The overregulation of business has long been a problem for the Ukrainian economy. Even though the state made progress in simplifying business operations in the last few years before the full-scale Russian invasion and war, some outdated and frankly “harmful” regulatory acts are still obstructing the growth of economic activity. Moreover, since the start of the full-scale invasion, Ukraine has been confronted with specific deregulation tasks, which if not resolved will render recovery impossible.
Remove the excess, simplify the complicated
A year ago, on 23 January 2023, the Ukrainian government launched a large-scale deregulation reform effort. Its ambitious goal was to analyse more than a thousand regulatory instruments in various economic sectors and pare down and simplify the procedures for starting a business, obtaining licenses, permits, etc. for hundreds of thousands of Ukrainian entrepreneurs.
Numerous experts and organizations joined in the initiative. In particular, the BRDO Office of Effective Regulation took part in the work of the interdepartmental working group (IWG) on deregulation – within the EU4Business: SME Policies and Institutions Support (SMEPIS) project, which is being implemented by Ecorys together with GIZ, BRDO, and Civitta.
In a year, the IWG reviewed more than 1,300 state instruments regulating business operations. In the end, it recommended that about a quarter of them be cancelled, and that another 500 or so be optimized or digitized.
According to the estimates of the BRDO Office of Effective Regulation, the implementation of these IWG decisions will save over UAH 1.4 billion (EUR 34 million) just for those enterprises whose activities fall under the regulatory policy of the Ministry of Economy. For the agricultural sector, the predicted economic effect of deregulation exceeds UAH 8.5 billion (EUR 208 million), while for the construction industry it could be UAH 250 million (EUR 6 million).
Want to demine, but can’t
A painful problem for Ukraine, now and for the years to come, is the contamination of vast areas of its territory with explosive objects – unexploded bombs, and mines. As of February 2023, the State Emergency Service estimated that the total area contaminated by explosives was 174,000 square kilometres. Despite the high demand for the respective services, during the year-and-a-half of the full-scale war, only 18 entrepreneurs have received the status of mine action operators, that is, a business entity that can officially carry out demining works.
The current regulatory mechanisms in force in Ukraine actually make the procedure for obtaining the necessary permits for acquiring the status of a mine action operator extremely difficult for a business, which is obstructing the development of entrepreneurship in this field.
By the end of 2022, the BRDO Office of Effective Regulation formalized the procedure for obtaining the relevant permits and developed business opening instructions for future mine action operators. This information has been posted on the website of the state information service #StartBusinessChallenge.
Still, this is just an intermediate result, the BRDO says: The next step in achieving the main goal of deregulation is to determine how this procedure can be simplified – via cancelling and digitalizing the state regulation tools involved.
Deregulation must be open
Deregulation reform is a long-awaited and important initiative for the Ukrainian economy and business. However, without complete transparency of the reform process itself, it will be impossible to win the trust of the business community and society as a whole in this effort.
So another important project implemented in the summer of 2023 as part of the EU4Business: SME Policies and Institutions Support initiative was the development and launch of an interactive online platform https://deregulation.me.gov.ua/, which allows the public to track the process as it goes on.
Currently, the portal contains all available information on the deregulation reform progress, in particular, on the IWG meetings held, recommendations adopted, and the deregulation legal acts drawn up to implement IWG decisions.
The deregulation reform website also contains a questionnaire and a feedback form enabling Ukrainian businesses to actively participate in the reform, i.e. by leaving comments, suggestions, and their observations about the regulations that effectively prevent them from doing business.
