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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

IF THINGS ARE SO GOOD, WHY IS EVERYTHING SO BAD?

12 October, 1999 - 00:00

Kyiv hosted the First Congress of Entrepreneurs of Small and Medium Businesses. Currently, this economic sector employs over five million, and represents an electoral class to be reckoned with in the coming presidential elections. No wonder that the organizers of the congress attempted to turn this event into a component of the incumbent's campaign. The scenario was written in line with the artistic canons of Soviet propaganda: the presence of the chief executive and dedicated building of his image of a champion for entrepreneurs' interests evoked associations with “the unity of the Party and people.”

In his speech Leonid Kuchma tried to distance himself from the unsolved problems of small business, saying that it was the fault of Verkhovna Rada, which will not adopt the required legislation, while the President in only the last two years issued 20 decrees to make entrepreneurs happy. As it should be, the most exciting news was announced near the end: it turned out that Ukraine has seen promising changes in real individual incomes, which in the last three months increased by 19% (a pity that the striking miners or impoverished pensioners could not hear this). According to Leonid Kuchma, in the eight months of this year, “positive dynamics” have been achieved in all macroeconomic indices, but it will be still better in the next year, when the “growth will be tangible” (supposedly, there is such a trend now, but nobody except the President can seem to feel it).

Incidentally, this biased congress had also its dark side: the real state of affairs in small and medium business. When delegates were relating their troubles, they sounded far removed from the President's optimism. Consider a few fragments from their reports: “On the local level, there is a cold war between entrepreneurs and bureaucrats,” “Regional funds to support business operate in camera and are out of business people's reach,” “None of the laws or decrees on enterprise is fully effective,” “The tax machine causes tremendous damage to business,” etc.

Are those problems beyond the powers of the executive? Farmer from the Adelaida agribusiness firm Serhiy Rybalko, relating the hardships of doing business in rural areas, had every reason to hurl this to Leonid Kuchma: “If you, Leonid Danylovych, should think that your administration on the local level supports agrarian reform, you are absolutely wrong.”

According to the data presented to the congress by First Deputy Premier Anatoly Kinakh, the specific weight of small businesses' products in Ukraine's GDP is about 7%, while in the developed countries it is 40-60%. Last year the number of small enterprises increased by only 11%, which is much less than the 40% growth registered in 1997. For each thousand Ukrainian citizens there are only three small businesses, said Kinakh.

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