Doing business in the Kharkiv region is easy only for 14% of entrepreneurs

06/ 12/ 2021

To study the business climate in the regions, the European Business Association interviewed member companies of the Kharkiv office to identify key sentiments, trends, and forecasts for the development of regional business. Thus, the integrated value of the index was 2.69 points out of 5 possible, thus appearing to be in the negative plane. The survey showed that this year there is a decrease in the number of entrepreneurs who consider the conditions for doing business as satisfactory – 41% compared to 61% last year. Meanwhile, the share of entrepreneurs who find it difficult to do business has increased – 45%, while 14% of respondents find it easy to work. At the same time, 45% of entrepreneurs believe that over the past six months the conditions for doing business in the Kharkiv region have not changed, 41% report changes for the worse, and 14% – for the better. The top 3 barriers to business have remained unchanged since last year – what has changed is their priority order. Problems with the bureaucracy have come to the fore as they now disturb Kharkiv entrepreneurs the most. This is followed by corruption and the lack of the rule of law, for which entrepreneurs have expressed an equally high level of concern. When assessing the state of transport infrastructure in the region, respondents opinions were divided almost equally. Thus, 32% of the surveyed entrepreneurs gave a satisfactory assessment, the same number assessed the condition of the infrastructure negatively, the other 36% – positively. Almost half of the entrepreneurs, namely 45%, believe that the reconstruction of roads will help improve the state of transport infrastructure. Other proposals include the modernization of the railway connection – 16% and the construction of additional office space – 16%. At the same time, 13% are of the opinion that nothing needs to be changed, only the maintenance of what has been done before. Regarding the development level of e-services in the region, 41% of respondents consider it satisfactory, 32% consider it high, and 27% low. We also asked business representatives to evaluate the work of regional authorities on a 5-point scale. According to the results, we have two groups: the first was assessed by business in a neutral way, the second - in a negative way. Thus, the first includes the regional customs (3.37), the regional traffic police (3.35), the city council (3.24), and the National Police (3.21). And the second - the regional state employment service, regional administration, environmental inspectorate, and courts (all received a score less than 3). More than half of entrepreneurs, namely 55%, do not expect any changes in doing business in the next six months. Only 14% hope to improve working conditions. The opposite position was taken by 32% of respondents. In the next half of 2022, business representatives would like to see such changes: expanding the list of electronic services, simplifying permitting procedures and administrative services, reducing pressure from regulatory authorities. The business community also shared its plans for next year. Thus, 41% of entrepreneurs plan to implement new investment projects in 2022. At the same time, 55% intend to increase the number of employees, 41% plan to reduce them, and 5% will leave everything unchanged. The vast majority, namely 82%, plan to raise employees salaries to 10%, while the other 14% of entrepreneurs are ready for the even greater rise. For reference: The survey was conducted among the EBA Kharkiv member companies from October 19 to November 16, 2021. The press release is available at the link.

The survey showed that this year there is a decrease in the number of entrepreneurs who consider the conditions for doing business as satisfactory – 41% compared to 61% last year. Meanwhile, the share of entrepreneurs who find it difficult to do business has increased – 45%, while 14% of respondents find it easy to work.

At the same time, 45% of entrepreneurs believe that over the past six months the conditions for doing business in the Kharkiv region have not changed, 41% report changes for the worse, and 14% – for the better.

The top 3 barriers to business have remained unchanged since last year – what has changed is their priority order. Problems with the bureaucracy have come to the fore as they now disturb Kharkiv entrepreneurs the most. This is followed by corruption and the lack of the rule of law, for which entrepreneurs have expressed an equally high level of concern.

When assessing the state of transport infrastructure in the region, respondents’ opinions were divided almost equally. Thus, 32% of the surveyed entrepreneurs gave a satisfactory assessment, the same number assessed the condition of the infrastructure negatively, the other 36% – positively.

Almost half of the entrepreneurs, namely 45%, believe that the reconstruction of roads will help improve the state of transport infrastructure. Other proposals include the modernization of the railway connection – 16% and the construction of additional office space – 16%. At the same time, 13% are of the opinion that nothing needs to be changed, only the maintenance of what has been done before.

Regarding the development level of e-services in the region, 41% of respondents consider it satisfactory, 32% consider it high, and 27% low.

We also asked business representatives to evaluate the work of regional authorities on a 5-point scale. According to the results, we have two groups: the first was assessed by business in a neutral way, the second – in a negative way. Thus, the first includes the regional customs (3.37), the regional traffic police (3.35), the city council (3.24), and the National Police (3.21). And the second – the regional state employment service, regional administration, environmental inspectorate, and courts (all received a score less than 3).

More than half of entrepreneurs, namely 55%, do not expect any changes in doing business in the next six months. Only 14% hope to improve working conditions. The opposite position was taken by 32% of respondents.

In the next half of 2022, business representatives would like to see such changes: expanding the list of electronic services, simplifying permitting procedures and administrative services, reducing pressure from regulatory authorities.

The business community also shared its plans for next year. Thus, 41% of entrepreneurs plan to implement new investment projects in 2022. At the same time, 55% intend to increase the number of employees, 41% plan to reduce them, and 5% will leave everything unchanged. The vast majority, namely 82%, plan to raise employees’ salaries to 10%, while the other 14% of entrepreneurs are ready for the even greater rise.

For reference:

The survey was conducted among the EBA Kharkiv member companies from October 19 to November 16, 2021. The press release is available at the link.