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OECD Investment Policy Reviews: Ukraine 2016

image of OECD Investment Policy Reviews: Ukraine 2016

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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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.

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