RESOLUTION OF THE CABINET OF MINISTERS OF UKRAINE

of December 28, 2001 No. 1801

About approval of the Development program of investing activities for 2002-2010

In pursuance of Article 1 of the Presidential decree of Ukraine of July 12, 2001 N 512 "About measures concerning improvement of the investment climate in Ukraine" the Cabinet of Ministers of Ukraine decides:

1. Approve the Development program of investing activities for 2002-2010 (further - the Program).

2. To the ministries, other central executive bodies - executives in charge of the Program to provide funds for its realization in expense limits which are determined to these bodies in the government budget for the corresponding year.

3. To the ministries, other central executive bodies, Council of Ministers of the Autonomous Republic of Crimea, the regional, Kiev and Sevastopol city public administrations annually till January 15 and on July 15 to represent to the Ministry of Economy and European Integration information on the course of accomplishment of the Program.

4. To the Ministry of Economics:

together with other interested central executive bodies, organizations, the organizations, representatives of associations of entrepreneurs and investors to develop and provide till April 15, 2002 to the Cabinet of Ministers of Ukraine the draft of the plan of measures for accomplishment of the Program;

exercise control over the implementation of the Program and each half a year within a month that comes behind the accounting period, to inform the Cabinet of Ministers of Ukraine on the state of affairs.

Approved by the resolution of the Cabinet of Ministers of Ukraine of December 28, 2001 No. 1801

The development program of investing activities for 2002-2010

Urgent task of the state is activation of investing activities and considerable building-up of the volumes of investment. Increase in inflow of investments is priority activity of the central executive bodies.

This Program is based on provisions of President's letters of Ukraine in the Verkhovna Rada of Ukraine "Ukraine: promotion in the 21st century. The strategy of economic and social development for 2000-2004" and "About domestic and external situation of Ukraine in 2000", Presidential decrees of Ukraine of February 22, 2001 N 108 "About additional measures concerning increase in receipts of investments into economy of Ukraine" and of July 12, 2001 N 512 "About measures concerning improvement of the investment climate in Ukraine", Concepts of regulation of investing activities in the conditions of market transformation of the economy approved by the resolution of the Cabinet of Ministers of Ukraine of June 1, 1995 N 384.

I. Current state of investing activities

Revival of investing activities became result of economic transformations. Since 1998 growth rates of investments began to advance growth rates of gross domestic product and industrial production.

Positive role played transition since 1999 to cash privatization in expansion of the volumes of investment into the Ukrainian economy and creation of incentive system of development of small business; decrease in the tax burden of producer, implementation of the fixed agricultural tax; creation of network of special economic zones and the territories with the special mode of investing activities; reducing not monetary calculations and payments.

As a result in 2000 the volume of investment into fixed capital reached 23630 million hryvnias that is 1,9 times more, than in 1997 (in the comparable prices - on percent 18,5).

Foreign investments arrive to Ukraine meanwhile in insufficient amount.

The total amount of receipt of direct foreign investments to the country is insignificant - for October 1, 2001 it constituted 4194 million US dollars, or only 85 US dollars on one resident of Ukraine. In general foreign investments arrived from 112 countries of the world. The most powerful contribution was made by such countries as the USA (percent 16,8), Cyprus (percent 9,5), the Netherlands (percent 8,8), Great Britain (percent 8,7), Russia (7 percent), Germany (percent 6,3).

Such types of economic activity as the food industry and conversion of agricultural products, wholesale trade and mediation in trade, financial activities, mechanical engineering, the chemical and petrochemical industry, metallurgy and metal working, production of coke, products of oil processing and nuclear fuel, scientific and technology and innovative activities, tourism (development of hotel infrastructure) became investment attractive.

Crisis of 1998 which covered the financial and stock markets of the world, was noted also in the Ukrainian security market owing to what rates of development of infrastructure of the market were slowed down.

II. Problems of activation of investing activities

For activation of investing activities follows:

reduce the level of state regulation of business activity and provide stability of the relevant legislation;

eliminate ambiguity of interpretation of regulatory legal acts and complete judicial reform;

enhance the regulatory base concerning realization of the property rights;

complete administrative reform, provide publicity and transparency in decision making by authorities and as a result to overcome bureaucracy and manifestations of corruption;

implement effective corporate management methods;

promote market development of the capital, first of all banking sector, the share and insurance markets;

reduce the tax load;

reduce the list of the priority directions of innovative activities in Ukraine, having provided thus concentration of resources of the state support on the urgent directions of development of science and technology;

provide stability of political environment;

stir up activities for creation of positive image of the state.

III. Purpose and main tasks of the Program

The purpose of the Program is creation of the attractive investment climate and development of infrastructure of investing activities for ensuring stable economic growth and increase in living standards of the population.

The main tasks of the Program are:

in the field of creation of the attractive investment circle for the private unborrowed equity:

deregulation of business activity and liberalization of business activity;

completion of forming of stable regulatory framework which would be based on the principles of equality of all investors;

ensuring transparency of procedures of decision making central and local executive bodies;

enhancement of controling mechanisms the corporate laws including belonging to the state, strengthening of protection of the rights of small shareholders;

increase in efficiency of insolvency proceedings;

ensuring further reforming of the taxation system, including by decrease in the tax load, optimization and increase in transparency of the procedure of administration of taxes, unconditional observance of the rights of taxpayers;

increase in investment appeal of subjects to privatization;

further carrying out administrative reform for the purpose of enhancement and increase in efficiency of public administration, elimination of bureaucracy and manifestations of corruption;

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