The Parliament of Ukraine Has Passed the Law on Industrial Parks

The Parliament of Ukraine Has Passed the Law on Industrial Parks

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Many companies have anticipated this law, as its absence created a number of problems of a legal and other nature for effective economic activities in Ukraine. Furthermore, access to lands of an industrial assignation is a critical and important issue for business.

According to the Law, an industrial park is understood to be a plot of land or several land plots equipped with the appropriate infrastructure, in the boundaries of which the participants of an industrial park may conduct economic activities in the field of industrial production, and also scientific research activities, activities in the field of information and telecommunications, etc.

The creation and functioning of industrial parks on the territory of Ukraine is carried out in accordance with the following principles:

• free access to information on the possibility of the lands’ use for the creation of industrial parks;
• competitiveness in the choice of a private managing company for an industrial park on lands of government or communal property;
• coequality of all participants of an industrial park in the conducting of economic activities on the territory of the industrial park;
• guarantee of proprietary right to the land plots on the territory of an industrial park;
• Government stimulation toward the attraction of investments into industrial parks.
On land plots that have been granted on lease, industrial parks may be created at the initiative of the lessee after the inclusion of corresponding clauses in the land rental agreement and the making by the lessee of a resolution on the coordination of the industrial park’s concept.

A land plot, on the territory of which the creation and functioning of an industrial park is planned, may be located within or outside the boundaries of populated areas and must conform to the following requirements:

•pertain to the category of lands allotted for industrial, transportation, communication, electrical power lines, defence and other purposes;
• be suitable for industrial use taking into account conditions and limitations set by the corresponding urban planning documentation;
• the area of the land plot or the combined area of adjacent land plots must constitute more than 15 hectares and less than 700 hectares.

The sources of funding for the facilitations construction on the territory of an industrial park may be funds from government and local budgets, the resources of private investors, including models of government-private partnership, funds brought in, including banking credits and credits from other financial institutions, and funds from other sources non-prohibited by law.

The initiators for the creation of an industrial park may be: bodies of government administration, bodies of local self-governance, legal entities and physical persons that have the right to the creation of industrial parks on lands of government, communal or private property.

The decision for the creation of an industrial park is taken by the initiator on the grounds of an approved industrial park concept. An industrial park is created for a term of at least 30 years.

An industrial park may be dissolved in the case when in the duration of a year from the day of its creation the agreement on its creation and functioning has not been signed and if in the duration of three years economic activities have not been conducted on its territory.

A company may find participation in an industrial park profitable for the following reasons:

•  When buying out the territory of the park, large companies may expect profit from leasing out the lands with the full infrastructure already on them. In their turn, the participants of a park who are lessees profit from the reduction of expenses connected to establishing communications and developing the infrastructure, when in cases of construction on a regular territory, such expenses may in separate cases amount to half of the entire cost of facilities construction.

• The organization of parks presumes a high concentration of industrial enterprises on one territory. Therefore, it allows for a more effective organization of industrial manufacturing, as companies’ production expenses are reduced, such as that of the transportation of raw materials, or costs connected to engineering services in cases when the producers and the suppliers are located in one park, which in its turn allows to lessen the cost price of the produced goods due to effective logistics.

•  The functioning of a park promotes the adjustment of relationships in the field of industrial land use in accordance with the legislation, and also provides possibilities for the realization of new projects.
Legislative control over industrial parks allows organizers of industrial parks, as well as lessees of their areas, to be certain that their interests are protected and to act within the boundaries of Law

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If you want to discuss this article, please contact the authors:

Elena Mashkova, Partner of Awara Group
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