GENERAL INFORMATION

The Zhytomyr region is a land of dramatic centuries-old history. The first mention of the Polissya was made in thousand-year-old chronicles. As far back as the times of Kyiv Rus, the Polissya, the former land of the Drevlyans, played a prominent role in the state being an important center of political, economic and commercial life.

Today the Zhytomyr region is a picturesque area of Ukraine with rich natural resources. Appreciating the diversity of its mineral riches, Academician A.Fersman called it "the little Urals". More than 30% of the territory of the region is covered with forests.

Nowadays the Zhytomyr region is an important industrial and agricultural region of Ukraine, the land of highly-developed industry and automated agricultural production.

Due to the favorable geographic position and ramified, network of highways and railways, the region has a convenient transport communication with Kyiv, Lviv, Uzhhorod, Kharkiv, Odesa, Minsk, Moscow, St. Petersburg, as well as with countries of Eastern and Central Europe.

The region is rich in natural resources, having more than 220 deposits of different minerals. They are: decorative facing stones, marble, semi-precious stones, raw materials for metallurgy and construction industry, limestone, brown coal, and peat.

Reserves of alkaline kaolins have been explored. Their volume makes it possible to produce up to 0.5 mln tons of feldspar concentrates per year.

There are also building sands, pyrophyllite shales, ceramic clays and other kinds of mineral construction materials.

The region accounts for one-fifth of the quarrystone resources of Ukraine and has considerable capacities for their processing.

The resources of decorative facing stones (labradorite, granite, gabbro), which are in great demand both in Ukraine and abroad, are, as a matter of fact, unlimited. The region’s explored deposits of labradorites and gabbro make up more than 90% of the resources of these stones in Ukraine. That calls for rapid development of stone-extraction and stone-working industries and increased exports of their products.

Very promising is the deposit of marble having a pattern of unusual beauty and easily polished. It is a wonderful raw material for the production of facing tiles, marble aggregate, brine magnesium oxides, resin dolomites for metallurgy, different kinds of fluxes and fillers, and mineral fertilizers.

In the region they quarry semi-precious stones, such as beryl, topaz and quartz with subsequent processing to produce jewelry. Extensively applied in electronics is piezoelectric quartz crystal.

The region has a deposit of high-quality pyrophyllite. We are interested in attracting investments and finding partners for its development and wider application.

The Zhytomyr region produces enough titanium concentrate to satisfy the demand within Ukraine and export it abroad. In addition to titanium ilmenite, the ore complex of the region includes rare earth elements, such as vanadium, scandium, hafnium, and thorium, which are in great demand in the world market. Most of the ilmenite deposits contain apatites, their stock accounting for more than 85% of all of their resources explored in Ukraine.

Unique is the deposit of quartzites, with about 84% of all the country stock. This material is used to produce refractories for blast-furnace lining and to fabricate ferroalloys.

The region’s forest resources are the most significant in Ukraine. Forests cover nearly one third of its territory. Conifers prevail (60%); deciduous hard-leafed stands (oaks) and soft-leafed stands (birches, alders, aspens) account for 20% each.

Peculiarities of the economic and geographical position of the region and such natural factors as soil and climate conditions, raw mineral, forest and water resources altogether create favorable conditions for diversified agricultural and industrial development.

The agriculture of the region produces cereals, leguminous crops, sugar beets, milk and meat. Besides, the region is a leading Ukrainian producer of hop, flax and chicory.

In great demand is hop of valuable aromatic varieties, which are widely used in beer brewing, pharmaceutical production and other industries.

The basis of the economic potential of the region is formed by machine-building, metal-working and instrument-making enterprises. They produce metal-cutting and wood-working machines, electric measuring instruments, devices of telemetry and automatic control for thermal and nuclear power plants, unique automatic filter presses, equipment for chemical industry, agricultural and forestry machines, and construction metalwork.

The region possesses considerable capacity of manufacturing porcelain for electrical engineering.

The light industry is represented by textile, clothing, shoe-making, knitwear and leather processing factories. They produce men's, women's and children's clothes and footwear, hosiery, haberdashery, gloves and fur goods.

The region also manufactures nearly half of the country's flax fabrics, faience and chinaware.

Glass-works produce glass containers (including those for medical purposes), high-quality glassware, crystal goods, mirrors, as well as flasks, ampoules and laboratory items made of chemically neutral glass.

The enterprises of timber and paper industry produce good durable furniture, wooden goods, parquetry and paper of various kinds, some of them unique.

The chemical industry is represented by enterprises manufacturing technical and textile fibers and threads, varnish and paints, plastic products, colophony and synthetic resins.

In the region there are also several coal-mining, microbiological, medical, polygraphic and other enterprises.

The food industry accounts for a quarter of the total industrial production of the region. There are more than 40 manufacturers of construction materials.

Production increase, quality improvement, and expansion of the markets are related by the manufacturers of the region to establishing close relations with partners from other Ukrainian regions and other countries.

More than 50 joint ventures and companies with foreign investment have been created and are operating in the region, with firms from more than 20 countries involved.

The Zhytomyr region companies transact with their partners from 70 countries of the world. The foreign trade turnover in 1998 amounted to USD 224.7 mln, including USD 131.2 in exports and USD 93.5 in imports, with a positive balance of USD 37.7 mln. The region maintains a positive foreign trade balance with nearly all the CIS and Baltic countries.

In the exports structure, prevailing are textiles (20%), food industry products (8.2%), timber and wood items (9.2%), footwear (8.3%), and machinery and equipment (5.5%). Main imports include fuel, oil and petrochemicals (20%), chemicals (8%), and plastics and rubber resin (4.5%).

The mechanism of the introduction and functioning of the Regime is established by the Law of Ukraine "About the Special Investment Regime in the Territories of Priority Development in the Zhytomyr Region".

The Special Investment Regime is introduced on January 1, 2000 and will be valid for 30 years, its terms applied to the investment projects implemented in the priority economic sectors.

The territories of priority development in the Zhytomyr region include the towns of Berdychiv, Korosten, and Novohrad-Volynsky, as well as the Korostensky, Novohrad-Volynsky, Luhynsky, Narodytsky, Ovrutsky, Olevsky, Malynsky, Yemilchynsky, and Volodarsko-Volynsky districts.

The Special Investment Regime is applied to the business entities implementing an investment project to a total value of at least:

- USD 200,000 – for the period of implementation of the investment project in agriculture, food industry, textile industry, woodworking and production of wood items, pulp and paper industry, furniture production, ready-made clothes and fur production, healthcare, and education;

- USD 300,000 – for the period of implementation of the investment project in construction industry;

- USD 500,000 – for the period of implementation of the investment project in mining, chemical, mineral processing, machine-building industries and transport sector.

For the period of an investment project implementation, a special legal regime of business activity is applied to the business entities implementing the investment project, and they are provided incentives concerning the payment of the import duty, value added tax, profit tax, and payment for land.

Exempted from the import duty for the period of the investment project implementation, but no longer than for five years are business entities importing:

- raw materials, whose range and amounts are determined according to a procedure established by the Cabinet of Ministers of Ukraine;

- machinery, equipment and their components

to Ukraine to be used in the framework of the investment project implemented in a territory of priority development.

The transactions of importing machinery, equipment and their components to the customs territory of Ukraine in a priority development territory to be used in the framework of an investment project are exempted from value added tax for the period of the investment project implementation but no longer than for 5 years.

Newly established, re-profiled, restructured, or re-equipped companies implementing approved investment projects in the territories of priority development are exempted from the profit tax (in the part of the profit gained from the application of the investment) for three years.

The profit of such companies gained from the investment project implementation in the period from the forth to the six years of the investment project implementation inclusive is taxed at 50% of the effective taxation rate.

That norm is applied since the company discussed receives its first profit.

Gross revenue of a company to be taxed does not include the investment amount received under the investment project, in the form of:

- money;

- material assets;

- non-material assets including rights of authorship, rights for inventions, models, industrial designs, trade marks for goods and services, know-how, etc. legalized in the territory of Ukraine, whose value in a convertible currency is confirmed according to the regulations of the investor's country or international trade customs, as well as expert evaluation in Ukraine.

Businesses implementing investment projects in the territories of priority development are exempted from land rent for the period of the land plot development (land planning, infrastructure building, etc.), but no longer than for 5 years.