The early 1990s were a worrying time for one of the regions most affected by the Chernobyl disaster: Belarus’ Gomel Region. The question of how best to revive this huge territory, to enable residents to return, was hotly debated. One of the first steps to economic recovery was the establishment of the free economic zone, Gomel-Raton.
Gomel-Raton FEZ was established by Presidential Decree on March 2nd, 1998, offering tax and customs concessions and unprecedented preferential treatment, with the aim of attracting foreign and domestic investments. Export-oriented and import-substitution high-tech industries were particularly encouraged, forming the basis for recovery in the Gomel Region. With employment, people’s indepen-dence returns, as well as their spending power and self-esteem, bringing new life and hope. The FEZ is to offer its preferential terms for 50 years, in three stages: formation — 1998-2005; basic infrastructure — 2005-2015; and sustainable development — 2016-2048.
The initial move involved setting the boundaries of the FEZ, and introducing its infrastructure. Next, relevant legislation was passed to regulate its activity, ensuring that it remains attractive to foreign and domestic investors.
The first residents included the Republican Scientific Production Unitary Enterprise Raton and Gomelcable JSC, alongside several foreign enterprises. By early 2001, 37 businesses had been registered, including 25 with foreign capital: 13 were foreign and 12 were joint ventures. Almost every FEZ resident began by developing ineffectively used industrial areas, most of which had been empty for years.
No empty premises
Dozens of thousands of square metres were abandoned by industry giants in the 1990s, following the collapse of the Soviet Union and the Chernobyl disaster. Technical personnel relocated and it became harder than ever to re-establish high-tech business. Now, the empty Korall warehouse is manufacturing PVC units, thanks to a joint foreign enterprise with German Becker-System. Another abandoned warehouse now houses Alcopack and Multipack (both using foreign capital) while foreign Kashtan and Intertapes are both building factories at Raton.
The first head of the Gomel-Raton Zone, Vladimir Byk, tells us, “Investors who came with $20,000 in the first year are now generating $20m of goods annually and exporting around $1m per month.”
The Gomel FEZ has attracted capital from 13 countries: Germany, Russia, Switzerland, Liechtenstein, France, USA, Great Britain, Czech Republic, Cyprus, Israel, Poland, Moldova and Kyrgyzstan. By the end of the formation stage, there were 36 residents, including 14 domestic, 10 joint ventures and 12 foreign enterprises. About 5,400 people were employed at the Gomel-Raton FEZ, with foreign trade turnover of companies reaching over $650m. The FEZ covered 4,700 hectares in its early years of launch, of which 600 hectares were urban, including in Gomel’s northern industrial hub.
Time for change
The FEZ has now entered its second phase of development (2006-2015), using 2,000 hectares in the Sozh flood plain. Several local industrial sites have been added, including the Production Association Crystal, Gomel Radio Plant and a number of construction companies. Some new sites have opened near Gomel Chemical Plant and near Gomelavia airport, with the FEZ now covering 3,722 hectares (a slight fall in territorial coverage). The investment potential of the area has increased significantly, with several key players in residence. One of the Gomel-Raton FEZ’s administrative managers, Alexander Skvortsov, notes that it has become a beacon of foreign investments in the region within a very short time, creating a foothold for successful business within a market-based economy.
Inclusion of new industrial sites has required the FEZ to attract foreign and domestic investors in new spheres and in new ways. Some investment projects have been offered ‘ready-made’ to potential investors, using new and old sites. This has brought in Russian private company Veza-G, which produces climate control equipment, as well as Belarusian MiGom, which makes elements for ventilated facades, roofing and water systems. In addition, Belarusian-Swiss Barpromex has launched production of cable reels and Turkish investors have started production of electric-walled pipes and aluminium extrusions.
Today’s Gomel-Raton Free Economic Zone has 77 residents, including 35 with foreign capital, from 15 countries — including Russia, the Czech Republic, Germany, Liechtenstein, the United Kingdom, Austria, France and Iran. Impressively, goods produced within the FEZ are exported to 70 countries. Among these are diamond tools, precious metal items, packaging products, wires, cables, pipes, boilers, construction and finishing materials, furniture and hydraulic equipment.
The current head of the FEZ, Antonina Yezhova, tells us, “We’re currently implementing a number of major investment projects, which are of great economic interest not only for the Gomel Region but for Belarus as a whole. For example, one is to produce gypsum and building materials, and multilayer barrier films. We’ll be making flexible hoses in stainless steel for export and import-substitution and we’re offering investors a wide range of co-operation in various fields. Sites are offered fully supplied with electricity, land and other resources, to help enterprises start up quickly.
Since launching, the Gomel-Raton FEZ has attracted investments of $860m, including foreign capital of over $300m. The foreign trade turnover of FEZ resident companies has exceeded $4.5bn, with over 7,300 new jobs created; in all, about 35,000 people work at FEZ enterprises.
To be continued...
The Gomel-Raton Free Economic Zone, having proven its solvency, is on the threshold of its third stage (2016 to 2048) when achievements will be consolidated and built upon, to maximise the FEZ’s contribution to the industrial-technological and socio-economic development of the Gomel Region. The area now offers favourable conditions, experienced staff and an attractive business climate.
By Violetta Dralyuk
Skorina’s work continues
[b]Belarus and Lithuania continue dialogue of cultures[/b]Belarus has traditionally close economic and cultural relations with Lithuania. Since ancient times, we’ve been bound by ties of neighbourliness. Lithuanians admire our preservation of the heritage of the Grand Duchy of Lithuania, often visiting our sites, while Belarusians love to see Vilnius, bowing to the icon of Our Lady of Ostra Brama. It’s pleasant to promenade the streets where Frantsisk Skorina published his books and where Yanka Kupala wrote his first poems.