Since 1991 throughout all these years of independent development, Ukraine has moved significantly from a centralized planned economy, it once had within the USSR, toward a free market economy. Gradually modifying its legal system, Ukraine has been growing into an independent player at the international marketplace and in 2008, Ukraine joined the WTO. There is still a lot of work to be done, especially in regards to updating the Ukrainian economy markers to the EU standards.
However, the major improvements achieved in the business environment in Ukraine, since the country gained independence in 1991, have opened up the market for foreign direct investment (FDI). There is a law on foreign direct investment, an extensive privatization program has been carried out since the mid-nineties, and several new commercial laws now regulate foreign trade, taxation and banking. The legal and regulatory framework for investment and commerce is in place. The legal framework for FDI has become better over time, although it still needs enhancement. The government’s top policy priority is to attract more FDI. There are such government bodies, as the Cabinet of Ministers, the Ministry of Finance, and the Ministry of Economy that handle the matters related to FDI.
Ukrainian law pledges to protect foreign direct investments in a variety of ways. Some allow for the full repatriation of profits, invested capital and the wages of expatriate employees in hard currency, once taxes and other debts have been paid. If nationalization or expropriation takes place, Ukrainian law guarantees quick hard currency compensation of the full amount that was invested. It also provides a 10-year guarantee against changes in legislation that could damage foreign investors in any way.
Ukraine has signed many bilateral investment treaties with a variety of countries. Projects from treaty countries may sometimes be allowed to import machinery and other equipment tax free or at concessional rates, with the possible exception of restricted sectors like banking, insurance and heavy industry. There are also provisions for international arbitration in the settlement of disputes between foreign investors and the state. Products manufactured by a company with ties to a foreign company are exempt from export licensing and quotas, although such benefits do not apply to all products. All in all, Ukraine has made great progress over the past years in making its economy both stronger, more stable and open for foreign investments.