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Presentation Restoring Donbas and Ukraine

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How to go the way from military conict to peaceful life and qualitatively new economy of the region and country

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Presentation Restoring Donbas and Ukraine

  1. 1. RESTORING DONBAS AND UKRAINE How to work the way up from military conict to a peaceful life and a new level of economy in the region and in the country November, 2014
  2. 2. RESTORING DONBAS AND UKRAINE How to work the way up from military conict to a peaceful life and a new level of economy in the region and in the country
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  23. 23. Ukraine is currently going through one of the worst tragedies in its history. Every day the war brings us new losses. People are dying. Civilians are living in awful conditions. No water, electricity, health care. Many of them were left without shelter and means of living. The war has also provoked a severe economic crisis in Ukraine. The country has lost one Šfth of its share in levels of international trade. Foreign debt is three-quarters of GDP. Every mistake in the reforms can trigger a domino e‹ect. Then the whole sectors of economy will perish. Investors are massively leaving the country. Long money do not like uncertainty. The end of the military conŒict is undoubtedly desired and awaited by every one. But it will not solve all the problems. When peace comes, Ukraine will face a new challenge - restoration of the destroyed Donbas. This region can become either a depressive ghetto or a driver to the development of the whole Ukraine. Today my colleagues and I are thinking only about how to make the second option a reality. And we can see necessary solutions. We think, that direct governmental subsidies to the a‹ected region are not an e‹ective way. Because Ukraine has too little money, but too much corruption. We want to say: Donbas needs opportunities more than money. Donbas will be saved by free entrepreneurial initiative. The main task of the Government is to create appropriate conditions for them. There are lots of mechanisms - from tax holidays to the very simpliŠed procedure of business registration and cancellation of war-time penalties. Minor taxes and little bureaucracy, but a lot of opportunities. It will be interesting to business. Only business activity will bring back life into Donbas cities. Then, enterprising people will restore the ruined on their own cities. There are many patriots and a lot of heartwarming people in Donbas! I am sure, these people are patriots of their native land, and once again they will prefer to develop their business there. Why we, my colleagues and I, are dealing with this issue? Because we feel as if every projectile in this war is Œying at every one of us. Because the war destroys all that is dear to us and that we love and have known since childhood. It destroys everything, what the leadership and the people of the region have been building and trying to multiply for Donbas for decades. We cannot stare blankly at the ongoing tragedy. Therefore, all our knowledge, strength and love for our country, we are ready to o‹er in the best interest of Donbas and Ukraine. And we are grateful in advance to all who will join us and support us. Yours faithfully, Oleksandr Klymenko
  24. 24. 3 : CONFLICT IN DONBAS: PRICE OF WAR On April 7, 2014 the anti-terrorist operation (ATO) was launched in the East of Ukraine - Donetsk and Luhansk regions. Instead of the pre-announced 48 hours for its implementation, ATO has been held for 7 months already, causing thousands of deaths and destruction to the region. What is the true price of this war for the region? 7 2014    (‰‚Ž) – „
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  29. 29. : CONFLICT IN DONBAS: PRICE OF WAR
  30. 30. „ –  
  31. 31. War in Donbas means thousands of claimed lives and millions of destroyed destinies 4
  32. 32. 7  : During 7 months of war in Donbas: 4035 ( 27 ) 9336 ( 38 ) (  29 )   
  33. 33.  1 ,
  34. 34.  262     5 ­ 
  35. 35.  Over 4035 people have died (not less than 27 children) and over 9336 people were injured (about 38 children) (according to UN as of October, 29) The number of forced migrants from Donbas exceeded 1 million people, with only 262 thousands resettling within Ukraine Over 5 million people still remain in the area of combat operations
  36. 36. 298 Boeing 777 Malaysia Airlines, €
  37. 37. ‚ -ƒ 17  2014  298 passengers of the airplane Boeing 777 of Malaysia Airlines have died; The plane was performing a planned ight from Amsterdam to Kuala Lumpur and was shot down on July 17, 2014 in the east of Donetsk region in the area of armed conict
  38. 38. 5 : CONFLICT IN DONBAS: PRICE OF WAR
  39. 39. „ –  € € War in Donbas means a humanitarian catastrophe and destroyed infrastructure
  40. 40. 7  : During 7 months of war in Donbas: „ , ­
  41. 41. ‚…, 5 60%. , - 12%, , ‚, „
  42. 42.  60% 620
  43. 43. 300
  44. 44. -  .  € € 4  .  
  45. 45.  60 127  About 620 gas pipelines and 300 gas distribution stations are damaged. Over a thousand power lines and more than 4 thousand transformer substations are damaged. From 60 to 127 settlements in Donbas are still without electricity supply †
  46. 46. -
  47. 47. € 200 €
  48. 48.  €   ƒ Because of destruction of 200 schools and lack of elementary safety, the educational process in schools and universities of Donetsk and Luhansk regions has actually been thwarted †
  49. 49. -
  50. 50.  ƒ . „ 20   , ­ 17
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  53. 53. The degree of damage to residential properties in the cities of the ATO area, is ranging from 5 to 60%. For example, in Kramatorsk, – it is 12%, and in case of Nikolayevka, Avdeyevka, Seleznevka in the Donetsk region it reaches 60% Because of the infrastructure damages, water supply of Donetsk and Luhansk was discontinued for more than one month. Today water is supplied intermittently Not less than 20 hospitals in Donbas are not operating, another 17 are either destroyed or severely damaged. In Luhansk, there is a high risk of outbreak of infectious diseases
  54. 54. : CONFLICT IN DONBAS: PRICE OF WAR
  55. 55. „ –  War in Donbas means an industrial collapse 8 Œ‚‹ 1 †Š‹ 24 †Šƒ‹ 18 ‚‡‰„…‚ 18 ‚‡‰„…‚ Gorlivka chemical concern Stirol
  56. 56. 
  57. 57.  «» Severodonetsk chemical plant Azot 
  58. 58. «‰» Gorlivka machine-building plant «
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  60. 60. » Enakievo Steel Plant ’
  61. 61. 6 Enakievskiy coke and chemical plant ’
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  63. 63. 20 .
  64. 64. ,  70%  . ”
  65. 65. : During 7 months of war in the region more than 20 thousand enterprises in the eastern regions had been shut down, which is 70% of their total number. Chronicle of enterprises’ shutdown: 18 ‚‡‰„…‚ 18 ‚‡‰„…‚ 18 ‚‡‰„…‚ 29 ‚‡‰„…‚ 2700 3500 Khartsyzsk pipe plant ”
  66. 66. MAY, 8 JUNE, 1 JULY, 24 AUGUST, 18 AUGUST, 18 AUGUST, 18 AUGUST, 18 AUGUST, 18 AUGUST, 27 AUGUST, 29 4000 Avdeevsky coke and chemical plant ‰
  67. 67. 
  68. 68. Company-manufacturer of household appliances Nord ­-
  69. 69. «‡» 17800 10400 „…ˆ†‡ EMPLOYEES „…ˆ†‡ EMPLOYEES Alchevsk Iron Steel Works. Yasinovskiy coke and chemical plant ‰
  70. 70. . †
  71. 71. - 
  72. 72. The work of the last blast furnace at the Donetsk Metallurgical Plant is stopped Ž
  73. 73.  „ -  „…ˆ†‡ EMPLOYEES „…ˆ†‡ EMPLOYEES „…ˆ†‡ EMPLOYEES „…ˆ†‡ EMPLOYEES 1200 „…ˆ†‡ EMPLOYEES 7300 „…ˆ†‡ EMPLOYEES 500 „…ˆ†‡ EMPLOYEES „…ˆ†‡ EMPLOYEES 4000 8700 27 ‚‡‰„…‚
  74. 74. 7 : CONFLICT IN DONBAS: PRICE OF WAR “ 7 
  75. 75. „ €   During 7 months of war in Donbas oal mining industry, which is the main for the region, is de facto destroyed †
  76. 76. 95  € ­  24 9 €
  77. 77.   € «„», «ˆ», « »  €: «ƒ », «ƒ », «Ž», «Œ»  
  78. 78. 70 000 € 
  79. 79. -
  80. 80.   30 ‘. ‡ 
  81. 81. 1 Š‚ˆ 24 out of 95 state-owned mines are currently operating 9 mines are drowned and beyond repair Coal mining has been stopped at promising mines Sverdlovantratsit, Rovenkianthracite, Oktiabr’skii rudnik Work of the whole colliery groups: LisichanskUgol, Luganskugol, DUEK, Makeevugol has been stopped Over 70 000 miners were thrown idle Because of combat actions in Donbas Ukraine has lost 30 million tons in annual capacity. For the “rst time in its history Ukraine is forced to buy 1 million tons of coal from the Republic of South Africa
  82. 82. : CONFLICT IN DONBAS: PRICE OF WAR ‘
  83. 83. 30   More than 30 thousand people have lost their jobs in Luhansk region, as the result of combat actions „
  84. 84. , , 100   ’  ,   200   Not less than 100 thousand people, according to preliminary estimates, have lost their jobs in Donetsk region, as the result of combat actions If this trend persists, up to 200 thousand people more will lose their jobs by the end of the year 8 30 000 100 000 200 000
  85. 85. 9 : CONFLICT IN DONBAS: PRICE OF WAR
  86. 86. „ –  
  87. 87. War in Donbas means a strike on the economy of the whole Ukraine   16 . ( € ) Direct revenue losses of Ukrainian budget at year-end can be UAH 16 billion (according to the Ministry of Finance of Ukraine) ƒ- „
  88. 88. ‘
  89. 89. 4,4 .. Due to the mass closure of businesses in Donetsk and Luhansk regions, budget losses on tax payments amounted to more than UAH 4,4 billion  ,   7 9%, € 17 22% According to forecast, the drop of Ukrainian GDP at year-end can constitute 7 to 9%, inŒation will constitute 17 to 22%  —,
  90. 90.    According to IMF forecasts, later on Ukraine could face a deep recession and a sharp drop in GDP awaits 16 ‰ˆ 16 billion UAH 4,4 ‰ˆ 4,4 billion UAH ‡‡ -7 -9% † 17-22% GDP -7 to -9% Ination 17-22% GDP
  91. 91. : CONFLICT IN DONBAS: PRICE OF WAR 10
  92. 92. 11 C .   BUILDING NEW DONBAS. HOW TO OVERCOME THE COLLAPSE The team, uniting economic experts, experienced state managers, entrepreneurs of Donbas, who know Šrsthand about the peculiarities and problems of the region, has developed a step by step plan for the restoration of Donbas. We believe that the Šrst priority steps should be Šnding a political solution for establishment of peace in the region. However, even now it is necessary to think not only about how to restore the region's industry and infrastructure, but also how to build a NEW DONBAS, which will be able to become a driver for the development of the WHOLE UKRAINE! ­,    , , -
  93. 93. „, , -
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  97. 97. 12 C .   BUILDING NEW DONBAS. HOW TO OVERCOME THE COLLAPSE …-7 ”‚‰‡ ‚‡„…ˆ• ‡Œ  ‚„„ TOP-7 STEPS TOWARDS THE NEW DONBAS Œ  Peaceful Donbas Normalization of region life Determination of the region status Investments in Donbas Small and medium businesses as the backbone of Donbas economy Donbas as an economic hub between the East and the West Overcoming the humanitarian catastrophe
  98. 98. 
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  101. 101. 1 2 3 4 5 6 7
  102. 102. 13 C .   BUILDING NEW DONBAS. HOW TO OVERCOME THE COLLAPSE Œ†ˆ—˜  ‚„„ PEACEFUL DONBAS Cessation of Šre and Šnding a political solution in the course of negotiations. Establishment of an international commission under the auspices of the UN to oversee the observance of truce in the region.    . 
  103. 103. 
  104. 104. ŽŽ‡ .
  105. 105. 14 C .   BUILDING NEW DONBAS. HOW TO OVERCOME THE COLLAPSE ˆŒ‚ƒ†™‚š†‹ ›†™† ˆ•‰†‚ NORMALIZATION OF LIFE IN THE REGION Establishment of an Advisory Group (Ukraine-Russia-EU-USA) to solve the current problems in the region: provision of humanitarian corridors, restoration of urban water supply, carrying out the full-scale heating season, ensuring operation of industrial facilities. 
  106. 106. (-ˆ-’-˜‰)  :  , ,  ,  .
  107. 107. 15 C .   BUILDING NEW DONBAS. HOW TO OVERCOME THE COLLAPSE ˆ••ƒ•†• „…‚…„‚ ˆ•‰†‚ DETERMINATION OF THE STATUS OF THE REGION Ž  
  108. 108.  „
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  110. 110. €
  111. 111.  Economic autonomy of the region Rights of Russian speaking citizens   , €  „,
  112. 112. : Conduct of local elections, a search for a compromise of the conŒict resolution with the involvement of the Donbas population, which will necessarily include: Creation of a political institute to protect the regional interests, with no impact on foreign policy and security of Ukraine 1 2 3
  113. 113. 16 C .   BUILDING NEW DONBAS. HOW TO OVERCOME THE COLLAPSE †‡•„…†š†† ‡  ‚„„ INVESTMENTS IN DONBAS ‡ , ‡
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  116. 116. . „ -   .   : Suggested tools: „
  117. 117.  „”‚, •„, ˆž €  ‡ 
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  122. 122. , It is necessary not only to restore, but to build New Successful Donbas. A complete modernization of production, including introduction of energy-saving and environmentally friendly technologies, must become an integral part of the region's recovery. Restoration of industry of Donbas, together with rising of living standards, – are a prerequisite for reducing social and political tension. „
  123. 123. 
  124. 124.  
  125. 125. , -  ,  € ,
  126. 126. 
  127. 127. -  Creation of a special international fund of donors, involving the United States, EU, Russian Federation for the restoration of industry and infrastructure of Donbas Implementation of mechanism of a concessionary agreement with investors for modernization of the infrastructure: airports, railways, housing and utilities infrastructure and other infrastructure facilities, as well as public transport systems, healthcare facilities, educational, cultural and sports facilities Establishment of a mechanism of tax compensations to business, involved in the restoration of Donbas, reduction of customs duties for the goods, intended for modernization of the region's infrastructure
  128. 128. 17 C .   BUILDING NEW DONBAS. HOW TO OVERCOME THE COLLAPSE Œ‚ƒ—˜ † „ˆ•†˜  †™•„ – „‡‚ ‡˜ ŽŒ††  ‚„„‚ SMALL AND MEDIUM BUSINESSES AS THE BACKBONE OF DONBAS ECONOMY „ : For reference: „  ( ) The share of small and medium businesses in the regional economy (pre-war data) … „  , .   ,
  129. 129. ,   € . …  
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  131. 131. 
  132. 132. . Economy of Donbas does not need a face lift, but structural changes. We are Šrmly convinced the main stake in the development of the region should be placed on small and medium businesses, on private initiative and on formation of the middle class. This is important not only in terms of economic transformations, but also in terms of achieving social and political stability of the region. 5-7% 24-27% Donetsk region Lviv region
  133. 133. 18 C .   BUILDING NEW DONBAS. HOW TO OVERCOME THE COLLAPSE Œ‚ƒ—˜ † „ˆ•†˜  †™•„ – „‡‚ ‡˜ ŽŒ††  ‚„„‚ SMALL AND MEDIUM BUSINESSES AS THE BACKBONE OF DONBAS ECONOMY „ , 
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  137. 137.  ­   10 - ,  , € ‚… ‰
  138. 138. ,  In order to motivate small and medium businesses to return to the region, to increase their role in the regional economy, it is necessary not only to restore the infrastructure, but also to create tax and regulatory incentives for the development of small and medium-sized businesses in the region: Exemption of entrepreneurs and citizens in the ATO area from paying taxes, penalties and credit installments, accumulated over the period of military actions Simpli“ed procedure for registration of enterprises Tax incentives in the form of a 10 years vacation for entrepreneurs, working on the territories, aŸected within the framework of ATO State crediting programs for regional business, involvement of commercial banks to these programs   «»
  139. 139.  «
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  145. 145. . As a pilot project, we consider it necessary to create industry-speci“c «business-incubators» on the basis of depressed miners’ villages and towns, devastated by the war, with full exemption of entrepreneurs from taxes, free provision of premises, land plots. Priority should be given not to outdated industry, but startups in the Šeld of the IT industry, high-tech, medicine and other perspective industries.
  146. 146. 19 C .   BUILDING NEW DONBAS. HOW TO OVERCOME THE COLLAPSE  ‚„„ - ŽŒ†•„†˜ œ‚  Œ•› ‡„…Œ † ™‚‚Œ DONBAS AS AN ECONOMIC HUB BETWEEN THE EAST AND THE WEST  -
  147. 147. , ’, ‚
  148. 148. ,  „ ,  . Creation of Export Processing Zone (EPZ) on the territory of the region, which will be oriented on both the CU market, and the EU market, which will allow Donbas to recover the economy, to preserve old and to create new jobs. Simpli“ed procedure for registration of enterprises   : The priviliged enterprises will be obliged to: ˆ  
  149. 149. . ƒ  
  150. 150. €. ‡ €
  151. 151.  
  152. 152. . The implemented measures will result in the rise of investment attractiveness and business activity in the region. Investors and big industrialists will be interested in reconstruction and modernization of worn-out infrastructure. The volume of foreign exchange earnings will surely increase against the background of possible reduction of tax and customs budget payments. ­  †  Investment tax credits  
  153. 153. ­ „ Accelerated procedure of VAT refund „
  154. 154. Œ
  155. 155. ‡ ›œ Create new jobs in the region Modernize manufacturing/production Restore the infrastructure and housing and utility sector of the region  ,  … “,   : Enterprises, working within the EPZ, should get the following opportunities:  € Complete exemption of the new equipment from import duties   € , ,
  156. 156. Partial exemption from import duties on semi-“nished materials, raw materials, imported to the enterprises of the area
  157. 157. 20 C .   BUILDING NEW DONBAS. HOW TO OVERCOME THE COLLAPSE  ‚„„ - ŽŒ†•„†˜ œ‚  Œ•› ‡„…Œ † ™‚‚Œ DONBAS AS AN ECONOMIC HUB BETWEEN THE EAST AND THE WEST For reference: ­ : One of the Šrst areas in the world practice, specializing in manufacturing of export products since the day of its foundation, is an Export Processing Zone Shannon in Ireland, founded in 1959 in the vicinity of cognominal airport, located in the western part of the Shannon river frith. Due to convenient transport connections, as well as provision of a number of beneŠts to potential investors, in particular, the duty-free import of raw materials, semi-Šnished products and components, low-rent for the factory premises and warehouses, simpliŠed procedures for investment and comfortable living conditions, the Shannon Zone had pretty quickly achieved impressive successes. Enterprises, located in Shannon, produce electronic equipment, industrial diamonds, the equipment for well-drilling, goods of the mass consumer demand, etc. The volume of export had increased from 230 million dollars in 1980 to 1 billion dollars in 1994. Shannon turned into the prosperous industrial center of the western part of Ireland. Ž
  158. 158. ,   
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  168. 168. 21 C .   BUILDING NEW DONBAS. HOW TO OVERCOME THE COLLAPSE ˆ•ƒ•†• ‰Œ‚†…‚ˆ˜ ‚…‚„…ˆž— OVERCOMING THE HUMANITARIAN CATASTROPHE 
  169. 169. € „: We can see three components of overcoming the humanitarian catastrophe in Donbas: „
  170. 170. ­    1 Creation of conditions for the voluntary return of IDPs to their places of permanent residence   ­    „. „   € 
  171. 171. . ­    –     . ™    €€  , €  . ­ ,  €   . Establishment of a special Coordination Center for assistance to internally displaced people in Donbas. Activities of the center should be regulated by a special law and should not duplicate the functions of regional state administrations and local authorities. A key goal of the center – is a strategic management of the process of return of IDPs to the places of permanent residence. Centralization of policy for IDPs will allow to avoid bureaucratic delays and to e‹ectively coordinate the process of provision of assistance, rehabilitation of infrastructure and ensuring security. In addition, this body will become a single information and consultation center for all IDPs.
  172. 172. C .   BUILDING NEW DONBAS. HOW TO OVERCOME THE COLLAPSE 22 ˆ•ƒ•†• ‰Œ‚†…‚ˆ˜ ‚…‚„…ˆž— OVERCOMING THE HUMANITARIAN CATASTROPHE „
  173. 173. ­  , € 2
  174. 174. ­ Social protection and legal guarantees for IDPs who haven't decided to return into the region yet ‡  ,
  175. 175.  ,  ,  
  176. 176. . “  : It is necessary to improve and to execute the law that will protect the property, social and other rights of IDPs, who do not want to go back to the combat actions area. It is necessary that the law would regulate the following issues: temporary accommodation and provision of necessary assistance in settlement (of the necessary facilities) renewal of social payments, registration at the labor exchange, in polyclinics and schools transfer of students on similar specialties to higher education institutions payment of a monthly allowance to IDPs, who have returned to the ATO area within 1 year 
  177. 177. 
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  179. 179. 23 C .   BUILDING NEW DONBAS. HOW TO OVERCOME THE COLLAPSE ˆ•ƒ•†• ‰Œ‚†…‚ˆ˜ ‚…‚„…ˆž— OVERCOMING THE HUMANITARIAN CATASTROPHE 
  180. 180. 
  181. 181. 3 Demilitarization of the region and formation of a security system — 
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  184. 184.   
  185. 185. ) : Formation of the Municipal police, accountable to the community Civilian control over the activities of law enforcement agencies (joint patrols, intensiŠed monitoring of human rights observance on the part of public organizations) ’  ; 
  186. 186. – -
  187. 187. , Strengthening control over the circulation of weapons: Quarterly amnesty of owners of unregistered weapons under condition of its surrender; Strengthening of control in the places of mass gathering of people - installation of metal detection arches at railway stations, stadiums
  188. 188. C .   BUILDING NEW DONBAS. HOW TO OVERCOME THE COLLAPSE 24 ˆ•ƒ•†• ‰Œ‚†…‚ˆ˜ ‚…‚„…ˆž— OVERCOMING THE HUMANITARIAN CATASTROPHE
  189. 189. 25   ECONOMIC BREAKTHROUGH FOR UKRAINE 
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  196. 196. . Not only economy of Donbas, but economy of the whole Ukraine needs structural changes. Naturally, the most important thing today for Ukraine and its citizens is to restore peace. But now it is the time to think about what will happen not just tomorrow, but the day after tomorrow. To think about how to prevent new conŒicts, how to reach a political consensus in the society and to accommodate interests of all citizens, regardless of their region of residence. We must not only restore the war-torn regions, but already now we must provide growth drivers for our economy, which will allow increasing the level of material well-being of every Ukrainian family for decades to come. †   …   . ’    . My colleagues and I have developed a detailed program of economic breakthrough for Ukraine. Its implementation will allow enhancing competitiveness and revealing the potential of the country as a whole and of each region with its special features and capabilities.
  197. 197.   ECONOMIC BREAKTHROUGH FOR UKRAINE “ 10  2014 : During the 10 months of 2014: † 16,2% Ination 16,2% ‡ 1,5% Military tax 1,5% 26 ƒ€  16,2% ‡  , , . ‚, 1,5%
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  201. 201. ,
  202. 202. ,  . InŒation since the beginning of the year has already reached 16,2% and continues to grow  75% Devaluation up to 75% „ 
  203. 203. – – 75%: 8 . 1 2013 13-14 . 1 2014 The devaluation of the national currency - hryvnia - is up to 75%: from 8 UAH per 1 dollar in November 2013, to 13-14 UAH per 1 dollar in October 2014 ‡‡ 5,1% III Drop of GDP to 5,1% in the III quarter     1,1% 2014 , 4,6% - 5,1% - Drop of Ukrainian GDP amounted to 1.1% in the Šrst quarter of 2014, 4.6% - in the second and 5.1% - in the third Hoping to bring in additional tax revenues into the budget, over the past six months Ukrainian Government has introduced new taxes, has increased rental rates and fee rates. So, a 1,5% military tax has been introduced, the excise tax on alcohol and tobacco products has repeatedly increased, excise tax on new cars has doubled, environmental tax has increased, as well as land tax, tax for the special use of water, etc.
  204. 204. 27   ECONOMIC BREAKTHROUGH FOR UKRAINE Ž  : The main directions of the program of economic breakthrough:    ­ ­
  205. 205. : Development of the internal investment market and innovative reconstruction of the existing production potential:   
  206. 206. –  ,
  207. 207. , . €   ,   €   
  208. 208. –  ,
  209. 209. , . €   ,   € Policy of reindustrialization of basic industries - modernization of production, introduction of high technology into the manufacturing process, increasing the level of labor safety. Introduction of tax on old capital assets to stimulate modernization and re-equipment of production, as well as replenishment of the Pension Fund Ž
  210. 210.  , 
  211. 211. ,  €  š­”   
  212. 212. 
  213. 213. .  - Nationwide program for all industrial enterprises on modernization of production, introduction of innovative technologies, technological re-equipment of agro-industrial complex Government lending and borrowing for infrastructure projects and projects of reconstruction of housing and utilities Improving the innovation component of the economy. State support of innovative startups
  214. 214.   ECONOMIC BREAKTHROUGH FOR UKRAINE 28 € 
  215. 215. €  ‡ ,   
  216. 216. ’ ‰  . Improving the competitiveness of domestic producers on the domestic and foreign markets It is necessary to create all conditions for domestic enterprises so that they were able to take advantage of the Association Agreement, signed by Ukraine and EU, and to minimize the negative consequences for themselves at the same time. Subsidies from the state budget for modernization of enterprises and for certiŠcation of products for the EU markets Introduction of the institute of Authorized Economic Operator in Ukraine, its synchronization with similar institutions in the EU. On the eve of possible signing of the Association Agreement with the EU, in the autumn of 2013, Ukraine has been preparing for introduction of this institute. It would allow to substantially simplify the issue of movement of goods across borders. Now the Association Agreement is signed and the creation of this institute is extremely important and necessary „
  217. 217.  €  ’  ,   ’. ‡   ’, 2013 ,  . Ž    . 
  218. 218.  ‰ , 
  219. 219. Establishment of the Institute of Economic Attaché at embassies and diplomatic missions abroad to assist Ukrainian enterprises in entering foreign markets   €  
  220. 220. 29   ECONOMIC BREAKTHROUGH FOR UKRAINE  
  221. 221. ,
  222. 222.  The “ght against monopolism, creating opportunities for a free competition , Fight against monopolies, improvement of antimonopoly legislation 
  223. 223.  ,
  224. 224. 
  225. 225.    
  226. 226.   Creating equal opportunities for all market participants, promotion of fair competition Reorientation of the oligarchic economy on the free market economy … –  Point of pro“t in Ukraine €€   € 
  227. 227. 
  228. 228. €
  229. 229. , € BEPS 
  230. 230. Ž’ Fight against withdrawal of capital into o‹shore and low-tax jurisdictions by means of the full-Œedged implementation of the Law on transfer pricing and Ukraine's accession to the global system of automatic exchange of tax information, which is formed in within the framework of BEPS plan under the auspices of the OSCE
  231. 231.   ECONOMIC BREAKTHROUGH FOR UKRAINE 30 “ €  (‚™Ž)  2013  , ‰ ­. €  Law on transfer pricing (TP) was adopted in Ukraine in 2013 at the initiative of the Ministry of Revenue and Duties, which at that time was headed by Minister Oleksandr Klymenko. Mechanisms of control over transfer pricing, implemented in Ukraine, were agreed upon Second half of 2013 First half of 2014 UAH 113,3 billion UAH +19,7 billion UAH 133 billion with business, enjoyed the support and positive feedback from experts both in Ukraine and abroad. As a result, in December 2013, the volume of export operations from Ukraine through o‹shore zones has been halved. Ukrainian companies had to prepare and submit the Šrst reports on TP by May 1, 2014. But, in the spring of 2014, introduction of norms of transfer pricing control was suspended at the initiative of the new Government. As a result, in 2014, 75% of export transactions have been carried out by indirect contracts. For 6 months of 2014 with the help of indirect export contracts UAH 133 billion has already ,   , . ­ , 2013   
  232. 232.  €€  .    ‚™Ž 1 2014 . ‡
  233. 233. 2014 €   . 2014 75%  
  234. 234. - . “ 6  2014   133 . . … 19,7 . ,  2013 .
  235. 235.  2,6 . . gone from Ukraine to the countries with preferential tax treatment. This is by UAH 19,7 billion more than in the second half of 2013. As a result, Ukrainian budget is under risk to short-receive revenues in the amount of UAH 2,6 billion. The growth of operation’s volume of indirect export contracts
  236. 236. 31   ECONOMIC BREAKTHROUGH FOR UKRAINE Ž
  237. 237. Energy self-su¡ciency of the country 
  238. 238.  Increased domestic production of gas ‰ 
  239. 239. 
  240. 240.  
  241. 241. € š­” Extensive use of biofuels and other alternative fuels in industry and private households to reduce dependence on Russian gas Active introduction of energy saving technologies into the sphere of housing and utilities €€ State program for improvement of energy e›ciency of production
  242. 242.   ECONOMIC BREAKTHROUGH FOR UKRAINE 32  
  243. 243. . … ,   ,  . ,
  244. 244. , 
  245. 245. , . State support of priority branches of economy The Government should select priority specializations for its own economy. These are branches that trigger a spiral of economic growth and social development, create jobs. The Government must take all possible measures to use all tools to support, protect and stimulate the development of industry branches on which the stake is placed. 
  246. 246.  : ‰ We consider it necessary to single out the following industry branches:  -
  247. 247. —  € -
  248. 248. 
  249. 249.  € Agrarian industry Mechanical engineering industry and precision instruments industry Military-industrial complex Pharmacology and medical engineering Housing and utilities sector Construction of residential real estate and infrastructure  
  250. 250. : Support for priority industries: €
  251. 251.     ‘ ˆ € , ˆ €   Temporary tax and customs preferences for the enterprises of priority industries Provision of concessional loans for business development Encouragement of export Elimination of regulatory barriers Regulation of rates for beneŠt of own producer, not the importer Development of infrastructure for new productions Provision of public contracts
  252. 252. 33   ECONOMIC BREAKTHROUGH FOR UKRAINE „ ,
  253. 253. Freedom of private initiative, support for small and medium businesses  . ­   ,  – ,  . 
  254. 254.  , ,  We must bring private enterprises back on the road of revival. Every person should be given an opportunity to make the best use of his talents, and the task of the state – is to create structures and conditions under which this can be done. We consider it necessary to provide support to entrepreneurial initiatives in Ukraine by creating favorable and stable tax climate, introduction of a‹ordable and acceptable credit programs, reducing bureaucracy and bureaucratic arbitrariness  € () Enhancement (simpli“cation) of tax treatment
  255. 255. € , , , , . ‡ - , ,  €- . Ž  , Rules and regulations in the tax sphere should be transparent, stable and most importantly, equal for all. Our priorities - a fair tax system, maximum support to small and medium-sized businesses, inventorying and curtailment of unjustiŠed tax incentives of large businesses and Šnancial-industrial groups. Combining of social contributions and income tax, reducing the burden on wages
  256. 256.   ECONOMIC BREAKTHROUGH FOR UKRAINE 34 Œ
  257. 257.  
  258. 258. € . … , 
  259. 259. . 90% , , . Minimization of bureaucracy within the licensing system Too much of the budget funds in Ukraine are being spent on maintain-ing the state apparatus. These funds go to the o›cials, who are engaged in issuance of documents, 90% of which, according to the business, are not needed. : Today in Ukraine there are: Over 1,6 million of civil servants/o›cials Over 3000 various licensing and approval procedures 1,6   3000   24 State Services, 14 State Agencies and 11 State Inspectorates, that issue various licenses and approvals, conduct inspections 24 , 14 11 
  260. 260. , , , 
  261. 261. ,   ,  ,
  262. 262.  
  263. 263. 
  264. 264. .   
  265. 265. 
  266. 266. -  , 
  267. 267. .
  268. 268.    
  269. 269. ,  
  270. 270. ,  ,  . We believe that Ukraine needs a systematic approach to deregulation, restriction of intervention of o›cials into business activity, simpliŠcation of rules to conduct business, creation of conditions for the fair competition and ensuring real protection of entrepreneurs and consumers. Therefore, the obvious and primary step is inventorying, together with business, of all authorization documents and regulatory procedures, establishment of programs of their phasing out. We are setting a goal to abolish and to combine a part of inspectorates, to reduce the number of licenses and authorization documents, to make the procedure of their
  271. 271. 35   ECONOMIC BREAKTHROUGH FOR UKRAINE  130-  (
  272. 272. ­) Overcoming corruption and ascertainment of zero tolerance to this phenomenon in society Today, Ukraine takes the 130th place in the world on corruption level (between Uganda and Cameroon) ,  
  273. 273. 
  274. 274.  ,
  275. 275. €.  5  
  276. 276. -20 We are sure that implementation of this anti-corruption strategy will allow to reduce considerably corruption level in authorities, government institutions and budget sphere. Within 5 years, thanks to implementation of this strategy, Ukraine could take a worthy place in top-20 of the least corrupted countries of the world   ­ „ ,  , , , . ‡ ,     . „ 
  277. 277. €  , 
  278. 278. (, , ‡ “, ˜, ­, ‡, ƒ, .) Years of struggle and change of consciousness are needed in order to overcome corruption that has Šrmly rooted not only in practice, but also in minds of Ukrainians. But we are conŠdent that through the introduction of a few simple steps, one can quite soon qualitatively change the situation. In order to Šght corruption, we have developed a large-scale anti-corruption strategy, which is based on the world's most successful practices in the Šght against corruption (Singa-pore, Hong Kong, New Zealand, Sweden, Canada, the Nether-lands, Israel, Germany, and others)
  279. 279.   ECONOMIC BREAKTHROUGH FOR UKRAINE 36 Overcoming corruption and ascertainment of zero tolerance to this phenomenon in society   ­ Perfection of veriŠcation of declarations of public o›cials concerning their property, income, expenses and Šnancial obligations  
  280. 280. : ‡ €€
  281. 281. ‡ 
  282. 282. 
  283. 283.  
  284. 284.  , , € Among measures, proposed by us within the framework of anti-corruption strategy: Beginning of the e‹ective National Anti-Corruption Bureau work for the systematic struggling against corruption in the public sector and budget organizations   , 
  285. 285. € 
  286. 286.  Adoption and adherence of policy, governing the conŒict of interests Strengthening of anti-corruption veriŠcation of applicants for positions in the public sector and budget organizations —
  287. 287.  ,
  288. 288. Formation of professional ethics of public servants, a constant control of its observance   
  289. 289.  
  290. 290.  , 
  291. 291. 
  292. 292. Harsher punishment of o›cials and employees of public sector for corruption Involvement of public organizations and representatives of private business to the Šght against corruption, more powers and authority to citizens for Šghting corruption …   €   € ˜ 
  293. 293. Electronization and automation of processes in the Šeld of provision government services in order to minimize the human factor Large-scale implementation of anti-corruption educational program in Ukraine 
  294. 294. € 
  295. 295. 37   ECONOMIC BREAKTHROUGH FOR UKRAINE ™­ , Protection of private property rights, the “ght against (corporate) raiding   
  296. 296. .   
  297. 297. .  
  298. 298. 
  299. 299. - ,
  300. 300.  , .     2013 ’
  301. 301.   œ. The rights of private property shall be most protected. An entrepreneur should be provided with available and reliable instruments of protection of his rights in judicial and law-enforcement system. For this purpose we propose to introduce an institute of Business-Ombudsman in Ukraine, who will protect the interests of both Ukrainian and foreign businesses in Ukraine. Support in implementation of this institute in 2013 was guaranteed by the president of European Bank for Reconstruction and Development Suma Chakrabarti. 
  302. 302.  143- 148  
  303. 303. ( “
  304. 304. ) Now Ukraine takes the 143rd place in the world among 148 countries on protection of private property (between Zimbabwe and Myanmar)
  305. 305.   ECONOMIC BREAKTHROUGH FOR UKRAINE 38 „ €
  306. 306.   Free foreign trade and development of transit potential of Ukraine    -  . „
  307. 307.  – « »
  308. 308. 
  309. 309. 
  310. 310. , .. . ‡  . „  ,
  311. 311. . œ 
  312. 312. ,  , ,  –  The primary task is to overcome corruption at the border. To solve this problem, we propose the creation of a single control service on the border – a Services One-Stop for all regulatory bodies and customs with the maximum automation and electronization of all procedures, including in Ukrainian ports. It is necessary to maximally develop transit potential of Ukraine. For this purpose we propose to reduce transit fees, abolish of quotas and other obstacles to road transportation of goods across the country. Thus to avoid abuses, it is necessary to introduce special instruments, guaranteeing, that goods will be exported from Ukraine - electronic locks
  313. 313. 39
  314. 314.    HOW TO CREATE UNDERSTANDABLE AND 
  315. 315.  
  316. 316. ­   PREDICTABLE TAX SYSTEM IN UKRAINE œ
  317. 317. 
  318. 318.  ,  
  319. 319. .
  320. 320. , , 
  321. 321. . ˆ €  ,  ,  . …  „     € ,
  322. 322. €€ : Today, in order to recover its investment potential and to increase com-petitiveness in world markets, Ukraine needs to ensure a decisive liberal-ization of the rules of conduct business. Ukrainian tax system needs transformations that would open access to entrepreneurship to anyone who feels the strength and desire to act. This entails not just arithmetical reduction in the number of taxes, but also qualitative transformations, stimulating entrepreneurial initiative. This will allow pulling national economy out of the dive Three systemic steps in the tax policy, which will have an enormous positive e‹ect for business are enough for this purpose:  1 Œ ­ 2 „­
  323. 323. 3 Deregulation of doing business Maximum simpli“cation of reporting Reduction of the time for paying taxes
  324. 324.    40 
  325. 325.  
  326. 326. ­   HOW TO CREATE UNDERSTANDABLE AND PREDICTABLE TAX SYSTEM IN UKRAINE œ 
  327. 327. € : What needs to be implemented in the tax sphere of Ukraine: „­ 22 10 Harmonization of tax reporting and accounting  
  328. 328. 
  329. 329.   Standardization of reporting on uni“ed social tax and individual income tax …     .    2014   . ‡ €  
  330. 330. €,
  331. 331.  This will signiŠcantly simplify tax reporting by reducing document Œow and reducing time spent on paying taxes. Corresponding initiative was proposed by the Ministry of Revenue and Duties in January 2014 and subsequently received approving comments of the public and business. The new Government has actually frozen implementation of this reform, and has assigned it a marginal signiŠcance  2 ‰ ­  135 22. 
  332. 332.   10,     . ˆ 
  333. 333. €
  334. 334. In less than 2 years Ministry of Revenues and Duties of Ukraine led by Oleksandr Klymenko was able to reduce the number of taxes and duties in Ukraine from 135 to 22. Within the framework of continuation of the work on systemic simpli cation of the tax system, a concept on reduction of number of taxes and duties up to 10 has been developed, with a signi cant simpli cation of reporting and reduction of payment periods. Implementation of this reform will allow making tax system simpler and reducing the time and resources of business for administering of tax payments
  335. 335. 41
  336. 336.    HOW TO CREATE UNDERSTANDABLE AND 
  337. 337.  
  338. 338. ­   PREDICTABLE TAX SYSTEM IN UKRAINE „  Harmonization of tax reporting and accounting Ž
  339. 339.    Electronization of tax procedures and services  
  340. 340. ,  ,
  341. 341. € 2012-2013 , . … 
  342. 342. Doing Business According to the businessmen, electronic services, which were implemented in tax and customs areas in 2012-2013, consider-ably simpliŠed business environment in Ukraine. These assessments are reŒected in the Ukrainian success in the World Bank Doing Business ‚ 
  343. 343.  ,  , . …   ‡ , 2011 . ƒ €   ,  € 2014 . 
  344. 344.  
  345. 345. 
  346. 346. Such initiative will make tax accounting simpler and clearer, will reduce the amount of time and cost for both business and tax o›cials. This convergence, as a strategic objective, has been documented in the Tax Code of Ukraine, adopted in 2011. Ministry of Revenue and Duties, together with the Investment Council formalized this idea into a concept that was presented in February 2014. Now it is necessary to complement the existing framework document with an implementation algorithm and to bring it into action Ukraine in rankings Doing Business-2012, 2013, 2014, 2015: Position 112 2014 Position 96 2015 Position 140 Position 152 2012 2013
  347. 347.    42 
  348. 348.  
  349. 349. ­   HOW TO CREATE UNDERSTANDABLE AND PREDICTABLE TAX SYSTEM IN UKRAINE  
  350. 350. Ž ­ Ž 
  351. 351. . ­    ,  
  352. 352. €. A full-scale launch of the Electronic Taxpayer Cabinet and Electronic Remote Business Audits are the priority issues. Contacts of business and the state at the level of e-services would not only signiŠcantly speed up the procedural issues, but would eliminate the human factor. Ž ­ Electronic Taxpayer Cabinet …  2013
  353. 353.  . 
  354. 354.  . , 
  355. 355.  , ,  « ». …   , €  ,  
  356. 356. This tool has been put into operation in 2013 in the framework of systemic work on simpliŠcation of procedures. Today, it has a great potential to expand its use. In particular, the electronic cabinet can become the basis for uniŠcation of all types of public administrative services, provided to citizens, on the principle of single window. This will ensure savings of time and e‹ort to citizens and business, it will allow to execute documents and get certiŠcates/licenses in a few minutes, without having to visit governmental agencies Ž 
  357. 357. Electronic Remote Business Audits … 1 2014 . ’ €,   -  . ,
  358. 358. €
  359. 359. ,  , € . ‡
  360. 360.  
  361. 361. ,  
  362. 362. This tool has started working on January 1, 2014. Its main function, in addition to simpliŠcation of procedural issues is to reduce the corruption risks and administrative pressure on business. Within the framework of work of the new tax agency, the State Fiscal Service, remote audits had not been canceled, but, virtually, are frozen and are not used. No popularization or development of this technology, no encouragement of taxpayers to use such service is observed
  363. 363. 43
  364. 364.    HOW TO CREATE UNDERSTANDABLE AND 
  365. 365.  
  366. 366. ­   PREDICTABLE TAX SYSTEM IN UKRAINE
  367. 367. Partnership business and the state €, ,   .    € , .
  368. 368. , €
  369. 369. , . ,
  370. 370. . ‚ , € „,
  371. 371.   €
  372. 372. Most of the reforms that are required in Ukraine now, have already started being implemented in previous years. Today it is necessary to cast away political prejudices, and to ensure the continuity of the reforms and their predictability for citizens, businesses and foreign partners. At the time of crisis and entry into the European markets, an important point in reforming Ukraine is creation of partnerships between business and the state, support in discovering new horizons. The State must not only listen, but actually hear the business. Only dialogue, only the search for a compromise will allow both, to extinguish the conŒict in Donbas, and to put into motion economic reforms in the whole country. 
  373. 373. ,  ‰ ­,
  374. 374. ,     –
  375. 375.  
  376. 376. „  – ! From our side we, the whole team of experts under the leadership of Oleksandr Klymenko, are willing to apply all our experience and knowledge in order to make our dream and the dream of millions of Ukrainians - a peaceful and prosperous Donbas and Ukraine as a whole – come true !  ! Thank you for your attention !
  377. 377. About Oleksandr Klymenko Oleksandr Klymenko, 34, is considered by many to be the nancial wunderkind of the economy of Ukraine. Despite his relative youth, Klymenko, who holds a doctoral degree in nance, was able to introduce reform and transparency to virtually every level of the Ukrainian tax, duties and customs system despite the barriers of conservatism and self-interest he had to ght along the way. In particular, Oleksandr Klymenko’s tenure as Minister of Revenue and Duties in the previous government was marked by a consistent integration of the Ukrainian tax system with European Union members, motivated by the explicit goal of attracting signicant foreign investment into the economy https://facebook.com/VosstanovleniyeDonbassa http://oleksandrklymenko.com In the presentation was used photographs by Reuters, AFP, Getty Images, .ˆ, Associated Press, Andy Rocchelli/Cesura/LUZ, Evgenii Shibalov/Facebook, Sergey Bogachov/Facebook, Roman Pilipey/EPA/UPG, ƒ‚‰ˆ-‚‰, Youtube- «‘
  378. 378. » (youtube.com/user/NewsLentaLine), Dominique Faget/AFP/East News, Lucas Jackson/Reuters/Vostock Photo, Alexander Khudoteply/AFP/East News, Vadim Ghirda/AP/East News, ‰—.ua, ˆƒ‰ «‡», KyivPost.com, Lifedon.com.ua, Nahnews.com.ua, .ua, Objectiv.tv, Ipress.ua, ‚‡.ua,  .ua, Forbes.ua, .ua, Reuters/Vostock Photo, ƒ /UkraFoto, UBR.ua, Vgorode.ua, Bigmir.net, Comments.ua, Investgazeta.ua, Dt.ua, Rbc.ru, reilalex.livejournal.com, ontrajournal.blogspot.com.
  379. 379. ©Oleksandr Klymenko. 2014 All Rights Reserved

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