Belarus Forum “Broadening the horizons: investment, finance, development” results

6 October 2016

The experts discussed strategies to attract foreign investments in Belarus, prospects of investment cooperation with financial institutions of the EU, the Eurasian Economic Union, the United States and China, as well as opportunities for involvement of US investors into investment projects and other relevant issues

The forum was opened by Prime Minister of Belarus Andrei Kobyakov. “Belarus is ready to adopt the best international practices and guarantee its quality execution”, noted Andrei Kobyakov during his welcoming remarks. Head of the Government admitted that, despite all efforts, Belarus has not yet received the inflow of foreign investment, which has been expected.

“Lack of awareness of investors about existing potential opportunities in Belarus plays an important role.  We are purposefully working to overcome these shortcomings. We have organized a number of major events in New York, London, Vienna. Today's forum continues to list these activities”, said Andrei Kobyakov. The second, equally important goal of the forum is to develop measures to improve the investment environment.

Belarus should be provided with a quality and possible operational transition from dominant attraction of foreign credit resources to the full inflow of foreign direct investment, said the Prime Minister.

We need to focus investment policy on certain investors, understand their expectations and possible fears", said Kobyakov. He noted that even the place of the hotel “Marriott” was a good example of attraction and use of foreign direct investment.

Belarus consistently moves to a new level of cooperation with international financial institutions.

“Together, we develop and implement structural policies in economics and finance. They are used in the preparation of the country program documents for the near and medium term, “said the Prime Minister.

According to him, it is supposed to hold a dialogue with the business community in a similar way. "This forum is a concrete proof", assured the Prime Minister. Andrei Kobyakov said that a good legal framework for foreign investment had been formed in Belarus.

"A large part of the country  is functioning preferential regimes to accommodate the business within the free economic zones, High-Tech Park, the industrial park Great Stone”, recalled the head of the Government.

Currently, Belarus jointly with partners from EAEU has been improving business conditions in free economic zones. "In this mode the HTP will be endowed with the properties of the port area, and it will become possible to handle loads, pass customs formalities, receive more services,” said Deputy General Director of CJSC  Company for the development of the Industrial Park" Kirill Koroteev.

First Deputy Finance Minister Maxim Ermolovich said that currently the focus of activities in the Ministry of Finance was not to create new tax incentives, provide tax incentives, or lure with a special tax regime.

"Improvement of the tax system will follow the pathway of reducing tax benefits and building a competitive system with a fairly modest level of tax rates, so that businesses understand the conditions in which it works and in what conditions it will work in the future", said Maxim Ermolovich. “We are building the system that would allow us to stabilize the operation of the financial system and pave the way for successful business, «he concluded.

Ermolovich also noted that many of the recommendations of the International Monetary Fund mission were fully comply with the directions of work of the Ministry of Finance.

"We have the recommendations of the mission to assess the effectiveness of the public sector. Many of those recommendations, which have been set out in the document, are related to the Ministry of Finance activities and basically completely correspond to the areas of work, which we have taken before. Some work we started in 2010, some we have started not so long ago, but all we pay great attention to all of the activities", Maxim Ermolovich said.

Maxim Ermolovich named two essential elements. Firstly, it is improving the quality of management of state-owned enterprises. "The Ministry of Finance is involved in the evaluation of the financial statements and the transition to international standards. For 2016 more than 90 of the largest state-owned enterprises, banks, insurance companies, all socially important organizations will have to report with accordance to IFRS. In the IMF recommendations, this trend is agreed on", explained the first Deputy Minister.

The second issue is the work on the relief of the risks of state enterprises’ ability to pay. "We do this, conduct securitization of liabilities of enterprises, so as not to shift this burden on banks, do not create conditions for the development of the crisis in the banking sector. The work requires an appropriate organizational and information support of the Ministry of Finance.", stated Maxim Ermolovich.

The European Union is ready to provide promotion for Belarus in attracting foreign investment.

"The EU should understand in this case what Belarus is ready to make in the field of further reforms, the creation of favorable conditions for attracting investment, strengthening its reputation,” said head of unit at the Directorate-General for Neighbourhood and Enlargement Negotiations of the European Commission Vassilis Maragos.

The most important advantages of Belarus are highly educated people, skilled workforce, competitive products, rapidly growing IT sector, rich traditions in mechanical engineering and process industries.

The reforms undertaken by the Government of Belarus, had helped to improve the situation in the private sector, said the representative of the European Commission. Today, Belarus pay more and more attention to the development of small and medium-sized enterprises. It is also a positive signal.

The EU cooperates with Belarus on a number of projects in the energy sector, support for small and medium-sized enterprises, information technology. "We face new challenges and we can solve them jointly. The experience of Western Europe can be an excellent example for Belarus, and we will be happy to work with you and thus achieve better results against the background of the overall objectives, including security in the world ", he stressed.

Vassilis Maragos drew attention to the fact that then there was the work on the preparation of a number of partnership agreements. "We are talking about the financing of 30 million euros and we will continue to build on these efforts. I mean managing migratory flows, development of small and medium-sized businesses,” he explained. In addition, Belarus has the opportunity to attract resources of the European Investment Bank. "We will work with the bank, the government of Belarus and local authorities to identify the real investment projects that can be supported,” the expert said. “We also consider the possibility of providing grants through the European Neighbourhood Fund".

The Turkish business is interested in expanding its presence on the Belarusian market. Turkish companies are ready to offer Belarus a major new investment projects. The possibilities of expanding cooperation are discussed today at the government level. “Significant progress can be observed in the negotiations with the International Monetary Fund,” said during the forum Deputy Chairman of the National Bank of Belarus Dmitry Kalechits.

"The negotiation process is ongoing. We are moving, and progress is evident.", said Kalechits. However, he thinks that the new program could be signed before the end of the year. Dmitry Kalechits said that the IMF mission welcomed the work carried out by the National Bank of Belarus.

"They understand the measures we are taking in terms of stabilizing the economy, understand the complexity of the time. We have no contradictions. For all matters relating to monetary policy, financial markets, technical missions are constantly working. De facto, all what we do is very close to the recommendations that our colleagues give us, " said Dmitry Kalechits.

The International Finance Corporation is ready to attract Belarusian banks to the program to promote investment in the green economy. IFC supports the Government's plans and business in Belarus to develop alternative energy sources, such as projects on the use of biomass and biogas. These projects strengthen the energy independence of the country, develop energy-efficient technology.

“We can fund such projects, both directly and through our regional investment promotion program in the so-called green financing and include it in Belarusian banks,” said head of the regional office of the International Finance Corporation in Belarus and Ukraine Rufat Alimardanov. According to him, Belarus has the potential for the transport sector and logistics system. A lot has been done in this direction. However, a lot remains to be done in the field of improvement of the transport and logistics infrastructure, Rufat Alimardanov is sure of this.

“We can support such projects, including public-private partnership level,” he stressed. “We have partners all over the world, and we are able to attract investors.”

Following the results of the forum, a roadmap to improve the investment climate will be prepared. "This document can be used by the government to adjust the economic policy in several directions,” explained director of the National Agency of Investment and Privatization Natallia Nikandrava. The proposals of the private business and foreign investors were discussed to create more favorable conditions for the attraction and development of investments, as well as to overcome existing barriers to investment.”

Belarus Forum “Broadening the Horizons. Investment. Finance. Development” brought together more than 600 participants from 30 countries, including representatives of CIS countries, North America, the Persian Gulf, East Asia and the European Union. Participants of the forum were the largest international companies with a worldwide reputation – CRH, Kastamonu, Merck, Pinvex Fondi, Stadler, Gazprom Transgaz, Pure Energy Intelligence, Turkcel, Sohra, EPAM, EPC, Pöyry, Heineken, Google, etc. The event was attended by major international investment and financial organizations and foundations, among which were the London and Warsaw stock exchanges, the Bank of New York, AKA bank, Rothschild investment bank, the Investment Fund of Abu Dhabi, the Kuwaiti Arab economic development Fund (KFAED), Cerberus Capita Fund, OPEC, BaltCap , the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC), the World Bank, Nordic investment Bank (NIB), the Organisation for economic cooperation and development (OECD), the Nordic Environment Finance Corporation (NEFCO), and others.

The event was organized by the National Agency of Investment and Privatization, UNITER Investment Company, the Belarusian Institute for Strategic Studies (BISS).

Source: National Agency of Investment and Privatization