Andrii Pidhainyi, partner
Olena Yurets, senior associate
State Support Mechanisms for Private Investment
Amendments to the Law adopted in August 2023 have expanded the List of industries, where projects can be implemented with the use of the state support mechanism and types of such support. The minimum investment amount (from EUR 20 million to EUR 12 million) as well as the requirements for the investor and the project have also been reduced. The Law provides for state support in the form of tax, customs, and other benefits, various forms of compensation, up to 30%of the contributed investment amount.
The process of developing and adopting a set of amendments to by-laws intended to implement provisions of the law, reduce the timeframe and simplify procedures
is currently being finalized. All necessary acts are expected to be adopted in March. This will allow potential investors to start preparing and submitting applications and to conclude the first investment agreements with the Government.
PPP-based cooperation between the State and the private sector
Despite ongoing hostilities in Ukraine. the reconstruction process is gaining momentum. Given the enormous extent of damage to infrastructure facilities. the government. expert organizations and foreign donors continue to work to find ways of attracting investments to Ukraine.
Public-private partnership (PPP) is regarded as one of these instruments. Therefore. discussions have now intensified around amendments to the PPP legislation (draft law No. 7508), which were adopted in the first reading in October 2022.
The draft law extends the scope of PPP to new sectors, introduces new forms of state support and new sources of PPP financing (through grants, and simplifies procedures for recovery projects.
Also, in January 2024, the Ministry of Infrastructure of Ukraine signed a memorandum of cooperation with the International Federation of Consulting Engineers to introduce procurement. engineering and contracting practices implemented jointly with international financial institutions (IFls).
Projects to be worked on under the Memorandum are aimed at emergency recovery programs in infrastructure, energy, healthcare, education, and agriculture. etc. This will help to bring Ukrainian construction standards and procedures closer to European ones and to spread the practice of using FIDIC proforma contracts, in PPP as well.
Intensifying development of industrial parks
In 2020-2023, the process of improving legislation aimed at creating and operating industrial parks (parks) was underway. A number of benefits were introduced for participants and management companies of parks.
As of February 2024, 74 industrial parks have been registered. This prompts that the interest of private companies and local governments in the said tool is growing, which is not surprising. The mechanism proves to be most effective for relocating businesses from war zones to safer areas, creating logistics hubs near seaports or in areas near Ukraine's western border.
Unfortunately, most parks are not functioning, and have no management companies or residents. In some cases, the necessary engineering infrastructure (roads, utilities, railways) is lacking, which means significant costs for investors and the State.
However, the Ministry of Economy of Ukraine plans to establish an Industrial Parks Development Office and has allocated UAH 1 billion <EUR 25 million) from the budget funds for the development of parks in 2024.
The development of parks will also be facilitated by the possibility of obtaining insurance against war risks, which has already been granted to the M10 Lviv Industrial Park by the World Bank's International Investment Guarantee Agency (MIGA).
For Legal Industry