ALEXANDER MARKUS, Delegate of German Industry and Commerce in Ukraine - Competition for FDI in the Black Sea Region

1. Competition for FDI in the Black
Sea Region?
What investors from Germany are looking for
Black Sea Economic Forum
4th October, 2012, Yalta

2. FDI (shared capital) in Ukraine
Country of origin accumulated FDI in % of total
Total 52,426.7
Cyprus 14,521.5 27,7 %
Germany 7,403.9 14,1 %
Netherlands 4,949.3 9,4 %
Russian Federation 3,652.5 7,0 %
Austria 3,249.6 6,2 %
France 2,505.2 4,8 %
United Kingdom 2,493.1 4,8 %
Virgin Islands (Brit.) 1,749.7 3,3 %
Sweden 1,566.1 3,0 %
Switzerland 1,071.5 2,0 %
USA 988.0 1,9 %
Italy 985.0 1,9 %
Poland 861.9 1,6 %
from other countries 6,429.4 12,3 %
1st July, 2012 – source: State Service for Statistics of Ukraine, http://www.ukrstat.gov.ua/
Alexander Markus, Delegation der Deutschen Wirtschaft in der Ukraine, 24.09.2012 Slide 2

3. FDI (shared capital) in Ukraine
Country of origin accumulated FDI in % of total
Total 52,426.7
Cyprus 14,521.5 27.7 %
Netherlands 4,949.3 9.4 %
India at least 4,800.0 9.2 %
Russian Federation 3,652.5 7%
Austria 3,249.6 6.2 %
Germany 2,600.0 5.0 %
France 2,505.2 4.8 %
United Kingdom 2,493.1 4.8 %
Virgin Islands (Brit.) 1,749.7 3.3 %
Sweden 1,566.1 3.0 %
Switzerland 1,071.5 2.0 %
USA 988 1.9 %
Italy 985 1.9 %
Poland 861,9 1.6 %
1st July, 2012 – source: State Service for Statistics of Ukraine, http://www.ukrstat.gov.ua/
Alexander Markus, Delegation der Deutschen Wirtschaft in der Ukraine, 24.09.2012 Slide 3

4. stability
stability
…not changing the
rules of the game
in the very middle
of the game
Alexander Markus, Delegation der Deutschen Wirtschaft in der Ukraine, 24.09.2012 Slide 4

5. predictability
predictability
not changing official
positions every now
and then
Alexander Markus, Delegation der Deutschen Wirtschaft in der Ukraine, 24.09.2012 Slide 5

6. long-term planning cycles
long-term
planning
…for
investment
into people,
equipment and
sites foundation stone ceremony of W.E.T. housing complex in Vinogradiv,
4th Sept. 2012
Alexander Markus, Delegation der Deutschen Wirtschaft in der Ukraine, 24.09.2012 Slide 6

7. transparency
Transparency
…for example of
• investment procedures
• rules
• decision making
• payments
Alexander Markus, Delegation der Deutschen Wirtschaft in der Ukraine, 24.09.2012 Slide 7

8. Investing into their own business
German investors
know their own business
very well, some for
centuries and
generations.
That is what they invest
in! 10 Years Leoni Wiring Systems in Striy, Lviv Oblast
Alexander Markus, Delegation der Deutschen Wirtschaft in der Ukraine, 24.09.2012 Slide 8

9. criteria
Investment criteria
• markets for both
– purchasing and
– sales
• supply framework
• land sites with infrastructure
• work force
• connection to major transport corridors
• investment climate
• political stability
Alexander Markus, Delegation der Deutschen Wirtschaft in der Ukraine, 24.09.2012 Slide 9

10. barriers to German investment
low level rule of law 4.3
red tape 4.3
extensive bureaucracy 4.3
customs 3.9
expensive credits 3.6
taxes 3.4
VAT reimbursement 3.3
licensing and permits 3.2
low purchasing power 3.2
currency risk 3.1
product certification 3.0
purchasing sites and real estate 2.7
costs and supply of energy 2.7
import VAT on capital stock 2.4
work and liviing permits for foreigners 2.3
lack of qualified work force 2.2
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0
Alexander Markus, Delegation der Deutschen Wirtschaft in der Ukraine, 24.09.2012 Slide 10

11. Many thanks!
Alexander Markus
Delegation of German Economy in Ukraine
Ukraine, 01004 Kyiv, vul. Pushkinska 34,
phone +38 044 234 5995
alexander.markus@dihk.com.ua,
www.ukraine.ahk.de
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Limited. Picture on slide 4 is the property of Alexander Markus. The same as above applies.
Alexander Markus, Delegation der Deutschen Wirtschaft in der Ukraine, 24.09.2012 Slide 11