Business
opportunity
in Ukraine
National economy is mainly industrially oriented. This is due to the
considerable reserves of natural resources and their diversity. Among power
resources coal is predominant.
Ukrainian
iron-ore and manganese-ore deposits are considered as the richest in the world.
Ukraine is also a primary producer of sulfur, titanium and beryllium. There are
also large deposits of nickel,
chromites, mercury (2-nd
in the world), aluminum ores, etc. Over 15 deposits of gold have been discovered
in recent years. Ukraine is one of the leading countries in Europe and the
world for non - metallic natural mineral resources.
Table 1.
Production
Values of Manufacturing
and
Food Industries of Ukraine
|
|
2002 |
%, Change 2002/2001 |
|
Electro energy, bn. Kwh/year |
172,8 |
+0,4 |
|
Oil, mln. ton |
3,7 |
+0,6 |
|
Gas, bn. cub. m. |
18,4 |
+1,3 |
|
Coal, mln. ton. |
59,4 |
--3,8 |
|
Cast iron, mln. ton |
27,6 |
+4,7 |
|
Steel, mln. ton. |
34,5 |
+3,0 |
|
Plates, mln. ton. |
26,4 |
+4,0 |
|
Tubes, mln. ton. |
1,5 |
--8,8 |
|
Fertilizers, mineral, mln.ton. |
2,3 |
+5,6 |
|
Chemical threads,
ton |
24800 |
--6,4 |
|
Cement, mln.ton. |
7,1 |
+23,5 |
|
Machine-tool works |
808 |
--28,7 |
|
Grain, mln.ton. |
38,8 |
--2,3 |
|
Sugar, mln. ton. |
1,6 |
--16,4 |
|
Sunflower oil, mln. ton. |
0,9 |
+7,1 |
|
Milk, mln. ton. |
14,1 |
+5,2 |
|
Meat,mln. ton. |
2,5 |
+7,6 |
|
Eggs, bn. |
11,3 |
+16,8 |
The largest part of the total output of industrial production belongs
to ferrous metallurgy (20,6%),
food industry (19,1%), power industry (14,1%), machinery and metalworking
(11,5%), coal industry
(7,3%), chemical and
petrochemical industries (6,9%).
A number of industries in Ukraine are
characterized by high technological level of development. Manufacture of rocket
carries, satellites and
space exploration equipment has been established. Ukraine is a significant
manufacturer of military equipment – tanks, military transportation aircraft,
antiaircraft-missile complexes, optical equipment. Ukraine has considerable
intellectual potential practically in all branches.
Soil is one of the natural riches of our country. According to the
estimations Ukraine has a quarter of the world”s black soil reserves.
The main branches of food and processing industry are sugar, alcohol, meat, milk,
flour-and-cereals branches, etc.
Transport system potential of Ukraine is quite high. National transport
network is able to get up the intensification of products and passengers
transportation in both home and international communication.
Foreign trade turnover of goods, services and works in
2002 increased by 10.3 per cent compared with
2001 and made 40,5 USD.
Volumes of export increased by by 11.1 per cent and made 22
bn USD.
Volumes of import increased by 9.4 per cent and came to 18,5 bn USD.
Positive trade balance amounted to 3,5
bn USD.
The biggest trade partners of Ukraine are Russia, Germany, Turkmenistan, Turkey, USA,
Italy, Belarus, Poland, China, Bulgaria and France.
Table 2.
Exports by the
main
chapters, 2002
mln
USD
|
Chapter |
Exports |
|
|
Value |
% |
|
|
Total |
12757582,1 |
100 |
|
Live animals and other animal production |
266423,3 |
2.09 |
|
Cereals |
610542,50 |
4.79 |
|
Products of the food industry |
361968,6 |
2.84 |
|
Ores, slag, and ash |
325553,6 |
2.55 |
|
Inorganic chemicals |
313321,7 |
2.46 |
|
Fertilizers |
279415,2 |
2.19 |
|
Impregnated, coated, covered or laminated textile
fabrics and textile articles |
496829,6 |
3.90 |
|
Iron and steel |
3861539,8 |
30.1 |
|
Articles of iron and steel |
383351,2 |
3.0 |
|
Tools, implements and cutlery |
520242,2 |
4.08 |
|
Machinery and equipment |
889148,8 |
6.97 |
|
Electrical machinery |
341158,1 |
2.67 |
|
Lokomotive, aircraft, sh³ps and parts
thereof |
439789,99 |
3.45 |
Table 3.
Imports
by the main chapters, 2002
mln
USD
|
Chapter |
Imports |
|
|
Value |
% |
|
|
Total |
12044592,7 |
100 |
|
Products of the food industry |
433965,0 |
3.60 |
|
Crude petroleum |
1592599,5 |
13.22 |
|
Gas natural |
2625244 |
21.80 |
|
Plastics and rubber products |
519060,6 |
4.3 |
|
Paper and paperboard |
482937,4 |
4.01 |
|
Impregnated, coated, covered or laminated textile
fabrics and textile articles |
481078,9 |
3.99 |
|
Machinery and equipment |
13474323 |
11.19 |
|
Electrical machinery |
482682,1 |
4.0 |
|
Lokomotive, aircraft, sh³ps and parts
thereof |
702896,0 |
5.84 |
Ukrainian
– Turkish bilateral cooperation
After the collapse of former Soviet Union Turkey was among the first
countries of the world recognizing Ukraine as an independent state. Nowadays
trade and economic relations between Ukraine and Turkey are regulated by the
main following agreements:
Trade and Economic Cooperation Agreement, Agreement on Avoidance of
Double Taxation, Agreement on the Reciprocal Promotion and Protection of
Investments.
There are also bilateral
agreements concluded between our countries in various fields including
transportation, customs, standardization, tourism, agriculture, science and
technology.
Now Turkey is the 4th
trade partner of Ukraine. For the 2002
the bilateral trade amounts to 1,3 bn. USD. As compared to the 2001 the volume of trade
turnover has increased by 22,2%.
Table 4.
mln USD
|
|
2001 |
2002 |
%, Change 2002/2001 |
|
Trade volume |
1045.1 |
1278,8 |
122,2 |
|
Export(from Ukraine to
Turkey) |
757.5 |
969,4 |
128 |
|
Import(to
Ukraine from Turkey) |
287.6 |
309,4 |
107 |
|
The trade statistics based on the data of The State Institute of
Statistics of Turkey is shown in table. |
|||
Ukrainian export is mainly composed of such
groups of goods as tools, instruments, cutlery of base metal (38,7%), iron and
steel (33.4%), chemical products (15%) etc.
Our import from Turkey, on
the other hand, are mainly composed of
fruits and vegetables (12,3%), plastics
articles (16,1%), chemical products
(11%), textile products and ready-to-wear clothes (10,5%), machinery and equipments
(16%), food industry products (14%) and mineral products (11%).
Ukraine and Turkey are ready to
further develop the dialogue and collaboration between them not only in iron and steel industry,
chemical industry but in automotive sector, machine building, electronics,
shipbuilding industry, aircraft industry, defense industry etc.
Special opportunities are open between them in the energy sector with
particular emphasis on oil and natural gas transportation, oil refining,
construction of the Turkish power generation sector and electric power
transportation.
Foreign
Investment in Ukraine
The
main features of the foreign investment legislation can be summarized as
follows:
No Minimum Capital Reguirement
A Ukrainian legal entity is recognized as a company
with foreign investment if it has at least 10% foreign ownership in its charter
capital (i.e. share capital); no minimum/maximum foreign capitalization
requirements are stated. Registration of foreign investment with the local
authorities is required in order to benefit from the foreign investment
guarantees. Foreigners should not apply any permission from central
ministries for investment.
National
Treatment Principle
The firms and branch offices established according
to Ukrainian legislation are considered as Ukrainian firms and branch offices.
Foreign investors, either in the form of a
legal entity or an individual may generally acquire up to a 100% participation
in a Ukrainian business. Virtually no restrictions are made on the form of the
contemplated investment in Ukraine. Capital contributions can be in cash or in
other kind (tangible or intangible assets). However, government licensing and
administrative bodies may restrict the business areas of investment. Foreign
investment in armaments, explosives, drugs and other areas of national interest
are prohibited.
The Law recognizes that foreign investment can
take place in a variety of forms, including:
·
formation
of a joint-venture company;
·
acquisition
of stock (shares) in existing enterprises;
·
buying
movable or immovable property;
·
creation
of a company, wholly-owned by a foreign investor;
·
acquisition
of property rights by purchasing securities;
·
buying
the right to use land and concessions to exploit natural resources.
Form of Capital
Foreign investors have the right to invest by
using all knowing forms of capital
( hard
currency; Ukrainian currency as a re-investment into an existing or a newly
established enterprise; any movable or immovable property and property rights
connected with it; shares, bonds, their securities and other corporate rights;
monetary claims and claims under contracts, valued in a hard currency and
guaranteed by first rank banks; any intellectual property rights with confirmed
estimation in hard currency according to the laws of the investor's country of
residence, including copyrights, trademarks, firm names, know-how and others;
rights
in respect of economic activities, including exploration and utilization of
natural resources valued in hard currency and conferred and valued under the
laws of the investor's resident country).
Taxation
Under current Ukrainian legislation foreign
investment is exempted from VAT and import duties. However, if the goods
contributed are subject to excise duties, the exemption from VAT and import
duties does not apply. If the investment is disposed of within 3 years from the
date of registration in the books of the Ukrainian entity, all the relevant import duties will be due.
Land property
According to the Ukrainian Land Code, which was
adopted last year, foreigners are allowed to buy non-cultivated land or
buildings with land in cities. This
plots of land may be used for construction of facilities for business activity.
Guarantees
Guarantees for investors are set out in
legislation as follows:
• 10 year grandfathering clause permitting any
qualified investor to enjoy favorable treatment and guarantees contained in the
Law in the event of a subsequent change in legislation;
• foreign investment is exempted from
nationalization, except for cases of natural disaster;
• foreign investors may seek damages (losses of
profit and moral injury) resulting from negligent acts by or failure to perform
by the state (if confirmed, compensation is payable in hard currency);
• when terminating its activity, an investor
has 6 months to return its investment in kind or in cash without payment of
customs duties, as well as any profits earned in kind or cash at their real
market value;
• foreign investors are guaranteed unhindered
and immediate rights to repatriate the profits abroad after complying with the
withholding tax regulations.
State
Protection of Foreign Investment
Ukrainian legislation on foreign investments
sets out protection for foreign investment in Ukraine against state
confiscation except for cases of national emergency. Such cases include
evacuation/rescue measures in connection with disasters, accidents or
epidemics. Foreign investors are eligible for compensation of losses caused by government
bodies with respect to the above cases.
Besides this you may also contact our trade
mission, which can help you to choose investment project, to give more detailed
information about export –import operations, plan of international exhibitions
in Ukraine, Ukrainian producers of some goods, to prepare program of business
trip etc.
Representative Offices of Foreign Companies in Ukraine
For attention: A representative office of
a non-resident in Ukraine is a place of the non-resident's business activity in the territory of
Ukraine. Non-resident legal entities which carry out their activities via a representative office in Ukraine do not
have the status of a legal entity in
Ukraine and are subject to the legislation of the country of their
permanent residence. Representative
offices undertake accounting and reporting in accordance with Ukrainian legislation.
The Ministry of Economy of Ukraine carries out the registration of
representative offices. Business activities of representative offices are
regulated by the relevant Laws of Ukraine. Foreign investment activities of
representative offices are regulated by the Ukrainian legislation on foreign
investment.
Under acceptance of
documents for registration, an applicant is given the number of account for
payment of registration fee, amounting to 2.500 USD.
Foreign Investment Figures
As of the end of 2002,
accumulated foreign direct investment in Ukraine amounted to 5,3 bn.
USD in terms of the value of foreign capital approvals. As of 2002, 8690 foreign capital companies
operated in Ukraine.
The total of last year”s
foreign direct investment approvals stands at 784 mln. USD(increased by 15,2%).
Turkish
Investments in Ukraine
Turkish investments in Ukraine are 38,1 mln. USD. There are 265
companies with Turkish investments in Ukraine.
About 32% of Turkish investments are in industry, 20,7% - agriculture and food industry, 20,2% -
finance activity, 20,2% - trade, 6,8% - construction and transport services.
Last year, for example, a famous
Turkish holding “Evyap“, has established its
branch in Illichivsk in Odessa region. After finishing some reconstruction
works this Turkish factory will produce soap not only for Ukrainian market, but
also Russian, Belorussian and other republics of former Soviet Union. The total
expected investment is 60 mln.
USD.
Macroeconomic
indicators
During last year GDP grew by 4,6% in comparison with 2001. These
results were achieved due to uncertainty in the global market and the leveling
off in consumer demand.
Ukrainian currency strengthening in 2002 has had a positive influence
on the repayment of external debts. In 2002 deflation was shown by 0,6%.
Official unemployment level was 3,8% .
Table 5.
Macroeconomic
indicators
|
|
2000 |
2001 |
2002 |
||
|
|
|
||||
|
Economic activity |
|
|
|||
|
GDP, billions UAH |
170 |
202 |
220.5 |
||
|
Real GDP, apc* |
+5.9 |
+9 |
+4.6 |
||
|
Real industrial output, apc |
+12.9 |
+14.2 |
+7.0 |
||
|
Real agricultural, apc |
+7.6 |
+10.0 |
+1.9 |
||
|
Real household disposable income,
apc |
+11.1 |
+14.5 |
+21.2 |
||
|
Real retail trade, apc |
+7.5 |
+11.7 |
+14.8 |
||
|
Consumer price index, apc |
+26 |
+6 |
-0.6 |
||
|
Producer price index, apc |
+21 |
+0.9 |
+5.7 |
||
|
Labour market |
|
||||
|
Real wages, average, apc |
+1.0 |
+20.9 |
+18.2 |
|
|
|
Official unemployment rate, % |
4.2 |
3.7 |
3.8 |
|
|
|
Foreign economic activity |
|
||||
|
Exports of goods & services , apc |
+20.3 |
+10.0 |
+11.1 |
||
|
Imports of goods & services , apc |
+18.9 |
+14.0 |
+9.4 |
||
|
Monetary indicators |
|
||||
|
NBU international reserves, millions
USD |
1539 |
3095 |
4417 |
|
|
|
Official exchange rate (average annual), UAH/USD |
5.44 |
5.37 |
5.33 |
|
|
|
Loan interest (average annual), yearly %(1) |
41 |
32 |
24.8 |
|
|
|
apc
– annual percentage change |
Note
(1) commercial banks loans, UAH UAH-
ukrainian currency NBU
– National Bank of Ukraine |
||||
The
Banking System
After independence Ukraine has established its own banking system. The
current banking system is two-tiered, comprising the NBU and 189 commercial
banks. Oschadnybank and Ukreximbank are still state owned.
There are currently six main
banking companies in Ukraine with foreign ownership: Credit Lyonnais, Citibank,
Bank Austria Creditanstalt, ING, Raiffeisenbank and First Ukrainian International
Bank.
We also have agreement between our Governments to establish branches of
Turkish banks in Ukraine.
Free zones in Ukraine
As of the end of 2002, there were 11 free zones in Ukraine and 66 territories
with special investment regime.
Privatization
Endeavor in Ukraine
Privatization in Ukraine, aims not only to minimize state involvement
in economic activities and to relieve the financial burden of state economic
enterprises on the national budget, but also contemplates the development of
capital markets and the rechannelling of resources towards new investments.
Now about 80% of industrial output is produced by non - public sector.
More detail information about
investment in Ukraine you may see on our Web-site www. ttnet.net.tr/ukremb
Consulting companies which are ready to suport you
on our market
“COSMOS”
e-mail nd-cosmos@ukr.net
“TRADEX”
e-mail tradex2002@ukr.net
Trade and Economic Mission
of the Embassy of Ukraine
to
the Republic of Turkey