If conditions are favourable investors come and stay
The development of new business can be both beneficial and rewarding to net investors
- Vladimir Ulakhovich, Deputy Chairman of the Belarusian Chamber of Commerce and Industry;
- Rimantas Purtulis, Head of projects at ARVI Group (Lithuania);
- Alexander Shchurko, official representative of ARVI in Belarus;
- Svetlana Zaburuyeva, Head of the Department of Foreign Economic Activity at the Belarusian Chamber of Commerce and Industry.
Belarus magazine: Let us begin by explaining the rationale behind the desire of Belarus to attract foreign investments to the country?
V.U.: A high level of investment activity is an indicator of the level of development of the economy. Often, this relates not only to financial business, but also to the field of technology. The most advantageous investments are linked to the transfer of technology, and the development of industrial co-operation. I would primarily outline these as our peculiarities. In the early 1990s, investments were mainly in the form of privatisation, to ‘clear out’ the competitive environment. Unfortunately, we are aware of many examples in neighbouring countries (in the Russian Federation and Ukraine, for example) when rather successful enterprises were privatised but quickly disappeared. Belarus today has a significantly different approach. It seems to me that our concept of ‘pin-point’ (selective) investment in our country is justified. We place heavy emphasis not only on the financial assets, but the reputation of a partner or investor, who will guarantee the most effective development of our enterprises. If we try to assess our experience, we must primarily consider this factor. Moreover, this unique conceptual approach has justified itself already, and is in line with the social profile of our state, which aims to preserve businesses even when this might be difficult. Essential key enterprises are retained and privatised on the basis of effective management. This brings us closer to similar implementations in the European Union. Neighbouring countries have a different experience of unlimited capitalism and privatisation.
Speaking purely about Belarus, it must be said that our country has its own advantages. Its geographical position, for instance; for Europeans, Belarus is a door to the Eurasian Economic Union. In this large market, barriers are minimised and customs conditions are simplified. Our second advantage is that Belarus has managed to preserve its industrial profile of manufacturing. We have learned from the experiences of our neighbours, when they wasted such potential. In this respect, the state has acted prudently in deciding to take care of these holdings and to organise industrial chains. Today they work, sometimes it’s hard and there are certain difficulties, but, nevertheless, they do work.
We have a further advantage compared to the Eurasian Economic Union. For our first two partners, Kazakhstan and Russia, raw materials dominate the economy. In our country, industry accounts for over 30 percent of GDP. This means that there’s a basis into which investments can be fed and used to develop manufacturing. Production is the sphere where it’s necessary to invest now. In my opinion, one of our advantages is the policy of optimising investment legislation, which has been carried out during recent years. If we look at the ratings, we can see that we are high achievers among countries that take the most determined steps in dealing with business procedures and on the optimisation of the tax burden.
One further benefit is our people. New investors have commented that we have well-trained personnel, we have retained a formal quality high school education as well as a stable and peaceful political climate in our country. Levels of crime are low and corruption is dealt with severely, new business leaders are appreciative of all these things.
In addition to the advantages I’ve already described, we have a whole range of preferential zones. For example, the Industrial Park offers 10 years of tax exemption and then payment of 50 percent tax for another 10 years. There are six free economic zones, and many privileges in small cities for the development of small and middle-sized businesses. There is also an investment agreement, according to which the state undertakes guarantees. We offer benefits but with our own specific criteria: we follow a well-considered and perhaps cautious investment policy, but the figures show that there is a great deal of interest in what Belarus has to offer.
R.P: There are those who are of the opinion, incorrectly I believe, that investors will come if they are promised piles of money. For example, there’re some discounts for income tax, but first this income must be earned and only after that you should receive discounts. Why did our group come here? We are not a large, global company that would step on others on its way to the top. In Belarus, as in other countries, some technology appears before it is seen in other countries but in other cases, it’s long after. Our enterprise is leading in one sphere but may lag behind in another. We had no plans to invest in Belarus ‘at any cost’, but as we were invited, it was to our mutual benefit. Business must be beneficial for both sides. It is a question of public private partnership. This is a real advantage of investing in Belarus and it is clear that the state supports its partners.
We have a specific manufacturing process, which was not privatised in Lithuania; our new technology was created from scratch. Our main business is the processing of animal waste. Cattle-breeding and poultry-farming branches as well as farms have waste, and there is also loss of cattle to consider. Previously this was all buried in the ground, or minimally processed. With the new technology that is available, we can now process this waste without polluting the environment. Lithuania joined the World Trade Organisation (WTO), which has strict requirements on such environmental issues. If the environment is polluted during the processing of waste, then meat from such enterprises cannot be exported to other countries. Belarus is currently negotiating to join the WTO. Our technology in this area would help you to reach the required level.
We are happy to share our new ideas with the support of an investment agreement to offer us stability and the preservation of benefits. Even when regulations and laws change, these will remain irrespective of political or economical fluctuations. During our time in Belarus, we have revived a dying industry and in just two years have developed a project and constructed a working plant. People from Russia, in particular from Siberia, come to see how to make new technology from old, having invested the minimum amount of cash.
Our main task was not to create new workplaces, but to preserve those already existing, to bring them to a higher level. Machine operators have been retrained to work with a variety of complex machinery. The workforce is highly skilled as a result of developing businesses. Our second field of activity is the creation of a large complex for the cultivation and manufacture of turkey meat. Why do we come here with turkeys? Young chickens are available everywhere, this industry is already well developed in your country, and similarly in Lithuania. Poultry grow quickly, within a month, and provides for the demand for affordable meat. Of course, turkey meat does not belong to the luxury products market, but it is already developed to a higher level of industry. At first, this was also at a low level in Lithuania and we were the only enterprise to turn this into an industry. As result, the consumption of this meat increased from 300g per head/year to 2-3kg, while the average European indicator is about 8-10kg a year. In Belarus it is approximately 1kg. Turkey is more expensive than young chicken, but we believe in the purchasing capacity of the population. We have seen our niche, we have been promised good conditions, and we have met with local authorities, and signed the investment agreement. As a result: both investors and consumers are happy, as the latter have the opportunity to buy quality useful meat. This is the essence of our concept which we’re developing with the help of the state; it’s a classical example of public private partnership.
V.U.: You have touched upon a very good theme. I want to focus attention on the fact that there are niche markets that are not obvious, but investors can discover new directions. This is a very interesting role played by investors. There are many other examples of absolutely new manufacturers in Belarus. It is not simply ready cash, when someone buys assets. It is very important to us to have the dynamics of development and new opportunities.
A.S.: Ecological safety is of paramount importance today. We all know the situation with waste disposal, especially that of animal origin. It also concerns mortuaries, which are criticised constantly by the President. We have had discussions with the Ministry of Natural Resources and Environmental Protection. We need to bring everyone’s attention to the question that all economic entities should recycle animal waste through the businesses that have been already created in the country. In the future it will be necessary to focus attention on this issue. These are also issues of ecology and safety when disposing of carcasses. People receive many different illnesses from meat. Therefore, recycling is a very important issue for environmental safety. There is also the issue of food safety to which the Government of Belarus pays a great deal of attention. Poultry, beef and pork are good but are we ‘spoilt’ by turkey meat? According to the experts however, turkey is a very useful meat for our diet, it is good for children and does not contain cholesterol.
As far as recycling is concerned, we are now constructing a recycling plant, with proposals for the Mogilev district, the Minsk Region’s Soligorsk and the Grodno Region. Waste free production is a state responsibility: a recycling plant will utilise manufacturing wastes from turkey breeding facilities, including feathers. Apart from this project, we are also building a feed mill. A recycling plant produces protein tankage which is then supplied to a feed mill to produce forage and forage additives. In turn, turkeys eat this and meat is the final product. As a result, a closed cycle is created, with no production waste.
R.P.: It’s important to add that if a car manufacturing plant is established, for example, it does not mean that other similar enterprises wouldn’t be allowed nearby. A group of small enterprises such as rubber and component manufacturing would enhance the development. In Lithuania, we work with regional authorities, and investigate where a feed mill can be located. It should be located not merely in areas where factories operate but in areas where farming enterprises are well developed. We aren’t afraid of competition with the farmers, as they have small capacities, but the more turkeys we breed, the more meat people buy. We sell young turkeys to farmers (in line with agreements), providing them with forage. We are trying to build relationships with farmers to ensure they become our assistants.
A.S.: Production employment is an important issue. However, farm construction has another aspect to consider, the provision of accommodation, usually provided for workers on the farm. Additionally, we have a large amount of fish waste produced by such enterprises as Santa-Bremor, Belryba and others. ARVI run a facility processing fish waste in Latvia, which produces cod liver oil as a result. The latter is purchased by companies, who go on to make Omega-3 poly-vitamins from it. This year, we plan to increase the plant’s capacities three fold while also studying the issue of processing fish.
ARVI waste recycling plant in the Gomel Region
Belarus magazine: What is the approximate potential investment capacity of the Belarusian economy? Or alternatively, what branches of the economy need investment urgently at the moment?
V.U.: It’s difficult to discuss capacity, since investment in new technology is an endless process. In general though, Belarus has preserved its industrial potential and taken significant steps to modernise our industries, including the machine building sphere and the petrochemical sector. However, there are still many enterprises that can be invested in; particularly the wood processing industry and machine manufacturing. Competition in this market is huge. Our giants, the flagships of the industry, are being modernised, and adapting their products is a continuous process.
Secondly, we’ve preserved Belarusian science. When I attended the Helsinki business forum, I was shown a Drone pilotless aircraft, which has already been tested in Finland and used to survey forest animals. When we hear about new technology and materials, such as nano-materials, we know this is an area for investment. There are advanced industrial states where little time passes between innovations and their implementation. Sadly, we’ve not yet learnt how to do this quickly. This is a key area for investment and venture capital for us. The state should regulate industries to ensure balanced economic development and upgrading of the infrastructure. State programmes do exist. Looking at the policies of the National Agency for Investment and Privatisation for example, we can see a focus on the development of biotechnology, pharmaceuticals, alternative energy and car manufacturing. These are extremely promising avenues, offering special benefits to investors. In the sensitive area of pharmaceuticals, where global companies dominate the market, Belarus has an edge in our home country. We realise that we can manufacture many products domestically. We can produce import-substituting items; moreover, we have the potential to manufacture new types of pharmaceutical products. Not long ago, we hosted a business forum featuring Chinese partners (from Qinghai Province) who proposed an interesting pharmaceutical development. We know that flax can be used to produce many drugs, which lower the cholesterol level; traditional Chinese medicine has used this knowledge for a long time. We grow flax and we also have the Industrial Park offering its residents ten years of work in ideal conditions, a plan to merge the two opportunities is in place.
As for the national economy, we are incredibly dependent on energy resources. A state programme ensures sustainability for our energy balance; it aims to achieve 25 percent local energy. Unsurprisingly, a project to develop our own nuclear power station is being developed. Alternative energy is also very important, especially at a local level. At present, these issues are overseen by local authorities. We also have local electricity stations that use alternative fuels. Waste recycling factories operate in Belarus. Sadly, compared with more industrially developed countries that have more than four decades of experience, we are not experts in their technology. There are German and Swedish technologies that we can borrow and use. This is also a very worthwhile and exciting investment opportunity.
Car manufacturing, in particular, the production of car components is next in line. In recent years, BelGee was launched (producing Chinese automobiles) while Unison liaised with Ford and General Motors, actively conducting talks with the Industry Ministry. Among the factories manufacturing car components is Borisov’s BATE. A separate programme for the industry’s development has been produced. Whilst developing car manufacturing, our infrastructure is also simultaneously being developed alongside the services and transport sectors. This is a major industry, which requires accompanying production facilities.
These are the key areas, but if you visit the Industrial Park, you will note their five major avenues. There is a preferential zone open to investors embracing IT, pharmaceuticals and other spheres. It’s also important to make products that will be sold outside the Belarusian market. The latter is not large — as distinct from the markets of the European Union or the Eurasian Economic Union. The manufacturing of products to ‘service’ these markets is a major goal for us.
R.P.: The state publicises its policies with the help of the Investment Agency and the officials of the Chamber of Industry and Commerce. Investors will however, choose the area they are most interested or experienced in, in spite of our desires.
At one of our feed mills, old boilers consumed three times more steam (which generates expenses) per kilogram of feed flour. Modern boilers — irrespective of where they’ve been produced (Germany, Belarus or Russia) — consume three times less. If we need to attract capital to a particular area such as this, we must make that sector more attractive to potential investors.
V.U.: Some years ago, sceptics voiced the opinion that the market should be left to regulate itself independently, but the crises of recent years have shown that the market can collapse without a well thought out plan and consistent state management. We see crises occurring in states not far from us; with this in mind, the state’s role should be circumspect. It should not merely take care but support, direct and see potential. This is the value of state management.
Belarus magazine: Certainly, an investor has the right to personally choose where they inject their capital. They’ll probably turn to the areas with the most profitable returns. What features does Belarus have to attract foreign investors, from the point of view of those around the table?
V.U.: Our clear advantage is our geographical location and our country’s economic focus. We have a good base for future development. There are many opportunities to modernise businesses from currently operating facilities — such as car component production, as an example. We have enterprises that produce small parts that should be steadily expanded. It’s possible to create a separate industry entirely for the production of car spare parts and components. A German businessman told me that investors and their money love peace and that he enjoys staying in Belarus where everything is ordered and stable. Last year, we had a business forum in New York, attended by our Prime Minister. I was asked to deliver a speech. I told our partner that I would quote him when he said, “I’m happy to run a business in Belarus as I love being here. It’s calm and I employ well-trained personnel. The city is peaceful, beautiful and clean. However, I’d like to give you a piece of advice: you should be more aggressive in promoting your image, your opportunities and your potential”. There are aspects in Belarus not set in the law. This is the quality of life. If your daughter went to Minsk’s Gorky Park at 11pm, she would be safe, not something that can be said of many European capitals. The quality of life is certainly an attraction, as is the quality of our staff, working conditions and confidence in the future. We are sometimes criticised for our extensive administrative resource; however, this can be an advantage. Investors are very pragmatic and shrewd. They pay little attention to political analysts’ commentaries but study the real situation. They consider the history of business successes and real opportunities.
R.P.: Of course, investors read newspapers but treat political-economic analysts with a pinch of salt. An analyst can be passionately in favour of a policy one minute, then shortly afterwards, just as passionately explaining the reasons why it has failed.
V.U.: In recent decades, much investment went to China which is, in turn, a key investor. Nobody then spoke of the country’s tough public relations or serious punishments. Nobody paid attention to that. When the possibility emerged, investments were placed there. As a result, all major market players operate there and transnational companies run their own production facilities.
R.P.: Belarus and Lithuania are close from the point of view of geography. The countries are tied historically. Around twenty years ago, our industries were at almost the same level. At present, Belarus leads in some areas and Lithuania tops in others. If investors see that they are in need and can repeat the process they’ve already followed in their own country it will be easy for them. Investors repeat their experience in Belarus with state support. Belarus is a neighbouring and familiar country for us — a Lithuanian company, and it’s easy for us to see opportunities here. There’re no big conglomerates here which wouldn`t let strangers in. In my opinion, anyone who is needed for the industry becomes friendly.
S.Z.: Lithuania is a relatively small state, but occupies third place as far as the volume of investments into Belarus is concerned.
Belarus magazine: Investments are focused on the centre of the country. This is probably because any difficulties are easily solved here: agencies and ministries work in the capital and the local infrastructure is more developed than in the regions. We would like to clarify the situation for investors in other regions of the country. What is their investment competitiveness in comparison to the centre? Are there any advantages to investing in such areas?
R.P.: Your opinion is outdated really. Investors are often reluctant to locate in large cities — except for highly sophisticated technology. Generally speaking, the regions are characterised by greater flexibility and freedom. They have more jobs and great interest is shown in them. Minsk is already a ‘crowded bus’.
V.U.: The regions have a different atmosphere compared to the rest of the country but it is also a problem that needs to be solved. The Economy Ministry is now developing a strategy of direct foreign investment attraction for 2016-2020 and investment development in the regions is one of this programme’s aims. According to our statistics, regions receive 20-25 percent of all investments. Many investors have come to Minsk, which is an industrial and financial centre, but there are excellent opportunities for business in other parts of the country. The programme also outlines clusters, the so-called inner division or co-operative areas. For example, the Brest Region’s Pinsk area is a wood-processing centre. Food and textile industries are concentrated in Brest, while Mikashevichi is known for its mining industry. Alternative energy, industry and textiles are developed in the Vitebsk Region and Gomel boasts a new industrial park. Each regional centre has its own free economic zone and an investment portfolio. Grodno is a chemical base. Everything has a clear focus and we promote businesses joining these sectors. The situation should be managed in a more concentrated way to ensure balanced development.
R.P.: I believe Minsk is attractive for those who need a high concentration of science businesses: for science intensive rather than energy intensive facilities.
V.U.: I can describe what major investments were made last year and what spheres they covered: those were transport and logistics (the major share), trade (primarily in the capital) and industry. The logistical cluster is now actively developing: as soon as a large barrier-free market opened, it became easier to launch a business in Belarus. It’s now possible to register a company in just one day, where this may be connected with various difficulties in some other countries. Moreover, it’s more predictable to run a business in Belarus. A Belarusian driver’s salary and a logistical service would cost less than in Europe while the quality is the same. Accordingly, we are experiencing a boom in logistics. Belarus is beginning to realise its new role.
R.P.: It’s clear that the regional authorities are quick to overcome any issues. They know their area and its needs well. The issues which come under the jurisdiction of governors and regional executive committees are settled rather promptly. Meanwhile, there are some problems that cannot be so easily solved, where issues are of a centralised nature. In this case, decision making might take some time. Whilst our investment is welcomed in the regions, this is not the case in Minsk itself. The capital needs projects relating to the major electricity stations; outside Minsk, areas might need just 5km of electricity cable laid but the local authority does not have the power to authorise even small projects such as this. We do not have time to wait for numerous permissions from Minsk; the regions should be given more powers in this regard.
V.U.: We do have an administrative policy where each governor needs to be responsible for investment attraction, but this must be centrally regulated to begin with. They have indicative figures, which should be achieved and this inspires them to reach these goals.
A.S.: You are right. A governor signs an investment agreement on behalf of the Republic. However, during the implementation process of this investment agreement, subdivisions of central management are involved and, it’s not often so easy to deal with them. There are issues that can be settled only at the highest level.
Belarus magazine: What problems do foreign investors face in Belarus: complex legislation, red tape, or lack of interest among local authorities to liaise with investors?
A.S.: As I see it, if an investment agreement is signed, then state management bodies must continue to work to make it happen — including contributing to the selling of the products outlined in the agreement. They should not leave investors alone to face any subsequent difficulties.
We see that authorities are interested in giving assistance to our present developments. Local authorities contribute to the implementation of not only investment projects but also everything that is created as a result of it. This is encouraging to see and this positive response will generate a desire for further success.
R.P.: Foreign currency fluctuations are one of our acute problems. Everyone talk about it. We inject Euros and need to generate profit in Euros as well. In Russia, there are cases where the state needs investments, and the possibility of compensation for banking rates is envisaged. This is not as a kind of charity to investors. Banking rates are regulated by the Central Bank, and the Government wishes to offer incentives by removing some of the risks and contributing to the attraction for new businesses. Support of this kind would be very much appreciated in Belarus, in all areas of industry.
Price fluctuations are also important. This is especially topical for energy resources. Clearly, we are doing our best to cut costs as much as possible. However, a situation might occur when energy prices (regulated by the state) rise. In this case, our business is negatively affected.
I’m speaking about the most vulnerable issues that businesses might face. We need to be aware of them and react if necessary to continue to promote favourable conditions for our investors. There are a few who complain that they have come to Belarus but their businesses have not flourished here. I have studied these cases in detail and not all of the failures are the state’s fault. When signing an investment agreement, we consider the small print carefully and reputable investors should do the same so that they are able to fulfil their obligations to us.
A.S.: The investment agreement to launch our factory was implemented three years earlier than planned. We could have been waiting until 2017 but the plant was put into operation in 2014. This indicates the investor’s serious intentions.
V.U.: Another aspect refers to the responsibility of the state and the investor, which they need to share. We sometimes have to say goodbye to investors who fail to fulfil their obligations. I think that our legislation can still be improved however. Our Ministry of Economy is working constantly to update the laws. It would also be desirable to simplify our administrative procedures; some, such as accounting, require rigour and we wish to avoid corruption at all costs but there could be improvements nonetheless. At present, there are certain IT technologies available which would help optimise accounting and other areas of administration.
Of course, the Belarusian rouble’s sustainability is vital for all of us but, sadly, we depend on the global market situation in it. The situation observed recently in our neighbouring states has played its role: 40 percent of our exports head for Russia while Ukraine imports 17 percent of our products. We are interested in ensuring sustainability. The Government and the National Bank are now conducting a tough strategy to preserve the rate. We must also pay attention to the issues of financial guarantees with our ministries and people responsible for the investment policy in the Government.
R.P.: I think it necessary to stress that the state organises different forums in the provinces with the help of the Chamber of Commerce and Industry. These involve an exchange of opinions and often heated debate. At such forums, all aspects of trade and investment alongside possible solutions can be considered.
S.Z.: At the moment, diverse strategies for attracting direct foreign investment are being discussed, in addition to the small and medium sized businesses’ development (in the coming five years). State management bodies are actively attracting different international companies to develop strategies themselves. The International Finance Corporation and the International Monetary Fund have been invited to assess how our legislation could be improved. Their opinions are also important to improve working conditions.
Belarus magazine: Considering the facts already mentioned, we can speak about Belarus objectively as an attractive country for foreign investors. What are its advantages compared to other countries in the post-Soviet region?
R.P.: We are situated close to the European Union where an industrial nucleus is located, with new technology and financial resources. We are close to the centre of European dynamic development. Although our paths of development differ, our starting point was the same. Our mutual experiences enable us to occupy our own niche and find our own place. The market is not large in Lithuania; moreover, there is no language barrier there. The industrial potential also matters. Of course, it’s easier for us to enter the markets of the Customs Union and the Eurasian Economic Union via Belarus than via the Kaliningrad Region.
A.S.: I’d like to add some practical experience. In Belarus, it took three months to register and a year to implement an investment agreement. In some neighbouring states, this procedure takes much longer.
Belarus magazine: What does the experience of foreign investors in Belarus demonstrate? Is there a need to change our approach when dealing with them?
V.U.: It is never the case that nothing needs changing. In this case, business activity ceases. Of course, it’s always necessary to move along the path of improvement, optimisation and perfection. Speaking of the current situation, I believe it’s vital to truly fulfil investments in the strategic areas, which have been outlined, such as car manufacturing and the production of components and spare parts. The industrial base is key. We also have increased availability of markets. It’s now not a problem to sell Turkey- or China-made products to Russia or Kazakhstan. In the meantime we can look forward to the possibility of manufacturing quality products domestically. If this aim were reached, then our machine manufacturing would reach a new level. It’s necessary to breathe new life into our holdings and the realisation of these goals is of paramount importance at the moment. We do have a disadvantage in that the state governs a major part of the economy. However, the state is sometimes able to act as an umbrella to support enterprises and inject resources into them. Our managerial personnel have enjoyed a privileged position: they did not have to struggle to increase their market, as they were well aware that the state would not abandon them. As a result, we lack a good deal of experience of working in very competitive markets. Of course, we need to ensure a staff potential of a slightly different level: to be able to work with partners and achieve technologies and funds coming into the country and its serious, strategic branches. We need long-term investments, not companies who will leave as soon as they turn a profit. There are several governmental documents aimed at enhancing our marketing services and improving the quality of people who work on the global markets, this is necessary for us to compete effectively in the modern world.
R.P.: I think the state is not fully utilising its financial tools. Many companies used to receive subsidies or investments from the government. However, developed enterprises would be satisfied with more complex financial packages rather than cash, such as governmental guarantees or guarantees of sales. So far, these measures are not used to the full, in comparison with other countries even Russia and Kazakhstan. Certain flexibility in this issue would make it possible to attract more financial resources.
Belarus magazine: Investors rely on a greater share of the market than Belarus offers. Do the Customs Union, the Eurasian Economic Union and other associations offer increased possibilities for investors?
V.U.: This summer is the busiest we have ever seen. In a single week, we hosted a business forum with China’s Qinghai Province — featuring around 100 Chinese enterprises. A Japanese delegation consisting of the flagships of the Japanese business — Hitachi, Panasonic, Mitsubishi and JTI — has also paid a visit. The visit by a Moldovan delegation was part of the Moldovan President’s visit to Belarus. The majority of our guests are interested in how they could co-operate with Belarus to break into the vast market of the Eurasian Economic Union. This is our great advantage as our own market is not large; our economy is export oriented. As an example, several years ago, I read a thesis paper by a Russian author who spoke of the indices of the export-oriented economy. According to him, Belarus is second in Europe after Belgium. In some areas, especially dairy production and machine manufacturing, our small country is a global market player. We have excellent opportunities for investors who come here.
Belarus magazine: Envisaging the future. How do you see the Belarusian investment position in 2-3 years?
V.U.: We are optimists and I’d like to say that, judging by the last year, the volume of international investments has fallen by 8 percent but Belarus has sustained its positive dynamics: losing only slightly more than 1 percent. One of the issues making investors cautious is the lack of regional stability in our neighbouring states. From the regional point of view, they see how this situation influences the rouble exchange rate. I think the situation in the country will be continuously improving. Our Industrial Park has around ten large companies in residence already, with expressions of interest from twenty more. In the pharmaceutical sphere, Bayer is a good example; the company has signed a draft contract with the Park. I believe our preferential zones will develop further. Most of the Belarusian-Chinese Great Stone Industrial Park’s infrastructure investments come from China. However, the Park is open for anyone and it aims to combine the most advanced production facilities. Pharmaceutical investment, in particular, introduces technologies that will have far reaching benefits. Similar to the oil industry, in terms of its significant financial value and high investment potential, pharmaceutical manufacturing and development encourage global markets.
A.S.: In terms of prospects, as a representative of a foreign company, it is important to stress that we all have high hopes when investing in Belarus. We have no plans to develop our business in the Grodno region alone. We’ll continue investing in the Belarusian economy — in particular, focusing on the Mogilev and Minsk regions. We are also investigating the possibility of investing in Belynichi’s Waste Processing Plant (in the Mogilev Region), with the aim of modernising it. Our company plans improvements in turkey breeding in the Klimovichi District (as a result of the Presidential decree on development of the country’s south-eastern areas). All our agreements are signed and we are now sorting out final issues. We’ll then sign an investment agreement.
R.P.: Apart from pure investments, we are also ready to share technologies and are now negotiating with a Belarusian farmer on the issue. We are not closed competitors, but are willing to share our experiences.
Dynamics of investments
In the first six months of the year, Br92.5 trillion of investments have been used into basic capital, with major share of injections coming into processing industry (29.6 percent), agriculture (11.4 percent), transport and communications (9.3 percent), production and distribution of electrical energy, gas and water (6.2 percent). Construction and installation works amounted to Br51.2 trillion.
Remarkably, the amount of investments into construction is falling, with construction and installation works accounting for 55.4 percent of the total volume of injections into basic capital. Over this period, investments for the purchase of machines, equipment and transport vehicles stood at Br29.9 trillion (32.3 percent of the total amount).
By Victor Mikhailov
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