By Kirill Dmitriev
“It’s not an easy issue, as there are so many points of view. Accordingly, we need to decide the most appropriate and effective approach. Of course, this will be based on national interests and priorities for the development of our country,” underlined Alexander Lukashenko.
He noted that, when innovation funds were launched over a decade ago, they aimed to stimulate sci-tech achievements and the manufacture of science-intensive goods. The direction of funding into those branches has given the opportunity to focus on the most promising projects and important state programmes.
“In recent years, innovative development has been one of our top priorities, with these budgetary funds designed to help its implementation,” noted the Head of State. He believes that serious analysis of the situation regarding the formation of the innovation funds and their use has revealed a whole range of trends. Firstly, each year, fewer enterprises have been making contributions to innovation funds. In 2009, the total number of those paying into the funds exceeded 25,000 (including in the trade sphere); by 2011, their number has fallen 10-fold and, this year, there are proposals to reduce them further.
The Government is proposing the re-organisation of the system, gradually shifting from obligatory contributions by state enterprises being a percentage of their production costs to payments being made from profits. Mr. Lukashenko has some doubts as to whether this will prove efficient however.
Previously, much has been spoken of private enterprises being at a disadvantage, compared to state sector firms. Originally, everyone was obliged to pay in to the system, while only state enterprises received from the fund. The mission was to encourage expertise and the development of innovative technology but the reality has failed to live up to this. Some funding has simply been used to drill a well and bottle mineral water. Clearly, the system has proven neither fair nor efficient, leading to many being dissatisfied. However, the situation seems to have now reversed, with private companies currently exempt from innovation duties.
The Chairman of the State Control Committee, Alexander Yakobson, reminded everyone of the President’s outline for innovation, as detailed at the 4th All-Belarus People’s Congress. The Belarusian leader requested that venture financing and investment insurance be explored, yet no progress has been made in these areas. As far as innovation funds are concerned, there’s no directly wasteful attitude towards them but the reality has failed to live up to expectations.
During the conversation, the contours of a more efficient model became evident and the President summed up the essence of all proposals. The Government needs to elaborate a new mechanism proceeding from several conditions. Primarily, the Government should clearly and finally determine how to make deductions — from production cost or from profit. Since innovations are a nationwide task, a definite contribution should be made by everyone, private businesses and state sector alike.
However, a fair principle should be observed. If everyone makes a contribution, each should have equal access to resources. If a private businessman offers a breakthrough project, they should hope to receive support from the state treasury. The major administrators of the funds will be branch ministries. Moreover, clear criteria for innovations should be developed, so that ministries allocate funds wisely. A clear definition is required for ‘innovation’ to allow money to be allocated where it will reap most rewards. The Prime Minister will have the power to re-distribute funds where one branch fails to spend its share and another has a surplus of promising ideas. Meanwhile, of course, there are likely to be several major state projects — such as those relating to space technologies, which can set the standard.
Mr. Lukashenko explained that such ideas may appear at any level: from a state enterprise, a private business structure or from an individual scientist. The system should be flexible, able to react to each initiative. The President summed up, “All legal acts regarding these issues should be annulled, replaced by a single unambiguous and fundamental document.”
According to Belarus’ Finance Minister, Andrey Kharkovets, businesses should not be afraid of the tax burden rising.
Elaborating the budget for next year, the Finance Ministry aims to slightly reduce profit tax. This year, it has already fallen from 24 to 18 percent. Mr. Kharkovets believes that a further fall may not be seen for a while, with the difference between the planned (reduced) value and that which currently exists spent on financing innovations. His idea remains unopposed.
The major keynote of the meeting was that material injections should stimulate intellectual investments, with funds many times paying for themselves. Naturally, in showing the world our intellectual abilities, we enhance our reputation, status and prestige.
