Time to expand private sector to encourage future economic growth

Government holds extensive talks with business representatives — using Council of Ministers’ Presidium format for the first time

By Inna Yeremenko

According to the European Bank for Reconstruction and Development, the private sector accounts for no more than 25 percent of the country’s GDP. In neighbouring Russia, this figure stands at 65 percent, in Ukraine and Kazakhstan — 60 percent, and in Armenia, Georgia and Azerbaijan — 75 percent. “We are lagging behind,” notes Economy Minister Nikolai Snopkov, asserting that we must adjust the infrastructure of the economy to encourage the private sector. This could be the foundation for future economic growth, as businesses agree.

Vladimir Karyagin, the Chairman of the Republican Confederation of Entrepreneurship, stresses that production entrepreneurship is vital, with businessmen being allowed to buy their premises. Most currently rent, which hampers them from taking loans (having nothing to pledge). Moreover, they cannot attract investments, as few are interested in injecting money into businesses which lack ownership of property. In addition, taxation needs to be simplified, with businessmen noting that Belarus’ taxes are higher than those of Russia or Kazakhstan. Meanwhile, individual entrepreneurs are eager to be allowed to hire workers outside of their close relatives.

The Government shares the worries of businesses. Mr. Snopkov is convinced that small privatisation mechanisms should be launched anew, with de-bureaucratisation continuing. Ideally, businesses should spend no more than 10 percent of their time on administration issues. The Economy Minister is also convinced that equal access to raw materials is essential. Moreover, division into such notions as ‘state’ and ‘private’ should be eliminated.

Mr. Karyagin tells us that the meeting involved serious discussion. Business initiatives were heard and approved, although no concrete decisions have been taken yet. Probably, these should not have been expected after a first meeting. Nevertheless, points of agreement and disagreement were to the fore. As regards taxation simplification, advancement looks possible only regarding profit tax. As for other taxes, the Finance Minister has promised to study the situation and analyse the taxation system of neighbouring states. Employment of workers by individual entrepreneurs is also still being studied, with no definite plan of action as yet. As Mr. Karyagin notes, businessmen and the Government differ in their views of what constitutes a ‘result’. “Officials consider that a result has been achieved if discussions are underway while businesses only view a goal as met once a decision has been made and they are working under new conditions,” he added.

Naturally, dialogue is to continue. The business unions’ proposal to set up public-consultative councils at executive committees and ministries has been approved. Prime Minister Mikhail Myasnikovich is hopeful that, by early 2012, a package of documents on direct action will be ready.

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