TOP-10 priorities for the development of a favorable business climate

12/ 01/ 2022

A favorable business climate and rapid economic development – that is what the business community would like to be proud of at the end of 2022. To achieve this, the European Business Association declares 10 development priorities and looks forward to an effective and transparent dialogue with the authorities. Anna Derevyanko. EBA Executive Director. For several years now, the business has been emphasizing the importance of creating equal and fair rules of the game, which shall be guaranteed by the efficient work of law enforcement agencies and a fair judiciary. Sure, there are signs of progress and cosmetic changes, but obviously, they are not enough to develop a quality business climate in the country. Moreover, the geopolitical risk is still on the radar, which, together with the lack of fundamental changes, threatens the economic development of Ukraine. The business is not being dramatic, it still works as usual but if the visible, and most importantly, useful results are what we want for the country then we should start with systemic things. So, below is what the EBA proposes as priorities for 2022. The first is to counter the shadow economy, the share of which varies from 25% to 60%, depending on the sector, and creates unequal rules of the market and prevents transparent businesses from moving forward. We are talking about maintaining fair competition, equal, predictable, transparent conditions for all market participants, combating smuggling, counterfeiting, countering illegal trade in excisable products, effectively fighting the grey market, protecting intellectual property rights, and more. The second is to reduce the tax burden on the payroll and pressure on legal business. Thus, the experience of the past year has shown that sometimes under the slogans of modernization of the tax system the state offered not quite rational tax novelties and selective additional taxation on honest taxpayers. Therefore, for the development of business, it is necessary to ensure a fair tax policy and cash discipline - without trying to impose additional taxes on those who already pay them. The third is the implementation of the principles of sustainable development. In this context, we are talking about combating climate change through the development of decarbonization policy and reform of climate finance (eco-tax, CBAM), promoting the principles of economic barrier, implementing the principles of circular economy, recycling, protecting biodiversity, fostering waste management. Last year, with the initiative and support of business, EBA took a big step in this direction by launching two projects – Agro Varta on a smart system of recycling used containers from CPPs and Second Chance Bank – the first online reuse center. The fourth is the continued harmonization of Ukrainian legislation with EU norms so that Ukrainian products meet European requirements and businesses do not have difficulties in supplying products to and from the EU. Therefore, in this aspect, the legislation in the field of consumer protection and e-commerce, livestock, personal data protection, customs tariff update, etc. needs to be updated. The fifth is the adoption of modern labor legislation, namely, through deregulation and digitalization of labor relations, the introduction of alternative forms of employment (freelance, gig contracts, etc.). The sixth priority relates to healthcare, and it is especially important given the pandemic. And here we are talking about the continuation of medical reform, further digitalization of the medical and pharmaceutical industries. Besides, special attention should be paid to the development of the field of clinical trials and increasing the number of projects to expand the access of critically ill patients to innovative and free treatment, and so on. The seventh is to promote international trade. This includes addressing the lack of road permits for international freight, introducing industrial visa-free travel (signing the ACAA Agreement), reducing non-tariff barriers to trade, including mutual recognition of EU markings, and harmonizing technical regulations and national standards in line with EU acts. The eighth is to promote education development so that young professionals are provided with the necessary practical skills to work effectively in business and the public sector. The ninth is to foster innovation and the introduction of new technologies in business and public administration. We are talking about the digitalization of business-state communication, for example, the digitalization of all processes of customs clearance, information, and public services in the grain industry, the licensing of the production and sale of alcoholic beverages, and more. It also includes the further development of cashless, the introduction of open banking, the development of an innovative economy, which should be the basis for further economic and social growth of the country. The tenth is to strengthen the investment attractiveness of Ukraine and its regions. This implies the development of transport and water infrastructure, public-private partnership, full-scale privatization, as well as the maintenance of the countrys energy independence. Moreover, amendments to the tax legislation need to be prepared so that investors can make long-term plans considering the investment climate in Ukraine. Also, the business environment and working conditions should attract and not scare away investors. This requires a valued attitude and respect for the existing investors because they serve as a beacon for those who only start considering Ukraine as a destination for business. For reference: The European Business Association has 21 advocacy committees, each aimed at improving work in the relevant field/industry. You may want to review the TOP priorities of these EBA committees.

Anna Derevyanko EBA Executive Director

For several years now, the business has been emphasizing the importance of creating equal and fair rules of the game, which shall be guaranteed by the efficient work of law enforcement agencies and a fair judiciary. Sure, there are signs of progress and cosmetic changes, but obviously, they are not enough to develop a quality business climate in the country. Moreover, the geopolitical risk is still on the radar, which, together with the lack of fundamental changes, threatens the economic development of Ukraine. The business is not being dramatic, it still works as usual but if the visible, and most importantly, useful results are what we want for the country then we should start with systemic things.

So, below is what the EBA proposes as priorities for 2022.

The first is to counter the shadow economy, the share of which varies from 25% to 60%, depending on the sector, and creates unequal rules of the market and prevents transparent businesses from moving forward. We are talking about maintaining fair competition, equal, predictable, transparent conditions for all market participants, combating smuggling, counterfeiting, countering illegal trade in excisable products, effectively fighting the “grey” market, protecting intellectual property rights, and more.

The second is to reduce the tax burden on the payroll and pressure on legal business. Thus, the experience of the past year has shown that sometimes under the slogans of modernization of the tax system the state offered not quite rational tax novelties and selective additional taxation on honest taxpayers. Therefore, for the development of business, it is necessary to ensure a fair tax policy and cash discipline – without trying to impose additional taxes on those who already pay them.

The third is the implementation of the principles of sustainable development. In this context, we are talking about combating climate change through the development of decarbonization policy and reform of climate finance (eco-tax, CBAM), promoting the principles of economic barrier, implementing the principles of circular economy, recycling, protecting biodiversity, fostering waste management. Last year, with the initiative and support of business, EBA took a big step in this direction by launching two projects – “Agro Varta” on a smart system of recycling used containers from CPPs and Second Chance Bank – the first online reuse center.

The fourth is the continued harmonization of Ukrainian legislation with EU norms so that Ukrainian products meet European requirements and businesses do not have difficulties in supplying products to and from the EU. Therefore, in this aspect, the legislation in the field of consumer protection and e-commerce, livestock, personal data protection, customs tariff update, etc. needs to be updated.

The fifth is the adoption of modern labor legislation, namely, through deregulation and digitalization of labor relations, the introduction of alternative forms of employment (freelance, gig contracts, etc.).

The sixth priority relates to healthcare, and it is especially important given the pandemic. And here we are talking about the continuation of medical reform, further digitalization of the medical and pharmaceutical industries. Besides, special attention should be paid to the development of the field of clinical trials and increasing the number of projects to expand the access of critically ill patients to innovative and free treatment, and so on.

The seventh is to promote international trade. This includes addressing the lack of road permits for international freight, introducing industrial visa-free travel (signing the ACAA Agreement), reducing non-tariff barriers to trade, including mutual recognition of EU markings, and harmonizing technical regulations and national standards in line with EU acts.

The eighth is to promote education development so that young professionals are provided with the necessary practical skills to work effectively in business and the public sector.

The ninth is to foster innovation and the introduction of new technologies in business and public administration. We are talking about the digitalization of business-state communication, for example, the digitalization of all processes of customs clearance, information, and public services in the grain industry, the licensing of the production and sale of alcoholic beverages, and more. It also includes the further development of cashless, the introduction of open banking, the development of an innovative economy, which should be the basis for further economic and social growth of the country.

The tenth is to strengthen the investment attractiveness of Ukraine and its regions. This implies the development of transport and water infrastructure, public-private partnership, full-scale privatization, as well as the maintenance of the country’s energy independence. Moreover, amendments to the tax legislation need to be prepared so that investors can make long-term plans considering the investment climate in Ukraine. Also, the business environment and working conditions should attract and not scare away investors. This requires a valued attitude and respect for the existing investors because they serve as a beacon for those who only start considering Ukraine as a destination for business.

For reference:

The European Business Association has 21 advocacy committees, each aimed at improving work in the relevant field/industry. You may want to review the TOP priorities of these EBA committees.