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.

AGRICULTURE

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.

ENTERPRISES

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%.

TOURISM

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.

FOREIGN TRADE

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.

FOREIGN INVESTMENT

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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