World Bank Report: Doing Business 2008

Kyiv, October 9, 2007 - Ukraine's overall standing on the ease of doing business has not changed this year, finds Doing Business 2008 -the fifth publication in the annual series issued by the World Bank and IFC. Ukraine is ranked 139th out of 178 countries reviewed in the report. The rankings present indicators of the time and cost of meeting government requirements to business start-up, operation, trade, taxation, and closure.

Ukraine received very low ratings on a number of indicators-notably Paying Taxes and Dealing with Licenses, in which it ranks in the bottom five economies in the world-while neighboring countries that had previously ranked below Ukraine have improved their positions by implementing reforms.  Ukraine's highest rankings were in Enforcing Contracts (#46, unchanged) and Getting Credit (#68, down six places from the previous year).  To stay competitive in the region as well as to create better conditions for doing business and attract local and foreign investment, more reforms are needed in Ukraine, recommend WB and IFC analysts.
 
Ukraine has one of the most cumbersome taxation systems in the world.  The survey finds that a Ukrainian business has to pay 99 separate taxes and spend 2,085 hours a year on procedures related to tax payment. Ukrainian enterprises are required to pay nearly 60% of their profits in taxes, while a global average is about 40%.

Ukraine's ranking on dealing with licenses (#174) is only marginally better. This indicator analyses the procedures, time, and cost to build a warehouse, including obtaining necessary licenses and permits, completing required notifications and inspections, and obtaining utility connections. On average, it takes 429 days to go through 29 procedures to get construction permits in Ukraine.
 
"Reforms are taking place in Ukraine, but not at a pace sufficient to allow Ukraine to advance vis-a-vis the other economies with whom it is competing for investment and markets" - notes Paul Bermingham, World Bank Country Director for Ukraine, Belarus and Moldova. "We urge the authorities to deepen and accelerate the process of reforms designed to enhance national competitiveness.  Ukraine should be in the top half of nations, not the bottom quarter.  World Bank and IFC programs in Ukraine are dedicated to this goal." 

The World Bank and IFC have identified the following areas for priority action, noting that these reflect the views of the enterprise sector within Ukraine:

• adopt a new Tax Code that includes a significant decrease in the number and complexity of procedures

• radically reduce and simplify the regime of licenses and permits, including for construction

"The state authorities in Ukraine should start acting as a catalyst for development and innovation instead of blocking it. One of the best examples are technical regulations. Standards from Soviet times are still in many cases compulsory, and to introduce new products or technologies is basically forbidden, except if you get specific authorization for it through a burdensome and costly process.  Ukraine is geographically in Europe, so its regulations need to be as close to it as possible. Now is the time for a radical change," - said Elena Voloshina, Head of IFC Operations in Ukraine.

Ukraine's Ranking on Doing Business Indicators

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Doing Business 2008 ranks 178 economies on the ease of doing business based on 10 indicators of business regulation. Singapore, for the second year, tops the aggregate rankings across 178 economies. The top-ranked countries in Eastern Europe and Central Asia are Estonia (17), Georgia (18), Latvia (22), Lithuania (26), Slovakia (32), Armenia (39), Hungary (45), Bulgaria (46), and Romania (48).

The rankings track indicators of the time and cost to meet government requirements in business startup, operation, trade, taxation, and closure. They do not track variables such as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.  Since 2003 Doing Business has inspired or informed over 113 reforms around the world.

The top 25 in the overall aggregate rankings, in order, are Singapore, New Zealand, the United States, Hong Kong (China), Denmark, the United Kingdom, Canada, Ireland, Australia, Iceland, Norway, Japan, Finland, Sweden, Thailand, Switzerland, Estonia, Georgia, Belgium, Germany, the Netherlands, Latvia, Saudi Arabia, Malaysia, and Austria.

For more information on Doing Business 2008, please visit www.doingbusiness.org

Additional information: Doing Business 2008: Ukraine (PDF)