This year’s progress in Doing Business rating provides momentum for broader investment climate reforms
By Qimiao Fan, World Bank Country Director for Belarus, Moldova and Ukraine – Exclusively published in the Day daily.
A new World Bank Group report released today has some good news for Ukraine. Doing Business 2014: Understanding Regulations for Small and Medium-Size Enterprises finds that Ukraine has improved its business regulatory environment for local entrepreneurs by implementing regulatory reforms in eight areas between June 2012 and June 2013.
In the past year, Ukraine has implemented more reforms than any other country worldwide in areas tracked by Doing Business. The Report shows that Ukraine made starting a business easier by eliminating the requirement for registration with the statistics authority and by eliminating the cost for value added tax registration; it made dealing with construction permits easier by introducing a risk-based approval system, eliminating requirements for certain approvals and technical conditions, and simplifying the process for registering real estate ownership rights; it made getting electricity easier by streamlining the process for obtaining a new connection; Ukraine also made transferring property easier, by streamlining procedures and revamping the property registration system.
As a result, this year Ukraine is ranked 112 among 189 economies globally. The authorities deserve much credit for their systematic efforts over the past two years to overhaul obsolete and burdensome laws and regulations that, until recently, had kept Ukraine’s ranking very low.
At the same time, Doing Business 2014 shows that much remains to be done as Ukraine is still in the bottom half of the global ranking on the ease of doing business. Indeed, Ukraine compares unfavorably with its neighboring countries: Poland is ranked 45, Hungary – 54, Belarus – 63, Romania – 73, Moldova – 78 and the Russian Federation - 92. In particular, the Report shows that companies operating in Ukraine still face high costs in getting electricity (ranked 172), protecting investors (ranked 128), paying taxes (ranked 164), trading across borders (ranked 148) and resolving insolvency (ranked 162). Continued strong efforts will be needed to improve regulations and reduce costs in all these areas.
More importantly, other aspects of the business environment that are not measured by Doing Business but matter to firms and investors remain challenging in Ukraine. Businesses, particularly small and medium-size companies, continue to suffer from macroeconomic instability, presence of large number of permits and licenses, frequent and ad hoc inspections, non-transparent application of laws and regulations, corruption, inconsistent enforcement of competition regime and insecure property rights. These challenges must be addressed to further improve the business environment in the country.
Ukraine’s significant improvement in this year’s Doing Business ranking shows that a lot can be achieved in a short time when there is political will and leadership for reform. We hope that the Government, in close dialogue with the business community, will now apply even higher level of political will, leadership and energy to tackle broader obstacles in the business environment in the country. Ukraine should build on the momentum created by this year’s improvement in the Doing Business ranking, seize the opportunity of possible signing of the Association Agreement and Deep and Comprehensive Free Trade Agreement with the EU, accelerate reforms and make Ukraine a better place for business and its people! We, at the World Bank Group, will continue to assist the country in its reform efforts.