Investment protection is priority! Does draft Law of Ukraine 11195 provide for this?
"On Amendments to Some Laws of Ukraine Regarding the Mechanism for the Protection of the Property Rights of Third Parties", which was registered in the Verkhovna Rada of Ukraine (No. 11195 ).
Bohdan Danylyshyn, doctor of economics, professor, former chairman of the Supervisory Board of the National Bank of Ukraine, former Minister of Economy of Ukraine
Recently, I came across a rather interesting draft law "On Amendments to Some Laws of Ukraine Regarding the Mechanism for the Protection of the Property Rights of Third Parties", which was registered in the Verkhovna Rada of Ukraine (No. 11195 ).
Today, we very often talk about plans for the reconstruction of Ukraine in the post-war period and the possibility of attracting foreign investments. Thanks to the heroism of our soldiers, the activities of all authorities - the President, the Government of Ukraine, we have a situation where in April 2024, business, for the second month in a row, positively assessed the current results of its activities, adapting to the difficult conditions of the full-scale war. The index of expectations of business activity (IODA) in April was 52.3% (compared to 51.5% in April 2023 and 52% in March 2024). According to the study of the state of SMEs in Ukraine, conducted by "AdvanterGroup", in 2023, 21.6% of the surveyed respondents had results 100% in line with expectations (9.3% in 2022), 16.5% exceeded expectations by 10 %-30% (8%, respectively) and in 9.2% – significantly exceeded expectations (by 40% or more than 6% compared the last year). At the same time, 44.5% had lower or significantly lower than expected results (50.1%, respectively) and 8.2% partially or completely stopped working (26.5%, respectively). According to the State Statistics Service, the indicator of economic expectations in the II quarter 2024 is + 9.9% (+7.3% in the second quarter of 2023).
This is a positive news, which should only be welcomed.
At the same time, the net inflow of direct foreign investments in the 1st quarter of 2024 is estimated at 572 million USD (in the 1st quarter of 2023 – 1.1 billion USD ), including:
- reinvestment of banking sector revenues – 243 million USD (in the 1st quarter of 2023 – 1.1 billion USD );
- net inflow of equity capital (except reinvestment of income) – 130 million USD (in the 1st quarter of 2023 – 128 million USD );
- net borrowing by debt instruments – 198 million USD (in the 1st quarter of 2023 - 71 million USD ).
Considering the conditions of this terrible war, the inflow of foreign investment is insignificant and it may also decrease due to the risks that are opened with the adoption of this bill.
Will the specified bill be able to contribute to the attraction of foreign investments? Will it not become a kind of barrier for investors, which has been observed more than once in the recent history of Ukraine?
We all strive for the eradication of everything that can threaten the national security of the country. We understand that the right to property is inviolable, it is guaranteed by the Constitution of Ukraine. Its violation can have irreversible consequences for both the state and the individual. Therefore, a balanced systemic position is needed here, which will ensure that the interests of all parties are respected.
The explanatory note indicates that the draft law will create conditions for the protection and restoration of the rights of third parties who indirectly own a share in an asset charged to state income. Another positive consequence, according to the authors' plan, will be reduction of the share of such investors seeking protection of their rights in international investment arbitrations against the state of Ukraine.
Author: Bohdan Danylyshyn
