In a concerted effort to drive economic growth and enhance the value of its industries, Ukraine is implementing a series of programs designed to stimulate the development of high-value processing sectors. This strategic move is part of the broader economic development plan currently being crafted by the Ministry of Economy and various other ministries and departments. Deputy Minister of Economy, Nadezhda Bigun, highlighted these initiatives during the Regional Economic Forum held in Kiev.
Bigun emphasized the critical role of industries with high added value in the forthcoming economic strategy. In particular, the focus is squarely on boosting the performance of processing enterprises. She stated, “When forming a strategy for the development of the real sector of the economy, we must focus on stimulating industries with high added value. And processing is an important sector here… Therefore, we are trying to increase the share of processing in the GDP structure from the current 10% to at least 20%.”
The logic behind this approach is straightforward: the higher the value added during processing, the greater the economic benefit. Bigun illustrated this concept with a simple example. If raw wheat is sold, the added value is a modest $90 per ton when the product fetches $300. However, if the wheat is processed into flour, the added value increases to $220, and if a more complex product like gluten is produced, the added value soars to $550.
This principle extends to various other products. For instance, while a cubic meter of wood may yield a meager $26 in added value, when that wood is transformed into plywood, the added value surges to $190. Further processing into cabinet furniture can elevate the added value to $290.
Bigun emphasized that amid complex export logistics, Ukraine must seek new solutions. A key strategy is to enhance the added value per unit of exported products, thereby increasing their economic impact.
To achieve these goals, Ukraine has launched programs aimed at stimulating processing industries. One such program provides grants of up to UAH 8 million for enterprises located in standard territories. Under this program, financing is split equally between the state and the applicant, with each contributing 50%. In de-occupied territories, a different program operates, where 80% of the financing is covered by the state, and the remaining 20% is borne by the applicant.
Bigun also highlighted ongoing negotiations between the Ministry of Economy and local authorities to encourage their participation in co-financing programs aimed at stimulating processing industries. This collaborative effort aims to create additional financial incentives that can act as a magnet for businesses, fostering regional development and economic prosperity.
