Source: 24tv.ua.
In a few days, the parliament will consider a draft law that will help improve the investment climate in Ukraine. Experts call it the reformatory and key one to attract $10 billion of investments, create new jobs and improve the well-being of Ukrainians.
As the experts of the Better Regulation Delivery Office (BRDO) explained to the website “24”, the purpose of the draft Law on amendments to some legislative acts of Ukraine regarding improving the investment climate in Ukraine No.6540 is to increase the Ukraine’s investment attractiveness in the global economy and improve the business climate in the country, while the draft law’s KPI is to improve the Ukraine’s positions in the DoingBusiness rating, which is a internationally recognized indicator of ease of doing business in the country.
Rating and prosperity
Experts explained: the government takes into account the Doing Business rating (index of ease of doing business developed by the World Bank), because many investors are guided by it when choosing which country it is better to invest in, where it is better to launch and maintain their production.
“A country’s rise of 1 position means an increase in the inflow of investments into its economy by $600 million. Ukraine ranks the 76th in the Doing Business 2018 rating. We have risen by 7 positions over the past two years. We estimated that the draft law 6540 would help Ukraine to rise by 32 positions in the rating,” the BRDO Head Oleksiy Honcharuk said.
Top-10 in the Doing Business rating
Experts add that other countries also takes into account this rating and do a lot, because they are also interested in attracting investors. To keep the same position in the rating, you need to run, but to move forward – you need to run twice as fast. That is why it is necessary to approve the draft law 6540 already this year. Otherwise, we risk to worsen our position in the rating for the
next year. This should not be allowed to happen, since we are still behind the countries of Eastern Europe.
For comparison, Estonia ranks the 12th, Poland – the 27th, Belarus – the 28th, Russia – the 35th and Georgia – the 9th in Doing Business 2018.
Only Kyrgyzstan and Tadzhikistan have lower positions than Ukraine among post-Soviet countries
Why do we need investments?
The rise in the rating and investments give an additional impetus to the economic development, as they facilitate the modernization of production, introduction of innovations, creation of new jobs and increase tax revenues to the budget, that is, in general, improve the well-being of Ukrainians.
“The draft law 6540 improves the business environment significantly. It simplifies construction conditions, makes credits more affordable, enhances the protection of shareholders’ rights and makes it easier for entrepreneurs to go through many legal procedures. For example, it cancels share participation, introduces the trust ownership and simplified bankruptcy procedures,” Oleksiy Honcharuk clarified.
These comprehensive changes will not only encourage investors, but also motivate Ukrainian business to develop, as they provide it with many new opportunities.
In Mexico, the introduction of reforms to progress in the Doing Business rating has led to the fact that 15% of entrepreneurs started to work legally. This is a possible scenario for Ukraine as well. In such a way, 6540 will help reducing the share of shadow economy at the same time.
Key provisions of the draft law
Protection of shareholders’ rights:
– a the joint-stock company, which concludes the agreement, should immediately disclose information about the conflict of interests by all means, if there are any;
– strengthening the personal responsibility of joint-stock company’s officials and majority shareholders for losses caused by obviously loss-making transactions;
– shareholders have the right to learn all documents related to the joint-stock company activities;
– a joint-stock company can choose an independent auditor exclusively at the general meeting of shareholders;
– a shareholder who buys 50% of the company’s shares necessarily receives an offer to buy out shares of minority shareholders they would like to sell.
System of justice:
– simplified access to evidences;
– introducing mandatory “weighing” of evidence by court (higher credibility standard in economic procedures).
Easing of credits (implementation of Article 6 of Directive 2002/47/EC):
– introducing an alternative to pledges and mortgages – trust ownership as an effective way to ensure fulfillment of obligations.
– if the risk of credit defaults is reduced, banks can reduce credit interest rates;
– increasing the availability of information on honesty of borrowers through the bureau of credit histories. In such bureaus, companies provide each other with information about borrowers. At present, only financial institutions can be their participants in Ukraine, but the draft law allows other companies also to join the bureau.
Access to alternative dispute resolution:
– expanding the competencies of arbitration courts;
– introducing additional requirements and liability for arbitration courts and judges.
Contract enforcement:
(implementation of certain elements of the Directive No. 2013/11/EC, the EU Council Directive 93/13/EEC, Commission Recommendations No. 98/257/EC and No. 2001/310/EC)
– if terms of a contract are not fulfilled, the parties will be able to file a suit and exchange other documents with the court online
– broadening options to use arbitration courts to consider disputes.
Construction:
– real estate developers will no longer have to pay a share contribution to the development of the settlement’s infrastructure;
– a quick and transparent procedure for assigning construction and postal addresses.
Bankruptcy:
– introducing individual bankruptcy procedures of debtors with a majoritarian lender or whose property is transferred to a mortgage.
Land:
– notaries will not be able to demand an expert monetary valuation of land plots without a reasonable basis.
The approval of this draft law will allow Ukraine to attract 10 billion of potential investments into the country, bring about15% of entrepreneurs out of the shadow economy as well as create new jobs and improve the well-being of Ukrainian citizens.
And as the BRDO stressed, the Verkhovna Rada had currently a key to this.
Written by Yanina Tkachuk.