Foreign investors name major obstacles to attracting investments in Ukraine

Foreign investors name major obstacles to attracting investments in Ukraine

Lack of trust in the judiciary and corruption are major obstacles for both strategic and portfolio investors.

This was said in a survey of foreign investors conducted by the European Business Association (EBA), Dragon Capital and the Center for Economic Strategy (CES) at the end of October 2020, the EBA press service reported.

"Some 48% of foreign investors believe that Ukraine has become less attractive for investment, 42% consider the investment climate largely unchanged, and only 9% see improvements. The “lack of trust in judiciary” was named the main obstacle to foreign investment for the first time in five years, while “widespread corruption”, the previous leader, moved to second place. These two obstacles were named by both strategic and portfolio investors," the report reads.

The monopolization of markets and the seizure of power by oligarchs rank third among obstacles, although strategic investors were also concerned about cumbersome and frequently changing legislation.

All investors view an effective fight against corruption as a top priority in improving the investment climate. Other important factors include the relaunch of the judiciary and the appointment of highly reputable reformers to key positions.

Meanwhile, debt default is seen as the main threat to the investment climate, followed by a shift away from democratic values and change in geopolitical direction from west to east.

Strategic investors also view loose economic policies as an important negative factor, while portfolio investors would negatively react to failure to reach an agreement with the IMF on the next loan tranche.

The investor community is resilient to a potential new coronavirus lockdown. Some 47% of the strategic investors already working in Ukraine think that a repeat lockdown will not affect their investment plans, while 27% would reduce or stop investments.

As Ukrinform reported, in 2019, the inflow of foreign direct investment to Ukraine amounted to $2.5 billion.

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