Small and medium businesses as the backbone of Donbas economy

12:00 / 01 Dec. 2014 / 1272

Economy of Donbas does not need a face lift, but structural changes. We are firmly convinced the main stake in the development of the region should be placed on small and medium businesses, on private initiative and on formation of the middle class. This is important not only in terms of economic transformations, but also in terms of achieving social and political stability of the region.

For reference:

In Lviv the share of small and medium businesses in the regional economy is about 24—27%, in Donetsk region it is at the level of 7—9% (pre-war data).

In order to motivate small and medium businesses to return to the region, to increase their role in the regional economy, it is necessary not only to restore the infrastructure, but also to create tax and regulatory incentives for the development of small and medium-sized businesses in the region:

– Exemption of entrepreneurs and citizens in the ATO area from paying taxes, penalties and credit installments, accumulated over the period of military actions.

– Simplified procedure for registration of enterprises.

– Tax incentives in the form of a 10 years vacation for entrepreneurs, working on the territories, affected within the framework of ATO.

– State crediting programs for regional business, involvement of commercial banks to these programs.

As a pilot project, we consider it necessary to create industry-specific «business-incubators» on the basis of “depressed” miners’ villages and towns, devastated by the war, with full exemption of entrepreneurs from taxes, free provision of premises, land plots. Priority should be given not to outdated industry, but startups in the field of the IT industry, high-tech, medicine and other perspective industries.