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© Norautron Electronics Production | March 01, 2010

Ukraine to be the new European EMS hub

Ukraine's cost-competitiveness and strategic proximity to other European countries make it the preferred destination for several European tier 1 EMS companies.
Additionally, the establishment of free economic zones in Ukraine is encouraging electronics manufacturers to invest in the country due to lower import/export duties and tax holidays issued by the Ukrainian government to promote manufacturing activity and generate job opportunities. The government is also trying to woo foreign investors to invest in the country by restarting privatisation of existing state-owned facilities to boost foreign direct investment (FDI) in key markets such as EMS during the economic downturn. This offers opportunities for foreign investors to capitalise on the existing infrastructural facilities available in the country.

However, bureaucracy and red-tapism in the Ukrainian administration is reducing the transparency of foreign investment transactions and several foreign investors are sceptical about investing in the country. "Foreign investors perceive Ukraine to be corrupt, restraining foreign investments in electronics manufacturing in the country and turning away many potential investments to other east European countries," explains the analyst of this research.

Since the latter half of 2009, the total Ukrainian electronics manufacturing market is showing signs of recovery due to improving global demand in key end-user segments. Furthermore, proposed investments are moving forward in Q4 2009, thereby bringing the Ukrainian market back on the growth path. "Ukraine is likely to attract more multinational investments in the near future, with the number of market participants likely to double by 2015," concludes the analyst. "EMS is anticipated to account for a significant portion of these investments."

This is mentioned in a Frost & Sullivan research study titled Ukraine - An Emerging EMS Haven in Eastern Europe. It provides market forecasts, vertical market analysis, and surface mount technology (SMT) penetration rate in Ukraine for electronics manufacturing services (EMS).

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