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23 Jul. 2023

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Investing in Ukraine: what industries do foreigners consider the most profitable and what risks stop them from investing?

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Investing in Ukraine: what industries do foreigners consider the most profitable and what risks stop them from investing?

Over the past two years, a large number of investors have become interested in Ukraine, but they are in no hurry to invest. Find out which industries are currently the most profitable and what scares foreign investors

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International investors are actively looking at Ukraine, but they are not yet in a hurry to invest their own funds, even in popular and profitable industries. Thus, according to Anatoliy Amelin, who personally communicates with large international investors, there is a certain list of key industries in which partners are interested, but at the same time, there are many risks that scare away those who want to invest in Ukraine. So, which industries are the most profitable and why foreigners are unwilling to take risks - we will tell you further in the article.


What industries are foreigners interested in?


Restoration and construction of infrastructure


It's no secret that construction will become the most profitable industry after the end of hostilities. The demand in Ukraine will be particularly high for:

- construction and structural materials (rebar, rolled steel)

- construction services

- construction equipment (excavators, cranes, machinery, etc.)

- engineering services

- raw materials (clay, sand, gravel, etc.)

- related materials and services

The amount of funds that will be circulated in the construction market will be in the tens of billions of dollars. Thus, according to UIF, the minimum volume of construction work to restore damaged infrastructure facilities will be $100 billion, not including the volume of construction of new industrial facilities for plants.


Agro-processing


Even during the war, Ukraine remains an important player in the global food security arena. The blocking of Ukrainian grain has led to a significant rise in market prices and an increased risk of famine in Africa. Therefore, this area is also of interest to foreign investors. In particular, it is about the potential to increase yields through the use of modern technologies and the possibility of even deeper processing of agricultural products. 

Ukraine has the opportunity to increase its exports by at least 5 times, and the volume of investments in this sector ranges from 5 to 10 billion dollars.


Energy


This is a very large and capacious capital sector, as Ukraine needs not only cheap energy but also the development of more important sectors. In particular

- hydrogen production and export

- production and refining of domestic oil products

- gas production (and the potential volumes of Ukrainian gas will allow not only to cover the country's own needs but also to enter the European market)

- development of energy storage systems, as well as reconstruction of old and construction of new power units

According to preliminary estimates, the total investment in the energy sector exceeds $75 billion.


MilTech and HiTech


A large number of new military developments are already being developed and applied in Ukraine. However, the scale of production is limited due to a lack of foreign investment. Nevertheless, this is one of the most profitable industries, as new technologies, weapons and equipment can be immediately used on the battlefield.


Medicine and rehabilitation


Unfortunately, the number of people in need of intensive care, implants, and rehabilitation has increased due to the war. This applies not only to the military but also to civilians who suffer from rocket attacks. Therefore, the development and application of new technologies in these areas can help Ukraine become one of the main centers of medical tourism in Europe.




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The IT sector


According to estimates, this is the only sector that not only did not lose revenue during the war, but, on the contrary, was able to reach a new, higher level. And after the end of hostilities, the last risks will disappear, so the IT sector is expected to scale up significantly.


Logistics


Ukraine's geographical location has a lot of potential, as the country has the ability to become the main border buffer between Europe and russia, and most importantly, a logistics transport hub for cargo transportation by land, water and air.

Despite the large number of promising industries, no one is in a hurry to invest here and now.


What foreign investors are afraid of: Ukraine's main problems


- Incompetence of the authorities. According to Anatoliy Amelin, this is the biggest fear of foreigners, because Ukraine, firstly, does not have a unanimous strategy for the development of the state and priorities, and secondly, there are almost no successful cases for investors since independence.

- Lack of legal security. Foreign investors have no understanding of how the legal sphere works in Ukraine and why legislation is constantly changing (for example, the rules for issuing licenses or permits), and a large number of stories in the Western media about how business can be blocked by tax authorities or other structures deter foreigners.

- Corruption. As long as corruption schemes at all levels of government continue to operate in Ukraine, no large foreign investors will invest their own money in the country's development, no matter how profitable these industries are.

- Impossibility of free movement of capital. This area requires reforms, as a large number of investors have repeatedly faced problems when trying to withdraw their currency from the country. In addition, the lack of "free economic zones" makes Ukraine "uninteresting" for foreigners. For example, Poland has 13 free economic zones and Turkey has 20.

Therefore, despite the large number of promising and highly profitable industries for foreign investors, the existence of serious risks and imperfect legislation are becoming significant obstacles to investing in Ukraine.


We remind you! Volodymyr Zelenskyy has fired Vadym Prystaiko, his closest and longest-standing ally. In our previous article, we explained what role the former British Ambassador had played all these years and why he was so unexpectedly removed from the international arena.


Photo: capital.ua




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