Ukraine does not have license provisions on waste storage approved, while, for example, the tourist industry is regulated disproportionally to its potential impact on human life and health. This imbalance is just one of numerous examples of chaotic regulation of businesses in Ukraine. Ukrainian businessmen, government officials and experts discussed issues related to the market access regulation at the roundtable “Moving towards businesses: simplifying the market access” in Kyiv on April 4. This event gave an official start of the campaign related to the public dialogue between government and business, which aims to improve the state regulation and the business climate in the country.
The Ministry of Economic Development and Trade and the State Regulatory Service initiated public consultations as a necessary element of the regulatory reform to make business rules effective and clear and the process of their adoption – transparent and open. The independent analytical center BRDO organized public consultations and developed analytical materials as part of the EU4Business \ FORBIZ initiative. More than 100 entrepreneurs and representatives of business associations participated in public discussions.
As reported by the Better Regulation Delivery Office (BRDO), one-third of instruments regulating market access are used improperly, and 379 licensing documents don’t have any defined legal status at all. This not only complicates the interaction of entrepreneurs and the state, but also creates numerous opportunities for corruption. The ineffective regulation is expensive: just improper licensing costs 900 million hryvnas for businesses annually.
“The deregulation is still one of the priorities of the Government. We have abolished almost 500 obsolete and illegal acts in the last 6 months. In the future, we have to introduce a system of effective regulation that will prevent the creation of counterproductive regulatory practices at the national level. This is possible only in the process of constructive dialogue between businesses and the government,” the First Deputy Prime Minister and Minister of Economic Development and Trade of Ukraine Stepan Kubiv commented on this event. While opening the public consultation, the Deputy Minister of Economic Development and Trade of Ukraine Mykhaylo Titarchuk said, “When entering the market, small and medium businesses are facing with a number of unnecessary barriers, obsolete rules and unnecessary restrictions. We have no illusions that we can simply abolish all this. We approach the regulation problem in a consistent manner. Public consultations in the form of roundtables and online consultations on the basis of the newly created Platform for Effective Regulation PRO will allow to involve those who need it most of all – Ukrainian entrepreneurs – into identifying problems and developing solutions”.
“Low quality decisions that regulators take is a sore point for small and medium businesses. A year ago, we adopted the updated Methodology of regulatory impact analysis requiring the regulators not only to foretell the regulation effects for businesses and the state budget in detail, but also consult with the business community,” the Head of the SRS Kseniya Lyapina said.
The leader of the European FORBIZ project in Ukraine Matthias Halder expressed his support for the regulatory reform. In his opinion, effective decisions are those ones that were developed in cooperation with all market participants. “The European experience shows that public dialogue between the state and all stakeholders is an integral part of an effective regulatory reform. Results oriented exchange of views and motivated involvement of the business community in the decision-making process is a way to create effective regulatory changes,” he said.
“Now Ukrainian business is a hostage of ineffective regulation,” the BRDO Head Oleksiy Honcharuk said. “The effectiveness is measured by the formula: progress in achieving goals divided by the amount of resources spent. However, according to our analysis, it is impossible to define the goal of more than 95% of existing regulatory documents. Effective regulation is a prerequisite for business development, job creation and economic growth.”
The experts of the Control and Supervision sector have found 661 cases of using instruments to restrict the markets access, and the provisions providing these restrictions are in 943 regulatory acts. At the same time, the regulatory environment is of poor quality. Analysts have identified four key issues on regulation of market access:
- Gaps in the regulation of licensing, for example, a lack of license provisions on 4 types of economic activity
- Gaps in the regulation of the licensing system, for example, 18 procedures to issue permits, which is 21% of licensing documents provided by the Law of Ukraine “On the List of Licensing Documents in the Economic Sector”, have not been developed and approved
- The existence of illegal regulation: in particular, 6 types of economic activity are licensed illegally
- Legal uncertainty: 379 documents related to the licensing system do not have any defined legal status, and 206 of them have signs of licensing documents while not being specified in the Law of Ukraine “On the List of Licensing Documents in the Economic Sector”, that is they are not formally included into the licensing system, while being used by licensing authorities.
The BRDO experts believe that the procedures to use instruments regulating the market access are also inefficient, and these instruments are used improperly. The experts proposed to develop the Methodology of using instruments restricting access to markets, which will prevent the officials’ subjectivity and abuses in the process of choosing appropriate regulatory instruments.
Regulating the market access through licenses, declarations and permits is aiming at preventing threats to human life and health, the environment or national economy.
About public consultations
The Ministry of Economic Development and the SRS as well as other ministries assisted by the independent analytical center BRDO and supported by the European Union involve the business and expert community in discussion of regulatory issues and their solutions in 18 key markets. Consultations will be held as roundtables in Kyiv and the regions as well as online on the Platform for Effective Regulation PRO at http://regulation.gov.ua. BRDO experts identify the issues of market regulation in analytical “Green papers”, and they will prepare “White papers”, which will form the basis of specific regulations, according to the results of public consultations. Thus, the business can be involved in forming the regulatory policy at the stage of its development.
About BRDO
The BRDO (Better Regulation Delivery Office) is an independent analytical center that forms the agenda related to regulatory development to establish a level playing field favorable for business development. The organization was created as a result of the initiative of reformers within the Government funded by international donors to solve the problem of lack of qualified specialists and experts the state requires to reform the regulatory system. The BRDO includes more than 60 Ukrainian experts on markets, lawyers and analysts who work with the MEDT, the SRS and other ministries and agencies to develop the regulation priority markets in a consistent manner.
About FORBIZ
The FORBIZ project is functioning as part of the European EU4Business initiative to support reforms in Ukraine and its economic recovery by offering system-based and reasonable changes for friendly business environment with a special focus on SMEs. The project helps to change the state policy towards the more recognition of SMEs and the role they play in the economic recovery. FORBIZ will focus on reducing the regulatory burden and risks to the business.