Kyiv, July 12, 2007 — IFC, the
private sector arm of the World Bank Group, has helped Ukraine establish
a new law on inspections of business activities. The president of Ukraine
recently signed the law, which was adopted by the country's parliament
in May 2007. The law, which was drafted with assistance from IFC, will
streamline the local inspections system and significantly decrease the
burden on small and medium enterprises.
A 2006 IFC survey of SMEs in Ukraine
revealed that the inspections process is one of the most burdensome administrative
procedures for private enterprises. State agencies inspect about 95 percent
of all enterprises annually. In 2006, businesses spent an estimated 189
million Ukrainian hrivnyas ($37 million) on staff costs to deal with inspectors
and control agencies. To help reduce this burden, the new law establishes
principles of conduct for inspections by state authorities. It specifies
the maximum duration of inspections, determines a clear procedure for conducting
site visits, and requires implementation of a risk-based system, which
links the frequency of inspections to the level of risk a firm's operations
pose to society and the environment.
The law also foresees the compulsory
use of checklists, which outline requirements for inspections. Businesses
will be able to access these checklists beforehand to help improve their
compliance with regulatory requirements. The law will also limit
unplanned inspections. Previously, more than 50 agencies could conduct
inspections without prior notification, sometimes causing significant problems
for businesses. Entrepreneurs now have the right to involve third parties
during inspections and to make video and audio recordings of this process.
IFC will help the government implement
the law by working with key pilot inspectorates to develop and introduce
checklists. IFC will also inform entrepreneurs about their rights and responsibilities
as established by the law.
Ksenia Lyapina, a member of Ukraine’s
parliament, said, "The law aims to protect entrepreneurs. It
should help improve Ukraine’s business-enabling environment, allowing
the country to reach a European standard. On behalf of our committee,
I would like to express my gratitude to IFC for the significant impact
of this law, as well as for the introduction of best practices reflected
in the law."
IFC's Ukraine Business Enabling Environment
Project helped draft and promote the law on inspections in cooperation
with a working group headed by Ukraine's Parliamentary Committee on Industrial
and Regulatory Policies and Entrepreneurship Policy. The project is funded
by the European Commission.
IFC, a member of the World Bank Group,
fosters sustainable economic growth in developing countries by financing
private sector investment, mobilizing capital in the international financial
markets, and providing advisory services to businesses and governments.
IFC’s vision is that poor people have the opportunity to escape poverty
and improve their lives. In FY06, IFC committed $8.3 billion, including
syndications, to 284 investments in 66 developing countries. For more information,
please visit www.ifc.org.
About the European Commission
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body of the European
Union. The EU is made up of 27
member states who have
decided gradually to link their know-how, resources, and destinies. During
a 50-year period of enlargement, they have built a zone of stability, democracy,
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