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The Strategy for Reforming the Permit System in Ukraine


Washington
Irina E.Likhacheva

Phone: +1 202 473 1813

Email:
ilikhachova@ifc.org
                                               

Ukraine


Natalia Shevchuk,
Phone: (044) 490-64-00,
Fax: (044) 490-64-20,
Email:
nshevchuk@ifc.org


Ukraine, April 5, 2005 — Participants of the round table “Ways of Reforming the Permit System in Ukraine”, organized by the International Finance Corporation (IFC) with the financial support of the European Commission, agreed on 3 key principles for successful reform of business permits in Ukraine.

Government representatives, members of the Ukrainian Parliament, experts from international organizations, and business associations recognize that the current system of issuing business permits in Ukraine is outdated and requires urgent reform.  The system is a significant administrative barrier for opening a business as well as for the further development of already functioning enterprises.  In Ukraine there are over 1,200 different types of permits, which are regulated by 167 laws, 150 decrees of the Cabinet of Ministers, and about 1,500 normative acts issued by local authorities.

The participants of the round table determined 3 key principles of reform of the permit system:

1. Adopt the Framework Law “On the Permit System of Ukraine”. The Law will set forth the principles of state policy governing permit issuance procedures, set limits to the authority exercised by permit issuing agencies and municipalities, and standardize requirements for the content of legislation governing permits.  According to the draft of the new Law, only permits which are directly stipulated in the Law will remain obligatory, and the issuing order will be within exclusive competence of the central government authorities.

2. Standardize regulations governing permit issuance procedures. Special attention should be paid to review, clarification and dissemination of state agencies’ internal instructions and procedural requirements for issuing permits. As a result, the permit issuance process should become simpler and more transparent to businesses.

3. Actively inform entrepreneurs of their rights and responsibilities as market participants. This includes disseminating regulations for employee and consumer safety and for protection of the environment, as well as disseminating information on agency requirements and on exact procedures for obtaining permits.

Mr. Andriy Dashkevych, Head of the State Committee on Regulatory Policy and Entrepreneurship of Ukraine, is confident, that adoption of the new law will harmonize relations between entrepreneurs and state authorities, and will help to adapt Ukrainian legislation to EU requirements.

The manager of IFC’s SME Policy Development Project, Mr. Andrey Gurevich, believes that introduction of the application principle for obtaining permits for activities not related to use of hazardous technologies and mechanisms will be an important part of the new Permits Law. Successfully implemented by many EU countries, the application principle allows an entrepreneur to complete a simple form confirming that he/she understands and meets the requirements of state agencies regulating his sphere of business, in lieu of obtaining a permit. Importantly, the entrepreneur need not wait to receive explicit approval from the state to launch or expand operations. Oversight of compliance to regulations is conducted through inspections of the enterprise.

The participants of the round table “Ways of Reforming the Permit System in Ukraine” agreed to continue co-operation to support the adopted concept of the reform and to conduct regular round table discussions.

Amongst key-speakers of the round table were the Director of IFC’s Private Enterprise Partnership, Mr. Christian Grossmann, the Head of the State Committee of Ukraine on Regulatory Policy and Entrepreneurship, Mr. Andriy Dashkevych, ead of the State Committee of Health and Safety at Work – Mr. Olexander Storchak, Deputy Head of the State Fire Safety Department – Mr. Ivan Krisa, Deputy Minister of Health – Mr. Serhiy Berezhnov.  Members of the Ukrainian Parliament, representatives of the European Commission, non-governmental organizations, and business associations also took part in the discussion.

The International Finance Corporate (IFC) is the private sector lending arm of the World Bank Group. IFC (www.ifc.org) finances private sector investments in its member countries, mobilizes capital in international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. In Ukraine, IFC has been active since 1993, carrying out investment activities and implementing technical assistance projects.  IFC’s direct investments in Ukrainian companies have reached 200 million US dollars.

European Union numbers 15 Members States:  15 different nations determined to shape their future closely together. Over a period of enlargement of 40 years, they have, together built a zone of peace, stability, progress and solidarity. The European Union is a model for overcoming conflicts and promoting reconciliation through close co-operation to achieve common goals, while respecting national sovereignty and territorial integrity. But the EU is not focused on itself:  its ambition is to share its achievements and values with countries and people beyond its borders. The European Commission is the EU’s executive body.