Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
With growth potential of 4-5% per year, many market watchers agree that Ukraine could demonstrate economic growth similar to neighboring Poland, if it were to capitalize on its enormous economic potential in agribusiness, information technology, trade-related transportation, aerospace, and defense. These same analysts agree, however, that despite recent progress under enormously challenging circumstances (conflict, occupation, foreign intervention, and trade blockades), economic growth is most constrained by corruption.
While the government took several initial steps in 2019 toward tackling Ukraine’s endemic corruption, reform will be a long process. Progress towards reforms is largely stalled by oligarchs and the politicians they promote, who continue to challenge the efforts of a growing and dedicated reform movement. One example of this is a lack of prosecutions related to corruption, and another is a failure to privatize state-owned enterprises indirectly controlled by oligarchic business interests. Partially due to insufficient reforms and a high-risk business environment, Ukraine is rated Caa1/B/B by Moody’s/S&P/Fitch respectively, lower than some emerging markets in Latin America and above those in Africa.
In addition to corruption, other significant market challenges in Ukraine include:
- A lack of transparency within tax and customs institutions
- Harassment by tax and customs officials
- A dysfunctional court system, unable to fairly adjudicate business disputes
- Limited financing resources
- High tax rates
- Opaque and inefficient regulatory environment
- Inadequate protection of intellectual property rights