VPM Tigipko proposes approval of amendments to the customs code and other initiatives

U.S.-Ukraine Business Council (USUBC)
Kiev, Ukraine, Friday, July 30, 2010

UKRAINIAN VICE PRIME MINISTER TIGIPKO MEETS WITH UPS AND DHL SAYS UKRAINE NEEDS TO MODERNIZE ITS CUSTOMS REGULATIONS
VPM Tigipko proposes approval of amendments to the customs code and other initiatives

U.S.-Ukraine Business Council (USUBC), Kiev, Ukraine, Friday, July 30, 2010.

KYIV - VPM Sergei Tigipko met with top company representatives of UPS and DHL in Ukraine, two members of the U.S.-Ukraine Business Council (USUBC), following his commitment given at a two-hour USUBC Business Roundtable meeting with the major corporate members of USUBC on Tuesday, July 27 in Kyiv, to further investigate the critical issues which significantly hamper the delivery of express packages into Ukraine.

VPM Tigipko stressed that Ukraine needs to modernize its customs regulations and to bring it in line with the requirements of the modern world and promised his full support to this process. The major issues impacting  the speed of clearance are partly due to the current legislation which will only change with the approval of the amendments to the Customs Code in the Parliament.

Several immediate initiatives were proposed by VPM Tihipko in order to streamline the process of clearance of express shipments:

       [1] packages for private individuals with the declared value below 200 Euros and which do not require additional payments to be cleared on the day of arrival and all additional paperwork to be cancelled asap.

        [2] Non tariff regulation permissions for non dutiable shipments to be delegated to the Customs Services to avoid time consuming applications to numerous state authorities.

        [3] Customs Services was advised to accept a practice of maximum 5% inspection of packages which is in line with the best international practices.

The Deputy of the Head of the Customs Services Victor Bondar was also advised to review other procedures that can be resolved in the immediate future.

Also the proposed measures will only resolve a part of the major problem but this will be a big relief for the thousands of express operators’ customers and the first ever “walk the talk” in the facilitation of the customs issues impacting delivery of express packages to Ukraine.

BUSINESS COMMUNITY HURT BY EXTREMELY SLOW SYSTEM
"The ability to receive and/or send express packages is vital to sustaining operations of almost any international firm in Ukraine.  The complete mess that is the system for processing these type of letters and parcels is yet another one of the many impediments to Ukraine receiving adequate investment by international entities," said Morgan Williams, Director, Government Affairs, Washington, D.C., office, SigmaBleyzer private equity investment group, who serves as president of USUBC. 

“The archaic, inefficient, slow and extremely complicated customs procedures have been discussed with Ukrainian government officials for four years now and little progress if any has been made. It is a typical situation when equipment worth hundreds of thousands of dollars will stand idle for a week waiting for the spare parts worth 100 dollars while the parts get cleared at customs," said Williams. 

"The business community contacts USUBC on a regular basis about the terrible express package system operated by the Customs Service in Ukraine," according to Williams. "USUBC has had the improvement of the handling of express packages as one of its top priorities since 2008.  Almost no improvement in the system has taken place in the last two years."

Vadim Sidoruk from DHL Express presented the issues faced by the international express carriers in Ukraine to VPM Tigipko, State Customs Services’ and Cabinet of Ministers’ top officials. “ There are three dedicated  cargo aircraft landing in Kiev everyday with express packages and just over 20% of  the dutiable shipments can be cleared through customs on the day of arrival.

UKRAINE'S SYSTEM IS ONE OF THE WORST IN THE WORLD
"There are only few countries in the world which “outperform” Ukraine as the worst in the world. It is important to understand the impact of the shipments delayed at customs which often result  in lost revenues, additional costs for companies and Customs Services itself, it generates innumerous complaints from business community and private individuals. Last but not least it constantly deteriorates Ukraine attractiveness among potential investors,” according to Sidoruk from DHL.

NOTE:  UPS and DHL are members of the U.S.-Ukraine Business Council (USUBC), Wash, D.C., www.usubc.org.