Ukraine moved from the 140th to the 35th position in the component “Obtaining construction permits” in the Doing Business rating. The reason of this rise was the reduction of share participation in the Kyiv infrastructure from 10% to 2% along with the reduction of the cost of technical supervision services in construction. World Bank’s experts estimated that one position in the overall Doing Business rating would give us an opportunity to attract up to $600 million of investments into the country.
“The Ministry of Regional Development set an ambitious goal – to enter the TOP-50 in terms of the indicator “Obtaining construction permits”. According to the Doing Business 2018 rating, we managed to enter the TOP-40. In the component “Obtaining construction permits”, we rose by 105 positions from 140 countries over a year, so we moved to the 35th place and improved the Ukraine’s position in general,” the Deputy Minister of Regional Development, Construction, Housing and Utilities Lev Partskhaladze said.
The Deputy Minister added that the share contribution on infrastructure development was reduced from 10% to 2% and the market cost of technical maintenance services in construction was reduced from 5% to 1.8% in Kyiv that year.
“To improve this year’s result, it is necessary to completely cancel share participation in the development of settlement’s infrastructure, which is called a “legalized bribe” of developers. The Ministry of Regional Development carried out an analysis: no hryvna from share participation payments was spent on the construction of kindergartens, schools, hospitals or on the connection of new buildings to the infrastructure. The Cabinet of Ministers together with the BRDO Office developed a draft law No.6540, which includes the cancellation of share participation. This draft law was registered in the Verkhovna Rada, and we are very hopeful for the support of deputies,” Lev Partskhaladze summed up.
The ultimate goal of the Ministry of Regional Development for the next year is to enter the TOP-20 countries in terms of the indicator “Obtaining construction permits”.
“No other country in the world has such a rapid progress in the component “Obtaining construction permits” as Ukraine has. We established excellent cooperation with both the Ministry of Regional Development and the BRDO. We hope that the Kyiv City Council will at least extend the validity of the reduced 2% rate of share participation in the following year as well. But the best way for Ukraine is to approve the draft law No.6540 that provides for the full cancellation of share participation in construction, and the World Bank Group supports this option,” the Program Manager of the Global Practice on Trade and Competitiveness in Ukraine, Belarus and Moldova IFC/World Bank Group Heinz-Wilhelm Strubenhoff said.
“For the first time, Ukraine ranges among the European countries in terms of the cost of licensing procedures not only geographically. We progressed due to the reduction of share participation in the capital. It is believed that share participation fills local budgets, but, in fact, the proceeds from it is about 1% in the revenues of local budgets. In 2016, revenues from share participation payments totaled 1.35 billion hryvnas at the country level, 42% of which was provided by Kyiv. If we measured the position in the Doing Business rating not only in the
capital, but in other cities as well, Ukraine would ranks 100 in the component “Obtaining construction permits”, because in Odessa, for example, the share contribution is 10%,” the BRDO Construction Sector Head Olena Shulyak said.
Olena Shulyak added that the real estate tax brought more money into the budget than share participation payments. Moreover, to improve Ukraine’s positions in the Doing Business rating in the component “Obtaining construction permits” next year, it is important to support the draft law No.7084 that will protect the rights of investors in housing construction.
For information: The World Bank’s Doing Business rating is a result of the annual research assessing the ease of doing business based on 10 indicators in 189 countries. Components of the rating assess the legislative acts that regulate activities of small and medium enterprises throughout their life cycle as well as their actual use in practice.
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