The war has brought the industrial sector in Ukraine to a crossroads. Dozens of the country’s largest enterprises have been destroyed, and now the question arises what to do about it: whether to revive what has been destroyed or to build a new modern industrial sector.
Julia Kiryanova, CEO of Smart Holding, reflects on when to start investing in the revival of Ukrainian industry and how to encourage investment inflows.
Ukrainian industrial sector has survived the war
Let us start with the fact that the Ukrainian economy as a whole and its industrial sector in particular have survived and persevered. The economy has suffered significant losses due to the war, but continues to function and contribute to the economic front in the fight against the Russian aggressor. For example, the businesses of Smart Holding Group paid UAH 2.5 billion in taxes and fees to the budget for 9 months of 2022, and the scope of social assistance to local communities and the Armed Forces of Ukraine amounted to almost a billion hryvnias (UAH).
How can the Ukrainian business sector be restored?
Obviously, businesses require significant investments to modernize. We see our contribution to the development of the country’s economy in several areas. First, in the revival of the metallurgical industry and its renewal in accordance with the principles of decarbonisation. Secondly, in increasing the level of Ukrainian gas production and developing new gas fields, at the same time as looking for partnerships with strategic investors. Thirdly, in the development of an industrial park in Mykolaiv, as well as in a number of projects on the processing of agricultural produce for further export of products with high added value.
Investments in the industrial restart of Ukraine are needed
The full-scale war had a significant impact on the investment attractiveness of Ukrainian assets, so they are undervalued today. Nevertheless, Ukraine has a potentially huge amount of resources which can give the country a powerful economic impetus towards the twenty first century industrialization – modern, environmentally friendly and with high added value. Therefore, those who , like us, already firmly believe in the victory of Ukraine and its economic revival, should be the first investors in the industrial restart of the country.
International and Ukrainian investors should take the risks and invest now. There will be a large-scale capacity for long-term growth and business profitability after the victory.
Prerequisites for inflow of investment to Ukraine
Ensuring the rule of law, the inviolability of property rights and zero tolerance for corruption are crucial prerequisites for an influx of investments. Incentive measures spearheaded by the government will also be critical. They could in particular include the development of target investment funds, the state mortgage program, the energy efficiency fund, free trade opportunities, tax incentives and sectoral programs to support industries. All this will become a backbone and a ground to which foreign investors can be invited through the joint efforts of the government and businesses.
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