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EBA Investment Attractiveness INDEX

EBA Investment Attractiveness INDEX. I 2012. Conducted by the EBA with the support of InMind research company. Project summary. The results of the 15 th wave of investment climate in Ukraine tracking research.

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EBA Investment Attractiveness INDEX

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  1. EBA Investment Attractiveness INDEX I 2012 Conducted by the EBA with the support of InMind research company

  2. Project summary The results of the 15thwave of investment climate in Ukraine tracking research. Methodology:EBA Investment Attractiveness Index is assessed as the mean value based on the following five questions: What do you think about the investment climate in Ukraine? How would you estimate the investment climate for your company in Ukraine at the moment compared to the previous three months? What are your expectations of the investment climate in Ukraine over the next three months? In your opinion, would it be profitable for new entrants to invest in Ukraine over the next three months? What are your expectations of the business environment of your primary industry over the next three months? Participants: 149 CEOs of EBA members companies Timing:March 6, 2012 – March 26, 2012 Survey Implementation: the Survey was conducted by the EBA with the support of InMind research company

  3. Key findings

  4. Key findings

  5. Key findings

  6. Key findings

  7. EBA – Index: Components

  8. Investment Climate in Ukraine + The Investment Climate in Ukraine is… (5 point scale) 0 –

  9. Investment Climate Dynamics: last 3 months + The Investment Climate in Ukraine is… (5 point scale) 0 –

  10. Investment Climate dynamics expectations: next 3 months + The Investment Climate in Ukraine is… (5 point scale) 0 –

  11. Profitability for New entrants: next 3 months + Profitability for New Entrants … (5 point scale) 0 –

  12. Investment Climate of primary industry: next 3 months + Investment climate of primary industry…(5 point scale) 0 –

  13. Positive Changes in Investment Climate during the last 3 months When asked about positive changes that took place during the last 3 months most of respondents (70%)stated that they could not name any, 7% of respondents found it difficult to answer, totalling77% (or over three quarters) of investors who failed to name any recent improvements in the investment climate. Among some positive changes is “more positive legislative activity” (by the opinion of 5%), 3% of respondents said that “officials became more open”.

  14. Negative Changes in Investment Climate during the last 3 months When asked about negative changes, the respondents had a great deal more to say.Political developments, concerns over Ukraine-EU relations, tense gas talks with Russia, technical barriers for investors, Tymoshenko imprisonment are top of the list of concerns for businessmen worried about Ukraine's political and economic state. Increase in pressure from the state authorities was specially emphasized. Destructive corruption (15%), the poor legal framework for doing business (11%) and an unjust court system (5%) are still among the business community's chief concerns. Barriers to the export trade in the form of customs clearance obstacles and VAT refunds were reported as troublesome by 13% and 7% of the respondents respectively. Meanwhile, 5% of those who contributed to the poll said the banks crisis and restricted access to loans and credits had presented fresh problems.

  15. Estimation of the situation with solving issues The situation with solving 7 issues that the EBA has raised remained unchanged compared to the IV quarter of 2011. Corruption and court system are still considered as the most problematic issues as over 85% of investors evaluate the situation in these areas as definitely or rather unfavorable. The situation on customs and evaluation of technical barriers to trade are insignificantly worse than in Q4 2011.

  16. The 2nd wave of the economic recession expectations When commenting on double dip recession expectations, 58% of the respondents said a further economic slowdown was either a certainty, or probable. This was more optimistic compared to the last quarter's results (69%), but the outlook is still a good deal more cloudy than bright. Every third investor found it difficult to evaluate the crisis probability.

  17. Key findings • Five-grade scale is used to evaluate the investment climate, where 1 stands for the lowest evaluation and 5 stands for the highest evaluation mark. • In the I quarter of 2012 the EBA Investment Attractiveness Index has averaged 2.18 on a 5 point scale compared to 2.19 in the IV quarter of 2011 reflecting further decrease in investor evaluation and expectations of the investment attractiveness of Ukraine. • The main components of the Index that contributed to such decrease were as follows: • the current investment climate evaluation received the lowest mark and also decreased compared to the previous wave (1.7 compared to 1.8) • the climate changes during the last 3 months were evaluated at 2.2 (no changes) • future expectations of the investment climate received 2.3 on average

  18. Key findings In the evaluation of the recent changes in Ukraine’s investment climate negative feedback significantly prevails. Major concerns are related to political developments (26%), increased pressure from state authorities (18%), problems with taxation and the new Tax Code of Ukraine and customs clearance obstacles (25% and 13% respectively), corruption (15% of respondents). Thepoor legal framework for doing business (11%), VAT refund (7%), unjust court system (5%), UAH devaluation and buying power decrease (5%), banks crisis (5%). 77% of those surveyed failed to name any positive changes at all. When commenting on the negative changes and concerns that are behind the brewing investor discontent, the respondents had a great deal more to say. When asked about the progress with 7 key points that the EBA raised in the context of business and authorities interaction the respondents still saw the situation remain unchanged with corruption and court system issues still on the agenda as the most problematic. Customs clearance problems and technical barriers to trade were also reported as troublesome. When commenting on double dip recession expectations, 58% of the respondents said a further economic slowdown was either a certainty, or probable. This was more optimistic compared to the last quarter's results (69%), but the outlook is still a good deal more cloudy than bright.

  19. +38 044 496 06 01 office@eba.com.ua www.eba.com.ua

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