DEREGULATION IN UKRAINE

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December 2015

ANNUAL REPORT 2015

DEREGULATION IN UKRAINE

EASYBUSINESS

ACHIEVEMENTS

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EasyBusiness would like to express its immediate gratitude to the International Renaissance Foundation, The Royal Norwegian Embassy in Ukraine,

the World Bank and the German Agency for International Cooperation (GIZ) for their considerable support during the recent year

STATE AUTHORITIES

BUSINESS

We would also like to thank the representatives of the state sector, international and non�governmental organizations, expert and business communities for our fruitful cooperation in the process of implementation of deregulation initiatives

NON�GOVERNMENTAL ORGANIZATIONS, EXPERTS AND MEDIA

INTERNATIONAL ORGANIZATIONS

ACKNOWLEDGEMENT

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PREFACE 6

ABOUT EASYBUSINESS 7

WHY DEREGULATION 8

ACTIVITIES 12

STRATEGIC COOPERATION 14

TEAM 15

ACHIEVEMENTS AND RESULTS 19

KEY ACHIEVEMENTS 21

RESEARCH 73

STRATEGY AND METHODOLOGY 77

GENERAL DESCRIPTION OF THE STRATEGY 79

EFFECTS OF THE REFORM 92

EASI METHODOLOGY 96

INTERNATIONAL EXPERIENCE 99

DEREGULATION IN PRACTICE 107

ANNEXES 111

CONTENTS

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PREFACE

Daniyil Pasko

Mykola Gaidai

Mykhailo Obolonskyi

The Ukrainian regulatory system is one of the worst and least favorable

for doing business and attracting investments. Such an aggravating

situation is confirmed by international ratings. Thus, the Doing Business

Ranking gives Ukraine the 83th position out of 189 states. And according

to the Economic Freedom Index, Ukraine occupies the 162th position out

of 178 countries.

This situation is caused by the inconsistent policy of the government

during the recent decade. Due to this fact, we can observe business

processes become subjects to double or even triple regulation. It is so

even when the EU member states do not require such regulation. Given

the lack of a unified approach to the inspection and control system, the

Ukrainian business is suffering from arbitrary behavior of regulatory

authorities, which, by making use of defects in and fuzziness of the laws

and the lack of transparency in their operation, are involved in corporate

raids and advance corrupt demands.

In May 2014, understanding that deregulation is the only no�cost instru�

ment to achieve the economic growth, reduce unemployment and

improve the investment climate, we joined the team of Pavlo Sheremeta,

Minister of Economic Development and Trade at that time.

During the recent year, our team cooperated with four � due to the unsta�

ble political situations � Ministers for Economic Development and Trade of

Ukraine, developed about thirty regulatory legal acts, with eight of them

approved by the Verkhovna Rada (the Parliament), the Cabinet of Minis�

ters and the Ministry of Economic Development and Trade of Ukraine,

entered into partnership with Jacobs, Cordova and Associates, the

world’s leader of the regulatory guillotine, and developed an action plan

to introduce the regulatory guillotine in Ukraine, as well as initiated the

development of a program for the long�term cooperation with the World

Bank in the economic and the budgetary aid spheres.

This report contains a description of our achievements, methods,

approach and subsequent steps aimed at securing the maximum trans�

parency of the implementation of deregulation initiatives. We are con�

vinced that the involvement of all parties in the implementation process

will make it possible to achieve results and success promptly.

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ABOUT EASYBUSINESS

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ABOUT EASYBUSINESS

WHY DEREGULATION?

In early 2015, Ukraine reached the lowest level of economic activities in its

entire history. The decrease in the level of economic activities, which could

be observed during 2014, continued to Quarter 1 of 2015. According to

the assessment of the National Bank of Ukraine, the fall of Ukraine’s GDP

from 14.8% annual down to 15% in Quarter 1 of 2015. The key drivers that

facilitated this GDP fall were as follows:

■ hostilities in the Eastern Ukraine;

■ devaluation of hryvnia against foreign currencies;

■ high inflation rate, which reached 40% from the beginning of 2015 by

June 2015 (with the National Bank of Ukraine’s forecast of the inflation

rate at a mark of 47%).

The above complicated trends have aggravated the investment climate in

Ukraine:

■ the volume of direct foreign investments in the Ukrainian economy

demonstrated an almost ten�fold decrease compared to 2013 and

amounted to $0.4 billion;

■ the volume of the debt against the GDP grew from 95.1% up to

109.8% of the GDP during Quarter 1, despite of its reduction by

$0.3 billion during Quarter 1 of 2015. The reduction can be explained

predominantly by raising a loan from the International Monetary Fund

($4.9 billion).

Given the size of the debt and the negative dynamics of macroeconomic

indicators, Ukraine faces hardly positive prospects as the country is

actually unable to repay its debts itself. Currently, Ukraine can only reduce

its debts by using the IMF loans, which are the only source of financial aid

received by Ukraine.

The above problems resulted in the abatement of the performance indica�

tors in the major spheres of both the Ukrainian real economy (such as

agriculture, heavy industries etc.) and domestic production sectors (such

as trade, construction operations etc.). Besides, these problems are

making an increasing number of plants shut down, as they cannot stand

against the regulatory impact and are unable to operate under such

conditions.

Reforming the regulatory system is the only way of solving these problems.

It will not only help create a favorable business environment, but will also

have a positive impact on the general economic situation. Besides,

deregulation is a fast, efficient and also no�cost method to combat bureau�

cracy and excessive regulation, which a struck root in the Ukrainian

system. The introduction of this reform will not only facilitate doing busi�

ness in Ukraine, but will also produce a positive effect on the economic

growth, reduction of state expenditures and eradication of corruption,

which, as a consequence, will improve the social environment and diminish

the shadow economy of the country.

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$10billion

GOLD AND FOREIGN CURRENCY RESERVES

*as of the end of June 2015 Figure 2. Gold and foreign currency reserves of the National Bank of Ukraine, $ billion Source: State Committee of Statistics of Ukraine

*during January/June 2015 Figure 3. Direct foreign investment balance, $ billion Source: World Bank, State Committee of Statistics of Ukraine

$0.7billion

DIRECT FOREIGN INVESTMENT

�9.5% GDP GROWTH *Forecast by the National Bank of Ukraine

Figure 1. GDP growth dynamics (year on year) Source: World Bank, State Committee of Statistics of Ukraine

The hostilities in Eastern Ukraine caused the loss of the key sectors of

Ukrainian economy, namely the mining and the metal production indus�

tries. These negative developments, together with the general deteriora�

tion of the macroeconomic situation and the decline in production in other

industry sectors of Ukraine, provoked the aggregate fall of the GDP by

6.8% in 2014. As of the end of June 2015, the negative trends

aggravated, with the GDP fall reaching 7.5%.

The unstable economic and political situation, hostilities in Eastern

Ukraine and the crisis of financial system gravely affected the investors’

expectations. During 2013�2014, the direct foreign investment in Ukraine

demonstrated an over eleven�time decrease and amounted to

$0.4 billion in 2014 compared to $4.5 billion in 2013. The similar decrease

amounted to about 50% during 2012�2013.

The artificial maintenance of an exchange rate band and the negative

foreign trade balance gravely affected on the Ukrainian balance of pay�

ments. During 2013�2014, the gold and foreign currency reserves of the

National Bank of Ukraine became almost three times lower and reached

the critical level of $7.5 billion. By attracting the external financial aid,

namely the IMF money under the Extended Fund Facility, the country

managed to raise its reserves to $10.2 billion during the first six months of

2015.

ABOUT EASYBUSINESS

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47%

INFLATION *Forecast by the National Bank of Ukraine by the end of 2015 Figure 4. Inflation rate Source: State Committee of Statistics of Ukraine, National Bank of Ukraine

83th position

IN THE EASE OF DOING BUSINESS

RANKING

162nd position

IN THE INDEX OF ECONOMIC

FREEDOM

Figure 6. Ukraine in the Ease of Doing Business Ranking and the Index of Economic Freedom Source: World Bank, http://www.heritage.org *as of December 2015, Index of Economic Freedom for 2016 has not been published

$126billion

FOREIGN DEBT

*as of the end of April 2015 Figure 5. Foreign debt, $ billion Source: National Bank of Ukraine

The increase in inflation expectations caused by unstable economic and

political situation and considerable devaluation of hryvnia and additional

issuance of the national currency resulted in the fast growth of the general

price rate in Ukraine. The inflation rate in 2014 amounted to 24.9% and

during the first six months of 2015, the rate reached 40%.

Against the backdrop of significant production decline and limited domes�

tic financing, the attraction of foreign funds negatively affected the volume

of Ukraine’s foreign debt. If the correlation between the volume of foreign

debt and GDP amounted to 78% in 2013, this figure was 96% in 2014,

while by the end of April 2015, it reached 104%.

The earlier implementation of economic reforms did not prove to be

efficient in practice. Ukraine occupied the 162nd position out of 178

countries of the world in the Index of Economic Freedom in 2015, with

the score of 46.9, losing 2.4 points year by year.

During the last year, Ukraine improved its position in the Ease of Doing

Business Ranking by 16 points, due to the changes in its taxation system;

currently, Ukraine occupies the 96th position among 189 countries of the

world.

ABOUT EASYBUSINESS

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The above diagrams dramatically demonstrate the difficult

economic situation in the country. This fact does not make

doing business easier in Ukraine; on the contrary, it aggra�

vates the current conditions. But it is necessary to provide an

incentive for the development of small and medium business�

es, that are the major drivers of an economic growth, in such

difficult economic conditions. Besides, one of the require�

ments of the International Monetary Fund is to improve the

country’s business climate. As we stated above, the deregu�

lation represents the fastest and most efficient instrument for

the implementation.

This brings up the question: what does the deregulation

mean?

The deregulation involves cancellation, simplification and

improvement of state regulation of the operation of economic

entities. The principal objective of deregulation is the

elimination of excessive regulation of relations between the

state and businesses and the elimination of excessive control

over entrepreneurship. It should be noted that deregulation

implies the implementation of a very wide and fundamental

reform, that includes a great number of components and

whose introduction requires a lot of technical work.

“ LESZEK

BALCEROWICZ Former Polish Minister for Finance and Head of the Polish National Bank, famous Polish economist

Restore confidence in the government. Carry out the

deregulation. Create competitive business environment.

The principal objective of DEREGULATION is the elimination of excessive regulation of relations between the state and businesses and

excessive control over entrepreneurship

ABOUT EASYBUSINESS

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ACTIVITIES

EasyBusiness is a non�profitable organization that consults the Ukrainian

government on the implementation of the reform of the country’s regulato�

ry system. The major goal of EasyBusiness is the reduction of the state’s

regulatory pressure on businesses by simplifying procedures, reducing the

number of regulatory bodies and the frequency of inspections, cancelling

excessive permits and licenses etc.

The key objective of our team is to facilitate the creation of environment for

successful and easy doing business. A reform of the regulatory system, or

the deregulation, is the best instrument for achieving this objective. It will

make it possible to ease the regulatory pressure on businesses and pro�

mote the country’s economic growth.

ABOUT EASYBUSINESS

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TO PREPARE REGULATORY LEGAL ACTS IMPLEMENTING

DEREGULATION INITIATIVES:

■ To obtain support of the leading lawyers in the development of

regulatory legal acts.

TO IDENTIFY REGULATORY RESTRICTIONS THAT HAMPER

BUSINESSES:

■ To make inquiries.

■ To organize meetings and direct communications with businesses.

■ To hold round table discussions aimed at specifying excessive regu�

latory restrictions.

TO SPECIFY DEREGULATION INITIATIVES:

■ To form specific deregulation initiatives on the basis of the analysis

of collected data and information obtained from businesses.

TO ANALYSE THE ECONOMIC EFFECT OF THE

IMPLEMENTATION OF DEREGULATION INITIATIVES:

■ To determine the economic effect of the implementation of the

EASI/RIA1) model initiative.

■ To determine the impact of the reform on corruption and state

budget, the Doing Business Index.

■ To analyze international experience.

TO SUPPORT REGULATORY LEGAL ACTS BEFORE THEIR

FINAL APPROVAL:

■ To hold presentations and discussions, to explain the effect of the

implementation of deregulation initiatives.

TO IMPLEMENT THE APPROVED CHANGES, TO MONITOR

THE IMPLEMENTATION AND THE ACTUAL EFFECT:

■ To share the experience in the determination of economic effect and

to interview businesses.

■ To develop web portals and to integrate them into state procedures,

to train local staff.

■ To communicate the approved changes to the key stakeholders

■ To monitor the actual effect on businesses.

The above areas of activities represent an interrelated process, which describes the team’s general approach to the implementation of deregulation initiatives.

It is only by using a

COMPREHENSIVE APPROACH

That we can achieve the maximum effect of implementation of the reform of the regulatory system and obtain an practical result � both for businesses and the state

1) methodology for the regulatory impact assessment

ABOUT EASYBUSINESS

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STRATEGIC COOPERATION

With a view to applying a comprehensive approach to implement the re�

form of the regulatory system, EasyBusiness cooperates various organiza�

tions and institutions such as ministries and state authorities, businesses,

international and non�governmental organizations.

STATE AUTHORITIES

The Ministry of Economy and Trade and the State Regulatory Service are

among the primary partners as regards the deregulation. Besides, we

cooperate with the Administration of the President of Ukraine, Ministry of

Agrarian Policy and Food, Ministry of Justice, Ministry of Ecology and

Natural Resources. Daniyil Pasko is a member of the National Reform

Council.

INTERNATIONAL ORGANIZATIONS

When determining the best possible regulation, we should also analyze

international experience. For this purpose, we cooperate with the key and

most active international actors, such as the World Bank, the Delegation of

the European Union, the International Monetary Fund, USAID, GIZ, repre�

sentative offices of the states that are partners of Ukraine.

CIVIL SOCIETY, EXPERTS AND ACADEMICS

With a view to monitoring the implementation and quality of the reform, we

should actively engage experts, representatives of the civil society and

academic institutions. They include the Reanimation Package of Reforms,

Nova Kraina, Kyiv School of Economics, Professional Government etc.

REPRESENTATIVES OF BUSINESS

With a view to identifying the regulatory restrictions and obtaining infor�

mation needed to determine the economic effect, we actively cooperate

with the largest business associations such as the European Business

Association, ACC, Chamber of Commerce and Industry, Ukrainian League

of Industrialists and Entrepreneurs etc.

AUTHORITIES INTERNATIONAL ORGANIZATIONS

SOCIETY BUSINESS

ABOUT EASYBUSINESS

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TEAM

TEAM HISTORY

The EasyBusiness team was formed in May 2014. Pursuant to the

announced priorities of economic development of Ukraine, a group of

advisers systematized the entire previous experience in deregulation,

assisted Pavlo Sheremeta, the Minister for Economic Development and

Trade of Ukraine, in the development of a deregulation strategy and its

further implementation. In August 2014, the team presented the developed

strategy aimed at reforming the regulatory system to the general public.

Later, members of the EasyBusiness team became advisors of Administra�

tion of the President of Ukraine and the Prime Minister. During October�

November 2014, the team developed the first package of draft laws under

the deregulation strategy, which were submitted to the Verkhovna Rada

(the Parliament) together with Aivaras Abromavicius, the Minister for Eco�

nomic Development and Trade of Ukraine, with whom EasyBusiness

cooperates. As results of Quarter 1 of 2015, three big laws and a resolu�

tion were adopted. Currently, the team cooperates with Jacobs, Cordova

& Associates, the world’s leader in the introduction of regulatory guillotine.

ABOUT EASYBUSINESS

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Team

inst

itutio

naliz

atio

n

The work on deregulation was started by the office of Pavlo

Sheremeta, the Minister for Economic Development and

Trade

MAY 2014

Development of the deregulation strategy MAY�AUGUST

2014

The developed strategy was presented to the general public

by Dmytro Shymkiv, the Deputy Head of the Administration of

the President of Ukraine, and Pavlo Sheremeta, the Minister

for Economic Development and Trade; the internet platform

easybusiness.in.ua was launched

AUGUST 2014

The implementation of the deregulation strategy began, the

EasyBusiness team welcomed new project managers AUGUST

2014

Establishment of cooperation with the Presidential

Administration of Ukraine SEPTEMBER

2014

Cooperation with the Cabinet of Ministers of Ukraine was

established OCTOBER

2014

Preparation of the first package of draft regulatory legal acts OCTOBER� NOVEMBER

2014

Cooperation with the newly appointed Minister for Economic

Development and Trade was established DECEMBER

2014

Submission of the first package of draft regulatory legal acts

to the Ministry of Economic Development and Trade, the

support and approval thereof

JANUARY�APRIL 2015

Partnership with Jacobs, Cordova & Associates, the world’s

leader in the issues related to regulatory reforms, and organi�

zation of a visit of Mr. Scott Jacobs to Ukraine

MAY 2015

Pursuant to the results of the international tender of the World

Bank, the team of EasyBusiness and Jacobs, Cordova &

Associates developed an action plan for introducing the

regulatory guillotine in Ukraine

JUNE 2015

JUNE�AUGUST

2015

Preparation of the second package of draft regulatory legal

acts

ABOUT EASYBUSINESS

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Daniyil

Pasko

Mykola

Gaidai

Mykhailo

Obolonskyi

LEADERSHIP

PROJECT MANAGERS

ORGANIZATIONAL STRUCTURE OF EASYBUSINESS

ABOUT EASYBUSINESS

INTELLIGENCE UNIT

Andrii

Shpakov Olena

Iagniuk

Tetiana

Okhrimets

Dmytro

Lyvch

Oleksandr

Soboliev

Oleksandra

Sheliug

Oleksandr

Hloza

Sergii

Petrov

Artem

Nykonovych

Kateryna

Busol

Oleksii

Maslov

Artem

Rafaielian

Alina

Sviderska

Tetiana

Palamarchuk

Volodymyr

Popereshniuk

Andrii

Erashov

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FUNDING OF EASYBUSINESS

ABOUT EASYBUSINESS

INTERNATIONAL RENAISSANCE FOUNDATION

contract conclusion date — April, 2014, term of financing — 6 months

THE ROYAL NORWEGIAN EMBASSY IN UKRAINE

contract conclusion date — November, 2015, term of financing — 6 months

THE WORLD BANK

contract conclusion date — April, 2015, term of financing — 90 days

GIZ (DEUTSCHE GESELLSCHAFT FUR INTERNATIONALE ZUSAMMENARBEIT)

contract conclusion date — April, 2015, term of financing — 6 months

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ACHIEVEMENTS AND RESULTS

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“ DANIYIL PASKO

We have done less than we

expected, but more than the system allowed us.

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KEY ACHIEVEMENTS

During the recent year, EasyBusiness actively participated in the develop�

ment of about 30 draft regulatory legal acts which cover almost 150

deregulation initiatives under the Economy Deregulation Strategy of

Ukraine.

Today, about 15 acts from out of those developed have been adopted;

they are aimed at the implementation of about 80 high priority deregulation

measures in the sphere of the regulatory approval system and licensing

system, technical regulation, controlling activities and in such sectors as

construction operations, food industry, agriculture, IT sector, oil industry

and electric power production. Some of the implemented initiatives are

aimed at improving Ukraine’s position in the Doing Business Index.

The Law of Ukraine and the Resolution of the Cabinet of Ministers of

Ukraine on deregulation, which solve acute excessive regulation problems

in several spheres and sectors at the same time, have become the

weightiest achievements of the team’s activities so far.

All developed regulatory legal acts’ drafts were supplemented with the

detailed assessment of their effect, detailed assessment of their effect,

which covered the potential advantages and costs, both for businesses

and the state.

As a whole, the implemented initiatives will facilitate the improvement of the

current business climate through the introduction of more transparent pro�

cedures and reduction of the time and money the entrepreneurs have to

spend in the course of the regulation�based relations with state authori�

ties. The implemented deregulation measures are also aimed at improving

Ukraine’s investment attractiveness and harmonizing its legislation with the

codes and standards of the European Union. This will create preconditions

for stimulating foreign trade and increasing direct foreign investments from

Europe.

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During the recent year, EasyBusiness was involved in the development and

managed to implement the considerable part of deregulation initiatives to

significantly diminish the regulatory burden and improve business environ�

ment in Ukraine. The key measures, in the implementation of which

EasyBusiness was involved during the year, include the following

Improvement of business environment through the cancellation of

excessive regulation, the reduction of administrative load and

corruption level by adopting Bill No. 1580 (Law of Ukraine No. 191�VIII) “On

amendments to certain legal acts of Ukraine on the simplification of business

environment (deregulation)” dated 12.02.2015

Reduction of about 50% of licensed types of economic activities,

by adopting Law No. 222�VIII “On licensing of certain types of economic activi�

ties”

Strengthening the protection of rights of minority investors, which

directly affects the improvement of Ukraine’s position in the Doing Business

Ranking, by adopting the Law of Ukraine No. 1255�VII “On amendments to

certain legal acts of Ukraine on the protection of investors’ rights”

Simplification of entrepreneurship and reduction of corruption in

agricultural, food, oil and gas sectors and IT sphere became possible thanks to

the adoption of the Resolution of the Cabinet of Ministers of Ukraine No. 42

“On certain issues related to deregulation of economic activities”

Elimination of the state monopoly and the corrupt scheme of

UkrEcoResources in the market of recycling of tare and packaging thanks

to the cancellation of the Resolution of the Cabinet of Ministers of Ukraine

No. 915 “On introduction of the system for collection, sorting, transportation,

recycling and utilization of waste as recoverable resources”

Adoption of the Action Plan of the Cabinet of Ministers of Ukraine

on Deregulation pursuant to the Regulation of the Government No. 357

dated 13.03.2015, which obliges the central executive authorities to implement

131 high priority deregulation measures by mid�2016


Simplification of business registration (Law №835�VIII), which pro�

vides for the principle of extraterritoriality, creation of competitive environment,

cancellation of the annual Form №6 filing, unification of business registration

procedures, obtaining and filing of documents in electronic form.

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“ MYKOLA GAIDAI

The deregulation is not exclusively about the restrictions on state involvement in companies’

or entrepreneurs’ activities by executing organizational, legal, administrative and

economic measures. Firs and foremost, it is about the change of the paradigm of relations

between the state and economic entities. During the recent year, the team of EasyBusiness,

together with our partners in the Government, made significant steps to change the paradigm,

though a great part of the work is still ahead.

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The adoption of Law No. 191�VIII was a significant step in the implementa�

tion of the first stage of deregulation reform. The law covered a number of

important initiatives, which simplify doing business and decrease regulatory

pressure on entrepreneurs. The implemented initiatives are also aimed at

improving Ukraine’s position in the Doing Business Ranking.

The law covers the following key spheres and sectors:

■ Permits

■ Food industry

■ Agricultural sector

■ Oil and gas industry

■ Doing Business Ranking

■ IT sector

According to the calculations made by EasyBusiness, the total effect for

the Ukrainian economy from the adoption of this law will amount to about

UAH 40�60 billion within the next five years. The implemented initiatives will

considerably reduce the state expenses and enable the increase of tax

revenues by UAH 1�3 billion. The expected flow of investments resulting

from the implementation of the deregulation measures amounts to

UAH 12�15 billion. The law will also facilitate business unshadowing and

elimination of large corruption flows amounting to UAH 4�8 billion.

20�25 BILLION UAH

1�3 BILLION UAH

40�60 billion UAH

TOTAL ECONOMIC EFFECT

EXCESSIVE REGULATION OF ENTREPRENEURSHIP HAS BEEN

CANCELLED (LAW OF UKRAINE NO. 191�VIII)

ECONOMIC GROWTH

ADDITIONAL TAX REVENUES

BUSINESS UNSHADOWING

2�5 BILLION UAH

INVESTMENTS

12�15 BILLION UAH

4�8 BILLION UAH

ELIMINATION OF CORRUPTION

REDUCTION OF STATE EXPENSES

40�60 BILLIOM UAH


Figure. 7. Expected economic effect from implementation of the Law №191�VII Source: EasyBusiness

� 25 �

PERMITS & LICENSES

The law provides for the cancellation of 16 regulatory measures. It will reduce

the state regulatory pressure in the agricultural sector, food industry, mining

industry and power sector:

■ Permit to import veterinary preparations, microorganisms and pathologic

materials containing anti�animal agents, import or transit animal�

contained loads

■ Permit to import feed additives, premixes and ready�to�use feeds

■ Certification of the permitted quantity of pesticide and agrochemical resi�

dues in food products sold in the Ukrainian market

■ Certification of pesticides and agrochemicals as regards their conformity

with the requirements of state standards and other regulatory docu�

ments on standardization

■ Certification of technical facilities for the use of pesticides and agrochem�

icals

■ Permit for industrial testing of pilot and experimental samples of mining

equipment and materials used in mines and pits

■ Attestation of production of the plants that deal with processing,

recycling or destruction of poor property and dangerous products with�

held from commerce

■ Certificate of conformity for packaged drinking water

■ Report of the state sanitary and epidemiological expertise for packaged

drinking water

■ Manufacturer’s quality certificate for each consignment of sea foods

obtained according to the procedure of the special use of fish and other

marine living resources

■ Operational permit for sea food processing facilities

■ Mandatory state expertise of land surveying projects securing ecological

and economic feasibility of crop rotation and land regulation

■ Operational permit for facilities which produce milk, milk raw materials

and dairy products (including dairy products for special dietary nutrition,

children’s food products, food products for sportsmen and elderly peo�

ple)

■ Report on the conformity of a commodity exchange with the require�

ments for rendering services for conclusion and registration of agree�

ments for purchase and sale of agricultural products and foods for the

state and regional purposes, repayment of tax debts, as well as conclu�

sion and registration of foreign economic contracts

■ Permit for installation or construction of cogeneration units on the basis

of functioning power facilities

The total economic effect of cancellation of the above 16 permits amounts to

about UAH 2.4�3.8 billion.

16 REGULATORY

MEASURES CANCELLED

2.4�3.8 billion UAH

TOTAL ECONOMIC EFFECT


� 26 �

Below, there are examples of the most important cancelled permits.

■ Cancellation of the certification of pesticides and agrochemicals

This requirement is not in line with the EU legislation and the WTO require�

ments. According to the WTO Technical Barriers to Trade (TBT) Agreement, a

standard is a document containing non�mandatory provisions. The market for

plant protecting agents makes up $ 300�500 million, with about 1�3% of the

cost of plant protecting agents, or UAH 100�200 million, spent on certificates.

Approximately 50�70% of the above amount (UAH 50�100 million) will be

invested in the economy, which will result in the economic growth by UAH 30

�60 million, create about 300�600 new jobs and generate tax revenues

amounting to UAH 0.1�0.2 million. Besides, the savings of the state for labor

compensations to the staff administering issuance of certificates will amount

to approximately UAH 3�6 million. The total economic effect of the cancella�

tion of this requirement is shown in Figure 8.

Figure 8. Economic effect of cancellation

Source: EasyBusiness

■ Cancellation of the operational permit for sea food processing facilities

will secure additional investments in the economy

Today, about 200 companies, which process 100 thousand tones of raw

materials, operate in the market. In monetary terms, the market is evaluated

at UAH 400 million and is oversaturated with products. According to experts,

the market will not grow significantly after the simplification of regulation in the

operational sphere. The growth will be about 5�7%. Besides, there will be

certain import substitution: 1�2 facilities for the production of canned food will

be constructed. This permit mirrors the operational permit provided in the

Law of Ukraine “On the safety and quality of food products”. The total eco�

nomic effect of the cancellation of this requirement is shown in Figure 9.

Figure 9. Economic effect of cancellation of the operational permit


5�7% MARKET GROWTH

DUE TO SIMPLIFICATION OF THE REGULATION

0.2 billion UAH

CORRUPTION COMPONENT IN THE

SPHERE OF PESTICIDES AND

AGROCHEMICALS


� 27 �

2�5 million UAH ECONOMIC GROWTH

■ The certificate for drinking water is not in line with Ukraine’s obligations

before the WTO, and its cancellation will lower the operational expenses

The certificate for drinking water is not in line with Ukraine’s obligations before

the WTO as the latter provides for the use of certificates on a voluntary basis.

Its cancellation will reduce the expenses of businesses thanks to the optimi�

zation of their functions and staff. According to experts, the cancellation of

the certificate will release UAH 6�14 million, with about 50�70%

(UAH 3�7 million) invested in the economy. It will lead to the economic growth

by UAH 2�5 million, promote the creation of up to 0.3�0.5 thousand new jobs

and provide additional tax revenues in the amount of UAH 0.1�0.2 million. The

total economic effect of the cancellation of this requirement is shown in

Figure 10.

Figure 10. Economic effect of cancellation


■ Cancellation of the report of the state sanitary and epidemiological ex�

pertise for packaged drinking water will eliminate corruption and bring

the legislation in line with international standards

Obtaining the report of the state sanitary and epidemiological expertise is

accompanied with a corrupt component, is not in line with Ukraine’s obliga�

tions before the WTO regarding the use of certificates on a voluntary basis. Its

cancellation will result in the reduction of expenses of businesses due to the

optimization of their functions and staff. The barrier means difficulties in ob�

taining the report, which leads to a corrupt component in an amount of

UAH 10�40 million per annum. According to experts, the cancellation of the

report will attract about 50�70% (UAH 5�15 million) investments in the econo�

my, resulting in the economic growth by UAH 5�10 million, promote creation

of up to 0.3�0.5 thousand new jobs and generate additional tax revenues

amounting to UAH 0.1�0.2 million. The aggregate economic effect of the can�

cellation of this requirement is shown in Figure 11.

Figure 11. Economic effect of the cancellation of the report of the state sanitary and epidemiological expertise for packaged drinking water


5�15 million UAH ADDITIONAL

INVESTMENTS


� 28 �

3�5 million UAH ECONOMIC GROWTH

FOOD INDUSTRY

In the field of the food industry, the law regulates production of organic

goods, thus making the Ukrainian legislation in this sphere closer to the EU

standards and creating conditions for the emergence of a competitive market

of organic products in Ukraine.

The major innovations are as follows:

■ Instead of “technical regulations (detailed rules) on the production of

organic products (raw materials)”, the Cabinet of Ministers of Ukraine will

approve of the “detailed regulations on the production and circulation of

organic products (raw materials)” (according to the EU and WTO legisla�

tion, technical regulations may not establish requirements for food

products).

■ The registry of the producers of organic products (raw materials) is open

to the general public.

■ The provision that organic products shall only be produced industrially

from organic raw materials grown on appropriate land or in specially

determined areas of the production of organic products and raw materi�

als is cancelled.

■ The provision on the determination of the areas of production of organic

products and raw materials is cancelled (which is completely in line with

the EU legislation).

■ Instead of the quality and safety indicators prescribed by technical regu�

lations, organic products and raw materials will have to comply with the

detailed regulations on the production and circulation of respective

organic products (raw materials).

■ The products (raw materials) that are certified in the EU member states

as organic will be circulated in the Ukrainian market as organic products

(raw materials) without the necessity to obtain any additional certification.

■ The provision prescribing the procedure and requirements for producing

organic products shall be determined by the Cabinet of Ministers of

Ukraine is cancelled.

The law also provides for the harmonization of the Ukrainian legislation in the

sphere of production and circulation of organic products (raw materials) with

the legislation of the European Union. It will give Ukrainian entrepreneurs a

possibility to produce competitive organic products and to export them to

Europe.

The total economic effect for the food industry resulting from the adoption of

the law amounts to about UAH 8�13 billion (Figure 12).

Figure 12. Economic effect of implementation



� 29 �

AGRICULTURE

In the agrarian sector, the law improves the legal regulation of land lease,

which is a necessary component of the development of agriculture.

The key improvements are as follows:

■ No alienation of leased state or community�owned land is permitted

without a lessee’s consent.

■ The list of the material terms and conditions of land lease agreements is

shortened.

■ The list of integral components of land lease agreements is cancelled.

■ An object of a land lease agreement is deemed transferred to a lessee

by a lessor at the moment of state registration of a lease title, unless

otherwise provided by the law (currently, an object of lease is transferred

to the lessee within the terms and under the conditions specified in the

respective land lease agreement, which is certified in the acceptance

act).

■ In case of leasing out the agricultural land for its use for the purpose of

commercial agriculture or farming, the period of validity of the respective

land lease agreement may not be less than 7 years.

■ The labor rent (provision of services to the lessor) is cancelled (the mone�

tary and in kind forms of paying the rent remain).

■ Subject to the consent of both parties, the in kind forms of payment for

the rent is permitted. Any in kind payment should correspond the mone�

tary equivalent of the cost of goods at market prices as of the date of

rent payment.

The introduced amendments will simplify the circulation of leased land and

make land relations more transparent; they will also facilitate the preservation

of the proper state of soil.

The total economic effect of the implementation of this initiative amounts to

about UAH 20�38 billion (Figure 13).



1�1.5 million UAH

REDUCTION OF BUDGET EXPENSES


� 30 �

OIL AND GAS

In the oil and gas industry, the law provides for a gradual switch to adding

bioethanol in order to reduce the unnecessary expenditures of oil refining

companies.

A mandatory provision on adding 5% of bioethanol to motor petrol should

have become effective in 2014, but it was impossible to implement it due to

the following reasons:

■ there is not enough bioethanol in Ukraine;

■ there is no possibility to set up modern test laboratories at oil refining

plants;

■ the implementation of a legal provision on the mandatory addition of

bioethanol requires great investments to reconstruct oil refining and oil

product providing plants.

The cancellation of the mandatory addition of bioethanol will allow:

■ to reduce the cost of the reconstruction of oil refining and oil product

providing plants, which will amount to UAH 1.5 billion and which can be

invested in the economy and facilitate the economic growth in by

UAH 2 billion;

■ to create conditions for the development of a better legislative basis to

introduce alternative types of fuel and to develop the sector of agriculture

in Ukraine.

It should be noted that the practice of adding bioethanol is widespread in

many EU member states as it stimulates the development of the market and

its openness to alternative types of fuel and makes a positive impact on envi�

ronment. However, it should be noted that the process of switching to adding

bioethanol took the considerable period of time in the EU member states (for

instance, it took a 10 years to introduce this initiative in Poland).

0.3�0.5 million UAH ADDITIONAL

TAX REVENUES

Figure 14. Economic effect of implementation of the initiative



� 31 �

DOING BUSINESS RANKING

In order to improve Ukraine’s position in the Doing Business Ranking, the law

provides for reduction of the term of company registration to two days, by

introducing the principle of real time and reducing the term of documents

examination by state registrars.

Implementation of this initiative will provide for:

■ Possibility to submit documents in an electronic form, by post, personal�

ly, by delegated persons

■ Obtaining information by third persons, access to the register data by

state authorities

■ Issuance of documents exterritorialy and on�line

■ Acceleration registration in case of a military conflict, temporary occupa�

tion, epidemics, emergency situations of a natural or technogenic char�

acter etc.

■ Maximum term of registration of two working days

■ Electronic interaction of registers between state authorities

Implementation of this initiative will have a positive influence on Ukraine’s

position in the Doing Business Ranking:

■ General Ranking – a rise by 5 positions (currently, the 83th position)

(provided that the positions of other countries remain unchanged)

■ Good signal for business and investors

■ Reduction of the duration of registration to two days will increase reve�

nues of the local budgets and state budget in the form of unified social

contribution and tax revenues by UAH 32.6 million per annum

■ In case the economy grows by UAH 100 million, we can expect creation

of 5 thousand new jobs

Total economic effect from the implementation of this initiative is shown in

Figure 15.



2 days

MAXIMUM TERM OF COMPANY REGISTRATION

5 positions

RISE IN THE DOING BUSINESS RANKING


� 32 �

IT SECTOR

In the sector of information technologies, the law introduces a ban on physi�

cal seizure of IT companies’ servers that have no signs of crime; the law also

cancels the mandatory requirement for registration of franchising agreements.

Before the law was adopted, the seizure of the telecommunication infrastruc�

tures components by national security, defense and law enforcement agen�

cies had been used as a doubtful instrument of competition and as a source

of influencing the economic entities. In most cases, investigation needs can

be satisfied without any physical seizure of the telecommunication infrastruc�

tures components, by copying information. Implementation of this initiative

will break off the acts of power abuse by authority agencies.

Creation of efficient mechanisms of concluding franchising agreements and

public license agreements will enable:

■ to revitalize the franchising market;

■ to eliminate the tax influence on consumers of franchising services;

■ to open access to the sale of IT products in the internet, with the copy�

rights reserved.

Implementation of this measure will enable to attract UAH 150�200 million of

additional investments and will cause the economic growth by UAH 350�400

million (Figure 16).



25�35 million UAH ADDITIONAL

INVESTMENTS


� 33 �

“ MYKHAILO

OBOLONSKYI

Freedom of entrepreneurship must become the highest public priority. Therefore, it is necessary to

reduce state interference with businesses as much as possible, make the taxation system transparent and provide for protection of property rights. During the recent year, we have managed to start introducing

changes, though the key reform is still ahead.

� 34 �

ABOUT 50% OF LICENSED TYPES OF ECONOMIC ACTIVITIES REDUCED

(LAW OF UKRAINE NO. 222)

Law No. 222 is aimed at optimizing the licensing system and reducing the regulatory pres�

sure on business. The document reduces the number of licensed types of activities from 56

to 30 by cancelling and consolidating licenses. The adoption of the law facilitates harmoniza�

tion of the Ukrainian legislation in this sphere with the regulations and standards of the Euro�

pean countries. The major changes are as follows:

■ Licensing of 23 types of economic activities cancelled

■ List of the licensed types of economic activities shortened by consolidating 5 types of

economic activities into 2 types

■ Regulatory procedures in the construction sector simplified

■ Production of liquid fuel from biomass and biogas stimulated

■ Doubling of regulation in the sphere of collection and primary recycling of waste and

scrap of precious metals eliminated

■ Possibility for small and medium businesses to enter the market for collection and recy�

cling of scrap of ferrous and non�ferrous metals created

■ Level of piracy in the market for import and export of holographic protective elements

reduced

Here are examples of several initiatives that the law contains and their economic effect:

TOTAL ECONOMIC EFFECT FROM THE ADOPTION OF THE LAW ON

LICENSING AMOUNTS TO

UAH 10�15 BILLION UNTIL 2020

ECONOMIC GROWTH INVESTMENTS


ADDITIONAL TAX REVENUES

7�10 UAH BILLION

0.2�0.5 UAH BILLION


12�20 UAH MILLION

40�70 UAH MILLION

2�4 UAH BILLION

Cancellation of the license for collection and

primary recycling of waste and scrap of pre�

cious metals eliminates double regulation of

this type of activities


Cancellation of the license for land appraisal

and land tenders removes one of the four regu�

latory barriers

0.5�1 billion UAH

Cancellation of the license for import and ex�

port of holographic protective elements reduc�

es the level of piracy in the market



0.1�0.2 UAH BILLION


Figure 17. Expected economic effect from implementation of the Law №222 Source: EasyBusiness

� 35 �

PROTECTION OF MINORITY INVESTORS RIGHTS STRENGTHENED

(LAW OF UKRAINE NO. 1255�VII)

The law is aimed at deregulation, simplification of economic activities of joint�stock compa�

nies, on the one hand, and introduction of higher demands for public joint�stock companies

whose shares are included in the stock exchange register, on the other.

Such deregulation will give Ukraine a possibility to raise its position in the Doing Business

Ranking and to make joint�stock companies investment�attractive. At the same time, severi�

sation of demands for public joint�stock companies will strengthen protection of minority

investors rights in Ukraine and will significantly approach Ukraine to the performance of its

obligations under the Ukraine–European Union Association Agreement.

Adopted law harmonizes the legislation that regulates protection of minority investors and

gives Ukraine a possibility to improve its position in the Doing Business Ranking through a

number of measures, such as:

■ Introduction of a derivative complaint (the right of a minority shareholder to lay a com�

plaint in the interests of the company to compensate losses)

■ Introduction of responsibility of economic entities’ officials in case their illegal actions

inflict damage to the company

■ Establishment of the procedure recognizing a deed executed by an official as invalid and

returning the profits obtained as a result of this deed

■ Grant to a claimant of the right to receive compensation from the company of his/her

expenses related to judicial settlement of the matter under the complaint against an offi�

cial of the company regarding compensation of the loss incurred by the company, within

the actual amounts obtained by the company

■ Creation of conditions for changing quasi�public joint�stock companies into private ones

■ Introduction of the institute of “independent directors” to represent the interests of

minority shareholders of public joint�stock companies

■ Establishment of detailed regulation of agreements which will include the interests of all

shareholders

The adopted law will become effective on 01.05.2016, due to amendments

suggested immediately after its adoption by Member of Parliament Serhii

Faiermark.


� 36 �

Implementation of the above measures will have significant effect for both business environ�

ment and Ukraine’s investment attractiveness.

■ To introduce a requirement which would enable to apply imprisonment as a supplemen�

tary punitive measure to guilty officials

■ To decrease standards related to provision of evidence in civil matters compared with

criminal matters

■ To grant to minority shareholders the right to elect and dismiss an external independent

auditor

■ To allow shareholders to trade their shares before the major corporate event (an event

which affects acquisition, change or termination of the property right for securities issued

by the company) or the meeting of shareholders

■ To provide for the right for the mutual shareholding up to 10% of free�floating shares by

two independent companies

According to the indicator “Protection of minority investors” in the

Doing Business Ranking 2016, Ukraine will enter the Top 10 (rising

from the 109th position in the Doing Business Ranking 2015). At

the same time, according to the general indicator of ease of doing

business, Ukraine will rise from the 96th up to the 91st position in

the Ranking

Implementation of the above measures will provide for the adapta�

tion of the Ukrainian legislation to the legislation of the European

Union in terms of protection of investors rights, will give a positive

signal to investors (both domestic and foreign ones) and will

improve Ukraine’s investment climate and image

Compliance with the requirements of the World Bank with regard to

harmonization of the Ukrainian legislation (in terms of protection of

minority investors) in order to have a possibility to receive subse�

quent tranches and loans from the IMF and the World Bank

AMOUNT OF ADDITIONAL INVESTMENTS IN THE UKRAINIAN

ECONOMY $2�3

BLN/YEAR


Figure 18. Expected amount of additional foreign direct investments under measures to improve the "Protecting minority investors" indicator in the Doing Business ranking Source: EasyBusiness

� 37 �

“ VOLODYMYR

POPERESHNIUK

Excessive regulation prevents businesses from creating a prosperous and independent future of

Ukraine.

� 38 �

SIMPLIFICATION OF BUSINESS OPERATION (RESOLUTION NO. 42)

TOTAL ECONOMIC EFFECT FROM THE ADOPTION OF THE RESOLUTION

ON DEREGULATION AMOUNTS TO UAH 10�15 BILLION UNTIL 2020

Resolution No. 42 is another comprehensive document which has imple�

mented a number of important deregulation initiatives in such spheres as

agriculture, food industry, oil and gas industry and IT sector.

The resolution is aimed at harmonization of the Ukrainian legislation in the

sphere of safety and quality of food products, simplification of procedures

for quarantine and phytosanitary control, easement of import of plant

protecting agents and conditions for using mineral resources and abate�

ment of barriers for foreigners to become employed in Ukraine.

According to EasyBusiness calculations, total economic effect from the

adoption of the resolution amounts to UAH 10�15 billion, which will pro�

vide for creation of 20�30 thousand additional jobs until 2020. Implement�

ed initiatives will reduce the budget expenses and enable to increase tax

revenues by UAH 0.5�0.7 billion. Expected increase in investments from

the implementation of the measures amounts to UAH 2�3 billion. The

resolution will also facilitate business unshadowing and elimination of cor�

ruption flows of UAH 2�3 billion.

2�3 billion UAH ADDITIONAL

INVESTMENTS


� 39 �

20�50 million UAH


FOOD INDUSTRY

In the food industry, the resolution facilitates harmonization of the systems for

determining safety and quality of food products with the requirements of the

EU legislation in the sphere of state registration of food products.

Before the resolution was adopted, the legislation had not contained clear

assessment criteria of food products’ quality, which had resulted in emer�

gence of considerable corruption flows. According to experts, an unofficial

payment for expertise, without any sanctions by controlling authorities,

reached UAH 4�5 thousand. The annual number of applications, according to

different estimates, amounted to 5�7 thousand. So, the implementation of

this initiative will allow businesses to save time and money for expertise.

Total economic effect for the food industry from the adoption of the resolution

amounts to about UAH 100�150 million (Figure 19).




� 40 �

AGRICULTURE

In the agrarian sector, the resolution improves legal regulation of import of

plant protecting agents and significantly eases the procedure for quarantine

and phytosanitary control.

The resolution provides for:

■ Cancellation of the warrant required in the process of registration of agri�

cultural machinery

■ Determination of a clear term to put forward an invoice for tests of plant

protecting agents (from 30�60 to 10 days). In case of failure to meet this

term, a state authority will be brought to responsibility

■ Reduction of a term for issuance of a phytosanitary certificate to 24

hours

■ Cancellation of mandatory obtainment of a quarantine certificate for

crops and oil plants

■ Cancellation of licensing of import of plant protecting agents

Implemented changes will simplify circulation of agricultural machinery, make

the procedure for import of plant protecting agents more transparent and

reduce time and monetary expenses of business for obtaining quarantine and

phytosanitary certificates.

Total economic effect from the implementation of these initiatives amounts to

about UAH 20�38 billion (Figure 20).






� 41 �

OIL AND GAS INDUSTRY

In the oil and gas industry, the resolution provides for cancellation of the man�

datory monitoring of compliance with the special conditions for subsoil use.

The control over subsoil users, particularly, the right for monitoring and scien�

tific support of special conditions for subsoil use, was only received by state�

owned companies accredited by the State Service of Geology and Mineral

Resources of Ukraine, which provided additional opportunities for corruption.

The major problems of geological monitoring are as follows:

■ Lack of transparency and complicated algorithm of formation of the

monitoring service cost for different companies�subsoil users

■ Monitoring services practically copy the activities of the state geological

control bodies, which execute control measures on a free�of�charge

basis

■ Large cost of monitoring services (from UAH 100 thousand up to UAH 1

million) causes additional expenses for mining companies, which do not

see much benefit in it

■ Monitoring is nominal and, due to the lack of methodical procedure, is

mainly conducted by subsoil users themselves

■ Conclusion of contracts for scientific and technical support is not in line

with the world practice

The resolution cancelled the need of geological monitoring. Total economic

effect from the implementation of this initiative is shown in Figure 21.

1�3 billion UAH ECONOMIC GROWTH




� 42 �

IT SECTOR

In the sphere of information technologies, the resolution simplifies the proce�

dure for issuance, prolongation and cancellation of the permit for the use of

labor of foreign citizens and persons without citizenship.

Currently, up to 100 thousand specialists work in the software development

sector, 3�5% of whom are foreigners. Only about 300 people hold employ�

ment permits, while others receive their wages illegally. According to experts,

implementation of this innovation will facilitate legalization of about 2.5 thou�

sand foreign citizens, which will generate additional tax revenues in amount of

UAH 20�25 million.

Implementation of this measure will also enable to attract additional invest�

ments in amount of UAH 300�500 million and result in the economic growth

by UAH 500�800 million (Figure 22).




FOREIGN DIRECT INVESTMENTS


� 43 �

“ ALINA

SVIDERSKA

Deregulation in the oil and gas industry does not only mean cancellation of excessive and corrupt mechanisms, but also improvement of the current ones. The ultimate goal is to

increase our own extraction. The main thing is to retain the balance between comforta�ble business and environmental protection.

� 44 �

The adopted resolution solves an important problem in the sphere of waste

treatment by creating conditions for emergence of a competitive and efficient

market for recycling tare and packaging waste in Ukraine.

Before this innovation was implemented, Ukrainian packaging waste market

had been actually monopolized by state�owned company Ukrekoresursy,

which, in fact, had not performed its function and obligation to recycle waste.

During the recent ten years, the company collected over UAH 1 billion from

importers, but did not provide producers with a possibility to obtain high qual�

ity services.

The existence of that mechanism contributed to Ukraine’s considerable lag in

this sphere compared with European countries. So far, Ukraine recycles only

4% of packaging waste. This figure in the EU does not go beyond 40% on

average.

The scope of recycling of secondary raw materials in Ukraine is several times

smaller than in the EU member countries, with falling down twice compared

with the figure two years ago during the recent years. The fact that the load of

the Ukrainian recycling facilities is 35% compared with 95% in Europe also

confirms the market inefficiency. To minimize losses, which reach UAH 5

billion per annum at the domestic plants, the recyclers have to import 400

thousand tones of secondary raw materials every year in order to load their

facilities and reach profitability, at least, in the domestic market.

ONLY 4%

OF PACKAGING WASTE RECYCLED IN UKRAINE

STATE MONOPOLY AND CORRUPT SCHEMES OF

“UKREKORESURCY” DESTROYED

35% LOAD

OF UKRAINIAN RECYCLING FACILITIES AS OF NOW

Load of manufacturing facilities of

the companies that deal with recy�

cling of secondary raw materials

Ukraine

Loss of profits by com�

panies due to the lack

of raw materials for

recycling, UAH million

Ukraine EU Ukraine Ukraine

Share of solid domes�

tic waste lost in

Ukrainian disposal

fields

Volume of forced im�

port of secondary raw

materials for recycling,

thousand tones

95% 35� 75% 40% 400 5,000


Figure. 23. Economic effect in the form of loss of business profits from the lack of raw material processing Source: EasyBusiness

� 45 �

To recycle tare and packaging, the entrepreneurs had to pay twice to get the non�rendered services of Ukrekoresursy from private companies

Current procedure for packaging waste treatment

created discriminative conditions for companies dealing with imported goods

The importers must pay the cost of recycling of 100% materials, while the national producers must only pay 35%

This situation leads to the increase of production costs for the companies that imports packaged goods

■ Businesses pay twice ■ Funds on Ukrekoresursy accounts are used extremely inefficiently, with

signs of laundering


Figure. 24. Schematic visualization of the SE «Ukrekoresursy» functioning problems Source: EasyBusiness

� 46 �

The resolution provides for introduction of the principle of extended producer responsibility

for recycling of tare and packaging. This principle is the one on which the EU Directives are

based and which Ukraine undertook to implement in the Ukraine–

European Union Association Agreement. The necessity to implement this principle is also

provided in the Coalition Agreement and in the Deregulation Action Plan for 2015�2016

approved by the Cabinet of Ministers of Ukraine.

The adoption of this resolution was the first stage in the process of switching to the extended

producer responsibility.

Implementation of this initiative will facilitate Ukraine’s GDP rise by UAH 5.6 billion every year

due to elimination of the corruption component and reduction of losses of the recycling

industry.

AFTER CANCELLATION of Resolution No. 915 and Decree No. 789/414/709, the system for packaging waste treatment in

Ukraine will be regulated by the provisions of the Law “On waste”, which had been effective before the adoption of the above resolution and decree

THERE WILL BE NO REGULATORY VACUUM AFTER THE INTRODUCTION OF THE EXTENDED PRODUCER

RESPONSIBILITY

Corruption component

Annual recycling fee collected by

Ukrekoresursy and private structures

controlled by other state institutions

(which did not create any public

benefit)

Losses of the recycling industry

Loss of profits by recycling companies

due to idleness of their manufacturing

facilities resulted from the lack of local

secondary raw materials (according to the

Ministry of Energy and Coal Industry)

0.3

5.3

5.6 UAH

BLN

Volume of the GDP

losses every year


Figure. 25. Amount of annually foregone GDP from the Resolution №915 Source: EasyBusiness

� 47 �

Round table discussion on liberalization of the waste packaging market,

Kyiv, Cabinet of Ministers of Ukraine, April 2015

� 48 �

During the second stage, until 2020, Ukraine will implement the major principles of the ex�

tended producer responsibility, which are as follows:

■ The producer shall bear responsibility for recycling and utilization of its products

■ The producers/importers of packaged products shall perform their obligations inde�

pendently or collectively (by transferring their obligations to authorized organizations)

■ Clear recycling and utilization standards, which will be gradually rising

■ The authorized organization, at the producers’ expense, shall independently provide for

the implementation of the recycling standards, including, but not limited to separate col�

lection, transportation, sorting and recycling/utilization of packaging waste, informational

campaign for population

According to EasyBusiness estimates, the economic effect from the implementation of the

extended producer responsibility in Ukraine may amount to about UAH 5�7 billion. The larger

part of this amount will fall to the economic growth, while about a quarter to private invest�

ments in the sector.

Moreover, implementation of the suggested changes will facilitate reduction of the load on

environment due to decrease in the weight and volumes of packaging waste. Improvement of

ecological situation, decrease in the disease rate caused by ecological factors will facilitate an

increase in life standards and local business climate.

Total economic effect from demonopolisation of the market and adoption of the draft law on packaging and waste amounts to

UAH 5�7 billion until 2020



4�5 UAH BLN

1�2 UAH BLN

0.2�0.3 UAH BLN

8�10 thsd. ADDITIONAL JOBS


Figure. 26. Total economic effect from demonopolisation of the market and adoption of the draft law on packaging and waste Source: EasyBusiness

� 49 �

“ KATERYNA

BUSOL

The balanced regulation does not just make it easier to run one’s business. It raises the

issues of communication and responsibility that are so acute for Ukrainian politics. The state should learn, on the one hand, to hear the public and take its reasonable remarks into

account. And, on the other hand, it should be able to provide sound arguments when

explaining the necessity to preserve certain measures. However, both private individuals and business should comprehend that the liberalization is often accompanied by the

increase of individual responsibility. Thus, for instance, the deregulation of a Ukrainian

energy sector does not diminish the obligations of the state, private consumers and businesses

regarding the enhancement of energy efficiency

� 50 �

Deregulation Action Plan for 2015�2016 was developed with the aim to implement the first

priority deregulation initiatives as fast as possible. The plan includes 131 measures (Annex 4),

which cover a number of spheres and sectors of the economy, such as the system of per�

mits and licenses, technical and customs regulation, telecommunication sphere, agrarian

sector, oil and gas industry etc.

According to EasyBusiness calculations, implementation of the Action Plan will facilitate the

economic growth by UAH 25�35 billion. The expected increase in investments amounts to

UAH 15�20 billion. Implementation of the measures will also facilitate elimination of corruption

flows of UAH 5�10 billion.

DETALIZATION OF THE NUMBER OF MEASURES ACCORDING TO SPHERES OF IMPACT

DEREGULATION ACTION PLAN OF THE CABINET OF MINISTERS OF UKRAINE NO. 357P


IN CASE OF IMPLEMENTATION OF THE ENTIRE SET OF MEASURES, EXPECTED ECONOMIC EFFECT WILL REACH ABOUT

UAH 50�70 BILLION UNTIL 2020





ADDITIONAL TAXES

25�35 UAH BLN

15�20 UAH BLN

5�10 UAH BLN

1�3 UAH BLN

1�3 UAH BLN

0.1�0.2 UAH BLN

Figure 28. Expected economic effect from the implementation of the Cabinet of Ministers Deregulation Action Plan №357р Source: EasyBusiness

Figure. 27. Cabinet of Ministers Deregulation Action Plan №357р structure by spheres of impact. Source: EasyBusiness

� 51 �

LIST OF THE MOST SIGNIFICANT MEASURES DECLARED IN THE ACTION PLAN

(1/2)

LICENSING AND PERMITTING PROCEDURES FOR REGULATION OF ECONOMIC ACTIVITIES TO BE SIMPLIFIED:

■ cancellation of 4 types of licensing, including tour operator activities, mediation in employment abroad, safeguarding

activities, activities of banks for umbilical blood, other human tissues and cells;

■ cancellation of 14 permitting documents, for example, the report of the sanitary and epidemiological expertise, docu�

mentation on designed machinery, technologies, equipment, tools etc.;

■ provision of a legal possibility of obtaining permitting documents only in an electronic form (as of now it is optional);

■ introduction of the unified portal for rendering administrative services, by the resolution of the Cabinet of Ministers of

Ukraine.

PROCEDURES FOR TECHNICAL REGULATION OF ECONOMIC ACTIVITIES TO BE IMPROVED:

■ switch to the voluntary application of standards;

■ transfer of the regulatory functions to the national Standardization Authority;

■ cancellation of state registration of food products with UkrSEPRO as per 2018;

■ changes in the principles of development and approval of technical regulations;

■ adoption of new technical regulations, which will meet the requirements of the EU technical regulation system.

PROCEDURES FOR CUSTOMS AND TAX REGULATION OF ECONOMIC ACTIVITIES TO BE SIMPLIFIED:

■ reduction of the number of reports on the unified social contribution to be submitted, from 12 to 4 per annum;

■ introduction of the unified reporting period, a calendar year, for payers of groups I�III;

■ cancellation of submission of the balance sheet to state registrars by businesses;

■ cancellation of the inspection by the fiscal bodies of such a document as the declaration of conformity in the process

of import of any commodities to the customs territory of Ukraine;

■ introduction of the provision that the commodity shall only be certified once, when it first enters the market, and

introduction of the principle of transparent information about certification of commodities by making it public in the

internet;

■ simplification of customs clearance of vehicles and their parts and differentiation of functions between the customs

authorities and the traffic police.

IMPROVEMENT OF UKRAINE’S POSITION IN THE EASE OF DOING BUSINESS RANKING EXPECTED:

■ term for registration of a business – 24 hours;

■ term for registration of a VAT payer – 24 hours;

■ opening of a bank account on the date of submission of the application;

■ provision of creditors access to information about debtors;

■ granting creditors the right to be involved in approval of material deeds (10% or over of the balance value of assets)

with regard to debtors’ assets in the process of asset disposal;

■ granting creditors the right to address to courts with request to appoint property administrators and terminate their

powers.


� 52 �

LIST OF THE MOST SIGNIFICANT MEASURES DECLARED IN THE ACTION PLAN

(2/2)

AS OF JULY 2015, 13 INITIATIVES ARE IMPLEMENTED OUT OF 131 MEASURES. THE LARGEST NUMBER OF UNIMPLEMENTED MEASURES

IS WITHIN THE RESPONSIBILITY OF THE MINISTRY OF ECONOMIC DEVELOPMENT

AND TRADE AND THE MINISTRY OF AGRARIAN POLICY AND FOOD

EXCESSIVE BARRIERS TO BE LIQUIDATED AND LAWS ON BUSINESS OPERATION IN FOOD INDUSTRY TO BE

IMPROVED:

■ improvement of relations in the children’s food sector;

■ establishment of the necessity to register only new food products for children;

■ creation of legal grounds to develop and apply new technologies for packaging and other materials, which may

contact food products.

BUSINESS ENVIRONMENT IN THE CONSTRUCTION INDUSTRY TO BE SIMPLIFIED:

■ reduction of the corruption component by cancelling the payment of shares in the infrastructural development of a

settlement;

■ establishment of personal responsibility of local authorities officials for failure to develop, approve and publish the

urban planning documentation (urban planning cadaster, general planning scheme of a settlement, zoning plan of an

area);

■ development and submission for the examination by the Cabinet of Ministers of Ukraine of a draft law on the unified

simplified procedure for provision of the postal address for a construction facility.

STATE REGULATORY POLICY IN THE ELECTRICITY INDUSTRY TO BE IMPROVED:

■ introduction of the formula for calculating the “green” tariff, unified for all alternative energy sources;

■ establishment of remuneration in the form of a surcharge to the “green” tariff for the use of domestically manufac�

tured components in the process of design and construction of alternative energy facilities;

■ cancellation of the local component; however, the use of Ukrainian equipment will be encouraged by a surcharge (5�

15%) to the “green” tariff.

LEGAL REGULATION IN THE INFORMATION TECHNOLOGIES SECTOR TO BE IMPROVED:

■ introducing in the Civil Code possibility to conclude license agreements remotely;

■ creation of public license mechanism;

■ recognition of an electronic document as written evidence;

■ tax exemption of transactions involving electronic money executed by commercial agents of an issuer of electronic

money;

■ consideration of electronic money settlements in determining the taxation base.


� 53 �


EasyBusiness representatives contributed to the development of the draft law on optimization

the procedures for registration of legal entities and individual entrepreneurs. President of Ukraine

approved the law on December 11, 2015. It applies to the registration of legal entities, non�

governmental organizations, individual entrepreneurs and their symbols.

The most significant changes are described below.

SIMPLIFIED PROCEDURE OF BUSINESS REGISTRATION (LAW OF UKRAINE №835�VIII)

INTRODUCTION OF THE PRINCIPLE OF EXTRATERRITORIALITY It creates the possibility of filing documents to open a business anywhere in Ukraine irrespective of the place of per�son’s registration

CREATING COMPETITIVE ENVIRONMENT FOR SERVICES PROVISION

Notaries and other accredited entities are empowered to perform the functions of state registrars

CANCELLATION OF THE ANUUAL FORM №6 FILING

Canceling the need to file the registration card to prove the information about legal entity contained in the Unified State Register (Form №6)

OBTAINING DOCUMENTS IN ELECTRONIC FORM

Provides possibility to obtain documents after the state registration through electronic services portal

SUBMITTING DOCUMENTS IN ELECTRONIC FORM

Provides possibility to submit documents for business registration through electronic services portal

� 54 �

Resolution of the Cabinet of Ministers of Ukraine No. 719 dated 29.12.2014

cancelled the inefficient regulation of granting privileges in the

process of import of energy efficient equipment, which was deter�

mined by Resolution of the Cabinet of Ministers of Ukraine No. 444 dated

14.05.2008 and due to which the Ukrainian budget did not receive over

UAH 1 billion in 2013.

Resolution of the Cabinet of Ministers of Ukraine No. 1 dated 14.01.2015

approves the list of commodities, whose export and import shall be licensed,

which determines that import of plant protecting agents shall not be

licensed.

The necessity to find approval of technological cards of catering

facilities by sanitary and epidemiological control bodies is can�

celled, according to Resolution of the Ministry of Economic Development and

Trade No. 509 dated 20.05.2015.

OTHER IMPLEMENTED INITIATIVES


� 55 �

Round table discussion on improvement of investors rights protection

Kyiv, Cabinet of Ministers of Ukraine, April 2015

� 56 �

REGULATORY LEGAL ACTS WHICH ARE NOT ADOPTED,

BUT ARE DEVELOPED AND LAUNCHED INTO IMPLEMENTATION


Draft law on cancellation of registration and maintenance of work record books

Draft law on intellectual property rights

Draft law on optimization of 30 permitting documents and 5 licenses

Draft law on liberalization of the use of land for the purposes of geological surveys

conducted by oil and gas companies

Draft laws related to the Doing Business Ranking

Draft law on improvement of taxation transactions involving electronic money

Draft resolution on reduction of the food products and tools subject to price con�

trol

Draft law on streamlining the procedures for search and seizure of telecommuni�

cations infrastructure elements

Draft law on optimization of statistical reports for businesses

� 57 �

DRAFT LAW ON OPTIMISATION OF 30 PERMITTING DOCUMENTS

AND 5 LICENCES SUBMITTED FOR APPROVAL

As part of the efforts to implement Clauses 5, 7, 9, 19 of the Deregulation

Action Plan of the Cabinet of Ministers of Ukraine for 2015�2016, which was

approved and adopted by the Cabinet of Ministers of Ukraine Order

No. 357�p dated 18.03.2015, Ministry of Economic Development and Trade

of Ukraine, EasyBusiness, together with experts and volunteers developed a

draft law on optimization of 30 permitting documents and 5 licenses

(5 licenses and 17 permits to be cancelled; 6 permits to be switched to

declarative principle; 7 permits to become informational).

Total expected economic effect from the optimization of permitting docu�

ments amounts to about 4 UAH billion, in the form of business and state ex�

penses saving, reduction of corruption and increase in foreign direct invest�

ments.

Proposed draft law will enable businesses to save at least UAH 3.5 billion

every year due to reduction of expenses related to obtaining permitting docu�

ments and will facilitate reduction of budget expenses for administrating the

process of issuance of permitting documents by UAH 55 million per annum,

which is a three time excess over the benefits of their issuance.

Optimization of permitting documents will improve business environment,

which will be manifested by an increase in foreign direct investments of

UAH 108 million every year. It is expected that adoption of this draft law will

enable to reduce corruption flows by UAH 725 million.

30 permits

AND

5 licenses

WILL BE CANCELLED

AND SIMPLIFIED


� 58 �

■ Total reduction of business expenses resulted from the implementation

of the reform amounts to UAH 3.7 billion

■ Indirect financial expenses represent the major component of such

reduction (about 97%)

■ The major problem with the current permits is a long period of their

obtaining, reaching 30�45 days in certain cases

■ Long expectation leads to expenses related to losses of profits by entre�

preneurs (UAH 2,355 per day on average) and stimulates businesses to

make informal payments aimed at speeding up the process of obtaining

the permitting documents

■ Reduction of expenses for corruption payments amounts to about UAH

725 million

■ A great number of permitting documents issued during a year (over

100,000) and the long procedure for their obtainment are the major

drivers of corruption

■ Administering of permitting documents, which covers 2% of the total

expenses of businesses, is mainly related to labor costs for execution

and preparation of documents required to obtain a permit

■ Optimization of 30 permitting documents and 5 licenses will result in

reduction of revenues of the state budget in amount of about UAH 15

million every year, which is actually the money that businesses could

save

■ Reduction of expenses for administering the process of issuance of per�

mitting documents amounts to at least UAH 55 million per annum, which

is a three time excess over the benefits of their issuance

■ Total benefit for the state budget, which is calculated as a difference

between the reduction of the state administrative expenses and the re�

duction of the budget revenues, amounts to UAH 40 million

■ Consequently, proposed changes will enable to save money by both

businesses and the state

Figure 29. Economic impact on businesses

Source: EasyBusiness, central and local executive authorities

Figure 30. Administrative and governance impact

Source: EasyBusiness, central and local executive authorities

3�4 billion UAH

TOTAL REDUCTION OF BUSINESS

EXPENSES

700 million UAH

REDUCTION OF CORRUPTION COSTS

55 million UAH

SAVING OF THE STATE FOR ADMINISTERING

DOCUMENTS


� 59 �

Ukraine received work record books as inheritance of the USSR, while there

is no practice of using work record books in economically developed coun�

tries. In order to cancel this outdate standard, the EasyBusiness team

developed a draft law which cancels the need of using work record books in

relations between employees and employers.

About 1.7 companies of various size face the need to use work record books

held by over 8.7 million employees every year (according to the data of the

State Statistics Service for 2013). While administering work record books,

entrepreneurs spend almost UAH 290 million every month to engage the

respective specialists (accountants, HR specialists). Moreover, for large and

medium companies, administration of work record books is accompanied

with additional expenses for their custody (expenses for archivists), which

reach UAH 220 million per annum.

Thus, cancellation of work record books will enable businesses to save about

UAH 500 million per annum for compliance with this outdate and unneces�

sary standard.

The idea of cancellation of work record books is often accompanied with

criticism based on the potential risks the cancellation can result in. The

named major risks are the risk of failure to accrue pensions, the risk of failure

to receive social allowances and the risk of employment of dishonest employ�

ees. However, all these risks are not well�grounded.

■ Firstly, working experience that affects the calculation of a pension does

not depend on records in a work record book. The size of a pension is

determined on the basis of the amount and the duration of withdrawals

to the Pension Fund from salaries. When a person applies for award of a

pension, the inspector of the Pension Fund may follow all amounts of the

respective withdrawals by using this person’s individual identification

code.

■ Secondly, in case a person applies to an Employment Centre for receiv�

ing social allowances, the information about this person’s previous

employments, reasons for his/her dismissals and other data contained in

work record books will be received from copies of resolutions on dismis�

sal and the information from the Unified Register of the Employment

Centre and the Tax Inspectorate.

■ Thirdly, an employer may avoid the risk of employing a dishonest person

by obtaining information about the previous workplace and the reasons

for dismissal of this potential employee as an answer to the respective

inquiry to the Employment Centre.

Therefore, cancellation of work record books has positive consequences for

both employers and employees, which proves the necessity to implement this

innovation.

DRAFT LAW ON CANCELLATION OF WORK RECORD BOOKS

DEVELOPED

1.7 million

COMPANIES FACE THE NEED TO

ADMINISTER WORK RECORD BOOKS

500 million UAH SAVING OF BUSINESS EXPENSES

WORKING EXPERIENCE

THAT AFFECTS THE

CALCULATION OF A

PENSION

DOES NOT

DEPEND ON RECORDS IN A WORK

RECORD BOOK


� 60 �

Television interview on cancellation of work record books, Kyiv, August 2015

� 61 �

Today, the companies that conduct survey works are constantly running into

problems related to acquisition of rights for land plots for the purposes asso�

ciated with their activities. The major problem is that the procedure for land

allocation is rather long. The minimum term for allocation of a land plot is 4

months, which in practice may take 2�5 years.

To solve the above problems, the draft law suggests the following measures:

■ to allow companies, institutions and organizations to conduct survey

works on the basis of the agreement with the owner or the administrator

of the land plot, or upon approval of the land user, without changing the

purpose of the land plot. In this case, the procedure for alienation

(redemption) of a land plot will be unnecessary;

■ to give legal entities a possibility, after completion of the research and

industrial development of deposit fields and after the fields start being

commercially developed, to use the land plot on the basis of the agree�

ment with the land owner or upon approval of the land user during the

period when the purpose of the land plot is being changed and the

documents to certify the right to use the land plot are being executed,

and to grant a pre�emptive right for the purchase of this land plot in case

it is sold by its owner;

■ to give a possibility to execute and apply an easement with regard to

facilities associated with arrangement of deposit fields, without changing

the purpose of the land plot, and to provide for the impossibility of termi�

nation of an easement with regard to land plots due to temporary obsta�

cles related to placement, construction, operation and maintenance of oil

and gas bore holes and allied facilities.

According to EasyBusiness estimates, the total saving of expenses for the oil

and gas industry from the implementation of this innovation will reach UAH

1.5�3 billion every year.

Implementation of this initiative will also enable to eliminate corruption flows,

which emerge because of a long period of expectation and high probability of

a refusal to issue this document of title. The preliminary calculations of the

potential corruption component in this sphere demonstrated that it amounts

to about UAH 1�3 billion per annum.

The extraction of gas from non�operating bore holes during the period of

expectation for the completion of the land allocation process may reach 1

billion m3 per annum, for the entire gas industry of Ukraine. This volume of

non�extracted gas may potentially secure the needs of the population and

reduce Ukraine’s dependence on the gas imports from the Russian Federa�

tion. As a result of simplification of the regulatory pressure in the sphere of

land allocation for oil and gas companies, the import of the Russian gas to

Ukraine will be potentially reduced by 7�10% per annum due to the increase

in its own production.

DRAFT REGULATORY LEGAL ACT ON LIBERALISATION OF THE USE

OF LAND FOR THE PURPOSES OF GEOLOGICAL SURVEYS

CONDUCTED BY OIL AND GAS COMPANIES

1�3 billion UAH


1.5�3 billion UAH SAVING OF BUSINESS EXPENSES

IMPLEMENTATION

OF THIS INITIATIVE WILL

ENABLE TO REACH A

7�10%

DECREASE IN THE VOLUME OF

IMPORT OF GAS FROM THE

RUSSIAN FEDERATION TO

UKRAINE


� 62 �

“ ANDRII

ERASHOV

Deregulation in Ukraine reflects governmental program of

disenchanting businesses. State authorities bear sole responsibility for

the pace of this process.

� 63 �


Doing Business Ranking � annual survey of the World Bank, which assesses

the ease of doing business in 189 countries based on ten indicators, such as

ease of starting a business, obtaining construction permits, registering prop�

erty, protecting investors, paying taxes, etc.

The ranking is based on the estimates of entrepreneurs who carry out eco�

nomic activity, particularly in Ukraine. The ranking takes into account all pro�

cesses of the company operation, since its establishment, throughout the

cycle of its existence and termination. Higher scores in the ranking show bet�

ter and generally more simple business regulations and better relationships

between the state and entrepreneurs.

In the last ranking, released in late October, 2015, Ukraine rose by 13 posi�

tions and took the 83th place. However, the revision of the methodology au�

tomatically increased the position from 96 to 87. Thus, the real improvement

was just 4 positions. Figure 31 shows the ranking results for Ukraine and

other countries.

Globally, the ranking is a measure of regulation efficiency and important indi�

cator of decision�making for international investors.

For Ukraine, increasing the position in the ranking would mean creation of

favorable conditions for business, significant improvement of the international

image in the eyes of investors and attraction of millions of dollar in additional

investments.

4 positions

IMPROVEMENT COMPARED TO THE

PREVIOUS YEAR

83 position

OF UKRAINE IN DOING BUSINESS RANKING

DRAFTLAWS PACKAGE TO IMPROVE POSITION OF UKRAINE

IN DOING BUSINESS RANKING TO TOP 15

Fig. 31. Ukraine in the world Ease of Doing Business Ranking

Source: World Bank

*Ranking for 2015 was officially adjusted due to the review of the methodology by the World Bank

*

� 64 �


EasyBusiness experts offer 14 steps that will enable the country to reach the

TOP�15 ranking next year. This is a package of 19 draft legal acts, implemen�

tation of which will significantly increase the investment attractiveness of

Ukraine and, most importantly, will reduce business and state costs, in partic�

ular through the optimization of processes and procedures. Total economic

effect from implementation of all measures is estimated at UAH 10�15 billion.

In addition, innovations will eliminate corruption flows of around UAH 6�10

billion.

Developed draft legal acts are related to the 9 out of 10 indicators of the Do�

ing Business ranking.

Within the «Starting a Business» indicator, it is proposed to simplify the pro�

cedure for new businesses registration as VAT payers, reducing the registra�

tion period to 1 day, simplify the procedure for opening an account in a finan�

cial institution, introduce modern technologies for starting a business. This

innovation will improve the position of Ukraine on this indicator from the 30th

to 14th place in 2017.

In the field of construction permits, proposed changes are aimed at the aboli�

tion of the shared infrastructure contribution, as well as simplification of pro�

cedures for obtaining the mailing address. Implementation of these key

changes will increase the position of Ukraine on this indicator from the 140th

to 14th position in 2017.

Developed draft law in the field of electrical grid connection will ensure simpli�

fication of the procedure of connecting to grids by setting common to all con�

nection procedure, which requires minimum actions from the customer and

establishes liability for electricity companies for the terms of connection. This

innovation will raise the ranking of Ukraine on this indicator from the 137th to

82th place.

In the area of property registration, it is proposed to shorten the period for

obtaining regulatory and monetary valuation of the property object from 3 to 1

day. This will improve the position of Ukraine on this indicator from the 61th

to 57th place.

Within the «Protecting Minority Investors» indicator, EasyBusiness participat�

ed in the development, analysis and support of the draft law №2259 On

amendments to some legislative acts of Ukraine on protection of investors'

rights (currently the Law of Ukraine №289�VIII), which will allow for rapid ad�

aptation of Ukraine's legislation to EU legislation regarding the protection of

the rights of investors and will enable to increase the ranking of Ukraine on

this indicator from the 88th to 5th position.

To simplify tax system, draft legal acts provide for the establishment of a uni�

form single social contribution at 20% for all businesses and reduction of the

time spent on preparation, publication and filing of financial and other report�

ing. These innovations will allow Ukraine to rise within this indicator from the

107th to 12th position.

20�30 billion UAH

TOTAL ECONOMIC EFFECT FROM

PACKAGE IMPLEMENTATION

TOP�15 expected

POSITION OF UKRAINE IN THE RANKING AFTER

PACKAGE IMPLEMENTATION

� 65 �


In the field of international trade, it is proposed to introduce a number of im�

portant changes to ensure maximum transparency and ease of export and

import operations. For example, it is assumed to unify and lower the number

of import duties to three types � 0%, 4% and 10%. Currently, there are 117

types of them. Reduction of customs procedures term will be achieved

through transferring the functions of phytosanitary, environmental and radio�

logical monitoring and control procedures regarding cultural values in the

areas of customs clearance from special bodies to customs. It is also as�

sumed to eliminate the need for original documents of origin submission and

establishing certification only during the first product’s entrance on the mar�

ket. Implementing all changes will boost Ukraine's position on this indicator

from the 109th place allowing it enter the TOP�50 of the list.

Within «Enforcing Contracts» indicator, developed changes establish Europe�

an standards for court decisions enforcement, implement shortcut proceed�

ings and establish the balance of private and public executants powers, as

well as optimize the stages of enforcement proceedings. In practice, this

means that conscientious contractors will be protected while unfaithful ones

will be brought to justice. Implementation of initiatives in this field will improve

Ukraine's position in the ranking on this indicator from the 98th to the 1st

place.

In the area of resolving insolvency, it is proposed to limit the possibility of

delaying bankruptcy procedures, providing creditors with on�line access to

the information about the debtor, empowerment and participation of creditors

in bankruptcy proceedings, as well as improving procedures and transparen�

cy of debtors' property realization and reducing the duration of bankruptcy

procedures for the debtors, the total value assets of which equals to less than

5,000 minimum salaries. Another innovation concerns establishing priority for

the creditors that provided the insolvent debtor with a credit to the demands

of other creditors of the fourth turn. These changes will improve the position

of Ukraine on this indicator from 141th to 55th place.

Fig. 32. Expected results of Ukraine in Doing Business 2017 ranking in the event of all draft legal acts adoption.

Source: World Bank, EasyBusiness

1st place expected

ON «ENFORCING CONTRACTS»

INDICATOR

� 66 �

Because of the Verkhovna Rada (the Parliament), Ukraine lost

30 positions in the

DOING BUSINESS RANKING

As the Parliament did not support governmental initiatives several times, we have already lost 30 positions of Ukraine’s investment attractiveness.

This year, another opportunity to increase our position by 30 point was lost due to the lack of

MPs’ support prior to May 2015 (the month, when the data for next�year Index is collected).

_

Speech of Prime Minister at the government meeting on 27.05.2015

� 67 �

DRAFT LAWS DEVELOPD ARE AIMED AT DEREGULATION OF

THE IT SECTOR

The team prepared a number of draft laws covering most vital issues of the IT

sector.

The documents developed by the team suggest the following:

■ improvement of intellectual property rights regulation in Ukraine;

■ improvement of taxation of electronic money transactions;

■ improvement of control marks’ regulation.

The Draft Law “On Improvement of Intellectual Property Rights Regulation” is

aimed at regulatory improvement of acquisition, exercise and protection of

certain intellectual property rights. This aim is to be achieved by filling in legal

gaps and eliminating collisions, as well as by adapting Ukrainian legislation to

the EU rules on:

■ administrative protection of rights for trademarks and service marks;

■ combating “patent trolling”, i.e. establishing additional mechanism pre�

venting acquisition or abuse of rights for industrial models which do not

meet the conditions for provision of legal protection, or preventing acqui�

sition of such rights by dishonest applicants;

■ distribution of copyright and related rights items on the basis of public

license agreements;

■ introducing compensation for infringement of intellectual property rights

and other protection methods, in line with modern realities;

■ simplification of intellectual property rights registration by using electronic

document circulation;

■ formation of a generally accessible electronic database of applications

for trademarks, service marks and industrial models;

■ allowing parties to determine the terms and conditions of franchise

agreements.

The Draft Law “On Improvement of Taxation of Electronic Money” provides

for:

■ establishment of a clear procedure for taxation of electronic money

transactions of the issuer of electronic money and the issuer’s agents;

■ determination of the procedure for including electronic money transac�

tions into the calculation of the taxation base;

■ consolidation of the right of economic entities that apply the simplified

taxation system to accept electronic money as consideration for goods

and/or services that they provide.

The Draft Law “On Improvement of Control Marks Regulation” shall provide

for additional legal protection of copyrights, rights of performers,

manufacturers of phonograms (videograms), software, and databases in the

process of distribution of their works and performances, combatting piracy

and improvement of the investment climate in Ukraine. The Draft Law will

provide a possibility for copyright holders and holders of related rights to in�

dependently protect their interests in the process of issuance of control

marks, by analyzing the information about those who receive control marks

and the names of copies placed in the web site of the state authority.

ADAPTATION OF THE LAWS

ON INTELLECTUAL PROPERTY TO THE EU

STANDARDS

IMPROVEMENT OF TAXATION OF

ELECTRONIC MONEY TRANSACTIONS


� 68 �


Abuse of telecommunications infrastructure elements seizure in IT companies is scorching for the business climate.

Currently, there are no rules in the Criminal Procedural Code of Ukraine that could serve as a safeguard against inves�

tigators or prosecutors abusing their rights during the search. These rights have gradually transformed into modern

racket instruments. Undoubtedly, this situation has a negative impact on the investment attractiveness of Ukraine.

The first priority for the state in this area should be the development and implementation of safeguard mechanisms to

prevent abuses of investigators’ rights in conjunction with the provision of sufficient authority to conduct an effective

investigation. The use of force by public authorities must be justified.

The proposed draft law includes the following innovations:

■ The search can be used only as a last resort; for every search request, the investigator shall explain why he can

not get the desired information by other means.

■ The investigator can not repeatedly apply for the search, arguing for the same motives or reasons.

■ Narrowed list of grounds for information carrier seizure. The possibility to copy information in case of seizure must

be provided.

■ Additional provision that a lawyer can have access to a search anytime, on any stage.

■ Specified procedure for the arrest of the seized property, which should facilitate the return of unlawfully seized

things to rightful owner.

■ Using special units and means may be allowed only on direct orders from the judge.

■ The investigator and prosecutor must provide a detailed description of things, documents and persons they intend

to find during a search.

Investigators’ actions on IT companies in Ukraine have a direct negative impact on economic processes in the country.

DRAFT LAW ON STREAMLINING THE PROCEDURE FOR SEARCH AND SEIZURE OF

TELECOMMUNICATION INFRASTRUCTURE ELEMENTS

PROBLEM

GOAL

Figure 33. Schematic display of a negative effect for the state in case of the infrastructure elements seizure abuses Source: EasyBusiness

� 69 �

“ ARTEM

RAFAIELIAN

While the hope for reforms in the society is higher than ever, deregulation should

become an indicator of those long�awaited changes, giving new impetus for efficient

development to our country. Despite fruitful work of the civil society, reform is being

implemented slowly due to strong resistance of the system, the lack of the

common understanding by the authorities of the priorities and directions of the reform, inefficiency of the bureaucratic machine. Representatives of the state however are

able to overcome these constraining factors.

� 70 �

Interview to The Ukrainiska Pravda, Kyiv, August 2015

� 71 �


2016 WORK STREAMS

Freedom of capital movement

Enhancing the energy independence of Ukraine

Stimulating the development of IT technologies

Limitation of state control and pressure on business

Reducing the administrative costs of business

Improving position in the Doing Business ranking

Liberalization of labor legislation

Property rights protection

Liberalization of land relations

� 72 �

“ ARTEM

NYKONOVYCH

State authorities’ communication with society is at its lowest. Although almost each day

brings in new reforms and new deregulation steps, public awareness remains very feeble. Media lacks the ability to present both major

and small changes to the public.

� 73 �

RESEARCH

EasyBusiness team is actively engaged in research on socio�economic is�sues and developing reports for the Ukrainian Government to implement

reforms


PERMITS OPTIMIZATION

Regulatory impact assessment using EASI methodology

EasyBusiness, Ministry of Economic Development and Trade of Ukraine

July 2015

EMPLOYMENT RECORD BOOKS CANCELLATION

Socio�economic impact assessment


July 2015

CREATION OF FREE LAND MARKET IN UKRAINE

Cost�benefit analysis for public discussion

EasyBusiness

April 2015

REFORM OF PACKAGING WASTE TREATMENT

Based on the European experience

EasyBusiness, Ministry of Economic Development and Trade of Ukraine, UkrPEK

February 2015

KEY MACROECONOMIC OBJECTIVE � AVOIDING HYPERINFLATION

International experience analysis

EasyBusiness, Professional Government

March 2015

� 74 �


REFORM OF THE STATE CONTROL SYSTEM

Current system analysis and recommendations

EasyBusiness

December 2015

FACILITATION OF LAND ACQUISITION PROCEDURE IN OIL AND GAS INDUS�

TRY

Impact assessment

EasyBusiness

September 2015

E�VOTING REFORM IN UKRAINE

Technology analysis and recommendations

EasyBusiness

December 2015

REFORM OF THE STATE CONTROL SYSTEM

International experience overview


July 2015

STATISTICAL REPORTING OPTIMIZATION

Impact assessment

EasyBusiness

October 2015

REFORM OF THE INTELLECTUAL PROPERTY SYSTEM

International experience analysis and recommendations on intellectual property im�

provement in Ukraine

EasyBusiness

December 2015

� 75 �

ANALYSIS OF INTERNATIONAL EXPERIENCE IN HYPERINFLATION AND

DEVELOPMENT OF RECOMMENDATIONS FOR THE NATIONAL BANK OF

UKRAINE WITH REGARD TO POTENTIAL RISKS COMBATTING

December 2014 was marked with rapid devaluation of Ukrainian currency. Sharp decline of

population’s confidence in hryvnia was illustrated by massive purchase of basic consumer

goods and considerable budgetary deficit. The National Bank of Ukraine attempted to face

these challenges by excessive emission of money. These factors gave a significant impulse to

the inflation rate. For instance, according to the State Statistics Committee, the annual infla�

tion at the beginning of 2015 speeded up to 28.5% (against January 2014).

With risk of hyperinflation in Ukraine becoming more and more probable, EasyBusiness team

analyzed experience of 20 success stories of hyperinflation combatting in various countries.

Having engaged Steve Hanke, a professor at the John Hopkins University and the world�

known expert in hyperinflation, the team recommended to the National Bank of Ukraine num�

ber of preventive methods for combatting quick devaluation of the national currency. The

team determined the major steps to follow in order to neutralize the risk of hyperinflation and

developed a road map (major points can be found in Figure 34).

Figure 34. Interaction between the monetary policy and the currency regulations



� 76 �

For the purpose of assessing the effect of current moratorium (permits only lease of agricul�

tural land) cancellation, the members of the EasyBusiness’ team analyzed successful interna�

tional experience in formation of a free land market. The team distinguished the advantages

gained by each of these countries.

The team determined that Ukraine is the only democratic country in the world where land

owners are not entitled to freely dispose of their property (Figure 35), assessed the living

standards of the Ukrainian farmers, which are critically low (the detailed characteristics are

shown in Figure 36), and formulated the advantages that will appear in case the moratorium

is cancelled, as well as the risks and methods for their neutralization.

Figure 35. Major indicators of the living standards of the Ukrainian farmers

Source: interviews of experts, EasyBusiness

Figure 36. Advantages of the liberalization of the land market in Ukraine


Based on this analysis, we developed a report, vividly illustrating the both state and private

level advantages in the form of synergic effect: the investment effect, particularly, introduction

in the economic circulation of assets with the total value of $125 billion during the next 10

years; the tax effect, which may totally amount up to UAH 90 billion per annum due to intro�

duction of additional taxes; the advantages for farmers and the material effect on jobs, which

is assessed as possible employment of 1.5 million people in the agricultural and other sec�

tors.

In case of cancellation of the moratorium on sale of agricultural land, Ukraine will be able to

attract about $125 billion of direct foreign investments, generate

UAH 90 billion of additional taxes and create 1.5 million of new jobs

ASSESSMENT AND ANALYSIS OF THE EFFECT OF CANCELLATION OF THE MORATORIUM ON SALE OF

AGRICULTURAL LAND AND OF THE INTERNATIONAL EXPERIENCE


� 77 �

STRATEGY AND METHODOLOGY

� 78 �

Presentation of the Deregulation Strategy, Ukrainian Crisis Media Centre,

Kyiv, August 2014

� 79 �


GENERAL DESCRIPTION OF THE STRATEGY

According to the developed strategy, the reform consists of three stages:

Liquidation of Regulatory Barriers

This stage envisages expended analysis

of regulatory restrictions simultaneously

with detecting and eliminating most hin�

dering barriers.

Using specifically elaborated analysis

approach, the team targeted and sche�

duled elimination of 200 most acute regu�

latory barriers.

Regulatory Guillotine

This stage provides for introduction of

profound regulatory reform aimed at can�

cellation of burdensome provisions,

which impede business and economic

development.

Reform envisages review and listing of all

regulatory provisions falling within the

regulatory guillotine and provision of rec�

ommendations on their amendments.

Preventive

Mechanism Formation

The last stage foresees regulatory impact

analysis and formation of the preventive

mechanism.

Its further implementation is supported on

the basis of the developed model of

preventive mechanism aimed at preclu�

sion of groundless regulations.

The implementation of all the above stages will secure

COMPREHENSIVE DEREGULATION of the national system

� 80 �

131 initiatives

APPROVED IN THE ACTION PLAN OF THE CABINET OF

MINISTERS OF UKRAINE

STAGE

Representatives of Jacobs, Cordova & Associates held a seminar

for employees of the regulatory service and non�governmental or�

ganizations

STAGE

Deregulation Action Plan of the Cabinet of Ministers of Ukraine

(Resolution No. 357�p), which includes 131 initiatives, is approved

About 80 deregulation initiatives are already implemented

STAGE

Currently, the developed Plan is being discussed by the key stake�

holders

The operational plan for implementation of the regulatory guillotine is

prepared

80 initiatives ALREADY

IMPLEMENTED

STRATEGY IMPLEMENTATION. CURRENT STATUS

The Regulatory Impact Assessment Guidelines are prepared and

will be entered into force by respective resolution of the Cabinet of

Ministers of Ukraine


� 81 �

EasyBusiness team has developed special methods for outlining and priori�

tizing deregulation initiatives, as shown in Figure 37.

Figure 37. Stages of development of the road map


The members of the team started with analysis of the previous experience

in implementation of the regulatory system reform. It was uncovered that

in most cases only the general economic approach to assessment of regu�

latory restrictions was applied. This approach provides for the analysis of

restrictions impacting all aspects of economic activities. Taking this fact

into account, the team decided to add a sectorial approach based on

assessment of the regulatory restrictions impacting certain sectors of the

economy. The application of both approaches in a comprehensive manner

facilitates more profound analysis with more exact results.

For better understanding of the real problems facing business, the team

organized a number of interviews with expert groups, business and indus�

trial associations, questioned entrepreneurs in various regions and held a

number of round tables with businessmen and key stakeholders.

LIQUIDATION OF REGULATORY BARRIERS (STAGE I)

DATA

COLLECTION

INTERVIEWS

WITH

EXPERTS

HYPOTHESES

FORMULATION

HYPOTHESES

ASSESSMENT

PRIORITIZING AND

OUTLINING THE

STRATEGY

■ Preparation of the

list of experts and

other interested

persons

■ Analysis of the

previous experi�

ence

■ Analysis of barriers

while making draft

laws out of ideas

■ Elaboration of

previous

hypotheses

■ Interviews with

experts:

� Expert groups

� Business

associations

� Industrial

associations

■ Questioning local

entrepreneurs

■ Dialogue with other

stakeholders


major hypotheses

■ Analysis of the

international

experience

■ Preparation of

deregulation priority

goals

■ Grouping hypothe�

ses into a matrix

■ Assessment of

hypotheses:

� Potential effect

� Easiness /

Complexity

■ Consultations with

experts, associa�

tions, MPs, officials

and other stake�

holders


Deregulation Strategy:

� Prioritizing hypotheses

� Action planning

� Assessment of the

required resources

■ Confirmation of the

stakeholders’ approval

■ Development of imple�

mentation control

methods

■ Media support

ST

AG

E

SC

OP

E O

F W

OR

K

■ Understanding of

the previous experi�

ence

■ List of preliminary

hypotheses

■ Feedback from

business

■ Understanding of

deregulation issues

■ Set of matrixes with

structured

hypotheses

■ Grouped and

prioritized list of

hypotheses

■ Final Deregulation

Strategy

RE

SU

LT

S


� 82 �

In order to select key sectors, the team assessed them under following

four criteria: share of the sector in the GDP; dynamics of the sector; num�

ber of jobs; and volume of exported commodities. This resulted in prioriti�

zation of food industry, agriculture, construction industry, power industry,

oil and gas industry, and IT sector (Figure 38).

Figure 38. Stages of development of the road map


The regulatory restrictions were analyzed in view of both regulatory

spheres and economic sectors (Figure 39). As a result, the team distin�

guished the regulatory restrictions that impact both general aspects of

economic activities and certain industry sectors.

Figure 39. Approaches to analyze regulatory restrictions


GENERAL ECONOMIC APPROACH SECTORIAL APPROACH

Regulatory restrictions that impact all aspects of

economic activities

Regulatory restrictions that impact certain industry

sectors

GENERAL PROBLEMS FOOD INDUSTRY 1 1

SYSTEM OF PERMITS AND SYSTEM OF

LICENCES AGRARIAN SECTOR 2 2

TAXATION SYSTEM CONSTRUCTION INDUSTRY 3 3

CUSTOMS POWER INDUSTRY 4 4

TECHNICAL REGULATION OIL AND GAS INDUSTRY 5 5

SYSTEM FOR CONTROLLING ACTIVITIES

(INSPECTIONS) INFORMATION TECHNOLOGIES 6 6


� 83 �

“ TETIANA

PALAMARCHUK

For a long time, Ukraine has experienced “legislative inflation ” � the process, in which strict�ness and excessiveness of regulation is compen�sated by non�compliance therewith. Deregulation efficiency depends on the government’s readiness for political and economic liberalization. As for the regulation of international trade, our ultimate goal should not be to detect and stop smuggling. It is important to establish the rules, making it simpler and cheaper for an entrepreneur to clear goods

through customs, while smuggling and corruption at the customs will lose their sense.

� 84 �

The team analyzed over 1,500 ideas, selecting the most important deregu�

lation initiatives.

The team formulated and prioritized about 800 deregulation initiatives (400

general economic and 400 sectorial ones) (Figure 40).

Figure 40. Number of “pressure points” for business in different sectors

Source: interviews of experts, analytics of EasyBusiness

In order to prioritize selected initiatives, the team applied a prioritization

approach based on the following two criteria: economic effect and easi�

ness of implementation. An example of this approach's application is given

in Figure 41. Here, the easiness of implementation provides for both tech�

nical aspects of implementation (adoption of the law / resolution of the

Cabinet of Ministers of Ukraine) and non�technical ones (such as lobbying,

social resistance etc.), and the effect of implementation provides for expert

assessment of the sectorial or general economic effect.

Figure 41. Approach to prioritizing initiatives Source: EasyBusiness, illustratively

EFFECT OF IMPLEMENTATION2)

Priority II Priority I

Priority IV Priority III

easy

difficult

EA

SIN

ES

S O

F IM

PLE

ME

NT

AT

ION

1)

little great

Sale of 3G licenses 1

Liquidation of the agricultural

inspectorate

2

Cancellation of the moratorium on

sale of agricultural land

3

Making controlling bodies responsible for

consumers’ rights protection during

inspections

4

Analysis of conformity of licensed types of

economic activities with the established

criteria of implementation and licensing

5

Easiness of implementation criterion provides for both technical aspects of implementation (adoption of the law / resolution of the Cabinet of Ministers of Ukraine) and non�technical ones (such as lobbying, social resistance etc.) Effect of implementation criterion provides for expert assessment of the sectorial and general economic effect


� 85 �

“ SCOTT

JACOBS World expert in deregulation

Narrow reform is not our aim in

Ukraine. We focused on explaining to common citizens how a democratic country functions, how decisions are

taken and why their votes are important. It is equally important for

foreign and domestic investors. Believe me, they are focused not on local improvements, but on systematic

changes in the society. _

Interview to The Novoye Vremya, May 2015

� 86 �

Regulatory guillotine reform is aimed at cancellation and simplification of

regulatory provisions, reduction of the number of controlling bodies and

limitation of their functions, which impede economic activities and growth.

The reform is based on comprehensive review of the regulatory acts that

setting framework for state�business relations

The general reform of the regulatory guillotine includes the following three interrelated major stages:

Listing all regulatory provisions falling within the regulatory guillotine.

Scrutinizing the provisions listed:

■ is regulatory provision legal?

■ is regulatory provision necessary for the future needs of the policy?

■ does regulatory provision have positive impact on business?

■ is regulatory provision in line with the DCFTA?

Recommendations on canceling, amending or upholding certain legal acts.

Major objectives of the reform:

To reduce business’s expenses by 50%; to decrease regulatory risks faced by business

and citizens by simplifying or cancelling regulatory provisions and procedures; to

demonstrate actual and tangible results in 2015 and regularly further on until 2018.

To secure complete transparency during implementation of the reform by determining

the improvement target indicators and public reporting by regulatory bodies.

To reduce corruption and uncertainty emerging due to complicated and discretionary

procedures.

To get prepared for trade agreements, particularly, for the implementation of the Deep

and Comprehensive Free Trade Area (DCFTA) between Ukraine and the EU.

To build steady opportunities (e.g. regulatory impact analysis) for efficient and better

regulation.

REGULATORY GUILLOTINE (STAGE II)


� 87 �

The role of the special Deregulation Subdivision is very important in the

implementation of the reform (Figure 42).

The regulatory guillotine reform should be implemented simultaneously with

listing regulatory acts and involving all stakeholder, while clearly outlining

their individual roles

Figure 42. Concept of the working process for the reform of the regulatory guillotine in Ukraine

Source: Jacobs, Cordova & Associates, EasyBusiness, the World Bank

DEREGULATION SUBDIVISION

Expert group MEDT STS

Ministries and institutes Society Business EU

Ministry of Finance Ministry of Justice

Committee

Cabinet of Ministers

Verkhovna Rada

3�4

WEEKS

1�2

WEEKS

1�2

WEEKS

1�2

WEEKS

1�2

WEEKS

5�6

WEEKS

1

2

3

4

5

6

STAGE ONE

■ The Deregulation Subdivision prepares a list of legal acts using the web portal of the Verkhovna Rada (the

Parliament) and proposes committee’s working schedule

■ The Subdivision immediately initiates cooperation with ministries and agencies in order to get the list

approved and receive feedback and recommendations, by using check�lists (ministries and agencies

being responsible for feedback and approval)

STAGE TWO

■ The Deregulation Subdivision consists of about 70 people and about 10 representatives of the Ministry of

Economic Development and Trade and the State Registration Service

■ Based on the information obtained from the ministries, civil society, and experts, the Subdivision

develops recommendations and respective draft acts for their implementation, including cost reduction

assessment

STAGE THREE

■ Approval of draft regulatory legal acts by two key ministers (the Ministry of Justice and the Ministry of

Finance), approvals by other ministries are not required

STAGE FOUR

■ Examination of draft acts by the Special Deregulation Committee or the Governmental Committee for the

Economic Policy and European Integration (headed by the prime minister)

STAGE FIVE

■ Voting at the meeting of the government

STAGE SIX

■ Previous arrangements with major stakeholders (the speaker, the head of the Committee for Develop�

ment of Entrepreneurship, key MPs etc.) on prompt examination and voting for sets of regulatory docu�

ments suggested by the Deregulation Subdivision (according to the current parliamentary procedures)


� 88 �

Working meetings with representatives of Jacobs, Cordova & Associates, Kyiv, May 2015

� 89 �

The success of the regulatory guillotine reform depends

on a number of important aspects

The must�haves for successful implementation of the regulatory guillotine

in Ukraine are:

1. Comprehensive listing of regulatory acts.

2. Clear criteria for the regulatory acts review.

3. Engagement of international experts for the purposes of regulatory review

(representatives of the World Bank, foreign economists and lawyers).

4. Providing for and enforcing regulatory review through legislation.

5. Development of software to coordinate the process.

6. Securing transparency of the process.


� 90 �

The formation of a preventive mechanism, precluding further adaption of

burdensome regulatory barriers is the final stage of comprehensive deregu�

lation.

This stage is, as shown in Figure 43 below, distinguished by such major

components:

■ initiation by the Ministry of new regulatory provisions, including estab�

lishment of new controlling body and cost�benefit analysis of the im�

plementation of the new regulations;

■ examination of all regulatory acts by the governmental commission is

the next step, during which the commission should discuss the neces�

sity of additional regulation and decide on expediency of its introduc�

tion;

■ the final step is to decide on implementation of the new regulatory

provisions at the governmental meeting.

FORMATION OF A PREVENTIVE MECHANISM (STAGE III)

Figure 43. Functioning of the preventive mechanism


The ministry initiates new

regulatory provisions

All new draft acts are scruti�

nized by the governmental

commission

Final decision is taken at the

governmental meeting

Establishment of a

controlling body

Analysis of the regulatory impact

(cost�benefit analysis)

Discussion on the necessity to

introduce additional regulation

Decision of the governmental

committee

1 2 3


� 91 �

“ ANDRII

SHPAKOV

After the revolution great number of Ukrainians are united, by the desire to make significant changes to the existing state system. This enabled

us to form a young team of proactive people aimed at comprehensive

analytical support of the regulatory reform.

� 92 �

EFFECTS OF THE REFORM

The effect of implementation of the deregulation strategy was assessed

with regard to six key sectors of Ukrainian economy; besides, we assessed

the effect of implementation of the general economic initiatives related to

the economy in general.

The approach to the analysis of the effect of the deregulation initiatives can

be divided as follows:

■ Economic growth.

■ Elimination of the corruption.

■ Cutting state expenses.

According to the conducted research, the largest economic effect, among

industry sectors, can be observed in the construction and the food indus�

tries and amounts to about UAH 40 billion in each of them. On average,

the effect of implementation of the deregulation initiatives within the sectors

ranges from UAH 10 billion to UAH 40 billion. According to the obtained

results, the effect of implementation of the general economic initiatives

amounts to approximately UAH 170 billion. The total economic effect of

implementation of all the developed deregulation initiatives amounts to

UAH 300 billion.


� 93 �

300 UAH BLN Total expected effect of

IMPLEMENTATION OF THE DEREGULATION

STRATEGY

FOOD INDUSTRY

The total expected effect of implementation of the developed deregulation strategy will amount to about UAH 300 billion until 2020. The economic

effect for industry sectors will amount to UAH 85 billion, of the reduction of corruption will be UAH 60 billion and of the saving of budget costs will be

UAH 16 billion

AGRICULTURE

CONSTRUCTION INDUSTRY

Figure 44. Economic effect of implementation of the deregulation strategy in the food industry (until 2020)


Figure 45. Economic effect of implementation of the deregulation strategy in the agrarian sector (until 2020)


Figure 46. Economic effect of implementation of the deregulation strategy in the construction industry (until 2020)



� 94 �

POWER INDUSTRY

Figure 47. Economic effect of implementation of the deregulation strategy in the power industry (until 2020)


OIL AND GAS INDUSTRY

Figure 48. Economic effect of implementation of the deregulation strategy in the oil and gas industry (until 2020)


IT SECTOR

Figure 49. Economic effect of implementation of the deregulation strategy in the IT sector (until 2020)


GENERAL ECONOMIC INITIATIVES

Figure 50. Economic effect of implementation of the deregulation strategy with regard to general economic initiatives (until

2020)


60UAH BLN total expected effect of

REDUCTION OF THE CORRUPTION

16UAH BLN total expected effect of

REDUCTION OF THE STATE BUDGET COSTS


� 95 �

“ OLENA

IAGNIUK

Deregulation is an efficient expenses optimization tool. Application of the cost�benefit analysis enabled us to clearly demonstrate it. Implemented initiatives have already saved billions

of hryvnias for the state and businesses.

� 96 �

EASI METHODOLOGY

In the process of regulatory act assessment, it is necessary to account for

the comprehensive set of social and economic aspects and to conduct

cost�benefit analysis of the changes in regulations for entrepreneurs and

the state.

To implement this approach, EasyBusiness developed an EASI model

(Economic Impact on Businesses, Administration and Governance Impact,

Social & Political Impact, Investment Impact), which is intended to assess

the impact of the suggested regulatory changes broken down by four key

packages.

E – ECONOMIC IMPACT ON BUSINESSES

Includes the impact on the following costs of businesses:

■ administrative costs – payment for working hours and covering of

costs for executing control over the compliance with the requirements

of the regulatory provision;

■ direct costs – payment for issuance of a permitting document (or other

mandatory payments provided in the regulatory provision) that is

based on the data on the number of such payments and their size;

■ indirect costs – volumes of loss of profits due to the downtime / delay

of the beginning of economic activities related to expectation for issu�

ance of a permitting document, which is calculated on the basis of the

average daily GDP growth generated by one economic entity and the

number of businesses, which the regulatory provision covers;

■ corruption costs – spending of money for the purpose of reduction of

indirect costs, which are calculated on the basis of the assumption

that the value of an average corruption payment made by businesses

to a state body in order to obtain / speed up the obtainment of a

permitting document amounts to 20% of the volume of indirect costs

(loss of profits).

Economic Impact E

Administrative & Governance Impact A

Social & Political Impact S

Investment Impact I


� 97 �

A � ADMINISTRATIVE & GOVERNANCE IMPACT

Includes the impact on the following aspects:

■ administrative costs – the sum of costs of labor compensations and

overhead costs incurred by state authorities in the process of imple�

mentation of the regulatory provision;

■ loss of profits – reduction of monetary revenues to the budget from

official payments and obtainment of permitting documents.

The difference between the sum of reduced administrative costs and the

sum of lost profits of the budget will determine the impact of the regulatory

provision on the state finance.

S – SOCIAL & POLITICAL IMPACT

Includes the impact on such spheres of the social life as:

■ employment;

■ changes in average salaries;

■ public access to technologies and innovations;

■ development of human capital assets;

■ improvement of the ecological situation;

■ public loyalty to central and local authorities.

The analysis also includes estimation of the impact on political dividends of

the major authorities, such as:

■ President;

■ Prime Minister;

■ sectoral ministers, etc.

The above aspects of the social and political sphere determine the effect of

implementation of the regulatory provision/deregulation. Within each

sphere, where the social and political impact is expected, it is determined

whether this effect is positive or negative and within which period it can be

observed (a short�term or a long�term period).

I – INVESTMENT IMPACT

This indicator is divided into two major parts:

■ the impact of the regulatory provision (its cancellation) on the country’s

advancement in the world indexes (Doing Business, International

Country Risk Guide Rating, OECD Regulatory Restrictiveness Index);

■ the reinvestment of the money saved by businesses due to implemen�

tation of the regulatory provision (or deregulation) in their own activi�

ties.

The model suggests that a change in the positions in the Doing Business

Index has a direct impact on a change in foreign direct investments.

Besides, a change in the position in one of the indexes applied in the

model automatically results in a change in the positions in the two other

indexes (according to historical data). Therefore, in case there is infor�

mation about potential changes only in a part of the indexes, it can be

extrapolated to the other part of the indexes.


� 98 �

Daniyil Pasko takes part in Shuster LIVE TV program, Kyiv, October 2014, May 2015

� 99 �

At the moment, it is very important to boost the deregulation process; this issue

should be settled at the legislative level. Successful international experience of

the countries that already implemented the regulatory system reform and

showed positive results proves that deregulation is an efficient instrument for the

economic growth

INTERNATIONAL EXPERIENCE

Analysis of international experience of the countries that already succeeded

in introduction of the regulatory system reform clearly demonstrates great

advantages of its implementation. For example, Bosnia and Republika

Srpska cancelled and simplified about 70% of the regulatory provisions,

while in Mexico this figure reached 80%, which bespeaks the actual

achievements in the regulation sphere. Besides, implementation of the

deregulation reform resulted in business simplification; for instance, in

Kenya the savings for businesses are assessed as $ 146 million per

annum, or 0.06% of the GDP.

Moreover, simplification of the regulatory system facilitated the develop�

ment of the economy in general; particularly, it affected the macroeconom�

ic indicators, such as foreign direct investments. South Korea can serve as

a bright example, where $ 36.5 billion of additional direct foreign invest�

ments were attracted during 5 years.

The above�stated examples prove the expediency and efficiency of the

regulatory system reform and show potential possibilities that can be

obtained in case the deregulation reform is implemented.


� 100 �

СТРАТЕГІЯ ТА МЕТОДОЛОГІЯ

~70% Of the regulatory provisions were CANCELLED AND

SIMPLIFIED

$15mln Key results

SAVINGS BY BUSINESSES PER ANNUM

Number of provisions before the reform:

2,804

Reform implementation period:

9 months

Results:

■ 41% of the regulatory provisions were cancelled;

■ 32% of the regulatory provisions were simplified;

■ direct savings for businesses are assessed as $ 2 million per

annum;

■ indirect savings: $13 million per annum.

Figure 51. Results of deregulation in Bosnia / Republika Srpska

Source: Jacobs, Cordova & Associates

BOSNIA / REPUBLIKA SRPSKA

� 101 �



SIMPLIFIED

$37bln Key results

FOREIGN DIRECT INVESTMENTS ATTRACTED


11,125


11 months

Results:

■ 48.8% of the regulatory provisions were cancelled;

■ 21.7% of the regulatory provisions were simplified;

■ 1.07 million new jobs were created;

■ $ 36.5 billion of additional foreign direct investments were attracted

during 5 years.

Figure 52. Results of deregulation in South Korea


SOUTH KOREA

� 102 �



SIMPLIFIED

Figure 53. Results of deregulation in Mexico



2,038


9 months

Results:



■ the economic effect was not assessed.

MEXICO

� 103 �


Figure 54 Results of deregulation in Kenya



1,315


18 months

Results:



■ savings for businesses are assessed as $ 146 million per annum,

or 0.06% of the GDP.


SIMPLIFIED

0.1% of

the GDP Key results

SAVINGS BY BUSINESSES PER

ANNUM

KENYA

� 104 �


Figure 55. Results of deregulation in Croatia



1,451


9 months

Results:



■ $65,6 million per annum saved, or 0.13% of the GDP.


SIMPLIFIED

$100 mln Key results

SAVINGS BY BUSINESSES PER

ANNUM

CROATIA

� 105 �


Figure 56. Results of deregulation in Moldova



1,530


6 months

Results:



■ the economic effect was not assessed.


SIMPLIFIED

MOLDOVA

� 106 �

� 107 �

DEREGULATION IN PRACTICE

� 108 �



Ukraine’s statements on deregulation are finally being translated into legis�

lation. The Acts of Ukraine On Licensing of Certain Types of Business

Activity of 2 March 2015, No.222�VIII and On Changes to Some Acts of

Ukraine on Facilitating Business (Deregulation) of 12 February 2015,

No.191�VIII have already been signed by the President of Ukraine. The

UJBL initiated discussion on significant provisions of these comprehensive

documents, which are not widely commented on in the media. We suggest

dwelling specifically on the proposed initiatives.

NATALIYA GAIDAI, associate, Antika Law Firm

Licensing is one of the ways for the government to have a regulatory con�

trol over the economy. The licensing itself is not a negative notion, because

it is an important part of the administrative system of business activity and

is considered as a rate of flexibility to conduct business in Ukraine. But the

procedure for obtaining a license has, due to its non�transparency, created

a number of conditions for corruption that, in its turn, caused certain prob�

lems for running a business and created an unattractive investment climate

in Ukraine.

Law No. 222�VIII cancelled licenses in 20 fields of business activities. For

instance, security guard activities, creating forms for securities, conducting

land evaluation works and land tenders, collecting and using information

that includes credit history, sales of liquid fuel made from biomass and

biogas, sales of pesticide and agricultural chemicals, etc.

ANATOLII MIROSHNYCHENKO, attorney at law, scientific coun�

sel, head of agrarian and land law practice, ILC EUCON

Law No. 191�VIII eliminates several problems related to agricultural land

use.

Particularly, the law considerably reduces the number of mandatory provi�

sions in land lease agreements (Article 15 of the Law “On land lease”). This

fact is positive.

The Act directly authorizes the owners of land plots designated for subsist�

ent farming to lease these land parcels to legal entities for commercial

farming (amendments to Article 33 of the Land Code) without any permit�

ting procedures. It must be noted that the practice of such lease existed in

the past, but its legality was sometimes challenged.

� 109 �

ANNA ZORIA, partner, head of agribusiness, Arzinger Law

Office

Law No. 191�VIII introduces several novelties concerning agricultural land.

The minimum duration of a lease of agricultural land, designated for com�

mercial agriculture, private farming or farming, cannot be less than 7 years.

Previously, there was no minimum duration for land leases (while the maxi�

mum duration remains 50 years).

According to the provisions in the Act obligatory documents on crop rota�

tion and relevant state control is eliminated. Therefore, no fines can be

imposed for the absence of crop rotation documents. This novelty will

reduce the corruption component in doing business.

Important changes are to be introduced in respect of products that are

already certified in the European Union — such products will receive a

Ukrainian certificate without any additional procedure. Such an approach is

aimed at simplifying EU/Ukraine trade.

DMYTRO GADOMSKY, attorney�at�law, partner, the Juscutum

Attorneys Association, head of the IT Law Committee of

the L'viv IT Cluster

On March 24, 2012, Law No. 191�VIII was forwarded to be signed by the

President. It will finally allow the Ukrainian IT business to get rid of risk of

equipment seizures within criminal proceedings.

For a long period of time now Ukrainian authorities have practiced seizures

of computer equipment (servers) during searches in offices of IT compa�

nies under investigation of copyright infringement, distribution of pornogra�

phy, etc. Despite the need for only a few gigabytes the authori�

ties seized all servers, which literally paralyzed the business of the compa�

ny. The explanation for such actions refers to the purpose of investigation,

which turns out to be more about pressure on an IT company than about

the investigation of a particular crime.

The above�mentioned bill replaces seizure of servers with copying of infor�

mation.

Source: Ukrainian Journal of Business Law


� 110 �

� 111 �

ANNEXES

� 112 �

ANNEXES

ANNEX 1. REGULATIONS CANCELLED BY LAW NO. 191 (DRAFT LAW NO. 1580)

1. Permit for import of veterinary preparations, microorganisms and pathologic materials containing

antianimal agents, imported or transit animal�contained loads

2. Permit for import of feed additives, premixes and ready�to�use feeds

3. Certification of the permitted quantity of pesticide and agrochemical residues in food products

sold in the Ukrainian market

4. Certification of pesticides and agrochemicals for their conformity with the requirements of the

state standards and other regulatory documents on standardization

5. Certification of technical facilities for the use of pesticides and agrochemicals

6. Permit for industrial testing of pilot and experimental samples of mining equipment and materials

used in mines and pits

7. Attestation of production of the plants that deal with processing, recycling or destruction of poor

property and dangerous products withheld from commerce

8. Certificate of conformity for packaged drinking water

9. Report of the state sanitary and epidemiological expertise for packaged drinking water

10. Manufacturer’s quality certificate for each consignment of sea foods obtained according to the

procedure of special use of fish and other marine living resources

11. Operational permit for sea food processing facilities

12. Mandatory state expertise of land surveying projects securing ecological and economic

feasibility of crop rotation and land regulation

13. Operational permit for facilities which produce milk, milk raw materials and dairy products

(including dairy products for special dietary nutrition, children’s food products, food products for

sportsmen and elderly people)

14. Report on the conformity of a commodity exchange with the requirements for rendering services

for conclusion and registration of agreements for purchase and sale of agricultural products and

foods for the state and regional purposes, repayment of tax debts, as well as conclusion and regis�

tration of foreign economic contracts

15. Permit for installation or construction of cogeneration units on the basis of functioning power

facilities

16. Permit for industrial testing of pilot and experimental samples of mining equipment and materials

used in mines and pits

� 113 �

ANNEX 2. LICENSES CANCELLED BY LAW NO. 222�VIII (DRAFT LAW NO. 0943)

1. Extraction of precious metals and precious stones, precious stones of organogenic origin,

semi�precious stones

2. Production of veterinary medicines and preparations, their wholesale and retail trade

3. Trade in pesticides and agrochemicals (plant growth regulators only)

4. Production of special substances containing lachrymatory and irritant agents, personal protection

facilities, means of offensive defense and their sale

5. Rendering services in the spheres of cryptographic protection of information (except for services

for electronic digital signatures), trade in cryptosystems and means of cryptographic protection of

information

6. Introduction, import and export of holographic protective elements

7. Rendering services in the sphere of technical protection of information

8. Manufacture of security forms

9. Development, testing, manufacture and operation of missile carriers, space vehicles and their

components, ground control systems for space vehicles and their components

10. Processing of donated blood and its components, production of blood preparations, except for

the operation of banks for umbilical blood, other human tissues and cells

11. Collection, primary recycling and metallurgical recycling of scrap of ferrous and non�ferrous

metals

12. Collection, primary recycling of waste and scrap of precious metals and precious stones,

precious stones of organogenic origin, semi�precious stones

13. Land appraisal and land tenders

14. Customs brokerage

15. Manufacture, export and import of discs for laser sensing systems, matrixes

16. Trade in pedigreed (genetic) resources, conducting genetic expertise of animals’ origin and

anomalies

17. Fumigation (disinfection) of object of regulation specified in the Law of Ukraine “On plant quaran�

tine”, which cross the state border of Ukraine and quarantine zones

18. Activities related to production and trade in pyrotechnicals

19. Activities related to rendering services by non�military firing grounds and functioning of hunting

stands

20. Development, manufacture, sale, repair, modernization and utilization of weapons, military

machinery, weapons of war and ammunition

21. Collection and use of credit histories

22. Genetic and engineering activities in an isolated system

23. Trade in liquid fuel from biomass and biogas

ANNEXES

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ANNEX 3. LIST OF MEASURES PROVIDED IN RESOLUTION OF THE CABINET OF MINISTERS OF UKRAINE NO. 42

1. Cancellation of Resolution of the Cabinet of Ministers of Ukraine No. 915 “On introduction of the

system for collection, sorting, transportation, recycling and utilization of waste as recoverable re�

sources” and Joint Decree of the Ministry of Economic Development and Trade, the Ministry of

Ecology and Natural Resources and the State Migration Service of Ukraine No. 789/414/709 “On

approval of the Procedure for customs clearance of imported commodities packed in tare and

packaging materials” in order to reduce corruption flows in the market for recycling of tare and

packaging

2. Cancellation of the state regulation of prices for food products approved by Resolution of the

Cabinet of Ministers of Ukraine “On measures aimed at regulation prices and tariffs in the consumer

market”

3. Permit for the field testing of seeds in 30 control fields in various climate zones and increase in the

procurement of seeds

4. Cancellation of the warrant required in the process of registration of agricultural machinery

5. Determination of a clear procedure for issuance of registration certificates for state registration of

plant protecting agents and permits for import of plant protecting agents to conduct state tests

6. Permit for mixture of seeds in port elevators upon the owners’ consent, approval of the technical

regulation on a grain storage

7. Elimination of a possibility to abuse distribution of rights for privileged import of energy efficient

equipment by determining the list of energy efficient equipment and provision of the right to import it

to all who wishes to do it

8. Adoption of the new Regulation on development of oil and gas deposit fields, which account for

peculiarities of the geological survey and development of deposit fields of non�conventional hydro�

carbon systems

ANNEXES

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ANNEX 4. DEREGULATION ACTION PLAN APPROVED BY THE CABINET OF MINISTERS OF UKRAINE ORDER NO. 357P

1. Improvement of permitting procedures in the sphere of economic activities by introduction of the

procedure for issuance of permitting documents by telecommunication means (in an electronic form)

and reduction of the list of documents which a business entity must submit to obtain a permitting

document

2. Restriction of the state regulation of prices for food products

3. Simplification of the procedure for preparation by tender participants of documents required to

participate in state tender procedures, namely, introduction of declaring by tender participants of

negative information and execution, if necessary, by customers of procurement procedures of an

audit of such information without involving the participants

4. Determination of the list of administrative services and the amount of payment for their provision

5. Reduction of the number of permitting documents and optimization of permitting procedures by

switching to a declarative (registration, application) principle of economic activities (or certain

actions, objects which do not provide material threat to human life and health, environment or the

state)

6. Simplification of the procedure for submitting reports to the Fund of Social Insurance in Cases of

Industrial Accidents and Professional Diseases

7. Cancellation of issuance of a special permit for activities related to folk medicine (healing)

8. Cancellation of issuance of a certificate for establishment of a certain hotel category

9. Exclusion of a permit for hunting (license, hunting card) from the List of permitting documents in

the sphere of economic activities approved by the Law of Ukraine “On the List of permitting docu�

ments in the sphere of economic activities”

10. Cancellation of issuance of an operational permit for facilities that produce children’s food

11.Cancellation of issuance of a report of the state sanitary and epidemiological expertise of

children’s food

12. Harmonization of the Procedure for issuance of special permits for the use of mineral resources

with the legislative acts on the system of permits in the sphere of economic activities

13. Cancellation of issuance of a permit for the operation of a laboratory of pathogens of the respec�

tive pathogenicity group

14. Grant to territorial subdivisions of the central executive authorities and local state administrations

of the powers to issue permitting documents

15. Determination of the routes of international transportation of dangerous cargoes by motor vehi�

cles, which are not subject of the respective approval of the State Traffic Police

16. Improvement of the permitting procedures in the sphere of economic activities and harmoniza�

tion of the domestic permissible rates of radiation with the European standards by increasing the

permissible rates of electromagnetic radiation for very high frequencies and ultrahigh frequencies

from 2.5 microwatt/cm2, or 3 volt/meter, up to 10 microwatt/cm2, or 6 volt/meter

17. Cancellation of the requirement regarding licensing of X�ray equipment manufactured in 1960�

1990 and equipped with low capacity X�ray tubes, which is operated, except for licensing of X�ray

therapeutic equipment and X�ray departments that use open sources of ionization radiation

ANNEXES

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18. Cancellation of the requirement regarding the necessity to obtain a certificate for state registra�

tion of a high�risk facility

19. Cancellation of issuance of a certificate of conformity for the manufacturer and the importer and

licensing of economic activities on import, export of ethyl alcohol, cognac and fruit spirits, wine recti�

fied ethyl alcohol, fruit rectified ethyl alcohol, alcoholic beverages and tobacco products

20. Cancellation of the requirement regarding approval of placement of advertising facilities (carriers)

within the easement areas of motorways and outside settlements

21. Cancellation of inspections carried out by authorized officials of subdivisions of the State Traffic

Police in the process of state registration of new vehicles sold by economic entities, whose activities

are related to sales of vehicles and their parts with identification numbers. Confer of responsibility on

such economic entities for conformity of identification numbers of components of new vehicles with

the numbers specified in the documents provided by such economic entities for the purpose of

state registration of such vehicles

22. Cancellation of the requirement regarding allocation of a separate premise, which must be

guarded and properly equipped, to store forms of the State Traffic Police (warrants, acceptance

acts), number plates for one�time journeys and “Transit” number plates. Introduction of storage of

such forms and number plates in lockable metal boxes or safes at places where economic entities

conducts their activities

23. Cancellation of the requirement regarding mandatory state registration of vehicles purchased by

economic entities, whose activities are related to sales of vehicles and their components with identi�

fication numbers, for the purpose of their subsequent sale to end consumers, who are obliged to

have such vehicles registered according to the procedure established by the laws

24. Introduction, in the process of sale of new vehicles by economic entities, whose activities are

related to sales of vehicles and their components with identification numbers, of warrants in an elec�

tronic form

25. Cancellation of the requirement regarding provision to buyers of vehicles imported from abroad

of copies of electronic customs declarations for the purpose of their subsequent provision to subdi�

visions of the State Traffic Police to conduct state registration of vehicles, and introduction of the

provision that the essential details of electronic customs declarations must be specified on the re�

verse side of the warrant

26. Cancellation of the right to regulate (establishment) by local authorities of tariffs for transportation

of passengers and luggage by buses that carry out suburban and intercity regional transportation in

a regular manner

27. Simplification of the procedure for collection, removal, disposal and utilization of exhaust oil

28. Introduction of provision by economic entities and controlling bodies to the information system

of ports of information in an electronic form according to the form approved in compliance with the

laws, which is used in the process of cargo treatment in sea ports, instead of paper documents

29. Cancellation of the procedure for sampling of segregated ballast and execution of control over

segregated ballast

30. Introduction of ecological control over vessels in case of environment pollution

31. Cancellation of submission of ecological declarations with regard to vessels and commodities

32. Introduction of a legal provision with regard to the principle of extended responsibility of the

manufacturer and determination of a clear procedure for dealing with packaging and packaging

waste according to the Association Agreement between Ukraine, of the one part, and the European

Union, European Atomic Energy Community and their member countries, of the other part

33. Cancellation of the requirement regarding the obligation to conclude a utilization agreement or

submission of confirming documents with regard to independent acceptance and utilization of used

tare and packaging materials in the process of customs clearance of imported commodities

ANNEXES

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34. Introduction of the procedure for submission of applications for registration of the right to lease a

land plot in an electronic form

35. Harmonization of acts of the Cabinet of Ministers of Ukraine with the Law of Ukraine “On

amendments to certain legislative acts of Ukraine on reduction of the number of permitting docu�

ments”

36. Provision in a model land lease agreement of the provision that the lease payment for state�

owned or community�owned land plots shall be made in connection with the approval or change of

the monetary appraisal of the land plot and informing of such change by either party of the agree�

ment, without the need to amend the agreement

37. Increasing the value of indicators, by reaching which it becomes required to obtain a permit of

the Anti�Monopoly Committee for concentration of economic entities, of assessment of the impact

of such concentration on competitiveness in Ukraine

38. Introduction of amendments to regulatory legal acts for the purpose of preventing doubling of

information submitted on the request of bodies of the Anti�Monopoly Committee, and restriction of

provision of regular information on requests only under the instruction of the Anti�Monopoly

Committee

39. Cancellation of before and after�travel medical examinations of drivers of vehicles and sanctions

for using vehicles that have not undergone shift�time inspection

40. Cancellation of issuance of the permit for storage of precursors by the Committee for Medical

and Microbiologic Industry

41. Approval of the Strategy for development of the technical regulation system for a period until

2020

42. Approval of the technical regulation on safety of simple high�pressure vessels adapted to the

regulations of the European Union

43. Cancellation of mandatory certification of products with the state certification system

(UkrSEPRO)

44. Formation of the electronic full�text base of standards (about 28 thousand standards)

45. Cancellation of substitution of about 13 thousand standards for the former USSR

46. Harmonization of the requirements for marking of products and informing of it with the

standards of the European Union

47. Authorization of private companies to certify organic products and control over such products

48. Liquidation and reorganization of controlling bodies

49. Reduction of the number of state supervising (controlling) bodies and their functions

50. Introduction of the legal provisions with regard to the necessity to place on official web sites of

controlling bodies of regulatory legal acts, whose compliance is controlled during execution of

measures of state supervision (control) over the formation of an integrated database of controlling

bodies, which contains information about the executed inspections of economic entities

51. Formation of the integrated database of controlling bodies aimed at reducing contacts of such

bodies with economic entities, which must provide for automatic classifying of economic entities

depending on the rate of risk of their economic activities, determination of regularity of execution of

planned measures by state supervising (controlling) bodies, publishing of information about the

legislative requirements for each type of business activities

52. Review of the current criteria and development of new ones to assess the rate of risk of

economic activities

53. Determination of the procedure for classifying facilities as potentially dangerous and introduction

of the requirement regarding the official publishing in mass media of information about the approved

list of such facilities

54. Expanding legal effect of the Law of Ukraine “On fundamental principles of state supervision

(control) in the sphere of economic activities” to tax authorities

ANNEXES

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55. Harmonization of the procedure for verification of the certificate of origin of commodities from

Ukraine with the international agreements of Ukraine

56. Simplification of the form of recording reports

57. Introduction of the submission in an electronic form (approved by the State Fiscal Service) by

subdivisions of the State Veterinary and Phytosanitary Service, the State Sanitary and Epidemiologi�

cal Service and the State Ecological Inspection to tax authorities of information about the results of

veterinary, sanitary and epidemiological, phytosanitary and ecological control required for customs

control and customs clearance of commodities liable to control

58. Improvement of the procedure for interaction between tax authorities and structural subdivisions

of the regional service for state veterinary and sanitary control and supervision on the state border

and of vehicles

59. Restriction on the areas of execution of veterinary, sanitary and epidemiological, phytosanitary

and ecological control over commodities moving as customs transit in containers of sealed freight

automobiles and railway vehicles

60. Simplification of the procedure for obtaining technical conditions in the sphere of construction,

particularly, reduction of the terms for their issuance from 15 working days (30 working days in case

of the need of their approval by the owner (user) of main engineering networks) down to 10 working

days after the date of submission of the respective application

61. Increasing the level of investors’ rights protection

62. Simplification of the procedure for connection to electric grids (level two: 16�50 KW, level three:

50�160 KW)

63. Reduction of the number (down to three or four) of mandatory documents submitted to execute

administrative procedures during export / import

64. Simplification of the procedure for enforcement of contracts in courts

65. Improvement of the procedure for settlement of companies’ insolvency

66. Cancellation of state registration of franchise agreements

67. Cancellation of state registration of premixes and ready�to�use feeds

68. Cancellation of the maximum trade increment (mark�up), the requirements regarding conclusion

of agreements and the terms for obtaining revenues, particularly, harmonization of the provisions of

the Law of Ukraine “On state support of agriculture in Ukraine” with the provisions of the Law of

Ukraine “On prices and price formation”

69. Improvement of the laws in the sphere of production and sales of organic agricultural products

(raw materials) to provide for comprehensive and efficient development of its production

70. Improvement of the regulatory legal mechanism for regulation of circulation of land plots located

within one land massive (field), particularly, by introducing economic impetuses for exchange of land

plots and elimination of fragmentation of plots

71. Increase in the volumes of seeds that are exported for the purposes of research, field testing,

particularly, at the rate of one sample of seeds per annum per one point of research, provided that

the number of points of research shall not exceed 30

72. Introduction of the procedure for registration of copyrights for plant grades by a legal entity un�

der the condition of the declarative confirmation of labor relations with the author of the grade (plant

selection breeder)

73. Improvement of the procedures for management of the Guarantee Fund for performance of obli�

gations under storage documents for grain, particularly, introduction of voluntarily participation of

grain storages in this Fund

74. Cancellation of the crop rotation control system

75. Cancellation of the necessity to develop land use plans, which provide for ecological and

economic feasibility of crop rotation and arrangement of agricultural lands, and introduction of con�

trol over the quality of soil for the economic entities that use agricultural land plots for commercial

agriculture, whose period of land lease amounts to at least 10 years

ANNEXES

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76. Simplification and adaptation of the safety regulation system and the feed quality to the require�

ments of the legislation of the European Union

77. Cancellation of mandatory certification of food products

78. Cancellation of mandatory certification of children’s food products

79. Preparation of regulatory legal acts on state procurements of children’s food products and food

products for clinical feeding (parenteral feeding and enteral feeding)

80. Reduction of the list of the objects of state price regulation, as a result of assessment of efficien�

cy of intervention programs

81. Improvement of Form No. 1�TN (Customs Service) of the specialized consignment note for

transportation of dairy raw materials

82. Improvement of the legislation in the sphere of securing the proper quality and safety of dietary

food products for the purpose of improvement of the further development of the domestic produc�

tion of such products

83. Determination of requirements for brand new food products, namely, criteria for distinguishing

such products from other food products

84. Formation of the regulation base to develop and application of new technologies of manufac�

turing packaging and other materials contacting food products

85. Exclusion of restrictions on urban development conditions and restrictions on development of a

land plot in case of development, renewal of or introduction of amendments to urban development

documentation

86. Introduction of the unified simplified procedure for provision of a postal address to the construc�

tion facility

87. Determination of the exhaustive list of grounds for returning declarations on the beginning of

preparation and construction works to eliminate detected defects

88. Introduction of preliminary registration by the customer of construction of the property right for

apartments sold before the commissioning of the building

89. Settlement of issues with regard to: demonopolisation and deregulation of potentially competi�

tive markets in the sphere of communal services and their development, provision of access to them

by new participants, particularly, switch of relations in the sphere of management of an apartment

building on market principles, cancellation of state regulation of prices for services for management

of an apartment building (formation of prices by agreement between the parties), simplification of the

procedure for conclusion of contracts for provision of communal services in apartment buildings

90. Introduction of free selection by co�owners of apartment buildings of methods for management

of the common property of an apartment building and the persons that will conduct such manage�

ment on a contractual basis

91. Introduction of unified requirements for technological regulations of water supply and sewerage

companies, development of an action plan for development of drinking water purification systems

92. Provision of a possibility to legal entities and natural persons, in case they lease state and/or

communal property, of independent selection of an appraiser that holds required documents to

appraise state and/or communal property

93. Simplification of the form of the declaration of conformity of the material and technical base to

the requirements of the laws on fire safety

94. Differentiation of powers of the national commissions that regulate natural monopolies and the

central executive authorities that form the state policy in the respective sphere

95. Exclusion from the list of types of activities and facilities that represent ecological threats of the

facilities, which produce thermal and/or electric power from biomass and biogas and whose level of

ecological impact is of a local character

96. Formation of competitive conditions for production of electric power from alternative energy

sources

97. Introduction of the stimulating price formation system

ANNEXES

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98. Introduction of a simplified digital real time access to “secondary geological information”

99. Cancellation of the requirement for mandatory addition of 5 per cent of bioethanol to automotive

petrol

100. Adoption of a restated version of the Code of Mineral Resources of Ukraine, which will provide

for definitions of such notions as “functions of an operator”, “contractual joint venture”, “mechanism

for transfer of special permits”, “concept of the minimum working programs and the minimum

working obligation”, “obligation to regulate the specific character of extracting of non�conventional

carbohydrates”, as well as regulation on the issue of publishing geological information about strate�

gic resources, namely, oil and gas, within the limits provided in the laws

101. Introduction of a simplified procedure for land use during geological surveys

102. Adoption of new regulations on development of oil and gas deposit fields, which must be har�

monized with the standards of the European Union

103. Cancellation of the requirement for mandatory maintenance of the state register of producers

of liquid biological types of fuel and biogas

104. Improvement of legal regulation of the market for natural gas in view of the major requirements

of the legislation of the European Union, including those provided in Directive 2009/73/EC of the

European Parliament and the Council of the European Union concerning common rules for the inter�

nal market in natural gas and Regulation 715/2009 of the European Parliament and the Council of

the European Union on conditions for access to the natural gas transmission networks

105. Improvement of the procedure for registration of oil and gas bore holes

106. Improvement of the legal regulation of software

107. Introduction of a procedure for publishing information about applications for industrial models

for the purpose of provision of a possibility to submit objections by third persons in the basis of

inconformity of the applied object to the patent capacity conditions

108. Securing the development of the electronic commerce market

109. Improvement of legal regulation of electronic document circulation for the purpose of

approaching the conditions of its application to the paper document circulation

110. Provision of free circulation of intellectual property items

111. Simplification of the procedure for approval and determination of the procedure for taxation of

transactions involving electronic money

112. Introduction of free access to the register of applications for trademarks for commodities and

services

113. Formation of a transparent mechanism for granting the right for control marking and execution

of control over their intended use

114. Simplification of the electronic interaction between authorities and economic entities in terms of

review of the terms and conditions for connection of state authorities with the global data transmis�

sion networks

115. Cancellation of issuance of the permit for carrying out diagnostics, experimental, testing and

measurement works at companies, institutions and organizations, whose activities are related to the

use of ionization radiation sources

116. Simplification of the procedure for placing telecommunication facilities at construction facilities,

buildings, houses, structures and in premises

117. Cancellation of the requirement for mandatory output of signals of fire alarm automatic systems

at built in (attached to), over�built mobile communication and wireless access facilities to fire alarm

control units. Introduction of requirements for mandatory submission by operators, which conclude

contracts for rendering services for maintenance of fire�extinguishing systems and fire alarm system

at basic stations with contracting companies, of copies of such contracts and copies of licenses of

such contracting companies to the responsible regional department of the State Emergency

Service, and for mandatory conclusion by a mobile operator, in case it is impossible to conclude a

contract with a contracting company, of a contract with a servicing company approved by the State

Emergency Service for output of signals of fire alarm automatic systems

ANNEXES

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118. Harmonization of the provisions of the Law of Ukraine “On the List of permitting documents in

the sphere of economic activities” and the Law of Ukraine “On provision of sanitary and epidemio�

logical welfare of population” with regard to issuance of a permit for dealing with radioactive

substances and other ionization radiation sources

119. Harmonization of the procedure for allocation and redistribution of the radio frequency resource

with the requirements of the legislation of the European Union for the purpose of increasing the effi�

ciency of its use

120. Securing technological neutrality in different ranges of frequencies for the purpose of provision

of telecommunication services to customers by using various telecommunication technologies

121. Cancellation of licensing of types of activities in the telecommunication sphere and introduction

of the informing principle in this sphere

122. Taking measures aimed at conclusion of the Conformity Assessment and Acceptance of

Industrial Products (ACCA) Agreement with regard to radio and telecommunication terminal equip�

ment

123. Provision of a possibility of mobile number portability

124. Exclusion from the list of types of activities and facilities with increased ecological danger of

radio�technical facilities (digital radio relay stations, basic stations, satellite communication systems)

125. Simplification of the procedures and cancellation of permitting documents in the sphere of

using radio frequency resource

126. Establishment, for economic entities that intend to carry out (those that carry out) activities in

the telecommunication sphere, of a procedure for access to and use of infrastructural facilities to

develop the general telecommunication system of Ukraine for the purpose of satisfying the needs of

customers of telecommunication services

127. Optimization of measures of state supervision (control) in the telecommunication sphere by

cancelling the powers of the controlling body to conduct planned inspections

128. Improvement of the procedures for taking measures aimed at radio frequency monitoring of

radio�electronic facilities, namely, introduction of a procedure, in accordance with which monitoring

may be conducted: at the expense of accruals paid by users of the radio frequency resource to the

state budget on a monthly basis as a rent for the use of the radio frequency resource, on request

and at the expense of telecommunication operators, by transparent determination of the necessary

number of radio�electronic facilities liable to be monitored by all telecommunication operators

129. Simplification of the procedures for provision of access to cable�conduit systems

130. Introduction of a requirement regarding the application of the rent rate of 40 per cent in case of

operation of real property facilities to place offices of the telecommunication operators that provide

mobile communication services, telecommunication operators and providers that provide internet

access services, and of the rent rate of 10 per cent in case of operation of real property facilities by

the State Property Fund to place technological equipment, antennas of the communication opera�

tors that provide mobile communication services, telecommunication operators and providers that

provide internet access services

131. Simplification of the procedure for carrying out in�situ testing of electromagnetic compatibility of

radio�electronic facilities (namely, determination of the mobile communication operator’s right to

carry out in�situ testing independently, and in case no agreement between the operators is reached

with regard to the testing results, a possibility to engage the Ukrainian State Centre for Radio

Frequencies)

ANNEXES

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