RESOURCES SUPPORT FOR FOREIGN INVESTORS ENTERING UKRAINE: FOREIGN INVESTOR’S ROAD MAP

The “Foreign Investor’s Road Map” (“MAP”) briefly describes the steps that have to be taken in order to start a business in the country of investment (preparation and registration of incorporation documents, state registration, registration with the state government agencies, making a seal, opening a bank account) and which are the same and compulsory for all businesses registered in the form of a legal entity. This first block of steps requires the processing of a rather large body of legal information, in particular the Law of Ukraine “On the State Registration of Legal and Physical Business Entities”, «On the Notary”, “On Business Associations”, “On Banks and Banking”, “On State Tax Service”, Regulations of the Cabinet of Ministers of Ukraine “On the Creation of the Unified State Registry of Enterprises and Organizations in Ukraine”, sub-legislative acts,that apply to registration with social insurance funds and the Pension Fund of Ukraine, and rules on creating a seal.

A separate block in the Map applies to the steps related to the registration of a foreign investment. It is an extracted list of relevant provisions the Commercial Code of Ukraine, and the laws of Ukraine “On Foreign Trade” and “On the Regime on Foreign Investing”.

Inclusion of a chapter informing a potential investor about the basic conditions of taxation in the country of the investment is a recommended step, giving the potential investor a better understanding of the conditions of doing business, so at the initial stages, the investor can make calculations regarding the economic feasibility of the investment and time to market.

The Map should follow its “introductory” registration procedures with a mega-block of permit procedures related to the type of business that will be involved in a direct foreign and reflecting a  “green field” investment, which entails starting a business from point zero. These procedures include:

1. procedures related to land plot allocation. This block contains the steps required in both the national legislation (Land Code of Ukraine in the first place), and regulations, including local regulations, of various enforcement and permitting agencies;
2. procedures related to acquiring permits to locate an industrial facility; and
3. procedures related to acquiring permits for construction of facilities.

The Map should also describe other relevant aspects of the legal environment by including information about licensing and patenting procedures, to the extent that the current legislation of Ukraine provides for licensing and /or patenting of a specific type of a business activity in accordance with laws of Ukraine “On Licensing of Certain Types of Businesses” and “On Patenting of Certain Types of Businesses”.

It is also desirable that the Map include information about the costs and time needed to implement each step of permit acquisition procedures in each block of information. This allows a potential foreign investor to properly evaluate the prospects of making an investment, to adequately calculate his resources and to plan his activities from the very initial stage of doing business in a certain locality in a new country.

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A new country and a new locality are by definition strange and unknown to a foreign investor. Because business in general needs certainty, the information contained in a Map will be a convenient way for the investor to know about his legal obligations. In addition to making important information available to foreign investors, the Map should allow for an easy search, good translation into a foreign language, and reliably complete information. All of these factors will positively dispose the foreign investor to the country in general and to the region of investing in particular.

The “introductory” information regarding guidance in the business and investment environment of the country is a useful tool for a potential foreign investor and, at the same time, it demonstrates that the hosting country is serious about giving full notice of circumstances to its potential “partners”.

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Algorithm for compiling the document

In order to create an effective mechanism of attraction of foreign investments, and taking as a model the “Investor’s Road Map: From Start to Termination of Business”, which was developed by the State Committee on Regulatory Policy and Entrepreneurship, we can offer the following sequence for presenting the basic provisions of the Ukrainian legislation in such document, which could be placed on website portals that play the role of “gates” for a foreign investor:

Development of the “Foreign Investor’s Road Map”: step-by-step presentation of the national legislation

Language of the “Road Map”

The next step in the preparation of the “Foreign Investor’s Road Map” to be place on the official portals should be translation of this document into English and other languages of economically powerful countries that are likely to have businesses interested in investing in Ukraine, such as : Germany, France, the Czech Republic, Poland, Slovenia, Russia, China, Turkey, etc. The “language tactics” of other countries shows the expediency of multilanguage and not merely English language approach to a foreign investor. Thus, for instance, the website of the Polish Agency on Information and Foreign Investments presents Poland’s investment opportunities not only in the national and English languages, but also in German, French, Japanese, Russian and Italian.

Expanding the Scale of the “Road Map”: “Foreign Investor’s Guide”

Providing a foreign investor with a concise, clear and unified document presented in the form of the “Foreign Investor’s Road Map” is only one step in the package of activities expedient for implementing a systematic approach in order to encourage foreign investments in Ukraine. The basic information is needed to make the “first impression” when getting acquainted with the country. More comprehensive sectoral information on economic, geographic, legal, tax and infrastructure conditions of entering the market, including the information applicable to the specific potential target region of investing, is equally important for a potential investor in order to evaluate the investing environment and take the decision about investment implementation.

The comprehensive description of business and investment environment should be presented in the following format: