The State Regulatory Service of Ukraine – partnering with the businesses towards building effective economic policy

The State Regulatory Service of Ukraine was established by the Government of Ukraine in December 2014 under the auspices of the State Service of Ukraine on Regulatory Policy and Entrepreneurship Development (Derzhpidpryiemnytstvo).

The State Regulatory Service of Ukraine is the central executive body, whose activities are directed and coordinated by the Cabinet of Ministers of Ukraine.

Currently, the Service is the national executive authority which is responsible for ensuring an effective dialogue between the Government and business community.

The specific responsibilities and tasks of the Service include the following opportunities:

• implementation of the regulatory policy, policy on licensing and permit system, as well as supervision (control) of economic activity;
• coordination of the state authorities with regard to deregulation of economic activities, helping the business associations to work out their proposals on how to overcome impediments for business development, revising and adjusting the regulations that create unnecessary barriers for business, “filtering” draft regulatory acts of local, district, regional, and central levels, and introducing the use of regulatory impact analysis of these acts and their influence on business environment.

The year 2015 was marked by active regulatory policy reforms which certainly led to the development of new regulations. The Government was tasked to find a balance between the accelerated launch of reforms and predictability of policies, which is essential for businesses in planning their activities.

We proceeded from the fact that successful reformation of Ukraine’s economy is impossible without ensuring quality regulatory policy. This means, first and foremost, compliance with the fundamental regulatory principles: appropriateness, adequacy, efficiency, balance, predictability, transparency, and consideration of public opinion.

In order to ensure reasonable and cost-effective Government’s decision, it is necessary that a regulatory act developer in a simple and understandable manner informs the society about the economic expediency of the decision.                                       

To this end, the Government adopted the Methodology for conducting regulatory impact analysis. The Methodology was developed by the Service and clearly defines the standards of regulatory impact analysis (RIA), its elements, and procedures. The Methodology provides for mandatory introduction of the “cost-benefit analysis” which should be conducted by the regulatory authorities (assessment of costs and economic benefits) and SME-test, which will significantly improve the quality of regulatory decisions and ensure the implementation of the national regulatory legislation consistent with the European legislation.

An important step in implementing the Methodology is properly working out the procedures for calculation of costs and benefits, as well as the SME-Test by the regulatory act developers at the state and local levels.

In 2015, the deregulation process was jumpstarted in Ukraine. The essence of deregulation is removing administrative barriers and maximum simplification of the conditions for doing business. In particular, in March 2015, the Government of Ukraine approved a comprehensive document – the Action Plan for Deregulation of Economic Activities. Implementing the activities envisaged by the Plan will have a significant economic effect, namely about UAH 50-70 billion until 2020.

We have initiated changes in the sphere of government regulation, which are primarily based on the need to ensure economic efficiency of the state regulations, including by minimizing and simplifying the administrative relations between the state and business entities.

This was made possible through the introduction of the deregulatory procedures that encompass promotion of the regulatory changes based on the active standing of the business community, and legislative integration of these changes by the public authorities.

During last year, deregulation was conducted in two organizational forms. The DRSU coordinated implementation of the action plan for deregulation of economic activities by the state authorities as well as review of the normative and regulatory acts, lifting of irrelevant regulations or amending the legislation on the state supervision (control) of economic and business activities by the state authorities with active participation of business community.

Participating in the review (“clearing”) of the overregulated legislation were the representatives of business community who actively defended their viewpoint on the necessity to cancel / amend the regulations that 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 inter-industry deregulation.

As demonstrated by the results of this work, the community involvement in the regulatory acts review can help decrease the unnecessary regulatory pressure in a legal way.

The deregulation agenda covers almost all areas of economic activity. The basic directions of deregulation include the following: minimizing and improving licensing and permit procedures, technical regulation procedures, state supervision (control), customs and tax regulation, improving Ukraine’s position in the “Doing Business” ranking, simplification of activities in the agricultural, food processing, construction, oil, and gas industries as well as in the spheres of electricity, and telecommunications.

In 2015, a number of important deregulation initiatives were envisioned in the laws of Ukraine and decisions of the Government that are vital for the business community.

At the legislative level the following was attained: procedure for obtaining licenses simplified,  the number of business activities that require licensing reduced; scope of authorities of notaries and specifics of registration of derivative rights to agricultural land plots clarified; terms and conditions of public procurement improved, participation of business entities in tenders simplified; annual confirmation of data by legal entities canceled; the possibility to change data related to legal entities and individual entrepreneurs via Internet introduced; electronic business registration through the portal of electronic services legalized.

The Government decisions allowed the following: 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, close down the state company “Ukrekokomresursy”; 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, the procedure for disclosing information in an open-source data format was determined, and a minimum set of data to be primarily released was defined.

From now on, the citizens will have a possibility to receive statements, certifications, and extracts from the Unified State Register of Legal Entities and Individual Entrepreneurs in electronic form.

The deregulation in the licensing system focuses primarily on reducing the number of permits in the field of economic activity and simplifying the procedures related to obtaining permits.

With the adoption of the Law of Ukraine dated March 02, 2015 No. 222 “On Licensing of Economic Activity”, new approaches towards regulation of licensing activities in Ukraine are being introduced:

• licensing procedures simplified;
• the number of business activities subject to licensing significantly reduced (from 57 to 30);
• optionality of obtaining license in paper form introduced;
• indefinite duration of license established;
• responsibilities of the Expert and Appeal Council for Licensing under the SRSU expanded, which is an effective mechanism for pre-trial licensing disputes settlement.

Since this Law of Ukraine came into force, the Service is taking steps towards implementation of its provisions aimed at comprehensive improvement and simplification of all licensing procedures covering all types of economic activities.

Ukraine is currently reforming the system of the state supervision and control.

The Government decisions are being implemented, which include among others substantial reduction of the number of regulatory agencies, aligning their functions, improving control procedures; eliminating duplication of powers (under the Deregulation Plan). The moratorium on inspections of economic entities by the executive authorities was introduced.

The following promotes improvements in the field of the state control:

• extension of the moratorium on inspections;
• adoption and implementation of the draft laws that allow to maximally extend the application of the Law of Ukraine “On the Principles of the State Supervision (Control) of Economic Activity” to all matters arising in the implementation of the state supervision;
• creation of the integrated automated system of the state supervision which contains information about all control measures;
• specifying the scope of authorities of the state supervision agencies in the field of economic activity while increasing their responsibility for misuse or abuse of powers;
• establishing the unified procedure for enforcing of administrative and economic sanctions enforced by the state supervision authorities based on the facts of violations;
• extending the provisions on the advisory support of economic entities by the state authorities.

DRS will continue to promote reformation of the state supervision and control system in Ukraine.

The year 2016 should become a year of fully-fledged implementation of the European way of decision-making. The decisions should be based on clear-cut, feasible and appropriate, and should be based on reasonable calculations which are understandable for the society. This is the way of building trust in the Government among the businesses community.