Will Ukraine become a global investment mecca
The four engines of Ukrainian revival and the sources from which financiers will rebuild the country after the end of the war with Russia are named.
The country’s authorities are convinced that an investment boom awaits Ukraine after the end of the war with Russia. The priority industries that will become drivers of the recovery of the Ukrainian economy have already been named.
Will there be an investment boom after the war?
First Deputy Prime Minister Yuliya Svyridenko is sure that after the end of the war, an investment boom is expected in Ukraine.
In her opinion, the very next day after the victory, Ukraine will become its native world investment Mecca. Companies that are ready to invest in Ukraine and localize production here understand that in fact it is not only about the Ukrainian market, but about the EU market, even though Ukraine will be in the European Union. It is private international investments that can become the nucleus for the reconstruction of Ukraine.
Some experts are optimistic about individual authorities, and some are not.
For example, Maksym Oryshchak, analytical company “Center of Exchange Technologies” (CBT) believes that the reconstruction of Ukraine after the war and the construction of destroyed cities and districts can be a good investment project.
In turn, Ivan Nikitchenko, director of Crane IP Law Firm, asks a logical question: why was there no investment boom before the war? In his opinion, the mere fact of ending his war will not change anything. And even the restoration of the destroyed infrastructure will simply return Ukraine in terms of attractiveness to the state it was in before the start of the full-scale Russian invasion of Ukraine.
From the point of view of the consumer market, Ukraine will need not one, but maybe a decade to recover. First, the savings and real incomes of Ukrainians fell – there was a drop in consumer demand. Secondly, some of the Ukrainians who left did not return. According to the most optimistic forecasts, Ukraine will lose 1-2 million people, according to pessimistic ones – up to 4-5 million. This will lead to a reduction in consumer demand and a shortage of labor (and before the war, it was difficult to find enough workers in villages and small towns).
The expert also says that, unfortunately, little has been done in the past year in terms of reforms, in particular, in the economic, tax and judicial spheres. Currently, there is not even a clear road map. This means that, instead of real reforms, we are once again waiting for rewriting of state programs and presentations.
The driving force of revival
The authorities named the Russian industries for the recovery of the Ukrainian economy after the end of the war.
According to Yu. Svyridenko, four priority industries should become drivers of the recovery of the country’s economy: military-tech (high-tech weapons); metallurgy, mining industry and mechanical engineering; agriculture and food industry; IT industry.
I. Nikitchenko, for his part, believes that even before the war these industries developed, and at a good pace and will continue to develop even after the war.
At the same time, he says that it is necessary to remember the difficulties faced by these industries. According to him, for example, there is no scientific and technological base for the development of military-tech (high-tech weapons) in Ukraine. So far, all we create are small series of drones, importing many components for them. It takes years and billions of investment to develop and set up serial production of one’s own designs. Why are so many resources being invested in Ukraine, if there are already development centers in the USA, Israel, Great Britain, and South Korea?
Regarding metallurgy, unfortunately, many enterprises were destroyed after the start of a full-scale war, so before talking about the development of this industry, it is necessary to restore its potential. The question: whether this will be done remains open. Even before the war, this industry required serious changes and was too energy-consuming. According to I. Nikitchenko, metallurgy did not show qualitative changes, remaining dependent on price trends in the world. Maybe this is a chance for her to do everything in a modern way.
In turn, Oleksandr Okhrimenko, president of the Ukrainian Analytical Center, believes that the greatest prospects for development are in the agrarian complex.
“Ukraine is strong in agribusiness. She showed it even during the war, continuing to feed the world. It is in this industry that it is necessary to invest after the end of the war. Especially since the land market will be launched next year,” says the expert.
In my opinion, it is possible to invest in his land, in the food industry, in the engineering of agricultural machinery, and even in logistics and biotechnology.
Regarding the IT sector, Oleksandr Boltyan, analyst company Esperio,
believes that it remains as attractive as it was before the war. Employees of the IT industry maintain high wages, which allows them to live cheaply according to personal incomes, but to form jobs and requests in shops, restaurants, entertainment centers.
Sources of recovery of Ukraine
Ukraine offers four main sources of funding to rebuild the country after the end of the war with Russia.
According to the Prime Minister of Ukraine Denys Shmyhal, these are confiscated Russian expenses in Ukraine and the world; funds from international partners, including international financial organizations;
the cost of the cost from the state budget of Ukraine;
cost of donors and the private sector.
The head of the government believes that the main compensation for damages should be borne by Russia. In order to hold a country accountable for crimes, it is important to develop appropriate mechanisms of international law.
“We expect that, together with our partners, we will clearly establish the provisions about what resources should be used for long-term recovery,” he said.
I. Nikitchenko believes that all the mentioned sources are real. If the West develops a mechanism for the confiscation and transfer of Russia’s assets, it will solve the main issues. The West itself is in this interest, because it understands that it needs a lot of funds, which Ukraine does not want to allocate on its own, given its economic and social problems.
The question remains as to the extent of recovery itself. Unfortunately, many settlements have been badly damaged and even completely destroyed. Why rebuild a destroyed school if there is no one left in this settlement? If the population of a city is halved, is there a need for a large number of hospitals? And one must understand that the West will not allocate money just like that – they are also studying these issues. Because while the war continues, these questions remain rather theoretical.
Oleksiy Kushch, an expert of internal analytical “United Ukraine” believes that Ukrainians should first of all rely on sources. We need to show the ability to invest internal resources in our recovery. Then external donors join. We must get rid of the illusion that after the war we will be flooded with money. As for the frozen Russian assets that can be used to finance reconstruction, O. Kush believes that our expectations are too high in this matter as well. The expert does not rule out that some money from Russian assets will be transferred to us, but the main part will be blocked for trade with future Russian political elites who will come to power and try to establish a dialogue with the West.
In turn, O. Boltyan says that Ukraine still has a high level of corruption, the legal environment is not ideal for investors, but there is a willingness to cooperate and strengthen the country. This is a great advantage of Ukraine in the foreign arena, thanks to which we are very promising for investors after the end of the war.
Victoria Khadzhiradeva