Business requires stability

After Yuriy Yekhanurov was elected prime minister, most experts expected the domestic investment climate would finally improve. They were echoed by analysts working in this country and foreign observers. Anthony Wayne, Assistant Secretary for Economic and Business Affairs, U.S. Department of State, told The Day that the new government is making foreign investors more confident in assessing the level of investment safety in Ukraine. The opinions of Ukrainian businessmen were more guarded, but they still have some hope for stability.

One of the confirmations of this notion is a poll conducted by the council of young entrepreneurs at the Cabinet of Ministers, in the youth wing of Ukrainian business. According to the council chairman, Denys Krasnikov, the survey of 200 young businessmen indicates that the number of optimists, who are convinced that Yekhanurov is capable of fundamentally improving the investment situation, is considerably larger (38.28 percent) than the group of pessimists (20.58 percent) who believe that the situation will go from bad to worse. In fact, Krasnikov says that both groups have reasons to think this. Despite the fact that young people are always in the vanguard of change, a positive prognosis is based on the opposite: business requires stability, and in considering Yekhanurov a moderate and predictable individual and remembering his work on the State Committee for Entrepreneurship, the optimists expect him to introduce order into the economy made unstable by the “reformist” Tymoshenko. The opposite side, still smarting from the unfulfilled promises of a single tax, a single “window,” and simplified registration procedures, and aware of even stronger administrative pressure, no longer expects that the new people in power will be better and more reasonable and experienced than the previous ones. So they are bracing themselves for new reforms that will only exacerbate their situation.

The answers to the survey questions were not just limited to “for” and “against.” The lion’s share of respondents (41.14 percent) is not counting on the government. They feel sure that the investment climate will remain unchanged and that they must rely only on their own resources. These are the people who are the most disillusioned, notes Andriy Kryvonis, member of the council of entrepreneurs and the head of the directorate of the Franchising Association. They are proposing their own ways out of problem situations. Kryvonis, however, believes that all these proposals are virtually worthless without intervention from upstairs. The point at issue is overregulation of the Ukrainian economy. Among the various problems he singles out the incomprehensible situation with registering enterprises, which is especially important for people starting out in business. They are taking their first steps in the market and simply by not knowing the confusing and contradictory rules, they expose themselves to constant penalties and other difficulties in their relations with the tax authorities. What’s more, the immortal notion that the only way to get somewhere is by greasing palms has not completely disappeared. Young businessmen don’t know how to grease palms the right way or whether it is necessary at all.

Proceeding from all this, entrepreneurs are asking the government to allow them to draw up business plans not for a week or a month, but for three or four years. In addition to the government’s predictable performance, this calls for constant discussions with experts about future changes, since all changes break economic cycles that are planned by a given business and are already working. Kryvonis noted that for a businessman it is not the tax rate that is important but a clear-cut management procedure, so that his accountant’s office will not have problems with backdating a changed rate. Most importantly, entrepreneurs want to have the presumption of innocence. When they register their businesses, they must be considered completely law-abiding individuals and subject to inspections only when some violations are revealed.

Can one predict that the government and parliament will listen to the opinions of young businessmen, if both of these structures practically ignore the ideas and feelings of giants of domestic business? Like the song says, “Peace is but a dream.” Maybe those businessmen who rely only on their own resources are right.