Public Private Dialogue – Action Plan

Recommendations for the Improvement of PPD in Ukraine

The Business community of Ukraine wants to highlight the importance of the ongoing transformative process in Ukraine into full-fledged market economies, which entails both challenges and opportunities. The Business Community wants to work together with the public sector to improve conditions for growth and a more favourable business climate. This transformation process and implementation of necessary reforms can best be done by involving the private sector in the policy making process. We, the Business support and private sector organisations call upon the political decision makers to consider us as partners for the design and implementation of reform processes, strategies for economic development and regional cooperation.

Background:

During 1991-2017 a long transformation process in Ukraine occurred a gradual development of the economy principles and established new market regulations. However, there was a noticeable lag in the formation of institutional system of mutual communication between public authorities, business entities and civil society organizations. The proper solution of these challenges may occur due to the social consolidation and implementation of European standarts of the public private dialogue.

Legislation on Public Private Dialogue and existing PPD Platforms in Ukraine:

The absence of the structured public private dialogue system has become a breeding ground for the spread of “shadow” economy and corrupt relationships, when business considered more appropriate and most effective to invest not in the development of civil society and advocacy, but in obtaining necessary decisions by unlawful lobbying or direct corruption.

Nevertheless, Ukrainian authorities made a number of attempts to eliminate this problem and establish communication with business community. In March, 1993 a Resolution #210 established an advisory and expert body of the Government - the Council of Entrepreneurs under the Cabinet of Ministers of Ukraine, composed of 16 representatives of business associations. The Council is a permanent advisory body under the Cabinet of Ministers of Ukraine, the main task of which is to ensure interaction of government and business. Over time the Council and its regional representative offices has been reformed many times. As of 2017 the Council units the leaders of 84 business associations.

The next step was the adoption of the Resolution "On creation of local and regional sectoral councils of entrepreneurs" in May, 2009 #518 (repealed in 2011). In order to improve the mechanisms of cooperation between business and public sector a new document was accepted, that defined the relevant principles of PPD interaction – Resolution “On participation of civic society in formulation and implementation of government policy” by November, 2010 #996.

Pursuant to the Resolution, all Ukrainian ministries, other central executive bodies, city and regional administrations were ordered to form councils from NGOs, BSOs and BMOs, as well as to ensure their functioning. This was a significant step for the development of civil society, but many problems occured with implementation of the public private dialogue. Since the councils could only include representatives of civic organizations and unions, without participation of entrepreneurs in fields, the subjects of the discussions did not reflect the problems of the real sector of the economy in the regions. SME sector continued to defend its rights with rallies and protests, as they don’t believe that the government will hear their demands in a civilised way. On the other hand, the inability of most associations to formulate their proposals in professional way led to a loss of trust of the authorities, that business is ready to participate in the policy making processes.

However, the advantage of consolidation and civilised partnership with the authorities was quickly appreciated and implemented by big businesses, especially representative offices of foreign companies in the country.

So why European Business Association (ЕВА) (founded in 1999 by European Commission, joins more then 900 companies) and American Chamber of Commerce (ACC) (founded in 1992, joins 600 largest companies operating in Ukraine from over 50 nations across the globe) operate effectively in Ukraine, providing a big input to the improvement of legislation on entrepreneurship development. Large Ukrainian enterprises found protection of their interests in Ukrainian League of Industrialists and Entrepreneurs (ULIE) (started in 1992, ULIE has 28 regional offices, 73 branches, 22 representative offices and 34 commissions for various issues).

In last few years Ukrainian Chamber of Commerce and Industry (UCCI) continues to strengthen its position in the context of PPD both on national and regional levels. UCCI is a member of the International Chamber of Commerce, World Chamber Federation, as well as the Association of European Chambers of Commerce and Industry (EUROCHAMBRES). Nearly 10,000 enterprises and companies of different forms of property are members of UCCI as of 2017.

In December, 2014 was established The Business Ombudsman Council, funded through the Multi-donor Account for Ukraine set up at the European Bank for Reconstruction and Development (EBRD). The Business Ombudsman investigates complaints concerning alleged acts of corruption and other violations of legitimate interests of businesses by actions or omissions on the part of state and municipal authorities.

The main challenge of the PPD in Ukraine is the consolidation of the small and medium-sized entrepreneurship (SME) segment (not more than 5%) and the possibility of their competent participation in the PPD at the same level as the large companies. Because the imbalance of interests leads to a non-competitive policy and a blocking of SME development in Ukraine. Some of the associations of small entrepreneurs became the basis for achieving the political goals, as happened with NGO "All-Ukrainian association of small and medium businesses “Fortrecia” (44 regional and 7 regional unions, 65 individual members). In 2014-2015 were made few attempts to create a National SME Platform as a nonformal Local Reform Coalition of 74 BSOs and BMOs, with the support of USAID implemented by CIPE. As of 2017 coalition managed to achieve self-sufficiency without donor funding, but such independent initiatives still need support and assistance to reach a decent level of the development.

Not less attention should be paid to the public sector both on the national and regional level to change the attitude towards the business community as a full-fledged partner for dialogue and cooperation.

Actions to be taken to improve PPD:

To enhance and ensure public-private dialogue for the equal participation of all relevant stakeholders, including the private sector organisations in the policy making process, the following actions should be implemented:

1. SME sector consolidation support

  • Create a positive image of entrepreneurship and promote the general idea of consolidation of SMEs
  • Develop strong SME Business Membership Organisations (both sectorial and regional associations), as well as unions and confederations
  • Enhance cooperation between think tanks, universities, associations and business support organizations
  • Actively use SME trainings, discussions and social media channels for promoting the clusterization
2. Education for private and public sector on PPD
  • Reinforce the capacity building of both private and public sectors through training, exchange of experience (E-learning could be a cost-effective variant)
  • Facilitate the organization of training programs for representatives of both private and public sector on PPD algorithm
  • Provide a constructive and systematic information policy for promotion of the public private dialogue
  • Initiate acquaintance of Ukrainian PPD stakeholders with EU and EaP best practices on Public Private Dialogue models
3. PPD legislation improvement
  • Establish rules for a quality and regular consultation channels for PPD on the all levels of the public sector (village level, oblast level, national level, Ministries, President)
  • Introduce legislative framework for self-regulation of the economy based on EU standarts
  • • Create a system of monitoring and evaluation of implemented economic reforms, as well as an indexation for benchmarking and a system of civic control of technical support programs with participation of private sector representatives