Tuesday, June 20, 2023
The American Chamber of Commerce in Ukraine today presents the latest results of its survey "Doing Business after 15 Months of Full-Scale War in Ukraine", conducted jointly with member company EY Ukraine. After more than 480 days of the war, 84% of AmCham member companies are fully operational.
49% of respondents indicated that their plants/factories/facilities/storehouses/offices have been damaged: 27% of them have minor damage, 22% – have major damage which requires significant repair. 49% of member companies had no damage after 15 months of the war. 19% of members had some of their assets under occupation.
At the same time, only 15% of the member companies consider requesting compensation for direct (physical) damage or lost profits, while 53% do not plan to request compensation, and 32% have not decided yet. The main reasons for such low rates are the number of losses (two third of companies among those that suffered damages have losses below $10 million), the complexity of the process, uncertainty in reimbursement results, and the cost of the process. Currently, the companies are left to cover losses and damage due to war at the cost of their own resources. To support Ukraine's economic recovery, it should be critically important to streamline the process of gaining compensation from the aggressor and seek support from donors for business recovery.
The business representatives identified the following main difficulties of the compensation process: unclear legal strategy on enforcement (48%), too long procedure on litigation and enforcement (40%), high process-related costs (27%), lack of expertise for litigation in non-Ukrainian jurisdictions (21%), and drawbacks of valuation methodology in Ukraine (19%).
Due to the difficulties, 36% of organizations are uncertain about the next steps within the next 12 months related to compensation for damages from the Russian Federation. The most common strategy is to wait for the creation of the mechanism for the confiscation of Russian assets (24%) or not to plan on requesting such compensation at all (27%).
The business representatives were asked a difficult question on the safety and security of employees. 56% of respondents said that all of their companies' employees are safe. Sadly, there were painful numbers also, with 32% of companies' having instances of employees killed and 27% having instances of employees injured.
The following key findings emerged regarding organizations' plans for Ukraine's rebuilding: 74% plan to create jobs for Ukrainians in existing projects; 63% intend to invest in new projects, plants, or facilities; 47% are ready to offer expertise or technical assistance to Ukraine's government.
Advice from business leaders operating in Ukraine for foreign companies looking to invest can be summarized as follows: start investing now, conduct thorough due diligence and engage with stakeholders, seek local partnerships, consider specific sectors (manufacturing, agriculture, infrastructure, IT, renewables), advocate for reforms and support Ukraine, be patient and resilient.
102 CEOs and top managers from AmCham Ukraine member organizations took part in the Survey, conducted from May 30 – June 12, 2023. 75% of the respondents are CEOs, 25% – top managers.
Andy Hunder, President of the American Chamber of Commerce in Ukraine: "After 15 months of Russia's full-scale war in Ukraine, 84% of AmCham members are fully operational. The majority of businesses in Ukraine don’t plan to make claims for war damages until proper compensation mechanisms are in place. It is important to have these clear mechanisms developed and eventually implemented.”
Mykhailo Prykhodko, Partner, Valuation, Modeling & Economics leader at EY Ukraine: "Despite the fact that almost a half of respondents stated that their business had incurred damages due to the Russian invasion, only 15% of the member companies consider requesting compensation for direct (physical) damages or lost profits. The main reasons for such low rates are due to complexity of the litigation process and, uncertainty in reimbursement results, high litigation costs compared to the number of losses (two third of companies among those that suffered damages have losses below $10 million). Currently, the companies are left to cover losses and damage due to war at the cost of their own resources. To support Ukraine's economic recovery, it should be critically important to streamline the process of gaining compensation from the aggressor and seek support from donors for businesses recovery."
Full results of the survey are available here.
About the American Chamber of Commerce in Ukraine:
The American Chamber of Commerce is Ukraine's most influential international business association that has been serving 600+ members in Ukraine since 1992, delivering the shared voice of US, international, and Ukrainian companies, who invested over $50 billion in Ukraine and remain committed to the country. For more information, please visit our website and Rebuild Ukraine page.
About EY:
EY exists to build a better working world, helping to create long-term value for clients, people, and society and build trust in the capital markets. Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate. Working across assurance, consulting, law, strategy, tax, and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today.
EY refers to the global organization and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. For more information about organization, please visit ey.com.
