Long term injections

Modern technologies come to Belarusian wood processing industry, jointly with Lithuanian company, representing Swedish IKEA

By Kirill Merkuriev

Lithuanian Vakaru Medienos Grupe (VMG) JSC has signed an agreement envisaging the establishment of ‘a vertically integrated wood processing complex’. Three plants are to be built in Mogilev’s free economic zone. According to the General Director of VMG, Viktoras Adomaitis, the project will be one of the best in Belarus. The Lithuanian firm is acting under the aegis of global furniture produce IKEA, bringing top grade technologies to our wood processing industry.

The project is helping attract about 80m Euros into the domestic economy. Despite its attractiveness, the idea was initially unpopular in Belarus, as there were fears that the foreign company might hamper the domestic wood processing industry (which is yet to gain a strong foothold and requires some state support). These fears have no grounds of course, since all manufacture is to be exported: 50 percent to Russia and 50 percent to the EU.

In fact, the facility should bring benefits, including about 1.5m Euros in annual tax and over 1,000 new jobs. The modern establishment will pay good salaries while ensuring high labour efficiency. Additionally, it opens the way to another idea — discussed in detail at the 5th International Investment Forum, held in Mogilev several months ago. A network of facilities (wood processing, wood cutting and transport-logististical) is soon to be established with foreign partners. This large scale production network is to involve many existing companies, giving them new orders. Annual purchases of their products for the needs of the forestry branch should reach about 20m Euros.

Mogilev’s Governor, Piotr Rudnik, was authorised by the Government to sign an agreement with VMG on behalf of Belarus. He stresses that the Mogilev Region is especially interested in the project, with three enterprises launching next year. Since the project is worth over 10m Euros, the local administration must provide heat, electricity, gas and water to the new industrial buildings, while building rail track and roads to the new sites. Our foreign partners note that establishing favourable conditions for future businesses is promoting the location of high-tech factories at Mogilev’s free economic zone.
The Ambassador Extraordinary and Plenipotentiary of Lithuania to Belarus, H.E. Mr. Edminas Bagdonas, assures us that his country is eager to see Belarus become a fully-fledged member of the pan-European economic process. He sees the entry of major Lithuanian investments into the Belarusian economy as another serious step in strengthening our mutually beneficial co-operation.

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