IFC Helps Ukraine Ease Regulatory Burden on Manufacturers

Ukraine’s new Law on Market Surveillance, adopted with IFC’s advice, introduces EU-style regulation that frees manufacturers from excessive state inspections, decreasing their costs and making it easier to attract investment.

A recent survey by IFC Investment Climate Advisory Services revealed that inspections are one of the three most burdensome regulations in Ukraine. Besides reducing the private sector cost, the new market surveillance system will help boost innovation and bring Ukraine closer to signing a free trade agreement with the EU.

“Clear, consistent,and continuous communication is key in the reform-making process,” said Serhiy Osavolyuk, Acting Project Manager of the IFC Investment Climate Project. “We spent hundreds of hours preparing for our meetings with state officials, knowing that we had to persuade people to change the system that had been there for decades.”

IFC helped policymakers understand why Ukraine needs a strong market surveillance system to be able to compete in international markets and to be an equal member of the World Trade Organization.

The team learned that four elements contributed most to their success: a clear, common purpose and shared objectives; clarity of roles and responsibilities; quality of leadership; and individual commitment and contribution. If these four are in place, then the rest is just mechanics.

State inspectors will no longer interrupt Oksana Kharchenko’s embroidery production, so Kharchenko, owner of a small workshop in Kharkov, Ukraine, can now focus on creating and delivering her products to market. Previously the state controlled every stage of product development – from initial design, to material selection, to manufacturing processes. Now state inspectors will only check her goods when they are ready to go to market.

“My business is about creativity, but when you have to stop every time an inspector comes, you can’t really talk about any creativity or product innovation,” said Kharchenko. “Delays in production also come at huge cost. I am really happy that it has all come to an end now.”