Ukraine's Ministry of Defense has announced the creation of a systematic mechanism for developing protected production capacities within the defense-industrial complex, which for the first time will allow private businesses to invest directly in the construction of underground defense enterprises. This was reported by RBC-Ukraine, citing an official statement from the ministry. The key instrument of the reform is amendments to Cabinet of Ministers Resolution No. 1494, which expand the circle of potential customers for protected production facilities.
Who Can Now Build Underground Factories
A significant innovation is that the customer for the construction of protected production facilities can now be not only the defense-industrial complex enterprise itself, but also any other legal entity — in particular, a developer or investor. Such a customer gains the right to build the facility using its own or raised funds and then transfer it to the defense-industrial enterprise. In effect, the state is opening the door for private capital in a segment that had previously been almost entirely dependent on budgetary financing.
Goals of the New Model According to the Ministry of Defense
According to Ukrainian Deputy Minister of Defense Anna Hvozdya, the new model will allow protected production capacities to be created faster and will reduce the dependence of defense projects on the state budget. The ministry emphasizes that the goal of the reform is to enable Ukraine's defense industry to simultaneously increase production volumes amid ongoing combat operations and to attract additional resources from outside state financing.
Status of the Document
At the time of publication, the document containing amendments to Cabinet of Ministers Resolution No. 1494 is at the stage of being refined following legal and anti-corruption expert reviews. Once this procedure is completed, it will be submitted for consideration by the Cabinet of Ministers. This means that the mechanism has not yet entered into force and cannot be used by investors until it is officially approved at the government level.
Context: Financing Shortfall for the Armed Forces
The decision to attract private investment into underground defense infrastructure is being made against the backdrop of acute financial needs in the defense sector. RBC-Ukraine previously reported that Ukraine's Armed Forces require an additional $27 billion in financing, and the Cabinet of Ministers is considering several options for raising the necessary funds. In parallel, the Cabinet plans to simplify the rules for constructing underground defense enterprises in the near future, while the Ministry of Defense is preparing corresponding amendments to the regulatory framework.
Contradictory Data
No significant contradictions in figures or dates were identified in the provided sources. However, it is worth noting that the announced mechanism currently exists only at the level of the ministry's statements and a draft resolution under refinement: no specific deal involving a private developer in the construction of an underground defense factory has been confirmed, and the exact timeline for submitting the document to the Cabinet has not been specified. Thus, the actual implementation of the announced model remains at the planning stage.
