40% GDP growth, USD 50 bln in investment by 2024: economic growth strategy presented

A key economic goal is to provide citizens with legal work with decent wages and to establish conditions for successful own business. To this end, the Government sets ambitious goals: to increase the country's GDP by 40% in 5 years, to create more than 1 million jobs and to leverage $50 billion in direct investments. Such ambitious tasks are enshrined in the Government's economic strategy: growth through investment presented today by the Ministry of Economic Development, Trade and Agriculture.

Investment is the cornerstone of this strategy. Investing means new jobs, and work is an opportunity for Ukrainians to earn and live better. We work to help people find a job with an official declared salary, and if a person wants to start own business - to create the conditions for that," Minister of Economic Development, Trade and Agriculture Tymofii Mylovanov stressed.

Given the underinvestment of the domestic economy (in Ukraine, the wear-out rate reaches 60%, while in neighbouring Slovakia - just over 35%), investments can have a very high return.

"We are talking about investment flows both in fixed assets technology and in human capital. By 2024, Ukraine should move to the top group of the human capital index, and average life expectancy to grow to 75 years," the Minister said.

According to the Strategy efforts to ensure vigorous growth of investment growth are targeted to three areas:

Creating effective markets. Both factors of production (land, capital, labour), and final product, including in those markets where the state is now a monopolist. In particular, the alcohol market had already been demonopolized. The creation of competitive markets for domestic universities and medical institutions are next on the agenda. Later on-the freight and passenger rail and energy markets.

Investment initiatives. Firstly, an issue at stake is public investments in infrastructure. The efficiency of the domestic business suffers greatly from the “bottle necks” in the transport sphere. In this direction, the priorities are roads, expansion of access of the railway to the ports, electrification of the railway, development of river transport, in particular, modernization of the Dnieper cascade.

At the same time, it is impossible to build infrastructure allocating only government funds. Therefore, investment initiatives are aimed to attract private investors to finance infrastructure through a public-private partnership (PPP) mechanism, and in particular concessions. The Government had already held successful concession tenders in two Black Sea ports - Olvia and Kherson. Other ports, PPP pilot projects at airports, research of train stations to start pilot concession projects are next in line.

The privatization of state-owned enterprises and banks is the next step to attract private investments. The Government plans to sell more than 300 objects of small-scale privatization and 5 objects of large privatization through the State Property Fund. As to large enterprises, investors are offered additional incentives - "tax holidays" to all investors who will get involved in privatization [with investments] of $10 million plus. They will not pay income tax for five years. At the same time, the investor must fulfil the investment plan: to keep the profile of the enterprises included in the high-tech value chains.

Also for major investment projects (over $100 million), the Government plans to introduce a special program for providing coordination and support to the investor. Investment incentives, such as land allocation and access to infrastructure, tax privilege, etc. may also be included in the relevant agreement between investors, government and local authorities.

Apart from that, the Government will make efforts to further develop the industrial parks to provide the necessary infrastructure and proper facilities. We currently have 43 parks, 7 of which were created in the last year. Over the next 5 years, we plan to complete the renovation of all parks (currently 12) and involve management companies and participants. The ambitious goal is to raise $5 billion from industrial parks that will create 50,000-100,000 jobs.

Another area of investment initiatives is the promotion of bank lending and insurance. In particular, it is the support of micro and small businesses through the program "Affordable Loans 5-7-9%" and the system of export insurance, and programs of mortgage lending.

A favorable business climate. Creating a supportive environment for doing business needs to be stepped up. Particular attention will be devoted to strengthening the rule of law, in particular through the establishment of verification mechanisms through registries, the establishment of a system of commercial arbitration, the strengthening of enforcement discipline by decisions of judges, and etc.

Effective public finance management tools, such as new customs and taxation, financial monitoring and financial control, are also being actively implemented. A separate element in ensuring a favourable business climate should be the tax system, which has the potential to reduce taxes on investment, activity and labor due to the additional burden on negative effects (pollution, alcohol, tobacco) and assets.

"Investment and growth drivers in synergy must ensure meeting the goal of 40% economic growth. We need to keep pace in order to launch this ambitious program of economic growth through investment. The President, the Government, the Parliament and the local self-government bodies should continue to work as a single team," the Minister summed up.