The country needs effective and independent supervisory board representatives of SOEs

24/ 06/ 2020

The state budget loses millions of hryvnias from corruption at state-owned enterprises. Thus, a total of 3733 enterprises are owned by the state. According to NABU, the state’s losses from corruption at SOEs are estimated at UAH 18 billion, which is 0.5% of GDP.

Meanwhile, the involvement of professional, independent, unbiased supervisory board representatives who can help to ensure stable development in the short and long term perspective is a ‘must’ for the effective operation of SOEs. The role of the supervisory board becomes essential, taking into account the announced privatization plans. In the context of strengthening the private sector, SOEs will have to increase their competitive advantages for further effective development.

In February, the Head of the State Property Fund Dmytro Sennichenko announced that it was planned to sell more than 500 enterprises in 2020. It is expected that privatization will bring about UAH 12 billion to the state budget of Ukraine: 6 billion from small-scale privatization and 6 billion from large-scale privatization.

The business community welcomes state intentions in the context of privatization. After all, the private sector is about business and quality competition. Thus, enterprises must make a profit, and this is impossible without investment, the introduction of new technologies, and high productivity.

At the same time, the government must take care of the stable development of state-owned enterprises. Therefore, a draft law prohibiting foreigners from joining the supervisory boards of state-owned companies submitted to Parliament in May became a surprise for the business community. According to the explanatory note, such regulation is necessary as the supervisory board of SOE is a body that protects the rights of the state and, within the competence, defined by statute and law, controls and regulates the management of the enterprise.

However, according to the business community, the main focus has to be made on the professionalism, regardless of nationality, gender, etc. Members of the boards should act efficiently, transparently, and fairly to help building a quality strategy, a strong team, and renew the sufficient work of an enterprise. Moreover, considering quite a problematic situation with SOEs and the coronavirus crisis, the importance of effective and transparent management and supervisory board becomes even more crucial, as the country’s economy needs incentives and real revenues to the state budget.

Therefore, the European Business Association calls on the President of Ukraine and the Government to focus on the professional qualities of the supervisory board, the importance of effective strategy to boost SOE’s development to give a chance for the Ukrainian economy to grow.

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