Ukraine improved its position in the Doing Business 2018 ranking thanks to the decision adopted by the Kyiv City Council. The changes are to affect developers and the capital’s construction market.
Ukraine was ranked 76th in the World Bank’s Doing Business 2018 ranking out of the 190 positions possible. Ukraine did 4 positions better in comparison to the last year. The country’s ranking went 105 positions up in terms of the indicator that concerns dealing with construction permits: it raised from the 140th place to the 35th. “The Doing Business report notes that the 105 positions up in question owe in particular to the new procedure of contributions adopted by the Kyiv City Council. The change in the position of the Kyiv City Council on the calculation and payment of contributions brought the country to the new level in the ranking,” said Kyiv City Council deputy Olha Balytska at a press-briefing at Ukraine Crisis Media Center.
According to the first deputy head of the Kyiv State City Administration Hennadiy Plis, the Council has decreased the contribution for infrastructural development of non-residential premises from 10 per cent to two per cent. It is what brought Ukraine to a higher position in the world ranking. “I am happy to say that we have thus helped our country a bit and we hope to benefit from it as well,” said Hennadiy Plis. “By having decreased the rate five times we actually incurred no losses from the contributions. In the 10 months of the current year we already have 410 million hryvnia (approx. 13 million euro) of contributions. I am sure we will get 120-130 million hryvnia (approx. 3,8-4,1 million euro) more in these two months, and will thus reach the level of the previous year. In my opinion this step will help attract investors and improve our rankings without any losses on our part.”
In his turn the deputy of the Kyiv City Council, head of the Samopomich faction in the Council Serhiy Gusovsky explained how the system of contributions used to work prior to the changes. The developer was charged with maximum percentage, then its representative had to come to various departments of the Kyiv State City Administration and to the commissions of the Kyiv City Council. “The developer received discounts, prolonged terms of payments, his previous payments were accepted. Surely, he did pay for this. It used to be a totally corrupted scheme, as a result the city used to get no money and it was causing the construction misbalance. Residential and non-residential premises were being constructed while there was not enough money available for the infrastructure construction,” Gusovsky noted.
The Anticorruption Council within the Kyiv Mayor’s Office, part of which were experts of the Reanimation Package of Reforms (RPR), helped to have the respective decision approved. Unfortunately, not all expectations were met. The number of meeting hours per week at the Kyiv State City Administration available to the developers willing to sign the contribution agreement, has not increased and constitutes 16,5 hours. Vitaliy Gryb, RPR expert, emphasized that the situation further complicates and protracts the process of agreement signing.
To remind, the decision on the new procedure of contributions is in force for one year only. It is of temporary nature and requires further discussion in which the interests of all parties will be taken into account, Olha Balytska said.