Two thirds of foreign investors prefer to wait until after parliamentary elections to decide on investment – survey
Only each fifth foreign investor is interested in investing in Ukraine after the presidential election run-off, while two thirds peter to wait until after the parliamentary elections and formation of a new government for investing in the country, according to a survey of strategic and portfolio investors which was jointly conducted by the European Business Association (EBA), Dragon Capital, and Center for Economic Strategy (CES) in April 2019.
Tomas Fiala, CEO of Dragon Capital and President of the European Business Association, said that 12% of respondents do not see attractive opportunities for investing in Ukraine in the near future.
He said that the survey was conducted between April 15-19, 2019. A total of 75 respondents, including 63% strategic investors and 76% have invested in Ukraine, participated in the online survey.
The respondents said that the primary steps of president-elect Volodymyr Zelensky should be demonstration of effective anti-corruption efforts, appointment of credible reformers to key positions, and reduction of influence of oligarchs.
"Results of the survey show that investors’ demands and requests remain just the same - establishment of the rule of law, fight against corruption, honest and equal "game rules…" we see certain changes, but we need to reload the system," EBA Executive Director Anna Derevyanko said.
According to the survey, the following steps of the new president could negatively influence investors: shift in Ukraine's geopolitical direction away from the West, steps to undermine anti-corruption framework and independence of the National Bank of Ukraine (NBU).
The EBA said that widespread corruption and low trust in judiciary remained the biggest obstacles to investment in Ukrainian assets for the fourth consecutive year. Market monopolies and state capture by oligarchs add to the negative perception of Ukraine’s investment attractiveness.
According to the survey, unstable financial system and currency, previously among the top-3 hurdles, sank to sixth place. The military conflict with Russia remains a significant obstacle, as well as oppressive law enforcement agencies.
"Both external and domestic investments in Ukraine are very low, totaling 1.2% and 17% of GDP, respectively, which puts the brakes on economic growth and keeps Ukraine lagging behind its western neighbors. We hope that the new President and Verkhovna Rada will direct their energies, first of all, towards establishing the rule of law, fighting corruption, and reducing the influence of oligarchs," Fiala said.