should
take no longer than 2 hours, while importers are no longer required to present phytosanitary
certificates for all cargo categories (except food products). The Law also abolishes compulsory
radiological examination of cargo. Implementation of the Law requires amendments to by-laws
as well as improvement of customs digital infrastructure which is expected in 2019.
The draft law canceling mandatory share contributions by developers to the local budgets has
been approved by the Government and is being considered by the Parliament. The Law aims at
abolition of the currently applicable obligation for developers to contribute up to 10% of cost
estimate for non-residential buildings and up to 4% of cost estimate for residential buildings to
the local budget for the development of infrastructure. Adoption of the Law will decrease costs of
construction and significantly deregulate construction procedures.
The law aims at approximation of Ukrainian regulations with the EU customs procedures as
required under Ukraine-EU DCFTA. Ukrainian AEO program is based on the Customs-to-Business
partnership introduced by the World Customs Organization (WCO) and implemented in the
EU. AEOs will be able to obtain certificates for customs simplification, security and safety or a
combination of the two. Candidates for AEO should meet the requirements, similar to those
in the EU, such as: (i) compliance with customs legislation and taxation rules, (ii) appropriate
record and books keeping, (iii) financial solvency, (iv) proven practical standards of competence or
professional qualifications, (v) appropriate security and safety measures. Ukrainian AEO certificates
shall be recognized in all customs offices in Ukraine and are eligible for mutual recognition in the
EU pursuant to Article 80 of the Ukraine-EU DCFTA. Adoption and implementation of the Law will
ensure more transparent and quicker custom clearance procedures.

46
MAKING CONNECTION TO THE GRID EASIER
Implementation of the Methodology on Calculating Fee for Connecting to the Transmission
and Distribution System that has been adopted by the energy regulator
REFORMING STATE INSPECTIONS OF BUSINESS
FURTHER LIBERALIZATION OF CURRENCY CONTROL
According to the new regulation, the basic rate for connection to the grid is 3480 UAH/ kW
(VAT excluding, approximately 112 EUR) for all transmission operators until the end of 2020.
Regulation provides incentives for connection of large electricity plants to the high-voltage
grids by setting a discounted connection rate and a discounted connection rate for electricity
producers. The new methodology will apply starting January 2019 and is expected to improve
procedures related to connection to the grid and ensure transparent pricing mechanism.
The Government is implementing a risk-based approach for state inspections aiming to
decrease the number and duration of inspections. The decision includes introduction of a
public integrated inspection database, which encourages more transparent, predictable and
accountable activities by state bodies. The system provides open online access to information
about state supervision measures and schedule of state inspections for the current year.
An approved methodology determining the frequency of authorized business inspections
has been adopted. The methodology ensures a unified approach to the measurement of risk
inspections might have towards economic activity and introduction of the frequency of planned
state supervision. It also introduces unified forms of documents, drafted as a result of state
supervision measures. Further steps will be focused on implementation of the risk-based approach
and integration of all inspection agencies into the database.
The Parliament passed the Law on Currency that comes into effect in February 2019. The law
replaced restrictive post-soviet regulations and introduced liberalized rules of currency control.
Pursuant to the Law international business transactions below the UAH 150 000 threshold shall
not be subject to currency control. Further, the law enables non-residents to open accounts with
Ukrainian banks and use such accounts for cross-border and local currency transactions. Cross-
border FX transfers can be operated via banks, non-banking financial institutions, or post offices
holding respective NBU licenses. Certain transactions can be settled in a FX on the territory of
Ukraine. The Law implies mild sanctions for violating currency regulation and introduces clear
criteria for currency-control restrictive measures, whereby such measures must be proportionate,
necessary to address the risks to the financial stability, well-substantiated and temporary. The
Law stipulates market self-regulation principle aimed at introduction of floating exchange rates.
The National Bank of Ukraine introduced a number of liberalization initiatives to supplement
the Currency Law. As of February 7, 2019 special sanctions for breaching terms of payments in
cross border transactions will be abolished. Further, the time period for settlement of export-
import contracts will be extended to 365 days (instead of currently applicable 180 days). With
macroeconomic growth and increase of foreign currency reserves, NBU will further proceed with
liberalization of currency regulation.

47
APPROXIMATION OF TECHNICAL REGULATIONS WITH THE EU STANDARDS
IMPLEMENTATION OF THE EUROPEAN PRODUCT LABELLING RULES
As of January 2019, Ukraine have withdrawn 12 090 interstate standards (GOST/ГОСТ),
developed before 1992, meaning the abolition of over 90% of previously applicable
outdated technical standards. Instead, Ukraine progressively transposes the corpus of European
standards (EN) as national standards, including the harmonized European ones as required under
article 56 of the Ukraine-EU DCFTA.
Government is expected to further develop legislation on technical regulation, standardization,
conformity assessment, market surveillance, metrology and accreditation concerning the
provisions, which regulate circulation of industrial products in line with the EU acquis. The
remaining GOST regulations will be eliminated by 2022.
The law on Food product packaging was adopted by the Parliament in December 2018. The
law aims at alignment of Ukrainian packaging with the relevant EU regulations. The law provides
clear rules regarding the information that must to be placed on packaging such as shelf life,
country of origin, storage and ingredients that may trigger allergies or intolerance. The similar
technical regulation concerning the packaging of cosmetic products is being developed in line
with the EU standards. The relevant by-laws are to be introduced and adopted in 2019 to comply
with EU regulations.The Government will also proceed with implementation of EU standards into
labelling of goods.

Recent
success stories

4949
ArcelorMittal, the largest steel producer in
Ukraine, attracted EUR 350 million financing
from EBRD and European commercial banks in
2017. The loan will be used for investment in
ArcelorMittal’s plant in Ukraine – modernization
of current operations, expanding production,
improving ecological standards. In 2018 the
company announced further USD 286 million
to be invested in production modernization
in Ukraine
Leoni, the cable supplier for major automotive
companies, launched construction of their
second plant in Kolomyya, Ivano-Frankivsk
region, investing around USD 20 million. The
number of jobs is going to rise to 5,000 till 2020
Fujikura plans to open its third cable
manufacturing location in Ukraine. The company
plans to expand staff to 6,000 employees. In the
recent years the company opened two plants in
Lviv and Nimiriv
In May 2018, world leading producer of ski
and scuba diving equipment HEAD signed a
USD 80 million deal on building a new plant
in Ukraine
Sarantis Group acquired Ergopack, the leading
player on the Ukrainian household goods market.
Ergopack pioneered production of household
products in Ukraine in 2001 and currently is the
second largest player in the local arena
Unilever will expand production localization in
Ukraine in 2018-2019. At the recent meeting with
the President the company confirmed intention
to further invest in its facilities
680MILLION
$
20MILLION
$
80MILLION
$
80MILLION
$
Recent success stories

5050
UBC Group (top-3 global producers of beverage
coolers)investedEUR10millioninthefirststage
of construction of the refrigerator production
plant Greencool. The second stage will involve
another EUR 10 million of investments. The
projected sales volumes from the first stage of
the plant are 400 million UAH per year, and after
the second stage is completed (approximately
in 2019-2020), they will grow to 700 million UAH
per year, provided that additional 1,000 new
jobs are created
In June 2018, the manufacturer of leather seats
and other automotive parts for Audi and BMW
cars launched additional production capacities
in Lviv region. The number of employees is
expected to grow from 660 to 1,200
In 2015, the automobile wiring system
manufacturer working for European brands
(Mercedes, Audi, BMW, Volkswagen) opened
its second Ukrainian plant in Zhytomyr region.
3,200 jobs were created
In January 2018, the world leader in contract
manufacturing opened a new production line
at a plant in Mukacheve, Zakarpattya. The total
number of employees is 3,000
10MILLION
€
6MILLION
$
12MILLION
$
Recent success stories

Produced by the Office of the National Investment Council of Ukraine which
is supported by the European Bank for Reconstruction and Development
This report has been prepared by the Office of the National Investment Council for information purposes only. Although the
information in this report comes from sources we believe to be reliable, and although we have made every effort to ensure
its accuracy at the time of publication, we make no warranty, express or implied, of this report’s usefulness in predicting
the future performance. Nor should this report be regarded as a complete description of the macroeconomic situation and
markets regulation in Ukraine.
Office of the National Investment Council doesn’t do or seek to do business with companies covered in its research reports.
Any investment decision made on the basis of this report shall be made at the investor’s sole discretion, and under no
circumstances shall Office of the National Investment Council or any of its employees or related parties be liable in any way
for any action, or failure to act, by any party, on the basis of this report.
This report, or any part of it, is free to reproduce, distribute and quote, referencing Office of the National Investment Council
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For any questions or comments please contact office@nicouncil.org.ua
Source of photos: Shutterstock

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