Abstract
The article is about problems of special free economic zones, special (free) economic zones and peculiarities of their laying, development and functioning in Ukraine. The development of Special Economic Zones (SEZ) in my native country is of essential importance as it promotes investments into Ukrainian economy, opens a lot of new working places, and considerably improves the financial state of enterprises. It also contributes to activation of external economic activity and overcoming the problem of poverty due to the growth of buying capacity of the population.
Keywords: special (free) economic zones(SEZ), priority development areas (PDA), economic growth
Introduction
Special economic regions became the center of scientific research in Western Europe in the 70s. The interest of the scientists was aroused by the constantly increasing number of SEZ and the appearance of results and consequences of their activity in developing countries. Such foreign scholars as Y. Monkevich, J. Dushen, E. Lowven, R. Bolin, S. Najito and some others played an essential role in laying the foundations and working out the principles of the SEZ study, which I support. Ukrainian and Russian scholars ( V. Budkin, V. Pyla, V. Dergachov, Y. Makogon, I. Franchuk, E. Savelyev) focus their attention on the following problems: possibility and necessity of introduction of SEZ under the conditions of economy reformation in the country; finding the ways of adapting the international parameters of SEZ development to national conditions; defining the peculiarities of SEZ formation for the transitional economics. Despite the fact that the idea of introduction of the SEZ in Ukraine became supported by many scholars and became popular in the whole society, the problem of its practical realization appeared to be much more complicated due to the problems of methodological character.
Methodology
My project presupposes the usage of a wide variety of scientific research methods:
• analysis, synthesis (for the analysis of the level of SEZ development in Ukraine);
• the methods of induction, deduction and analogy (these methods are used while studying the peculiarities of the SEZ formation and consequences of their activity in Ukraine and comparison of the achieved results with other countries and Ukraine in the first place);
• the methods of abstrugation and concretization (used for differentiating the peculiarities of the SEZ formation and functioning in Ukraine);
• systemic analysis, economic-mathematic and economic-statistic analysis (used for the analysis of the results of the SEZ functioning in Ukraine).
Special economic zone (SEZ) is defined by the present legislature of Ukraine as a part of Ukrainian territory where the special legal regime of economic activity, the order of its application and legislation acts are set up and functioning. Privilege customs, financial, tax and other conditions of national and foreign legal entities economic activity are established on the territory of SEZ.[1-7] 10 SEZ were functioned in Ukraine: “Azov”, “Port Crym”, “Donetsk”, “Kurortopolis Truskavets”, “Zakarpattya”, “Interport Kovel”, “Mykolaiv”, “Porto-franko”, “Reni”, “Slavutych”, “Yavoriv” [1-7].
In accordance with Ukrainian law “On state budget of Ukraine for 2007,” article 125: to establish that, in the year 2007 for all business entities in case if they import on the territories of special economic zones and priority development areas (PDA) of excisable goods(alcoholic drinks, petrol, diesel fuel, beer, ethyl alcohol, vehicles, tobacco goods) and goods of 1-24 groups according to Ukrainian goods’ classification of foreign economic activity (living animals, products of animal origin;products of vegetative origin;fat and oil of animal or vegetative origin;products of its fission; final food suet; waxes of animal or vegetative origin; final food products; alcoholic and alcohol-free drinks and vinegar; tobacco and its substitutes), stop the use of privileges about payment entrance duty and value-added tax (VAT) as to such goods regardless of the aim of their import.[1]
In case if other Ukrainian laws regardless of the date of their adoption, including Ukrainian laws, guaranteeing invariability of the tax legislation, establish other terms and conditions of tax and duties payment (obligatory payments), norms of this law are applied.
In accordance with requirements of article 19 of the Ukrainian Constitution public authorities are prohibited to adopt and execute decisions, which establish other rules of taxation of business entities, which fulfill investment projects on the territories of special (free) economic zones and PDA, differеnt from the rules, determined by norms of this law.
Verhovna Rada of Ukraine passed a law «On special economic zones and special regime of investment activity in Donetsk region» for the period of 60 years in November, 1998, special economic zone «Donetsk» was formed (which is situated in the south of Donetsk and occupies an area of 466 hectare) and «Azov» (which is situated in the south of Mariupol and occupies an area of 318 hectare).[1-7]
The Council responsible of special economic zones and special regime of investment activity in Donetsk region approved 5 investment projects to the total amount of 35066 thousand US$. Realization of investment projects supposes the creation and preservation of 4274 working places. The work of equipping special economic zones «Donetsk» and «Azov» continues.
By the decree of the President of Ukraine from June 1, 1998 №657/98 «On special economic zones «Slavutych»» for the period till 1 January 2010, special economic zone(SEZ) «Slavutych» was created on administrative borders of the town Slavutych, Kiev region. Business entities of SEZ «Slavutych» realize investment projects by total estimated cost of 72886 thousand US$. [1-7]
From the beginning of investment projects realization investments to the amount of 37 thousand US$ were attracted. Volume of sold industrial production, produced by enterprises thanks to investment projects introduction, was 298,7 million of hryvna. [3-7]
By the decree of the President of Ukraine «On free economic zone (FEZ) «Porto-Franko»» on the territory of Odesa trade seaport from January 1, 2000 free economic zone «Porto-Franko» was created on the territory of Quarantinian mole of Odessa trade seaport which occupies 32,5 hectare.[4] Expected results of activity: it is supposed to attract 150 million US$ to preserve old and to create new working places – 1,5 thousand. Five investment projects were confirmed with estimated cost about 30 million US$. Investments to the amount of 25,6 million US$ were attracted. Production to the amount of 156 million hryvna was realized.[3-7]
By the decree of the President of Ukraine «On special economic zone «Mykolaiv»» for 30 years SEZ was created in the town Mykolaiv on January 1, 2000 on the territory of the shipbuilding enterprises and adjoining to them territories.[4] On April 1, 2007 investments to the amount of above 54 million US$ were attracted. 15 thousand working places were created and preserved. [3-7]
Expected results of activity: it is supposed to attract 650 million US$, to preserve old and to create new working places – 33 thousand.[3]
From Jan. 1, 2000 in Autonomous Republic of Crimea on the territory of 27 hectare in the town of Kerch special economic zone ‘Port Crym’ was created for the period of 30 years. Special economic zone is not included into the priority development area. The expected results of the activity: it is supposed to attract 150 million US$, preserving old and creating new working places – 1,5 thousand. Today one project is being implemented. 49 thousand US$ of direct foreign investments have been attracted. 179 new workplaces have been created.[3-7]
In Lviv region in the town of Truskavets in the middle of 1998 for the period of 20 years SEZ of tourist and recreational type ‘Kurortopolis Truskavets’ was created with the aim of preserving unique natural and climatic, mineral and biological resources and mineral sources, of modernization and reconstruction of material and technical infrastructure of the resort, solving of engineering problems and preserving historic and architectural monuments. The advantages of the resort are: favorable ecological situation, high level of infrastructures, territorial position and high professional level of workforce.[1-7]
The main aim of the project is creation of efficiently working resort of European level to compete with the resorts of CIS, Central and Eastern Europe.
Investment resources in all the areas of resort activity will constitute about 250-300 million hrv.
It will allow to boost the quality of medical services and decrease the costs of the services (generally at the expense of resources preservation), increase the number of resort visitors up to 340-350 thousand person per year.[3]
The introduction of resort duty will increase the revenues to the municipal budget to 3 million hrv per year. On the territory of SEZ ‘Kurortopolis Truskavets’ 25 investment projects with estimate value of 96,9 million US$ have been registered with the primary aim to provide comfort of the working health resort complexes by their reconstruction and technical re-equipment, applying up-to-date methods of treatment and recreation using modern medical and diagnostic equipment, energy- and resource-saving technologies. Today 25 investment projects are being realized.[3-7]
Till March 1, 2007 investments to the amount of 94,7 million US$ were attracted, including foreign ones to the amount of 25,8 million US$.[3]
In the limits of investment projects implementation 544 workplaces were created and 3173 of these preserved.[3]
By the decree of the President of Ukraine of March 27, 1998 ‘On economic experiment “Yavoriv” in force till January 1, 2010 in the administrative borders of Yavoriv district Lviv region special economic zone was created with the aim to attract investments, create workplaces, solve ecological problems, expand production and develop infrastructure.[4]
On the territory of SEZ “Yavoriv’ 90 investment projects have been approved, estimate value of the approved projects constitutes about 250 million US$. All the business entities of SEZ “Yavoriv” are newly established enterprises which bought or rent vacant production areas, 16 of companies started production process.[3-7]
From the start of SEZ functioning, enterprises sold production to the amount of 401,7 million hrv, including export 46 million hrv. 11 enterprises have been assembling equipment and doing start-up work, other entities of SEZ “Yavoriv” started to implement investment projects.[3-7 ]
The investors are developing new branches of industrial production: machine-building, equipment building, light and food industry.
10 enterprises are developing manufacture of energy-saving products. New enterprises employ over 2,2 thousand of workers.[3-7]
Thanks to the decree of the President of Ukraine “On special economic zone “Zakarpattya” of December 9, 1998, the territory of Transcarpathian region with an area of 737,9 ha was turned into special (free) economic zone for the period of 30 years. In SEZ “Zakarpatya” 16 investment projects with estimate value of 212 million. US$ are being implemented.[3,4]
Implementation of these projects enabled to create about 8000 and preserve 200 workplaces.[2]
The business entities of the zone sold products and provided forwarding trade services to the amount of 6765,7 million hrv. The budget received 1 143 million hrv.[3-7]
The expected results of SEZ activity are: it is supposed to attract 550 million US$, preserving and creating new workplaces -50 thousand.[3-7]
On April 1, 2007 from the beginning of functioning by control authorities of special economic zones (SEZ) and priority development arias (PDA) 435 investment projects were confirmed. Total estimated cost of all approveв projects is 6,3 billion dollars US$, among them foreign investments – 2,3 billion US$ (36,5 per cent from total estimated cost of projects), among them for PDA – 4,5 billion US$, foreign – 1,05 billion US$ (23,3 per cent), in SEZ – 1,8 billion US$, among them foreign – 1,2 billion US$ (67 per cent).[3]
Approved projects are supposed to create 72,3 thousand of new working places and preserve 91,2 thousand of existing.[3]
In accordance with the Program of Special (free) economic zones and territories with the special regime of investment activity development in Ukraine, Ukrainian Cabinet of Ministers planed to achieve the following results by the year of 2010: “Special (free) economic zones functioning will allow to employ above 87, 000 people, to increase the amount of production by the sum of UAH 3, 9 billion, to invest above $ 3, 4 billion additionally. Functioning of established territories with the special regime of investment activity will allow to employ additional 304,300 people by 2010, to increase the amount of production by the sum of UAH 2, 5 billion, to invest more than $ 13, 7 billion”.[2]
Summary
1. That is why, as we can see, special (free) economic zones were created in Lviv, Donetsk, Kyiv, Luhansk, Mykolaiv, Odesa, Kharkiv, Volhynia, Sumy, Chernivtsi, Zhytomyr, Zakarpattya regions and the Crimea.[1-25]
2. Make amendments to corresponding codices, lows and normative acts; bring the country’s internal legislation and international legislative acts to harmony; clearly define priority activities, which should be developed in SEZ, connecting them to state programs of the country’s social-economic development.
3. As these data suggest, results of making zone in Ukraine is rather positive: large volume of investment resources was attracted for comparatively short period of time, many enterprises were rescued from bankruptcy, considerable amount of working places were created and preserved, volumes of production and export essentially increased. But it is reasonable for intensification of these positive tendencies to improve conceptual and methodical bases, legal base of creation and functioning SEZ and PDA.[3,7-25]
4. It is necessary to stress two crucial peculiarities of SEZ. Firstly, each zone is characterized by specific economic relations, if compared to the whole country. These economic relations are in the sphere of production and division of the necessary and additional goods produced on its territory. Secondly, SEZ ability for diffuse expansion and broadening its borders to other economic spheres, branches and territories connected with it directly or indirectly.
References
1. Official web portal Parliament of Ukraine- https://www.rada.gov.ua/en
2. Official web portal Cabinet of Ministers of Ukraine- https://www.kmu.gov.ua/en
3. Official web portal Ministry of economy of Ukraine- https://www.me.gov.ua/
4. Official web portal President of Ukraine-//www.president.gov.ua
5. The International Centre for Policy Studies (ICPS)-https://icps.com.ua/en/-
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23. Tantsyura O.A.Improvement of regulatory politics as to special economic zones – the best way of activization of external-economic activity. (in Ukrainian),in: Collection of scientific papers, Cherkasy( Cherkasy Technological Institute), sphere Economic sciences, 2001, № 2, pp. 29-34
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26. Serlet Thibault Can Special Economic Zones Help Ukrainian Refugees? (Tuesday, March 22, 2022)- https://fee.org/articles/can-special-economic-zones-help-ukrainian-refugees/
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