Ukraine: Businesses Relocate to Safer West

Galyna Ostapovets

Ukrainian war reporter

Monday, 13 June, 2022

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Shortly after Russian’s full-scale invasion of Ukraine began on February 24 2022, fierce fighting in the town of Hostomel near Kyiv forced entrepreneur Olexander Nesterov to evacuate his coffee production plant.

Nesterov told IWPR that the ensuing chaos meant he had been unable to contact several employees and still had no idea what had happened to them. Some equipment and raw materials from his TM Finca Coffee business, which roasts beans from South America and Africa, had also been destroyed.

He decided to move operations to Rivne, in the west of Ukraine.

"It was March, Kyiv at that time was surrounded by Russian troops,” he recalled. “It was very difficult to transport everything. Large cars were not allowed into the capital, so we delivered equipment to Bila Tserkva [85 km from Kyiv] in five small cars and from there we drove to Rivne in a circuitous route by truck.”

Nesterov’s speedy relocation was made possible by a ministry of economy programme to help businesses move equipment and redeploy workers to safer areas.

A ministry spokesperson said that they had received over 1,500 applications for relocation, with priority given to those in strategic sectors or producing essential goods.

Prime minister Denys Shmyhal told a government meeting on May 20 that “517 such enterprises have already been relocated, most of them in the processing industry. At the locations of the state property fund for these enterprises a symbolic rent is set – one UAH per square metre”.

According to official data, another 192 companies are also preparing to transfer to nine western regions of Ukraine. Officials help locate new premises, arrange transport free of charge and support the business in adapting to new conditions.

To cope with the influx, some abandoned production facilities in areas such as Zakarpattia, Ivano-Frankivsk, Ternopil, Khmelnytsky, Chernivtsi and Vinnytsia, idle since Soviet times, were being refurbished.

Each region has its own approach to supporting relocated businesses, but often provide free commercial real estate for a period of time.

“We were very well received here [in Rivne] by the local military administration,” Nesterov continued. “Rent-free premises were provided for six months. Such maximum assistance gave us the opportunity to integrate our work throughout the region. We also helped find accommodation for our homeless workers. And we in turn plan to open ten to 15 outlets where we will teach IDPs to work in the coffee business.”

Originally, officials offered to evacuate him to Chernivtsi, a city 540 kilometres from Kyiv, close to the Romanian border. But Nesterov decided that Rivne was better from the point of view of logistics, as the location would allow him to develop imports of green coffee from Europe.

Sergei Gemberg, who oversees the Rivne region state centre for the resettlement of entrepreneurs - part of a network across the western regions of the country that helps relocated businesses adapt – said that this was a major advantage.

“We are… close to the European Union - 250 km to the border with Poland - and two highways pass through our region - Kyiv-Chop [on the border with Hungary] and Kyiv-Warsaw,” he said. “We also have two major railway junctions - Zdolbunov and Sarny. This is a significant advantage over other Western regions, and it works to attract business.”

Gemberg told IWPR that the centre in Rivne had already processed about 300 applications for business relocation from Ukraine's hotspots. Of these, 20 enterprises have moved, while another 150 applications were under consideration.

“The Rivne region is much more interesting than other western regions in terms of operating costs, rent of industrial warehouses and logistics, as well as wages,” he continued. “Lviv is more attractive because of the immediate border with Poland, for example. But everything is more expensive there in terms of wages and rent.”

However, the government scheme does not cover those classified as individual entrepreneurs, who have to arrange relocation by themselves.

This was the experience of beautician Irina Chepurna, who was preparing to open a new cosmetic clinic in Lozova, Kharkiv on March 1.

On the night of February 23, 2022, Chepurna took to Instagram to announce its launch event, ending her post with the prediction, "There will be no war."

Just a few hours later, Chepurna and her family were woken up by the sound of bombing as Russia launched its full-scale invasion.

That same day, she canceled all her bookings, took her two children to a nearby village for safety and began volunteering to support soldiers in the Ukrainian army.

But after rocket attacks on Kharkhiv increased, on March 12 she decided to move her family to Rivne where her children’s godparents lived. Three colleagues who had been due to start work with her in the new clinic moved with her, also taking their families with them.

In Rivne Chepurna began working once again as a beautician at a friend’s clinic, with most of her clients also internally displaced people (IDPs).

“The results of the work spread by word of mouth and I thought, if in that life [before the war] I was able to start a business, then I can do it,” she said.

Having rented a treatment room in the centre of Rivne, Chepurna hired a five-tonne truck to transport her equipment from Lozova. Before leaving, she had hidden all her cosmetics and equipment in an undergound bunker to keep them safe.

“I took everything apart from the walls and the doors,” she recalled. “It was difficult to find a driver who would agree to go to the city, which is constantly bombed. But money now solves many problems – 40,000 hryvnias (1,350 dollars) for a driver from Lutsk.”

In total, she spent 10,000 dollars to restart her business in Rivne, and is looking for a long-term rental apartment. As someone classed as an “individual entrepreneur,” she can expect no government support.

“It was a huge risk and it still is,” she said. “In Kharkiv, I invested crazy money in a clinic that I could not open. And I don't know what will happen in Rivne.