Ukraine to overhaul business regulations to prop up war-ravaged economy

By Olena Harmash

KYIV (Reuters) – Ukraine’s government is working to overhaul its business regulation system to scrap and update hundreds of documents to help entrepreneurship and boost the war-ravaged economy, a deputy economy minister said.

The reform to review about 1,300 existing regulatory documents, licences and permits began last year.

About 100 documents had been already cancelled. Another 400 would be eliminated this year and 500 procedures would be updated and digitized, Oleksiy Sobolev, a deputy economy minister overseeing the changes, told Reuters.

“The main idea is that now people should either fight or work,” Sobolev said in an interview in Kyiv’s government quarters, which are cordoned off by military patrols and sandbag defences at entrances.

“So we need to create an environment that does not prevent businesses from working, and where the business can work under the most convenient conditions.”

Russia’s invasion of Ukraine on Feb. 24, 2022, severely hit the Ukrainian economy as millions of people fled the country, cities and infrastructure were bombed, and logistics, supply chains and exports disrupted.

The economy shrank by about a third in 2022 in the biggest annual fall in Ukraine’s 30 years of independence.

With Ukraine’s Western allies pouring in billions of dollars in financial aid, the government maintained economic stability and businesses adjusted to war-time reality.

TO SUPPORT SMES, RESILIENCE

In particular, Ukraine’s small and medium-sized businesses proved adaptable, helping the broader economy, Sobolev said.

“SMEs in Ukraine are diversified, varied and it adds to the economic stability. SMEs adapt faster, we really see this resilience at SMEs, so it is important for us to support it.”

Once the regulatory changes are implemented, businesses would be able to save between 12 billion and 13 billion hryvnias l($320 million – $345 million) annually, Sobolev estimated.

Agriculture, a key sector and top hard currency earner, would benefit the most from the ongoing reform, he said.

An overhaul of the regulations was also part of the “home work” for Kyiv, Sobolev said as the government continued work with the European Union on Ukraine’s four-year facility.

Earlier this month the EU approved the 50 billion euros ($54 billion) package. Sobolev reiterated the government hoped to receive 18 billion euros as budget support this year.

A total of 39 billion euros would be channelled for Ukraine’s budget needs until 2027. Sobolev said the government hoped most of that amount would be received in the first two years.

The Ukrainian government also wants to increase economic self-reliance and the EU package included 8 billion euros earmarked to help bring in more investment into priority sectors that can drive economic growth.

The agriculture, energy, IT, logistics and transport and industry are singled out as priority industries.

Sobolev expected better access to capital this year for Ukrainian businesses, saying bankable projects and transparency would be key.

“We together with the Europeans expect that it would help bring up to $30-40 billion of additional investment to Ukraine in the next four years,” he said.