2015 was marked by a number of achievements in the sphere of deregulation in the agricultural sector of Ukraine, which is a positive signal for investors. WE expect that it is just the beginning of a qualitative reform of the whole industry, in particular the system of state administration and control, which will be updated and gradually brought in line with the European standards. Such reform will greatly simplify doing business, attract new investments and help Ukrainian agricultural producers to open up new markets. The economist, consultant at the European Bank for Reconstruction and Development, Vasily Govgera agreed to talk with APK-Inform Agency about the features of deregulation and changes in the business environment.
- Since January 1, the free trade zone with the European Union comes into force in Ukraine, and the government has repeatedly stated about the readiness of Ukraine to the FTA. In your opinion, whether the Ukrainian business is ready for such changes, in particular in connection with the possible increase of imports of European products? How the launch of the FTA will affect the terms of agricultural business in Ukraine?
The European Union is the largest trading partner for Ukraine, especially in the agricultural sector, especially after Russia imposed the ban on imports of Ukrainian products. The deep and comprehensive free trade zone aimed at a gradual reduction of duties with the expectation that soon will launch a completely free trade zone with the EU. However, it is worth noting that there is not so important tariffs and duties, which are not the main problem for Ukrainian exporters for shipments to Europe. We have not exhausted a number of quotas in many positions due to the fact that the Ukrainian norms and standards do not meet the European requirements or the products that we produce, do not need European consumers. Therefore, the FTA should be viewed as a process of harmonization of norms and standards in the agricultural sector, as well as an incentive to domestic producers to improve production and improve product quality. In the long term this will lead to the improvement of trade between Ukraine and the EU. Of course, there are some areas that could benefit from a good rate, for example milling. The quota for the flour is combined with grain, and in the first days of the year is chosen entirely grain traders, making it virtually impossible to supply flour to the EU. It is worth noting that the introduction of a free trade zone Ukraine and the EU also have a positive impact on other markets: the harmonization of Ukrainian standards with the European allow Ukraine to revive exports in other directions.
To date, I think the UAH devaluation and reduction of the purchasing power of Ukrainian consumers will not revive the imports of European products in Ukraine.
- The Government cancelled a number of bureaucratic procedures in the agricultural sector of Ukraine in 2015, and the Cabinet of Ministers plant to continue deregulation. How would You rate 2015 for the Ukrainian agrarian business?
2015 for agriculture was quite important because the sector was a long way in the direction of deregulation. Despite difficult economic and political environment, agriculture remains almost the only profitable sector of the economy of Ukraine. I think that in 2016 Ukraine should continue moving to the direction, slightly changing the vector in which we operate.
The aim of aggressive deregulation in 2015 was the rapid simplification of business environment and the fight against corruption, and for that all methods were justified. Today, we need to go back a little to restore order and begin to build a functional and modern system of state control of industry.
- In Your opinion, how will amendments to the Tax Code affect development of the agricultural market?
There has been found more or less satisfactory consensus on the tax issue. As for agriculture, there are several benefits. Positively, there was not imposed a general system of taxation. I believe that the united tax system is the right step for further development of the industry, as it will shape accounts for agriculture; however, it should be introduced only gradually. At the same time, it does not successfully solve the issue of VAT refund.
Interviewed by Maya Pletenets
