Bureaucracy and corruption in Southern Ukraine: a survey by European Business Association

Kateryna Morozova, Team Lead of EBA Southern Ukrainian Office describes the results of a Regional index survey conducted among member-companies of the EBA Southern Ukrainian Office to determine the level of ease-of-doing business and the factors that negatively affect it.


30 member companies of the Southern Ukrainian office of the European Business Association took part in the EBA Regional Index Survey. The questionnaire consisted of 9 questions, the survey was conducted from 7 to 27 October 2020.

 

Namely 51% of respondents believe that the conditions for doing business in the Southern region are satisfactory, 36% report some difficulties in their activities, while 13% said that conditions of doing business are quite good for them.

So, what exactly is negatively affecting the ease of doing business in the region? The main negative factors are bureaucracy and corruption ‚Äď 50% of surveyed entrepreneurs believe so. Another 21%¬†‚Ästcomplain about the unsatisfactory state of infrastructure, 14% ‚Ästabout¬†the lack of the rule of law,¬†8% of respondents¬†noticed¬†pressure from law enforcement agencies, and 6%¬†of¬†participants¬†told¬†about difficulties in relations with authorities.

The Southern region has a¬†fairly¬†multiple¬†transport complex, represented by all types of transport, including the largest sea freight forwarding trading ports, shipping companies, developed railway and road facilities, airport and airfield complexes, airlines. However, there are comments on the quality of¬†these¬†infrastructure systems. More than half of the respondents, namely 56% believe that the¬†condition¬†of transport infrastructure in the region¬†is¬†bad, another 30% ‚Äď satisfactory and only 13% believe that transport infrastructure is well developed.

To improve the situation, 51% of entrepreneurs propose the reconstruction of roads, 21% believe it is necessary to modernize the railway and 15% point to the need of developing river infrastructure. In this context, the European Business Association welcomes the long-awaited start of river transport reform and supports the need to adopt a sectoral¬†Law Project¬†‚ÄúOn Inland Water Transport‚ÄĚ for the development of Ukraine‚Äôs inland waterways,¬†in case the principles developed with the participation of business before the second reading are¬† adopted.

Business has a mostly neutral attitude to cooperation with local authorities and a level of satisfaction with the services of¬†a number of¬†authorities in the regions. The business in the South has the most complaints about the work of the Ecological inspection (56% are dissatisfied with its work), the Odesa City Council (40% of respondents are dissatisfied), The¬†Regional¬†Customs¬† Authority¬†and the National Police (33% ‚Äď dissatisfied entrepreneurs).

What¬†are¬†the¬†business¬†plans¬†for¬†the¬†next¬†6¬†months?¬†According¬†to¬†the¬†results¬†of¬†the¬†Regional¬†index¬†survey¬†in¬†the¬†context¬†of¬†the¬†uncertainty¬†and¬†quarantine¬†restrictions,¬†companies¬†plan¬†to:¬†digitalize¬†enterprises¬†‚Äď 31%,¬† reduce¬† their¬†costs¬†‚Äď 19%,¬†expand¬†and¬†attract¬†new¬†investment¬†‚Äď 15%,¬† optimize¬† office¬†space¬†‚Äď 15%,¬†access¬†¬†new/other¬†markets¬†‚Äď 10%,¬†and¬†another¬†10% of¬† respondents experience¬† difficulties¬†planning¬† now.¬† About¬†57% of¬† enterprises¬†in¬†the¬†Southern¬†region¬†report¬†income¬†losses¬†due¬†to¬† quarantine¬†restrictions.

The companies refer to the need to develop infrastructure, effectively combat the shadow economy, and improve the work of courts and law enforcement agencies. Despite a number of problems and complications, the business in the region is quite optimistic and declares its readiness to attract new investments.

Kateryna Morozova, Team Lead of EBA Southern Ukrainian Office

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