The past year has demonstrated that an ongoing conflict is not an obstacle to development and investment. Despite infrastructure being targeted by shelling, Ukraine’s real GDP grew by 4% in the first nine months of 2024, with expectations that this figure will reach 4.3-4.6% in the coming years. To maintain this growth, Ukraine must actively engage private investments to rebuild its damaged infrastructure and assets.
In this article, we focus on two key areas currently receiving significant attention in Ukraine: (i) the overhaul of the public-private partnership (PPP) legal framework and (ii) the rapid expansion of industrial parks.
Upcoming PPP Overhaul
The Ukrainian Parliament is currently preparing for the second reading of Bill No. 7508, titled On Amendments to Certain Legislative Acts of Ukraine to Improve the Mechanism of Private Investments Attracted under the Public-Private Partnership Mechanism to Accelerate Restoration of Objects Destroyed by War and Construction of New Objects Related to Post-war Rebuilding of the Ukrainian Economy (Bill).
The Bill was developed under tight deadlines in 2022 to address two main objectives: (i) further enhancing Ukraine’s PPP regulations following the successful reform in 2019, and (ii) establishing a viable and efficient PPP framework for rebuilding efforts. The Bill was adopted in the first reading on October 6, 2022, and has since undergone additional scrutiny and review by both Ukrainian lawmakers and European industry experts.
Among other changes, the Bill introduces an electronic system for procurement of PPP projects, foresees the development of standard tender documentation and agreements, and makes other general improvements to the framework to align it with industry best practices.
More significant changes include the categorization of PPP projects into three types: (i) “minor” PPP projects with a value not exceeding EUR 5.538 million, (ii) “rebuilding” PPP projects, and (iii) other types of PPP projects. A key difference here is the removal of the requirement for a feasibility study for “minor” and “rebuilding” PPP projects. Typically, developing a feasibility study takes around a year, so this change will significantly shorten the time needed to prepare such projects for procurement.
Another major change is the expanded scope of PPP applications, which will also cover residential construction. This expansion aligns with the introduction of rebuilding PPP projects, which focus on restoring war-damaged infrastructure and real estate and benefit from a simplified procurement process. The Bill introduces dedicated lists of rebuilding PPP projects and special commissions responsible solely for organizing tenders and acting as a single point of contact for potential private partners. Additionally, the Bill allows for the shortlisting of private partners to further streamline the procurement process of rebuilding PPP projects.
These changes are expected to be widely welcomed, as PPPs are considered one of the key tools for the reconstruction of Ukraine’s infrastructure damaged and destroyed during the war.
Rapid Development of Industrial Parks
Industrial parks are essential for infrastructure development, offering businesses a centralized space with access to efficient transportation, utilities, and communication networks.
In recent years, there has been a notable increase in the establishment of industrial parks, with 31 new parks registered in 2024 alone, bringing the total number to 99. This surge in interest can be attributed to the finalization of the legal framework. It now includes comprehensive laws and bylaws, and the attractive benefits that industrial parks offer to their participants. These benefits include full or partial compensation of loan interest rates for the development of industrial parks (unfortunately, this benefit does not apply during the period of martial law), non-refundable financing for park development, and/or compensation for connecting to engineering grids (non-refundable financing), exemptions from corporate income tax, value-added tax, and customs duties, as well as reduced real estate and land taxes.
The Ukrainian Government allocated approximately EUR 23 million in the 2024 state budget to provide non-refundable financing. Most of these funds have already been distributed across various industrial parks. Although, as of now, the 2025 state budget does not provide funds specifically for non-refundable financing, it allows the government to reallocate income from certain other sources to support this and other forms of state aid.
Industrial parks are becoming a cornerstone of Ukraine’s infrastructure development, driving investment and economic recovery through their strategic benefits and state support. As the regulatory framework improves and interest continues to grow, industrial parks will play a pivotal role in driving the infrastructure development of the country.
By Maksym Maksymenko, Partner, and Rostyslav Mushka, Senior Associate, Avellum
This article was originally published in Issue 11.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
