Economic obstacles frighten businessmen more than institutional impediments. A quarterly survey of company managers by the Institute for Economic Research and Policy Consulting (IER) found that high loan rates or not having enough liquidity is more disturbing than the need to pay bribes.
“Businessmen have gotten used to corruption. It is part of everyday life, and people as well as businessmen tend to consider it a normal practice,” Oksana Kuziakiv, chief executive of IER says.
The study found that managers deemed the investment climate last year in Ukraine to be very risky. Managers identified insufficient income (55.5 percent), high cost of capital (28.2 percent) and fear of defaults (20.1 percent) as the top three impediments to investment planning.
Not surprisingly, they also assessed the corruption level as very high, with more than 70 percent of respondents admitting to using bribes as an instrument “to get things done.”
Moreover, company managers don’t consider corruption to being the most harmful obstacle for their business, according to the study .
Only about 10 percent look at corruption as a business hindrance. At the same time, about 60 percent say the lack of demand for their good or service is a much graver business barrier. More than half also identified the regulatory climate and lack of liquidity as impediments.
“The vast majority of respondents know where, to whom and how much they have to pay,” Kuziakiv said.
Two-thirds of businessmen know that by paying a bribe, they will get the desired result. However, they are less certain of the amount of the bribe they must pay than in 2012. Only 65 percent of respondents could forecast a bribe payment amount . From this point of view, 2012 was more predictable. About 85 percent of respondents knew which amount they would be asked to pay.
The importance of informal relations with state authorities for business success increased more than twice over the last six years, from 18.5 percent in 2008 to 49.7 percent in 2013.
For example, the role of tax-collecting authorities grew from 17.2 percent to 44.7 percent during this period. Only 16.2 percent of respondents noted that it is important to have personal relations with the police. In 2013 this figure rose by 39.5 percent. The central government was important for 13.1 percent in 2008, whereas last year 38.9 percent mentioned the importance of having connections in high places.
Kyiv Post staff writer Mariia Shamtoa can be reached at [email protected].
