• 22/07/2024 05:01

Ukraine has developed an infrastructure for war risk insurance – Sviridenko

Україна напрацювала інфраструктуру страхування воєнних ризиків - Свириденко

Attracting investment in the real sector and economic growth through investment is one of the government’s priority goals in 2023.

As Ukrinform reports, this was reported by the press service of the Cabinet of Ministers.

To achieve this, the Ministry of Economy worked in three key areas: access to financing for investment projects, insurance of military-political risks, support mechanisms and government incentives for investment. Thanks to these efforts, according to the Ministry of Economy, there has been an increase in the level of foreign direct investment.

Nobody expected such dynamics – neither international experts nor Ukrainian ones. In January-August, the net inflow of investment amounted to $2.9 billion. For example, the German concern Bayer announced that it would invest 60 million euros in a plant in the Zhytomyr region. Or the example of the Irish company Kingspan Group, which announced that it would build a building materials plant in Ukraine for $280 million. There are also dozens of defense companies ready to manufacture their products fully or partially in Ukraine. Meanwhile, Ukrainian investors are building and raising financing despite the war – especially in the agro-processing sector. Recently, Astarta-Kyiv signed a loan agreement with Sberbank for $60 million for the construction of a plant for advanced soybean processing. Or, for example, a powerful flour-grinding complex of the Volyn-grain-product company started operating in Volyn,” said First Deputy Prime Minister – Minister of Economy of Ukraine Yulia Sviridenko.

According to her, to expand access to financing for businesses, loan financing was available with partial compensation of the interest rate under the 5-7-9 program. In addition, the Ministry of Economy has provided an investment mechanism as part of the plan for the Ukraine Facility.

Sviridenko said that at a government meeting they approved a plan for further provision to the European Commission. The investment mechanism itself will help attract at least $30 billion to the private, public and municipal sectors. It will be aimed at providing guarantees to international financial organizations and financial development institutions in order to strengthen the attraction of investment in Ukraine. In addition, the Ministry of Economy is now actively working on launching the Ukraine Development Fund to implement large capital-intensive investment projects for reconstruction in Ukraine.

According to her, in the second priority area – investment insurance. Ukraine was able to build an entire insurance infrastructure, which the government plans to scale next year. This included the first cases of insuring investments against war risks, developing a mechanism for insuring ships, working on the Ukraine Development Fund and other steps.

In particular, the Ministry of Economy launched a mechanism for insuring ships against war risks together with British partners.

“This tool is already working. The market has interest. We are expecting the first signed insurance agreements with exporters. The total volume of insurance included in this mechanism is $50 million. We expect that the corresponding insurance policy should additionally influence the increase in the export of Ukrainian products by sea and reduce the cost of insurance for grain transportation to 1-1.25%,” the press service quotes Sviridenko.

It is also noted that the investment guarantee agency MIGA insured the first investment. We are talking about investments in the M10 industrial park in the Lviv region. In addition, the agency updated insurance for the packaging manufacturer and one of the banks. MIGA is currently working to raise additional funds for the MIGA Sure Trust Fund. Japan, Great Britain and Norway have already made their contributions.

According to the press service, the American International Development Finance Corporation (DFC) will finance 5 projects worth $380 million. In particular, this year the first project was insured against political risks – the Lviv center for prosthetics, reconstructive surgery and rehabilitation Superhumans Center. Also, more than 14 national export credit agencies (ECAs) of other countries have opened limits for medium-term insurance of operations and investments in Ukraine and began to insure the risks of private investments of their companies. The total limit exceeds €1 billion and is the first step towards attracting foreign private investors from partner countries.

The government also reported that the European Bank for Reconstruction and Development is working on a several hundred million dollar mechanism for insuring against war risks of property on the road and in warehouses with the involvement of the Ukrainian insurance market, and our partners from the European Commission are ready to provide appropriate guarantees for this.

In addition, this year the government expanded the mandate of the domestic export credit agency. Now Ukrainian companies investing in Ukraine can receive coverage against war risks.

Sviridenko also spoke about the third area of work – attracting investment in the real sector. According to her, next year the government will actively develop industrial parks and projects with significant investments. At the end of the year, there were 73 objects in the register of industrial parks. According to the minister, the government will work to ensure that the number of parks not only grows nominally, but also that industries appear on the territory of these parks.

“Industrial parks will provide solutions to important problems for the investor: land, connection to networks, industrial buildings, equipment costs due to tax and customs incentives. Budget funding for the development of industrial park infrastructure in the amount of UAH 1 billion is provided for next year. Also, for the next year, 3 billion UAH are provided in support of projects with significant investments, a mechanism for partial compensation of such investments through taxes,” Sviridenko explained.

The minister added that next year the government, together with business, will work even more actively on specific investment projects and proposals, because there is significant demand from investors for this.

As Ukrinform reported, First Deputy Prime Minister – Minister of Economy of Ukraine Yulia Sviridenko said that in 2023, the volume of purchases carried out through the Prozorro system tripled compared to last year – to UAH 480 billion.


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