Billions of dollars received from the sales of Kryvorizhstal and Aval Bank have given a major boost to the country’s foreign direct investment figures for last year
Billions of dollars received from the sales of Kryvorizhstal and Aval Bank have given a major boost to the country`s foreign direct investment figures for last year, totaling nearly five times more than in all of 2004.
Ukraine’s State Statistics Committee on Feb. 21 announced that the country had attracted $7.3 billion in FDI last year, bringing the total injected into the economy since independence to almost $17 billion. About $375 million was expatriated or pulled out of the country last year.
The committee attributed the large increase to last fall’s $4.8 billion repeat privatization sale of the Kryvorizhstal steel mill and the $1.1 billion sale of Aval Bank.
Mittal Steel, one of the largest steel companies in the world, acquired a controlling stake in the mill through a repeat privatization tender; the Ukrainian owners of Aval sold their controlling stake to Austria’s Raiffeisen Banking Group.
Mittal is headquartered in London, but their acquisition was recorded as a German investment, as the purchase was done through a subsidiary located in Germany.
As a result, Germany shot up eightfold in the rankings of top countries investing in Ukraine, becoming the leading investor in the country.
Cyprus, with cumulative investments of more than $1.5 billion in Ukraine, is second on the list, while Austria, home to Raiffeisen, shifted to third place after the Aval acquisition, with a cumulative contribution of $1.4 billion.
The United States, for years the leader in FDI contributions to Ukraine, fell to fourth place, accounting for $1.37 billion in FDI since independence, $200 million of which came last year.
Statistics committee officials said Kyiv has attracted the most FDI since independence, roughly 22 percent of the total. Kyiv is followed by Dnipropetrovsk region, at 10.5 percent, and Odessa and Kyiv regions with nearly 4 percent each.
Statistics committee officials also said they expect Ukraine’s promising but inefficient metallurgical industry, ranked seventh globally in terms of production and exports, to receive the bulk of FDI this year.
Much of that investment is expected to pour in as Ukrainian business groups are forced to cope with higher prices for fuels imported from Russia. They are expected to either sell their assets to bigger industry players from abroad, or attract investment needed to revamp production, making them more energy efficient and competitive.
