OREANDA-NEWS. November 17, 2009. Belarus Investment and Economic Forum and the sixth session of the Advisory Council for Foreign Investments opened in Minsk. The forum was opened by Prime Minister of Belarus Sergei Sidorsky, reported the Official website government.by.

Belarus plans to implement another 500 innovation projects by the end of 2010. The number includes enterprises for manufacturing buses and railway cars, caterpillar tractors and engines, Prime Minister of Belarus Sergei Sidorsky said at the Belarusian Investment and Economic Forum.

The Premier reminded that Belarus is implementing a state innovation-based development program for the sake of switching the national economy into an intensive innovative development mode. The program provides for implementing about one thousand innovation projects. “Yes, those are our ambitious goals and we confirm them by our results,” said Sergei Sidorsky.

Over the last 2.5 years 68 enterprises and 167 production facilities have been set up in Belarus. New and high technologies have been used to modernize 256 production facilities. The output of innovation products has exceeded US2 billion in this period. Belarus has started manufacturing seamless hot-rolled pipes, microchips, new kinds of tractors, household appliances.

According to the Prime Minister, Belarus will continue retooling the petrochemical and mechanical engineering industries, will modernize the energy industry, implement projects in the optics and electronics industry.

Attention will be focused on infrastructure projects, in particular, the construction of the US 5 billion business center Minsk City. Belarus is in talks with the World Bank and French companies about financing the reconstruction of automobile roads.

A total of about 100 investment projects are offered to investors at the forum. These proposals of the Belarusian government are worth around US 6 billion. The projects can be implemented within the next 2-3 years.

Foreign banks have trust in Belarus, Belarusian Prime Minister Sergei Sidorsky noted in his report at Belarus Investment and Economic Forum. “We use credit lines of Germany, Italy and China. In 2009, Euler Hermes, the German export credit agency, increased three times Belarus’ country limit for export loans,” the Prime Minister noted. The Italian export insurance agency Sace also increased plafond for Belarus.

Belarus successfully cooperates with the international financial organizations. Together with the International Monetary Fund Belarus carries out speedy structural reforms of the national economy. Belarus fulfills its obligations despite the complicated economic situation, Sergei Sidorsky underscored.

The Prime Minister also pointed to Belarus’ capacity to pay foreign debts. In July 2009 Standard & Poor's and Moody’s Investors Service confirmed Belarus’ credit ratings.

In 2009 inflation in Belarus will be under 10.5%, which is sync with the pre-crisis projections, Prime Minister of Belarus Sergei Sidorsky said when speaking at Belarus Investment and Economic forum in Minsk. According to Sergei Sidorsky, in January 2009 Belarus had to devalue the national currency. Simultaneously Belarus re-pegged the ruble to the basket of foreign currencies, which dovetails to a greater degree with the structure of trade and financial flows of Belarus.

“Today the Belarusian ruble exchange rate is stable, within the designated band,” Sergei Sidorsky said. The devaluation did not make a dramatic impact on inflation in the country, he added.

In 2010, the tax burden on the Belarusian economy will be reduced by 4.5% as against 2005. Belarus will abolish all the turnover taxes. According to the Prime Minister, the rational policy of budget expenses allows the government to reduce tax burden on the economy and reduce the number of taxes. Since 2005 Belarus has abolished 22 taxes successively.

The implementation of these measures allowed the country to reduce the tax burden by 1.3% in 2009. More than Br2 trillion were left at companies’ disposal. In 2009, Belarus introduced one of the lowest in Europe rate of income tax on individuals, Sergei Sidorsky said.

Belarus is looking for an investor for Belinvestbank, Prime Minister of Belarus Sergei Sidorsky said. “We are planning to sell a stake in Belinvestbank investment bank. We are looking for an investor,” Sergei Sidorsky said.

He also spokes about the recent major deals in the banking sector: Mezhtorgbank (Alfa-Bank now) and Slavneftebank (VTB Bank now). Russian Sebrbank’s offer for BPS-Bank is being considered. The past four years have witnessed the arrival of four banks with foreign capital, one with the Swiss capital and two with Iranian capital. Another bank has been set up with the participation of the European Bank for Reconstruction and Development.

Belinvestbank is a universal bank which services mainly corporate clients and provides support to investment projects in Belarus. The bank accounts for around 7% of the assets of the banking system, 8% of the corporate lending market. The state owns the majority stake in Belinvestbank through the State Property Committee (85.8%) and the National Bank (6.5%).

Investment agents should become the connecting link between interests of investors and the Republic of Belarus, said Prime Minister of Belarus Sergei Sidorsky. Timely review of investment proposals and contacts of the government with investment agents will be part of the foundation to create a single investment agency. It will be accountable to the Belarusian government and will replace the existing National Investment Agency, pushing its duties to a higher level.

Investment agents will be authorized to represent Belarus’ interests in matters relating to the attraction of investments. They will be tasked with seeking investors and supporting their realization of investment projects in Belarus by providing consulting and legal services.

In 2010 electronic registration of juridical persons will be introduced in Belarus. It will use a dedicated website to facilitate business startups, said Prime Minister of Belarus Sergei Sidorsky. As far as business registration goes, Belarus ranks seventh out of 183 countries according to a World Bank report. In order to start a business, one has to complete five procedures spending a total of six days on them, noted the Prime Minister.

Procedures required for getting construction permits have been improved. The key innovations are the ability to design and build objects simultaneously, cancellation of tenders for building objects which are financed by foreign investors.

Sergei Sidorsky reminded about the Land Code which came into force on 1 January 2009. It allows juridical persons to take possession of land plots. The matter was a serious concern for foreign investors a year ago and they posed the question at the London Investment Forum. It has been settled now. “A land plot can be bought via an auction or without one if there is a capital building owned by the juridical person,” said the Prime Minister. Apart from that, when state real estate is sold now, a land plot required for servicing the property is bundled with it.

Financnial watchdog bodies in Belarus are there to prevent rather than punish, Prime Minister of Belarus said. Belarus has revamped the system of watchdog activities which now follow the principle to “prevent rather than punish”. Addressing foreign investors, Sergei Sidorsky said that watchdog bodies’ interference in business used to be an issue. Belarus has adopted Decree No510 “On improving watchdog (supervisory) activities in the Republic of Belarus” to introduce a brand new system of watchdog activities. For the first time a ban has been introduced in Belarus on all inspections of start-up companies within two years since their inception. The International Finance Corporation also praised the new system.

Restrictions on the circulations of the shares bought by individuals during the preferential privatization period are gradually removed, said Prime Minister of Belarus Sergei Sidorsky. Free trade in shares can be allowed now, noted the head of Government.

In his words, at present foreign investors show a great interest in the privatization process in Belarus. Major consulting companies, including those in Germany, Russia, Sweden, Poland, work with Belarus. Belarus has adopted a three-year privatization plan. The conversion of over 470 state-run enterprises into joint-stock companies is in progress.

“The privatization uses the formula 30-40-30. It means that 30% of the target was secured in 2008, 40% will be secured in 2009 and another 30% in 2010. Government-owned shares of 160 joint-stock companies are now on sale,” said Sergei Sidorsky.

Belarus has a big investment potential, Ms. Chantal Dupasquier, the chief of the UNCTAD Policy Reviews Section, said during a plenary session of Belarus Investment and Economic Forum. “Belarus has made obvious progress in improving investment climate, business environment. The country needs to continue working in this direction including on the communication between the state and business community,” Ms Chantal Dupasquier said. This will allow improving the general understanding of Belarus’ policy, Ms. Chantal Dupasquier believes.

There is a need to improve the work with investors. Special attention should be paid to the allocation of land parcels under investment projects. “The country has adopted serious measures in this area. However, UNCTAD recommends rationalizing the procedure of zoning land plots. This will help create equal conditions for economic entities,” Chantal Dupasquier.

According to her, Belarus has a big investment potential. Investors from many countries are aware of that. “I think that the country will come out of the crisis using all its resources and will become an investment destination attractive for investors from various states,” she added.

The International Finance Corporation (IFC) will provide support to Belarus in improving the investment climate, Craig Bell, Representative of the International Finance Corporation in Belarus, co-chair of the working group for improving the investment legislation, said at Belarus Investment and Economic Forum in Minsk.

“The IFC will continue providing consulting services to Belarus to help it improve the investment. We seek to increase investments including in the real production sector,” said Craig Bell.

Analyzing the investment climate in Belarus, Craig Bell noted that Belarus has achieved “good results in raising investments, yet it is lagging behind other countries. “The country needs to work harder to raise more foreign and domestic investments,” the expert said.

Craig Bell stressed that the main factor for an investor is the transparency of the legislation. “We have seen positive changes in Belarus. Yet some areas need more attention,” he added.

According to the IFC representative, foreign investors see a plenty of positive trends in the state regulation of business. The control over price formation has been eased, business registration procedures simplified, taxation system streamlined, Decree No. 10 adopted, the expert said. Yet some issues remain unresolved. “For example, in many situations a bureaucratic burden discourages small and medium-sized enterprises from investing in the Belarusian economy,” he said.

According to Craig Bell, in the future Belarus has to focus on further improvement of its taxation system, mechanisms of obtaining loans, and investors’ protection system. “In order to improve the investment climate and give an impetus to the economic growth, comprehensive reforms should be adopted; they will bring Belarus to a new level of development,” the expert underlined. Talking about the improvement of business environment and investment climate, he said that all the interested sides should be involved in the process, including investors and representatives of business associations. “In order to come up with an efficient strategy to raise foreign investments, all the representatives of the business community should be invited to participate,” Craig Bell said.

Belarus is the most promising new market in Europe, President of the Belarus-EU Business Cooperation Council James Wilson noted in his report at the Belarus Investment and Economic Forum.

According to James Wilson, highly-skilled workforce, good scientific support, open export-oriented economy and a number of other factors make Belarus attractive for foreign investors. It is a very important market zone, a middle-sized country with a big population, James Wilson underscored.

According to him, Belarus is a good place to start a business. “In the near future Belarus may outpace several EU member countries and get into the top 30 countries with the most favorable business climate,” James Wilson said. “There is no hesitating. You need to use all the opportunities. You need to go and invest in Belarus,” James Wilson told foreign investors.

The establishment of the Customs Union of Belarus, Russia and Kazakhstan will enable the three countries to boost their GDP by 19% by 2015, Executive Secretary of the Customs Commission of the Customs Union Sergei Glaziev said.

“The unified system of economic regulation and economic partnership within the Customs Union will allow the three countries to increase their GDP by 19% (or about US 0.5 trillion) by 2015,” Sergei Glaziev said.

Apart from that, after the Customs Union is established on 1 July 2010, the state control on the Belarusian-Russian border will no longer be needed. The state control might be abolished on the Russian-Kazakh border at the same time or a year later.

Starting 1 January 2010, the Customs Union member states intend to launch the unified system of tariff and non-tariff regulation, control mechanisms and sanitary and phytosanitary requirements. “We intend to remove all the barriers which hinder the trade,” Sergei Glaziev said. According to him, the Customs Union is formed for a long-term perspective. It is aimed at setting up the free trade zone and creating new conditions for cooperation, the official added.

Belarus is an important participant of the Customs Union, Sergei Glaziev underscored. “Belarus successfully copes with the impact of the global economic crisis, competes on the market of sophisticated technologies. This experience is expected to be in demand in the Customs Union and foreign countries,” Sergei Glaziev noted.

Belarus consistently and actively supports the integration. “Soon the Customs Union heads of state will pass a landmark decision on introducing the unified customs tariff and the Customs Code. The Customs Union Commission will start working,” Sergei Glaziev noted. All the decisions related to the Customs Union are in compliance the WTO standards. They will promote the development of business competition, transparency of all the decisions taken at all the levels of the state regulation.

Sergei Glaziev noted that Russia is ready to launch the Customs Union.

Belarus has fulfilled basic conditions for creating country advertising, Klaus Baier, President of the German Economic Club in Belarus, member of the Foreign Investment Advisory Council, said at the Belarusian Economic and Investment Forum.

In his words, Belarus’ progressive efforts to improve the investment climate are evident. “Foreign investors have already noticed Belarus”, said Klaus Baier. He thinks that at present it is necessary to start pursuing a systematic marketing policy, otherwise haphazard measures can lead to haphazard results. The attractiveness of the investment climate depends not only on the government but on every citizen, too.

Klaus Baier suggested using this particular time to channel freely circulating global cash assets into the economy of Belarus. “It should become a signal for investors”, stressed Klaus Baier. The comprehensive marketing policy of the country will help Belarus recover from the crisis with new strengths and take its place in the structure of the world economy.