TRADERUN
MOODUL
TRADERUN
MODULE
BUSINESS PECULIARITIES IN THE EU,
RUSSIA AND
EASTERN PARTNERSHIP COUNTRIES
ÄRI ERIPÄRAD EUROOPA LIIDUS, VENEMAAL JA IDAPARTNERLUSRIIKIDES
Lecturers: Ryhor Nizhnikau (
responsible ) Giorgi Gaganidze,
Sergei Proskura, Andres Assor
P2EC.00.202 (UT
code ), RIE 7044 (TLU code)
Reading materials: Business peculiarities in
Ukraine and
Belarus
Lugemismatejal: Äri eripärad Ukrainas ja Valgenenes
Created by Andres Assor
Tartu 2013
TABLE OF CONTENTS
INTRODUCTION ................................................................................................................... 4
1.
UKRAINE ...................................................................................................................... 5
1.1.
General information ..................................................................................................... 5
1.1.1.
Country Profile ..................................................................................................... 5
1.1.2.
Post-Independent Ukraine. Economy and politics ............................................... 6
1.1.3.
Key Macroeconomic indicators ......................................................................... 14
1.1.4.
Foreign Direct Investments ................................................................................ 16
1.1.5.
Demographics and labor force .......................................................................... 17
1.1.6.
New emerging industry ....................................................................................... 19
1.2.
The Business Environment ........................................................................................ 23
1.3.
Banking system.......................................................................................................... 27
1.4.
Starting a business in Ukraine ................................................................................... 32
1.5.
Market entry strategies .............................................................................................. 33
1.5.1.
Direct Sales ........................................................................................................ 33
1.5.2.
Agency and Commission arrangements ............................................................. 34
1.5.3.
Joint venture with a Ukrainian partner .............................................................. 34
1.5.4.
Representative office (commercial and non-commercial) ................................. 34
1.5.5.
Ukrainian subsidiary .......................................................................................... 35
1.6.
Foreign investment treatment .................................................................................... 35
1.7.
Corporate forms ......................................................................................................... 37
1.8.
Taxation ..................................................................................................................... 39
1.8.1.
Corporate income tax (CIT) ............................................................................... 39
1.8.2.
Withholding Tax (WHT) ..................................................................................... 41
1.8.3.
Value Added Tax (VAT) ...................................................................................... 42
1.8.4.
Transfer Pricing (TP) ......................................................................................... 43
1.8.5.
Personal taxation ............................................................................................... 44
1.9.
Financial Reporting ................................................................................................... 45
1.10.
Currency regulations .............................................................................................. 46
1.11.
Risk of UAH devaluation ....................................................................................... 48
2.
BELARUS .....................................................................................................................51
2.1.
General information ................................................................................................... 51
2.1.1.
Country Profile ................................................................................................... 51
2.1.2.
Overview of Belarusian economy ....................................................................... 52
2.2.
Customs Union of Belarus,
Russia and Kazakhstan.................................................. 55
2.3.
The Business Environment ........................................................................................ 58
2.4.
Banking system.......................................................................................................... 59
2.5.
Development of Private
Sector .................................................................................. 61
2.5.1.
Starting a business in Belarus ............................................................................ 63
2.6.
Foreign Investment treatment .................................................................................... 66
2.7.
Corporate forms ......................................................................................................... 71
2.7.1.
Limited Liability Company ................................................................................. 72
2.7.2.
Joint- Stock Company .......................................................................................... 73
2.7.3.
Private unitary enterprise .................................................................................. 74
2.7.4.
Registration of the companies in Belarus .......................................................... 75
2.8.
Taxation ..................................................................................................................... 75
2.8.1.
Corporate income tax (CIT) ............................................................................... 75
2.8.2.
Withholding tax (WHT) ...................................................................................... 78
2
2.8.3.
Value Added Tax (VAT) ...................................................................................... 80
2.8.4.
Transfer Pricing (TP) ......................................................................................... 82
2.8.5.
Personal Taxation .............................................................................................. 82
2.9.
Financial Reporting ................................................................................................... 83
2.10.
Currency Regulations ............................................................................................. 86
Appendix 1. Ukraine. Key macroeconomic
forecasts . ...........................................................89
Appendix 2. Ukraine. Development of IT
Outsourcing industry - selected charts ..................90
Appendix 3. Ukraine. Summary of Doing Business indicators...............................................92
Appendix 4. Ukraine.
Chart of withholding tax rates. ............................................................96
Appendix 5. Belarus. Summary of Doing Business indicators. ..............................................99
Appendix 6. Belarus. Chart of withholding tax rates. ........................................................... 103
References ......................................................................................................................... 104
ABOUT TRADERUN
PROGRAMME .................................................................................. 106
3
INTRODUCTION
The
current reading
material focuses on business peculiarities in Ukraine and Belarus.
***
The aim of the Traderun programme course “FUNDING PROJECTS IN RUSSIA AND EASTERN
PARTNERSHIP COUNTRIES” is to provide the students with comprehensive and practical
overview of the fundraising possibilities in EU and Estonia. The course gives an overview of
EU structural support and regional implementing agencies, that are available for a
businessman to apply for a fund.
A successful student will be aware of and understand the EU fundraising possibilities in the
frames of cooperation with Russian and Eastern Partnership countries, and able to define the
financing criteria and priorities.
The current reading material summarises the main aspects covered by lectures and
structurises the information channels for the future.
The course supports the other Traderun courses, especially the course related to EU
cooperation with Russia and Eastern Partnership Countries.
4
1. UKRAINE
1.1. General information
1.1.1. Country Profile
Capital: Kyiv.
Total area: 603,550 sq. km (the largest country in
Europe by area that is physically
within
Europe entirely).
Population: ~ 45 million (
declining).
Major cities and
estimated population (
Good news
! Not all the business and capital
concentrated in the capital):
Kyiv (
Kiev ) – 2.8 million,
Kharkiv (Kharkov) – 1.5 million,
Lviv (
Lvov ) - 1.5 million,
Donetsk – 1 million,
Dnipropetrovsk (Dnepropetrovsk) - 1 million,
Odesa (Odessa) – 1 million.
Zaporizhzhya (Zaporozhye) – 0.8 million.
5
GDP
growth , %: 1.0 (2013
forecast EBRD – downward revision from previously projected
2.5%).
Official language : Ukrainian (
although Russian is widely used in business
communication ).
Currency: Hryvnya (UAH).
Government type:
republic .
Membership: the United Nations, the International Monetary Fund (IMF), the World
Bank , the European Bank for
Reconstruction and Development (EBRD), the World Trade
Organization (WTO), etc.
Ukraine is bordered by Russia in the
east , the
Black Sea in the
south ,
Moldova , Romania,
Hungary,
Slovakia and
Poland in the
west , and Belarus in the
north . The country is
rich in
mineral resources:
iron ore,
coal , manganese, natural gas (
shale – costly and dangerous to
extract), oil,
sulfur , graphite,
titanium , magnesium, kaolin, nickel,
mercury , timber and
others .
It’s commonly
known that Ukraine is politically
divided between its
Western and Eastern
regions . Ukraine's geography and history have played an
important role in the country's
current
political crisis . Western parts of the country at
times belonged to Poland, Austro-
Hungary, and Czechoslovakia,
while eastern and
southern parts belonged to Russian
Empire .
Only after World War II did Ukraine attain its
present borders as a republic within the
Soviet Union. That history
partly explains Ukraine's voting
patterns , political sympathies, and
outlook on the future.
Population of Western Ukraine largely supports politics paying EU card (Yusteshenko,
Tymoshenko), while
industrial Eastern regions support Yanukovych as Politian closely
associated with better relation / integration with Russia.
1.1.2. Post-Independent Ukraine. Economy and politics
1990-s
When Ukraine
became independent in 1991,
there were
expectations that it would in the
near future become a wealthy free market
democracy and a
full member of the European
and Euro-
Atlantic communities. Ukraine
never fulfilled those expectations. Instead, it is
seen as an underachiever, sometimes as a sick man of Europe, and
perhaps even as a potentially
failed state thanks to its geopolitical situation, historical burdens, and the mistakes made in
institutional development and
policy .
Economically, Ukraine has
grown along with the
region . As
such , growth rates have not been
low, but they
come after the economically devastating
1990s and are not
built on a
6
sustainable foundation. For
years Russia
provided Ukraine with underpriced gas while
Ukraine’s
export prices increased rapidly. Over the decades Ukraine,
however , grew
dependent on oil and gas
coming from Russia, at
almost no
cost .
Today , 70
percent of gas
consumed in the country is imported.
In 1991 Ukraine was one of the poorest Soviet republics. Statistics for the time are
notoriously uncertain, but the
best ones available show Ukraine’s GDP at just $1,307 per
capita . Only
Azerbaijan ,
Georgia , Kyrgyzstan, Tajikistan, and Uzbekistan lagged
behind Ukraine; even Moldova and Turkmenistan, generally regarded as very
poor Soviet republics,
were
ahead of Ukraine.
Ukraine’s economy contracted annually between 9.7 and 22.7 percent in 1991–1996. The
country experienced hyperinflation and an exceptionally huge
production decline for a
country not ravaged by a major war. Official GDP collapsed by almost
half from 1990 to
1994, and
slow decline continued throughout the decade.
Economic growth would not
resume again until 2000. The
budget deficit was, at 14.4 percent of GDP, exceptionally large.
Barter and the use of surrogate moneys and foreign currencies
prevailed . Ukraine had
introduced a sovereign currency, the Hryvnia, but it was
little used. A
shadow economy
swelled and compensated for an unknown
share of the economic collapse.
2001-2008
Between 2001 and 2008, the Ukrainian economy picked up significantly. Many of Ukraine’s
large-
scale capitalists—the oligarchs—are
former Soviet-era industrial managers who
succeeded on a grand scale when industries were privatized. Their
wealth was originally
based on a
traditional ,
simple formula :
convert cheap energy and raw materials into
metals and manufactured
goods . The six richest Ukrainians are all metallurgy magnates.
In Ukraine—like in Russia—incumbent managers (
there is a special term in Russian for such
executives/ owners – Red Director ) were present at the
birth of private property and
could harness privatization. The political atmosphere of
nation building helped
keep foreigners —
Russians and Westerners alike—mostly out of the
game . The major exception was the
financial system;
several banks both from the West and the East have entered Ukrainian
markets .
Crucially for Ukraine’s survival, between 2001 and 2008, as metals and
chemicals prices
boomed on the
back of
fast international economic growth while the
price of gas imported
from Russia remained low,
terms of trade
improved by 50 percent. Monetization also helped
to drive this boom, as the
ratio of
credit to GDP grew extremely fast—from 7 to almost 80
percent over just several years.
7
In less
than a decade, Ukraine leaped from an economy not based on
money to
having a
banking sector comparable in relative
size to that of many well-
established market
economies . Credit was at last available, and not only from state-controlled and other
politically connected banks, but from reputable foreign banks channeling
easy international
liquidity to Ukraine as they did to other emerging economies.
From 2000 to 2007, Ukraine’s
real growth averaged 7.4 percent and was thus very
similar to
Russia’s. In both countries, this growth was driven by
domestic demand : orientation
toward consumption , other structural
change , and financial development. In Ukraine, domestic
demand grew in
constant prices by almost 15 percent annually. It was supported by
expansionary—pro-cyclical—fiscal policy generally driven by populism for
perceived short-
term political
gain .
Further , industrial
capacity left idle in the 1990s was
brought into use, capital inflows surged
after 2005, and credit growth was fueled by
external borrowing. In terms of markets, in
2000, the EU was
already the largest, purchasing almost a third of Ukraine’s exports. It was
followed by Russia and
Asia , with a share of just under a
quarter for both. In 2009, Asia
passed the EU, but together they
still accounted for 55 percent of exports. Fast-
growing Asian economies are now the
basic consumers of Ukrainian metallurgy
products , and
Russia’s exports of oil and gas suffer from low growth in Europe more than Ukraine’s exports
do.
Meanwhile , the price of gas remained low. In 2008, the price
paid by Ukraine for gas was still
less than half of that paid by Western European countries. Over a longer
period , this growth
pattern was
bound to be unsustainable. This is the most important
single fact of Ukraine’s
economic prospects. The improving terms of trade of the 2000s were a
positive windfall, but
Ukraine did not
know how to use that windfall wisely. Ukraine’s economy and its growth
prospects ultimately suffered from its nationalism and inefficiency.
The windfall Ukraine enjoyed meant that industry did not have to diversify or become more
sophisticated—two
characteristics that are
necessary for
competition in today’s markets. In
2000, metals and mineral products accounted for half of Ukraine’s exports.
Adding agro-food
and chemicals
took the
proportion to just over 70 percent. In 2008, the
shares remained
quite similar, with agro-food increasing from 11 to 16 percent.
Steel export
unit value grew
more than
four times between 2000 and 2008, while steel export
volume grew only little
between 2000 and 2004, and then stagnated.
Missteps in Domestic Economy
With a windfall to rely on, Ukraine not only failed to diversify its exports but also
mismanaged its domestic economy.
Since 1992 Ukraine has had just one
year , 2002, with a
8
balanced budget. Income growth has been huge, and the ratio of domestic savings declined
as consumption boomed. Since 2001 annual growth in
average monthly earnings has always
surpassed
consumer price inflation, until 2008 quite frequently by more than 20 percentage
points and never much
below that. Such income growth was supported by the country’s high
export, especially steel, prices.
Boosted by rapidly improving terms of trade,
import volumes grew much faster than export
volumes and the net growth impact of foreign trade was
negative by some 5 percent
annually. As imports were liberalized in the 1990s, consumers and investors alike
preferred the
superior quality ,
choice , and
brands available from world markets. By the 2000s an
increasing share of
them could afford foreign goods. Cheap imports from Asian and other
countries also became available. The trade
balance has been consistently negative since
2005, and the current
account has followed since 2006.
Imports contribute to
welfare , but for that to be sustainable, any country also has to be able
to
cover the import bill with exports,
running down reserves, inward investment (direct or
other), or raising foreign credit. But exports, of course, were not
providing the necessary
boost. And Ukraine had to
begin with in
practice no official reserves or foreign
assets and
liabilities, as Russia had taken responsibility for the Soviet bequest. Ukraine inherited no
assets to run down. And no
reserve funds were built to
sustain the fiscal situation over a
longer term. Thus, Ukraine’s dependence on foreign,
usually short-term, funding increased
(which would
prove dangerous in the 2008 crisis and will threaten Ukraine in the future as
well).
Net inward foreign direct investment (FDI) has been positive since 1992, varying in 2005–
2010 between $5 and $10
billion annually. But most foreign direct investment has
gone to
closed-sector
services such as retail trade and
finance , while the industries inherited from
the Soviet Union were privatized to domestic owners and are controlled by oligarchs.
These industries have
typically failed to become more
competitive in more than a decade. Major
needs for infrastructure investment have accumulated.
In
contrast to traditional industries, foreign entry into financial services was encouraged. Up
to 40 percent of bank assets have been controlled by foreign entities, but the share is now
declining with only Russian banks penetrating the market. Some Western banks are
downsizing their
activities , and a few at
least wish to
exit , if they only could
without losing
their past investments.
In spite of inevitably worsening demographics, a huge
pension burden was created. In a
nation of 46 million inhabitants, the pensions of 14 million pensioners grew from 9.2 percent
of GDP in 2003 to almost 18 percent in 2009. This is one of the heaviest pension burdens
9
globally, and negative demographics will
continue to worsen the situation if needed
measures , like increasing the general pension age, are not taken.
The end of cheap gas
By the mid-2000s, Russia had reached several conclusions on energy and money that
started to rock Ukraine’s
position . The much-needed energy efficiency demanded a huge change in
the
whole of economy and society—as in Ukraine—a
process known in Russia as
modernization.
The
first necessary
condition for modernization was to
raise domestic gas and consequently
power prices. A roadmap for doing that was accepted in
late 2006, and an evident
conclusion emerged. If Russians had to pay more, there was no
reason why Belarusians,
Ukrainians, and others should continue to be subsidized.
The simple Russian
proposition has had dramatic consequences for Ukraine. Ukraine’s terms
of trade would change from a windfall to a downpour of cold rain. And Ukraine had not
made the necessary domestic reforms to
prepare for such a
turn of
events .
There have been aspiring political leaders who have thought that the Russian
decision may
be turned or at least postponed by playing on the Slavic or Eurasian Union cards: Ukrainians
will continue to entertain prospects of Eastern integration if Russia continues postponing
inevitable price hikes. Trying to
avoid the price
revolution is surely seen by some inside
Ukraine as a potent argument for
joining post-Soviet reintegration schemes, like Belarus has
done .
Others in Kiev
found virtue in necessity. In the end the price revolution would
benefit Ukraine by
making long-postponed reforms inevitable. Perhaps as well, excessive
dependence on Russia could be minimized by
developing domestic
sources of energy, like
unconventional gas. Others took solace in the possibility that Ukraine’s export prices might
in the end
increase faster than those of Russia’s exports.
Possibilities for the future have been explored, but meanwhile populist policies have
continued unabated. The Yanukovych government has refused to increase gas prices for
households, as demanded by the International Monetary Fund (IMF) as a key condition for
continued financial support.
Waste of energy by households thus continues unabated. There
has also been no progress in reducing the burden posed by excessive pension expenditures
on the budget—now and especially in the future.
Debt builds
10
Compounding this was the financial crisis that rocked the international economic system in
2007–2008. Ukraine’s
lack of sound domestic economic
structures and debt
accumulation made it especially difficult for the country to weather the financial storm. Gross reserves
have grown from less than a
month ’s imports to around
five months’ worth from 2005 to
2010, still a modest level. Public and private foreign debt has recently risen fast from more
than $10 billion in 1997–2002 to over $100 billion in 2008–2009. The 2008 level was 56.4
percent of GDP and 118.7 percent of exports.
In 2009, as GDP declined and the UAH weakened, external debt stock was 91.5 percent of
GDP and 191.6 percent of annual exports—
clearly an unsustainable level for Ukraine. In late
2011, Ukraine’s official reserves were some $30 billion. Paying back its debt—barring a
further accelerated depletion of foreign
exchange reserves—would be
close to impossible
without
fresh foreign finance, preferably in the form of disbursements from the IMF.
A two-year IMF
stand -by arrangement, put in
place in 2008, provided exceptional
access to
financing that was
crucial in helping Ukraine
through the Great Recession. In
particular , it
helped to
prevent a banking crisis. In many respects, however, Ukraine reneged on its
commitments, and the
program went off-
track very soon, as a 2011 IMF evaluation
concludes. This holds for fiscal, exchange
rate , and monetary policies, but in particular for
the energy sector.
In 2008, Ukraine committed itself to phasing out all gas subsidies in three years, but little
was done on that
front . For some
specific industries, gas prices were actually decreased in
2009. Ukrainian households still pay traditionally extremely little for the gas their
everyday life depends on. At end of the year, gas prices for households accounted for about one-fifth
and those for
utilities for one-third of import prices. Officially the low gas prices are justified
as poverty alleviation, but it is difficult to imagine a less effective and less equitable pro-poor
policy.
The chart below illustrates
dynamic of gas prices in Ukraine – import
vs household prices.
11
Source: Ukraine Macro Outlook for 2013 by UkrSibbank (BNP Paribas Group)
Following this, there was little left of Ukraine’s credibility as a policy program partner. Yet,
another stand-by arrangement amounting to $15.3 billion was somewhat surprisingly
approved by the IMF on
July 28, 2010.
2013 is extremely challenging year for Ukraine in terms of servicing its debt. The table below
summarizes Ukraine’s FX (foreign currency) denominated debt repayment schedule for 2013
is billion $.
12
Source: Ukraine Macro Outlook for 2013 by UkrSibbank (BNP Paribas Group)
Not all bad news
Ukraine could be a rich country. No other European country can boast its resources of coal,
iron, gas, and rich agrarian
land . Almost three-quarters of its area is agricultural land, more
than half arable. Though the quality of legendary black earth deteriorated
during the Soviet
decades, it remains
among the best globally.
The country has some oil and conventional gas, and perhaps more importantly, possesses as
much as 4 percent of
global coal reserves. Though more than half of energy consumed is
imported, reserves of unconventional gas are estimated to be several trillions of cubic
meters in size, promising gas independence from Russia in about two decades. Indeed,
Ukraine’s growth rate in 2001–2008, boosted by exceptional improvement in terms of trade,
was fully comparable with Eurasian hydrocarbon
producers at some 7 percent annually.
Infrastructure is in spite of deterioration in relatively good
shape . The Soviet Union left
industries, for
instance in crucially important metallurgy, that are generally taken to be in
better condition than in Russia.
Ukraine was a potentially rich country made poor by a tragic history. During the years
following independence, Ukraine has grown with the region, but relative to many
expectations, this has been a bitter disappointment. Ukraine is seen as an underachiever.
Source:
http://carnegieendowment.org/2012/03/09/underachiever-ukraine-s-economy -
since-1991/a1nf#
13
1.1.3. Key Macroeconomic indicators
For Key Macroeconomic indicators and forecasts
please refer to Appendix 1.
Ukraine’s economic sectors are
diverse , but in need of new capital and investments to
compete with sectors in the West. The country’s major export categories
include :
ferrous and non-ferrous metals,
steel products and steel structures;
chemical products (
including fertilizers;
plastics and
rubber );
agricultural products and food (mainly
grains , cereals; food
processing and packaging).
As seen from the list
above , Ukrainian economy is strongly dependent on various
commodities and as
result of price fluctuations of those commodities. Perhaps, the only
commodity group, which is in long-run
rather immune (not 100% though) to cyclical
changes are agricultural products.
Taking into account growing population
worldwide and gradual
income growth, particularly in food importing Asia and
Africa , it’s rather
safe assumption
that demand and prices for agricultural products will continue upwards trend. Ukraine with
Europe’s best and largest
areas for
agriculture is very well positioned to benefit from the
World’s growing demand for food.
Other commodities exported by Ukraine (such as steel, coal, chemicals etc) are and will
continue to be
affected by cycles of the global economy – there will be periods of growing
demand and prices hikes as well as periods of
slowing demand and declining price.
Ukraine’s dependence on energy supplies and the lack of significant structural reform have
made the Ukrainian economy vulnerable to external shocks. Ukraine depends on imports to
meet about 75% of its annual oil and natural gas
requirements and 100% of its
nuclear fuel
needs.
The
strong correlation between world commodity prices and Ukraine’s economic growth can
be seen in
Figure below.
14
A
drop in steel prices - Ukraine’s top export - and Ukraine’s exposure to the global financial
crisis because of
aggressive foreign borrowing lowered the GDP growth rate in 2008.
Ukraine reached an agreement with the IMF for a USD 16.4 billion Stand-By Arrangement in
November 2008 to deal with the economic crisis, but the program quickly stalled because
little progress was made in implementing reforms. The economy contracted
nearly 15% in
2009 - one of the worst economic performances in the world.
In April 2010, Ukraine negotiated a price discount on Russian gas imports in exchange for
extending Russia’s
lease on its
naval base in Crimea. In August 2010, Ukraine reached a new
agreement with the IMF for a USD 15.1 billion Stand-By Agreement to put the country on the
path to fiscal sustainability, reform the gas sector, and
shore up the country’s banking
system. Economic growth resumed in 2010 and 2011, buoyed by exports. After initial
disbursements, the IMF program stalled in
early 2011 due to the lack of progress in
implementing key gas sector reforms, namely gas tariff
increases (
obviously politically very
unpopular measure ).
Agriculture
fell to 9.3% of the total GDP in 2011 compared with 14% in 1999. Industry,
including
mining ,
manufacturing and
construction , continued to account for 34.7% in this
period. Meanwhile, trade and other services grew from 51 to 56.1 percent.
15
1.1.4. Foreign Direct Investments
Despite having huge potential, Ukrainian economy is critically lacking in foreign investments.
Percentage of FDI to GDP was declining very year since 2007 and, according to BNP Paribas
in Ukraine forecast, projected to continue declining during 2013-2104.
According to State Statistics
Service of Ukraine, foreign direct investment (FDI) in a form of
equity capital slowed substantially in 2012. FDI for the period of
January – September 2012
(3 quarters) amounted to USD 2.6 billion, which was 29.4% down year of a year.
Investments
came from 129 countries and regions. The ten largest
investor countries, which
account for over 82% of total FDI, are Cyprus with $15.076 billion in investment,
Germany with $7.4 billion, the
Netherlands with $5.04 billion, Russia with $3.71 billion, Austria with
$3.3 billion, the United Kingdom with $2.4 billion, the
British Virgin
Islands with $1.81 billion,
France with $1.8 billion,
Sweden with $1.58 billion, and Switzerland with $1.09 billion.
Industrial
enterprises received $16.866 billion in investment, which was 32% of total FID in
Ukraine. In particular, $13.936 billion was
invested in the processing industry $1.51 billion in
the production and distribution of electricity and gas, and the water
supply , and $1.424
billion in the mining industry.
In the processing industry the investment was
split in the following way: the
manufacture of
basic metals and fabricated metalware received $6.137 billion in direct investment, the
production of food,
beverages and tobacco got $2.995 billion, chemical and petrochemical
industry $1.321 billion,
engineering $1.156 billion, while the manufacture of other non-
metallic mineral products $1.013 billion.
Financial
institutions accumulated $15.702 billion in direct investment, which was 29.8% of
total
amount .
A total of $8.523 billion, or 16.2% of total FDI, was invested in
organizations that are
engaged in transactions with real
estate , rent and leasing, engineering, and services to
individuals, while $5.503 billion, or 10.4%, was invested in enterprises engaged in trade,
repairs of motor vehicles, household and personal goods.
Total foreign direct investment (equity and debt
instruments ) as of October 1, 2012 was
$6.252 billion.
The amount of direct investment (equity) from Ukraine in other countries as of October 1,
2012 was $6.428 billion, in particular, EU countries received $6.027 billion (93.7% of total
amount), the CIS countries $306 million (4.8%), and other countries $95 million (1.5%).
16
Direct investment from Ukraine went to 47 countries, the
lion ’s share
going to Cyprus
(90.4%). Total direct investment (equity and debt instruments) by Ukraine in other countries
as of October 1, 2012, amounted to $6.652 billion.
Source: The American Chamber of Commerce in Ukraine
The European Bank for Reconstruction and Development continues to be the largest
financial investor in Ukraine. As of January 1, 2013 the Bank has committed more than EUR
8.2 billion (USD 10.7 billion) in 318 projects. In 2012, the EBRD has invested EUR 934
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