Country’s renewal — the way to success and prosperity
On Friday, April 19th, President of Belarus Alexander Lukashenko delivers the State of the Nation Address to the Belarusian People and the National Assembly
Dear fellow citizens!
Honoured deputies and members of the Council of the Republic!
2013 is a key year in the current five-year plan.
If look back, the early days of this plan were difficult, as we all remember. We were affected by the world financial and economic crisis. However, we managed to stabilise the situation.
Today, we are overcoming the barrier to average salaries of $500 countrywide. I repeat: the average salary. We’ve coped with high inflation, have calmed the currency market, have provided a budget surplus and have kept gold and foreign currency reserves at a safe level.
These positive trends have been recognised abroad.
For instance, the annual UN Human Development Index places us among the top 50 states: the highest index in the CIS. This is the objective opinion of the UN.
However, there are also reasons for concern, as we live in a global world. The dramatic events in Greece and Cyprus unfortunately affect Europe, bringing unfavourable forecasts for the future.
The world’s financial and political elite are at a loss. Simple ways of solving problems — like printing more currency — have no effect; nor do more complex solutions. They lack the power or courage to make inevitable yet fundamental reform, waiting for others to act.
In such periods of history, mankind always returns to basic economic needs, providing essential commodities: food, clothing and shelter. We have a good margin of stability in this regard and good skills, because Belarus has developed its private sector and has refrained from blowing financial smoke bubbles.
The further growth of citizens’ welfare depends not only on national operational measures but upon the correct choice of development strategy. Taking into account the extreme interdependence of our modern world, we need to understand global processes and our role.
Despite the financial crisis, global intellectual progress continues with tremendous momentum.
Mankind is accumulating knowledge and improving technologies. The information revolution is creating hundreds of new products and services.
I’m convinced that new scientific inventions, rather than sophisticated financial schemes, will revive the ‘dying engine’ of the global economy.
There is a global whirlpool of new ideas, technologies and inventions, which is sucking Belarus within.
Despite meeting average European standards, our destiny is tied to that of the wider world.
All global phenomena — from the Internet to the ‘shale revolution’ — affect us directly and immediately.
Accordingly, we must learn to live in this new world, where everything is changing rapidly, right in front of our eyes, and where every decade brings a whole historical era.
We have no choice: we must adapt to rapid changes or stay on the sidelines of history.
Modern times have three main requirements.
The first is speed.
Modern civilisation is characterised by constant acceleration. It’s felt everywhere: in the speed of new ideas, technologies, economic trends, trade, education, media and politics. It’s even felt in the everyday lives of people.
Those who stay ahead of the curve will win out. This frantic, wild pace, set by our man-made world, contrasts with our naturally quiet, deliberate mentality. We don’t naturally choose a frantic pace of life. Nevertheless, we have no choice. We need to change, adapting to our high-speed world. If we don’t, we’ll be left behind economically and technologically, including in the information space.
The second requirement is flexibility.
The world is not just accelerating in its development; it is constantly changing. We have just become used to some commodities when others replace them — even within a year. We barely master the latest technology when it becomes out of date before our eyes.
At the same time, the world is surprisingly interdependent. To sell a product, it must be adapted for dozens of different countries and for numerous groups of consumers, whose tastes and preferences are constantly changing.
Flexibility (the ability to react promptly to change) is essential to our competitiveness. Of course, we must also throw off laziness and habit.
The third requirement is creativity.
If you simply copy, you’ll always lag behind. Young nations learn from the outside world and, of course, reproduce what they see. However, at some stage, they need to present the world with something new.
Only creativity can allow us to break through into the leading group.
The results of the economy work for the first quarter of this year are positive in general, but only against the background of the world economy development. The growth rate of the gross domestic product amounted to 103.5 percent, investments in basic capital amounted to 112.5 percent, including in the equipment — almost 122 percent.
We observe positive balance foreign trade in goods and services. The currency income is growing from month to month. Gold and foreign currency reserves are formed in amount of more than two months of import.
A stable situation on the domestic market comes from the fact that the supply of foreign currency exceeds the demand at all of its segments. By the way, since the beginning of the year, the National Bank has bought nearly $600m.
Though the refinancing rate of the National Bank still remains high, taking into account the decrease of the inflation, it has been reduced up to 27 percent per annum. This means that the credit resources for the real sector of the economy are gradually becoming more affordable.
However, despite this positive trend, the reserves of ready products are growing actively in the warehouses of industrial enterprises both in absolute and relative terms.
On April 1st, there are ready products worth over Br30tr in the warehouses. This is almost twice more than last year.
What is the reason? I have not cancelled my requirement to the Government to be one big Ministry of Trade. I ask the local authorities to join the Government immediately and provide specific results of the unloading the warehouses!
You have convinced me that when the warm time comes, spring and summer come, and the situation will change. We’re waiting.
And the most important thing is that nobody has cancelled the tasks related to economy growth this year. The Government and the Parliament claimed voluntary without forcing these amounts of increase. Please, both the Government and the Parliament, start fulfilling your own decisions!
Remember, today there is no reason to relax. Yes, it seems that crisis has been left behind and we are moving forward gradually. But when we relax at least for a while, the life will punish us severely for this, because the markets of our main consumers — European Union and Russia — have sagged, the situation is complicated.
The key problem of our economy is the competitiveness of domestic goods. And to win in the severe competitive war at the global market, we should constantly update our knowledge, technologies, equipment and management systems.
So today, the main backbone idea for Belarus is the idea of renewal.
Renewal is not a rejection of our model and the previous path.
Renewal is a new stage of our development.
When we talk about upgrading, modernisation, ultimately this doesn’t mean that this is President’s yesterday’s fiction. We approached this long ago, and even moved forward significantly in some mane directions in terms of modernisation.
Modernisation means the update of what has been left from previous generations, from technologies of the country that was the leader in its development. We have not ruined this, but it’s time to update. In addition, we not only renew the old, we also are building new enterprises. But I’ll tell later about this.
At the same time, we should rely on three strong national projects that will update the state.
The first project is the modernisation of our economy.
The second one is the society’s informatisation.
The third one is the support of youth and its large-scale involvement in the state’s construction in the broad sense.
We shouldn’t miss the moment of upgrade at all segments of generations.
Now I’ll provide more details.
The current stage of socio-economic development is special. It requires the accelerated pace of the process of modernisation. The fact is that happening at the present time change of the dominant technological structures opens a ‘window of opportunities’ for successful entry into a new wave of economic growth.
In these times of large-scale global technological movements ‘window of opportunities’ allows individual countries to get ahead and make an economic breakthrough. And we should take advantage of this experience.
We discussed these issues in March at the meeting of the Council of Ministers. Even if in tough, as Premier says, severe form, but we have discussed these issues and, in my opinion, we have understood one another, agreed. We have established criteria for the effectiveness of modernisation — the achievement of annual revenue per employee of not less than $60,000.
We have identified the necessary conditions that the Government, the National Bank and the Governors should create for the successful modernisation.
It’s not necessary to convince anyone in the importance of the modernisation.
Its necessity is obvious. Why obvious? Because the world is developing, and, in general, the world has never stood still. There have been some regressions in the development of society, for example, in the case of war. But even the war pushed the society forward in its development. So, we should just improve all the processes, not mentioning the base, the foundation of any state and society — economy.
So there is no sense to argue if the modernisation is necessary or not. This is an objective process of state and society development.
One more thing... Today, one of our partners, the main one, in the Customs Union and the Single Economic Space — Russia — has joined the World Trade Organisation, and the second one — Kazakhstan — is on the verge of joining. This means that we are already actually working in the conditions of global competition. So, there is no other choice, but to update rapidly the economy.
Today, media is wicked a lot about the issue of modernisation today.
Our opponents say that the authorities have found another pre-election slogan. And, they say, everything will be limited just with empty talk. They come to a strange conclusion that the competitiveness growth potential of Belarusian products has been exhausted and in absolute terms, the degradation of our economy is going on. Therefore, there is no need to modernise it, we should just forget about it and take a radically different model. Well, we have already faced this. Even with you, I’m not talking about myself. For this time, I have already got such lessons several times. I was suggested: ‘There is no need in new combine, no need in new machines, we will buy everything abroad’, ‘these enterprises should be liquidated, sold for a penny, we don’t need them’. Time has passed. We have chosen a different path. And what do we have today? It turns out that those, who suggested this to us, say today, “Belarusians do good job”. Someone whispers somewhere in the diplomatic sidelines, but we, you and I, see that we were right, choosing this way.
There no again new ideas of our opponents, public or private enemies, the ‘fifth column’, so they use again ‘the old weapon’: let’s close everything and liquidate...
Well, let’s imagine this: we close everything today. And what will people do tomorrow? Where will they get paid, even though the average of $500?
In short, these are old songs on ‘let’s destroy to the ground, and then’, which have merged countries in the chaos of social disruption and economic regress several times in the history.
As they say, to break is not to build — much mind is not required.
Our way is not the destruction, but creation, not Manilov’s dreams, but real projects for systematic economy development, improvement and steady increase of our production capacity. Primary attention is paid to the modernisation of the industries that use local raw materials.
I believe that the best answer to our opponents is concrete examples of what has been done and what remains to be done.
I’d like to point out one more time: the modernisation has started long ago in the country. I would even say that we are entering the final stages of modernisation. Therefore, we start to put an issue on it point-blank. We could continue doing this in the same calm pace, but the life has pushed us. Russia joining WTO, our old markets — this situation pushes us to move forward faster, so we should to complete this modernisation faster.
Talking about the fact that the modernisation has started long ago, let’s remember agriculture. It has been upgrading for a decade already. And within the framework of this modernisation, we have invested $40m only in the revival programme.
For example, woodworking. I give specifically well-known examples. The modernisation programme for woodworking when it starts working with a good profit will be completed by November 7th. This is the time when we should show people examples of decent work.
Let’s talk about power engineering, which we have discussed recently, and have mentioned a lot of disadvantages there. We have invested $7bn for the recent 5-6 years. Yes, we have talked about the shortcomings and the minister was affected because of this, but we have got new power engineering.
Further, oil refining goes. Remember when with participation of the President, together with responsible Russian partners, we opened new production at the Mozyr Oil Refinery. Remember, how many times I had to come, including opening new productions. We created new enterprises at the Novopolotsk Oil Refinery. Today, our partners, who produce oil, stand in line to get to our oil refineries with their raw materials. I ask them, “Why? Don’t you have places in Russia or somewhere else?” “No, you are twice ahead of us in oil refining.” You have heard recently a report from Mozyr about absolutely unique production. They produce the most modern fuel.
I even see that Alexander Alexandrovich [Alexander Surikov — the Russian Ambassador to Belarus] says smiling, “Yes, indeed, this is so.” He supports me. But, this has started probably about 15 years ago.
All this is modernisation, but then we couldn’t move as a single front, because we did not have either resources or money to conduct this upgrade as a single ‘front’. Then, we upgraded separately objects on which our life depends. Our economy was skewed, and has until now: we produced 70-80 percent of what we have never used. We have not used raw materials, because the main line in the world is a struggle for raw materials. We had resources under foot, but we did not use them in full.
So we have started to improve our economy by turning to our own raw materials. But do we need a lot for 10 million population and 2 million guests that come today to us?! Quite little. Therefore, it was necessary to turn to raw materials, including power engineering. 30 percent of electricity and thermal energy we will receive from our own sources, which we didn’t have before. We are implementing these plans. And we will reach 30 percent by the end of the five-year plan.
This is modernisation and when it started.
So, if someone thinks that this is another President’s project, well thank you that you attributed it to me. Although, I’m not the only hero here, we all worked and work on modernisation.
If anyone says again in the diplomatic sidelines or writes to the motherland that the President is almost daydreaming, I have an answer to this too: modernisation is the task of any society, even the most advanced. Russia has also set the task of modernisation of not only economy, but of the whole country; in the early years of Medvedev’s presidency, we had with him a long talk on the subject at the time. Due to upgrading, it becomes the first empire in the world, the first power.
So, this is not daydreaming or Mr. Lukashenko’s fiction. This is an objective requirement of our life!
I answered our opponents with specific examples.
The first one is the pulp and paper industry and wood processing.
The country has a rich potential of national forest resources. In Belarus, there is 173 cubic metres of growing stock per capita in Belarus, which is 2.5 times higher than the world average.
To estimate the order of numbers, I would say that on the harvesting of timber we are in 9th place among the nearly three dozen European countries.
However, we export the bulk of products with a low degree of processing and low added value. And we import a finished product! So we export timber, for example in Germany or Italy, they make furniture from our materials and sell us it as the most qualitative and the best. Why don’t we do it ourselves?
This is the issue.
Today, this situation is unacceptable.
Therefore, the modernisation has been started in the forest industry in all production stages, in order to make a real qualitative breakthrough in next three years.
You all know about my decisions, sometimes unpopular, adopted as a result of the visit of the major wood processing companies. This is due to the need to complete successfully the started modernisation there.
By the way, what we oracles of the ‘fifth column’ from abroad foreshadowed that after my decisions, including on personnel issues, mass disturbances, terrorism would take place at these enterprises — this has not happened. And if they did not say so, then neither you nor anyone else would even see these processes and hear of them. Today, people are paid better than before, at least more than twice. And ‘military’ mobilisation of people was carried out there to perform the tasks that we should solve, to be honest.
This refers to the first criterion of which I spoke — speed.
For the first time in the history of modern Belarus, the export of round timber if has not been completely stopped, then will be in some time.
New productions will manufacture products of deep processing, and not only wood boards and plywood, wooden houses, newsprint and hanging paper, but also bleached pulp, which production technology is a major innovative product of our country.
Instead of importing these goods we will start their export.
The second example is light industry. Let’s talk about tanning industry. Unfortunately, more than half of the shoes, which are on our shelves today, are imported. Every year, it is imported on the sum of $200m. The main reasons of this situation are the technological backwardness of the industry, the lack of a sufficient amount of the qualitative domestic raw materials.
Why not to conduct modernisation? Why not to modernise an enterprise, but it’s so important for people?!
We should oriented shoe manufacturing enterprises, there are over dozen of which in the country, to use qualitative domestic raw materials.
We should radically improve the tanneries for this, as they set the quality of the products throughout the whole production chain, or create new ones, using modern equipment. As proposed for the needs of large shoe holdings in the Vitebsk Region.
We carry out similar work in the textile industry...
Recently, I’ve read a report of Kosinets Alexander Nikolayevich [the Chairman of the Vitebsk Regional Executive Committee] that a Decree of President has been discussed for three months in the Ministry of Light Industry to give an impetus to this development. I have asked the Prime Minister and the Head of the Administration to investigate the matter. You can immediately take your briefcases and go away from this ministry, if this is really true. The question is solved, and they have been procrastinating for three months!..
We are modernising Baranovichi Production Cotton Association. You remember that this assignment was given to the Prime Minister, and this year, we will examine how it is made. Orsha Linen Mill, which one of the Vice-Premiers is responsible for, the Minsk Worsted Plant and Sukno.
Ultimately, the challenge is not only in the replacement of the main volume of imported to us shoes, fabrics at the domestic market, but also in increasing of the export of the same Belarusian goods. It is also necessary to provide decent salary to the employees of these enterprises.
And here is the third example. Today, our country is one big construction site and there are all necessary resources for this.
Raw materials base for production of building materials is over 140 deposits of building sand, about 200 deposits of sand and gravel materials, 3 deposits of building stone, as well as large deposits of carbonate rocks.
On the basis of the developed deposits, we have modernised first of all Krasnoselskstroymaterialy, Krichevcementnoshifer and Belarusian Cement Plant. These are three giant enterprises. Due to this, the volume of cement production has increased from 3.5 to 10 million tonnes, this means that we produce a tonne of cement on each citizen of Belarus.
Who produces so much? And we have always been ‘complaining’ that as spring comes, there is lack of cement.
Today we not only meet our own needs, but also a large share, as planned, export abroad and sell. But visiting these plants, we came to the conclusion together with the experts that we shouldn’t do this. This is the same as we exported the round timber. Why not to sell ready made goods? So we have also agreed on these issues. I would like the relevant ministers, vice prime ministers and the Prime Minister wouldn’t say then that I demand strictly to fulfil what we agreed about. I allude that during the last visit to the Kostyukovichi plant we mentioned behind the fence a non-working enterprise and agreed that it will produce very necessary building constructions for the Russian Federation. So, we will see, what has been done at this enterprise.
While speaking about the cement industry, it should be mentioned that it’s provided with raw material for the long term, which is the guarantor of stable operation of the construction industry with their own building materials.
Available deposits of quartz sand, which are over 18 million cubic metres, are the key for successful modernisation of the glass industry, which is focused mainly on exports. One should just export and sell, all buy this.
Successfully modernised Gomelsteklo already today produce high-quality float glass from domestic raw materials according to the highest international standards.
Besides that, now in Belarus and in the border regions of neighbouring countries, the construction and automotive glass is demanded. Moreover, both segments of the market are growing and promising. Look even at our new buildings. Almost all of them are turned into glass buildings, this means that the glass is in demand. So, let’s produce it and sell. We have raw materials for this.
If we want to use opening possibilities, then in the coming years, we should expand the resource base of the glass industry.
We have reserves for increasing twice the output of all kinds of glass and increasing export of these products one and half times. In the medium term, the Republic can really become a major European producer of glass for all segments of the glass market.
Said above are not laboured examples. In fact, the modernisation is in full swing in our country.
I repeat once again: we are in the final stage of this modernisation. And the tough set of this question is determined by the fact that we should accelerate.
For example, the petrochemical industry: technical re-equipment of light flow at Belshina allowed organising the production of tires of new generation.
At Svetlogorsk Khimvolokno, a modern production of polyester filament yarn has been created.
‘Super-heavy’ dump truck BelAZ has been developed with carrying capacity of 450 tonnes. It will meet needs of the large segment of the market of Kazakhstan, Siberia, Far East, Asian countries. The first models of this vehicle will go off the assembly line this summer.
The launch of the isomerisation unit at the Mozyr Oil Refinery will allow receiving of motor fuel that meets modern environmental standards and requirements of the European standards.
However, we cannot be focused only on these familiar to us the traditional sectors of the economy.
Already within this five-year plan, not less than 40 percent of export growth will be provided by high-tech production with low import capacity, bio-, nanotechnologies, pharmacy, information technologies and optoelectronics.
For the past two years, we have created and develop 30 biotechnological productions on the basis of domestic developments. Agricultural and pharmaceutical areas with the greatest growth potential are especially important for us. By 2015, we will reach volumes of hundreds of thousands of Dollars, for the five-year plan, more than five-fold increase in production is expected — from 70 to 360 million dollars — and revenue per employee in these areas from the current 39 to 212 thousand dollars. Not planned 60,000, but 212,000!
By 2015, due to Belarusian technologies the complete demand of the domestic market in feed additives will be meet, as well as need for proteins and conservatives of feed, milk replaces, medicines of blood plasma, medical diagnosis and treatment at the cellular level. This is a new bio production with high added value, which will give us advantages in the market of the Common Economic Space.
These are just a few examples, the list of which can be continued both according to industries and regions.
Unfortunately, we should also mention examples of how modernisation shouldn’t be conducted.
According to the Committee of State Control, in 2007, the Gomel branch of Petrikov House-Building Plant decided to reconstruct sintering plant with a solid increase of capacity.
They have described investment project right up to 2015.
For several years, only the Ministry of Architecture and Construction Innovation Fund has allocated Br9bn for reconstruction.
But they didn’t take into account that house building factories are moving to the production of modern upgraded panels, in which the constructional expanded clay is not used.
In other words, knowing about reducing the need for expanded clay, they planned growth of its production. The result is that this money is wasted. No, Mikhail Vladimirovich [Mr. Myasnikovich — Belarus’ Prime Minister] the money may be thrown to the wind, but it won’t be so. This expanded clay will be used.
In order to avoid such situations, every enterprise should have a modernisation plan, confirmed with deep study of the market.
Our strategy of development in this important sector is set, so we cannot ignore it.
Our five-year plan expects increasing volumes of production and food exports, as well as economic efficiency and a rise for rural employees’ incomes.
The question is how to achieve this, increasing the return on capital investments, per hectare of land, at each farm.
Frankly, I’m worried more about quality than volumes. We’ve learned how to reap good harvests and are gradually raising gross production. The pace of growth in 2012 was 117.5 percent while food exports reached almost $5bn. Over the past year, that’s 125 percent growth.
We’re yet to see all farms breaking even. Without taking into account state support, 500 organisations (about one-third of the total) are unprofitable. The debt load of the agricultural sector is very high, which is a serious disadvantage.
The most important task in 2013 is to ensure the financial sustainability of farms, accelerate their self-financing. Accordingly, we must remove loss-making companies, since this will greatly improve the economy of the entire agricultural sector, helping to raise the income of villagers. Technological renovation of production, improvement of methods of management and structural changes should help the dynamic development of the agricultural sector.
Over the next year or two, the Ministry of Agriculture and Food Production will be guiding local authorities across every major area. We need to combine a number of agricultural enterprises and processing plants, to ensure a complete cycle of production and sales. There are examples of good work — at Snov, Dzerzhinsky, Zhdanovichi and elsewhere.
Secondly, to increase exports, we need to complete the creation of food companies this year, focusing on expanding sales at home and abroad. However, the answer is not to simply merge two cheese factories. I’ll never agree to such moves! There shouldn’t be any voluntarism in agriculture. We’ll receive nothing good if we unite two poor companies. We should search how the poor can become rich and act only in this direction.
Taking into account modern food requirements, we must change the structure of our agrarian exports. It’s not enough to make animal breeding a priority, which currently provides 90 percent of food exports; rather, we should increase the depth of our raw material processing so that we can sell products with higher added value. Rather than selling animal carcasses, we should be selling final products.
I’d like to focus your attention once again on our basic approach to modernisation. Its essence is not just to update but to achieve higher standards and competitiveness. Only then, will we become more efficient: not import based but export oriented.
This is the sense of our structural reforms. We won’t give away state assets for a song or pursue absolute privatisation — as we are advised by home-grown and foreign experts. Instead, we are seeking a new economic level. I repeat once again, we won’t privatise our factories by selling them almost for free but will reach a new economic level! This is our view of modernisation.
We aren’t talking about radical change in property relations. Practice shows that the enterprise management system is the most important for medium and large-sized enterprises. The fate of companies is in the hands of the hundreds or thousands of employees, not in the hands of those who own them (the state or a private owner). We support diversity of ownership but our approach to privatisation remains unchanged: we’ll sell any enterprise — openly and fairly. Our principles have been announced more than once. If you want to buy anything, then pay the market price. Also, commit to investing money in production, saving jobs and paying decent salaries.
We need such privatisation and such investors, to ensure extension of our commodity markets, the creation of new industries and technologies and, most importantly, good salaries. We don’t want investors who intend to pay small salaries to employees, taking all profits for shareholders.
Our joint project with Swiss Stadler is a good example. This leading European manufacturer of railway rolling stock is working with Belkommunmash, establishing an enterprise to produce railway and urban passenger electric transport in the Minsk Region. Very soon, it will start launching its excellent modern electric trains and urban electric transport: trolleybuses, trams and more. They’ll be produced in Belarus, being the same quality as Swiss transport.
Although the plant is still under construction, it already has a decent portfolio of foreign orders. Peter Spuhler, who owns Stadler, is also discussing joint production of special machinery for municipal services, including the services of another Swiss manufacturer.
We welcome such investors. He has already invested over $200bn in the plant, having arrived with money for building new factories. In addition, the Swiss company is offering new markets. They are already present on these markets and are keen to achieve more quickly. I met Mr. Spuhler recently and can confirm that the company is in a hurry to achieve success. We have won a tender for Russian sales, using this latest Swiss technology.
Mr. Spuhler has told me, “Mr. President, I feel awkward. We’re taking people from Belkommunmash to the plant in Dzerzhinsk. We’re producing new products, but we don’t want this site to be forgotten. Some people will stay.” I said that I hadn’t heard of this so I asked what was planned. “We’ll bring you a good investor to produce municipal vehicles, which are in demand worldwide.”
What can you say to such a man, who not only promises much but has already begun to meet those promises?
Why do I say so? This is referred to the discussion of KamAZ privatizing MAZ, privatisation of Wheel Tractor Plant and a number of other enterprises. This is criterion! Come from Russia, Africa, Asia, the United States, Europe and the European Union. We will welcome any investor coming with such proposals. There won’t be questions about corporisation and privatisation. But when people come to me, and I ask them, “What will we get from this association, corporisation? What will we get?” We have common markets and we are competitive in quality and price to the products manufactured by the so-called future investor. Our MAZ vehicles are not worse that KamAZ or any other. The market is known. We have a modernisation programme for MAZ. I ask, “How much will you invest in the modernisation of MAZ, since you came here?” The answer is that there is no money. The question arises: so what do we want to show with this, what do we want to achieve? One informs me that there are foreigners from Germany and America behind them. They are shareholders there and they are just interested to close MAZ here, as they don’t need competitor. Well, it will produce an axle or cook cabs by hand — and that’s enough. What about Belarusians? They don’t need much, they’re not the Germans... My dear, I am the President of the country. I am the President of Belarus. The Belarusian people elected me, and I won’t be involved in this action! Do you want to try? Ok, do this. We won’t touch the property. Do you want to create a joint management company? Let’s create. Let’s work 3-5 years and see what we will get from this. If the leadership of the country, working group will see advantages of this, we’ll do this.
I think that this is the last time I answer the question about corporatisation and privatisation and I’ve given quite detailed answers. This is not a panacea for all woes for me and for the whole country. The IMF, the West, the European Union, even Russia already, the anti-crisis fund and others want the same from us: let’s privatise, sell state-owned enterprises. I answered to this question, we don’t mind to sell any enterprise, but you should pay the normal price.
You shouldn’t press us too much, especially, our partners our brothers shouldn’t do this. You shouldn’t do this. Why? Because the market is at the very bottom now. Today, enterprises are sold for a song, at bargain prices. We won’t do this. We are not so rich to sell our enterprises for a song. We’ll discuss this question when the situation at market stabilise.
Am I wrong again? I haven’t invented anything. The whole Europe says that today it is unprofitable to sell assets. America is talking about this, so if someone tries to use the situation to sell out the country — this won’t happen with me.
This is half of deal to build a plant. The greater talent is necessary for developing new markets, for promoting the products, reducing the cost, predicting correctly the behaviour of whimsical world and regional markets.
Therefore, one of the key points of modernisation consists in rebuilding of not only technological lines, but also our facilities management system. Our leaders have to learn the psychology of the entrepreneur who is accustomed to act in the hard world of global competition.
The success of our policy of renewal of the economy is connected not only with the creation of new productions.
Economical, careful behaviour in traditional for us industries is also an essential and natural part of modernisation.
This year has been declared Year of Frugality. Starting the large-scale modernisation of the economy, first of all it’s necessary to be sure that the careful and rational usage of raw materials is ensured in all spheres — material, financial, labour. Without this, any undertaking is doomed to failure.
The government should provide accelerated implementation of the most energy efficient measures at all stages of production, processing, conversion, transportation and end-use of energy resources. Today, there is nothing to be proud of. We had the bad start. Key indicators in this area have been failed. I warn that landmarks, which we have set in the energy efficiency for the current five-year plan, should be fulfilled.
It’s necessary to reach the GDP energy intensity reduction by 29-31 percent compared to 2010, including the current year reduction of the energy intensity of gross domestic product by 7 percent.
One should pay more attention to the development of renewable energy sources and increase of the share of domestic energy resources, development of mineral resources.
The task is to increase annually the volumes of local kinds of fuel and reach the level of 30 percent of production volume of electricity and thermal energy at the expense of own resources by the end of the five-year plan. This is the key to our energy security.
We shouldn’t forget that high rolling, poor management, inappropriate expenditures bear heavily on the cost of products, worsening the economic situation of a particular enterprise and causing serious damage to the whole state.
As shown by the verification of our regulatory bodies, there are cases when purchased imported equipment, on which great currency funds have been spent, has not been used for years.
It’s a typical situation, when some enterprises by imported scrap metal, and mountains of this valuable raw material are attaining at other enterprises or it is given to various crooks.
But people are especially perturbed, when in words urging the team to the economy, the head of the enterprise, which is in debt to the armpit, buys expensive foreign cars, equips chicly his office.
To prevent such things, I had to take the appropriate decisions recently.
Of course, the relevance of the theme of thrift is determined by many factors and applies to all sectors of the economy. But first and foremost, it is caused by the need to save our foreign currency resources. We spend them mostly on the purchase of the energy resources. Therefore, energy conservation tasks are of top priority.
As a conclusion, I point out — we should fight for energy savings because we spend an overwhelming amount of our currency on this. The most important question of our economy is the currency.
Mogilevkhimvolokno JSC can be a good example in this case. Implementing energy efficient equipment and technologies, we got there economic benefits of almost Br15bn for half a year and paid for the project.
Unfortunately, the reverse critical situation is in the organisations of the Ministry of Energy. Many facts of inefficient use of funds have been revealed there, as well as poor study of modernisation projects, supply of low-quality, sometimes counterfeit equipment.
I have already set this example that during the modernisation of Bereza hydroelectric power station in 2008-2011 years, the foreign supplier was paid the advance of nearly 20 million Euros. We still haven’t received production from it!
Checking the Beltopgaz has showed wasting of about Br54bn of Energy Ministry Innovation Fund. Every fourth invested rouble hasn’t paid back. Funds have been wasted by means of additions, overvaluation of volumes and cost of the works. The list of negative examples can be continued.
As a result, a large-scale modernisation of the energy sector, where billions of dollars have been invested for the last six years, hasn’t led to the planned economic effect. The effect could be more significant.
Just recently, we have analysed in details the state of affairs in the industry and have taken a number of important decisions to restore the order.
Today, everyone, from the Prime Minister to power engineers, says to me, “Alexander Grigorievich, we have created a new branch in the energy sector.” I do not deny this, but I can’t allow this waste of money, of dozens, perhaps even hundreds, millions of dollars. Moreover, this is not an objective process, this is purely subjective factor. And in this hall in the diplomatic corps, there are people who lobbied this project of Bereza hydroelectric power plant and keep silence today. The experts warned, “There is no need in this project. There is no such organisation that produces it.” They have paid almost 100 percent in advance. What for? Today, many billions of roubles have been spent already on business trips to plead for this equipment — the question has already been set to the President of Russia. They travelled across Russia to beg for this equipment. What trade is this?
Today, I warn all managers in the country in public once again. If familiar cases are found in other areas, don’t wait for mercy. None is allowed to work so in Belarus, either the Prime Minister or the Deputy Prime Minister, or ordinary manager.
One more thing... Here, some begin to think and write that ‘the President starts some new campaign’. What have I told new? What has changed in my working style? Just some has forgotten that will be severe control. But what could I ask for when the whole economic system was sagged, when the task was just to survive? And we have survived. I controlled every process in the country not to lose money. But when such money is allocated for upgrade, when such money is spent — who will stand on the sidelines? I didn’t promise this to anyone either during the campaign or after the elections. One can say, this is one of the cornerstones of the current President’s policy.
Besides, I warn you in advance that noose is so: put your head inside — and there’s no you. Don’t put yourself your head in the noose, don’t do this. In short, I have warned everyone: step left, step right — and you know what will happen. Don’t touch something that’s not yours, because it won’t bring good! You all are believers. Sometimes, I look at you in the church, you pray with candles in your hands. So, my dear, if you go to church and pray, then be devoted to these ideals. Why do you steal? Why do you work badly?
Have I invented something here? No!
I’ll tell you simply, if you want to live in your own country and don’t want to lose this country if you don’t want to be thrown away by people as a result, and me together with you from these seats, then let’s work normally. In our history, it has already been once when people simply despaired and threw out those who were sitting in this room, and those who were sitting behind the wall, and chose a young, not yet proven President. It was people’s despair. Do you want me and you to finish the same way? I don’t want.
Everyone in the world says that our people are kind. The guests say that this is a beautiful country. There is no practically corruption here. Thank you for saying so, but there is. It is difficult to get rid of it, I know this. But, they say, this is a decent country where people are treated well. So, we should appreciate this. It’s worth it! We shouldn’t depart from it!..
At the present stage, our strategic aim should be the construction of knowledge and services economy. High-tech sectors of the economy should grow organically alongside traditional industries.
The basis for this breakthrough can and should become a large-scale computerisation of society.
I talked about modernisation — our first direction. Now, I talk about informatisation.
It happened so that information technologies have become the engine of the world economy in the last two decades. They have completely changed the face of modern civilisation.
In the IT-sphere around the world, thousands of businesses have grown — from small businesses to huge corporations with multibillion turnovers that have created tens of millions of jobs.
Of course, Belarus is involved in this rapid flow of information revolution. But we have used marginally its benefits that have already provided other countries a breakthrough in the economy and technologies.
The country has launched a project for the construction of data transfer networks of new generation — LTE Networks of 4G standard.
Unfortunately, we are not ahead of the whole planet here, but just catching up. In many countries, these networks operate successfully, and we only proceed to their creation. Of course, it is better late than never. But the bad thing is that the Government has not seen this timely, and if it has seen, there were not any proposals. Well, if you suggest today, you’ll have to implement this yourself tomorrow. Ultimately, the initiators of the project are not the Government and the Ministry of Communications and Informatisation, but other officials and structures.
It is obvious that a small country can’t do everything at once. Belarus needs its own niche in the global knowledge economy. The world has been pointing to the high quality of our education in the field of IT-technologies for a long time.
But we have found ourselves in a strange situation, as a shoemaker without shoes. Belarusian programmers work on the West, while Belarus itself is lagging behind in IT-sphere.
Informatisation should become a large-scale national project. It should cover all, without exception, spheres of our life — from online education and telemedicine to computer systems of calculating fuel consumption.
Information technologies, as the nervous system, have to tie everything together — from the economy and education to management and security.
Informatisation is able to provide a number of strategic breakthroughs for the country, including:
- to solve fundamentally the problem of red tape reduction at the expense of large-scale introduction of electronic public services, or in other words, ‘e-government’, as the world calls this;
- to create a new system of accounting and control in the country — from monitoring financial flows to control the movement of goods. To provide additional effect in energy saving;
- to implement a technological breakthrough in the areas of trade, education, health and safety;
- to give a significant boost to the development of the internal market of services. It is important to understand the peculiarity of IT-sphere — it gives high returns with minimal material costs.
At the same time, the world experience shows clearly that the successful computerisation can be hold not separately in individual agencies, but only centrally according to a single plan and from the single centre.
In this regard, I assign the Government together with the Administration of the President and Operational and Analytical Centre to think over and propose concrete structure with all necessary powers, at which all these processes will close. I really hope that this won’t last long.
The success of Belarusian competitiveness in the global economy depends on whether we bet on the new, energetic, creative generation of young Belarusians.
The importance of young people was great in every society and in every historical era, but this value has increased considerably in the 21st century.
The main cause is simple: acquired knowledge and skills are becoming obsolete very fast. In this regard, the psychology of people is also becoming outdated. Nowadays, new spheres of science and sectors of economy appear that have never existed before.
Decades and even centuries had passed before an innovation was implemented. Therefore, an older man was almost always more experienced and more skilled practically in all spheres of life.
Today, we have become the eyewitnesses of an amazing thing. The younger generation turns out to be more professional and more experienced in many knowledge fields and specialisations.
In fact this is a natural process. The appearance of absolutely new knowledge makes the starting conditions equal for young specialists and those of older generation. As a matter of fact, they all start mastering many things simultaneously from the scratch.
All these facts should make us reconsider the role of younger generation in our society.
We have always tried to support the youth and involve them actively in nation-building, but I believe it’s time for new, more fundamental decisions.
I entrust the Administration of the President collaboratively with the Government and Belorussian Republican Youth Union, our major youth organisation, to think over a new system of searching young talented people and their promotion to significant positions both in governmental institutions and enterprises. However, the statement stays essential that the combination of youth and experience is a must. We should more actively involve the youth in this process. If the manager is experienced, then he should feel those trends from of youth and adapt them in manufacturing.
All declared strategic projects — the modernisation, the computerisation, the promotion of young managers — are ultimately made to improve the lives and the welfare of each individual.
We have always tried to make the state policy taking into consideration interests of millions of citizens, not a narrow stratum of elite.
Today, I would like to focus on pressing issues that bother the majority of our people.
The growth of population welfare is one of the major goals of our policy and citizens’ incomes continue to rise.
We supported and will continue to support people who are in restrained life circumstances. The number of low-income households is falling both in cities and villages.
Yes, in recent years, a considerable gap has formed between payment for labour in the budgetary sphere and the national economy as a whole. Today, this correlation stands at around 80 percent while it should be no less than 90 percent.
You would agree with you that a teacher or a medical worker shouldn’t feel ‘defective’ before employees from other spheres.
It has been stipulated in this year’s budget that the first grade wage rate of the budgetary workers, as well as pensions and allowances, will be enhanced several times.
However, this shouldn’t be simply indexation of price growth or ‘imitation’ of salary growth.
This March, I’ve put a task before the Government to reduce the gap in labour payment among those working in the budgetary sphere and those working in the national economy. After the first six months I’m waiting for the report on the adopted measures aiming to change the situation.
Meanwhile, I’d like to underline that there shouldn’t be any populism. I’ve said about medical workers and teachers. However, I could have said the same about others. Unless they begin to optimise themselves (ministers are present here), there can’t be any conversation about high salaries.
We’ve spoken with teachers and their rate is 18 hours per week. What if they work slightly more — 20 hours per week? Meet us halfway in this respect, as happened with the state apparatus where I made the decision to make redundant 25 percent of the staff. The nation will soon understand if we use this situation to raise salaries for state officials. Why can’t they do the same with these two hours in order to show this to people?
Why hasn’t the Education Ministry cleared our educational structure from all types of ‘hangers-on’? There’re so many various methodical and other groups there who don’t bring any benefit to education. They only demand from teachers to write plans. What’s the essence of these plans?
Unless you do this, don’t even start talking about salaries, and don’t dump this issue either on the Government or the President. If you don’t do this in the nearest time, you will follow in the footsteps of notorious ministers. I won’t speak to you about this anymore.
Don’t nurture illusions that objective differentiation in labour payment will disappear. I refer only to elimination of distortions.
Of course, it would be nice if everyone’s salary rises as quicker and more often as possible. However, there’re no easy solutions here and empty printed money immediately leads to price growth. This brings to nothing any rise in salaries and incomes.
So, my requirement remains unchanged — salaries should be earned! Their growth depends completely on us. If we manage to modernise enterprises, enhance labour productivity and beneficially sell our goods, we’ll be paid more and, accordingly, the incomes of budgetary workers will increase, as will pensions and allowances.
No one will expand incomes at the expense of money emission!
The Head of State gave an important task to the Government and the National Bank: the growing earnings of the population should be effectively used for the country’s benefit.
Saving money in Belarusian Roubles should be as attractive as possible. Moreover, this refers not only to deposits but also to savings for building homes and developing land plots. In other words, this should be done for the sake of resolving day-to-day and future life problems.
The Government and the National Bank, alongside local authorities, were strictly demanded to perform price regulation more efficiently.
At present, there’re no and there can’t be any grounds for price rises. Any facts of their increase above the forecast level, especially what concerns consumer goods, should become the issue of immediate and strict investigation.
The domestic market should be decisively protected from all those who try to make money out of surplus profit while using their position.
We should also monitor prices in the sphere of housing and public utilities in the same way. It’s necessary to control estimates of expenditures of almost each structure in the housing and public utilities, power engineering and gas branch. The feasibility of expenditures at each stage of price formation should be controlled in the strictest way. In practice, it’s vital to be guided by a well-known rule: prices grow quickly where someone misuses their offices on the market and who calculate these prices carelessly and irresponsibly.
My requirement towards the Government and the National Bank remains unchanged: the growth of consumer prices within a year shouldn’t exceed the forecast figures. It would be better if this rise stands at about 10 percent.
Is 10 percent little? After the financial mess in the country I’ve always supported the Government that prices should be equalled, because prices in Russia and in the West are different and we shouldn’t work uselessly while selling our produce for trifling sum. No more of that! We need to stop. When I was talking about this in March at the governmental session many began to speak in the society: ‘The President said this but Myasnikovich with his team will do what they want…’
Firstly, according to April data, the situation with prices is rather stable in the country, so I’d like to say those who ‘yap’ in this way: if the President says something, there will be so. Sooner or later, but it will be so. This depends not only on Myasnikovich but on each employer on their working place. Harness and pull, then we’ll be wealthy. Each citizen of the country or its guest who live here temporarily should think each evening before going to bed what they’ve done today to require tomorrow from Lukashenko higher salary, pension or allowance? What I’ve done today to ensure better living tomorrow and more welfare for myself and my country?’ When you ask these questions and answer them sincerely at least by 50 percent, you won’t have any claims towards the President.
Each family should have their own flat, a house and a roof over their heads. This is why in the past years we’ve injected colossal funds into housing construction even in violation of the laws of macroeconomics.
Hundreds of families have acquired their housing due to very powerful state support and we built 5m sq.m. of housing per year on average. Moreover, over half of these were for those in need to improve their living conditions. We outstrip all CIS states in these positions.
Direct state support of citizens in ensuring housing is being currently preserved and will be preserved in future. However, it’s becoming more targeted while taking into account real financial opportunities of citizens. We’ll be providing state support only to those who really need it. To everyone who needs it!
Upon my instruction by this April the lists of such families have been adjusted. As a result, 85,000 citizens were struck off the list; these hadn’t right to be among those on the waiting list.
We also set strict requirements for renting of housing which was constructed using the state support.
These people have built housing using privileged loans and then offered it for rent and received income from this. Then why we helped these people if they don’t need housing?!
From now on, the state support in housing construction will be targeted and will be strictly controlled what concerns its target use.
From this year, housing is built in line with a state order for those who are on the waiting list. At first, a house will be constructed and then ready-made accommodation will be allocated to citizens on prices which are formed on the date of the house commissioning (with a privileged bank loan issues).
The opportunities are also widened for citizens to independently solve their housing issue.
We’re forming a sector of rent housing while increasing the share of individual housing construction.
Moreover, in the nearest time, the responsibility of developers in the shared-equity construction will be made more rigorous. The terms of cost of construction, stipulated in the contract, will be rigidly controlled and strictly observed. God forbid someone doesn’t hear my instruction!
In case these are violated due to the fault of developers all additional expenditures will be covered by them. Moreover, they will also pay a significant penalty to equity holders.
I’m confident all these measures will create a civilised construction market, enabling us to advance in solving the housing problem.
Moreover, I warned Ladutko [Chairman of the Minsk City Executive Committee] and others that responsible developers should construct. It isn’t normal when developers themselves have only a table and a stool in their own kitchen, come and take resources in our banks as intermediaries, hire our construction firm which builds for them and then sell housing at the highest prices on the market. You should take this money in the banks, come up to developers, oblige them to build — these are primarily state enterprises and even private companies on which you have a considerable influence — and then sell on a normal price and put money into the state pocket.
We’ve agreed on this and there shouldn’t be such charlatans on the construction market. They don’t understand anything in construction; only specialists should construct.
There’re also other investors. For example, Russians have arrived and are construction near the Lebyazhy market. They’ve brought money and technology, order our builders and are building housing. They’re welcome. Why shouldn’t we reject their money? Another situation is when someone brings foreign credits. A Qatar company is constructing near the Football Manege; they’ve brought money, employed our people and construct. You’re welcome! You should remove all these charlatans; otherwise, I’ll suspect you of corruption and this won’t be merely a suspicion.
I underline again: we have such prices because of this situation. Today, one square metre in good flats costs $3,200-3,500. I ask these people who own this construction organisation what is the real price and they don’t name the price higher than $2,000-2,200 but sell at $3,500. Then why don’t you want to take this profit?
In our country housing should be affordable and comfortable. Today, I hear these issues from our citizens more and more often. People primarily complain of absence of parking places and notorious urban densification.
Meanwhile, these two issues are inter-dependent. Yes, we need to ‘pack’ somewhere and to construct parking places somewhere but everything should be done in the