Vladimir Karyagin Chairman of the Presidium of the Republican Confederation of Entrepreneurship Chairman of Minsk Capital Association of Entrepreneurs and Employers www. allminsk.biz, www.rce-ale.org E-mail: lider@allminsk.biz Tel./fax+375(17)2982438 1
BUSINESS IN BELARUS Opportunities for investment, industrial and trade cooperation
Belarus: economy s profile in 2011 GDP - $54,6 bln. (70 th in the world) Industrial production- $67 bln. Agricultural production- $11 bln. Fixed capital investment - $18 bln. Retail turnover - $22 bln. Export ~$46 bln. Import ~$48 bln. Government spending~39% GDP (~$21 bln.), budget surplus in 2011 Belarusian banks assets ~$24 bln. (in foreign currency - $14.7 bln.) Foreign debt (as of 01.01.12) - $34,3 bln. (62,3% GDP), government debt - $12,4 bln. (22,5% GDP)
On January 1st, 2012 the Common Economic Space was created (Belarus, Kazakhstan, Russia) Belarus can become a solid ground for European companies seeking to get access to the vast market of the Common Economic Space. 4
Free Movement of: Capital Products Services Workforce
Product 2006, $ mln 2007, $ mln 2008, $ mln 2009, $ mln 2010, $ mln 2011, $ mln Belarusian Export Spread 2011 to 2010, % The product s share in export in 2011, % The product s share in export in 2010, % The product s share in export in 2009, % Gross export 19734 24275 32571 21304 25283 40294 59,4 100 100 100 Mineral products 7661 8645 12207 8082 7131 14492 103,2 36,0 28,2 37,9 Chemical industry products 1590 2106 4580 2634 3283 6592 100,8 16,4 13,0 12,4 Transport 2054 2887 3222 1445 2338 4212 80,1 10,5 9,2 6,8 Fertilizers 1131 1527 3589 1570 2446 3784 54,7 9,4 9,7 7,4 Machinery and equipment 1717 2317 2666 1702 2222 2787 25,5 6,9 8,8 8,0
Belarusian Import Product 2006, $ mln 2007, $ mln 2008, $ mln 2009, $ mln 2010, $ mln 2011, $ mln Spread 2011 to 2010, % The product s share in import in 2011, % The product s share in import in 2010, % The product s share in import in 2009, % Gross import 22351 28693 39381 28569 34884 45747 31,1 100 100 100 Mineral products 7444 10259 14339 11511 12346 19086 54,6 41,7 35,4 40,3 Machinery and equipment 3592 4664 6277 4424 5796 6212 7,2 13,6 16,6 15,5 Metals and metal products 2621 3427 4860 2504 3897 4592 17,8 10,0 11,2 8,8 Chemical industry products 1581 1807 2543 2054 2574 2894 12,5 6,3 7,4 7,2 Transport 1452 1962 2724 1650 2197 3827 74,2 8,4 6,3 5,8
Geographic structure of export Country Share in the gross export, % 2006 2007 2008 2009 2010 2011 Total, mln. $ 19734 24339 32571 21282 25226 40294 Russia 34,7 36,5 32,2 31,5 38,9 34,0 The Netherlands 17,7 17,8 16,9 17,3 11,0 15,3 Ukraine 6,3 6 8,5 8,0 10,2 10,3 Latvia 2,3 4,1 6,6 7,8 3,7 7,8 Germany 3,8 3 2,5 4,6 1,8 4,5 Poland 5,2 5,0 5,5 3,9 3,5 2,8 Lithuania 2,2 2,3 1,9 1,7 1,8 2,1 China 2 2 1,9 0,8 1,9 1,6 Sweden 0,01 0,003 0,002 0,003 0,003 0,002 CIS 43,6 46,1 43,8 43,8 53,5 48,4 EU 45,5 43,8 43,9 43,6 30,1 39,0
Geographic structure of import Country Share in the gross import, % 2006 2007 2008 2009 2010 2011 Total, mln. $ 22351 28764 38381 28564 34868 45747 Russia 58,6 59,9 59,8 58,5 51,8 54,5 Germany 7,5 7,6 7,1 7,8 6,8 5,6 China 2,5 2,8 3,6 3,8 4,8 4,8 Ukraine 5,5 5,4 5,4 4,5 5,4 4,4 Poland 3,4 2,9 2,9 2,8 3,1 2,8 Sweden 0,005 0,004 0,004 0,005 0,005 0,004 CIS 64,9 66,2 66,0 63,8 58,8 61,4 EU 22,3 21,8 21,6 22,9 21,6 19,0
Trade turnover between Belarus and Sweden, mln. $ 350 300 250 200 150 165,50$ 150,60$ 175,20$ 217,50$ 100 50 96,95$ 72,70$ 77,60$ 91,50$ 0 2008 2009 2010 2011 Belarus' export Sweden's export
Trade Structure From Belarus Potash Peat Tyres Timber From Sweden Electricity generators Trucks Cars Communication equipment
Private Entrepreneurship in Belarus
Belarusian business, as of 01.04.2012 125 652 legal entities Agriculture- 4723, Food industry 1039, Textile industry 1917, Timber industry 1993, Rubber and plastic products production 1310, Machinery and equipment production 1178, Trade 42371, Building 9977, Hotels and restaurants 2447, Transport and communications 8885, Public utilities 9546 246 155 individual entrepreneurs
Number of small and medium-sized private enterprises 14
Share of small and medium-sized enterprises in GDP, % (1-250 employees) 15
Division of small and medium-sized private enterprises according to the spheres of activity Trade 41% Industry 20% Transport 8% Agriculture 3% Building 11% Other 17% 16
Belarus in Doing Business report, 2012 0 20 40 60 80 100 120 140 160 180 200 2006 2007 2008 2009 2010 2011 2012 8 7 9 58 68 69 106 85 97 110 119 129 153 148 156 175 175 178 181 183 183 Doing Business Rank Paying Taxes Starting a Business
Republican Confederation of Entrepreneurship The main priorities: 1. Creation and promotion of the Belarusian National Business Platform. 2. Development of public-private partnership in Belarus. 3. Protection of rights and representing interests of the business community. 4. Creation of the republican business network. 5. Consolidation of the business community through the dialogue between business and government. 6. Development of social partnership. 18
Since 2006 the business community has created the National Business Platform, which is updated annually. It is presented to the government, civil society and international organizations. 19
Areas of the business climate improvement (as in the National Business Platform of Belarus - 2012): I. Macroeconomic environment improvement. II. De-monopolization, fair competition within the Common Economic Area. III. Expansion of private initiative and responsibility sphere. IV. Regulating and tax burden optimization. V. Improvement of corporate and public management quality. VI. Partnership of business, society and government. 20
President s Directive #4 December 31, 2010 On the development of the entrepreneurial initiative and incentives for business activity in the Republic of Belarus 21
575 Administrative procedures Three times less than in 2010 Taxation Profit tax 18% Income tax 12% Value-Added tax 20% Dividend tax 12% Social Security tax 35%
Decree 6 of May 7, 2012. On incentives for entrepreneurship in medium and small towns, and rural areas 23
For 7 years newly created enterprises are exempt from: Profit tax Income tax Real estate tax License duty Payments to innovation funds 24
Enterprises get the right: To independently choose types and amount of raw materials purchased, terms of products sale, suppliers and buyers. To insure property rights with foreign insurance companies To be exempt from import duties and VAT on products imported as investment into the statutory fund of the enterprise To possess incompleted buildings and constructions, on condition that they will be finished in 5 years. 25
Privatization All enterprises can be privatized. It is a matter of price and conditions А. Lukashenka, April 2012 Price Volume of purchase (control stock or not) Maintenance of jobs Investment into the privatized enterprise Preservation of company s profile Product delivery to the domestic market
Investment environment: advantages Common market with Russia and Kazakhstan Capacious domestic market for SME s Security Developed infrastructure (roads, energy, water supply, telecommunications), healthcare and education High quality of human capital Relatively low competition at the domestic market Special conditions of business in Free Economic Zones
Investment environment: disadvantages Different market conditions for private and public sectors (taxation, licenses, access to lending, lease) Unstable legislation High inflation Expensive credit resources Complicated tax legislation
Trade deals (import/export) Greenfield projects Privatization, acquisition of public assets Joint ventures
The possibility of success is higher in cooperation with Belarusian private companies All privatization offers should be profoundly analyzed High prospects of orientation towards Russia s market High potential of modernization and recapitalization of many enterprises Usage of the European market s credit means
Business web-pages www.rce-ale.org Republican Confederation of Entrepreneurship www.allminsk.biz Minsk Capital Association of Entrepreneurs and Employers www.liberty-belarus.info Strategy Analytical Centre www.mfa.gov.by Foreign Ministry www.bel.biz Belarusian business-portal www.ifc.org International Finance Corporation 31
www.investar.by Investment legislation Weekly overviews of investment events Monthly overviews of auction results Investment news Plans of privatization Handbook for investors 32
11-115 Serafimovicha 220033 Minsk Belarus Tel./fax: +375(17)2982438/41 e-mail: souz@allminsk.biz s.u.l.business@gmail.com lider@allminsk.biz www.rce-ale.org 33