Law, 10. Commercial law
Dolinin Dmytro Volodymyrovich
Yaroslav the Wise national lawacademy of Ukraine
The problems of foreign investment in Ukraine
According to the article 1 of the Law of Ukraine "On investment activity" , investments are all types of investment property and intellectual property that are invested in the facilities business and other activities, which resulted in the generated income or achieve social-ment effect.
The main problem stands too well-regulated investment business, investment in traffic law. The reason for the presence of these factors - lack of clear government policy on economic development in general and investment (both foreign and domestic) in particular. However, the problem of efficiency of legislation on investment is complex and can not be limited only by aspects of state regulation.
Article 1 of the Law of Ukraine "On foreign investment" defines foreign investors as subjects who carry out investment activities in Ukraine, namely: legal entities established by acording to legislation other than legislation of Ukraine; individuals, foreigners who do not have a permanent place in Ukraine and is limited in capacity, foreign governments, international governmental organizations and other entities of foreign investment are recognized as such under the legislation of Ukraine. That Ukrainian legislator gives non-exhaustive list of persons who can be foreign investors, and noted that these subjects carry out investment activity in Ukraine. Solving the problem of the recognition of foreign investors, noted V. Poedinok, along with the criteria set out in the art.1 of the Law of Ukraine "On Regime of foreign investment" we should take into account the criteria set in numerous bilateral agreements of Ukraine on the promotion and reciprocal protection of investment (in case of disagreement the last will have priority), the analysis of existing bilateral agreements reveals a wide variety of moves to formulate criteria for membership of state investor.
It should be recognized that the problems of legal regulation of investment relations, improvement of its efficiency has long been a subject of thorough research. An important contribution to the study of this problem have made O.Vinnik, V. Kossak, O. Kibenko, Y. Atamanowa, V. Polatay, D. Fedorchuk, G.Vinogradova an others. However, the problem of too well-regulatedness of economical activity has not been business a complex and specifically in the literature reserched.
The analysis of the Legislation of Ukraine on nationalization and requisition of investment suggests that the law has a number of gaps that need to be resolved, namely: the order of nationalization and requisition is not determined in the legal way, and not otherwise specified under the law legal act,on the basis of which can be made nationalisation or requisition of investment; there si no a specific body that has the authority to decide on the requisition or nationalization; compensation terms are not defined, which allows officials to make independent decisions about the size, timing and the way of compensation, and it does not always correspond the requirements of law.
In Ukraine, there is almost no developed the “portfolio” investment. The total number of the “portfolio” (up to 10% of the ststute fund) investments of the non residents at the beginning of the year is only about $ 250 million, that is connected with the imperfection of the national legislation in the protection of minority shareholders.
As for prospects, the state efforts to create a regime promoting foreign investment should be constant, expected for the long development strategy and take into account the increasing competition in attracting foreign capital. Strategic direction of investment should be considered in reforming tax system - so that it provided sufficient revenues to budgets of all levels. Reforming of this system should aim to reduce the tax burden by reducing the list of taxes and fees; broaden the scope of taxation by eliminating incentives that are not directly related to the innovative and investment activities; introduction of a mechanism of declaration tax benefits by the subject - taxpayer; introduction of taxation of real estate. You shold clearly understand intercommunication that untill the national capital will not work, primarily private, in Ukraine never will come foreign in adequate quantities. Among the key strategic directions should be called an improovement of investment climate in the process of privatization. State policy in this area should aim to replace the fiscal model of privatization with investment and innovational; privatization of large enterprises and sub-enterprise monopoly on individual plans through saling controlling stakes to industrial investors; technical and technological renewal of the business through funds received from privatization.
One major factor for expantion of investment is to stimulate long-term bank lending to real sector of economy and raising the funds of the population. The solution to this problem requires an effective mechanism for better security of the rights of creditors and transparent implementation of the pledged property, increasing the concentration of banking capital, incentives to attract financial contributions to the population and putting the mechanism of mortgage lendingencourage inflow of foreign capital into the banking sector.
The development of the stock market can be important strategic direction of investment to.
It should be noted that for investment flowing into the country the system of private guarantee system in a foreign investment must functioniren. A. Zahorodniy and T.T.Hryniv were researching this problem and concluded that in Ukraine today there is no clear system of laws on the activities of non-bank financial institutions guarantee, not differentiated functions of agencies that regulate foreign investments and promote their involvement. A guarantee of investment is one of the most important forms of support.
Having a defined range of problems associated with the situation in the field of international and national regulation of investment, we can make some conclusions and recommendations.
Firstly.Modify existing strain in the relations of property, in fact, provide political support and reliable in-state secure of private property rights, interests, business partners, investors and creditors, increasing the share of private and corporate sectors of GDP to at least 75-80%.We must prove to the logical conclusion of land reform, establish modern mechanisms of land-lease and mortgage relationships in the agricultural sector as well as full-fledged land market in towns in Ukraine. It is important to create an effective system of protection of intellectual property.While such systems do not exist, high technology will not appear in Ukraine, the scientific staff will outflow.You must take additional measures to stimulate entrepreneurship and small business assistance in entering new markets and economic actors.
Second. The government should ensure the effective use of state property, land, forest and water resources, mineral resources, airspace, real estate and shares that remain in state ownership. All these riches should work on the economy, provide income for country.
Thirdly. Bank and the government should implement a comprehensive program of rehabilitation and strengthening of the banking system, increasing its reliability, increasing banks' capitalization, the development of specialized banking, including mortgage institutions, financial and investment institutions.
Fourth. We need to strengthen the stock market and its infrastructure, development of joint investment institutions, insurance and pension funds, Ukraine's withdrawal to the international capital markets, in the stock market development, there are very important its transparency, increasing the role of state securities regulation, development of legal framework, improving investor protection.
Fifthly.State policy should be focused on constructing the effective competition in economy, ensuring deep liberalization of energy markets and Agricultural raw materials, transport and municipal services, and other spheres of economic activity, correcting disproportions in the estimating mechanism, improving the mechanisms of bankruptcy. Forming of equal conitions for enterprises and organizations irrespective of their ownership and origin of capital is especially important. The state as owner of the property must be equal in rights with private owners. Unjustified benefits of enterprises with foreign investments, which limits the availability of a competitive environment, should be canceled.
Sixth. Particular attention should be paid to staffing market reforms.