OREANDA-NEWS. November 19, 2010. The Belarus Investment Forum has opened in Frankfurt am Main, Germany. The President of the Republic of Belarus Alexander Lukashenko has send letter of greeting to the participants of Belarus Investment Forum.

“I am sincerely happy that we have managed to attract interest of such an authoritative business audience to the event. We view your participation in the forum as an evidence of a growing interest of foreign business to the Republic of Belarus, which we are going to support in every possible way,” the letter of greeting says.

Today Belarus’ top priorities include energy, tourism, new high-technology manufactures, industry and agriculture.

Belarus’ advantageous geographic position, stable economy, high human potential as well as the sustained economic growth and improving investment climate are only some of the features that distinguish the contemporary Belarus.

“The country’s legislation guarantees the protection of investment, free disposal of profits and favorable conditions for investors,” Alexander Lukashenko stressed. “I am confident that the forum will become a starting point for a whole range of serious projects which will be beneficial for investors and which will help Belarus to promote economic growth and improve the living standards of Belarusians,” he added.

The address was read out by Vice Premier of Belarus Andrei Kobyakov.

Belarus Investment Forum is an effective platform for negotiations, which brings real results, Prime Minister of Belarus Sergei Sidorsky said in a plenary session of the forum.

In his words, this large-scale event provides an opportunity to do a systemic review of the Belarusian economy. The forum will give an objective expert assessment of the investment climate in Belarus as well as the measures being taken in the country to enhance its investment attractiveness.

The PM stressed that Belarus has been consistently implementing the model of the socially-oriented market economy. The country has made considerable progress in its economic development. In the pre-crisis period the average annual GDP growth was 9.5-10%, industrial production was expanding at the level of 10.5% every year. Capital investment rose by 23.8% on average, and real wages 12.1% per year. The country’s economy kept on track during the crisis. “Timely anti-recessionary measures and flexible government management of the economy secured lower production decline than in other CIS member states,” the Belarusian head of government stressed. In his words, the country managed to halt the crisis and even increase the GDP at the end of 2009.

According to Sergei Sidorsky, the GDP growth is ensured with simultaneous efforts to reduce power consumption. The country has been also working to strengthen food safety, develop agriculture, increase export potential and expand the construction sector.

The Belarusian economy today is ready to utilize large-scale and serious flows of foreign investments, Prime Minister of Belarus Sergei Sidorsky said addressing the Belarus Investment Forum in Frankfurt am Main.

Belarus is home to over 5,000 companies with foreign capital. The major investors are Russia, Lithuania, Germany, Poland, Cyprus and the UK. This is another testimony to the fact that the goals, tasks and principles underpinning the economy of the EU member states, can apply to the modern day Belarus.

“Our investment forum is also a signal to the international community and Europe, first of all, that we understand global issues and globalization and want to build mutually beneficial and equal economic relations taking into consideration Belarus’ economic experience,” Sergei Sidorsky said.

Talking about the measures to improve the investment climate in the country, the Prime Minister noted that Belarus has streamlined business terms following the example of the EU member states. Many administrative procedures were abolished. As a result, today one can start a business in Belarus within five days in five steps. For example, starting a business in Germany will take 15 days and 9 steps.

Land lease laws were optimized. The tax system was simplified. Beginning 1 January 2011, taxpayers will pay only five basis taxes. As for the types of taxes and duties and payment intervals, Belarus’ tax system resembles that of European countries. Businessmen working in Belarus no longer need to declare the origins of capital.

“All your investments are welcome in Belarus. The Investment Code of the Republic of Belarus gives you the right to use your profits the way you want, you can re-invest them into your operations in Belarus or take them abroad without any obstacles,” Sergei Sidorsky said.

He reminded that Belarus set up the National Investment and Privatization Agency which is “one-stop place” for investors. The agency offers them the entire package of services: from consulting and providing information up to project administration and efficient communication with government bodies.

The Prime Minister also informed the participants about the Customs Union of Russia, Belarus and Kazakhstan.

Belarus plans to boost the volume of transit transportation by several times soon thanks to the Customs Union membership, Prime Minister of Belarus Sergei Sidorsky said.

“We have reasons to believe we will be able boost the volume of transit transportation soon thanks to Belarus’ membership in the Customs Union of Belarus, Kazakhstan and Russia. We work together on the legal base to launch the single economic space in January 2012. With the single economic space in place, we will build a structure that will be virtually identical to the European Union,” said Sergei Sidorsky.

Several legal acts have been adopted in Belarus to raise the country’s transit attractiveness. Large-scale efforts are underway to build motorway services outlets, reconstruct automobile roads, and develop the infrastructure of border-crossing stations for automobiles and trains.

At present Belarus has a well-developed network of motorways, railways, gas and oil pipelines, data networks and power lines. “We plan to undertake large-scale efforts to further modernize transport communications, build transportation and logistics centers and invite foreign investors to take an active part in these processes,” remarked Sergei Sidorsky.

Pouring investments into Belarus’ transportation and logistics system, investors will get free access not only to the Belarusian market but also to huge markets of Russia and Kazakhstan. As a matter of principle investors will be able to provide a large number of logistics services as part of trade between the European Union and Asian countries, said the Prime Minister of Belarus.

Belarus plans to float up to USD1 billion worth of government bonds in the Asian stock market, Prime Minister of Belarus Sergei Sidorsky said.

Belarus expects to attract investors from Hong Kong and Singapore, said Sergei Sidorsky.

He reminded that this year it was the first time Belarus has floated USD1 billion worth of government bonds on a foreign market as an instrument to attract investments. The bonds were floated in two steps, with the coupon rate at 8.7% per annum. The bonds are now in demand, their profitability is about 8% per annum.

“We believe the floatation has been successful and we’ve decided to take the next step – floating our bonds on the Russian market. Our floatation on the Russian financial market will be a debut for us and for Russians, who will open their market to bonds of foreign governments via Belarus,” said the Prime Minister.

Although Belarus’ external borrowing has increased considerably over the last few years, the public debt accounts for less than 20% of Belarus’ GDP while in many other countries the figure is as large as 60-80%.

The ratings agency Standard & Poor’s has assigned the B+ credit rating to Belarus, saying the country is one of the most solvent and developed nations.

“We put a lot of efforts into enhancing the banking system. The system has survived the crisis and has managed to earn considerable profits. At present there are over 30 banks with a share of foreign capital in Belarus. We have successfully sold blocks of shares in state-owned banks to Raiffeisen Group and Sberbank of Russia. We have opened new banks that include capital from Switzerland, Cyprus, the Netherlands, Germany, the UK, Sweden, Ukraine, and Kazakhstan,” added Sergei Sidorsky.

Taking into account the performance of the Belarusian economy all the banks have managed to survive the global financial and economic crisis.

At the investment forum, The Prime Minister of Belarus had met with several foreign investors, including representatives of Commerzbank and Deutsche Bank, earlier that day.

Commerzbank has been working in Belarus for several years and has a representative office there, said Sergei Sidorsky.

“Deutsche Bank was one of those to initiate the floatation of Belarusian eurobonds in Europe. Today we’ve discussed the maiden floatation. The floatation was successful,” said the head of the Belarusian government and added that the sides also discussed prospects of cooperation between Belarus and Deutsche Bank in other areas. In particular, Deutsche Bank encouraged its clients Siemens and Claas to use the bank’s resources to enter the Belarusian economy.

Sergei Sidorsky said that at present over 250 German companies work in Belarus. “We are building a wind farm in Belarus with assistance of German investments. Great opportunities are opening up for German investors, German high technologies in Belarus,” said the Prime Minister.

Founded in 1870, Deutsche Bank is Germany’s and Europe’s largest bank. For about 20 years Deutsche Bank has been working with over half of Belarus’ banks. It has been providing syndicated loans to Belarusian companies (AKA Hermes) since 1992. In the protocol that the Belarusian Finance Ministry and Deutsche Bank Global Markets signed on 24 February 2010 the German bank expressed readiness to use its contacts in relevant German ministries and the agency Euler Hermes to improve Belarus’ OECD credit risk rating.

In recent years Deutsche Bank has stepped up operation in Belarus. Several delegations of Deutsche Bank visited Belarus to meet with officials of the Finance Ministry and financial institutions. As part of the consortium that includes four financial institutions Deutsche Bank organized a floatation of Belarusian eurobonds on the international financial market in 2010.

Deutsche Bank is interested in cooperation with Belarus in consulting in effective management of privatization processes, consulting in risk management, consulting in matters relating to the floatation of Belarusian government bonds on foreign markets, and associated project lending.

Belarus’ economic growth is impressive, Klaus Mangold, Chairman of the Committee on Eastern European Economic Relations, said at the Belarus Investment Forum.

Klaus Mangold praised the economic development plans of Belarus. “The plans are ambitious, but I am sure you will be able to materialize them,” the chairman of the committee said.

Germany has always placed a great emphasis on cooperation with Belarus, Klaus Mangold said. In his words, it is worth investing in the Belarusian economy. He emphasized the importance of the establishment of the 170 million market of the Customs Union.

Germany is one of Belarus' major trading partners. In 2009, it was the third biggest foreign partner of Belarus after Russia and the Netherlands. In January-September 2010, Belarus-Germany trade made up USD1.96 billion. Credit and investment cooperation is an essential part of the bilateral relations. In January-September this year, Germany invested USD41.3 million in the Belarusian economy (investment in banking sector not included).

The Committee on Eastern European Economic Relations is a joint initiative of economic unions and enterprises of Germany. The committee acts as an influential contact person for enterprises and administrative agencies in Germany and abroad.

Belarus has achieved a considerable economic success by pursuing its own policy, said World Bank Regional Director for Moldova, Belarus and Ukraine Martin Reiser at the Belarus Investment Forum.

He added that this way of economic development was not a recommendation by the World Bank, but it is a serious experience and WB should look into it.

Mere statistics and facts are not enough to appraise Belarus, one should see the country with his/her eyes, Martin Reiser believes.

WB regional director praised Belarus’ economic success and said that the engine of Belarus’ growth needs a second cylinder. “We need to add a private cylinder.” Martin Reiser praised the advantages of Belarusian economy, and the investment growth, which did not dwindled during the crisis.

Martin Reiser said Belarus’ progress in various areas is obvious, as the latest WB Doing Business Report says, but the country should go further.

Belarus hopes to improve its position in the Doing Business report of the World Bank and the International Finance Corporation in 2011, Economy Minister of Belarus Nikolai Snopkov said.

“We expect better ranking in such categories as Paying Taxes, Protecting Investors, Dealing with Construction Permits and Closing a Business,” Nikolai Snopkov said.

As for the tax system, the Economy Minister emphasized that Belarus will keep easing the tax burden and optimizing the tax system.

A reminder, the Doing Business 2011 ranked Belarus 68th out of 183 economies. Belarus undertook reforms in four areas covered by the research, like Getting Credit and Paying Taxes. Belarus has simplified the use of collateral and offered an opportunity for parties to agree on out of court enforcement. Belarus has lowered the turnover tax, social security contributions and immovable property tax. The introduction of e-declarations has simplified and reduced the cost of taxpaying in Belarus. The introduction of e-declaration of export and import helped speed up trade transactions thanks to which Belarus moved up the ranking in Trading Across Borders. As for Closing a Business, Belarus changed the rules regulating the work of crises managers and reinforced the rights of creditors in case of a company’s bankruptcy.

Belarus is ranked rather high in other rankings, too. For example, our country is the region’s leader in terms of simplicity of registration of foreign companies, Nikolai Snopkov said.

The Economy Minister confirmed Belarus’ interest in raising foreign investments and noted that in 2010 Belarus expects to receive USD5.8 billion of foreign direct investments, up 12% over 2009.

In the course of the Belarusian Investment Forum participants entered into a number of agreements.

In particular, Sberbank of Russia and Deutsche Bank will set up an investment company with operations in Minsk, Chairman of the Board of BPS-Bank Vasily Matyushevsky told.

Apart from that, BPS-Bank and Banque Havilland (Luxemburg) are setting up Belarus’ first FDI Fund.

Apart from that, BPS-Bank signed cooperation agreements with Commerzbank and Deutsche Bank. “We have sealed an agreement with Commerzbank to deepen cooperation, like implementing a series of projects in retail business. It is new to the Belarusian market” Vasily Matyushevsky said.

During the Belarus Investment Forum in Frankfurt am Main, BPS-Bank, the Mogilev Oblast Executive Committee and Germany’s Binos signed a three-party protocol of intent to construct a plant producing cement impregnated chipboard in Belarus. Deputy Chairman of the Mogilev Oblast Executive Committee Viktor Nekrashevich told reporters that the plant is to produce 60,000 cubic meters of chipboard per year; the project is estimated at roughly EUR25 million. The plant may be constructed and inaugurated within 15-18 months.

Apart from that, Vasily Matyushevsky informed that another two agreements are to be signed. Unimilk and the Minsk Oblast Executive Committee will fulfill a project to upgrade Slutsk Cheese Making Plant (the first stage of the project is estimated at EUR 85 million). The second project deals with the construction of eight hotels in Belarus by Blue Eagle Private Equity – three hotels will be located in Minsk, and one in the other oblast centers each ). The project is estimated at \\$200 million). At least 50% of the finances will be provided by investors.

A deal on selling a stake in Belinvestbank to a European investor can be closed within six months, chairman of the board of directors of Belinvestbank Alexander Rutkovsky told.

According to him, the issue on privatization of the bank is on the agenda. “The head of state made it clear long ago that Belinvestbank is one of the objects that can be sold to a strategic investor,” said Alexander Rutkovsky. According to him, strategic investor means a controlling stake with a possibility of the state withdrawing as a shareholder.

“As of today there are no concrete agreements and official documents on the strategic investor. Therefore we can speak now only about finding a potential partner. At the same time there are proposals on acquiring a non-controlling stake – around 25%,” informed Alexander Rutkovsky.

“I think that we will close this issue in the next six months,” he said.

A possibility of selling the bank to the strategic investor in the future is not ruled out. According to Alexander Rutkovsky, the final decision will be taken by the state, who is the owner of the bank. “Today we give the priority to European financial institutions. The negotiations are underway. We want it to be the bank that is among the twenty largest financial institutions in Europe,” Alexander Rutkovsky noted.

It was previously reported that the EBRD may become a shareholder of Belinvestbank.

The John Deere company is interested in manufacturing cooperation with Belarusian agricultural machinery manufacturers, John Deere representative Dirk Stratmann told.

This and other matters were discussed when John Deere representatives met with Vice Premier of Belarus Andrei Kobyakov during the Belarus Investment Forum in Frankfurt am Main on 17 November.

Andrei Kobyakov and the John Deere representatives discussed two projects: the renovation of the technologies that Belarusian agricultural machinery producers use and possible manufacturing cooperation with a Belarusian agricultural machinery producer. Dirk Stratmann said: “It is possible that in the near future we will see John Deere products with the label ‘Made in Belarus’. This is not a new idea and has been discussed before. Now we are close to final results. The project may get started after our next visit to Belarus”.

At present the corporation John Deere manufactures agricultural equipment, engines, equipment for construction and forestry enterprise, for tending to parks and green spaces. The company provides service, spare parts and loans for buyers. John Deere machines are manufactured in Europe, Asia, North and South Americas. John Deere products are sold in over 130 countries across the globe.

According to participants the Belarusian Investment Forum has provided comprehensive information on the country’s economy and Belarus’ development prospects.

Potential partners from Germany and other countries received objective information about what is going on in Belarus, noted Miroslaw Tieluszecki, Vice President at Discovery Potash (Luxembourg). He expressed hope that such investment forums will be held on a regular basis.

Discovery Potash produces and processes salts, and is engaged in geological exploration of potash salts fields.