By Vladimir Vasiliev
During his recent visit, the Belarusian President noted that, in future, the whole of Belarus should become a free economic zone. The state will continue improving conditions for doing business while making the country more attractive for investments. Speaking about this, Mr. Lukashenko added that all necessary measures to protect private property will be adopted within the next five years.
The Head of State has visited three enterprises within the Minsk FEZ — Bahco Bisov, AluminTechno and Alutech Incorporated. Each factory was constructed from scratch using foreign capital and now manufactures goods which are proving popular domestically and abroad: bimetal band saw blades and pressed aluminium shapes. My colleagues and I were primarily impressed by the culture of production. Of course, what enterprise wouldn’t prepare thoroughly for a presidential visit? However, no fresh paint or newly polished workshops were apparent; rather, all was clean and in order. You could tell that organisation is always meticulous, while staff are well-disciplined and motivated (Br2.5-3m is the average salary, with a good welfare package included). Judging by the management’s clear answers to the President’s questions, their systems are quite European.
New, dynamic and innovative manufactures are appearing alongside the traditional Soviet legacy of MAZ, BelAZ and Horizont. Minsk FEZ currently boasts 89 businesses, with 318 businesses registered countrywide in our free economic zones.
Mr. Lukashenko notes that the idea of setting up free economic zones in the republic belonged to the former Chairman of the Council of Ministers of Belarus, Mr. Kebich. In early 1990s, a top ranking group from Belarus studied Chinese experience of such zones and decided they could be applied here. The first pilot FEZ appeared in 1996 in Brest — during the presidency of Alexander Lukashenko. Later, free economic zones opened in every region, and in Minsk. Legislation has been developed, adopted and later improved, regulating the work of these special territories. Investors are offered a privileged tax regime, inspiring them to inject money and establish new companies.
The President of Belarus is keen to follow the success of these initiatives, which he fully supports, finding out how much revenue is being generated. Belarus’ Deputy Prime Minister, Andrei Kobyakov, is certain that FEZ residents are successful, with export oriented enterprises earning foreign currency for the country. Meanwhile, Mr. Kobyakov admits that import volumes are also up, since such companies require contemporary engineering tools, manufacturing lines and advanced technologies. Of course, these are investment imports which should lead to improved production and export revenue, while meeting the needs of the domestic market for goods which are currently imported.
What is the future of free economic zones within the competitive Customs Union? Mr. Kobyakov notes that existing privileges should eventually be abolished but not immediately; the Belarusian, Russian and Kazakh governments have agreed to preserve the current preferential regime for free economic zones until 2017. Current FEZ residents, as well as those registering until early 2012, will be able to make use of this delay. The Belarusian President has requested the promotion of registration of new residents in every possible way while solving issues of land allocation promptly; to benefit from privileges, an enterprise must physically be located within FEZ territory. The government has been called upon to take the initiative regarding businesses, rather than just responding to requests, creating industrial sites with all necessary communications and infrastructure, ready to offer to interested investors seeking new factory sites.
Further reduction of customs tariffs and tax burdens was also tackled, aiming to stimulate the development of all Belarusian enterprises while enhancing the competitiveness of Belarusian produce. The President believes that, by improving our common business environment, the state will be able to preserve its special conditions for free economic zones. He plans that privileges abolished within the Customs Union will be compensated for by other preferences not banned by Customs Union legislation.
The state expects FEZ residents to increase exports and the manufacture of import substitution goods. According to the Belarusian President, the republic still imports much from abroad, so needs to attract investors to set up manufactures within the country. Mr. Lukashenko stressed that, although Belarus boasts large forests, it still imports chain saws from Sweden and Japan. Why can’t we invite a leading company to set up here? Judging by the conversation, this business idea will soon acquire concrete definition.