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

2. Project summary
The results of the 18th wave 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 into Ukraine over the next three months?
What are your expectations of the business environment of your primary industry over the next three months?
Participants: 118 CEOs of EBA members companies
Timing: December 1-14, 2012
Survey implementation: the Survey was conducted by the EBA with the support of InMind research company

3. Key findings 3

4. Key findings 4

5. Key findings
III/08
IV/08
I/09
II/09
III/09
IV/09
I/10
II/10
III/10
IV/10
I/11
II/11
III/11
IV/11
I/12
II/12
III/12
IV/12
Investment Climate in Ukraine
3,1
2,3
2,0
2,2
2,1
2,7
3,8
3,6
3,5
3,7
1,8
1,7
Investment Climate Dynamics: last 3 months
2,8
2,5
2,6
3,2
3,4
Investment Climate Dynamics Expectations: next 3 months
3,0
Profitability for new entrants: next 3 months
2,4
2,9
3,3
Investment Climate of Primary Industry: next 3 months
General EBA Index
3,14
2,22
2,64
2,56
2,57
3,08
3,25
3,20
3,28
3,40
3,39
2,19
2,18
2,14
2,12 5

6. Key findings 6

7. EBA – Index:
Components

8. Investment Climate in Ukraine+
The Investment Climate in Ukraine is… (5 point scale) –
Mean
3,1
2,3
2,0
2,2
2,1
2,7
3,8
3,6
3,5
3,7
1,8
1,7 8

9. Investment Climate Dynamics: last 3 months+
The Investment Climate in Ukraine is… (5 point scale) –
Mean
2,8
1,8
2,1
2,7
2,5
2,6
3,2
3,1
3,4
3,6
3,5
2,2
2,3 9

10. Investment Climate dynamics expectations: next 3 months+
The Investment Climate in Ukraine is… (5 point scale) –
Mean
3,1
2,2
2,8
2,6
3,4
3,0
3,2
2,7
2,3 10

11. Profitability for New entrants: next 3 months+
Profitability for New Entrants … (5 point scale) –
Mean
3,4
2,3
2,4
2,7
2,6
2,5
2,9
3,3
3,2
2,1
2,2 11

12. Investment Climate of primary industry: next 3 months+
Investment climate of primary industry… (5 point scale) –
Mean
3,3
2,5
2,4
2,7
2,9
2,8
3,2
3,1
3,0
2,3 12

13. Positive Changes in Investment Climate during the last 3 months
When being asked about positive changes that took place during the last 3 months, 76% noticed the absence of such changes in the investment climate.
11% of investors indicated relatively peaceful elections as a positive change . «Parliamentary elections went peacefully», «reduced number of inspections due to the elections», «elections finished, focus should come back to real life soon», «no more elections in near future» - with these words respondents described positive changes in last quarter of 2012. 13

14. Negative Changes in Investment Climate during the last 3 months
In comparison to previous periods, a lot of experts noticed the increase of pressure from fiscal authorities on business (this indicator decreased in Q2 & Q3 2012). Also the experts noted the problems of currency regulation, currency fluctuation and restrictions on foreign exchange transactions.
The third important negative manifestation of Q was the course of elections. The main part of experts negatively described the results of elections, because of lack of transparency, and impact on the economy - governmental populism and political influence on the distribution of budget funds.
Also the situation of governmental corruption, inefficient judicial system, business conditions and position of Ukraine in the international arena did not improve. 14

15. Estimation of the situation with solving issues
For the 7 key priorities of the EBA, the situation was relatively unchanged in comparison to the previous quarter. Stable decrease of ratings was observed in the sphere of currency regulation – a mean value of this index declined in the third wave of the survey, and in the 4th quarter decreased by 0.4 points.
0,0
-0,1
-0,4
-0,0
-0,2
Changes:
1,6
1,7
2,3
1,9
2,1
2,5
2,2
Mean: 15

16. Summary
The integral index of investment attractiveness and its components did not change during the fourth quarter of 2012, and the indices of 2012 showed the lowest for the entire period of measurement.
If to talk about positive and negative changes, that took place in the investment climate during the last 3 months, most of experts tended to negative evaluations, in particular they noted the increase of pressure from fiscal authorities on business. Also the experts negatively evaluated currency policy of NBU. The election results were also considered as negative – for example, nontransparent elections and their impact on the policy of the Government (making populist decisions, political influence on the distribution of budget funds, etc.). The largest positive change was a relatively peaceful course of elections.
For the 7 key priorities of the EBA in context of business and relations with the government, the situation was relatively unchanged. Current situation was considered by experts almost entirely conducive for solving problems of corruption and judiciary system, and rather unfavorable for land issues, VAT and technical barrier of trade. Experts also negatively evaluated sphere of currency regulation. The most positive were estimates of power in solving problems of customs procedures. 16