Deregulation holds the key to defeating corruption – Minister of Agrarian Policy and Food of Ukraine


Kyiv, September 30, 2015. Deregulation is vital to reforms in the agro-industrial complex, cutting costs, bureaucracy and corruption and leading to increased output and exports, according to  experts. “Less involvement of state officials means a lower risk of corruption,” – stated Oleksiy Pavlenko, Minister of Agrarian Policy and Food of Ukraine at a press briefing at Ukraine Crisis Media Center as he presented the performance results of “Agro.ReformsUA”.  Activities of the NGO Agro.ReformsUA for the first half a year serves as  evidence of positive cooperation between government agencies, civil society, business and the expert community. As a result of this cooperation many pressing issues were identified, priority areas of activity defined, and first steps in deregulation of the agro-industrial complex were made.

To identify the most urgent reforms in the sphere of deregulation on local levels, the NGO organized ten discussions between representatives of small and medium business and the agrarian policy ministry. “The fruit of our discussions was a list of a hundred items and propositions, including land issues, standing in the way of agribusiness development today,” says Dmytro Symashko, an expert on agrarian law and participant of the project ‘Deregulation against corruption’. “We chose the way of “smart deregulation”, i.e. intelligent and balanced deregulation”. According to him, issues on the agenda now include optimization possibilities and repeal of 44 permits and obligatory procedures in various industries in agriculture. “These are different initiatives — starting with elimination of corruption when obtaining land plots and registration of land leasing agreements and finishing with taking away unnecessary hurdles for exports,” commented Oleh Protsenko, the Head of the NGO «Agro.ReformsUA». In the words of Minister Pavlenko, 16 types of permits and six types of certificates have already been cancelled. At the same time, observed Oleh Protsenko, some licenses cannot be repealed, as they are necessary for exporting to the EU. Agrarian products account for 37 percent of Ukraine’s exports in total.

“The road map of land reform,” says Anatoliy Myroshnychenko, the reform’s architect, “envisages large-scale deregulation in land governance. Basic initiatives so far are to eliminate the ‘proper use of land plots’ principle in favor of land-use planning and stamping out the corrupt mechanism of the state land lease expertise. It also suggests eliminating licensing orders for obtaining technical documentation on land use as well as finishing reconciliation of technical documentation on land use, facilitating the mechanism of land auctions, which now block effective transfer of state or municipal land, including the possibility of e-auctions”. “It is very important to reform the mechanism of the so-called ‘no-payment privatization’ (when one submits documents for privatization and does not have to pay for it – ed.note), which is ‘no-payment’ only on paper and in reality is accompanied by all sorts of corruption,” emphasized Mr. Myroshnychenko. In the framework of the project there are also plans to eliminate state regulation of land leases and solve the issue of what should be done with construction and buildings located on somebody else’s land plot.

Together with the ministry, NGO AGO.ReformsUA for over half a year has been organizing financial analysis of the 30 biggest state-owned enterprises with the help of seven audit companies. ”According to the audit results, the majority of those enterprises are unprofitable, the property use defy all possible criticism,” informed Oleksandr Pochkun, expert of NGO Agro.ReformsUA and managing partner of BakerTilly.  According him, these results were predictable but thanks to the audit it was possible to understand the situation better, which is necessary to identify effective solutions.

The first steps introducing the so-called ‘agrarian receipts’ in Ukraine have already been made. “Agrarian receipts allow obtaining secured funding for crops and permits for replenishment of circulating assets — something our small and medium businesses requires so badly now,” said Minister Pavlenko. According to Bohdan Khomyak, expert of NGO Agro.ReformsUA, this tool has been successfully used in different countries for many years. “This year we helped to provide loans of 37.4 million hryvnas using these receipts in Poltava region,” said the expert and added that if the financial system is more stable next year this tool will be introduced in all regions of Ukraine.

Apart from the aforementioned initiatives, wide-scale privatization of enterprises is also planned in order to increase their effectiveness as well as a radical reform of agroinsurance system. “Government-society cooperation is positive, a new culture is being created,” comments Oleksandr Sushko, Head of the Administrative Board at the International Renaissance Foundation. “This is a model of interaction which provides a rather quick and positive result and which is noticeable not only for the participants of the process but also to business and the broader public”.