Will the Ukrainian cities become competitors?

15-08-2018

In September, the rating of ease of doing business in Ukrainian regions will be published. Which cities are most friendly to investors?

The world is moving by reducing the role of states and increasing the role of cities and agglomerations.

Visionaries say that in 25 years the world will consist not of the countries, but of 500-600 large and influential cities.

The basis for such changes is progress, in particular the development of transport and communications.

Is someone willing to believe that Kyiv, Lviv or Dnipro will be among such political and economic centers as New York and Paris without structural changes?

Not just yet, because our cities are less digitized, their authorities are less flexible and less friendly to investors.

But the struggle for investments is the main battlefield of the world’s economies during the radical change of business approaches. This struggle is even deeper among Eastern Europe countries.

While Estonia gains competitive advantages due to its fantastical technological progress, e-Residency and the actual merging of the state with the activities of IT companies and start-ups, and while Georgia ranks  9th in the world in terms of ease of doing business, in Ukraine, reforms are implemented not as fast as we would hope.

There is no habit of competing

Historically, domestic regions have not yet got used to compete with each other as well as compete with foreign neighbors.

The information that many Hollywood movies are filmed in Canada, but not in the United States, and that producers often film Toronto as New York sounds sensationally, but not for American cinema entrepreneurs.

This is because of privileges and subsidies provided by the northern neighbor for movies that involve Canadian actors.

It is difficult to imagine such a situation in our country, but decentralization will run its course and the most effective and business-oriented cities will start to dominate.

Regional Doing business

In order to establish and standardize the relevant competition process, make it convenient for both regional officials and potential investors, in 2017, the BRDO Office together with the Union of Ukrainian Entrepreneurs (UUE)  launched a rating of ease of doing business in Ukrainian regions.

This study was based on the World Bank methodology.

For the first study, five areas of interaction between entrepreneurs and local authorities were selected: paying local taxes; establishing an enterprise; obtaining construction permits; registering a land plot for real property projects; connecting to electricity networks.

The main evaluation criteria were the “money” and “time” spent to complete official procedures as well as a number of appeals to state/local authorities.

Can a potential investor be interested in Kherson, if the procedure for obtaining construction permits takes 147 days here, while in the neighboring Kirovohrad region it is 78 days?

Can entrepreneurs connect to electricity networks quickly and with no hassles here? Unfortunately, they can’t.

In addition to direct results, the relevant administrations also received recommendations to improve the situation.

It should be noted that some local officials and deputies neglected these recommendations, while others promoted the necessary useful initiatives due to them.

For example, Chernihiv, which ranked 22nd last year, reduced a share contribution rate for non-residential premises from 10% to 0.1% that will definitely have a positive impact on the rating, and more importantly, it already has a positive result for the city’s economy.

New criterion is electronic services

What would we do without them? The example of Estonia has already been mentioned, and it should be noted that this Baltic country made good progress. It provides about  4,500 online services on a single portal .

Electronic services are simple and convenient, and because of this, the criterion was included to the rating this year.

Of course, we are far from reaching the Estonia’s level, but not all of our cities trail far behind. Moreover, in this situation, the regional centers should model themselves on the small Drohobych, which is in the Lviv region.

Even today, the city authorities made more than 200 sets of data and dozens of online services publicly accessible on a single portal, which is what we want for every Ukrainian city!

Already in mid-September, we will publish the rating of 2018 together with conclusions and showcases for progress/regress made over the last year!

We hope that this will be a great motivator to attract experts and entrepreneurs to interact with local authorities and will allow us to build an investment-attractive country!

Source:  “Економічна Правда“.

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