As part of the analytics partnership between the International Mayors Summit and VoxUkraine, we are publishing a special episode of the podcast “What about the economy?” with two mayors, Ruslan Martsinkiv from Ivano-Frankivsk and Oleksandr Symchyshyn from Khmelnytskyi. We recorded the podcast in the 2021 Summit’s mobile studio. Listen to the podcast’s full version here.
The Ivano-Frankivsk locomotive repair plant is a total success story
Yuliia Mincheva: Four years ago, the Ivano-Frankivsk city authorities took the very unusual step of purchasing a locomotive plant. Tell us, please, why you did it, and from today’s perspective, how do you gauge whether it was an effective decision? How is the plant doing now?
Ruslan Martsinkiv: Such projects perform an important social function for the city. Although, I’d like to emphasize that the “social”, too, should have costs and be profitable, making money and paying wages. This plant is also part of my family history. My granddad worked there for over forty years because he could not work elsewhere as someone convicted by the Soviet regime.
Despite my personal history, I also believe in decisions aimed at revitalizing plants. We already have an example of a high-quality private partnership in our city, “Promprylad. Renovation”. The story of Yuriy Filiuk (executive director and initiator of the project – ed.) inspired us to believe that plants can be preserved and given a new development. Today, we have a number of valuable initiatives for the Frankivsk residents and those living in other places. For example, the environmental initiative. We have an enterprise headed by Natalia Hasiuk. The company collects and processes plastic (lids, containers, packaging for household chemicals), utilizing the capacity of the LRP (PJSC Ivano-Frankivsk Locomotive Repair Plant – ed.). Used and recycled plastic is used to make benches, fixtures for playgrounds, and other useful purposes for the city.
This year, we took a chance and conducted the LPR-Fest, opened up the plant sites for various cultural platforms – in all 12 of them. It used to be a closed area you couldn’t touch or get into. However, this year, thousands of Frankivsk residents could come there and see: we’ve got a plant, the community has a plant, and that’s opportunity. We had a very varied program with writers, artists, combat veterans, environmentalists. We held workshops, exhibitions, film screenings, and music band concerts. It was interesting.
But most importantly, the plant is operating, it’s profitable, the wages have quadrupled, 220 people have a steady job, and we’re constantly hiring new staff. So we decided that it’s a total success story because the UAH 32 million investment has already paid off.
Also, the community has vacant plots of land outside the settlements, so we decided to show that it’s possible to create new jobs and grow something on our own. Now we’re getting ready for the spring planting. As for agriculture, we focus on growing berries since the plots are not located together, and growing berries calls for many people, which means jobs. We took the risk somewhere, and we worried about whether it would pan out. But it did. I believe that’s one of the positive examples that we must publicize and move forward.
If businesses are comfortable, investors will feel great too
Y.M. In our podcasts, we talk with the mayors of the fastest-growing cities. And we ask everyone: why should investments go to your city and not to Mariupol or Khmelnytskyi? What attracts investors to Ivano-Frankivsk?
R.M. Frankivsk is the most comfortable city for living. We’re waiting for innovative businesses. IT professionals feel comfortable in our city. That was affirmed by the biggest IT company, EPAM, that opened a new office in our city because their employees want to live and work in Frankivsk. So Frankivsk truly is a great place for living.
Y.M. We have the same question for the Khmelnytskyi mayor. Oleksandr, why should investors invest in Khmelnytskyi in the first place?
Oleksandr Symchyshyn: Indeed, we’ve already reached the level where we compete with each other for investors, for human resources. And that’s great because healthy competition helps us all develop further. You mentioned Ivano-Frankivsk, Vinnytsia, Mariupol, and you can add Zhytomyr here – these are the cities with which we’re friends and competitors at the same time. It’s a healthy competition making us better.
Khmelnytskyi is a city that has the best geographic location. We have the same distance to all regional centers of the right bank. Logistically speaking, we’re the most well-positioned. Logistics is one of the city’s strategic development directions affirmed by the fact that we’re hosting large companies building their logistics centers here. Two years ago, the Nova Poshta company built a big innovative terminal. Also, ATB built a vast logistics terminal servicing the entire right bank. Epicentr, too, has purchased land and is set to begin building its hub next year. They have a similar facility only in Kyiv. These three logistics hubs will provide 2,200 jobs. That’s why I’m talking about the Khmelnytsky region’s convenience.
Speaking about large-scale production, it’s also light industries. We are a leader in Ukraine in exporting wedding dresses, competing with Turks and Chinese. Khmelnytskyi has a favorable investment climate and adequate city authorities, ensuring a proper level of cooperation with any investors, which is attested by various rankings and high indicators such as competitiveness, doing business, investment climate, etc. The main thing is what businesses think about how comfortable they are here. Companies operating in Khmelnytskyi say they’re feeling great. It means the investors will feel great, too.
Not just happy to see any investor
Y.M. Questions to both mayors. Roger Myerson of the academic supervisory board at Vox Ukraine studies game theory and democracy from an economic point of view. He says that citizens, city residents benefit the most from decentralization because they have more choices in terms of political competition. After all, many more political leaders emerge, proving their usefulness to society in practice. And when the next election cycle comes up, voters get many more high-quality alternatives to choose from.
If local authorities do their work well in the city, they are a source of leaders at the national level treading this path. Both of you are very popular mayors in your communities, with a high level of approval for your performance. Are you considering the option of bringing order to the entire country, or are you focusing exclusively on your cities? How do you perceive the process of political competition revived through decentralization, and what is the secret of your success?
R.M. Any state authorities in Ukraine want to centralize resources, money in the first place. That’s a priori a conflict, not only in Ukraine but in the entire world. Civilized countries resolve it very quickly: 50% of the tax revenue goes to the state budget, and 50% stays locally. We sign a memorandum, enshrine it in the Constitution or law, and we move forward. Unfortunately, for thirty years, we’ve been “locking horns”, as people put it, and hogging the blankets.
For starters, more taxes need to stay on the ground, and rightly so. I’m convinced that the closer money is to local authorities, the cheaper the services, and the more it’s under control, overseen by the community. The higher this money is on the Kyiv hills, the more expensive it makes everything. Secondly, the community has minimal influence, and that’s a systemic problem. Elite changes will occur naturally, whether we like it or not. Today, every city has a lot of work to do, from infrastructure to investment. We’ve chosen a strategy for ourselves that we are not just happy to see any investor. I’m not excited to see investors in the chemical or metallurgical industry because our city sits close to the mountains. It’s not in line with the concept of “Ivano-Frankivsk is a comfortable place to live in”. If you are an investor in automotive production, it shouldn’t harm the environment. It matters to us. We have more investments through small, medium, and craft businesses because we’re one of the most enterprising cities in Ukraine, where small businesses do something creative.
No one knows the practical plane better than the mayor
Y.M. Do you see this prospect that mayors will have ambitions to go to the national level? Or is there more work in Ukrainian cities now, especially when they approve of your performance?
O.S. You are right to say that we often see changes in such high-ranking positions as the post of Prime Minister, which is a key one. And as mayors, we have the opportunity to compare. We can quite clearly see the difference between those who’ve gone through all the stages you mentioned (local management experience and higher) and “eaten the bread” of local government and those who have never had a complete enough understanding or worked on the ground. In practice, it all matters. The decisions are different because people who “never ate this bread” are often far from knowing how it works in practice. When successful mayors move up and reach new heights at the central level of government, it’s great for us. We understand that this person knows how the budget affects the sewerage system and how any resolution or law passed by Parliament affects people’s lives. Nobody knows the practical plane better than the mayor.
We are essentially practicians, and we understand how a decision passed on the Kyiv hills can be adapted in Khmelnytskyi or the Rakove district of the city. Or the decision on closing kindergartens in the yellow zone on Tuesday at 16.00, and then not closing them anymore, on Wednesday at 16.00. For those making this decision, it’s no big deal. They raised their hand and voted in the Cabinet. But for a mother who has a three-year-old child, and she learns on Tuesday that her kindergarten is not working, and she’s got to go to work tomorrow? What should she do with the child: get a babysitter, take a vacation, ask the grandmother? You can’t leave the child at home alone. She is in a panic, and then at 15:00, they’ll say that everything’s fine and that the child is going to kindergarten.
We don’t make such decisions locally. When I first ran for mayor, I said that two terms were the best time to get done everything you wanted. And now people meet me on the street and say: well, listen, you spoke nonsense, you don’t need two (terms – ed.), you need more. But I think there’s a moment of conservation and habit in there somewhere. People are just such creatures. They get used to things, adapt, and get a bit lazier if they don’t change their comfort zone. It’s possible that after the second term, I’ll try to fulfill my potential in a different format using the experience I gained here.
This past weekend, we had the Day of the City. In Turkey, we have a sister city, Efeler, with a 65 thousand population, which is a very interesting city, a world market leader in exporting figs. The city is headed by the mayor, who has been a member of the Turkish Parliament three times. He decided that after such experience, he’d take the position of mayor, and he said he realized that he only really started working when he became mayor. And he advised that I work here and then go to Parliament to rest (joke). I’ll go there, not to relax but to work.
In working with businesses, the most important thing is trust
Y.M. At the International Mayors Summit, you spoke about what the city has done to support small and medium-sized businesses. What panned out, and what is still left to be done in your working with businesses? If, last year, COVID-19 caused a crisis for businesses, now we see a crisis in trying to return to normal life and vaccinate as many people as possible. The second part of my question is, what ways to encourage people to get vaccinated do you see in Khmelnytskyi? Are you doing something extra, something special?
O.S. First off, I oppose coercion in such things. I believe that coercion causes a backlash. The more people are forced to do something, the more they see 5G, Bill Gates, etc. Such things must happen through self-awareness and leading by example. Personally, I got vaccinated, and I did it in public, without calling on anyone to do anything but by showing an example that I wanted to be even more protected, even having antibodies. I understand that I can still get sick, and I look at COVID-19 like any other respiratory disease. So when I wanted to protect myself even better, I got vaccinated.
I’m also improving my immunity by working out and playing football for the national Ukrainian mayors’ team. And I believe that a healthy lifestyle strengthens the immune system and that vaccination provides additional protection. In our city, we don’t use any other incentives. We are creating the infrastructure in vaccination centers that would be convenient for residents as much as possible.
We were talking about businesses. As of today, vaccination centers are operating at the Khmelnytskyi markets. An entrepreneur or buyer doesn’t need to go to the main vaccination center because everything is already there, 300 meters from your workplace. And it only takes 15 minutes of your time. The infrastructure is in place.
The most important thing in working with businesses is the trust that we’ve built through dialogue. Over a cup of coffee or tea, I talk about any head-hurting topics and issues, and of course, I certainly talk about how we spend taxpayer money. We have separate programs for reimbursing interest rates on loans to build trust. We’ve entirely removed bureaucratic factors because a bureaucrat means subjectivity and, sometimes, corruption risks. In fact, the cases are handed over to us by banks: the company goes to one of the eight banks we cooperate with and takes a loan. This loan must meet the criteria set out in the city’s development strategy: job creation, innovation, the delivery of equipment, etc. It doesn’t apply to all activities. After receiving approval from the bank, the city budget reimburses the interest rate in the amount of the NBU discount rate. There were periods when we made up for 16-17%, and the entrepreneur took a 21-23% loan. Today, 4% in hryvnia is a very cool loan, which would be a norm in the economically developed Ukraine. Such a program is working well in our city. Every year, we receive a large number of applications, we do reimbursements, there is no subjectivity, everything is fair and square, and businesses trust us.
We also reimburse part of the fee for participating in paid exhibitions. That’s the Turkish experience. There, the state reimburses Turkish manufacturers for participating in international exhibitions. The company can discover foreign markets, bring currency into the country, and stimulate economic development. We saw this experience, and we liked it. We also set clear criteria, including for exhibitions in Ukraine, Kyiv, and Poland. If it’s a paid exhibition, we reimburse part of the cost. The participating companies form a new, overseas customer base. We minimize competition between our own [companies], encouraging them to cooperate; we create clusters under the brand “Buy made-in-Khmelnytskyi products“. Such initiatives create new jobs, attract funds from the customers – not from Khmelnytskyi but other cities and countries.
One of the brightest events I attended was Kyiv Fashion Week. There, the Khmelnytskyi companies were united under one brand, and our city dominated. The representatives of other cities highly regarded this initiative.
The authors do not work for, consult to, own shares in or receive funding from any company or organization that would benefit from this article, and have no relevant affiliations