50% of instruments of the forest industry regulation carry high corruptions risks


In Ukraine, losses from illegal logging has increased by 77% reaching a total of 300 million hryvnas over the last 5 years. However, regardless of logging volumes, a single fine is only 170 hryvnas. In 2016, 15 cases concerning administrative offences were brought to court.

This is only one aspect of the problems related to the forest industry regulation, which representatives of government, business, community and expert circles discussed during the roundtable “Regulatory jungles: is forest a commodity or a resource?” as part of the Public dialogue “#PRODialogue” in Kyiv on April 27.

The Better Regulation Delivery Office (BRDO) conducted a comprehensive analysis of industry problems and presented it in the Green Paper “Regulation of timber market”. “50% of acts regulating the timber market carry high corruption risks due to their out-of-dateness, while 6 of 44 acts are illegal. The existing regulatory environment can not provide the state recording of forests and their use as well as can do nothing with illegal logging and does not provide effective mechanisms to protect forest and sell the timber,” the Head of the BRDO Agriculture sector Andriy Zablotskyi said.


Opening the meeting, the First Deputy Minister of Economic Development and Trade of Ukraine Maksim Nefyodov emphasized the need to introduce the electronic timber management at the earliest possible time: “In the near future, we are planning to introduce the state electronic timber management as a pilot project for a year. The relevant draft Resolution of the Cabinet of Ministers has been already prepared. Regulatory rules should be effective and predictable. Without emotions, only after analyzing the data and providing the predicted impact on business.”

The above mentioned problems are compounded by an acute lack of budget financing of the sector that meets only 8% of needs. For example, in Belarus, it is 9 dollars/hectare, in Poland – 17.5 dollars/hectare and in Ukraine – just 0.3 dollars/hectare. With such funding, it will require 40 years to achieve the forest cover index at the level of 20%.


At the same time, the country still does not have any development strategy in the field of forest relations that would define priority areas of forest use for the state and businesses. The Head of the State Agency of Forest Resources of Ukraine Hrystyna Yushkevich emphasized the priority of this task. “Today, the State Agency of Forest Resources takes the first steps in creating the national forest policy of Ukraine with the expert help of Austrian colleagues. This is impossible without the quality analysis of regulatory acts and we are very grateful for BRDO’s expert help in this area,” Hrystyna Yushkevich said.


The representative of the EU Delegation to Ukraine Nicholas Burge stressed the importance of the regulatory reform: “Europe is interested in stable economic development of Ukraine and it is possible only with effective regulatory changes in the legislation, including the laws in forest industry. Our common task now is to find a balance between the value of the forest as a natural resource for future generations and the contribution of the timber market in economic growth.”


The Ministry of Economic Development and Trade together with the State Regulatory Service initiated public consultations as an essential element of the regulatory reform to make the rules for businesses more effective and clear and the process of their adoption – transparent and public. The independent BRDO analytical center is organizing public consultations and developing analytical materials in the framework of the EU4Business/FORBIZ initiative.


The Public Dialogue between the government and businesses is aimed at improving the state regulation and the business climate in the country.