EBA: 81% do not see any changes: the state of the business environment in the Southern region

To understand and assess the current business sentiment in the regions, the European Business Association conducted a survey of company executives in the Southern region. Thus, 44% of respondents say that the conditions for doing business in the region are satisfactory, 37% say that it is difficult for them to do business and 19% believe that it is easy. The integrated index of the survey was 2.25 points out of 5 possible and was in last place among all regional offices of the Association. 

Has it become easier to do business in the region? 

In general, none of the respondents gave a positive answer to this question. On the other hand, for 7% of entrepreneurs, the situation with the business environment in the Southern region has deteriorated over the past six months, and 11% even report a significant deterioration. At the same time, the vast majority –  81% did not experience any changes in the business environment over the past 6 months. 

Thus, corruption (25%) and bureaucracy (24%) continue to lead the anti-rating of the main obstacles to doing business in the region. Problems with unsatisfactory state of infrastructure (20%), lack of the rule of law (18%), and difficult relations with the authorities (11%) remain unresolved. 

The activities of companies in the southern regions depend much on the capabilities of the transport complex in the region. But, according to business, no tangible steps have been taken in a year to improve the state of transport infrastructure. Compared to last year, the number of positive assessments of the state of infrastructure has decreased significantly. Only 4% of respondents believe that the transport infrastructure is in good condition and 26% that it is satisfactory. The majority of respondents complain about the poor state of infrastructure, namely 70%. 

According to business, the situation with transport infrastructure in the region can be improved with the reconstruction of roads (45%), modernization of railways (32%) and river (13%) networks, airport (4%). And only 2% consider it necessary to build additional office space. 

Regarding the quality of interaction with government agencies, business representatives complain about the work of the regional administration, city council, national police, courts, and environmental inspectorate. At the same time, the business has neutral relations with the regional customs, the state tax service, and the state employment service. 

In addition, 48% of respondents believe that the level of e-services in the region is underdeveloped. Local entrepreneurs lack e-access to administrative services and permits. However, the number of satisfied with the volume and quality of e-services is still higher –  52%. 

A significant part of entrepreneurs, namely 59%, believe that changes in the regional business environment are not expected during the next six months. At the same time, 26% believe that doing business will become more difficult, and 15%, on the contrary, believe that the conditions for doing business will be more favorable. 

What are business plans for 2022? 

59% of business representatives have stated their intention to implement large-scale investment projects. Next year, 56% of entrepreneurs will leave the size of their staff unchanged, 33% are going to increase it, and 11% –   to reduce. In addition, most companies in the Southern region, in particular 67%, plan to increase wages, while 33% have no such plans for next year. 

When it comes to the greatest expectations for 2022, 18% hoped for reducing pressure from regulators, 17% – for developing transport infrastructure, 15% – for improving the judicial and law enforcement system, 12% – for simplifying permitting procedures and the procedure for providing administrative services, as well as 11% – for expanding the list of available e-services. 

For Reference: 

The survey was conducted among the member companies of the EBA Southern Ukrainian Office from October 19 till November 16, 2021. 

The general release is available at the link

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