Belarus Investment Forum, which will take place in London, undoubtedly arises interest of representatives of foreign business circles. How will we represent ourselves during this solid event? We asked this and other questions to the deputy Prime-minister of Belarus Andrey Kobiakov.— Andrey Vladimirovich, it is obvious that the event objective is wide informing of representatives of western business circles on possibilities of our country. Can we say that there is deficiency of information about Belarus and its economic potential abroad?
— People recognize those who is not shy to show oneself. Honestly and openly. We have many business partners abroad. But we could have had more. It means that an offer on some information deficiency is rather reasonable. The forum is focused on elimination of this disadvantage. Our main objective is to show a real investment potential of Belarus. Success of such a presentation will open new possibilities for attraction of investors and business-partners to the country. This is a factor of strengthening of the country’s image.
Belarusian forum participants are geared to establishment of direct contacts with the businessmen from different countries. In London will be provided the possibility of an open dialogue between influential business and policy representatives of Belarus and international financial and business elite. Some foreign guests will tell about their own positive cooperation experience with our country. These are honored, authoritative people in the world of business. Among them there is a member of the board “Raiffeisen-bank” Patrick Butler, the chairman of the Confederation of industrialists of Lithuania, a former Prime-minister of this country Bronislovas Lubis, a vice-president of “ABN АМРО” bank Frank Kajlaars, a president of the International Group of Companies “ITERA” Igor Makarov.
Today we observe interest to the forthcoming event on the part of not only business representatives, but also of influential Mass-Media. Forum is a culminating point of a big information campaign, focused on the foreign audience. For example, we have what to say about recent changes in legislation, oriented to improvement of business climate in the country. They increase investment attractiveness of Belarus and form a favorable background for the forthcoming forum.
— How would you characterize the interest of foreign companies and banks to presence on the Belarusian market, to direct investments in our country?
— Statistics answers this question best of all. In 2002 into a real sector of Belarusian economy came almost 0,3 billion US Dollars of direct investments. Their volume for the last year reached 1,3 billion US Dollars. During the first six months of 2008 — 1,2 billion US Dollars. Agree, this dynamics is substantial. Or such figures. In 2002 with our country worked 2082 organizations with foreign capital. To the beginning of this year their number reached 4218 organizations. It is obvious, if foreign businessmen were not interested in the country, we wouldn’t observe such tendencies. In Belarus successfully work organizations, created with such foreign companies as LLC “КК Beverages Holdings PB.V.” (the Netherlands); “Henkel SII GmbH” (Austria); “Giviesse” АО (Italy); “АТЕК Holding GmbH” (Austria); Mobilcom Austria Group (Austria); “Ascending Holding Limited” (included into “Heineken”) (Austria); “Ilona Group S.p.A.” (Italy), LLC “Internazionale investizions und Serwaltung” (Austria) and some others.
Presence of the foreign capital becomes even more apparent in a bank sphere. As of July 1, 2008 the funds of foreign investors were put up into authorized funds of 22 from 28 working banks. In 17 banks foreign capital share exceeded 50 per cent, authorized funds of 6 banks are completely formed from foreign investments. They are OJSC “Moscow–Minsk Bank”, OJSC “Home Credit Bank”, CJSC “BTA Bank”, CJSC “BelSwissBank”, CJSC “SomBelBank” and OJSC “International reserve bank”. Their assets amount to 1518,5 billion US Dollars from 50922,5 billion rubles over a bank sector in whole.
— In your opinion, by what businessmen are governed, accepting a decision on investing into Belarus?
— There are several stimulating factors in this process. The fact that Belarusian economy goes along the road of investment development, looks rather attractive. Socio-economic stability in the country, a high level of human potential development, profitable geographical position are highly estimated in business circles. Work in Belarus opens the access to the markets of the European Union and Russian Federation.
One more important aspect is transparent and comprehensive rules of the game. Our country was the only between CIS states to accept the Investment code. Its provisions are focused on stimulation of the investment activity, its support by the state, and protection of investors’ rights.
Besides, territories with preferential regimes attract business. These are free economic zones, the Park of High Technologies, small and medium town settlements. Besides, potential of the latter only starts to be used. There are great perspectives here.
— In the World Bank rating “Doing Business-2009” Belarus was included into the top-five of states-reformers of the year, having ranked 85th and improved its position in comparison with the former rating by 30 positions. This success was noted by many experts. Which further steps on business-climate improvement the government intends to undertake in the near future?
— Let me specify. Belarus was included into top-ten of countries carrying out reforms in 2007–2008 and occupied the 4th place. However, not only this is important. Estimation of the World Bank is not the one to note success of our country. Thus, in the rating of United Nations Conference on Trade on factual attraction of foreign investments in 2008 Belarus rose by 27 positions and ranked 95th.
We pay much attention to business climate improvement. It is not by chance. We set an ambitious aim — to enter the top-30 of the world countries with the most favorable conditions for business conduction. Recently in the process of realization of this task 30 regulatory acts have been accepted, focused on legislation improvement in different spheres of economy.
Legislation on withdrawal and grant of land plots was essentially changed, a single principle of their public sale was introduced. The number of administrative procedures was significantly reduced, time and money consumption for business opening was reduced, a first-to-file principle of state registration and dissolution of commercial organizations was fixed, the order of issuance of special permissions (licenses) for realization of certain kinds of activity was simplified and many other.
A solid layer of work is taxation improvement and simplification. Today our system is analogous with those existing in the European and CIS states in terms of underlying tax and the level of rates. The main tax sources of the budget are income taxes of legal and natural persons, value-added tax, excise taxes, real estate tax, land tax, resource and customs payments. Their calculation and payment are identical to the taxation system, applied in the world practice.
Customs laws of Belarus, including customs tariffs and the order of collection of customs payments, are formed on the basis of the World Trade Organization, and also harmonization of customs and tax legislation in interstate integration associations, where our country takes part.
This is, so to say, what we have. But the process of improvement of norms and rules of business conducting continues. For example, in the sphere of tax policy for the basic orienting point we accept further tax system simplification, tax deduction for economy and formation of a transparent, stable and effective taxation system. It shall provide both stimulation of economic growth, and attraction of necessary volume of financial resources for realization of state expenses.
One more strategic direction of the state policy is creation in the country of the best conditions for development of the enterprising initiative.
— Can you tell about this moment in detail?
— There are several moments here. Firstly, we plan to simplify the order of state registration of economic agents, to reduce the total term of their registration and recording to 5 working days. Secondly, the list of licensable types of activity shall also be shortened at the expense of exclusion of works out of it, which are not connected with the risk of impairment of interests of national safety, public order, protection of rights and freedoms of the citizens, which can’t directly inflict the health of the population and environment. Such types of activity can be regulated by other instruments apart from licensing. For example, by certification, hygienic rating and other. Thirdly, we will reduce the number of administrative procedures, carried out by state bodies and organizations in relation to legal entities and individual entrepreneurs. First-to-file system shall be used wider. Fourthly, the contribution rate for pension insurance fund will be reduced for employers from 29 to 28 per cent of the payroll bill. Fifthly, in a due course will be set requirements to information disclosure on transactions, in realization of which members of the board of directors (supervisory board) are interested directly or indirectly, members of the Collegial Executive Body, persons, performing powers of a sole executive body of the business company.
As for the nearest perspective, several events are planned for the next year. Collecting to the republican fund of support of agricultural production manufacturers will decrease from 2 to 1 per cent from revenue (from 2010 it will be completely cancelled with local target collectings from profit). From the object of real estate taxation we exclude an active part of basic production assets. A single rate of income tax at the rate of 12 per cent is being introduced, and for entrepreneurial income — 20 per cent. Customs and related procedures will be simplified, as well as the procedures in the sphere of certification and transit. Some limitations for the access of foreign investors to the insurance market of Belarus are being lifted.
Besides, in a perspective we plan to cancel payments from income completely, to reduce tax burden of the payroll bill, simplification of the order of calculation and payments of taxes and duties, and also optimization of tax administration procedures.
Concerning the organizational moments I would like to specify increase of the status of the “National Investment Agency” until it is subject to the Government. This organization will work for investors by one stop principle.
— On the background of several decisions, directed to stimulation of the stock market development, the following question becomes topical: will the shares of the majority of Belarusian joint-stock companies be easily sold and bought in the near future? Are we awaited by more dynamic privatization processes?
— As it is known, the Republic of Belarus carries out considered approach to privatization of the state property. In due course we put a stake on realization of point wise privatization and we think that this decision was and is correct.
Privatization in our country is carried out for the sake of privatization. The main aims of reorganization of state enterprises into open joint-stock companies are: increase of the development level of the country’s economy at the expense of attraction of direct investments, both foreign, and national; development of a joint-stock company by the way of attraction of investments, usage of new technologies, advanced managerial experience; solution of the budget tasks, connected with budgetary recharge and exclusion of necessity of direct financing of privatized enterprises by the state etc.
State approaches to privatization of the state property on this stage of economic development of the country are fixed in the Decree № 7 signed by the President of the Republic of Belarus as of April 14, 2008 “On introduction of amendments and additions to the Decree № 3 of the President of the Republic of Belarus as of March 20, 2008”. This document assigned planned character to privatization. The Decree stipulates formation of privatization plans of the state property for a term of three years. This gives a possibility to the investor to study the enterprise he is interested in, in detail. They, in their turn, obtain additional time for search of an optimal investor, realization of an advertising campaign, solution of other tasks.
The plan for 2008–2010 provides privatization of 519 republican unitary enterprises, including such big companies, known abroad, as the production association “Minsk motor plant”, Belarusian optical-mechanical association “BelOMO”, production association “BelavtoMAZ”, scientific-production association “Integral”, production association “Gomselmash”, production republican unitary enterprise “Minsk plant of wheel-tyre tractors”, haulage contractors, rendering internal and interurban shipment, and other.
The government also approved the list of open joint-stock companies, established in the course of state property privatization, the shares of which belong to the state and are to be sold in 2008–2010. It includes 147 open joint-stock companies.
Our legislation in the sphere of privatization provides various investment forms to national and foreign investors of their capital to Belarusian enterprises. This is participation in reorganization into OJSC with contribution of a corresponding deposit into the authorized capital. It can be represented by cash assets, equipment, other property, necessary for activity and development of the established joint-stock company. The state will probably sell its shares of already established joint-stock companies. Joint-stock companies will possibly issue additional shares, acquired by the investor, and other participation forms. The enterprises being the state property, can not only be reorganized into joint-stock companies, but can also be sold to investor as property complexes.
Decisions accepted in the sphere of property relations are complemented with measures on securities market development.
The Program of corporate security market development for 2008–2010 is realized in Belarus. Many of its events has already been realized. For example, purchase and sale transactions of OJSC shares are carried out exclusively on the exchanging market; the rate of state duty for registration of shares was lowered; a new instrument was introduced — stock bonds, which floatation and circulation is carried out exclusively on the exchanging market without state registration of securities issue; tax rates were reduced for income from transactions with shares from 40 per cent to 24 per cent; income from transactions with corporate bonds, issued within a term of 5 years (from April 1, 2008 to January 1, 2013) were exempted from taxation; administrative procedures were simplified, carried out in the process of state registration of securities.
Cancellation of the “golden share” institute was an important step. This instrument was negatively estimated by international organizations and foreign companies and obviously restrained the inflow of foreign investments.
From 2008 to 2011 the moratorium on carve-out of shares by the citizens, bought from the state on special terms or in return to personal privatization cheques “Property”, will be gradually shifted.
As it can be seen, a complex of measures was realized, oriented to stimulation of stock market development and liberalization of proprietary relations. The Government doesn’t stop here. We continue working at legislation improvement, regulating the security market, other investment instruments.
In the near future it is planned to accept a new version of the Law “On securities and stock exchange”. The project of introduction of amendments and additions to the Law “On custody business and central depositary of securities”, and also several projects of documents, including those directed to investment funds development, venture activity and venture companies.
Apart from this, the issue is worked out on conversion of accountancy to International Accounting Standards (IAS), as it is known that for IPO (Initial Public Offering — initial offer to investors to become the company’s shareholder) the organization shall keep IAS accounting during 3 years.
We are open for negotiations with investors, having serious intentions in long-term cooperation with our enterprises, joint-stock companies and are ready to consider corresponding offers. The main thing for us is mutually beneficial cooperation, meeting the interests of the government and a certain organization.
