Focus Ukraine

Investment guarantees by the German Government protect German direct investments abroad against political risks. With regard to applications for investment guarantees for projects in Ukraine, the Federal Government is continuously monitoring the current dynamic situation. It is and remains the objective of the German Government to provide Ukraine with the best possible economic support. Decisions on applications are made on a case-by-case basis, depending on the specific risk situation. Existing investment guarantees continue to protect investors and financing banks against political risks in Ukraine. Investments by German companies can play an important role here.

This page offers a brief summary of information on investment guarantees for German projects in Ukraine as well as the current situation regarding cover policy for Russia and Belarus.

19.06.2024

The Interministerial Committee for Investment Guarantees has decided to include income in the scope of cover for investment guarantees in future at the request of German investors within the scope of regulatory possibilities.

You can find the current DIA report on this topic here.

Project example: Production of agricultural machinery in Ukraine

TOV Düvelsdorf Ukraine is a 100 % subsidiary of Düvelsdorf Handelsgesellschaft mbH, which develops and markets machinery and equipment for agricultural uses, which are mainly manufactured by its Ukrainian subsidiary. In all, some 130 workers are currently employed by Düvelsdorf, 105 of them at Düvelsdorf Ukraine in the Chmelnyzkyj Oblast. Manufacture of the machinery at the site in Ukraine currently takes place on 12,000 m2 of factory floor space. Manufacture of the machinery has a relatively high degree of vertical integration. Production of metal sheet, piping and angle iron up to the final paint job of the finished product are almost entirely done independently. The products are stored temporarily at the company’s German facility, assembled and delivered from there to the customers. 

         Image rights reserved by: Düvelsdorf Handelsgesellschaft mbH, Ottersberg

Project example: Building materials for Ukraine

The FIXIT GROUP is a leading European manufacturer of building materials and produces insulation systems, mortars, plasters and paints in 68 plants in 19 European countries. As a group, it offers building materials and solutions for residential and non-residential construction, building construction and civil engineering, new construction and renovation.  

For 20 years, the FIXIT GROUP has been actively operating under its Kreisel brand with a plant in Ukraine.  Since 2018, this plant south of Kiev has been continuously and sustainably expanded. The plant has extensive production facilities for both dry and wet building materials.

In order to better meet the requirements of customers, especially in the regions of western Ukraine, and to better serve the rapidly growing building materials market in Ukraine, construction of a state-of-the-art, high-performance plant south of Lviv began in August 2021 after an extensive planning phase. This plant, which will have approximately 60 new jobs and state-of-the-art production standards, will produce high quality building materials for customers throughout Western Ukraine, produced according to European standards, and is prepared for further strong growth of the Ukrainian market through its modular expansion concept. Due to the outbreak of war in February 2022, construction work was increasingly complicated, but not suspended. Once completed, the Kreisel Ukraine plant is expected to play a decisive role in the reconstruction and modernisation of Ukraine. Thanks to the Federal Government's investment guarantee, which covers war-related and political risks, the injection of new capital and thus the continuation of construction work on site is ensured despite the uncertainties currently existing in Ukraine due to the war.

          Image rights reserved by: FIXIT TM Holding GmbH, Freising

UKRAINE

The necessary requirements for legal protection are met by the German-Ukrainian Bilateral Investment Treaty (BIT), which came into force on 29 June 1996. The BIT does not specify any special authorisation or approval requirements with regard to its applicability. Apart from this, however, it is incumbent on the policyholder to obtain any necessary authorisations or similar in Ukraine in accordance with Section 13 (1) of the General Terms and Conditions.

In the case of equity investments, the Federal Government was recently unable to include conversion and transfer risks and risks from payment embargo or moratoria in the guarantee. It was also not possible to cover the earnings from equity participations.

On 16 June 2023, the National Bank of Ukraine lifted the previously applicable transfer and foreign exchange restrictions for government-backed loans. For this reason, the federal government has decided to lift all existing cover restrictions for investment-like loans.

In May 2024, the National Bank of Ukraine further relaxed the existing capital controls with regard to the repatriation of profits abroad. In response to this, the IMC has decided to include income in the scope of cover for equity guarantees in future at the request of German investors within the scope of regulatory possibilities. As the banking sector is still subject to more extensive capital controls, this option is initially only available for investments in project companies outside the banking sector.

RUSSIA

On Thursday, 24 February 2022, the German Government suspended the assumption of new Federal Investment Guarantees as well as extensions of guarantee periods and increases in liability for existing guarantees for Russia until further notice. Since Saturday, 26 February 2022, there has also been an EU-wide ban on investment guarantees for Russia.

BELARUS

On Thursday, 24 February 2022, the German Government suspended the assumption of new Federal Investment Guarantees as well as extensions of guarantee periods and increases in liability for existing guarantees for Belarus until further notice.