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More than half of the CEOs still consider the investment climate in Ukraine unfavorable

13/ 07/ 2021
  However, the integrated indicator of the Investment Attractiveness Index in the first half of 2021 increased slightly compared to the previous period and amounted to 2.84 points out of 5 possible. These are the conclusions of the new wave of the expert research conducted by the European Business Association together with Vasil Kisil & Partners law firm. Let it be known that in the previous period the index amounted to 2,40 points. View the presentation The CEOs of the Associations member companies are cautiously improving their assessments of the business climate. The percentage of CEOs who consider the current investment climate unfavorable remains significant - 58%. However, this figure has decreased significantly compared to the end of 2020, when it was as much as 78%. Other 29% of respondents consider the current investment climate neutral, and the other 13% assess the investment climate in Ukraine as favorable. And this figure has doubled compared to the second half of 2020. The assessment of the half-year dynamics of the business climate has also improved. Only 15% believe that the investment climate has deteriorated in the last 6 months (previously - 66%). At the same time, the majority, namely 53%, are convinced that the business environment has not changed, and the other 32% have noticed an improvement in the business climate. Forecasts for the investment climate in the next six months have also become more optimistic. The majority of respondents, in particular 58%, believe that the investment climate will remain unchanged in the second half of 2021. Other 25% expect an improvement in the investment climate in the next six months. In the previous period, only 1 in 10 believed that conditions would improve. The percentage of pessimists has also decreased - only 17% expect further deterioration of the situation. Almost one in five CEOs, namely 19% of all respondents, believe that new companies will benefit from investing in Ukraine over the next six months. The other 35% of respondents do not agree with this, and almost half - 46% - are hesitant. CEOs traditionally consider the weak judicial system (stated by 90% of respondents), the high level of corruption (80%), and the shadow economy (65%) to be the main problems for business. Among other obstacles to the development of the investment climate the directors mention unpredictable business conditions, slowing down of the reforms needed to cooperate with the IMF, high staff rotation in the Government, instability in Ukraines relations with foreign partners, and tax pressure. Talking about positive aspects, business leaders highlight the stabilization of the situation with the coronavirus, a stable exchange rate, low discount rates, digitalization of public services, the launch of the land market and the beginning of changes in the social contract with the oligarchs, support for significant investment projects. According to the top managers, the investment climate can be improved through the implementation of real judicial reform, the fight against corruption and smuggling, stable legislation, predictable and transparent conditions for business, acceleration of vaccination and continuous effective dialogue with business. Anna Derevyanko. The Executive Director of the European Business Association. The results of our survey show that the integrated indicator of the Index has increased mainly due to estimates of expectations of the business climate developments in the next six months. Instead, estimates of the current situation are worse, so this is a kind of an advance from business, which expects positive changes to strengthen by the end of 2021. The reforms that business expects to see remain unchanged and reappear every year. We look forward to the authorities attention to these strategic issues and the fulfillment of their promises. HOW DO WE MEASURE THE INDEX The European Business Association has been conducting the “Investment Attractiveness Index of Ukraine” survey since 2008. Throughout its history, the Index has never reached a positive zone – above 4 points. Altogether, 91 managers of the largest international and Ukrainian companies took part in this wave of the survey. For the Index calculations, we use a Likert scale which has 5 gradations, where is very negative, 5 is very positive, and 3 is neutral. Legal Partner Analytic Partner

However, the integrated indicator of the Investment Attractiveness Index in the first half of 2021 increased slightly compared to the previous period and amounted to 2.84 points out of 5 possible. These are the conclusions of the new wave of the expert research conducted by the European Business Association together with Vasil Kisil & Partners law firm. Let it be known that in the previous period the index amounted to 2,40 points.

View the presentation

The CEOs of the Association’s member companies are cautiously improving their assessments of the business climate. The percentage of CEOs who consider the current investment climate unfavorable remains significant – 58%. However, this figure has decreased significantly compared to the end of 2020, when it was as much as 78%. Other 29% of respondents consider the current investment climate neutral, and the other 13% assess the investment climate in Ukraine as favorable. And this figure has doubled compared to the second half of 2020.

The assessment of the half-year dynamics of the business climate has also improved. Only 15% believe that the investment climate has deteriorated in the last 6 months (previously – 66%). At the same time, the majority, namely 53%, are convinced that the business environment has not changed, and the other 32% have noticed an improvement in the business climate.

Forecasts for the investment climate in the next six months have also become more optimistic. The majority of respondents, in particular 58%, believe that the investment climate will remain unchanged in the second half of 2021. Other 25% expect an improvement in the investment climate in the next six months. In the previous period, only 1 in 10 believed that conditions would improve. The percentage of pessimists has also decreased – only 17% expect further deterioration of the situation.

Almost one in five CEOs, namely 19% of all respondents, believe that new companies will benefit from investing in Ukraine over the next six months. The other 35% of respondents do not agree with this, and almost half – 46% – are hesitant.

CEOs traditionally consider the weak judicial system (stated by 90% of respondents), the high level of corruption (80%), and the shadow economy (65%) to be the main problems for business. Among other obstacles to the development of the investment climate the directors mention unpredictable business conditions, slowing down of the reforms needed to cooperate with the IMF, high staff rotation in the Government, instability in Ukraine’s relations with foreign partners, and tax pressure.

Talking about positive aspects, business leaders highlight the stabilization of the situation with the coronavirus, a stable exchange rate, low discount rates, digitalization of public services, the launch of the land market and the beginning of changes in the social contract with the oligarchs, support for significant investment projects.

According to the top managers, the investment climate can be improved through the implementation of real judicial reform, the fight against corruption and smuggling, stable legislation, predictable and transparent conditions for business, acceleration of vaccination and continuous effective dialogue with business.

Anna Derevyanko The Executive Director of the European Business Association
The results of our survey show that the integrated indicator of the Index has increased mainly due to estimates of expectations of the business climate developments in the next six months. Instead, estimates of the current situation are worse, so this is a kind of an advance from business, which expects positive changes to strengthen by the end of 2021. The reforms that business expects to see remain unchanged and reappear every year. We look forward to the authorities attention to these strategic issues and the fulfillment of their promises.

HOW DO WE MEASURE THE INDEX

The European Business Association has been conducting the “Investment Attractiveness Index of Ukraine” survey since 2008. Throughout its history, the Index has never reached a positive zone – above 4 points.

Altogether, 91 managers of the largest international and Ukrainian companies took part in this wave of the survey.

For the Index calculations, we use a Likert scale which has 5 gradations, where is very negative, 5 is very positive, and 3 is neutral.

Legal Partner

Analytic Partner

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