Ukraine is one of the 10 most pronounced countries in the world. Unfortunately, the reason for this is the terrible, cruel and unprovoked war of the Russian Federation against our prosperous country. The economy, as an integral part of any country, was significantly damaged for more than 3 years of war. Thousands of destroyed companies, enterprises and businesses. Thousands of square kilometres of lost and spoiled land are considered the best in the world for agriculture. And, of cource, thousands of killed people. Despite this, Ukraine’s GDP has grown since 1Q2023 and will probably grow in 2025. Ukrainians learned how to live in the war’s conditions and how to create and boost new businesses. See our review for the best businesses to start in Ukraine in 2025.
Military industry.
According to the Ukrainian government, Ukraine produces more than 50% of the weapons used to repel Russian armed aggression. The planned defence spending is 2.2 trillion hryvnias (more than a billion US dollars), which is more than 25% of Ukraine’s GDP. Of course, a significant part of this amount will be spent on the purchase of Ukrainian-made weapons. At the same time, weapons production financed by foreign countries has become more popular. It is called “the Danish model”. For example, countries such as Norway, Germany, Sweden, Denmark and others finance weapons production directly from Ukrainian weapons manufacturers. That is, in addition to funding from the Ukrainian budget, the Ukrainian defence industry also receives direct orders from foreign partners. The weapon will then be used by Ukrainian armed forces.
Due to security reasons, the vast majority of weapon production is located on the western side of the Dnipro River.
Agriculture
Ukraine contains many hectares of the most fertile land in the world. For centuries Ukraine was called the breadbasket of Europe. Now, we have all the potential to become a granary of the world. Our country is one of the top 10 main agriculture commodities producers worldwide. Considering the growing population and economic growth in many countries (at least before the COVID pandemic), climate changes, and the growth of consumption, it can be a good investment. In 2015 agriculture became the number one sector in Ukraine’s GDP contribution. Still, it is not developed and diversified enough and there is a lot of work to do and a lot of money to make. Another good thing is that the agriculture sector can give needed raw materials at a good price for the food industry. That is why Ukrainian poultry, cheese, and milk products, sweets, meat, and other food productions are growing.
Consider also that there is EU as one of the biggest markets nearby our country with a population of almost 450 million people. This is one of the biggest consuming regions in the world. Most of the goods (except agricultural commodities) to the European Union are supplied by auto trucks. At the same time, Ukraine is not far from the Middle East and the export to that region is growing as well.
You do not have to lease the land and buy tractors to work in the agriculture sector. There are thousands of possible businesses that are related to agriculture to be made. Such as fertilizers and agriculture commodities trading, transport services, consulting, the supply of needed equipment and technologies, logistic and storage services, intermediation, etc. Also, there is a high demand for construction services in the agriculture sphere. Many companies that do have a good production still need grain elevators, barns, hangars, etc. The Ukrainian government intends to boost up local manufacturing and use needed legal tools for this (like in 2017 there was an additional tax for the export of sunflower seed in order to increase Ukraine sunflower oil production).
But if you are ready to start farming in Ukraine, please consider that agricultural land can only be leased by foreign citizens or companies. It is not allowed to acquire agricultural land even for Ukrainian individuals and companies before 2021. But there is a big offer of fields to lease. You can find such in any part of Ukraine. Also, there are many medium and small agriculture companies that are being sold due to bad management or some other reasons. Consider that the southern part of Ukraine is good for growing vegetables and fruits, but using irrigation is mostly needed. At the same time central, northern and western Ukraine is good both for vegetables/fruits and grain growing.
Information technology and customer support services
This is the most fast-growing sector of the economy. More than 40% of our clients ordering a company registration in Ukraine intend to make an IT business. There are many IT hubs in Kyiv, Lviv, Dnipro, and Odesa. Our country is one of the best for IT outsourcing. Employment in the information technology field has been tripled since 2012. Ukrainian IT sphere’s yearly demand for employees growth is more than 15%. The biggest problem is that there are not so many Ukrainian that speaks English well. Some of our clients even start learning Russian or Ukrainian language with the aim of good communication. But tax rates (5% revenue tax and 0% VAT) are very favorable. The medium monthly salary for advanced programmers is $1850 in Kyiv and $1650 in Lviv and Kharkiv. Ukrainians are very clever, fast learning, and creative people. The cost of real estate is also very cheap that helps to reduce spending. For example, monthly rent in a business center in Kyiv is $ 20-40 per square meter. In the suburbs of Kyiv and smaller cities, the medium cost is $10 per square meter.
Renewables
Ukraine’s population is more than 42 million. But our economy depends on imports and most of the energy resources (such as oil, natural gas, and oil) are imported. There is a special tax regime for biofuel and other renewable fuel production in Ukraine. We do have a feed-in tariff for solar, wind, biomass, and hydroelectric production, which is one of the best in Europe. The renewable sector in Ukraine is booming. The bad thing is that to go into this business you need to act fast because the tariff depends on the time of commissioning of the power station. The sooner the power station will be constructed and connected to the energy supply system, the higher the tariff will be.
Privatization
Although the breakdown of the Soviet Union was more than 26 years ago, there are still many state-owned companies, factories, and assets in Ukraine. Most of these assets do not have good management. Most of the Ukrainian state-owned businesses are not effective at all. But good management and good owners can make such assets as profitable. Despite the war, the Government still offer many big, medium and small businesses (owned by the State) for sale. The sale of such assets is to be made through a public auction, which is the only way to get the real price for a business. The good thing for an investor is that anyway all the assets will be underestimated because many capitalists are afraid to invest in Ukraine due to conflict with Russia. Also in the case of litigation, parties may sue in the High Court of London, and dispute resolution will proceed under English law. This is made in order to provide more guarantees and more confidence for investors. Although there is a rising interest to invest in this country and as it was mentioned before there is much more confidence and prosperity.
Consider that there are two privatization lists of companies: a list of small companies and a list of big companies. Among big ones, you can find big power stations, energy supply companies, chemical factories (even monopolists in certain fields), coal mines, and other mining companies, hotels, and insurance businesses. These enterprises have the potential to generate billions of dollars profit, but for decades were used in order to enrich a small group of people that control it. But most of these assets get donations from the state budget and do not generate profit, but only debts. Some businesses (like President Hotel in Kyiv) are profitable already. We think that this is a good way to acquire an existing business with needed ground and basis for profit.
Natural resources
Ukrainian employees are the cheapest in Europe. In 2018 medium monthly wage in Ukraine was 50% less than in China. So if you do intend to make a production of goods nearby a huge market (European Union) Ukraine can be a good solution. Logistics with Europe is good. For example, the distance from Kyiv to Vienna or Prague is not more than 1350 kilometers (840 miles). Another important fact is the cost of real estate, which is also very cheap. The total cost to construct a plant in Ukraine can save a lot of investors’ money.
We hope that this information was useful for you and we hope that you will find success, growth, and prosperity in Ukraine.
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