Creating preferences is a way to increase the investment attractiveness of communities

Do you know what preferences are? What are the types of preferences? And how the attractiveness of communities for investors can increase with it?

To answer these and other questions, on March 28, 2019, at the initiative of the Dnipropetrovsk Investment Agency (DIA), a seminar “Forming and implementing local preferences to increase the investment attractiveness of communities” was held for representatives of city councils, communities, investment agencies and regional economic development agencies.

What are preferences? Preferences represent certain benefits provided to enterprises, organizations to support certain types of activities (reduction and / or exemption from duties and taxes, the provision of profitable loans, etc.).

What are the types of preferences? During the seminar, the types of preferences were identified:

  •  direct provided by local budgets (taxes and fees);
  •   indirect, that is, the resources and powers that society possesses.

Where to begin? The efforts of the communities must be directed to the analysis of their territories.

These can be: human resources, logistics (roads, railway), infrastructure (electricity, gas, water supply), land, buildings and exclusive offers.

Such information will make it possible to understand the need to create preferences and will help determine the economic and social needs that are necessary for the development and attraction of investments in the community. Such information about the investment advantages of the community reduces the time for decision-making by the investor.

Compliance with legislation. The seminar was joined by experts on tax and antimonopoly legislation in order to present the specifics of introducing financial and tax preferences by local governments. According to experts, special attention when introducing local preferences should be paid to their compliance with current legislation.

Yevhen Varnakov, Deputy Chairman of the Dnіpropetrovsk Regional Territorial Division of the Antimonopoly Committee of Ukraine, provided the seminar participants with information on the need to agree with the Antimonopoly Committee on decisions on granting preferences from local budgets. He also presented a project to support the Antimonopoly Committee of Ukraine in implementing the rules of state assistance. The aim of the project is to support the institutionalization and development of an effective System of control and monitoring of state aid in Ukraine, in accordance with the requirements of the Association Agreement between Ukraine and the EU.

Successful experience. Representatives of Pavlohrad and Ternivka city councils shared their experience and results. Local preferences were presented, the introduction of which is aimed at stimulating the development of SMEs through partial compensation of interest rates on loans, conducting specialized training seminars and reducing local taxes and fees.

The interest among those present raised a question regarding the holding of specialized training seminars and the provision of grant support to young entrepreneurs (aged 18 to 27 years) in order to implement business projects. This program, which was introduced by Pavlohrad City Council, supports the development of small and medium-sized businesses and provides the opportunity to train the necessary qualified specialists.

“Dnipropetrovsk region is a leader in many indicators in the field of attracting investments among other regions of Ukraine. Therefore, it is very important for us to consolidate the status of an investment-attractive region. And it can be done better by joining forces on the ground. After all, the positioning of the region through successful histories of introducing privileges and preferences in the community adds a positive weight to the territory, when it is presented to potential investors. As the DIA experience shows, such events are very useful, because in this way everyone can communicate with colleagues from other communities, discuss common problems, ideas, share experiences, and perhaps in the future implement a joint project. Thanks to this seminar, each participant was able to understand the immediate needs and the vector of further development of his community in the sphere of introducing preferences. This, perhaps, is the main goal of the seminar. As Investment agency, we are initiating the development of a visual map of preferences in the Dnipropetrovsk region,”said Valentyna Zatyshniak, DIA director.

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