The Land reform: New prospects and development opportunities for foreign investment in Ukraine

The issue that concerns of lifting the moratorium on land sales in Ukraine remains a very actually topic and is gaining momentum for discussion, because untill now our country is still uncompetitive on the land market with capacity and investment potential and remains in the list of countries such as North Korea , Venezuela, Cuba, Congo, where there is no free land market.

In Accordiance to article 14 Constitutions of Ukraine, land is the main national richness under special protection of the state. Land ownership is guaranteed. This right is acquired and exercised by citizens, legal entities and the state solely in accordance with the law. The land market can be defined as the set of legal and economic relations that arise between the subjects of such a market in the course of land circulation, lease, exchange, sale, pledge, gift and inheritance.
For today, the issues regulating the relations of the land market are establishes in normative legal acts, as fallows: laws of Ukraine "On Land Management" of 22.05.2003, "On Valuation of Land" of 11.12.2003, Land Code of Ukraine of 25.10.2001 year, "On the State Land Cadastre" of 07.07.2011.

Since the independence of Ukraine, land reform, which has been going on for 28 years, has been drawn-out process due to the moratorium on the sale of agricultural land, which was introduced with the adoption of the new Land Code of Ukraine in 2001. According to clauses 14-15 of section X, "Final Clauses" of the Land Code of Ukraine means that landowners cannot freely dispose of it, and practically the only way to transfer land to others persons is to conclude a lease agreement. The stated reason for the prohibition is the absence of infrastructure in Ukraine for introducing a market for buying and selling agricultural land.
After the Land Code was adopted, the moratorium on land sales was roll over every two years for the development of the shadow economy, which negatively impact development of the economy as a whole.

Recently, a draft Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine on the Circulation of Agricultural Lands" was published on the official website of the Ministry of Economic Development, Trade and Agriculture of Ukraine No. 2178 of September 20, 2019, which was registered by the Verkhovna Rada of Ukraine in which the following is proposed that:

• Since 1 October, 2020, the prohibition on the exclusion of agricultural land of all forms of ownership will be lifted;
• determine the subjective composition of persons who can acquire ownership of agricultural land: citizens of Ukraine, territorial communities, the state, legal entities of Ukraine and foreign citizens and stateless persons in the case of inheritance and the obligation to alienate the land during year;
• shall be defined by starting price for the sale of state and communal land plots at land auctions at a level not lower than the regulatory monetary valuation;
• limits are placed on the aggregate area of agricultural land that may be owned by a citizen and a legal entity and persons associated with it. Restrictions do not allow the acquisition of more than 15% of agricultural land in the region and 0.5% of agricultural land in Ukraine;
• the preferential right of the tenant to purchase the land is ensured;
• to provide for the obligation of the state registrar to enter information on the price (value) of property rights, including usage rights, in the Register of Property Rights;
• to ensure the right of citizens to purchase land for the maintenance of peasant (farmer) economy which they belong to the right of permanent use and the right of life inherited possession is guaranteed. It is possible to redeem with installments up to 5 years at a price equal to the normative monetary valuation of such land plots;
• The Law of Ukraine “On Sanctions” is supplemented by a new type of sanctions “prohibition of land ownership”. Such sanctions are imposed by the decision of the President of Ukraine upon submission of the National Security and Defense Council of Ukraine and approved by a resolution of the Verkhovna Rada of Ukraine. The sanctions may be covered by foreign states, an indefinite number of persons of certain activity (sectoral sanctions) and certain legal and individuals.

But the Committee on Agrarian and Land Policy of the Verkhovna Rada of Ukraine rejected the draft law "On Amendments to Certain Legislative Acts of Ukraine on the Circulation of Agricultural Land" No. 2178.
Following the rejection of Draft Law No. 2178 by the Profile Committee, after which the land market in Ukraine should be opened, the Alternative Bill "On Amendments to Certain Legislative Acts of Ukraine on the Circulation of Agricultural Lands" was approved, No. 1078-10 of October 10, 2019 On November 13, 2019 was adopted by the Verkhovna Rada of Ukraine, which provides for the following changes:

• Reduce the land concentration limits within the area from 15% to 8%;
• Introduce a 35% limit on land concentration within the ATG;
• Introduce a transitional period until January 1, 2024, during which legal entities, beneficial owners of which are foreigners, stateless persons, legal entities created under legislation other than the legislation of Ukraine, foreign states, will not be able to acquire agricultural land designation of state, communal property, as well as unitary lands, except for those lands which at the moment of entry into force of the law are already leased, emphitheism of such legal entities and provided that such legal entities are created not less than 3 years before the law enters into force;
• in section X "Final Clauses" of the Land Code of Ukraine: to supplement section 6.1 with the following content:
  «Paragraph 6.1 The citizens, who own the right of permanent use, the right of life inherited ownership of land plots of state and communal property, intended for the management of peasant (farmer) economy, as well as tenants of land plots that have acquired the right to lease land by re-issuing the right of permanent use in respect of the said land plots the right to repurchase such land plots with a installment payment of up to 5 years at a price equal to the regulatory monetary value of such land plots, without holding land auctions."

It is important to note that support for the initiative on prospects and opportunities for attracting foreign investment in agricultural land sales in Ukraine came from International organizations such as the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development.

Opening up a free land market will enable farmers to buy and sell agricultural land, invest and diversify their income sources, and landowners can profit from their most valuable asset. Land reform will improve the standard of living of the Ukrainian people by unlocking the country's agricultural potential. Non-residents will have the right to buy Ukrainian land for agricultural destiny, therefore helping our country to achieve high economic development, to provide additional GDP growth, financing of considerable funds to the state budget, creation of new jobs, transparency and openness of land trades, introduce of new technologies of cultivation of land. etc.

Analyzing all of the above, we can conclude that an open land market for foreign investment of Ukraine is necessary because it will put an end to the shadow economy, will enable fair and transparent involvement of foreign capital in the country's budget, provide the right to buy land for foreigners exclusively for the purposes of agricultural production with appropriate limiting the area and without the possibility of changing the purpose of the land, will create an opportunity for electronic land bidding procedures, financing of common infrastructure objects, as follows: irrigation systems, main channels.