The team of authors consisting of a group of people’s deputies and representatives of four organizations drafted a law that provides for transferring certain types of state-owned land into ownership of united territorial communities while empowering the State Service of Ukraine for Geodesy, Cartography and Cadastre to control the land use and protection along with the significant enlargement of service’s powers.
The draft law of Ukraine “On amendments to certain legislative acts of Ukraine regarding empowering local governments in land management and strengthening state control over land use and protection” provides amending at least 3 Codes (land code, forest code and code of administrative offences) and 17 laws of Ukraine.
The Better Regulation Delivery Office (BRDO) experts analyzed the law and found its negative impact on government regulation and the presence of large corruption risks related to the unjustified and unreasonable empowerment of the State Service of Ukraine for Geodesy, Cartography and Cadastre.
The BRDO expert Maksym Maksymenko said that a legal structure, in which one entity (the state) owns a facility and another entity (territorial communities) is empowered to administer this facility, is harmful and doesn’t ensure the efficiency of the administrator’s functions. The lawyer believes that provisions of the abovementioned draft law on delegating to local government bodies the authority to administer state-owned lands (without actual transferring the relevant land ownership from the state to territorial communities) are in direct contradiction to provisions of the Coalition Agreement of the Verkhovna Rada and the Concept of the reform of local self-government and territorial organization of government in Ukraine adopted by the Resolution of the Cabinet of Ministers of Ukraine.
According to Maksym Maksymenko, the abovementioned strategic documents don’t contain such a condition for transferring most of the state-owned lands into communal ownership as creating united territorial communities.
“State-owned land plots, with the exception of certain lands (with immovable property owned by the state; some lands, by using which the state ensures performing own functions, such as military lands, etc.) should be legally transferred directly into communal ownership that will appear with the entry of this law into force,” Maksym Maksymenko said.
In addition, authors of this draft law unjustifiably and unreasonably enlarge the powers of the central executive body in the area of land relations instead of transferring functions of state control over the land use and protection to the State Ecological Inspection of Ukraine and reserving the relevant functions for the central executive body regulating land relations. This has large corruption risks of using these powers for illegal purposes (land redistribution for the benefit of interested parties, etc.).
Taking into account the above facts, the Better Regulation Delivery Office (BRDO) as an expert organization can’t support this draft law without significant amendments.
The Verkhovna Rada Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety that considered a number of draft laws on connecting to electricity supply networks last week took this decision. All initiatives, including the draft law #4310-1 “On amendments to certain laws of Ukraine (regarding improvement of connecting to electricity supply networks)” developed by a group of people’s deputies with the involvement of the Better Regulation Delivery Office (BRDO) experts, were sent for revision.
“This Committee’s decision suspends the process of creating a transparent and favorable investment climate. Unfortunately, this actually means delaying the reforms in relations between energy transmission companies-natural monopolies and customers interested in the connection procedures for at least six months,” the head of the BRDO Energy sector Oleksiy Orzhel said. He also added that it was a too long period, especially when changing the principles of mutual relations between an energy-supplying organization (natural monopoly) and customers, who are both individuals and businesses, was on agenda.
The expert said that the proposed draft law #4310-1 could make the regulation in this area clearer for a customer. According to him, the approaches envisaged by the draft law will be reflected both in Article 21 of the draft Law of Ukraine “On electricity market of Ukraine” and the subsidiary legislation (in relevant codes) after revision.
“Unfortunately, the postponement of the decision to simplify the connection to electricity supply networks and implement this market reform’s component through its implementation into the major draft Law of Ukraine “On electricity market of Ukraine” brings the same risks as the introduction of a new electricity market has,” the head of the BRDO Energy sector Oleksiy Orzhel emphasized.
The Better Regulation Delivery Office expects that people’s deputies will support initiatives aimed at optimizing the relationship between business and companies-natural monopolies after finalizing the draft law by including the best provisions of other draft laws.
It was expected that the adoption of this draft law would improve the investment attractiveness of Ukraine, in particular – by increasing the country’s position in the World Bank’s Doing Business ranking in terms of convenience of connecting to electricity supply networks.
The head of the BRDO Transport sector Oleksandr Kava gave this opinion while commenting on the discussion “State strategy and innovations in the infrastructure sector of Ukraine” moderated by him in the framework of the Ukrainian Infrastructure forum.
The expert pointed out that this is quite possible with the development of internal infrastructure and the use of possibilities of Ukraine as an international transport junction.
“There is no need in “revolutions”, we have to develop these two directions step by step. However, the issues of internal infrastructure require immediate attention, since it can be a potential point of growth for national economy. The experience of such countries as Germany, the USA and Japan demonstrates this perfectly,” Oleksandr Kava said and added that it was a high time to focus on real projects but not on utopial strategies.
After all, such projects can provide “quick wins” both in increasing the mobility of industrial transportation and in improving the comfort of movement of citizens.
Initiators and developers of transport strategies in Ukraine have aimed their efforts at trying to realize the potential of our country as a potential international transit junction by using its specific features and resources over the past decade. However, the system development of domestic transport infrastructure was a minor issue.
Ukraine often forgot that the foundation of today’s economy is mobility. Mobility of population, fast transportation of raw materials and energy resources, prompt delivery of manufactured products – a joint contribution of these components creates a significant added value to any economy. In the XXI century, transport together with innovations are a major catalyst for economic growth. There can be no strong economy either theoretically or practically in Ukraine without the modern transport infrastructure.
High-quality and well-designed intrastate roads, water and air routes are one of the most serious incentives for economic development.
Best practices of successful countries that have actually built outstanding domestic transport corridors – Germany, the USA and Japan – are an example that proves: high-quality and well-designed intrastate roads, water and air routes are one of the most serious incentives for economic development. It is just worth saying that the population mobility in Ukraine is 6.5 times lower than in EU countries. This problem won’t be resolved even by joining the European community. We have to build domestic corridors, provide modern conditions of their construction and operation and satisfy the modern transport needs of the Ukrainian market. This will help the country save a lot of time on transporting both people and goods. By the way, time is the most expensive non-renewable resource.
Ukraine needs real projects. The government has made a large mistake for many years: offered to implement unjustified, economically feasible investment projects. It may be useful to mention, for example, the concession project of constructing highways. This state initiative was one of the most publicized initiatives among international investors. However, no one project has started to be implemented – there even were no interested investors. At the same time, the construction of a new highway Kyiv – Bila Tserkva that doesn’t require huge costs hasn’t even been considered as a promising project to implement. This is despite the fact that such a highway not only would reduce the time to transport goods and people by half, but also would relieve a traffic congestion on one of the most intense Ukrainian corridors – the E95 highway in the southern direction from Kyiv. In addition, this highway would take some traffic of the Kyiv bypass road.
Ukraine needs real projects
Even our expert community hasn’t recovered from the former ‘gigantomania’. We offer to implement projects requiring enormous costs and huge resources (in particular, the time). But we forget that the only thing we need for such projects is to get the trust of investors. We offer to invest in the economy that has not proved its ability to think in terms of feasibility, benefits and social significance not only by words yet.
I hope the discussion under the first “Ukrainian Infrastructure Forum” will help highlight key points and consider the transport strategy of Ukraine not only as a transit country, but also as a comfortable environment where people can move between cities quickly and easily.
The Better Regulation Delivery Office analyzed 355 acts regulating business activities in Ukraine by using the Rolling Review method in the first quarter of 2016. The BRDO identified three trends based on the results of the analysis performed:
The BRDO activity with regard to establishing a new type of the business regulation system is conducted simultaneously in several areas:
One the main problems of small and medium-sized businesses in Ukraine is a low quality regulatory environment. Business in Ukraine can never be sure that all the legal requirements for doing business have been met. This due to the fact that:
To deal with these problems, the BRDO developed a standardized process of systematic review of regulatory acts by using the Rolling Review method that provides for a comprehensive assessment of the current regulatory legislation on such criteria as legality, necessity, corruption risks, business convenience and others.
The review will be resulted in a decision taken on each act: to recommend to abolish, revise or save. The BRDO sends the packages of draft regulations providing for the abolition or making amendments to regulators to establish an effective regulatory environment.
Legality. 12 acts of the Cabinet of Ministers of Ukraine and 52 acts of ministries and other central government bodies bear marks of being the ones that don’t meet the basic criteria of legality. The review of legality includes verifying reasonable grounds to adopt a subordinate regulation and the registration in the Ministry of Justice of Ukraine.
The structure of the Ukrainian legal system provides for a direct hierarchy of regulations: subordinate regulations should be adopted on a ground, within the powers and in a way envisaged by the Constitution and laws of Ukraine. In cases when subordinate regulations are adopted in violation of this principle, the rules become unpredictable for business and the legal protection is complicated. Resources spent by business to deal with these problems are the money that the Ukrainian economy loses as high transaction costs.
Importance. Based on the results of the BRDO review, 76 acts have been identified as being non-important, 23 – as being partially important and 182 – as important. This means that a large number of existing regulations were not brought in compliance with the current legislation and are likely to contain contradictory rules for business.
Effectiveness. Based on the results of the BRDO review, 206 regulatory acts have been identified as being relatively effective – that is, their effects can’t be determined by using supporting documents on the regulatory impact analysis.
The adoption of a regulatory act provides for achieving a certain purpose clarified in supporting documents – explanatory notes or the regulatory impact analysis (RIA). It is possible to find out whether the effectiveness of this act can be determined by using these documents only on the basis of their availability or non-availability and the clearly measurable criteria included. Thus, only 47 documents had explanatory notes or the RIA while only 3 of them contained measurable indicators of effectiveness. None of the analyzed acts has documents on monitoring appropriate effects, by using of which the effectiveness of the act could be determined. In a case, when there is no analysis of the state policy effectiveness conducted, the state and the society are deprived of key indicators of effectiveness, without which it is impossible to work on improving the regulation.
Corruption risks. The review for corruption risks found out that 34 regulatory acts had a medium and high level of corruption. This includes 10 laws, 15 resolutions of the Cabinet of Ministers and 9 orders of ministries and other central government bodies.
This method provides that a regulatory act should be assessed on the basis of a number of points, including: a number of contacts of an official and an entrepreneur available, a need for officials to take decisions on granting permits or prohibiting activities, the availability of clear criteria to take decisions and appeals deadlines.
Convenience for business. Based on the assessment of regulatory acts impact on business processes, 12 regulatory acts having a high or medium risk for the freedom of doing business have been identified. There are 5 laws of Verkhovna Rada of Ukraine, 5 resolutions of the Cabinet of Ministers and 3 orders of ministries and other central government bodies among them.
Totally, 355 regulatory acts were reviewed on criteria of legality, 281 – on criteria of importance, 206 – on criteria of effectiveness, 90 – on criteria of corruption risks, 69 – on criteria of impact on business.
Detailed review can be found on the BRDO website.
Aspects of government regulation of the use of nuclear energy and the need to amend the Law of Ukraine “On licensing of certain types of economic activity” in this area were discussed at the meeting of the Verkhovna Rada Committee on Industrial Policy and Entrepreneurship. The meeting was held on April 19, chaired by the Committee Chairman, the people’s deputy of Ukraine Volodymyr Halasyuk.
The people’s deputy of Ukraine Oleksandra Kuzhel, representatives of the State Regulatory Service and the State Nuclear Regulatory Inspectorate participated in the workshop discussion of these problems. The expert of the Control and Supervision sector Nataliya Dupliy represented the Better Regulation Delivery Office BRDO.
When discussing the draft law on making amendments to the law, people’s deputies and experts paid particular attention to the position of the State Nuclear Regulatory Inspectorate regarding inconsistency of the current legislation of Ukraine with provisions of international agreements and IAEA requirements. According to the initiators of amendments to the legislation, it is needed to limit the application of certain provisions of the law on licensing of certain types of economic activity in the field of nuclear energy use. This thesis was confirmed by requirements of the provision on independence of a state regulatory body for nuclear safety.
“Some imperfect provisions of the current Law of Ukraine “On licensing of certain types of economic activity” require to be systematically improved and refined. We support and fully share the State Regulatory Service’s approach on reforming the regulatory policy, which involves, first of all, a comprehensive preliminary analysis. Being experts in the regulation area, we should offer unbiased and independent conclusions based on a clear understanding of the impact that amendments to the legislation have. In this specific case – the issue should be studied further as it involves cross impacts of safety standards, the international law, current national legislation of Ukraine and many other factors,” the BRDO expert Nataliya Dupliy said after the workshop discussion.
The meeting participants and experts proposed the State Nuclear Regulatory Inspectorate as the initiator of amendments to the law on licensing of the use of nuclear energy to provide additional arguments to support its position.
As a reminder, the BRDO opened a special section on its website to publish draft regulations sent by the State Regulatory Service and the Ministry of Economic Development and Trade for our expert review.
The Better Regulation Delivery Office encourages business representatives and the public to get involved in this process and send their proposals to [email protected]. All proposals and comments coming to the BRDO email will be considered when making the conclusions.
According to experts, mechanisms and principles of business licensing in Ukraine require significant improvements. This issue was discussed during the consultation on the State Regulatory Service’s proposals to make amendments to the Law of Ukraine “On Licensing of Economic Activities” that took place on April 19, 2016. The head of the BRDO Control and Supervision sector Volodymyr Holovatenko and the expert Leonid Litvinenko represented the Better Regulation Delivery Office at the event.
The State Regulatory Service’s proposals on amendments to the Law of Ukraine “On Licensing of Economic Activities” presented by the Head of the State Regulatory Service Kseniya Lyapina are aimed at removing a number of inconsistencies, gaps and internal legal conflicts of provisions of this Law.
“Systematic processing of packages of licensing conditions in different sectors showed that the Law “On Licensing of Economic Activities” required to be clarified by a large number of positions. Our practical experience allows us to confirm State Regulatory Service’s conclusions – a significant number of inconsistencies repeat and illustrate the need for system amendments to the basic law on licensing of business activities. It is important to carefully approach the issues on what activities should be regulated by the state with the help of such a regulatory instrument as a license. The market may be regulated with a variety of instruments – both limiting and stimulating ones,” Volodymyr Holovatenko summed up discussion results.
During the presentation of State Regulatory Service’s proposals, government officials and experts supported the State Regulatory Service’s concept on system improvement of licensing procedures by optimizing the mechanisms of state regulation.
We would like to remind the reader that a systematic review of regulations, including licensing conditions, and developing effective changes is one of key tasks of the Better Regulation Delivery Office while being the main BRDO focus concerning the reform of the Ukrainian economy and state administration since it has been established in 2015. Conclusions of our experts constantly result in making amendments to certain regulations governing various sectors – from medicine and hazardous waste management to national supervision over business activities.
The Committee of the Verkhovna Rada of Ukraine on Industrial Policy and Entrepreneurship headed by Viktor Halasyuk supported draft laws that liberalize the rules of interaction between business and state regulatory (control) bodies.
Proposed amendments, many of which have been worked out by the Better Regulation Delivery Office (BRDO) provide reorientation of state control bodies to prevent crimes rather than apply penalties. In addition, the adoption of these draft laws will allow to reduce costs on interaction of business and these bodies by threefold.
The draft laws #2418a “On Amendments to the Law of Ukraine “On Basic Principles of State Supervision (Control) in the Sphere of Economic Activity” regarding liberalization of the state regulation system and the draft law #2531a “On Amendments to Certain Legislative Acts of Ukraine on improvement of legislation in the sphere of state supervision (control)” are recommended by the relevant Committee of the Verkhovna Rada of Ukraine to be adopted in the second reading.
“The civilized principle of moving state bodies from penalty functions to prevention of crimes, moving away from total control to supervision can be a real reformatory achievement of the Ukrainian state supervision system. In addition, clear inspection rules will help business entities to build own activities in the process of more predictable and understandable regulation,” the head of the BRDO Control and Supervision sector Volodymyr Holovatenko commented on the Committee’s consideration results.
As a reminder, draft laws #2418a and #2531a will significantly liberalize conditions of interaction between business and regulatory bodies by:
Also, the Integrated automated system of state supervision (control) is created to collect, store and systematize information on inspections. This will significantly reduce the possibility to manipulate inspection results and help reduce corruption risks.
Additionally, it should be mentioned that current changes establishing administrative responsibility of collegiate body officials for violation of control and expanding the effect of the Law of Ukraine “On State Principles of State Supervision (Control) in the sphere of economic activity” on local state administrations.
A number of expert organizations worked on these initiatives jointly with BRDO experts.
The expert of the Better Regulation Delivery Office (BRDO) Anna Palazova shared practical skills and guidelines on the use of regulatory analysis instruments, including testing of small business (M-test), at the workshop of a training program for regulatory policy instructors and consultants.
The BRDO expert together with the head of the department of methodological support for regulatory policy implementation Olena Krychevska participated in the practical training on preparing the regulatory impact analysis (RIA) of draft regulations on April 12, 2016.
The joint report of the State Regulatory Service and BRDO experts is the result of close cooperation to develop recommendations on preparing legislative initiatives of regulatory policy as well as practical skills in the use of regulatory analysis instruments, including the small business test – M-test.
The widespread and effective implementation of the M-test regulatory instrument in Ukraine will contribute to the government employees’ understanding of real effectiveness and practicability of introducing various regulatory levers. According to State Regulatory Service and BRDO experts, this, in turn, will increase the financial capacity of small and micro business by reducing costs for unnecessary regulation.
“The need to determine the regulation impact on business in terms of numbers will help a regulator actually forecast the practical effects of his work. This is especially important for an effective regulatory policy, because it has an effect on small business enterprises. The State Regulatory Service got the BRDO experts to take part in practical testing of a data collection mechanism and preparing the M-test. Our work resulted in practical recommendations that later can become the standards to prepare the regulation impact analysis. The State Regulatory Service experts set before us a task to demonstrate in practice that the RIA preparation is not an extremely resource-consuming and complicated procedure. In my opinion, this workshop demonstrated that we successfully dealt with this task and are ready not only to train the regulatory authority specialists, but also provide them with the professional practical assistance to analyze regulatory impact of laws and regulation,” the head of the BRDO’s “Control and Supervision” sector Volodymyr Holovatenko summed up.
While working out this program, experts of the Better Regulation Delivery Office prepared several M-tests for existing legislative initiatives of regulatory acts that affect the regulatory environment of small and micro business enterprises. In future, based on the existing experience and methods developed by the State Regulatory Service of Ukraine, the Better Regulation Delivery Office will provide the practical assistance to properly prepare the regulation impact analysis of any regulatory document – for both central and local authorities.
One of the important components of cooperation between the State Regulatory Service and BRDO is the work on the implementation of effective and reasonable regulation of small and medium businesses. Just the implementation of the SMEs policy based on ten principles of the Small Business Act for Europe (SBA) provides for the introduction of the M-test.
The draft Law of Ukraine #4310-1 “On amendments to certain Laws (regarding improvement of connecting to electricity supply networks)” dated 04/06/2016 that provides for significant simplification of this procedure, considerable reduction of the time required for connecting to electricity supply networks and, accordingly, cost reduction for business. The Better Regulation Delivery Office BRDO experts participated in drafting the law.
“The proposed draft law contains more “reformist” innovations than other draft laws, which are currently under consideration by deputies. It simplifies the procedure of connecting to electrical networks for new consumers and make this procedure clearer, more transparent and predictable in terms of costs. This draft law also increases protection of consumers of connection services from monopolies in the market. When applying to an energy supply organization, a customer will be able to clearly define the time and money he needs to spend for connecting to electricity supply networks, or, connect to networks by himself if he is able and willing. Even based on available statistical data on standard connection procedures, overall business savings can be more than 285 million hryvnas in a year and a half just by introducing electronic document management,” the head of the BRDO Energy sector Oleksiy Orzhel said.
The key feature of this draft law are a clear definition of services of connecting to electrical networks provided by a natural monopoly, the introduction of a partial liberalization of the services market of connecting to electricity supply networks and compliance with today’s requirements. Thus, the draft law:
The law was drafted in accordance with the Roadmap for implementation of best practices of quality and effective regulation to improve Ukraine’s positions in the World Bank’s DoingBusiness ranking approved by the Cabinet of Ministers on December 16, 2015.
Today, Ukraine takes the 137th position in terms of the ease to connect to electricity supply networks in the Doing Business-2016 ranking. This negatively affects the general position of Ukraine in this ranking. The key indicators to assess the country is the time required for connection and affordable costs for consumers, which influence the level of investment attractiveness of any country.
Experts also say that if this draft law on connection to electricity supply networks is adopted in this version, Ukraine will increase its position by 11 points. Moreover, according to the Ministry of Economic Development and Trade of Ukraine, increasing the country’s position on average by 10 points in the Doing Business ranking can attract up to 2 billion dollars of investments.
Introducing the trust property as a way to secure performance of obligations related to credit repayments may help increase Ukraine’s positions in the DoingBusiness ranking and, consequently, improve the country’s investment attractiveness. This matter was discussed at a meeting organized jointly by the Better Regulation Delivery Office BRDO and the American Chamber of Commerce (ACC).
The BRDO head Oleksiy Honcharuk participated in the event and presented the draft Law “On amendments to certain legislative acts of Ukraine regarding introducing the trust property as a way to secure performance of obligations” developed by the BRDO experts for discussion. This draft law was registered under #4188 in the Verkhovna Rada of Ukraine on March 10, 2016 and is one of the regulations listed in the DoingBusiness-2017 Roadmap approved by the Cabinet of Ministers of Ukraine.
The draft law provides for supplementing the list of existing mechanisms to secure performance of obligations by means of the trust property. The trust property is a kind of title to property that a creditor can’t use but just may apply to the court for recovery. Trust property items can be any property that may be alienated and against which recovery proceedings may be brought. The draft law provides for amendments to a number of existing legislative acts to ensure applying the trust property procedure.
“The introduction of the trust property concept meets the needs of the time. This mechanism protects both the rights of a creditor and an investor as well as guarantees the debtor’s rights by limiting the right to use the property transferred in trust ownership. This mechanism is effectively applied in Canada, the United States, Australia and many other countries. We are confident of its effectiveness to improve the investment environment in Ukraine. Now, having the full support of experts, bankers and business, we hope to be supported by legislators,” the BRDO head Oleksiy Honcharuk commented the meeting’s results.
The Chairman of the Management Board at Pravex Bank Taras Kirichenko, the partner at the Baker&McKenzie international law firm Ihor Olekhov, the legal advisor at the Redcliffe Partners law firm Dmytro Orendarets, the project coordinator of the Odesa Financial Forum Roman Motychak, business leaders, representatives of leading consulting companies, lawyers, financiers and investors participated in this discussion.
We remind that the World Bank’s Doing Business experts will conduct their regular analysis of the business environment in May of 2016. In autumn 2015, specialists of the Ministry of Economic Development of Ukraine together with BRDO experts developed a program consisting of 43 steps to simplify the business environment in Ukraine. The Cabinet of Ministers approved this Roadmap in December. Each step involves adopting certain documents amending the existing legislation, removing certain barriers and harmonizing procedures that exist in Ukraine with the best international practices.
According to experts, performing only the first 23 points of this plan by May 31, 2016 should provide Ukraine with a position in the TOP-50 countries in terms of ease of doing business. Steps under the Doing Business 2017 Roadmap’s program is a way to systemic changes. This implies not only simplified registration procedures or reduced control over business, but also the possibility to increase the effectiveness of the business environment’s development systematically by providing the access to more affordable credit resources and strengthening the protection of investors’ rights and many other positive results.
Creating more than 1,500 territorial communities according to results of the decentralization reform can radically change the rules on the construction and development market in Ukraine. This conclusion was made by experts during the discussion “Decentralization: investments and development” organized by the Ukrainian Building Community on April 5 in Kyiv. The head of the construction sector of the Better Regulation Delivery Office (BRDO) Olena Shulyak attended the event.
The Deputy Head of Kyiv City State Administration Oleksiy Reznikov, the director of the Land Resource Department of Kyiv City State Administration Oleksiy Polischuk, the Director General of the Kyiv Investment Agency Oleh Mystyuk along with business, public and expert community representatives analyzed current issues of attracting investments the local authorities face with when implementing the decentralization law and increasing their importance.
Participants of the discussion pointed out a lack of development strategies and inventory / certification of property of settlements, biased planning and a lack of qualified personnel among main problems faced by territorial communities according to results of the decentralization reform. A separated set of questions was devoted to land management issues with strengthening the role of territorial communities. All questions raised during the discussion directly influence on the progress of construction and development sectors.
“The ideology of the decentralization reform involves transferring many functions from the center to territorial communities. Enhancing the role of local authorities in the management of community property and land, increasing tax revenues and obtaining regulatory powers at the regional level can be a catalyst for fundamental changes on the construction market. Such changes require much more professional skills and deep knowledge in economics, finance and strategic management as well as the understanding of investment management from local leaders,” Olena Shulyak said.
Despite the opportunities that decentralization provides for investment projects, it is needed to create a clear mechanism for harmonization of regulatory initiatives on local and national levels. Changes in procedures and a list of specific tasks that local authorities should take into account will, first of all, contribute in creating a favorable investment climate at the local level.
According to the head of the BRDO construction sector Olena Shulyak, the problem of clear and transparent communications of local authorities and the community also requires the attention:
“I can say that a perfect example of the incompetent communication policy and a lack of understanding of possible effects coming due to a lack of interaction with society is no competition for a position of head of the State Inspection of Architecture and Construction Control in Kiev. Local authorities should listen to the community and not repeat old mistakes. I’m sure that an investor will actively invest in the development of those settlements, where the authorities take into account the position of society and business.”
It should be noted that according to results of the decentralization reform in Ukraine, it is expected that a large part of regulatory functions in the field of construction will be transferred. In particular, all territorial communities will get the functions of state architecture and construction control that provide for granting permits for construction, control over construction facilities and putting them into service.
The Law of Ukraine “On Amendments to the Land Code of Ukraine regarding the procedure for holding land auctions” signed by the President of Ukraine on March 31, 2016 limited the number of cases for alienation of land plots and rights to them without auctions. The Verkhovna Rada of Ukraine adopted the Law on February 18, 2016.
The Better Regulation Delivery Office (BRDO) experts analyzed the law and positively reported on its overall impact on government regulation.
The BRDO Food&Agriculture Sector Head Andriy Zablotskyi said that provisions regarding the alienation of leasehold rights, emphyteusis and superficies only by auctions and avoidance of cases of land auction circumvention with involvement of government bodies and local authorities could be considered as positive aspects of the signed law.
“The law significantly limits opportunities for circumvention of auction sales reducing corruption risks. In addition, the provision that removes the duplication of exceptions to acquis land rights without auctions when land plots are purchasing for public needs is positive to harmonize the regulatory legislation. Despite this fact, provisions precluding the possibility of acquiring rights to land plots used for concession activities, in particular, on creating new facilities, without auctions carry obviously negative aspects. This complicates the implementation of such projects significantly,” Andriy Zablotskyi said.
The law signed by the President comes into force 30 days after its publication.
The Investment forum “Prospects of commercial sea ports of Ukraine” held on April 1, 2016 in Odessa was devoted to the issue of investment potential of the sea transport system of Ukraine and projects aimed at implementing innovations projects in this area. The Forum was organized by a group of companies “Fleiman Group” jointly with the Kominternivsky District State Administration of the Odessa region. The Better Regulation Delivery Office BRDO expert, head of the Rolling Review project Oleksiy Dorogan was a forum’s moderator.
During the forum, representatives of government bodies, international organizations, Ukrainian companies, investors from Ukraine, France, Turkey and Azerbaijan had an opportunity to discuss port industry problems, ways to increase the export and import potential of the country as a modern European hub on the Black Sea openly and professionally. They paid a special attention to the presentation of capabilities of Ukrainian ports to attract both domestic and international investors to develop the sea transport system of Ukraine.
The Odessa region governor Mikheil Saakashvili opened the Forum. The head of the Kominternivsky District State Administration Dmytro Natalukha, EBRD and US Chamber of Commerce representatives, port directors, representatives of investment, financial, logistics and consulting international and Ukrainian companies attended the Forum as well.
An integrated project of grain export terminal from one of the largest Turkish companies was presented at the forum. During the presentation, project authors declared that this project would significantly increase the export level of flour and grain products from Ukraine to most parts of the world.
“Transport sector is one of BRDO working priorities. That’s why our team constantly monitors all trends in major segments of this industry. We are trying to get information on the situation and prospects directly from experts: relevant civil servants, businessmen and investors. Participation in such events allows us to keep “abreast” and effectively handle tasks to reform the regulatory policy. It is possible to create a new quality regulation only by using a feedback from business,” Oleksiy Dorogan said.
World Bank’s EBA (Enabling the Business of Agriculture) group experts analyzed the impact of main factors on doing business in the agribusiness sector in 40 countries. Ukraine demonstrates the level, which significantly higher than the average market level, in terms of 4 of 6 main analyzed indicators (overall level of the development of the agricultural, seed and fertilizer market and existing equipment). This level is lower just in terms of funding and logistics. According to the report, improving the country’s ranking will be associated with changes in those areas, where the Ukraine’s EBA ranking is below the average – agri-finance, transport and logistics.
The Sea Ports Authority (USPA) estimates that currently commercial sea ports of Ukraine have capacities for loading 42 million tons of grain (without including ports of temporarily occupied Crimea). Ukraine’s grain export has been demonstrating the positive dynamics over the past few years. This picture confirms long-term benefits of grain loading projects in ports and the high investment attractiveness of the industry.
Purchasing the property in the primary market in the context of a large number of contractual schemes of purchasing was a key topic of the round table organized by the Real Estate and Construction Committee of the Ukrainian Bar Association. The expert of the Construction sector Mariya Hrabovska represented the Better Regulation Delivery Office BRDO at the event.
The leading lawyers of Ukraine, construction business representatives and experts participated in discussing issues of judicial and non-juridical ways to protect the rights of property buyers, the introduction of necessary changes of legal regulation schemes regarding purchasing the real estate in the primary market of Ukraine.
Mariya Hrabovska presented a draft law “On amendments to certain legislative acts to protect ownership rights of immovable property to be built in the future” developed by BRDO experts to regulate procedures for registration of ownership rights of such property during the discussion.
According to the authors, amendments proposed in the draft law will help prevent using a wide range of fraud schemes: double sale of apartments, change of technical specifications and others. Some tax issues in this area were discussed separately. In addition, the draft law provides for increasing commitments of developers to provide the information concerning immovable property items by creating a web page.
“Improving the regulatory policy in construction is inextricably linked to attracting the investments. Protection of investor’s rights and their rights to obtain reliable information is a main task that we set ourselves as developers,” Mariya Hrabovska said.
Changes in regulatory policy in construction should become one of the main issues of the legislative work in the near future. Solving the issues that have been accumulated over the years without being resolved will help bring significant finances to the sector. And as a result – to give an impulse to the development of not only the construction sector but also more than 30 other sectors related to it.
The Better Regulation Delivery Office encourages business representatives and the public to get involved in reforming the regulatory legislation and send their proposals to [email protected]. All proposals and comments coming to the Better Regulation Delivery Office’s email will be considered when drafting new laws.