Considered one of the regions of Ukraine with the most European mindset and lowest corruption levels, Lviv is one of the best places in the country to do business. Governor Markiyan Malsky, who brings a strong legal background to the job, including former work with foreign investors, discusses the top opportunities for investment in the area and explains why there is very little risk of adverse legal changes
You don’t have a background in politics. How did you end up becoming the governor of Lviv?
I was a partner at a law firm for 12 years and I worked in places like Stockholm, Paris and Switzerland, but I wasn’t very politically active in my life. Then there was a change of power that had been a strong demand of Ukrainians – the president won with 73% of the vote, giving him a big mandate for change. I trusted that the president would be able to conduct the reforms that are so necessary in Ukraine. One day I got a call from his office to ask whether I would be interested in becoming the governor of the Lviv region. This had never been my dream or wish, but I thought: “If not me, then who?” I always believed that I can contribute to the country, and unfortunately many young people do not get a chance to develop because of our systemic problems. I felt I owed it to the country to try to do something about it. Three of us went in for an interview with the president, and I was selected.
How does your legal background help you with the position?
It helps me quite a lot in terms of having a clear mind when it comes to making decisions, interacting with people, communicating. A legal background helps me find the way from A to Z, and it helps me to understand what I am signing. It also gives me an understanding of how to move ahead in complicated situations. A good example was when heating was not started ahead of the cold season in Novyi Rozdol and Novoyarivsk. This was a big deal, and it was complicated to find a legal way to restart operations at the two heating stations, which are under seizure over corruption scandals. But we found a way for the government to step in because there was a clear risk of systemic failure of life-supporting units.
You took office in July. What are the milestones you want to achieve?
Each governor should focus on his own strong points. I have a very in-depth understanding of international relations. I was the honorary consul of Austria to West Ukraine for two and a half years and that gives me a good understanding of how the region cooperates with other countries. I speak Polish, English and German, and I hold the record for foreign ambassadors visiting West Ukraine in half a year. I also come from a practice area where I was a partner with the main legal service provider here and my clients were mostly foreign investors, so I already know many of them. Medical tourism and medicine in general is also a priority for me, as it means that Ukrainian doctors will remain in Ukraine rather than go abroad. I am now working hard on the so-called ambulatories in order to attract doctors to villages by offering them a place to live and work. And the average medical tourist leaves a lot more money in the country than the general tourist. I am also a big fan of sports and I try to support different teams and facilities. Then there is the day-to-day work to make sure the budget is well spent, that there are no infringements of the law, and that construction is conducted in time.
What are the core medical tourism divisions that people can expect to find here?
We have a great area called Truskavets, which is very renowned for its spas and great supply of mineral waters that are used for treating various diseases. During Soviet times a lot of people came here, and the area also offers great services for recovery after medical treatments. We have a strategy for developing the region.
You have talked about attracting investors who see Ukraine as something more than a place with cheap labor. What do you want investors to see in Ukraine?
I want to attract investors for partnerships with local businesses. This means that investors will see not just a land plot and cheap labor, but also the traditions, the partner’s family, the local environment, and that will change their outlook. It is a change of approach that I am aiming at, to give a soul to investment. We are competing with the rest of the world, and there will always be some place that does things cheaper. That is not what we should be aiming for, to be the cheapest place.
Investors are wary about legal changes that are taking place rapidly. What would you say to them to allay their fears?
I think that the main laws have already been adopted. This is quite a young democracy and all laws had to be written from scratch. Additionally, no law is ever perfect and it always needs to be developed. I think there is no risk to investors regarding substantial legal changes. I do not expect any major risk for businesses.
How do you compare the business climate in Lviv to other regions?
I think we have one of the best investment climates because people here have always wanted to develop further, and that is a very important attitude to have. I have done business in many parts of Ukraine and Lviv is one of the easiest places to do business in, partly because of the European mindset and the belief that the region will only develop if the economy develops. We probably have the lowest level of corruption, and many local residents have lived abroad, which gives them an open mind and European values. There are many business associations here, assisting companies solve any arising issues.
What areas of investment do you see as having potential?
One of the most popular areas is IT, which also includes Business Process Outsourcing, and there are quite a few examples of companies doing this, such as Austrian Airlines. We are also seeing an increase in residential property development, office space, and green energy. Agriculture is also a hot topic, as is the outsourcing of auto industries and others.
What can Lviv offer towards the government’s push to increase the digitization of the country?
I think that the digitizing effort is a very good idea, especially to fight corruption because it limits direct interaction between private citizens and state officials, but also to reduce the use of paper and become greener. The idea is to make as many services available as possible online, and Lviv firms are doing a good job there. The lower taxation regime and good living conditions for IT workers helps, too. I think we will see a lot of creative solutions emerging here soon. The president recently visited Estonia, which is famous for its electronic government, to see how they do it.
What does the M&A landscape look like in Lviv?
Ukraine was hard hit by the financial crisis in 2008. Those were the years when M&A basically died in Ukraine, but it is picking up again. Ukraine has adopted very up-to-date legislation in the corporate area. There are already several success stories, and this creates incentives for investors.
Ukraine has a lot of skilled labor, but many companies struggle to retain workers. What is being done in Lviv to hold on to talent?
This is one of the most complicated issues for us. We try to improve the working conditions, making sure employers treat workers well; we ensure salaries are being paid and protect the rights of employees. We encourage higher salaries and try to persuade people that living here with your family makes more sense, as we see many broken families due to emigration. And not every labor provider abroad is fair or honest, especially when it comes to female workers, and there is a risk of falling into trafficking rings, so we do a lot of social media work to provide information about people’s rights and what to do in adverse situations. Ultimately, people should earn more so they are less tempted to go abroad. And even if they do, they should plan to return, otherwise it is a disruptive scenario for the country.
How do you see Ukraine in the near future?
Ukraine has incredible potential. Unfortunately, for 30 years there was no political will to develop it, and a big part of the economy is still run by oligarchs, which puts us in a spot where some people have concentrated huge amounts of money. But Ukraine looks forward to becoming a strong nation, and we have a chance to do so now, with a president and prime minister and parliament who hold the same views and who are working towards the same goals. I believe that people have changed and I believe in the future of this