Panel discussion with Government and NABU. 14th Annual Ukraine Investor Conference
03.03.2018
- Dragon Capital held its 14th Annual Ukraine Investor Conference on March 1-2 in Kyiv. As in previous years, the event gathered close to 300 guests, with top speakers addressing the audience of international and local investors including Prime Minister Volodymyr Groysman, other government members, top management of leading Ukrainian companies, representatives of international financial institutions and western diplomats. Over 25 Ukrainian and foreign TV channels, news wires and other print and online media covered the event.
Below please find highlights from the keynote speeches delivered by Hennadiy Zubko, Deputy Prime Minister of Ukraine – Minister of Regional Development, Construction and Housing and Communal Services of Ukraine, Maksym Nefyodov, First Deputy Minister of Economic Development and Trade of Ukraine, Olga Trofimtseva, Deputy Minister of Agrarian Policy and Food of Ukraine, Pavlo Petrenko, Minister of Justice of Ukraine, Artem Sytnyk, Director, National Anti-Corruption Bureau of Ukraine.
Mr. Zubko spoke on Ukraine’s ongoing institutional transformations. As part of decentralization reform, 722 regional communities have been created all over Ukraine, taking responsibility for budgeting authority on the local level. - Currently, over 51% of consolidated budget funds are formed at the municipal/rural level. Together with shifting funding to local communities, a system of KPIs was launched for community governments, the Human Development Index and the Regional Competitiveness Index, with the latter focused on promoting the regions’ investment attractiveness. But with local governments receiving access to higher volumes of funding, checks against corruption at the local level need to be enhanced.
- Separately, Mr. Zubko said over 65% of the Ukrainian population receive utility subsidies, and without monetizing the subsidy system, motivation for energy efficiency will remain low. Together with monetization, more stringent verification criteria for subsidy recipients should be introduced.
- Mr. Nefyodov said the Ministry of Economy continued to work on business deregulation and other aspects of improving the investment climate, part of a strategy adopted two years ago, with around 50 legislative acts remaining in the pipeline.
- Ukraine aims to make it into the Top-50 in the Doing Business ranking, having already been recognized as the world’s best improving country in the ranking since 2010.
- Reform of controls (in addition to reform of rules) is under way, with risk-oriented procedures to be introduced to avoid arbitrary selection of companies for review by authorities.
- An online registry of scheduled inspection visits is already set up, open for every Ukrainian company to view information on upcoming checks by authorities, with arbitrary inspections prohibited.
- Open data systems are utilized in different government projects (like public procurement) help reduce corruption and inefficiency within government bodies. After launching of the Prozorro public procurement system, the Economy Ministry developed the Prozorro.
- Sale platform for sales of state property (UAH 6.5bn or $244m worth of assets was sold in 2017). It will be utilized for upcoming privatizations of thousands of small state enterprises and other applicable assets following the recent passage of new privatization legislation. First tenders are expected in May-June.
- Ms. Trofimtseva said land reform remains high on the government’s agenda, with technical work on relevant legislation ongoing.
- The government understands the importance of properly communicating the reform and its benefits for land owners.
- Ms. Trofimtseva does not expect sharp growth of FDI immediately after the land market is launched, as other reforms, particularly those to strengthen rule of law, are needed in parallel.
- She also spoke on Ukraine’s harmonization with EU standards in agriculture and food processing, with the government continuing to implement relevant provisions of the EUUkraine association and free trade agreement.
- Mr. Petrenko said the ongoing judicial reform involves a reshuffle of more than 8,000 judges, with new people entering the system.
- The Supreme Court has been reformed, with 115 judges selected via a transparent and competitive procedure and a majority of the pre-reform Supreme Court’s judges not making it.
- The regional and appeals courts are now to be overhauled. Mr. Petrenko voiced his support for the anti-corruption court, saying it was likely to be formed by end2018. To become effective, the new court should include only new people from outside the system, similar to other newly created anti-corruption institutions.
- Mr. Sytnyk said businesses’ confidence in NABU increased over the past year, with companies requesting protection against abuses by different controlling bodies.
- However, a major problem is that the existing court system is not ready to work with corruption cases, which gives little incentive to NABU detectives.
- Moreover, there is significant pressure from vested interests elsewhere in response to NABU’s high-profile investigations launched last year. Therefore, launching an independent anti-corruption court is crucial to ensuring that Ukraine’s anti-corruption drive succeeds.