According to the results of a recent assessment by the World Bank, Ukrainian recovery and reconstruction will require at least $411 billion. This figure is 1.5 times higher than the size of the pre-war economy of Ukraine — writes Anna Derevyanko, European Business Association Executive Director (pictured),

Plans to rebuild Ukraine are already being talked about – at different events all over the world, in media, during business trips and high-official meetings. Nevertheless, it is also worth moving from words to actions – making concrete plans, with concrete steps and understanding who will have to pay and for what.

Definitely, the private sector has an important role to play in the rebuilding of Ukraine — in a variety of ways, including direct investment, critical projects, mobilizing capital, etc. And we see – a business that works in Ukraine is ready to be involved in the process of rebuilding. Moreover, businesses stay committed and support the country, continue to work and to pay salaries. Now even more than at the beginning of the war. However, rebuilding is a huge process that entails investments. Hence, how to attract the private sector, foreign investments – the questions that need to be thought about already. As opportunities are enormous – in food and agro, IT, logistics and infrastructure, defense, etc. Sure, for some businesses security reasons can be a slowdown. However, mechanisms like war risk investment guarantees can bring the appetite. In other words, businesses that want to invest or work with Ukraine also need to have support, guarantees while entering a challenging market. It’s priceless to have donors and governmental support. However, the sooner we (as a country) create a more sustainable economic front, the sooner Ukraine will be less dependable on international support, the sooner the EU and USA will spend less from their budgets. So, I welcome countries to think about such mechanisms for their businesses willing to invest in Ukraine.

Ukraine as well must do a huge homework to welcome investors. Let’s be honest, even before the start of the full-scale war, Ukraine didn’t have huge boom of investors due to the continuing concerns about corruption, rule of law, governance, etc. Though, Ukraine is currently the focus of the whole world. And, yes, countries support Ukraine, help and are ready to continue doing so. But when you talk to real businesses about specific things, investments, you still hear a certain skepticism. Therefore, the situation must be corrected already — across all industries and fronts, and this should be the focus of the entire governmental team.

Important progress has already been achieved. According to the Corruption Perception Index 2022 of Transparency International, an NGO working in over 100 countries to end the injustice of corruption, Ukraine is one of the few countries tracked that became less corrupt last year. Ukraine is well-known for the digitalization of administrative services, Ukraine has 18 free trade agreements with 46 countries, in recent times Ukraine canceled around 600 permits required for running a business. And this list of changes can be continued.

However, the Ukrainian government must make significant further reforms on transparency and accountability to create a strong business-enabling environment for attracting private sector investment.

The situation motivates Ukraine to strengthen diplomacy and economic diplomacy. Ukraine should work to create an attractive brand and an economic brand abroad. Reputation is not easy to form, it is not fast, even harder to change but it is the only way to convince others. Therefore, we in the European Business Association launched a Global Business for Ukraine initiative to work on the development of economic diplomacy, to talk about Ukraine and business opportunities, to help global companies find business partners in the country, to be the right hand for global companies — potential investors who want to launch business in Ukraine.

However, the attractiveness of the brand must have a real and strong background. Hence, it is necessary to take care of creating a new, transparent, and fast management structure, to continue reforms and changes, to be more demanding towards the state apparatus. After all, Ukraine faces a task that, probably, has not yet been performed by any country in the world. But opportunities are also opening, which probably has not been in any country.

So, what we as a country should continue doing to create this strong background?

First, to continue establishing the rule of law in the country, investors must know that even if their rights have been violated, the courts will certainly be able to help find justice, protect legal interests and it won’t take years.

Second, effectively fight against corruption. Currently, many agencies, in particular, law enforcement agencies, have an extremely bad reputation in this area. Since taking office, Zelensky has stressed to the international community that he will make fighting corruption in his country a major policy priority. Zelensky’s reform agenda leaves little doubt about his intention to eradicate illegal practices and step up the fight against corruption. But more complex solutions — at all levels and in all branches of government are needed. And complex results.

Third, concrete steps and plans to overcome the shadow economy in the country, which accounts for about a third of the GDP. Unfortunately, the war did not fundamentally change the situation, but in some industries even deteriorated. As an example, the shadow economy in the tobacco industry is the highest since Ukrainian independence and is about 22%. Last year, the state budget did not receive about 20.5 billion hryvnias of charges due to the illegal circulation of tobacco,and in 2023, according to KPMG report, the state losses will amount toEUR 636 million of unpaid taxes.From the media we could read high-profile cases of recording specific violations, but, unfortunately, it is difficult to remember specific punishments and prosecutions. The share of the illegal market remains significant. Therefore, it’s crucial to have coordinated work of all structures and make unpopular decisions. So that a transparent business also understands and feels fairness in approaches.

I am sure that these issues can be resolved. Actually, we as a country that is confidently heading towards EU membership have no other way out. And business is ready to be a partner in this process of transformation. Partner in spreading the word of the mouse to motivate new investments to come to the country. It already does so by promoting Ukraine, participating in global events, sharing stories, investing. And I hope this tendency will continue. Moreover, hope that the Ukrainian government will have a constant dialogue with such companies. As only together is possible to rebuild, develop and strengthen our economy.

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