Officials express hope Ukraine climbs higher in the business rating as a result of freshly adopted laws, yet there is a number of obstacles to overcome in different spheres.
Kyiv, June 1, 2016.Ukraine can climb from 83rd to 65-69th place in Doing Business rating this year. “This rating gives foreign investors the opportunity to assess the state. Each rating point brings 500-600 dollars of investment to a state (for every 10 points in the raiting – UCMC note),” said Pavlo Petrenko, Minister of Justice of Ukraine, at a discussion at Ukraine Crisis Media Center. According to him, last year Ukraine went up from 96th to 83rd position in the rating due to deregulation in the area of business registration. “We adopted a package of revolutionary laws in the area of business and real estate registration. We eliminated the Ministry’s monopoly on these registrations, we renounced these functions and passed them to local authorities, notaries and accredited entities. We introduced a system of simplification of documents and online registration, we opened access to registries. In fact, we eliminated domestic corruption,” said the Minister. According to him, there are still obstacles in the sphere of tax office, pension fund and so on. Therefore the following system was introduced: after the company was registered, other services automatically register it within 24 hours. Now Ukraine is expected to rise from 30th to 16th place in terms of business registration. In property registration rating, it is expected to rise from 61st to 34th place. As for protection of investors, it is expected to jump from 88th to 7th place. Mr. Petrenko stressed the priority of judicial reform in this sector.
Andriy Yerashov, EasyBusiness partner, noted that of all the departments, which the government had identified as responsible for promoting the Doing Business rating, only three have something to boast about. They are the Ministries of Justice, Finance and Economy. Ivan Mikloš, co-chairman of the Strategic Advisory Group for Support of Ukrainian Reforms, believes that Ukraine is below its potential. “If Ukraine continues implementing the reforms, in no more than three years it can achieve systematic growth by 6-7% a year”. He believes that if reforms are carried out, and business environment changes, Ukraine will be able to attract investors in the sphere of mass production. “It will be of the same quality but cheaper, because costs, including salaries, are lower,” said Mr. Miklos. He stressed that the reform is not a technical problem but a political one, so it requires a political will. “Populists are a bigger problem for Ukraine than Russia is. They have no solutions, they distort events. They try to convince that all the problems have occurred because of the reform. But in fact, all the problems arose due to the fact that there had not been any reforms since the 90s,” he declared. Mr. Miklos considers another problem to be tax burden on business.
Anton Yanchuk, Deputy Minister of Justice of Ukraine, spoke about plans for the next year (till May31, 2017). The entity’s email address will be compulsory. There are plans to equate it to the location address and use for communication, including with the judicial authorities. “It is very important in the framework of the upcoming judicial reform, creation of an electronic court, electronic workflow. This address will be created on a single domain and placed in a single state register,” explained Mr. Yanchuk. The service is worked out simultaneously with the state registration of booking a bank account. According to Mr. Yanchuk, they continue working on a draft law that would provide a real possibility of sequestration within claims provision within a minute. Tetyana Palamarchuk, EasyBusiness partner, proposed to set up the institute of authorized economy operators, to optimize kinds of state control and create a single window – transparent interaction between public authorities and entrepreneurs. “Ukraine bans investment in construction. The cost of our licensing procedures is 15.2% of the investment. In fact, it is a ban. We have prepared a draft law that abolishes […] the greater part. We have a chance to be in the top ten after 140th position,” – said Sergiy Petrov, EasyBusiness project manager.
According to Viacheslav Klimov, co-founder and general director, delivery company “Nova Poshta”, priorities of Ukrainian business are deregulation, tax and customs reform. “Ukrainian business has believed in SSC [single social contribution]. It has a chance to emerge from the shadows, at least in the context of wages. Ukrainian businessmen do not want to be criminals. The government must create profitable conditions for the entrepreneur,” said Mr. Klimov. According to him, Ukraine may become a “Ukrainian China” – a production platform.
Svitlana Mykhailovska, European Business Association representative, noted some reactivation of Ukrainian manufacturers on the European market. However, they face a number of problems there. Among them is the problem of currency regulation: the inability to quickly buy currency, to completely use non-transit potential because of overregulation, radical increase in the cost of veterinary inspection.