The Cabinet of Ministers of Ukraine has approved a package of decisions aimed at strategically supporting the domestic defense-industrial complex amidst ongoing hostilities. A key initiative is the involvement of private capital in constructing secure underground production facilities, designed to protect arms manufacturing from regular missile and drone strikes.
New Opportunities for Private Developers in Defense
Under the government-approved regulations, private companies now have the legal right to independently build underground defense-related facilities. Subsequently, investors can lease out completed spaces, transfer them for use, or sell them directly to enterprises engaged in military production. This approach significantly simplifies the creation of necessary engineering infrastructure and allows for the rapid expansion of capacities for manufacturing weapons and equipment.
To implement the project, developers will need to conclude official agreements with special zone residents, government contractors, or companies designated by the Ministry of Defense as critical for the defense sector. Meanwhile, regulatory requirements obligate investors to allocate at least 25% of the total built facility area specifically for defense needs.
Preferential Imports and Customs Simplification
The second major area of government reform concerns the import of components funded by Ukraine's international partners. A special mechanism has been introduced to fully exempt such shipments from import duties and value-added tax (VAT). This measure aims to reduce the financial burden on manufacturers and speed up the logistics of essential parts.
Additionally, the government has significantly simplified customs inspection and clearance procedures by implementing a single-window mechanism. According to relevant agencies, these changes will reduce the duration of bureaucratic procedures several times over, ensuring an uninterrupted flow of raw materials and equipment to enterprises.
Significance of the Reform and Manufacturing Scale-Up
The measures adopted by the Cabinet of Ministers aim to attract off-budget investments to build secure infrastructure, accelerate the scaling of defense capacities, and facilitate the relocation of plants from hazardous regions. Amid intense hostilities and constant aerial threats, moving production underground is becoming a critical factor for the survival and technological advancement of Ukraine's military-industrial complex.
