Ukraine is not only strong, proud, and free — it’s open for business

President Biden was right when he said that “Ukraine stands strong … proud and …free,” when he made his historic visit to Kyiv last month. Ukraine, a healthy democracy, is a country with a bright future. Ukraine’s people see their future in the West and as a full member of the European Union. Ukraine is looking for business partners to build the new Ukraine now.

Ukraine will win the war, but Ukraine will also win the peace. The process of rebuilding has already begun. Ukraine will create the conditions for high growth, jobs for Ukraine’s people, and ensure that Ukraine reaches it enormous potential.

Last July, world leaders gathered at the Ukraine Recovery Conference in Lugano, Switzerland, where Ukraine presented its Recovery and Development Plan, which — given the scope of destruction — calls for $750 billion in investment from 2022 to 2032. A follow up conference, jointly hosted by Ukraine and the United Kingdom, is scheduled in London this June. Pledges have also emerged from high-profile businesses such as BlackRock and Goldman Sachs, but a lot more needs to be done.

Some may argue that it is too early to begin rebuilding Ukraine, as Russia mounts a new offensive. However, there are three arguments in favor of action now.

First, the war should not preclude advanced planning for investment projects in Ukraine. Experience from previous conflict shows that countries should not wait to begin planning for reconstruction until hostilities cease. Given that the private sector will play such a critical role in bringing in the investment needed, the Ukrainian government is calling on international businesses to start planning their projects right now, not waiting for the war to end.

Planning and discussions can begin today even if they do not currently have operations in the country. These preparatory steps include business planning, project location selection, and obtaining permits, all of which can be accomplished remotely. 

Second, manufacturing will be a key piece of Ukraine’s reconstruction, but it may take between two to three years to build these new facilities. Manufacturing accounts for 10 percent of Ukraine’s GDP as of 2021, and significant planning and investment will be needed to rebuild the sector. Planning for new facilities may consume up to half the total project time, but accounts for just a fraction of the total project cost. Therefore, planning for these facilities should begin now so that implementation can begin as soon as it is safe to do so.

Third, the rebuilding of Ukraine needs to happen quickly. As Ukraine will need to restore its economy and attract refugees back to the country, the Ukrainian government hopes to attract investment sooner rather than later. While the reality may be different, companies that conduct advanced planning will nonetheless launch their businesses sooner and gain a competitive advantage when reconstruction begins.

One company that has understood and acted on engaging in reconstruction efforts now is the Irish multinational company, the Kingspan Group, which left Russia after the invasion and announced significant investment in Ukraine. An insulation and building materials company, Kingspan launched a project in Ukraine with the symbolic name “Saoirse,” meaning “freedom” in the Gaelic language. Through this project, more than $200 million will be invested in greenfield construction of high-tech plants to produce construction materials with an emphasis on low-carbon, low-energy solutions and will also include District Heating Systems. This implementation will create between 600 and 800 jobs.

Saoirse, which will begin in 2024, is an example of how the Ukrainian government is actively trying to encourage investment. UkraineInvest and other state institutions are providing organizational and advisory support to maximize the project’s potential and ensure its effective implementation.

To support these efforts, the Ukrainian government is taking steps to attract private investment.

First, the Ukrainian government offers investment incentives. Investors can take advantage of corporate income tax exemptions for up to ten years, no import duties for equipment, and construction of related infrastructure at the state’s expense.

Second, partner countries and international financial institutions are considering Ukraine-focused programs to facilitate investment. One challenge in attracting investment is the lack of war and political risk insurance, which is necessary to minimize uncertainty given the high chance of further Russian destruction. One promising measure under consideration is a Polish draft law that is being designed to provide cover for investments against war risks in Ukraine, and insure commercial contracts. The Multilateral Investment Guarantee Agency (MIGA) has also created a pilot political risk insurance program that can be built upon. Ukraine’s partners could be doing more here, and there are meetings this Spring in Washington, Japan and London where this issue should be addressed. On a related note, the U.S. Development Finance Corporation is looking at a number of projects that bring new investments into Ukraine.

Third, Ukraine is actively tackling corruption cases. While corruption remains a challenge, President Zelensky has pledged a zero tolerance approach to corruption. The Ukrainian government has taken steps — including removing high-level officials, appointing a special anti-corruption prosecutor, and adopting innovative digital transparency tools, such as ProZorro and Diia, online platforms for administration of state services.

Fourth, Ukraine has 19 FTAs with 47 countries including the European Union (EU) and is officially a candidate for membership in the EU. The EU granted Ukraine candidate status in June 2022, interconnected its energy system with Ukraine and integrated Ukraine into the TEN-T, the Trans European Transport Network. EU access requires governance performance, economic and structural reforms — and Ukraine will have to reduce trade barriers so as to make the country an even more desirable destination for trade and investment. Accession will bring Ukraine closer to the Euro-Atlantic community and closer to President Zelensky’s goal of transforming the country into an “investment Mecca” for Eastern and Central Europe.

Ukrainian businesses have shown extraordinary resilience during the war, with 83 percent of medium to large companies ready to contribute to reconstruction and 80 percent continuing to pay salaries in full, showing the immense potential for future private sector investment.

Ukraine has enormous agricultural potential, enormous manufacturing potential, and enormous potential in the technology sector. Tourism, pharmaceuticals, and the creative economy are all sectors that in time will also have tremendous growth. In 2023, the Ukrainian government, its allies, and businesses must take further pragmatic steps to prepare for reconstruction and maximize Ukraine’s economic potential. Like the Kingspan Group, global businesses should take steps now to plan investments in Ukraine.

Sergiy Tsivkach is the CEO of UkraineInvest, the investment promotion agency of Ukraine.

Daniel F. Runde is a senior vice president and director of the Ukraine Economic Reconstruction Commission at the Center for Strategic and International Studies (CSIS). He previously worked for the U.S. Agency for International Development, the World Bank Group, and in investment banking, with experience in Africa, Asia, Europe, Latin America and the Middle East. He is also the author of the recently published book “The American Imperative: Reclaiming Global Leadership Through Soft Power” (Bombardier Books, 2023).