Deregulation of Ukrainian business

Business deregulation is an important area of government economic policy. Ukraine has a highly regulated economy, with the cost of regulation at a level that corresponds to the European average 20 years ago, although since then, the EU has been implementing campaigns to reduce the administrative burden on business on a massive scale.

The work on simplifying business regulation, which has been going on for decades, needs to be continued.

Taking into account international experience and our analysis of Ukrainian practice, we recommend that soon the government should:

• In future deregulation campaigns, focus on regulations that have a greater impact (e.g., affect a larger number of entities). One of the main candidates is the tax and customs sectors.
• When choosing tools for deregulation, business surveys should be used. The survey should be explicit, asking them which regulations they are most concerned about (asking them to name 10 or 20), rather than offering to evaluate specific acts.
• Decisions on deregulation should be made with particular caution in areas that have special reasons to be regulated due to various market failures (monopolies, etc.) or because of the direct impact on people’s lives (labor relations, healthcare, etc.).

After the end of martial law, when it will be possible to allocate more funds from the budget, the following measures can also be implemented:

• A full-scale, methodologically correct calculation of the cost of business regulation using the SCM methodology. Based on these calculations, build further deregulation plans.
• Similarly to what has been done in the EU, the deregulation campaign should set a specific target for reducing the cost of the regulatory burden (e.g., by the same 25% as in Europe).
• Consider adopting the approach proposed by the draft law No. 8058 on the “regulatory guillotine” (taking into account the comments described above – large budgets and deadlines, and without the “one for two” rule).