Ukraine: Eastern Europe’s Greatest Market Brussels, 27 June, 2007

2 Ukraine: introduction The second largest country in Europe The second largest country in Europe Strategic position at the crossroads between Europe and Asia Strategic position at the crossroads between Europe and Asia The largest Eastern European consumer market with 47 million people The largest Eastern European consumer market with 47 million people 69% of the territory of Ukraine is adapted for the agricultural use 69% of the territory of Ukraine is adapted for the agricultural use Rich in natural resources (coal, iron ore, gas, stone, salt etc.) Rich in natural resources (coal, iron ore, gas, stone, salt etc.) 32 active airports, flights to 45 countries 32 active airports, flights to 45 countries 20 seaports and 10 river ports 20 seaports and 10 river ports 4 out of 10 European transport corridors run through Ukraine 4 out of 10 European transport corridors run through Ukraine Industry/GDP: 27% Agriculture/GDP: 10% Investment/GDP: 19% Exports to: Russia 18%, EU 29% Imports from: Russia 40%, EU 32% (data from Dec 2006, source: Institute for Economic Research and Policy Consulting)

3 Ukraine: Investment advantages Rapid Growth Rate Rapid Growth Rate 7% in 2006; 6,5% forecasted for 20077% in 2006; 6,5% forecasted for 2007 potential for high investment returnspotential for high investment returns Sizable Domestic Market Sizable Domestic Market rapid growth in purchasing power and consumer spendingrapid growth in purchasing power and consumer spending Retail trade turnover has increased by 20% over the past five years Retail trade turnover has increased by 20% over the past five years Real income accounting for price factors has increased by 24% for 2006 Real income accounting for price factors has increased by 24% for 2006 Strategic market access Strategic market access geographical location and bilateral/multilateral agreements make Ukraine an ideal manufacturing base for Middle East and Russian marketsgeographical location and bilateral/multilateral agreements make Ukraine an ideal manufacturing base for Middle East and Russian markets soon open access for the Ukrainian-based exports to the 150 members of WTOsoon open access for the Ukrainian-based exports to the 150 members of WTO Low Labor Costs and Highly Qualified Human Capital Low Labor Costs and Highly Qualified Human Capital one of the lowest salary levels in CEE for hard working and loyal labor force - less than 70 USD (in agriculture), USD (in construction) and 170 USD (in transport)one of the lowest salary levels in CEE for hard working and loyal labor force - less than 70 USD (in agriculture), USD (in construction) and 170 USD (in transport) In 2005, Ukraine was ranked 5 th in number of certified IT specialist by BrainbenchIn 2005, Ukraine was ranked 5 th in number of certified IT specialist by Brainbench Rich in Resources Rich in Resources 6 th in the world production capacities of metal and mining6 th in the world production capacities of metal and mining 40% of the global production of manganese ore is located in Ukraine40% of the global production of manganese ore is located in Ukraine 1/3 of the world’s “black soil” is found in Ukraine1/3 of the world’s “black soil” is found in Ukraine

4 Ukraine: FDI dynamics Cumulative FDI inflows in USD billion, as of Jan 2007 FDI distributed by the main sectors of Ukrainian economy, as of Jan 2007 Source: Ministry of Economy, Ukraine

5 Alternative and renewable energy: a promising sector for investment The sector includes: alternative (rape, biodiesel) and The sector includes: alternative (rape, biodiesel) and renewable (wind, sun, water) renewable (wind, sun, water) sources of energy - Sector capacity: 100 mln tons of the conditional fuel - Biomass potential: 22 mln tons - Territory: 42 mln hectares of arable land for rape production - Hydropower potential of the Transcarpathian region: 2-3 GWt - Investments needed for sector in : $ 2,57 bln. Special Governmental support program exists Special Governmental support program exists Law on bio-fuel development adopted in June 2007 Law on bio-fuel development adopted in June 2007 Kyoto Protocol: 150 mln tons of pollutants saved annually Kyoto Protocol: 150 mln tons of pollutants saved annually Competitive advantages: Competitive advantages: - availability of land - availability of land - low-cost labor - low-cost labor

6 Information Technology: a promising sector for investment Total market size - about $ 2,2 billion Total market size - about $ 2,2 billion Growth rate in 2006: 28% Growth rate in 2006: 28% in comparison: Russia – 18 %, Poland – 15 %, Kazakhstan – 33 %. in comparison: Russia – 18 %, Poland – 15 %, Kazakhstan – 33 %. 4,000 companies and appx. 47,000 workers involved 4,000 companies and appx. 47,000 workers involved Competitive advantages include: Competitive advantages include: -Qualified and relatively low cost skilled labor -Highly-ranked technical schools Medium-high innovation level: Technological Activity Index – (ranked 39 among 117 countries) Medium-high innovation level: Technological Activity Index – (ranked 39 among 117 countries) Ukraine rated 5 th in 2005 in terms of the number of certified IT specialists by Brainbench Ukraine rated 5 th in 2005 in terms of the number of certified IT specialists by Brainbench

7 Other sectors with investment potential Logistics Logistics Construction Construction Financial Services Financial Services Social Investments Social Investments Agriculture Agriculture

8 Ukraine: There’s never been a better time than now… Elena Panova Public-Private Partnership Officer Ihor Nikolaiko Director UNDP Ukraine 1 Klovsky Uzviz Str., Kyiv Tel: Fax: InvestUkraine 28 Druzhby Narodiv Blvd., Kyiv Tel: Fax: