As of December 31, 2024, Russia’s invasion of Ukraine continues to have profound physical, socioeconomic, and environmental impacts, which will be felt for generations. This fourth Rapid Damage and Needs Assessment (RDNA4) – undertaken jointly by the World Bank Group, the Government of Ukraine, the European Commission, and the United Nations, with support from other partners—takes stock of almost three years of the ongoing invasion, estimating damage.
Official version of document (may contain signatures, etc)
Ukraine’s construction industry has been significantly impacted over recent years for many reasons; the conflict with Russia, the Covid-19 pandemic, material shortages, price increases, and other political and economic global developments. However, with the latest press reports indicating potential peace developments in Ukraine, the focus has swiftly shifted back to the prospects of reconstructing the region.
In earlier ‘Rebuilding Ukraine Series’ was considered the potential approach and core issues connected to rebuilding Ukraine, including around procurement; core contract conditions; funding; insurance; and investment opportunities. This update examines Ukraine’s post-war construction opportunities, potential funding sources, and strategies for contractors and consultants involved in rebuilding efforts.
The scale of construction opportunities in Ukraine
The ongoing conflict in Ukraine has resulted in extensive damage to the country’s infrastructure, housing, and essential services. As the war continued, the need for future reconstruction became increasingly apparent and urgent.
According to UN News and a joint Rapid Damage and Needs Assessment (RDNA3) released by the Ukraine Government, European Commission, World Bank Group, and United Nations (UN), the total estimated cost of rebuilding Ukraine over the next decade, as of 31 December 2023, was calculated to be $486 billion. It is possible that this projected cost has since increased, given the previous year’s estimate was $411 billion (equivalent to €383 billion), and likely further exacerbated by inflationary issues.
The reconstruction of Ukraine presents real opportunities for businesses to secure contracts involving complex and prominent projects. Likely areas of future focus or project types may include:
Transport and infrastructure reconstruction: restoring critical infrastructure like roads and bridges which are essential to the country’s transport links, recovery and economic activity.
Housing projects: large-scale residential developments may be planned to accommodate displaced people and rebuild communities. A significant amount of housing stock has been destroyed or damaged due to the conflict and will need replacement. The housing and utilities sector accounts for 20% of the overall estimated reconstruction costs identified in the RDNA3. Reports indicate state support for household programs in the region this year, and regional banks have considered providing interest-free loans.
Commercial and industrial rebuilding: there are opportunities in restoring manufacturing facilities, warehouses, and commercial hubs, as well as reviving activity and economic recovery. In terms of location, some new construction activities have continued in the Kyiv and Lviv regions, which have accessible local transport routes and larger populations.
Energy: the destruction of the Kakhovka Dam and hydropower plant in 2023 was reported to have significantly harmed the environment, and worsened access to housing, food, and water[1]. The emphasis will be placed on opportunities related to general energy infrastructure, including power plants, cables and grids, as well as energy security, resilience, and access. In November 2024, Ukraine announced plans for the development of over 800MW of wind generation facilities during 2025. These types of initiatives are expected to contribute significantly to other reconstruction efforts.
Green recovery and sustainable construction: there may be a greater focus on environmentally sustainable and resilient building practices, energy-efficient projects, and the integration of green technologies to future-proof the country and align with broader climate goals.
Debris clearance and management, and demolition: a significant amount of costs have been estimated for actioning this across all sectors.
Whilst these types of projects and activities offer major opportunities for construction, engineering, and infrastructure businesses, they also pose potential challenges (as we will cover in future updates).
Opportunities for domestic and international construction companies
International partners, such as the World Bank, European Commission and UN, will be integral to supporting Ukraine’s future reconstruction efforts. These organisations offer support, financial assistance, technical expertise, and policy guidance to facilitate a systematic and effective recovery. The Ukrainian Government may also aim to attract private investments to expedite reconstruction efforts and advance the nation’s integration into the European Union (EU).
Government funding and incentives
At the Ukraine Reconstruction Conference held in London in June 2023, over 400 global companies committed to supporting the rebuilding of the country. Similar conferences have been held in Switzerland, Italy, France, Germany, and Poland. Additionally, there have been reports of the EU, UK, and US pledging significant financial contributions.
In November 2024, the EU launched a Call for Expression of Interest (Call) to mobilise private EU business to invest in critical areas to support Ukraine’s recovery and reconstruction[2]. This followed the European Commission’s earlier endorsement and communications from September 2024[3]. EU businesses, including consortia or joint ventures, involving EU and Ukrainian companies, were invited to submit their proposals by 1 March 2025. The proposals will be reviewed and matched with appropriate investment projects funded by the Ukraine Investment Framework, which is part of the EU’s €50 billion Ukraine Facility. This initiative aims to promote business partnerships and EU private sector involvement in Ukraine’s recovery and reconstruction, while also supporting Ukraine’s further integration into the EU Single Market.
The six priority areas outlined in the Call align with the Ukraine Plan and the Strategic Orientations of the Ukraine Investment Framework[4] (identifying key economic sectors requiring Foreign Direct Investment to facilitate Ukraine’s socio-economic recovery), including:
Construction materials: supporting reconstruction activities by investing in the construction material industry, construction supervisors, and construction companies.
Information technology and digital transformation: enhancing and strengthening technology and digital infrastructure to increase innovation and growth across a range of sectors.
Energy: the development of sustainable energy solutions, encompassing renewable energy initiatives and the modernisation of existing energy infrastructure.
Critical Raw Materials: focusing on investment and processing minerals and resources, including those required for high-tech industries and renewable energy technologies.
Processing industry and manufacturing: updating the manufacturing sector and boosting competitiveness.
Transport and export logistics: replacing and upgrading public infrastructure, transport, and logistics to support connectivity and mobility.
We plan to cover more about the Call, together with the eligibility criteria and other points to note in a forthcoming article in this series. We anticipate that there may be other initiatives or incentives for Ukrainian and foreign construction and engineering businesses to participate in the reconstruction process. Based on other post-conflict reconstruction efforts, examples of incentives could also extend to possible grants, tax breaks, etc.
Potential funding and players
UK
Earlier press reports suggest that UK funding will be made available to Ukraine. In 2024, the Department for Business and Trade released updated guidance on initiatives to boost UK-Ukraine trade, improve market conditions, and support Ukraine’s critical and long-term reconstruction[5]. By way of a similar example, construction industry press has previously highlighted the potential opportunities available to UK organisations in international recovery efforts, such as from the Iraq reconstruction budget in 2008. Reports at that time had indicated that British engineering expertise, particularly in the areas of energy, infrastructure, and public works, was highly sought in the region affected by conflict.
It is a frequent practice for the UK Government/public sector to conduct public procurement processes for the appointment of construction and engineering works, as well as other services and goods. If the UK Government is providing funding, it is likely that numerous Tier 1 and Tier 2 contractors and consultants will have a significant interest in these projects, particularly due to their familiarity with procurement procedures and their experience in post-conflict reconstruction efforts.
Whilst there will be opportunities for businesses to undertake and execute projects benefitting Ukraine and its citizens, such opportunities and contracts will entail certain risks. Additional concerns regarding future UK involvement may also link to the broader political, economic, and regulatory environment and approach to long-term commitment. Nevertheless, given that many larger UK contractors and consultancy firms already have a history of supporting post-conflict recovery efforts over several decades, including in Afghanistan, Iraq, and parts of Africa, they are particularly well-suited to contribute effectively to Ukraine.
Poland
Regarding local supply chain expertise and resources, there may be an increased demand for Polish contractors and consultants. Poland is anticipated to play a significant role in Ukraine’s reconstruction, particularly following the UN’s announcement of the establishment of a UN Office for Project Services, a special UN agency for reconstruction issues. It is presently unclear whether such businesses will act predominantly as main contractors, subcontractors/trade contractors or subconsultants, although the approach to procuring contracts and available funding or resources will inevitably influence this.
It is also notable that “Rebuild Ukraine,” an international exhibition and conference, has been scheduled for November 2025 in Warsaw[6].
US
Donald Trump has been reported to have actively engaged in recent discussions aimed at ending the conflict in Ukraine. We understand from press reports that he has held conversations with both Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy. Trump has conveyed optimism about the potential for resolving the conflict, suggesting that there is a possibility of achieving peace. Consequently, Trump’s recent involvement may accelerate the need for such reconstruction efforts and influence interest within the US to secure related contracts in Ukraine. There are some major global contractors and consultants with headquarters in North America and presence in Europe who might benefit from this approach.
Other funding sources?
During the conflict, political leaders and organisations appear to have proposed that reconstruction and recovery efforts should also be financed through the imposition of sanctions and the confiscation of frozen Russian assets. The extent to whether such funding is feasible and the contribution this would provide in practice is yet to be confirmed.
Other considerations
In our next update we will consider the potential risks and challenges contractors/subcontractors and consultants should have in mind when tendering or negotiating future contracts for projects in Ukraine. We will also touch on how the future of construction law may evolve as a result of the efforts to rebuild.
Concluding thoughts
The urgent and extensive rebuilding efforts in Ukraine will inevitably present businesses in the construction, engineering, and infrastructure sectors with unique and significant opportunities to secure lucrative contracts on high-profile projects. It is crucial for businesses to be aware of the opportunities available, as well as the associated risks and impact of legal and regulatory frameworks.
Ukraine’s evolving market offers a wide spectrum of opportunities for foreign investors, but choosing the right city can be as critical as selecting the right industry
From thriving tech hubs to industrial powerhouses, each major urban center has its unique strengths—often proven by the success of top international companies already operating there. This guide provides a comparative overview to help you decide where to establish your business in Ukraine in 2025.
Proximity to Government Institutions: As Ukraine’s capital, Kyiv houses key regulatory bodies and ministry offices, making it ideal for ventures requiring frequent official engagements (e.g., finance, legal, and consulting firms).
International Companies in Kyiv:
Procter & Gamble (P&G): Leverages Kyiv’s consumer market and robust distribution channels.
Ernst & Young (EY): Manages audit and advisory services for local and multinational clients.
Who Should Locate Here:
Corporations seeking a strategic command center for national operations.
Consultancy, banking, and consumer goods firms that benefit from direct access to governmental and corporate clients.
Lviv: The IT and Creative Hub
Primary Industries: IT Outsourcing, Software Development, Creative Services Why Lviv?
Tech Ecosystem: Renowned for tech talent and startup culture, supported by universities focusing on computer science and engineering.
European Orientation: Its western location and cultural ties facilitate collaboration with EU partners, especially in nearshoring models.
International Companies in Lviv:
GlobalLogic and N-iX: Serve global tech clients, demonstrating Lviv’s capacity for high-end software projects.
EPAM Systems: A major IT services provider capitalizing on local engineering talent.
Who Should Locate Here:
Startups seeking top-tier developers at competitive costs.
Creative agencies, design studios, and any enterprise wanting swift access to European markets.
Kharkiv: Engineering, R&D, and Advanced Manufacturing
Primary Industries: Engineering, Aerospace, Scientific Research, IT Why Kharkiv?
Academic Excellence: Home to multiple technical universities and research institutes, fueling a strong pipeline of engineers and scientists.
Industrial Legacy: Kharkiv has a long history in machinery, aerospace, and defense, making it a prime location for advanced manufacturing.
International Companies in Kharkiv:
Siemens: Implements large-scale infrastructure and industrial automation solutions.
International IT Firms: Outsourcing and R&D centers focusing on complex software and hardware projects.
Who Should Locate Here:
Businesses that rely on specialized R&D or require a steady stream of engineering talent.
Tech-driven companies needing advanced prototyping or product testing facilities.
Dnipro: The Industrial and High-Tech Manufacturing Powerhouse
Import-export businesses, tourism, shipping & distribution
Considerations for Starting Business in Ukraine by Location
Local Labor Market
Kyiv: Access to a broad range of talent, albeit with higher salary expectations.
Lviv & Kharkiv: Specialized IT and engineering skill sets at competitive costs.
Dnipro & Odesa: Strong workforce for manufacturing and logistics but may require sector-specific training.
Infrastructure & Connectivity
Kyiv & Lviv: Well-developed road and rail systems plus air connectivity.
Dnipro: Industrial transport networks and cargo-friendly railway lines.
Odesa: Direct port access crucial for global trade.
Operational Costs
Kyiv: Higher office and living expenses but excellent networking potential.
Regional Cities: Typically lower real estate and labor costs, though sector-specific fees (e.g., shipping costs in Odesa) should be factored in.
Local Incentives
Industrial Parks & Special Economic Zones: In cities like Dnipro, offering tax breaks or simplified customs procedures.
Tech Clusters: Lviv and Kharkiv often have supportive startup ecosystems with coworking spaces and incubators.
Market Access & Networking
Kyiv: Corporations, government agencies, and financial institutions.
Regional Hubs: Industry-focused communities, local business associations, and academic partnerships.
Conclusion
Choosing the best Ukrainian city to establish your business in 2025 depends largely on your industry focus and growth strategy. Kyiv remains a prime choice for corporate headquarters and financial services, while Lviv stands out for tech and creative endeavors. Kharkiv offers unmatched engineering and R&D potential, whereas Dnipro excels at industrial-scale manufacturing. Odesa, on the other hand, is the go-to location for maritime logistics and trading.
By aligning your operational needs with each city’s established strengths—and taking cues from the top foreign companies succeeding there—you can make an informed decision that sets your venture up for sustainable growth in Ukraine’s evolving economic landscape.
1. What is a representative office of a foreign non-profit under Ukrainian law?
Representative office of a foreign non-profit entity – a subdivision of a foreign legal entity (NGO or foundation) which got officially registered in Ukraine. Although such a rep office is inserted in the Unified State Register of Legal Entities and Individual Entrepreneurs of Ukraine, it does not possess the status of a separate legal entity.
2. What types of rep offices are available to foreign non-profits in Ukraine?
A foreign non-profit legal entity may register its representative office in Ukraine in the following forms:
representative office of a foreign non-governmental organization (NGO);
representative office of a foreign charitable organization.
The choice depends on the scope of activities conducted by the parent non-profit entity pursuant to its Charter. If the parent entity does charitable work, it should opt for a rep office of a foreign charitable organization. On the other hand, if the foreign entity is focused on promoting a certain public agenda, a rep office of a foreign NGO will be a more suitable option.
The registration procedure and fundamental principles of functioning are practically the same for both types of rep offices. Hence, the answers to the questions below are applicable to both of them.
3. Which documents govern the activities of a rep office?
In Ukraine, representative offices of foreign non-profits are regulated by the following acts:
Civil Code of Ukraine;
Tax Code of Ukraine;
Law of Ukraine “On Non-Governmental Organization” (for NGOs);
Law of Ukraine “On Charitable Activities and Charitable Organizations” (for charities).
The main internal document that governs the activities of a Ukrainian rep office is the “Regulations of the representative office”. The Regulations contain basic provisions on the functioning of the rep office in Ukraine and must comply with Ukrainian law.
4. What is the difference between a rep office and a separate NGO / foundation?
A foreign non-profit can establish its presence in Ukraine in two ways: by registering a representative office or by creating a separate NGO / foundation under Ukrainian law.
While an NGO / foundation is a full-fledged legal entity, a rep office does not have the status of a legal entity and possesses no separate civil capacity. This means that the rep office enters into contracts on behalf of the foreign parent entity, and the foreign entity bears full reposponsibility for the legal actions of its subdivision. Meanwhile, a separate NGO / foundation established under Ukrainian law acts in its own name, has its own separate assests and bears civil liability for its own actions.
Apart from these basic differences, there is also a set of labor, tax and internal governance distinctions between a rep office and an NGO / foundation.
5. Who is considered the founder of a rep office?
Under Ukrainian law, a representative office is established by the resolution of the foreign parent entity. Such foreign entity is the sole founder of the rep office; no other founders (participants, shareholders) may join at a later date.
6. Who can be the head of a rep office?
The head of a representative office is appointed by the foreign parent entity and inserted in the Ukrainian public Register. The head exercises his powers in Ukraine based on a power of attorney issued by the foreign parent entity.
Any person regardless of citizenship may be appointed as the head of a Ukrainian representative office. However, a foreign citizen must obtain a Ukrainian tax ID number before registering as head of the rep office.
7. Is it obligatory to employ the head of the rep office under Ukrainian labor law?
If the head of the rep office is a Ukrainian citizen, it is advisable to employ him under labor law and pay him at least a minimum monthly salary of UAH 8,000 (» EUR 180). The head may be employed either full-time or part-time. In the latter case, the head’s monthly salary may be even lower, i.e. proportionate to his hourly workload.
If the head of the rep office is a foreign citizen, you may choose one of the following options:
to employ him in the rep office under Ukrainian labor law and pay him a salary in Ukraine; in this case, it is not required to obtain a labor permit for foreigners in Ukraine;
to employ him directly in the parent entity under foreign labor law and pay him a salary abroad; no Ukrainian labor permit is required here as well.
8. Does a rep office need to rent property in Ukraine to use it as a legal address?
When filing for registration, a rep office must indicate a legal address which will be shown in the Ukrainian public Register. This address determines where all official correspondence from counterparties and state authorities will be sent.
The law does not require to provide the Ukrainian registrar with ownership title documents or lease agreements on the property stated as the rep office’s legal address.
9. Are rep offices obliged to have an official seal?
A seal is not mandatory for a rep office under Ukrainian law. However, some rep offices voluntarily choose to use a seal in their activities. A rep office may order a seal from any seal-manufacturing company; no special permits are required.
10. Documents required to register a rep office
As a rule, the following documents are required to file for registration of a rep office:
filled-in application form;
resolution of the foreign entity on setting up a representative office in Ukraine;
regulations of the representative office;
an up-to-date excerpt on the foreign parent entity from its national commercial, banking, court or other register;
ownership structure;
copy of UBO passport(s);
power of attorney for registration purpuses.
Some of the above documents may require additional notarization & apostille/legalization, depending on the circumstances.
11. Who can file documents for registration of the rep office in Ukraine?
Under Ukrainian law, only two categories of people may act as representatives of a foreign entity for the purposes of registering a rep office:
an attorney who is admitted to the Ukrainian bar and practices law individually;
a person registered as a Ukrainian individual entrepreneur, whose main type of activity, according to the public Register, is the provision of legal services.
12. What is the timeline for official registration of a rep office?
The state registration of a representative office in Ukraine takes up to 5 business days from the date of filing. However, the registrar may refuse to register the rep office if certain documents are missing, incorrect or contradict Ukrainian law.
After the rep office is successfully registered, the foreign parent entity must also file for registration with the Tax Office of Ukraine. This is a separate procedure that usually lasts several days.
13. Can the rep office open a bank account in Ukraine?
Once the rep office is officially registered, it may open a bank accounts in Ukrainian banks. Usually, the head of the office personally visits a bank branch where he undergoes identification and signs various banking papers.
The scope of KYC documents requested by the bank varies depending on the particular bank’s compliance policy. We recommend checking KYC requirements in advance with your bank of choice.
Ukraine’s largest private energy company, DTEK, announced plans on Jan. 22 to invest 450 million euros ($468 million) in expanding the Tyligulska Wind Power Plant near the Black Sea coast.
“The commitment is the largest private sector investment in Ukraine since Russia’s full-scale invasion in 2022 and the biggest ever private investment in Ukraine’s energy sector,” DTEK said in a press release.
DTEK, owned by Ukraine’s richest man Rinat Akhmetov, said it had reached a deal with lenders to purchase 64 wind turbines from Danish manufacturer Vestas, a world leader in turbine production.
Of the 450-million-euro investment, 370 million euros ($385 million) will be financed through bank loans guaranteed by Denmark’s state-owned Export and Investment Fund (EIFO), with the remainder funded by DTEK.
The project is expected to be completed by late 2026 and generate 1.7 terawatt-hours (TWh) of electricity annually, enough to power 900,000 Ukrainian homes.
The big picture: DTEK lost nearly 90% of its generation capacity in 2024 due to Russia’s aerial attacks targeting Ukraine’s energy infrastructure. Wind turbines are harder to target than DTEK’s large thermal power generation plants.
The company has also largely been shut out from financing from large institutional investors wary of its owner, Akhmetov. EIFO lending to DTEK could be a signal to other would-be investors.
A big sale in the making
Kyivstar — Ukraine’s leading mobile operator that’s been in the news lately over its parent company VEON’s plans to list Kyivstar on Nasdaq — is looking to buy Ukraine’s favorite ride-hailing service Uklon.
Forbes Ukraine reported on Jan. 27 that Kyivstar had filed an application with Ukraine’s antitrust regulator to purchase Uklon. The deal could be valued at anywhere from $40–80 million, according to Forbes’s analysis.
What’s in it for the two companies? Uklon has had trouble expanding into other markets, unable to compete with ride-hailing giants like Uber and Bolt. The company launched in Georgia, Moldova, Azerbaijan, and Uzbekistan, but exited each market except for Uzbekistan.
Veon, Kyivstar’s parent company, has capital, expertise, and access to other markets where it also operates, one market insider told Forbes. The company also owns mobile operators in Kazakhstan, Uzbekistan, Pakistan, and Bangladesh.
Uklon ended the first three quarters with Hr 1.2 billion in revenue, or $28 million, twice as much for the same period of 2023. Kyivstar would get a growing company, and be able to offer its 23 million subscribers special offers and discounts on trips, Vitaliy Laptenok from Flyer One Ventures told Forbes — potentially incentivizing even more people to use the app.
A Sense Bank branch in Kyiv, Ukraine
Back on the market?
After being nationalized at the start of Russia’s full-scale invasion over their Russian ownership, Ukraine is preparing to sell Sense Bank and Ukrnafta, Economy Minister Yuliia Svyrydenko told Forbes Ukraine in an interview published last week.
“We are ready to privatize Sense Bank, as well as consider the possibility of selling a stake in Ukrnafta, which is in dire need of modernization,” Svyrydenko said. Discussions on Ukrnafta are still in their infancy, she said.
The Ukrainian government took control of Sense Bank in the summer of 2023 after its owner, Mikhail Fridman, was placed under sanctions in response to Russia’s full-scale invasion.
Ukraine’s government nationalized oil producer Ukrnafta in November 2022, seizing it from its shareholders, infamous oligarch and former PrivatBank owner Ihor Kolomoisky and his business partner Hennadiy Boholyubov.
What’s next? It’s unclear. Selling Ukrnafta’s stakes or Sense Bank quickly is another story, as there are no reported serious buyers. Privatization has also been a historically slow process in Ukraine, where many of the country’s biggest banks are state-owned, and also in “dire need” of being privatized.
Wesley Jordan, Chief Executive Officer of VisionFund Ukraine.
Foreign investor spotlight
Ukraine’s Central Bank gave the green light to VisionFund Ukraine to operate as a non-bank financial institution, allowing it to start lending in the country, the company said in a statement last week.
VisionFund Ukraine is part of the global VisionFund network, which provides financial inclusion services in 28 countries across four continents, including loans, savings, insurance, and financial education.
Over the past 21 years, VisionFund has lent $12.2 billion through 21.5 million loans. It works mostly with small businesses and entrepreneurs, especially in rural areas.
“I look forward to working with entrepreneurs and partners in the financial inclusion ecosystem. We plan to enhance entrepreneurship in Ukraine by financing small businesses to support economic recovery and capacity building of communities and help families achieve financial stability,” said Wesley Jordan, Chief Executive Officer of VisionFund Ukraine.
“We start now as we understand how important fast recovery is and how timely and vital access to capital and inclusive finance is for small businesses in Ukraine,” he added.
The big picture: Small and medium-sized businesses are the backbone of Ukraine’s economy. But access to capital to grow businesses in Ukraine, where borrowing money is expensive, remains a big barrier for many entrepreneurs.
Ukrainian President Volodymyr Zelensky speaks at the World Economic Forum in Davos, Switzerland, on Jan. 21, 2025.
Davos Digest
The World Economic Forum in Davos, Switzerland is over and it’s safe to say that in addition to the inauguration of Donald Trump, Ukraine captured a lot of the spotlight this year as talks to end the war gain momentum.
An end to the fighting could usher in a gold rush of investment into Ukraine, piquing the interest — or at least curiosity — of foreign investors.
The Kyiv Independent has lots of interesting insights from the forum this year, including an op-ed from Ukraine’s Economy Minister Yuliia Svyrydenko, and an interview with Ukraine House Davos’s director, Ulyana Khromyak.
Interpipe invests $16 million in its front-line Nikopol plant since start of full-scale invasion
Steel pipe and railway wheel producer Interpipe, owned by Ukrainian oligarch Viktor Pinchuk, has invested $16 million in the development of its assets and new equipment at the plant in Nikopol, Oleksandr Garkavy, director of the Interpipe railway products division said in Davos. Russian forces are located just across the Dnipro River from Nikopol and the city is subject to near-daily attacks.
Ukraine’s poultry producer giant MHP experiences ‘largest hack in history of company.’
MHP wrote on its official Facebook page on Jan. 22 that the hack brought down its IT infrastructure, affecting shipments. The company is Ukraine’s largest poultry producer, has over 30,000 employees, and finished 2023 with a revenue of over $3 billion. The hack follows a large-scale Russian hack on Ukrainian government databases in December of last year.
Nova Poshta delivers a record 480 million packages and cargo in 2024
Ukraine’s leading private postal service Nova Poshta also reported that it delivered 19 million international parcels, an 86% increase from the year before, as it continues its expansion across the European continent. The company recently announced it had opened its first branch in Manchester, England, adding to its two London locations in the country. Nova Poshta, known abroad as Nova Post, is now active in 15 countries in Europe.
Ukraine’s central bank raises key policy rate to 14.5% due to inflation
“In order to maintain the stability of the foreign exchange market, keep expectations under control, and gradually bring inflation to the 5% target on the policy horizon, the (central bank) board decided to raise the key policy rate by 1% to 14.5%,” the bank’s Chairman Andrii Pyshnyi said in a press briefing on Jan. 24.
Ukrainian business association calls on government to implement ‘targeted air raid sirens’ to limit disruptions to business activity
Air raid alerts warning of Russian attacks in Ukraine by oblast, with the exception of the city of Kyiv, which has its own alerts separate from Kyiv Oblast, “leads to unjustified work interruptions even when there is no immediate threat in the area where the business is located,” the European Business Association said. According to the association’s members, downtime at enterprises can reach up to 50% of working time, causing disruptions to production plans and increased operating costs, undermining export capabilities. It’s unclear how Ukraine’s Air Force would even be able to change the alert system to target specific regions instead of entire oblasts.
Since the outbreak of the full-scale invasion on February 24, 2022, the Russian Federation has caused Ukraine losses of over 55 billion USD. Residential buildings, schools, hospitals, enterprises, thermal power plants, transformers, and the Kakhovka hydroelectric power station – that is what has been destroyed. Entire cities have been completely destroyed by Russian shelling and scorched-earth tactics during hostilities.
The war is still lasting, while the amount of destroyed Ukrainian infrastructure is only growing. The issue of restoration is not just on the agenda; some affected regions where active hostilities are not underway are already being rebuilt at the expense of private, state, or grant funds. The reconstruction system itself is now quite complicated by various by-laws and government orders. Therefore, the Ministry of Restoration initiated a government bill “On the Principles of Recovery of Ukraine”.
We consciously created this material as participants in the “Window of Restoration” network. You can find all about the recovery of the affected regions of Ukraine on the single platform recovery.win
What changes does the draft law “On the Principles of Recovery” make to the system of rebuilding Ukraine’s infrastructure?
The Ministry of Recovery presented the government draft law “On the Principles of Recovery” in May 2024. This draft law should make recovery in Ukraine transparent and accountable, involve people, and facilitate conditions for sustainable economic growth. One of its main goals is to create tools so that partners can be confident in reliable cooperation with Ukraine.
The war between Russia and Ukraine has caused enormous damage and destruction of infrastructure. According to the KSE Institute, as of January 2024, the Russians had damaged or destroyed over 250 thousand residential buildings, including 222 thousand private houses, over 27 thousand apartment buildings, and 526 hostels. The infrastructure of 78 small, medium, and large private enterprises, as well as 348 state-owned enterprises, got destroyed or damaged.
All sectors of Ukraine’s economy have incurred losses. For example, the agricultural sector suffered losses of over eight billion USD. Russian army also damaged hospitals and municipal infrastructure through missile/drone strikes. The most destroyed infrastructure was in Donetsk, Kyiv, Luhansk, Kharkiv, Chernihiv and Kherson regions.
The war is still lasting, but the issue of reconstruction is already relevant now. Reconstruction of social and housing infrastructure should sustain the economy and facilitate the residence of Ukrainians. In the regions de-occupied in spring 2022, reconstruction is ongoing. 29 thousand buildings were destroyed or damaged in the Kyiv region. Among them, as of April 2024, over 17 thousand buildings were restored.
In Chernihiv region, over five thousand civilian infrastructure facilities were damaged, including schools, hospitals, and residential buildings. Kharkiv, Donetsk, and Kherson regions have faced the worst situation concerning reconstruction. In Kharkiv region, there is a more vital “elimination of the consequences of armed aggression” than actual reconstruction. In the most destroyed towns, reconstruction has not yet begun due to their proximity to the front line, for instance, in such cities as Kupyansk, Stary Saltov, and Chuhuiv.
As of September 2024, reconstruction in Ukraine is still governed by the law “On the Principles of State Regional Policy” and numerous government by-laws aimed at regulating the practical aspect of reconstruction that reconstructors and local authorities have faced in the process of reconstruction.
The involvement of various sources of funding in reconstruction (e.g. state, local, grant, and private ones) also creates a problem of control over reconstruction projects. Regulation of financing and transparency should make such projects public, and, most importantly, mitigate the risks of corruption in reconstruction projects. Regulation and control are carried out through the State Agency for Reconstruction.
Martyna Bohuslavets, CEO of the Institute of Legislative Ideas says that it is necessary to adopt a comprehensive law that should regulate the activities of the main bodies responsible for reconstruction, as well as govern the use of reconstruction funds, drafting strategic documents and programs for digitalization of the reconstruction process, such as the DREAM.
She noted, “Draft law “On the Principles of the Recovery of Ukraine” aimed at governing such issues has been developed since September 2023. Meantime, the wording submitted for discussion to the Ministry of Reconstruction, among the above issues resolves only consolidation of the DREAM system: a positive step forward, but insufficient”.
The analyst added, that for the avoidance of corruption risks during the reconstruction of Ukraine, the draft law should contain provisions for the following:
1. Regulating the use of costs from the fund aimed at financing reconstruction projects;
2. Improving activities of the Restoration Agency as a key body responsible for launching reconstruction projects;
3. Resolving the issue of the conflict between the development of programs and plans for reconstruction in communities.
The draft law on recovery has already been criticized for granting the government increased powers in the system of control over reconstruction financing. The Association of Ukrainian Cities made a statement on the need to finalize the draft law.
The draft law also introduces the concept of a private consulting engineer for reconstruction projects. Ukraine already has state architectural and construction control over development, whose representatives also conduct reconstruction projects. The powers of consulting engineers duplicate the powers of state control bodies. The Association believes that this introduces corruption risks into the reconstruction system.
The government receives expanded powers to control the financing of infrastructure facilities. This provision contradicts the law on decentralization, where the main powers regarding infrastructure decisions are given to local authorities. Centralization of such a process will undermine one of the main reforms of Ukraine in all the years of independence.
What is the DREAM system and how will it affect the organization of reconstruction?
The draft law “On the Principles of Recovery of Ukraine” governs the procedure for keeping and using the DREAM system for the purpose of managing reconstruction projects. It provides access to everyone: officials, local authorities, investors, and even journalists.
The DREAM system is currently in test mode. The system should collect, organize, and publish open data at all stages of reconstruction projects in real-time. It also makes it possible to monitor the effectiveness of project implementation at each stage and mitigate risks, create accurate reporting, and improve the overall efficiency of the project.
The DREAM system facilitates filling in the register of damaged and destroyed property, registration of reconstruction projects, and project analysis from financing to the implementation plan. This should be a full-fledged monitoring of the reconstruction of infrastructure facilities.
Anatoliy Komirny, the Deputy Minister of Community, highlights, “This will allow us to see at each stage what is happening with the project, whether its estimated cost has changed or not and why (if yes), who is responsible for it, who carried out the first work projects, and why he made mistakes. If everything is fine, we need to understand: are we on time with the deadlines and why, if we are not on time. People should understand in advance when they will be able to move into renovated housing when their children will go to a rebuilt school, and so on. From the partners’ point of view, this is an opportunity to make sure that the money they provided was spent for good reason”.
As of September 2024, over seven thousand reconstruction projects have already been registered in the DREAM system. Their aggregate budget exceeds 371 billion UAH. If the draft law “On the Principles of Recovery of Ukraine” is adopted, the DREAM system will become mandatory for conducting reconstruction projects in Ukraine. The Ministry of Reconstruction hopes that the DREAM system will help them to digitalize the entire reconstruction process in Ukraine.
Martyna Bohuslavets says that the DREAM system is really being built on the principle that everyone sees everything, which should significantly increase the transparency of reconstruction projects.
She notes, “Although the introduction of the DREAM system is positive, this system alone is not able to secure fully transparent reconstruction because for this an independent system of key bodies with accountable financing mechanisms still needs to be created. In addition, it is important to secure the publication of information on the prices of material resources during public procurement (including upon reconstruction). This will allow a comparison of the prices set for the restoration of facilities with market prices. This will make it possible to establish the presence or absence of overestimation of reconstruction cost. For this purpose, the Supreme Council registered draft law No. 11057 dated 04.03.2024, which is currently adopted as a basis”.
Anatoliy Tkachuk, Director of Science and Development at the Civil Society Institute, believes that the draft law “On the Principles of Recovery of Ukraine” in its current state does not resolve the most important issues. However, they need to be resolved for a reasonable and systematic reconstruction.
He summarized the goals of the draft law on the principles of recovery in an analytical note, “It seems that the main goal of adopting this draft law is to legislatively fix one of the possible instruments in the DREAM system aimed at recovery. This is not a good practice and is being proposed for the first time in Ukraine. Adoption of this draft law may be harmful to recovery planning. Regulations laid down in this draft law level the entire planning system and introduce new concepts that contradict those fixed in the legislation”.
Anatoliy Tkachuk says that the draft law itself complicates the developed network of laws and by-laws on infrastructure reconstruction in Ukraine and requires more changes to legislative acts than the Ministry of Recovery is talking about.
He added, “In Ukraine, there is a systemic law “On the Principles of State Regional Policy” governing a significant part of recovery issues. However, the actual situation in this area, the existence of duplication of planning documents for restoration, and the absence of clear financing rules require coordinated changes to several legislative acts of Ukraine, in particular, the laws “On the Principles of State Regional Policy”, “On Regulation of Urban Planning Activities”, “On the Procedure for the solution of certain issues of the administrative-territorial structure of Ukraine”; the Budget Code of Ukraine; the Land Code of Ukraine and the Civil Code of Ukraine”.
Therefore, it is unknown whether the DREAM system, like the government bill itself, will be able to influence the reconstruction in Ukraine, to improve it and to mitigate corruption risks. Now the draft law is at a public hearing.
Political prospects of the draft law in the Supreme Council
A draft law on the principles of recovery has not yet been submitted to the Supreme Council. Therefore, its consideration is expected, first in the committees of the Supreme Council, and then at the meeting of the Supreme Council itself. But this draft law, as stated by Olena Shulyak, People’s Deputy from the “Servant of the People” faction, is part of Ukraine’s implementation of the “Ukraine Facility” plan from the European Union. Thanks to it, Ukraine will be able to receive assistance of 50 billion euros.
But at the moment, the government draft law gives the government great powers over the entire reconstruction system. It provides that the restoration will be carried out by the following institutions: the Cabinet of Ministers, the Ministry of Restoration, the Restoration Agency (Integrity Council), as well as specialized central government bodies, such as the Ministry of Health, the Ministry of Education, the Ministry of Internal Affairs and Communications, and others. Local authorities should also conduct restoration projects, but the expanded powers of the Cabinet of Ministers will centralize the reconstruction itself. The Cabinet of Ministers will receive the authority to decide which objects should be subject to reconstruction or not.
The use of the DREAM system for the restoration of infrastructure facilities at the expense of the state budget or at the request of the state will become mandatory. Authors of the draft law believe that this will affect the transparency of the process. However, based on the DREAM system, certain objects can be prioritized over others. The only question is how objective this prioritization will be.
People’s Deputy Olena Shulyak commented upon the draft law at its presentation, “This legislative framework is aimed to secure effective, transparent, and accountable restoration of Ukraine, reduce the damage caused by military aggression of the Russian Federation, and ensure sustainable economic growth. Introduction of this legislative instrument will allow us to overcome consequences of the war and to facilitate conditions for socio-economic growth, improve the lives of the population and business”.
Throughout August, the Supreme Council Committee on the Organization of State Power, Local Self-Government, Regional Development, and Urban Planning held public consultations on the draft law. This means that it will soon be transferred to committees for consideration and approval. Martyna Bohuslavets, CEO of the Institute of Legislative Ideas says that the draft law will expand the already broad powers of the government in reconstruction. Transparent mechanisms for using funds for reconstruction would allow for attracting more international assistance for reconstruction.
She summarizes what needs to be added to the draft law before its consideration in the Supreme Council, “Therefore, we at the Institute recommend that the draft law on recovery will fix the following: mandatory prioritization of reconstruction projects; publication of all information regarding the work of the commission/working group that will make decisions upon distribution of funds; a clear procedure for determining the administrator of funds. In addition, it is local governments that are most aware of the community’s needs for recovery. Therefore, local governments should have the right to independently submit projects for funding. In addition, representatives of local government associations, as well as representatives of the public, should be part of the commission/working group that will make decisions on the distribution of funds”.
Anatoliy Tkachuk, Director of Science and Development at the Civil Society Institute, believes that the draft law “On the Principles of Recovery” will in no way affect the process of systemic recovery, which is not currently taking place in Ukraine.
He noted, “We can adopt any draft law, regardless of its quality and necessity. It all depends on the will of the president or on the agreements of the main vote holders. Such draft law can also acquire the status of a law, but unfortunately, it will not be able to work on systemic recovery. Changes will be required if real recovery begins. Given the situation at the front, there is no question of comprehensive reconstruction of the territories along the front line and the border with Russia at the present moment, while recovery of damages in other territories does not require for adoption of a new law”.
The draft law “On the Principles of Recovery” solves only specific problems of reconstruction, such as the distribution of funds, which are not enough for all reconstruction projects. The transparency of reconstruction via the DREAM system has not yet been studied through testing the system. In addition, it is unknown whether the prioritization of reconstruction takes into account the needs of the local population, the urgency of the reconstruction of the facility, etc. The principal task facing the reconstruction of Ukraine is to determine by what principle to rebuild. First, where people are now, or to plan for the future; either to rebuild quickly or to modernize the infrastructure according to new standards. The draft law does not solve this problem.
These are the findings of the annual Infrastructure Index 2024, conducted by the European Business Association in collaboration with law firms Arzinger and Sayenko Kharenko.
In 2024, 59% of companies reported making such investments. The majority focused on modernising existing facilities (59%), developing new infrastructure and facilities (44%), and acquiring ready-made assets (16%).
Most businesses invested to improve logistics and expand their geographical reach within and outside Ukraine.
In 2024, 79% of companies relied on their own funds, while 30% used debt financing. Only 9% accessed grant funding for investments. Foreign investments accounted for 39% of funds, while Ukrainian sources made up 61%.
Key barriers to funding included a focus on maintaining existing infrastructure and the risk of asset loss due to the security situation. Other constraints were a lack of external funding and insufficient internal resources.
War-related Losses
In 2024, 53% of businesses reported direct damages from hostilities, with nearly half describing these losses as significant. Nevertheless, 41% have already restored the damaged assets, while others plan to do so soon (25%) or after the war ends (28%). Only 6% said recovery is impossible or impractical.
Plans to claim compensation for war-related damages have increased, with 45% of respondents intending to do so in 2024, up 25% compared to 2023. Companies are at various stages of the process:
Documenting damage and gathering evidence (41%)
Damage assessment (38%)
Seeking consultants (23%)
Initiating criminal proceedings (21%)
Filing claims for compensation (10%)
Key Challenges for the Industry
The most pressing issue for 2024 is a labour shortage, reported by 69% of respondents. Rising logistics costs negatively impacted 65% of businesses. Other challenges include limited activity at seaports, shipping hazards, reduced demand, lower export and import levels due to decreased production, and power shortages.
Roads and Passenger Transport
82% of respondents support the introduction of toll roads, provided the quality of the existing infrastructure is improved beforehand.
Top three unresolved issues in passenger transport:
Low quality and accessibility of public transport (57%)
Unlicensed operators in intercity passenger transport (51%)
Insufficient integration of transport modes for multimodal transportation (49%)
Government Priorities to Stabilise the Market
According to businesses, the government should focus on unblocking maritime transport and reopening ports, ensuring accessible risk insurance for investors, developing public-private partnerships, adopting the Railway Transport Act, and providing targeted support to restore damaged terminals and infrastructure.
75% of respondents support separating the Ministry of Communities and Territories Development to establish a dedicated transport authority.
Maryna Sharapa. Arzinger Partner
It is encouraging to highlight the results of the index, which demonstrate that despite significant losses, a labour shortage, and other challenges, the majority of businesses maintain a positive trend towards growth. An impressive 67% of companies are planning investments! Amid the war, this can be seen as another front the transport sector holds. In this context, the discussion at the infrastructure event about updates to the rules and procedures for investment mechanisms such as industrial parks, major investments, and public-private partnerships proved particularly timely.
Tymur Enkhbaiar. Counsel at Sayenko Kharenko
After some improvement in the situation last year, this year we are once again witnessing an increase in damages caused by military actions and the extent of harm incurred. Despite this, 59% of companies in the transport sector have invested in business development this year, and 67% plan to invest in 2025. Unsurprisingly, companies predominantly rely on their own funds and focus on improving logistics, expanding geographical presence, achieving energy independence, and enhancing security.
Does the state have a foreign investment promotion programme?
Ukraine actively promotes foreign investment through several key initiatives as follows:
Law on Investment Nannies (2021): Enacted on 13 February 2021, the Law of Ukraine No. 1116-IX ‘On State Support of Investment Projects with Significant Investments’, commonly referred to as the ‘Investment Nannies Law’, aims to attract significant foreign and domestic investments by providing state support to large-scale investment projects. The law introduces a framework for facilitating investments exceeding €20 million by offering various incentives, legal guarantees, and dedicated support services to eligible investors. The Investment Nannies Law represents a strategic initiative by the Ukrainian government to attract and facilitate significant investments by offering a comprehensive package of incentives and dedicated support services. By providing tax benefits, customs exemptions, infrastructure assistance, and personalised support through an assigned manager, the law aims to improve the investment climate and stimulate economic growth in priority sectors.
UkraineInvest: This state agency serves as the primary manager of Ukraine’s investment promotion programme. It offers support for significant investment projects and facilitates access to state support mechanisms.
Ukraine Facility Programme: This programme is a European Union financial assistance initiative running from 2024 to 2027, allocating €50 billion to Ukraine. It aims to finance the state budget and stimulate investment by mitigating risks for private and institutional investors.
Regional Investment Promotion: Local government bodies conduct additional investment promotion activities, often through tailored regional investment programmes.
Applicable domestic laws
Identify the domestic laws that apply to foreign investors and foreign investment, including any requirements of admission or registration of investments.
The main domestic laws that apply to foreign investors and foreign investment are as follows:
Law of Ukraine No. 93/96-ВР, dated 19 March 1996 ‘On the Regime of Foreign Investments’;
Law of Ukraine No. 1540а-XII dated 10 September1991 ‘On the protection of foreign investment in Ukraine’;
Law of Ukraine No. 1560-XII dated 18 September 1991 ‘On Investment Activity’;
Law of Ukraine No. 1116-IX dated 17 December 2020 ‘On State Support for Investment Projects with Significant Investments in Ukraine’;
The Law of Ukraine ‘On Public-Private Partnership’ (No. 2404-VI, dated 1 July 2010);
The Law of Ukraine ‘On Concession’ (No. 155-IX, dated 3 October 2019);
The Law of Ukraine ‘On Production-Sharing Agreements’ (No. 1039-XIV dated 14 September 1999); and
The Law of Ukraine ‘On the Privatisation of State and Municipal Property’ (No. 2269-VIII dated 11 January 2001)
In addition to these specialised laws, a number of other legislative acts are applicable, such as the Civil Code of Ukraine, the Commercial Code of Ukraine, the Tax Code of Ukraine, the Land Code of Ukraine and the Custom Code of Ukraine.
These acts together with bilateral investment treaties may provide requirements for admission of investment.
There is no requirement to register an investment. Foreign investors were registering their investments before the enactment of the Law of Ukraine No.1390-VIII, dated 31 May 2016, ‘On Amendments to Certain Legislative Acts of Ukraine Concerning the Abolition of Mandatory State Registration of Foreign Investments’.
Relevant regulatory agency
Identify the state agency that regulates and promotes inbound foreign investment.
UkraineInvest: Established by the Ukrainian government in 2018 and functions as the country’s official investment promotion office. In this capacity, it provides comprehensive support to investors, offering reliable and current information, guidance on conducting business in Ukraine, and assistance in identifying optimal investment opportunities. The agency also plays a crucial role in facilitating communication between investors and government entities at various levels, while working to address systemic challenges that investors may encounter. Complementing UkraineInvest’s efforts, the Ministry of Economy of Ukraine maintains a significant influence in shaping the nation’s investment policy framework.
The National Investment Council: The Council is an advisory body to the President of Ukraine, which advises on policies to improve the investment climate and coordinates between investors and government agencies.
State Property Fund: Manages privatisation processes and oversees state property transactions.
Ministry of Economy: Develops economic policies, including those related to investments and public-private partnerships (PPPs).
Relevant dispute agency
Identify the state agency that must be served with process in a dispute with a foreign investor.
In investment arbitration proceedings, the Ministry of Justice is the designated body to receive service of process on behalf of the state.
This is demonstrated by the latest wave of the “Ukraine’s Investment Attractiveness Index” survey, conducted by the European Business Association in partnership with NEQSOL Holding.
The integral score of the Index slightly improved in 2024, reaching 2.49 out of 5 (compared to 2.44 in 2023). This overall rating is similar to the investment climate assessment during the “COVID year” of 2020.
The percentage of business leaders considering Ukraine’s investment climate as unfavourable has decreased from 84% last year to the current 79%, with 20% describing it as extremely unfavourable. Notably, this share has consistently decreased from 53% in 2022 to the current 20%. A neutral stance on the current investment climate was taken by 12% of top executives (up from 7% last year), while 9% view it favourably.
Perceptions of the investment climate dynamics remain unchanged from last year. Almost half of the respondents (49%) believe that the investment climate has worsened, 39% see no significant changes, and 12% think it has improved.
The proportion of companies already operating in the market and planning to continue investing, despite the war, increased from 57% last year to 70% currently. Meanwhile, only 17% believe it would be beneficial for new investors to enter Ukraine (down from 32% in 2023 and 17% in the second half of 2022).
Looking ahead to the next six months, 49% of CEOs expect further deterioration in Ukraine’s investment climate, 33% expect no changes, and 18% hope for improvement. The outlook within their own sectors is similar: 44% expect a decline, 43% anticipate stability, and 13% foresee improvements.
Russian military aggression remains the top negative factor affecting the investment climate, followed by corruption, a weak judicial system, the shadow economy, and attacks on Ukraine’s energy system. Additionally, 81% of companies surveyed view currency restrictions as a negative factor impacting Ukraine’s investment appeal.
This year, business leaders cite Ukraine’s EU candidate status, tariff and quota elimination for Ukrainian exports, the “transport visa-free regime” with the EU, digitalisation of public services, and integration into the unified European electricity system as positive factors.
Slightly more than half, or 54%, of companies reported losses due to hostilities. Among these, 25% have already approached law enforcement agencies, while another 11% plan to do so. Additionally, 3% have sought recourse through national and international courts.
Anna Derevyanko
Despite the challenging business environment, investment climate assessments indicate a slight improvement, reflecting companies′ adaptation. Notably, the shadow economy emerged as a significant negative factor this year, highlighting an intensified call for action against the shadow sector amid rising taxes for legitimate businesses. EU candidate status remains a crucial positive factor for the third consecutive year, and as an ЕВА, we will continue focusing on European integration activities, including work on shaping Ukraine′s strong negotiating positions.
Volodymyr LavrenchukCountry Manager of NEQSOL Holding Ukraine
Despite the challenging situation, investment opportunities in Ukraine remain. This is evidenced by the recent decision of the NEQSOL HOLDING international group to become a strategic investor in one of the world’s largest titanium raw materials producers, UMCC. 70% of EBA member companies participating in this year′s survey also plan investments in Ukraine. I believe that the Ukrainian market′s investment potential will be realised primarily by investors who understand the local market, possess management experience in wartime conditions, and maintain well-developed business partnerships internationally. Implementing compliance and ESG practices will ensure the sustainability of such investments as Ukraine integrates into the EU.
HOW WE MEASURE THE INDEX
The European Business Association has been conducting the “Ukraine’s Investment Attractiveness Index” survey since 2008. Over its history, the Index has never reached the positive zone (above 4 points). In the current survey wave, 80 CEOs of the largest international and Ukrainian companies participated. Of these, 39% represent medium-sized businesses, 38% large businesses, and 23% small businesses. The main partner of the survey in 2024 is NEQSOL Holding.
NEQSOL HOLDING is an International Group of Companies employing more than 12 thousand people in 11 countries (including US, UK, Azerbaijan, Ukraine, Netherlands, Georgia and Turkey). NEQSOL Holding has 3 head offices located in Amsterdam (Netherlands), Baku (Azerbaijan) and Kyiv (Ukraine) to manage its businesses in telecommunications, energy, construction and hi-tech industries. NEQSOL HOLDING group providing services to over 25 million customers across the globe.
Investment treaty practice Does the state have a model BIT? The state does not have a model BIT.
Preparatory materials
Does the state have a central repository of treaty preparatory materials? Are such materials publicly available?
The Ministry of Foreign Affairs maintains a State Departmental Archive that houses official documents, including original international treaties and related preparatory materials.
Scope and coverage
What is the typical scope of coverage of investment treaties?
Investment treaties typically define ‘investment’ and ‘investor’ broadly, covering various assets and entities, including tangible and intangible property, shares, monetary claims, and intellectual property rights. They apply to investments made by one party’s investors in the other’s territory, often including those made before and after the treaty’s enactment.
The definition of an ‘investor’ typically encompasses citizens or nationals of a contracting party, generally excluding permanent residents. This, however, is subject to a few exceptions. Four Bilateral Investment Treaties (BITs) (those with Azerbaijan, Canada, Israel, and Kazakhstan) as well as the Energy Charter Treaty, extend protection to both citizens or nationals and permanent residents of the contracting parties. Additionally, BITs with Bosnia and Herzegovina and San Marino offer protection to both citizens and permanent residents of these countries. However, Ukraine only extends protection to citizens, not permanent residents, of these nations.
Several BITs, and a Fair Trade Agreement with Canada, contain provisions that aim to prevent ‘treaty shopping’ and ensure that only genuine investors from the contracting states benefit from the treaty’s protections. Such provisions allow Ukraine to deny benefits to a company either controlled by a national of any third state or which has no substantial business activities in the territory of the other party.
Treaty protections include fair and equitable treatment, full protection and security, national treatment, and most-favoured-nation treatment. They safeguard against expropriation and provide compensation for losses due to extraordinary circumstances.
BITs also offer dispute resolution mechanisms, including investor-state and state-to-state procedures, allowing direct recourse to international arbitration. They typically have set durations with renewal provisions and ‘survival clauses’ extending protections after termination.
Modern BITs often address performance requirements, subrogation rights, and transparency in investment-related regulations. While generally consistent, specific provisions vary between Ukraine’s individual treaties.
Protections
What substantive protections are typically available?
Investment treaties typically offer the following protections to investors:
Fair and equitable treatment.
Most-favoured-nation treatment (investors receive treatment no less favourable than that given to investors from any third state).
Protection against expropriation.
Compensation for losses (covers losses due to war, armed conflict, national emergency, revolt, insurrection, or riot; specific compensation for property requisitioned or destroyed by host state forces).
Free transfer of funds (covers profits, capital gains, dividends, royalties, interest, liquidation proceeds, loan repayments, licence and technical fees, and investor earnings).
Subrogation rights (a contracting party’s right to assume investors’ rights if it pays under an indemnity, guarantee, or insurance contract).
Preservation of more favourable treatment (investors can benefit from more favourable treatment provided by domestic legislation or other international obligations).
Only six of Ukraine’s BITs (Armenia, Azerbaijan, Croatia, Russia, Tajikistan and Turkey) do not contain a fair and equitable treatment standard.
By contrast, other BITs are more detailed. The France–Ukraine BIT stipulates that limits imposed on the purchase or transportation for production of raw materials or supporting materials, fuel and energy shall be considered a breach of fair and equitable treatment.
All Ukrainian BITs provide that the provision of most favoured nation or national treatment does not extend to the benefits of membership of a customs union, monetary union or free trade area.
Most carve-outs in BITs relate to taxation and the application of other international treaties.
A total of 27 investment treaties contain an ‘umbreall clause’, including treaties made with the following countries:
Austria
Azerbaijan
Belgium and Luxembourg
Denmark
Egypt
Finland
Germany
Italy
Japan
Korea
The Netherlands
Panama
Singapore
Spain
Switzerland
The United Kingdom
The United States
Dispute resolution
What are the most commonly used dispute resolution options for investment disputes between foreign investors and your state?
The following are the most commonly used dispute resolution options:
International Centre for Settlement of Investment Disputes (ICSID).
ICSID Additional Facility (often mentioned as an alternative when one of the parties is not a member of the ICSID Convention).
Ad hoc arbitration under the United Nations Commission on International Trade Law (UNCITRAL) Rules.
The Arbitration Institute of the Chamber of Commerce in Stockholm.
The International Court of Arbitration of the International Chamber of Commerce.
Confidentiality
Does the state have an established practice of requiring confidentiality in investment arbitration?
Arbitration awards in most investment disputes are public, save for the following cases:
Remington v Ukraine; and
JKX Oil & Gas and Poltava v Ukraine.
Hence, Ukraine does not have an established practice of requiring confidentiality in investment arbitration.
Insurance
Does the state have an investment insurance agency or programme?
Ukraine has established a comprehensive investment insurance programme primarily managed by the Export Credit Agency (ECA). This initiative is based on the Law of Ukraine No. 1792-VIII, ‘On financial mechanisms to stimulate export activity’, adopted on 20 December 2016.
The ECA provides insurance, reinsurance, and guarantees for contracts that promote export development, operating on a voluntary and commercial basis.
As of 1 January 2024, under Law No. 3497-IX, the ECA’s mandate has been expanded to include insurance against military and political risks for investments in Ukraine.
The war risks insurable by the ECA encompass the following:
military conflicts, including war, armed aggression, and hostilities;
violent changes in constitutional order or seizure of state power;
terrorist acts and sabotage related to military conflicts; and
occupation and annexation
The ECA has begun accepting applications for investment insurance and has already signed its first war risk insurance contract for an investment loan.
This programme represents progress in Ukraine’s efforts to mitigate risks for foreign investors.
