Investment Attractiveness Index with the support of the InMind research company EBA Investment Attractiveness INDEX III/2011 Conducted by EBA with the support of InMind research company

Investment Attractiveness Index with the support of the InMind research company 2 Project summary The results of 13 th wave of investment climate in Ukraine tracking research. Methodology: The 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 in Ukraine over the next three months? What are your expectations of the business environment of your primary industry over the next three months? Participants: 122 CEOs of EBA members companies Timing: September 7 th, 2011 – September 23 rd, 2011 Survey Implementation: the Survey was conducted by EBA with the support of InMind research company

Investment Attractiveness Index with the support of the InMind research company 3 Key findings

Investment Attractiveness Index with the support of the InMind research company 4 Key findings

Investment Attractiveness Index with the support of the InMind research company 5 Key findings III/2008IV/2008I/2009II/2009III/2009IV/2009I/2010II/2010III/2010IV/2010I/2011II/2011III/2011 Investment Climate in Ukraine 3,12,32,02,32,22,12,73,83,63,53,7 2,3 Investment Climate Dynamics: last 3 months 2,81,82,12,72,52,63,2 3,13,43,63,52,5 Investment Climate Dynamics Expectations: next 3 months 3,12,2 2,82,62,83,43,03,2 2,7 Profitability for new entrants: next 3 months 3,42,32,42,72,62,52,93,33,2 3,4 2,6 Investment Climate of Primary Industry: next 3 months 3,32,52,42,72,92,83,23,13,03,1 3,22,7 General EBA Index3,142,22 2,642,562,573,083,253,203,283,403,392,56

Investment Attractiveness Index with the support of the InMind research company 6 Key findings

Investment Attractiveness Index with the support of the InMind research company EBA – Index: Components 7

Investment Attractiveness Index with the support of the InMind research company Mean 3,12,32,02,32,22,12,73,83,63,53,7 2,3 Investment Climate in Ukraine The Investment Climate in Ukraine is… (5 point scale) 0 – + 8

Investment Attractiveness Index with the support of the InMind research company Investment Climate Dynamics: last 3 months The Investment Climate in Ukraine is… (5 point scale) 0 – + Mean 2,81,82,12,72,52,63,2 3,13,43,63,52,5 9

Investment Attractiveness Index with the support of the InMind research company 10 Investment Climate dynamics expectations: next 3 months The Investment Climate in Ukraine is… (5 point scale) 0 – + Mean 3,12,2 2,82,62,83,43,03,2 2,7

Investment Attractiveness Index with the support of the InMind research company 11 Profitability for New entrants: next 3 months Profitability for New Entrants … (5 point scale) 0 – + Mean 3,42,32,42,72,62,52,93,33,2 3,4 2,6

Investment Attractiveness Index with the support of the InMind research company 12 Investment Climate of primary industry: next 3 months Investment climate of primary industry… (5 point scale) 0 – + Mean 3,32,52,42,72,92,83,23,13,03,1 3,22,7

Investment Attractiveness Index with the support of the InMind research company 13 Positive Changes in Investment Climate during the last 3 months When asked about positive changes that took place during the last 3 months two thirds of respondents (66%) state that they can not name any. Another 9% find it difficult to answer, totaling 75% (or three quarters) of investors who fail to name any improvements in the investment climate recently. This share significantly increased compared to II quarter Among some positive changes in legislation there is a variety of singular comments included mentioning the Pension law, Subsoil and PSA law, Car leasing legislation, etc. Other trends marked by 3% each are business and market growth and currency stabilization.

Investment Attractiveness Index with the support of the InMind research company 14 Negative Changes in Investment Climate during the last 3 months The variety of negative changes mentioned by investors remains high. Main concerns are related to continuous pressure from state administrations, corruption practices, taxation, problems with VAT refund and general uncertainty. The share of those who underline opposition oppression and political control over the courts as the negative driver of the investment climate has increased. Among newly added comments there are the expectations of the international recession impact on the Ukrainian economy, weak energy policy of the government, and criminal structures influence increase. Among other comments there are such issues as difficulties for small businesses, IMF requirements neglecting, worsening relations with Russia, and many others

Investment Attractiveness Index with the support of the InMind research company 15 Estimation of the situation with solving issues The situation with solving 7 issues that EBA has raised remained unchanged compared to II quarter of Corruption and court system are still considered as the most problematic issues as over 75% of investors evaluate the situation in these areas as definitely or rather unfavorable. Mean 1,8 2,42,92,92,3 +0,10,0-0,1 0,0+0,1

Investment Attractiveness Index with the support of the InMind research company 16 The 2 nd wave of the economic recession expectations Estimating the probability of the second wave of the crisis in their sectors of business activity in Ukraine investors expressed apprehension of its rather high probability. 51% consider the next wave of recession in their industry definitely or rather probable, while only 15% consider it as rather or definitely improbable. Every third investor found it difficult to evaluate the crisis probability

Investment Attractiveness Index with the support of the InMind research company 17 Key findings Five-grade scale is used to evaluate the investment climate, where 1 stands for the lowest evaluation and 5 stands for the highest evaluation In III quarter of 2011 the EBA Investment Attractiveness Index has averaged 2.56 on a 5 point scale compared to 3.39 in II quarter of 2011 reflecting the investors evaluation and expectation of the investment attractiveness of Ukraine. The main components of the Index were as follows: the current investment climate evaluation received the lowest mark (2.3) the climate changes during the last 3 months were evaluated at 2.5 future expectations of the investment climate received 2.7 on average The main components of the Index were as follows: the current investment climate evaluation received the lowest mark (2.3) the climate changes during the last 3 months were evaluated at 2.5 future expectations of the investment climate received 2.7 on average

Investment Attractiveness Index with the support of the InMind research company 18 Key findings Considering progress with 7 key points that EBA raised in the context of business and authorities interaction the situation still remained unchanged while corruption and court system issues are evaluated as the most problematic issues. In evaluation of the recent changes in the investment climate the negative feedback significantly prevails. Major concerns are related to continuous pressure from state administrations (12%), corruption practices (11%), unfavorable taxation, problems with VAT refund and general uncertainty (9% each). The share of those who underline opposition oppression and political control over the courts as the negative driver of the investment climate have increased. While 16% of investors stated that no negative changes took place recently the share of those who reported no positive changes significantly increased to 66%. 51% of investors consider the next wave of recession in their industry definitely or rather probable, while only 15% consider it as rather or definitely improbable. Every third investor found it difficult to evaluate the new crisis probability.

Investment Attractiveness Index with the support of the InMind research company