Формування ринкової структури

The Department of Entrepreneurship Development of the Lutsk City Executive Committee carried out state registration of 1974 business entities.

222 business entities - legal entities were registered.

1752 business entities - individuals were registered.

In order to simplify the registration procedure and registration for accounting of business entities, in accordance with the city mayor's order 'On the establishment of a single commission on state registration of business entities' dated 07.04.2003 No. 152-rv, the single commission on state registration of business entities continues and improves its work.

Registered business entities	2000	2001	2002	2003	Total
Overall indicator	1372	1424	1821	1974	6591
Legal entities:	233	206	255	222	916
- association	1	1	-	-	2
- state enterprises	2	-	1	-	3
- municipal enterprises	4	3	1	1	9
- closed joint-stock companies	1	2	1	3	7
- collective enterprises	4	-	-	-	4
- associations of enterprises	2	2	-	-	4
- enterprises founded on the property of associations of citizens	8	6	6	3	23
enterprises with foreign investment	2	4	-	-	6
private enterprises	102	105	133	96	436
general partnerships	-	-	-	1	1
- joint ventures	14	3	-	-	17
- consumer societies	-	-	-	-	-
- limited liability companies	78	73	100	109	360
Business entities - natural persons	1139	128	1566 1752 4466

In 2003, the municipal communal property accounting department privatized 55 communal property objects, and UAH 1695.5 thousand was received to the city budget.

During the reporting period, 1596 apartments with a total area of 83460 sq. m. were transferred into ownership. 4478 apartment tenants applied to the housing stock privatization department. 4356 city residents took part in housing privatization, of whom 3891 privatized housing free of charge.

Considerable attention is paid to attracting domestic investment; this involves ongoing work with banks and credit unions on issuing short-term and long-term loans; deepening contacts and developing beneficial cooperation with Russia, Poland and other states.

The city's enterprises are implementing measures under the "Program for the Development of Investment Activity for 2003-2010" and the "Main Directions of Competition Policy for 2002-2004".

Economic growth in 2003 was ensured by an active investment policy through avoiding further buildup of state debt, stimulating the investment process, and creating a favorable investment climate.

The consistent implementation of investment policy to activate investment processes and increase investment resources led to certain results in 2002-2003.
- in 2003, 16 foreign investments were registered for a total amount of USD 22986.18 thousand, compared with USD 2223.0 thousand in 2002;
- attracted funds remain the main source of fixed capital investment;
- compared with last year, the volume of investments in fixed capital increased.

The main problems restraining investment activity and the increase in investment volume are:
- the technical and technological backwardness of most enterprises, which produce uncompetitive products;
- ineffective depreciation policy, which restricts the rights of enterprises and organizations regarding the formation and use of depreciation funds.


To continue partnership contacts and with the aim of expanding bilateral cooperation in various sectors of the economy and deepening cultural relations between Ukraine and Russia, in April a trip was organized for a delegation of representatives of local self-government bodies, culture, and the city's artistic figures to participate in the celebration of Sochi City Day in the Lazarevsky District.

In Mytishchi (Russian Federation), the Fourth Forum of Partner Cities of the Russian Federation and Ukraine was held, entitled "The Role of Partner Cities of Russia and Ukraine in Solving Regional Problems, Creating Conditions for the Formation of Beneficial Economic and Production Relations, Developing Border Trade and Small Business"; a trip of a delegation of public representatives was also organized to attend it.

Contacts with representatives of Russian industrialists and entrepreneurs are expanding. Possible options for attracting additional investment funds into the city’s economy from the Russian Federation are being studied.

To initiate bilateral cooperation in various fields of science, technology, and the national economy between the Lutsk City Council and the Municipality of Xiangtan, Hunan Province (PRC), a trip of an official delegation was organized, during which a protocol of intentions on cooperation between the cities of Lutsk and Xiangtan was signed, and in September of this year, the partnership agreement.

Contacts between the city and the Republic of Poland are actively developing at the cross-border and regional levels; in particular, an exhibition pavilion is planned to be opened in Lublin (Republic of Poland), where a permanent exposition of Lutsk manufacturers will be presented.



Since the tourism industry is an integral part of the city's economy and a source of revenue for the state and local budgets, special attention is paid to its development.

To create favorable conditions for the development of the tourism sector, the issue of establishing a Tourist Information Center in the city is being addressed.

An initial exhibition of historical books dating from the 17th to the 20th centuries and valued at more than US$500,000 has been assembled for the opening of the "Museum of the Book" in Lutsk. Premises have been selected on the territory of Lubart's Castle—the former premises of the county treasury—for the creation of this museum. The problem that has arisen in opening the museum is the lack of funds to purchase furniture, shelving, and camouflage.

In order to preserve the "Old Town" historical and cultural reserve, a working group was created to develop the "Development and Strategy of the Old Town" program.



A program was submitted to obtain a financial grant to the Polish-American-Ukrainian Cooperation Initiative PAUSI on local self-government reform, which provides for holding a series of seminars with the participation of civil servants of the Lutsk City Council and its executive committee.

Our proposals have already been considered by the PAUSI secretariat and board, for which a positive written response has been received, and which is under review by the Higher Supervisory Committee. We hope for a positive decision.

In the current year, the administration has carried out a number of measures, namely:
In March, a seminar titled "Investment Projects in Local Economic Development" was held in the city of Lviv, in which staff of the department participated. Together with the


A trip by our creative groups was organized to participate in the Days of Ukrainian Culture in Poland. A monument to the soldiers of the Ukrainian People's Republic who are buried there was unveiled at the civil cemetery in Lublin.

According to the protocol signed with the City Council of Lublin in Poland, employees of the municipal guard underwent an internship.





For Switzerland and Japan, in accordance with the established requirements, a concept for a cooperation program has been prepared and sent to the associations of cities of these countries. An agreement has been signed with France on the opening of an information representation of Ukraine with a separate section on the city of Lutsk.

Entrepreneurs from our city have been invited to Latvia (Rezekne) to participate in the exhibition "Latgale - 2004" and in preliminary negotiations between city administrations.

The signing of partnership agreements with Kazakhstan is planned for December–January. The cooperation agreement with Bulgaria is under approval at the Ministry of Foreign Affairs of Ukraine.

In order to popularize the city, materials were collected, fundraising was organized, and a booklet about the city was printed, which included the most significant events and developments that took place in the city over recent years.

This year, together with the committee for physical culture and sports, a number of sports clubs and schools were involved in participation in international competitions in Zamość, Lublin, Olsztyn, and Chełm. In them, almost all prize-winning places were won by children's and youth teams of our city.

In order to popularize our city, representatives of delegations from our partner cities from Brest (Belarus), Sochi, Tver (Russian Federation), Olsztyn, Rzeszów, and Lublin (Poland) were invited to the celebrations on the occasion of the 12th anniversary of the independence of our state.

There are 14 commercial bank institutions operating in the city (2 legal entities and 12 branches). The city has 2 banks - legal entities - CB "Zakhidinkombank" and a bank established with the participation of 100% Polish capital - Pekao (Ukraine) LTD.

2 banking institutions are in liquidation - the Volyn Directorate of Bank "Ukraine" and the Lutsk branch of JSC "Gradobank".

There is 1 balance-sheet banking institution per 48 thousand people in the region, and together with non-balance-sheet institutions - 1 institution per 3.6 thousand people.

In 2003, 38 credit unions were registered in the region. According to data from the credit unions, they issued loans totaling UAH 6,872.7 thousand.

The dynamics indicate steady growth in the volume of bank operations. Thus, the total assets of banks increased by 1.8 times compared with the same period last year, including earning assets by 1.9 times. The source of their growth was mainly borrowed funds from bank clients, which increased by 2.8 times.

The growth in public trust in the banking system, reflected in a steady increase in the volume of citizens' deposits entrusted to banks for terms of more than 1 year, was precisely what allowed banks to make long-term investments.

86% of the increase in attracted client funds is the increase in citizens' funds. These are mainly time deposits of citizens. Thus, compared with last year, long-term deposits increased by 7.7 times, and short-term deposits of the population by 1.3 times.

Overall, the volume of client funds attracted by banks over the period from 01.01.2001 to 01.10.2003 increased from UAH 175.6 per capita to UAH 486.3. This is 16th place compared with other regions of Ukraine.

Banking operations are conducted mainly in the national currency: for lending, their share increased from 53% to 62% of all loans granted; for public deposits - from 55% to 58%.

The total loan portfolio of banks over the period from 01.01.2001 increased 23 times, with long-term loans growing 8.2 times. The structure of the loan portfolio improved toward an increase in the share of long-term loans. The share of overdue loans, on the contrary, decreased from 5.6% to 3.1%.

As of 01.10.2003, the volume of loan debt of small businesses amounted to 22.8% of the total loan portfolio.

Loans per capita in the region increased from UAH 183.8 to UAH 606.8 - this is 11th place compared with other regions of Ukraine.

NBU policy, in accordance with the economic situation in Ukraine, is constantly aimed at creating conditions for investing credit funds in the state economy, as well as at making them cheaper.

The dynamics of interest rates fully correspond to nationwide trends. In terms of deposit rates (time and demand deposits), Volyn ranks 5th; in terms of time deposit rates, 7th; and in terms of loan costs, 9th among the banking systems of Ukraine's regions.

Dynamics of interest rates according to NBU data. %

	In September 2001	In September 2002	Deviation (+, -)	In September 2003	Deviation (+, -)
Loans	33.0	24,7	-8,3	17,0	-7,7
To legal entities	33,1	28,1	-5,0	16,8	-11,3
To individuals	26,4	24,8	-1,6	19,2	-5,6
Term deposits	12,3	11,8	-0,5	8,4	-3,4
Legal entities	4,9	8,5	+3,6	5,1	-3,4
Individuals	19,1	12,7	-6,4	11,8	-0,9

The dynamics of banks' financial results are also positive. The financial result for 2003 was already 1.3 times higher than the result of the previous year, 2002, and 6.5 times higher than the result of 2000.

This was facilitated by the growth of net interest income from the main banking activity — lending funds. Banks' commission income from providing services to clients also increased somewhat. As for expenses, the growth of administrative, business and other expenses was insignificant, and expenses for the formation of insurance reserves in the current year were made by banks less intensively than in previous years. Thus, the growth of net interest income almost fully ensured the corresponding growth of the aggregate profit of the region's banks during the analyzed period. Therefore, the main factor in increasing the profitability of bank assets is the intensification of their lending activity. Overall, the excess of income growth over expenditure growth, in line with the expansion of banking operations, ensured a reduction in the level of expenses per 1 hryvnia of income from UAH 0.96 in 2000 to UAH 0.82 in 2003 and an increase in the profitability of assets from 0.8% to 1.9%.

In order to effectively use entrepreneurship opportunities for the development of the regional economy, accelerate economic reforms, attract extra-budgetary funds and investments, and solve social problems in the city, significant attention is paid to and comprehensive support is provided for the development of entrepreneurship. In particular, modern credit and investment mechanisms for the development of small entrepreneurship are being introduced, microcredit programs for small business entities are being developed and implemented through credit unions and other non-bank financial institutions, and free production premises of state and municipal enterprises are being transferred to small business entities on preferential terms.