Unfair competition may become a reputational risk for the Defence City initiative — UkrArmoTech CEO Hennadii Khirhii

"Even a successful launch of the special legal regime for defence manufacturers, Defence City, does not guarantee the success of the next phases of the reform. The initiative has strong potential, but it also contains complex challenges that may affect its effectiveness," UkrArmoTech CEO Hennadii Khirhii wrote in his article for UP.

"Unfair competition among potential residents may become a reputational risk for the Defence City initiative. The result of such behaviour would not simply be a disadvantaged competitor, but a loss of trust in defence manufacturers across the sector," the expert emphasised.

Given that the Ministry of Defence has the authority to independently form the register of residents, it is critically important to avoid bias or the creation of a so-called "privileged club", Khirhii believes. In his view, any subjectivity or unequal competition in obtaining resident status would undermine a promising idea and negatively affect investor confidence.

Khirhii argues that all entry criteria must be applied transparently and consistently, without exceptions. He also suggests further examining the ban on paying dividends from profit exempt from taxation. This restriction reduces investment attractiveness by limiting the possibility of a quick return on investment and may slow the inflow of new capital.

Background:

UkrArmoTech is a manufacturer of armoured vehicles for the needs of the Armed Forces of Ukraine, the State Border Guard Service, the Ministry of Internal Affairs, and specialised security units within the national defence and security sector. The company provides a full production cycle: from laser cutting of armour steel and all types of mechanical processing to full assembly and testing of finished vehicles.