14 April 2020

On 22 April 2020, the Cabinet of Ministers made a decision to allow business entities with the right to military export to independently enter external markets, without coordination of the marketing and pricing policy. At the same time, the companies remain the right to work with special exporters if it’s more convenient and advantageous for them. 

The Cabinet of Ministers of Ukraine (CMU) approved the amendments to the CMU order #1228 and #838 initiated by the Ministry of Economy that previously bound state and private enterprises which produce military goods to coordinate the export price and target marketing with State Defence Conglomerate Ukroboronprom. As currently most companies with export licence are private, this norm required from them to coordinate not with a neutral and independent regulator but in fact with the state competitor. Apart from that, a procedure to receive the export certificate for military goods is not an easy one, it’s time consuming and red-tape as it requires making amendments to the very Order of the Cabinet of Ministers #1228. It was also financially costly for business entities to receive such a right.

NAKO supports the Cabinet of Ministers and the Ministry of Economy in its decision to demonopolize arms export, as this should positively impact:

  • the provision of equal conditions and rights to perform international economic activity
  • the increase of revenue for Ukrainian exporters and increase of competitiveness of domestic goods
  • time savings to enter external markets by eliminating artificial red-tape obstacles
  • attractiveness of Ukrainian military goods producers for foreign investors.

This being said, one can assume that demonopolization of external pricing will reduce corruption as free and open market will reveal the real process to components of weapons and military equipment which were artificially overvalued in the process of defining the so-called Calculation and Accounting Materials (called RKM in Ukrainian) while executing the State Defence Order. 

Competitive arms market is a condition for development of Ukraine’s military and industrial complex which will work under transparent and understandable rules.