1

INVESTMENT POTENTIAL OF LVIV REGION

EMERGING MARKET

May 17-18th 2010

DENYS SHMYHAL

CHAIRMAN OF MAIN ECONOMIC DEPARTMENT OF LVIV REGIONAL STATE ADMINISTRATION

2

WHY LVIV REGION?

COMPETITIVENESS OF THE REGION

3

A BRIDGE BETWEEN THE EU AND UKRAINE

• For the EUFor the EU – – access to significantaccess to significant marketmarket::

• 2.52.5 millionmillion consumers – Lviv region– 1212 millionmillion consumers – Western

Ukraine– 4747 millionmillion consumers – Ukraine

• Extensive goods turnover with EuropeExtensive goods turnover with Europe::

– Export – 794794 millionmillion US dollars (in 2009)

– Import – 11,6,6 billionbillion US dollars (in 2009)

• Lviv regionLviv region – – transit transit border territoryborder territory: :

– Key airport for all Western Ukraine

– International carriers: Wizz Air, LOT, Austrian Airlines

– Lviv – 7070 km to the EU border

– 400400 km to Warsaw

– 630630 km to Budapest

– 720720 km to Vienna

– Border with Poland stretches for – 278278 km

– 77 border crossings

4

Lviv region is rated Lviv region is rated 44thth competitive region among competitive region among other Ukrainian regionsother Ukrainian regions

– (Ukraine Competitiveness Report, World economic forum)• RationaleRationale::

– Intellectual potential and qualified workforce• Rated 22nd nd by the quality of education in Ukraine

(Ukraine Competitiveness Report, World Economic Forum, 2009)

• 2525 universities and academies, 110 110 thousandthousand students: every 55th th person in Lviv is a student

• Ivan Franko Lviv National University – one of the oldest in Europe (est. 16611661)

– Innovations and IT• 15%15% innovation-rich industrial enterprises• Lviv is one of 3030 most promising cities in the

world for IT development (KPMG research) • More than 100100 companies and 5 thousand5 thousand

persons are involved in IT• 10001000 students graduate from National

University “Lvivska Politechnika” annually – Competitive labour costs

• Average wages:– Almost 3030 times less than in France– 66 times less than in Poland.

COMPETITIVENESS

5

industry

agriculture

finance

construction

real estate

automotive trade

FDI into Lviv Region in 2008 SECTOR SPLIT

INVESTMENT PROFILE OF THE REGION

• Investment volumeInvestment volume::– 44thth among Ukrainian regions – 11stst in Western Ukraine – 1112,0 1112,0 millionmillion USD of FDI

attracted into the region as of 1.01.2010

– 12731273 enterprises-recipients• DynamicsDynamics::

– 234234,9,9 millionmillion USD in 2009– 225050 millionmillion USD (outlook for

2010)• StructureStructure::

– More than 50%50% - real sector– industry and agriculture per

26%26% each

FDI into Lviv Region in 2008 COUNTRY SPLIT

Great Britain

USA

Poland

Austria

Denmark

Cyprus

other

6

LESS EFFECTED BY CRISIS

• European economy structureEuropean economy structure– Small business

• 87%87% in real numbers, 75%75% in tax earnings– Business growth

• 25,5%25,5% in 2009 (almost 15 15 thousandthousand of new entrepreneurs)

• Less effected by economic crisisLess effected by economic crisis– 2009:• Because of the factors of global financial crisis the region has lost 20 percent of

industrial output. The volume of construction activity decreased nearly by 50 percent. The commercial and financial sectors activity decreased as well.

• Official unemployment level 1,7%.– 2010 outlook:

• Decline in industrial production by 44,0%• Agricultural production to 4,5 billion UAH (1,6%)

7

INVESTMENTS INTO LVIV REGION:

REGION’S PROFILE

INVESTMENT CLIMATE

PROJECTS AND OPPORTUNITIES

8

INVESTMENT CLIMATE

Maximum support inMaximum support in::• Simplifying procedures for setting up of Simplifying procedures for setting up of

businessbusiness– Simplification of a permit system – Establishment of a “single permission window”

in all Lviv region district administrations• Information supportInformation support

– Regular meetings with entrepreneurs, investors – Every investment project has a responsible

executive within Lviv Regional State Administration (Head of the Department/Deputy Head of the Department)

– Co-ordinating investment council patronized by Head of regional administration

• PromotionPromotion: : – Lviv International Economic Forum– Ukrainian Investment Summit– Lviv promotion investment agency

9

KEY INVESTORS WORKING IN THE REGION

10

INFRASTRUCTURE PROJECTS: INTERNATIONAL AIRPORT

• Construction timeframeConstruction timeframe: : – 2009-20102009-2010

• CostCost::– 100-150100-150 millionmillion USD

• FundingFunding: : – State budget of Ukraine

• ProjectProject::– new passenger terminal:

• handling capacity –10001000 passengers per hour

• area 3434 thousandthousand sq.m– ground infrastructure– runway built according to the

requirements of ІCАО CAT II• transnational planes allowed (critical

plane – Boeing 767-400)• Development started inDevelopment started in 2009 2009..

11

INFRASTRUCTURE PROJECTS: EUROGAUGE

1435 mm gauge railway connection1435 mm gauge railway connection Polish border – LvivPolish border – Lviv

• Improving connection from Western Europe to Lviv area along the III pan-European Corridor

• Boost to international high-speed railway connection across the EU

• Multiple stakeholders – the EU, state & local authorities, transport ministries and railway operators in Ukraine and Poland

– Part of the State Programme of implementing high-speed railway passenger traffic in Ukraine for 2005 – 2015

– Outlook for EURO-2012 and the 150th anniversary of the 1st railway connection Vienna – Krakow – Lviv (1861-2011)

• Investment volumeInvestment volume:: 628628 million million USD– Including the fleet of high-speed railway trains

• Implementation frameImplementation frame: : 2-3 2-3 years• Design speedDesign speed - - 300-500 300-500 km/hour• Revenue forecastsRevenue forecasts:: during the 1st year of direct commercial exploitation of 4

trains (box-office returns only) – over 2525 millionmillion USD.

Przemysl – Lviv, 85 km

12

INDUSTRIAL AND MINING PROJECTS

• Cement plantCement plant “Lafarge” of “Mykolaivtsement” “Lafarge” of “Mykolaivtsement” corporationcorporation– “Dry” method of cement manufacturing– Total investment – 326326 millionmillion USD– Land plot for this project sold at an auction on

December 30, 2008 – Growth of cement sales by 250250 thousandthousand tons

per year – Decrease in harmful emissions into environment

• ““LyubelskaLyubelska”” mine mine– First private mine in the country with foreign

investment– Implementation timeframe: 20092009--20142014– Total investment – 11 billionbillion USD, 2255 millionmillion USD

– 2009, 2020 thousandthousand jobs– Coking coal of one of the most valuable varieties – Balance reserve – 8686 millionmillion tons of coal will

partially cover the deficit of coking coal in Ukraine.

13

TOURISM & RECREATION PROJECTS

Hotel and resort with in-houseHotel and resort with in-house therapeutic therapeutic pools in Truskavetspools in Truskavets

• Construction timeframeConstruction timeframe: : – 2007-20102007-2010

• CostCost::– 3636 millionmillion USD

• ProjectProject::– 5* hotel: 210 rooms, 9 floors – Aquapark:

– 4 floors– Water area – 5 554 sq.m– Water surface area – 1 320 sq.m.

14

PRIORITIES FOR THE DEVELOPMENT AND INVESTMENTS

• Region of sustainable economic and business developmentRegion of sustainable economic and business development• Lviv regionLviv region: : environmentally friendly manufacturingenvironmentally friendly manufacturing• Lviv region:Lviv region: agricultural businessagricultural business

• Ukrainian Gateway to the European Union Ukrainian Gateway to the European Union – – EUROEURO 2012 2012– Infrastructure, tourism and recreation:

– Border areas, Lviv: transport, housing and utility sector– Lviv and Pre-Carpathian territory: network hotels with international brand

names– Lviv: exhibition and conference halls– Pre-Carpathian are and Carpathian mountains: hotels providing sport and

recreation services• Region of well educated populationRegion of well educated population, , innovation potential and innovation potential and

technologically advanced companiestechnologically advanced companies– Lviv: professional services, ІТ sector, energy-saving technologies and

innovations.

15

CENTRE FOR CULTURE AND RECREATION

Resort and recreation area attractive for Resort and recreation area attractive for investorsinvestors– Cultural monumentsCultural monuments

• 50%50% UNESCO heritage of Ukraine • 25%25% of all Ukrainian historic and architectural

monuments of ХІІ-ХХ centuries• Lviv first mentioned in history in 12561256

– Nature recreationNature recreation • Balneology: 7 of 87 of 8 world famous mineral

waters (Truskavets, Morshyn, Skhidnytsya)• Carpathian mountains: a range of mountain

resorts – Tourist flow Tourist flow

• 11,95 ,95 millionmillion in 2009 – 10% of potential used.10% of potential used.

16

THANK YOU FOR ATTENTION AND WELCOME TO LVIV REGION!

http://www.loda.gov.ua

d.shmyhal@loda.gov.ua