Medvedkova Nataliya Sergeevna

Postgraduate student, chair of finance

Taras Shevchenko National University of Kyiv

THE ATTRACTION OF FOREIGN DIRECT INVESTMENTS INTO ECONOMY OF UKRAINE: THE SITUATION AND THE PROBLEMS

The results of practically all expert valuation, passing at the beginning of XXI sentry, are evidence of a low attractivness of Ukraine as a country, which accept investments. According to the valuation of CIA World Factbook in 2009 year Ukraine ranks 53^rd place among selected 84 countries. Even in comparison with the countries of East Europe and the countries of post-Soviet space Ukraine outpaces only 5countries: Slovenia, Latvia, Azerbaijan, Macedonia and Estonia.

Hereof we can state, that today rhe policy of the attraction of foreign direct investments in Ukraine appears to be far from resultive comparing to to what was expected, and this can be traced according to the volume of the receipt of foreign direct investments.

Over a period of time from 2001 to 2007 years a growth of foreign direct investments (without consideration of selling of JSC «Krivorogstal» at the amount of 4,8 billion dollars) took place. The decline of the speed of the growth of foreign direct investments into economy of Ukraine began from the second half of 2008 year and in the most part is explained by the impact of world finance crisis on the movement of the capital.

According to the theory of indicative analyse for quantitative and qualitative valuation of the level of investment security of the state the system of its indicators and their threshold valuations exists. One of the indicators, which chractirizes the optimum level of investment processes in the country, is a ratio of the volume of the foreign capital to GDP. The threshold valuation of that indicator should be not less than 6% [2]. In Ukraine from 2010 year that indicator was only 3,5%. Also a singular indicator of the level of the investments security is a growth of foreign direct investments per head.

According to the valuation of European bank of the Reconstruction and Development, the cumulative indicator of the valume of foreign direct investments in Ukraine at the beginning of 2010 year was 1000 dollars per head, whereas in Czech Republic – 7418 dollars, Bulgaria - 6226, Kazakhstan - 3706, Poland - 3155, Rumania - 2350 dollars[4].

The sectoral structure of the investments in Ukraine is characterized by the steady-state groups of the most attractive forms of the economical activity, in which the basic part of foreign direct investments is directed. Among the branches- leader of attraction of investments are internal trade, finance, industry and building. In 2010 year the growth of foreign direct investments was observed in the enterprises, which realize financial activity (2 628,5 billion dollars), in the enterprices of industry (766,2 billion dollars), in operations with real estate, leases, engineering, rendering of services for business class (485,6 billion dollars), in the enterprices which work in trade, repair of automobile, household productes and articles of personal use (447,9 billion dollars) [3].

In 2010 year the volumes of foreign direct investments grew from the Cyprus (by 909,3 million dollars), Russian Federation (by 836,4 million dollars), the Netherlands (by 753,3 million dollars), France (by 736,3 million dollars), Germany (by 475 million dollars), Sweden (by 454,1 million dollars). Foreign direct investments of the several countries to the economy of Ukraine reduced: from USA (by 116,7 million dollars), Israel (by 12,8 million dollars), Norway (by 71,3 million dollars) and Iceland (for 29,3 million dollars) [3].

According to the data of The Center of the research of the market of M&A about the activity of the markets of M&A among 175 countries, Ukraine takes only 90th place. In 2010 year M&A kept 2% from the total sum of the contracts in the emerging markets, and 0,3% worldwide. The biggest agreement in 2010 year were following:

1. in fuel-oil sector:

· russian company «ТНК-ВР International» completed the agreement for acquisition of 100% of Ukrainian groups of the companies «Vik Оil» (the total sum of the agreement was near 313 billion dollars, including the value of the share and Debt Instruments of the companies of the group «Вik Оil», and also the value of the working capital;

· the Canadian company Kulczyk Oil Inc finished the agreement about acquisition of 70% of Lugansk gas-production enterprise «KUB-Gas» of the value of 25 billon dollars. The seller of thecontrol stock «KUB-Gas» was ameirican company Gastek LLC.

2. in the chemical industry:

· Cyprus company OstChem Investment Limited acquired 90,3% of the chemical concern «Stirol»;

· Istil Group made an agreement about the acquire of 51% of the authorized capital of «Аlеаnа» Ltd;

3. in the mining and smelting complex:

· Russian group «Меchеl» bought 100% shares of CJSC «Doneck electrometallurgy завод» from «Аlfa-Group» [5].

The analysis of the attraction of foreign direct investments accordingto the types of economical activity and regions of Ukraine allow to reveal a range of problems and lacks of economic and legal environment, which prevent to attract foreign capital.

First of all, it is an imperfection of the legal environment. This factor is mentioned in the first place, because thebarriers of the administrative-legal character are the first problem, which foreign investor faces. Introduced since 01.01.2011 Tax Code of Ukraine and The State Goal Economical Program of the Development of the Investment Activity for 2011-2015 years allows to a increase degree to decide this issue.

The powerful factor of the restrsin of forign investments in Ukraine is also uneven allocation of the taxation pressuare that is excessive for the legal working subjects of economic activity. The redemptiom of major part of profit, unstability of the tax rates and the rules of calculation prevent for effective doing business in Ukraine. According to the rate of the tax burden, Ukraine takes rather low place -149 place due to the the big burden for the incomes of natural person.

According to the data of IFC, the Ukrainian entrepreneurs think that the burden regulatory procedure are administration of taxes, permissiones, audits procedures of the technical regulation. According to the analysis of the PWC analitics in the report «Paying Taxes 2011», the significant reduction of the time to provide the reports of taxation and tax payment are required for 3 countries: Azerbaijan, Belarus аnd Ukraine.

At the present time The Cabinet of Ministers works on improving of the state mechanisms of development of investment climate in Ukraine, including the question of maximum reduction of the activity of foreign investors, particularly, a range of bills accepted, which substantially reduce the quantity of the supervisory member and licensed types of activity, and also they simplify the permitting procedures.

One of the examples of the improving of the administration of the taxes is acceptance of the Law of Ukraine «About collection and accounting of the lump-sum payment for obligatory state social insurance ». From 2011 year instead of payments in 4 insurance funds (Pension fund, Fond of Insurance for the case of unemployment, Fond of Insurance for the temporary disability, Fond of Insurance from accident on the production) introduced the lump-sum payment for obligatory state social insurance, which will be allocated between funds according to the proportions, fixed by the law.

Also one of the essential restrictions for investment in Ukraine is corruption. Accorfing to the index of perception of corruption Ukraine takes 134^th place among 180 countries. The Researches of IFC indicate that enterprices consider the realization of unofficial payments for faciltation the process of registration, audit, etc. Accepted The Law of Ukraine about the struggle with corruption will promote reduction of barriers for attraction of foreign direct investments in Ukraine.

The analyze of the situation of attraction of foreign direct investments in Ukraine indicates, that the question of the search of the mechanisms dor creating favourable investment conditions in the country and growth of the competition of the national economy is topical for today.

For stimulation the attraction of foreign direct investments The Program of the government considers the provision of assistance for the foreign investors during of setting up and realization of the higher-priority for the economical development of Ukraine investment projects in the branches of energetics, transportation, telecommunication, ecology, municipal infrastructure.

The state investment policy is directed for the creation of favourable conditions in Ukraine for stimulation of attraction of foreign capital, and also for search of the new forms combined investment in the perspective projects.

Sources

1. The investment climate in Ukraine: how business see it [Electronic resource]. – Access mode: http://www.ifc.org/Ukraine/bee.

2. Каrаevа Н. V. Teoretico-metodological basics of the researches of the investment security in the system of anti-crisis management [Electronic resource]. – Access mode http://www.nbuv.gov.ua/e-journals/PSPE/2009_1/Karaeva_109.htm.

3. The Оofficial site of The State comitet of statistics of Ukraine[Електронний ресурс].- Режим доступу: http://www.ukrstat.gov.ua/

4. The Direction of The Cabinet of Ministers of Ukraine from 29.09.2010 р. N 1900-р «About acceptance of Conception of The State Goal Economical Program of The Development of investments for 2011-2015 years».

5. Mergers and assimilation – 2010 (a special project) / Commentaries// 2010.-№49-50 (246).

6. List_of_countries_by_GDP_(nominal) [Електронний ресурс]: Режим доступу : http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

7. List_of_countries_by_received_FDI [Електронний ресурс]: Режим доступу : http://en.wikipedia.org/wiki/List_of_countries_by_received_FDI

8. Paying Taxes 2011 [Електронний ресурс]. – Режим доступу: http://www.pwc.com/gx/en/paying-taxes/download-order.jhtml