UKRAINE Trends and Developments Contributed by: Timur Bondaryev, Maryna Sharapa, Andrii Pidhainyi and Olena Yurets, Arzinger
Insurance of investments against war risks The Ukrainian government considers the intro - duction of an insurance mechanism to be one of the basic conditions for attracting foreign investment during the post-war recovery of Ukraine’s economy. In particular, the Ministry of Economy of Ukraine has agreed with the Mul - tilateral Investment Guarantee Agency (MIGA) (a member of the World Bank Group) to launch a wartime investment insurance mechanism. Other insurance mechanisms are also being developed. New approaches to procurement, engineering and contracting in projects implemented jointly with international financial institutions (IFIs) In January 2024, the Ministry of Infrastructure of Ukraine signed a memorandum of co-operation with the International Federation of Consulting Engineers (FIDIC) to co-operate and introduce procurement, engineering and contracting prac - tices implemented jointly with IFIs. The projects to be worked on under the memo - randum are aimed at emergency recovery pro - grammes in various areas (such as infrastruc - ture, energy, healthcare, education, agriculture, etc). This will help to: • bring Ukrainian construction standards and procedures closer to European ones; • spread the practice of using FIDIC pro forma contracts; and • implement high-quality infrastructure projects. At the same time, co-operation with IFIs requires improving Ukraine’s institutional capacity and qualification of specialists and consultants, as these are relatively new tools and rules for Ukraine.
Intensifying development of industrial parks In 2020–2023, the process of improving legis - lation aimed at creating and operating indus - trial parks was underway. A few benefits and advantages were introduced for participants and management companies of industrial parks. The government has also adopted several additional acts that allow for the introduction of these privi - leges, as well as other types of State incentives for industrial parks from the budget. As of March 2024, 75 industrial parks have been registered, of which ten were registered in late 2023 and four in 2024. This shows that the inter - est of private companies and local governments in said tool is growing, which is not surprising. This mechanism proves to be most effective for relocating businesses from war zones to safer areas, creating logistics hubs near seaports or in areas near Ukraine’s western border. Unfortunately, most industrial parks currently only exist formally, are not functioning, and have no management companies or residents. In some cases, the necessary adjacent engi - neering infrastructure (roads, utilities, railways, etc) is lacking, which means significant costs both for investors and the State. However, given that this tool is gaining momentum, the Minis - try of Economy of Ukraine plans to establish an Industrial Parks Development Office, and has allocated UAH1 billion (EUR25 million) from the budget funds for the development of industrial parks in 2024. The development of industrial parks will also be facilitated by the possibility of obtaining insur - ance against war risks, which has already been granted to the M10 Lviv Industrial Park by the World Bank’s MIGA.
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