Improving positions in the Doing Business ranking is crucial for Ukraine so it could attract investment. A series of measures need to be accomplished including amendments to legislation and a set of practical reforms.
Ukraine was ranked 80th in the Doing Business ranking. Compared to 2014 when the country was ranked 112th it may be considered a success. However, if compared to the countries that had similar starting conditions and are currently Ukraine’s competitors for foreign investment, the results are not so optimistic. Vyacheslav Klymov, president of the Union of Ukrainian Entrepreneurs, member of the National Council of Reforms, co-owner of “Nova Poshta” company, voiced the opinion at a discussion at Ukraine Crisis Media Center. “Doing Business is the ranking for international investors. We are part of a very tough competition. We need to fight for investments, without them we will not be able to develop our economy. Our neighbors have rankings that are twice as higher, than Ukraine’s. Belarus was ranked 37th, Moldova – 44th, Poland – 24th and Slovakia – 33rd. Comparing to our competitors 80th place is a very negative result,” Klymov said.
He noted that Ukraine’s actual ranking also sets the future of economy. “Investment is not going to work immediately. With our present figures we will neither achieve the results next year, nor in five or ten years. Investments concern long-term projects,” explained Klymov.
According to Kateryna Glazkova, executive director of the Union of Ukrainian Entrepreneurs, Ukraine now needs to quickly adopt the required deregulation laws. The laws concerned include the draft law No. 3365 on mediation that is expected to lessen the burden on judicial system; the draft law No. 3610 lifting contribution of construction companies into development of cities; the draft law no.4187 stipulating that the architect at construction site needs to have specialized higher education; the draft law No. 3132-D that regulates the procedure of bankruptcy etc. “Cumulative effect of these laws may bring Ukraine 20 positions higher in the ranking. Although, these documents remain in parliamentary committees with no action taken,” she emphasized.
Tetyana Tyshchuk, editor of the Index for Monitoring Reforms (iMoRe) at VoxUkraine, noted that Ukraine was able to achieve some progress in deregulation, competition policy and international trade. Small progress was registered as to the property rights and corporate governance. “Priority laws that need to be adopted are the laws stipulating simplification of the export of services, changes to the bankruptcy procedure, connecting to power networks as well as on simplification of the procedure to obtain permission for construction,” she said.
Anatoliy Amelin, director of economic programs at the Ukrainian Institute for the Future, is of the opinion that the goal Ukraine needs to set and achieve by 2030 is to attract USD billion 270 of investment, to improve its positions up till the 40th place in the ranking and be aiming at the 20th position. “There is very little of what we are now able to offer to the investor. It is the result of the lack of policy. We need to decrease the cost of resources as well as draft the strategy for entrepreneurship development. It will also create working places and stabilize the economy. Small business creates the platform that helps the economy to be stable,” Amelin noted. He said authorities are not taking action to bring the economy out of the shadow. “We need to implement tax reform. Tax burden on business is too high. Compared to the EU Member States, Ukraine is an outsider based on the total amount of taxes paid into the budget,” Amelin explained. Intention to move from income tax to the tax on withdrawn capital is generally positive. This decision will help to attract several additional billions per year.
Amelin also emphasized the need to reform the government’s administrative office. “Government’s administrative office needs to provide services not mooch. We still follow the Soviet model under which people used to be a resource for the country’s economy. We have been independent for 25 years now, however, for civil servants both people and business remain a resource. In some cases it is a resource for corrupt practices, in other – a way to survive. These are not the civil servants that business needs,” emphasized the director of economic programs at Ukrainian Institute for the Future.