Business news from Ukraine

UKRAINIAN PARLIAMENT ADOPTS AT FIRST READING BILLS ON INVESTMENT RAISING

The Verkhovna Rada of Ukraine adopted bill No. 3761 with amendments to the Tax Code with benefits for projects with significant investments, as well as bill No. 3262, with amendments to the Customs Code from the package of bills on investment raising.

According to a correspondent of Interfax-Ukraine, bill No. 3261 was supported by 273 MPs and bill No. 3262 was supported by 262 MPs, with the required 226 votes.

The bills provide tax incentives for investors who implement projects with significant investments, as well as exempt from import duties on equipment for such projects.

In addition, the bill amending the Tax Code proposes to exempt equipment from VAT for 2021-2035, which is imported for the implementation of a project with significant investments, and also provides for income tax benefits.

Deputy Head of the President’s Office Yulia Kovaliv said that the bills are intended to strengthen Ukraine’s position in investment raising and creating new jobs in the package with the previously adopted bill No. 3760 on investment.

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JAPAN RATING AND INVESTMENT INFORMATION UPGRADES UKRAINE’S FOREIGN CURRENCY RATING

Japan Rating and Investment Information, Inc. (R&I) has upgraded Ukraine’s foreign currency issuer rating from B to B+, rating outlook is stable.

“When fiscal consolidation efforts to date and enhanced resilience to external shocks are also taken into account, economic and fiscal conditions are expected to recover in 2021 and beyond,” R&I said in a Thursday press release.

R&I said that the International Monetary Fund (IMF) financial support for Ukraine, together with loans from the World Bank and the European Union (EU), will help stabilize the government’s funding, which R&I views favorably.

R&I believes that the improved political and social stability under the leadership of President Volodymyr Zelensky will allow the government to focus on rebuilding the economy.

R&I said that among other positive moments is that foreign reserves are on the rise, standing at $28.8 billion as of end-July 2020, which covers 4.9 months of imports. Gross external debt is declining as a percentage of GDP. As of end-March 2020, the ratio was 75.8%. With external debt maturing within one year falling to 29.3% of GDP, the short-term external debt to foreign reserves ratio declined to around 1.6x from more than 2x seen until the previous year.

There is little concern over the government’s foreign currency liquidity, R&I said.

The banking sector has improved profitability. Supported by growth in deposits, the sector also maintains stability on the liquidity front.

“R&I will follow their [government and National Bank of Ukraine’s] efforts to ensure financial stability, as the impact of the coronavirus is anticipated to emerge going forward,” the agency said.

In R&I’s view, containing infections, reinforcing the healthcare system and rebuilding the economy are top priorities for the government’s fiscal policy.

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MHP WORKING ON CARBONIC ACID PLANT, WAITING FOR CERTAINTY IN ‘GREEN’ POWER INDUSTRY FOR INVESTMENT IN BIOGAS

Myronivsky Hliboproduct (MHP), one of the largest agricultural holdings in Ukraine, is working on a carbon dioxide plant project, deputy chairman of the board Oleksandr Dombrovsky has said when signing a memorandum of partnership between the agricultural holding and Organic Ukraine.
“This is an innovative project, I can’t tell you much. We are now doing a very professional feasibility study, considering various options. Today it is too early to say that we are ready for this project. We are working on it,” he said.
Dombrovsky clarified that the plant is being designed both for the needs of MHP itself, and for the domestic market and export. According to him, today about 70% of carbonic acid in the domestic market is imported, mainly from Poland and Hungary.
He also said that MHP, which has already built two of the world’s largest biogas complexes for processing poultry manure, has another ready-made similar project and a permit for its construction.
“But we are thinking to start or not to start. And if to start, then when, given that the “green” industry in Ukraine has not been paid money at all for six months,” Dombrovsky explained.
He stressed that investments in biogas are significantly higher than in solar energy, and range from EUR3 million to EUR3.5 million per 1 MWh of capacity.
The expert noted that the agricultural holding is also working on other innovative projects, in particular, on “green” hydrogen.

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NATIONAL BANK OF UKRAINE REVISES APPROACHES TO CALCULATING FOREIGN DIRECT INVESTMENT

The National Bank of Ukraine (NBU) has revised approaches to calculating foreign direct investment (FDI), in particular, reevaluated the cost of FDI, which was previously calculated in foreign currency, to the hryvnia equivalent, the NBU press service said on Friday.
According to the report, the National Bank also began to consider reserves, additional capital, retained earnings and damage to the application to the charter capital of enterprises with FDI.
In addition, the regulator changed the approach to accounting for negative capital indicators in companies with FDI, in particular for such enterprises, the NBU began to use zero values in calculations.
As a result of the new calculations, FDI in Ukraine in 2019 increased by 5.1%, to $51.4 billion, and investment from Ukraine decreased 56.5%, to $3.5 billion.
“After the recalculation, FDI volumes generally increased. For example, in 2019, FDI volumes increased by about $2 billion only due to significant profits while the business environment was favorable. Last year’s appreciation of the exchange rate also contributed to an increase in the FDI volumes in U.S. dollar terms,” Director of the Statistics and Reporting Department Yuriy Polovnev said.
He said that the recalculation of FDI will not affect the balance of payments.

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CAPITAL INVESTMENT IN UKRAINE IN JAN-MARCH DECREASES BY 35.5%

Capital investment in Ukraine in January-March this year fell by 35.5% after growing by 21.2% in the fourth quarter of last year, the State Statistics Service said on Tuesday. According to the State Statistics Service, in the first quarter of this year, UAH 76.914 billion of capital investment was disbursed (excluding the temporarily occupied Crimea, Sevastopol and the territories of Luhansk and Donetsk regions).
Among the regions, a significant decrease in capital investment in January-March 2020 compared to the same period in 2019 was recorded in Kherson (by 75.4%), Ivano-Frankivsk (by 49.5%) and Zakarpattia (by 49.2%) regions.
Among the industries, capital investment growth in the first quarter of this year was recorded in the provision of other types of services – by 51.4%, telecommunications – by 41.4% and IT and telecom – by 8.7%.
At the same time, in the field of art, sports, entertainment and recreation, the drop in investment amounted to 79.1%, aviation – 77.3%, catering – 74.2%, scientific achievements and developments – 73.2% and forestry – 72%.
The own funds of enterprises and organizations remained the main source of financing for capital investment, thanks to which 73.2% of the total volume of all investments was made.
A significant share of capital investments was made in machinery, equipment and vehicles – 41.7%, buildings and structures – 49.3% of all investments.

CAPITAL INVESTMENT IN UKRAINE DECREASES BY 35% IN Q1

Capital investment in Ukraine in January-March this year fell by 35.5% after growing by 21.2% in the fourth quarter of last year, the State Statistics Service said on Tuesday.
According to the State Statistics Service, in the first quarter of this year, UAH 76.914 billion of capital investment was disbursed (excluding the temporarily occupied Crimea, Sevastopol and the territories of Luhansk and Donetsk regions).