The Better Regulation Delivery Office published the rating of Government’s openness
On March 6, 2017, the Better Regulation Delivery Office presented the results of an analysis of how the Ukrainian ministries fulfill the requirements of openness and availability of information regarding their activities. According to the study’s report, the Government fulfills, on average, only 65% of these requirements.
According to the report of the Government’s openness study, the Ministry of Infrastructure of Ukraine having 65 of 70 possible points and the Ministry of Education and Science of Ukraine having 64 points are at the top of this rating. The outsiders are the recently created Ministry of Information Policy of Ukraine and the Ministry of Temporarily Occupied Territories and IDPs – 23 and 19 points respectively.
“The available data are not only the increased openness and transparency of government agencies, but also a source of information necessary for business development. And there is good reason for our attention to the websites of ministries, because they have to be a tool to obtain the first-hand information and a platform for dialogue with the public and business,” the head of the Better Regulation Delivery Office Oleksiy Honcharuk said.
One of the undeniable advantages of all ministries is the work with open data bases, most of which are available on websites. However, there are some exceptions. For example, the Ministry of Energy and Coal Industry of Ukraine does not publish data on maximum amounts of electric energy consumption; environmental and radiation conditions in the area of nuclear power plants; reports prepared as part of the Extractive Industries Transparency Initiative. And the Ministry of Agriculture and Food did not publish the information on forest fires, forest monitoring data and so on.
The analysts of the Better Regulation Delivery Office estimated the openness of ministries based on seven criteria: implementation of the principle of information transparency, the work with open information, publicity of action plans and reports, anti-corruption expert review and public monitoring of law enforcement. The rating is based on the analysis of 18 websites of ministries.
According to Oleksiy Honcharuk, last year the BRDO Office initiated a systematic review of regulatory environment in six key sectors of economy, providing maximum transparency of the process and participation of all stakeholders. And the rating of Government’s Openness is the first indicator of the readiness of these bodies to the public dialogue with their target audiences.
The Better Regulation Delivery Office has developed recommendations to improve the transparency of data and sent them to each ministry. The BRDO experts will analyze the effect of recommendations and update the rating in two months.
Will Soviet-type schools continue to be built in Ukraine? After all, Ukrainian schoolchildren spend at least 2,720 days – 7 years and 7 months in classrooms
Source: life.pravda.com.ua
Before graduating from high school, Ukrainian schoolchildren spend at least 2,720 days in classrooms. This is solid 7 years and 7 months. The space, in which children spend this time, not only affects whether it is comfortable for them to study and take a rest at school breaks. It helps or prevents to form skills of working in groups, a sense of responsibility and pride in their achievements and leadership qualities. This all will have an impact on competitive abilities and success of today’s schoolchildren in the future. The Ministry of Regional Development, Construction and Housing and Communal Services is planning to adopt a seemingly unremarkable document in the near future. It is a guide for constructors building domestic education institutions. And it depends just on this document whether our children will have modern schools with comfortable classrooms and co-workings, or these schools will still be gloomy primitive facilities as they are now.
What is meant here?
In Ukraine, the construction is regulated by so-called state building codes – regulatory documents that determine both the thickness of walls, the height of stair-steps and the size of classrooms…
Recently, the Ukrainian Zonal Research and Design Institute for Civil Construction (PJSC “KyivZNDIEP”) has developed a new version of state building codes (DBN) “Educational Institutions”.
This is a good and useful initiative, but there are virtually no specialists, who are able to understand the matter and develop a modern code.
So, it happened that the provisions of the draft DBN “Educational Institutions” were not modern and not very different from the existing ones.
For example, when designing and building an educational institution, insolation standards should be taken into account – regarding providing the sunlight penetration into the rooms, which has a health-improving effect on a human body and a bactericidal effect on the environment microflora.
However, this positive effect can be seen only if there are sufficient doses of direct sunlight, which is characterized by the duration of insolation.
Well, but the insolation duration is limited to the period from March 22 to September 22 in both current and new draft state building codes.
The first question that arises is why developers have focused on the period, which lasts mostly in the summer holidays, when children are absent in schools.
Maybe, we should consider the European experience, according to which the insolation is provided 365 days a year due to modern projects of buildings and even shutters that move with the sun. As an example, an ordinary secondary school in the Danish city of Erstad.
Another standard is obligatory garbage disposers in schools. While there is a total rejection of their use and the whole world is striving to separate waste collection, we continue to bring our children up with a habit to lump everything together and make a stench.
A washing room for eggs, where they should be washed before using in food purposes, requires special attention. So, this room in schools should be separate of 6 square meters (!).
As for me, a separate working space is enough for this purpose, because the volume of consumption of this product in schools does not require this metric area.
In addition, , most schools today do not cook, but order the food or are provided with the egg mélange (semi-finished product in special containers, that is broken-out shell eggs). And most importantly, any other codes don’t contain the requirements on this mandatory separate room, except poultries.
Finally, the requirements on the classrooms size for school headmasters are almost 30 meters as a two-bedroom apartment.
As an expert real estate developer, I know for sure that 1 sq.m will cost at least $500. So, I doubt that spending more than half a million hryvnas to build offices for principals and deputy principals is the effective use of our taxes.
Education – new, but schools – old?
Almost simultaneously with the beginning of the review of state building codes, particularly, regarding educational institutions – schools, colleges and universities, a Concept of new Ukrainian education is presented in the Ministry of Education and Science of Ukraine. And be sure, these documents are not correlated with each other.
For example, the Concept provides for introducing information and communication technologies in education that should cover all activities, significantly enhance the potential of teachers and pupils and optimize management processes.
For this purpose, it is planned to develop the infrastructure, create online platforms and even entire hubs at the schools.
Instead, the developers of the new draft DBN relied on standards and rules of instructions developed by the Ministry of Communications of the USSR for the period of 1970-1980.
You do not need to be a mega expert to understand that landline phones and massive TV sets are the latest technologies, the implementation of which is provided for in these documents. This approach looks at least strange in the period of rapid technological development.
Update of realities
The developers added the garbage disposers and did not forget about spacious offices for school authorities.
But they did not remember that now it is the 21st century, which completely changed the world and forgot to correlate this fact with the Concept of education.
If new state building codes for schools are adopted in this version now, it will be long before we can change them. As a result, children will continue to study in Soviet conditions. And no Concept of new Ukrainian schools will help there, because “new schools” are built under the rules of Soviet times…
That’s why experts, progressive educators and concerned parents should join the review of the new version of state building codes.
It is very necessary for our children to have modern and comfortable schools that will encourage their development.
Freelancers shouldn’t celebrate just yet: the cancellation of individual NBU’s licenses to place funds in accounts of foreign banks and invest funds from these accounts abroad doesn’t apply to those who are registered as individual entrepreneurs.
The National Bank of Ukraine canceled the need to obtain individual licenses for transactions related to placing funds in bank accounts outside the country (excluding funds from Ukraine).
In addition, investment activities with such funds abroad also will not require individual licenses (for example, purchasing foreign securities or real estate). However, both these provisions apply only to individuals who are not registered as individual entrepreneurs.
Freelancers who work as individual entrepreneurs in Ukraine – such as programmers or designers – still can not open accounts abroad, accept payments from overseas clients there and dispose funds freely without NBU’s licenses.
“That is, even if incomes of individual entrepreneurs abroad are in no way related to their business activities in Ukraine, they still have to obtain a license,” the legal expert of the Better Regulation Delivery Office Denis Malyuska said. He noted that it would be fairer to take into account whether these transactions were related to business or not rather than whether individuals were registered as entrepreneurs or not. However, the regulator has chosen the criterion of being registered as individual entrepreneurs, because it is much easier to apply.
Denis Malyuska claims that despite the limits of the reform, the cancellation of this archaic provision from Soviet times is a positive step for the market. The life of the regulator, which lacked the tools and resources to control the process of receiving and using funds in foreign accounts of individuals, also will be easier.
“Currency regulation requires the further liberalization, but in our case even these micro-steps are important. Suffice it to recall that those actions, which are now excluded from the licensing regime, were considered to be a crime in 2011 and could be punished by a two years imprisonment,” the expert said.
Source: http://www.epravda.com.ua
Last weeks clearly showed the agony of government control over the energy sector.
Unfortunately, the consideration of a key sector document – the draft energy strategy – was pushed into the background.
This document should define the development of the Ukrainian energy sector in accordance with the requirements of the national economy and become a main directive for any Minister of Energy and any government.
It turned out that it was not interesting to determine the sector development options at a time when there were hot discussions on the NKREKP’s decision to establish rates for non-standard connection to electricity grids and on the failed Rotterdam+ formula.
The decision on non-standard connection was to be an element of investment predictability and to prevent the possibility of corruption abuses by using a formula method of determining the cost of this service.
Instead, this decision increased and formalized the monopoly rent for regional power distribution companies, which control the centralized Ukrainian energy system through “avatars” in the government.
The work on secondary legislation and NKREKP’s regulatory acts doesn’t reach its ultimate goal, and current actions of the regulator distort the good ideas.
Due to a lack of trust to government institutions, the deputies have to establish the method of cost determination in the law that should be determined at the level of secondary legislation in rule-making reason in order to remedy the situation. It is more difficult to change the law, since there should be 226 votes.
The method that included market instruments to determine the coal price as the electricity cost and was designed to ensure the storage stability at thermal power stations and combined heat and power plants became a “fool’s bargain”: the price increased, but there is no coal.
The Ukrainian economy and consumers have become the hostages of poverty due to inefficient decisions, corruption and populism. This is the way the oligarchic economy operates.
Are current decisions effective?
I support the decision of people’s deputies to immediately renew the discredited team of the energy regulator, but I have little hope that it will change anything. Can anyone guarantee that new “perfect people” will change the situation? These “perfect” people will have difficulties in resisting the political pressure and pressure of oligarchs.
While there is an objective necessity to increase the price of electricity and thermal energy for consumers, the politicians-populists, who are afraid of the possibility to lose their ranking, and oligarchs, who seek for maximizing profits through the monopoly position by blackmailing with disruption of the energy system.
It is difficult to overcome the “system” of oligarchic economy, so it should be fooled. For example, one sentence to support the development of solar energy at the household level established in the law during Klyuev’s days in solar generation area caused dynamic development of this area.
This provision allows to create jobs, pay taxes and provide the partial energy independence of Ukrainian houses.
Are there any options?
Previously, the Soviet legacy could be used to stimulate the domestic economy and provide easy and affordable access to infrastructure, and to ensure low-cost energy resources on the market due to a lack of investment costs in the tariff structure.
This would increase the competitiveness of Ukrainian goods on the world market and allow to receive its share in the international division of labor. However, the time has been lost. The exhausted and inefficient energy infrastructure is controlled by well-known people interested only in using it to the fullest.
As there is a threat of rolling power cuts and a failure of the centralized system to ensure the energy supply sustainability, the Ukrainians must rely only on themselves providing the energy through local means: starting from stoves in village houses and ending with solar heating systems on the roof and solid fuel combustion appliances with automated bio-fuel supply in today’s economy.
Providing own production cycle by own energy sources – the distributed generation on the basis of possible local renewable fuel. As for multi-unit apartment building s – people living there form associations of co-owners of apartments of one building (TN – cooperatives) and finding alternative energy supply options. This approach is not perfect, but a no-win situation makes us to use it.
Is it bad to start using the “wood” again?
The EU policy is aimed at decentralization of energy systems and their transition towards the distributed generation, which allows everyone to become a market participant by using own generation from renewable sources: consumption, accumulation and sale of produced electricity.
This vector of development will increase the proportion of “smart” grids in the energy system and raise funds to develop new efficient technologies to accumulate the energy and control microsystems.
It is paradoxical that the situation in the energy sector pushes us to the principles of functioning of the system and the energy market that meet the requirements of the fourth European energy package, although we have not yet completed the third package.
We are catching up with the countries with developed renewable energy in the period of competitive prices of “green” generation.
It is a funny thing, but while using exhausted infrastructure controlled by oligarchs and not developing new types of conventional generation, we waited through the period of formation of renewable energy, and now we can get “green” kWh per year for adequate prices for the economy provided that the rules are stable and a maximum number of investments and participants are involved into this sector.
At the level of the strategy, we have to determine the share of renewable energy in the overall balance and its share considering maneuvering capacities and form prices realizing that the traditional energy sector was brought to the emergency state.
To the global economy?
This means that a fuel, carbon component is decreased in the Ukrainian GDP’s structure and our goods will be more competitive in the world.
After returning investment costs, the price of energy from renewable energy sources will be determined only operating costs, but this component for renewable energy much less compared with coal-steam plants and combined heat and power plants or with nuclear power plants, taking into account operating costs for security and withdrawal of units from operation.
As a result, we can get a stable, affordable and clean energy for the economy and for all of us. All developed economies are taking this way.
Ukrainian energy sector was brought into critical state. There is much to be done to improve the energy efficiency of Ukrainian consumers and Ukrainian GDP, and renewable energy resources still have a very small proportion in the energy market.
Each traditional oligarchic ineffective kilowatt is very expensive for Ukrainians, and its cost is increasing with every wrong action of the Ukrainian government.
It was clear before, but external and internal threats create the situation with no alternatives for Ukraine, remaining one possible development option: energy efficiency and distributed renewable energy.
Ironically, Ukrainian farm-yard system in the historical process of state formation may be positive for the development of the Ukrainian energy sector.
Is the regulatory tsunami over?
We often say that bad and stable rules for business are better than the good but constantly changing ones. The last year had a low level of changes that may indicate the end of the regulatory tsunami.
For example, there were 3 times fewer changes in the legislation in 2016 than in 2015, with the largest decline rates (by 5 times) in laws. The only indicator remained at the same level is the adoption of new regulations by ministries and other central executive bodies.
However, it should be noted that the decrease in total number of changes does not necessarily mean reducing the number of really significant changes for business. For example, an amended law could change just one phrase or propose the whole text as a new version, which is not friendly to businesses.
Does the frequency of changes in by-laws depend on changes in laws?
In Ukraine, there are laws along with by-laws, the number of which is much larger and which are taken to implement the laws. Accordingly, there should be a correlation between the activity of legislators and activity of the Cabinet of Ministers of Ukraine, ministries and other central executive bodies that implement the laws in the by-laws. The diagrams reflect this correlation to some extent, with the exception of 2016, when the number of by-laws almost didn’t change compared to 2015.
How did we count up that?
The analysis was carried out on the basis of regulatory acts, which are included in the database “Legislation of Ukraine” of the VRU, with the exception of international agreements.
If a law “On Amendments” amended 10 laws, this would mean for lawyers and businessmen the need to analyze 10 amended laws or risk to break the law. Therefore, we determined the primary regulatory acts (with the exception of the international ones) and counted up the number of stages they have passed through: the adoption of a new act, making amendments to it and the loss of effect. So, we’ve got a true picture.
Why do we count up that?
It is necessary to work out the decisions to change the rules for businesses. The analysis of data helps us determine what these decisions influenced on in the past and predict their impact in the future.
What is next?
We make every effort to understand whether it has become easier to live for businesses or the lawmakers have focused on critical changes. Share your thoughts with us in the comments.
If you need to make the similar analysis under other criteria (in terms of subject areas, lawmakers, etc.), we are open to cooperation, please, contact us.
The business and community circles continue to discuss new rates for non-standard connection to electricity grids the regulator has introduced recently. Yesterday, for example, the people’s deputies, businesses and experts discussed this topic during the round table devoted to the impact of tariff policy on the industry and economy and initiated by the relevant committee of the Verkhovna Rada. The Energy Sector head Oleksiy Orzhel joined this discussion.
Oleksiy Orzhel gave a variety of reasons why new rates would demotivate the business and investors:
Firstly, non-standard connection rates are too high and economically unjustified.
Secondly, the regulator behaves unpredictably: it voiced certain figures but approved other rates.
Thirdly, the calculation method includes the controversial replacement value of assets of energy-distributing companies, which requires to be checked and justified.
Fourthly, an investor provides installing lines from the regional power distribution company’s grids to own power facilities at his own costs (so-called “linear component”), but then he is forced to transfer them to a regional power distribution company because of its pressure.
According to Oleksiy Orzhel, the assessed replacement value of energy-distributing companies, which was used by the regulator, distorts the investment climate in the country promoting the connection in well-developed regions (Kyiv and Dnipro, where the rates are the lowest) while the regions with less developed energy infrastructure (Poltava , Sumy) lose their chance to attract new investments.
To remedy this situation, the Better Regulation Delivery Office proposes to improve a method of calculating rates or, more specifically, the formula that will allow to determine cost-effective rates by introducing justified indexes (that have not been taken into account previously). In particular:
Oleksiy Orzhel believes that there can be other options to determine rates of non-standard connection considered, in particular, on the basis of sampled connection prices or cost estimates of standard connection projects. “If we make this, the rates can be reduced. As a result, the country will receive both the transparent formula and adequate rates,” the expert said.
The “right without guarantees” is a current status of property rights of citizens who have invested in own housing. The recent situation with the raiders’ attempt to occupy an apartment building at the 58a Bohdana Khmelnytskoho St. in Kyiv is a good example. They used a classic scheme, when a real estate developer is declared a bankrupt and several owners appear in court.
The Construction Sector Head of the Better Regulation Delivery Office Olena Shulyak believes that a lack of effective tools to protect ownership rights to real estate becomes a snow avalanche that involves more and more injured persons on a daily basis. The state, which is not an effective regulator, plays a key role in this scheme, since the fund of construction financing it established to raise funds doesn’t protect investors from multiple sales, bankruptcies and delayed construction.
“Currently, investors have only a financial intermediary represented by the fund of construction financing under the law, but in case of problems, it won’t help to resolve them or return the invested money. The fund receives the money and a contractor company carries out the construction, but only the investor deals with risks,” Olena Shulyak said.
The BRDO Office experts developed a mechanism that will protect Ukrainian citizens from such situations and provide the investors not only with the right to purchase ownership titles, but also with real ownership rights for real estate. We are talking about the draft law of Ukraine on registration of property rights to facilities to be built in the future.
The Draft Law “On Amendments to Certain Legislative Acts of Ukraine regarding protection of ownership rights to properties to be built in the future” provides for registering property rights in three steps:
I step – construction project owners register the property right to every facility (apartment) to be built in the future if they have all the necessary permits making it impossible to carry out illegal construction projects;
II step – the property right is being reregistered in the name of an investor after purchasing the facility;
III step – the “ownership right to immovable property to be built in the future” title changes into the “ownership right to immovable property” title automatically when the construction is finished and the facility is put into service.
This initiative is being currently approved by the Ministry of Justice. We hope that it will be presented to the Government for consideration and submitted to the Parliament in the coming days.
Based on the Ukrainian Crisis Media Center’s report
The NKREKP’s resolution on new prices to connect to electricity grids is totally unacceptable and should be revised. The experts of some organizations, people’s deputies and representatives of local authorities unanimously agreed on this opinion during the discussion held in the Ukrainian Crisis Media Center today.
“We will pay a very high price for access to electricity grids and fund the regional power distribution company due to the linear component,” the head of the Energy sector Oleksiy Orzhel said in his speech during the discussion.
Issue of calculations
According to the people’s deputy of Ukraine (Union “Self Reliance” faction) Lev Pidlisetsky, the NKREKP applied the law provisions when using the formula completely improperly. “We had no idea on the asset valuation they applied and no one could assume that they wouldn’t use any discount rates,” he said.
The first issue is referred to the transparency of the valuation of regional power distribution company’s assets, which is the numerator of the formula. For example, according to the new valuation formula of the State Property Fund, the cost of “Dniprooblenergo” increased from 6.2 billion hryvnas in 2015 to 13.4 billion in 2016, although there have been no changes in the company, the former NKREKP’s member Andriy Herus said. Secondly, the facilities that don’t operate in depressed regions any more have been also included to the asset valuation. As a result, the connection cost for these regions is more than doubled compared with Kyiv and Dnipro. “There is a distortion: connection procedures are expensive in the regions where the production should be stimulated, and the connection will cost less in the center of Kyiv, where the facilities are overloaded,” the expert explained. It is also illogical that the denominator includes the rated capacity of transformers instead of the contracted capacity of consumers, as well as that they apply the same approach both to generating enterprises and to all others and that new schools, kindergartens and high-rise buildings will also pay for the connection on a non-preferential basis.
The connection price has risen by 6 times and it should be noted that it doesn’t include the construction cost of electric lines to facilities. “The linear component is a “store”, where you buy products. That is, you also have to build a shop for sellers to buy a product. We will pay a very high price for access to electricity grids and fund the regional power distribution company due to the linear component,” the head of the BRDO’s Energy sector Oleksiy Orzhel said. Experts also said that the new tariff is a visible attempt to legalize the “corrupt rent” – the funds the regional power distribution company previously received as bribes.
“The formula contains mistakes not only by definition, but also from a legal point of view. The resolution hasn’t been published yet, but if it is published – there will be a lawsuit with all grounds to abolish it,” Andriy Herus said.
A risk to investments and the green energy
The sharp increase in prices to connect to electricity grids will be a serious blow to the industry and small generating enterprises, especially in the green energy sector, lead to the freezing of initiated investment projects and discourage foreign investors. “Now connection procedures take up 30% of the project budget instead of 10%, and it is paid not to the state but to another business,” the member of the Ukrainian Union of Businessmen Serhiy Petrov said.
“This factor creates an investment barrier to enter the industry, whereas Ukraine has to destroy these barriers. This does not correspond with the principles proclaimed by the government. We can’t build a strong economy in that way and will always depend on IMF’s loans,” the people’s deputy of Ukraine from the Radical Party of Oleh Lyashko faction Viktor Halasyuk said. “We will review these valuations [based on which the calculations were made]. I have already sent a deputy request to get them, and we will initiate an independent examination,” he added.
A threat to the development of territorial communities
The chief of staff of the Sumy Regional State Administration Dmytro Zhyvytsky said that the new resolution would slow down the development of new integrated territorial communities. For example, if some community establishes agricultural cooperatives, now the cost of new construction for them will be considerably more expensive, so the idea of consolidation is not viable.
A number of organizations call to review this decision
Experts of the Intensive Care Reforms Package published an official statement, in which they supported all above reservations and called to review this decision taking into account the interests of all participants. The experts also remind that it is necessary to provide a full rotation of the NKREKP. “If we do not really have independent decisions, it makes no sense to speak about the further reforming of the energy sector and the electricity market,” the statement says.
The co-chairman of the Energy Committee of the European Business Association Maksim Sysoyev said that the organization was also deeply concerned about the NKREKP’s decision and was preparing an appeal to the Prime Minister and the regulator.
The representative of agricultural associations Denys Marchuk said that new rules would create serious difficulties for processing enterprises in the agricultural industry, so 9 agrarian associations have already appealed to the President and the NKREKP’s head.
The discussion participants also stressed that it was important to clarify all the details in the law carefully in the future to narrow the scope for abuses.
Follow the link to watch the video from the discussion: http://uacrisis.org/ua/stream
The National Commission for Regulation of Energy and Utilities (NKREKP) is planning to approve these rates for 2017 today.
For example, the connection cost for1 kW of capacity from Kyivoblenergo will be more than 5,000 hryvnas. And in Kyiv – the price will increase from 41 up to 3,000 compared to the previous year according to the Kyivoblenergo’s report for the first half of 2016 published on their website.
As explained by the Energy sector’s head Oleksiy Orzhel, this decision will have a negative impact on the investment climate in Ukraine and, actually, will make it impossible to create new production facilities and develop innovation sectors. First of all, it is referred to the renewable energy, because it generates the largest number of connections.
In addition, it may lead to increased prices in construction. In particular, the cost of 1m2 of residential area in new buildings in some regions may rise by 11%.
The Better Regulation Delivery Office believes that the rates proposed by the regulator are too high and unreasonable, and they will create additional barriers not only for businesses, but also for the country’s economic development. We call on the NKREKP to use a balanced approach and revise the connection cost to cut it.
The Better Regulation Delivery Office together with the Ministry of Economic Development and Trade initiated the abolition of 17 permissive documents, 10 of which are proposed for transferring from the control principle to the declarative one.
Currently, this means a number of barriers that take a lot of time and resources of businesses. For example, sometimes it takes up to 45 days to obtain permits. You will need to spend up to 30 days to obtain a declaration of the state sanitary and epidemiological expertise. In addition, the monitoring of intermediary prices shows that the estimated cost of services for assistance in obtaining this declaration is 2.5-3 thousand hryvnas (depending on product types and terms to obtain the declaration). At the same time, we need to consider that no Ukrainian laboratory for sanitary and epidemiological expertise has been certified according to the recognized international ISO 17025 standard that means, none of declarations of such expertise is recognized just by Ukraine.
The draft law “On Amendments to Certain Legislative Acts of Ukraine regarding reducing the number of permissive documents by extending the application of declarative principle” was developed as part of this initiative.
We hope that it will be considered by the Government and submitted to the Verkhovna Rada in February. Its adoption will allow to reduce the state administrative burden on businesses, introduce clear rules for economic entities and minimize their time and financial costs.
Read more about the draft law here.
The Ministry of Economic Development and Trade published a draft order of the Cabinet of Ministers “On approval of the Strategy for Development of Small and Medium Enterprises in Ukraine until 2020”.
The objective of the draft order is to create favorable conditions for opening, doing and developing the business and unleashing the potential of SMEs, which are 99.9% of the total number (1.97 mln) of companies and individual entrepreneurs.
This means the approval of long-term public policy priorities for the development and support of SMEs.
The above-mentioned draft order along with its explanatory note were published on the website of the Ministry of Economic Development in the section “Discussion of draft documents”.
Comments and proposals on this draft order can be sent within one month from the date of its publication to: 01008, Kyiv-8, 12/2 Hrushevskiy st. or by e-mail: [email protected] and [email protected].
Today, the working group for bringing State Building Codes in compliance with internationally recognized principles of setting of standards was discussing a new version of DBN “Educational Institutions” during the meeting at the Ministry of Regional Development, Construction, Housing and Communal Services.
The draft text is available here:
To give consideration to the interests of all interested parties, the BRDO Construction Sector experts invite to join the discussion. Please send your proposals and comments by e-mail to [email protected] with the subject “Reform of state building codes”.
A full list of state building codes planned to be reviewed is available here.
Today, the Verkhovna Rada Committee on Construction, Urban Development, Housing and Communal Services approved the draft Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine regarding improving conditions for construction activities” developed by the Ministry of Regional Development for the first reading.
The adoption of this draft law can provide Ukraine with +2 positions in the overall Doing Business ranking and +60 positions in terms of the construction component.
Key provisions of the draft law:
the abolition of the requirement to obtain the basic data and technical specifications from the State Emergency Service of Ukraine, including technical conditions on fire and technological safety;
the professional development of authorised workers in construction (preventing persons who didn’t get higher education in the relevant area from obtaining a certificate);
providing legal grounds allowing the Cabinet of Ministers of Ukraine to approve a list of construction works, which do not require documents to perform them and after the completion of which the facility is not subject to put into operation;
the abolition of the mandatory expertise on strength, reliability and durability of construction objects with I and II categories of complexity, which are built in areas with difficult conditions;
defining the legal conditions to improve the collection of state statistical reporting data on putting finished construction objects into operation.
The draft law is one of 46 steps in the roadmap developed by BRDO experts – it is an Action Plan on implementation of implementing the best practices of quality and effective regulation approved by the Government (#1406-p, 16/12/15). The implementation of all steps provided for in the roadmap will allow Ukraine to enter the top 20 of countries in terms of ease of doing business in the ranking (link to the ranking) annually formed by the World Bank. Currently, Ukraine takes the 81st position among 190 countries.
There is a topical problem of using residential apartments for commercial purposes, but the provisions of the draft law #5473, which will be submitted to the vote in the debating chamber this week, won’t resolve the issue.
In Ukraine, the effective regulation of these relations requires deeper changes than those ones proposed in the draft law #5473.
First, the changes establish a single rule for the whole country without considering local specifics. At the same time, these rules and restrictions are usually set at the local level all over the world that allows to consider specifics of not only a particular region or locality, but also a particular part of each locality. Moreover, it would be also logical and clear from the perspective of the decentralization policy.
Secondly, it would be practical to think not about the complete prohibition, but about the possibility to conduct economic activities provided that this aspect is agreed with the owners of neighboring apartments or local authorities;
Third, there is a problem of changing property designation (obtaining a status of residential / commercial premises), which is still remaining without clear regulation. This issue will become a very burning problem after the introduction of the prohibition.
Fourthly, there should be a focus on the possibility to prohibit activities at the request of persons, whose rights are violated, in a timely manner instead of focusing on the administrative liability.
The BRDO Office experts believe that the adoption of this draft law will cause the worsening of the business climate and have high risks for small and medium sized enterprises without solving the above-mentioned problems.
As for the citizens living in residential buildings, the situation will have both positive (the possibility to prevent changing the use of buildings by neighboring owners) and negative effects (for example, reducing the market value of apartments because of the inability to use them as office premises) for them.
In general, experts say that the advocacy of this draft law is at the wrong time.
Ukrainian officials and politicians change the legislation and the regulatory environment so quickly like never before under the deregulation slogan. It seems like everything is done to simplify the life of entrepreneurs. The Better Regulation Delivery Office proposes to radically change the approach to regulation and finally develop clear and simple rules for businesses.
The Better Regulation Delivery Office has been working in Ukraine since November 2015. It is a non-governmental organization that doesn’t duplicate the functions of the State Regulatory Service or other state institutions while being involved in analyzing the legislation and the regulatory environment, identifying problematic issues and preparing documents that will solve these problems. The BRDO Office has already announced ambitious plans for the next year: to review regulatory rules on markets controlled by five ministries – the Ministry of Agrarian Policy, the Ministry of Energy, the Ministry of Economy, the Ministry of Regional Development and the Ministry of Infrastructure. It is referred to about 70 different markets – from the coal and nuclear energy market to the market of crushed stones and concrete. The Delo.UA had a conversation with the BRDO Head Oleksiy Honcharuk about the analysis of regulatory rules in the coming year as well as about the potential increase of Ukraine’s position in the Doing Business ranking.
Is the recent abolition of 367 regulatory acts the first result of the review of rules on markets?
It is a kind of so-called “rubbish” that should be removed from our legislation. There are certain rules in five economy sectors that we are talking about and they are described by 10 thousand of laws, regulations, resolutions, orders and instructions. We analyze them in terms of their legality and importance at the first stage of review.
What does it mean?
There are the laws and by-laws, which are much more numerous and adopted to implement the laws, in Ukraine. If the law doesn’t prescribe that there should be the resolution, it should not exist at all. However, we have many documents that officials have just invented.
In addition, there are also outdated documents. For example, some by-laws have been adopted as part of the law, but this law was abolished while the by-laws continue to exist.
This all is the “rubbish” we need to clean out the regulatory environment first. So, we have a list of 367 illegal and outdated documents at the level of Cabinet of Ministers and now we are preparing a list of orders and instructions at the ministerial level in a similar way.
Speaking of real deregulation, what measures did the Cabinet of Ministers take to improve the situation in specific markets?
The systematic review of markets will start in January 2017. Now it is important to understand what goals the government wish to achieve as part of the regulation. Every ministry and every regulator should know why its functions are necessary and what its goals are, for example, when it interferes in construction or agriculture. Therefore, we were working together with ministries on the inventory of their regulation in autumn.
We were not just trying to count regulatory acts and promise to review them in the coming year, but we would like to answer three key questions – “what, how and why?” First of all, we tried to find out what markets were regulated by these five ministries. Secondly, we tried to understand what instruments – licenses, quotas, patents, restrictions, etc. – they used to regulate each market. Third, we attempted together with them to understand why they do that. Therefore, we offer to build the activities of five ministries in this direction in a fundamentally different way the next year. We will start with markets of interregional bus transportation, wood, steel structures and energy distribution.
As for the decisions the Cabinet of Ministers has already adopted, this is also an important part of our activity, but it is not related to the systemic review of markets. There was a moment when the Prime Minister held a meeting and honestly said, “I have a feeling that the process of deregulation and effective regulation is not active. To my mind, we have stayed in the same place during the last couple of months”. However, their task was simple – to offer decisions that can be adopted as soon as possible at the level of the Cabinet of Ministers and will have a positive impact on small and medium businesses. In particular, these decisions include the adoption of license provisions, without which the access to markets is virtually closed, the possibility for notaries to set the price for services, which is less than 1%, the simplification of the procedure to approve the installation of telecommunications equipment, the revision of rates for renting the roofs of state property, the preparation of rules for developing oil and gas fields and the permission to mix grain of different types.
What changes should we expect in the near future? What issues is the BRDO working on now?
One of the important initiatives is the liberalization of interregional bus transportation. Our government is still trying to decide how many buses should go from Kyiv to Zhytomyr. But it is obvious that it does not know the real needs, and you can see this fact easily if you look at the official figures and the real situation. We estimate that about 60% of the market is in the shadow economy, and this is a sentence. It means that carriers are also beyond the state control. Our idea is to abolish limits on transportation. The government says, “If you wish to go, there is a station A and a station B, there are general rules of road safety and ecology”. What you need to understand? If we try to bring the transportation sector out of the shadow economy, the state can have a clearer idea about the passenger traffic. And what is the idea about passenger traffic? This is a possibility to choose an adequate transport model and use the territory for transporting cargo and goods efficiently and profitably.
Is there someone other than the BRDO who understands the strategic importance of these changes?
Of course, the team of the Ministry of Infrastructure understands. But an average minister’s “life period” is 11 months, so the government is trying to set more realistic plans for this short period. Thus, they mostly focus on things that can be changed right here and right now while having some results. This is a mode of quick wins. In fact, it is exactly the opposite of what any minister should perform. Actually, the BRDO’s function is just to follow the sequence and look into the future. We have to set the pace and vectors and continue on that path regardless of the Government.
Why did you choose these markets for the systematic review?
We followed several criteria. First, the markets should be related to the small and medium business. Second, these markets were the ones, where we could try to show a compromise. After all, an ideal reform will be implemented when they all agree on the rules once and for 100 years. But it is possible to agree for a long time only when you hear them all, understand and develop the rules to suit everyone.
What other decisions related to the deregulation will be taken in the near future?
Another important issue we are dealing with is the export control. Ukraine has a much longer list of goods subject to this control than in other countries, and, particularly, it is because the Security Service included many different comments to it. We would like to shorten this list.
Another very important topic, which, on the one hand, promises to save the state money and on the other hand, to sort out the mess in the sector, is the wood registration. There are 619 primary forest users, i.e. forestry and objects of nature reserve fund eligible to use and manage the forest in Ukraine. Almost all these entities cut the trees, however, not only for industrial but also for sanitation purposes. Of course, we can run through the forest and catch the guys with the axes checking their documents to enable the state to control who cuts the trees and on what grounds. But it is expensive and we can’t catch everyone. They introduced a chipping method to ensure the adequate operation of the system of wood registration. If someone cuts down a tree and intends to sell it, he has to put an identification mark on it and this information will be included to the information system of the SE “Leskonsalting” company. However, the problem is that only state enterprises (the number of which is less than 300) from 619 forestry agencies have this system. Other forest users sell the wood but without these marks. Therefore, everyone has to use a single approach to make the system of wood registration effective. The Cabinet of Ministers should adopt a resolution and oblige all forestry enterprises, including the military and municipal ones as well as objects of natural reserve fund, to record the data in a unified system. It is quite possible and we are working on this issue now.
What does the business say about your plans?
Someone supports us, someone is watching from sidelines and others resist because they are afraid of changes. There are a lot of work to be done and we will gain the confidence of businesses step by step and try to reformat its relations with the state.
What is a serious barrier for businesses in your opinion – the bad regulation or outdated visions of Ukrainian entrepreneurs?
These aspects really complement each other. Today’s blinkered vision is a legacy, a result of total mistrust and the attitude to the state as something external. This is a fantastic phenomenon since it turns out that you can support the state while being against it at the same time. To my mind, there are very deep grounds for that. On the one hand, small and medium businesses constantly feels guilty, for example, because of unpaid or underpaid taxes. On the other hand, they also feel a constant fear since the state constantly changes the rules, and so they simply can’t be sure than they comply with all the requirements. In addition, the state has long been used for other purposes to protect individual corporate interests. Therefore, it is treated as an instrument of reallocation.
The Government has recently announced the adoption of a law that supposedly should raise our position by 40 points in the Doing Business ranking. How do you think what changes are the most important and when this document will be adopted?
The value of this draft law is in its comprehensiveness, it doesn’t contain non-important aspects. What does it cover? In particular, this is the abolition of share contributions for real estate developers, a trust property instrument that will help restore the credit activities, an instrument of alternative consideration of disputes and provisions enhancing the protection of minority shareholders. We consciously included only the aspects that the Doing Business ranking offers into this draft law. We believe that it will be easier to “sell” the document to the parliament in such a way. After all, there are dozens of draft laws, which can positively affect the ranking’s position this way or another, in the Verkhovna Rada now, but we need to win quickly to achieve a significant progress and make it noticeable on the international stage. If the document is adopted in late March or at the beginning of April, it will have a result and we will enter the top 30.