DEREGULATION IN UKRAINE
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Transcript of 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
� 6 �
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.
� 9 �
$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
� 13 �
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
� 14 �
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
� 16 �
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
� 17 �
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
� 18 �
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
� 19 �
ACHIEVEMENTS AND RESULTS
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“ DANIYIL PASKO
We have done less than we
expected, but more than the system allowed us.
� 21 �
ACHIEVEMENTS AND RESULTS
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.
� 22 �
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
ACHIEVEMENTS AND RESULTS
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.
� 23 �
“ 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.
� 24 �
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
ACHIEVEMENTS AND RESULTS
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
ACHIEVEMENTS AND RESULTS
� 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
Source: EasyBusiness
5�7% MARKET GROWTH
DUE TO SIMPLIFICATION OF THE REGULATION
0.2 billion UAH
CORRUPTION COMPONENT IN THE
SPHERE OF PESTICIDES AND
AGROCHEMICALS
ACHIEVEMENTS AND RESULTS
� 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
Source: EasyBusiness
■ 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
Source: EasyBusiness
5�15 million UAH ADDITIONAL
INVESTMENTS
ACHIEVEMENTS AND RESULTS
� 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
Source: EasyBusiness
ACHIEVEMENTS AND RESULTS
� 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).
Figure 13. Economic effect of implementation
Source: EasyBusiness
1�1.5 million UAH
REDUCTION OF BUDGET EXPENSES
ACHIEVEMENTS AND RESULTS
� 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
Source: EasyBusiness
ACHIEVEMENTS AND RESULTS
� 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.
Figure 15. Economic effect of implementation
Source: EasyBusiness
2 days
MAXIMUM TERM OF COMPANY REGISTRATION
5 positions
RISE IN THE DOING BUSINESS RANKING
ACHIEVEMENTS AND RESULTS
� 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).
Figure 16. Economic effect of implementation
Source: EasyBusiness
25�35 million UAH ADDITIONAL
INVESTMENTS
ACHIEVEMENTS AND RESULTS
� 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
ELIMINATION OF CORRUPTION
ADDITIONAL TAX REVENUES
7�10 UAH BILLION
0.2�0.5 UAH BILLION
BUSINESS UNSHADOWING
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
5.0�6.5 billion UAH
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 billion UAH
REDUCTION OF BUDGET EXPENSES
0.1�0.2 UAH BILLION
ACHIEVEMENTS AND RESULTS
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.
ACHIEVEMENTS AND RESULTS
� 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
ACHIEVEMENTS AND RESULTS
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
ACHIEVEMENTS AND RESULTS
� 39 �
20�50 million UAH
ELIMINATION OF CORRUPTION
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).
Figure 19. Economic effect of implementation
Source: EasyBusiness
ACHIEVEMENTS AND RESULTS
� 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).
Figure 20. Economic effect of implementation
Source: EasyBusiness
2.5�3.5 billion UAH
ELIMINATION OF CORRUPTION
ACHIEVEMENTS AND RESULTS
� 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
Figure 21. Economic effect of implementation
Source: EasyBusiness
ACHIEVEMENTS AND RESULTS
� 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).
Figure 22. Economic effect of implementation
Source: EasyBusiness
0.3�0.5 billion UAH
FOREIGN DIRECT INVESTMENTS
ACHIEVEMENTS AND RESULTS
� 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
ACHIEVEMENTS AND RESULTS
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
ACHIEVEMENTS AND RESULTS
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
ACHIEVEMENTS AND RESULTS
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
ELIMINATION OF CORRUPTION
ECONOMIC GROWTH INVESTMENTS
4�5 UAH BLN
1�2 UAH BLN
0.2�0.3 UAH BLN
8�10 thsd. ADDITIONAL JOBS
ACHIEVEMENTS AND RESULTS
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
ACHIEVEMENTS AND RESULTS
IN CASE OF IMPLEMENTATION OF THE ENTIRE SET OF MEASURES, EXPECTED ECONOMIC EFFECT WILL REACH ABOUT
UAH 50�70 BILLION UNTIL 2020
ELIMINATION OF CORRUPTION
REDUCTION OF BUDGET EXPENSES
BUSINESS UNSHADOWING
ECONOMIC GROWTH INVESTMENTS
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.
ACHIEVEMENTS AND RESULTS
� 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.
ACHIEVEMENTS AND RESULTS
� 53 �
ACHIEVEMENTS AND RESULTS
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
ACHIEVEMENTS AND RESULTS
� 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
ACHIEVEMENTS AND RESULTS
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
ACHIEVEMENTS AND RESULTS
� 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
ACHIEVEMENTS AND RESULTS
� 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
ACHIEVEMENTS AND RESULTS
� 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
ELIMINATION OF CORRUPTION
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
ACHIEVEMENTS AND RESULTS
� 62 �
“ ANDRII
ERASHOV
Deregulation in Ukraine reflects governmental program of
disenchanting businesses. State authorities bear sole responsibility for
the pace of this process.
� 63 �
ACHIEVEMENTS AND RESULTS
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 �
ACHIEVEMENTS AND RESULTS
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 �
ACHIEVEMENTS AND RESULTS
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
ACHIEVEMENTS AND RESULTS
� 68 �
ACHIEVEMENTS AND RESULTS
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 �
ACHIEVEMENTS AND RESULTS
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
ACHIEVEMENTS AND RESULTS
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
EasyBusiness, Ministry of Economic Development and Trade of Ukraine
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 �
ACHIEVEMENTS AND RESULTS
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
EasyBusiness, Ministry of Economic Development and Trade of Ukraine
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
Source: EasyBusiness
ACHIEVEMENTS AND RESULTS
� 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
Source: interviews of experts, EasyBusiness
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
ACHIEVEMENTS AND RESULTS
� 77 �
STRATEGY AND METHODOLOGY
� 78 �
Presentation of the Deregulation Strategy, Ukrainian Crisis Media Centre,
Kyiv, August 2014
� 79 �
STRATEGY AND METHODOLOGY
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
STRATEGY AND METHODOLOGY
� 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
Source: interviews of experts, EasyBusiness
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
■ Preparation of the
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
■ Preparation of the
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
STRATEGY AND METHODOLOGY
� 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
Source: interviews of experts, EasyBusiness
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
Source: interviews of experts, EasyBusiness
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
STRATEGY AND METHODOLOGY
� 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
STRATEGY AND METHODOLOGY
� 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)
STRATEGY AND METHODOLOGY
� 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)
STRATEGY AND METHODOLOGY
� 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.
STRATEGY AND METHODOLOGY
� 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
Source: EasyBusiness
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
STRATEGY AND METHODOLOGY
� 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.
STRATEGY AND METHODOLOGY
� 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)
Source: EasyBusiness
Figure 45. Economic effect of implementation of the deregulation strategy in the agrarian sector (until 2020)
Source: EasyBusiness
Figure 46. Economic effect of implementation of the deregulation strategy in the construction industry (until 2020)
Source: EasyBusiness
STRATEGY AND METHODOLOGY
� 94 �
POWER INDUSTRY
Figure 47. Economic effect of implementation of the deregulation strategy in the power industry (until 2020)
Source: EasyBusiness
OIL AND GAS INDUSTRY
Figure 48. Economic effect of implementation of the deregulation strategy in the oil and gas industry (until 2020)
Source: EasyBusiness
IT SECTOR
Figure 49. Economic effect of implementation of the deregulation strategy in the IT sector (until 2020)
Source: EasyBusiness
GENERAL ECONOMIC INITIATIVES
Figure 50. Economic effect of implementation of the deregulation strategy with regard to general economic initiatives (until
2020)
Source: EasyBusiness
60UAH BLN total expected effect of
REDUCTION OF THE CORRUPTION
16UAH BLN total expected effect of
REDUCTION OF THE STATE BUDGET COSTS
STRATEGY AND METHODOLOGY
� 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
STRATEGY AND METHODOLOGY
� 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.
STRATEGY AND METHODOLOGY
� 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.
STRATEGY AND METHODOLOGY
� 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 �
СТРАТЕГІЯ ТА МЕТОДОЛОГІЯ
~70% Of the regulatory provisions were CANCELLED AND
SIMPLIFIED
$37bln Key results
FOREIGN DIRECT INVESTMENTS ATTRACTED
Number of provisions before the reform:
11,125
Reform implementation period:
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
Source: Jacobs, Cordova & Associates
SOUTH KOREA
� 102 �
СТРАТЕГІЯ ТА МЕТОДОЛОГІЯ
~80% Of the regulatory provisions were CANCELLED AND
SIMPLIFIED
Figure 53. Results of deregulation in Mexico
Source: Jacobs, Cordova & Associates
Number of provisions before the reform:
2,038
Reform implementation period:
9 months
Results:
■ 54% of the regulatory provisions were cancelled;
■ 27% of the regulatory provisions were simplified;
■ the economic effect was not assessed.
MEXICO
� 103 �
СТРАТЕГІЯ ТА МЕТОДОЛОГІЯ
Figure 54 Results of deregulation in Kenya
Source: Jacobs, Cordova & Associates
Number of provisions before the reform:
1,315
Reform implementation period:
18 months
Results:
■ 24% of the regulatory provisions were cancelled;
■ 29% of the regulatory provisions were simplified;
■ savings for businesses are assessed as $ 146 million per annum,
or 0.06% of the GDP.
~50% Of the regulatory provisions were CANCELLED AND
SIMPLIFIED
0.1% of
the GDP Key results
SAVINGS BY BUSINESSES PER
ANNUM
KENYA
� 104 �
СТРАТЕГІЯ ТА МЕТОДОЛОГІЯ
Figure 55. Results of deregulation in Croatia
Source: Jacobs, Cordova & Associates
Number of provisions before the reform:
1,451
Reform implementation period:
9 months
Results:
■ 15% of the regulatory provisions were cancelled;
■ 10% of the regulatory provisions were simplified;
■ $65,6 million per annum saved, or 0.13% of the GDP.
~60% Of the regulatory provisions were CANCELLED AND
SIMPLIFIED
$100 mln Key results
SAVINGS BY BUSINESSES PER
ANNUM
CROATIA
� 105 �
СТРАТЕГІЯ ТА МЕТОДОЛОГІЯ
Figure 56. Results of deregulation in Moldova
Source: Jacobs, Cordova & Associates
Number of provisions before the reform:
1,530
Reform implementation period:
6 months
Results:
■ 51% of the regulatory provisions were cancelled;
■ 15% of the regulatory provisions were simplified;
■ the economic effect was not assessed.
~65% Of the regulatory provisions were CANCELLED AND
SIMPLIFIED
MOLDOVA
� 106 �
� 107 �
DEREGULATION IN PRACTICE
� 108 �
DEREGULATION IN PRACTICE
DEREGULATION IN PRACTICE
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
DEREGULATION IN PRACTICE
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� 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
� 114 �
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
� 115 �
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
� 116 �
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
� 117 �
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
� 118 �
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
� 119 �
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
� 120 �
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
� 121 �
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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DISCLAIMER
This Report is prepared for general use and contains information about EasyBusiness achievements during one year of operation. The Report is only intended for information purposes. EasyBusiness shall bear no responsibility for any consequences of the use of information provided in the Report. Any photographic materials used in this Report are not owned by EasyBusiness. Distribution of the materials contained in this Report is welcomed, with a reference to the source.
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