This significant policy shift was announced during a cabinet meeting on Friday, as reported by the Ministry of Economy of Ukraine.
Key Objectives of the State Property Policy
The newly approved policy serves as a cornerstone for implementing the provisions of Law No. 3587-IX, which focuses on improving corporate governance in state-owned enterprises (SOEs) and aligns with the OECD principles. Developed over the past nine months, the policy outlines several critical areas:
Enhanced Management of State-Owned Companies
The policy delineates the state's role in managing its enterprises, identifying which companies are deemed strategic for the country, and specifying the tasks they must perform. This strategic approach ensures that state-owned entities contribute effectively to national interests and economic stability.
Introduction of High Standards of Corporate Governance
For the first time in Ukraine, the policy introduces clear and transparent remuneration policies for managers and members of supervisory boards of state-owned companies, alongside a defined dividend policy. These measures aim to:
- Increase Efficiency: Streamline operations and enhance the performance of SOEs.
- Attract Investment: Build investor confidence through transparent and standardized governance practices.
- Preserve and Increase Asset Value: Ensure that state assets are managed prudently to maximize their economic value.
Optimization of the State Asset Portfolio
The policy calls for the optimization of the state asset portfolio, which includes the privatization or liquidation of non-strategic enterprises. This strategic realignment ensures that the state retains ownership only in sectors crucial for national security and economic development.
Modern Corporate Governance Standards
Adhering to OECD principles, the policy mandates the creation of independent supervisory boards, the development of criteria for their mandatory formation, and the establishment of clear responsibilities for SOEs. These steps are designed to:
- Enhance Accountability: Independent supervisory boards oversee the management, ensuring accountability and reducing the risk of mismanagement.
- Improve Reporting Standards: Implement robust reporting mechanisms to monitor the performance and compliance of SOEs.
- Define Objectives: Clearly outline the goals and objectives of state-owned companies to align their operations with national priorities.
Collaborative Development with International Partners
The development of the state property policy involved extensive collaboration with international partners, ensuring that the policy incorporates best global practices. Key contributors included representatives from:
- European Bank for Reconstruction and Development (EBRD)
- European Union (EU)
- International Monetary Fund (IMF)
- World Bank
- Organisation for Economic Co-operation and Development (OECD)
- USAID/Ukaid (SOERA Project)
This international cooperation underscores Ukraine’s commitment to adopting globally recognized standards and enhancing the transparency and efficiency of its state-owned enterprises.
Implementation and Future Steps
Following the approval of the state property policy, the Ministry of Economy outlined the next phases of implementation:
Triage of State-Owned Companies
A comprehensive triage process will be conducted to identify and categorize state-owned companies into those that will remain under state ownership and those slated for privatization or liquidation. This step is crucial for optimizing the state asset portfolio and ensuring that only strategically important enterprises remain state-owned.
Formation of Supervisory Boards
For SOEs meeting specific criteria, supervisory boards will be established. These boards will play a critical role in overseeing management practices, ensuring adherence to corporate governance standards, and enhancing the operational efficiency of state-owned companies.
Defining Responsibilities and Functions
The policy will also delineate the responsibilities and functions between government authorities and state-owned companies. This clear separation of roles aims to prevent overlap, reduce bureaucratic inefficiencies, and promote a more effective governance structure within the state sector.
Impact on Investment and Economic Growth
The state property policy is anticipated to have a profound impact on Ukraine’s economic landscape:
- Attracting Foreign Investment: By implementing transparent governance standards and optimizing the state asset portfolio, Ukraine positions itself as a more attractive destination for foreign investors.
- Boosting Economic Efficiency: Enhanced management practices and accountability within SOEs will lead to improved performance and economic contributions from state-owned enterprises.
- Increasing Foreign Exchange Earnings: Streamlined and efficient state asset management is expected to enhance Ukraine’s foreign exchange earnings through strategic exports and investments.
Official Statements
Yulia Svyrydenko, First Deputy Prime Minister and Minister of Economy of Ukraine, emphasized the significance of the policy:
“The state property policy defines the role of the state in managing state-owned companies, outlines which companies are strategic for the country and what tasks they must perform, and also introduces high standards of corporate governance in the state sector of the economy. These measures will make it possible to increase the efficiency of state asset management and attract investment into the economy.”
Taras Kachka, Deputy Minister of Economy and Trade Representative of Ukraine, highlighted the policy’s role in preventing bureaucratic redundancies:
“The cancellation of the licensing regime for agricultural products is necessary to avoid misunderstandings during customs clearance of exports. This move simplifies the conditions for doing business for exporters and aligns with our goals of enhancing transparency and efficiency in the agricultural export sector.”
Conclusion
The approval of the state property policy by the Cabinet of Ministers of Ukraine marks a pivotal moment in the country’s economic reform agenda. By enhancing the management of state assets, introducing stringent corporate governance standards, and optimizing the state asset portfolio, Ukraine is poised to attract significant investment and foster sustainable economic growth. The collaborative effort with international partners ensures that the policy is robust, transparent, and aligned with global best practices, paving the way for a more resilient and prosperous Ukraine.
