EasyBusiness - Deregulation Strategy of Ukrainian Economy

Kyiv, 22/08/2014
Deregulation
Strategy of Ukrainian
Economy

2
Contents Page
А. Main points 3
B. Methodology of deregulation strategy development 6
C. Economy-wide deregulation initiatives 12
D. Specification of deregulation initiatives by industries 22
D.1. Food 24
D.2. Agriculture 34
D.3. Construction 43
D.4. Electricity 54
D.5. Oil & Gas 62
D.6. IT 71
E. Specification of deregulation initiatives by state inspections 81

4
~100 organizatіons interviewed and ~800 “pain points” for
business identified while developing deregulation strategy
Source: NGO 'EasyBusiness'
~70
TOTAL
~30
Economy-
wide
Agriculture Construction
~800
ITFood Oil & Gas
~40
~400
Electricity
~90
~70
~100
А MAIN POINTS
KEY ORGANIZATIONS INVOLVED

5
Total economic effect from deregulation strategy implementation
is estimated at UAH ~300 bn
BASIC INDUSTRY AND REGULATORY AREAS INDICATORS
А MAIN POINTS
11
6
30
11
1610
14
24
21
8
12
6,5
91 3
6,0
5 20
8,0
7,0
7,5
15
5,5
2,5
2 22
0,5
188
1,0
2,0
1176
3,5
3,0
4
1,5
211613
5,0
4,0
4,5
19 25242317141210
REDUCTIONINSTATEEXPENDITURES,UAHBN
CORRUPTION REDUCTION, UAH BN
Control system
Permission and licensing system
Other issues
ІТ
8 Tax system
Customs
Food
Technical regulation
Oil & Gas
ConstructionAgriculture
Electricity
6 Economic effect from industrial initiatives implementation, [UAH bn] 8 Economic effect from economy-wide initiatives (not related to industries analyzed) implementation, [UAH bn]

6
B. Methodology of
deregulation strategy
development

7
In order to formulate deregulation strategy a comprehensive
methodology was developed
B
STAGES OF THE STRATEGY DEVELOPMENT
> Preparation of the list of
experts and other
interested parties
> Analysis of previous
experience
> Analysis of barriers in the
process of ideas
preparation
> Preparation of
preliminary hypotheses
> Conducting expert
interviews with:
 Expert groups
 Business associations
 Industrial associations
> Conducting enterprise
surveys in the regions
> Dialogue with other
“stakeholders"
> Preparation of principal
hypotheses
> Analysis of international
experience
> Formulation of primary
deregulations goals
> Grouping the hypotheses
into matrix
> Carrying out hypotheses
evaluation:
 Potential effect
 Easiness / difficulty
> Consulting experts,
associations, deputies,
officials, and other
“stakeholders"
> Preparation of
document:
 Hypotheses
prioritization
 Actions planning
 Evaluation of
resources needed
> Confirmation of
“stakeholders’ “ consent
> Development of
methodology for control
implementation
> Media support
> Understanding of
previous experience
> List of preliminary
hypotheses
> Set of «matrices» with
structured hypotheses
> Grouped and prioritized
list of hypotheses
> Final document on
EXPERT
INTERVIEWS
HYPOTHESES
FORMULATION
HYPOTHESES
EVALUATION
PRIORITIZATION
AND STRATEGY
FORMULATION
DATA
COLLECTION
STAGEAMOUNTOFWORK
RESULTS
> Results of business
survey
> Understanding of
deregulation problems
METHODOLOGY OF DEREGULATION STRATEGY DEVELOPMENT

8
Regulatory constraints were analysed within regulatory spheres
and by industries
APPROACHES TO DEREGULATION INITIATIVES ANALYSIS
ECONOMY-WIDE APPROACH INDUSTRIAL APPROACH
Regulatory constraints that influence all aspects of doing
business
METHODOLOGY OF DEREGULATION STRATEGY DEVELOPMENTB
1
2
4
5
6
3
GENERAL ISSUES
PERMISSION AND LISENSING SYSTEM
TAX SYSTEM
CUSTOMS
TECHNICAL REGULATION
CONTROL SYSTEM (INSPECTIONS)
1
2
4
5
6
3
FOOD
AGRICULTURE
CONSTRUCTION
ELECTRICITY
OIL&GAS
IT
Regulatory constraints that influence particular industries

9Source: NGO 'EasyBusiness', Ukrstat, OECD, IT Ukraine, Derzhzovnishinform
APPROACH TO KEY INDUSTRIES SELECTION
INDUSTRY SHARE OF
GDP [2012]
INDUSTRY DYNAMICS,
CAGR [2008-2012]
NUMBER OF PEOPLE
EMPLOYED, thsd persons
[2012]
EXPORT,
CAGR [2008-2012]
CROP FARMING
CONSTRUCTION
ІТ
FINANCIAL SERVICES
FOOD
STOCKBREEDING
ELECTRICITY
OIL&GAS
AUTOCONSTRUCTION
METALLURGY
COAL INDUSTRY
MACHINERY
ENERGY MACHINERY
RANKING
CHEMICALS INSUDTRY
AGRICULTURE
2,1%
2,3%
4,7%
0,9%
3,2%
3,3%
7,7%
2,2%
1,0%
1,4%
3,1%
1,4%
5,0%
0,7%
4,0%
1,3%
-27,6%
9,8%
2,9%
3,3%
-0,1%
0,8%
12,4%
-39,7%
10,9%
15,8%
-1,4%
1,1%
148
102
244
274
322
194
277
235
198
498
322
294
282
374
20,1%
18,1%
-5,2%
28,4%
8,8%
11,3%
4,7%
8,0%
15,2%
10,1%
17,9%
41,2%
17,4%
6,9%
Industries of first priority according to the analysis: food,
agriculture, construction, electricity, oil & gas, ІТ

10
ACCUMULATED DEREGULATION INITIATIVES BY INDUSTRY
Based on the analysis conducted ~800 deregulation initiatives
were formulated and prioritized
EXAMPLES OF BURNING ISSUES
FOOD
AGRICULTURE
1. Elimination of corruption flows of
SOE «Ecocomresursy» in order to
reduce business administrative
expenses
2. Reforming food safety system
1. Liquidation of the State
Agricultural Inspection
2. Forming State Register of Real
Estate Rights in part of derived
rights to agricultural lands
IT
1. Permission for company and
banking accounts registration
abroad
2. Simplifying the procedure of
getting permit for foreigners
employment
ITOil&GasConstruction
~70
~30
Economy-
wide
initiatives
~100
~800
ВСЬОГО
~400
Agriculture
~90
~70
ElectricityFood
~40
ECON. EF.,
[UAH mn]
CORRUPTION,
[UAH mn]
~100
~250 ~600
~300
~1 000
~300 ~250
~300
~500
~10 ~50
~200

11
Prioritization is based on two criteria: economic effect and ease
of implementation
APPOACH TO INITIATIVES PRIORITIZATION
1) Criterion «Ease of implementation» considers both technical (passing laws/acts) and nontechnical (lobby, social resistance) aspects of implementation
2) Criterion «Effect from implementation» provides expert evaluation of economic effect on industry and economy
EASEOFIMPLEMENTATION1)
EFFECT FROM IMPLEMENTATION 2)
І-st priorityІІ-nd priority
ІІІ-rd priority
small large
difficult
easy
ІV-th priority
ILLUSTRATIVELY
1 Selling of 3G licenses
2 Liquidation of the State
3 Cancelling the
moratorium on the sale
of agricultural land
4 Introduction of liability for
regulatory bodies in the area of
consumer rights protection during
inspections
5 Cancelling of license on veterinary business
B METHODOLOGY OF DEREGULATION STRATEGY DEVELOPMENT

12
С. Economy-wide
deregulation initiatives

13
TOTAL
Еffect of economy-wide initiatives accounts for ~ UAH 86 bn,
corruption reduction ~UAH 64 bn, expenditures ~ UAH 24 bn
ECONOMY-WIDE DEREGULATION INITIATIVES SEGMENTATION
0. OTHER ISSUES 1. PERMISSION
AND LICENSING
SYSTEM
2. TAX SYSTEM 3. CUSTOMS 4. TECHNICAL
REGULATION
6. CONTROL
SYSTEM
14
80
8 13
277
11
~14
~8~8~12~24~21
~86
C ECONOMY-WIDE INITIATIVES
~6~9 ~6
~10
~64
~18~15
1) Economic effect is estimated for the period till the year 2020
~2~2~3~7~6
~24
~4
EASING OF
DOING
BUSINESS IN
UKRAINE
(1) General
business
climate
improvement
(1) Cancelling of
~100 licenses
(2) Cutting the
number of
permits
(1) Cutting the
number of taxes
to 9
(2) Simplifying
tax adm-tion
(1) «Single
window»creation
(2) Simplifying
customs
procedures
(1) Technical
regulation
harmonization
with EU
(1) Cutting the
number of
contr. bodies to
32, contr. fun-
tions by 40%
62
387
37335410794
NUMBER OF
PRIMARY
INITIATIVES ON
THE WEBSITE,
[UNITS]
ECONOMIC
EFFECT1), [UAH
BN]
REDUCTION IN
STATE
EXPENDITURES,
[UAH BN/YEAR]
CORRUPTION,
[UAH BN/ YEAR]
MAIN
POINTS
NUMBER OF
GENERAL
INITIATIVES,
[UNITS]

14
Based on the analysis of economy-wide initiatives, 81
deregulation initiatives of first priority were identified
ECONOMY-WIDE INITIATIVES PRIORITIZATION
EASEOFIMPLEMENTATION
EFFECT FROM IMPLEMENTATION
ІІІ-rd priority
small large
difficult
easy
ІV-th priority
Number of initiatives,
[units]
Corruption,
[UAH bn / year]
Economic impact,
[UAH bn]
Reduction in state
expenditures, [UAH bn]
~29
~40
~11
176
~10
~4
~14
61
[units]
~13
~17
~5
81
~16
~11
~4
69
Corruption,
[UAH bn / year]
Economic impact,
[UAH bn]
Reduction in state
[units]
Corruption,
[UAH bn / year]
Economic impact,
[UAH bn]
Reduction in state
[units]
Corruption,
[UAH bn / year]
Economic impact,
[UAH bn]
Reduction in state

15
Economy-wide initiatives of first priority within «Other issues»
regulatory area
1
2
3
4
5
Reduce the procedure of business activity cessation of individual entrepreneurs by application principle
Accelerate the adoption of a separate Law on Currency Regulation and Currency Control
Establish a «single investment window»
Improve the ownership rights registration procedure
TOP-5 ECONOMY-WIDE DEREGULATION INITIATIVES WITHIN REGULATORY AREA
Cancel the requirements of mandatory provision of paper extracts from the Unified State Register of legal entities and individual
entrepreneurs

16
Economy-wide initiatives of first priority within «Permission and
licensing system» regulatory area
1
2
3
4
5
Cancel alcohol export license
Develop draft laws and other legal acts on transfer permits issuing authority to local offices of central executive bodies and local
administrations
Cut the number of economic activities subject to licensing by more than 50 percent
Switch to electronic way of submitting and getting permits and licenses
Reduce the number of documents the entity must provide in order to get a permit

17
Economy-wide initiatives of first priority within «Tax system»
regulatory area
1
2
3
4
5 Develop and adopt legal acts on simplifying tax reporting forms
Introduce only annual reporting for small and medium enterprises (except VAT reporting in case of tax credit refund need)
Eliminate unreasonable grounds for VAT refund refusal, particularly, recognition the transactions as void; ensure 100% VAT refund
for entities
Develop a procedure of electronic financial statements submission, in accordance with the international standards
Improve the transfer pricing system

18
Economy-wide initiatives of first priority within «Customs»
regulatory area
1
2
3
4
5
Eliminate plans of tax mobilization for customs posts and customs clearance centres
Add types of customs declarations ІМ 74 «Customs warehouse» ІМ 51 «Processing on the customs territory of Ukraine» to the list
of customs declaration contained in paragraph 2 article 3.3. of NBU Instruction №136 from March 24, 1999
Improve customs valuation procedures in accordance with the WTO and EU recommendations
Approve the legal act on the application of automated analysis and risk management during the customs control and customs
clearance of goods using the cargo customs declaration
Transfer authority to provide certificates of EUR1 origin to the State Customs Service of Ukraine

19
Economy-wide initiatives of first priority within «Technical
regulation» regulatory area
Generate a full-text electronic database of national standards
Ensure adoption of technical regulations identical to the European ones
Ensure adoption of laws and legal acts, defined by the new Law of Ukraine on Metrology and Metrological Activities
Differentiate requirements for labeling of food and non-food products
Approve the Technical Regulation Development Strategy of Ukraine for the period till year 2018
1
2
3
4
5

20
Economy-wide initiatives of first priority within «Control system
(inspections)» regulatory area
Establish the norm on limiting the number of days in a year for regulatory authorities verification measures
Prohibit checks for compliance with legal acts conducted by regulatory bodies if there is no free access for the legal acts; introduce
liability for violation of such a prohibition
Cancel mandatory contracting on permanent service of the state emergency services
Cancel the need for mandatory trainings on actions in emergency situations for managers
1
2
3
4

21
D. Specification of
by industries

22
Economic effect by industries is UAH ~85 bn, сorruption and
state expenditures reduction by UAH ~60 bn and UAH ~16 bn
Reduction of
corruption in
production and
sales
Raise of Ukraine
up in Doing
Business and
reduction of
corruption level
Market
liberalization and
raise of Ukraine
up in Doing
Business rating
Harmonization of
production
processes with
EU standards
Increase of own
share in oil & gas
production, and
decrease of
dependency on
Russian supplies
Integration of IT
industry into the
worldwide market
D SPECIFICATION OF DEREGULATION INITIATIVES BY INDUSTRIES
KEY POINTS
INDICATOR &
INDUSTRY
FOOD AGRICULTURE CONSTRUCTION ELECTRICITY OIL & GAS IT
1,4%3,1% 0,9%3,2%
8,3%7,7%
3,3%0,8%10,9%
-0,1%
15,8%
-0,2%
28,4%58,6%
4,7%6,9%17,9% 18,1%
235198498322576374
3
111221
77
611111610
30
11344
2
1424
12
282415
INDUSTRY SHARE IN GDP
INDUSTRY DYNAMICS,
CAGR [2008-2012]
EXPORT,
CAGR [2008-2012]
NUMBER OF PEOPLE
EMPLOYED, [THSD PERS.]
CORRUPTION,
[UAH bn / YEAR]
ECONOMIC EFFECT1), [UAH
bn / YEAR]
REDUCTION OF STATE EXP-
RES, [UAH bn / YEAR]
IMPACT ON DOING
BUSINESS
# OF PRIMARY INITIATIVES
ON THE WEBSITE
1) Economic effect is calculated till 2020

24
The main focus of deregulation in food industry is
harmonization with EU standards and norms
KEY INDUSTRY INDICATORS ECONOMIC IMPACT
~30UAH bn
D.1 FOOD
IMPACT ON DOING BUSINESS CORRUPTION
~7 UAH bn
15,8%
7,7%
17,9%
374
Number of people
employed, [thsd. pers.]
Share of industry in
GDP
Industry dynamics,
CAGR [2008-2012]
Exports,
CAGR [2008-2012]

25
Deregulation initiatives of first priority in the food industry
according to the results of business survey (1/3)
Reforming food safety
system and adaptation
of Ukrainian legislation
to the requirements of
the EU one
Mechanism and
control: Adoption of
the Draft Law of
Ukraine on
Amendments to
Certain Legislative
Acts of Ukraine on
food products
№4179а (deputies-
initiators: O. Prodan, Т.
Kutovyi, N. Agafonova,
О. Belkova, S. Kaplin
and others)
For – business
Against – State
Sanitary and
Epidemiological
Service of Ukraine,
Ministry of Health and
their lobby in the
Parliament of Ukraine,
State Inspection for
Consumer Rights
Corruption: Current law
does not define clear
procedure for food
products safety
examination and the
maximum period of
examination
Econ. effect: Reduction
in state expenditures on
the maintenance of
food safety regulatory
bodies by 314 UAH mn
annually (annual exp.–
744 UAH mn)
Improving the safety
and quality of food
products. Reducing
the number of
regulatory bodies.
Creating the
conditions for
exporting food
products to the EU and
other developed
countries
(1) Improvement of the
safety and quality of
food products
(2) Consumers will pay
less for the state
control
(3) Reduction in
business expenditures
related to the state
control system
(4) Reduction in state
expenditures on the
control system
Kateryna Onul, IFC
Yana Dobidovska, expert
Genadii Kuznetsov, League
of food producers
Mykhailo Sokolov, Kesarev
Consulting
Mariia Baranovych, Arzinger
Oleksandr Baldeniuk,
Ukrkondprom
Inna Buriak, EBA
Cancellation of the
CMU Resolution №915
from July 26, 2001 and
joint decree
№789/414/709 from
July 30, 2009, and
adoption of the Law of
Ukraine №4266а on
Packaging and
Packaging Waste
Mechanism and
control: (1)
Cancellation of the
CMU Resolution №915
from July 26, 2001
(2) Cancellation of the
joint decree
№789/414/709 from
July 30, 2009
(3) Adoption of the
Law of Ukraine
№4266а on Packaging
and Packaging Waste
For – business
Against – SOE
«Ecocomresursy»,
Ministry of Ecology
Corruption: Opaque
money usage by SOE
«Ecocomresursy»,
corruption flows ~250
UAH mn/year
Econ. effect: (1)
Reduction in
administr. costs and
costs on solving ecol.
problems (saving 10+
UAH mn);
(2) 600 UAH mn inv. in
infr. during first year
Elimination of the
monopoly of SOE
«Ecocomresursy»,
reduction in business
administrative
expenses and creation
of the system of
packaging waste
recycling in
accordance with EU
practice
(1) Reduced
environmental
pollution
(2) Consumer costs
will be reduced, as
producer expenses on
environmental
protection measures
are included in
production costs
Volodymyr Slabyi,
UkrPEK
Initiative is supported by the public association «Reanimatsiynyi paket reform» Initiative is supported by the Administration of the President
D.1 FOOD
INITIATIVE MECHANISM AND
CONTROL OF
IMPLEMENTATION
«FOR» AND
«AGAINST»
CORRUPTION AND
ECONOMIC EFFECT
INITIATIVE
EXPLANATION
MEDIA MESSAGE EXPERTS

26
Improving legislation
on identification and
registration of animals
Mechanism and
control: Adoption of
the Draft Law of
Ukraine on
Amendments to
Certain Legislative
Acts of Ukraine on
Identification and
Registration of
Animals № 4986-1
from June 16,2014
(deputies-initiators: I.
Gorina, К. Liapina, О.
Myrnyi, К. Vaschuk)
For – business, State
Sanitary and
Epidemiological
Service of Ukraine,
State Veterinary and
Phytosanitary Service,
Agency of Animal
Identification and
Registration
Against – individuals-
owners of farm
animals
Corruption: There are
some gaps in the
legislation that create
conditions for public
officials getting
benefits from
corruption by means
of threatening to delay
the registration of
animals
Econ. effect:
Reduction in business
expenditures on
getting permits that
are not applicable in
the EU and other
developed countries
Improving legislation
on identification and
registration of animals
by adopting the Draft
Law of Ukraine on
Amendments to
Certain Legislative
Acts of Ukraine on
identification and
Registration of
Animals № 4986-1
from June 16,2014
Yana Dobidovska,
expert
Mykhailo Sokolov,
Kesarev Consulting
Mariia Baranovych,
Arzinger
Genadii Kuznetsov,
League of food
producers
Iryna Syrotenko, АСС
Volodymyr Lapa–
Ukrainian Agribusiness
Club
Denys Marchuk,
Ukrainian Agricultural
Council
Liuba Akulenko,
Reanimatsiynyi paket
reform
and others
(1) Improvement of the
safety and quality of
food products
(2) Consumers will pay
less for the state
control
(3) Reduction in
business expenditures
related to the state
control system
(4) Reduction in state
expenditures on the
control system
D.1 FOOD
CONTROL OF
IMPLEMENTATION
«FOR» AND
«AGAINST»
CORRUPTION AND
ECONOMIC EFFECT
INITIATIVE
EXPLANATION

27
Elimination of the
state regulation of
food products prices
Mechanism and
control: (1)
Cancellation of the
CMU Resolution №
1222 from October 17,
2007;
(2) Amending the CMU
Resolution №1548
from December
25,1996
For - business
Against - State
Inspection on Price
Control
Corruption: The CMU
Resolutions №1222
and №1548 contain
requirements for
operators of food
products that are
almost impossible to
satisfy
Econ. effect: Increased
production and sales
due to eliminating
distortions of the
competition
mechanism
Cancellation of the
mechanism of state
regulation of trade
margins and
profitability
Increased supply of
goods on the market,
which would benefit
consumers
Genadii Kuznetsov,
League of food
producers
Amending the CMU
Resolution №767
Abolition of licensing
procedures for
operators of food
products that are not
applicable in the EU
Mechanism: (1)
Amending the CMU
Resolution №767;
(2) Adoption of the
Draft Law of Ukraine
№4179а
Control: All procedures
are simplified and their
number is minimized
For - business
Against– research
institutes, Ministry of
Health of Ukraine,
State Sanitary and
Epidemiological
Service of Ukraine
Corruption: Ambiguity
of procedures creates
corruption risks
Econ. effect:
expenditures on
are not applied in the
EU and other
developed countries
expenditures on
are not applied in the
EU and other
developed countries
Genadii Kuznetsov,
League of food
producers
D.1 FOOD
CONTROL OF
IMPLEMENTATION
«FOR» AND
«AGAINST»
CORRUPTION AND
ECONOMIC EFFECT
INITIATIVE
EXPLANATION

28
Analysis of deregulation initiatives within food industry value
chain
MATRIX OF INITIATIVES BY VALUE CHAIN
AND LICENSING
SYSTEM
REGULATION
6. CONTROL
SYSTEM
TRANSPORT AND
LOGISTICS
Internal logistics
External logistics
Storage
PROCESSING AND
PRODUCTION
Processing and of
producing food products
Quality control
Ароматизатори та
харчові добавки
Internal sales
Exports
MARKETING AND
SALES
INNER PRODUCTS
Other issues
Inner products
10
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
20
3
1
1
2
1
17
n.a.
n.a.
n.a.
n.a.
1
1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
1
1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3
2
2
n.a.
n.a.
n.a.
23
n.a.
n.a.
n.a.
n.a.
4
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
15
n.a.
n.a.
n.a.
108INITIATIVES
Imports
OTHER
D.1 FOOD

29
For the food industry, 16 deregulation initiatives of first priority
were identified
FOOD INITIATIVES PRIORITIZATION
ІІІ-rd priority
small large
difficult
easy
ІV-th priority
~0,6
~3,5
~1,6
38
~0,3
~1,6
~0,7
17
~1,5
~0,7
~0,3
16
~0,6
~3,4
~1,5
37
D.1 FOOD
GDP share: 7,7%
[units]
Corruption,
[UAH bn / year]
Industry growth,
[UAH bn]
Reduction in state
[units]
Corruption,
[UAH bn / year]
Industry growth,
[UAH bn]
Reduction in state
[units]
Corruption,
[UAH bn / year]
Industry growth,
[UAH bn]
Reduction in state
[units]
Corruption,
[UAH bn / year]
Industry growth,
[UAH bn]
Reduction in state

30
Based on the «Economic effect» and «Ease of implementation»
criteria initiatives of first priority were identified (1/3)
1
2
3
4
5
Oblige all laboratories performing tests for the purpose of state control to obtain accreditation according to the EN / ISO / IEC
17025 standard
Harmonize the procedure for monitoring of hazardous substances in animal products with the current EU legislation
Cancel the necessity of getting the state sanitary and epidemiological inspection conclusion for the HACCP system
Improve the procedure for imported products advanced control, which is currently carried out and duplicated by two services:
veterinary and sanitary
Cancel state registration of premixes and finished feeds
6 Eliminate the monopoly of SOE «Ecocomresursy» in order to reduce business administrative expenses, create the system of
packaging waste recycling in accordance with EU practice
D.1 FOOD
DEREGULATION INITIATIVE

31
7
8
9
10
11
Harmonize the procedure for customs clearance of animal products with the current EU legislation
Cancel a certificate for food raw materials and food products
Implement Commission Regulation (EU) 136/2004 from January 22, 2004, which establishes the procedure for veterinary checks
of goods imported from third countries at Community’s border crossing points
Cancel the certificate of conformity for food products
Harmonize the procedure for tracking the location of animals with the current EU legislation
D.1 FOOD

32
12
13
14
15
16
Reform the food safety system and adapt the Ukrainian legislation to the requirements of the EU one by
adopting the Draft Law of Ukraine on Amendments to Certain Legislative Acts of Ukraine on food products №4179а
Improve legislation on identification and registration of animals by adopting the Draft Law of Ukraine on Amendments to Certain
Legislative Acts of Ukraine on identification and Registration of Animals № 4986-1 from June 16,2014
Abolish licensing procedures for operators of food products that are not applicable in the EU by amending the CMU Resolution
№767
Eliminate state regulation of food products prices
Cancel sanitary and epidemiological inspection conclusion for investment projects and programs; products, intermediate products,
substances, materials and hazards, use, transfer or sale of which may cause harm to human health; documentation for developing
technology, equipment, tools, etc.
D.1 FOOD

34
Key focus of deregulation in agriculture is corruption
elimination as well as export promotion
~10UAH bn
~7UAH bn
-0,2%
8,3%
58,6%
576
D.2 AGRICULTURE
Number of people
GDP
Industry dynamics,
CAGR [2008-2012]
Exports,
CAGR [2008-2012]

35
Based off the business survey conducted, top deregulation
initiatives in agriculture were identified and analyzed
Source: IFC, UCAB, NGO 'EasyBusiness'
Liquidation of the
State Agricultural
Inspection;
transferring its
functions (2-3 of
approximately 11) to
other CEB’s
Adoption of the Draft
Law on the Liquidation
of the State
The text of agreement
is currently being
finalizing with market
participants
For – agricultural
associations,
international
organizations
Against – MinAgr,
small businesses,
individual associations
of producers related to
the Inspection
Corruption flows on
grain quality
certificates accounted
for about1 UAH bn
Liquidation will allow
to save 260 UAH mn of
state budget annually
Fixing the deregulation
process, the
impossibility of
restoring unnecessary
regulatory functions
and powers of control
Liquidation of the
authority performing
regulatory functions
Eliminating corruption
Reducing the
administrative burden
on state business
Serhiy Gluschenko, IFC
Volodymyr Lapa, UCAB
Denys Sobolev, АСС
Iryna Dushnik, EBA
At least - amending the
CMU Resolution and
the National Standards
of Ukraine
Ideally – adoption of
the Draft Law on
Amendments to the
Law on
regulation of urban
planning activities
producers, Ministry of
Justice of Ukraine,
international
organizations
Against – State
Architectural and
Building Inspection
Significantly reduces
construction costs for
each object
Lowers corrupt
relations in the country
Development of priority
(exports oriented)
sectors (agriculture)
Caring for village, jobs
in rural areas etc.
Development of related
industries
(construction,
transport)
Volodymyr Lapa UCAB,
Denys Maliuska, IFC
Serhiy Gluschenko, IFC
Classifying
construction of
elevators, livestock
farms, and other
agricultural
infrastructure as the
III-rd construction
category
Simplification and
acceleration of:
(1) Project
documentation
approval
(2) Getting permits
(3) Commissioning
Will attract
investments in the
sector
Forming State
Register of Real
Estate Rights in part
of derived rights to
agricultural lands
Adoption of the Draft
Law of Ukraine №3237
producers, Ministry of
Justice of Ukraine
Against – n.a.
Saving on informal
payments of 100-800
USD for the rental
agreement (4 ha)
Prevention of land
cultivation rejection
Acceleration of the
land rent rights
registration that would
allow to cultivate
agricultural land
legally
of the previous
government delays
Acceleration of the
land rent registration
for businesses and
individuals
Volodymyr Lapa, UCAB
Marian Zablotskyi, UAA
D.2 AGRICULTURE
CONTROL OF
IMPLEMENTATION
«FOR» AND
«AGAINST»
CORRUPTION AND
ECONOMIC EFFECT
INITIATIVE
EXPLANATION

36
Value chain in agriculture industry analyzed through a number of
deregulation initiatives at each step
AND LICENSING
SYSTEM
REGULATION
6. CONTROL
SYSTEM
TRANSPORT AND
LOGISTICS
Auto transportation
Vessel transportation
Railway transportation
PROCESSING /
STORAGE
Granaries
Mills
Forages
Internal sales
Exports
MARKETING AND
SALES
BASE PREPARATION
AND PRODUCTION
Other issues
R&D
Land
Seeds
Irrigation
Agricultural equipment
Breeding
5
1
5
5
3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
1
1
1
2
3
7
4
5
10
1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
1
1
2
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2
1
2
2
5
1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
Fertilizers and pesticides
1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
OTHER
73INITIATIVES
D.2 AGRICULTURE

37
After final prioritization, 24 deregulation initiatives of first
priority were identified in agriculture industry
AGRICULTURE INITIATIVES PRIORITIZATION
І-st proirityІІ-nd proirity
ІІІ-rd proirity
small large
difficult
easy
ІV-th proirity
Number
of initiatives, [units]
Corruption, [UAH bn]
Industry growth,
[UAH bn]
Reduction in state
~1,4
~3,4
~1,4
25
Number
Industry growth,
[UAH bn]
Reduction in state
expenditures, [UAH bn] ~0,3
~0,3
~0,7
5
Number
Industry growth,
[UAH bn]
Reduction in state
~1,4
~3,2
~1,4
24
Number
Industry growth,
[UAH bn]
Reduction in state
~2,6
~1,1
19
GDP share: 8,3%
D.2 AGRICULTURE

38
1
2
3
4
5
Allow to submit application for land rent registration electronically
Assist local communities in returning land to public ownership
Transfer the right of state-owned land disposal to local communities
Reduce the period of the phytosanitary certificate issuance to 2 hours
Review the National Standards of Ukraine for grain and industrial crops, which are based on the standards of the former Soviet
Union and are incompatible with international standards, and, as a result, lead to the increased logistics costs
6
D.2 AGRICULTURE
Establish soil quality control for the companies that rent land during the period not less than 10 years

39
7
8
9
10
11
Define the clear procedure for issuing certificates of plant protection products state registration and permits for importing plant
protection products for state tests
Classify construction of elevators, livestock farms, and other agricultural infrastructure as the III-rd construction category
Form the State Register of Real Estate Rights in part of derived rights to agricultural lands
Amend the Law on the Procedure of Actual (Afield) Allocation of Land Parcels to Owners of Land Shares (Pais) №899-IV from June
5, 2003, defining that the owner of the field can actually knock only the edge of the field/array (to keep its integrity)
Liquidate the State Agricultural Inspection; transfer its functions (2-3 of approximately11) to other CEB’s
(State Ecological Inspection, State Veterinary and Phytosanitary Service etc.)
12
D.2 AGRICULTURE
Harmonize the procedure for importing the seeds, entered in the register of the OECD, with the aim of its breeding in Ukraine and
subsequent exportation with the rules of the OECD

40
13
14
15
16
17
Increase the volume of seeds imported for research, field testing and state registration to more acceptable and reasonable level
Cancel the need for certification for imports of agricultural machinery from developed countries. Implement recognition of
certificates of EU member states, the OECD countries and others
Cancel the certificate account for agricultural machinery registration
Cancel import licensing of pesticides and agrochemicals
Eliminate crop rotation control
18
D.2 AGRICULTURE
Cancel licensing regime for trade of pesticides and agrochemicals, harmonizing the procedure of market placement of pesticides
and agrochemicals with Regulation 2009/128 (articles 5 and 6)

41
19
20
21
22
23
Eliminate the conflict within the Law of Ukraine on the Protection of Plant Varieties where "variety breeder” (breeder) is defined as
the individual exclusively, whereas the term "applicant“ refers to the person who has applied
Review the issue on payment for modifying grain registry documents, which should not depend on the number of warehouse
receipts issued (the number of operations with grain)
Eliminate inconsistencies of the Law related to the introduction of the Guarantee Fund for obligations under warehouse receipts
for grain with other laws and the Constitution of Ukraine
Transfer the power to register specialized machinery from the State Agricultural Inspection to the body that registers vehicles (at
this moment -special unit of the State Automobile Inspection)
Identify prohibited plant protection products transportation routes (all other routes should be allowed)
24
D.2 AGRICULTURE
Cancel mandatory getting of the quarantine certificate for grains and oilseeds (is not required for domestic transportation in the
EU) by reducing the list of regulated objects in the field of quarantine of plants under the CMU Resolution N 705 from May 12, 2007

43
Deregulation in Construction industry is aiming at corruption
elimination and leveling Ukraine up in Doing Business rating
~16UAH bn
~21UAH bn
10,9%
3,2%
6,9%
322
D.3 CONSTRUCTION
Decreasing the time and number of procedures on construction permits
obtaining, increase rating of Ukraine in Doing Business rating for over 20
positions to make it to TOP-20
Number of people
GDP
Industry dynamics,
CAGR [2008-2012]
Exports,
CAGR [2008-2012]

44
Deregulation initiatives in construction industry of first priority
based on the results of a business survey (1/3)
Simplification of
procedures and terms
of the land acquisition
Mechanism Adoption
of the Draft Law
№3238 from
September 12, 2013
with amendments
from the
Confederation of Con-
structors of Ukraine
Control (1) Reducing
the duration of land
allotment to 130 days;
(2) Reducing the
number of procedures
to 10; (3) Reducing the
mandatory period of
permit issuance to 10
days
For – business, public,
agricultural committee
in the VRU
Against – local
government, National
Academy of
Agricultural Sciences
Corruption: Appears at
the repeated stages of
land acquisition
approval and lack of
accountability of
officials for unjustified
refusals
Econ. effect: (1)10%
industry growth
annually (5 USD bn. *
10% = 500 mn);
(2) Eliminating
corruption flows,
accounted for the 5%
of construction budget
= 250 USD mn
(1) Reducing the
duration of land
allotment from 540 to
130 days by
eliminating duplicative
procedures and
reducing the number
of procedures from 30
to 10
(2) Reducing the
mandatory period of
permit issuance from
15 to 10 days.
Harmonization with
the EU legislation
(1) Corruption
elimination in
construction
(2) Housing prices
reduction by 5%
Lev Partshaladze, CCU
Taras Lylyk, CCU
Mariana Riabchun,
CCU
Oleksiy Feliv, GLN
Simplifying electricity
and gas networks
connection, improving
connections and
technical conditions
obtaining
Mechanism:
Elaborated regulatory
framework of CCU and
the World Bank, which
should be transformed
to laws
Control: Adoption of
the appropriate Draft
Law of Ukraine
For – business, public
Against -
National Electricity Re-
gulatory Commission,
oblenergo, oblgazy
Corruption: Appears in
the process of
electricity and gas
networks connection
Econ. effect:
flows (10 USD per
sq.m. = 100 USD mn
for residential real
estate, or 200-300 USD
mn for all kinds of real
estate)
(1) Simplifying the
procedure for
electricity and gas
networks connection,
which is currently
corrupted
(2) Increasing position
in Doing Business from
150 to 80
(1) Corruption
elimination in
construction
(2) Housing prices
reduction by 10 USD
per sq.m.
Taras Lylyk, CCU
Mariana Riabchun,
CCU
Oleksiy Feliv, GLN
D.3 CONSTRUCTION
CONTROL OF
IMPLEMENTATION
«FOR» AND
«AGAINST»
CORRUPTION AND
ECONOMIC EFFECT
INITIATIVE
EXPLANATION

45
Finalizing deregulation
initiatives for Ukraine's
entry in the top 20
ranking of Doing
Business
Mechanism: Finalize
and adopt the Draft
Law №2285а from
June 11, 2013
Control:
(1) Ukraine's entry in
the top 10 ranking of
Doing Business in
construction
(2) Ukraine's entry in
the top 20 ranking of
Doing Business overall
For – bisiness, public
Against - State
Architectural and
Building Inspection
Corruption: Results
from artificial
certificate issuance
postponement by the
SABI
Econ. effect:
flows (10 USD per
sq.m. = 100 USD mn
for resid. real estate, or
200-300 USD mn for
all kinds of real estate)
(1) Introduction of
declarative principle
for acquiring
construction rights
and building
commissioning
(2) Establish clear
grounds for permits
issuance refusal
Taras Lylyk, CCU
Mariana Riabchun,
CCU
(1) Corruption
elimination in
construction
(2) Housing prices
reduction by 10 USD
per sq.m.
Development and
approval of urban
planning
documentation
(zoning, detailed plans
of territories)
The transition from
manual construction
criteria setting to the
zoned urban
development plan with
clear definition of
criteria and building
rental costs
Mechanism: Writing
and adopting the Law
on Zoning
Control: Adoption of
the appropriate Draft
Law of Ukraine
For – land committee
in the VRU
Against - State
Architectural and
Building Inspection,
architectural bodies
Corruption: Appears at
the mayors of
settlements and bodies
that coordinate urban
planning
documentation
Econ. effect:
1)10% industry growth
annually (5 USD bn. *
10% = 500 mn);
(2) Eliminating
corruption flows,
accounted for the 5%
of construction budget
= 250 USD mn
(1) Corruption
elimination in
construction
(2) Housing prices
reduction by 5%
Mariana Riabchun, CCU
Oleksiy Feliv, GLN
D.3 CONSTRUCTION
CONTROL OF
IMPLEMENTATION
«FOR» AND
«AGAINST»
CORRUPTION AND
ECONOMIC EFFECT
INITIATIVE
EXPLANATION

46
Allow companies with
100% foreign
participation to
purchase non-
agricultural land
Mechanism: Amending
article 82 of the Land
Code of Ukraine
Control: Practical
realization of
permission for
purchase of non-
agricultural land for
companies with 100%
foreign participation
by amending article 82
of the Land Code of
Ukraine
For - business
Against – land
committee in the VRU
(believe that the
initiative deals with the
agricultural lands)
Corruption:
No corruption
Econ. effect: Growth in
construction and new
projects by 20% on
average
Increasing the number
of foreign investors
who can develop real
estate projects in
Ukraine
Oleksiy Feliv, GLN
Dmytro Senychenko,
Jones Lang LaSalle
Allow to transfer the
right to rent the land of
the state or municipal
property, if such a rent
entitles construction.
Allow to add the rental
right for the land plots
of state or municipal
property to the
company's charter,
mortgage
Mechanism and
control: Amending a
number of articles of
the Land Code of
Ukraine
For - business
Against - local
communities
(explanations of future
benefits for local
communities are
needed)
Corruption: Significant
corruption occurs at
mayors level during re-
registration of rental
agreements for new
potential investors
Econ. effect: Growth in
construction and new
projects by 20% on
average
The ability to revive
and build up large
amount of land that is
currently "dead"
because rental rights
can not be transferred
or pledged, while the
tenant can not
implement the project
himself
Creating opportunities
for the implementation
of the "frozen" projects
Oleksiy Feliv, GLN
Dmytro Senychenko,
Jones Lang LaSalle
(1) Access of foreign
investors to the market
(2) Creating clear and
understandable rules
of land acquisition for
companies registered
as legal entities in
Ukraine
D.3 CONSTRUCTION
CONTROL OF
IMPLEMENTATION
«FOR» AND
«AGAINST»
CORRUPTION AND
ECONOMIC EFFECT
INITIATIVE
EXPLANATION

47
All deregulation initiatives within construction were spread
through the industry value chain to identify problem zones
AND LICENSING
SYSTEM
REGULATION
6. CONTROL
SYSTEM
Building construction
Ennobling the territory
Internal assemblage works
CONDUCTING
ASSEMBLAGE AND
CONSTRUCTION
WORKS
Construction site
preparation
Groundwork
Earthworks
Utility connections
Commissioning
BUILDING
COMMISSIONING
GETTING
CONSTRUCTION
PERMITS
Other issues
Land allocation
Prepar. data for planning
Prepar. and approv. the
project
Complex project expertise
ACW permit
1
5
n.a.
22
n.a.
n.a.
11
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
10
6
1
3
3
7
1
6
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
88INITIATIVES
Preliminary preparations
OTHER
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
5
1
1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
2
3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
D.3 CONSTRUCTION

48
28 deregulation initiatives of first priority in construction were
identified
CONSTRUCTION INITIATIVES PRIORITIZATION
ІІІ-rd proirity
small large
difficult
easy
ІV-th proirity
Number
Impact on GDP, [UAH bn]
Reduction in state
~6,7
~1,7
~8,6
36
Number
Reduction in state
~1,7
~0,4
~2,1
9
Number
Reduction in state
~5,2
~6,7
~1,3
28
Number
Reduction in state
~3,6
~0,7
~2,8
15
GDP share: 3,2%
D.3 CONSTRUCTION

49
Initiatives of first priority based on the «Economic effect» and
«Ease of implementation» criteria (1/4)
1
2
3
4
5
Approve the right of building owner to use autonomous engineering systems regardless of whether the required engineering
support is available on the territory
Approve (by CMU) typical form of investment contract, which provides: detailed description of the investee characteristics,
responsibility of the constructor/customer for provision of information to investors, responsibility of the constructor/customer for
reporting to the investor, the responsibility of the constructor/customer for failure to fulfill contract terms
Create legislative mechanism for providing the association of investors of troubled property with the right for construction
completion without permits renewal
Simplify the mechanism of land for urban planning needs rent renewal and introduce an exclusive list of grounds for rent renewal
refusal
Introduce a system of "implied consent" for approvals, not related to the safety (protection of monuments)
6 Implement preliminary registration of property rights for apartments that will be built in the future in order to avoid double sales
7 Ensure transparency and accessibility of data planning documentation
D.3 CONSTRUCTION

50
8
9
10
11
12
Unify the principles and procedures for obtaining licenses in construction
Introduce a system of auctions for the allocation of land plots for construction instead of the current two-stage system (according
to the law, only the land plot with fully finished planning documentation should be exhibit at the auction)
Introduce a system of auctions organized by companies licensed to conduct land auctions
Accompany the Draft Law of Ukraine on reducing the period of land allocation for urban needs to 60 days in the Verkhovna Rada of
Ukraine
Regulate the procedure for setting the mailing address of the construction object
13 Reduce the number and timing of permits necessary to start assemblage and construction works
14 Provide individuals intending to build the land in their possession or use with technical conditions within 10 working days from the
date of application submission (no application registration)
D.3 CONSTRUCTION

51
15
16
17
18
19
Leave mandatory technical supervision of the urban planning construction object for state budget projects. For private investors -
at the request of the constructer
Approve the procedure for engineering networks connection for the completed construction s (except electricity and gas networks)
Set standardized price for network connection for each settlement
Compute the cost of network connection in a "transparent" way and link it to the cost of new networks and distribution points
construction
Set an exclusive list of grounds that provide the right to cancel declarations of start of construction works
20 Make information on the monopolies’ network connection points available
21 Set the mechanism for obtaining "repayable financial assistance" when the monopolist returns the constructor funds spent to build
out-site networks
D.3 CONSTRUCTION

52
22
23
24
25
26
Simplify the procedures and terms of the land acquisition
Allow to transfer the right to rent the land of the state or municipal property, if such a rent entitles construction. Allow to add the
rental right for the land plots of state or municipal property to the company's charter, mortgage
Simplify electricity and gas networks connection, improve connections and technical conditions obtaining
Develop and approve the urban planning documentation (zoning, detailed plans of territories)
Set a mechanism for transferring the balance of out-site networks to operating organizations
27 Introduce the declarative principle for acquiring construction rights and building commissioning
28 Allow companies with 100% foreign participation to purchase non-agricultural land
D.3 CONSTRUCTION

54
Ukraine’s raise in Doing Business rating as well as corruption
elimination - key deregulation priorities for electricity industry
~11UAH bn
~12UAH bn
0,8%
3,1%
28,4%
498
Decreasing the time on electricity connection
D.4 ELECTRICITY
Number of people
GDP
Industry dynamics,
CAGR [2008-2012]
Exports,
CAGR [2008-2012]

55
Electricity deregulation initiatives of first priority according to
the results of business survey (1/2)
Source: IFC, NGO 'EasyBusiness'
Accelerating the
process of simplified
procedure for
electricity networks
connection (second
degree 16-50 kV, third
degree 50-160 kV)
Amending the Law of
Ukraine №5021 on the
fee for natural
monopolies networks
connection, stating the
period of the standard
connection of larger
power
The Draft Law is ready
and the President may
give in it to Parliament
For – business,
planning to use
electrical energy in
large amounts (around
1-3 thsd. connections
annually)
Against – oblenergo,
gulatory Commission
(1) Corruption –
around 10 USD per
sq.m.due to non-
transparent
procedures for non-
standard connection
(2) Reduction in
housing pricing
(3) Foreign investment
through improvements
in Doing Business
ranking
Simplifying the
process of electricity
networks connection
for real estate
(including commercial
objects)
Corruption reduction
Improving Ukraine's
position in the Doing
Business ranking
Denys Maliuska, IFC
Anton Iaschenko, CCR
Іnna Buriak, EBA
Dina Narezhneva, ACC
Improving the
transparency of
energy-efficient
equipment imports
MinEk should amend
the CMU Resolution
№444 on the clear
criteria and
mechanism for
defining the energy
efficient equipment
For – producers
wishing to use energy-
efficient equipment
Against – company,
defined "individually"
(1) Elimination of
budget losses from
providing unjustified
benefits (first half of
2013 – approximately
1 UAH bn of benefits)
(2) Increased energy-
efficiency due to the
imports of energy
efficient equipment
Increasing the
transparency of the
imports of energy-
efficient equipment on
favorable terms. Non-
transparent procedure
of energy-efficient
equipment definition
Corruption reduction
Increasing energy
efficiency
Denys Maliuska, IFC
Іnna Buriak, EBA
CONTROL OF
IMPLEMENTATION
«FOR» AND
«AGAINST»
CORRUPTION AND
ECONOMIC EFFECT
INITIATIVE
EXPLANATION
D.4 ELECTRICITY

56
Electricity deregulation initiatives of first priority according to
the results of business survey (2/2)
Source: IFC, NGO 'EasyBusiness'
Creating free market
of renewable energy
equipment
(Reduction of the
local component to
25-30%)
Amending the Law of
Ukraine on Electricity
For – producers of the
green energy, EU,
equipment producers
Against – Ministry of
Energy,
gulatory Commission ,
Furlander
Windtechnology, Activ
Solar (Kliuev’s assets)
(1) Investments in
renewable energy will
account for around
300-500 EUR mn
(2) Increasing the
share of renewable
energy
(3) New jobs creation
at new electric power
plants
(4) Reducing gas
dependence by means
of cogeneration plants
(biomass, biogas)
Reducing the share of
mandatory Ukrainian
components in the
equipment used to
produce electricity
(1) Increase the share
of renewable energy
(2) New jobs creation
(3) Cancel the local
components for
cogeneration plants
Introduction of
stimulating tariffs
Oblenergo gets
economic incentives to
invest in equipment
modernization
gulatory Commission
should adopt the
resolution on
stimulating tariffs
introduction
For – all key market
players
Against – poor people
because of increased
tariffs at the early
stages
(1) Improving the
reliability of electricity
networks and reducing
power losses
(2) Tariff reduction in
the medium term
(3) No corruption
(1) Reducing the cost
of electricity in the
medium term
(2) Reduction of losses
due to the new and
more efficient
equipment
Denys Maliuska, IFC
Іnna Buriak, EBA
Denys Maliuska, IFC
Іnna Buriak, EBA
CONTROL OF
IMPLEMENTATION
«FOR» AND
«AGAINST»
CORRUPTION AND
ECONOMIC EFFECT
INITIATIVE
EXPLANATION
D.4 ELECTRICITY

57
Value chain of electricity industry was analyzed and deregulation
initiatives spread over it to identify pain zones
AND LICENSING
SYSTEM
REGULATION
6. CONTROL
SYSTEM
Materials delivery (fuel,
equipment, expertise)
Transfer
Electricity production
DISTRIBUTION
Sales of Ukrenergo
capacities
Distribution
Sales
SALES
OTHER
Other issues
2
1
n.a.
n.a.
n.a.
n.a.
22 1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
32INITIATIVES
GENERATION
TRANSFER
1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
1
1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
D.4 ELECTRICITY

58
For the electricity industry, 12 deregulation initiatives of first
priority were identified
ELECTRICITY INITIATIVES PRIORITIZATION
ІІІ-rd proirity
small large
difficult
easy
ІV-th proirity
Number
Industry growth,
[UAH bn ]
Reduction in state
~4,3
~4,9
13
Number
Industry growth,
[UAH bn]
Reduction in state
~0,4
~0,1
~0,3
1
Number
Industry growth,
[UAH bn]
Reduction in state
~4,0
~4,5
12
Number
Industry growth,
[UAH bn]
Reduction in state
~2,2
~2,0
~0,6
6
GDP share: 3,1%
D.4 ELECTRICITY

59
Initiatives of first priority according to the «Economic effect»
and «Ease of implementation» criteria (1/2)
1
2
3
4
5
Adopt the Draft Law on Amendments to Some Laws of Ukraine on the Promotion of Electricity Production from Alternative Energy
Sources №2946 from April 26, 2013
Develop and adopt the Cabinet of Ministers of Ukraine Resolution concerning the approving of the action plan for the transition
period (until full-scale implementation of the electricity market based on bilateral contracts and balancing market)
Adopt the Cabinet of Ministers of Ukraine Resolution concerning creation of the Coordinating Center to ensure implementation of
the new model of the electricity market in Ukraine
Enter economically justified energy tariffs (heat and electricity), produced by cogeneration plants running on biofuels
Create free market of renewable energy equipment (Reduction of the local component to 25-30%)
6 Encourage the imports of foreign equipment for biomass cogeneration at early stages (first 2-3 years)
D.4 ELECTRICITY

60
Initiatives of first priority according to the «Economic effect»
and «Ease of implementation» criteria (1/2)
7
8
9
10
11
Cancel mandatory procedure for National Electricity Regulatory Commission approval for contracts of electricity sale signed by
SOE "Energorynok" with the producers of electricity from alternative sources
Improve the transparency of energy-efficient equipment imports
Introduce the stimulating tariffs
Accelerate the process of simplified procedure for electricity networks connection (second degree 16-50 kV, third degree 50-160
kV)
Accelerate the spread of "standard“ connection mode for the third degree power of electrical installation
12 Approve the list of operations/actions that must be performed in the territory of Ukraine in order to eventually reach the total fixed
share of each individual element of the local component (%)
D.4 ELECTRICITY

62
Deregulation in Oil & Gas industry aims at accelerating
exploration and increasing local output of oil and gas
~11UAH bn
~11UAH bn
-0,1%
1,4%
4,7%
198
D.5 OIL & GAS
Number of people
GDP
Industry dynamics,
CAGR [2008-2012]
Exports,
CAGR [2008-2012]

63
Based on the business survey and expert interviews, top
deregulation initiatives in Oil & Gas were analyzed
Simplification of the
land provision for the
exploration and
construction of
networks
Amending the Land
Code of Ukraine
Against – State
Agency for Land
Resources
Getting 3 bn cubes of
gas during 3 years
Starting of drilling
operations within the
4-12 months period
after getting a permit
Increasing energy
independence
Roman Opimach, CCR
Dina Narizhneva, ACC
Inna Buriak, EBA
Updating and
codification of the
basic law on subsoil
use
Creating the document
«Subsoil Code of
Ukraine»
For - business Increase in gas
production
Adoption of the new
Subsoil Code
(1) Increasing energy
independence
(2) Guarantees for
investors rights
Roman Opimach, CCR
Inna Buriak, EBA
Excluding
requirements for
monitoring specific
conditions of subsoil
use
Amending the CMU
Resolution №605,
conducting auctions
for granting special
permits
Reducing barriers of
doing business,
reducing costs for
business
Reducing abuse,
eliminating
unnecessary
procedures
(1) Corruption
elimination
(2) Increasing energy
independence
Roman Opimach, CCR
Inna Buriak, EBA
Easing geological
information exporting
Amending Regulations
on the procedure for
geological information
the disposal
(1) Acceleration of
subsoil development
(2) Reducing the time
to get permit for data
exporting
Possibility of quick
data transmission
Attracting investment,
technology
Roman Opimach, CCR
Inna Buriak, EBA
Improving PSA
taxation
Amending the Tax Code
of Ukraine
Increased investment
in oil and gas sector,
increased budget
revenues from PSA
projects
Providing individual
taxation for several
investors within one
PSA
Increasing energy
independence
Roman Opimach, CCR
Inna Buriak, EBA
For - investors
Geological Service
Geological Service
Against – Ministry of
Ecology
D.5
CONTROL OF
IMPLEMENTATION
«FOR» AND
«AGAINST»
CORRUPTION AND
ECONOMIC EFFECT
INITIATIVE
EXPLANATION
OIL & GAS

64
Deregulation initiatives within a value chain of the Oil & Gas
industry
AND LICENSING
SYSTEM
REGULATION
6. CONTROL
SYSTEM
Production
Processing
PSA realization
Exploring
Marketing and sales
DOWNSTREAM
OTHER
Other issues
4
1
1
5
8
n.a.
1
4
n.a.
n.a.
n.a.
n.a.
39INITIATIVES
UPSTREAM
MIDSTREAM
1
n.a.
n.a.
n.a.
n.a.
n.a.
1
1
2
n.a.
n.a.
n.a.2
2
n.a.
n.a.
n.a.
n.a.
3
2
1
n.a.
n.a.
n.a.
D.5
OIL & GAS

65
For the Oil & Gas industry, the number of deregulation initiatives
of first priority stands at 24
OIL AND GAS INITIATIVES PRIORITIZATION
ІІІ-rd proirity
small large
difficult
easy
ІV-th proirity
Number
Corruption, [UAH bn ]
Industry growth,
[UAH bn]
Reduction in state
~1,4
~0,2
~1,5
5
Number
Industry growth,
[UAH bn]
Reduction in state
~0,5
~0,6
2
Number
Industry growth,
[UAH bn]
Reduction in state
~7,0
~0,8
~6,6
24
Number
Industry growth,
[UAH bn]
Reduction in state
~2,2
~0,3
~2,3
8
GDP share: 1,4%
D.5 OIL & GAS

66
Initiatives of first priority based off the «Economic effect» and
1
2
3
4
5
Amend the transitional provisions of the Tax Code of Ukraine, Customs Code of Ukraine and other laws of Ukraine according to
which the state must guarantee to domestic refineries immutability of legal conditions for petroleum industry enterprises for a
period of not less than 10 years
Introduce a simplified digital online access to "secondary geological information”
Solve the problem of entering the entities in the state register of producers of liquid biofuels and biogases, which actually does not
exist
Adopt the Draft Law of Ukraine №3145 on Recognition as Void the Law of Ukraine on Amendments to Some Laws of Ukraine
regarding the production and use of motor fuels containing bio-components"
Amend the Law of Ukraine on Natural Monopolies №1682-III from April 20, 2000 on the elimination of legal conflicts of the
existence and functioning of national regulators (particularly, the National Commission for the Regulation of Natural Monopolies)
6 Amend the transitional provisions of the Tax Code of Ukraine (№2755-VI from December 2, 2010), Customs Code of Ukraine
(№4495-VI from March 13, 2012) on the temporary setting of a zero VAT rate and exemption from import duty on machinery,
components etc. imported for the purpose of modernization /reconstruction of refineries
D.5
OIL & GAS

67
7
8
9
10
11
Disclose the geological information for strategic resources, particularly oil and gas
Cancel the geological data export permit as a means of over-regulation
Adopt amendments to the Land Code in order to introduce a simplified and safer land allotment for exploration and production of
carbohydrates
Amend the Tax Code of Ukraine and other legal acts in order to implement the mechanism of individual VAT accounting for several
investors within one PSA
Cancel the automatic recognition of bioenergy plants as high risk and fifth difficulty category objects
12 Exclude oil and gas wells, mine workings and industrial pipelines (including natural gas distribution networks) from the list of
objects that are considered as real estate and are subject to the state registration of rights for immovable property and their
encumbrances
D.5
OIL & GAS

68
13
14
15
16
17
Bring the regulations of the NBU in accordance with applicable law on production sharing agreement
Identify and enter mechanism to prevent disconnection, threats of disconnection in case of the balance absence in the Ministry of
Energy and Coal Industry Decree №920 from November 26, 2012
Prohibit signing and issuing the partial monthly balance: balance signing should take place in the final version, which is the basis
for the gas market operation
Develop market of biofuels in Ukraine: develop market infrastructure, reliable sources of supply of such fuel, industries that provide
necessary equipment
Improving PSA taxation (Providing individual taxation for several investors within one PSA)
18 Adopt appropriate amendments to the articles 167, 170 and 170-1 of the Code on Administrative Offences of Ukraine №8073-X
from December 7,1984, which would increase the penalty for the production, sales, non-compliance with the standards during
transportation, storage, usage of petroleum products, putting them into circulation without a certificate of packaging compliance
D.5
OIL & GAS

69
19
20
21
22
23
Update and codify of the basic law on subsoil use
Exclude the requirements for monitoring specific conditions of subsoil use
Adopt the Rules for Oil and Gas extraction
Adopt the new Law on Gas Market proposed by the Energy Community before January 1, 2016
Simplify the land provision for the exploration and construction of networks
24 Ease the geological information exporting
D.5
OIL & GAS

71
IT sector deregulation main goal is to integrate Ukrainian IT
business into worldwide market
~6UAH bn
~3UAH bn
3,3%
0,9%
18,1%
235
D.6 IT
Number of people
GDP
Industry dynamics,
CAGR [2008-2012]
Exports,
CAGR [2008-2012]

72
IT deregulation initiatives of first priority according to the
results of business survey (1/3)
Ensuring equal access
to license for 3G
connection obtaining
(1) Conversion of the
Ministry of Defence
radio frequency
(2) Technological
neutrality (agreement
between telecom on
frequencies
distribution)
For –operators, public
Against - Ukrtelekom,
National Commission
for the State
Regulation of
Communications and
Informatization
(1) Job creation
(2) Increase in GDP
(3) Investments in
creating 3G / 4G
infrastructure
Introduction of
modern means of
communication, which
are already used
around the world
(1) Ukraine - one of the
few countries in the
world where 3G is not
yet implemented
(2) Introduction of 3G
will significantly boost
Ukrainian economic
development
Illia Kenigshtein
Oleg Achtyrskyi, GLN
Oleg Matsech, CCR
Oksana Prodan, VRU
Oleksandr Fediienko
Olena Minich
Permission for
registration of
companies and bank
accounts abroad
(1) Cancel the CMU
Resolution №122
(2) Amend the CMU
Resolution on
Currency Regulation
System and Currency
Control
(3) Cancel the NBU
Decree №485
(4) Cancel article
№162-2 CUAO
For – export-oriented
business
Against - NBU, SSU,
Tax Inspection,
conversion centres
(1) Simplification of
business activities in
foreign markets
(2) Goods turnover
increase
(3) De-shadowing in
the IT and start-ups
field
Providing possibility of
the registration of
companies and bank
accounts abroad
(1) Citizens of Ukraine
will be able to own
assets abroad without
hindrance
(2) Ukraine - one of the
few countries where
there are existing
restrictions on foreign
assets ownership
Ievgen Sysoiev,
AVentures
Andrii Kolodiuk,
AVentures
Maksym Plachtii, UАОVZ
Artem Afian, Iuskutum
Olena Vardamatska, LF
WOLF THEISS
Simplification of the
procedure for
obtaining work permit
for non-residents
(1) Amend the Law of
Ukraine on Population
Employment
(2) Amend the CMU
Resolution №437 from
May 27, 2013
For – foreign business
representatives
Against - employment
centres
(1) Attracting highly
skilled professionals
(2) Creating favorable
conditions for
transnational
corporations
Issuing work permits
for non-residents who
are involved in IT using
simplified procedure
Increasing the number
of leading specialists
working in Ukraine for
the exchange of
experiences and best
practices.
Dmytro Gadomskyi,
Iuskutum
Dmytro Parpales, LF
Pravovyi aktsent
Mykyta Palataiko, LF
Saienko Kharenko
CONTROL OF
IMPLEMENTATION
«FOR» AND
«AGAINST»
CORRUPTION AND
ECONOMIC EFFECT
INITIATIVE
EXPLANATION
D.6 IT

73
Intellectual property
protection
(1) Take measures to
ensure enforcement
of the CMU Resolution
№1433 on Approval
of the Use of
Computer Programs
in the Executive
Branch"
(2) Amend the Law of
Ukraine on Copyright
For – license software
right holders, content
authors
Against – government
agencies that use
unlicensed software,
business
representatives and
users who actively use
unlicensed software
(1) Loss ~ 70 USD mn
through sanctions for
using unlicensed
software
(2) Loss ~ 300 UAH
mn for copyright
infringement
(3) Unfavorable
conditions for foreign
investors
(1) Using unlicensed
software
(2) Copyright and
related content
rights protection
(1) Align intellectual
property rights to the
right to private
property
(2) The authors should
be paid for their
content
Dmytro Shymkiv, APU
Andrii Kolodiuk, AVentures
WOLF THEISS
Dmytro Gadomskyi,
Iuskutum
Oleg Zaiets, LF Dentons
Dmytro Parpales, LF
Pravovyi aktsent
Mykyta Palataiko, LF
Saienko Kharenko
Introduction of
electronic
documentation and
equating it to the
paper one
(1) Adopt a new
version of the Law on
Electronic Digital
Signature, the Law on
Electronic Documents
and Electronic
Documentation
(2) Adopt a new
version of the SSU
Decree on Approval of
the Rules for Qualified
Certification
For- business
Against -commercial
centers for
certification of
electronic keys
issuance
(1) Improving the
business environment
(2) Reducing business
costs
Possibility to sign
contracts and acts
remotely without
loss of validity
(1) Saving taxpayers'
money
(2) Improving the
business climate and
reducing business
costs
(3) Reducing
corruption
Ievgen Sysoiev, AVentures
Andrii Kolodiuk, AVentures
Artem Afian, Iuskutum
WOLF THEISS
Dmytro Gadomskyi,
Iuskutum
Oleg Zaiets, LF Dentons
CONTROL OF
IMPLEMENTATION
«FOR» AND
«AGAINST»
CORRUPTION AND
ECONOMIC EFFECT
INITIATIVE
EXPLANATION
D.6 IT

74
Ensuring the
development of e-
commerce
Mechanism and
control: Support the
adoption of the Law
on Electronic
Commerce №2306
from June 17, 2013 (in
the second reading)
For –
consumers/buyers,
merchants
Economic effect:
(1) Trust and
protection of
consumers/buyers
(2) New opportunities
for traders
(3) Attracting
investment
Adopt the draft Law
on Electronic
Commerce №2306
from June 17, 2013
(1) E-commerce
demonstrates
confident dynamics of
35-40% annually
(2) Given the situation
in the east electronic
forms are more
convenient for some
regions
(3) Further opening of
trade borders with the
EU and increasing
competition in terms
of both goods, services
and facilities for trade
and information
services
Oleksiy Anikin
Olena Vardamatska
Oleg Matsech
Oksana Prodan
Olga Belkova
Mykyta Palataiko
Dmytro Parpales
Vadym Zhuravskyi
Artem Afian
Oleg Achtyrskyi
Iegor Stefanovych
CONTROL OF
IMPLEMENTATION
«FOR» AND
«AGAINST»
CORRUPTION AND
ECONOMIC EFFECT
INITIATIVE
EXPLANATION
D.6 IT

75
IT sector deregulation initiatives distribution over the industry
value chain
AND LICENSING
SYSTEM
REGULATION
6. CONTROL
SYSTEM
R&D CENTRES
ELECTRONIC COMMERCE
OTHER ISSUES
2
1
1
1
n.a.
13
2
8
1
1
n.a.
n.a.
5
n.a.
n.a.
n.a.
n.a.
n.a.
1
1
n.a.
n.a.
n.a.
n.a.
1
n.a.
n.a.
n.a.
n.a.
n.a.
1
n.a.
n.a.
n.a.
n.a.
n.a.
39INITIATIVES
IT OUTSOURCING
START-UPS
TELECOM
D.6 IT

76
For IT industry, 14 deregulation initiatives of first priority were
identified
IT INITIATIVES PRIORITIZATION
ІІІ-rd proirity
small large
difficult
easy
ІV-th proirity
Number
Industry growth,
[UAH bn]
Reduction in state
~1,2
~0,3
~2,1
13
NO INITIATIVES
Number
Industry growth,
[UAH bn]
Reduction in state
~1,1
~1,9
~0,3
14
Number
Industry growth,
[UAH bn]
Reduction in state
~1,2
~2,1
12
GDP share: 1,4%
ITD.6

77
Initiatives of first priority in IT according to the «Economic
effect» and «Ease of implementation» criteria (1/3)
1
2
3
4
5
Register and submit to the VRU the Draft Law on Amendments to Certain Legislative Acts of Ukraine on the improvement of
software legal regulation
Ensure intellectual property protection in accordance with the international standards
D.6 IT
Ensuring the development of e-commerce
Give permission for registration of companies and bank accounts abroad
Introduce electronic documentation and equate it to the paper one

78
6
7
8
9
10
Provide the publication of application information at the end of the formal examination of an application for industrial design to
allow third parties to submit their objections on the basis of non-compliance of the object with the requirements of patentability
Ensure equal access to license for 3G connection obtaining
Protect critical elements of telecom infrastructure (prohibition of servers removal, network disconnection)
Simplify (or cancel) the issuance of licenses for electronic money and its administration
D.6 IT
Simplify the process of obtaining permits and licenses in IT

79
11
12
13
14
Share tender.me.gov.ua database with all platforms that want to process the data and display it in a convenient way
Simplify the procedure for obtaining work permit for non-residents of Ukraine
Disclose registers of applications for registration of intellectual property
Cancel mandatory labelling checkmarks
D.6 IT

80
E. Specification of
by state inspections

81Source: NGO 'EasyBusiness'
1
2
3
State Veterinary and Phytosanitary Service of Ukraine
State Sanitary and Epidemiological Service of Ukraine
State Ecological Inspection of Ukraine
E DEREGULATION INITIATIVES BY STATE INSPECTIONS
Analysis of corruption reduction and economic effect from
deregulation initiatives by state inspections (1/3)
4 State Agricultural Inspection of Ukraine
5 State Inspection of Ukraine for Consumer Rights Protection
6
7
State Service of Mining Supervision and Industrial Safety of Ukraine
Antimonopoly Committee of Ukraine
8 State Architectural and Construction Inspection of Ukraine
9 State Emergency Service of Ukraine
10 State Automobile Inspection of Ukraine
11 State Inspection of Ukraine on Price Control 2
6
5
1
5
4
9
19
12
15
12
3,0
1,0
1,5
0,8
0,3
1,0
0,2
2,0
0,8
2,4
0,4
1,5
1,2
0,4
0,2
2,2
1,2
1,4
3,1
2,7
2,8
0,5
STATE INSPECTION NUMBER OF
INITIAT. [units]
CORRUPTION
[UAH bn/year]
ECON. EF.1),
[UAH bn]
1) Economic effect is estimated till the year 2020

12
13
14
State Service of Ukraine on Drugs Control
State Border Guard Service of Ukraine
State Agency for Land Resources of Ukraine
15 State Registration Service of Ukraine
16 State Inspection of Ukraine on Labor
17
18
Securities and Stock Market State Commission
State Commission for Regulation of Financial Services Markets
19 State Education Inspection of Ukraine
20 National Commission for State Regulation of Utilities
21 State Migration Service of Ukraine
22 State Road Agency of Ukraine 2
1
1
1
3
1
3
7
6
13
24
0,1
0,4
0,2
0,6
0,1
0,7
1,4
4,5
0,7
3,2
1,4
0,4
0,1
0,3
0,2
0,5
1,1
0,2
2,3
0,5
1,0
4,5
INITIAT. [units]
CORRUPTION
[UAH bn/year]
ECON. EF.1),
[UAH bn]

23
24
25
State Agency on Science, Innovations and Informatization of Ukraine
State Agency on Energy Efficiency and Energy Saving of Ukraine
State Agency for Investment and National Projects of Ukraine
26 State Agency of Fisheries of Ukraine
27 State Water Resources Agency of Ukraine
28
29
State Service for Geology and Mineral Resources of Ukraine
State Forest Resources Agency of Ukraine
30 State Service for Veterans, People with Disabilities of Ukraine
31 State Intellectual Property Service of Ukraine
32 National Commission for Energy State Regulation of Ukraine
33 State Property Fund of Ukraine
34 State Nuclear Regulatory Inspectorate of Ukraine 1
1
6
2
1
9
2
1
6
2
3
13
0,3
0,1
0,1
3,4
0,2
0,3
0,2
5,4
0,4
2,2
0,7
0,3
0,2
0,3
4,9
0,3
0,0
2,6
0,2
0,2
1,8
0,1
0,3
0,2
INITIAT. [units]
CORRUPTION
[UAH bn/year]
ECON. EF.1),
[UAH bn]

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