Germany is the fourth largest foreign investor in Ukraine, having put $1.7 billion in Ukraine since the country’s independence, according to the Embassy of Ukraine in Germany.
Only the United Kingdom, the Netherlands and Cyprus are ahead.
Cyprus alone has invested $10.3 billion as of 2020, although most of this money has come from Cypriot entities set up by Ukrainians who use Cyprus as a tax haven.
The total amount of foreign direct investment in Ukraine since 1991 has grown from $44 billion in 2019 to $49 billion in 2020, according to the German Society for Foreign Trade.
However, the global pandemic deterred many investors. According to the National Bank of Ukraine, FDI plummeted in 2020.
According to the United Nations Conference on Trade and Development, foreign direct investment in Ukraine was about $3 billion in 2019. For reference, Ukraine’s neighbor Poland received $13.2 billion.
Most of the German investors are medium-sized enterprises who in 2020 mainly invested in Ukraine’s industry (62%), wholesale and retail trade (12.5%), and transport (8%).
The largest German companies investing in Ukraine are the pharmaceutical Bayer, transportation company Hamburger Hafen & Logistik, and automotive parts manufacturer Kostal.
Since 2018, Bayer alone has invested $200 million in Ukraine. In 2020, Kostal put $47 million in a car electronics plant near Boryspil in Kyiv Oblast.
The Germans chose Ukraine for cheap labor, its market of 41 million potential consumers, and its convenient location between Europe and Asia.
Foreign investors create jobs, pay taxes and bring new technologies to Ukraine. For example, in 2019, one of Ukraine’s largest pharmaceutical companies, Biopharma, merged with German drug manufacturer Stada Group. They develop blood plasma that’s used to treat trauma, burns and shocks.
German companies plan to invest more in logistics, pharmaceuticals and renewables in 2021, according to the embassy of Ukraine in Germany.
The two countries strengthened their cooperation in the energy sector after Ukraine declared its alignment with the Green Deal, EU’s policy to make Europe carbon-neutral, said Olha Stefanishyna, deputy prime minister for European and Euro-Atlantic integration, in an interview with news agency Ukrinform. She said Germany will invest “millions of euros” in Ukraine’s renewables.
At the same time, Germany supports the construction of the Nord Stream 2 pipeline built by Russia to bypass Ukraine when transporting an annual 110 billion cubic meters to European countries. The transit will go through Germany, depriving Ukraine of at least $1.5 billion in transit fees per year.
