Group manager

Romanovych Dmytro
Phone: 0503623611
dmitriy.romanovich@gmail.com

Lead expert

Vyshlinsky Hlib
hlib.vyshlinsky@ces.org.ua
Мельничук Віталій
melnychuk9@gmail.com

Civil Society Organisations:

  • Center for Economic Strategy
  • The Institute for Economic Research and Policy Consulting
  • CASE-Ukraine
  • Center of Reform Support
ISSUES TO BE RESOLVED BY THE REFORM

Due to the aggression of the Russian Federation, the Ukrainian economy is undergoing one of the major crises in its history. Military actions in the eastern part of the country and the annexation of Crimea have deprived Ukraine of about 15% of its economic potential. The trade war waged by Russia, which is blocking not only the export into the Russian Federation, but also transit to other countries, has also affected the economic situation. Weak raw materials markets have significant impact on the Ukrainian economy which has historically been focused on the export of raw materials.
The consequences would have been less grave, had Ukraine actively implemented reforms over the last 25 years. However, Ukraine is suffering not only from the hostilities, but also from an excessive state regulation of business, red tape, cumbersome and corrupt state control, excessive share of assets and businesses owned by the state, distorted competition, insecurity of investors, poor institutional development, a lack of infrastructure, etc.
Ukraine traditionally ranks low in the international economic rankings. Thus, in Doing Business-2016, Ukraine ranked 83-rd; in the economic freedom ranking — 162-nd; in the global competitiveness ranking — 79-th.
Economic and political conditions shaped after the Revolution of Dignity and the start of military operation, alongside Ukraine’s obligations under the EU-Ukraine Association Agreement and the IMF program, create an enormous potential for the reforms in the economic sector.
Key areas of reform are further deregulation, development of small and medium businesses, continuous development of competition, privatization and improvement of state property management, export development, etc.
State-owned enterprises do not work efficiently. The problem is caused by frequent political interference into the management, as well as delay in the implementation of corporate governance, restructuring, and reorganization standards. State property is managed by various government agencies, which leads to corruption and low efficiency of enterprises. There is a need of an extensive, fast, and transparent privatization.
Another objective is to harmonize Ukrainian legislation with the European one in accordance with the Association Agreement between Ukraine and the EU. This agreement remains an effective tool for comprehensive reforms, which should take into account the European norms, requirements, and standards, as well as best practices of the European integration progress of other countries. In particular, the legislators are challenged to improve the activities of the customs to promote bilateral international trade, improve national anti-monopoly, food safety legislation and technical regulations in line with European practices, lay down transparent rule in the energy sector, and build a market surveillance system.
All of these areas are tackled by policy documents — both international and national ones (Strategy — 2020, the Coalition Agreement, the Government Priority Action Plan). However, to ensure a successful implementation of these reforms, it is necessary to engage experts and advocate these reforms in the government and in the parliament.
It is also necessary to develop and implement the programs of competition development, in particular those introducing competitive neutrality and ensuring the SMEs development, and to guarantee independent assessment of business climate in Ukraine.

GOAL I. CONSIDERABLY SIMPLIFIED AND NORMALIZED CONDITIONS
FOR DOING BUSINESS IN UKRAINE
  1. Abolish groundless regulatory restrictions. Continue deregulation of economic activities and to make the Ukrainian markets more attractive for domestic and foreign investors, particularly through implementation of the Deregulation Plan and the Doing Business roadmap, as well as a rolling review of the Ukrainian legislation.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade.

  1. Limit legislatively undue influence of the controlling agencies on businesses, reduce the number and duration of inspections, ensure transparency of inspection procedures, introduce an integrated public database of inspections, introduce the concept of presumption of innocence for businesses
    and prevalence of substance over form, ensure the use of risk-based control.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade, Ministry of Finance.

  1. Correct discrepant and ambiguous provisions of the legislation that give rise to bureaucracy and corruption in the area of licensing, control, etc. Remove duplications between the permit system and the system of administrative services.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade.

  1. Provide legislative support to the activity of self-regulatory organizations, create conditions for the introduction of business self-regulation institutes and to engage them into the processes of governance and government decision-making.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade.

  1. Expand the use and to improve the quality of regulatory impact analysis, introduce the norms of «sunset provision» for regulatory acts, as well as the concept of a regulatory cycle.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade.

GOAL IІ. EFFECTIVE PROGRAM OF COMPETITION DEVELOPMENT
  1. Create effective markets related to natural monopolies. Minimize state preferences for monopolies
    (subsidies, tax incentives, access to cheap loans), ensure equal access of the market participants to the goods and services of natural monopolies.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Developmentand Trade.

  1. Make the Antimonopoly Committee of Ukraine (AMCU) more effective, bring its activity in line with the European standards and the provisions of the EU Association Agreement. Introduce a systemof
    priorities of AMCU cases based on the risk of market competition distortion, raise the threshold for their consideration. Introduce a clear and transparent mechanism of calculating fines for the violation of antimonopoly laws. Limit the opportunities for abuse and to prevent violations. Empower the courts to review the amount of fine imposed by the AMCU.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade, Antimonopoly Committee.

  1. Strengthen the independence of regulators. Introduce politically independent and transparent supervision in the markets with natural monopolies (e.g. energy and public utilities market).

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Energy, Ministry of Regional Development.

  1. Introduce competitive neutrality. Create a level playing field for public and private enterprises.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade, Antimonopoly Committee.

GOAL ІIІ. ACCESSIBLE AND HIGH-QUALITY INFRASTRUC URE FOR ECONOMIC ENTITIES
  1. Provide straightforward procedures for accessing public utilities and land resources. Simplify the procedures for connecting to electricity and gas supply networks, in particular, to cut cost and to shorten the period of connection. Simplify the procedure of land allocation for the infrastructure projects. Replace the methodology of calculating the infrastructure use fee with a model which encourages investments.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade, Ministry of Regional Development, Ministry of Energy.

  1. Make transport infrastructure more accessible and of higher quality. Deregulate inland waterways transportation. Provide private carriers with access to the railway infrastructure. Adopt a de-politicized model of financing highways. Change the road maintenance model by making a transition to the contracts on road surface maintenance and warranty repair of roads.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Infrastructure, Ministry of Economic Development and Trade.

  1. Develop an effective functioning model for industrial parks to optimize government spending on infrastructure development and cut administrative costs in the course of accession to the market.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade, Ministry of Regional Development.

  1. Make the data on infrastructure public and accessible.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Infrastructure.

  1. Ensure ease and affordability of connection to the communication and radio networks.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Infrastructure.

  1. Create conditions for the large-scale use of mechanisms of public-private partnerships and concessions in the course of infrastructure development.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade.

GOAL ІV. EFFECTIVE AND NON-CORRUPT MANAGEMENT
OF PUBLIC PROPERTY
  1. Conduct large-scale, quick, and transparent privatization.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade, State Property Fund.

  1. Centralize the function of state ownership in a single agency (i.e. empower this agency to effectuate shareholders’ rights in those enterprises that will not be privatized). To this end, reform the State Property Fund (set up an independent supervisory board, introduce professional management, set clear objectives for the management, ensure clear accountability and responsibility of the supervisory board and the management) or set up a new National Welfare Fund based on the same principles.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade.

  1. Reform corporate management in public enterprises that will not be privatized: eradicate political interference, establish independent supervisory boards, and introduce professional management.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Developmentand Trade.

  1. Introduce professional, de-politicized management of public assets through open registers, establishment of supervisory boards, and other mechanisms.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Developmentand Trade.

GOAL V. DEVELOPED EXPORT AND INTERNATIONAL TRADE
  1. Introduce European standards in the areas of technical regulation and supervision (control) over and
    protection of consumer rights. Create conditions for the conclusion of the Agreement on Conformity Assessment and Acceptance of Industrial Products (ACAA) to facilitate exports to the EU.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Developmentand Trade.

  1. Reform sanitary and phytosanitary measures by creating the necessary legal and financial framework to ensure proper functioning of the State Service of Ukraine on Food Safety and Consumer Protection. Adopt the European standards regarding feed and labeling of food and contacting materials. Conduct audit, optimization, and upgrading of the laboratories of the State Service of Ukraine on Food Safety and Consumer Protection, and make a transition to the state control based on risk assessment.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Developmentand Trade.

  1. Cut down on the time for products export and import. Establish a system of authorized economic operators, shorten the time of getting a certificate of origin, introduce the principle of «one stop shop» when cargo crosses the customs border of Ukraine in order to improve Ukraine’s position in Doing Business ranking by the indicator «International trade».

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Developmentand Trade.

  1. Set up a National Committee on Trade Facilitation, introduce the practice of document processing before the arrival of goods, take measures to improve cooperation between border services (agencies).

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Developmentand Trade.

  1. Develop a mechanism of export support to insure, guarantee, and cheapen export credits.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Developmentand Trade.

  1. Create conditions necessary for taking measures to promote export activities of SMEs at the regional level.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Developmentand Trade.

  1. Deregulate and streamline the currency control and the relevant legislation in the sphere of foreign trade, first of all, for the export of services and trade in goods in B2C format, and later — for all agents.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Developmentand Trade.

GOAL VI. CONDITIONS FOR SUSTAINABLE AND RAPID DEVELOPMENT OF SMES CREATED
  1. Develop and adopt a Strategy of Small and Medium Enterprises (SMEs) Development by 2020, as well as a plan on its implementation. Formalize legislatively state support of SMEs development in Ukraine. Improve strategic planning of SMEs development at the regional level.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade.

  1. Develop additional instruments to support SMEs in accordance with the principles of the Small Business Act, in particular, through granting access to financing and providing consulting and other types of support.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade.

  1. Set up a new SMEs Development Agency responsible for the implementation of policies for SMEs development and establish regional business support centers.

Decision-making authority: Cabinet of Ministers, Ministry of Economic Development and Trade.

  1. Streamline the procedure of providing public services for SMEs and improve their quality.

РDecision-making authority: Cabinet of Ministers, Ministry of Economic Development and Trade.

  1. Enhance the system of collection, processing, and publication of information on the status and dynamics of SMEs development. Resume preparation of analytical reports on the status and prospects of SMEs development, introduce SMEs Profile, and conduct an independent assessment of the business climate in Ukraine.

Decision-making authority: Cabinet of Ministers, Ministry of Economic Development and Trade.

GOAL VII. MODERN INSTITUTE OF AVOIDING BANKRUPTCY
AND RESTORING SOLVENCY
  1. Make the activity of the State Agency for Bankruptcy more effective through moving the issue of bankruptcy to the economic block of the Government.

Decision-making authority: Cabinet of Ministers, Ministry of Economic Development and Trade.

  1. Make the activity of court-appointed trustees more effective by introducing the ways to deregulate their activities and develop self-government.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade.

  1. Encourage businesses to take timely measures of financial recovery in case of a threat of insolvency.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade.

  1. Make it easier for investors to take part in the procedures of debtors’ solvency restoration.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade.

GOAL VIII. BOOST OF THE INFLOW OF INVESTMENTS INTO UKRAINE
  1. Enhance legislation on corporate management and property rights to protect investors.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade.

  1. Implement proactive state policy to attract investments. Set up an office for the attraction of foreign investments empowered to provide the investors with information support, coordination, and assistance.

Decision-making authority: Cabinet of Ministers, Ministry of Economic Development and Trade.

  1. Expand the range of instruments the local communities can use to attract investments.

Decision-making authority: Verkhovna Rada, Cabinet of Ministers, Ministry of Economic Development and Trade, Ministry of Regional Development

ADDITIONAL INFORMATION

Group experts

  • Akulenko Liubov
  • Blinov Andrii
  • Boiarchuk Dmytro
  • Boikul Oleksandr
  • Boitsun Andrii
  • Burakovskyi Ihor
  • Butin Andrii
  • Dubrovskyi Volodymyr
  • Kashko Oleksandr
  • Kovalchuk Artur
  • Kravchuk Kostiantyn
  • Kuziakiv Oksana
  • Lukach Rostyslav
  • Nedzvedska Vira
  • Romanovych Dmytro
  • Savarets Andrii
  • Stepaniuk Oleksa
  • Viazovchenko Anatolii
  • Vlasiuk Volodymyr
  • Vyshlinsky Hlib
  • Zakharov Artem
  • Yablonovskyy Dmytro

Draft laws

Drafts laws (15)

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