20 REDUCING MARKET DISTORTIONS FOR A MORE PROSPEROUS UKRAINE New producers have been observed entering just 14 of the 34 markets in which SOEs or politically connected 昀椀rms operate (excluding those classi昀椀ed as legal or natural monop- 32 olies ), and in many cases these 昀椀rms were only able to enter the market after obtaining an explicit government endorsement. Several of the new entrants were large international 昀椀rms with considerable investment resources and the capacity reduce infrastructure gaps and improve service quality (Figure 21). However, even major international players have struggled to enter the Ukrainian market. For example, Ryanair failed to enter the air transportation market in 2017, but it later succeeded in obtaining approval from the Ukrainian government and has announced that it will 33 launch operations in October 2018. Similarly, P&O Maritime—which is owned by DP World Group, the world’s largest port operator—started operations in Ukraine in January 2018 and will provide 34 towing services in the Odessa region. Even in markets that are not dominated by SOEs, entry remains limited. Between 2006 and 2016, the average entry density in Ukraine’s formal private sector was low, both by global standards and by the standards of comparable countries (Figure 22 and Figure 23). Low entry density weak- ens competitive pressure in domestic markets, contributing to low productivity growth. Multiple factors could explain Ukraine’s low entry density, including a lack of investor con昀椀dence due to the country’s di昀케cult macroeconomic and political situation in recent years, but regulatory barriers to entry and policies that protect certain incumbent 昀椀rms almost certainly play a major role in pre- venting open competition. 32 The Law on Natural Monopolies of 20.04.2000 (#1682-III) identi昀椀es the following markets as natural monopolies: transpor- tation of oil and oil products by pipelines, transportation of natural gas and LPG by pipelines, other transportation pipelines, large-volume natural gas storage, electricity transmission and distribution, of electricity (transmission of electric energy by local electricity grids); use of railway tracks, dispatch services, stations and other infrastructure items, providing tra昀케c to general rail transport; air-tra昀케c control, centralized water supply and drainage systems, thermal energy transportation infrastructure, riverine and maritime port services, certain airports, and household waste-disposal services. 33 See Ryanair’s corporate website: https://corporate.ryanair.com/news/ryanair-cancels-planned-ukraine-services-as-kiev-air- port-fails-to-honour-commitments/ and https://corporate.ryanair.com/news/ryanair-brings-low-fares-to-ukraine/ 34 See SD Capital Press O昀케ce: http://sd.capital/2018/01/04/the-worlds-largest-port-operator-dp-world-group-enters-the- ukrainian-market/