Foreign business giants have signed contracts in Ukraine worth more than 1.5 billion euros, according to conservative estimates, since the beginning of the year.
That’s a bonus for this country of 42 million people, which still desperately needs more investment to regain economic momentum.
But the gains have still only been modest.
Ukraine lured in only $2.3 billion in foreign direct investment (FDI) last year — almost 50 percent less than in 2016, and the country’s gross domestic product was back to the level it was in 2006.
Meanwhile, the country needs to attract $20 billion in FDI every year to grow 8–10 percent annually, according to Anatoliy Amelin, co-founder and director of the economic programs of the Ukrainian Institute for Future think tank.
The good news is that, despite a bad business climate and an uncertain political situation that put off many investors, some big global companies are still ready to open up shop here.
General Electric
Railway transportation is a sector that is most visibly in need of investment. Early this year, U.S. multinational corporation General Electric (GE) entered into one of the biggest deals in the modern economic history of Ukraine.
GE signed a $1 billion agreement with Ukraine’s railway monopoly Ukrzaliznytsia on Feb. 23 to supply diesel locomotives. A total of 200 new locomotives from General Electric’s Pennsylvania plant will be supplied to Ukrzaliznytsia, while GE will modernize 75 of Ukraine’s own locomotives over the next 10 years.
Renewable energy
Experts think Ukraine has the fastest growing renewable energy market in Europe, due to its high green tariff — 15 eurocents per kilowatt.
So it’s not surprising that 550 million euros have already been invested in renewables since 2015, adding 567 megawatts of new generating capacity, according to the State Agency on Energy Efficiency and Energy Saving of Ukraine.
And some companies plan this year to seriously expand their projects.
The main reason for that is that the green tariff for solar stations of more than 10 megawatts and wind stations of more than 20 megawatts will not be available any longer after a system of auctions for energy purchases is launched in 2019.
Global companies such as China Machinery Engineering Corporation (CMEC), General Electric, and Acciona Energia Global have struck some big deals in Ukraine recently: the first two with DTEK energy holding, and the third with UDP Renewables.
Since the beginning of the year these foreign companies have signed contracts worth at least 434 million euros.
After the launch of two solar power plants and one wind farm as part of these projects, the total generating capacity of Ukrainian renewable market will grow by more than 350 megawatts.
Westinghouse
Westinghouse Electric, the U.S.-based global leader in nuclear fuel production, is positioning itself to take almost half of Ukraine’s nuclear fuel market.
The company signed a new nuclear fuel contract extension with Energoatom, Ukraine’s national nuclear generating company, on Jan. 29.
The other half of the market is still occupied by Russian nuclear fuel company Rosatom, which sells nuclear fuel to Ukraine through its subsidiary TVEL.
Westinghouse, which currently supplies fuel to six of Ukraine’s 15 nuclear reactors, expects to supply another reactor with fuel between 2020 and 2025.
DP World
Ukrainian seaports have always been interesting for business, as they are the gateways for international trade to Eastern Europe — even though they are some of the most expensive and corrupt ports in the world.
The world’s largest port operator DP (Dubai Port) World Group, working with 78 sea and land terminals in 40 countries around the world, entered the Ukrainian seaport industry at the beginning of the year.
P&O Maritime company, which is fully owned by DP World, teamed up with Ukrainian investor SD Capital to gain control over the LB Shipping towing company on Jan. 4. P&O Maritime has since started to provide tug services at the seaport of Yuzhny near Odesa.
Although the value of the deal was not disclosed, P&O Maritime’s purchase could be the largest struck in the country in the last few years, according to Andrey Stavnitser, the chief of Terminals TIS Group, a chain of port terminals operating at the Yuzhny port, and the co-founder of SD Capital.
Meanwhile, Yuzhny seaport processed 41.9 million tons of cargo last year and thus became the country’s leader in cargo handling in 2017, according to the Center of Transport Strategies, an independent information and consulting center.
Six months later, P&O Maritime expanded its activities and started providing tug services in Chornomorsk seaport, another big seaport near Odesa.
Renault
Bureaucratic red tape and crumbling road infrastructure notwithstanding, a few car manufacturers are also mulling a move to the Ukrainian market.
France’s Renault, for instance — a company with a 12 percent share of the Ukrainian car market among more 25 competing brands in Ukraine, which sold 10,500 cars in 2017 — is considering whether to build a car plant in the country. Renault specialists are studying projects with potential local industrial partners to find a site in Ukraine.
Ryanair
In the airline industry there are also a few signs that economic turbulence is waning.
Starting this fall, Ryanair, the largest budget airline in Europe, will start flights from two Ukrainian airports — Boryspil and Lviv.
The Irish low-cost airline will fly to six European countries from Oct. 31. It plans to fly the new routes between two and five times a week.
In total, there will be 10 destinations from Kyiv (including Barcelona, Warsaw, Stockholm and London) and five from Lviv (Krakow, Warsaw, Dusseldorf, Memmingen and London) offering cheap flights.
Tickets are already on sale, with prices varying from 14.19 euros to Warsaw and up to 55.19 euros to Barcelona.
H&M and IKEA
One of the best-known Swedish clothes brands in the world, H&M (Hennes & Mauritz), has been eyeing Ukraine’s market conditions. But only now has H&M, which is present in 69 countries, decided to open its first store in Ukraine.
The company’s first Ukrainian store opened in Kyiv’s 140,000-square-meter Lavina shopping center on Aug. 18. H&M will open its second store in Kyiv in October.
Meanwhile, the world’s largest furniture retailer, IKEA, also originating from Sweden, announced its intention to open a store in Kyiv this year.
IKEA has already started to recruit personnel, placing vacancy announcements on Ukrainian job websites such as Rabota.ua and Work.ua.
