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Yuliya Kovaliv

Head of Office of the National Investment Council

With almost ten years of experience in executive positions throughout Ukraine’s energy and public administration, Yuliya Kovaliv became the head of the Office of the National Investment Council in 2016. Founded in 2014 as part of the country’s transformation into a more business-friendly economy, the National Investment Council promotes investment, while also providing advisory solutions for investors. Here, Kovaliv explains the history of the entity and what most attracts investors to the new Ukraine

The National Investment Council was created in December 2014. What is the story behind its creation, the need for it, and how much ground you’ve managed to cover between 2014 and today?

During this time the economy of Ukraine has stabilized. We have had nine quarters of permanent economic growth. IMF data predict that Ukraine’s GDP growth in 2018 will be 3.2 percent and the forecast for 2019 is optimistic. Since 2014, the country gained 32 points on in the World Bank’s Ease of Doing Business, and in 2018 it was the 76th among all countries. To give the economy a tangible boost and to improve its long-term perspective, Ukraine needs foreign direct investments. Both the president and the government have a clear understanding of why making the investment climate more favorable and supporting policy reform are essential for investment promotion. The dominant idea now is to return Ukraine onto the radars of strategic investors.

With this idea in mind, President Poroshenko established the National Investment Council – an advisory body giving a platform for direct dialogue between international investors and government bodies. On May 25, the council met in Kyiv, a meeting that gathered top managers and owners of 20 multinational companies with a total capitalization of almost $1 trillion. They are already working in Ukraine and are considering expanding their business here.

The meeting was an opportunity for Ukraine’s top officials to present the results of the reforms to the council members. Likewise, business leaders shared their views on what Ukraine still has to do to improve the investment climate and pinpointed the further priorities for reforms. Many companies announced their plans to expand on the local arena and came up with co-projects with other council member companies.­­

The member companies represent the global business sector and come from Europe, Asia, and North America. In terms of industries, they operate in the agricultural sector, finance, transport infrastructure, telecom, IT, energy and renewables. These are the sectors where Ukraine has a fantastic potential in terms of building public-private partnerships and growing investments.

The first meeting of the Investment Council was headed by the President and co-chaired by the president of the European Bank for Reconstruction and Development (EBRD), Sir Suma Chakrabarti. The EBRD is the single biggest investor in the country, and its president stated at the meeting that the bank was looking forward to further expand its portfolio here. We also received commitments from many other council members to significantly enlarge their investment into the Ukrainian economy. They acknowledged achievements Ukraine has made following the course of reforms, mainly in the field of deregulation and eliminating the burdens and bureaucracy around doing business, as well as the launch of the judicial reform with the new team of the Supreme Court taking office in early 2018.

Previously, the biggest issue for big exporters was the VAT refund. This has now been resolved, and they are actually very excited about how easy it is now to trade from Ukraine. A huge step forward has been made in the further liberalization of cross-border trade, with the Deep and Comprehensive Free Trade Area (DCFTA) coming into force. It has made Ukraine a very competitive location for export facilities on the European market. While the FTA with Canada increases the enormous potential of bilateral business with Canada, the country is now completing another agreement of the kind, with Israel. Ukraine now has FTAs with over 40 countries, and taking into account the very competitive cost of doing business in the country, Ukraine offers significant advantages to investors. Over the last two years, more than 115 new production facilities were launched in Ukraine, most of them being export-oriented. This is probably the best evidence that the reforms we have launched since 2014 have bearing fruit.

“The government is now extremely open to investors, ready to react to issues and support international business working in the country”

The Investment Council’s members include multinational companies and business associations. How did you approach them to join the council?

These are the companies that represent a huge diversity of the business activities in the country, covering different sectors and covering a global perspective. They include companies who have invested a lot in the country and are forecast to further enlarge their investment, and also include newcomers to the Ukrainian economy. When new companies enter the Ukrainian market, we will invite them to be members of the council. Each of our members received a special invitation from the President of Ukraine to participate, and of course, all of them were delighted to provide their input and advice about where the next steps of further improvement need to be taken.


What are the principal issues that member companies have in Ukraine, and what are they asking from the government in terms of assistance?

There are a few measures investors expect Ukraine to introduce and implement this and next year. First is privatization, because Ukraine still has a huge state-owned sector with more than 3,000 state-owned companies.

Investors see great potential in taking part in the privatization of the state-owned assets in the country, and at the beginning of this year, the new privatization law was voted in the Parliament that not only allows transparent, competitive privatization procedures but also gives confidence to the businesses to participate.

For example, privatization will be run under UK law, introducing international arbitrage to protect investors’ rights as well as introducing reputable advisors, investment banks, who will run all of the preparation and advice in terms of launching the privatization of big, state-owned companies.

The second aspect is around building effective public-private partnerships that will help reveal the tremendous potential of the Ukrainian transport infrastructure, utilities and energy sectors. Concessions will introduce an investable and bankable instrument to attract investors, for example, in seaport infrastructure, road construction, airport concessions, and utility sector.  

The third aspect that was mentioned at the Investment Council meeting was further reform of the judiciary and protection of property rights. Ukraine is committed to moving forward with it, with establishing the anti-corruption court and further reforming the judiciary system, including local courts. Another important commitment of the Ukrainian government is the one to the IMF program which Ukraine needs to support macroeconomic stability.

And finally, investors demonstrate a deep interest in the process of digitalization of the Ukrainian economy and driving the digital agenda. We are observing a great uplift in the local IT sector. It has become one of the biggest export service sectors: in 2017, Ukraine exported $3.6 billion in IT services, and this year we expect that figure to reach at least $4 billion. The government has committed to support the development of IT through education. Indeed, Ukraine is one of the top 30 countries in terms of the quality of human capital, and that is our big advantage.

Which sectors are most attractive to investors in Ukraine?

We see growing interest from investors who come to Ukraine to explore opportunities and possible projects. Apart from IT with its rapid pace of development, agriculture, renewable energy, gas upstream and transport infrastructure are mostly on their agenda.

Since 2014, Ukraine has done a lot of deregulation in the energy sector which increases its potential and attractiveness from the international investor’s point of view. We see more and more projects in renewable energy productions, with international companies building wind farms, solar and biomass plants. Since 2015, over 1 billion euros have been invested into renewable energy production in Ukraine, and the forecast for the years to come is more than optimistic. Agriculture remains traditionally investment attractive. Last but not least is the modernization of the country’s transport infrastructure. Seaports and airports modernization, new road construction, liberalization of the railway – due to the scarce budget financing, these projects require private capital.

“Ukraine has enormous potential in terms of very skilled, very motivated and highly proficient people”

What have been the biggest deals so far, and what is in the pipeline in terms of FDI?

One of its biggest deals in Ukraine in 2018 was the $1 billion framework agreement between Ukrainian Railways and General Electric. This is GE’s largest-ever deal in Ukraine, and as it is linked to up to 40 percent of production localization in the country, it will not only help to renovate Ukrainian Railways’ locomotive fleet but will also boost the further development of the spare parts production inside the country.

We are also expecting a few major deals in the transport infrastructure, with big international players to enter Ukrainian seaports, as well as energy companies from Europe who are looking into the renewables sector.

By the end of the year, we expect to see deals on the construction of 200 megawatts of renewable energy production capacities with $250 million invested into it.

Furthermore, large retailers are now looking at the Ukrainian market. Apart from H&M that will officially open in August, more iconic retail brands will enter the Ukrainian market within the next 8-10 months. And this is the best proof of the recovering economy.

As for privatization, we currently have at least 26 big SOEs to be privatized, from energy generation and distribution companies to chemical and industrial companies.

“We welcome every investor here, ready to support and give them a hand”

How difficult is it to convince foreign investors of the quality and capacity of Ukraine as a place to invest?

You know seeing is believing, that’s why we invite investors to come to Ukraine and see it not only from the headlines in the media but actually on the ground. This year, we have had a huge inflow of both financial institutions and strategic investors coming to Ukraine, and what they experience here is dramatically different from the picture they tend to see from head offices in their countries. Ukraine has changed a lot, a lot of key challenges have been fixed, but what is also important is the attitude to business, which has changed dramatically. Both the president and the government are now extremely open to investors, ready to react to issues and support international business working in the country, paying taxes here and creating jobs. This is very important because it allows us to build this public-private dialogue and see its results.

Today, local business associations confirm that they have never witnessed such openness and readiness to respond from all of the government agencies. Of course, we still need to do a lot of homework, but with the support of the international companies here in Ukraine, their global experience, perspective and advice, we are certainly able to proceed in the right direction.

What would be your message about Ukraine as an investment destination?

Ukraine has enormous potential in terms of very skilled, very motivated and highly proficient people. It has an abundance of natural resources, from the agricultural sector to the natural oil and gas reserves. The country has done a lot to improve and become a steadily growing economy. Despite the challenges related to the illegal annexation of part of our territory and the Russian aggression in the East of Ukraine, the country is safe for doing business. We are moving forward, and we welcome every investor here, ready to support and give them a hand.

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