The work of entrepreneurs under martial law, compensation for losses and insurance of war risks, relocation and return of business, liberalization of tax policy, implementation of institutional reforms – these and other issues were the focus of the business forum “Dialogue of civil society, business and government: a course for Recovery of Ukraine”, which took place on October 9 in Kyiv. Representatives of business associations – members of the Ukrainian Business Council and the National Business Coalition, representatives of the government and parliament, entrepreneurs from different regions of Ukraine, experts of analytical centers, and public figures took part in the discussion.
The forum, which was held for the fifth time, is traditionally the main platform for coordinating the actions of business and the authorities and determining priorities in the implementation of institutional and economic reforms. The event was supported by the Center for International Private Entrepreneurship (CIPE).
“Today, a brutal war is going on in Ukraine. This is not a war for territory or resources, but for a civilizational choice. At the same time, the war only sharpened the understanding of the inevitability of democratic reforms, which are the key to restoring the country and building a state that will become a worthy member of the family of democracies, Natalia Otel Bilan, regional director of CIPE in Europe and Eurasia, emphasized, opening the forum. – We are convinced that greater transparency, better governance and other democratic reforms will accelerate the country’s reconstruction and ensure long-term economic growth and stability.”
Presenting an overview of the country’s strategic documents, representatives of analytical centers noted that only 20% of the National Economic Strategy-2030 has been implemented, and only 15% of the Recovery Plan of Ukraine. The pace of implementation is extremely low, therefore it is necessary to determine specific executors and deadlines for each task of the Strategy, to provide a quarterly public report on the state of implementation, as well as to monitor the effectiveness of their implementation.
The participants of the forum consider the issues of indemnification of Ukrainian business losses and the liberalization of tax policy to be urgent. Commenting on this topic, Danylo Hetmantsev, Chairman of the Committee of the Verkhovna Rada of Ukraine on Finance, Tax and Customs Policy, spoke about the difficult situation with filling the budget in wartime conditions.
According to the head of the parliamentary committee, Ukraine should speed up European integration and implementation of European norms.
“The speed of European integration is our survival. The longer we drag out internal discussions, the longer the process of European integration will last and we may disrupt this process. Because the situation in the world is changing,” said Danylo Hetmantsev.
In addition, the recovery of the economy will be facilitated by solving problems with the logistics of export goods: a new sea corridor and the expansion of land transport corridors; “industrial visa-free” and sending interest from confiscated assets of Russian banks to Ukraine. The head of the committee supports the draft law on military risk insurance: “Military risks are extremely important, and without their insurance none of the investors will enter Ukraine. We should create a reconstruction bank on the basis of the state banks that already exist. It should have one goal: to finance high-risk operations for the recovery of Ukraine.”
Grigol Katamadze, president of the Association of Taxpayers of Ukraine, member of the Supervisory Board of the Ukrainian Business Council, called for the reform of the tax, customs service and the Bureau of Economic Security.
“For some reason, everyone was surprised when a letter from the US State Department appeared in the public domain. And why are we surprised? This letter reflects everything you and I talk about from year to year: TOP-10 priorities, institutional changes, rebooting the law enforcement system. It is not necessary for the Americans, but for us and you. We need to do our homework. We have demonstrated over the course of several months that we are capable of changing in various directions, especially the law enforcement system.”
Not everything can be done instantly, but it is necessary to determine the “road map”, the prerequisites for the transition from the current state, believes Dmytro Boyarchuk, executive director of the CASE Ukraine analytical center: “In order to restore the economy, we need to take liberal steps. But liberalization must be implemented under the rule of law. What we call for, we try to attract time, resources, efforts – at least “to lie in the right direction”. Identify this vector and note that it is important.”
Mykhailo Nepran, the first vice-president of the Chamber of Commerce and Industry, a member of the Ukrainian Business Council, is convinced that the state should respond more quickly to business requests – for example, in compensation for losses from military operations. “The state has no money for business during the war. What then can the state offer? Full, maximum deregulation.” According to the speaker, in the negotiations with international partners, the Ukrainian authorities should propose to postpone the fulfillment of some requirements for the duration of martial law. “No one in the world likes to pay taxes. But there is a reasonable compromise, there is an understanding of the payer that his money is spent transparently, clearly and efficiently. If we take the simplified “Polish model” of taxation, then it is tougher, not appropriate for Ukraine at this time, they have many rates for various types of activity.”
Oleksandr Chumak, president of the Association of Private Employers (Kharkiv), spoke about the working conditions of entrepreneurs in the regions close to the war zone: “The issue of safety comes first. Security significantly increases the costs of any business and makes the goods and services it produces uncompetitive. Everything must be rebuilt at one’s own expense, because the state does not help. There are no regional programs for the development of entrepreneurship, not even a state strategy for the development of entrepreneurship, which ended in 2020. Business continues to leave. Because even if you have a mined field, you still pay land tax. People demine their fields themselves, these are all additional costs.”
The head of the association suggested extending the exemption of entrepreneurs from such regions from taxation for 2023-24.
Dmytro Kokhan, deputy chairman of the All-Ukrainian Agrarian Council, member of the Supervisory Board of the Ukrainian Business Council, drew attention to the situation of agricultural producers: due to the lack of sea logistics, all export crops will be unprofitable, and the question arises as to how agricultural producers will get through next year’s sowing.
“It is good when the state provides loans. But when you take out new loans for the third year in a row to cover old loans, it’s not normal,” said the deputy head of the VAR. He proposed to bring order to the collection of taxes by reforming customs, tax and the Bureau of Economic Security. “The biggest demand is justice and the rule of law. When we will all pay the same taxes, live in the same conditions and bear the same responsibility: both us, white business, and officials.”
Borys Emeldesh, president of the All-Ukrainian Professional Association of Entrepreneurs (Odesa), proposed to narrow the scope of the PRO and exempt from the PRO those entrepreneurs for whom it is economically impractical. In addition, the head of the association raised the issue of increasing the limits of the transition of entrepreneurs to VAT.
Commenting on this issue, Danylo Hetmantsev assured that the introduction of the PRO in the existing model is an irreplaceable position. Regarding the increase of VAT limits to the level that exists in European countries, these issues are related to different tax rates and can be considered only in conjunction with a change in the taxation model.
What affects sustainability are active employment programs, programs for creating jobs and starting one’s own business, emphasized Halyna Tretyakova, head of the Committee of the Verkhovna Rada of Ukraine on social policy and protection of veterans’ rights. The head of the committee noted that the legislation on social dialogue needs to be updated and invited all leading associations to the working group to develop a modern law with qualitative criteria of representativeness.
Oleksiy Sobolev, Deputy Minister of Economy of Ukraine, also became the speaker of the forum. In particular, he noted that during the development of the Plan of Ukraine for 4 years, business proposals are taken into account within the framework of general policies for the development of sectors and improvement of the business climate. Currently, the Government continues work on the Plan and consults with business, public organizations and think tanks on filling. It is planned to finish work on the Plan by mid-November.
Ihor Marchuk, the head of the subcommittee on interaction between the state and business and investments of the VRU Committee on Economic Development, noted that the processing industry and the production of products with high added value are a priority in the state support system. It is on the development of this sector of the economy that we should focus our main attention. Implementation of programs to support entrepreneurship, family and craft production, development of industrial parks and non-industrial areas, improvement of the investment climate – all this is on the agenda of the Economy Committee of the VRU. Ihor Marchuk emphasized that in the budget for 2024 more than UAH 41 billion has been allocated to help businesses.
Answering a question about the importance of draft law No. 9015 for Ukrainian manufacturers, government representatives noted that this draft is ready for voting as a whole and should be adopted in the coming months.
Regarding draft law No. 7805 on the modification of public-private partnership – Ihor Marchuk noted that the draft is being prepared for the second reading and will be adopted by the end of the year.
Maria Shevchuk, director of the IT Ukraine Association, spoke about the importance of human capital for business development. “Today we have two painful problems: reservations and temporary trips abroad. We are an export industry, 95% of us work with foreign clients, we need to be integrated into the teams of our clients. We want to have a clear, transparent mechanism. Because our industry is intolerant of any corruption schemes. We need a good, high-quality mechanism for temporary travel abroad.”
According to the chairman of the association, the IT industry can be a driver of Ukraine’s reconstruction. “We are very adaptable, and this helped us show a plus last year.”
Bohdan Mosunov, head of the “4Business” Association, presented the problems and business proposals of the northern region. The main idea is uniform and transparent work rules. “There are problems in replacing damaged equipment, in restoring destroyed property, business recovery programs are needed. When we asked the city authorities for help, we were told: wait for reparations.” A question for the state: help restore this business, and it will pay taxes.”
“We have opportunities to develop, create jobs, increase GDP. But it will all work when we agree that we are one and we all work together. We have to live today and move into the future. All that is required from the state is not to interfere and help in the construction of new enterprises. For this, it is necessary to insure war risks by the state and reduce interest rates on loans. This will increase credit opportunities for manufacturers and give them an impetus for development,” emphasized Ivan Tarshin, co-owner of the GradOliya group of companies, Ukroliyaprom Association.
Oleksandr Taranenko, the first vice-president of the All-Ukrainian Association of Bakers, spoke about the destruction of enterprises in the industry and the situation with their restoration. The representative of the association suggested creating a target program for the restoration of destroyed enterprises. The speaker also drew attention to the consequences of the negative demographic situation: the market decreased by 20%. “The way out is in stimulating the domestic market and conquering foreign markets,” Oleksandr Taranenko stressed.
A video recording of the forum is available at the following link:
The event was organized by the National Business Coalition and the Ukrainian Business Council, which united more than 200 business associations representing 40,000 enterprises from all over the country.
Analytical partner: Economic expert platform.
Information partners: Public Radio, Delo.ua, Den, Price of the State, National Platform of Small and Medium Business.
