Capital means much but not everything
Investment figures from past year
By Leonid Velekhovsky
The Belarusian Government has long been promoting our country abroad as a good investment location, stressing our membership of the Single Customs Space, our well-qualified yet relatively inexpensive labour force, our high technologies, our level of governmental support and our diverse investment privileges.
Naturally, investors are cautious with their money, so not every meeting yields fruit. According to the National Statistics Committee of Belarus, foreign investors injected $14.3bn into the private sector of our economy last year (down almost 25 percent on 2011). Of this, direct investments totalled $10.35bn and others stood at $3.94bn. Portfolio investments stood at $23.3m. In the crisis year of 2011, $18.8bn came in from abroad, with trade branches proving most popular (39.2 percent of the total, or $5.62bn). This was followed by transport (27.8 percent, or $3.9bn) and industry (24.4 percent, or $3.5bn). Only $134.7m was attracted into construction, $50.5m into hotel and restaurant businesses and $303m into communication technologies.
As ever, Russian companies remain the major investors, accounting for almost half of all funds. Those from the UK are placed second (25 percent), followed by investors from Cyprus (6.4 percent) and Austria (4 percent). Meanwhile, investments into CIS states are arriving through offshore schemes, as the Eurasian Development Bank notes. Cyprian and Dominican investors are often major foreign investors within the post-Soviet space while around half of direct foreign investments come from Russia (in goods, works and services). Last year, 3.2 percent of the total volume of direct investments came from British residents, followed by those from Cyprus (4.6 percent) and Ukraine (3.4 percent).
In 2012, Belarusian businesses also invested in foreign ventures: $6.1bn in total (up 11 percent on 2011). Significant amounts of investment went to Russia (35.8 percent of the total), the UK (16.5 percent), Ukraine (13.8 percent), the Netherlands (9.6 percent), Germany (8.2 percent), Switzerland (4.8 percent) and Austria (3.8 percent).
Over the last few years, Belarus has failed to meet its targets for incoming direct foreign investments, despite having signed over 60 bilateral agreements to avoid double taxation and the same number on the mutual protection of investments. Moreover, our country is now a fully-fledged member of the Multilateral Investment Guarantee Agency and investors’ interests are protected by the Investment Codex.
Last year, Belarus adopted a FDI attraction strategy for the period until 2015, which the Government believes will improve the situation.