What standard contract forms are used for construction and design? Must the language of the contract be the local language? Are there restrictions on choice of law and the venue for dispute resolution?
In Ukraine, there is no standard mandatory form of a construction contract. ‘The General Conditions for Conclusion and Performance of Capital Construction Contacts’ approved by the Resolution of the Cabinet of Ministers of Ukraine No. 668, dated 1 August 2005 (Regulation No. 668) provides recommended terms and conditions of construction contract in capital construction, which the parties may deviate, provided that the provisions of the contract do not contradict imperative (mandatory) provisions of Ukrainian law. Regulations No. 668 provides that the general conditions should be ‘mandatorily taken into consideration’ irrespective of the sources of construction funding or the form of ownership of an employer or a contractor.
Regulation No. 668 does not provide for a binary structure of a construction contract – there are no references to particular conditions such as in FIDIC contracts. It is more common in Ukraine to have a construction contract drafted as a single document, without splitting it into General Conditions and Particular Conditions as in the case with FIDIC.
According to the Commercial Code of Ukraine and Regulation No 668, the construction contract should contain the following material terms to be valid:
name and details of the parties;
date and place of execution of the contract;
the subject matter of the contract;
contract price;
terms for commencement and completion of work;
rights and obligations of the parties;
instruments to secure fulfillment of obligations under the contract;
order of procurement of design documentation, resources and services required for the performance of works;
order of engagement of subcontractors;
requirements for the arrangement of works;
order of employer’s supervision over the quality of resources;
terms for conduction of author’s and technical supervision with respect to construction works;
sources and order of financing of construction works;
payment procedure;
procedure of handover of completed construction works/construction object;
guarantee terms regarding the works and object, remedy of defects;
parties’ liability for the violation of the contract;
disputes resolution procedure; and
grounds and procedure for amendment of the contract and its termination.
Template forms of contracts such as FIDIC may be used subject to their alignment with Ukrainian imperative law provisions.
The language of business documentation, social and economic relations as well as agreements shall be the official state language (ie, Ukrainian). At the same time, the current legislation does not prohibit concluding bilingual contracts, which are widely used in international contracts (contracts with a foreign element).
Provided that the construction contract contains a foreign element (either party is a foreign entity), the contract may be governed by a foreign law and the parties may apply either to Ukrainian courts or international arbitration institutions, subject to the agreement of the parties. As a matter of practice, construction contracts concluded as a result of public procurements are usually governed by Ukrainian law at the request of the customer.Payment methods
How are contractors, subcontractors, vendors and workers typically paid and is there a standard frequency for payments?
Payments under construction, supply and services contracts are normally made by wire transfer. The National Bank of Ukraine limits the amount of cash settlements per day to 10,000 hryvnas between business entities, 50,000 hryvnas with individuals. Non-cash payments shall be made through banks and non-bank payment service providers where the respective accounts are opened. Payment procedures as well as frequency of payments are subject to the agreement of the parties.Contractual matrix of international projects
What is the typical contractual matrix for a major project in your jurisdiction in terms of the contractual relationships among the various construction project participants?
As a matter of practice, employers in Ukraine usually conclude contracts for design works and construction works directly with certified designers and licensed contractors. For small-scale projects, employers usually engage contractors for separate work packages with a designer, and multiple contractors responsible for the fulfilment of different work packages. For large-scale projects, employers engage a general contractor, who then hires subcontractors for relevant packages of works and manages construction. The general contractor may be responsible only for construction works based on the design documentation provided by the employer (eg, similar to the FIDIC Red Book contract) or perform both design and construction works (eg, similar to the FIDIC Yellow Book contract).
Engaging an engineer (eg, with the functions as provided, eg, in the FIDIC Red, Yellow or Harmonised MDB edition) is not a widespread practice in Ukraine. Nevertheless, such engineer is often engaged in large-scale international contracts or contracts involving financing from IFIs.PPP and PFI
Is there a formal statutory and regulatory framework for PPP and PFI contracts?
Ukraine has a regulatory framework for PPPs and concessions. It was significantly updated in 2018 and is still being improved. The Ukrainian PPP regulatory framework was developed in consideration of best international practices and currently includes over 20 laws and by-laws, including the following key legislation:
Are all members of consortia jointly liable for the entire project or may they allocate liability and responsibility among them?
Ukrainian law does not provide for the joint and several liability of the consortium members. Unless Ukrainian law directly provides for joint and several liability, the parties of the contract are free to agree on joint and several or joint shared liability of the consortium members.
In large-scale projects, employers prefer having a general contractor be liable for the management, timely and proper fulfillment of all works.Tort claims and indemnity
Do local laws permit a contracting party to be indemnified against all acts, errors and omissions arising from the work of the other party, even when the first party is negligent?
Under Ukrainian law, the general contractor is liable for the proper fulfilment of construction works assigned to the general contractor under the construction contract regardless of whether such works were performed by the general contractor or a subcontractor. A general contractor is liable to the employer for non-fulfilment or improper fulfilment of obligations by its subcontractors regardless of the subcontractor’s fault.
At the same time, a breaching party (eg, subcontractor) shall compensate damages to another party (eg, general contractor), unless it proves that the breach of the obligation occurred through no fault of his or her own. Therefore, the general contractor may file a regress claim to its subcontractor. Liability to third parties
Where a contractor constructs a building that will be sold or leased to a third party, does the contractor bear any potential responsibility to the third party? May the third party pursue a claim against the contractor despite the lack of contractual privity?
The contractor is liable to the employer or developer for the quality of works within the warranty period established by the contract or law and shall remove any defects in the building, within the warranty period. A third party who purchased a building from the employer or developer (first purchaser) has the right to file a claim with regard to the defects of such building to the employer/developer, which will then have a right to file a regress claim to the contractor within the statute of limitation. If the first purchaser is to further sell the building to another person, such new purchaser will have no right of claim to the employer or developer.Insurance
To what extent do available insurance products afford a contractor coverage for: damage to the property of third parties; injury to workers or third parties; delay damages; and damages due to environmental hazards? Does the local law limit contractors’ liability for damages?
The above risks may be covered by the following insurances available in Ukraine:
insurance of construction risks, which, among other, includes insurance against accidental damages to the property of third parties;
third party liability insurance, which covers liability for the damages to the property or health of third parties;
professional indemnity insurance allows to ensure against losses unintentionally caused to third parties in the course of professional activities as a result of unintentional professional error (omission, negligence) or other events stipulated by the insurance contract;
environmental insurance; and
accident insurance including an industrial injury and occupational illness of employees.
Under Ukrainian law, the damages and losses (direct losses and lost profit) shall be reimbursed in full unless liability is limited by the law or contract. Ukrainian law does not limit the contractor’s liability for damages. At the same time, the law prohibits limiting liability for the intentional breach of obligations.
The ongoing Russian aggression has turned Ukrainian energy sector into a critical battlefield, with Russia’s relentless attacks targeting infrastructure that sustains Ukraine’s power grid and heating systems. Since the full-scale invasion began in February 2022, these attacks have inflicted unprecedented damage, pushing Ukraine’s energy system to the brink. Yet, amid the darkness lies an opportunity to rebuild the energy sector not only to survive the war but to emerge stronger, greener, and more self-reliant.
Ukraine’s import patterns for energy equipment tell a story of both immediate necessity and long-term strategic thinking. The domestic production capacities were not sufficient to meet the energy demand following the destruction of domestic energy infrastructure, so in response the country has seen a significant surge in the imports of critical energy equipment. The share of energy equipment imports within Ukraine’s total imports nearly doubled from 1.4% in 2021 (EUR 0.9 billion out of EUR 61.6 billion) to 2.7% in 2023 (EUR 1.6 billion out of EUR 58.7 billion), reflecting the urgency to repair and replace what has been lost. Diesel generators and electricity storage systems have been at the forefront of this import surge, essential for ensuring backup power during frequent outages caused by ongoing Russian attacks.
Figure 1. Share of energy equipment imports by category, annual total (2021-2023), EUR million
Source: International Trade Center based on Ukrstat data, authors’ calculations. Note: since this figure is based on customs statistics, it does not include in-kind donations of equipment
The prioritisation of non-renewable energy generation equipment, particularly diesel generators, underscore the immediate need to stabilise power supplies during the ongoing war conditions. These generators are quick to deploy and provide reliable power, which is crucial when the grid is under constant threat. However, this short-term reliance on fossil-fuel-based technologies carries long-term risks. Ukraine’s domestic oil refining capacities have been destroyed by Russian bombing, creating reliance on oil product imports and this dependency introduces significant economic risks due to potential supply chain disruptions and price volatility. And this is not even mentioning lock-in risks and the impact on greenhouse gas (GHG) emissions.
On the other hand, the war has starkly highlighted the strategic importance of renewable energy sources. Solar photovoltaic (PV) systems, for example, offer a decentralised power solution less vulnerable to large-scale attacks. Despite a decline in imports of renewable energy equipment—solar PV imports fell from EUR 193 million in 2021 to EUR 52 million in 2022 before partially recovering—there is a growing recognition of the need to pivot towards renewables. The integration of solar PV and wind energy, coupled with robust storage solutions to manage the intermittency of renewable energy, is seen as one of the key tenets of a resilient energy infrastructure that can withstand future disruptions.
While the immediate priority must be to ensure enough power and heat are available to the population for the coming winter, and that sufficient flexible capacity (such as highly manoeuvrable gas-powered plants) is present in the system, there is ample room for growth in terms of renewable rollout. Higher renewable ambitions are presented in all key governmental planning documents, even in the short-term to mid-term, including in the recently adopted National Energy and Climate Plan 2025-2030. Importantly, the deployment of small-scale renewable solutions has already been key, providing more reliable power to not only individual consumers, but also to public buildings, including schools and hospitals. The goal is not yet to provide full generation autonomy, but the installation of decentralised renewables has been important in helping provide power during both planned and unplanned blackouts, which Ukraine has been experiencing throughout the war. This has especially been the case in the last few months, as Russia’s missile attacks and attacking of key infrastructure has intensified.
Figure 2. Imports of energy equipment by technology, in EUR million
Source: International Trade Center based on Ukrstat data, authors’ calculations
International partners have played a vital role in supporting Ukraine’s energy sector. Through in-kind donations and coordinated efforts by international partners such as the Ukraine Energy Support Fund, G7+ Energy Coordination Group, Ukraine Support Task Force, and EU Civil Protection Mechanism, significant quantities of critical energy equipment have been delivered, strengthening the country’s ability to restore power amidst ongoing attacks. However, this external assistance must be complemented by robust domestic policies that create the conditions for an organic development of the renewable energy segment.
Ukraine has already begun taking steps in this direction. Legislative measures have been enacted, such as the July 2023 Law No. 3220-IX which aims at simplifying the connection of renewable energy generation facilities to the grid, and bolstering benefits for prosumers (individuals who both consume and produce energy). Financial and market mechanisms are also increasingly emerging, and in July 2024 the Government of Ukraine announced a 0% interest loan program for households that purchase and install renewable energy generating equipment and energy storage systems, as well as support to businesses. While these amounts are small for now, the creation of a new 5-year product for ancillary services provides an important instrument to enable market-based investments into the system.
In many cases, small-scale solar PV panels already provide good value even under the currently capped electricity tariffs, with lower-bound estimates from a study earlier this year suggesting payback periods below 8 years. Importantly, larger amounts of battery storage will be needed to ensure that renewable energy sources can be integrated into the system. In mid-2024, the Transmission System Operator Ukrenergo took important steps forward in this direction, holding a successful auction for 99 MW of storage capacity.
If expanded and sustained, these initiatives could drive a significant shift towards a greener energy system, reducing the country’s reliance on imported fossil fuels and enhancing its long-term energy security. While the immediate focus is elsewhere, renewables can already help and must be prioritised in the overall reconstruction of the system, going in tandem with increases in balancing and storage capacity.
For decision-makers and stakeholders involved in Ukraine’s energy and climate strategies, the message is clear: the war presents a bittersweet opportunity to rebuild the energy system back in a greener and better way. While in the short-term, especially for the upcoming heating season, all measures must be pursued to ensure the provision of electricity and heat to Ukrainians, the role of renewables must not be neglected. This is especially pertinent given Ukraine’s climate commitments, its ongoing accession to the European Union, as well as the long-term economic competitiveness of the Ukrainian economy.
The stakes are high. Ukraine’s energy future hangs in the balance, and the decisions made today will have lasting implications for the country’s resilience and environmental sustainability. Many pathways have to be pursued concurrently. Part of the story is ensuring the continuous operations of the country’s nuclear fleet, which was and continues to be instrumental to Ukraine’s electricity supply. Increasing interconnections and electricity trading capacities with the ENTSO-E is also fundamental on the supply side, while bolstering energy efficiency measures and demand response can decrease the pressure on generating capacities. Continuous system stability and balancing capacities are hugely needed and will require fundamental investments in the transmission grid, but also in larger battery storage and highly manoeuvrable gas capacities. Importantly, decentralisation and the continued roll-out of small-scale renewable solutions however also play a key role. By continuing to prioritise and invest in renewable energy, both small- and utility-scale, coupled with the other aforementioned assets, Ukraine can not only rebuild what has been lost but also create a more secure future. The war has revealed the vulnerabilities of the old energy system—now is the time to embrace a new one.
At the beginning of the full-scale invasion, many people lost their jobs. Now, one of the biggest challenges for businesses is a labor shortage, despite the still significant level of unemployment. This indicates that structural unemployment has increased in Ukraine. The war has created extraordinary challenges for the labor market, including workforce losses due to migration and mobilization, as well as changes in employment structures. Such a situation calls for effective government intervention. What is the current state of the labor market, and what measures is the government proposing to address the challenges caused by the war?
Labor demand and supply
With the mass departure of citizens abroad, internal displacement, and mobilization, the workforce shortage is increasing in Ukraine. According to UN estimates, the number of Ukrainian migrants worldwide is 6.7 million people, primarily women and children. Of these, approximately 1.7 million were employed in Ukraine before leaving, representing 10.6% of the economically active population before the full-scale invasion. According to NBU surveys, 44% of enterprises in 2023 faced staffing difficulties due to the mass reduction of employees related to mobilization and 24% due to migration.
Data from a survey by the European Business Association also indicates a growing workforce shortage: as of April 2024, 74% of surveyed employers experienced this issue (+19 percentage points compared to fall 2023), while only 7% of businesses reported no shortage (-5 percentage points). According to the survey by the State Employment Service of Ukraine (SESU), 26.7% of enterprises faced a workforce shortage in 2023, while NBU survey data puts this figure at 36%.
The reduction of the labor force in 2023 by approximately 40% compared to 2021 (according to NBU estimates) is attributed to factors such as demographic losses, people transitioning to economically inactive status, difficulties for IDPs in finding work, the occupation of part of the territories, the need to care for other family members, and the lack of skills required in the labor market.
Unemployment and qualifications
According to NBU estimates, the unemployment rate remains high, although it has decreased from 21% in 2022 to a projected 14% in 2024 (Figure 1). It is important to note that before 2022, the State Statistics Service of Ukraine provided official unemployment data based on regular household surveys. However, these surveys were discontinued due to the war, making accurate assessments more difficult. Therefore, current figures are based on selective surveys and labor market modeling.
Figure 1. Unemployment rate in 2021-2024 according to ILO definition (percentage ratio of unemployed to economically active population aged 15-70)
Unemployed individuals are seeking jobs, but their skills and qualifications do not always match employers’ requirements. Surveys show that 16% to 18% of employers face the issue of insufficient qualifications among applicants for open positions.
The unemployment rate among IDPs is higher than the general population. According to the Ministry of Social Policy of Ukraine, there are 4.7 million registered IDPs in Ukraine, 42.3% of whom are of working age. As of September 2023, only about 800,000 working-age IDPs, or 38%, were employed. The survey by the IOM conducted in April 2024 showed an increase in employment among working-age IDPs: 45% were employed, and an additional 7% were self-employed at the time. IDPs themselves cite the lack of job opportunities in their new locations and a mismatch between their qualifications and labor market demand as reasons for unemployment. Furthermore, when IDPs move to areas where schools operate online, or there is a shortage of kindergartens, women typically cannot work.
Overall, the war has increased the role of women in the labor market. Firstly, 67,000 women are currently serving in the Armed Forces of Ukraine (AFU), which is 40% more than in 2021, and the number of women officers has increased sixfold. Secondly, the share of women among job seekers and entrepreneurs has also risen. In the first quarter of 2024, 58.8% of registered individual entrepreneurs were women, which is 7.8 percentage points higher than in the corresponding period of 2021 (Figure 2). Among job seekers on the private service Work.ua, women make up 59%.
Figure 2. Shares of men and women among newly registered individual entrepreneurs in the first quarter of 2021-2024, %
The regional and qualification imbalance in the labor market requires strategic approaches to ensure alignment between employers’ expectations and job seekers’ capabilities. At the Ukraine Recovery Conference, the government, along with international partners, announced the launch of a three-year program called “Skills Alliance for Ukraine.” This initiative is aimed at retraining and upskilling Ukrainians, particularly in sectors such as construction, transportation, IT, engineering, and healthcare. The first projects are already underway. Over the next three years, EUR 700 million is planned to be allocated for these purposes. The funding for this program will come from around 50 countries, international partners, donors, and business community members. This amount is significantly more than the state can allocate for its own employment programs. Nevertheless, the number of state programs remains quite substantial.
The work of the State Employment Service of Ukraine (SESU)
Due to the full-scale war, many people have lost their jobs. However, the number of registered unemployed in the SESU has significantly decreased: in January 2023, there were 166,000 registered unemployed, which is half of what it was in January 2022. By the beginning of 2024, the number of registered unemployed had further decreased by nearly 40% to 101,400 (Figure 3). This decline is related to significant migration, as well as the fact that some men do not register as unemployed with the SESU due to outdated military conscription data or fear of mobilization, which prevents them from seeking official employment. Another reason for the reduction in registered unemployment is the shortening of the unemployment benefit period during martial law from 360 to 90 days. For internally displaced persons (IDPs) who have lost documents needed to obtain unemployment status and for young people who have just completed their education or service, the benefit period was reduced from 180 to 90 days. The benefit period was reduced from 720 to 360 days for people of pre-retirement age.
Figure 3. Monthly dynamics of registered unemployed in 2022-2024, in thousands of people
In 2024, there has been an increase in the share of IDPs among registered unemployed (17.3% in 2024 compared to 8.9% in 2023). This is due to new regulations for IDPs receiving subsistence allowances, which require non-disabled individuals without employment to register with the SESU. According to a survey by the SESU, 75.8% of employers see no barriers to employing IDPs, 73% stated that their company does not require support, and 13.8% consider wage subsidies a priority for stimulating IDP employment.
SESU data shows a growing interest among employers in hiring veterans and people with disabilities, as these are often individuals with work experience and a lower risk of mobilization. In 2021, Ukraine had 2.7 million people with disabilities, and since the full-scale invasion, their number has increased by approximately 10%. However, the number of employed individuals with disabilities grew by only 297 people in 2023, reaching 403,500. Given that at the beginning of 2023, 86.7% of people with disabilities belonged to the second and third disability groups, the issue of employment for this population is critically important. Employment will contribute to the economic independence of these individuals, their social integration, and the utilization of their professional potential, which is especially valuable amid the current labor shortage.
In 2024, the share of people with disabilities among those who received employment and training services from the SESU was 5.6%, only 0.3 percentage points higher compared to 2023. According to an SESU survey, 60.3% of employers see no obstacles to employing people with disabilities. However, 18.3% of employers noted that individuals from this category do not apply for jobs at their companies. Additionally, 7.8% of employers identified unprepared workplaces as a key barrier to employing people with disabilities, while 4.9% pointed to a lack of quality services and infrastructure. Meanwhile, data from the OLX platform, which features various listings, indicates that only 9% of employers are willing to hire individuals with disabilities.
Currently, there are about 1.2 million veterans in Ukraine, 800,000 of whom are combat veterans, while the rest are war-disabled individuals and other war participants. The share of combat veterans among SESU service recipients is 2.5% (10,100 people), which is 1.6 percentage points higher than in 2023. However, a study conducted by the Ukrainian Veterans Foundation, the Ministry of Veterans Affairs of Ukraine, and Work.ua in July 2023 showed that 57.1% of veterans and service members did not seek help from the SESU in finding a job.
According to an SESU survey, 65.9% of employers do not see obstacles to employing veterans. However, 18.8% noted that veterans do not apply for jobs. A survey by Work.ua revealed different results: 62% of employers have no experience in hiring, interviewing, or considering veterans for jobs. This is mainly because most veterans are still engaged in combat or remain in rear positions. Many veterans who are no longer on active duty are either of non-working age or have disabilities. After the war, veterans will represent a significant portion of Ukraine’s population and potential workforce. Additionally, most veterans plan to engage in entrepreneurship: 62.9% of military personnel intend to start their own business after demobilization, 11% already own a business, and 50.1% of demobilized veterans who are not currently serving aspire to develop their own ventures.
The government introduced several programs to support the unemployed and employers in stabilizing the labor market during the war. These initiatives promote the creation of new jobs and that support employment for IDPs, veterans, and people with disabilities. The programs include business grants, employer incentives, the involvement of unemployed individuals in socially beneficial work, and financial support for adapting workplaces for people with disabilities. An essential component of this support is the retraining and skills development programs designed to maintain the competitiveness of certain population groups.
Employment support programs administered by the SESU and funded by the State Fund for Compulsory State Social Insurance of Ukraine against Unemployment (State Unemployment Insurance Fund)
The eRobotaproject offers grants for starting a business, developing entrepreneurship, and training, including microgrants for creating personal ventures, funding for processing enterprises, horticulture, and greenhouse farming, as well as funds for launching startups, including in the IT sector and IT training programs. The project is implemented by the Ministry of Economy and aims to stimulate entrepreneurial activity and create jobs.
As of September 2024, in the two years since the launch of the eRobota project, nearly 19,600 entrepreneurs have received grants totaling UAH 9.3 billion, enabling the creation of 55,000 jobs. Of this, UAH 4.2 billion (17,800 microgrants) were issued under the Vlasna Sprava (Own Business) grant program, UAH 3.7 billion (743 grants) to processing enterprises, UAH 1 billion (231 grants) for horticulture and greenhouse farming, and UAH 366 million (806 grants) for veterans.
The Vlasna Sprava program is one of the key components of the eRobota project. Its target audience includes entrepreneurs, veterans, war-disabled individuals, and veterans’ spouses. Under the Vlasna Sprava program, microgrants ranging from UAH 50,000 to UAH 250,000 are provided for the following commercial and production purposes: purchasing furniture, equipment, and vehicles; acquiring licensed software, raw materials, goods, and services (up to 50% of the microgrant); marketing and advertising (up to 10%); renting premises and land (up to 25%); renting equipment (up to 10%); and leasing equipment (up to 50%). Grant recipients receiving up to UAH 75,000 are not required to create jobs. However, if a grant is between UAH 75,000 and UAH 150,000, one job must be created, and for grants between UAH 150,000 and UAH 250,000, at least two jobs must be created. For entrepreneurs registered and planning to operate in the Kharkiv region, the grant amount can be increased by up to 100%, with a maximum grant size of UAH 500,000.
The veteran component of the Vlasna Sprava program provides grants ranging from UAH 250,000 to UAH 1 million for veterans or individuals with war-related disabilities and from UAH 250,000 to UAH 500,000 for their spouses. The amount of financial support depends on the number of jobs created (ranging from 1 to 4). For grants between UAH 500,000 and UAH 1 million, veterans must have been registered as individual entrepreneurs for at least three years and fund 30% of the project themselves. This ensures the state selects grant recipients with entrepreneurial experience willing to venture their own funds.
In 2024, the most popular business sectors in the Vlasna Sprava program included wholesale and retail trade and vehicle repair (35%), temporary accommodation and food services (16%), and processing (13%). Among veterans and their family members, the most popular business areas were trade and repair (27%), manufacturing (16%), cafes and bakeries (15%), and services (8%).
Sixty percent of participants of the Vlasna Sprava program are women. The majority of businesses operate as individual entrepreneurs, which account for 76% (Figure 3). The prevalence of individual entrepreneurs is attributed to simplified registration, favorable taxation, low business operating costs, and management flexibility.
Figure 4. Distribution of participants in the Vlasna Sprava program by organizational and legal form, %
Source: State Employment Service of Ukraine
Vouchersfor training and retraining are available to certain categories of citizens to help maintain their competitiveness in the labor market. The program allows individuals to acquire new professions or enhance their qualifications in various fields, such as medicine, education, culinary arts, driving, and more. Eligible recipients include individuals over 45 years old (before reaching retirement age), veterans, IDPs, people with disabilities, and those affected by military aggression or who have been through captivity. Voucher recipients must already hold a vocational or higher education and not be registered as unemployed with the SESU. They must not have received training funded by the State Unemployment Insurance Fund in the last three years. The voucher amount does not exceed UAH 30,280. As of the end of August this year, 15,600 individuals received training vouchers totaling UAH 114 million. In 2023, 18,100 people participated in the program, with a total of UAH 252 million allocated.
The wage subsidy program for employers hiring IDPs, introduced in April 2022, aims to increase employment and support the adaptation of displaced people. Employers receive compensation for employing IDPs for three months or six months if the IDP has a disability. The payments are funded by the Social Security Fund for Unemployment. The compensation amount equals the minimum wage, which has been UAH 8,000 since April 2024. In the first quarter of 2024, the government paid employers UAH 78 million in compensation for hiring 7,000 IDPs.
The compensation program for employers to equip workplaces for people with disabilities in groups 1 and 2 was introduced by the Ministry of Economy in 2023. The program aims to promote the employment of individuals with disabilities by removing workplace barriers. Under the program’s conditions, employers can receive compensation for adapting workplaces: 15 times the minimum wage for people with group 1 disabilities (up to UAH 106,500 in 2024) and 10 times the minimum wage for group 2 disabilities (up to UAH 71,000 in 2024). Over nearly a year since the program’s launch, 854 employers have equipped 949 workplaces for employees with disabilities and received almost UAH 63.1 million in compensation from the state.
What are the long-term plans?
The issues in the labor market caused by the war and the demographic crisis require a comprehensive approach. The government recognizes these challenges; all measures are part of a systematic, long-term strategy. Employment challenges are thoroughly addressed in the draft Demographic Development Strategy of Ukraine for the period until 2040. Among other initiatives, the government proposes creating a supportive environment for families with children, enhancing their economic independence, reducing premature mortality by improving public health and healthcare quality, attracting talented migrants, bringing back those who have left Ukraine, developing regions, promoting longevity, supporting older people, ensuring a safe and eco-friendly environment, improving infrastructure, and increasing social cohesion within Ukrainian society.
To address the structural unemployment problem, the Ministry of Economy, with the support of international organizations and businesses, is implementing retraining and upskilling programs, adapting educational programs to labor market demands, and promoting vocational training. Plans include the modernization of the SESU, which will shift to a service-oriented model and establish partnerships with training companies, recruitment agencies, and social organizations. The SESU will evolve into an analytical center for labor market forecasting and the development of support programs while continuing to handle personnel recruitment, unemployment training, and the implementation of government programs. Additionally, SESU vocational training centers will be reformed into modern learning spaces to prepare skilled workers.
Conclusions
Ukraine is facing several complex challenges in the labor market, including labor shortages caused by migration and mobilization. At the same time, unemployment remains high, with many internally displaced persons struggling to find work in their new locations due to a lack of job opportunities and infrastructure. A significant factor contributing to the labor shortage is the slow return of migrants, influenced by security risks, adaptation abroad, and the resumption of labor migration. In 2024, there has been an increase in job vacancies and a reduction in unemployment. However, the mismatch between candidates’ qualifications and labor market requirements continues to complicate the situation.
Participation by specific social groups in the labor market is also shifting, with women playing an increasingly important and active role. Interest in involving veterans and people with disabilities in the labor market is gradually growing, but this process requires additional measures.
For effective post-war recovery, Ukraine must bridge the gap between the population’s existing and necessary skills while addressing both high unemployment and the shortage of qualified workers. According to the Ministry of Economy, the labor shortage over the next decade is estimated at around 4.5 million people. Retraining and upskilling programs for Ukrainians, such as the Skills Alliance for Ukraine, will be crucial in reducing unemployment and filling the shortage of skilled workers.
Key factors in shaping the labor market will include the return of people to their previous places of residence (if safe), the reintegration of veterans, the expanded participation of people with disabilities, and the increased involvement of women. Achieving these goals will require joint efforts from businesses and the government, focusing on creating an inclusive environment, improving job accessibility, providing training for new skills, and supporting women’s professional development, especially in traditionally male-dominated sectors. Expanding childcare infrastructure will also be critical. The government has already initiated relevant projects, but these initiatives need to be scaled up to achieve significant results.
The Ukrainian government has launched an electronic residency program. E-residents will enjoy special tax conditions in Ukraine: only 5% of their income.
Ukraine’s Ministry of Digital Transformation is taking one of its new services out of beta testing. uResidency—an electronic residency format—will allow foreign citizens to run their own businesses from Ukraine. To make the service popular, the government offers several advantages, including:
Remote Registration: Potential e-residents can register from anywhere in the world without needing to travel to Ukraine, unlike other programs that typically require an in-person visit.
No Accounting or Reports: The bank will handle accounting as the tax agent for the resident. They will be able to open a bank account online, and account management will be done through an app or a web version.
Free Service: The only costs are taxes and a symbolic fee for opening and maintaining the accounts.
The program handles all complex and bureaucratic aspects, allowing entrepreneurs to focus on their tasks.
Tax Details:
uResidency is focused on individual entrepreneurs and will be most suitable for IT specialists and the creative class. This is also reflected in the tax policy. The tax rate is only 5%, with a cap on transactions up to €180,000. This rate aligns with the Ukrainian tax system for third-group individual entrepreneurs. If transactions exceed €180,000, the tax rate increases to 15%.
This approach attracts individuals, small businesses, and solo entrepreneurs. Over 1,000 interviews with potential participants revealed an average income of $40,000 annually, aligning with the program’s capabilities.
Program Access:
The pilot service was launched in 2023. Since then, the Ministry of Digital Transformation has refined the program and amended Ukrainian legislation to ensure it works within legal norms. From July 2024, uResidency is available to residents of four initial countries:
India
Pakistan
Thailand
Slovenia
Future expansions will include more countries. However, restrictions apply:
Residents of Russia and Belarus, which started the war against Ukraine, cannot become residents.
Other countries were recognized as aggressors or occupiers of Ukraine.
FATF gray and black lists.
Countries identified by the European Commission with weak anti-money laundering and counter-terrorism financing regimes.
Ukraine’s Aim:
Electronic residency aims to make Ukraine a hub for people running online businesses, especially digital nomads. These individuals may not be tied to one country or city but want to run a legal business. The uResidency program is designed for such professionals.
For Ukraine, it means new tax revenues. The uResidency program will support Ukraine’s economy during the war and rebuilding.
In the future, Ukraine will increase the number of countries whose citizens can use the service, thereby increasing the number of e-residents.
How to Apply:
The process to obtain e-resident status is as follows:
Application: Create an application through the mobile app or the Ukrainian e-residency website. Only a passport is needed. Login and password for tracking the application will be sent to the email.
Verification: Ukrainian authorities and uResidency team specialists will verify the application and profile for any disqualifying reasons. Verification is usually quick but can take up to 30 days in some cases.
Obtaining e-Resident Status: Schedule an appointment and visit a consular office of Ukraine in your country to receive an electronic signature and e-resident status.
Entrepreneur Registration: Register as an e-resident entrepreneur and open a bank account using the qualified electronic signature.
Bank Account Opening: E-resident entrepreneurs can open a bank account in Ukraine and conduct business within Ukraine’s jurisdiction.
In summary, one of the most significant advantages of the program is its complete remoteness: potential participants do not need to visit Ukraine at all. All actions can be performed entirely online, including obtaining e-resident status. Business can be conducted from anywhere in the world.
Western Ukraine, particularly its border regions (oblasts), is emerging as a promising area for business and foreign investment. These include Lviv, Volyn, Zakarpattia and Chernivtsi, which all share borders with EU member states Poland, Slovakia, Hungary and Romania. This strategic location offers unique advantages for businesses looking to tap into both Ukrainian and European markets and to take advantage of the favorable trade rules between Ukraine and the EU.
Strategic advantages
Proximity to EU markets: The western oblasts’ proximity to EU countries facilitates easier access to European markets, reducing transportation costs and time. This is particularly beneficial for sectors like manufacturing, logistics, agriculture and food processing.
Skilled workforce: Western Ukraine boasts a well-educated and skilled workforce, particularly in IT, engineering and manufacturing. Cities like Lviv, home to a renowned polytechnic, have become IT hubs, attracting tech companies and startups.
Infrastructure development: Significant investments have been made in improving infrastructure, including roads, railways and border checkpoints, enhancing connectivity and trade efficiency.
Government incentives
Tax benefits: The Ukrainian government offers various tax incentives to attract foreign investors. These include reduced corporate tax rates, exemptions on import duties and VAT for equipment and tax holidays (See: Ukraine strengthens state support for investment) as well as a special regime for the IT industry through the Diia.City regime (See: Diia.City Special Tax Regime).
Special Economic Zones (SEZs): SEZs in regions like Zakarpattia provide additional benefits, such as simplified customs procedures, reduced land lease rates and government support in obtaining permits and licenses. The Zakarpattia SEZ was established to leverage the region’s strategic location bordering Poland, Slovakia, Hungary and Romania.
Investment promotion agencies: Agencies like UkraineInvest actively promote investment opportunities and provide support to foreign investors, including assistance with legal and regulatory issues. Advantage Ukraine promotes investment by showcasing over 500 projects and opportunities across various sectors, including agriculture, technology and natural resources. (See: Interview with Oleksandr Gryban, Advantage Ukraine)
Economic opportunities
IT and software development: Known as Ukraine’s Silicon Valley, Lviv is a major IT hub with numerous tech companies and startups. The IT sector has seen significant growth, with exports reaching over US$5 billion in 2023. (See: Interview with Anna Ryzhova, Ciklum)
Agriculture and food processing: The fertile lands of Western Ukraine are ideal for agriculture. Investment opportunities exist in organic farming, food processing, and agriTech. The region’s agricultural exports to the EU have been steadily increasing.
Renewable Energy: With a focus on sustainability, there are opportunities in renewable energy projects, including solar and wind farms. The Ukrainian government has set ambitious targets for renewable energy, making it a favorable environment for investment.
Manufacturing: Since the start of the war, approximately 13.4 percent of Ukrainian firms have relocated, either partially or completely, to Western Ukraine. This includes a significant number of companies in light manufacturing industries such as apparel, textiles, and beverages. Having seen much less disruption since the war’s onset, thanks to its distance from the front lines, Western Ukraine is perceived to be safer and has benefited from programs to assist with relocation costs and logistics. For example, Kingspan Global plans to invest €200 million in a construction technology hub in Lviv to produce low-carbon insulation and building envelope products. This hub will support both EU exports and reconstruction efforts in Ukraine.
Tourism and Hospitality: Rich in cultural heritage and natural beauty, the tourism sector shows potential for growth. Opportunities exist in hotel development, travel services and cultural experiences.
Economic growth and statistics
GDP growth: The western oblasts have shown resilience and growth despite the challenges posed by the ongoing conflict. For instance, Lviv’s GDP grew by 4.5 percent in 2023.
Foreign Direct Investment (FDI): Western Ukraine has attracted significant FDI, particularly in the IT, manufacturing and renewable energy sectors. In 2023, the region received over US$1 billion in FDI.
Export growth: Exports from the western oblasts to the EU have been on the rise, with agricultural products, machinery and IT services leading the way.
Western Ukraine’s border regions offer a wealth of opportunities for businesses and foreign investors. With strategic advantages, government incentives and a growing economy, these regions are well-positioned to become key economic hubs. Whether in IT, agriculture, renewable energy or tourism, the potential for growth and success is substantial.
Since the start of the war, Russia has inflicted severe damage on Ukraine’s energy infrastructure, leading to a critical need for comprehensive rebuilding efforts. As a result of the attacks, Ukraine has lost over 9 GW of electricity generating capacities, while local gas production has dropped 5–10 percent.
In a recent attack—and one of the largest—on Ukraine’s energy infrastructure, Russia targeted critical facilities, including the Kyiv Hydroelectric Power Plant, leading to emergency power cuts, as well as significant damage reported across 15 of Ukraine’s 24 oblasts.
International support and investment can help to not only restore but also modernize and secure Ukraine’s energy sector. Below, we explore the extent of the damage, the kinds of support provided and pledged by various international organizations, financial institutions and governments, and the investment opportunities available in the sector.
Repair and reconstruction of infrastructure
Ukraine’s energy infrastructure has seen more than half of its pre-war capacity destroyed. Reconstruction efforts are focused on restoring damaged infrastructure, including the construction of new substations and power transmission lines using modern and energy-efficient technologies. These efforts aim to not only restore but also improve the resilience and efficiency of the energy sector.
Support from international organizations and financial institutions
International organizations and financial institutions have been pivotal in mobilizing resources for Ukraine’s energy sector. The Ukraine Energy Support Fund, established by the EU’s Energy Community Secretariat, has raised over €500 million to support urgent repairs and maintenance of energy infrastructure (See: Ukraine Energy Support Fund). The World Bank has allocated US$200 million for immediate repairs, with potential additional funding up to US$300 million. During the Berlin Ukraine Recovery Conference in June of 2024, The European Bank for Reconstruction and Development (EBRD) signed an agreement for €300 million in emergency support for the energy sector to address the immediate energy crisis exacerbated by Russian attacks on Ukraine’s energy infrastructure (See: 2024 Ukraine Recovery Conference Results), and in September 2024 the EBRD enabled more than €300 million in new lending by two Ukrainian banks for long-term energy security. Additionally, the International Renewable Energy Agency (IRENA) is collaborating with the Energy Community Secretariat to support sustainable energy initiatives.
Governmental support
Several governments as well as the European Union have stepped up to assist Ukraine in rebuilding its energy sector. In 2024, the EU committed €1.4 billion in guarantees and grants to help repair, rehabilitate, and develop Ukraine’s heavily damaged energy infrastructure. This initiative includes contributions towards renewable energy projects, like wind power and energy storage systems. The EU’s broader €50 billion Ukraine Facility will also support energy recovery, as part of a larger plan to help Ukraine resist aggression and transition towards sustainability. Additionally, the EU will help Ukraine secure 4.5 GW of generation capacity and provide an additional €160 million to get through the winter. This includes repairing 2.5 GW of capacity and exporting 2 GW of electricity to Ukraine, covering more than 25% of Ukraine’s energy needs for the coming winter. Ursula von der Leyen, the head of the European Commission, highlighted that the EU’s energy support includes three components: repair, connection, and stabilization. Of the €160 million, €100 million will come from revenue generated by Russia’s frozen assets in Europe, with funds allocated to repairing energy facilities damaged by Russian attacks and providing solar panels to 21 hospitals in Ukraine. The remaining €60 million will be provided as humanitarian aid.
The United States has provided over US$190 million through USAID’s SPARC project along with additional funding for economic recovery. Energy Security Project of USAID envisages US$244 million in support for the Ukrainian energy sector to be provided within seven years, in the form of procurement aid, grants and technical assistance (See: Energy Security Project). The US Department of Energy has also shipped high voltage electrical infrastructure components to Ukraine.
Japan has also pledged significant support for Ukraine’s energy sector during the war. Valued at approximately US$600 million, this assistance includes vital equipment like transformers, generators and solar panels, aimed at helping Ukraine repair damaged energy infrastructure. Japan’s aid package also prioritizes energy resilience, with around 40 percent of its total assistance focused on energy security. (See: Japan Supports Ukraine)
Germany has pledged €30 million to enhance the reliability of Ukraine’s energy system.
Innovative solutions for continuous energy supply
To ensure continuous and uninterrupted energy supply, Ukraine is exploring various innovative solutions. There is a strong emphasis on developing renewable energy sources such as wind, solar and biomass, including biogas and biomethane. Decentralized energy generation is also being promoted to enhance resilience against attacks. Technological innovations include new space heating technology for heat pumps, innovative battery storage solutions, smart grids and geothermal energy harnessing. These solutions are crucial for building a sustainable and resilient energy sector.
Diversification of energy supply
Reducing dependence on imported energy is a key priority for Ukraine. Efforts are being made to diversify energy sources and improve energy efficiency. The Green Transition Law includes measures to align with the Energy Community’s legal framework for renewable energy. This law aims to create a more diverse and sustainable energy mix, reducing vulnerability to external shocks and enhancing energy security.
Investment opportunities
Of course, such a massive reconstruction effort presents numerous investment opportunities in Ukraine’s energy sector.
Ukraine’s Energy Strategy until 2050 outlines investment opportunities amounting to US$383 billion, with its focus on clean energy production and system resilience. Private sector involvement is being encouraged in renewable energy projects, smart grids and energy-efficient technologies. These investments are not only crucial for rebuilding the energy sector but also for transforming it into a modern, resilient and sustainable system.
The National Renewable Energy Action Plan to 2030 envisages an almost 10 percent increase in the total share of renewable energy in gross final energy consumption by 2030—from 17.3 percent in 2025 up to 27.1 percent by 2030. In order to achieve such an ambitious increase, the following investments will be required:
US$11 billion for generating capacity
US$1.4 billion for balancing capacities
US$6.6 billion for heating production from renewables
US$1.2 billion for increasing the share of renewables in the transportation sector
The Ukrainian government has already taken certain practical steps to attract such investments. In August 2024, the Ukrainian transmission system operator ran two auctions for long-term ancillary services contracts, to attain the construction of more than 1.1 GW of balancing capacity. By the end of 2024, it plans to run pilot auctions to distribute a quota of support for 110 MW of new renewable energy facilities. The Ukrainian government also launched a tender to build 700 MW of new high maneuverable generation. (See: Ukrainian government approves National Renewable Energy Action Plan, 110 MW RES auction, and contest to construct 700 MW of high maneuverable generation)
Rebuilding Ukraine’s energy sector is a monumental task that requires significant international support and investment. The efforts to restore and modernize the energy infrastructure are crucial for ensuring a resilient and sustainable energy future for Ukraine. By focusing on renewable energy, grid modernization and energy security, Ukraine can emerge stronger and more resilient. The international community’s support and investment are vital in achieving this goal, providing both immediate relief and long-term benefits for Ukraine’s energy sector.
Since the onset of Russia’s February 2022 invasion of Ukraine, Germany has emerged as a steadfast ally, providing extensive support across various domains.
German Chancellor Olaf Scholz recently reaffirmed this commitment, emphasizing that Germany will remain Ukraine’s biggest national supporter in Europe, even amid discussions of budget cuts. During a visit to Moldova, Scholz declared, “Germany will not let up in its support for Ukraine. We will continue to support Ukraine for as long as necessary.” Germany is also exploring technical solutions to use frozen Russian assets to aid Ukraine—just one example of its multifaceted approach to supporting the war-torn nation. Before Russia’s invasion, Germany was one of Ukraine’s top three investors. This history of cooperation between the two nations has no doubt contributed to Germany’s resolve to support Ukraine.
Financial assistance and economic support
Germany has committed significant financial resources to stabilize Ukraine’s economy and support its recovery. As of 2024, Germany has provided nearly €34 billion in various forms of aid, including direct financial assistance, loans, and contributions to international financial institutions. These efforts are vital in helping Ukraine maintain economic stability and fund essential government functions during the conflict.
In addition to direct financial aid, Germany has been instrumental in fostering economic ties between the two nations. German businesses have been encouraged to invest in Ukraine, with 43 percent of German companies in Ukraine planning new investments in sectors such as energy, pharmaceuticals, IT, and outsourcing. These investments are crucial for Ukraine’s economic recovery, providing jobs and stimulating growth despite the ongoing conflict. Additionally, trade between the two countries has flourished, with Ukraine’s trade volume with Germany surpassing that of Germany’s trade with Russia. Ukrainian entrepreneurs have also benefited from German support, with grants of up to €20,000 available to help them restart and sustain their businesses.
Humanitarian aid and reconstruction efforts
Germany has been at the forefront of humanitarian efforts, delivering essential supplies, medical aid, and support for displaced Ukrainians. The German government has worked closely with NGOs and international organizations to provide food, water, shelter and medical care to those affected by the conflict. Furthermore, Germany has pledged substantial funds for the reconstruction of war-torn areas, focusing on rebuilding infrastructure and restoring essential services. The reconstruction efforts are concentrated on critical sectors such as energy, healthcare, and infrastructure, ensuring that Ukraine can recover and rebuild its economy.
The German Development Bank (KfW) plays a crucial role in these efforts, financing projects that support economic recovery in regions like Sumy, Chernihiv and Kyiv. Through initiatives like grants for micro-enterprises and small businesses, KfW is helping to revitalize Ukraine’s economy at the grassroots level, fostering resilience and growth in the face of adversity.
Diplomatic and technical support
Germany has also played a pivotal diplomatic role in rallying international support for Ukraine. This includes advocating for sanctions against Russia, supporting Ukraine’s bid for EU membership and participating in international forums to uphold Ukraine’s sovereignty and territorial integrity. German agencies like Euler Hermes have provided export credit financing and war-risk insurance programs to protect businesses operating in Ukraine, mitigating the financial risks associated with the conflict. In many cases war-risk insurance programs are crucial for final decisions on investment in Ukraine.
Technical support has been another crucial area of German assistance. Germany has provided expertise in governance, legal reforms and anti-corruption measures, helping Ukraine build a more transparent and accountable government. These efforts are essential for Ukraine’s long-term stability and integration into European and global markets.
Support for the energy sector and infrastructure
Recognizing the strategic importance of energy security, Germany has provided substantial support to Ukraine’s energy sector. This includes financial aid for energy infrastructure projects, technical assistance for energy reforms and investments in renewable energy sources. Germany has been instrumental in helping Ukraine repair and upgrade its energy infrastructure, ensuring a stable supply of electricity and gas.
Investment in Ukraine’s defense sector
German defense companies are actively involved in supporting Ukraine’s defense sector and armed forces. For instance, Flensburger Fahrzeugbau GmbH (FFG) is constructing a military repair hub in Western Ukraine to service German military equipment like Leopard 1A5 tanks, enhancing the efficiency of repairs and training Ukrainian mechanics on-site. Additionally, Rheinmetall has formed a joint venture with the Ukrainian Defense Industry to produce weapons and military equipment within Ukraine, further bolstering Ukraine’s defense capabilities. These initiatives aim to streamline logistics and ensure rapid redeployment of military assets.
Another notable development is the production of German Vector drones in Ukraine. German UAV manufacturer Quantum-Systems has launched a factory in Ukraine that produces these drones for the Ukrainian Armed Forces. This partnership not only enhances Ukraine’s defense capabilities but also contributes to the country’s technological and industrial base, further strengthening its resilience.
Challenges and future outlook
Despite Germany’s comprehensive support, challenges remain. Debates within Germany’s coalition government over budget allocations have raised concerns about the sustainability of future aid. The planned US$50 billion loan agreed upon by G7 leaders, intended to cover Ukraine’s budget deficit and military needs, has faced technical challenges and political objections. Despite Chancellor Scholz’s insistence that Germany will continue to be Ukraine’s most significant supporter in Europe, the recent state election victory of the far-right party Alternative for Germany (AfD) could signal a shift in German politics, potentially reducing support for Ukraine as the AfD gains more influence.
Germany’s multifaceted support for Ukraine underscores its commitment to helping the country navigate the challenges posed by the ongoing conflict. Through financial aid, humanitarian assistance, military support, and economic cooperation, Germany continues to stand by Ukraine in its time of need, demonstrating a deep and enduring partnership that is crucial for Ukraine’s survival and future prosperity.
In May 2024, the State Property Fund of Ukraine (the SPFU) introduced the “Land Bank” project, which opens the state land lease market for farmers and agrarians. The project will be implemented within the framework of Law № 3272-IX dated 27 July 2023, which aims to ensure the efficient use of state-owned agricultural land. The formation of the Land Bank is anticipated to be implemented in several stages:
The Cabinet of Ministers of Ukraine (the CMU) will issue a resolution transferring agricultural lands to state operators of the Land Bank — several state enterprises under the SPFU that are free of debt and corruption cases. These enterprises will subsequently be transformed into Limited Liability Companies (LLCs) or Joint Stock Companies (JSCs), with 100% of their shares owned by the state.
The state operators will lease the land for 50 years and organise open competitive sublease auctions through the Prozorro.Sale platform.
The initial rental rate will be no less than 12% of the land’s normative monetary valuation, with sublease agreements being concluded for 14 years for annual crops and 25 years for perennial crops.
In accordance with Order of the CMU № 541-r dated 13 June 2024, 104,000 hectares of agricultural land have already been transferred to the State Enterprise “Agrarian Investment Fund” which, after corporatisation, will serve as a land auction operator. The first land auctions on the Prozorro.Sale online platform are anticipated to take place in 2024.
State Registration of Property Rights for Land Improvement and their Components
The possibility of state registration of property rights to land improvement networks and their components (for irrigation, drainage, collector-drainage and other related purposes) was introduced via amendments to the final and transitional provisions of the Law of Ukraine “On Water User Organisations and Stimulation of Hydrotechnical Land Improvement“. From now on, to register an irrigation and drainage network or its components (including changes to information about them), the applicant (any interested person, government, or local authority) may submit the following to the State Cadastral Registrar:
An application for the state registration of a land improvement network or its components (including changes to information about them), in the form prescribed by the Procedure for Administration of the State Land Cadastre;
Documents establishing the details of a land improvement network or its components;
An electronic document containing information about a land improvement network or its components.
State registration or a reasoned refusal to register is granted within 14 days from the date of registration of the application.
Compensation for the Restoration and Construction of Land Improvement Systems
According to amendments to Resolution of the CMU No. 1070 dated 11 October 2021, agricultural producers who use improved land may receive up to 50% compensation for the costs incurred for the reconstruction and modernisation of existing or the construction of new land improvement systems. Water user organisations may also receive up to 50% compensation for the restoration of pumping stations. These subsidies will be provided for land improvement systems that have been commissioned between 1 November 2023 and 31 October 2024.
Compensation for Humanitarian Demining Costs
The CMU has updated the Procedure for using the state budget funds allocated to compensate agricultural producers for the costs of humanitarian demining of agricultural land. According to the amendments, the updated Procedure now also applies to demining activities carried out between 24 February 2022 and 15 April 2024, provided that such activities are conducted by certified demining operators. Compensation will cover up to 80% of the costs.
ІІ. LEASE OF STATE-OWNED PROPERTY
The CMU has amended the legislation governing the preparation of documents required for the lease of state-owned real estate by social service providers
The CMU has amended the legislation governing the preparation of documents required for the lease of state-owned real estate by social service providers included in the Register of Social Service Providers and Recipients. As a reminder, since August 2023 social service providers have been included in the list of entities eligible to lease state and municipal property without the need for an auction.
By Resolution № 381 dated 2 April 2024, the Government of Ukraine approved the list of documents that must be submitted by such applicants, specifically a document confirming the inclusion of the social service provider in the Register of Social Service Providers and Recipients, as well as a lease application. Additionally, a uniform preferential rental rate of 1% per year of the market value of the leased property has been established for all social service providers.
ІІІ. STATE INCENTIVES FOR ATTRACTING INVESTMENT
New Regulations on State Support for Projects with Significant Investment (so-called “Investment Nannies”)
The Government has approved a series of resolutions that regulate the conditions for providing state support to projects with significant investment.
In particular, to implement the provisions of Article 3 of the Law “On State Support for Investment Projects with Significant Investment in Ukraine” (“the Law“), the Government approved in March 2024 the Procedure for Compensation for Construction Costs of Engineering and Transport Infrastructure Objects by Applicant or Investor with Significant Investment (“Resolution № 292”).
Resolution № 292 outlines the requirements for the submission of documents and the procedure for obtaining full or partial compensation from budgetary funds for:
The costs of engineering and transport infrastructure facilities constructed by the applicant or investor with significant investment, required for the implementation of the investment project;
The cost of connection to engineering and transport networks required for the implementation of an investment project with significant investment.
To recap, the Law introduces the aforementioned state incentives for investors planning to implement investment projects in Ukraine with a value of at least €12 million and a duration of up to five years in sectors such as manufacturing, extraction and processing of minerals, transportation, logistics, and other specified industrial areas. The total amount of state support can reach up to 30% of the investment project’s value.
Additionally, on 26 April 2024, the Government approved the Procedure for Use of Funds to Support Projects with Significant Investment, including budgetary funds allocated as full or partial compensation to applicants or investors for the costs of constructing engineering and transport infrastructure facilities and/or the costs of connecting and joining engineering and transport networks.
The allocation of budgetary funds for these purposes will be carried out in accordance with the Procedure set forth in Resolution № 292, within the framework of the special fund of the state budget under the program “State support for the implementation of investment projects with significant investment.”
Among other things, the Procedure mandates that the applicant must return the received compensation if it is determined that the amount of investment is less than the threshold of €12 million or if such funds were obtained unlawfully.
On 14 May 2024, the Strategic Investment Council was established and its composition approved. The Council will approve the medium-term plan of priority public investment and the unified portfolio of public investment projects, as well as oversee their high-level implementation.
Certain Issues of State Incentives for Creation and Operation of Industrial Parks
Resolution No. 1208 dated 28 October 2022 “On Approval of Procedure for Providing Full or Partial Compensation of the Interest Rate on Loans (Credits) for the Development and/or Conduct of Business Activities within Industrial Parks” is suspended for the period of martial law,
сancellation of Resolutions No. 1207 “On Approval of the Procedure for Providing Funds on a Non-Refundable Basis for the Development of Industrial Parks and/or Ensuring the Construction of Related Infrastructure Facilities Necessary for the Creation and Operation of Industrial Parks” and No. 10 “On Approval of the Procedure for Providing Compensation for Expenses to Initiators of the Creation of Industrial Parks — Business Entities, Management Companies and Participants of Industrial Parks for Connection to Engineering and Technical Facilities”.
Instead, state support for industrial parks will now be regulated by the updated Procedure for Providing Funds for the Development of Industrial Parks and/or the Construction of Engineering and Transport Infrastructure Required for the Creation and Operation of Industrial Parks, as well as Compensation for Costs of Connecting and Joining Engineering and Transport Networks (the “Procedure“). State incentives will be provided to initiators and managing companies for two main purposes:
(i) the development of infrastructure for industrial parks, and (ii) compensation for the costs of connecting to engineering networks.
However, the amount of state support should not exceed UAH 150 million per applicant (one industrial park) and will cover no more than 50% of the project’s cost (80% for de-occupied territories).
Furthermore, the Procedure outlines the required documentation for obtaining state funds and sets a number of requirements that applicants must meet, including the inclusion of the industrial park in the Register of Industrial Parks, timely submission of reports on the operation of the industrial park, absence of debt and open bankruptcy proceedings, absence of asset confiscation, and no records of the applicant in the Unified State Register of Persons who Committed Corruption or Related Offenses.
Catalogue of Industrial Parks
The Ministry of Economy has published a Catalogue of Industrial Parks, which contains data on the specialisation, location, area, infrastructure, and available services of industrial parks. The catalogue is intended to help businesses find partners to develop their operations within industrial parks, attract new investment, or select locations with developed infrastructure to house their production facilities.
Newly registered industrial parks
Since the beginning of 2024, 16 new industrial parks have been registered in Ukraine, primarily located in the western and central regions, with a diverse range of activities planned by future residents (production of building materials, woodworking, paper, and food industries). As of July, 84 parks have been included in the Register of Industrial Parks.
Are you an entrepreneur or a representative of a civil society organisation? Do you want to work with a Ukrainian organisation on reconstruction activities in Ukraine and sustainable recovery of the Ukrainian economy? If so, apply for a subsidy from the Ukraine Partnership Facility (UPF).
Budget
Start date: Wednesday 30 October 2024 00:01 (CET)
End date: Friday 31 January 2025 23:59 (CET)
Total budget: € 32,500,000
For whom?
The UPF subsidy scheme (UPF2) supports Dutch and international companies and civil society organisations that want to work on recovery and sustainable reconstruction activities of the Ukrainian economy and society. These companies and organisations partner with at least one Dutch and one local organisation in Ukraine to establish and implement the project. The main applicant must represent a Dutch company or civil society organisation.
Budget
For this opening round, a total of €32.5 million is available. You can apply for a minimum grant of €500,000 and a maximum of €4 million for your project.
UPF2 reimburses up to 95 per cent of the total eligible costs for each project. You must demonstrate how you provide for the own contribution and deal with unforeseen costs. Projects must not be commercially fundable or for-profit.
Aim
Since the Russian invasion of Ukraine, the need for support has been immense. Financing projects with money from the commercial sector is not possible. Thus, UPF supports concrete projects of the (Dutch) business community that contribute to the reconstruction and sustainable recovery of the Ukrainian economy and society. The subsidy is for the following sectors:
agriculture
water
healthcare
sustainable energy, and
circular construction.
The expertise of Dutch companies and organisations is particularly valuable in these areas. For example, expertise in providing access to drinking water, essential healthcare or improving food quality.
UPF does not cover emergency aid.
Where possible, these projects contribute to a better position of vulnerable groups, including women and youth.
Conditions
Conditions for applicants
As an applicant, keep the following in mind:
A Dutch company or civil society organisation submits the subsidy application on behalf of a partnership.
The partnership must consist of at least 2 companies or organisations.
The partnership must have been formed before the applicant applies for a subsidy.
The applicant (lead partner) sends the partnership agreement and the subsidy application.
All partners in the partnership are private legal entities established before 15 August 2023. They must also have experience and expertise in the project’s field. Partners must also be necessary for achieving the project goals. All partners are able – also financially – to make their own contributions and deal with risks.
Projects are concrete and have tangible results. They will lead to broader local economic and social development. Projects should also have a lasting long-term impact on the local community or chain of businesses and civil society organisations. For example, projects that contribute to local employment and labour employability, such as the knowledge, skills, and mental and physical health of Ukrainian citizens. Projects that contribute to reconstructing facilities damaged or destroyed by war are also eligible for a subsidy.
Feasibility studies, pilots and projects based on technologies that are in an experimental phase are not eligible.
Assessment criteria
We will use the general conditions and 3 extra criteria to assess applications:
alignment with local needs and priorities;
results and impact;
action plan and effectiveness.
Certain criteria are more important than others, so each is assigned a ‘weighting factor’. Look at all criteria carefully. Project proposals must score sufficiently on all three criteria.
For a list of the criteria and their respective weighting factors, see the publication in the Dutch Government Gazette.
Project duration
Project activities must last at least 6 months and a maximum of 4 years. They must start within 2 months of being awarded the UPF subsidy, but they can also begin before we award the subsidy.
Responsible Business Conduct (RBC)
What International Responsible Business Conduct requirements must my project meet?
Dutch companies set an example for others in International Responsible Business Conduct (RBC). If you do business internationally with financial or other support from the government, we expect you to act responsibly.
International RBC risks and due diligence
Using an RBC risk assessment approach, you ensure that projects you undertake or participate in reduce or prevent potential harmful effects on people and the environment. This process is also called due diligence. It examines
the social and environmental risks of your international activities and supply chain,
how you prevent or reduce them, and
how you report on them.
International RBC guidelines and UPF
If we approve your project proposal, you must follow these international RBC guidelines:
Activities on the FMO Exclusion List are not eligible for funding under the UPF subsidy programme.
Responsible Business Conduct (RBC) in your application
Specify your project’s international RBC risks for people, the environment and society. Describe what you do to manage these risks. Use the RiskCheck for a quick and easy overview of potential risks.
Establish a joint integrity policy and implementation plan for the project.
If we approve your subsidy application, our advisor will discuss your specified international RBC risks during the initial meeting.
We may include specific measures to prevent or reduce identified international RBC risks in confirming the subsidy approval.
During the project, you report the measures you have taken to prevent, reduce, or end RBC risks. We expect you and your partners to share this information openly and proactively with us.
Preparing your application
There is no mandatory quick scan for this subsidy round. On the Dutch Q&A page, you will find the most frequently asked questions and answers. Is your question not listed? Mail your question to upf@rvo.nl.
Our advisors are available to answer your questions. To schedule an appointment with an advisor, visit the b2match platform website.
Has your partnership been formed, and do you have all the necessary documents? Then, you can apply for funding via the eLoket during the opening on our English apply page. You will also find the forms to send with your application on this page.
You can apply for a subsidy from 30 October 2024, 00:01 CET, until 30 January 2025, 23:59 CET. You will need at least eHerkenning level 2+ for this. If you still need to get eHerkenning, apply for it first. The process may take a few days.
Once we have received your subsidy application, we will send you a written acknowledgement. We only process complete applications in the order of receipt: first-come, first-served. If your application is not complete, we will notify you. You can add documents to complete your application until the closing date.
Is your application complete? You will receive a message about this and the date you will receive the decision (within 13 weeks).
You can add documents to complete your application until the closing date.
After your application
We aim to inform you whether we have approved your application within 13 weeks of receiving your complete application. We will also send you our assessment of your application.
Do you have questions about your approved project? Send an email to upf@rvo.nl.
Approved projects UPF1
The first application round for UPF closed on 31 December 2023. We received more than 60 project proposals varying in size and complexity, requesting a total of €200 million. The total subsidy amount of €25 million has now been allocated. Our advisors, the Netherlands embassy in Kyiv, specialists and an advisory committee assessed complete project proposals on a first-come, first-served basis. 7 projects from companies and NGOs were approved:
Agriculture
Resilient energy-efficient agriculture and food supply for Ukraine;
Rebuilding potato Ukraine;
Building of a multifunctional transhipment terminal for agricultural products.
Water
Water-immediate damage reconstruction and sustainable solutions.
Healthcare
Expanding access to diagnostics for improved treatment and rehabilitation;
Trauma: Scaling up community mental health care for children and youth at risk in Ukraine’s conflict-affected communities and beyond;
Building a prosthetics and rehabilitation centre and setting up a Netherlands-Ukrainian educational programme for medical specialists.
The State Property Fund of Ukraine (SPFU) has unveiled the Large Privatisation-2024 project, an ambitious initiative to attract strategic investors and stimulate economic growth through the privatisation of state-owned assets.
Following the success of small-scale privatisation efforts, this initiative is a key element of Ukraine’s broader economic reform strategy. It aims to enhance transparency, improve efficiency, and drive foreign investment into the country. The key highlights of the privatisation effort are as follows:
Top assets for privatisation. The programme has identified several high-value assets that will be offered to investors. These assets represent some of the most valuable and strategically important properties available for privatisation (more information can be found here):
the Ukraine Hotel in Kyiv (auction scheduled for 18 September 2024 with a starting price of UAH 1.05bn/EUR 23.30m);
the United Mining and Chemical Company, the biggest producer of titanium ore in Ukraine (auction scheduled for 9 October 2024 with a starting price of UAH 3.9bn/EUR 86.5m);
LLC “AEROC”, a leading producer of aerated concrete products with its facilities located in the Kyiv and Lviv regions;
LLC “Demurinskiy Mining and Processing Plant”, which is developing the Vovchansk deposit of titanium and zirconium; and
LLC “Investment Union “Lybid”, owner of Ocean Plaza, one of the biggest malls in Kyiv.
Strategic goals. The SPFU aims to use the proceeds from privatisation to bolster the national budget, reduce the state’s economic footprint, and improve corporate governance across various sectors. Key goals also include improving enterprise performance, enhancing property utilisation, and modernising production.
Prozorro.Sale platform. For the first time in Ukrainian history, large-scale privatisation will be conducted via the Prozorro.Sale platform, ensuring a transparent and competitive bidding process. This platform has proven effective in promoting fair competition and preventing corruption in smaller privatisation auctions.
Investor confidence. The initiative comes at a crucial time when Ukraine is seeking to rebuild and stabilise its economy amid ongoing challenges. The government hopes that this privatisation drive will signal Ukraine’s commitment to economic reforms and attract substantial foreign direct investment.
