Анатолій Кінах Об'єднання організацій роботодавців України

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The Anti-Crisis Program

The Anti-Crisis Program of Joint Actions of the Government and Businesses,

the composition of the Anti-Crisis Council of Non-Governmental Organizations

We would like to bring to notice of industrialists, entrepreneurs and employers the full text of the Anti-Crisis Program of Joint Actions of the Government and Businesses, which was drawn up by the ULIE and then discussed and approved at an extended meeting of the Management Board on December 23, 2014. The Anti-Crisis Council of Non-Governmental Organizations was created and its membership was approved at the same meeting. Please acquaint yourself with the Council membership and we are ready to hear your proposals if you would like to join it.

The Anti-Crisis Program of Joint Actions of the Government and Businesses

Kyiv                                                                                                               December 23, 2014

Ukraine is on the verge of an unprecedented socio-economic crisis and further ignoring of this fact will inevitably result into a critical slump in economic activity and volume of the country's GDP as well as impoverishment of the population.

The reasons for the dramatic destabilization of the situation in Ukraine include the military operations in the eastern region of the country, the annexation of the Autonomous Republic of Crimea, the government's inability to do away with corruption, the tabling of deep reforms for deregulation and public administration, capital outflows from the country, uncontrolled devaluation of the national currency, the lack of well thought-out monetary and exchange rate policy of the National Bank of Ukraine (NBU), a decrease in foreign trade activities and industrial production volumes, the lack of vigorous actions aimed at overcoming the reduction of the population's ability to pay.

Domestic industrialists, entrepreneurs and employers are concerned about the adoption of premature tax reform which will complicate business activities, the delayed passing of the 2015 national budget of Ukraine, the absence of constant communication between all branches of the government and the civil society for the settlement of national problems.

Thus, the Cabinet of Ministers of Ukraine and the Verkhovna Rada of Ukraine have to unite their efforts and implement reforms for the fulfillment of the following tasks:

- to form a favorable business climate;

- to ensure financially reliable domestic demand;

- to protect and support national producers;

- to extend the sales markets for domestic products;

- to create in Ukraine financially sustainable and developed regions.

The lack of reforms and the development of legislation without participation of the civil society and experts have led to a significant worsening of the socio-economic situation in the country which is confirmed by the following statistics.

GDP dropped by 5.3% in Q3, 2014 year-over-year (at constant prices of 2010), while in Q2, 2014 it fell by 2.3% year-over-year.

Industrial output was 10.1% down in January through November 2014 year-over-year. The following spheres of industry suffered most of all: machine building output declined by 21% (including a 35.3% slump in vehicle production), coke and refined petroleum products output fell by 19.6%, metallurgy production dropped by 14.9%, chemical production – by 14.9%, extraction and processing industry output – by 10.7%.

Construction output decreased by 19.3% in the 11 months of 2014 year-over-year.

The number of enterprises operating at a loss grew to 44.2% in the nine months of 2014. At the same time, the amount of their losses increased by almost 3.7 times.

Ukraine's investment attractiveness is 48.8% lower than last year. In January through September 2014, foreign investors directly invested a mere $1.906 billion (equity capital) in the economy of Ukraine.

The volume of used capital investment was 23% lower in the nine months of 2014 year-over-year.

The hryvnia devaluated against the U.S. dollar by around 100% during the 11 months of 2014.

Consumer price index (inflation) in January-November 2014 was +21.2% (year to date) and industrial goods producer price index was +31.8%.

Gold and forex reserves shrank by 51.2% in the 11 months of 2014 to $9.97 billion as of the beginning of December, while the required minimum volume of gold and forex reserves is set at around $23 billion.

Wholesale and retail goods turnover in January through November 2014 dropped by 14.5% and 7.5% respectively.

Export and import slumped by 7.7% and 25.4% respectively in the nine months of 2014 year-over-year.

Delayed VAT refunds exceeded UAH 14 billion and the automatic reimbursement system does not work.

The deficit of the consolidated balance of payments in January through October 2014 was estimated at $8.46 billion (in 2013 it demonstrated a surplus of $2 billion).

Wage debts were estimated at over UAH 2.2 billion as of early November 2014, which is 2.2 times higher year-over-year.

National and government-backed debt in Ukraine was estimated at around UAH 945.33 billion as of October 31, 2014 (60.05% from the 2014 GDP forecast), including UAH 515.95 billion in foreign debt and UAH 429.38 billion in domestic debt. Consolidated debt is approaching 100% of GDP, which increases the risk of default in Ukraine.

Due to the new tariff policy in the housing and utility and energy spheres the cost of services has grown by 40-60% and in some cases by 100%. Taking into account the impoverishment of households, we can predict further exacerbation of the crisis of nonpayment for gas, heating, water and electricity. Thus, the housing and utility sphere is at risk of collapse because of huge arrears.

The business community has consolidated efforts and determined major problems, causes behind them and solutions to them.

1. The outflow of deposits from the banking system has exceeded UAH 120 billion since the beginning of the year, which is a sign of lower confidence in the banking system. Ukraine's banking sector is facing the plight as a result of the devaluation of the national currency, loss of access to resources on the foreign market, a decline in confidence in the banking sector, nontransparent refinancing of commercial banks and low liquidity of banks. Under such difficult conditions commercial banks' access to refinancing is an opportunity which has to be used primarily for the return of deposits on time and bank liquidity support, and only after that it can be used to boost lending. As a result of such use of funds which were allocated for refinancing the trust in the banking system and respectively its liquidity has become significantly lower.

Decisions to support banks through refinancing are made privately, as a result, huge amounts of public finances are allocated according to an obscure principle. The overall volume of refinancing for the banking system increased by 4.4 times to UAH 152.2 billion in the 10 months of 2014. In January-October 2014, the refinancing rate grew by 11.53 percentage points (from 6.84% per annum in January to 18.37% in October), while the average rate was 14.5% per annum.

The absence of a joint action plan between the NBU and the Cabinet of Ministers of Ukraine (CMU) for the regulation of the economic situation and coordination of their actions deepens the economic crisis in the country. As a result, the NBU's refinancing rate increased by 7.5 percentage points in the 11 months of 2014 and as of November 13, 2014 it was 14.0% per annum. In addition, the lack of a sound monetary policy at the NBU resulted into a complete loss of connection between the refinancing rate as a reference rate for the cost of borrowed and invested funds for a relevant period and the value of banks' resources.

The current exchange regulations of the NBU (mandatory sale of 75% of foreign currency earnings, 90 days period for performing payments under export and import contracts, complicated procedure of foreign currency purchase, etc.) make the work of local exporters difficult, reduces investment in the modernization of production facilities, makes lower the attractiveness of loans in foreign currency, leads to delays in payments and breach of international contracts. These decisions taken by the banking regulator result into reduced exports, a decline in production and lower budget revenues.

2. The housing and utility sphere also requires reforms. First of all, the quality of housing and utility services has to correspond to their cost and energy efficient technologies have to be introduced in this sphere as soon as possible.

In 2011-2013, the European Bank for Reconstruction and Development (EBRD) financed the implementation of the project on the technical support for residential energy efficiency. As a result of its implementation, a range of national standards for energy efficiency in buildings were introduced and an online information platform on residential energy efficiency Teply Dim (www.teplydim.com.ua) was launched. In 2015, the EBRD decided to open a credit line for Ukraine for the realization of the next residential energy efficiency project entitled "Technical assistance for the support of investment in residential energy efficiency." The abovementioned projects are aimed at the introduction of the provisions of the Directive 2010/31/EC Energy Performance of Buildings in Ukraine.

Such technologies could give Ukrainians an opportunity to save much on housing and utility services, but instead the energy efficiency programs are tabled and citizens continue to spend more and more on utility services. Taking into account further devaluation of the national currency, growing prices and tariffs as well as wage arrears, housing and utility debts are growing and will keep increasing. As of late October 2014, debts for utility services were estimated at UAH 11.79 billion, which is 6.7% higher than in September, although in general it dropped by 5.4% in the 10 months of 2014.

Another negative factor is the lack of transparent targeted aid to the population for housing and utility payments as well as its small size. In January-October 2014, some 693,360 families were entitled to obtain subsidies. According to the statistics, 19.2% of families that applied for subsidies did not receive them. The total amount of the allocated subsidies over the 10 months was estimated at UAH 76.78 million, which was 44.3% down on 2013.

3. A slump in industrial production occurred first of all due to the lack of targeted industrial development programs in Ukraine and the disruption of the previously elaborated concepts. In addition, according to the industrial and business community, the government made a mistake when it decided to reorganize the Industrial Policy Ministry and merge it with the Economic Development Ministry, as the formation and implementation of state industrial policy requires a much broader approach, given the characteristics of each sector of the economy.

A decline in output is the result of lower demand and a significant reduction in trade relations with Russia. Ukrainian exports to Russia dropped by 27.3% in the nine months of 2014. Therefore, the government's action plan should focus, among other things, on the development and implementation of a program on import diversification, import substitution and geographic expansion of the market for domestic products.

Actions of the CMU aimed at the diversification of Russian energy sources import were successful. To some extent, the diversification helped to reduce the share of imports from Russia by 36% in the nine months of 2014 year-over-year.

Military operations in eastern Ukraine and the lack of support for pro-Ukrainian businesses in the anti-terrorist operation (ATO) zone seriously destabilized the Ukrainian industry. Eastern Ukraine is the region with the highest concentration of industrial production. The destabilization of the situation there led to additional losses of industrial coal, chemical, petrochemical, steel production and engineering. The average share of businesses in these regions to total industrial output was the following: around 22% in the industry in general, including around 27% in the mining and quarry development, and around 21% in the processing industry.

4. The unbalanced taxation policy is a result of the lack of effective taxation reform that could motivate businesses for legal and transparent work. The adoption of tax reform widely advertized by the government indeed never made the load on the wages budget lower, a mechanism of controls over transfer pricing was not introduced, the system of automatic VAT reimbursement was not launched in full, the issue of tax overpayment by businesses was never settled.

The reason for ineffective taxation policy in general and implementation of the latest pseudo reform was the isolation of the public and businesses from the reform elaboration process and appointment of the Finance Ministry of Ukraine as the executing agency responsible for these reforms. The latter provided all decisions with exclusively fiscal nature and the main goal of taxation reform was determined as immediate short-term budget replenishment. Inefficiency of the adopted taxation laws was conditioned by the absence of a single center of responsibility for reform implementation in the country, the lack of coordinated actions between all ministries and agencies involved in the settlement of economic development problems in the country.

5. Public procurement is still the main source of loss of public funds. In 2014, some 40% of public procurement, which is UAH 40 billion, was conducted according to a non-competitive procedure, which means that the procurement was made from one participant (according to the Economic Development Ministry). According to the law on public procurements, purchase from one participant is allowed only in exceptional cases, for example in the absence of competition or in case of urgent need for goods necessary for the cleanup of man-made and natural disasters as well as procurement of works of art. According to preliminary data, public procurement in 2014 was estimated at around UAH 150 billion.

The Board of the ULIE developed the Anti-Crisis Program of Joint Actions of the Government and Businesses in order to settle a range of socio-economic problems, intensify Ukraine's economy growth and improve social welfare.

I. The Monetary Policy of the NBU

The settlement of entrepreneurs' problems related to the monetary and credit policy of the National Bank of Ukraine (NBU) and the financial sector of the economy requires the implementation of a range of measures:

1.1. The NBU and the Cabinet of Ministers of Ukraine with the participation of non-governmental organizations of businesses, experts, scientists and employers should intensify the elaboration and implementation of a joint program on the crediting of the real sector of economy by state-run and commercial banks at an adequate cost.

1.2. Entrepreneurs and the NBU should take joint steps in order to ensure liquidity in the banking sector (specific banks), prevent corruption during the refinancing of commercial banks, ensure control over targeted refinancing and direct this support to lending of the real sector of economy.

1.3. The procedure for providing government guarantees for the business projects implemented with the use of loans issued by state-run banks should be introduced with due regard for the priorities of the economic policy.

1.4. The share of earnings in foreign currency what is subject to mandatory sale should be reduced from 75% to 50% and further to 25% in some spheres.

1.5. A clause should be introduced under which the enterprises that need to repay loans issued in foreign currency should be exempt from the mandatory sale of their earnings in foreign currency in the same amount needed to repay principal debt and interest on such loans.

1.6. The time for the fulfillment of a foreign currency exchange bid should be shortened, or foreign currency should be purchased on the day when the bid is submitted and the needed sum in the hryvnia equivalent is transferred.

1.7. The 90 days' period for effecting payments under export and import transactions, which was introduced by an NBU Board resolution, should be cancelled with the simultaneous return to effecting export and import transactions under the law of Ukraine on the procedure of settlements in foreign currency No. 185/94-VR dated September 23, 1994.

1.8. The term for the return of receipts in foreign currency from foreign economic operations should be extended from 180 to 360 days for the enterprises with long production cycles (defense industry, machine building, etc.).

1.9. The provision of NBU Board resolution No. 591 dated September 22, 2014 prohibiting transactions in foreign currency on the basis of individual licenses issued by the NBU should be amended so that producers could obtain individual licenses from the NBU and pay premiums and bonuses in foreign currency to non-resident buyers, aimed at facilitating the producers' sales.

1.10. The limitations introduced by NBU resolution No. 591 "on the repatriation of dividends to foreign investors, except for the dividends accrued on securities traded on stock markets" should be changed, and securities should be classified not according to their listing or non-listing on stock markets, but according to the financial and economic performance of relevant issuers (for example, restrictions should be introduced on the minimum amount of charter capital, net assets, average wages, taxation base and other indicators). This would prevent outflows of capital and currency assets through the schemes of dividend payment to dubious companies that do not conduct real business activity.

1.11. The ban on settlements under import transactions without import of goods to the territory of Ukraine (in line with NBU Board resolution No. 591 dated September 22, 2014) should be cancelled.

1.12. The procedure for repayment of foreign currency loan debts should be developed for business entities.

1.13. The restriction on settlements under import contracts under which the goods have been imported in the territory of Ukraine and underwent customs clearance on the basis of declarations whose date of issuance exceeds 180 days (under NBU Board resolution No. 591 dated September 22, 2014) should be cancelled.

1.14. The banking system of Ukraine should be streamlined with that of European countries. The maximum size of annual interest on credit use should be set at 5-7%, as the case in Europe, the crediting system should be facilitated for enterprises, entrepreneurs, business structures and households, and groundless penalties and sanctions introduced by banks should be eliminated.

II. Fiscal Policy and Its Improvement

2.1. The State Fiscal Service of Ukraine (SFSU) should be reformed and public controls over its activities should be tightened.

2.2. The number and volume of tax returns should be cut and smooth access to distant submission of reports and tax payment (electronic services) should be ensured in order to save taxpayers' time and money.

2.3. Transparency and predictability of the taxation system should be ensured via:

- the creation of a public base of conducted individual tax consultations (not mentioning the name of taxpayer);

- the legislative recognition of the provision of general tax consultations by the Finance Ministry;

- the improvement of the procedure of filing appeals against decisions of fiscal agencies.

2.4. Transfer pricing control procedures should be streamlined along with the principles of the Organization for Economic Co-operation and Development (OECD), in particular business entities should spend a minimum of time and money on such procedures.

2.5. The punitive model of tax control should be abandoned:

- financial penalties for taxpayers who paid additional tax without contesting the tax notice should be cancelled;

- fines and penalties should be eliminated from the national budget revenues;

- a tax compromise (tax treaty) should be granted for 2014 and a tax amnesty for capitals should be held after tax reform via a single voluntary declaration as of January 1, 2016;

- the administration system should be simplified with the use of cash registers;

- criminal prosecution of individuals for tax evasion should be restricted by law until his or her tax liabilities are finally adjusted;

- personal liability should be established for tax and customs officials for the losses suffered by business entities due to these officials' illegal actions or inactivity;

- the effect of the law on the main principles of government supervision (controls) in the sphere of economic activities should be extended on taxation agencies.

2.6. Fiscal burden on the payroll budget should be reduced to the level which could help bring incomes out of the shadows to the maximum.

2.7. Pension reform that envisages a gradual switch to the accumulative pension system should be implemented.

2.8. Modernization of income tax:

- income tax should be imposed on a taxpayer taking into account the financial result in the financial reporting drawn up according to the International Financial Reporting Standards (IFRS) or the Provisions (Standards) of Accounting. At the same time, the right of fiscal agencies to check the financial result calculated according to the accounting rules should be restricted. Tax on distributed profit should be introduced in 2016.

2.9. Value-added tax (VAT) reform:

- the rights of taxpayers have to be secured during VAT administration, VAT should be reimbursed in time;

- VAT reimbursement guarantees should be introduced, in particular terms for reimbursement and taxation agency's liability for noncompliance with them should be established;

- the provisions of the laws of Ukraine No. 1621-VII and No. 1690 on the introduction of the VAT refund electronic procedure (VAT accounts) as of Q4, 2014 should be cancelled.

Legal regulations and stimuli for repatriation of Ukraine's economy should be introduced.

2.10. VAT reimbursement term of up to 30 days should be established legislatively and it should be returned automatically, the fiscal service's liability for untimely VAT return should be toughened to criminal.

2.11. Relevant incentives for the modernization of production facilities and creation of new jobs should be introduced through the exemption from VAT during imports of high technology equipment produced outside Ukraine.

ІІ. Industrial Policy, Support for National Producers

Ukraine is facing a threat of deindustrialization, which may completely deteriorate industry, degradation of the economy to the level of raw materials provision, which will inevitably lead to the impoverishment of the country's population in general.

Today Ukraine lacks in the industrial policy that determines the factors hindering the development of industrial production and finds the ways for their elimination including the following ones: competitive recovery of the economy, improvement of the investment climate, support for national producers, modernization of industrial facilities, implementation of import substitution and state protectionism policies, preservation of innovations in Ukraine's economy development.

The national industrial policy should form the basis and guidelines for the elaboration of sectoral industrial support programs based on the peculiarities of functioning and stimulation of the national economy branches development.

Ukrainian industrialists and entrepreneurs hope for the government's support for industrial development and protection of Ukrainian producers.

A complex of measures should be introduced for the protection of domestic producers, in particular the process of import substitution and protectionism should be launched, financially reliable domestic demand should be formed and competitive domestic products should be manufactured.

The import substitution program should become an important component of the support system for domestic producers. Considering the fact that Ukraine still occupies the niche of a raw material supplier on the world market, however our market is open to the sale of high technology products from other countries, the domestic economy is vulnerable to external risks.

The government should pay attention to the protection of Ukraine's home market from excessive imports and reduce the country's dependence on import as long as around 60% of goods on the home market are imported.

Taking all this into account the government and public should join efforts for the introduction of the national protectionism policy in Ukraine in line with Ukraine's commitments to the WTO and the Association Agreement with the EU. The measures aimed at the introduction of the protectionism policy will strengthen Ukraine's trade, financial and political position in the global economy as well as increase benefits from international cooperation.

It should be noted that support for national producers, effective import substitution and implementation of the national protectionism policy depend on home demand (paying capacity and preferences of consumers) for domestic products as well as on competitiveness of domestic producers.

First of all, a transparent and effective public procurement system should be created via quick introduction of the electronic public procurement system and adoption of all necessary laws and regulations for legal use of this system.

To sum up, the support and protection of national producers and stimulation of economic growth have to be ensured in the following way:

3.1. Resume crediting for the real sector of economy.

3.2. Intensify efforts of the Cabinet of Ministers of Ukraine in search for ways to increase public procurement of domestic products and expand the home market for domestic products.

3.3. Introduce active antitrust policy.

3.4. A range of measures aimed at the return of positive dynamics of industrial production and VAT growth should be taken in order to revive macroeconomic stability. This can be achieved through the implementation of the following measures:

- elaboration of the development and support program for industries for the prevention of deindustrialization;

- speed up deregulation on the principles of transparency, unification and automatization of administration procedures, mutual responsibility of sides;

- strengthening of Ukraine's innovation policy as an integral component of the development;

- development of the home market infrastructure;

- export development (economic diplomacy, special export crediting programs, export consortiums of small businesses);

- commitment of state-run companies (primarily banks) to the fulfillment of tasks for the economic growth recovery;

- effective protection of rights and interests of investors (using such tools as the single investment window, introduction of the position of investment ombudsman, goal setting agreements with the government);

- stimulation of agriculture development through the modernization of infrastructure, continuation of land reform implementation and improvement of the organizational structure based on cooperation;

- organization of effective public procurement for the defense sphere (including placement of government defense orders);

- rationalization of budget expenditures aimed at the stabilization of fiscal deficit.

3.5. Stimulation of the development of trade infrastructure on the home market with high level of service and standards of product sale, elimination of barriers for domestic producers' access to the market, legal and information support for their sale activities.

3.6. Active use of non-tariff regulation in line with the WTO regulations on controls over quality, safety, compliance of imported goods with phytosanitary and veterinary norms in case of a considerable destabilization of trade balance.

3.7. The prime minister of Ukraine should be personally liable for non-fulfillment of proposed reforms and worsening of the socio-economic situation in the country.

ІV. Business Excellence and Competitiveness of Enterprises and Organizations

The principles of the national policy aimed at support for enterprises and organizations in the development based on modern European approaches and the best practices should be elaborated in Ukraine as soon as possible. The prestige of excellent organizations and their development processes should be declared by the government at the top level, "The more perfect the organization, the best comfort it enjoys in the country."

Business entities should create modern management systems and the government has to introduce legal mechanisms of motivation and conditions encouraging the owners and heads of enterprises to improve purposefully and regularly using the latest European approaches and the best business practices.

The state executive agencies have to be personally liable for the development of the movement for business excellence and quality in Ukraine.

V. Energy Security, Energy Efficiency, Energy Saving

Ukraine is facing an energy security crisis due to the shortage of its own energy resources – coal, gas, electricity – and the need to buy them abroad.

The share of Ukraine's own energy resources is less than 60% despite the fact that the territory of Ukraine is rich in natural gas and steam coal. For example, the experience of Bulgaria, where thermal power plants (TPPs) burn humid brown coal (lignite), or Estonia, where TPPs burn shale, could be learned and tested. There are many examples of natural gas and steam coal substitution.

The government together with the public should form the culture of energy saving in the society and implement energy conservation programs. The culture of energy saving should help all business entities and households develop skills needed to maximize energy efficiency. Today Ukraine has the highest in the world GDP energy intensity.

5.1. The government should order that heating tariffs remain unchanged during 5-7 years if measures for energy conservation and increase of energy efficiency are taken.

5.2. The costs saved due to the implementation of energy saving and energy efficiency measures and the substitution of natural gas with alternative fuel should be transferred to an account with special treatment.

5.3. Arrest of accounts with special treatment by the state agencies, including court executors, should be prohibited.

5.4. The price of alternative fuel should not exceed its general production cost and the threshold level of profitability of 20%.

5.5. Burning of alternative fuel (biomass) elsewhere except the heating and electricity generation establishments should be prohibited.

5.6. The State Forest Resources Agency should be obliged to provide boiler houses that burn wood and its wastes with necessary volume of raw materials at a price with the profitability of up to 20%.

VІ. Support for Small- and Medium-Sized Businesses

During the crisis the government should pay more attention to the development of and support for small- and medium-sized businesses. It is a generally recognized fact that small- and medium-sized businesses are more flexible and can quickly respond to change of working conditions. In 2013, some 95% of Ukrainian enterprises were small- and medium-sized businesses. Considering the domination of small- and medium-sized businesses in Ukraine, support for them could contribute to economic growth, reduction of unemployment and sustainable development of the economy and society.

The following measures are necessary for the support for and development of small- and medium-sized businesses in the country:

6.1. The provisions of the law of Ukraine on the development of and state support for small- and medium-sized businesses in Ukraine No. 4618-VI dated March 22, 2012 should be implemented.

6.2. A national program for the development of small- and medium-sized businesses should be elaborated and implemented, and people responsible for its implementation should be appointed. A program for the regional and local development of small- and medium-sized businesses based on the national program should be elaborated together with local governments.

6.3. Deregulation of economic activities should be conducted in order to facilitate the setting up and closure of businesses, certification, etc.

6.4. Fiscal pressure on business entities should be reduced and the Ukrainian taxation legislation should be made clear and understandable.

6.5. Small- and medium-sized businesses should be provided with affordable crediting at the level of 3-5% per annum in the national currency.

6.6. An information portal should be launched in order to enhance financial awareness in the society and settle the issues related to the setting up and closure of businesses, filling in and submission of documents, current issues related to business activities, etc.

VІІ. Support for Pro-Ukrainian Businesses in ATO Zone

As of 2013, around 10.2% (some 40,120) of the total number of Ukrainian enterprises operated in Donetsk and Luhansk regions.

The list of measures aimed at the facilitation of business activities in the anti-terrorist operation (ATO) zone given in the law of Ukraine on temporary measures during the anti-terrorist operation No. 1669-VII dated September 2, 2014 is a significant support for businesses and citizens in the ATO area. However, business entities in the ATO area require a complex support and assistance. The government and businesses should elaborate together a range of measures to ensure safety at enterprises, create conditions for supplies of necessary industrial goods to support the production process, help to solve the problems with logistics and create conditions for operation of enterprises that are moving outside the ATO area as well as find sources of financing for the abovementioned measures.

VIІІ. Decentralization of Power, Personnel Policy, Fight against Corruption

Decentralization of power, first of all, foresees the passing of the majority of powers to local governments together with the sources of financing for the implementation of these powers, which means the decentralization of the budget system that could increase effectiveness of distribution and use of budget funds. Redistribution of powers, responsibility for financial resources between the government levels is a long-standing need in Ukraine. In the long run the local governments should obtain autonomy from the central authorities, an opportunity to determine development strategies for their territories, necessary powers, resource base and strengthen responsibility for socio-economic development of the territories.

The regional policy of Ukraine should be reformed and incentives for regional development should be created. This can be achieved in the following way:

8.1. The Budget Code of Ukraine should be amended in the part of the budget decentralization in order to increase financial independence of local governments.

8.2. Economic powers of local governments should be expanded with regard to management of housing and utility facilities and natural resources.

8.3. Powers of local governments with regard to regulation of local taxes and levies should be expanded.

8.4. The distribution of taxes between the central and local budgets should be improved.

8.5. The practice of creating territories with special taxation regime should be returned.

8.6. Conditions for local borrowings should be facilitated.

The current personnel policy, especially local, has to become transparent to the maximum through the involvement of the public in the process of nominating candidates for positions. The appointed region governor should have support, trust and respect of the public except for necessary skills and qualification.

Public competitions should also be held for the appointment of top state officials taking into account opinions of the public and businesses.

Without fight against corruption the government's attempts to intensify economic activity and ensure economic development will not give the desired results.

Adopting of a package of anti-corruption laws is not enough. They have to be implemented and the government and watchdogs have to regain people's trust. The most corrupt branch of power – the judicial branch – has to be reformed and modernized. Corruption in the judicial branch slows down the flow of foreign investment in the economy of Ukraine, as investors are unable to protect their ownership rights. Foreign investment outflow has significantly increased recently due to these reasons.

The government agencies together with non-governmental organizations and business associations should develop and implement effective measures aimed at fight against corporate raids, complex measures to toughen criminal liability of officials for inability to protect the rights of owners.

In addition, the government together with non-governmental organizations and business associations should inform entrepreneurs about fights against corruption and corporate raids. Cases of corporate raids, corrupt actions or forcing into them should be detected, made public and those guilty should be drawn to responsibility. Business organizations and government agencies should be involved in controls over compliance with the legislation on protection of ownership rights, anti-corruption laws and public expertise of anti-corruption laws and regulations, concepts and programs, etc. should be held.

ІХ. Deepening of Cooperation with the EU, Implementation of the Association Agreement with the EU

The EU has prolonged autonomous trade preferences for Ukrainian goods until the end of 2015. The introduction of this regulation helped to increase export of Ukrainian products to the EU. Export to the EU member countries grew by 5% over 11 months in 2014, while the share of Ukraine's export to the EU increased to 32% of total exports. However, the effect from the introduction of this regulation could be even better if businesses obtained information support on the introduction of European standards and establishment of goods supplies to the EU.

Due to the lack of funds for the modernization of production facilities, product certification, etc. many domestic enterprises are unable to use the EU's trade preferences. In order to help entrepreneurs introduce necessary standards for sale of their products in the EU territory, the government together with business associations should elaborate and ensure consistent implementation of a national program for the adaptation of the Ukrainian economy to the conditions of free trade with the EU (standards, technical regulations, modernization) as well as develop the roadmap for the implementation of the EU-Ukraine Association Agreement.

The national adaptation program should be aimed at the establishment of regular communication of the government and businesses through the elaboration of promotional measures (tax and investment) for the modernization of domestic production facilities, development and introduction of measures for the protection of the home market from oversaturation with imported products and substitution of imports, ensuring competitiveness of domestic producers, gradual liberalization of the market via providing Ukrainian producers with opportunity to use the transition period and protection mechanisms in line with the conditions for the creation of a free trade area between Ukraine and the EU, etc.

The EU's support should be gained for the implementation of the following measures aimed at the deepening of cooperation between Ukraine and the EU:

9.1. Creation of modern European certification centers in the territory of Ukraine at the expense of the EU grants that are accredited in the EU and issue European certificates. A monitoring group should be formed of representatives of non-governmental organizations and associations for controls over use of the funds received.

9.2. Support for the harmonization of the tax legislation with the EU norms and regulations.

9.3. Obtaining a compensation (discount) for the participation of Ukrainian producers in exhibitions and forums hosted by the EU with the aim of establishment of contacts with potential partners.

9.4. Expansion of the rights (access) of Ukrainian enterprises to the participation in public procurements in the EU.

9.5. As part of the joint agriculture policy of Ukraine and the European Union, quotas on duty-free supplies of agriculture products to the European market should be increased.

Х. Export Policy

Ukraine's export policy should be directed at the expansion of markets for Ukrainian products and include incentives to enhance product quality and increase exports of high value added products. For its successful implementation, competitiveness of domestic products should be increased, technological inferiority of Ukrainian industry compared with the world standards should be lowered, and financial, technology and information infrastructure should be developed to ensure the improvement of high technology products.

Businesses and the government should join hands in an effort to realize Ukraine's foreign economic potential to the maximum, support export-oriented spheres of the economy and use available tools in order to increase exports of Ukrainian products and expand the horizons for product supplies. Such tools include the following:

10.1. Economy diversification, speeding up the adaptation of technical regulations and standards to the EU regulations with the aim of reducing production, commercial and investment risks related to the loss of Eastern markets.

10.2. Export crediting of importer-buyer on payment for purchases (in fact it is a mechanism for delay of payment for the supplied products). The implementation of this mechanism is impossible today because of the current system of foreign exchange regulation in Ukraine.

10.3. Insurance of export credits for the protection of property interests of exporter-creditor from commercial and non-commercial risks. Unfortunately, Ukraine still does not have necessary infrastructure for export crediting and insurance of export credits.

10.4. Work of trade and economic missions should be resumed. Trade and economic missions composed of foreign diplomatic institutions worked until early April 2010. Activities of these missions were directed at the development of trade and economic relations, promotion of domestic products in the territories of other countries. In cooperation with watchdogs the missions detected schemes of non-taxable incomes and laundering of proceeds.

10.5. Cooperation with the economic departments of Ukraine's diplomatic missions abroad with the aim of finding alternative markets for Ukrainian products. Special attention should be paid to the countries of Northern and Southeastern Asia as well as the list of countries with which Ukraine has trade deficit.

XІ. The Strengthening of the Dialogue between the Government and Businesses

Under the difficult macro economic situation Ukraine is facing the government and businesses should join efforts to ensure economic growth, development of the home market, increase competitiveness of domestic producers and prevent further decrease of industrial production, growth of unemployment and prices.

In order to implement the abovementioned tasks, the ULIE together with non-governmental and sectoral associations and employers' organizations initiates the creation of the Anti-Crisis Council of Non-Governmental Organizations.

Activities of the anti-crisis council are necessary for the minimization of negative influence of the economic crisis on business entities.

ХІІ. The Anti-Crisis Program of Joint Actions of the Government and Businesses has to become an integral part of the Action Plan of the Cabinet of Ministers of Ukraine and the Coalition Agreement of the Verkhovna Rada of Ukraine.

The Anti-Crisis Council of Non-Governmental Organizations

 

No.

Organization

Name and Position of Head

1.

The Ukrainian League of Industrialists and Entrepreneurs

Kinakh Anatoliy Kyrylovych, President

2.

The Ukrainian Chamber of Commerce and Industry

Chyzhykov Hennadiy Dmytrovych, President

3.

The Entrepreneurs' Council under the Cabinet of Ministers of Ukraine

Kozachenko Leonid Petrovych, Head

4.

The Union of Poultry Farmers of Ukraine

Bakumenko Oleksandr Borysovych, Board Chairman

5.

The Ukrkondprom Association

Baldyniuk Oleksandr Vasyliovych, President

6.

The Union of Entrepreneurs of Small, Medium-Sized and Privatized Enterprises

Bykovets Viacheslav Mykhailovych, acting President

7.

The Ukrainian Association of Ferrous Metallurgy Enterprises

Bilokurov Dmytro Eduardovych, Director General

8.

The National Association of Dairy of Ukraine (Ukrmolprom)

Bondarenko Vasyl Markovych, Board Chairman

9.

Kyiv Department of the International Association of Veterans of the Alpha Counter-Terrorism Unit

Novak Anatoliy Mykolayovych, Head

10.

The Association of Ukraine-EU Business Cooperation Assistance

Kohut Yuriy Ivanovych, Board Chairman

11.

The Association of Ports of Ukraine (Ukrport)

Kruk Yuriy Borysovych

12.

The Ukrelectrocable Association

Pushkar Anatoliy Petrovych, President

13.

The Academy of Financial Management

Yefymenko Tetiana Ivanivna, President

14.

The Ukrainian Academy of Energy

Kovalchuk Yuriy Heorhiyovych, President

15.

Pulse Magazine

Vasylyshyn Roman Nykanorovych, Editor-in-Chief, Candidate of Economic Sciences

16.

The Union of Scientific and Engineering Associations of Ukraine

Kiriukhyn Mykola Mykhailovych, President

17.

The All-Ukrainian Council of Popular Control "The Committee of Popular Control" non-governmental organization

Yavorsky Volodymyr Mykolayovych, Head

18.

The Ukrainian Institute of Research of Extremism

Zarubinsky Oleh Oleksandrovych, Director

 

19.

Maidan Open International University of Reform

Liubarevych Anatoliy Yuriyovych, Head of the project entitled "Single State Monitoring System"

20.

The Association of Farmers and Agriculture Enterprises of Ukraine

Kohan Serhiy Eduardovych, President

21.

The Ukrshkirprom Association

Borodynia Oleksandr Hryhorovych, President

22.

The Ukrhlibprom Bakery Business Association

Vasylchenko Oleksandr Mykolayovych, Board Chairman

23.

The KYIV-MAF Association

Hanul Mykola Valentynovych, Board Chairman

24.

The Ukrainian Bakers' Association

Koshelev Kostiantyn Vasyliovych, President

25.

The Bioenergy Association of Ukraine

Heletukha Heorhiy Heorhiyovych, Board Chairman

26.

The Center for Anti-Crisis Studies

Zhalilo Yaroslav Anatoliyovych, President

27.

The Ukrainian Quality Association

Kalyta Petro Yakovych, President

28.

The Ukrainian Chemists Union

Holubov Oleksiy Hryhorovych, President

29.

The Telecommunications Chamber of Ukraine Association

Hritsak Kostiantyn Ivanovych, Director

30.

The Ukrainian Association of Secondary Metals

Hureyev Vasyl Mykolayovych, President

31.

The European Business Association

Derevyanko Anna Oleksandrivna, Executive Director

32.

The Ukrainian Association of Furniture Manufacturers

Zavalniuk Andriy Petrovych, President

33.

The Kyiv City Association of Industry, Construction, Transport and Communications

Mayko Vitaliy Ivanovych, President

34.

The Kyiv Chamber of Commerce and Industry

Zasulsky Mykola Vasyliovych, President

35.

The Ukrainian Realtors Association

Zlyden Serhiy Anatoliyovych, President

36.

The Ukrlehprom Association

Izovit Valentyna Arkadiyivna, President

37.

The Ukroilprom Association

Kapshuk Stepan Pavlovych, Director General

38.

The Ukrainian Union of Dairy Enterprises

Karpenko Lidiya Oleksiyivna, President

39.

The Ukrainian Producers Association 'Ice Cream and Frozen Products'

Bartkovsky Ihor Illich

40.

The Ukrainian Grain Association

Klymenko Volodymyr Heorhiyovych, President

41.

The Association on Energy Efficiency and Energy Saving

Kozachuk Oleh Ivanovych, President

42.

The Ukrainian Wind Energy Association

Konechenkov Andriy Yevhenovych, Board Chairman

43.

The Ukrpivo Association

Korenkova Halyna Mykolayivna, Director General

44.

The Independent Association of the Banks of Ukraine

Korobkova Olena Mykolayivna, Executive Director

45.

The Association of International Automobile Carriers of Ukraine

Kostiuchenko Leonid Mykhailovych, President

46.

The Ukrsudprom Association of Shipbuilders of Ukraine

Lysytsky Viktor Ivanovych, President

47.

The Ukrainian Agribusiness Club

Alex Lissitsa, President

48.

The Ukrcement Association

Miguel Machado, Head

 

49.

The Association of Kyiv Private Schools

Movchun Olena Mykolayivna, Head

50.

The Ukrkonservmoloko National Association

Nahaytseva Tamara Mykhailivna, Director General

51.

The Accounting Chamber of Ukraine

Nesterenko Ivan Ivanovych, Head

52.

The Ukrainian Credit-Banking Union

Olifer Halyna Ivanivna, Director General

53.

The Ukrvodka Association

Ostapiuk Volodymyr Petrovych, Director

54.

The Ukrainian Telecoms Operators Association TELAS

Osherov Leonid Mykhailovych, Head

55.

The Ukrainian Internet Association

Popova Tetiana Volodymyrivna, Board Chairman

56.

The Association of International Freight Forwarders of Ukraine

Prykhodko Yuriy Nykanorovych, Director General

57.

The Ukrelectrocable Association

Pushkar Anatoliy Petrovych, President

58.

The Ukrainian Motor Vehicle Manufacturers Association UkrAutoprom

Reznik Mykhailo Borysovych, President

59.

The Mebliderevprom Association

Sahal Serhiy Zakharovych, President

60.

Association "League of machine builders and employers of Ukraine" (Ukrmashbud)

Sachenko Volodymyr Illich, Board Chairman

61.

The Ukrainian Association of Special Technical Equipment (Ukrspetstekhprom)

Tandura Serhiy Volodymyrovych, President

62.

The League of Insurance Organizations of Ukraine

Filoniuk Oleksandr Feodosiyovych, Board Chairman

63.

The Seed Association of Ukraine

Khadzhymatov Valeriy Atabekovych, Executive Director

64.

The Union of Tenants and Entrepreneurs of Ukraine

Khmiliovsky Viktor Mechyslavovych, President

65.

Ukraine's Association of Tobacco Manufacturers (UkrTobacco)

Khomenko Valentyna Oleksiyivna, Director General

66.

The Association of Energy Auditors

Tsybulko Andriy Vasyliovych, Head

67.

The Association of Greenhouses of Ukraine

Chaika Oleksiy Petrovych, Director

68.

The Union of Juice Producers of Ukraine

Cherepkov Serhiy Tymofiyovych, President

69.

The Ukrainian League of Oil Producers

Shpak Oleksandr Hryhorovych, President

70.

The Ukrsugar Association

Yarchuk Mykola Mykolayovych, Board Chairman

71.

Pobuzke Ferronickel Plant

Bespalov Oleh Leonidovych, Director General

72.

Knauf Gypsum Kyiv LLC

Bychkov Oleksandr Mykolayovych, Director General

73.

JSC Motor Sich

Bohuslayev Viacheslav Oleksandrovych, Board Chairman

74.

NIBULON Agricultural Company

Vadatursky Oleksiy Opanasovych, Director General

75.

Zorya-Mashproekt State Enterprise

Kartoshkin Kostiantyn Eduardovych, Director General

76.

Inshi Merezhi LLC

Kashevarov Leonid Oleksandrovych, Director

77.

Antonov State Company

Kiva Dmytro Semenovych, President

78.

UkrAVTO Corporation

Kozis Oleksandr Mykolayovych, Board Chairman

79.

National Nuclear Energy Generating Company Energoatom

Nedashkovsky Yuriy Oleksandrovych, President

80.

410 Civil Aviation Plant

Podreza Serhiy Mykhailovych, Director General

81.

PJSC MTS Ukraine

Prozhyvalsky Oleh Petrovych, Director

82.

European University

Tymoshenko Ivan Ivanovych, Rector

83.

Amway Ukraine

Tomasz Muras, Director General

84.

Kriukov Car Building Works

Shabala Anatoliy Dmytrovych, Board Chairman

5 reasons to join ULIE

  • ULIE members can take part in improvement of business regulatory and legal framework, as well as prevent the enactment of anti entrepreneurial standards and rules.
  • ULIE will help you to build relationships with banks, institutes, consulting companies for the development of your own business and to find the new perspective line of activity.
  • ULIE members are authorized to attend international business forums organized during visits of the President and the Prime Minister of Ukraine and participate in the activity of bilateral intergovernmental commissions.

  • ULIE has a corporate security, which helps to protect its members in case of controversies with partners, bureaucratic pressure and lawlessness.
  • ULIE gives you an opportunity to feel the atmosphere of responsible business, to realize the need of your company to make a positive social and environmental influence.