Investment Opportunities of the Republic of Belarus
Nowadays Belarus offers favorable legal conditions for investors to conduct business activity on the territory of the republic both at the national and international levels. Belarus is party to over 60 bilateral agreements on avoiding double taxation, about 60 bilateral agreements on mutual promotion and protection of investments. Belarus joined the Seoul Convention Establishing the Multilateral Investment Guarantee Agency (MIGA). The Investment Code of the Republic of Belarus was passed in 2001.
The main priorities of the investment policy are the liberalization of business conditions, improvement of legal mechanisms of investment protection which help promote investment activity. These legal mechanisms were formalized by Directive No. 4 of the President of the Republic of Belarus.
With a view to liberalizing business conditions, the Parliament has worked out the draft law of the Republic of Belarus “Concerning Investments”. The document has been drafted taking into account international experience. The draft law is based on the following principles: rule of law, equality of investors, honest and rational implementation of investments, inadmissibility of arbitrary interference in private matters, inviolability of property, unhampered realization of investors’ rights, guarantees that infringed rights and legal interests will be restored and protected in court, transparency of legislation.
According to the World Bank Doing Business 2012 Report, Belarus was ranked 69th out of 183 countries. In comparison with the year 2011, a number of methodological innovations helped Belarus climb 22 positions.
Belarus offers the following advantages for capital investments:
· direct access to the market of the Customs Union and the Single Economic Space;
· formation of the Single Economic Space and unification of national legal frameworks in economy as of 1 January 2012;
· favorable economic and geographic location at the crossroads of major transport routes connecting the European Union and the CIS, the Baltic Sea and the Black Sea;
· well-developed infrastructure;
· political, social and economic stability, absence of international and religious conflicts;
· favorable ecological conditions;
· qualified workforce.
While creating favorable conditions for investment activity, Belarus prioritizes the mechanism of public-private partnership (PPP). This form of interaction between government bodies and businesses allows overcoming economic contradictions when objects of strategic importance cannot be privatized and the state budget cannot provide due financing. Public-private partnership can be exercised in transport and transport infrastructure, municipal services, culture and social services, tourism, extraction of natural resources, etc.
The mechanism of interaction within the framework of public-private partnership is currently under consideration. The program to privatize state assets is being implemented in Belarus. The national legislation provides for various forms of investors’ participation in the privatization process. These include the procedure to turn the enterprises into an open joint stock company, buying shares of the existing open joint stock company at auctions and tenders, buying the enterprise (the possibility to buy it at the reduced price or at the price equal to one basic amount).
As for big strategic companies, Belarus chose the strategy of point privatization. There were some large-scale deals which became one of the biggest takeovers and mergers in Europe (for instance, the sale of the state-owned stake in Beltrangaz and the joint venture Mobile Digital Network).
In order to fulfill targets of the previous years and hit targets set forth for the current five-year term, Belarus created preferential business regimes to implement investment projects in free economic zones, the High-Tech Park, the special tourism and recreation park Augustow Canal, the Belarusian-Chinese industrial Park, small and medium-sized towns and villages, in cases when the investment agreement is signed with the Republic of Belarus, etc.
Belarus successfully cooperates with world-famous manufacturers, transnational corporations and large banks. Thus, joint ventures and companies with foreign capital were set up in Belarus. Among them are MAN and Adidas (Germany), Maersk Medical (Denmark), Danone (France), Olvi (Finland).
Shares of Belarusian banks are owned by Russia’s Sberbank, Vnesheconombank and Bank VTB, Austria’s Raiffeisen Bank and others.
The National Agency of Investment and Privatization (www.investinbelarus.by) was established in Belarus in order to raise more foreign investments, increase the efficiency of privatization processes in the Republic of Belarus and ensure cooperation between investors and state administration bodies. The agency takes part in enhancing Belarus’ investment image, monitoring and supervision of implementation of investment projects and privatization of assets.
Moreover, the Belarusian Council of Ministers operates the Foreign Investments Advisory Council which comprises representatives of foreign companies, government officials and scientists. The council has created a number of working groups to improve investment legislation, taxation and customs conditions for the Belarusian market operators, etc.
In order to make Belarus more attractive for investors and enhance positive image of the country the National Bank and the Council of Ministers have worked out and approved the strategy to raise foreign direct investments till 2015 (Resolution No.51/2 of the Council of Ministers and the National Bank of 18 January 2012).
The document defines priority sectors for raising foreign direct investments (FDI). These include pharmaceutics, biotechnologies, nanotechnologies, new materials, information and telecom technologies. There are also plans to attract FDI in traditional industries. Pharmaceutics and flax production ought to be developed.
In line with the strategy, an action plan has been devised in Belarus to improve business and investment environment. The action plan provides for openness of the operation of government bodies, observance of the competition principle, equal business conditions, observance of legal interests of investors and other persons, proper protection. Additional work in this field is made in line with the instructions of President of the Republic of Belarus Alexander Lukashenko given on 8 May 2012 when the head of state delivered the State of the Nation Address to the Belarusian People and the National Assembly of the Republic of Belarus.