Government Resolution No. 875, which was intended to give Ukrainian defense companies broader access to the international arms market, has failed to deliver the expected results over the past three months. One of the main obstacles has been a mandatory advance payment amounting to 20% of the value of an export contract. Ihor Fomenko, head of the Federation of Employers of Ukraine "FRU Defense," said this in an interview with Defense Express, UNN reports.
Details
According to Fomenko, the resolution adopted on July 1 contains a number of provisions that complicate the conclusion of international contracts. In particular, companies must pay 20% of the deal's value before receiving an export permit, creating financial risks and making Ukrainian products less competitive.
Indeed, the biggest problem with the resolution today, in my view, is precisely the obligation to make an advance payment in the form of a 20% fee on the deal, and to do so before its implementation begins in order to obtain a permit
Defense companies propose changing the rules
The head of the association, which includes more than 700 defense companies, proposes reducing the export fee depending on the type of product. For armored vehicles and other weapons that the Ukrainian army purchases in insufficient quantities, he proposes a rate of 1–3%, while for drones and electronic warfare systems – 5–7%. At the same time, payments should be made after the contracts are fulfilled.
Fomenko cited export geography restrictions as another problem. Instead of defining a list of countries to which Ukrainian weapons may be sold, he proposes establishing a list of prohibited destinations so as not to lose markets in Asia, Africa, and Latin America.
According to the representative of the defense industry, Ukraine is already losing potential customers. In particular, just six months ago, countries on the Arabian Peninsula were actively interested in Ukrainian interceptor drones, but these opportunities could not be used because export rules had not been regulated. Subsequently, demand for the systems in question declined due to technological development.
Fomenko called on the government to suspend Resolution No. 875 or certain of its provisions until financial and economic calculations are carried out and amendments are introduced. He warned that further restrictions on exports could lead to the loss of engineers, technologies, and production competencies within Ukraine's defense-industrial complex.