OECD Investment Policy Reviews

1990-0910 (online)
1990-0929 (print)
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OECD Investment Policy Reviews present an overview of investment trends and examine a broad range of policies and practices affecting investment in the economies under review. This can include investment policy, investment promotion and facilitation, competition, trade, taxation, corporate governance, finance, infrastructure, developing human resources, policies to promote responsible business conduct, investment in support of green growth, and broader issues of public governance. The reviews take a comprehensive approach using the OECD Policy Framework for Investment to assess the climate for domestic and foreign investment at sub-national, national or regional levels. They then propose actions for improving the framework conditions for investment and discuss challenges and opportunities for further reforms.

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OECD Investment Policy Reviews: Ukraine 2016

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27 Sep 2016
9789264257368 (PDF) ; 9789264259454 (EPUB) ;9789264257351(print)

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Ukraine’s post-Maidan authorities have embarked upon an ambitious reform programme to improve the country’s framework for investment and strengthen the country as an attractive investment destination. This review, which was prepared in close cooperation with the Ukrainian authorities in response to their 2011 request to adhere to the Declaration on International Investment and Multinational Enterprises (OECD Declaration), analyses the general investment framework as well as recent reform, and shows where further efforts are necessary. It assesses Ukraine’s ability to comply with the principles of openness, transparency and non-discrimination and its policy convergence with international investment standards such as the OECD Declaration. In light of the recently updated OECD Policy Framework for Investment, it also studies other areas such as investment promotion and facilitation, infrastructure development; financial sector development and responsible business conduct practices. In the scarcely two years since a new attempt at economic reforms was launched in earnest, Ukraine has made quite important progress in introducing a modern legal framework for investment. But additional efforts are required in some policy areas to reaffirm Ukraine’s attractiveness for investors.

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  • Foreword

    In 2016 Ukraine became the 47th adherent to the OECD Declaration on International Investment and Multinational Enterprises. This adherence bears witness to the determination that Ukraine holds towards its integration into the world economy and promoting responsible business conduct.

  • Acronyms and abbreviations
  • Executive summary

    The 2016 Investment Policy Review of Ukraine assesses the country’s ability to comply with the principles of openness, transparency and non-discrimination and its policy convergence with the OECD Declaration on International Investment and Multinational Enterprises, including responsible business conduct practices, which Ukraine adhered to in 2016. It also considers the interaction and coherence of Ukraine’s investment policy with other areas such as investment promotion and facilitation, infrastructure and financial development. In doing so, it evaluates progress made by Ukraine in response to the recommendations of a previous Review conducted in 2011.

  • Assessment and recommendations

    Since 2014, Ukraine has deployed significant efforts to improve its investment environment. Ukraine’s post-Maidan authorities have been moving forward with a reform agenda to create a welcoming business environment. In parallel, ongoing economic and social reforms that aim to bring Ukraine closer to international standards in fields such as human rights or labour relations are important steps in shaping and strengthening the country’s policy that promote sustainable development and responsible investment.

  • The role of FDI and multinational enterprises in Ukraine's economic development

    Attracting foreign investors has been a top priority for Ukraine’s authorities, particularly since 2014. Ukraine underwent a deep recession and a sharp macroeconomic adjustment in 2014-15, in large part due to unprecedented geopolitical tensions and military conflict in the East. As a result, FDI inflows reached their lowest level in a decade in 2014, before partially recovering in 2015. Companies from the European Union (EU), the United States and Russia are major foreign investors. The FDI Stock (49% of GDP at the end of 2014) is heavily concentrated in metallurgy, finance, retail trade and other non-tradable sectors. Over the long-term, attracting more export-oriented, efficiency seeking FDI projects in a broader range of manufacturing sub-sectors would benefit both export diversification and a better integration into EU value chains.

  • The policy framework for investment in Ukraine

    During 2014-15 Ukraine deployed significant efforts to improve its investment environment. The ratification of the Association Agreement with the European Union and the entry into force of its economic part in January 2016 have provided an anchor for many reforms. Recent initiatives have focused on reducing administrative burdens and improving public procurement. The government has also introduced significant tax reforms, resulting in better tax transparency, and made headway on reducing bribery and other forms of pressure on businesses with the establishment of a Business Ombudsman institution. Corruption nevertheless remains a serious challenge, and investors still complain about inadequate enforcement of anti-corruption legislation. Problems in applying laws and regulations continue to plague the business environment and public consultation mechanisms are not yet fully satisfactory. The overall policy and institutional framework for investment promotion and facilitation needs to be consolidated.

  • Infrastructure, financial development and natural resources in Ukraine

    Given the state budget constraints and substantial investments required to modernise and expand existing infrastructure capacity, more private sector participation is necessary. However, despite a modernisation of Public Private Partnership (PPP) legislation in 2015, the use of PPPs is at an early stage in Ukraine. Among infrastructure sectors, electricity is the most advanced in regulatory reform, with full-scale liberalisation of the market scheduled in 2017. Significant private (foreign and domestic) investments in the sector are expected as major power plants are slated for privatisations. The banking sector is going through an unprecedented consolidation (54 banks, accounting for one fifth of banking assets, were classified as insolvent since January 2014). Remaining banks are being recapitalised and the regulatory framework is being strengthened.

  • Ukraine and the OECD National Treatment instrument

    Ukraine’s legislation embodies the principle of non-discrimination of foreign investment. Ukraine has no institutionalised general screening mechanism for foreign investment but still applies several transectoral and sectoral restrictions on foreign investment which qualify for the list of exceptions to national treatment and measures reported for transparency in the meaning of the OECD Declaration on International Investment and Multinational Enterprises. In particular, Ukraine maintains exceptions to national treatment for established foreign-owned enterprises for access to land and forests and in sectors such as news information agencies, television and radio broadcasting, maritime and air transport, as well as for certain types of investment in privatisations.

  • Supporting responsible business conduct and the OECD Guidelines for Multinational Enterprises in Ukraine

    Responsible business conduct (RBC) is recognised as an important part of the investment climate and is increasingly integrated within public policies aimed at attracting better investment and enhancing sustainable development. RBC-related activities in Ukraine so far have mostly been undertaken by the private sector and civil society. While there is no comprehensive national or sectoral strategy on RBC, the ongoing economic and social reforms that aim to bring Ukraine close to international standards in fields such as human rights or labour relations represent a positive step in shaping and strengthening Ukraine’s policy framework that affects and enables RBC. Ukraine’s adherence to the Declaration, and, in particular, the establishment of a National Contact Point for the OECD Guidelines for Multinational Enterprises, is an opportunity to further promote RBC principles and standards, both within the government and with the wider public, and to further clarify and set out the government’s expectations on RBC.

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