Oleksandr Chervak: System reform or the future - with optimism

Oleksandr Chervak: System reform or the future - with optimism.

Oleksandr Chervak, executive director of the Confederation of Builders of Ukraine, spoke in an interview with Build Portal about the stages of the most important reform for the domestic construction industry, pain points and an optimistic view of the future, about the urban planning reform and the priorities of the Confederation's work.

What events of the past year do you consider the most important for the construction industry of Ukraine. What of what happened will affect the future development of the industry?

- I think most market participants will agree that the main leitmotif of the year is the reform of the architectural and construction state system. The essence of the reform is to overturn the system in such a way as to destroy all the monsters associated with corruption in DABA and create something new. This is the thing about institutions. Conceptually, the goal of the reform is to implement deregulation. We see it this way: the state transfers the authority to business - of course, to an accredited business, which includes the necessary specialists. Then the only lever of influence of the state remains the accreditation of such organizations, supervision of their activities, and the third is, of course, increasing the responsibility of all market participants, who are responsible for their decision with their signature.

What has already happened within the framework of this reform? This is the finalization of draft law No. 5655, its adoption in the first reading, preparation for the second reading. We hope that it will be adopted already in the first quarter of next year. This is if we talk about some global, revolutionary changes.

About institutions - we are glad that we reached out last year, and the reform did not pass, which provided for three new organizations instead of one DABI. Everyone came to the conclusion that it is necessary to conceptually change the approach. And this year, the activity of DABI was terminated and a new institute was created - the State Inspection of Architecture and Town Planning (DIAM). And a really good concept of personnel selection was implemented - it was decided that those who once worked in the archbud control system will not be employees of DIAM. That is, they do not know how to abuse the system. Hopefully the reform will be quick and they won't find out as the permit system will be changed.

That is, it can be said that the Confederation of Builders of Ukraine supports this reform?

- I will say more. We do not simply support the concept of the reform, we participated in the development of the concept, therefore we support it unequivocally. The main thing is that it should be implemented as presented.

So far, how is it going, does it live up to your vision?

- Globally yes. There was a significant aggravation with the architectural community, but controversial issues related to architectural activity were completely removed. The controversial point was simply removed, the new draft law does not change anything in this matter.

The composition of KBU includes not only construction companies, but also architectural bureaus, so it is very important for us that any reform takes place in consensus with the main stakeholders of the market. Of course, architects are one of the key ones.

Otherwise... It is clear that the reform is complicated by political motives. There is objective criticism, and somewhere under the sauce of criticism, political motives are included, which exacerbate those issues that can be removed through a normal discussion with the authors of the reform.

Oil is added to the fire by those people who benefit not to change the system, to leave the mechanism that existed for the last ten years, if not more.

In order to implement this reform, the will of state officials is still needed, and a number of laws and by-laws are also needed. This is important: we need to pass the point of no return. So that everything went according to the new concept. And we are close to her. Perhaps after the adoption of the bill No. 5655, it will come in general.

The reform of the archbud control system is, of course, the main event of the year. And what else important happened in the industry?

- With the appointment of a specialized deputy minister in the Ministry of Regions, active work on updating building regulations began. Last year - and it is very important - a record amount was allocated from the budget, more than 50 million hryvnias, for updating the entire normative technical base - DBN and DSTU, i.e. key things.

Economists have already confirmed that the "Big Construction" program, that is, investing money in infrastructure projects, has a large weight in the structure of the country's GDP this year. And this is good.

There were risks - there was an unclear tax initiative in the framework of draft law No. 5600, but at the insistence of the Confederation of Builders and other representatives of the expert community, the rule on the introduction of VAT on the second and subsequent sale of an apartment was not implemented.

There is another issue that has not been resolved for the second year, and the market is very worried about it. We know that the authorities are also aware of this problem, but the solution tools have not yet been presented. It is about admission to the construction market, namely the absence of a licensing procedure. We try to talk about it at every event, we raise issues in the ministry, committees of the Verkhovna Rada, we speak directly with representatives of the Cabinet of Ministers and the President's Office. But for now, unfortunately, this issue is not moving much, which worries us a lot. Because a vacuum has been created - when new companies and new investors cannot enter the market as construction volumes increase. A license is required to carry out construction work, and since the end of March 2020, there is no licensing procedure. However, it should be noted that a working group under the Ministry of Regions has been created on this issue and, we hope, this problem will be resolved.

Can we say that in general the picture is not so bad, and the authorities are actually ready to listen to the builders?

- Yes, we are glad that the authorities will definitely listen to us. For our part, we are ready to cooperate with all representatives of the authorities to discuss the key issues of the industry. There was a certain disconnect, as several ministers changed in the Ministry, there was no profile deputy minister. Then the pandemic began, the quarantine, the priorities were not the same. Because of this, attention to the industry has somewhat decreased, but in general - yes, now we can say that the authorities hear us.

What areas of work does the Confederation of Builders consider to be priorities in the near future?

- We want to establish more communications with the regions, our participants have a need for offline meetings and to be heard on the ground. Therefore, we resumed the away meetings of the KBU. We go to different locations, organize meetings with local authorities, try to convey to the officials who are responsible for the urban planning policy, the opinion of local businesses about the issues that concern them. This year we held meetings in Volyn, Odesa, Kharkiv. Next, we are planning Zaporizhzhia, Lviv, maybe some other Carpathian region - maybe Chernivtsi or Ivano-Frankivsk.

Many specialists are already well aware of the Confederation's tradition of holding at least two professional forums a year - the Mortgage Forum and the Building & Construction Forum. We plan to continue this practice in the future and will definitely share the details soon.

We were not enough at the expo, so now we have an agreement with the organizers of several key exhibitions and forums, where we act as partners. In particular, KyivBuild is the nearest event, where we plan to hold our panel discussion with an emphasis on building materials, to discuss the future market supervision of this segment.

At the initiative of our participants, we created committees in the Confederation, and they are actively working. We have a Committee on building materials, headed by Serhiy Pylypenko, general director of PBG "Kovalska", a Committee on financial, banking and investment activities, headed by Serhii Mamedov, chairman of the board of the bank "Globus". As well as the Committee on the activities of project and expert organizations - it is headed by Nver Arakelyan, and the activities are carried out in coordination with the deputy chairman of the Board of Directors of KBU Taras Lilyk.

As part of the work of the committees, we have the opportunity to cover narrower issues that arise in the market. In particular, the Committee on Financial and Banking Activities promotes a number of initiatives related to how to create a working mortgage mechanism - in dialogue with the authorities and banks. Over the past year, by the way, we have added two more banks - in addition to Globus, Credo and TAS-bank, we will have a new participant - Pravex-bank.

An important draft law - the protection of investors' rights - is also being considered within the framework of the work of the committee with the involvement of lawyers. It was also adopted in the first reading. But there are a number of mechanisms that we consider necessary to discuss so that there are no conflicts on the part of developers or investors.

As part of Serhiy Pylypenko's committee, there is work related to the implementation of the law on the construction products market (according to 305 of the EU Technical Regulation): updating new standards and establishing market supervision - an option that existed de facto, but de jure did not work. Many honest manufacturers are concerned about the presence of counterfeit products and the lack of control over the quality of building materials. The Ministry of Regions together with DIAG as a supervisory body should soon develop an algorithm according to which the new order will be introduced.

Important work is carried out by an expert committee. As part of the carried out architectural and construction reform, it is necessary to introduce mechanisms to minimize the possible abuse of experts, increase their responsibility. Now, participating in the digitalization process, we are trying to achieve this as much as possible. Which cannot help but please.

An important and interesting moment in the work of the KBU. We have created an active platform for webinars, where we offer participants to give key messages, hold consultations based on their field of activity. And these are not closed webinars, but public ones. We broadcast them on our Facebook channel, followed by the distribution of presentation materials and post-releases, as well as the possibility of comments and continued discussion in the framework of a round table, if the issue is particularly debatable.

We realized that there is a demand, and we are launching the KBU business club platform, where between our official meetings we will hold some narrowly themed ones. Approximately once every two months. These can be offline networking sessions for the discussion of narrow topics lasting no more than two hours. With the option of connecting online and those who cannot join in person. Since 2020, we have completely switched to a mixed format of meetings, where there is both offline and online for those who wish, but cannot physically attend our events for some reason.

Is 2022 the anniversary year for IBUILD - the award of the Confederation of Builders of Ukraine?

- Yes, this year will be the tenth anniversary of the IBUILD award. Last year we celebrated the decade of Confederation, and this year we will celebrate the anniversary of the award. In 2014, the prize was not awarded due to well-known events in the country. So there will be an anniversary, we are preparing for it. There will be many interesting conceptual changes, which we plan to introduce to everyone as early as possible, already in the first half of the year.

And in general, we look to the future with optimism and have high hopes for the successful completion of the reforms.

On behalf of the Confederation of Builders of Ukraine and on my own behalf, I would like to wish you a successful conquest of new peaks in 2022.

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