Page 40 - UKRRptFeb24

4.3 Fixed investment
Zelenskyy's office announces a plan to stimulate private investment. The Deputy Head of the President's Office, Rostislav Shurma, noted: “We understand that today there is practically zero investment interest in Ukraine. The main obstacles that are holding us back are uncertainty and military risks. The only solution is NATO, but it is not available. This means we must move to Plan B and propose something now, rather than hypothetically discuss when some post-war recovery will begin." Shurma said that he sees three possible solutions that can conceptually mitigate risks in this situation. The first is various types of sovereign guarantees for private investments, which Denmark and Germany are already beginning to provide. The second is various mechanisms involving international financial institutions (IFI), such as the EBRD, IFC, or MIGA, for cases when a state is not ready to provide sovereign guarantees, and these IFIs can offer specific products. A third option is to develop off-the-shelf commercial products that could provide insurance coverage at an affordable price.
4.4 Corp dynamics
The index of business activity expectations in Ukraine has worsened in January. The index of business activity expectations, which the NBU calculates every month, decreased to 41.0 in January from 45.7 in December 2023. Given the growing pressure from production costs and logistical difficulties, industrial enterprises increasingly expressed pessimistic expectations, resulting in the index falling to 43.7. Respondents significantly worsened their volume estimates for manufactured products and new orders and predicted a further decrease in raw materials stocks. Traders also predicted worsening economic results amid rising import prices due to the blockade at the western borders, high fuel prices, and a slowdown in demand: the index fell to 38.9 in January. Companies in the service sector strengthened their negative ratings, considering the decrease in demand due to increased tariffs and security risks: the index was 40.4. The most pessimistic estimates were given by construction enterprises, considering the intense hostilities, the shortage of qualified personnel, and the seasonal factor: the index was 31.9 (42.1 in December).
Nearly 10,000 companies with foreign involvement have exited Russia in the two years since it invaded Ukraine, the Vedomosti business daily reported Thursday, citing corporate data. The number of legal entities with foreign affiliation declined by 6,200 in 2022 and 3,400 in January-October 2023, totaling 9,600, according to the publication. Overall, Vedomosti said 23,500 companies with foreign co-owners have been liquidated since March 2022. The discrepancy between the 9,600 and 23,500 figures is explained by the number of new companies with foreign affiliations registering in Russia. Vedomosti noted a significant increase in companies with co-founders from former Soviet republics — which accounted for 59% of all new companies registered in 2023 in Russia, as well as companies with co-founders from China, which accounted for 25% over the same period. Companies with co-founders from Turkey and India accounted for 3% and 2% of firms last year respectively. Likewise, 3% of companies registered in Russia last year were from countries that the Kremlin deems “unfriendly” (such as the United States and Nato members), according to Vedomosti, compared to 14% in 2021.
40 UKRAINE Country Report February 2024 www.intellinews.com