14th Sitting of the OCED Regulatory Policy Commitee
THESIS to the presentation
The State Regulatory Administration of Ukraine – state institution influencing the quality and efficiency of the government regulations
(April 2016, Paris)
SLIDE 1. 14th Sitting of the OECD Regulatory Policy Committee
SLIDE 2. Participants of the Regulatory Process
All methods of the state support to business can be divided into two categories. The first category represents resources which could be provided by the state. Presently, these resources are limited. The second category stands for saving resources for business by reducing barriers and the cost of regulatory requirements. The balanced and rational regulatory policy will address this problem.
Different institutions/agencies are influencing the regulatory process in Ukraine:
Regulatory bodies (President of Ukraine, Verkhovna Rada of Ukraine, Cabinet of Ministers of Ukraine, central executive authorities, and local authorities) are regulating economic activity by way of developing the relevant regulatory acts;
Non-governmental organizations (economic entities, associations of economic entities, research institutions, consulting and advisory agencies, citizens) are participating in public discussions pertaining to these documents as market participants – they are direct users of this product; and
The State Regulatory Administration of Ukraine – the designated state institution, which considers all normative documents regulating business activity with regard to preventing violations of the regulatory laws, rights, and interests of entrepreneurs. It serves as a kind of “filter” in the executive branch.
The Administration acts as a mediator between the authorities and the general public, conducting expert examination of the draft regulations, including in terms of maintaining a balance between the interests of business community and the citizens in the course of introduction of new regulations and reducing hereby the state intervention.
SLIDE 3. Principles of the State Regulatory Policy
In 2004, the Law of Ukraine on the State Regulatory Policy was launched. The Law regulates the procedure for preparation and adoption of the regulatory decisions based on the following fundamental principles:
feasibility; adequacy; efficiency; balance; predictability; transparency, and taking into account public opinion.
SLIDE 4. Regulatory Act Development and Preparation of the RIA
The roles in the regulatory process are clearly defined. The regulatory body drafts a regulatory act in line with the following mechanism:
- Problem identification;
- Conducting RIA and SME-test;
- Developing a draft regulatory act;
- Promulgation of the draft and RIA;
- Mandatory consideration of proposals and remarks of the general public.
In turn, the general public holds public discussions and public hearings as well as provide their comments and proposals. That is, all draft regulatory acts go through promulgation and public discussion with the business community representatives.
We are monitoring compliance with the procedures, conducting expert examination of the regulatory acts in terms of its conformity with the principles of the state regulatory policy and ensuring that RIA is performed properly. We are conducting on-going dialogue with the associations of entrepreneurs, leaders of the civil society organizations as well as other interested parties through meetings, sessions, and consultations.
Only if a draft regulation complies with the state regulatory policy principles, the SRSU will approve it. This allows to avoid making rash and inefficient decisions.
Currently all administrative procedures (publication and preparation of RIA) are performed by over 90%, but the quality of the regulatory impact analysis by the regulatory bodies remains extremely low as ‘cost-benefit analysis’ is virtually not performed.
SLIDE 5. Regulatory Impact Analysis (RIA)
Regulatory Impact Analysis (RIA) is an integral part of every draft regulatory act. RIA is prepared for every draft from the moment a problem is identified.
RIA is informative and analytical document which substantiates:
- necessity of the state regulation
- compliance with the principles of the state regulatory policy
- achieving best possible positive results with minimum costs
Unfortunately, in the last ten years RIA contained only descriptive, but not quantitative assessments. For this reason, the changes were introduced to the RIA methodology and since April 2016 enhanced requirements has been established for RIA and SME-test, which is now mandatory.
SLIDE 6. Regulatory Impact Analysis (RIA) (SME-test) or SME-test as part of Regulatory Impact Analysis (RIA)
We lay great expectations on the new regulatory tool that will help make rational and feasible decisions, i.e. SME-test, called M-Test in Ukraine.
This tool has been used to evaluate and further reduce administrative costs in the EU since 2009 and came to frequent application in Europe, ensuring an effective and relatively simple calculation of administrative costs under a separate mandatory regulation (at the stage of regulation development or its revision).
As part of implementing the Memorandum of Economic and Financial Policy and the EU-Ukraine Association Agenda in December 2015, Ukraine introduced the principle of ‘cost-benefit analysis’ (assessment of the costs and economic benefits) and SME-test in December 2015. This will significantly improve the quality of a regulatory solution and ensure the implementation and approximation of the national regulatory legislation to the European legislation.
SME-test shall apply if a regulation effects over 10% of business, and:
– envisages mandatory calculations of benefits and costs of implementing a regulation, which is a fundamentally new system of public administration in Ukraine;
– allows to significantly minimize government and businesses spending as a result of ineffective regulations, reduce administrative burden on business, thus contributing to its sustainable development and promoting significant budgetary savings.
It is important that a regulatory act developer explains to the general public in a clear and understandable manner the feasibility of its decision.
SLIDE 7. Deregulation
In recent years, the SRSU coordinated the efforts of the government towards deregulation. In early 2015, the Government of Ukraine passed the Action Plan for Deregulation of Economic Activities.
In the case the whole complex of measures envisaged under the Action Plan is implemented, the expected economic effect will amount to € 1.6-2.4 billion by 2020, including:
Economic growth ≈ €0.8-1.2 billion
Investment ≈ €500-700 million
Elimination of corruption ≈ €170-300 million
Tax revenues ≈ €34-100 million
De-shadowing of business ≈ €34-100 million
Reducing government spending ≈ €0.3 million
The main priorities of the state deregulation policy include reduction of encounters between the business and the state as well as saving time and money for business.
The cost of meeting the regulatory requirements for business will be reduced by € 2.0 billion by 2020, which makes almost 5% of GDP. This money can be used by business to ensure its further development.
During last year deregulation was performed in two organizational forms: implementing the Action plan for deregulation of economic activities and revision of regulations. The SRSU coordinated the activities of the state authorities in both directions.
Participating in the review (“clearing”) of the overregulated legislation were a lot of representatives of business community who actively defended their viewpoint on the necessity to cancel / amend those regulations which failed to meet the principles of the state regulatory policy. Special task forces were created under the state authorities to review the regulatory acts. This turned out to be the most effective way of conducting industry deregulation.
The results of such review demonstrated that excessive regulatory burden can be reduced quickly and in a legal way.
The deregulation plans covers virtually all areas of economic activity. The basic directions include reduction of licensing and permit procedures, simplification of customs and tax regulations. Based on the industry principle, the deregulation happens in the most important sectors of economy – agriculture, food processing, construction, oil, and gas industries as well as electricity and telecommunications.
In 2015, a number of significant changes have already been introduced in the course of deregulating Ukraine’s economy.
Particular success has been achieved in the field of licensing and permit procedures, in particular, the number of business activities that require licensing reduced twofold, the number of examinations, certificates and other documents which required extra costs were also substantially cut.
The Government’s decisions allowed to significantly reduce the list of exported and imported goods subject to licensing; reduce the term for issuing phytosanitary and quarantine certificates from five days to 24 hours; reduce the list of quarantine inspection facilities for internal transportation by 33 items; cancel the excessive administration in the sphere of pesticides and agrochemicals; cancel the state registration of dietary food products; eliminate the corrupt system of collection, storage, and recycling of wastes as recyclable materials; cancel manual radiological cargo control in case of availability of fixed instruments at the port.
Over 300 government databases and registers became of free access for the citizens.
It is further planned to use the mechanism of quantitative restrictions on introducing new types of business regulation based on the principle “one in – two out.”
SLIDE 8. Final – SRSU contact details, Government’s portal.
So, Ukraine has ambitious plans and implements them gradually, introducing the best business practices.
We are introducing the European standards in public administration.
We certainly understand that only joint efforts of all authorities interested in cooperation with business as well as radical solutions will improve the conditions of doing business in the country and will make Ukraine attractive to the European market.
The web-site of the State Regulatory Administration. Government’s portal.
