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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

An entrepreneur needs a license for his every step

7 September, 1999 - 00:00

What rankles businesspeople starting out is the number
of governmental institutions one has to go through to get a license to
do business and the mountain of supplementary documents that has to be
obtained. This is shown by a study done in Ukraine by the International
Financial Corporation. The price to be paid for licenses is no cause for
joy either. What is more, one has often to pay it several times if the
a firm expands the territory of its business.

The License Chamber has drawn up a bill designed to finally
bring some order to the situation. However, the bill increases the number
of entrepreneurial activities subject to licensing from 54 to 80, and its
not clear at all whether it will become a panacea for entrepreneurs.

According to License Chamber Chairman Serhiy Tretiakov,
the existing system of permit granting includes almost 350 various documents.
Some of these are to be partially amended, but most will be canceled. As
a result, Mr. Tretiakov hopes to limit the number of activities subject
to licensing and make a license «the only permission-granting document.»
At first glance, a bill like this would seem virtual salvation for downtrodden
business. However, things are not that quite that simple.

First, according to Mr. Tretiakov said, when being debated
in Verkhovna Rada, the bill «will most likely see the increase in the number
of activities subject to licensing.» It is impossible to say now to what
extent it will increase, but the very fact will hardly cause entrepreneurs
to rejoice. In addition, if a license has been issued by a local executive
body, it will be only valid for that one oblast, and to work in a different
region, one will need another license and, of course, at full price. Incidentally,
the license fee remains unchanged.

No one is advised to lose his/her license, for the bills
pulls no punches about such people: «To issue a new license in lieu of
a lost, spoilt, or damaged one, a fee shall be charged in the amount and
order stipulated for granting the license. If the fact of losing a license
has been revealed while the economic entity was being audited... an administrative
fine shall be imposed, in the amount of five tax-free minimum individual
incomes.» Simple mathematical calculations show that it is far cheaper
to lose while undergoing an audit.»

The License Chamber is trying to get top priority for its
bill, which will might make it possible for a new licensing procedure to
take effect on January 1. Mr. Tretiakov is convinced that, by adopting
the law, «we will come significantly closer to European standards and make
a crucial step toward removing the unnecessary regulation of Ukrainian
business.» Will this make entrepreneurs feel more at ease?

COMMENTS

Vyacheslav KREDYSOV, chairman, coordination council,
New Formation Association of Entrepreneurs:

«Over the past few years, we have heard talk about the
deregulation of entrepreneurial activities, but what we have in reality
is the on-going process of increasing the number of activities subject
to licensing. This means we say one thing but do something different. Another
aspect is that the powerful bureaucratic apparatus we have created will
be constantly trying to prove its importance and justify the necessity
of making a certain activity subject to licensing. I don't quite believe
that a single license will be introduced: those in power say one thing,
think another, and do a third. One group of officials will hardly manage
to rob another group of the power to issue permission-granting documents.
I pray to God I were mistaken, but I see no real prerequisites for this.»

Viktor KHMILEVSKY, president, League of Leaseholders
and Entrepreneurs of Ukraine:

«Any increase in the number of activities subject to licensing
always creates additional problems for the subjects of entrepreneurial
activity. How can we turn back the licensing trade, when almost 10% of
those capable of working are engaged in it? A license makes trade in retail
outlets economically nonviable. What do we want when we license trade:
to ruin it by forcing every seller without exception to work on roadsides,
in subway stations, or in open air markets? The number of licenses should
be cut drastically. Licensing is necessary, but now it only has the shape
of a monetary tax, it does not reflect the right to do business which would
impose responsibility on a given subject. I consider licensing in its present
form dangerous for the nation's economy.»

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