Doing business in the regions of Ukraine
The level of regional development demonstrates the real state of the economic and social environment in the country, as it largely depends on the activity and success of the local business. Therefore, the European Business Association decided to find out from the representatives of member companies that focus their activities in the regions, whether it is easy for them to work at the local level and how this experience can be improved.
We analyzed the experience of four strategic regions where the EBA regional offices are situated – Lviv, Odesa, Kharkiv, Dnipro – and compiled a list of obstacles to doing business at the regional level.
In each of these regions, most enterprises assessed the business climate as satisfactory, and corruption came first among the factors hindering business development in three regions at once. So, let’s look at the situation in more detail in terms of regions.
Altogether, 74% of surveyed entrepreneurs assess the business climate in the region as satisfactory, while 20% say that it is difficult for them to do business and only 6% believe that it is easy. Among the TOP-3 factors that negatively affect the ease of doing business in the region, respondents included (1) corruption, (2) unsatisfactory infrastructure, (3) bureaucracy.
About 40% of respondents give a negative assessment to the state of transport infrastructure in the region, another 45% give a satisfactory one. To improve the situation, it is suggested, first of all, to reconstruct highways and modernize railways. In addition to infrastructure development, entrepreneurs expect the effective economy de-shadowing, the reduced payroll burden, and the improved work of courts and law enforcement agencies to ensure better business conditions.
About 80% of businesses in the Western region report income losses due to quarantine restrictions imposed by the state in the spring to contain the coronavirus pandemic.
Half of the local respondents, namely 51%, consider the business climate to be satisfactory, another 36% say that it is difficult for them to do business, and 13% believe that it is easy. The ease of doing business in the region is influenced by (1) bureaucracy, (2) corruption, (3) unsatisfactory infrastructure.
Altogether, 43% of respondents assess the condition of transport infrastructure as poor, another 30% – as satisfactory. Among the most anticipated infrastructure projects are the reconstruction of highways, modernization of railways, development of river and sea infrastructure.
The companies point to the need to develop infrastructure, effectively combat the shadow economy, and improve the work of courts and law enforcement agencies.
About 57% of enterprises in the Southern region report income losses due to quarantine restrictions. This is the best indicator of all four regions.
There, 61% of entrepreneurs believe that the ease of doing business in the region is satisfactory, 33% say that doing business is difficult, and only 6% that it is easy. The top 3 factors that complicate business activities are (1) corruption, (2) lack of the rule of law, (3) bureaucracy.
44% of respondents believe that the level of development of transport infrastructure in the region is satisfactory, while 39% say that it is bad. Like colleagues from other regions, Kharkiv entrepreneurs complain about the condition of roads and railways.
Among the factors that could improve the business climate in the region, entrepreneurs included the reduced payroll burden, the improved work of courts and law enforcement agencies, the reduced pressure from regulatory authorities.
About 83% of enterprises in the Kharkiv region report income losses due to quarantine restrictions.
The vast majority, namely 58%, rated the business climate in the region satisfactorily, while 42% said it was difficult for them to do business, and no entrepreneur rated the business climate as favorable. The ease of doing business in the region is primarily negatively affected by (1) corruption, (2) lack of the rule of law, (3) unsatisfactory infrastructure.
Most entrepreneurs consider the condition of transport infrastructure satisfactory (48%) or poor (42%). To improve the situation, the business expects the reconstruction of roads, construction of the airport, improvement of railway connections. According to business, for the improvement of the business climate in the region, it is necessary to reduce the burden on the payroll fund, improve the work of the judicial and law enforcement system, develop infrastructure.
About 75% of enterprises in the Dnipro region report income losses due to quarantine restrictions.
The survey was conducted from October 7 to 27 in nine oblasts of Ukraine. Altogether, 113 member companies of the EBA regional offices took part in the study.
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