Bureaucracy and corruption are the top obstacles to doing business in the South of Ukraine

18/ 11/ 2020

These are the results of a regional survey conducted among member companies of the EBA Southern Ukrainian office to determine the ease of doing business and the factors that negatively affect it.

Half, namely 51% of respondents, believe that the conditions for doing business in the Southern region are satisfactory, 36% report some difficulties in conducting their business activities, while 13% state that it is quite easy for them to do business.

What are the exact factors that negatively affect the ease of doing business in the region? Thus, 50% of surveyed entrepreneurs believe that the main obstacles are bureaucracy and corruption. Another 21% complain about the unsatisfactory state of infrastructure, 14% – about the lack of rule of law, 8% – pressure from law enforcement agencies, and 6% report difficulties in relations with the authorities.

The Southern region has a fairly extensive transport infrastructure represented by all modes of transport, including the largest sea freight forwarding trading ports, shipping companies, developed railway and road facilities, airport and airfield complexes, airlines. However, the business has commented on the quality of infrastructure. More than half of the respondents, namely 56% believe that the state of transport infrastructure in the region is poor, another 30% – satisfactory and only 13% believe that transport infrastructure is well developed.

To improve the situation, 51% of entrepreneurs propose the reconstruction of roads, 21% believe it is necessary to modernize the railway, and 15% point to the need to develop river infrastructure. In this context, the European Business Association welcomes the long-awaited start of river transport reform and supports the need to adopt a sectoral draft law on Inland Water Transport for the development of Ukraine’s inland waterways if the principles provided by the business are included before the second reading.

Most businesses have a neutral assessment of the cooperation with local authorities and satisfaction with the services provided by authorities in the regions. The business in the South complains most frequently about the work of the State Environmental Inspectorate of Ukraine – 56% dissatisfied entrepreneurs, the Odesa City Council – 40%, the regional customs, and the National Police – 33%. 

What are the business plans for the next 6 months? According to the results of the regional index, given the state of uncertainty and quarantine restrictions, companies plan to digitalize enterprises – 31%, reduce their costs – 19%, expand and attract new investment – 15%, optimize office space – 15%, access to new/other markets – 10%, and another 10% have not yet decided on their precise plans. About 57% of enterprises in the Southern region report income losses due to quarantine restrictions.

The companies point to the need to develop infrastructure, effectively combat the shadow economy, and improve the work of courts and law enforcement agencies. Despite some problems and complications, the business in the region is quite optimistic and declares its readiness to attract new investments.

For reference: 

Altogether, 30 member companies of the EBA Southern Ukrainian office took part in the EBA Regional Index Survey. The survey consisted of 9 questions and was conducted from 7 to 27 October 2020.

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