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Researches

The EBA conducts a series of surveys for research in various spheres
of the Ukrainian business environment. In particular, we consider areas such as investment climate, customs and tax field, court, etc. and suggest you read the results.

If you would like to know more details, please write us on pr@eba.com.ua.

Indexes for the year
Select a year:
2020
  • 2020
  • 2019
  • 2018
2.45

Court Index 20/05/2020

2.64

Happiness Barometer 28/04/2020

2.95

Tax Index 23/04/2020

Investment Index

The research that reflects business sentiment regarding the current state of the country's investment climate and forecasts for the next 6 months.

How we calculate the Index

The investment attractiveness index is calculated as an arithmetic mean of five aspects of the investment climate. Respondents answered questions by selecting one of the suggested answers that could be analyzed using a five-point system.

To download survey results, please click on the metric you are interested in.

  • Positively
  • Neutral
  • Negatively
Select a period:
2008, III кв.
  • 2008, III кв.
  • 2008, IV кв.
  • 2009, I кв.
  • 2009, II кв.
  • 2009, III кв.
  • 2009, IV кв.
  • 2010, I кв.
  • 2010, II кв.
  • 2010, III кв.
  • 2010, IV кв.
  • 2011, I кв.
  • 2011, II кв.
  • 2011, III кв.
  • 2011, IV кв.
  • 2012, I кв.
  • 2012, II кв.
  • 2012, III кв.
  • 2012, IV кв.
  • 2013, I кв.
  • 2013, II кв.
  • 2013, III кв.
  • 2013, IV кв.
  • 2014, I кв.
  • 2014, II кв.
  • 2014, III кв.
  • 2014, IV кв.
  • 2015, I кв.
  • 2015, II кв.
  • 2015, III кв.
  • 2015, IV кв.
  • 2016, I пол.
  • 2016, II пол.
  • 2017, I пол.
  • 2017, II пол.
  • 2018, I пол.
  • 2018, II пол.
  • 2019, I пол.
  • 2019, II пол.
2019, II пол.
  • 2008, III кв.
  • 2008, IV кв.
  • 2009, I кв.
  • 2009, II кв.
  • 2009, III кв.
  • 2009, IV кв.
  • 2010, I кв.
  • 2010, II кв.
  • 2010, III кв.
  • 2010, IV кв.
  • 2011, I кв.
  • 2011, II кв.
  • 2011, III кв.
  • 2011, IV кв.
  • 2012, I кв.
  • 2012, II кв.
  • 2012, III кв.
  • 2012, IV кв.
  • 2013, I кв.
  • 2013, II кв.
  • 2013, III кв.
  • 2013, IV кв.
  • 2014, I кв.
  • 2014, II кв.
  • 2014, III кв.
  • 2014, IV кв.
  • 2015, I кв.
  • 2015, II кв.
  • 2015, III кв.
  • 2015, IV кв.
  • 2016, I пол.
  • 2016, II пол.
  • 2017, I пол.
  • 2017, II пол.
  • 2018, I пол.
  • 2018, II пол.
  • 2019, I пол.
  • 2019, II пол.

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Areas of Research

Tax
Tax
Dynamic: positive
0.05
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Customs
Customs
Dynamic: positive
0.15
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Judicial
Judicial
Dynamic: negative
0.03
Read more

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Spheres

Year:
2020, I пол.
  • 2020, I пол.
  • 2019, II пол.
  • 2019, I пол.
  • 2018, II пол.
  • 2018, I пол.
  • 2017, II пол.
  • 2017, I пол.
  • 2016, II пол.
  • 2015, II пол.
  • 2014, II пол.
  • 2013, II пол.
  • 2013, I пол.
  • 2012, II пол.
  • 2012, I пол.
  • 2011, II пол.
  • 2011, I пол.
  • 2010, II пол.
  • 2010, I пол.
  • Tax
  • Customs
  • Judicial

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Logistics researches

Strategic documents that include a set of decisions and necessary changes in the port and railway sectors were prepared by the Logistics Committee.

More details

Business Forecasts

Research where business shares projections about $, employee salaries, staff size, investment projects per year, TOP-3 tasks from business to government, and more.

Business Forecasts
  • For 2020
  • For 2019
  • For 2018
  • For 2017

The EBA survey shows that 77% of member companies’ CEOs expect business development during the next year. More than half of businessmen (62%) expect 10 to 20% revenue growth, in UAH terms. Almost half (45%) of CEOs forecast revenue growth rates also at 10-20%.Such results were shown by the survey “Business Forecasts 2020” and announced during the special event of the European Business Association “Global Outlook” on 23th of September 2019.

View the Presentation

When budgeting for next year, the CEOs considered a currency rate of UAH 28 / 1$.  For this year, their respective forecast was UAH 30/1$.

A large majority (90%) of managers expect to increase employee salaries in the amount of 5-20%.

At the same time, the number of CEOs wishing to expand staff levels decreased. Nearly half (47%) plan to leave the number of employees unchanged. Only 46% plan to recruit new people due to staff expansion (last year, 58% of CEOs did so).

The study also showed that large-scale investment business projects are not planned, and 67% of CEOs confirmed this.

In addition, the survey defined the top-3 tasks from business for the next year. For a long time, they remain the same – a fight against corruption, judicial reform and establishment of the rule of law, political stability, and good governance.

It is worth noting that the survey conducted in early 2019 demonstrates the same tasks for the country’s leadership, along with the introduction of land reform and a fight against the shadow economy. We hope that businesses’ voice will be heard so that the country can develop.

Additional information: 104 CEOs of EBA member companies took part in the survey “Business Forecast 2020”. The questionnaire consisted of 10 questions.

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77

CEOs expect business development during the next year

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62

expect 10 to 20% revenue growth, in UAH terms

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The EBA survey shows that 75% of member companies’ CEOs expect business development during the next year. Almost half of businessmen (42%) expect 10 to 20% revenue growth, in UAH terms. Prognoses in $ are less optimistic. 43% of CEOs mentioned they expect up to 10% growth. Such results were shown by the survey “Business Forecasts 2019” and announced during the special event of the European Business Association “Global Outlook”.

View the Presentation

Besides, business feels the need for tax and customs reforms, effective public administration, progress in the implementation of the EU-Ukraine Association Agreement’s terms, and strengthening of energy security and energy efficiency.

What are the main conclusions of our survey? When planning a budget for the following year, the business owners considered 30 UAH / 1$ on the average. For this year, the forecast was UAH 28 / 1$. In addition, large-scale investment business projects are not planned, and 61% of the CEOs confirmed this.

However, despite currency fluctuations, 58% of all respondents plan to expand the state. 33% of entrepreneurs will leave the state unchanged. In turn, almost half of them expect to increase employee benefits by 10 to 20%.

As a reminder, EBA Investment Index results demonstrate that the following actions are needed to improve the investment climate for the business, namely: launch of the Anti-corruption court, judicial reform, land market reform, reduction of tax pressure on the salary fund, deregulation of the economy, more communicating positive changes and cases, making the state apparatus effective, which in some cases will mean its reduction. According to some respondents, even up to 5 times.

Reference: 106 CEOs of the EBA member companies took part in the survey «Business Forecast 2019». The questionnaire consisted of 10 questions.

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75

CEOs expect business development during the next year

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42

expect 10 to 20% revenue growth, in UAH terms

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Last year expectations of CEOs were more optimistic. Then 86% of CEOs hoped for positive scenario. Now we are returning to the numbers as of 2017. And the reasons for it are obvious. Business suffers from corruption and feels a real need for fight against it, as well as the need for establishment of the rule of law and judicial reform, political stability. There is a little progress, but they are not enough. Thus for the next year top tasks from business remain the same. I hope that this time we will be heard better and the reforms in these areas will be more tangible.

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Anna Derevyanko Anna Derevyanko The Executive Director of the European Business Association

In August, we asked key Ukrainian investors about their expectations regarding the state of the country’s economy in 2018. We conduct this research every year on the eve of the active autumn business season to understand how the EBA member companies plan their business activities.

View the presentation

Thus, EBA Business Forecast 2018 includes assessments of the development prospects for their own business, as well as the company’s vision of the future in 2018 against the background of the global economy. Most respondents who shared their views with us work in the service sector – 37%, as well as manufacturing – 27%, construction – 7%, mining – 3%, and other sectors.

KEY TAKEAWAYS

  • Quite a significant percentage – 86% of respondents – confirmed that they expect a positive business growth dynamic in 2018;
  • The majority of respondents – 58% (last time there were 46%) do not plan new investment projects for 2018, but at the same time 23% (45% – last year) plan to launch new projects next year;
  • The majority (29%) still consider the fight against corruption to be the priority for the Government;
  • Most executives 58% have already planned to increase the company’s staff. 9% – will reduce staff in 2018;
  • The vast majority – 40% of respondents predict an increase in salaries for available employees by 5-10%;
  • Similar to last year, 57% of respondents set the exchange rate 27-28 UAH for 1 USD when planning the budget for 2018.

TRENDS OF BUSINESS ACTIVITIES      

This year’s results showed that a very high percentage of respondents (86%, compared to 74% last year) expect positive business growth dynamics.

At the same time, 34% of managers forecast an income increase in hryvnia by 6-10%, another 15% talk about an increase in income by 20-30%, almost 6% expected growth of more than 30%. Although last year the sentiment was more optimistic, as there was a small percentage (almost 4%) of respondents seeking the growth of 50% or more. The respondents undoubtedly took into account the level of inflation in their calculations.

According to the top managers of EBA member companies, the projected profitability of companies in dollar terms is as follows: the majority of respondents (about 23%) believe that business profitability in 2018 will increase by 10%; another 21% may increase to 20%.

We also learned about investors’ forecasts for profit growth in physical terms for 2018. Accordingly, the largest percentage of respondents (about 40%) expect the growth to 10%, another 16% say the growth to 20% is maximum. And only 7% believe that such growth will not happen at all. For comparison – only 6% of respondents admitted to the income growth by 30% or more in physical terms.

ECONOMIC ENVIRONMENT

We traditionally asked directors about the barriers that significantly impede the planning of their business activities and development in Ukraine.

Interestingly, this year the business community considers that the fight against corruption and the need for judicial reform is equally important as the priorities for the Government: 29% and 26% respectively. For several seasons in a row, corruption has always been the absolute leader among the negative factors.

The respondents also emphasized other factors:

17% – tax and customs reform

12.5% ​​- political stability and effective management

4% – energy independence and energy efficiency

2% – reduction of government spending

PAY AND EMPLOYMENT 

As most respondents hope for positive business growth dynamics, there is a strong tendency to expand the number of employees in many companies. This sentiment is reflected in the results of our survey: almost 67% of respondents admitted that in 2018 they will hire new employees, 34% will stick to the current number of staff, and only 9% of executives are likely to lay off staff in the next calendar year.

Compared to last year’s results, we see optimistic sentiments this year in terms of wages. Thus, 40% of respondents plan to increase the level of salaries from 10% to 20%, another 37% hope to increase salaries by 5-10%, and 10% – by 5%, and a very small percentage – only 3% of respondents refuse to raise wages.

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86

expect a positive business growth dynamic in 2018

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23

plan to launch new projects next year

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We see that the overall picture is optimistic because this year 86% of respondents expect positive dynamics in the growth of their businesses in Ukraine. At the same time, some percentages fell to a lesser extent, which means that investors take a more moderate approach in planning business activities in Ukrainian realities. Certain stability is reflected in the constant exchange rate used by the top managers of our member companies. Last year′s trend to increase staff and raise staff salaries also remained positive. Time will tell whether the expectations of the business community will come true. Our goal, for now, is to remove barriers that hinder the business and deter potential investors.

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Anna Derevyanko Anna Derevyanko The Executive Director of the European Business Association

Just before the new business season start, when most of companies actively plan their strategies of further development and budgeting for the next year, we asked top-managers from EBA member-companies to provide their economic prognoses in the framework of our specific research - EBA Business Forecast 2017.

View the presentation

This topical research covers the development of own business as well as vision of the company’s future in 2017 following the world economic tendencies and globalisation processes.

We would like to share with you the summarised opinions from 117 key investors, most of which work in services - 35%, as well as in such sectors as: manufacturing– 25%, construction – 7%, mining – 3% etc.

MAIN OUTPUTS

  • Significant percent – 74% of respondents – predict positive dynamics of business growth in 2017;
  • The most of respondents - 46% - do not plan any new investments for 2017. At the same time, 45% eager to launch of new projects next year;
  • As it used to be last year the majority of respondents marks combating corruption as a main task for the Government – this time 26.61% of respondents think so;
  • Vast majority of top-managers (48%) are not going to change the number of workers. At the same time, 44% have already scheduled the raise of staff members. 9% – will downsize workforce in 2017.
  • Vast majority - 41% - forecast 10-20% growth of salaries;
  • 23% respondents use currency rate 27-28 UAH for 1 USD while planning their budgets.

BUSINESS ACTIVITY TRENDS

The positive signal lies in high percent of respondents (74%), who expect a positive dynamics for their businesses’ growth. 34% of directors forecast incomes 10-20% growth in UAH, 22% marked 20-30% income growth, 12% pointed 10% income growth. There is also a low percent (almost 4%), who fixed 50% income growth in 2017. In general our respondents are likely to consider the level of inflation when predicting incomes growth. Income growth in USD looks a bit different. For instance, 32% of respondents are likely to predict 10% income growth.

This time we asked top-managers about the rate of growth in volume terms when budgeting for 2017. The highest percent of respondents (32%) look forward to receiving 20-30% growth. 22% of directors pointed their maximum growth rate as 10%, and other 21% forecast no growth at all. And only 2% of respondents marked 50% rate of growth in volume terms for their businesses.

BUSINESS CLIMATE

Corruption in Ukraine is number one barrier in the eyes of business-community. We notice such tendency in several researches simultaneously since we started measuring the status of investment attractiveness of Ukraine. That is why, combating corruption is obviously the most frequent answer (30%) for the question about the main tasks from business for the Government team. Other top answers-tasks are – court system reform and the rule of law – 25%, tax and customs reform - 19%. 15% of respondents pointed that the Cabinet of Ministers should pay attention to the level of political stability and fix the effective management system. 5% more percent of top-managers marked the importance of progress in DCFTA issues and strengthening of EU-Ukraine relations. 4% mentioned the need for energy safety and energy efficiency and 3% think that the Government should cut its spendings.

HUMAN CAPITAL AND SALARIES

Taking into account the fact that a vast majority of respondents forecast the positive dynamics of business growth next year, we can see the trend for expanding the staff in many companies. Our statistics proves that almost 44% of respondents confessed that in 2017 they will probably employ new staff members. 48% are likely to keep the staff composition unchanged. And only 9% are likely to reduce the staff in2017.

More optimistic figures (compared to last year results) we also received in terms of salaries. Thus 41% of respondents plan to increase the salaries for 10-20%. 37% leaders expect to increase salaries for 5-10%, а 10% of respondents forecast 5% salary increase. Only 4% will avoid the increase at all.

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74

predict positive dynamics of business growth in 2017

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45

eager to launch of new projects next year

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The results of this year research prove that business is currently more confident as it used to be in 2015. And we can see that a vast majority of companies’ leaders demonstrated quiet optimistic views as for dynamics of business growth in 2017. It means, there is a hope for some kind of boost for business-activity. Of course, investor dislike uncertainty of the economic situation in Ukraine, however some of them plan to grow their capitals including human one. Such data, of course, is a positive signal for a potential revival of business activity in the country in 2017.

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Anna Derevyanko Anna Derevyanko The Executive Director of the European Business Association
Obstacles for investors

Obstacles for investors

In these surveys, foreign investors share their views on obstacles and barriers to capital raising in Ukraine.

  • 2019
  • 2018
  • 2017
  • 2016

2019: Major obstacles to foreign investment in Ukraine

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View the press release

Foreign investors would like to see the newly elected President of Ukraine demonstrate effective anticorruption efforts, appoint credible reformers to key positions, and separate politics and business interests by reducing the influence of oligarchs.

These are the findings of a new survey of strategic and portfolio investors which was jointly conducted by the European Business Association (EBA), Dragon Capital, and Center for Economic Strategy (CES) in April 2019.

View the presentation of foreign investor survey results

Widespread corruption and low trust in judiciary remained the biggest obstacles to investment in Ukrainian assets for the fourth consecutive year. Market monopolies and state capture by oligarchs add to the negative perception of Ukraine’s investment attractiveness. “Unstable financial system and currency”, previously among the top-3 hurdles, sank to sixth place. The military conflict with Russia remains a significant obstacle, as well as “oppressive law enforcement agencies”, which rose from seventh to fifth place.

At the same time, a shift in Ukraine’s geopolitical direction away from the West, steps to undermine the existing anticorruption framework, and attempts to infringe on the central bank’s independence during the new President’s first 3-6 months in office would have the most negative impact on investment and business decisions.

An overwhelming majority of the surveyed investors, or 88%, are interested in investing in Ukraine, but most of them, or 68% of total respondents, prefer to wait until after the parliamentary elections and formation of a new government.

The survey was conducted by the European Business Association (EBA) and investment bank Dragon Capital with analytical support from Centre for Economic Strategy between April 15-19, 2019. A total of 75 respondents, including portfolio and direct investors and those already invested or planning to invest in Ukraine, participated in the online survey. The survey was conducted in the form of an online interview with the help of Info Sapiens.

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2018: Major obstacles to foreign investment in Ukraine

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View the press release

Corruption and lack of trust in judiciary lead the rating of the main obstacles for foreign investors for the third year in a row. In 2018, investors identified the volatile financial system and the exchange rate of the national currency as the third main obstacle. Changing legislation, repressive actions of law enforcement and restrictions on capital movement and foreign exchange operations were also mentioned.

2018 Foreign Investor Survey: Presentation

The results of the traditional survey of foreign investors evidenced about the barriers and obstacles for the attraction of capital to Ukraine. This survey was conducted by Dragon Capital, the European Business Association (EBA) and Centre for Economic Strategy (CES) in August-September 2018.

The instability of the financial system and the exchange rate of the national currency (investors rated it with 5.9 points out of 10 possible) rose up by 2 positions in 2018. This is the consequence of the continued uncertainty about the prospects for further cooperation with the country’s main creditor, the International Monetary Fund, and the significant external debt payments that Ukraine should implement in the nearest future.

At the same time, investors worry less about the military conflict with Russia (5.4 points), because during 2018 there was an extinction of active military operations and information on combat losses reduced its presence in the information agenda.

Now, in the pre-election year, investors have been asked to identify the main steps of the future government, which would positively and negatively influence their decision to invest in Ukraine.

Among the positive decisions, the main positions have been taken by decisive steps in the fight against corruption, relaunch of judiciary and tangible progress in separating politics from business. Default, attacks on independent anti-corruption institutions, rejection of democratic values and political pressure on the NBU will have negative influence on the decision to invest. 

 

The traditional annual study of international companies (existing and potential investors in Ukraine) showed what parameters of Ukrainian investment climate are uncompetitive and in what direction it is necessary to make efforts at the state level first of all. The survey was conducted among those who know Ukraine well – 92% of the investors in study either invest in Ukraine now or had invested in the past.

The survey was conducted by the investment bank Dragon Capital and the European Business Association (EBA) with the analytical support of Centre for Economic Strategy from 3rd to 10th of September 2018. In total, the survey studied 109 respondents, including portfolio and direct investors who have already invested and who only plan to invest in Ukraine. The survey was conducted by the online interview method. The survey was carried out with technical assistance of GfK Ukraine.

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Anna Derevyanko
Tomas Fiala
Hlib Vyshlinsky

Anna Derevyanko

The Executive Director of the European Business Association

Effective fight against corruption and a high-quality judicial system are the lighthouse for business which allow to understand that there is freedom of business in the country, free access to various segments of business, transparency and security. We would also like to mention the reform of currency liberalization that has been initiated and must be brought to competent practical implementation. Strategic investors also need this because now, unfortunately, nobody gives money to Ukraine. And the IMF’s mission, which operates in the country, is the lender of the last instance, so we need to be targeted at real reforms in the country. And this will help attracting investments into the country.

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Tomas Fiala

CEO of Dragon Capital

All successful countries in our region are leaders in attracting foreign direct investments. In order for Ukraine to become attractive to investors, it is necessary to ensure the rule of law and justice and to reduce corruption in law enforcement agencies and courts. In September 2017, the country’s leadership at the meeting with business associations promised to create a National Bureau of Financial Investigations. Unfortunately, this has not happened and even our comments to the bill have not been taken into account yet.

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Hlib Vyshlinsky

The Director of the Center for Economic Strategy

According to the rating of obstacles and the perception of possible steps of the new government we can see that the rule of law, strong democracy and the destruction of the corruption system are prerequisites for investment and economic growth in Ukraine.

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2017: Major obstacles to foreign investment in Ukraine

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Dragon Capital, the European Business Association (EBA) and Center for Economic Strategy (CES) conducted in early September their second annual survey of foreign investors aimed to identify obstacles to investment in Ukraine and priority areas on which Ukrainian authorities should focus to improve the investment climate. The vast majority of participating investors were familiar with Ukraine: 92% of those surveyed either had investments in Ukraine or had invested in the past.

View the presentation

The survey found that the main barriers for foreign investors remain the same as a year ago, with first-ranked “widespread corruption” followed by “lack of trust in judiciary” (average scores of 8 and 7 out of 10, respectively). In foreign investors’ view, the negative impact on the investment climate from “market monopolization” and “state capture by oligarchs” (6 points) is greater than that from the “military conflict with Russia” and “unstable currency and financial system” (5 points).

“Oppressive law enforcement agencies” finished sixth in the ranking of investment hurdles, reflecting numerous complaints from the business community about unlawful actions by Prosecutor General’s Office, the SBU and police.

“Cumbersome and frequently changing legislation”, “complicated tax administration” and “foreign exchange controls” were mentioned among other discouraging factors. Closing out the list were low consumer purchasing power and anemic economic growth in the wake of an earlier downturn.

The share of foreign investors who, despite all the barriers, decided to invest in Ukraine or were actively seeking business opportunities in the country slightly increased compared to 2016 (up to 40% and 22% of those surveyed, respectively). This finding signals that, despite the aforementioned negatives, Ukraine retains its potential as an attractive investment destination.

In order to improve the business climate, investors think the government’s top-priority actions should include the following:

  • effective anti-corruption activities (including criminal prosecution of officials of any rank and judges for corruption)
  • ensuring the rule of law for law enforcement agencies
  • reform and reset of the judicial system
  • timely implementation of IMF program

Actions such as tax holidays for new investors, infrastructural improvements or lifting of the moratorium on agricultural land sales are less important investment-wise than other reforms, the survey found.

The above survey of foreign investors was conducted for the second consecutive year. Participating this year were 77 portfolio and direct investors, both with and without active investments in Ukraine, including Dragon Capital’s clients as well as foreign companies which are members of the EBA. The online survey was conducted by GfK Ukraine.

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Anna Derevyanko
Tomas Fiala
Hlib Vyshlinsky

Anna Derevyanko

The Executive Director of the European Business Association

It has become customary that corruption and distrust of courts top the list of issues that worry investors and impede Ukraine’s healthy economic development. As an organization representing private business in Ukraine, we step up our rhetoric every year, we all say loudly about the need for active counteraction to corruption, including through political decisions. Justice and transparency can not be selective, the country must not have double standards, a rigorous anti-corruption policy must apply to all, including high-ranking officials and judges. Investors are saying it openly and loudly. Politicians should finally pay attention to them.

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Tomas Fiala

CEO of Dragon Capital

Unfortunately, the lack of rule of law and corruption in courts and law enforcement agencies continue to negate Ukrainian leadership’s appeals to invest and create jobs in the country.

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Hlib Vyshlinsky

The Director of the Center for Economic Strategy

Ukraine’s main problem, in foreign investors’ view, is not the economic downturn but weak and corrupt institutions that prevent business from investing and growing. The primary task for the authorities is to demonstrate they can effectively fight corruption and arbitrary law enforcement. It is noteworthy that, according to the survey, capture of the state by oligarchs and monopolization of power are seen as a bigger obstacle to the investment climate than the conflict with Russia. The solution lies in the political realm and should include changes to election law and ensuring that courts and market regulators act independently.

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2016: Major obstacles to foreign investment in Ukraine

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Foreign investors believe that the biggest obstacles for investment in Ukraine are widespread corruption (average score – 8.5 points out of 10 possible) and lack of trust in the judiciary (7.5 points). The military conflict with Russia (6.1 points), as well as unstable currency and financial system (6 points) were the next most highly ranked obstacles.

View the presentation

Widespread corruption and a lack of trust in the judiciary occupy first and second place for all groups of investors – portfolio and direct, those who have already invested in Ukraine, and those who have not yet done so. Interestingly, military conflict is one of the least significant obstacles for investors who are actively looking for business opportunities in Ukraine, who ranked it in 7th place (4.9 points) on their list of concerns. Of higher concern for this group, just behind corruption and the judiciary, is complicated tax administration (6.1 points).

The most positive actions that the government of Ukraine has to take to attract foreign investment

Businesspeople mentioned relaunching the judiciary by vetting existing members and hiring new judges (average score – 7.6 points out of 10 possible), and the prosecution of large numbers of high-level officials and judges for corruption (7.4 points). At the same time, the third most highly ranked government action is ensuring the IMF program remains on track and liberalization of foreign exchange controls (including canceling the dividend repatriation ban) – both received a score of 6.2 points.

Implementation of the IMF programs was ranked as less important for investors with no prior experience of business in Ukraine (8th place, 4.6 points) than streamlining tax administration, which they ranked in 3th place with 6.4 points. At the same time in general investors worried less about tax rates than about tax administration – with the rates per se occupying last place among the listed obstacles (offering tax breaks is less of an issue than simplification of administration).

Lifting the moratorium on land sales is not as important for investors as other possible reforms. However, investors who are actively looking for new business opportunities in Ukraine, evaluate its importance as above average. Cancelation of the moratorium on agricultural land sales is even more important than overhauling infrastructure and establishing an investment promotion office as a one-stop shop for foreign investors.

The survey was conducted on the joint initiative of Dragon Capital investment bank and the European Business Association (EBA) with analytical support of the Centre for Economic Strategy from August 25 to September 2, 2016. In total, the survey involved 102 respondents, including Dragon Capital clients and foreign investor-EBA members (including portfolio and direct investors who already have investments and who plan to invest in Ukraine). The survey was conducted by method of online interviews.

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Anna Derevyanko
Tomas Fiala

Anna Derevyanko

The Executive Director of the European Business Association

The study found that the main barriers to foreign investors in Ukraine are corruption at every level of power and a judiciary which is too weak. Despite the authorities’ attempts to improve the situation by introducing an anti-corruption agency or, for example, by introducing a new system of public procurement, business has not experienced drastic and visible changes in this direction. Unfortunately, there is also no significant progress in the judiciary since the process of reforming the judicial system is quite complex and involves many stages. As a result, confidence in the courts is collapsing and companies increasingly prefer pre-trial settlement of disputes. However, despite the negative factors, Ukraine remains a potentially interesting country for investment and businesses plan to continue their activity.

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Tomas Fiala

CEO of Dragon Capital

The resumption of Ukraine’s economic growth and reducing the gap with our western neighbors, which unfortunately increased significantly since 2009, is not possible without foreign investors. The results of interviewing international companies that invest around the world show in which areas the Ukrainian investment climate is uncompetitive and where the leadership of the country should aim first.

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2020 +0.3
2019 -0.5
2018

The results of the Small Business Attitudes Index, conducted for the third year in a row by the European Business Association within the Unlimit Ukraine project, showed an increase in optimistic views among Ukrainian entrepreneurs. Thus, the index reached 3 points out of 5 possible, compared to 2.7 points last year, and finally came out of the negative plane.

View the Presentation

In general, it can be seen as a positive trend, compared to the results of previous years. The number of satisfied with the current state of business has increased significantly – from last year’s 31.6% to the current 42%. In addition, the number of those who are not satisfied with the current economic situation decreased – 29.2% against 38.4% last year.

The number of entrepreneurs who expect an improvement in the business situation has increased by 10% compared to last year – 58.7% against 47.4%. Almost half of the entrepreneurs plan to increase the number of employees – 40.8% plan to hire new people, and only 9.6% plan to cut. In addition, 44.6% plan to increase the salary for their workers. Over the past year, entrepreneurs’ satisfaction with their level of profits has increased dramatically – almost one and a half times. Last year, only 27% of respondents were satisfied with their income, and now there are 40.7% of them. However, it should be noted that the vast majority (59.3%) would still like to earn more.

At the same time, according to 69.1% of respondents, the economic situation is still unfavorable for doing business. Although the number of dissatisfied decreased by 3% (it was 72.2% in 2018), the number of entrepreneurs skeptical of the country’s economic environment remains quite large. Thus, the biggest obstacles to the business were the tax burden (49.6%) and the high level of corruption (46%). It should be noted that dissatisfaction with these two factors decreased compared to 2018 (56.4% and 51.9% respectively). Besides, entrepreneurs have become less concerned about inflation issues, shortage of qualified personnel and the War in the East. However, concerns about the complexity of tax administration and pressure from judicial and regulatory authorities have increased.

Due to the violation of tax regulation, 35.1% of entrepreneurs were fined in the last 3 years. Most (33.1%) were simply late in paying their taxes, and 10.8% made mistakes in reporting. However, the reason for this situation, according to respondents, is often the lack of clarity in procedures and the lack of knowledge of entrepreneurs in taxation changes. In addition, almost 10% of the respondents complained about the irregularity of the control bodies’ decisions during tax audits.

It is not surprising that, if entrepreneurs had the opportunity to change one factor affecting the country’s economy for the benefit of their businesses, most of them (29.8%) would have changed tax legislation. Priorities in this area would be to simplify tax procedures and reduce tax rates. The idea of deregulation was endorsed by 8.5% of those polled who want to simplify the conditions for doing business and developing digital technologies in the public services sector.

SMALL BUSINESS ATTITUDES INDEX – conducted by the European Business Association since 2018 within the Unlimit Ukraine project. Project partners this year: LIGA:ZAKON, 28Quadrate, Ministry of Digital Transformation. The purpose of the study is to collaborate with small and microbusinesses and to analyze growth points that will stimulate its development. The survey was conducted from October 29 to December 18, 2019. 632 small business owners and directors of all fields of activity joined the survey.

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42

The number of satisfied with the current state of affairs in business has increased significantly - from last year's 31.6% to the present 42%

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29.2

The number of those who are not satisfied with the current economic situation decreased - 29.2% against 38.4% last year

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Anna Derevyanko
Olga Taranova

Anna Derevyanko

The Executive Director of the European Business Association

We are pleased that every year more and more small and medium-sized business owners join the survey. It is good to see that positive sentiment prevails among business representatives. Despite the improvements, small businesses are still complaining about problems related to government regulation. Of course, trust between the state and business cannot be built at one time, it can only be done by building on a long-term positive experience in relations between the two parties. And we are pleased to promote such a dialogue at the Association.

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Olga Taranova

LIGA:ZAKON "Platforma" Business Leader

Over a third of entrepreneurs have been paying fines in the last 3 years. Most of them have been paying due to inaccuracies in tax legislation, lack of clarification, the bureaucratization of processes, or technical issues. Behind most of the fines stand not violators, but young entrepreneurs focused on developing their businesses, who do not want to understand the legal requirements and remember the dates of payment of taxes. We support the Small Business Attitudes Index to identify gaps where we can help. I am sure that most of the current problems will disappear with the advent of smart technological solutions offered by the Ukrainian IT market.

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These are the findings from the Small Business Attitudes Index, conducted for the second straight year by the European Business Association within the Unlimit Ukraine project. This year, small business representatives slightly worsened their assessment of their own development prospects and economic situation in Ukraine. According to the survey, the overall Small Business Attitudes Index dropped to 2.7 out of 5, compared to 3.2 last year.

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Compared to last year, small businesses in Ukraine have found it more difficult to operate. Thus, 38.4% of respondents were dissatisfied with the current business environment, while 31.6% of entrepreneurs are quite satisfied with the situation. For comparison, last year’s positive sentiment prevailed – 45% satisfied against 26% dissatisfied. Also, according to the results of the survey, negative attitudes to the dynamics of business development over the past 6 months prevail – 44.4% against 30.1%.

Despite such sentiments, the surveyed entrepreneurs are willing to actively develop their business in 2019. More than half of respondents (53%) plan to increase funding, and 66% expect revenue growth in the first half of 2019. At the same time, almost half of businessmen (47%) expect the situation in business to improve within the next 6 months. Of these, 65% plan to hire new employees, 77% plan to raise wages, and the same number of entrepreneurs are going to increase investment in their business.

The main problems for the business have slightly changed. Last year most entrepreneurs named inflation as one of their main concerns and this year it ranks only 4th among topical problems for the business (43%). Entrepreneurs are much more concerned about the high tax burden – it was named by 56% of respondents, the high level of corruption (52%), as well as the war in the east (47%).

If entrepreneurs had the opportunity to change one thing in favor of their business, most of them would change the level of taxation. A quarter of respondents believe that this is a major problem for business. The availability of credit follows next by a large margin with 10% of respondents who want changes in this area. The state support for business and purchasing power of the population account for 9% each.

SMALL BUSINESS ATTITUDES INDEX – conducted by the European Business Association since 2018 within the Unlimit Ukraine project. Project partners this year: LIGA:ZAKON, BRDO, 28Quadrate. The purpose of the study is to collaborate with small and microbusinesses and to analyze growth points that will stimulate its development. The survey was conducted from December 5 to December 31, 2018. 133 small business owners and directors of all fields of activity joined the survey.

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31.6

entrepreneurs the situation quite suits

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38.4

respondents are dissatisfied with the current state of business​

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The Unlimit Ukraine project, which unites young Ukrainian businesses, has been successfully operating for three years within the framework of the European Business Association. We are witnessing the formation of a powerful layer of Ukrainian manufacturers that offer quality goods and services and can compete in international markets. It is obvious that building a business "from scratch" is a complex process especially in times of transformation for the country. Uncertainty makes entrepreneurs be cautious with their expectations. In addition, changing legislation, pre-election turbulence, and corruption pressures are still the main issues that hold back the optimism of both big and small businesses. Although it is nice to know that small business is planning further development and expects to improve the situation in the near future.

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Anna Derevyanko Anna Derevyanko the Executive Director of the European Business Association

Small business in Ukraine develops actively and is optimistic for 2018, despite the unfavorable business climate as reported by the Small Business Attitudes Index, conducted for the first time by the European Business Association together with LIGA: ZAKON within the Unlimit Ukraine project. The integral Small Business Sentiment Index is 3.2 out of 5, which is a neutral score.

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At the same time, such components of the Index as the evaluation of the current state of business, the dynamics of its development over the past 6 months, the forecast of the situation for the next 6 months and the evaluation of the business climate reflected radically opposite sentiments among the entrepreneurs.

The survey demonstrated strong optimistic sentiment in the expectations of business for 2018. 76.2% of those surveyed expect that their business situation will improve in the next six months. 87% expect income growth in 2018. Entrepreneurs are showing great optimism in their business development plans this year. In particular: 54.2% plan to increase the number of employees, 57.3% – to raise the level of salaries of employees, 64.3% – intend to increase the amount of financing for their business in 2018. The study shows that small businesses are export-oriented. 27% of companies surveyed have already entered foreign markets, and 30.3% plan to enter this year. Companies are committed to developing their businesses and reinvesting their earnings into their businesses.

Limited access to credit hampers the development of small businesses. According to the survey, 82% of companies are in need of credit funds. At the same time, 65% of respondents have difficulties with obtaining credit, of which 15.5% consider that it is absolutely impossible to receive loans.

Overall, the economic situation in Ukraine is not beneficial to small business development, according to 68.2% of those surveyed. Only 3% of respondents are completely satisfied with the business climate in Ukraine. Inflation (56.3%), tax burden (42.24%), high levels of corruption (41.9%), and lack of qualified specialists (39.3%) are the main factors for negative assessment of the business climate. At the same time, only 4% believe that inflation is the main reason that hinders business development.

About 21.6% of those polled want to change the tax system. 14.7% of respondents are most concerned about the availability of credit, while 9% consider corruption to be the most unacceptable. 6.1% of the respondents would first like to change the situation with state support for the business and purchasing power of the population in favor of their enterprise.

SMALL BUSINESS ATTITUDES INDEX – first conducted by the European Business Association and LIGA: ZAKON in 2018 within the Unlimit Ukraine project. The purpose of the study is to collaborate with small and microbusinesses and to analyze growth points that will stimulate its development. The survey was conducted from October 29 to December 18, 2019. 278 small business owners and directors of all fields of activity joined the survey. About 40% of the companies surveyed were founded during the turbulent 2015 – 2017.

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44.8

are satisfied with the current state in business

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26

are dissatisfied with the current situation in business

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Anna Derevyanko
Dmytro Dzhedzhula

Anna Derevyanko

The Executive Director of the European Business Association

Supporting small businesses has become a logical extension of the European Business Association's mission of improving the investment environment in Ukraine. A few years ago, we launched a very important Unlimit Ukraine project. The idea behind the project is that big business can share their experience with small businesses. So, we started consulting small business, we selected a team of mentors from experienced CEOs of large companies, who generously shared their expertise with young and ambitious Ukrainian entrepreneurs. We are convinced that such insights are needed for small and micro businesses to stay afloat and lay a solid foundation for development. The next stage in the project development is the Small Business Attitudes Index in Ukraine. This study revealed the problems that small businesses face daily - credit inaccessibility (65%), inflation (56.3%), tax burden (42.24%), high corruption (41.9%), lack of qualified specialists (39.3%) are the main factors of negative assessment of business climate. Knowing the vulnerable points of the business, we can influence the situation so that small entrepreneurs can feel more confident, and starting and growing a business in Ukraine become easier and safer.

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Dmytro Dzhedzhula

CMO LIGA:ZAKON

Cheaper loans for entrepreneurs are not expected in the near future - there are no Government initiatives on this. Moreover, the NBU has raised the refinancing rate, which will increase the cost of funds. But there are reasons for optimism. The President introduced a draft law on currency instead of the outdated 1993 Decree on Currency Regulation, which provides certain liberalization of currency transactions, which may remove some administrative constraints to attract real foreign investment. There are also some changes in the development of the tax system – the introduction of full and timely VAT refunds; the expected replacement of income tax by the capital deduction tax; and, if the draft law on the National Financial Security Bureau is passed, the tax police will be eliminated. There are a number of macroeconomic factors for revitalizing the economy – increasing demand for Ukrainian products abroad, stabilizing the exchange rate and, as a consequence, increasing the purchasing power of Ukrainian residents.

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Happiness Barometer in Ukraine 2019

Year:
2020
  • 2020
  • 2019
  • 2018

Higher scores

  • Current job
    3.36 +0.04
  • Social life and Leisure
    3.28 +0.04
  • General life experience in Ukraine
    2.92 +0.02
  • Income level
    2.61 +0.1

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Lower scores

  • Education system
    2.53 -0.02
  • Health care system
    2.38 -0.01
  • Human rights
    2.30 -0.09
  • Ecology
    2.18 -0.02
  • Security & Safety
    2.17 +0.06

Western Ukraine Labour Market

The research with analysis of trends, challenges and opportunities in the labour market of Western Ukraine.

Western Ukraine Labour Market
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