Quality rather than quantity
[b]Over coming months, the Government will be focusing on modernisation, further liberalisation of business conditions and the realisation of innovative projects, alongside export enhancement [/b]The aim is for the economy to develop more dynamically than in 2012. Sadly, last year Belarus failed to reach its target of Br21tr in added value but modern production facilities and advanced technologies are driving industry forward.
The aim is for the economy to develop more dynamically than in 2012. Sadly, last year Belarus failed to reach its target of Br21tr in added value but modern production facilities and advanced technologies are driving industry forward.
Money available for worthy projects
Economy Minister Nikolai Snopkov believes that Belarus’ legislative base for economic modernisation is ready, with the state supporting enterprises financially, such as through affordable loans. The only requirement is that projects must be highly efficient and be able to create rapid returns, so that capital injections reap rewards quickly.
Over the past seven years, $31.5bn has been invested into Belarusian industry but PM Mikhail Myasnikovich is convinced that even more is needed to revitalise our major economic branches. “Efficiency is vital as the country launches extensive modernisation. There’s no point in modernisation for its own sake; each injected Rouble should generate two or three in added value, while returns should be obvious within five years,” he stresses.
Company heads are expected to demonstrate greater initiative, showing knowledge of the market and being able to predict future trends. Mr. Snopkov considers that a new approach is needed for modernisation, explaining, “At present, projects are proposed at a certain cost but a reverse approach is needed. Projects with a rapid pay-off period should take funding priority.”
The most important innovative and investment projects have been defined, with 711 (of 1,350) already chosen — from such diverse spheres as pharmaceuticals and nano-technologies. According to the First Deputy Prime Minister, Vladimir Semashko, eight projects are viewed as most important. Among them is the construction of a pharmaceutical facility (meeting European GMP requirements), the establishment of a facility to produce optic-electronic equipment on the basis of heat-vision, the production of laser systems and the creation of a promising space satellite with land infrastructure to further develop Belarusian-Russian Earth remote sensing.
Of course, modernisation envisages not only modern production facilities and technologies but modern economic relations: 800 companies have been chosen to seek investment — from domestic and foreign business circles. Mr. Snopkov explains how they were selected, saying, “The list includes small enterprises (up to 100 employees), in addition to firms at least 50 percent state owned. Insolvent companies are also included. The list excludes those enterprises where an entire town centres around one form of production; the right to buy such shares belongs to regional and city executive committees.”
Stake on regions
Special attention is being paid to regions, whose economies are to experience drastic change. Their industry was often formed in Soviet times, 30-40 years ago, so technologies are out of date and goods lack competitive features. Naturally, this is hampering the development of small towns, where such enterprises are the main form of employment.
Mr. Snopkov asserts that the Govern-ment is keen to promote regional buoyancy, to avoid the trend of people moving to larger settlements. By 2032, some villages could lose 20 percent of their population. In fact, 40 percent of these losses are expected in the Vitebsk and Grodno regions. In turn, 77 districts (covering over 60 percent of Belarus’ territory) are seeing a trend of residents moving to more populous cities. Unless drastic action is taken, ever more districts will have less than 45 percent able-bodied, age-employable, citizens.
As Mr. Snopkov notes that the construction of new facilities in districts is a step in the right direction towards solving the problem. “Our economic policy initially focused on fulfilling the President’s orders, from the 4th All-Belarus People’s Assembly; these state that ‘at least 25-30 benchmark state investment and innovative projects must be realised in each region and in the city of Minsk, with governors and branch ministers being personally responsible’. Some believe that technological modernisation of existing facilities is the most cost-efficient way forward, while others would prefer to see new facilities built,” he tells us.
In the central Minsk Region alone, 110 new production plants are to be established this year — each employing 50 or more people. The Deputy Chairman of the Minsk Regional Executive Committee, Alexander Turchin, explains, “Labour efficiency regarding added value (approaching the figures of production leaders) is the major focus.” Investments of Br1.5tr are needed, and industrial sites have been chosen for 157 new enterprises: all aimed at export manufacturing.
Commodities generate money
Exports are a major priority the Belarusian economy. Last year, the country achieved a positive foreign balance in commodities for the first time in a decade. Deputy Foreign Minister Alexander Gurianov views this as a breakthrough, saying, “In 2012, considerable market changes in foreign trade were registered, which are the starting point for further action. Our $100m positive trade balance was the result of sales exceeding purchases, for the first time in the past decade. We managed to raise physical volumes of exports by 13.5 percent and expanded our presence on foreign markets. Besides selling oil products and solvents, last year, we increased exports of major Belarusian industrial and agricultural goods.”
The Customs Union and the Single Economic Space have also positively influenced sales: last year, exports to Russia increased by $1.8bn, while sales to Kazakhstan rose by $130m. Mr. Gurianov notes, “Our partners within the integration block, and their markets, have generated major growth for Belarusian exports with high added value.” However, he adds that, in 2012, prices were unstable on foreign markets, leading to prices only matching those of 2011. Clearly, to achieve growth we must raise volumes and ensure the greatest added value. The task is to achieve a quality economic growth in 2013; and consequently it should result in salary rises and higher standards of living.
By Lilia Khlystun