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Ukrainian government promotes investment
21 June 2010
The newly elected Ukrainian authorities have announced their intention of attracting investment into the country. To encourage investors they plan to make the economy more transparent and competitive. The President’s new administration has promised that there will be a change in attitudes toward the sale of state companies.

Such sales will be necessary to achieve the Ukrainian authority’s economic forecasts for the year ahead. In particular, the forecast for GDP growth is put at 3.7%, the consumer price index at 112.2%, producer price index 116% based upon an average annual calculation. Real wages are predicted to grow by 5% and the minimum level is set to increase by 23%. The government believes that unemployment will fall by 8%. This positive view extends to trade where the forecast is that the volume of exports will grow by 15.3%.

Unlike the previous administration, Ukraine’s new President Viktor Yanukovych and his Prime Minister Nikolay Azarov, have been able to demonstrate a coordinated approach to the economy. “On the second day of the inauguration, the President of Ukraine issued three edicts, two of which concerned the creation of the committee for economic reform and fighting corruption,” said the Deputy Chief of Staff Administration of the President of Ukraine Andrii Goncharuk. Yanukovych also stated his ambitious intention that during the forthcoming ten-year period Ukraine plans to join to the 20 most developed countries in the world.

By the end of this year it is forecast that the government will adopt a new Internal Revenue Code where the valueadded tax and corporate income tax will be lowered. Also the Ukrainian Authority promises to reduce the number of regulations with which companies must comply. “There are 86 inspecting organisations. We’ve got a whole army of unnecessary people (intervening) for both the state and business. We plan to cut their numbers by more than half,” said the Deputy Prime Minister of Ukraine Serhiy Tigipko.

The government promises to change the country’s approach to privatisation of state enterprises, making this process more transparent and understandable for investors. Among the state companies which may be added to the list of those to be privatised are energy generating and energy distribution companies, and the Ukrainian Telecommunication Company. There are also plans to revitalise the agriculture sector through private investment. Among other sectors that may be included in the privatisation plans are machine-building plants, such as the Lugansk diesel locomotive plant. “I want to accentuate the point that such serious objectives need a suitable framework,” explained Tigipko.

Source: Aleksandra Nekrashuk, Ukraine Business Insight

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