Pragma Consulting Group Newsletter

29/ 06/ 2022

Deregulation Plan: Passenger Carriages by Road Transport Regulation On June 16, 2022, the State Regulatory Service of Ukraine published a draft Plan for Support of Business and Deregulation Plan, which contains a preliminary list of deregulation measures, including the number of provisions, concerning necessary steps in the passenger transport sphere. In this issue: Permit procedures deregulation and demonopolization of markets De-shadowing of the taxi market Bus carriages market Permit procedures deregulation and demonopolization of markets The document contains both proposals of industrial and general measures. In particular, among proposed general measures, there are two that are important for the development of the transport sphere: liberalization of permitting procedures with simplified, declarative ones, and removal of regulatory conditions that lead to monopolization of certain markets. Simplification of permitting procedures and carrying them out based on the declarative principle is particularly important for the taxi and ride-hailing market, where, according to studies, over 90% of drivers operate without a valid license and without paying any taxes. The introduction of the simplified permitting system for such types of services presumably would be helpful for de-shadowing this market. In terms of removal of prerequisites for monopolization of markets, it is important for the bus carriages, as recently there were attempts to introduce regulation, restricting the number of bus carriers on market by introducing the exclusive right to service an interregional line. While this regulation was not introduced, there is also a number of current regulations that prevent certain carriers from entering the market. De-shadowing of the taxi market Apart from the general measures of simplification of permitting procedures, the draft Plan suggests taking measures, aimed at de-shadowing of the taxi market. While reform of regulation on this market is long-awaited, it is not clear what “de-shadowing of the market” stands for whether it implies strengthening control over compliance of carriers with existing regulation, complex reform, aimed at liberalization of permitting system and taxation model, or application of some other model. However, the Ministry of Infrastructure of Ukraine in the comments approved its further work on deregulation of the taxi market, as a prolongation of the work of MPs and the Ministry’s representatives, launched last year. Bus carriages market In addition to general measures, the plan contains a number of specific measures, aimed at improving the situation on the market for bus carriages. In particular, the document suggests the following measures: Modernization of obsolete norms and practices in the system of management of urban and suburban passenger carriages by busses that prevent investments in the market. Mainly, this measure concerns rules of selection of carriers for the bus lines, that lead to monopolization of the market by preventing new players from servicing certain lines. While such a step is important, it concerns only urban and suburban lines, where the carrier gets exclusive right for servicing the line but does not concern intercity lines. Application of the EU legislation in terms of access to the market of road carriages. In particular, the application European approach to providing licenses for carriages. Draft law no. 4560, aimed at implementation of this measure, was registered in the Parliament on December 30, 2020, yet it is still not considered even by the main committee on Transport and Infrastructure.

Deregulation Plan: Passenger Carriages by Road Transport Regulation

On June 16, 2022, the State Regulatory Service of Ukraine published a draft Plan for Support of Business and Deregulation Plan, which contains a preliminary list of deregulation measures, including the number of provisions, concerning necessary steps in the passenger transport sphere.

In this issue:

Permit procedures deregulation and demonopolization of markets
De-shadowing of the taxi market
Bus carriages market

Permit procedures deregulation and demonopolization of markets

The document contains both proposals of industrial and general measures. In particular, among proposed general measures, there are two that are important for the development of the transport sphere: liberalization of permitting procedures with simplified, declarative ones, and removal of regulatory conditions that lead to monopolization of certain markets.

Simplification of permitting procedures and carrying them out based on the declarative principle is particularly important for the taxi and ride-hailing market, where, according to studies, over 90% of drivers operate without a valid license and without paying any taxes. The introduction of the simplified permitting system for such types of services presumably would be helpful for de-shadowing this market.

In terms of removal of prerequisites for monopolization of markets, it is important for the bus carriages, as recently there were attempts to introduce regulation, restricting the number of bus carriers on market by introducing the exclusive right to service an interregional line. While this regulation was not introduced, there is also a number of current regulations that prevent certain carriers from entering the market.

De-shadowing of the taxi market

Apart from the general measures of simplification of permitting procedures, the draft Plan suggests taking measures, aimed at de-shadowing of the taxi market. While reform of regulation on this market is long-awaited, it is not clear what “de-shadowing of the market” stands for whether it implies strengthening control over compliance of carriers with existing regulation, complex reform, aimed at liberalization of permitting system and taxation model, or application of some other model.

However, the Ministry of Infrastructure of Ukraine in the comments approved its further work on deregulation of the taxi market, as a prolongation of the work of MPs and the Ministry’s representatives, launched last year.

Bus carriages market

In addition to general measures, the plan contains a number of specific measures, aimed at improving the situation on the market for bus carriages. In particular, the document suggests the following measures:

Modernization of obsolete norms and practices in the system of management of urban and suburban passenger carriages by busses that prevent investments in the market. Mainly, this measure concerns rules of selection of carriers for the bus lines, that lead to monopolization of the market by preventing new players from servicing certain lines. While such a step is important, it concerns only urban and suburban lines, where the carrier gets exclusive right for servicing the line but does not concern intercity lines.
Application of the EU legislation in terms of access to the market of road carriages. In particular, the application European approach to providing licenses for carriages. Draft law no. 4560, aimed at implementation of this measure, was registered in the Parliament on December 30, 2020, yet it is still not considered even by the main committee on Transport and Infrastructure.