Source: lb.ua
The World Bank has announced the results of Doing Business 2019. The Ukraine’s index has grown by 5 positions (from 76 to 71). What prevented Ukraine from gaining more positions? What gave positive changes in +5 points? And most importantly, how to improve our position over the next six months, taking into account that starting from the beginning of May, the World Bank will review the Doing Business 2020?
The concept of the half-full and half-empty glass is true this time too. On the one hand, this year Ukraine (+5 positions) worked better than all our neighbors: Poland (-6), the Russian Federation (+4), Belarus (+1), Moldova (-3), Romania (-7), Hungary (-5) and Slovenia (-3). Moreover, only Belgium achieved more progress than we did (+7) among the EU countries.
On the other hand, all our neighbors still take higher positions in the rating, and in order to achieve the Georgia’s position (6th in the world), we need to look to the progress of Asian leaders, such as China (+32 positions) and India (+23 positions), instead of European countries.
The glass seems to be even more empty, if we look in detail at components of our success.
International trade:
We improved our position by 41 points (from 119 to 78). This was a surprise, because just one small reform (excluding spare vehicle parts from the list of military goods), which could not have had such an effect, was implemented in this area. The answer turned out to be simple: the rating developers came to the conclusion that our last year’s figures were wrong, and in reality, exporters and importers spent less time and money on crossing the border. Therefore, the growth in terms of this component is not so much the reform as recognizing the fact that everything was not so bad even before the reform.
Protecting minority investors:
There is a similar situation. There was only a small reform (the mandatory disclosure of information on related party transactions in annual reports of joint stock companies), but we received two points instead of one point, and so we got 9 positions (from 81 to 72). The reason for our second point is that the rating developers recognized the possibility of establishing an audit committee in joint stock companies, that is, they took into account the reform implemented several years ago.
Resolving insolvency:
We obtained 4 positions (from 149 to 145). And again, the reason is not some this year’s reform, but adjustments made to the last year’s data. The rating developers admitted that the sale of debtor’s essential assets requires the consent of creditors. And do not ask what such “essential assets” are and who these creditors, whose consent is required, are – I do not know, these are evaluation questions.
Dealing with construction permits:
This is the most conflicting and interesting component. We’ve got rigorous adjustments that worsened all key indicators of past periods. If the government (MEDT and the Ministry of Regional Development) have done nothing this year, we would lose our positions (from 35 to 129) by this component. Fortunately, several reforms (canceling the need to obtain initial data for project designing from the State Emergency Service and introducing the requirement for higher education for designers and building inspectors) allowed not only to keep our last year’s position, but even to grow by 5 positions (from 35 to 30).
Starting a business:
Nothing has been done, so we lose 4 positions in the rating (from 52 to 56).
Paying taxes
Nothing has been done, so we lose 9 positions (from 43 to 54).
Registering property:
We lose 1 position (from 64 to 63). Honestly speaking, the Ministry of Justice carried out a reform that canceled the need for an expert monetary assessment of land plots in case of notarization of sale and purchase transactions between legal entities. But its implementation required additional several weeks they missed. We hope it will be taken into account the next year.
Getting electricity:
Nothing has been done, so we lose 7 positions (from 128 to 135).
Obtaining loans:
Nothing has been done, so we lose 3 positions (from 29 to 32).
Enforcing contracts:
It is our only “clear” victory. The commercial litigation reform (the amended Commercial Procedural Code) led to our growth by 25 positions (from 82 to 57). There were no data adjustments.
And finally, our coolest result is that Ukraine remained the second country in the world by growth rates in the rating. If you do not believe, just visit doingbusiness.org, find distance to frontier metrics and calculate the change of indicators for each of 190 countries. Unfortunately, the data are available only starting from 2009 (these rates were not calculated before), and therefore we can only evaluate the rates of the last 9 years.
However, this year’s +5 positions are too few for the Ukraine’s potential and ambitions. We can become a global leader by growth rates and be among the TOP-50 countries in the rating in the next couple of years. To do this, we just need to stop closing gaps at the last second and adopt the draft law No.8124.
We very much hope that the Ukrainian deputies will find time to consider this draft law, because the calculation of points for the next Doing Business rating will start in 6 months. The clock is ticking.
The views expressed in this article reflect the author’s point of view and do not necessarily coincide with the position of organizations that support the BRDO Office.