What bills do the business community need today?
The autumn political season in Ukraine usually tends to be the most active.
The Office of the National Investment Council would like to draw the attention of Members of Parliament to the most important bills for the business community, which have already been registered at the Verkhovna Rada and are now awaiting voting. These bills are No.3760 (on state support of investment projects with significant investments), No.1182-1d (on inland waterways), and No.3607 (on the establishment of a business ombudsman in Ukraine).
In this column, I would like to briefly highlight two of the above bills: their importance, what advantages do they offer, and how these bills will affect the Ukrainian economy and investment climate.
Bill on state support of investment projects with significant investments No.3760
Over the past 20 years, Ukraine has attracted three times fewer investments than our neighboring countries, while many projects were not implemented in Ukraine precisely because investors preferred countries that already offer instruments of state support for investors.
Bill No.3760 introduces several incentives for Ukrainian and foreign investors who make significant investments in the Ukrainian economy. The ultimate goal of this law is to increase the competitiveness of Ukraine on the global market and to encourage potential investors to come to Ukraine.
In particular, the bill will provide:
- tax incentives (temporary exemption from income tax, as well as duties and VAT when importing new equipment into Ukraine);
- simplified provision of land necessary for the implementation of the investment project;
- construction/reconstruction of related infrastructure at the expense of the state (highways, electricity, gas, heating, water networks, utilities, etc.);
- investor guarantees’ consolidation by signing a direct agreement with the Government of Ukraine for 15 years.
The total amount of state support will not exceed 30% of the overall investments in the project.
State support will be available for Ukrainian and foreign investors who intend to implement projects over 30 million euros in industries with high added value and create at least 150 new workplaces with an average salary of 15% higher than the average wage in the region. The project implementation period should not exceed five years.
This bill was developed based on best practices of the European Union and our neighboring countries, with which Ukraine competes for the investors. It has already been voted in the first reading by the Parliament on July 21, 2020.
Bill on Inland Water Ways No.1182-1d
Today, only 1% of freight traffic of Ukraine is carried out by river transport, while 59% of cargo is transported by rail and 40% – by road. It is worth noting that river transportation is the cheapest and most environmental-friendly way of delivering goods. Therefore, the restoration of inland waterways should be one of the main priorities of the state in terms of economic growth.
Current legislation has a fragmented character and can’t comprehensively address the issues of the river transport industry’s functioning and development.
Bill No.1182-1-d will start reforming river transportations in Ukraine, turning Ukrainian rivers into powerful transport arteries and introducing efficient river logistics. We expect that the adoption of the bill may increase the volume of river freight traffic up to 30 million tons per year, and it can foster efficient river logistics by transferring part of the cargo from the road transport onto the river. Adoption of bill No.1182-1-d will allow:
- to stimulate the development of the shipbuilding industry and creation of new workplaces;
- to liberalize the river transport market and boost international trade;
- to develop the E-40 waterway between Ukraine and Belarus, which would provide an additional 7 million tons of cargo per year on the Dnipro River;
- to deregulate the industry by introducing free passage of locks and partial dues exemptions in seaports for vessels of inland navigation;
- to simplify administrative procedures for vessels registration and issuance of documents;
- to implement European norms, as well as attract new foreign investments.
Bill No.1182-1-d was adopted by the Parliament in the first reading on April 24, 2020.
The business had been long advocating for the adoption of these bills and they all were drafted with the participation of business associations and industry experts. Their adoption will send a signal that the Ukrainian policymakers are willing to maintain a dialog with the business community and to develop a sophisticated FDI-oriented framework.
Olga Magaletska is head of the office of the National Investment Council to the president of Ukraine.
