Anti-crisis proposals from “Electron” Concern


On the 22-th of April videoconference  on the subject of  "Discussion problems  in economical and tax fields of machine-building  and instrument making industries ” was held.

The chairman of  Finance, tax and customs policy Committee of Verhovna Rada of Ukraine  (VRU) Danlo Germantzev, vice-chairman of Economic development Committee of VRU  Dmytro Kysylevsykyy , leaders of Federation of employers and representatives of leading machine-building  enterprises of Ukraine – in all 25 participants took part in the conference.

The main theme of the conference was supporting of mechanical engineering and instrument making  as base industries in the conditions of coronovirus pandemia and  large world economical crisis. The participants underlined that unlike most of the countries of the world, which are following the path of closing their economics and  all-round supporting of them, Ukraine  increasingly becomes dependent  from  import of products, including ones which can be manufactured in our country. This process is reaching threatening  scale and,  when defenceless domestic market, can irreversibly destroy industrial enterprises, even the whole  branches of Ukraine and block the creation of new ones. And this is going on in the conditions when because of quarantine in the world  more than 2 million of workers have already returned to Ukraine  from foreign  countries.

Deputy chairman of the board of "Concern-Electron” PJSC  Ivan Kuzovkin emphasized his attention on the problem and issues concerned with it.

"Electron” is a group of enterprises situated in Lviv. The Western region of Ukraine is  the main region with a high share of labor migrants. Machine-building branch is able to create many workplaces in the field with orders at least in mid-term prospect and develop the program of governmental support and stimulation.

As  Ivan Kuzovkin  noted,  that among priority steps to support machine-builders  it is to improve  a number standards of   the Law of Ukraine "On Public Procurement”.  The fact is that the major competitors of domestic enterprises are Belarussian and Turkish producers of  transport  and agricultural machinery. Special economical zones are both in Belarussia and Turkey, where enterprises are free from taxation and customs duties for 5-10 years. And  therefore, now we see an active damping  from their side on the territory of Ukraine. Moreover, Ukraine till now is a member of free trade agreement within CIS, it allows Belarussian transport to get to the territory of Ukraine absolutely duty free. At the same time Ukrainian producers pay all duties and taxes when importing components and spare parts for critical imports.

Therefore, it would be advisable at least temporarily to exempt domestic producers from duties and  VAT on import of critical import parts not made in Ukraine or to make a program of partial compensation of the value of the Ukrainian product for its buyers.

There is one more point  to which it is necessary to pay attention  - we see that Ukrainian state banks and state-owned banks through Article 3 of the Law "On Public Procurement freely bypass the Prozorro system through leasing programs and actively participate in the government program of the Republic of Belarus, which provides for interest rate compensation: if any  city orders Belarusian trolleybuses or buses,  it receives a lease or loan with an interest rate of 8% per annum. Even more - today there are programs already under 0-0,1 years. And if you buy  the transport of "Electron", "Bogdan" or "Etalon” - the leasing rate is 15-16%! This state of affairs completely distorts the competitive environment.

The proposal from the Electron Concern is to develop mirror programs to support national producers, and for the period of their development and introduction - to prohibit state banks and banks with state capital from supporting foreign producers through such programs. Concern "Electron" also proposes to include in the localization program transport and equipment purchased through leasing programs - now they are completely out of regulation.

Deputy chairman of  the board of "Concern Electron PJSC Ivan Kuzovkin drew vidconference participants' attention to another significant moment: the European Investment Bank is allocating $ 400 million for the purchase of municipal transport by Ukrainian cities. And the same Belarussian and Turkish producers with privileges in their countries, participate in public tendering and dumping.

At the same time, the European Investment Bank program in its procurement guide provides for the possibility to provide a 15% difference in preferential tariffs for products manufactured or created in the customer's country (defined as containing at least 30% of the local finished product). However, this norm is advisable and none of the cities of Ukraine took the opportunity to give preferences to local producers.

Therefore, it is proposed (the proposal has been already submitted to the Economic Committee of the Parliament) to oblige the customers of municipal transport (trams, trolleybuses, buses, electric buses) when purchasing transport at the expense of the European Investment Bank and the European Bank for Reconstruction and Development, to provide a 15% difference in preferential rates for goods manufactured or created in the customer's country (defined as containing at least 30% of the local finished product).

And finally, Ivan Kuzovkin emphasized,  that it is necessary to react to the decisions of local authorities and the facts of mass procurement through the system of leasing of communal transport, which was already used  bypassing the Prozorro system, which led to  withdrawing of considerable funds abroad instead of infusions into the economy of the State.

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