Businesses in the frontline regions need to be compensated for war risks. And not only this
11 March 2025 09:42
The European Business Association has analyzed the main problems of companies operating in the frontline regions and developed recommendations on how to support these companies, stabilize the business environment and create conditions for recovery. This was reported by the Association, "Komersant Ukrainian" informs.
The recommendations are addressed to central and local authorities, donors, international organizations and governments, banks and financial institutions.
What does the European Business Association offer?
Companies operating in the frontline regions would primarily benefit from the creation of mechanisms to compensate for war risks for domestic and foreign investors.
It is also important, according to business representatives, to ensure predictable mobilization measures and consider increasing the quota for reserving military personnel to 100% for critical enterprises in the frontline areas.
In addition, the EBA considers it appropriate to introduce:
Changes in tax policy – reducing the military tax to 1.5% and the unified social tax to 10% for employers in the frontline regions, introducing a zero rate of land and real estate tax for some time, suspending the automatic blocking of tax invoices.
Changes in financing and lending – expansion of the program “Affordable Loans 5-7-9%”, preferential lending for the restoration of damaged property in the frontline areas, loan restructuring, reformatting the “e-Robota” program, etc.
The EBA’s list of recommendations also includes logistics and infrastructure support: the introduction of a mechanism to compensate for some transportation costs, tax incentives for transport companies in the frontline areas, and tariff privileges for transportation.
The EBA also mentioned the importance of creating special economic zones, encouraging the return of economically active people, differentiating air alerts, assistance in demining, etc. The full list of recommendations is available here.
The project “Side by Side: Cohesive Communities” is launched in Ukraine
Strengthening cooperation between frontline outpost communities and partner communities in the rear is the goal of the project. Its implementation was approved by the Cabinet of Ministers in late January. From now on, the definition of “outpost community” – a symbolic name given by Ukrainians to towns and villages located within a 100-kilometer zone from the contact line, as well as from the borders with Russia and Belarus – is enshrined at the government level.
The project “Side by Side: Cohesive Communities” envisages the creation of cooperation mechanisms that will help outpost communities receive the necessary support: from humanitarian aid to infrastructure restoration, economic development and improvement of the quality of services for local residents.
The war has caused enormous damage to both communities and businesses
According to an estimate made by the Kyiv School of Economics (KSE) analytical team in cooperation with the Ministry of Communities and Territories Development and the Ministry of Economy of Ukraine, the total amount of direct damage to Ukraine’s infrastructure as a result of Russia’s full-scale invasion has reached almost $170 billion.
The largest losses were incurred in the housing stock, where direct losses are estimated at $60 billion, as well as in the transportation and energy sectors.
Losses in the transportation infrastructure amounted to $38.5 billion. More than 26,000 kilometers of highways were damaged and destroyed, which is estimated at $28.3 billion. The losses of railroad transport amounted to $4.3 billion, port infrastructure – $0.85 billion, and the aviation industry – $2 billion.
Ukraine’s energy sector lost $14.6 billion. Industry, construction, and the services sector suffered losses of $14.4 billion. The agricultural sector also suffered significant damage, with losses amounting to $10.3 billion. More than 130,000 units of agricultural machinery were lost, 4 million tons of grain storage facilities and 16,000 hectares of perennial crops were destroyed or damaged.
