Expert: Construction volume decline in Ukraine is a consequence of inefficient state regulation

An improvement of regulatory policy in the construction sector became a discussion topic during the LIGA:HUB “State Regulation in the Construction Field” panel discussion organized by the Company “LIGA: Zakon” on the “INTERBUILDEXPO-2016” platform on March 23. The Construction Sector Head Olena Shuliak represented the Better Regulation Delivery Office during the discussion.

The Vice Chairman of the Verkhovna Rada Committee on Construction, Urban Development, Housing and Communal Services Petro Sabashuk, the Deputy Minister of Committee on Construction, Urban Development, Housing and Communal Services Maxim Malashkin, the Head of the State Regulatory Service Ksenia Lyapina, business representatives and experts took part in the discussion of topical questions in the field of construction regulation.

As Olena Shuliak stated, construction sector rules are regulated by 1 683 regulatory acts (42 laws and 336 Cabmin’s resolutions). However, 158 of them were adopted during the Soviet period. The BRDO expert said that construction volume decline in Ukraine was a consequence of inefficient state policy in the construction sector.

For instance, Olena Shuliak noted in her report that the contribution of the construction industry in the structure of Ukraine’s GDP has fallen by 4 times (from 8% to nearly 2%), and the number of officially registered workplaces has reduced by 2.5 times in that period (from almost 680 to 278 thousands). The expert specifically addressed the fact that Ukraine was included to the list of TOP-15 countries in terms of construction permits cost.

Having analyzed a particular construction case in Kyiv, the BRDO Construction Sector Head gave an example of certain cases of excessive or inefficient use of regulatory tools in the industry and the consequences of such regulation. Olena Shuliak analyzed all stages of construction in details and stated that land allocation in Kyiv needed 17 contacts with officials and 55 separate documents. The whole procedure lasts 2-3 years. For example, the connection of buildings to the electricity supply networks can last up to 277 days.

“The current situation in the construction regulation sector does not assist the sector development. Conflicting regulations, a lack of investor’s guarantees and unclear legislative rules are the factors, which not only hinder the construction development in Ukraine, but also do not give an opportunity to stimulate other industries. We should pay attention to the fact that the construction industry provides at least 30 orders to contiguous ones.  And this is not only hundreds of thousands of workplaces, but also billions of dollars in revenue,” Olena Shuliak concluded.

Changes in the regulatory policy regarding the construction sector must become one of the main issues of legislative work in the near future. Statesmen who took part in the discussion panel assured the expert and professional environment of that. The Better Regulation Delivery Office calls business representatives and the public to join this process and send proposals to [email protected]. All proposals and comments sent to the Better Regulation Delivery Office (BRDO) will be taken into account while preparing the conclusions.