Experts: With that slow progress in Doing Business rating Ukraine is not competitive in terms of investment


Ukraine ranked 76th in Doing Business-2018 rating. This is 4 positions higher than last year. The growth was mainly due to taxation and construction permits criteria. “The 76th position means that doing business in Ukraine is not easy, not convenient, and Ukraine is not attractive to foreign and domestic investors. Ukraine really moves very slowly in this ranking. Being way down under the 30th position, we cannot compete with the countries qualifying for foreign investments. Ukraine needs 270 billion worth investments by 2030, but with such a slow movement in the rating, this amount is unreachable,” said Kateryna Hlazkova, Executive Director of the Union of Ukrainian Entrepreneurs, at a press briefing at Ukraine Crisis Media Center.

Most of all, Ukraine has progressed in taxation: by 41 positions. This is due to the reduction of the single social contribution in 2015 and the elimination of the contribution (3.6%) from salaries. “Since accounting became a little simpler for accountants, this consequently affected their labor input: it required 100 working hours before and now it needs only 92 hours,” said Andrii Yerashov, co-chairman of the Committee for the Entrepreneurship Development at the Union of Ukrainian Entrepreneurs.

“Unfortunately, nothing has significantly changed in settling the insolvency issue in Ukraine, except that now it is a little easier to recover the money. If you look at the rating, from one dollar invested in a business that fails, 8.9 cents are returned to the claim holder. In the previous rating, it was 8.4 cents,” said Mr. Yerashov.

Obtaining construction permits allowed Ukraine to move 5 positions higher in the ranking in this term.  The growth was influenced by the Kyiv City Council’s decision lowering the share payment for residential or non-residential premises in 2017 to only 2%. “Next year, Ukraine will lose its positions, if Kiyv City Council does not make a new decision or does not completely abolish the share payment. The decisions simplifying construction process approved by the Verkhovna Rada will not influence it in the same manner as the decision on share payment did,” noted Mr. Yerashov.

Business registration is an indicator that significantly reduced the overall rating of Ukraine. “New protective measures have been taken in Ukraine: for example, when a company employs a new person, it should inform the tax agency about this within a day. Correspondingly, this immediately affected the rating. Two more procedures were added to our position on this indicator.  Accordingly, our position worsened from 20th to 52nd,” detailed Andrii Yerashov.

Kateryna Hlazkova added that this year the issue of pressure on business by the security forces has exacerbated. This significantly affected the ease of doing business in Ukraine.

Approval of a number of laws will help Ukraine to rise by about 40 positions in the ranking, said Mr. Yerashov. “Currently, a draft law on capital outflow tax has been developed jointly with the Ministry of Finance. This tax will make Ukraine competitive in terms of business. Thanks to it, the annual GDP growth will be at the level of 3-4%,” noted Mr. Yerashov. Besides, the laws on mediation, the introduction of economic operators in Ukraine, and changes to the bankruptcy law are pending the approval by the Verkhovna Rada. “In fact, it is not easy to cooperate with the Verkhovna Rada. We will continue to emphasize and encourage every business association, the public, and journalists to join us to constantly remind them of what should be done. But we need to understand that this is certainly not enough. These are the existing draft laws, they have long been in the Verkhovna Rada. But in general, investment attractiveness implies not only these things. This is a wider issue on which Ukraine still needs to work hard,” stressed Kateryna Hlazkova.