KYIV, Aug 19 – Ukraine will seek to encourage businesses to make investments in Donetsk and Luhansk regions as part of a long-term program to develop the war-ravaged areas, a senior official said Wednesday.

Oleksiy Reznikov, deputy prime minister for reintegration of the temporary occupied territories, said the government is ready to provide business-friendly regulations and risk insurance for companies that will operate in the areas.

"We must focus on creating a new economy,” Reznikov told a meeting with executives from top domestic companies. “The renewed Donbas may become the center of new approaches in industrial economy. There is every reason to believe that it is possible to attract large investments to eastern Ukraine. After all, investors work in hot spots around the world."

Before the war, the Donetsk and Luhansk regions had Soviet-built economy dominated by heavy machinery and coal mining sectors, and both had collapsed since the Russian aggression in 2014.

The government is now seeking to create conditions that would help generate investments in order to propel the economy to sustainable development, and the key emphasis will be placed on private investors.

"The most important issue for investors is the existence of a permanent judicial system for the protection of investors' rights, the rule of law, and a system of risk insurance,” Reznikov said. “Risk capital can and is ready to come if aware that the legal field is working, that there is a system that they trust. And our goal is to create this special investment climate in the part of Donbas controlled by Ukraine."

The European Union and member states have pledged economic and financial support to rebuild the regions, with some local programs already underway. For example, in July an agreement was signed on EUR 64 million loan by the French government to provide Mariupol residents with clean drinking water.

Another agreement was signed with the German government to allocate EUR 25 million for a project to provide housing for internally displaced persons in the region.

Ukraine is also expected to receive a $100 million loan from the EBRD within the framework of the "Eastern Ukraine: Reconstruction, Reunification and Revival" project. The project provides for overhaul of about 183 km of highways in Luhansk region.

"It is necessary to create a permanent and effective management system, including all the necessary institutions, such as a trust fund and an investment agency.,” Reznikov said. “We understand that the main thing is to create conditions and attract, first of all, our Ukrainian investors, who will be followed by international ones." (tl/ez)