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Укр The Ministry of Economy of Ukraine signed an agreement with Ukrgasbank to support industrial parks
- Source: The Ministry of Economy of Ukraine
Today, the Ministry of Economy of Ukraine has signed the second cooperation agreement under the state program “State Stimulation of Industrial Parks Creation”. Ukrgasbank became the second state-owned bank to join the program. Support for industrial parks is part of the Made in Ukraine policy initiated by President Volodymyr Zelenskyy.
As a result, the initiator or management company of industrial parks can apply for state incentives in two key areas.
The first area involves non-repayable financing for the development of industrial parks and the construction of the necessary engineering and transportation infrastructure. This includes roads, communication lines, gas, water, and electricity supply. This will greatly facilitate the development of industrial parks and help create attractive conditions for investors.
The second area provides an opportunity to receive compensation for the costs of connecting and connecting to engineering and transport networks. This compensation will reduce the financial burden on project initiators and facilitate the faster commissioning of industrial parks. It should be reminded that during the martial law period, compensation is provided only for connection to the power grid.
The signing of the agreement with Ukrgasbank is an important step in the development of industrial parks. Cooperation with the banking sector will provide initiators with access to non-repayable financing for infrastructure development and compensation for the cost of connecting to utility networks, which will greatly simplify project implementation and create attractive conditions for investors.
Yulia SVYRIDENKOFirst Vice Prime Minister of Ukraine, Minister of Economy of Ukraine
“Every dollar invested in industrial parks brings significant private investment and creates new jobs, which is critical for economic recovery. Industrial parks ensure the development of infrastructure, attract investments in production facilities, equipment and technologies, create new jobs, strengthen the economy and increase its international competitiveness,” - said Yulia Svyrydenko, First Vice Prime Minister of Ukraine and Minister of Economy of Ukraine.
Rodion MOROZOV Acting Chairman of the Board of Ukrgasbank
“It is very important that the government has created a mechanism to stimulate the creation of industrial parks. Their support will help develop the economy, especially the processing industry, create new jobs and, of course, attract investments into the country, which are necessary, in particular, for the post-war recovery of Ukraine. Ukrgasbank, as the authorized bank of the program, offers a wide range of services to the participants of industrial parks, as well as support for imports and exports through trade finance and lending instruments, including for exporters,” - said Rodion Morozov, Acting Chairman of the Board of Ukrgasbank.
The Ministry of Economy is expected to sign a similar agreement with another state-owned bank in the near future. This will expand opportunities to attract state funding and support for industrial park projects, promote their development and increase the international competitiveness of the Ukrainian economy.
As a reminder, 86 industrial parks have already been registered in almost all regions of Ukraine. 60 of them have management companies, 10 have participants, and 16 have other entities. During the first and second quarters of 2024, 11 industrial parks were included in the Register, which is more than in 2022. Also this year, 5 parks were excluded.
The state budget of Ukraine for 2024 provides UAH 1 billion to stimulate the creation of industrial parks. In March 2024, the Procedure for the use of budget funds was approved. The updated Procedure provides for the provision of funds on a non-refundable basis (50% of the estimated cost) to management companies of industrial parks for the arrangement or construction of engineering and transport infrastructure, as well as reimbursement of 50% of the cost of connection to the power grid.
Management companies will be able to implement larger projects, as the maximum incentive amount has been increased from UAH 60 million to UAH 150 million, with co-financing of the work in a 50-50 ratio. Management companies of industrial parks from the de-occupied territories will be able to implement projects in a co-financing ratio of 80 to 20.
Certain safeguards have also been introduced. Each applicant undertakes to build at least 5,000 square meters of industrial buildings on the territory of the industrial park within 3 years and to attract at least 2 participants. All incentives will be provided through escrow accounts to be opened by applicants in state-owned banks.
Why is the development of industrial parks so important for Ukraine?
According to international and local studies, every $1 invested in the infrastructure of an industrial park brings $10-20 in private investment in production facilities, equipment, and technology. Industrial parks create about 50-100 jobs per hectare (depending on the industry). The annual income of industrial parks' participants is approximately $7-10 million per hectare, making industrial parks real economic engines.
The development of industrial parks and thus attracting investment in the real sector is part of the “Made in Ukraine” policy initiated by President Volodymyr Zelenskyy.
