The State Regulatory Service of Ukraine – the state institution influencing the quality and efficiency of the government regulations

The regulatory policy as the direction of the state policy aimed to prevent the adoption of inefficient and unfeasible decisions and reduce the state intervention in the activities of business entities exists in Ukraine since 2004. Exactly this year (2004) the Law of Ukraine “On the Principles of Regulatory Policy in Economic Activities” was passed, which obliged the state authorities in the course of development of these regulations to analyze their regulatory impact on businesses, citizens, and the state.

Currently the State Regulatory Service of Ukraine (hereinafter – the DRSU) operates under the executive bodies’ framework, and is responsible for the following:

• Conducting expert examination of the draft regulations and their regulatory impact analysis;
• Refusing the approval of unfeasible and inefficient regulations;
• Deciding on the need to eliminate violations of the state regulatory policy with regard to relevant regulations;
• Providing the regulation’s developers with the proposals on how to further improve these regulations;
• Reviewing inefficient regulations.

The DRSU acts as a mediator between the authorities and the general public, conducting expert examination of draft regulations, including maintaining a balance between the interests of businesses, citizens, and the government in the course of implementating new regulations.

The DRSU performs comprehensive work aimed at identifying poor quality and unreasonable regulations and preventing their introduction. Each year, as part of this work, the DRSU examines over a thousand of draft regulations.

Examination of the draft regulations shall be conducted in order to determine the compliance with the principles of expediency, efficiency, and balance, i.e. achieving maximum positive results due to reducing the costs for economic entities, citizens, and the state. The DRSU annually reveals over 200 inappropriate draft regulations which fail to meet the required guidelines.

In addition, the Government of Ukraine under the framework of implementating the Memorandum of Economic and Financial Policies (MEFP) and the EU-Ukraine Association Agenda commits to introduce compulsory introduction of the ‘cost-benefit analysis’ and the SME-test by the regulatory authorities.

The relevant methodology was approved in 2015 and envisages mandatory calculation of benefits and costs of implementing a regulation, which is a fundamentally new principle in the system of public administration of Ukraine. This methodology will allow to significantly minimize the costs incurred by the government and businesses as a result of ineffective regulations as well as reduce the administrative burden on businesses, thus contributing to its sustainable development and promoting significant budgetary savings.

However, inconsistent government policy over the past decade resulted in the Government’s over-regulation of the business environment. Under these circumstances, deregulation is the only instrument for achieving economic growth, reducing government spending and corruption, decreasing unemployment and improving investment climate.

During last years, the DRSU is coordinating the Government’s efforts towards deregulation. In early 2015, the Government of Ukraine adopted a Plan for deregulation of economic activity. The expected economic effect of the Plan implementation will amount to UAH 50-70 billion by 2020.

The activities of the DRSU and other authorities in 2015 resulted in the implementation of 70% of deregulatory initiatives envisaged by the Plan. Particular success has been achieved in the field of licensing and permit procedures, in particular, the number of business activities subject to licensing decreased twofold.

The joint efforts of the DRSU and other state authorities helped to significantly advance Ukraine’s position in the ‘Doing Business’ ranking in the last two years, particularly in the areas of business start-up and closure, registration of property rights as well as international trade.

Therefore, the DRSU serves as a coordinator and intermediary between the Government and business in Ukraine, and its efforts are aimed at preventing the adoption of inefficient state regulations, facilitating conditions for doing business and, consequently, promoting economic growth and welfare of the citizens.