The abolition of share contributions from real estate developers will make the construction industry more active and improve investment prospects of this sector. The BRDO Construction Sector Head Olena Shulyak said that live on the Radio Kyiv 98 FM.
“The draft law that provides for the abolition of share contributions from real estate developers was registered in the parliament. I fully support this initiative and believe that the adoption of this draft law will make the construction industry more active in Ukraine and improve investment prospects of this sector,” Olena Shulyak said.
According to the expert, a share contribution was a real burden for investors. In particular, a share contribution amount is 4% for construction of residential facilities and 10% of the construction cost – for construction of commercial premises. Today you will hardly find a country with such high mandatory payments. According to the Doing Business ranking, Ukraine takes the 176th position among 189 countries in the world in terms of mandatory payments amounts imposed on real estate developers. Therefore, it is not surprising that about 25-30% of investment projects (particularly in the commercial real estate sector) remain unrealized due to this contribution.
“The fact that these share contributions have become a major source of corruption makes matters worse. It is very convenient for local officials. Companies ‘pay’ to corrupt officials about half instead of paying a share contribution that costs about $5-10 / sq. m. for developers (in the case of commercial real estate). Of course, the city treasure receives not a penny from these deductions. Therefore, the implementation of this draft law will be, firs of all, an effective tool to fight corruption,” Olena Shulyak stressed.
She is confident that it is the availability of a corruption component discourages foreign investors and worsens the Ukraine’s position in the Doing Business ranking in terms of the ease of doing business.
“If we don’t abolish share contributions, the state will just lose not least because the management of this type of payments is a troublesome and very difficult task. Only in Kyiv, debts exceed 350 million hryvnias. And this is without counting losses from corruption schemes and millions and billions investments, which the sector has not received,” Olena Shulyak says.