investment attractiveness index with the support of the inmind research company eba investment...

Investment Attractiveness IndexInvestment Attractiveness Index with the support of theInMind research company

EBA Investment EBA Investment Attractiveness INDEXAttractiveness INDEX

I/2011Conducted by EBA

with the support of

InMind research company


2

Project summaryProject summaryThe results of the 11th wave of investment climate in Ukraine tracking research.

Methodology: The 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: 91 CEOs of EBA members companies

Timing: February 7th, 2011 – February 23rd, 2011

Survey Implementation: the Survey was conducted by EBA with the support of InMind research

company


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Key findings

2,56 2,57

3,083,25 3,20 3,28 3,40

2,64

2,222,22

3,14

0

1

2

3

4

5

III/2008 IV/2008 I/2009 II/2009 III/2009 IV/2009 I/2010 II/2010 III/2010 IV/2010 I/2011

EBA Investment Attractiveness Index


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Key findings

3,7

2,1

3,53,63,8

2,7

2,12,2

2,3

2,0

2,3

3,13,6

3,43,2

2,62,5

1,8

2,8

3,2

3,23,22,7

2,3

3,3

3,13,12,72,7

0

1

2

3

4

5


Current Investment Climate evaluationInvestment Climate Dynamics: changes to the previous 3 monthsExpectatin on Investment Climate change within next three months


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Key findings


Investment Climate in Ukraine 3,1 2,3 2,0 2,3 2,2 2,1 2,7 3,8 3,6 3,5 3,7

Investment Climate Dynamics: last 3 months

2,8 1,8 2,1 2,7 2,5 2,6 3,2 3,2 3,1 3,4 3,6

Investment Climate Dynamics Expectations: next 3 months

3,1 2,2 2,2 2,8 2,6 2,8 3,4 3,0 3,2 3,2 3,2

Profitability for new entrants: next 3 months 3,4 2,3 2,4 2,7 2,6 2,5 2,9 3,3 3,2 3,2 3,4

Investment Climate of Primary Industry: next 3 months

3,3 2,5 2,4 2,7 2,9 2,8 3,2 3,1 3,0 3,1 3,1

General EBA Index 3,14 2,22 2,22 2,64 2,56 2,57 3,08 3,25 3,20 3,28 3,40


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Key findings

3,2 3,3 3,43,12,62,62,63,1 2,2 2,2 3,3

3,53,3

3,53,7

2,7

3,2 3,1 3,1 3,2 3,22,9

2,42,3

3

2,5

2 2

2,7

2,3

2,7

3,3

2,3

III/2008Sep,3-Oct,2

N=151

IV/2008Oct,23-Oct,31N=53

I/2009Jan,19-Feb,12N=103

II/2009Apr,6-

May,14N=78

III/2009Sep,2-Sep,30N=59

IV/2009Dec,14-Jan,12N=99

I/2010Mar,9-Mar,31N=61

II/2010Jun,1-Jun,18N=113

III/2010Aug,30-Sep,18N=96

IV/2010Nov,11-Dec,3N=110

I/2011Feb,7-Feb,23N=91

General EBAIndex

PresentInvestmentClimate

FutureInvestmentClimate(Expectations)


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EBA – Index:

Components


Mean

3,1 2,3 2,0 2,3 2,2 2,1 2,7 3,8 3,6 3,5 3,7

Investment Climate in Ukraine

The Investment Climate in Ukraine is… (5 point scale)

0

–

+

4%

24% 35%24%

22%19%

12%

2%16%

18% 15% 7% 12% 15% 15% 22% 24% 22%

37%

6% 15% 5% 3%

20%

50% 49% 49% 51%

8%

3%

5%

19% 13% 13%18%

2%11% 15%

33% 47% 46% 53%59%

42%

8%

51%

20%19%8%

5% 3%3%4%


5 - definitely favourable to investing

4 - rather favourable to investing

3 - neutral to investing

2 - rather unfavourable to investing

1 - definitely unfavourable to investing

Mean

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Investment Climate Dynamics: last 3 months


0

–

+

7%

41%36%

13%17% 10%

3%0%

28%

36%22% 29% 34%

13% 23% 24%

15%13%

50% 19% 17% 49% 47% 50% 56% 46% 51% 36% 30%

12% 13%5% 4%

26%20% 19% 35% 43%3% 4%

5%10% 6%

11%14%

40%

6%

2%2%

5%


5 - definitely became better

4 - rather became better

3 - remained the same

2 - rather became worse

1 - definitely became worse

Mean

Mean

2,8 1,8 2,1 2,7 2,5 2,6 3,2 3,2 3,1 3,4 3,6

9


10

Investment Climate dynamics expectations: next 3 months


0

–

+

2%

24%29%

6% 12% 3%

1% 1%22%

33%29%

32%37%

7%27% 24%

22% 16%

50% 36% 29% 50% 39% 45% 53% 47% 46% 39% 47%

17%8% 14% 13%

37%

17% 21% 29%29%

9%

6% 3% 1%

3%

7%9%

9% 7%

3%38%

6%2% 3%


5 - will definitely become better

4 - will rather become better

3 - will remain the same

2 - will rather become worse

1 - will definitely become worse

Mean

Mean

3,1 2,2 2,2 2,8 2,6 2,8 3,4 3,0 3,2 3,2 3,2


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Profitability for New entrants: next 3 months

Profitability for New Entrants … (5 point scale)

0

–

+

2%

30% 23%14%

19% 16%5%

2% 3%1%

14%32% 24% 39%

30% 28%15% 19% 16%

15%

40% 21% 32% 41% 19% 38% 44% 49% 44% 48% 36%

27%

11%

15%

12%

13%18%

23% 29% 25% 38%

17%

5%

12%2%

5%

12% 6% 8%9%

2%34%

4%

4% 9%


5 - Definitely profitable

4 - Rather profitable

3 - Difficult to say

2 - Rather not profitable

1 - Definitely not profitable

Mean

Mean

3,4 2,3 2,4 2,7 2,6 2,5 2,9 3,3 3,2 3,2 3,4


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Investment Climate of primary industry: next 3 months

Investment climate of primary industry…(5 point scale)

0

–

+

2%

23%23% 6%

10%

5%2% 3% 3%

17% 33%31%

16%24%

13%18% 24% 23% 19%

45% 38% 30% 51% 48% 58% 52% 57% 52% 48% 54%

16%7%

6%22% 13%

33%16% 16% 19% 15%

20%

5%

3%

2%

7% 6% 7% 9%

3%

25%

10%

7%4%


5 - will definitely become better

4 - will rather become better

3 - will remain the same

2 - will rather become worse

1 - will definitely become worse

Mean

Mean

3,3 2,5 2,4 2,7 2,9 2,8 3,2 3,1 3,0 3,1 3,1


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Positive Changes in Investment Climate during the last 3 months

53%

3%

2%

2%

2%

8%

8%

8%

8%

13%

No positive changes

Tax Code

Stability /predictability

Cooperation with IMF

UAH stabilization

Construction procedures simplification

Demand recovery, economy growth

Other reforms started

Other

Hard to say/no comment

When asked about positive changes that took place during the last 3 months a half of investors (53%) underlined that there were no positive changes in the investment climate recently.

Compared to the previous waves where stability was mentioned as the most remarkable positive change in I/2011 the Tax Code as a positive change was mentioned by a larger number of investors (13%) compared to the gained stability (8%).

Other positive changes were mentioned by very small number of the survey participants


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Negative Changes in Investment Climate during the last 3 months

7%

15%

14%

9%

5%

4%

3%

2%

2%

2%

16%

23%

37%

No negative changes

Tax Code negative consequences

Corruption and bureaucracy

Worsening situation with the customsprocedures & legislation

Increased pressure & inspections from stateadministrations

Problems with VAT refund

Opposition, freedom oppression

Export quotas

Raids on companies

Inflation expectation

Political control over the courts

State control over economy

Other

Remarkable large number of negative changes were mentioned by investors. The key is the Tax Code which means that its evaluation is contradictory with more negative comments prevailing.

Corruption and bureaucracy increase was mentioned by a higher percentage compared to the previous wave (23% to 16%).

The next most popular comments were related with worsening situation with customs (both imperfect legislation and difficulties with the procedures were mentioned) and continuing pressure from state administrations.

Among newly mentioned barriers there are opposition oppression, export quotas introduction, raids on companies, and others

Among other comments there are single answers such as “non-transparent reforms”, “rigged tenders”, Ukraine image worsening, and many others


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Estimation of the situation with solving 7 issues

The most unfavourable situation in solving 7 issues that EBA has raised is observed with corruption and court system reform. Other issues evaluation is rather negative as well. Currency regulation while being evaluated as neither favourable nor unfavourable received slightly higher scores compared to others

Mean

1,8 1,8 2,6 3,0 2,2 2,0 2,3


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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

• Five-grade scale is used to evaluate the investment climate, where 1 stands for the lowest evaluation and 5 stands for the highest evaluation

• In I quarter of 2011 the EBA Investment Attractiveness Index has reached 3.40 on a 5 point scale compared to 3.28 at the end of 2010

• In I quarter of 2011 the EBA Investment Attractiveness Index has reached 3.40 on a 5 point scale compared to 3.28 at the end of 2010

• Changes were observed in the following Index components:

• the current investment climate evaluation has slightly increased to 3.7 (+0.2)

• the climate changes during the last 3 months evaluation has reached 3.6 (+0.2)

• the profitability to the new entrants in the next 3 months was evaluated as 3.4 (+0.2)

• Changes were observed in the following Index components:

• the current investment climate evaluation has slightly increased to 3.7 (+0.2)

• the climate changes during the last 3 months evaluation has reached 3.6 (+0.2)

• the profitability to the new entrants in the next 3 months was evaluated as 3.4 (+0.2)

• Future expectations on investment climate in Ukraine as well as in the primary industry where the investors operate remained unchanged and have the lowest scores compared to the other Index components (3.2 and 3.1. respectively)

• Future expectations on investment climate in Ukraine as well as in the primary industry where the investors operate remained unchanged and have the lowest scores compared to the other Index components (3.2 and 3.1. respectively)


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Key findings

Considering progress with 7 key points that EBA raised in the context of business and authorities interaction the situation remains overall unfavourable. The court system reforming and corruption are the most problematic issues: 84% and 79% respectively estimated the situation in these areas as rather or definitely unfavourable.

Considering progress with 7 key points that EBA raised in the context of business and authorities interaction the situation remains overall unfavourable. The court system reforming and corruption are the most problematic issues: 84% and 79% respectively estimated the situation in these areas as rather or definitely unfavourable.

Evaluating the positive and negative changes that took place in the investment climate during the last 3 months the majority of experts were keen to provide rather negative feedback. Tax Code received contradictory evaluation: whereas 37% mentioned its negative consequences, 13% highlighted the positive changes which are associated with it.

Corruption remains another strong negative trend that is mentioned by almost every forth expert (23%). Among new negative trends that were mentioned there are difficulties which companies face when dealing with the Customs, export quotas introduction, as well as increased number of raids on companies.

Evaluating the positive and negative changes that took place in the investment climate during the last 3 months the majority of experts were keen to provide rather negative feedback. Tax Code received contradictory evaluation: whereas 37% mentioned its negative consequences, 13% highlighted the positive changes which are associated with it.

Corruption remains another strong negative trend that is mentioned by almost every forth expert (23%). Among new negative trends that were mentioned there are difficulties which companies face when dealing with the Customs, export quotas introduction, as well as increased number of raids on companies.


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investment attractiveness index with the support of the inmind research company eba investment...

Documents

th wave of investment

ukraine tracking research

months profitability

point scale

new entrants

general eba index3

mean value

survey implementation