- Executive summary
- Industry overview
- Trends and developments
- Leading players
- Organizations and associations of the industry
- List of references
1. Executive summary
Machine-building is one of the leading industries
of Ukrainian economy. The companies of the
industry are engaged in manufacturing of machinery
and equipment for virtually all types of industrial
activities, contributing 10% of GDP in 2011.
The most developed sub-industries are railway
machine-building, heavy machine-building and machine-
building for agriculture.
The majority of manufacturing companies are situated
in the East of Ukraine, which is within short
distance from raw materials supply base, mainly
steel. The country has significant reserves of iron
ore being among top-10 world countries by iron
ore reserves with total amount of 27 bn tons. Also
Ukraine is well supplied with educated labor force
as domestic universities and colleges graduate c.
10,000 students from machine-building faculties,
Major machine-builders purchase raw materials directly
from local or regional suppliers. Few plants
are self-sufficient being part of large vertically-integrated
The sector’s output is mainly export-oriented with
Russia and other CIS states being the principal markets.
However, a significant portion of export goes
to the CEE, Middle East, Africa, China and India. A
few players sell machines globally. The key export
products are railway cars, locomotives, turbines
and engines. Domestic market consumes substantial
part of machines for agriculture, metallurgy and
Leading market players are mainly controlled by local
and Russian business groups, while a few companies
Currently Ukrainian machine-building industry is
characterized by the following:
- One of the strongest manufacturing performances
during 2010-2011 (annual industrial index grew by
36.1% in 2010 and 17.2% in 2011) due to steady
economic recovery (GDP enjoyed 5.2% growth in
2011 vs. 4.2% in 2010);
- Domestic manufacturers contracted stable list of
orders in the medium- to long-term horizon supported
by significant level of wear and tear of machines
in metallurgy, mining, oil & gas industries
and recently commenced new projects together
helped by substantial economic recovery and sustainable
growth of demand on main export markets;
- Railcar production enjoyed rapid increase in demand
posting the highest sub-industry growth of
132% in 2010 based on the extensive modernization
programs being undertaken in Ukraine, Russia
- Consumption of heavy machine-building products
remains high mainly driven by increased demand
for energy and mining machinery, and supported
by strong market position of Ukrainian companies
on focus markets. Moreover, the sub-industry has
a solid potential for development of domestic energy
sector infrastructure with estimated investments
of c. USD 74 bn until 2030 and probable
privatization process of state coal mines, energy
distribution and power generation plants;
- Although agricultural machine-building remains
underdeveloped, it has a large room for prospective
development as Ukrainian agricultural industry
is growing consistently operating the largest arable
lands in Europe and accounting for 2.4% of
the world’s total arable land;
Slow application of contemporary technologies
and modernization of machine-builder’s fixed assets.
The main problem of the industry remains
the depreciation rate of fixed assets, which equals
- Leading players have been negotiating deliveries
on the new markets of Asia and Africa which may
increase diversification of sales geography and
support long-term growth.
To summarize, the post-crisis period brought favorable market conditions to the industry and leading players
started to increase their profitability.
2. Industry overview
2.1. Current situation and potential for development
Machine-building is one of the leading industries in
Ukraine which comprised 10% of GDP in 2011 in
monetary terms. The industry is mainly developing in
the following sectors:
- Railway machine-building
- Heavy machine-building :
- metallurgy machinery;
- mining machinery;
- oil and gas, chemical machinery;
- engines and turbines;
- machinery for other industries.
- Machine-building for agriculture.
- Other transportation:
- Other (manufacturing of electrical, electronic and
For the purpose of this overview Ukrainian machinebuilding
industry is analyzed in respect of the following
segments: railway machine-building, machinebuilding
for agriculture, and heavy machine-building,
which comprised 64% and 69% of total machinebuilding
industry output (excluding automotive) in
2010 and 2011, respectively.
Turnover of products manufactured in Ukraine by selected machine-building categories, USD bn
For the last decade machine-building showed excellent
results and production volumes increased
by 2.5 times compared to 2000, despite significant
(45%) volume decrease during financial crisis in
2008 and 2009.
Sales of machine-building products vs. GDP
Machine-building industry showed one of the strongest
manufacturing performances during 2010 and
2011, with annual industrial index growth of 36.1%
and 17.2%, respectively, while real GDP increased
for the same period only by 4.1% and 5.2%. Sustainable
growth of demand for machinery and equipment
in Ukraine as well as in main export markets
(Russia and other CIS countries) led to 23.9% CAGR
in post-crisis period.
Ukrainian machine-building is characterized by following
Strengths and opportunities:
- long historical ties with large clients, firm position
on CIS markets;
- great degree of wear and tear of production and
- developed metallurgy industry together with significant
reserves of raw materials that satisfy production
- significant potential of scientific development
based on educational level of staff.
Threats and weaknesses:
- significant part of sales is to Russia, which makes
the viability of the industry dependent on political
relations between two countries;
- increase of components and raw materials cost.
Railway machine-building market in Ukraine can be
divided in to two main categories:
- diesel and electric locomotives.
The railcar production industry may be divided in
freight and passenger railway cars production.
Freight cars production market is divided among four
biggest producers with total share of 90% and 88%
of total production in 2009 and 2010, respectively.
“Kryukiv car building works” is the only plant operating
in passenger railway cars production with 25 and
38 cars produced in 2009 and 2010, respectively.
Freight cars production, thsd units
Diesel and electric locomotives production
Luganskteplovoz is the leader of locomotive production in Ukraine and is CIS export oriented (more than 95%
of sales are directed to Russia and Kazakhstan).
Locomotives export sales of Ukrainian producers
Majority of purchases are made by state companies
Ukrzaliznytsia (Ukraine), Russian Railways (Russia)
and Kazakhstan Temir Zholyetc (Kazakhstan), which
are monopolists in respective countries.
In 2010 and 2011 the industry increased its output
significantly. The great demand for railway machinebuilding
products was caused by the following reasons:
- the ongoing boom in regional demand for railroad
rolling stock which is expected to continue
in the medium term due to massive replacement
and renovation programs, growing railcar prices,
increasing rail freight rates;
- obsolete locomotives and railcars park at home
(c.90% of electric locomotives, 99% of freight
diesel locomotives and 88% of railcars of Ukrzaliznytsia
are fully depreciated), as well as in Russia
- delayed demand during 2008-2009, when state
and private companies postponed purchases due
- renewal of railway system due to preparation for
EURO 2012 in Ukraine, Olympic Games in Sochi
and 2018 FIFA World Cup, both in Russia.
Ukrainian railway system suffers not only from lack
of fleet (estimated daily deficit of wagons is about
6-8 thsd units) but also from significant physical obsolesce
(per estimates the obsolete rate is close to
Machine-building for agriculture
Leading producers of agricultural machines in
Ukraine are Kharkiv Tractor Plant (KhTZ), Agro-
Soyuz, Khersonskiy and Chervona Zirka machinebuilding
plants. From 70% to 90% of the domestic
park of agricultural machinery is fully depreciated or
In recent years demand for agricultural machinery
increased significantly due to fast development of
agricultural sector (increase in arable land and crops
production) and significant obsolescence of existing
agricultural equipment. Major part of demand is
satisfied by imports while domestic equipment does
not always meet needs of agricultural producers.
During 2010 the imports of agricultural machinery
comprised about USD 425 m, out of which 70% was
second-hand equipment. Even due to stagnation in
all segments of Ukrainian economy during financial
crisis of 2008 and 2009 imports of agricultural machines
showed CAGR of 14.6% starting from 2006,
booming in 2011 by 89.2%.
Currently Ukraine exports tractors, majority of which
is produced in Kharkiv, and other agricultural equipment
such as seeding, fertilizing and disc harrowing
machines to Russia, Kazakhstan and other CIS
Heavy machine-building sector in Ukraine provides
a wide range of equipment for mining, chemical and
petrochemical industries, metallurgy, metal treatment,
energy, construction and other industries.
The industry is highly involved in the projects in Russia,
Kazakhstan, Turkmenistan, Uzbekistan and Azerbaijan.
Long-term business relations have also been
established with Middle East, African and Asian states.
Export of heavy machinery equaled USD 3.2 bn in
2011. The biggest importer is Russia consuming 62%
of Ukrainian heavy machine-building exports.
Machine-building industry sales by main aggregated categories within Ukraine, USD bn
The sector is steadily developing in the post-crisis period
and its future growth to large extent depends on
the level of usage of the following opportunities:
- Modernization and development of Ukraine’s energy
sector infrastructure. Under the National Energy
Strategy of Ukraine until 2030, investments
of c. USD 74 bn are envisaged for modernization
and development of such industries as power
generation, mining, oil & gas, including modernization
of National Gas Transit and Storage system
with up to USD 10 bn of anticipated investments;
- Modernization prospects in metallurgy, mining, oil
& gas, and other industries in Ukraine as well as
the CIS. In accordance with the National Energy
Strategy of Ukraine the majority of state mines
and power generation companies deemed to be
attractive for investors will be privatized. As overall
level of depreciation and obsolescence of fixed
assets of these companies equals c. 86%, it creates
a great opportunity for potential investments
- The level of wear and tear of equipment of metallurgical
companies in Ukraine, Russia and Kazakhstan
is high. The owners are considering modernization
and investments in the basic equipment for the industry
such as molding and casting equipment which
is traditionally produced at Ukrainian plants;
- Construction of numerous energy plants in the world
with total anticipated capacity of 4,800 GW until 2030
(International Energy Agency forecast).
Half of these projects relate to emerging markets
where Ukrainian machine-builders are leading players;
Russia – the major consumer of Ukrainian machinery
– is planning to have 20 nuclear power plants
units constructed in ten years time.
Similar programs will provide heavy machine-building
industry with stable list of orders in the middle and
However, in order to benefit from favorable market
conditions the industry should focus on such areas
for development as equipment modernization, application
of new technologies and implementation of
fundamental government support programs.
2.2. Capacity and production volumes in 2001-2011
Industry boom in the last two years was led by scarcity of rolling stock and level of its wear and tear in CIS.
Production of locomotives (units) and wagons (thsd units)
After decrease in production levels in 2009 industry
rapidly recovered in 2010-2011 and even outperformed
pre-crisis level of locomotives produced
showing railway machinery index growth by 136% and
Industry boom in the last two years was led by scarcity of rolling stock and level of its wear and tear in CIS.
28% in 2010 and 2011, respectively. Ukrainian producers
of railway machine-building are now running
at almost 100% of their capacity and most of them
have portfolio of orders till the end of 2012.
Machine-building for agriculture
Ukrainian producers do not have enough production
volumes and necessary machinery quality to satisfy
increasing demand. Such situation leads to significant
imports by leading agricultural players, while products
of Ukrainian producers, with a few exceptions, are not
technologically competitive compared to foreign analogues
and are mainly purchased by small and medium
companies with limited funding.
Production volumes of major machine-building for agricalture products, units
Production of high value added machines for agriculture
showed positive tendency in 2011, the production
of tractors increased by 22% to 6.4 thsd units
and combines by 311% to 399 units. Despite positive
changes Ukraine still needs to increase production
capacity of high value products, as in 2011 the imports
of tractors (22.7 thsd) again significantly exceeded
exports (1.3 thsd).
In Ukrainian market operate nearly 40 plants that
manufacture agricultural machinery, which generally
run at 15-30% of their capacity. This is explained by
lack of working capital, poor financial situation, and
a lack of new technologies. Though the production
increased by 19% in 2010 compared to crisis 2009,
and became stable further in 2011. But even after
slight increase in 2011 the domestic agricultural machine-
building may provide only 10% of total needs
Production of heavy machine-building includes machinery
for metallurgy, mining, oil & gas and other
industries. The sector’s production dynamics depend
on the general business environment and desire of
the potential customers to invest in the renewal of
Production of main heavy machinery equipment in 2003-2011, thsd units
In the post-crisis period the sector experiences
growth as customers are interested in development
and increase of the production volumes and investing
in modernization and re-equipment. Enterprises
highly exploit their capacities with some Ukrainian
heavy machine-building companies enjoying near
100% capacity usage due to recent surge in demand
and strong positions on traditional markets. Many machine-
builders have significant number of contracted
orders for the current period and in the medium-term
which support production volumes at a solid level.
Despite strong capacities utilization and stable profits,
many enterprises are limited in external funding
and are not able to expand their capacities and implement
modernization programs, remaining with high
wear and tear fixed assets. The issue may be partly
resolved with implementation of a proper integrated
government support programs, which are now focused
only on aircraft- and shipbuilding sectors.
2.3. Availability of raw materials and human resources
Availability of raw materials
Ukraine has enough reserves of main resource for
steel production – iron ore. The country is among
top world countries by iron ore reserves with total
amount of about 27 bn t (located in Kryvorіzkiy (18
bn t), Kremenchutskiy (4 bn t), Bіlozerskiy (3.2 bn t)
and Kerchenskiy (1.8 bn t) iron ore basins).
Ukraine also has well developed steel production industry
with total output of 34.9 m t in 2011. Major part
of steel products (65.9% in 2011) is exported, but
domestic producers have enough capacity to meet
increasing demand for metal products. During 2010
and 2011 steel production showed positive trend, increasing
by 10.8% and 6.7%, respectively. Machinebuilding
is one of the major internal consumers of
steel products in Ukraine consuming about 12% of
total domestic steel production in 2009.
Production of steel in Ukraine and export demand for rolled metal products
Machine-building industry significantly depends on
metal products manufacturers as significant part of
cost is raw materials (steel products). Consequently,
predominant part of machine-building producers is located
near iron and steel works. As of now considerable
part of raw materials, but not all, are supplied by
domestic steel producers.
The main raw materials suppliers are Arcelor Mittal
Kryvyi Rih, Azovstal, Interpipe, Illich, Yenakiyeve,
Dniprovskiy and Alchevskiy iron and steel works,
Azovelektrostal, Kremenchug Steelmaking Plant
and others. The majority of suppliers are located in
Ukraine which enables prompt supply.
A number of domestic scientific institutes and organizations
work to develop new technologies, and
prepare high skilled staff: Physical-and-Technological
Institute of Metals and Alloys, G.Pysarenko
Special Design and Technology Bureau Institute for
Problems of Strength of the National Academy of
Science of Ukraine, Paton Electric Welding Institute
of National Academy of Science of Ukraine,
etc. Also producers such as Azovmash, Motor Sich,
Mining Machines, Turboatom, Dniprovagonmash,
etc. have their own R&D departments engaged is
specific products development and staff tutoring.
There are many universities where students get
relevant education needed for the machine-building
industry. Among the technical institutions the
following occupy leading positions: Kyiv National
Taras Shevchenko University, National Technical
University of Ukraine “Kyiv Polytechnic Institute”,
Donetsk National Technical University and National
Technical University of Ukraine “Lviv Polytechnic Institute”.
In spite of all mentioned positive factors
technological level of the sector requires significant
R&D contributions and innovations.
2.4. Export/import dynamics per every sub-industry
Ukrainian railway producers are in great demand on domestic market as well as on foreign markets. After
decrease in export sales of railway machinery products in 2009 by 71% Ukraine experienced sharp export
increase by 390% till 2011. The main export markets are Russia and Kazakhstan, taking 84% and 10% of total
exports of railway machinery products, respectively.
Import of railway machinery, USD m
TOP-5 countries for import of railway machinery in 2011, USD m
Ukraine mostly meets its own demand for railway machinery except for some spare parts for locomotives
which are predominantly supplied by Russia (58% of total imports of railway machinery products in 2011).
Machine-building for agriculture
Ukraine is a net importer of almost all types of agricultural
machinery, importing nearly 70% of agricultural
equipment (e.g. share of imported tractors out
of total purchased tractors in Ukraine in 2010 was
79%). During the last couple of years agricultural
sector observed a stable increase, which led to increasing
demand for machinery.
Import/export of tractors, thsd units
Top countries of export/import of tractors in 2011, USD bn
As domestic production is insufficient, the internal demand
is mostly met by foreign suppliers. For example,
during 2006-2011 imports of tractors increased
2.4 times. Another large part of import is combines.
There are almost no export sales of such machines,
as domestic equipment is of unsatisfactory quality.
While there are some producers whose equipment
possesses the adequate quality to be able to compete
on export markets. One of those is KhTZ one of
the biggest CIS manufacturers of universal wheeled
and track-type agricultural tractors (total share in export
of tractors equaled 72% in 2010).
Machine-building for agriculture foreign trade, USD m
The leading positions in import of grain combines are
divided between international brands, such as John
Deer, Claas, New-Holland, etc. As for tractors, Belarus
producers hold the leading position (37% of total
import of tractors in 2011); almost all of them are
made at Minsk Tractor Plant. China is a leading importer
of small machinery. Nearly 70% of imported
equipment was already in use for c. 3 years.
Generally high value added agricultural equipment
prevails in import (mainly from Germany, USA, France,
Belarus), while in export (mainly to Russia and Kazakhstan)
- low added value machinery (mostly items
without engines such as seeding, fertilizing and disc
Export/import of heavy machinery for 2006-2011, USD bn
Import structure by countries, 2011
Export structure by countries, 2011
In 2011 the main elements of export of heavy machine-
building in Ukraine were engines and turbines
(USD 964 m or 30.6% of total export of heavy machinery)
and specialized pumps (USD 540 m or
17.1%). Ukraine imported pumps (USD 397 m or
9.4% of total import of heavy machinery), engines
(USD 370 m or 8.8%), cranes and valves (USD 257
m or 6.1%) and other products.
3. Trends and developments
3. 1. Consumption trends
Railway machine-building has been showing positive
trends in all sub-sectors since 2010 driven by aftercrisis
recovery of CIS countries, significant level of
obsolescence of rolling stock and increase in both
passenger and freight traffic.
1.Coal transportation companies and CIS state
railway operators are the largest buyers of
freight cars. The drivers of freight cars consumption
in 2012 will be the following:
2.Passenger railway cars:
- Russia’s largest state-owned freight company,
Freight One, is planning to increase its fleet by
15 thsd units in 2012;
- Russia’s company Freight Two also intends to
purchase around 8 thsd freight cars in 2012;
Ukrzaliznytsia announced intended purchase of
10 thsd freight railcars for 2012;
- The European Bank for Reconstruction and Development
provided USD 75 m loan to private
Ukrainian company InterLeaseInvest to purchase
freight railcars. InterLeaseInvest plans to purchase
3 thsd freight railcars in 2012;
- A newly created joint venture between Russia’s
ICT investment group and Japan’s Mitsui, an international
rail industry leasing company, intends
to purchase 20 thsd freight cars over the next
- Ukraine’s national railway operator Ukrzaliznytsia
has an acute need to replenish its passenger
railcar fleet. Over the last 10 years total passenger
fleet in Ukraine fell by nearly 33%, or 3,620
units, 200 of which were removed from service
in October 2011. At the same, during the last
decade Ukrzaliznytsia bought just 550 passenger
railcars. As a result, the total passenger cars
fleet in Ukraine now comprises about 7,025 units,
17% of which are being repaired;
- Future demand for passenger railcars produced
in Ukraine will come from Ukraine, Belarus and
- According to the Cabinet of Ministers of Ukraine
renovation program, approved in August 2011, it
is planned to purchase 509 locomotives with total
approximate value of USD 3,6 m during 2012-
- If Russian economy develops according to the
optimistic scenario the demand for locomotives
should reach 7,8 thsd units till 2015, out of which
51.4% diesel locomotives and 48.6% electric locomotives.
Machine-building for agriculture
Steady growth of agricultural products consumption
and rise of food prices drive development of
agricultural sector as a whole and machine-building
for agriculture in particular. The lack of new arable
land and soil emaciation force agricultural producers
to implement modern technologies and purchase
machines with higher productivity levels. Ukrainian
producers mostly do not satisfy market needs, thus
demand of large agricultural companies is fulfilled
by international producers. Almost 38% of tractors
produced in Ukraine are the Ukrainian assembly of
The majority of Ukrainian producers, such as
Chervona Zirka, Agro-Soyuz and Khersonskiy Machine-
building Plant, are mostly specialized on
production of agricultural machines with low technological
level, while combines, tractors and other
high value added machines are mostly imported.
From 2009 to 2011 export of agricultural machinery
fluctuated from 33.5% to 15.9% as part of import,
consequently Ukraine is a net importer of agricultural
machinery. Mentioned trend is also supported by
CAGR, from 2006 till 2011 this indicator increased
for export by 6.1% (for USD 127,6 m; the peak in
exports of agricultural machinery was in 2008, USD
227,9 m), while for import by 14.6% and in 2011
comprised USD 804,7 m (the peak was in 2008,
USD 978,8 m).
Consumption of heavy machine-building products remains
steadily high in the post crisis period and is
mainly driven by:
- Strong market position of Ukrainian companies on
- High oil & gas prices, which stimulate demand for
energy machinery, promising a steady inflow of
new contracts in the short- and medium-term;
- Rising domestic demand due to development of
the National Energy Strategy of Ukraine and announced
modernization of the National Gas Transit
and Storage system;
- Adoption of the law on privatization of state coal
mines, which stipulates the modernization of mining
- New markets exploration (Eastern Africa, Central
Asia, India, Iran, Pakistan etc.) and new contracts
- Preferential tax regime for aircraft- and shipbuilding
3.2. Level of saturation and competition in specific markets
Machine-building for agriculture
Ukrainian market of the agricultural machinery is
mainly divided between the international producers
and Belarus’ MTZ.
Top-3 positions in the tractors’ market are held by
MTZ (24%), John Deere (19%), and Case (13%).
MTZ is gradually losing leading position to nearest
Leading positions on the grain combines’ market are
held by Claas (21%), John Deere (19%), and Case
According to the Ministry of Agricultural Policy and
Food the average annual demand for agricultural
equipment is about 40 thsd of tractors and 7,5 thsd
Railway machine-building market in Ukraine
Ukrzaliznytsia made supply agreements for locomotives
with Uralsk locomotives, Novocherkassk electric
locomotive plant, and Elektrovozostroitel for the
planned renovation of the hauling stock. According
Ukrzaliznytsia, Luganskteplovoz is not able to satisfy
all domestic needs as it is busy with foreign orders.
Production of passenger railcars in Ukraine does
not completely meet internal needs. Kryukiv Car has
the production capacity of 200 cars which is insufficient volume compared to the demand to replace
nearly 2,000 cars. In preparation for EURO-2012
Ukrzaliznytsia made agreements for purchase of 12
inter-regional trains from Hyundai Rotem and Skoda
The demand for freight railcars is met by local producers
but is expected to grow further, due to increase
of freight transportation and shortage of own
As for heavy machine-building industry many of the
Ukrainian producers are either monopolists in their
specific markets or produce the exclusive equipment
demand for which is stable. Thus, Mining Machines
Holding includes Druzhkivskiy engineering factory
which is the monopoly holder in Eastern Europe as
for automatic roof supports, mining cars, etc. Turboatom
is almost a monopolist in modernization of
hydro and nuclear power plants in CIS.
4. Leading players
After the crisis leading market players have been benefitting
from steady demand for their core products.
Top Ukrainian machine-building companies are traditionally
export-oriented with Russia and other CIS
states being the key markets. However, a significant
portion of export goes to the Central and Eastern Europe
(CEE), China, India with a several players selling
Major machine-builders purchase raw materials from
local or regional suppliers. Few plants are self-sufficient
being part of large vertically-integrated industrial
Leading players in Ukrainian machine-building industry
Leading market players are mainly controlled by local
and Russian business groups. The only two state
owned enterprises among top players are Zorya-
Mashproekt and Turboatom.
Companies, presented in the table below, are considered
public as their shares are actively traded at
the national stock exchange.
Companies, potentially interesting for investments
Investments in machine-building for agriculture
could be performed by establishment of new plants,
over the counter shares purchase or debt financing
as domestic companies are not actively traded on
the stock exchange (both locally and abroad).
5.1. General regulations, current legislation
Most of activities related to machine-building do not
require a license. However, special licenses are obligatory
for production of rockets, space crafts and
their spare parts, as well as for production of weapons.
Obtaining several permits from authorities controlling
labor, fire, sanitary and ecological safety issues
is obligatory prior to opening of a production plant.
Machine-building industry is generally regulated by
the Cabinet of Ministers of Ukraine and the Ministry
of Economic Development and Trade of Ukraine.
There are no special laws regulating machine-building
industry. However, there are legislative acts
envisaged to provide support to the industry. For
example, the Law of Ukraine “On stimulation of the
development of native machine-building for the purposes
of agricultural complex” adopted in 2002. The
law stipulates certain measures to support Ukrainian
enterprises (with no limitation of the foreign capital or
control) producing vehicles and machines designed
for agricultural activities. The supportive measures
include: partial compensation of (i) interest paid for
loans and (ii) of the cost of equipment designed for
agricultural activities for the purchasers, as well as
direct purchases of agricultural equipment by the
government. However, the volume of such support
depends on the funds envisaged in the State Budget
for a particular year. There are also other laws of
similar nature, such as Laws of Ukraine “On measures
of state support for the shipbuilding industry in
Ukraine” and “On development of aircraft industry”.
With regards to corporate income tax (hereinafter referred
to as the “CIT”) there is no special treatment
of machine-building activities. CIT is currently calculated
at a flat rate of 21%. CIT rate will be reduced
to 19% from 1 January 2013 until 31 December 2013
and 16% from 1 January 2014 onwards.
Value added tax (hereinafter referred to as the “VAT”)
currently levied at a rate of 20% of the taxable value
of domestic supplies, imported goods and auxiliary
services. The VAT rate will be reduced to 17% from
1 January 2014.
5.2. Government support – programs, state projects
Machine-building is one of the key industries of state
interest in Ukraine. According to the “State program
of economic and social development for 2012, and
general objectives for development in 2013 and
2014”, the major objective for machine-building industry
development is to increase production of
exportable products by introduction of modern advanced
technology. State support program for 2012
- State compensation of the interest expenses on
loans obtained for implementation of high-technology
- Promotion of domestic industrial products in domestic
and foreign markets (diversification of
foreign markets and a wider representation of
domestic industrial products in the markets of
North Africa and the Middle East);
- State support of the domestic producers of solar
cells and solar power systems.
Among the instruments of state support there will be
state guarantees and state insurance for exporters.
In 2013-2015 further harmonization of the regulatory
environment and customs procedures will be undertaken,
in accordance with EU regulations, in order to
realize a free trade zone with the EU. However, as
of now the state policy is of a reasonably protective
One of the main goals of Ukrainian government for
2012 is technical re-equipment of agricultural sector,
which is an important incentive for domestic agricultural
equipment manufacturers. Along with it, quite a
few state support programs are currently exercised
within the associated sectors:
- State support of the purchase for new railcars
(USD 1,2 bn planned for 2010-2015);
- 30% compensation of costs of agricultural machinery
of domestic production;
- Financial support provided to agricultural enterprises
through the mechanism of loan cost reduction;
- Purchasing of domestic machinery and equipment
for agriculture under national financial lease
Among projected measures to be taken by the government
in 2014 are: development of innovative infrastructure,
establishment of industrial parks and
development of their network.
6. Organizations and associations of the industry
There are several organizations aimed to contribute
to the development of machine-building industry.
They provide protection of members’ interests, lobby
legislative initiatives, etc.
Ukrainian League of Industrialists and
Goal: representation and protection members’ interests in relations with state and local authorities, other
institutions and organizations, as well as in the courts
of any authority and jurisdiction, disputes resolution.
Number of members: more than 38,000 members.
Goal: representation of members in relationships
with governmental institutions, other Ukrainian and
foreign organizations, providing information support
and professional development opportunities for
members, assistance in entering foreign markets.
Number of members: 19.
International Machine-building Union
Goal: fostering cooperation between scientists, experts
and representatives of industrial enterprises of
different countries to assist in development of machine-
building worldwide, protection of members’
rights and interests.
Number of members: N/A.
Established: No data.
Association of Technologists and Machine
-building specialists of Ukraine
Goal: scientific research work, arrangement of scientific
seminars and conferences dedicated to machine-
building, protection of members’ rights and
interests in relations with authorities.
Number of members: more than 60.
Established: No data.
7. List of references:
- Statistical information // Ukrstat, 2004-2012 - ukrstat.gov.ua
- Ukrainian Strategy 2011 // Dragon Capital, 2011 - email@example.com
- News // Unian Economics, - economics.unian.net
- Price index (Индекс цен) // UGMK, 2008-2011 - ugmk.info
- The situation on the steel and raw materials market. Forecasts for 2012 // Ukrpromzovnishexpertyza, Nov-
2011 (available only in Ukrainian) - delphicasteel.com/cgi-bin/wg.cgi
- AGRI-FOOD SPECTRUM OF UKRAINE: PERSONAL PROFILE” // Association Ukrainian Agribusiness Club,
2011 - agribusiness.kiev.ua
- Farm Machinery Market. Ukraine. 2011. / / UCAB, 2011 - Rating TOP-100 (available only in Ukrainian/Russian)
- Ukraine Equity // Astrum Investment Management, 40737 - astrum.ua
- Country Reports // Economist Inteligence Europe, 40969 - eiu.com
- Status and prospects of innovation and technological cooperation between Ukraine and the Customs
Union: potential of an engineering industry / / CPP Mining machines, (available only in Ukrainian) 40835 -
- Articles for 2011-2012 (available only in Russian) // Marketing.vc, 2011-2012 - marketing.vc
- The development strategy of Russia`s Transport Machinery in 2007-2010 and for the period until 2015 / /
JSC “Russian Railways”, 2007 (available only in Russian) - rzd.ru
- Railway machine-building market in Ukraine // Alliance Capital Management, - mdo.marketing.vc/
- Section: About Ukrzaliznytsya (Розділ: Про УЗ) // Ukrzaliznytsia - uz.gov.ua
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