In January, at the World Economic Forum in Davos, President Volodymyr Zelensky made a speech in which he noted that in order to increase the economic attractiveness of Ukraine and attract foreign investment, the institution pf “Investment Nanny” will be introduced.
Six months later, the draft law which would provide for the introduction of a new mechanism for investment activities, was registered in the Verkhovna Rada of Ukraine.
On July 21, 2020, this bill number 3760 entitled “On state support of investment projects with significant investments” was adopted in the first reading.
The main provisions:
The draft law registered in the Verkhovna Rada proposes to provide an investor with significant investments of state support in the following forms:
1) exemption from payment of certain taxes and fees in accordance with tax legislation (amounts of taxes and fees that are not paid to the budget and remain at the disposal of the investor with significant investments);
2) exemption from import duty in accordance with the customs legislation of new equipment (equipment) imported exclusively for the implementation of an investment project with significant investments to implement a special investment agreement in accordance with the law (the amount of import duty not paid to the budget and remaining at the disposal of the investor with significant investments);
3) ensuring the preemptive right to use a land plot of state or communal property for the implementation of an investment project with significant investments – granting a land plot of state or communal property for use (lease) for the implementation of an investment project with significant investments, with payment of land on the terms determined taking into account the obligations under the special investment agreement, and with the preemptive right to acquire ownership by an investor with significant investments of such land after the expiration of the special investment agreement (except for its early termination), if any the right is provided by a special investment agreement;
4) provision at the expense of state, local budgets and other sources not prohibited by law, construction, reconstruction, restoration, an overhaul of related infrastructure facilities (roads, communication lines, heat, gas, water and electricity supply, utilities, etc.) required for the implementation of an investment project with significant investment.In this case, the investment project is a project that involves investments in excess of the amount equivalent to 30 million euros. Also, the investment project must create at least 150 new jobs with an average salary of employees, the amount of which is not less than 15 percent higher than the average salary in the relevant area in the region.
Distrust of the judiciary ranked first among obstacles to foreign investment
Almost half — 48% –of surveyed foreign investors believe that Ukraine’s investment attractiveness is declining, 42% do not see significant changes, only 9% see improvement.
This is evidenced by the results of the 5th annual survey of foreign investors, conducted by the European Business Association, Dragon Capital and the Center for Economic Strategy in late October 2020.
A potential re-lockdown will have a moderate negative impact on investment activity.
Some 47% of strategic investors already working in Ukraine said they would not change their investment plans, while 27% would reduce or stop investing.
So, as we have at the end of the year – no management system or investment attraction – the head of the investment office under the President of Ukraine has been abroad since September, investment groups in key ministries have been disbanded, the bill has not been adopted, there is no strategic vision.
My proposal – in the face of budget deficits and disruption of the International Monetary Fund – to intensify work in the Asian direction:
- to sign the agreement on cooperation in the field of infrastructure with China which will give the chance to involve $1 billion in the first pilot projects in Kyiv and Kremenchuk;
- to start negotiations on an interstate agreement with Turkey – promised by Erdogan $ 2 billion for infrastructure projects;
- to conclude the financial agreement for $400 million for the construction of the Mykolayiv bridge; there are also the UAE, Saudi Arabia, Qatar and South Korea.
Investment in Ukraine’s infrastructure should be Zelensky’s new course to overcome the great crisis, as only economically successful countries regain their territories.
Victor Dovhan was deputy minister of infrastructure from 2016-2019.
