24.9% of sole proprietors and legal entities said that government officials abuse regulatory norms. These are the findings of the BRDO’s research on regulatory pressure on business, which involved 807 business representatives from all over Ukraine.
Who participated in the research?
The most active participants in the survey were representatives of enterprises from the city of Kyiv (11.1%), Dnipro (8.3%), Kyiv (7.2%), Lviv (6.1%) and Kharkiv (6.1%) regions. Legal entities dominate among the respondents (69.5%), with the share of sole proprietorships at 30.5%.
What are the biggest obstacles for business in Ukraine?
Among the problems that respondents consider to be the biggest obstacles to running a business, military aggression by the Russian Federation dominates (60.2% of respondents). In addition, flawed legislation in the areas where businesses are operating is among the top issues (56.3%), as well as the large number of permits required to do business (34.6%).
Which government agencies create the most obstacles for business?
The results of the research show that out of the 27 government agencies proposed in the poll, the most obstacles to doing business are created by the government agencies that are considered to be the most obstructive:
- The State Tax Service – 44.1% of respondents
- The State Customs Service of Ukraine – 11.1%.
- State Inspection of City Planning and Architecture – 8.8%.
- The State Service of Ukraine on Labor – 7.9%.
- The National Police of Ukraine – 7.5%.
2.8% of participants reported that local authorities create obstacles for business. It is significant that local authorities have a more negative impact on the activities of sole proprietorships (4.2%) than on the business of legal entities (2.9%).
At the same time, 7% of respondents said that they had not encountered any obstacles in their interaction with government agencies.
What does the BRDO have to do with it?
BRDO has been involved in deregulation initiatives for almost 10 years. Since 2023, the BRDO team has been participating in the work of the Interagency Working Group (IWG) on Deregulation to review the areas of state supervision and control. The IWG’s activities are aimed at eliminating outdated and irrelevant state regulatory instruments to improve the business climate in Ukraine. This applies to agriculture, urban planning, energy, healthcare, environmental protection, consumer protection and many other sectors. Experts prepare analytics, help prioritize and implement IWG decisions, including the development of regulations.
Overall, over the two years of work, the IWG has reviewed 1,323 regulatory instruments, of which 141 have already been canceled. The implementation of the IWG’s decisions to cancel outdated regulatory instruments will save Ukrainian entrepreneurs 21.3 billion hryvnias, hundreds of thousands of hours of working time, and, as a result, create new workplaces.
One of the results of the work was the draft law №5837 “On the Basic Principles of State Supervision (Control)”, which the Parliament of Ukraine supported in the first reading in October 2024. The draft law simplifies cooperation between business and the state and provides fewer inspections for insured entrepreneurs, an audit as a preventive measure, business involvement in public councils in controlling authorities, digitalisation of processes, and liability of heads of regulatory authorities for violations of procedures.
The draft law is currently awaiting a second reading. We urge Members of Parliament to adopt the document as soon as possible.
The study was conducted by the BRDO team together with the Center for Innovation Development at the request of the Ministry of Economy within the EU4Business: SME Policies and Institutions Support (SMEPIS) project, implemented by Ecorys in a consortium with GIZ, BRDO and Civitta with the financial support of the European Union.
For more information about the research, visit the following link (in Ukrainian): https://brdo.com.ua/wp-content/uploads/2024/11/Deregulation-survey-SMEPIS-1.pdf