Prospects of the Investment Climate of Ukraine

Improvement of investment climate is one of the most important challenges which are solving by the majority of countries. The crisis still continues to exist in the world economy.

According to the IMF, recovery will be slow, because financial systems are still damaged. Global financial crisis is far from to be over. Primarily the international community should not allow re-turn of recession, through the strengthening of economy and resumption of economic activity including investments.

According to the State Statistics Committee, the volume of direct foreign investments into Ukraine in the first quarter of 2010 was 717.1 million USD. In January-March 2010, the net increase in total foreign capital into Ukraine economy was 98.3 million USD. According to the Ministry of Economy of Ukraine, the average amount of investment growth in 2010 will be 6.2%.

For today the main suppliers of investments in Ukraine are all traditional developed countries. However, nowadays increasingly active and significant investors become new economies or the BRIC countries: Brazil, Russia, India and China. Russia takes the greatest activity. For example, in the first quarter of 2010 the volume of capital from Russia increased for 103.5 million USD, in comparison, the volume of capital from France increased for 68.1 million USD, from Germany – 44.7 million USD, from Poland –19.3 million USD. So, together with the inflow of investment from the traditional countries-investors we can expect an investment increase from the countries – beginners of the investment market.

The important encouragement of creation a favorable investment climate in the country and increase the inflow of investments is Government support. The essential place in the Government’s reform program takes the improvement of business-climate and investments attraction.

In particular, up to the end of 2010 the Cabinet of Ministers of Ukraine intends to create a unified authority on assistance of investments attraction and special conditions of investment activity. The First Vice-Prime Minister of Ukraine Andriy Klyuyev has informed about it, speaking at the XIV St. Petersburg International Economic Forum on June the 17th at the round table Russia – CIS Business Dialogue. According to these special conditions investors will have significant tax preferences.

Verkhovna Rada of Ukraine considered the law of exemption from income tax of 3-5* hotels which will be reconstructed or put in operation before September, the 1st, 2012.

The Government is also developing an improved system of taxation. It should result in reduce of VAT rates and the profit tax. This concept foresees reduction of VAT from 20% to 17%, profit tax – from 25% to 22%.

Organized actions of the government, improvement of political coordination is one of the reasons why on May the 17th, 2010 the Standard & Poor’s raised credit ratings of Ukraine on national scale from uaA to uaA+. The rating’s forecast is Stable.

Improvement of Ukraine investment climate and realization of intentions of the Government on investment attraction make it possible to predict the increase of foreign capital inflow.