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You're reading: Ukrainian president signs law on economic experiment in shipbuilding

Ukrainian President Viktor Yanukovych has signed a law on an economic experiment in state support for the shipbuilding industry passed by the Ukrainian parliament in September, reads a posting on the parliament's Web site issued on October 5, 2012.

The law approved by the parliament on September 6, 2012 implies the conducting of an economic experiment aimed at creating the conditions necessary for increasing the production volume of the branch, and revenues to the budget, from January 1, 2013 to January 1, 2023.

The experiment applies to shipbuilding enterprises (class 30.11 group 30.1 section 30, class 33.15 group 33.1 section 33 of the classification of types of economic operations GK 009:2010) and research design organizations (class 72.19 group 72.1 section 72, class 71.12 group 71.1 section 71, class 71.20 group 71.2 section 71 of the classification of types of economic operations GK 009:2010), which provide services to shipbuilding enterprises.

The key directions of state support for shipbuilders are the following: government guarantees on loans issued by foreign states, banks, and international financial organizations and on liabilities to foreign customers under foreign economic agreements (contracts); the cheapening of loans via partial compensation of credit rates of commercial banks to the level of the National Bank of Ukraine (NBU) discount rate at the date of payment of the credit rates and granting tax benefits and/or establishing special taxation regimes under the procedure stipulated in the Tax Code.

The procedure foresees exempting from value added tax (VAT) and duties imports of goods used in the building, repair and modernization of sea and river vessels and other types of craft, if they are not produced in Ukraine or they are produced in the country, but they are not in line with certification requirements of international classification bodies and requirements of customers as defined in contracts.

According to expert assessments, Ukraine’s share of the global civil shipbuilding market could be over 2% or at least $600-700 million, which is confirmed by orders to build vessels at Ukrainian shipyards in the general portfolio of orders.

With the total global tonnage of the sea fleet at around 800 million tonnes, annual demand is evaluated at no less than 35-40 million tonnes. The key suppliers of civil vessels on the global market (tankers, bulkers, container vessels and universal dry cargo vessels) are Japan, South Korea, Taiwan and China.

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