70% of EBA Enterprises Keep Investing in Ukraine, Despite War

Ukraine Investment Attractiveness Index increased slightly to 2.49 out of 5 possible points (compared to 2.44 points in 2023) – the business climate is still seen as unfavorable, but negative perception among CEOs has decreased by 5%, according to the study by one of Ukraine’s three largest business associations, European Business Association (EBA).

Meanwhile, 70% of surveyed companies will invest in Ukraine despite the war, according to the new study conducted by the EBA in partnership with NEQSOL Holding. EBA asked 80 CEOs from the largest international and Ukrainian companies: 39% of them represented medium-sized businesses, 38% – large businesses, and 23% – small businesses.

“The proportion of business leaders who view the investment climate in Ukraine as unfavorable has decreased from 84% last year to the current 79%,” according to the EBA press release. 

One fifth of CEOs see business climate as extremely unfavorable, but it’s a huge leap forward compared to 2022 when it was seen as unfavorable by 53% of them.

The share of companies investing also increased compared to 2023, from 57% last year to 70%.

“Meanwhile, only 17% believe it would be beneficial for new investors to enter Ukraine (compared to 32% in 2023 and 17% in the second half of 2022),” EBA stated in the press release.

War, corruption and weak courts: top problems in Ukraine

Other Topics of Interest

IMF Recommends Ukraine Avoid 50% Windfall Tax on the Banks in 2024

Ukrainian parliamentarians suggested a windfall tax on the banks in a recent bill – the IMF warned it may jeopardize the fairness of the tax system.

Ukraine’s enterprises suffer most from the Russia’s full-scale invasion of Ukraine and the attendant damage to business. Yet corruption and a weak judicial system are also seen as hurdles for the business climate.

The shadow economy and attacks on Ukraine’s energy infrastructure rank fourth and fifth in the list. Of surveyed companies, 81% believe that restrictions on currency operations negatively affect Ukraine’s investment attractiveness, although EBA did not include the problem in the list of top five challenges. 

More than half  of EBA members (54%), many of whom are Ukraine’s largest companies with Ukrainian and foreign capital, have suffered losses due to Russia’s hostilities in Ukraine.

Among them, 25% have already filed lawsuits on war crimes to law enforcement agencies, while 11% plan to do so. There are also companies with existing lawsuits against Russia, but they comprise only 3% of the companies in the survey.

EU accession, EU trade easing policy and digitalization are key benefits in Ukraine now

CEOs asked by EBA point to five positive features of Ukraine’s business climate:

• EU accession and a potential in Ukraine’s EU candidate status
• EU’s abolishing of import duties on imports from Ukraine
• EU’s permission for Ukrainian companies to transport goods to Europe without special permits, so-called “transport visa-free” arrangement
• Public services digitalization
• Integration into the unified EU energy system, ENTSO-E.

Ukraine has slowly evolved from its oligarch past, Ukraine’s Business Ombudsman Roman Waschuk previously told Kyiv Post in an interview.

“What’s important for outside observers to bear in mind is that Ukraine is now also home to hundreds of successful medium-sized companies that have emerged over the last 20 years. They have nothing to do with the state and nothing to do with previous state-owned enterprises,” he said.

They are greenfield companies like Nova Poshta, Avrora and others, expanding outside Ukraine. “Which means their business models are robust enough to actually work in an EU environment or in other countries’ environments,” Waschuk added.