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Ukraine Adopts Law on Business Permits Drafted by IFC


In Washington, DC
Irina Likhachova
Phone: +1 (202) 473 1813

E-mail:
ilikhachova@ifc.org


Kyiv, September 7, 2005—Ukraine’s Parliament, the Verkhovna Rada, has adopted a new law on the system of permits for business activities, which was drafted by the State Committee for Regulatory Policy and Entrepreneurship in cooperation with IFC’s Ukraine SME Policy Development Project, funded by the European Commission.

The adoption of this law is a first important step in reforming the permit system and reducing the barriers to launching and operating a business in Ukraine. The current system is in dire need of comprehensive reform: there are more than 1,200 types of business permits, while their issuance is regulated by 167 statutes, 150 regulations of the Cabinet of Ministers, and more than 1,500 normative acts issued by municipalities and state regulatory agencies.

The new law will significantly decrease the number of permits required for business activities in Ukraine.  It will also diminish the scope for government agencies and other institutions to create new permits and will greatly simplify the procedures for obtaining permits for business activities that do not pose heightened risk to society or the environment.

Through its fundamental provisions, the new law

  • prohibits issuance of permits that are not directly established by laws of Ukraine;
  • introduces the application principle to issuance of permits, making it nearly automatic for business activities that are not in a high category of;
  • gives administrative responsibility to permit issuing agencies for any violations of the laws governing their operations.

The president of Ukraine, Viktor Yushchenko, designated adoption of the law on permits as a priority for the country’s parliament. In his opening remarks at a recent forum, “Regulatory Policy – Guaranteeing the Openness and Transparency of Power,” he underlined that upon the adoption of this law over 1,000 unnecessary regulatory documents would lose their force in a single day.

Speaking on the law’s potential to improve the business climate, Andrey Gurevich, Manager of IFC’s Ukraine SME Policy Development Project, stressed that “adoption of the permit law reduces the cost of launching and running a business in Ukraine, as it removes a number of key regulatory hurdles for entrepreneurs. In addition, it allows for harmonization of Ukrainian legislation with the norms and requirements currently in force in the European Union.”

The European Union numbers 25 nations determined to shape their future together. Through 40 years of enlargement these countries have built a zone of peace, stability, progress, and solidarity. The European Union is a model for overcoming conflict and promoting reconciliation through close cooperation to achieve common goals while respecting national sovereignty and territorial integrity. But the EU is not focused solely on itself: its ambition is to share its values with countries and peoples beyond its borders. The European Commission is the EU’s executive body.

The mission of IFC (
www.ifc.org) is to promote sustainable private sector investment in developing and transition economies, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the emerging markets, mobilizes capital in the 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 countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.

Ukraine became a shareholder and a member of IFC in 1993. Through the end of fiscal year 2005 (June 30, 2005), IFC has invested $335 million in 18 projects in the country. IFC expanded its investment program in Ukraine significantly in 2004-2005, committing $255 million in the agribusiness, financial, and general manufacturing sectors. IFC has also been conducting an extensive advisory program since 1992, which initially focused on the privatization of small businesses, land, and idle construction sites. Current donor-funded programs offer advice on corporate governance, leasing, and agribusiness. Programs also seek to improve the business environment and promote the growth of small and medium enterprises.