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Regional Focus: Lviv

UBI: Are there any specific regional or national incentives offered to investors? VH: “Lviv district area operates two special economic zones, SEZ ‘Iavoriv’ and ‘Resortpolice Truskavets.’ These zones were established in 1999 and 2000 respectively, and completely justified their establishment until 2005. During this period they have been involved in over US $ 145 m of inward investment. They are also responsible for the creation of more than 6,000 jobs, and were contributing to ongoing development year after year.

“However, in 2005 the Government of Ukraine cancelled the tax privileges and the special customs area for enterprises in the SEZ, having made amendments to the regulations governing the territory, “For a special economic zone for tourists and recreation ‘Resort Truskavets’ and the special economic zone ‘Iavoriv’. These actions have detrimentally affected the development of these regions, both economically, and socially.

“Experts on the Lviv state region administration have carried out economic studies which demonstrate the economic feasibility of restoration of special economic zones and the potential to develop new SEZ’s in economically depressed districts in the region. With restoration of privileges for Resort Truskavets and SEZ Iavoriv there would be the opportunity to promote around 10 projects annually up to 2015 with the potential to attract around US $150 m of new investment. Based on these calculations, the regional government is seeking to persuade the Ukraine Cabinet of Ministers to restore the special economic zones.”

Mr Vasyl Horbal

the Lviv region contains all the necessary components that foreign investors might need to conduct successful business, from the fast developing tourist sector to manufacturing. I can guarantee an individual approach to each person who intends to invest in the Lviv region.”

UBI: What are the key industry sectors in the region in terms of manufacturing and services? VH: “Lviv region well balanced in terms of its economic activity. District centres in the Lviv region create provide the resources and infrastructural opportunities to support each other. In the tourist sector: Lviv, is the region’s leading tourist centre, and the Skole areas is opening up for tourists keen to enjoy the Ukrainian Carpathians. Truskavets and Morshyn resorts have long been known for their range of recreational activities. These two cities also give Lviv region a powerful medical and leisure base. Regarding industry, we can cite our powerful industrial zones: Mykolaiv - Stryj where the following foreign investors - Leoni (Germany) and Lafarge (France); Zhydachiv - Zhydachiv paper factory, one of the largest factories in Ukraine; Chervonograd

- one of the largest coal mining zones outside of Donbass; Drohobych with the enterprise oil processing refinery Galicia. In addition, there are Brody, Busk, Radechiv, Kamjanka, Buzka which are the region’s agriculture and food- processing industry centres.

UBI: I understand that the Lviv city authorities are providing E28 m this year and E252.4 m next year for the construction of roads prior to Euro 2012 – what stage are these projects at? When are they due to complete? Is there anything more you can say about these projects – total km, location, participants? What other plans are there to improve the infrastructure ahead of Euro 2012 (in terms of roads, hotels, stadia)? What level of investment does this represent, and what stage are these projects currently at? VH: “It is no secret that the problem of roads in the Lviv region was very severe. There are both objective and subjective reasons for this situation. Despite a lack of funds and replacement of some unscrupulous contractors, today the road situation is as follows: according to the Appendix 2 of the Ukraine Cabinet of Ministers resolution from 14.04.2010 No.357 the Lviv region is being provided with UAH 4827,36 million for building, reconstruction, capital and maintenance of highways, including building a new highway from Lviv to Krakovets at a cost of UAH 4112,60 m.

“The state target expenditure for building, reconstruction, capital and maintenance of roads in the Lviv region is put at UAH 1461.5 m in 2010.

“The main maintenance and repair projects are the Lviv – Rava Ruska road, Lviv - Krakovets, Lviv – Shehyni and the section of road on the entrance to Truskavets and Schidnytsa from the Kyiv - Chop highway. Reconstruction work is planned for the airdrome SE, Lviv international airport Lviv, and work is planned to upgrade part of the Lviv - Pystomyty- Medenychi road. Construction of the strategic Lviv – Krakovets road is also due to begin.”

UBI: What other plans are there for improvement of the Lviv region infrastructure in the run up to Euro 2012 (roads, hotel, stadiums)? What level of investment is involved in these projects and at what stage are they? VH: “Work on building the new stadium is underway, with 40% of work completed to date. The total cost of the project is UAH 1.65 bn. Also reconstruction of the runway and

October/November 2010 UkraineBusiness insight 39

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