01 October 2015, 08:31
Opening the parliamentary hearings, First Deputy Chairperson of the Verkhovna Rada Andrii Parubii noted that small and mid-sized businesses are the socioeconomic basis to revive and develop the Ukrainian economy. He said small and mid-sized business is the basis of the Ukrainian economy of the European level. Besides, Parubii considers that this is exactly the small and mid-sized business to substantially define the rates of the economic growth, structure and social orientation of the gross domestic product.
Parubii also said that one of the major functions of small and mid-sized business, which is very important, is to create millions of jobs. "To achieve remarkable economic success, state policy aimed at elimination of defects and creation of competitive advantages for the development of small and mid-sized business must be elaborated. That policy should be based on the best world's experience and take in account Ukrainian realia. Such policy must be formed by the authorities along with the business, experts and civil society in the course of the permanent dialogue," he said.
Chairperson of the Verkhovna Rada Committee on Industrial Policy and Entrepreneurship Viktor Halasiuk noted that the most important people in the country "are not the President, Prime Minister or deputies. The those are you, who risk and invest own money, own time and energy to business. Those, who create jobs and pay taxes to the budgets of all levels. Thus, we will give you the opportunity to talk the first. Later speakers will be representatives of central executive bodies, people's deputies, they will be those to response to what you tell us here today."
Halasiuk said that the fall of the purchasing power due to substantial hryvnia devaluation, too high and administering-complicated taxes, which are among the highest in Europe, burden on the salary fund are the problems entrepreneurs face every day. "These problems are the smuggling at the customs, corruption at all levels, the rust that ruins the economy of the country and the society and blocks our development. The problem is also an incredibly overstated cost of loans, which makes them absolutely unaffordable for small and mid-sized businesses," the head of the Committee said.
According to him, that is far not the whole list of the toughest and systemic problems Ukrainian entrepreneurs face everyday. "To settle them, our Committee has elaborated a model of industrial policy we are gradually embodying through taking specific laws, and particular role in this model is given to the support of small and mid-sized business," he said.
Speaking about what exactly has been done for the development of small and mid-sized business, the Chairperson of the Committee reminded about several adopted laws, in particular, the Law of Ukraine "On deregulation," which removes a number of regulatory barriers and limits the rights of control bodies, bans the withdrawal of server equipment from IT-companies.
Halasiuk also reminded about the new Law of Ukraine "On licensing," which halves the number of types of activity subjected to licensing, cancels double licensing of active pharmaceutical ingredients, as well as about the Law of Ukraine that introduced a 10-year ban on the exportation of unprocessed timber from Ukraine to allow domestic woodworking and furniture-producing sectors to have time for a rescue and development.
According to the Chairperson of the Committee, the laws on large-scale energy modernization of the state-financed sector through the energy-servicing contracts used in European countries will allow economizing up to a billion cubic meters of gas a year not buying it in Russia. The Committee has prepared extremely important investment draft laws for second reading. These draft laws touch state-private partnership, industrial parks, etc. The Committee has elaborated draft laws to abolish additional import duty for raw materials for Ukrainian producers and on export-credit agency, which has to help Ukrainian manufacturers, small and mid-sized businesses enter the European and other new foreign markets. Halasiuk also mentioned the draft law on support to small and mid-sized business, etc.
The Committee has initiated the start of the Anti-crisis Economic Headquarters to help entrepreneurs tackle important issues in regulatory, tax, customs and other fields.
However, Halasiuk noted that all the mentioned is not enough. "We will continue our work basing first of all on your recommendations. To be effective, the authorities have to have normal social dialogue with the businesses, experts and people," he noted.
Other participants of the parliamentary hearings were president of the Ukrainian Business Association Volodymyr Chepovyi; head of the First Professional Reforms Government initiative Andrii Dlihach; co-founder of the Nova Kraina [New Country] civil platform Valerii Pekar; head of the Entrepreneurs Protection Union Serhii Dorotych; board chairperson of the Turkey and Ukraine Industrial Businessmen Association Rasim Bekmezci; representatives of the Ukrainian Industrialists and Entrepreneurs Union to the European Union Mykola Tymoschuk; director of the IT of Ukraine Association Viktor Valeev, etc.
The participants of the event heard the reports on the following topics: "Strategy and modernization of the Ukrainian economy to ensure stable growth," "Trends in reformation, taxation of small and mid-sized business," "Customs policy as an instrument of economic growth," "Mechanisms of unshadowing of economy and legalization of labor market," "Problems of small and mid-sized business," "Smuggling and corruption at the customs as a threat to Ukrainian industry and investments," "EU Program for Support to Small and Medium-Sized Enterprises in Ukraine," and "Measures aimed at expansion of access of small and mid-sized business to funding."
Representatives of the Cabinet of Ministers of Ukraine have also taken floor before the participants of the parliamentary hearings.
In his speech, Minister of Justice Pavlo Petrenko noted that the State Fiscal Service, which is not represented by anyone at these hearings, should play the role of a servicing center for the entrepreneurs "instead of being a body engaged in blackmailing, persecution of entrepreneurs, bribetaking and creating problems."
Petrenko informed about the comprehensive inspection held at the State Fiscal Service, which is currently being carried out in compliance with the Law of Ukraine "On lustration." He noted that "very many employees there [at the State Fiscal Service] have worked for the Authority for decades and the rules they are working there at have outdated."
He said the position of the Government and the position of the Prime Minister was very clear: if the leadership of the State Fiscal Service fails to start staff reshuffles, the way it was done in police, the leadership of the State Fiscal Service itself will be reshuffled.
According to the justice minister, "the State Fiscal Service, which currently employs 50,000-60,000 people, has to change the whole philosophy of its interrelations with entrepreneurs. This should be a servicing body for small and mid-sized entrepreneurs. Moreover, small and mid-sized business should not know the appearance of a tax officer, [the State Fiscal Service] should in fact be a consulting center for the big business, instead of being a body engaged in other bad things."
"The Government's position is very clear: either through a comprehensive reform, recruitment of new people, which in fact is very simple to do… The issue of reformation of the State Fiscal Service will soon be raised very seriously: it either needs a comprehensive reform or a personnel reshuffle," he noted.
Speaking about the relations between the Ministry of Justice and the business, Petrenko said that all the problems had been addressed "however, we continue moving towards the provision of good services. Thus, we have introduced the system of online-services."
According to the member of the Government, one and half millions of entrepreneurs had to annually obtain different extracts and certificates at the Ministry of Justice, [its] registration service. "You, all of you, probably know what it is like. Lines lasting several days or UAH 300 to speed up the process. On April 7, we introduced that system, it gives you an opportunity in 30 seconds to download any document without chatting with any official. A million of Ukrainians has so far used that service. We have also introduced the similar system of online registration of companies. Now we want to simplify the submission of any reports or statements to the Ministry of Justice as much as possible. Through the Internet only…. in order to avoid the need of your going to officials. And finally, many people here have said that the major problems are monopolization and bureaucracy. Our philosophy is very simple: the Ministry of Justice is the first ministry to reject its registration functions. It transfers these functions to notary officers and local authorities," the minister said.
At the end of his speech, Petrenko noted "this philosophy of simplification of life of an ordinary Ukrainian, either businessman or a person, who is not engaged in any business, must be the basis of the work of all bodies having contact with entrepreneurs."
In her speech, Head of the State Regulatory Service Kseniya Liapina noted that small-sized business today is fundamental for the whole Ukrainian economy. Small and mid-sized business today gives 70% of all tax incomes. "Those, who think that big business pays taxes, is wrong. Small and mid-sized businesses are the ones to finance pensioners, teachers, doctors. These are only 7.5 million of employees. Add 2 million of private businessmen and you'll see that almost half of working population are small and mid-sized entrepreneurs. This is almost 70%, over 60% of sold products. The GDP is created by the small and mid-sized business in Ukraine. All this happens despite the fact that we have many problems. Over these 25 years, small and mid-sized business has learnt to survive in any conditions. It is the strongest in Europe. It can compete with any business," she noted.
Liapina said that the greatest problem is the pressure of the control bodies. Thus, of 79 control bodies only 32 remain.
The head of the State Regulatory Service said a moratorium on inspections had been imposed. The number of inspections has decreased. All that did not include fiscal inspections. She said the fiscal inspections "unfortunately live their own life. And all our efforts of deregulation have unfortunately failed in reaching them."
Liapina addressed the participants of the hearings and called on them to assist in deregulation. She said that in compliance with estimations of experts, different taxes and fees had been cut by UAH 10 billion.
The head of the State Regulatory Service also informed about some innovations in improvement of doing business, in particular, about the m-test, which is applied almost in all European countries. Before passing any regulation spread for small-sized business, a state body has to estimate the cost of this regulation not for the budget, but for the business. She said such a requirement had already been prepared, a draft resolution that introduces that m-test was to be send for consideration by the Government.
Business-ombudsman on Ukraine Algirdas Semeta also took floor before the participants of the hearings. He reported on his role in the settlement of problems of small and mid-sized businesses.
He said he had started to work four months earlier and had received 360 complaints from entrepreneurs. A total of 84% of those complaints were the ones sent by representatives of the small and mid-sized business.
He said that over the four months, a total of 40 cases have been settled, it means that decisions that helped the entrepreneurs have been taken. The direct economic effect from the activity of the business-ombudsman has made up UAH 110 million.
Semeta also drew attention to several problems noted by the business — administering of taxes, 40% of complaints touched that topic. Another problem is the actions of the law enforcement bodies: a total of 20% of entrepreneurs sent respective complaints.
The business-ombudsman informed about the elaboration of the systemic report on the administering of taxes that would contain a conclusion on the settlement of this problem.
Minister of Economic Development and Trade Aivaras Abromavicius said that the economic situation in the country remains complicated. He agreed with one of the speakers, who said that three things are needed to successfully develop the economy and entrepreneurship: tax reform, de-monopolization and fight against corruption.
Abromavicius supported the idea to create favorable conditions in Ukraine for all entities, but, first of all for small and mid-sized business.
Summarizing the results of the hearings, Chairperson of the Verkhovna Rada Committee on Industrial Policy and Entrepreneurship Viktor Halasiuk noted that the parliamentary hearings were the signal to the Government to adjust normal, open dialogue with the business.
Halasiuk addressed the participants of the hearings requesting to send their proposals for consideration of the Committee.