Land market launch: Is there something to fight for?

Author : Olexandr Honcharov

Apparently, from October 1, 2020, the land will go on sale. In the meantime, at the end of last week, the country's agrarians in 15 regions came out with peaceful protests to the main roads, opposing the intention of lawmakers to allow the sale of land to foreigners
12:42, 26 September 2019

Open source

The head of the parliamentary committee on agrarian policy and land relations Mykola Solsky suggests that after opening of the land market in autumn 2020, up to 3% of agricultural land will be sold annually in Ukraine.

"This is our statistics, and it coincides with the statistics of countries that have a similar history. In Moldova and other countries the population sells about 3-4% of the land per year. The market already exists," he added.

Yes, there is something to think about and what to fight for. Apparently, from October 1, 2020, the land will go on sale. In the meantime, at the end of last week, the country's agrarians in 15 regions came out with peaceful protests to the main roads, opposing the intention of lawmakers to allow the sale of land to foreigners.

At the same time, continuing to maneuver in anticipation of fateful decisions, the Ministry of Economic Development, Trade and Agriculture also published a draft law on the circulation of agricultural land.

The apotheosis of the moment - from October 1, 2020, the ban on the sale of agricultural land is canceled.

The opportunity to buy land will be given to Ukrainian individuals and legal entities, territorial communities and the state (but non-residents can also be beneficiaries of Ukrainian companies).

The ban applies only to legal entities and individuals, as well as those states that are subject to the law of Ukraine "On sanctions".

Moreover, the concentration of land in ownership is determined at the level of 15% in the region and 0,5% in the whole country. And, of course, the tenant has the preemptive right to purchase a land plot. But ordinary Ukrainians have shortage of money.

Prime Minister Oleksiy Honcharuk hopes to lower the National Bank's discount rate, which should automatically reduce the lending rates of commercial banks.

But the head of the National Bank is stubbornly silent in this regard, and the discount rate still remains at 16,5%! Even in America, President Donald Trump pushed the US Federal Reserve, and since September 19, the base interest rate is 1,75-2%.

The European Central Bank also lowered its key rate to 0% and launched a large-scale bond repurchase program. Well, and in June the Swiss National Bank introduced a key rate at minus 0,75%. Finally, the Bank of Russia for the third time has lowered its key rate, now it is at 7%.

How to maintain optimism in Ukrainian business and the majority of citizens under these conditions? Prime Minister Honcharuk didn’t tell us about the specific actions of financial authorities to reduce the cost of money, but only shared his hope: “Since the beginning of the work of our government, the National Bank has already lowered the rate on 0,5%."

Related: Ukrainians slave away on foreign soil, but cannot work in their homeland, - MP Vereshchuk

In addition, the authorities plan to sell our state and communal property land at tenders. It also provides for the obligation of the state registrar to add information on the price of property rights, including use rights, in the register.

In turn, financial monitoring specialists will have to check the origin of the money of those who wish to buy a land plot. And how could it be without bureaucracy? Even the Minister of Economic Development, Trade and Agriculture of Ukraine Tymofiy Milovanov said: "It is not right to be afraid of foreigners or Ukrainians. It’s right to be afraid of dirty money. Because either we don’t know who owns them (the real owners), or we don’t know the business methods of these people. Sometimes Ukrainian dirty money is just as bad as foreign money."

The Minister also emphasized that in the conditions of the land market it is planned to introduce a monitoring system that will fix the final owners (beneficiaries) who will buy land.

In particular, he said: “We need to know not only he official owner, but the real owner. Therefore, we are creating a monitoring system. When you come to register transactions, we need to show who the real owner is.”

Of course, all this is necessary, but first of all I would like to hear proposals for economic reforms in connection with the launch of the land market. What about attracting investments?

This is especially important in the context of decree No. 713/2019 signed by President of Ukraine Zelensky on urgent measures to ensure economic growth, stimulate regional development and prevent corruption.

Incredibly smart and timely idea. But how can all this be combined efficiently? The experience of developed countries has shown that there is a universal tool for this - investment. At the same time, economic development should not create enormous inequality; on the contrary, contribute to improving the entire population well-being.

For this, after the introduction of the agricultural land market in Ukraine, it is necessary to launch a new investment strategy and organize an international investment hub in Kyiv.

Otherwise, there will be no long investment money in the land market. In the meantime, unfortunately we still do not have:

- a new investment strategy developed by the Cabinet and approved by the president;

- the draft law of Ukraine "On Capital Markets" and the draft law on the circulation of agricultural land adopted by the Verkhovna Rada;

- a hedging business (at least currency risks and deliverable futures);

- universal exchange (with three sections - commodity, stock and derivatives);

And there are many obstacles in the issue of economic breakthrough. I can cautiously assume that Prime Minister will nevertheless succeed in two key areas regarding the land market, which he spoke about at a meeting with farmers. This is, firstly, to provide an opportunity to buy land and, secondly, to give financial resources to medium and small farms.

Related: Governmental bill on land market registered at Ukraine’s parliament

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