Lviv Region is situated in the Western part of Ukraine which is traditionally called Galychyna. This Region borders on Ivano-Frankivsk, Ternopil, Volyn, Rivne, Pre-Carpathian regions of Ukraine. It borders on Poland in extension of about 280.0 km.
The area of the Region is 21.8 thousand sq. km or 3.6% of Ukrainian total territory. The population is 2.7 million people, that makes 5.4% of population of Ukraine. There is high population density in the Region – 125 persons per 1 sq. km. The Region consists of 20 districts, including 43 towns and 1859 villages. Urban population makes up 61% of total quantity.
Lviv is the capital of the Region. It is a significant administrative, industrial and cultural centre of Ukraine which is included in the UNESCO inheritance list. Lviv is one of the biggest centers of education, general and branch sciences in the Western Ukraine. There are over 50 higher educational institutions in this Region. The Ukrainian National Academy of Sciences is represented by the Western science center.
The Region is rich in minerals – coal, natural gas, oil, sulfur, peat, salt, raw materials for production of cement, limectones and slates, building and fireproof clays etc. The particular resources of Galychyna are large reserves of curing mineral waters, where such well-known in Europe resorts are based as Truskavets, Morshyn, Skhidnycia.
The Region has a well-developed transport network. Its territory is crossed by international railway lines which are connected with many capitals of European countries. There are 3 important transport passages: from West to East (the passage number 3 Berlin-Wroclaw-Lviv-Kyiv; the passage number 5 Triest-Lubliana-Lviv) and from North to South (Gdans’k-Warsaw-Lviv-Odessa).
In the Region there are four automobile (Krakovets, Shegyni, Rava-Ruska and Smilnytsia) and three railway border-crossing stations (Rava-Ruska, Mostyska and Hyriv), one air border-crossing point and airport “Lviv”. International airlines connect with cities of Middle East, Central and Western Europe, North-American continent as well as the countries of the former USSR.
Gas pipe line is laid through the territory, that gives a possibility for the transportation of Russian gas to European consumers. There is also a transport oil corridor in the Region. 17-19 million tons of raw oil is transported from Russia and Kazakhstan to the countries of Central and Eastern Europe annually.
Lviv is one of the leading bank centers of the country and has about 100 plenipotentiary banks and their branches. Two trade exchanges and one stock exchange are also functioning in the city.
The International Economic Forum is annually held in Lviv. It is deals with the questions of border cooperation development. Prime Ministers of foreign countries, representatives of Regional authority, and businessmen take part in the Forum. Every year more than 10 International exhibitions and fairs take place in Lviv.
Lviv Region is an active participant of the Interregional Association “Carpathian Euroregion” and of “Bug” Euroregion
ECONOMIC DEVELOPMENT TENDENCIES
A lot of positive changes have been observed in Lviv Region during the last years. Among them are the tendencies of economic growth and stronger competitive ability of goods and services.
The Lviv Region's share in the state scope of total industry production makes up about 3%. According to this index the Region takes the 9-th place among the regions of Ukraine.
Lviv Region takes the third place in Ukraine at the growth rates of industry production.
More than a half of industry production in Lviv Region is provided by food industry, agricultural production processing, mechanical engineering, production and distribution of energy transfers.
THE MAIN FIELDS OF INDUSTRY
Mechanical engineering was traditionally one of the main fields of the Region’s industry. Here the main potential is concentrated for producing buses, loading systems, motor-taps, hanging conveyors, oil-gas-industrial and tool-making mechanical engineering, agricultural machines, although, they need complete modernization and renovation. The main enterprises of the industry are JC “Lviv Bus Factory”, Lviv factory “Autoloader”, JC “Concern-Electron”, JC “Conveyor”, JC “Lvivprylad”, JC “Iskra”.
There are more than 400 enterprises of timber and cellulose-paper industries of different forms of property in the Region. The production is based on its own raw-materials. “Zhydachiv cellulose-paper plant”, JSC “Yavir”, furniture factory “Stryi” constantly increase their production.
Light industry has stable development with an increase and occupies almost 5% of the total part of Region industry complex.
The light industry enterprises are situated almost in each city. In this field there are more than 1100 subjects of enterprising activities of different property. Sewing, knitted goods, stocking wares, shoes and other goods of common usage are produced here.
It is important to admit that almost all enterprises of this field with the high technical level, have organized the sewing wares production with the aim to enter the European market. The enterprises base their work on imported raw materials and equipment.
Positive tendencies are remaining in the work of wood production enterprises. Serial production of new goods – wood-sharpen plates (slabs), has been launched in the industry. In the meantime, furniture production has decreased because of low demand on its.
Enterprises of cellulose-paper and printing industries provide more than a half of paper and cardboard production of the country's capacity, taking a constant lead on the market.
The capacity of production in chemical and oil-chemical industries has increased by 10.6%. A larger amount of synthetic washing means, polyvinilpeach plasticates, varnish-painting materials, goods of everyday usage, pipers and pipe lines details of thermo layers was produced. Enlargement of the production in the field of chemical and oil-chemical industries was guaranteed by the implementation of a new joint-venture system, represented by SE “Polisyntes”, JC “Organika” in Bibrka and Yavoriv SEZ: CE “Snezhka-Ukraine”, SE “Vikont”, CE “Dezomark”.
The production of building materials and main goods for building, among those non-ore building materials, bricks, cement, lime and gypsum, has increased in the Region. However, due to a better correlation of price and quality, import production has the advantage on the market of building materials.
Investments for purchasing the modern technological equipment and implementation of advanced industrial technology are necessary to solve the problem of output decrease of building materials and goods, which are not worse than the foreign samples.
Food processing industry takes a great place in the industry of Lviv Region. There are about 130 powerful enterprises and more than 1200 small processing departments.
The largest increase of production is observed among the enterprises, which represent the brewery, alcohol, liqueur-vodka, non-alcohol, milk processing, oil and confectionery industries.
FUEL AND ENERGY INDUSTRY
The functioning of coal industry is connected with the existence of coal deposits. The stocks run to about 122.0 million tons. The share of Lviv Region in common state output of coal is 4.3%. There are about 14 acting enterprises in this industry, where about 12 thousand people are employed.
Oil-output industry is connected with function of Borislav oil-industrial area on the Region’s territory, which is considered one of the oldest areas in Europe. Today the stocks of oil run to about 30.9 million tons. There are about 800 acting pores nowadays.
Oil-processing industry is represented by open JC “NPK “Galychyna” which has about 1.8 thousand workers. The company processes about 3 million tons of oil annually.
Lviv Region is one of the most gasified regions in Ukraine. About 77% of housing fund is provided by natural gas.
More than 300 pores provide the output of natural gas. The stocks run to about 96 million cubic m of gas. Lviv Region has more than 5% of the common output of natural gas in Ukraine.
Electric energetics is an important industry in Lviv Region. The common capacity of power stations is 4707.5 MVt, including Dobrotvirska TES-600 MVt. Some share of electrical energy is exported to foreign markets (Poland). Great attention is paid to the introduction of untraditional and innovative sources of energy and small hydro- and wind-energetic.
583 large and middle agricultural factories of different forms of property are producing agricultural goods in the Region, among them 257 are private. In the private sector 1190 peasant farms and 343 thousand farms produce agricultural production.
Nowadays the agricultural lands possessed by the farmers have 657 thousand hectares or 59% of the Region's total area.
Lviv Region takes the third place among the other regions of Ukraine according to the number of workers on small ventures. At the first place is Kyiv (227 thousand people) and the second one takes Donetsk Region (153 thousand people).
There are over 70 thousand small ventures in the Region. Lviv has the forth place among the other regions of Ukraine considering the number of small ventures. More than 180 thousand people are employed at the sector of small business. The shares of small ventures in Regional economic potential are: the number of workers – 12%, production – less than 12%, budget incomes – more than 14%.
Lviv Region distinguishes from the other regions by its natural climate and resources and attracts different kinds of tourists. The Carpathian mountains occupy the bigger part of the Region, besides, they are considered a unique nature complex and one of the cleanest locations in Europe. More than 4000 monuments of Ukraine’s cultural inheritance are located on its territory.
The most known national natural parks are “Skolivski Beskydy” and “Yavorivskyi”, natural reserve “Rostochchya”, state historical and architectural reserves “Knyazhyi Bells”, “Zhovkivskyi”, “Tustan’”.
Sambir, Drogobych, Zolochiv are attractive for tourists. Four mountain ski resorts are situated on the Region’s territory: Slavsk, Tysovyts, Rosluch, Turka. One of the most popular among the tourists are the castles Oleskyi, Zolochivskyi, Pidgoretskyi, Svirzkyi, which are united in a popular tourist route “Gold Horseshoe of Lviv Region”. Green rural tourism is developing in the Carpathian mountain areas.
The Region is rich in unique reserves of mineral waters (over 200 sources) and medical mud, on the base of which such famous health resorts as Truskavets, Morshyn, Shklo, Nemyriv, Lubin’ Velykyi, Skhidnicya are functioning. There are 127 health centres and other healthcare institutions in this region.
Lviv is known as “The Pearl of Europe” and as an open-air museum. The central part of the city is declared the historical and architectural reserve and included into “The List of World Cultural Inheritance of UNESCO”.
The Region takes the 4th place among other regions (after Crimea, Odessa and Kyiv regions) according to the number of foreign tourists.
Lviv enterprises have conducted foreign trade operations with 114 countries of the world. The major part of production was exported into Russia, Poland, Slovakia and United Kingdom.
Analysing the export structure it should be admitted that the mechanical engineering production takes the first place and makes the 10% of the total export share. 1/3 share of export is production of light industry. Yet the major export field is light industry production with the use of non-domestic raw materials.
The production of fuel industry makes up nearly a half of the total import turnover.
The legal regime of foreign investment
The main document which determines the rules of foreign investment in Ukraine is the Law of Ukraine “About the regime of foreign investment”.
According to the articles 18 and 24 of this Law, foreign investor’s payment to the statute fund of enterprises with foreign investments as well as according to the agreements on common investing activity, is not imposed by customs duty.
The involved foreign investments are subjects to state registration in order determined by the decree of Ukraine Cabinet of Ministers from the 7th of August 1996 No 928 “On passage of the Principles about the state-registration order of foreign investments”.
The state registration of foreign investments is held after their deposition by the representative institutions of Cabinet of Ministers of the Crimea autonomic Republic, regional, Kyiv and Sevastopol city-state administrations.
Foreign investment in the Region’s economy
The research industrial complex, transport infrastructure and communication, fuel and energy industry, tourism and recreation, food and processing industry are the most investment fields of the Lviv Region.
The general amount of the direct foreign investments to the Region’s economy was more than $ 220.1 million. Investments from 58 countries all over the world were brought to 938 enterprises of the Region. In average about $ 78 per person was brought to the Region (in Ukraine – $102). It provided the 9-th place among the other regions of Ukraine.
The biggest investments into the economy of the Region are directed to the financial-credit sphere, wood processing industry, food-processing industry and production of paper and cardboards.
Development of special economic zones
The introduction of special regime of investment and economic activity aiming at involving additional resources for solving social, ecological and other problems of separate regions, is one of the most important elements of the regional politics. Two special economic zones are functioning in the region: SEZ “Yavoriv” and “Kurortopolis “Truskavets”.
The special economic zone “Yavoriv” was created within the administrative-territorial borders of Yavoriv Region on the period up to the 1-st of January 2020. The special regime of economic activity in SEZ “Yavoriv” spreaded on the subjects of enterprising activity, branches, departments and other separate subdivisions, situated on the SEZ “Yavoriv” territory and which carry out their investment projects. The amount of these investment projects is about $ 500 thousands. These investment projects should be confirmed by the Yavoriv Region State Administration and have state registration.
The subjects of SEZ “Yavoriv” have the lower mentioned tax privileges:
during the realization of invest project (but not longer than 5 years) the subjects SEZ “Yavoriv” which supply the special economic zone by the equipment and details (besides exciseble goods) for their own production needs, are free of customs duty;
the operations connected with delivering equipment and details (besides exciseble goods), which are supplied to the SEZ “Yavoriv” territory by the SEZ “Yavoriv” subjects for their own production needs are free of tax on additional value;
the profit of SEZ “Yavoriv” subjects which was received from investment project realization is free of taxes for 5 years (The investment project has to be confirmed by the Yavoriv Region State Administration);
the profit of such taxpayers which they would obtain during next years of the investment realization projects is being taxed by the rate of 50% of current tax rate (current tax rate is 30%). This principle is applied from the moment the subjects of SEZ “Yavoriv” get the first profit from the realization of investment projects;
the subjects of SEZ “Yavoriv” are also free of the payment on obligatory social insurance in the case of unemployment (current rate is 1.5% of the work payment fund of the enterprise + 1.5% of the salary of each worker), of the contribution into the State Innovation Fund (1% of the firm production realization per month);
the subjects of SEZ “Yavoriv” are completely free of the payment of land tax during the first 3 years of investment projects realization. In the next years they have to pay the land tax in the rate of 50% of current tax rate (the land tax rate in Ukraine is differential and depends on a user and a kind of land area).
Special Economic Zone „Kurortopolis Truskavets” has been created in 2000 for the period of 20 years within the administrative and territorial borders of Truskavets in Lviv Region.
The special regime of economic activity in SEZ “Kurortopolis Truskavets” spreads on the subjects of enterprising activity, branches, departments and other separate subdivisions, which are situated on the SEZ “Kurortopolis Truskavets” territory and which carry out their investment projects. The value of these projects is about $ 500 thousand.
The subjects of SEZ “Kurortopolis Truskavets” have the lower mentioned tax privileges:
medical means, equipment and its details, program maintenance of the objects of intellectual property (besides exciseble goods) delivered to the territory of SEZ “Kurortopolis Truskavets” by the subjects of SEZ for their own production needs concerning the realization of investment projects (the projects have to be confirmed by the executive committee of Truskavets City Council) are free of tax;
the operations on delivering medical means, equipment, details for it, program maintenance of the subjects of intellectual property (besides exciseble goods) transported into the territory of SEZ “Kurortopolis Truskavets” by the subjects of SEZ for own production needs connected with the realization of investment projects (the projects have to be confirmed by the executive committee of Truskavets City Council) are free of tax;
the profit of the subject of SEZ “Kurortopolis Truskavets” got on the territory of SEZ “Kurortopolis Truskavets” from the realization of the investment projects, is free of taxation during 3 years. The profit the taxpayers got from the 4th till 6th year of investment projects realization is taxed by the rate of 50% of current tax rate. This principle is applied from the moment the subjects get their first profit from the investment project realization.
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