CONTENTS:

FOUNDER: MODERNIZATION Council of Ministers of the Republic of MEMBERS: Alexei DAINEKO Ministry of Economy of the Republic of Belarus, Modernization: Ministry of Finance of the Republic of Belarus, Priorities and Essence Ministry of Foreign Affairs of the Republic of Belarus, Belarusian Telegraph Agency BelTA A country’s prosperity hinges on the pace of its economic modernization 4 EDITORIAL BOARD: Tatyana IVANYUK Mikhail Prime Minister of Belarus, MYASNIKOVICH Corresponding Member of the National Academy Learning of Sciences of Belarus (NASB), Doctor of Economics, from Mistakes Professor (Chairman of the Editorial Board) Total investment spent on the upgrade of Belarus’ wood processing industry Boris BATURA Chairman of the Oblast is estimated at €801.9 million 9 Executive Committee Olga BELYAVSKAYA Igor VOITOV Chairman of the State Committee for Science and Technology, Doctor of Technical Sciences, A New Lease on Life Professor Belarus is set to upgrade about 3,000 enterprises in 2013 13 Igor VOLOTOVSKY Academic Secretary of the Department of Biological Sciences, NASB, Doctor of Biology, Professor

Dmitry ZHUK Director General of Belarusian Telegraph Agency BelTA

Vladimir ZINOVSKY Chairman of the National Statistics Committee

Alexander Director General of the NASB Powder Metallurgy ILYUSHCHENKO Association, NASB Corresponding Member, Doctor of Technical Sciences, Professor Yekaterina NECHAYEVA

Viktor KAMENKOV Chairman of the Supreme Economic Court, Ingredients of Success Doctor of Law, Professor Belarusian companies can rival many world-famous producers 16 Dmitry KATERINICH Industry Minister IN THE SPOTLIGHT Sergei KILIN NASB сhief academic secretary, NASB Corresponding Member, Doctor of Physics and Mathematics, Tatyana POLEZHAI Professor Business Plan Nikolai LUZGIN First Deputy Chairman of the Board of the National for the Country Bank of the Republic of Belarus, Ph.D. in Economics Rational use of resources and modernization of enterprises are the major preconditions Sergei MASKEVICH Education Minister, for sustainable economic growth 24 Doctor of Physics and Mathematics, Professor Yekaterina MARKOVICH Anatoly MOROZEVICH Rector of the Academy of Public Administration under the aegis of the , Smart Construction Doctor of Technical Sciences, Professor Regulations were enacted in Belarus on 1 April to allow designing only energy-efficient housing 30 Alexander MOSHENSKY Director General of Santa Impex Brest LABOR MARKET Oleg PROLESKOVSKY Information Minister Striving for Balance Nikolai SNOPKOV Economy Minister Belarus is working to create civilized conditions for export and import of labor resources 34 Anatoly TOZIK Deputy Prime Minister, Ph.D. in History, Professor

Andrei KHARKOVETS Finance Minister ©ȅDzǶǵǶǴǰDzǨǩǭdzǨǸǻǹǰ(&2120<2)%(/$586ª1R   Registration certificate No. 346 of 23 April 2009 Vladimir SHIMOV Rector of the Belarusian State Economic University, by the Ministry of Information of the Republic of Belarus Doctor of Economics, Professor EDITOR-IN-CHIEF Tatyana VLASOVETS EDITORIAL BOARD: Dmitry ZHUK, Svetlana BALYSHEVA, Irina BUFETOVA, Yulia KOMAR

BELTA photographers: Natalya ABLOZHEY, Alexander DIDEVICH, Gennady ZHINKOV, Nikolai PETROV, Viktor TOLOCHKO, Oleg FOINITSKY, Alexander KHITROV, Sergei KHOLODILIN QUESTIONS TO THE MINISTER TRANSPORT Mineral Wealth Tatyana IVANYUK Rational mining and investment in subsoil use Belarusian Railways: are the key to sustainable economic growth 38 151 Years and Counting Every year about 150 million tonnes of cargo and 100 million passengers are transported by rail 80 AGRICULTURE Alexei MELESHCHENYA, Tatyana SHAKEL Lucrative Abundance Belarus has been steadily increasing STATE AND BUSINESS the export of dairy and meat products 88 Irina NOVIKOVA REGIONAL NEWS Public-Private Partnership: Tamara MARKINA Fashion or Trend? Successful Start The business model of public-private partnership (PPP) is the 44 Today products made in Lida District are sold key to fast socio-economic growth in 70 countries worldwide 94 FOREIGN ECONOMIC TIES BUSINESS ENVIRONMENT Marta ASTREIKO Protos Means “First” in Greek Living Within Means, Protos Group is investing about €20 million 98 Trading Wisely in the expansion of metal structures production Belarus is set to expand its export by 15.2% in 2013 50 INVESTMENTS

Yekaterina BABKEVICH Nadezhda RADIVON In Search of New Ways Stadler settles in Belarus and Solutions The Belarusian-Swiss electric transport factory in the town 102 In 2012, Belarus and the secured of Fanipol will start manufacturing merchandise in late 2013 an almost 23% increase in the bilateral trade EXHIBITIONS which now stands at $571.3 million 57 BANKS AND FINANCE : A View on the Baltic Sea The National Expo of the Republic of Belarus held in Riga Modern Payment Trends in December 2012 marked an important milestone in the Belarusian-Latvian relations 104 The share of cashless payments in the total number of card transactions increases year to year 62 Platform for Pundits The 20th Healthcare in Belarus 2013 expo Anna KOT took place in Minsk on 26-29 March 108 Cards, Banks, Cash Know How to Change the World The share of non-cash transactions in retail trade Belarus ranks sixth in the pace of advance of information in Belarus is expected to increase fourfold and communication technologies 110 to make up 50% by 2016 66 TRADE Alexander BENKO Vladimir VISHNEV Bringing Down Stereotypes Demand Creates Supply Is it possible to “spin up” the Belarusian stock market? 71 see benefits in bringing big supermarket chains to the regions 116 Steady Forecast for Leasing Business PLACE ON THE MAP In 2013 the demand for manufacturing equipment available Capital of via leasing is expected to rise in Belarus in view of the plans to modernize the economy 74 the Land of Castles 118

DESIGN: Andrei BORODUN Printed in the printing house Minsktipproekt 13/61 Very Khoruzhei Street, Minsk, 220123, Belarus. License No. 02330/0494102 as of 11 March 2009 PROOFREAD BY Natalya PYATNITSA Subscription index: Russian edition: for individual subscribers – 74987, Format 60x90 1/8. Enamel-paper. Offset printing. Edition: 3750 copies for corporate subscribers – 749872; English edition: for individual (3100 – in Russian, 650 – in English). Open price. Order No. Approved for printing 18 March 2013. subscribers – 74986, for corporate subscribers – 749862. Publication date 26 March 2013. Company address: BelTA, 26 Kirova Street, Minsk, 220030, Belarus Mail address: 30 Engels Street, Minsk, 220030, Republic of Belarus, phone: 327-37-80, © Contents may not be reproduced without Editor permission. fax: 222-33-29. E-mail: [email protected], www.belarus-economy.by Liability for ad content is borne by advertisers.

www.belarus-economy.by MODERNIZATION MODERNIZATION 2013 , 1 o. N Modernization: US AR Priorities

OMY OF BEL and Essence

ON A country’s prosperity hinges on the pace EC of its economic modernization

Alexei DAINEKO, up new capacities and providing Doctor of Economics, Professor, Director of the Institute of domestic producers with new com- Economics of the National Academy of Sciences of Belarus petitive technologies and produc- tion facilities. Economic modernization has been suggested by the Belarusian Developed and developing coun- President as a major instrument to enhance competitiveness and tries have different views on how maintain national security. It is viewed as a timely and most adequate economic growth targets should be response to challenges and threats posed by downturns of the global met. The former strive to sustain economy. Globalization, acceleration of sci-tech progress, and growth of technological leadership and associ- ated benefits. The latter are trying transnational corporations toughen up competition on the international to break to the forefront of scientific market in terms of speed and quality of innovations. and technical progress and occupy Earlier, competition mostly revolved around traditional products with their niche in the global division of competitors focusing on the quality and economic parameters of products, labor. Therefore, countries pursu- while in the past 20 years the major driving force behind competition ing aggressive innovation policies has been the creation of fundamentally new products and services should focus on creating and build- with a considerable share of added value. Against the backdrop of the ing up capacities in a narrow field global recession, the growth capacities of traditional export commodities of studies and innovative activities. are more than limited. The one who creates a new commodity and, In this context, the central issue consequently, a new sales market gets super profits until competitors to be addressed by modernization turn out a similar product. You need not look hard to find examples. We can be defined as “speed differ- have witnessed mobile phones, laptop computers and Internet services ence issue”. Belarusian companies transforming from novelties to mass-market products. upgrade their production facilities and refresh the product offer more slowly than the companies set up Fundamental outpace investments in equipment using foreign direct investments and construction. The government of transnational corporations in Objectives policy in the field of research, inno- neighboring countries. The first decade of the 21st cen- vations and education will play a Even having government sup- tury was marked by an increas- bigger role in creating an environ- port, domestic companies are una- ingly fast commercialization of sci- ment conducive to scientific pro- ble to compete on equal footing entific discoveries (from 40 years gress. with transnational corporations, in late 19th century – early 20th The objective of science is not because they lag behind in terms century to 3-4 years now). Science just to accumulate new knowledge, of financial resources, technolo- has turned into a leading economic but to provide adequate financial gies, know-how and management. power. Research and development return in relation to outlay taking Market analysis has revealed that projects and intellectual property into consideration the substantiated manufacturers who do not make account for an increasing share of priorities and long-term strategies part of transnational corpora- investment. In science-intensive of the government innovation pol- tions are eventually ousted from industries investments in research icy. This policy is aimed at building international markets. At present 4 MODERNIZATION www.belarus-economy.by

transnational corporations generate over a quarter of the global GDP, own about 4/5 of 2013 licenses and patents, and account for 2/3 of , 1

the international trade in goods and services o. with up to 40% of transactions conducted N within the corporations. Taking into consideration the differ- US ence in the availability of resources (natu- AR ral, labor, material, intellectual and other resources) that determine specific compara- tive advantages, every country chooses its own priorities and objectives of economic modernization. Thus, while implementing its modernization program Belarus should channel its efforts into the industries that will help it find and boost its positions in the OMY OF BEL international division of labor in the long- term perspective. ON Belarus boasts world-class know-how in

a number of fields, like laser equipment, EC theoretical substantiation of computer- assisted performance management of steel parts, technologies to produce new materials and substances. These industries advance Belarus to the fifth and sixth technological paradigms. Modernization should not be viewed as a one-time project but a continuous process to improve the institutional, technological, labor, managerial, territorial, branch-wise and financial structure of the economy. Individual modernization projects can be found in various program documents (the socioeconomic development program of the Republic of Belarus for 2011-2015, the state innovative development program of the Republic of Belarus for 2011-2015, the national export development program of the Republic of Belarus for 2011-2015, the indus- trial complex development program of the Republic of Belarus for the period until 2020, etc). The aforementioned documents are closely correlated with the goals of most countries regardless of their economic devel- opment, which reflects the global trends in technological progress and relevant expecta- tions of business and society. They are ori- ented towards the formation of the high-tech industries of the fifth and sixth technological paradigms, the development of such impor- tant knowledge-intensive and high-tech sec- tors as energy (including energy efficiency and conservation), nano- and bio-technology, information and communications and aero- space technologies, environmental manage- ment and national security. For systematic modernization to be suc- cessful, many conditions should be in place, of which the most important are clearly defined objectives and the means to achieve them. The means imply both resources and methods to address the tasks. 5 www.belarus-economy.by MODERNIZATION

The resources necessary for can absorb, on the one hand, excess of the modernization of strategically upgrade include: employment from large state-owned important sectors such as transport, 2013

, t science and technology (pat- enterprises, and on the other hand, energy, public utilities, social sector, 1

o. ents, licenses, know-hows, technical utilize private initiative. science and innovations. N documentation); Belarus has enacted a number t raw materials (by types of raw of strategic documents to liberal- Services in GDP US materials, semi-finished products, ize business environment in accord- components); ance with the priorities laid down The services sector plays a cru- AR t equipment and technology; in Directive No. 4 “Concerning pro- cial role in building an effective t energy (all sources of energy – motion of entrepreneurial initiative non-resource economy and improv- electrical, thermal, hydraulic, etc.); and stimulation of business activity ing the overall labor productivity. t required volumes of cargo traf- in the Republic of Belarus” of 31 This sector has contributed to the fic and vehicles (including loading December 2010. economic modernization in many and unloading); Significant assistance to private countries. For example, the Republic t communications and informa- business is also spelled out in the of Korea specializes in engineering tion management; newly adopted program of state consulting and construction ser- OMY OF BEL t land, water and other natural support for small and medium- vices, Singapore in financial, and resources; sized enterprises in the Republic of India in computer and information ON t human resources (taking into Belarus in 2013-2015. In addition to a services.

EC consideration increase and decrease set of targeted events, the document Belarus is lagging far behind in the able-bodied population, spon- provides for the national and local developed countries in terms of the taneous and organized migration budgets and the Belarusian Fund of maturity of the sector. For example, and redistribution of the population Financial Support of Entrepreneurs in the United States, UK, , across regions and settlements). to allocate significant resources – Japan, its share in the GDP ranges In this context, Belarus should from Br113.3 billion in 2013 to Br169.5 from 66% to 86%, while in Belarus focus on the following main areas. billion in 2015. it does not exceed 40%. The world Further economic growth will expects a further growth of this Transformation of also depend on the use of the instru- sector on the heels of technological Ownership Structure ments of public-private partnership advances and the influx of workers that brings together the public and who used to work in the production Increasing the share of private private interests and resources for sector. ownership is essential for improv- mutually beneficial investment pro- Services have a lower share of ing the efficiency of the economy jects. Public-private partnership can material and energy expenses in as a whole, since entrepreneurship and should become an important part production costs, a higher propor-

Table 1. Percentage of added value in the output per type of business activity in the Republic of Belarus

Added value share in Share in GDP industry’s output Production sector 46.1 31.1 including: Agriculture, hunting, and forestry 9.2 39.7 Mining and processing industry 24.3 26.3 Civil engineering 9.6 42.6 Services sector 41.2 62.7 including: Trade; repairs of automobiles, household items, and personal-use goods 12.1 65.7 Transport and communications 7.6 57.7 Finance 4.4 81.8 Real estate operations, rent and services to customers 6.3 72.6 State administration 3.9 78.9 Education 4.3 75.4 Healthcare and social services 2.9 66.0 Net taxes on products 12.7 - Total 100.0 - 6 MODERNIZATION www.belarus-economy.by

tion of added value and are highly its competitive ability, and creates sectors and regions and the risks for attractive for investment compared favorable conditions for the coun- the domestic business. 2013 to industrial production. The table try’s further integration into the Belarus has embarked on the , 1

below presents data on the propor- global system. creation of holding companies and o. tion of added value in the output by big production enterprises (state N industry (Table 1). Raising Investment, corporations). In this regard it is The sectors “Finance”, “Real Joining Transnational important that all of them should US estate operations, rent and ser- have a strategy for development and AR vices to customers”, “Education”, Corporations integration with the main partners “Healthcare and social services” Integration into global produc- in the Single Economic Space and demonstrate the largest share of tion and distribution networks of the CIS and set up new specialized added value, which makes them top transnational corporations gives production operations with a high priority for the sake of developing domestic companies an access to added value. the domestic and foreign trade of foreign direct investments and new It is also important for the Single the country. The sectors of tourism technologies for innovative modern- Economic Space to use a globally- services, transport and communica- ization. It is also a powerful factor recognized form of interaction such OMY OF BEL tions have a considerable potential. for promoting economic competi- as international cooperation of cap- For each type of service it is tive ability and export potential of ital, i.e. participation of economic ON necessary to define the area of the country. Such integration also operators from several countries in

specialization through the analysis brings financial resources in the the authorized capital of companies EC of the most promising market niches country without aggravating its located either in the participating both in the country and beyond its external debt. countries or in third countries. borders. For instance, online dis- Yet, there is the other side of tribution of advertising products the story when transnational cor- Innovation looks quite promising on the inter- porations outsource labor-inten- Development national market of computer ser- sive, energy-consuming and even vices. Geographical analysis may environment-damaging manufac- Roadmap be focused on the search for a mar- tures to developing countries. Here, There is an array of documents ket with an increasing demand for three important principles are and programs regulating the inno- a particular service. For instance, of paramount importance. First vation sector in Belarus. It is impor- due to maturity of the financial of all, since Belarus is not rich tant to incorporate all their funda- and insurance service market of in resources, the focus should be mental provisions into one nation- developed countries, the Republic placed on low resource-intensity wide document which could serve of Belarus might expand into products. Secondly, it should be ana- as a roadmap. the CIS. lyzed which of these products have This format means harmoni- Today the computer and infor- the greatest sales capacity. And, zation of all measures and events mation services market in many thirdly, when raising FDI in prior- into a clear-cut sequence of stages ways shapes the development of ity industries, it is important to take with full account of the existing the Belarusian economy, promotes into account the specificity of the resources (scientific and technical

Picture 1. The GDP energy intensity across a number of countries in 2010, according to the International Energy Agency (IEC). GDP is calculated in U.S. dollars at the exchange rate of 2005. (The volume of primary fuel and energy resources is calculated in kilograms of oil equivalent). 0.65 0.25 0.119 y y y a e e ia ia ia ia ld a v via g key taly alta t ium w or ak USA enia aine I onia eec anc istan istan r eden v v r yprus hstan ur ustr man Spain M oland China Japan EU-27 La elarus anada baijan menia inland eor F T w oldo C P Gr elg A r Est B F epublic omania C er gyzstan Uk Nor G ingdom S er Bulgar Slo ajik B Slo A Hungar M R G z T menistan Lithuania zbek yr azak k A hole w K U K ed K ur W ech R T z C Unit 7 www.belarus-economy.by MODERNIZATION

personnel, physical infrastructure, a new balanced and transparent finances). The document stipulates Higher Energy structure of functions, reorganize 2013

, an elementwise control of every Efficiency workforce, and introduce a new sys- 1

o. stage. tem of stimuli and incentives. N Entrepreneurship and inno- One of the priorities of economic vation are two major interrelated modernization is more efficient use Export-Oriented US areas of the roadmap fuelling the of fuel and energy. Given preferen- Economy Belarusian model. Foundation tial oil and gas prices in the Single AR for the former was laid down by Economic Space, the saving of fuel Commodity export growth has Directive No. 4 of the President of and energy resources can become always been one of the primary the Republic of Belarus. The basis a crucial source of additional rev- objectives of the Belarusian econ- for the latter is yet to be formed enue which can be injected into the omy. At least 65% of goods should be on the principles of public-private upgrade of industrial assets. exported. This target was set forth partnership in the innovation area. The GDP energy intensity is for 2012 and will remain relevant The public-private partnership one of the indicators used world- in 2013. principles for the innovation road- wide to measure energy efficiency The main goal is to gain a foot- OMY OF BEL map are as follows: of the economy at the macroeco- hold in traditional markets and the government encourages nomic level. As seen in Picture branch out into new ones. In the

ON t world-class research projects to 1, the GDP energy intensity in modern globalizing world the major

EC be implemented with the use of Belarus is lower than that in other problem is not to manufacture prod- the domestic intellectual potential CIS countries, including Russia and ucts but to sell them at a profit. to promote the national economic , yet there is still room for Therefore, winning over new mar- growth; improvement. In , Lithuania, kets is vitally important today. t the business sector finances Latvia, Estonia, which are similar It is important to enhance coop- commercially viable research pro- to Belarus in terms of climate and eration with major foreign compa- jects on order and in the interests of nature, the GDP energy intensity is nies, set up joint ventures, look for manufacturing enterprises; three times as low. new forms of mutually beneficial t the government and business This parameter is important cooperation and integration in the cooperate on programs and projects for making products more competi- industries where we cannot occupy aimed at manufacturing competi- tive. Therefore, if Belarus reaches leading positions on our own. tive and high technology products the world’s average energy inten- In 2013 Belarus is set to export with a high added value, make con- sity index, locally-made goods will more traditional energy commodi- tributions to the development of the create good competition to foreign ties to non-CIS countries, and agri- innovation infrastructure. products on the global market. cultural products and machinery to the CIS states. The sales growth will Personnel be, first of all, expressed in physical and Administrative terms. It is necessary to draw atten- Potential tion to the export of services. The At the stage of transition towards growth of services export should innovative economy, it is essential outstrip that of goods. Belarus to have the brain capital able to should make a more effective use of conduct cutting-edge research, com- its transit capacities, facilitate the mercialize new technologies, and export of transport services, first of get good commercial benefits from all, the export of national transport these innovations. companies carrying goods from for- A new architecture of gov- eign countries. Moreover, it is essen- ernance is needed, first of all, tial to boost the export of telecom, to improve the quality of public tourism, computer and information administration, efficiency of gov- services. ernment agencies. It is important to The near-term key goal is to turn enhance interaction between state Belarus into a large-scale interna- administration bodies and the soci- tional transport and logistics hub ety and raise the efficiency of the using its favorable geographic loca- administration system in the con- tion. Transit of goods can become text of economic modernization. a major source of budget revenues. Such transformation should Therefore, modernization of the be systematic. Time is ripe for most important industries of the unique administration technolo- economy will shape a new institu- gies adjusted to the specific needs tional structure of the economy and of the Belarusian society, and new lay down the foundation for effec- administrative and management tive social and economic develop- processes. It is necessary to develop ment. 8 MODERNIZATION www.belarus-economy.by MODERNIZATION 2013 , 1 o. Learning N US from Mistakes AR Total investment spent on the upgrade of Belarus’ wood processing industry € OMY OF BEL

is estimated at 801.9 million ON EC From the earliest times the humankind has been using wood to build high-quality products that can sell houses, make furniture and home decoration. Wood processing products well abroad. After studying the state are an integral part of our everyday life. Belarus abounds with wood raw of efforts to upgrade and revamp materials. Using an uninterrupted production cycle, from logging operations Mogilevdrev, the head of state to wood processing, the country can fully meet domestic needs in wood ordered to finish the investment pro- products and export the rest to the demanding West and insatiable East. ject as soon as possible. He upheld To boost Belarus’ wood processing capacities, companies working in the the idea of starting furniture pro- duction at the Mogilev-based com- industry have launched a number of large-scale upgrade projects, which, pany, because the furniture busi- unfortunately, are not progressing smoothly. ness will allow a closed production cycle and increase the added value Obstacles ary funds invested in the technical of the company’s output. upgrade over the past three years To make sure the wood process- and Setbacks did not produce the desirable effect. ing companies will stay on mod- Wood processing companies It became clear that the investment ernization track, the State Control embarked on technical upgrade and projects got stalled and the invested Committee will oversee the imple- renovation in 2007 when Presidential resources were used inefficiently, mentation of investment projects at Decree No. 529 “Concerning the including over $500 million of for- the key companies of the concern. development of the wood process- eign currency investments. ing industry” was passed. An invest- While visiting the company Key Areas of Focus ment program was elaborated to Borisovdrev in late November 2012, make sure that upgrade efforts President of Belarus Alexander Any problems can be resolved, will be efficient and consistent. Lukashenko criticized both the even the most complicated The program provided for build- administration of the Belarusian ones. During the next five years ing new production facilities fitted state timber industry concern Bellesbumprom Concern is set to with top-notch equipment at exist- Bellesbumprom and the affiliated revamp each of its enterprises. As ing factories. The ultimate goal companies. He stated that the wood a result, revenue per employee will was to manufacture products with processing companies had failed the increase to at least $60,000. Salaries improved properties for the domes- modernization program adopted in will rise too. As expected, the share tic and foreign markets. Additional 2007. He noted that the technical of the industry in the GDP will revenues from selling profit-making upgrade of industrial companies, increase from 1.9% to 10%. More goods were expected to stabilize the including woodworking enterprises, import-substitution projects will financial standing of wood process- should be the focal point of Belarus’ be implemented, and more timber ing companies and create objective economic policy. He demanded products will be exported. If all preconditions for their growth. that deadlines should be strictly the projects are implemented, the Although the upgrade projects observed. Large-scale projects are output in U.S. dollars will expand eventually kicked off, the pace and expected to diversify the economy 2.5 times in 2012-2015 to a total of outcome of this dramatic overhaul and reduce Belarus’ reliance on $2.3 billion. It is expected that by left much to be desired. Last year, western countries. 2015 merchandise export will rise the audits and checks conducted by During the visit to Vitebskdrev to $1.02 billion, the foreign trade the State Control Committee and the in December 2012 the President surplus will increase to $567.8 mil- General Prosecutor’s Office revealed urged installing production lines lion, i.e. up more than 2.8 times as that over Br1 trillion of budget- at idle premises to manufacture against 2012. 9 www.belarus-economy.by MODERNIZATION 2013 , 1 o. N US AR OMY OF BEL ON EC

“Setting even a minor process per year. Vitebskdrev, Gomeldrev, project to start the furniture pro- in motion is fraught with prob- Mostovdrev, and Borisovdrev duction with the use of MDF/HDF lems. Here we are talking about are getting ready to start manu- boards at Ivatsevichdrev. The pro- the major overhaul of the industry facturing MDF/HDF boards with ject is estimated at $30 million. that did not carry out large-scale the aggregate capacity of 550,000 Next year we plan to put into projects for years. Therefore, enter- cubic meters per year. Mozyr Wood operation new plants at Gomeldrev prises have faced a number of prob- Processing Plant is gearing up to and Mostovdrev with the total lems including external ones when produce 140,000 cubic meters of annual capacity of 350,000 cubic implementing these projects. For insulating fiberboards per year. meters of fiberboard. The new facil- example, the course of moderni- A new particle boards and lami- ities are expected to produce a wide zation was affected by the global nated boards shop with the annual assortment of furniture and other financial crisis twice in 2009 and capacity of 250,000 cubic meters was products for the construction indus- 2011. We encountered such prob- commissioned at Ivatsevichdrev try in the future. lems as delays in banking lending, last year. It boasts high-efficiency “These projects are showing a and in insurance of foreign credit German equipment. In addi- high maturity level: technological facilities,” said Bellesbumprom tion, Mogilevdrev and Gomeldrev equipment has been supplied in Concern Chairman Mr Alexander launched sawmill plants which pro- full, building and assembly works Pereslavtsev. duce 60,000 and 52,000 cubic meters are in progress. All is on schedule. The important area of moderni- of timber per year respectively. Implementation assessment meet- zation is the creation of new facili- The priority plans of ings are held on a weekly basis ties to manufacture wood boards of Bellesbumprom Concern include under the chairmanship of First improved quality. In fact, accord- a project to start the production Deputy Premier of Belarus Mr ing to Bellesbumprom Concern, low of 2-6mm thick particle boards at Vladimir Semashko or heads of the consumer properties of such goods FanDOK, with the annual capacity concerns and oblast executive com- are the main reason holding back of 30,000 cubic meters. Vitebskdrev mittees,” Alexander Pereslavtsev the production of up-to-date furni- is expected to start manufacturing said. ture and exports. MDF/HDF boards; Borisovdrev is Big import-substitution invest- Currently, the companies set to upgrade the wood harvesting ment projects have been launched in Ivatsevichdrev, Rechitsadrev and facilities and start using energy effi- the paper-and-pulp industry. Among FanDOK are working to be able ciency technologies. Rechitsadrev them is a turn-key construction to make 480,000 cubic meters of will retrofit the chipboard facility. project of a bleached sulfate fac- chipboards and laminated boards This year will see the launch of a tory at the Svetlogorsk pulp and 10 MODERNIZATION www.belarus-economy.by

cardboard mill with the total capac- rial resources and wages. Keeping ity as high as 400,000 tonnes a year. in mind high inflation rates, the 2013

Dobrush Paper Factory, a subsidi- projects got more costly. , 1

ary of the Belorusskie Oboi Holding It is worth mentioning that o. Management Company, will be refit- upgrade projects are being imple- N ted to start producing coated and mented at the operating factories, uncoated cardboard goods. China’s and the launch of a new project was US loan resources are used to imple- preceded by significant efforts to AR ment these projects. take down the outdated networks, It is expected that ongoing premises and equipment and to expansion of the production of lam- move engineering networks out of inated MDF panels and chipboards the construction footprint. as well as laminated flooring will Bellesbumprom Concern raise the domestic demand for tex- believes that today the major ture paper from $4.5 million in 2011 emphasis should be made on provid- to $24.6 million in 2015. To meet the ing the wood processing and pulp- OMY OF BEL mounting demand for texture paper and-paper industries with skilled a new plant will be built in Shklov workers and operating personnel. ON to produce base paper for decorative Therefore, Bellesbumprom Concern

materials with the total capacity of is looking into every possibility to EC up to 30,000 tonnes per year. Czech encourage specialists to stay put, loans will be used to materialize including through addressing their these projects. housing needs. According to Alexander Pere- The key to successful imple- slavtsev, there are neither design mentation of the projects is effec- offices nor R&D institutes nor con- tive teamwork of design engi- As expected, struction organizations in the struc- neers, constructors and suppliers ture of Bellesbumprom Concern. of technological equipment that the share This is why it cannot influence take part in erection and start-up directly the course of exploration, works. Moreover, it is important to of the industry building and assembly works. In train workers to operate new equip- turn, this affects the pace of invest- ment, Chairman of Bellesbumprom in the GDP ment projects. The industry still Concern Alexander Pereslavtsev will increase runs short of skilled workers and said. strong design institutes. The pro- from 1.9% jects were developed by private International companies or regional establish- Perspective to 10% ments lacking practical experience. As a result, preparation of design The investment projects will and estimate documentation was enable the wood processing enter- protracted and did not allow for prises to start producing new com- assessing the costs in concurrent petitive goods popular both on the engineering, caused some extra domestic market and abroad. This is expenditure on acquisition of mate- important because Bellesbumprom

EDITORS’ NOTE

The state-run forestry, wood processing, pulp-and-paper indus- tries concern Bellesbumprom unites 50 organizations with over 40,800 employees. The concern specializes in three sectors, namely wood pro- cessing and furniture production, timber harvesting, pulp and paper production. The aggregate annual output makes up about $900 million. Bellesbumprom Concerns ships over 50% of the output abroad.

11 www.belarus-economy.by MODERNIZATION

Concern is planning to expand its presence on the markets of the 2013

, SES member states, diversify the 1

o. export geographically, and branch N out into new sales markets in the countries outside the Customs US Union. After Russia’s entry to the WTO AR Belarusian wood processing com- panies got a better access to the markets of the SES member states. Today the export of various com- modities is regulated based on the demand/supply ratio in each par- ticular market and the maturity of a price segment, according to OMY OF BEL Bellesbumprom Concern. Moreover, the Single Economic Space opens ON up opportunities for the participa-

EC tion in public procurement con- tracts, particularly, for the con- struction industries of Russia and . Today manufacturers do not need to adapt to the require- ments of a particular market as technical regulations and sanitary, veterinary and food safety require- ments have been harmonized. There are no customs duties. All forms of state control have been removed from the internal borders of the SES member states. Nevertheless, Belarusian goods will inevitably face growing compe- tition on the SES market in the mid- term perspective. Sooner or later import customs rates will stop being used as a major mechanism to pro- tect industrial products. Russia’s accession to the WTO will make Belarus reduce import customs duties on many goods which are now sold duty-free on the Russian market and import duties for third countries. Therefore, one of the main strategies of Bellesbumprom Concern is to pursue an aggres- sive export policy in the SES and make foreign trade more efficient by means of more vigorous investment and innovative effort. In the near future forestry, wood processing, pulp-and-paper industries will face the challenge of further growth, which cannot be achieved without improving the quality and technological level of exports. Therefore, the companies need to continue their moderniza- tion efforts and advance technologi- cally.

Tatyana IVANYUK 12 MODERNIZATION www.belarus-economy.by MODERNIZATION 2013 , 1 o. A New Lease N US on Life AR Belarus is set to upgrade about 3,000 enterprises in 2013 OMY OF BEL ON

The country has embarked on a large-scale modernization of the EC manufacturing sector. Its major objectives and mechanisms have been outlined by President of the Republic of Belarus Alexander Lukashenko. During this five-year period the national economy is expected to make a quality breakthrough. In line with the socio-economic development program for the period until 2015, GDP, industrial output and real income of the population are to increase more than 1.5 times. The major driving force behind the growth will be technical upgrade and establishment of innovative companies and facilities.

Giving a Boost sectors. This will secure sustainable economic growth in the long run, Modernization is the focal point facilitate the advancement to a new of Belarus’ economic policy for a technological paradigm, and allow reason. Against the backdrop of increasing productivity of labor toughening competition on the and, consequently, salaries and the In 2013 global market and the accession of well-being of Belarusians. the major trading partners to the The year 2013 can be rightly the country World Trade Organization, the qual- called the culmination of moderni- ity of products came to the fore- zation efforts, because the bulk of will earmark front. Аfter all, the one who will be the works to revamp production able to offer the best price and qual- facilities is to be carried out this Br134 trillion ity will stay on top. year. The sooner domestic compa- This is the reason why Belarus nies install modern equipment and for modernization is working hard to enhance com- start making new products, the petitiveness of domestic goods. The sooner they will reap the benefits. and innovation efforts include renovation of pro- They have no time to drag their projects duction facilities, assimilation of feet. cutting-edge technologies, imple- Alexander Lukashenko urged mentation of innovative and invest- to speed up modernization at the ment projects. This comprehensive February session of the Council approach produced appreciable of Ministers, which reviewed the results in the agricultural industry social and economic development where modernization has almost of Belarus in 2012 and set the tasks been finished. Today Belarusian for 2013. foodstuffs and products of process- “Every manager should make ing companies are sold worldwide sure that modernization got well and bring substantial foreign cur- underway. In 2013, we should do rency revenues to the country’s the bulk of the work. If we are budget. slow at the start, it will be impos- A similar modernization policy sible to catch up later. The Council should be pursued in the manufac- of Ministers and the National turing industry and other economic Bank should create the necessary 13 www.belarus-economy.by MODERNIZATION 2013 , 1 o. N US AR OMY OF BEL ON EC

economic conditions for moderniza- Financial matters regarding smoothly. Unfortunately, feasible tion to be a success,” said Alexander modernization projects will be and well-calculated projects are few Lukashenko. under constant control of the gov- and far between. In addition, heads The modernization process can ernment. The requirement is one: of ministries, departments, oblast be called successful if annual rev- all funds must be spent wisely. executive committees and Minsk enue from sales reaches at least Squandering is unacceptable, Prime City Council are not actively work- $60,000 per employee. The President Minister Mr Mikhail Myasnikovich ing on raising foreign investments drew attention to the fact that he reiterated. and inexpensive credits for modern- wants socially responsible upgrade, “All economic entities asking ization. and this requirement will remain for funds must promise that these According to Finance Minister unchanged. It is no secret that cer- resources will be used effectively Mr Andrei Kharkovets, the budget tain enterprises still employ exces- and bring high returns in the short has necessary resources to support sive staff. Every worker laid off in term,” said the head of government. modernization in the country, in the course of modernization must Every invested ruble must yield particular by subsidizing lending be helped into work. two to three rubles in added value, rates on the whole volume of mod- and the bulk of the projects should ernization loans this year. Only Feasible and pay back in three or maximum five “We will support only those Effective Projects years, he said. producers whose investment pro- In 2013, Br134 trillion is to be jects are designed to increase added Taking into account the objec- allocated for modernization and value and who are unable to service tives set out by the head of state, the innovative development of enter- loans on their own. State support is government has formulated strict prises. Total capital investments are for projects with high added value requirements for modernization: projected at Br200 trillion in 2013. only,” he said. every enterprise should have a plan This will be budgetary assignments, The same policy is pursued and stick to it. Every plan should be proprietary funds of enterprises, by the Economy Ministry of the aimed at maximizing benefits from bank loans, and foreign investment. Republic of Belarus. modernization. The funds will be To stimulate innovation and invest- “We see two main criteria to channeled mainly into the acqui- ment projects, some Br9 trillion was assess the success of upgrade pro- sition of new equipment rather budgeted in 2013. Another Br2.6 tril- jects. It is the demand on foreign mar- than reconstruction of industrial lion will be assigned by innovation kets and added value figures meet- buildings, in other words, in exte- funds. ing European standards,” Econom y rior renovations. Such an approach It would seem that given this Minis ter Mr Nikolai Snopkov said. will quickly bring the desired level of financial support, the It is noteworthy that moderni- result. moder nization program would run zation will mainly cover the state 14 MODERNIZATION www.belarus-economy.by

sector. Implementation of the Br24 trillion. The other projects are projects at the companies of the included in the third group. 2013

Industry Ministry is expected to The first group deals with pro- , 1

increase the foreign trade surplus in jects to build a pharmaceutical com- o. goods from $2.4 billion in 2011 to $3.9 pany complying with the European N billion in 2015. Investment projects, GMP standards, ramp up the produc- re-equipment, optimization and tion of epitaxial elements at OAO US efficient use of production space Integral, launch the manufacture AR and equipment, reorganization will of optoelectronic equipment using allow increasing proceeds from thermal imaging laser systems, con- sales of goods, services and works struct a hydromechanical transmis- 2.1 times by 2015. Gross added value sion plant, set up the production of per employee is expected to go up super heavy-duty all-steel tires at 2.3 times over the period. The total OAO Belshina. investment for upgrade programs at There are plans to implement big the Industry Ministry is estimated projects in nanotechnologies and OMY OF BEL at $3.1 billion. microelectronics. Space technolo- At the same time, the state is gies are among the priority areas. ON ready to support upgrade and inno- Belarusian specialists are planning

vation development of private com- to build a new space vehicle and EC panies. It is important to have it the necessary ground infrastruc- as a bilateral movement, and see ture with a view to enhancing the business taking an active part in Belarusian-Russian orbital group re-equipment in the manufacturing of satellites for the remote Earth sector. sensing. Br9 trillion There are two scenarios to Priority finance projects included in the first to Innovations of budget funds group. In line with the first sce- nario, 15% of the total project costs The Premier believes that mod- will be used to will be financed by the innovation ernization in Belarus should care- funds, the other 85% will be covered fully follow certain requirements. energize by loans. The national budget will Among them is state support to innovative make up for the interest rates dur- projects, full responsibility of the ing the entire period of loan servic- managerial staff, development of and investment ing. The second scenario stipulates public-private partnership, integra- that the innovation funds will cover tion with the world’s leading com- projects 100% of the project costs. The inter- panies and the rewarding of the est rates will be reimbursed from national and regional managerial in 2013 the national budget, too. personnel for active participation in It is expected that the regula- modernization. tions on the reimbursement of Mikhail Myasnikovich is confi- interest payment will be simplified. dent that modernization is impos- The relevant documents are now sible without investment and inno- under consideration in the admin- vations. That is why innovation istration of the President of the projects aimed at quality economic Republic of Belarus. growth should be kept front and There are plans to create more center of the managerial staff at incentives to promote effective and any level. high quality production retool- By the way, the list of the most ing. However, managers should not important innovation and invest- count on total state support, soft ment projects has been drafted loans and subsidies. The state will already. They were selected follow- impose tough control over the use ing the contest and review by gov- of funds allocated for moderni- ernment bodies and other state-run zation. No ruble must be wasted. organizations. The list includes This is not only the requirement 711 projects which will be divided of the head of state and the gov- into three groups depending on ernment but also the criterion to their importance for the country’s evaluate the efficiency of the reno- economy. The first group includes vation efforts of each and every nine crucial projects to the tune company. of Br9.7 trillion. The second group comprises 25 projects worth almost Olga BELYAVSKAYA 15 www.belarus-economy.by MODERNIZATION MODERNIZATION 2013 , 1 o. N Ingredients US AR of Success Belarusian companies can rival many world-famous producers OMY OF BEL

ON Comprehensive modernization of

EC the manufacturing industry has been among the most notable economic trends in Belarus recently. Upon the instructions of the Belarusian head of state, domestic companies are elaborating efficient upgrade plans to be implemented within a short period of time. This task is reasonable and urgent, because quality renovation and modernization is a key to higher labor productivity, lower production costs, and increased competitiveness of products. In the long run, it will help strengthen the Belarusian statehood and improve the well- being of people. It is obvious that it is impossible to carry out major upgrade projects relying solely on internal resources. Modernization requires top- notch equipment, cutting-edge technologies, and finances. Where can Belarus get these ingredients for successful modernization? What is the difference between modernization Belarus-style and modernization Europe-style? What do Western investors think of the business climate in Belarus? These and other questions are addressed to Mr Janez SKRABEC, Director of the Slovenian company Riko d.o.o. that has been operating in Belarus for about two decades already. 16 MODERNIZATION www.belarus-economy.by

Riko has been present on the learn to operate in the market envi- mark), is the second one of a kind Belarusian market for about two ronment. in the world. Another example is 2013 decades. Its major business in the delivery of complex technologi- , 1

our country is provision of engi- Riko has its TOP 10 projects cal equipment for construction of o. neering services. In other words, running all over the world. The shafts, axes and clogs for Minsk N you help Belarusian companies list is posted on the official web- Tractor Works (MTZ trademark). purchase equipment and technol- site of the company. It features This is one of the most advanced US ogy on favorable terms… three Belarusian companies, lines and the largest project we have AR namely BelAZ, MAZ and MZKT. recently completed in Belarus. In Indeed, we have over twenty the aggregate the project featured years of experience in providing If we analyze the list, we will over 110 pieces of equipment worth engineering services and supplying see the role and place of Belarus in tens of millions of euros. We imple- equipment to well-known produc- our company. The list is a kind of mented the project together with ers of vehicles, tractors and air- ranking. Four projects from this list the German firm Niles-Simmons. planes. Riko has become an impor- are implemented in Russia, three in By the way, when implementing our tant strategic partner of a number Belarus, one in Slovenia, Macedonia projects, we try to use Belarusian OMY OF BEL of companies, including Belarusian and Ukraine each. As you see, equipment if possible. For example, enterprises. Using our expertise Belarusian companies account for a the MTZ project included 16 pieces ON and knowledge we assist our cus- significant share of our operations, of processing equipment made by

tomers in choosing the most optimal even though Belarus is a rather Belarusian manufacturers. EC technologies, developing concepts small country (compared, for exam- Our customers from Belarus are of new production lines, compiling ple, to Russia). Actually, besides very professional and extremely a list of equipment to be delivered the three above-mentioned enter- selective. They are great patriots of and tested. We also help to deliver prises, we also cooperate with MTZ, their country and they are proud of and commission technological lines. Gomselmash, Atlant and Triple. their achievements. When negotiat- I would like to note that our ing, discussing delivery terms, they Your customer portfolio fea- Belarusian office performed better fight for every penny, and it is not tures many companies, includ- than our offices in and Kyiv easy to work with them. So I cannot ing those based in the European in 2012. The turnover of financial say that the projects carried out in Union. Could you compare tech- assets of our Minsk office made Belarus were the most profitable nical proficiency of Belarusian up €70 million last year; the staff for us. and foreign companies? increased to 60 people. By the way, when we started our operations in They say the most difficult In my opinion, Belarus was Belarus, we had only two people negotiators are Chinese ... the most technologically advanced working in our office. republic of the . You just don’t let go. The truth Objectively, it still is. After all, man- The latest in-trend in the is we, businessmen, never count ufacturing is the major driving force Belarusian manufacturing indus- on easy solutions. We must con- of the country’s economic growth. try is modernization and invest- stantly prove our worth. I think In Russia, for example, raw materi- ment. What do you understand many Belarusians know what I am als, natural resources, namely oil by the concept “modernization” talking about. and gas, account for 90% of exports. and does your understanding Unlike Russia, Belarus does not coincide with the opinion of your MAZ, one of your partners in abound with natural resources, but Belarusian partners? Belarus, is in talks with Russia’s boasts a powerful industrial base KamAZ over the establishment inherited from the Soviet Union and For any enterprise, whether of a holding company. How might highly-qualified professionals. This it is in Belarus, the EU or China, this affect your cooperation? combination is a secret behind suc- upgrade is a necessary precondi- cess. You have to be self-reliant and tion for being successful. Therefore, If the current system of equip- work hard. This is a philosophy of a the modernization trend in your ment purchases, in particular, businessman, and I like it. country is welcome, of course. It through tenders, does not change, This philosophy yields good is extremely important that the the relations with MAZ will remain results. I can say that Belarus has Belarusian enterprises with which the same. However, the challenges been making appreciable progress we cooperate perceive moderniza- will remain as well: we will have to year to year. We closely cooperate tion not as the replacement of old provide good quality at a competi- with many Belarusian companies equipment with new tools, but as tive price. and see that all of them are work- replacement of old equipment with ing hard to become more techno- the most advanced tools meeting the Let us continue the unification logically advanced and competitive. highest world standards. theme, only this time at the level They can rival many world-famous For example, the longeron of the states. I am talking about producers, because they are hungry production line, which has been the Single Economic Space (SES) for new technologies, they try to installed on the order of Minsk and in the future the Eurasian keep up with modern trends and Wheel Tractor Plant (MZKT trade- Union of Belarus, Russia and 17 www.belarus-economy.by MODERNIZATION

which still puts obstacles into the import of the equipment we offer. 2013

, I am convinced that the results of 1

o. the tender should not be changed N in favor of a Belarusian firm which does not take part in the tender US from the very beginning and then announces it is able to supply similar AR equipment. As for other business conditions in Belarus, they suit us just fine. In any way, they are not worse than those in Slovenia for instance. In my view, your state accomplishes its major task very well. It secures equal access to education and OMY OF BEL healthcare. The unemployment rate in the country is low. Culture ON and sport are steadily developing.

EC The country provides high social standards. The results of the work of the Belarusian state are visible, Kazakhstan. Will it have any I hope even more companies will be and they are positive. Perhaps, the impact on your work in Belarus? set up in Belarus as the European administrative leverage is strong Have you already experienced the market is shrinking and yours is but it works. advantages of the SES? expanding. As a result, you have every chance to get more foreign Riko came to Belarus with I am sure that with the formation direct investments. investment projects in mechani- of the Single Economic Space, excel- In my opinion, there are still cal engineering. Later the com- lent prospects open up for Belarus. no signs for prompt economic pany expanded its business and In my view, your country has many recovery in the European Union. started doing projects in the undeniable advantages: law and Experts view the Asian market as energy sector. What other plans order, no corruption, transparent the most promising one. I believe it do you have in mind for this area? competition, good living conditions, was a very forward-looking step for highly-skilled workforce, favorable the Belarusian authorities to pro- We continue the construction tax system, and in the future the mote cooperation with China and and upgrade of several power sta- access to the huge consumer market Southeast Asia. tions in Minsk and the oblast. In of the Single Economic Space. The February 2011 we signed a contract access to such a market will encour- Talking about the authori- with Minskenergo to build two age many investors to open firms ties and the role of the state, power plants in Minsk with the here, in Belarus. You will greatly some foreign businessmen work- total capacity of 110KW (€54 mil- benefit from that. ing in Belarus take note of a lion). Turn-key projects to construct strong administrative leverage in two stations Dolginovskaya and And you? the country. Have you faced any Petrovshchina have been already administrative pressure in your implemented. And we too, because we can work here? Due to quality execution of reach out to the entire Eurasian these projects, we were able to win market from here. And since we There are situations when some another tender and sign the second have been working in Belarus for a methods which I would call unfair contract with Minskenergo in April long time and feel comfortable here, competition are used under the 2012 for the construction of two this will give us advantages too. guise of protecting the rights of more power stations (Brestskaya We should also bear in mind Belarusian producers. and Kamennaya Gorka) and the that the manufacturing industry, In order to purchase equipment upgrade of three operating trans- the auto-industry in particular, is from a foreign firm a Belarusian former substations of 110KW/10KW on a steady decline in the European plant should get permission from with cable lines in Minsk. The cost Union. Plants are shut down, jobs the Industry Ministry and call a of the contract is estimated at €41.1 are cut. The economic crisis in some tender. However, the results of the million. The delivery date is set for EU countries has affected foreign tender, as it turns out, can dis- late 2013. Our company acts as a trade. please some participants and can general contractor responsible for It is an absolutely different pic- be called off because of someone’s all loan resources. ture in the CIS: production is on complaints. We have won a tender Keeping in mind the scale of the rise, new plants are emerging, at one of the companies for the third these projects, we are doing our and modernization is gaining pace. time already, and there is one firm best to streamline works and reduce 18 MODERNIZATION www.belarus-economy.by

expenses. It is my belief that these neering. The logistics sector is vig- this industry. They perform regu- projects are vital for Minsk as the orously developing in your coun- lar equipment diagnostics, replace 2013 city is rapidly expanding, and its try. The government draws special obsolete parts, etc. , 1

demands for electricity are increas- attention to this process. The logis- At first service companies o. ing. Hence, the role of modern reli- tics system development program worked only with the Slovenian N able and powerful electric stations till 2015 is now implemented in NPP. Today they are large enough is increasing too. Belarus. Existing logistics centers to branch out into foreign markets. US are working to expand the storage For example, they assist with run- AR What other sectors are you infrastructure. I think our experi- ning similar facilities in the United going to tap into? ence in this field will be useful to States. Slovenian companies would Belarus too. We have already imple- like to help maintain and operate I am confident that environmen- mented dozens of projects to com- the NPP in your country. For this tal engineering is a promising area mission high-efficiency systems of purpose, we will initiate a special- in Belarus. We have gained con- storage, transportation and distri- ized seminar in Minsk in April. siderable experience in this field. bution in many countries. One of For instance, we have successfully the most successful projects is the Riko is running the biggest OMY OF BEL implemented projects related to one to set up the Lebedyansky auto- loan and investment project in waste collection and recovery, water mated storage facility for finished the -Slovenia ON and air treatment in Slovenia. products at the food processing com- relations. This is the project to

We can share our expertise and pany in Russia. construct the Kempinski hotel EC knowledge with Belarusian special- complex in Minsk downtown. ists. In particular, our company In one of the interviews you What is the progress made and took part in a tender to build a said that the company is inter- are you confident that the hotel waste recycling plant near Minsk. ested in shipping equipment for will be commissioned on sched- It was the first time we took part the future Belarusian NPP. Can ule in late 2013? in such a tender. And as it usually you update us on the progress turns out the first attempt was not a made? Indeed, Riko is a general con- success. tractor of the project to build the Riko has applied for a tender to Slovenia has been operating the hotel complex at the prestigious build a turn-key waste processing nuclear power plant in Krsko since area in Minsk downtown (near the plant in Grodno. The company sug- 1983. However, it is not as powerful circus building). It will include the gests fitting the plant with cutting- as the Belarusian one. Its capacity five-star Kempinski Hotel, 81 apart- edge equipment and launching a full is just 730MW. The Slovenian NPP ments and offices, service facilities cycle with the maximum selection is considered one of the safest in and a parking lot. The estimated of recyclable materials. In line with Europe. Stress tests conducted after cost of the project is about €120 mil- the company’s offer, this method the Fukushima accident in Japan lion. will allow processing 90% and bury- proved that the power plant is safe. Our company is a general con- ing only 10% of waste. Its safety relies on the fact that the tractor of the construction project. Another strategic cooperation power plant is operated by a num- The project is sponsored by the avenue is the logistics systems engi- ber of companies specializing in Belarusian company Elite Estate. The architectural design was cre- ated by the famous Moscow-based company SPEECH. The cost of the Kempinski Hotel construction project is €57 million. At present all the works are on schedule. We are planning to deliver the hotel by the end of the year. We have already prepared three typical room designs (one in the Slovenian style, and two in the European style) and submitted them to the customer. The most famous project of our company is Moscow’s Peter I Hotel. We have also built Kempinski hotels in Slovenia and . Therefore, we are familiar with the strict requirements and standards. I hope that Kempinski Hotel will be Riko’s trademark both in Belarus and the CIS.

Yekaterina NECHAYEVA 19 www.belarus-economy.by MODERNIZATION 2013 , 1 o. N US AR OMY OF BEL ON EC

20 MODERNIZATION www.belarus-economy.by 2013 , 1 o. N US AR OMY OF BEL ON EC

21

PANORAMA www.belarus-economy.by 2013

Nominations coming in for , 1 o. Belarus' Exporter of the Year 2012 Awards N US The Belarusian Chamber of Commerce and Industry

(BCCI) holds a traditional nationwide contest Exporter of the AR Year Awards. According to the BCCI, the event aims to identify and reward companies and businessmen who posted outstanding export achievements, to encourage export-oriented manufactures and to enhance the prestige of Belarusian companies on the international market. Winners will be chosen in 18 nominations, including

mechanical engineering, metalworking, metallurgy, oil OMY OF BEL refining, chemical and petrochemical industry, electronics and

instrument making, electrotechnical and optical industry, light ON industry, food industry, agriculture, production of household goods, forestry and logging industry, furniture-making and EC paper-and-pulp industry, construction and production of building materials. The best exporters will be selected in the following nominations “Small Business Management”, “Rehabilitation and Treatment Products”, “Development of Information Technologies”, “Services”, “Self-Employed Businessmen”. The winners will be announced and honored in April-May 2013.

23 www.belarus-economy.by IN THE SPOTLIGHT IN THE SPOTLIGHT 2013 , 1 o. N Business Plan US AR for the Country Rational use of resources and modernization of enterprises are the major preconditions OMY OF BEL

ON for sustainable economic growth EC The socio-economic development targets set for Belarus in 2012 were pretty tough. The country did its best to meet them and the efforts resulted in the $3 billion commodity trade surplus, something that had not happened in many years. However, five out of the twelve most important targets were not fulfilled. They include the GDP growth, increase in industrial production, reduction in material intensity in the manufacturing industry and GDP energy intensity, and the inflow of foreign direct investment. Almost all the regions failed to meet the gross regional product targets, while the city of Minsk performed even worse than in 2011.

President’s ing as planned and leaves much to be desired. Assessment However, in 2012 Belarus even- The social and economic devel- tually reached financial stability In 2013 opment of the country in 2012 and and macroeconomic balance: infla- the tasks for 2013 were discussed at tion slowed down considerably, the the export is the Council of Ministers’ session foreign trade deficit was reversed, projected led by President of the Republic the domestic currency market sta- of Belarus Alexander Lukashenko. bilized, gold and foreign currency to reach The head of state warned the reserves were kept intact while the government right away that the country fully met its external and $60 billion, discussion would focus on prob- domestic loan obligations. The most lems and failures, as well as new important economic sectors – manu- up $8 billion challenges. facturing industry and agriculture – The session lasted almost demonstrated good growth. (or 15%) seven hours. Reports were deliv- Belarus managed to consoli- ered by the Prime Minister, Vice date positive trends in the social from 2012 Premiers, Head of the National sphere: real income of individuals Bank, Chairman of the State increased by 21%, pensions were Control Committee, governors, and revised upward four times; house- company chiefs. That was a very hold deposits in Belarusian rubles detailed and focused discussion. and foreign currency rose 1.6 times. The Belarusian head of state The average nominal monthly sal- made a policy statement as he ary neared Br5 million ($552) in spoke about the most pressing December. People on the govern- problems impeding the country’s ment payroll received about $418 in economic growth. The President equivalent. also outlined short-term objectives “It is clear that in recent years and tasks. According to Alexander we have had to deal with numer- Lukashenko, the country’s eco- ous challenges brought about by nomic development is not proceed- the economic crisis and the global 24 IN THE SPOTLIGHT www.belarus-economy.by 2013 , 1 o. N US AR OMY OF BEL ON EC

recession. There is hardly any coun- try that has not been affected by the crisis in some way or another. Belarus is no exception. Therefore, the government should be credited for preventing the Belarusian econ- omy from collapsing,” the President noted. However, a slowdown in major economic sectors that became more pronounced in H2 2012 is a mat- ter of serious concern. Alexander Lukashenko warned that the sit- uation that happened last year is totally unacceptable; if the govern- ment let it happen again, it will be immediately dismissed. The President harshly criticized the work of the Cabinet and the entire executive branch for inac- tion, inability to anticipate nega- tive developments and fear to make decisions. “Ill-conceived decisions, red tape, failure to meet deadlines and fulfill instructions of the President speak volumes about the style and methods of the Council of Ministers,” Alexander Lukashenko said. “So far, the general assessment is unsatisfactory!” the head of state emphasized. Industry

Since the manufacturing indus- try largely shapes the development 25 www.belarus-economy.by IN THE SPOTLIGHT

of the entire economy, comprehen- sive and effective measures should 2013

, be taken to promote the industrial 1

o. sector and increase the production N of innovative goods, the head of state demanded. US The President expressed con- cern over the monthly contraction AR in the industrial output. A number of enterprises have reduced the out- put and exports by 20 to 30%. “If the markets for our traditional products shrink, why do you not come up with innovative goods instead?” the head of state asked. The President believes that it is OMY OF BEL vitally important to take comprehen- sive and effective measures, ranging ON from imposing order and discipline

EC to implementing upgrade projects. So far, things are not good in reality, remarked Alexander Lukashenko. He recalled the situation with the modernization of enterprises of the woodworking and worsted indus- tries when he had to intervene to give impetus to investment projects. Investment

The head of state slammed the government and local authori- ties for poor effort to raise foreign investments and implement invest- ment projects. Seventy-six projects included in the national register were supposed to be completed in 2012. Yet, by the beginning of 2013 nearly half of them had not been wrapped up. Alexander Lukashenko noted the lack of in-depth analysis of business proposals. “For the past several years we have witnessed a reduction in investment in fixed assets, more so in fixed assets in use: 42% of capital investment in 2012 as against 46% in 2011. We should aim for not less than 50% here,” the head of state said. In 2012 Belarus raised only $1.4 billion in foreign direct investment, down 65% from 2011. “Almost eve- rything was spent on trade and the financial sector. Here, ministers and governors do not even need to take effort. These investments do not require your involvement,” the President said. He criticized the Economy Ministry and the National Agency of Investment and Privatization for 26 IN THE SPOTLIGHT www.belarus-economy.by

the poor effort. The process of rais- the export 1.5 times. As a result, the “Starting from 2011, the Bela- ing foreign investment is understood industry has a deficit of $193 mil- rusian ruble has been devalued 2013 solely as the sale of state property. lion, twice as bad as in 2011. 2.9 times. Consumer prices rose 2.6 , 1

However, approaches to privatiza- As for the utilities sector, the times, of them prices for food pro- o. tion in Belarus remain unchanged. President instructed the govern- ducts increased almost three times, N “The principle is known: want to ment to grapple with prices for for non-food products and services buy – pay a price and take the obli- utilities services in Belarus. “We 2.5 times. Does your pricing policy US gation to invest in production, save keep insulting people saying that aim to catch up and outpace the AR jobs, provide people with decent sal- they are subsidized. Look into the devaluation rate?” the President aries and pay taxes to the budget,” matter from the beginning to the asked. the President remarked. end and calculate how much each The head of state is convinced: service should cost,” Alexander “If we do not restrain the inflation Services Industry Lukashenko said. now when we have a fairly stable In turn, the government deems exchange rate of the national cur- Today, people are very displeased it necessary to switch to pre-estab- rency, we will incur greater domes- with the quality of services pro- lished prices in each region where tic expenses, and our products will OMY OF BEL vided by the construction indus- the cost of utilities services will be lose competitiveness, in particular, try, housing and utilities services, determined taking into considera- products meant for export”. In this ON transport and communications. tion the local environment. respect, the head of state demanded

The President noted there is little to take more aggressive steps to EC improvement here. Agriculture curb the inflation and put a stop to The major goal of these indus- loose pricing practices”. tries should be lower costs, reli- The agriculture industry per- “The situation is absurd some- able operation of life support forms well in general. Yet the times. The State Control Committee systems, timely and qualitative President expressed serious con- reported to me that some com- provision of services. Alexander cern over the increase in the num- pany chiefs, following some price Lukashenko demanded that in the ber of loss-making companies. They increase schedule adopted by the Year of Frugality particular atten- accounted for one third of the total government at the beginning of tion be paid to the quality of ser- last year. Their aggregate net loss last year, have been raising their vices and energy conservation in soared 11 times. Despite consider- prices thinking that this schedule the construction industry because able support from the state, the was some kind of price rise guide- one third of Belarus’ energy majority of agricultural companies line,” Alexander Lukashenko said. resources is spent on providing hot still do not have financial resources “If we fail to restrain the inflation, water supply and the heating of for expansion. “I will put it straight: we will create serious problems for buildings. no one should expect that debts will ourselves on the consumer market “People say, and I agree with be written off. You should grow and make it harder to carry out eco- them, that the construction indus- more efficient, raise responsibility nomic modernization,” the head of try in our country, like in the neigh- of managers and specialists,” the state added. boring countries, is the most cor- head of state warned. rupt sector. People even call it a Alexander Lukashenko pointed Social Sector ‘mafia’ industry,” said Alexander out that not all of his instruc- Lukashenko. He drew attention to tions had been implemented in full Analyzing the state of things in the fact that the industry did not get regarding the industry. It pertains, the sector, Alexander Lukashenko rid of old problems: budget money first of all, to flax production, the drew attention to a considerable is spent ineffectively, the volume area where huge state resources gap between the remuneration of and cost of design, construction are put in and no results are given labor in the budget-financed sec- and installation services are over- in return, and to the upgrade of tor and the national economy in stated, books are cooked, and tar- dairies, which has been making general: today public-sector salaries iffs are manipulated,” remarked the extremely slow progress. make up 80% of the country’s aver- President. age salary while it should be at “Putting pressure on custom- About Prices least 90%. ers by raising the cost of projects “We should avoid moderniza- in order to squeeze out additional The head of state also talked tion by means of restraining wage money for wealthy lives and patching about the problems on the consumer increases for teachers and health- holes caused by poor management market. The President drew atten- care workers. The load should be will end badly for many construc- tion to the fact that the inflation distributed fairly. The budget sector tion industry executives,” warned rate gained momentum at the start also needs to get its organizational the head of state. The President also of the year and this aroused con- structure in order,” the President noted that Belarusian construction cern in the public, which was quite said. companies regularly fail to hit the understandable. The head of state Alexander Lukashenko also target to increase the export of con- stressed that macroeconomic stabil- touched upon the problem of per- struction services. Meanwhile, the ity in the country depends on the sonnel training, which is lagging import of these services exceeds solution of this problem. behind the retooling of leading 27 www.belarus-economy.by IN THE SPOTLIGHT

enterprises in a number of indus- Such projects will be supported tries. “Modernization is welcome through funds and cheaper loans,” 2013

, here, too. It is necessary to enhance he added. 1

o. the practical component of educa- Moreover, the President believes N tion to avoid situations when young that the country needs to involve specialists have to spend several Belarusian businessmen in mod- US years to come to grips with things. ernization and assist them in imple- We need to eliminate non-special- menting their initiatives. According AR ized training, raise the efficiency to Alexander Lukashenko, Bela- of material, technical and finan- rusian businessmen are ready to cial resources, keep the balance of engage in this work. interests of regions, industries and The President reminded that he organizations. We need to regulate still wants modernization to be car- everything. However, this might not ried out in a socially responsible happen within a year. If the state way. It is essential that salaries and needs certain categories of special- real incomes should grow on the OMY OF BEL ists, we need to train them,” the back of higher labor productivity. President said. Speaking about export, the ON President ordered to ensure a for-

EC Modernization eign trade balance. In 2013 the and Export export is expected to reach $60 bil- lion, up $8 billion (over 15%) from According to Alexander 2012. “Raising the export is the key Lukashenko, export and moderniza- factor to recovering the high pace of tion should be the locomotive which economic growth and is a guarantee will haul the entire economy. of macroeconomic stability in times The bulk of work is to be accom- As a result of of peak foreign debt payments,” plished in 2013. The annual pro- Alexander Lukashenko stressed. In ceeds from sales of at least $60,000 modernization his words, the entire top-down com- per employee will be the indicator to the annual sales mand structure from members of qualify the modernization as effec- the government to local authorities tive. Nearly 60% of enterprises with proceeds per one should make their contribution to a state-owned share have less than the export effort. $20,000 in proceeds per employee. employee should Wrapping up the session The President also remarked that the President said that the year the banking system of the country soar from $20,000 2013 had been declared the Year should provide the so-called “long of Frugality. Therefore, both the money” for modernization projects. to $60,000 government and local authorities For this purpose, the National Bank should concentrate on the effi- has to deal with the availability of ciency and rational use of natural, loans for the real fuel, energy, material and human production sector. “But you have resources. Alexander Lukashenko to exercise the toughest control noted that Belarus should make here. Loans should be given for con- ample use of its huge resources in crete and highly-efficient projects,” all industries. The country should Alexander Lukashenko demanded. do its utmost to find ways to reduce The President said that companies production costs, decrease energy should not apply for loans to per- and material intensity of prod- form routine operations, like pay- ucts, and carefully spend budget ment of salaries. funds. At the same time, the head of “Everyone – from chief execu- state believes that Belarus should tives to workers – should clearly not give up on foreign loan resources, understand that the saving of but attract them only on the terms resources and the focus on economic which are favorable for the country. modernization are not a one-time For example, as part of loan agree- campaign but the pillars of eco- ments with China, Belarus can raise nomic security of the country. The up to $12 billion. entire society should concentrate “Citing the lack of resources on fulfilling these urgent national will not count as an excuse,” the targets,” Alexander Lukashenko President warned. “Every company stressed. should have an upgrade plan cou- pled with an efficient business plan. Tatyana POLEZHAI 28

www.belarus-economy.by IN THE SPOTLIGHT IN THE SPOTLIGHT 2013 , 1 o. N Smart US AR Construction Regulations were enacted in Belarus on 1 April to allow designing only energy-efficient housing OMY OF BEL ON

EC The energy efficiency topic is Who would doubt! After all, heat Naturally, developers are pre- getting increasingly relevant in consumption in such a house makes pared to work using new standards. Belarus and the entire civilized just 35kWh per square meter a year, Belarus will soon produce import- world. Limited resources and high whereas neighborhood houses show substituting components for heat energy costs prompt the country completely different figures: a house and energy supply equipment and to find ways to reduce energy built in the 1950s consumed 220kWh climate control systems. consumption. An emphasis is per square meter a year, a house “Belarus has a powerful manu- placed on residential housing built under Khrushchev consumed facturing industry, including R&D 190kWh, and a house constructed in divisions. Therefore we will be able because it is a major energy Brezhnev times consumed 170kWh. to produce the sufficient amount consumer accounting for If we translate these figures into of these devices on our own, thus about 35% of all heat energy the language of money, we will see minimizing import,” Mikhail consumed in Belarus! Taking into that residents of energy-efficient Myasnikovich said. consideration that 80% of energy houses will pay merely Br2,000-3,000 He noted that an energy-efficient resources is imported, heat losses per month or even nothing. This building can be rightly called “a translate into considerable amounts was achieved due to several fac- smart house” that saves money of foreign currency going down the tors, including heat recovery venti- for its residents and the state. The drain. lation, introduced with assistance importance of this project should of the Atayev Research Institute of not be underestimated. Obvious Benefits Housing Construction. “Heat recovery ventilation helps Towards Energy Scientists undertook to chal- maintain a comfortable tempera- Saving lenge the situation. In 2007 special- ture and humidity preventing damp- ists of the Atayev Research Institute ness and mold,” Vice Governor of After the collapse of the Soviet of Housing Construction showed Grodno Oblast Mr Vladimir Deshko Union, Belarus found itself cut off what they had done: Minsk’s first commented on the benefits of the from sources of raw materials. Thus energy-efficient house consumed new solution. “Residents of energy- energy saving became a priority several times less heat energy than efficient houses pay four times less of the government policy, includ- the neighboring houses. The bene- for heat supply than their neighbors ing in the construction and mainte- fits were obvious; therefore the topic living in the houses of the same age. nance of the housing stock. Initially, has got the spotlight in recent years. The difference can be even bigger in order to reduce heat losses and Energy efficiency of high-rise build- if the former make most of heat increase heat insulation of build- ings and detached houses started to recovery. ings, Belarusian developers insu- be discussed at all levels. For exam- All the energy-efficient houses lated walls and used new windows. ple, in February Grodno hosted a built in Belarus offer consider- Energy savings in such houses seminar on turnkey construction able savings. These houses were reached 30-40%. Then all new homes of detached houses. The seminar built in almost all the regions of in Belarus were equipped with heat was attended by Prime Minister of Belarus under the auspices of the meters and heat energy regula- Belarus Mr Mikhail Myasnikovich. Architecture and Construction tors. Later on the Atayev Research The forum started with discussing Ministry as part of the energy- Institute of Housing Construction the energy-efficient house built in efficient housing construction pro- developed programmable heat regu- 2009. gram. Therefore it is obvious that lators, which were installed in all It took an hour to cover all the this segment of design and con- buildings in the country. During advantages of the “thrifty” house. struction needs “a restart”. daytime they maintain normal 30 IN THE SPOTLIGHT www.belarus-economy.by 2013 , 1 o. N US AR OMY OF BEL ON EC

temperature in the public building but to switch to advanced ventila- stock. At night, temperature drops tion systems – heat recovery venti- to +15°C. It generates approximately lation. This approach has become 15-20% in energy savings. In addi- the basis of an energy-efficient tion, new regulations have been house concept which is used today adopted to ensure such heat regula- in Belarus.” tors are used to residential housing. Other issues related to the tech- By now, however, these meth- nical implementation of energy-effi- ods of saving have exhausted them- In 2012 cient homes have been addressed. selves as in the houses that are Since the institute seeks to ensure built according to modern stand- energy-efficient that all components used in the con- ards, 60% of heat is lost through struction of energy-efficient build- air exchanges, i.e. money is thrown housing ings are locally manufactured, they to the wind in the literal sense, for have developed windows that keep example, through the exhaust sys- accounted heat indoors much better than the tems. standard ones and also modern “The institute came to realize for 12% approaches to the building envelope. that the problem of energy effi- In addition, house insulation has ciency in residential and public of the new homes become wiser, with the focus on the housing stock comprises a variety places of the greatest heat losses. of tasks and is complex. So address- built in the country The outcome of many-year ing issues separately is meaning- (504,000 square work was the first energy-efficient less,” said Mr Vladimir Pilipenko, house built in conjunction with Director of the Atayev Research meters) the construction company MAPID Institute of Housing Construction. in Pritytskogo Street in Minsk in “Thus, we came up with the idea 2007. All the solutions developed of a modern energy-efficient home by the Atayev Research Institute with optimal characteristics, taking of Housing Construction were used into account specific climatic and in its construction: new-generation urban conditions. We realized that windows, inhomogeneous heat insu- it is necessary not only to insulate lation, heat recovery ventilation buildings and install new windows systems, horizontal heating systems 31

www.belarus-economy.by LABOR MARKET LABOR MARKET 2013 , 1 o. N Striving US AR for Balance Belarus is working to create civilized conditions for export and import of labor resources OMY OF BEL ON Labor migration is a very complicated issue. It has always been so in the amount of labor force will fall

EC all the countries of the world, because it has not only economic but by 500,000 in 2012-2020. Therefore, also social and political implications. Although hardly anyone knows the it would be naive to think that real scale of labor migration, a lot has been said about its reasons and the number of labor resources will consequences, its good and bad sides. You would agree that one cannot considerably increase even if we make a fair judgment about it without verified facts and figures that are a get some of unemployed people to cornerstone for subsequent conclusions. Unfortunately, the statistics on work (according to statistics, the labor migration are inadequate, which creates a perfect ground for various number of people who do not work, insinuations. The number of Belarusian migrant workers ranges from study or serve in the army now 100,000 to more than one million, according to various sources. Therefore, makes up 450,000). In this context, the labor migration issue is viewed from different economic and political the focus should be placed on qual- ity rather than quantity of labor perspectives. resources. Apart from new labor market Weak Points by the flawed educational system regulations and reforms of the that fails to take into consideration education system, we need drastic Now that labor resources can economic needs. Over 75% of the changes in the real economic sector, move freely across the borders of vacancies submitted to employment which pertains to modernization the Single Economic Space, each offices offer blue-collar jobs. There and improvement of the business country seeks to attract labor is obviously a deficit of skilled blue- climate, among other things. Taking resources and prevent outflow collar workers. While some people into consideration that the num- of skilled workers. It is perfectly cannot find a job, a great number of ber one reason for labor migration understandable. However, it is also vacancies are not even considered is a better salary abroad, employ- clear that you cannot resolve the by potential employees. ees should be provided with more migration issue by bans and restric- “Employment issues are labor incentives at home. Salaries tions (after all, the borders are reported mostly by individual com- should grow simultaneously with open!). Therefore, to avoid a brain panies and are attributed to a great productivity of labor. Perks and drain, Belarus needs to come to number of uncompetitive jobs and benefits should not be underesti- grips with the domestic labor mar- overstaffing coupled with a lack of mated, because they can become an ket and eliminate the issues that qualified employees. This leads to additional stimulus for keeping an push people to leave the country. low productivity of work, a high employee with a company. However, it is not exactly clear what staff turnover and slow production Deputy Premier of Belarus Mr these issues are, because there is no upgrade,” Labor and Social Security Anatoly Tozik emphasized that the reliable information about the scale Minister Ms Marianna Shchetkina out-migration of labor resources of migration, its causes, employ- said. “Production upgrade neces- cannot be stopped by administra- ment periods abroad, qualifications sitates staff reduction. However, tive methods; economic incentives of migrants and so on. Thus, any this should be done in an evolu- are needed. migration policies are based on tionary way, using HR diagnostics “Naturally, we need to raise assumptions rather than facts. and providing re-training options to salaries. We should make them as The issues facing the domestic employees. Every employee should high as in the neighboring states, labor market include a misbalance be provided with rewarding work,” to prevent the drain of skilled and between supply and demand and she added. unskilled labor. At the same time, the uneven distribution of work- While analyzing the labor mar- this should be done taking into con- ers across regions and qualifica- ket, we cannot ignore demographic sideration the purchasing power tions. The latter is underpinned factors. According to projections, parity,” he said. 34

www.belarus-economy.by LABOR MARKET

Few go abroad to work under would hardly make a person with Belarus in 2012, including 3,200 in official contracts (this is especially kids and own apartment make a newly-created jobs. An estimated 2013

, true of blue-color jobs). The major- move but is likely to lure young 116,300 constructors were dismissed 1

o. ity of migrants are employed in people. Little appeal of jobs in the over the period. The employed/ N the shady sector, with all the conse- manufacturing sector of Belarus dismissed ratio made up 84% and quences: lack of remuneration, out- shies young people away from this remained the lowest in the country. US right violations of safety require- “unprestigious” sector. In the future For comparison: transport and com- ments, working from dark to dark, this could lead to a serious prob- munications sector - 91.1%, process- AR seven days a week, tough living con- lem of ageing personnel. The aver- ing industry 91.3%, manufacturing ditions and other “flavors” of the age age of workers has recently sector 91.7% , education 93.5%, agri- everyday life of an illegal alien. In increased in the sector. It was 39.8 culture, gaming and forestry 94.4%. short, work till you drop. years on average in 2007, and 40.4 With this, the figure hit 110.9% in By the way, it is not easy for years in 2010. trade, auto services, household qualified professionals to get pro- Perhaps to some extent the situ- goods and individual supplies sec- moted up the career ladder. It is ation in the labor market of Belarus tors, 104.5% in healthcare and social extremely difficult to jump from the will be mitigated by the arrival of services, 104.1% in financial sector, OMY OF BEL middle tier to the top (in addition to Russian and foreign employers who 102.2% in hospitality and catering the talent you need to be as tough as are ready to pay more than their industry, and 95.2% on average in ON nails) ... Belarusian counterparts, but still the country (a total of 875,800 people

EC Most often migrant workers face less than in Russia or Europe. were employed, including 51,800 in such problems as under-payment. newly-created jobs; 919,800 people According to a Russian study, only Builders for Export were dismissed). Last year a total 25% of the Belarusians have signed of 4,571,100 people were employed written agreements with employers. Brain drain hit the national in the country, down 1.8% from 2011. Verbal arrangements subsequently healthcare, transportation, IT and According to the Labor and turn into “verbal” payments. construction sectors the hard- Social Security Ministry, in late Belarusians get into troubles also est in 2011-2012. The construction 2012 the demand for workers was because of dishonest recruitment industry suffered the worst. While registered in the processing indus- agencies. A typical case of fraud: implementing construction projects try (22.5% of the total), construc- a person pays for certain informa- Belarus (especially Minsk) had to tion (17.1%), agriculture, hunting tion services, signs papers without invite workers not only from other and forestry (11.8%), trade, auto reading, and then he finds himself regions of the country but also from services, household goods and indi- with no money and no job. There are other countries. vidual supplies (10%), transport and cases of not only payment cheats According to the National communications (9.8%), healthcare but also cases of slavery. Sometimes Statistics Committee, the export of and social services (7.1%). we hear news reports about tragic construction services in Belarus It is well-known that migration situations when Belarusian workers soared 87.1% in 2012 as against 2011 is a reserve for replenishing human were injured or killed at work in the to reach $417.9 million. Imports of resources. To stabilize the demo- neighboring countries. construction services were also graphic situation the country needs, Some of those who have already on the rise to reach $610.9 million first of all, a large-scale compensat- worked abroad are going to do so (191.2% to 2011). ing immigration program based on again. Some of them (the minority) According to the Architecture a differentiated approach depend- are dreaming of settling down in and Construction Ministry, the ing on the category of migrants, another country with their fami- situation with the personnel has national interests. On the other lies. Others are determined to earn finally stabilized in the sector, put- hand, the country should continue money abroad but live in Belarus. ting an end to the outflow of build- working hard on its own intellectual Some migrants do not plan on going ers. Mr Alexei Shilo, Head of the and creative potential. overseas again even for high wages. Department for Foreign Economic Money cannot make up for back- Activity of the Architecture and Reaching Balance breaking work, poor living condi- Construction Ministry, acknowl- tions in overpopulated dormitories edged the difference in earnings Belarus is focused on creating and trailers without conveniences, for builders in Belarus and Russia, civilized conditions for the move- away from parents, wives and chil- and stressed that in order to even ment of workforce. dren. them out the exports of services In particular, the national demo- It should be kept in mind, how- should be increased: “Those special- graphic security program for 2011- ever, that the majority of migrant ists who have left the country are 2015 earmarks Br2.8 billion per year workers are young people aged starting to come back. They still to boost immigration in Belarus. It between 25 and 35. They are more want to work abroad but this time is worth saying that Belarus’ neigh- mobile, more ambitious, less under the guidance of Belarusian bors are already working to attract attached to a particular place than organizations.” foreign workforce to cover natu- adult migrant workers who have According to the National ral population loss and replenish families and property. For instance, Statistics Committee, almost 97,800 labor resources. The migration gain a 30-40% difference in earnings building specialists got hired in index envisaged by the national 36 LABOR MARKET www.belarus-economy.by

demographic security program labor migrants use informal trans- startups or make long-term savings makes up 60,000 people per 5 years. fer channels. They send money with as bank deposits. 2013

The government would like their friends or bring it home them- Labor migration has a mixed , 1

able-bodied and educated people to selves. This is widespread in neigh- impact on Belarus’ social policy. On o. come to Belarus. The agricultural boring countries, namely Russia, the one hand, Belarus gets addi- N industry opportunities, availabil- Poland, and Ukraine. Unfortunately, tional income from migrant remit- ity of comfortable housing in rural many Belarusian migrants are una- tances. Moreover, migrants are paid US areas can attract migrants to the ware of the foreign income offset in foreign currency, which prompts AR regions lacking workforce. By the agreements. They do not know how the inflow of foreign currency to way, immigrants coming to Belarus these matters are regulated. Others Belarus. Labor migrants acquire usually work as builders, farmers, do not want to advertise that they new experience, knowledge, mas- coaches, cooks. work abroad. ter modern technologies, raise their One of the main objectives of According to the National Bank competitiveness. They bring this the national program to promote and the Finance Ministry, migrant useful “baggage” to the home coun- employment in the Republic of remittances to Belarus are below try. Other positive sides of labor Belarus for 2013 is the regulation of 1% of the GDP per year. The volume migration are lower pressure on the OMY OF BEL foreign labor migration with a view is very small in comparison to other national labor market, lower risk of to ensuring a necessary balance CIS member states. In Tajikistan unemployment growth. On the other ON between the use of national labor remittances make 47-50% of the hand, huge budget funds were spent

resources and foreign workforce. GDP. The amount of remittances on professional training of workers EC For this purpose it is essential to to which is considered who enhance the potential of a for- monitor labor migration processes. one of the biggest players on the eign country. Moreover, labor migra- There are plans to improve migra- labor migration market increased tion creates additional pressure on tion control, first of all, between the by $50 million to reach $1.5 billion the Social Security Fund because countries of the Single Economic in 2012. About $1.3 billion was sent the country does not receive pay- Space. It is also necessary to update to Moldova via various fast money ments due. A considerable part of the list of jobs in the manufacturing transfer systems. tax revenues needed to support the and services sectors where there is Addressing the problem with budget-financed sector is lost. a deficit of workforce in Belarus. money transfers will produce a Therefore, labor migration has Perhaps, it is important to keep number of benefits. It is safe for both pros and cons. The top priority an eye on remittance flows. It is nec- the Belarusians working abroad is to maximize gains and minimize essary to create conditions to encour- and is good for the economy. In the losses. age migrants to transfer money via future the Belarusians could use banks. At present the majority of these means to invest in business Yelena PRUS

It is estimated that 85-90% of the labor migrants from Belarus work in Russia

37 www.belarus-economy.by QUESTIONS TO THE MINISTER QUESTIONS TO THE MINISTER 2013 , 1 o. N Mineral US AR Wealth Rational mining and investment in subsoil use are the key to sustainable economic growth OMY OF BEL

ON Belarus has its fair share of

EC mineral resources. Our country has the world’s third biggest commercial reserves of potassium salts that generate a lion’s share of budget revenues. However К2О is not the only mineral the country has. Promising mineral resources include coal, oil shale, oil, dolomite, chalk, clay, construction sand and gravel mixes. Proved reserves alone are enough to reduce the country’s reliance on imported raw materials and to sell substantial amount of minerals and products from them domestically and abroad. However, in order to take advantage of its mineral potential, Belarus needs to extract, process and turn mineral resources into a commodity. Will investments be able to speed up the process? What deposits are investors most interested in? What environmental protection measures are taken to offset the impact of mining operations? These and other questions are addressed to Minister of Natural Resources and Environmental Protection of the Republic of Belarus Mr Vladimir TSALKO.

Mr Tsalko, at present Belarus is actively look- ing for investors in its min- eral resources industry. What deposits will be developed first, what deposits draw the most interest and what investment proposals have investors put forward? 38 QUESTIONS TO THE MINISTER www.belarus-economy.by

First of all, we are going to Naturally, these are long-term raise investments into the devel- projects. As of 1 January 2012, 2013 opment of construction mate- recoverable reserves of potassium , 1

rials deposits, which number is salts in Belarus were estimated at o. pretty big in Belarus. In December 7.3 billion tonnes of raw salts (К2О N 2012 the Ministry of Natural – 1.4 billion tonnes). Planned pro- Resources and Environmental duction will make up 41.2 million US Protection announced a tender tonnes in 2013, 42.3 million tonnes AR to choose concessionaires for in 2014 and 42.5 million tonnes in the clay deposits Kuropatie and 2015. Golbitsa (Postavy District), chalk deposit Dobrushskoye (Dobrush The absence of clear-cut laws District), sand-and-gravel mate- in this field was believed to dis- rials deposit Perenosinskoye courage investments, including (Baranovichi District), sand and foreign investments. A bill on sand-and-gravel deposits Ulesie concessions has been drafted to OMY OF BEL (Dokshitsy District), oil shale straighten relations between the deposit Turovskoye (Stolin District state and investors over mining ON and Zhitkovichi District). operations. Could you, please

In 2013 we plan to announce sim- unveil the details of this bill? EC ilar tenders for the plaster deposit Brinevskoye (Petrikov District), The new bill aims to maintain a iron ore deposit Okolovskoye balance of interests of the state and (Stolbtsy District), bentonite clay business and regulate their rights deposit Ostrozhanskoye (Lelchitsy and responsibilities that arouse District). Private business is dem- in connection with investments in onstrating vivid interest in these Belarus’ natural resources industry. A con- deposits because these raw mate- cession contract is a written agree- rials have a wide variety of uses: industrial reserves ment obliging a concession grantor they are used in their unprocessed of potassium salts to transfer the right to own and form and as the basis for produc- use concession property, including tion of construction materials that make up exclusive property of the state, to are in big demand both domesti- a concessionaire for a fee. This per- cally and abroad. over 7.3 billion tains to natural resources too. In principle, like in any other The bill on concessions has been industry, investors’ interest tonnes developed by the State Property depends on the profitability of a Committee and the Economy project, the payoff period and the Ministry of the Republic of Belarus. availability of tax preferences. It should be noted, however, that the Investors are mostly interested, of matters arising out of and in con- course, in potassium deposits. nection with investments in natural In 2011 an investment project resources industry are sufficiently was launched to construct and formalized in the Belarusian legis- commission a mining and dress- lation. ing complex in Minsk Oblast. The The Presidential Decree designed capacity of the complex “Concerning the list of assets that is 1.1 million tonnes of potassium could be offered in concession” was chloride per year. The project is adopted back in 2008 in further- running at the Nezhinsky (eastern ance of the Investment Code of the part), Smolovsky and Lubansky Republic of Belarus. The resolution sections of the Starobin deposit of the Council of Ministers and the of potassium salts. The project is Ministry of Natural Resources and implemented by Slavkali. Environmental Protection govern- Another major investment pro- ing the use of subsoil under conces- ject involves commercial develop- sion contracts was passed the same ment of the Petrikov deposit of year. potassium salts, construction and Decree No. 442 as of 3 October commissioning of a mining and 2011 “On certain matters arising out dressing complex in Oblast. of and in connection with invest- The capacity of the complex is ments in natural resources indus- estimated at 1.5 million tonnes of try” grants concessionaires the potassium chloride per year. The right to use the privileges and pref- project is run by Belaruskali. erences envisaged in Decree No. 10 39 www.belarus-economy.by QUESTIONS TO THE MINISTER

of the President of the Republic of Belarus as of 6 August 2009. 2013 , 1

o. Lavishly endowed with N potassium salts, Belarus lacks hydrocarbon raw materials and US has to import them in signifi- cant amounts. Do we have any AR hope of discovering new oil fields?

Annual production of oil in Belarus is around 1.7 million tonnes per year, which covers about one-third of the country’s needs. Over the years the total OMY OF BEL production of “black gold” in the Belarusian Polesie has made up ON more than 125 million tonnes. The

EC largest fields are located in Gomel Oblast. These are the Rechitsa, Ostashkovichi and Vishanskoye oil deposits. The explored oil deposits can last 33 years, with the oil produc- tion being at the present level. As of today 77 oil fields have been discovered in Belarus. They hold about 250 oil deposits. However, it should be said that in the Pripyat Trough around a half of the initial oil reserves remain unexplored, and this requires improving the accuracy and efficiency of explo- ration works. Of course, we would like to not only maintain the current pro- duction level but also to increase it. To this end, we are planning to intensify prospecting works in the promising oil-bearing regions, including the underexplored areas in the marginal parts of the Pripyat Trough. We attach great importance to the exploration of deep horizons going down 5,000-6,000 meters. There are expectations that great undiscovered “treasures” may lay hidden at such depths. For exam- ple, in Glusk District we drilled the Shumyatichskaya well 5.101 meters deep and received an oil inflow at the point of 4,300 meters. Thus, we pin high hopes on the fur- ther surveying in the submerged parts of the Pripyat Trough. By the way, the results of the surveying in recent years have showed that there are real chances of discovering new, albeit small, oil deposits in the northern part of the Pripyat Trough. 40 QUESTIONS TO THE MINISTER www.belarus-economy.by

Today, many countries have As for the main components of been actively working on the the environment – subsoil assets, 2013 technologies for extracting air (including climate), water, , 1

shale gas, which they say could soil, biodiversity, specially pro- o. be the energy solution in the tected natural sites, the program N future. Is Belarus considering describes the top priorities at the producing gas from shale? national level, relevant events and US a mechanism of their implementa- AR In 2012, in accordance with the tion. instructions of the head of state Apart from the major environ- and the Prime Minister of Belarus mental document, the country is to assess the prospects of discov- implementing a whole array of gov- ering shale gas deposits in our ernmental, national, sectoral and country, we established a group of regional programs and developing experts. Its members are special- strategic long-term documents. ists of the Ministry of Natural In particular, the Ministry OMY OF BEL Resources and Environmental of Natural Resources and Protection, National Academy of Environmental Protection acts as a ON Sciences of Belarus, Belneftekhim state customer of a whole bunch of

Concern, and Russian experts with such documents, including the pro- EC surveying experience in shale gas. grams on developing deposits and In January-February 2012, the raw-materials in the Republic of group conducted an express-anal- Belarus in 2011-2015, government ysis of the possible discovery of programs on securing the opera- shale gas deposits in the territory tion and development of Belarus’ of the Republic of Belarus. As a Every year national environmental monitor- result, they selected eight promis- ing system for 2008-2014, a branch- ing sites: three in Brest Oblast about 1.7 million wise program on developing the within the basins of the Podlaska- state hydrometeorological services Brest cavity and five in Gomel tonnes of oil, for 2011-2015. Oblast within the Pripyat Trough. Belarus is taking part in the The feasibility of development or one third of program “Monitoring of the of shale gas deposits will be deter- Earth’s Polar Areas and Support of mined based on the results of the the oil used in the Arctic and Antarctic Expeditions geological survey. But I want to say 2011-2015” as well as the national that not everything is simple with country, action plan to fulfill Belarus’ this raw material. Its industrial is produced commitments to the provisions production involves significant of the Stockholm Convention on environmental risks. in Belarus Persistent Organic Pollutants (POPs) in 2011-2015. It is common knowledge that Specialists of the Ministry in the present-day world the sus- of Natural Resources and tainable development of a coun- Environmental Protection take try depends not only on a well- an active part in the preparation developed industrial complex of the country’s strategic envi- but also on the conservation of ronmental documents. Among natural resources and a favora- them is the Water Strategy of ble ecological environment. the Republic of Belarus for the Which areas in this regard do period up to 2025, the strategy on you believe to be of top prior- the preservation and sustainable ity for Belarus? Which environ- use of biodiversity for 2011-2020, mental projects is our country a strategy for the implementation part of, how efficient are they? of the UN Convention to Combat Desertification. Belarus’ socioeconomic devel- The ministry attaches utmost opment program for 2011-2015 out- attention to expansion and lines the main goal of the national enhancement of international environmental policy, i.e. environ- technical cooperation. Foreign mental enhancement and safety, technical aid is viewed as an addi- efficient use of natural resources, tional source and one of the instru- maintenance of natural integrity, ments to improve environmental including unique natural com- protection and rational nature plexes. management. 41 www.belarus-economy.by QUESTIONS TO THE MINISTER

Today Belarus is implement- on the agenda in virtually all ing 13 international technical aid countries. What measures are 2013

, projects with the total financing taken in Belarus to resolve the 1

o. exceeding $18 million. problems? N So far, a number of strategies have been developed as part of The volume of domestic waste US the EU/UNDP project “Support for in Belarus and, perhaps, every- the development of a comprehen- where, is constantly on the rise. AR sive framework for international This has a detrimental effect on environmental cooperation in the the environment. Waste processing Republic of Belarus” to improve and the use of recyclable materials solid household waste manage- have become an important task for ment. Highly-efficient equipment the state. has been acquired to upgrade the At present there are several waste management system in the mechanisms to involve recyclable towns of Mosty and Kobrin. materials in the economic turno- OMY OF BEL One more project, Persistent ver in Belarus. First, there is a Organic Pollutants Management, vast network of waste manage- ON was implemented in the country ment centers of the Belarusian

EC under the auspices of the Global Union of Consumer Societies, the Environment Facility. The project trade and manufacturing associa- enabled the country to deactivate tion Belresursy, the Housing and and take out for disposal to France Utilities Ministry, Belvtorchermet some 823 tonnes of PCB wastes Company. Second, there are con- and to destruct the Slonim pesti- tainers for the separate collection cides landfill. of domestic waste and special Six projects of the interna- Tenders disposal sites for complex house- tional technical aid have been hold equipment (transport vehi- implemented in the water protec- to transfer six cles), etc. Third, there are domestic tion sector. They focused on the Belarusian waste sorting stations. rational use of water bodies of the Waste sorting stations operate Baltic Sea and the Black Sea. deposits in in a number of Belarusian towns, In 2013 Belarus has launched for example, in Pinsk, Polotsk, a UNDP/GEF project “Landscape concession were Mozyr, and Pukhovichi. There approach to management of peat- are sorting stations at housing lands aiming at multiple ecologi- announced in and public utilities service cent- cal benefits”. The project envis- ers in the majority of Belarusian ages rewetting of degraded agri- December 2012 regions. cultural lands on the total area of The majority of recyclable about 4,311 hectares of depleted materials produced by waste pro- peat deposits. cessing companies are paper, card- Besides, the government of board, textiles, polymers, glass cul- Belarus and the European Union let, ferrous and non-ferrous metals. are getting ready to sign an agree- What is the output and importance ment on financing the project of of these resources? I will give an international technical aid “Green example: in 2012 local scrap metals Economy in Belarus” (the project accounted for more than 50% of is estimated at €12 million). the total volume of raw materials The ministry maintains close used by Belarusian Steel Works for cooperation with the EurAsEC and the first time in history. CIS member states in nature pro- Belarus has a well-developed tection. By the way, let me remind strategy to organize efficient waste you that in the Commonwealth collection, disposal and processing of Independent States the year of domestic waste, production of 2013 has been declared the recyclable materials and an action Year of Ecological Culture and plan to implement the strategy for Environmental Protection under 2011-2015. In particular, the docu- the chairmanship of Belarus. ment provides for the launch of the second line of the waste process- And the last question, Mr ing plant in Mogilev, opening of Tsalko. The problems of solid waste sorting stations in Grodno, domestic waste management, Minsk, Vitebsk, Borisov, Bobruisk, use of recyclable materials are Orsha, Mozyr and Soligorsk. 42 QUESTIONS TO THE MINISTER www.belarus-economy.by

The action plan also envisages the expansion of the waste man- 2013 agement network and increasing , 1

the number of containers for the o. separate collection of solid domes- N tic waste. There are plans to open regional centers collecting waste US which can be used as recyclable AR materials, including complex household equipment and trans- port vehicles in all Belarusian regions and the city of Minsk. An important step to expand the use of recyclable materials is the establishment of a mixed glass cullet sorting facility in Minsk. OMY OF BEL This is a recycling center to pro- cess various types of recyclable ON materials using non-waste tech-

nologies. The installation of spe- EC cial containers for food wastes in Belarusian retail outlets is impor- tant for the collection and disposal of eco-damaging wastes. Decree of the President of the Republic of Belarus No. 313 of 11 July 2012 “Concerning certain aspects of consumer waste man- agement” is aimed at reducing the volume of solid waste burial and minimizing their adverse effect on the environment. In line with the document, the principle of extended responsibil- ity of manufacturers and suppliers of packed goods, packages and the accompanying list of commodi- ties, including complex household equipment (refrigerators, wash- ers, etc.), oil products, rubber-con- taining items (tires and casting), charging devices and other goods is introduced in Belarus. This is a very important moment. From now on the decree obliges legal persons and self- employed businessmen who manu- facture or import the abovemen- tioned goods in plastic, glass, paper, cardboard packages to collect, dis- pose or use packages and goods after the expiry date of the latter. By the way, for this purpose manufacturers and suppliers can either use their own waste collec- tion systems or pay a state-run non-profit waste management center established at the Housing and Utilities Ministry. People should bear financial responsibility for bringing damage to environment. This is the only way to make it effective. 43 www.belarus-economy.by STATE AND BUSINESS STATE AND BUSINESS 2013 , 1 o. N Public-Private US AR Partnership:

OMY OF BEL Fashion or Trend?

ON The business model of public-private partnership (PPP) EC is the key to fast socio-economic growth

Irina NOVIKOVA, law is needed. Skeptics insist that Doctor of Economics, Professor, investment projects related to infra- Head of the Economic Theory Sub-Department at the Academy structure development could rely of Public Administration under the Aegis of the President on the Investment Code that has a of the Republic of Belarus provision on concessions. Others say that it would suffice to develop The recent two or three years have seen an increased interest in the law “On concessions”. Most of technologically public-private partnership in Belarus and elsewhere. PPP is discussed advanced countries have effective in newspapers, at scientific conferences, roundtable sessions, and laws on public-private partnership, seminars. International experts come to Belarus to share best practices. including the EU (2003), Germany In 2011, the Academy of Public Administration offered a master’s course (2003), Poland (2005), the Republic in the discipline “Management of investment projects in public-private of Korea (1997), Ukraine (2010), partnership”. The curriculum of the fourth-year students now features the and Moldova (2009). The Russian discipline “Mechanisms of public-private partnership”. Federation has not drafted a single law on PPP yet, but regional govern- The State of the Nation Address ments are authorized to pass such Back Story was followed by Directive No. 4 laws and have been taking advan- The first important step towards “Concerning promotion of entre- tage of this opportunity for the last public-private partnership in preneurial initiative and stimu- ten years. The federal law is to be Belarus was made by a traditional lation of business activity in the enforced in Russia in 2013. State of the Nation Address deliv- Republic of Belarus” that was In fact, Belarus is not even in the ered by the Belarusian President on signed on 31 December 2010. Article list of countries promoting public- 20 April 2010. The address empha- 8 of the Directive deals with the private partnership. It cannot be sized the importance of new forms formation of the legal framework to found in any rankings and coun- of interaction between business encourage public-private partner- try profiles made by international and the government. The President ship in Belarus. organizations. was more specific about the idea of A concept of the draft law Several years ago Deloitte & PPP in his next State of the Nation “Concerning public-private part- Touche compiled a rating of coun- Address a year later: “One of our nership projects in the Republic of tries promoting the business model most important tasks today is to Belarus” was elaborated. In August of public-private partnership. Of come up with efficient mechanisms 2011 the draft law “Concerning all the former USSR republics, of public-private partnership and public-private partnership projects Russia was the only one in the list the adequate legal framework. This in the Republic of Belarus” was and it stood at the very bottom of will create a foundation for a new developed. It passed international the ranking. Belarus was not there format of relations between the gov- examination and was to be enforced (Pic. 1). ernment and business. This new in 2012. But it was not. It was not So, what is public-private part- format will be based on agreements even on the agenda of the parlia- nership all about? Is it just a tribute on joint projects that are of para- ment for 2013. More than that, there to fashion or a modern economic mount importance for the public.” is some doubt as to whether the PPP trend? Why do the majority of 44

www.belarus-economy.by STATE AND BUSINESS

of infrastructure, higher quality of established standards and param- ment opportunities and a chance to services, including public admin- eters and assumes the responsibil- communicate with the government 2013

, istration services, and building an ity to observe these requirements directly. Consumers will enjoy an 1

o. innovation-driven economy. Public- when providing services. In return, optimal price/quality ratio, acceler- N private partnership is meant to the private sector gets paid by the ated development of the infrastruc- redistribute responsibilities and state or the consumer. The size of ture and higher quality of public US risks connected with the develop- payments depends on the results of services. ment of clusters which usually fall work. By the way, this model needs The business model will play AR within the scope of the state. clear-cut standards and parameters. a big role in the innovation sec- It is worth saying that to manage Otherwise, public-private partner- tor. It is especially important for such a business model one needs to ship lacking norms and standards us because the social and economic carefully divide spheres of influ- will instigate corruption and abuse. development program for 2011-2015 ence of the state and the business. For example, in Russia this envisages radical modernization of As a rule, in PPP projects the pub- model was compromised in the all sectors of the economy, establish- lic sector is in charge of setting municipal services sector. Managing ment of new science-intensive and parameters and standards for infra- companies received money from high-tech production facilities. OMY OF BEL structure facilities and the services the state and tenants. However, Moreover, if we are going to join sector. there were no effective norms and the WTO we must fulfill the acces- ON Private business is, in turn, laws. As a result, the industry was sion requirement which says that

EC responsible for the development, enmeshed in corruption. This hap- at the precompetitive stage the state construction, and financing of the pened not because of the defective can finance up to 75% of scien- project. It is in charge of project PPP model, but because of the lack tific research. At the competitive management in compliance with the of the adequate legal framework stage the share of state financing and standards which regulate the cannot exceed 25%. The innovation business. By the way, the draft law sector needs private investments. “Concerning public-private part- Therefore, the innovation industry nership projects in the Republic of should be reformed in line with the Belarus” envisages only transpar- requirement. This is what Russia ent tender procedures. The state is has been doing since the early 2000s. the only controlling body. In fact, The majority of countries apply the real mechanism of public-pri- this business model. Among them vate partnership needs to be con- are the United States, Germany, trolled by the people who will use France, Austria, Australia, the public and municipal services. It is Netherlands, China, India, Israel, essential to establish multilateral Canada, etc. ties between the state, the civil soci- Therefore, public-private part- ety and business in order to engage nership is not a tribute to fashion. the general public in the adminis- Nowadays it is a major trend in PPP is not tration of public affairs. Therefore, the majority of countries, which is if the bill is passed it will be neces- connected with globalization and just cooperation between sary to amend the legal framework geo-economics. Public-private part- related to public organizations. nership is now the main instrument the public and private Why do we need public-private of state regulation of the national partnership in Belarus? What does economy. sectors but a business it give to the state, government, If we are slow in passing the bill model of interaction citizens, and business? Using this “Concerning public-private part- business model the government nership projects in the Republic of between the state gets an opportunity to save a lot of Belarus” and the bill “Concerning financial resources and accelerate state support to technological inno- and business social and economic development. vations” in the innovative and tech- The business model will help raise nological sector, we will lose com- the quality of the necessary expen- petitiveness needed to raise foreign sive infrastructure (roads, depots, investments and develop the inno- airports, terminals, schools, water vation-driven economy. It is com- treatment and sewage facilities, petitiveness that should ensure geo- bridges, waste processing facilities, economic breakthrough together etc.), take advantage of the funds with Russia and Kazakhstan, and managerial solutions of private with whom we are partners in the business, and share risks with them. EurAsEC. This integration is based In such a way private business gets on the cluster and network region- access to the industries previously alization in the innovation sector dominated by the state, i.e. private built to the public-private partner- companies are given new invest- ship model. 48

www.belarus-economy.by FOREIGN ECONOMIC TIES FOREIGN ECONOMIC TIES 2013 , 1 o. N Living US AR Within Means,

OMY OF BEL Trading Wisely

ON Belarus is set to expand its export by 15.2% in 2013 EC

The year 2012 was a good year for Belarus’ foreign economic operations. The major achievements of economic diplomacy include a record high export of goods and services that reached $51.89 billion and a trade surplus. According to updated information, the trade surplus in 2012 amounted to $2.9 billion. Such a breakthrough would have been impossible to achieve solely by expanding the export of individual commodities. The secret behind the breakthrough is dramatic transformation of Belarus’ export strategies. The details of Belarus foreign economic policy are unveiled in an interview with Deputy Foreign Minister of Belarus Mr Alexander GURYANOV:

50 FOREIGN ECONOMIC TIES www.belarus-economy.by

Last year witnessed ground- Naturally! In recent time repre- breaking changes on the global sentatives of the Eurasian Economic 2013 market. They should become a ref- Commission have often said that , 1

erence point for our export strat- both Russia and Kazakhstan are o. egies. I would single out five of happy with the positive trends on N them. the common market. Our trade First of all, we reached a bal- within the Customs Union is more US ance of trade in goods by means of vibrant than our trade with third AR the faster export growth over the countries. This demonstrates that import growth. For the first time by removing barriers and facilitat- we posted a trade surplus. It made ing direct contacts between compa- up $111 million. It is not much, but nies, we managed to intensify the it shows that we are learning to mutual trade within the “troika” import just as much as we can pro- format. duce and sell abroad. Secondly, we managed to main- The export of services OMY OF BEL tain the export growth mainly by exceeded $6.6 billion in 2012, up increasing the physical volume by 14.5%. However, it is far from ON of Belarusian products. Belarus what we aim to sell…

objectively expanded its “physical” EC presence on external markets. If We will work on boosting the we look at the previous five-year export of services. By the way, in term, we will see that Belarus’ With the creation the majority of developed countries export figures were increasing on the export of services accounts for the back of higher prices. However, of the Customs at least a quarter of foreign rev- in 2012 the prices remained virtu- enues. ally unchanged, while the physical Union and the For many years we have main- volume rose by over 10%. tained a surplus in services trade, Thirdly, we expanded the export Single Economic which partially offsets the deficit of our traditional industrial and arising out of the merchandize agricultural commodities. Space, Belarusian trade. We should strengthen this Fourthly, we managed to “ration- trend in the future as well. alize” the import. Thanks to our companies There are a number of services efforts to restrain “appetites” for increased exports which are provided on the territory intermediate and consumer import of Belarus. Such services include and to pursue aggressive import- to Russia transportation, insurance, banking, substitution policies, the aggregate computer services, various retail amount of imports remained vir- by $1.8 billion business services, logistics, health- tually the same as in the previ- care and education. ous year (it inched up merely by and Kazakhstan However, there are some services 1.6%). This was despite the fact that that are more difficult to promote. we imported more oil products, oil by $130 million By these services I mean construc- and gas. Thus, Belarus is learn- tion services. In construction, we ing to live within its means and to need to utilize, to the maximum import only those products it really extent possible, the expertise and needs. knowledge that we have previously Fifthly, thanks to the establish- acquired. We have worked in the ment of the Customs Union and the Russian Federation and Venezuela. formation of the Single Economic We ought to follow the principles Space (SES), Belarusian companies used by successful overseas engi- considerably boosted the export of neering companies which rely on products to the Russian Federation expensive engineering services. We (by $1.8 billion) and Kazakhstan (by are fully capable of doing it and we $130 million). I would like to make need to pursue this strategy aggres- one thing clear: Belarus earned sively. this money by exporting industrial Why not complement the and agricultural goods with a high exported goods by the associated added value, not highly liquid pet- services. We could start with the rochemical products. export of technologies and proceed to the maintenance and servicing Have our SES partners also of the exported products on site. taken advantage of closer inte- The same would apply to logistics, gration? transportation and insurance. This 51 www.belarus-economy.by FOREIGN ECONOMIC TIES

Main foreign trade partners of the Republic of Belarus 2013 , 1 o. N Trade in 2012, Share

US USD million in total trade, (%) AR 43,824.5 47.4

8,036.0 8.7

7,878.7 8.5

OMY OF BEL 4,469.1 4.8

ON 3,425.1 3.7 EC 2,801.5 3.0

2,297.8 2.5

1,643.4 1.8

The share 1,556.3 1.7 of services in Belarus’ total 1,006.7 1.1 export will continue particular approach will allow us to Japan, whose industries develop so increasing increase the export. rapidly, constantly display interest The target for the export of ser- in Belarus as they do not gener- vices set out in the national export ate as many new ideas that would promotion program is clear, namely allow them to keep abreast with to increase the share of services to their development. New ideas are at least 20% in the overall volume exactly what we, Belarusians, can of our export. That said, we should offer and which up till now have not forget about the opportunities been collecting dust on the shelves arising out of the Hi-Tech Park and of labs. the science sector in general. In col- Other areas that can be poten- laboration with some countries, the tially successful are and National Academy of Sciences has education. In particular, as a result been creating the so-called technol- of close collaboration between ogy transfer centers, which allows healthcare companies and various utilizing the existing potential. embassies, the export of medical Our country has extraordinar- services grew by 4.3 times last year ily extensive experience and knowl- alone. edge of various technologies and The project to build the turnkey products – all of which can be suc- mining complex in Turkmenistan cessfully exported in the form of has allowed Belarus to increase services. When I was Ambassador not only supplies of technical to South Korea, I noticed an inter- products and technologies but esting peculiarity - we have a strong also educational services. The research base which however can- number of Turkmen students at not be fully utilized just within the Belarusian universities is almost Belarusian economy. No wonder 5,000 people. This is a prime exam- countries such as South Korea and ple of an integrated approach to 52

FOREIGN ECONOMIC TIES www.belarus-economy.by

when issuing export loans. There is Development Bank. It is quite pos- a system of export risks insurance sible that the bank may undergo fur- 2013 offered by Eximgarant of Belarus ther structural changes with a view , 1

which is constantly increasing to turning the institution into a spe- o. the volume of operations. There cialized export promotion agency. N is the national leasing operator Of course, certain problems per- Promagroleasing. The Development sist. I would put it this way: we have US Bank of the Republic of Belarus necessary instruments, but they are AR has been established to implement underused. Moreover, we have not government programs. We will do resolved the problem of state export our utmost to get the bank involved loans which are more preferable in the promotion of export. than commercial loans while imple- Two important steps were made menting big contracts or long-term last year. Firstly, the procedures projects abroad. In the near future to get export loans were simpli- the Development Bank will embark fied. Particularly, this pertains to on this work and we will be able OMY OF BEL the time-constrained projects that to say with certainty that we pro- require small loans and prompt vide all the necessary instruments ON support when the government com- to promote the export of our manu-

pensation of banks’ losses does not facturers. EC exceed $500,000. We have stream- We would also like to popular- lined the administrative algorithm ize preferential export loans envis- of harmonization. These efforts aged by Decree No. 466 among our have already produced results. clients in Ukraine, Moldova, South According to Eximgarant of Belarus Africa, Indonesia and other coun- and banks, the number of opera- tries. Financing will be provided by tions to issue export loans using the bank of the country purchas- Belarus has these instruments has increased ing Belarusian goods. Belarus’ gov- considerably. ernment, in turn, will compensate developed The Finance Ministry, the interest rates for borrowers. Such Economy Ministry and the Foreign a scheme has been a success in almost Ministry have been working on the Russia. It is implemented as part possibility to allow issuing loans in of the cooperation with Sberbank. the entire range Belarusian rubles. This amendment In fact, Russia’s Sberbank issued of export was introduced by Decree No. 534. loans to Russian purchasers of the The procedure to get permission Belarusian equipment, while the promotion from the National Bank to prolong government lowered interest rates a foreign trade operation and to use in order to make this form of loan tools insurance of export risks has been assistance more attractive. facilitated, too. Nowadays it is possi- The government has given an ble to get financial support to partic- instruction to consider ways to ipate in foreign tenders and to hold develop the scheme. Particularly, advertizing campaigns necessary to there are plans to implement it branch out into foreign markets. jointly with Russia’s VTB Bank. The volume of budget financ- This scheme is also feasible in ing of export loans and insurance other countries, for example, in through Eximgarant of Belarus has Nigeria which is eager to buy many increased. freight vehicles. Other countries The Finance Ministry, the are interested, too. For example, we Economy Ministry and the Foreign negotiate the possibility to export Ministry have recently met with the Belarusian quarry equipment to representatives of Eximgarant of Australia and Mozambique. Belarus, Promagroleasing and the In 2013 the country aims to boost Development Bank to discuss ways the export of goods and services by to improve the structure and vol- 15.2% over 2012. This is to be done ume of export support. We have con- notwithstanding price fluctuations sidered the idea to create a specific on the global market. centralized institution, an export We need to make joint efforts bank. We have agreed that the to reach our main goals – to boost Development Bank will coordinate export and make a contribution to the work. Moreover, the national Belarus’ economic development. leasing operator Promagroleasing has already become part of the Marta ASTREIKO 55

www.belarus-economy.by FOREIGN ECONOMIC TIES

Mr Markovich, how would you sis of exports from the CIS member describe the current relations states to the Czech Republic showed 2013

, between the two countries? that only two countries, namely 1

o. Belarus and Moldova, boosted their N Unfortunately, the political coop- exports last year. eration is in the frozen state at the However, Belarus posted a $310.5 US moment. Since the Czech Republic million deficit due to the implemen- is a member of the European Union tation of several large investment AR (EU) that has adopted a certain projects to upgrade Belarusian pro- strategy towards Belarus, the offi- duction facilities by Czech compa- cial follows the common EU nies in 2010-2012. Therefore, invest- policy by supporting all the state- ments accounted for about 80% of ments and restrictions imposed on the total imports from the Czech Belarus by the EU and its North Republic, which last year reached Atlantic allies. At the same time $440.9 million, an increase of 26.8%. the Czechs try to establish their OMY OF BEL own channels of cooperation with As you have already men- Belarus at various levels and their tioned, economic relations ON country is not closed for us. Thus, between Belarus and the Czech

EC last year there was less negative Re pub lic are getting stronger political rhetoric on Belarus and and numbers confirm that. Does certain Czech diplomats were taking this mean that the stability of the cautious steps to establish contacts bilateral economic cooperation with their Belarusian counterparts. can break the ice at the political The Foreign Ministries of Belarus level? and the Czech Republic renewed the Belarusian bilateral dialogue. For instance, a For sure. Belarus should con- telephone conversation was held on exports to the tinue focusing on economic coopera- the occasion of the 20th anniversary tion as the successful development of the diplomatic relations and the Czech Republic of the trade-economic ties will be two ministries exchanged congratu- beneficial for political contacts. This latory messages. The foreign min- increased area should remain a priority for the isters agreed that the Belarusian- two countries as even when the polit- Czech relationship has great future by 17.2% in 2012 ical relations were at low ebb the and the Czech party confirmed Czech officials were always against interest in the bilateral dialogue as against a year economic restrictions and anything with Belarus and in the Belarus- earlier to reach that could slow down economic European Union dialogue. cooperation. It is true that Czech Belarus is committed to develop- $130.4 million financial institutions follow the US ing contacts at the political level, sanctions against Belneftekhim including by means of economic Concern. Yet, when it comes to joint cooperation. This is the right projects, the Czechs choose what approach as economy is the back- suits their economy best. bone of political relations and if Besides, the Czech Republic is partners see that economic coopera- virtually the only country in Europe tion yields good results (increased that openly declares its interest in tax revenues and trade turnover, boosting economic ties with Belarus. additional jobs, lower unemploy- This is reflected in the Czech exports ment), they will get closer at the strategy for 2012-2020, which is based political level too. on three main principles: intellec- As for the economic situation, tual exports, export development and in 2012 the two countries reached support of business opportunities. record breaking results in their The document also lists the coun- bilateral trade with the highest tries that are priority export destina- trade turnover, export of services tions for Czech products divided into and Czech investments in Belarus several categories. The top category eve r. includes 12 countries that are most The bilateral trade soared by 23% important for the Czech Republic in 2012 over 2011 and reached $571.3 in terms of exports and business million. The Belarusian exports cooperation. They are Brazil, China, to the Czech Republic went up by India, Iraq, Kazakhstan, Mexico, 17.2% last year over 2011 to reach Russia, Serbia, , Ukraine, $130.4 million. A comparative analy- the USA and Vietnam. The next 58 FOREIGN ECONOMIC TIES www.belarus-economy.by 2013 , 1 o. N US AR OMY OF BEL ON EC

category includes 25 countries that been selling a wide variety of com- three Belarusian companies have the Czech Republic is very inter- modities from petrochemical prod- managed to get European quality ested in boosting cooperation ucts and tractors to mattress bases compliance certificates to date. with. They are Angola, Argentina, and bedding items. Belarus-made Austria, Azerbaijan, Belarus, Egypt, aluminum structures, raw and pro- Do you think that Belarusian Ethiopia, Chili, Croatia, Ghana, cessed flax, glass fiber, animal fat food products could be popular Israel, Japan, Canada, Colombia, and vegetable oil, butter, shirts and among Czech consumers? Morocco, Moldova, Nigeria, , hats are popular commodities in the Peru, Senegal, Singapore, the South Czech Republic. Not long ago a small private African Republic, Switzerland, Last year, there were 215 export store opened in Prague. It sells Thailand and the United Arab items on the list of Belarusian linen, products for women and other Emirates. As we see, Belarus was exports to the Czech Republic. For goods made by Bellegprom Concern. not only included into the export the first time ever Belarus supplied However, the first question the cus- strategy but also in the future plans a $1 million worth of white salt. tomers asked the owner was “Do of the Czech Republic. As part of the This is our small victory as Belarus you have any Belarusian food prod- Customs Union Belarus is in the top managed to gain market access with ucts?” Here is the answer to your category and Czech businessmen are this highly demanded product. question. Czech meat producers, as well aware of that. As for the prospects of coop- famous as they are, do not make the eration, we have yet to find our same sausages as we do in Belarus In the Czech Republic Belarus own market niche. Given the fact and the Czechs are eager to try is known for its potassium fer- that Belarus has no oil or gas to them. tilizers, agricultural machines, export, unlike our neighbors, it is But in order to export to the tires and pipes. What else can crucial to give some thought to what Czech Republic, Belarusian compa- Belarus offer to Czechia? products Belarus should bring to nies have to obtain necessary cer- the European market. These can be tificates which means they have to Indeed, Belarusian goods are foodstuffs, for instance, as they are modernize their production facili- popular in the Czech Republic. always in demand and will never ties and upgrade equipment. We Belarusian manufacturers have go down in price. Although only have to be at least half a step ahead 59 www.belarus-economy.by FOREIGN ECONOMIC TIES 2013 , 1 o. N US AR OMY OF BEL ON EC

Czech companies are interested in doing business in Belarus and ready to invest significant funds in various sectors of the Belarusian economy as they appreciate our reliability, the favorable investment climate and the stability of busi- ness operation ensured by the state. Attesting to this fact is the growing number of Belarusian-Czech joint ventures. Today there are 100 com- panies with Czech investments reg- istered in Belarus, of them 49 are joint ventures and 51 are foreign- owned companies; eight compa- nies are residents of free economic zones. Besides, there are 20 repre- sentative offices of Czech compa- nies in Belarus. Over the last ten years Belarus has raised over $315 million in Czech of our competitors. Only this will this are numerous joint invest- investments. Dozens of joint invest- help us get access to the EU market ment projects currently under- ment projects were implemented in and secure a foothold there. way. For instance, last year about such industries as automobile engi- 40 projects were in progress in neering, power industry, machine The Czech party has been Belarus, many of them were engineering, metalworking, petro- actively investing in the worth more than €25 million. chemistry, agriculture, and food Belarusian economy. Attesting to What is the situation today? industry. Czech businessmen are 60 FOREIGN ECONOMIC TIES www.belarus-economy.by

also interested in cooperation with a mini co-generation plant running their Belarusian counterparts in on local fuels in Belarus, as well 2013 other spheres such as logistics, con- as a possibility of supplying Czech , 1

struction, engineering and health- windmills to Belarus. o. care. N Are any joint projects in other Are there any projects of spe- sectors being considered? US cial importance? AR In H2 2012 preparation for imple- It is difficult to say as all the mentation of two new projects was projects that are currently in pro- started, namely the production of gress are important. For instance, base paper at the Newsprint Plant Novopolotsk-based Naftan jointly with the use of specialized equip- with some Czech companies have ment made by Czech-based Papcel been reconstructing a hydro skim- a.s. and setting up a turkey meat ming unit; a joint company is mod- processing facility with Bauer OMY OF BEL ernizing electric diesel-locomotive Technics equipment in Ludenevichi shunters in Lida, Grodno Oblast. agro-town. Bauer Technics will also ON Tabor-based Bauer Technics s.r.o. is supply equipment for construction

involved in turn-key construction of a hog breeding farm at Bobruisk EC of a new hog breeding complex with Bread-Making Plant. The construc- a closed production cycle for 24,000 tion of a Czech commercial center head in Borisov. Metrostav a.s. is in Minsk is being considered as building a transport and logistics There are 100 well as construction of a glassware center in Shchitomirichi village of companies with plant, modernization of Kamvol by Minsk Oblast and will be building the Czech company Envirmine and another one in Kozlovichi village Czech investments a number of other projects in the of Brest Oblast. Glinka, a company agricultural sector and food pro- of the Beltopgas state production registered cessing industry. association, jointly with Raselina A total of $447 million worth a.s. is involved in peat extraction in Belarus, of projects either have already and processing in Brest Oblast. been launched or are in the pipe- Czech partners are partaking in the of them line. It is important that financial project to supply a hot galvaniz- resources of the major Czech banks ing line to BelFerrumTsink, man- 49 are joint are attracted for virtually all the agement and security systems to projects implemented in Belarus. ten railway stations located on the ventures and The Czech Export Bank, CSOB, route from Polotsk to Vitebsk, and a 51 are foreign- European-Russian Bank, PPF cheese making line to Postavy Dairy Banka, Commercial Bank, Savings Factory. owned Bank, representative offices of I think that joint investment Commerzbank and UniCredit Bank projects in the energy and petro- companies in Prague provide export crediting chemical sector are worth special under equipment supply projects in mentioning. As for the energy sec- Belarus. tor the Belarusian and Czech par- The Czech Republic is one of the ties have been constantly looking few European countries that pro- for ways to boost cooperation and vide insurance to projects of Czech set up a Belarusian-Czech working entrepreneurs in Belarus. Leasing group in the energy sector. As a mechanisms were put in place fol- result Mavel a.s. joint venture is lowing the signing of a €10 million completing assembly, testing and agreement between ASB Leading commissioning of imported hydro- and Ceskoslovenska obchodni electric equipment for the Grodno banka a.s. hydroelectric power plant on the Belarus is ready to be a reli- River and is ready to provide able partner of any state and to services for construction of other build cooperation based on mutual hydroelectric power plants. Besides, respect. The Czech Republic is the two countries are considering aware of that and this is why the a great number of other energy two countries have established solid projects, including design and con- ties and mutually beneficial coop- struction of a brown coal extraction eration in various economic sectors. site in Lelchitsy, fostering nuclear power cooperation, construction of Yekaterina BABKEVICH 61 www.belarus-economy.by BANKS AND FINANCE BANKS AND FINANCE 2013 , 1 o. N Modern US AR Payment Trends The share of cashless payments in the total number of card transactions OMY OF BEL

ON increases year to year EC The expansion of cashless payments is one of the major objectives both for Belarus and the majority of developed countries. There are a lot of reasons for it. The increase in the number of transactions using bank cards has a positive impact on the country’s economic development because it allows cutting down on expenses associated with money turnover. Besides, the widespread use of cashless payments enhances the transparency of financial transactions and currency circulation, which, in turn, discourages off-the-books economy. Director of the Plastic Cards Department at Belarusbank Mr Anatoly BOGOVIK highlights the advantages of cashless payments and analyzes the development of the Belarusian market of bank cards in an interview with the Magazine.

Mr Bogovik, according to the National Bank, the number of plastic cards issued by Bela- rusian banks exceeds the number of Belarusians. How ever, despite the positive trends, the share of cashless payments in Belarus is insignificant compared to Euro- pean countries. Why do you think Belarusians still prefer to use cash instead of plastic? Does it have to do with inadequate pay- ment infrastructure or poor financial literacy of Belarusians? 62 BANKS AND FINANCE www.belarus-economy.by

Belarus has a well-developed actions over personal visits to the infrastructure for cashless transac- bank offices. tions. It includes 3,700 ATMs and In order to popularize cashless 3,300 self-service terminals; over payments, the bank regularly holds 37,000 retail and service outlets promos. Last year, for example, the accept bank cards. bank held two promotional games, You can use plastic not only in the winners of which won tickets to stores, restaurants and cafes, but the 2012 Olympic Games, and also also in movie theaters, gyms, beauty received cash prizes. Now two games parlors, showrooms and to pay for are in progress for Belarusbank taxi service. Belarusian banks offer cardholders. a variety of loyalty programs aimed Particular attention is paid to at encouraging their customers improving the financial literacy of to use bank cards more often. By people. We keep in touch with mass the way, about 500 retail and ser- media, write articles and do inter- vice outlets in Belarus offer dis- views in the press, Internet, tele- counts to holders of Belarusbank vision and radio. However, I would cards. like to emphasize that the campaign I would like to say a couple of to promote cashless settlements words about the remote services should involve other independent provided by banks. Today a card- and credible sources that enjoy the holder does not need to go to a bank trust of people such as, for example, to perform financial transactions. local authorities. This can be done 24/7 through a broad network of ATMs and self- Still, I would like you to cite service terminals, as well as mobile some statistics. How often do phone and Internet. Belarusians use bank cards? As for the level of financial lit- What is the share of cashless eracy, I think positive trends are transactions in total payments? getting more pronounced. More Has it been increasing lately? Belarusians come to understand that cashless payments are safer, We can say that by now more convenient and even cost- Belarusians have got used to pay- effective, compared to cash pay- ing their bills such as utilities, ments. Every month the number phone, Internet, and so on with tem, 53% are of international card and the volume of cashless trans- the use of cards. According to the vendors. actions performed at banks, retail National Bank, cashless payments As of 1 March 2013, Belarusbank and service outlets, as well as using account for 62.6% of all the trans- emitted more than 4.9 million self-service terminals and remote actions involving cards. But if we cards. Of them 3.2 million (64%) payment services increases. look at the sums, non-cash trans- were BelCard-M, 1.1 million (23%) – actions accounted for only 18.9%. VISA, 600,000 (13%) – MasterCard. What needs to be done, in your The remaining part is operations to BelCard with a magnetic stripe opinion, to increase the share of withdraw money from ATMs. (BelCard-M), Maestro and Visa cashless settlements in Belarus? As for Belarusbank, these fig- Electron cards are most popular ures are 73.1% and 26.4%, respec- among Belarusians. The bank’s spe- We need to continue encourag- tively. I would like to note that year cial offer for its clients of the retire- ing people to make cashless pay- after year the share of non-cash ment age is cards with higher inter- ments, raising the financial literacy payments in the total amount of ests on current account balance. of Belarusians and developing the operations with cards increases. In Today our cards are used by over infrastructure for non-cash opera- 2011 it was 19.4%, and in 2012 it 440,000 pensioners. We also offer tions. Belarusbank attaches much made up 22.7%. cards for students (53,000), rural attention to all these issues. Payments for goods and services dwellers (3,000) and even for chil- More new services and options account for the largest part of non- dren (1,800). become available for cardholders. cash payments using Belarusbank International cards on the bank’s Retail outlets offer loyalty programs cards (69.9%). offer include economy-class cards for customers who use plastic cards. VISA Electron and Maestro, cards We actively develop remote bank- What payment systems are with a wider range of services VISA ing services such as SMS bank- the most popular today? Classic and MasterCard Standard, ing, mobile banking and Internet- prestigious VISA Gold, MasterCard banking. By the way, around one To date the number of cards Gold and premium-class VISA million of our clients have come to in circulation in Belarus exceeds Platinum and MasterCard World appreciate the advantages of these 10.4 million. Some 47% of them are Black Edition. LadyCard is the services and prefer cashless trans- cards of the BelCard payment sys- bank’s woman-tailored payment 63 www.belarus-economy.by BANKS AND FINANCE

our bank on processing their non- cash transactions. Among them are 2013

, 5shop.by, policy.by, kvitki.by, ticket- 1

o. pro.by, pokupon.tut.by and others. N The popularity of online purchases has been steadily increasing. In US January 2013 non-cash operations on shopping websites that partner AR with the bank exceeded Br1.7 bil- lion making more than a fourfold increase over the previous year. Cardholders of our bank, except for those having BelCard-M cards, have an opportunity to make pay- ments in the Internet using a spe- cial 3D-Secure technology which OMY OF BEL guarantees enhanced security. The bank attaches special ON attention to the development of

EC remote banking services, namely SMS banking, mobile banking and Internet banking. Mobile banking is a fast and user-friendly solution that allows clients to make payments (utili- ties, Internet access, cable televi- sion, and other ones), repay loans, transfer money from one account to another, top up deposit accounts, lock/unlock cards, get payment receipts on e-mail, etc. using a mobile phone with special software installed in it. In 2012 the volume of monthly payments made via mobile banking increased more than six times and reached Br20.5 billion in January 2013. The number of ser- vice users totaled 66,000 last year product with an added perk of service terminals (63.5%), 2,010 cash (16,600 in January 2012). special discounts in a number of points (47.8%). Our terminal equip- Internet banking is a fast- merchandizing and service estab- ment has been installed at 20,653 growing service, too. It allows cus- lishments of Belarus. It is note- retail (service) outlets (53.2%). tomers to make a wide range of worthy that all the international We are constantly working to payments (utilities and apartment cards utilize microprocessors and improve services and payment security, Internet access, cable the latest security technology (EMV infrastructure to meet the increas- television, and other ones), repay standard). ing needs of our cardholders. loans issued by Belarusbank and We also issue savings cards in In 2012 the bank’s acquiring net- a number of other banks, top up the national and foreign curren- work expanded by more than 40% deposit accounts, transfer money cies. For corporate clients the bank and in the mid-January 2013 crossed from one account to another, etc. In offers a variety of customized cor- the mark of 20,000 retail and service 2012 it became possible for Internet porate card types. outlets. Among the most interesting banking users to lock and unlock projects implemented by the bank in plastic cards, register a 3D-Secure What is the number of 2012 was the installation of special password needed to make payments Belarusbank’s cards in circula- self-service terminals at customs online. Clients can also make pay- tion? How do the bank’s card pay- clearance points and gas stations, ments by entering payment details ment services work? payment terminals at taxi services on their own. In January 2013 and McDonald’s restaurants. the amount of cashless payments As I have already mentioned The Internet is a relatively new made via Internet banking went up there were 4.9 million cards in cir- but rapidly developing area of more than four times as against culation as of 1 March 2013 (46.8% cooperation between the bank, mer- January 2012 to exceed Br62.7 bil- of the market). Our card payment chants and service organizations. lion. The number of users of the system infrastructure includes 1,106 Today over 200 Belarusian service stands at 222,000 (100,000 in ATMs (30% of the market), 2,123 self- online stores have agreements with January 2012). 64 BANKS AND FINANCE www.belarus-economy.by

The bank is expanding the net- Could you tell us what new work of ATMs and self-service ter- card products and services will 2013 minals, which are conventional be offered in the near future? , 1

instruments of servicing cardhold- o. ers. Our bank constantly works to N As of today, Belarusbank oper- raise the quality of services avail- ates 1,106 ATMs. In 2012 the bank able to cardholders and develop US installed 71 new machines. Apart the nationwide market of cashless AR from cash withdrawal, ATM users transfers. We labor incessantly to can make payments, transfer money expand the range of card products from one account to another, top and offer new and demanded ser- up accounts using devices equipped vices to cardholders that will allow with a Cash-in function. When them to enjoy comfort, security, and developing payment infrastructure, reliability of cashless transfers. the bank tries to make equipment Last year the bank issued a more functional and user-friendly, variety of new and custom-tailored OMY OF BEL provide additional services to disa- cards. In 2012 we started offer- bled clients. ing Maestro gift cards that can be ON Thus, the first ATM for visually- acquired without a passport to be

impaired people was put into opera- gifted to another person. We started EC tion in Minsk in 2011. At that time offering international premium- the ATM was one of a kind not only class cards Visa Platinum and in Belarus, but also in the CIS. It MasterCard World Black Edition. looks pretty much the same as a Their holders are entitled to various regular machine. However, it is fit- additional services and privileges ted with a special audio system and There are available from the bank and pay- an earphone plug on the front panel. ment systems. The ATM has embossed buttons, i.e. 3,700 ATMs and January 2013 saw the launch they can be felt by touch. In a spe- of contactless cards Visa payWave, cial regime the ATM displays large 3,300 self-service which boast increased conveni- images on a contrast screen. At pre- ence and the speed of transactions. sent the bank operates three ATMs terminals In order to make a transaction, a of this kind. Apart from Minsk, holder does not need to hand the such machines have been installed in Belarus; card over to the seller. Bringing it in Vitebsk and Orsha. over 37,000 retail closer to a special contactless termi- The number of self-service ter- nal and entering your PIN number minals is growing fast. At present and service is sufficient. This year as part of the there are more than 2,123 of them, efforts to build up the infrastruc- with 91 installed in 2012. In 2012 the outlets accept ture to service cardholders the bank number of operations available via will install contactless terminals in self-service terminals was consider- bank cards retail and service outlets. At the ably increased. At present cardhold- same time holders of contactless ers can subscribe to periodicals, cards will be able to freely make top up electronic game accounts transactions throughout the service that allow buying Belarusian lot- infrastructure. tery tickets over the Internet, In the run-up to the final stage make payments by typing in the of the UEFA Champions League, we necessary information, and other have started issuing international things. cards MasterCard Standard with Self-service terminals allow two special football themes. At pre- making a large number of payments sent a promotional game is going (utilities and apartment security, on for holders of these cards, with Internet access, cable television, valuable prizes to be handed out. and other ones), repay loans, top The bank will continue work- up deposits, transfer money from ing to enhance the infrastructure one account to another, buy tickets to service cardholders, including to intercity and suburban buses, cards utilizing the latest technolo- learn various kinds of information gies. Attention will be paid not only about the bank and so on. About to quantity but to quality as well. half of the bank’s self-service ter- Cardholders will be offered new use- minals are available round the clock ful services. The development of and about 200 terminals are cash-in remote banking service channels enabled. will still be a priority. 65 www.belarus-economy.by BANKS AND FINANCE BANKS AND FINANCE 2013 , 1 o. N Cards, Banks, US AR Cash The share of non-cash transactions in retail trade in Belarus is expected to increase fourfold OMY OF BEL

ON to make up 50% by 2016 EC In the future a usual plastic card will no longer be just a payment Belarusbank offers a special instrument but also an identification document and an insurance policy product for women, which is called card. Belarus is set to develop a social card that will combine all these Lady’s Card. Holders of these cards functions. Today the number of services provided by banks to plastic get discounts at retail outlets, beauty cardholders is pretty big. A bank card is the most popular e-payment parlors, restaurants, and drugstores. instrument used for cashless payments in the retail sector. Belarusians By the way, in many countries use bank cards to receive salaries and pensions, save money and get women are offered not only debit, loans, give pocket money to kids and take part in charity events. Holders credit and gift cards but also cards with customized design or fragrance of VIP-cards have even more opportunities. By the way, the VIP segment or even diamonds. is experiencing a robust growth in the country. Belarusians have a variety You can make a contribution to of options when it comes to choosing a payment system, from domestic a charity cause by ordering a plas- BelCard to international VISA and Master Card. Besides, some Belarusian tic card issued by Belinvestbank banks started accepting American Express and UnionPay cards in their together with Zhdanovichi Orpha- acquiring network. All major international payment systems will operate nage for Mentally Challenged Child- in Belarus by 2014. ren within the framework of the charity program “Make the Miracle Game of Cards variety of plastic cards depending on Happen!” Holders of this card donate the type of currency, validity period 50% of the card issuance fee and Twenty-four banks issue plas- and interest rates. There can be inter- 0.25% of the amount of each cash- tic cards in Belarus. Belarusbank national cards or cards accepted only less transaction to the orphanage. is the biggest of them. At the in Belarus like BelCard-M. In solidarity with the cardholders, beginning of 2013, it accounted Debit cards are further divided Belinvestbank also transfers 0.25% for 41.1% of all cards issued in into several types depending on of the amount of all transactions to Belarus. Belarusbank is followed a target group. Plastic cards for the orphanage out of its own funds. by Belagroprombank (11.8%), BPS- pensioners are offered by several This piece of plastic can also be a Sberbank (11.7%), Priorbank (6.2%), banks, including Belarusbank, good gift. Such gift cards are a good and Belinvestbank (5.9%). As of Belinvestbank, Priorbank, and BPS- way to present a gift of money. 1 January 2013, the number of plas- Sberbank. Pensioners can use these Credit cards are also very com- tic cards in circulation in Belarus cards to make payments and earn mon in Belarus. They allow buy- exceeded the number of potential an interest on the available balance. ing goods and services on credit at cardholders, i.e. 10.4 million cards Such cards can be used in Belarus retail outlets, cafes, restaurants, vs. 9.5 million-strong population of and abroad. gas stations, and withdrawing cash Belarus. The number of cards issued Several banks like Belinvestbank at ATMs. Some banks offer instant under the national payment system and Belagroprombank offer special approval credit cards that can be BelCard amounted to 4.9 million, cards for children and the youth. issued the same day a credit card the number of VISA cards stood These are preset spending limit application is submitted. Revolving at 3.9 million, that of MasterCard cards allowing legal guardians to credit cards are extremely popular. amounted to 1.6 million. decide how much their children will They allow using a part of the loan As a rule, banks offer debit and be able to spend. Moreover, legal that was repaid in the previous bill- credit cards to individual clients and guardians can sign up for text mes- ing cycle over and over again. These payroll debit cards and corporate sage alerts to keep track of their cards can be used for a rather long cards to corporate clients. There is a children’s spending. time. 66 BANKS AND FINANCE www.belarus-economy.by

Dmitry FURS 2013

Deputy Head, , 1

Credit Card Department, o. As of 1 January 2013, Belgazprombank: N

there were 9.5 million cardholders US As of 1 January 2013, there were 1.1 bank cards per capita in Belarus; the total number of cards AR in circulation in Belarus. Just in circulation was 10.4 million to compare, in Russia this figure was about 1, in the EU and the United States more than three cards per capita. Two conditions are needed to be in place to stim- ulate the development of the card market and raise the vol- OMY OF BEL ume of non-cash transactions in Belarus. Cashless transactions ON should be as fast and convenient

as cash transactions. Second, EC fees for issuing and servicing cards should not be high. Today cardholders mostly use their cards to make pay- ments and withdraw cash. Bank cards are increasingly used to transfer money to another card account. Distant bank- ing services are becoming more popular, too. Therefore, Belgazprombank launched Internet Banking two years ago. Since then the service has gained over 20,000 customers. Every month over 100,000 pay- Holders of payroll debit cards The most economically active seg- ments and transfers are made can apply for overdraft, a form of ment of the population is interested via Internet Banking. Therefore, short-term loan allowing cardhold- in non-standard card products – we can say that online banking ers to make payments even if the charity and co-branded cards, mini- services are gaining popular- available balance goes below zero. cards and so on. ity. The number of people pay- The credit card issuer charges inter- Payment cards of the initial ing their bills, topping up bank est only on the outstanding balance. level such as Visa Electron, Maestro, accounts or repaying credits The principal debt and the inter- BelCard have traditionally been the online will keep rising. est rate are repaid automatically most widespread in Belarus due to I would also like to mention when a salary is credited to the card a number of factors. Firstly, the another promising area for the account. If the amount overdrawn is majority of salary projects and non- banking sector – contactless repaid in full, the overdraft option credit programs are implemented payments. Belgazprombank has can be used again. Moreover, hold- with the use of these types of cards, installed 13 payment terminals ers of some payroll cards can earn and secondly, these cards are a enabling contactless payments an interest on the available balance. good choice in terms of price and so far. Banks also offer corporate cards to functions for Belarus. The higher By the year-end we are plan- pay for travel expenses, - level cards such as Visa Classic or ning to install another 200 ter- ity costs, and other expenses of a MasterCard Standard have been minals. company. recently growing in popularity due to their additional features. Earn, Save and... Today more Belarusians are Spend willing to become premium service cardholders. Last year alone, the According to the banks, the most total issue of such cards in Belarus, popular product is still payroll debit according to the Visa International cards. The interest in savings cards, payment system, surged by more including those intended for pen- than 50%. For those who need sioners, has been growing lately. more functions than Gold cards 67

www.belarus-economy.by BANKS AND FINANCE

a joint action plan for 2013-2015 to simplify the transition from paper 2013

, Non-cash Settlements money to plastic cards and work out 1

o. a system of non-cash retail opera- N Development Program tions with the use of modern elec- tronic payment instruments and US Belarusians will pay for half of retail purchases and means. the same amount of services with plastic cards by 2016 It is expected that a wide use AR of non-cash operations will benefit Number of bank cards in circulation: everyone, from retail companies, the banking system to government as of 1 January 2012 as of 1 January 2013 bodies to population. Apart from obvious convenience, non-cash oper- million million ations save time, reduce the risk of robbery, and offer additional income – with the help of savings OMY OF BEL The biggest issuers The number of non-cash cards, bonus, accumulative and other programs. ON of bank cards among transactions in operations A lot of measures will be imple-

EC 24 banks are: involving bank cards: mented to develop the system of non- cash retail operations in the country. First of all, the action plan pro- Belarusbank vides for a considerable increase in facilities with the new-type payment terminals. Customers’ right to use Belagroprombank cashless payments will be formal- ized by the law. Besides, cardholders will have 24/7 access to infokiosks BPS-Sberbank and ATMs. The list of services that can be paid for using bank cards will On January 1, On January 1, be expanded. The National Bank of Priorbank 2012. 2013. the Republic of Belarus suggests Belinvestbank cashless payment for the goods and services which cost exceeds the For non-cash payments there are: base amount 100 times and more, i.e. over Br10 million. The proposal is in line with international practices. In bulk all the planned events will contribute to increasing the share of non-cash retail transac- tions and boosting the Belarusian Payment terminals ATM Info-kiosks market of plastic cards, believe rep- resentatives of the banking system. The number of cards in circulation will increase, which will enhance Source: National Bank of the Republic of Belarus Design by BelTA competition among issuing banks and reduce tariffs on some of opera- tions with the use of payment cards. totaled 13.2% in 2012 (9.5% in 2011). Yet, it is not much compared On the other hand, the efforts of Non-cash operations in the sector with the European statistics. issuing banks to expand the market of paid services are recorded by the According to the latest data, cash of plastic cards should go hand in National Statistics Committee of payments accounted for 10% of hand with the efforts to increase Belarus on the annual basis. They the total payments on average in the financial literacy of cardhold- made up 10.8% in 2011. the European Union. Less than ers, to explain card safety rules and It is estimated that in some 10% of cash was in circulation in to maintain an uninterrupted opera- three years Belarusians will pay for Denmark, Croatia, Estonia, Brazil, tion of the accounting system given half of their retail purchases and and Turkey. According to the Bank the increasing amount of transac- services using cashless transfers. for International Settlements, cash tions. It is also important that state Thus, the share of non-cash opera- payments totaled only 3% in the regulation and market methods tions in Belarus’ retail trade and Swedish economy. complement each other rather than services is expected to soar four The Belarusian government run contrary. times, up to 50% of all transactions and participants of the financial by 2016. market have teamed up to develop Anna KOT 70

BANKS AND FINANCE www.belarus-economy.by

professional securities trade orga- why the three countries will have of bonds as an independent bor- nizer. The list of professional mar- to work to approximate the laws rowing instrument. Revenues from 2013 ket participants, who are authorized in order to enable the fulfillment redeeming or selling the corporate , 1

to register transactions on the over- of their arrangements in prac- bonds issued from 1 April 2008 and o. the-counter market, will be stipu- tice. A supranational body of the till 1 January 2013 are exempt from N lated. Transaction registration rules Single Economic Space, namely the taxes. A recent amendment to the will be specified. It will be impos- Eurasian Economic Commission, is Tax Code extended the preference US sible to use one’s own promissory the one in charge of coordinating till 1 January 2015. AR notes as a guarantee of obligations this work. Experts believe that the tougher in a transaction. monetary management policy of the In 2013 work on other legal acts Growth Advantages government should encourage more that will regulate the stock market active development of the corporate will continue. The number includes Borrowing money by issuing bonds market. For instance, in early the law on investment funds. The shares and bonds has several advan- February the National Bank of the law is designed to enable the emer- tages over bank loans. Republic of Belarus issued recom- gence of collective investors in the “If we talk about shares, they mendations to commercial banks OMY OF BEL country, namely share and unit allow using attracted monetary requesting them to analyze the effec- investment funds. Thanks to the resources without deadlines and tiveness of lending to projects with ON securitization law the Belarusian without repaying them. Investments state support. Specified use of the

stock market will become more are attracted and used by the issuer loan should now be indicated in EC transparent, reliable, and effective. and do not have to be returned. loan contracts if the loan is issued One has to remember that In exchange the investor will get to corporations and self-employed Belarus is now part of the Single shares and respectively the rights businessmen. Economic Space together with that the shares certify. Thus, not “It turns out that from now on Russia and Kazakhstan, and there- only the issuer runs the risk of non- banks will pay more attention to fore the three countries are forced to returning investments if the perfor- whether loans are spent on speci- harmonize their laws. mance of the borrowing company fied purposes. Loans will be avail- “At present regulations on secu- is unprofitable (as is the case if a able only for a specific investment rities of the Customs Union coun- bank loan is taken out). The risks project. If money is needed, for tries rely on general regulation prin- are divided between the issuer and instance, to replenish key assets, ciples. However, due to the establish- the investor,” said Alexei Krasinsky. it will be simpler to get money via ment of the Single Economic Space The primary advantage of bonds bonds,” explained Vadim Iosub. of Russia, Belarus, and Kazakhstan is the ability to borrow money for It is possible that in the next few it has been decided to more tightly a long time. Not every economic years Belarusian companies will be harmonize the laws within the operator can take out a bank loan, more active in attracting foreign next seven years,” remarked Alexei a considerable one at that, for a capital, too. Specialists have been Krasinsky. “By 2015 the possibil- long time. Bonds allow doing that stating for a long time that in the ity of establishing a supranational because the issuer has the right to next few years the banking industry body to regulate the financial mar- determine how long the bonds will may run into certain problems since ket of three countries combined be in circulation. According to the its capacity will be insufficient to will be considered. By 2020 the sides Finance Ministry representative, satisfy the demand of Belarusian are expected to mutually recognize another advantage is that national companies for credit resources. The financial industry licenses. For and foreign corporations and indi- planned economic growth rate is instance, a professional stock mar- viduals can act as investors. The high and cannot be achieved with the ket participant with a Belarusian fact allows attracting foreign invest- help of bank loans alone. However, license will be able to freely ren- ments even if shares and bonds are in order to successfully borrow der its services in the partnering floated on the home market. money via foreign stock exchanges, states in the Single Economic Space. “National and foreign corpora- companies have to comply with sev- The same option will be available tions and individuals can act as eral requirements. To begin with, in Belarus for colleagues from the investors who operate on the stock in order to be listed at Western or neighboring states”. market. The fact allows attracting Eastern stock exchanges, companies Apart from that, as part of the foreign investments even if shares have to meet certain formal crite- Single Economic Space evolution and bonds are floated on the home ria. In particular, a company has to there are plans to enable the mutual market. The ability to use various have a coherent ownership struc- recognition of the registration of redemption schemes and if neces- ture and the operational structure, securities issues by the relevant sary, the ability to buy out bonds, a clear-cut development program, agencies of the member states in look attractive. It allows reducing good profits over the course of sev- the issuer’s country of origin in the cost of service of borrowed eral years. However, the readiness the medium term. It means that if, money and improving the state of of the borrower to show its hand is for instance, a corporation issues payable accounts,” remarked the the key aspect. Not every Belarusian bonds in Belarus, the corporation Finance Ministry representative. company can dare do that. will be able to sell the bonds in Most convenient and profitable Russia or Kazakhstan, too. This is taxation rules encourage the use Alexander BENKO 73 www.belarus-economy.by BANKS AND FINANCE BANKS AND FINANCE 2013 , 1 o. N Steady Forecast US AR for Leasing

OMY OF BEL Business

ON In 2013 the demand for manufacturing equipment EC available via leasing is expected to rise in Belarus in view of the plans to modernize the economy

The Belarusian leasing business is rather young when compared to other With 69% growth Belarus looked countries. Experts say that foreign leasing markets have had decades to quite decent in comparison with evolve and now have the relevant legislation and infrastructure. these countries. However, the trends witnessed in the last few decades indicate that in The volume of international Belarus the volume of new business (the value of leasing contracts signed leasing or the export of Belarusian for one year) rises all the time. Even the foreign exchange crisis of the products using international con- year 2011 could not slow down the growth. At present leasing contracts tracts is growing fast. In 2011 it skyrocketed by 250% in comparison account for 2.5% of the country’s GDP while in 2007 the figure was as with 2010 (46.5% up from 2009). The low as 1.9%. Experts believe that the growth rate is comparable impressive growth is attributed to to the European one. presidential decree No. 465 of 24 September 2009, which amended Operating the volume of new business of leas- certain leasing regulations. ing companies amounted to about Virtually no shipments like that in the Black Br6.9 trillion (€854 million calcu- had been made in Belarus before About 150 companies operate lated using the average weighted the decree. on the Belarusian leasing market exchange rate), 69% up from 2010 At present international leas- at present. The number is quite in Belarusian ruble terms. And the ing operations in Belarus are per- large for the country although the figure was achieved despite the fact formed by one company – OAO list is changed constantly as old that the year was a hard one due Promagroleasing. In particular, competitors are replaced by new to the well-known problems on the leasing schemes are used to ship ones. Every year the Association currency market. To compare: in Belarusian automobiles and agri- of Leasing Companies of Belarus Europe the volume of new business cultural machines as well as rock compiles a ranking of the mar- totaled €256.6 billion, 7.7% up from haulers to African countries – ket participants. The ranking 2010. Mozambique, Zimbabwe, Botswana, indicates that there are about 40 Here is the statistics of Belarus’ Angola, and South Africa. OAO major professional players on closest neighbors. Over €18 billion Promagroleasing also operates on the market. The other ones have worth of leasing contracts were the markets of Southeast Asia and either stopped providing leasing signed in Russia in 2011, nearly 60% Latin America. operations as their core business up from 2010. Considerable growth In 2011 the total volume of the or the share of leasing operations was achieved in Ukraine, too — leasing portfolio of Belarusian in their total business volume is 258% as against 2010 or €635 million leasing companies rose by 95% to insignificant. although in money terms the figure reach Br11 trillion. According to Mr Alexander Tsybulko, is way smaller than that in Belarus. preliminary results of the year 2012 Chairman of the Council of the Poland exceeded the year 2010 fig- a 10% increase is expected. No large Association, remarked that in 2011 ure by 10.6% reaching €7.3 billion. deals were registered, the leasing of 74 BANKS AND FINANCE www.belarus-economy.by

vehicles, including trucks, cars, and Office of the National Bank of the commercial vehicles considerably Republic of Belarus. 2013 invigorated the market. The mar- The country’s central bank , 1

ket was influenced by the delayed believes it is necessary to give o. demand brought about by the for- leasing companies the status of N eign exchange crisis of the year financial mediators for the sake 2011. “Resources were very expen- of increasing the potential of this US sive and it deterred the develop- industry. “The transition to inte- AR ment of this market,” the specialist grated regulation (megaregulation) explained. and supervision of all the sectors As an effective economic instru- of the financial market apart from ment leasing operations can resolve banking is part of the joint policy to many problems, stimulate entire be implemented by the government branches of the economy, and and the National Bank in the next develop various spheres of busi- five years,” said Dmitry Nabzdorov. ness, small and medium enter- There are plans to put the National The share OMY OF BEL prises. The relevant legal base has Bank in charge of regulating and been created in Belarus for that developing the leasing business. of leased vehicles ON purpose. It has been recognized as The financial potential of the one of the best ones in Europe by leasing industry may be increased in the total EC experts. “Our task is to work harder with the arrival of major foreign to increase the client base, invit- investors. Respectable domestic volume ing manufacturers to use leasing investors, which are not banks, schemes,” summarized Alexander may evolve. Apart from that, the reached 62.1% Tsybulko. business may grow livelier through market-based redistribution of the Watchdog Needed? money generated by the financial market, including money transfer At present the portfolio of leas- from the banking industry to the ing companies is ten times smaller leasing one. The National Bank than the amounts borrowed by believes it is the most realistic way. corporations from banks. In other “To make it happen, leasing words, corporations prefer taking companies should be granted the out loans for leasing-facilitated pur- status of financial mediators. As chases. a result, while considering loan Proprietary funds of corpora- applications banks will assess the tions account for only about 25% solvency of a business taking into of the money used to finance leas- account peculiarities of financial ing operations, the remaining 75% mediators instead of following the comes as borrowed resources, routine reserved for common corpo- mainly bank loans. Moreover, the rations. It will be possible, provided portfolio of leasing companies a specific government agency is put instituted by banks accounts for in charge of supervising the finan- over 70% of the country’s total cial stability of leasing companies. one. Hence leasing in Belarus is With many years of banking super- developed exclusively thanks to the vision under the belt the National presence of banks, as the latter Bank is up for the job,” explained give loans to leasing companies and Dmitry Nabzdorov. directly operate on the leasing mar- As the financial potential of ket. leasing companies grows stronger All in all, it correlates with gen- and the supervision mechanisms eral European figures where the are improved, the National Bank largest lessors either belong to the will be able to allow companies to banking industry or are branches access the interbank market or will of large industrial, financial and even be able to act as the lender investment holding companies. The of last resort for them similarly to consolidation of banking and leas- bank refinancing. It can advance ing business objectively leads to the the industry to a new level, believes establishment of a common regula- the NBRB representative. Then the tor for these two branches of the emergence of new domestic and financial market, said Mr Dmitry foreign investors on the leasing Nabzdorov, Head of the Non- market will be more probable. It Banking Operations Regulation is worth noting that the transfer 75 www.belarus-economy.by BANKS AND FINANCE 2013 , 1 o. N US AR OMY OF BEL ON EC

of the regulating function to the Aiming for Export National Bank does not mean the government will stop encouraging Some time ago the National the development of individual busi- Bank of the Republic of Belarus nesses (manufacturers, lessors, and and the Alliance for Financial lessees) in the future using the state Inclusion (AFI) polled small busi- budget. nesses about the availability of The possible transfer of leasing According to financial services. As many as 1,815 regulation functions to the National respondents were polled. As far as Bank has invoked heated debates in preliminary results leasing is concerned, only 6.6% of the business community. In particu- the respondents said they use the lar, it has been said that the meas- of the year 2012 instrument. When broken down by ure may lead to monopolization of regions, leasing is used by 24.4% of the market by subsidiary compa- the Belarusian the respondents in Minsk Oblast, nies of the banks. It may concen- 17.1% in the city of Minsk, 9.3% trate leasing in major cities. Other leasing market in Brest Oblast, 9.1% in Vitebsk changes may happen to worsen the expanded by 10% Oblast, 6.3% in Mogilev Oblast, operation of leasing companies. 2.7% in Grodno Oblast, and 1.4% in However, the source believes that Gomel Oblast. the involvement of banks in leasing The Association of Leasing is already rather large and there- Companies believes that the figures fore one should not fear market rather correctly characterize the monopolization. The National Bank leasing market. The leasing market will be focused on developing the capacity in Belarus is considerably market if it is authorized to regu- larger than the volume the leas- late the market. ing industry can service. In other 76 BANKS AND FINANCE www.belarus-economy.by

words, only a very small number of turing equipment is necessitated by economic operators use this finan- the large-scale modernization pro- Mr Maxim LISITSKY, cial instrument. gram set to run in 2012-2015. The ris- Director of SOOO Raiffeisen The Development Bank of the ing demand for the leasing of equip- Leasing: Republic of Belarus can largely ment became pronounced in H2 2012. The year 2012 was generally suc- accelerate the growth of the leasing In January 2013 Minsk hosted cessful for the industry. It set a record market. Established in line with the the first conference to discuss leas- for the imported automobiles and relevant presidential decree in 2011 ing trends and prospects in Belarus. hence a record for leased international by the Council of Ministers and the Participants of the conference automobile transport. The year 2013 National Bank of the Republic of were polled. The absolute majority will be weaker for international auto- Belarus, the institution is designed believed that the leasing market will mobile carriers, therefore one can to provide the Belarusian economy keep expanding in 2013, although hardly expect a significant increase in with affordable credit resources. they held different views on how deals in this sphere. “Effective lending to the economy, much it will grow. As many as 70% However, there are good forecasts particularly to priority projects, is believed that the growth will be regarding the leasing of real estate. our current objective. We should suc- small – up to 10% while 17% were Belarusian companies are once again cessfully and timely achieve it within more optimistic about the figure and interested in the leasing of office prem- a short time via the Development expected a considerable rise in leas- ises, shops, warehouse facilities, which Bank,” stressed Prime Minister of ing operations. encourages the construction of new Belarus Mr Mikhail Myasnikovich Those polled said they believed premises and creates good prospects at the bank’s presentation. He also that the main challenges the market for this segment of the leasing market. reminded that the government had will face will be expensive resources I think that the demand for cars come up with five main schemes (31% of the conference participants) may stay the same or even grow larger to support exporters, including via and restricted foreign currency leas- because it is now rather difficult to leasing. ing (23%). As many as 15% pointed import new cars or nearly new ones in By the way, since 1 March 2013 the out a possible decrease in the pur- private capacity. Both corporations and Development Bank of the Republic chasing power of Belarusian compa- individuals are likely to go to show- of Belarus has been the main owner nies. As many as 10% of the polled rooms and the trend is likely to be a of OAO Promagroleasing, with feared possible negative changes in long-term one. We expect an increase 62.5% of the state-owned shares the legislation and dumping on the in leasing services. transferred to the Bank’s author- part of competitors. It appeared that ized fund. The Development Bank an increase in overdue debts was not Mr Viktor KOBYAK, has clear government-set goals to important for lessors, with only 3% Director of OOO Activeleasing: achieve: elaborate understandable of the polled concerned about the Last year was very good for the leas- and acceptable leasing schemes for possibility. ing business. If we manage to maintain Belarusian exporters in order to As far as the forecast of the cost momentum in 2013, it will be just per- help Belarusian machines to com- of leasing services is concerned, the fect. I believe that this year the largest pete on foreign markets with foreign participants of the conference were growth can be expected in the leas- manufacturers, who use such mecha- divided, with 36% expecting a slight ing of manufacturing equipment and nisms. reduction, 32% expecting a slight small-capacity commercial passenger Chairman of the Board of increase, 27% hoping the rates will transportation. the Development Bank Mr Sergei stay the same, and only 5% fear- If we compare development trends Rumas remarked that the handover ing a considerable increase in rates of the European and Belarusian leas- of the controlling interest in OAO through the year 2013. ing markets, the major difference is Promagroleasing will allow setting Participants of the conference that in Europe passenger transport is up a comprehensive export support believed that the largest growth can the key driver. In 2011 the share of system. It will provide for complex be expected in automobile passen- leased cars over there stood at 42% structuring of all deals, borrowing ger transport and railway transport, while in Belarus it was only 4%. In of resources to finance foreign cur- as well as real estate. The majority the medium term our market should rency projects, preferential export of the polled prioritized automobile expect a many-time increase in the seg- lending and shipment of machines passenger transport. The respond- ment and a considerable increase in the using leasing terms. In 2013 the ents were careful while speaking share of passenger transport leasing in Development Bank intends to issue about a considerable expansion of the total volume of new business. at least Br5.5 trillion in loans to leasing services in the sector of Among the deteriorating factors of implement investment projects. information technologies and con- the industry I would mention the lack struction machines. of highly qualified and correctly moti- Forecasts for 2013 Participants of the conference vated personnel. The Belarusian leg- were also asked to assess the exist- islation on leasing is well-developed. In 2013 Belarus expects a massive ing legislation on leasing operations. It is understood unambiguously, the increase in the leasing of manufac- Only a third of the polled criticized practice of its application suits les- turing equipment as well as a solid it while the majority (64%) believed sors, and on the whole it contributes to demand for the leasing of cars and that the Belarusian legislation meets the development of our branch of the real estate. The demand for manufac- the demand of the industry. economy. 77 78 ECONOMY OF BELARUSN o.1 , 2013 can BelCard entity of inter Bank Club as BelCar in w Belar Serg na the (16%). n (37%) Business signed medium-siz to inc f T Supporting www or umber he er

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Belarus to set up 2013 , 1 o.

Financial Market Association N

The idea to establish the association was US put forward by the Belarusian offices of such international companies as Forex Club, Teletrade, AR Alpari and Admiral Umis. The National Bank welcomes the idea to set up the Financial Market Association, according to Dmitry Nabzdorov, the head of regulation of non- banking operations at the National Bank of Belarus. It is planned that the association will, in close cooperation with the National Bank, facilitate the development of the efficient and sustainable OMY OF BEL regulatory environment, expedite the emergence and development of new financial products and services ON for all market participants, and promote high standards of corporate governance and protection of EC the rights and interests of investors. The association will draw on the experience the financial companies have accumulated in Belarus and cooperate closely with organizations from other CIS countries, Russia in particular. World Bank to provide $90m for upgrade of two Belarusian CHPPs

The Energy Efficiency Department of the State channeled into the upgrade of CHPP-1 in Mogilev and Committee for Standardization is working on the loan CHPP-1 in Gomel. Some of these funds will be used for agreement with the World Bank to finance the upgrade other projects, informed Sergei Semashko, Director of of two Belarusian CHPPs. The $90 million loan will be the Energy Efficiency Department. Financial literacy campaign

In January 2013, the National Bank of Belarus and the international pay- ment system Visa signed a memorandum of cooperation to enhance financial literacy in Belarus. The National Bank is also working on a similar agreement with MasterCard. Repre sen- tatives of this payment sys- tem have already visited the National Bank. The National Bank is open to all forms of cooperation with the international payment systems. In particular, the National Bank invited the PayPal international payment system to discuss cooperation prospects. 79 www.belarus-economy.by TRANSPORT TRANSPORT 2013 , 1 o. N Belarusian US AR Railways:

OMY OF BEL 151 Years and ON

EC Counting Every year about 150 million tonnes of cargo and 100 million passengers are transported by rail

What comes to your mind when you think about railways? Some people imagine shiny and blazing strips of metal, others remember the calming and soothing sound of wheels turning on the railroad track… the feeling of tranquility and safety. Most people going on long-distance trips choose railway transport for its reliability and safety. It is not just about the low accident rate but also excellent service. Belarusian Railways, the national rail operator, is investing tremendous effort to ensure a high level of customer satisfaction. Head of Belarusian Railways Mr Vladimir MOROZOV tells the Economy of Belarus Magazine about the company’s ambitions and new products and services.

80 TRANSPORT www.belarus-economy.by 2013 , 1 o. N US AR OMY OF BEL ON EC

Mr Morozov, the year 2012 of transportation services. To this tion, cut down on equipment main- was an important milestone for end, we have launched large-scale tenance costs, facilitate innovative the company as the national rail investment projects as part of 15 development of our subsidiaries operator marked its 150th anni- government programs, including and enhance their competitiveness versary. This is quite a date for the state program for rail transport on the global market. In January any company. The company must development for 2011-2015. The most 2013 Belarusian Railways passed a be proud of what it has achieved. important of them include electri- plan to boost its operational effi- What are the major challenges fication of railway sections Gomel- ciency (the Modernization Plan). Belarusian Railways is going to Zhlobin-Osipovichi, Molodechno- The document envisages a set of take up this year? Gudogay-state border, renovation of measures to enhance the economic the rolling stock, expansion of the and technical performance of the Indeed, this year is a new ref- Minsk railway hub, development of company. The latter implies refresh- erence point for the company. It the operation control center, and ment of the rolling stock and rail- is noteworthy that in 2013 we also upgrade of the railway infrastruc- way infrastructure, assimilation mark the 50th anniversary of elec- ture. of new or improved transportation trification of the Belarusian rail- technologies, optimization of tran- way tracks. We are looking forward The modernization theme is sit cargo transportation using high- to enhancing cooperation with rail getting increasingly relevant speed container trains, and over- services of foreign states, taking now. Therefore, could you please haul of cargo terminals. advantage of new opportunities tell us about the company’s I would like to highlight some opened up by the establishment efforts to upgrade its capacities, of our projects. One of the most of the Customs Union of Belarus, expand the rolling stock and ren- important investment projects we Russia and Kazakhstan and the ovate infrastructure? are running now is the electrifi- Single Economic Space. cation of railway tracks as part Now our number one task is Our modernization efforts are of the Pan-European Transport to strengthen our positions on the meant to improve the quality of Corridor IX. In April 2013 we are domestic and international markets passenger and cargo transporta- set to complete the electrification 81 www.belarus-economy.by TRANSPORT 2013 , 1 o. N US AR OMY OF BEL ON EC

of the Osipovichi-Bobruisk section senger platforms with canopies, country. Currently, the reconstruc- and offer short-distance railway ser- ticket offices. By the end of 2015 the tion of the Kolyadichi commercial vice using electric trains. In July Belarusian rail operator plans to station is in progress. In 2013 we we will finish electrification of the upgrade the infrastructure on the plan to open a new indoor storage Bobruisk-Zhlobin section. This year Minsk-Smolevichi route. facility of 5,000 square meters for we have plans to start mounting In order to improve the qual- the unloading and processing of electric power supply installations ity of passenger service and relax unitized cargo transported in cov- at the Zhlobin-Gomel section. At border crossing, several railway sta- ered railcars. We will also begin the end of 2012 Belarusian Railways tions in border the construction of a new admin- and China National Electric Import are being renovated. Reconstruction istrative building which will meet & Export Corporation (CUEC) of the railway stations in Grodno the most up-to-date standards of signed a $94.9 million contract to and Brest is on track to be complete customer service. Following the electrify this section. This year we in 2013. upgrade of the station, Belarusian will start electrifying the section With regard to Minsk, under the Railways will be able to offer high- Molodechno-Gudogay-state border. Minsk-Passazhirsky railway station est-quality service to cargo ship- Belarusian Railways actively development project, this year we pers. The project consists of five upgrades the passenger transpor- intend to commence the redeploy- phases, on the completion of which tation infrastructure, including ment of the train maintenance facil- the Kolyadichi station will become through the project to develop the ity outside the city limits. In its one of the most advanced terminals urban rail line in Minsk. The appro- place we will arrange two additional of Belarusian Railways, providing a priate infrastructure has already passenger platforms with canopies. full range of services related to pro- been installed for the urban line Now Belarusian Railways is imple- cessing of large containers, heavy connecting the Minsk-Passazhirsky menting the second phase of the goods vehicles. railway station with Minsk’s suburb project to build a coach yard at the Zhdanovichi. Minsk railway junction. The comfort of passengers, the Currently Belarusian Railways I would like to mention that we confidence of customers in the is working on the infrastructure for are doing the upgrade of the cargo timely delivery of goods – this all the urban rail link between Minsk terminals with a view to turning depends on the technical capaci- and Rudensk, which is scheduled them into advanced transport and ties of the carrier. Maintenance to come on stream in 2013. The logistics centers, which is important of the existing rolling stock is new facilities will include under- not only for the rail operator but of crucial importance. But per- ground pedestrian crossings, pas- also for entire Belarus as a transit haps, the purchase of new cars 82 TRANSPORT www.belarus-economy.by

is as important. How are things PESA Bydgoszsz SA with the par- motives built by Datong Electric with the upgrade of the rolling ticipation of Minsk Railway Car Locomotive (China). The company 2013 stock? Repair Plant. This year, Belarusian plans to purchase the same num- , 1

Railways plans to purchase four ber of rail vehicles this year. The o. The upgrade of the rolling stock electric- and four diesel-trains. This project launched in 2011 to produce N is one of the most important tasks is a brand new rolling stock, which diesel shunting locomotives MTE-1 of Belarusian Railways. This is corresponds to up-to-date standards and MTE-2 in the Lida locomotive US done within the framework of the of reliability, safety, comfort and depot using the technology of Czech AR state program for rail transport environmental friendliness. CZ LOKO is of great importance development for 2011-2015. During We are upgrading the fleet of for the country’s railway system. this period the rail operator plans passenger cars to make passenger Belarusian Railways also launched to purchase 30 freight and 24 pas- ride in Belarusian trains as com- a project to build four-wheeled die- senger electric locomotives, eight fortable as possible. In the past six sel electric switchers MTEZ. The passenger diesel locomotives, six years, the Belarusian rail operator first locomotive of the kind was shunting locomotives, 20 diesel and purchased 168 cars, including two made in late 2012. This year there 29 electric trains. I would like to cars corresponding to the EU RIC- are plans to produce eight diesel OMY OF BEL note that last year the rolling stock 200 standards. New passenger cars shunting locomotives. was upgraded by more than 15%. are equipped with air condition- In general, the issue of renewing ON Over the past two years, as part ing, eco-friendly bathroom facilities rolling stock requires a comprehen-

of the effort to develop a new for- and electricity supply system allow- sive approach that should include EC mat of passenger transportation, ing recharging laptops and mobile the purchase of new-generation we purchased six electric trains for phones. In accordance with the state locomotives and modernization of the urban lines and four for the program for rail transport develop- the existing rolling stock. Diesel regional lines from the Swiss com- ment in Belarus, in 2013-2015 we freight locomotives 210TE and 2M62 pany Stadler Bussnang AG. In 2012 plan to purchase at least 140 passen- are currently having their diesel we commissioned three one-car- ger cars. As regards freight cars, we engines replaced – a total of 100 riage diesel trains for the regional aim for 2,000 units this year. locomotives have been upgraded lines made by Belkommunmash Last year Belarusian Railways so far. The upgrade allows saving jointly with the Polish company acquired six BCG1 electric loco- annually up to 74.4 tonnes of diesel

83 www.belarus-economy.by TRANSPORT

fuel and 4.7 tonnes of motor oil per minute cut to the journey time for Belarusian Railways and Russian vehicle. some routes. Railways signed the relevant agree- 2013

, Amendments will be intro- ment in November 2012. 1

o. New locomotives, new rail- duced to international routes as N road cars… Trains get better in well: Belarusian Railways and Belarusian Railways is work- terms of quality and design. Can Lithuanian Railways are planning ing hard on improving customer US we expect an increase in speed to cut travel time between Minsk service and introducing new ser- on national and international and Vilnius by 30 minutes to make it vices. What do you think of the AR routes in the near future? a 2.5-hour journey. Under the agree- electronic travel card introduced ments with the recently? I would like to say that the new schedule introduced in May increase in speed requires imple- reduces the travel time between Last year’s results are encour- mentation of a whole range of Moscow and Kaliningrad via aging, as we were able to secure a measures, starting from infrastruc- Belarus and the neighboring coun- considerable growth in passenger ture development to the repair of tries. In more detail, train No.29 numbers. A total of 100.5 million rail lines and optimization of traffic Moscow-Kaliningrad will see a people were transported in 2012, up OMY OF BEL schedules. reduction in journey time by 67 13% on 2011. The share of passenger There are plans to amend the minutes, train No.30 Kaliningrad- traffic by rail increased by 1.8% to ON 2013/14 national rail timetable Moscow by 74 minutes, train No.79 35.6% in the total passenger turno-

EC introduced on the last Sunday of -Kaliningrad by ver in the country. May. The schedule is annually two hours, train No.147 Moscow- Last autumn the rail operator approved by the Council for Rail Kaliningrad by 32 minutes. Apart launched the electronic registra- Transport of CIS States. In par- from that, passengers will spend tion service for passengers travel- ticular, we are looking to reduce less time traveling from Saint ling inside Belarus. Passengers paid journey time for passenger trains Petersburg to Minsk and back on for tickets via the Internet using No.656 Grodno-Minsk and No.655 trains No.51 and No.52. plastic cards. The service is grow- Minsk-Grodno. Increasing speed Belarus continues joint work ing in popularity. Since September limits at the section Lida-Mosty up with Russian Railways on the Belarusian Railways has sold more to 120-140km/h will reduce travel high-speed route Moscow-Minsk- than 34,000 e-tickets. In March time approximately by an hour. We Berlin with the use of Talgo rolling Belarusian Railways is planning to are also adjusting the traffic sched- stock. The project envisages instal- launch electronic registration for a ule for interregional economy-class lation of a railroad switch device number of passenger trains bound trains. The move will make a 7-15 at the Brest-Tsentralny station. to Russia.

84 TRANSPORT www.belarus-economy.by

On the official website of Cooperation with our north-west- , a project to trans- Belarusian Railways the sale of ern neighbors has been increasingly port BMW products from Leipzig e-tickets will be linked to the Internet vibrant too. Belarusian Railways to China’s Shenyang and Hewlett- acquiring system of Belarusbank. cooperates with the rail operators Packard goods from Chongqing to Passengers will buy tickets using of the Baltic countries. The compa- Duisburg. Visa International, MasterCard nies have launched high-speed pas- Belarusian Railways is a member WorldWide cards of any bank in the senger service Minsk-Vilnius, run of the Council for Rail Transport of world. The company is planning to the Viking container train project the CIS States, the Organization for finish all preparations this year. connecting Klaipeda, Minsk and Cooperation between Railways, the Odessa, electrify the Molodechno – International Railways Union, coor- Please tell us about the state border – Naujoji Vilnia rail- dination conference on passenger international cooperation of way, build the infrastructure of transportation of the Forum Train Belarusian Railways? What pro- the Vitebsk-Polotsk-Daugavpils Europe, the Coordinating Council jects implemented jointly with section. on Transsiberian Transportation. foreign partners are considered Belarusian Railways maintains Closer cooperation with these the most important? cooperation with Germany’s DB organizations will promote fur- Bahn. The two partners will imple- ther integration of Belarusian I would like to emphasize that ment the high-speed container train Railways into the global transport cooperation with leading foreign project to ship Volkswagen car parts network. companies and international trans- to Kaluga via Brest using the exist- port organizations is among our ing route and a new railway route to Tatyana IVANYUK priorities. Of course, Belarusian Railways will continue coopera- tion with foreign manufacturers of EDITORS’ NOTE rolling stock, machinery and equip- ment. We are planning to enhance mutually beneficial relations and bilateral cooperation with the rail- Belarusian Railways is an important component of not only the way services of Europe and Asia. transport sector, but also the entire economy of the country. The com- For instance, Belarusian pany has a modern and well-developed transport network with over Railways will promote freight 5,500km of track. Belarusian Railways is a leader of the national trans- transportation, including container portation system. It accounts for over 70% of Belarus’ freight trans- transportation, and raise the speed portation and about 40% of passenger traffic. Every year Belarusian of international passenger trains in Railways carries about 150 million tonnes of cargo and 100 million cooperation with Russian Railways, passengers. Belarusian Railways operates 31 subsidiaries. The com- our major strategic partner. pany has about 86,000 employees representing more than 500 profes- Belarusian Railways will team sions. Over 400 families have been with Belarusian Railways for many up with the rail operators of generations. These are 2,015 people, of them 730 work with Belarusian Russia and Kazakhstan to imple- Railways today. ment railway transport agreements signed within the framework of the Customs Union and the Single Economic Space. 85 www.belarus-economy.by TRANSPORT TRANSPORT 2013

, Nearly 770,000 people 1 o. N use Minsk metro every day

US About 769,000 passengers used the Minsk metro every day in 2012,

AR said the central statistics office of Minsk. The importance of metro grows year after year. Metro is used for half of the passenger transportation trips in the city. Minsk’s passenger transport network comprises automobile

OMY OF BEL (buses), urban electric, aerial, and inland water transport. ON In 2012 as many as 899.7 million people were transported in Minsk EC by all kinds of passenger transport, 1.8% up from 2011. Passenger traffic totaled 7,226.2 million passenger kilometers, up by 8.1%. Strategy for innovation- driven development of Belarusian transport system till 2030

The Transport and Communi- ca tions Ministry is busy putting together a strategy for the innovation-driven development of the transport system of Belarus till 2030. According to the press service of the Ministry, a council has been set up for the purpose, with scientific personnel as part of the council. “The state can earn economic benefits from modernizing the transport system, provided all kinds of transport are developed simultaneously. It will be taken into account during the elaboration of the innovation-driven development strategy,” said the source. 86 TRANSPORT www.belarus-economy.by 2013

A mixture of style and pragmatism , 1 o.

In January the Belarusian N air carrier Belavia presented

new uniforms for flight US attendants.

The Belarusian air AR carrier has ordered sets made for men and women for warm and cold weather since both can be sometimes experienced on the same day during long-distance flights. New summer and winter uniform sets have been OMY OF BEL designed for female and male cabin crew members ON of the national carrier. The familiar color spectrum of EC white – blue-turquoise will be changed. The new winter uniform set is designed in dark blue and red, while the summer set will be produced in white-grey-rose colors.

The uniform set shall include 40 items made from various materials, such as a jacket, a vest, a blouse/shirt, a skirt/trousers, a cap, an apron, a scarf. The uniform set will also include a coat and a hat for winter and a raincoat for summer. Besides, during summer months female cabin crew members will have an option to wear summer dresses. Finally, all cabin crew members will get special suitcases which can be used as personal luggage during the flights. The apparel has been designed by Ms Elvira Zhvikova, senior art director of OAO Fashion Center. In her words, the design takes into account wishes expressed by flight attendants and modern fashion trends. The result is a mixture of style and pragmatism. Unified vehicle passports for Customs Union There are plans to introduce unified passports digital passports of vehicles, chassis of vehicles, and of vehicles, chassis of vehicles, and self-propelled self-propelled machines. machines in the Customs Union as from 1 July Meanwhile, a special procedure will be in place 2013. The plans are stipulated by the relevant draft for issuing the passports till 1 July 2013: Belarus and intergovernmental agreement approved by the Council Kazakhstan will have to apply for and use Russian of the Eurasian Economic Commission and put on its forms. website. The agreement is subject to ratification and will In line with the document the unified passports will be temporarily in use as of the signing date. The be in effect until a digital passport system goes online. Eurasian Economic Commission has forwarded the The draft agreement stipulates that as from 1 January draft document to the member states for the sake of 2015 authorized agencies of the Customs Union member accomplishing the intrastate procedures required to states and specifically listed manufacturers will issue sign the document. 87

www.belarus-economy.by REGIONAL NEWS REGIONAL NEWS 2013 , 1 o. N Successful Start US

AR Today products made in Lida District are sold in 70 countries worldwide

The modernization policy adopted by the Belarusian government for this five-year term has been the OMY OF BEL mainstream policy in Lida District

ON for several years already. It is by no means surprising as Lida District

EC is home to dozens of modern industrial companies representing a variety of industries. For them upgrade is a matter of survival and competitive growth. Chairman of the Lida District Executive Committee Mr Alexander OSTROVSKY tells the Economy of Belarus Magazine about plans and aspirations of this unique ancient region.

Mr Ostrovsky, are you happy with the industrial development of Lida District in 2012? Did the region succeed in increasing the output of industrial goods and making them more competitive?

That was a difficult year. Nevertheless, the local industry manufactured Br5,818.1 billion worth of goods in factory prices (including the cost of raw materials supplied by customers). In 2012 the industrial output expanded by 10.7% (the target was 10%). If calculated in factory prices (including the cost of raw materials supplied by custom- ers), the output growth was 86.2%. The government urges pro- meant for export. About 30% of The region manufactured ducers to make more import sub- heating radiators are sold domes- Br824.3 billion in innovative prod- stitution goods. How is progress tically. Taking into consideration ucts, 15.2% of the total output. We on this side of things? great competitive advantages of also expanded the manufacture of these products, the factory is set some non-food products, including Within the framework of to boost their sales in Ukraine, the agricultural machines and equip- national, sectoral and regional inno- Baltic states and Poland. After a ment, furniture, construction mate- vation programs, our companies new welding line is commissioned, rials, lamps, optical devices, paints, turned out a variety of industrial the output will be increased. lacquers, enamels, footwear, etc. We and consumer goods. For example, Lidagroprommash started pro- sold more foodstuffs, including meat Lidselmash rolled out heating radia- ducing potato harvesters as part of products, flax oil and butter, flour, tors. On the one hand, these are the government program to develop cereals, starch, beer and non-alco- import substitution products, on and supply promising machines and holic beverages. the other hand, these products are equipment to domestic agricultural 94 REGIONAL NEWS www.belarus-economy.by 2013 , 1 o. N US AR OMY OF BEL companies in 2011-2015. Besides, enamel EP-158 for protection of Export of the companies exclud- ON we are going to provide domestic steel, copper or aluminum prod- ing the organizations subordi-

producers with Lida-GE 220 self- ucts against corrosion, LidAlkyd nated to the national government EC propelled flax pullers and Lida-U30 lacquers for the manufacture of amounted to $240 million, up 11.5% self-propelled flax harvesters. pentaphthalic enamels, Primecoat as against 2011. Lida Foundry and Mechanical enamel for protection against cor- Lida Milk Plant and Lida Meat- Plant also makes import substitu- rosion. All new products enjoy high Packing Plant account for 70.4% of tion products – castings for Minsk demand on the market. the export of this group of compa- Motor Plant. Lida Plant of Electrical nies. The latter managed to boost Products makes import substitution How popular are Lida-made export to the neighboring market by LED-based lighting equipment. The goods on foreign markets? How 20.8% in 2012. The export deliveries company is running an investment are things export-wise? What of Lida Milk Plant went up by 26.9% project of the Industry Ministry is the correlation between the in 2012. “Development of production of exports of goods and services? With regard to the export of energy-saving lighting equipment”. services, its volume is inferior to In order to make their products Foreign sales of local enterprises merchandise export, yet it has been more competitive in domestic and amounted to $608.3 million in 2012. increasing more rapidly. Thus, in foreign markets, a number of local The total export was $400 million, 2012 local producers provided $19.2 enterprises seek to establish mutu- up 16.8% from 2011. The district had million worth of services to for- ally beneficial contacts with world- a foreign merchandise trade surplus eign clients, which was up 57.2% renowned manufacturers, set up of $204.9 million from 2011 and well above the growth licensed production and expand the In 2005 we exported products target of 24%. The district had a range of import substitution prod- to 53 countries around the world, surplus in trade in services in the ucts. For example, Minoity Repair while in 2012 we were present on the amount of $10.5 million. Plant started producing spare parts markets of 70 countries. The main for CLAAS (Lexion, Mega), Bizon, foreign market is, of course, Russia. In order to secure a foot- John Deere grain harvesters. Under The share of exports to the Russian hold on the traditional markets the import substitution program, Federation made up 73% of the total and expand into new ones, it is the plant also manufactures mul- exports of Lida District. vital to steadily enhance com- tifunctional units for soil process- Many local enterprises have petitive ability. How are things ing “Diskopak-6”, semi-mounted boosted exports. These were Lako- with investment in technologi- ploughs, and crop collectors. kraska, Lida Milk Plant, Lida Meat- cal development of the industrial The company OAO Lakokraska Packing Plant, Glass works Neman, sector? has established good relations with Lidselmash, Yukon Advanced Optics, European partners. The company Optic Plant, Bel-Plast International, We are doing our best to create made pilot batches of two-compo- Lida khleb produkt bakery, Lida maximum favorable conditions for nent polyurethane materials under Furniture Factory, Lida Footwear investors. We have recently opened the license from BASF Coatings Plant, Lidastroikonstruktsia, Lida a number of new factories. Not long GmbH (Germany): BALISTA High Plant of Electrical Products, Lida ago, in cooperation with a German Gloss for painting equipment and Food Concentrates Factory, ZAO company, we set up a new company, BALISTA Filler for the protection Kaskad and other companies. XABEP BY Woven Wire Factory, of metal surfaces and fiberglass The food industry accounted for to produce woven-wire mesh. The against corrosion. As part of 44% of the total exports of Lida National Academy of Sciences the import substitution effort District, chemical industry for implemented an investment pro- Lakokraska produces new mate- 21.4% and manufacturing industry ject to build HD Galvanizing rials: enamel EP-152 and primer- for 9%. Plant Konus which uses hot-dip 95 www.belarus-economy.by REGIONAL NEWS

galvanizing method to protect large- age facilities. All organizations and sized metal structures from corro- companies have upgrade plans. 2013

, sion. MEDAX-M Company commis- Food manufacturers have 1

o. sioned a manufacturing facility of large-scale investment plans, too. N the total area of 800 square meters For example, Lidakhlebprodukt is to produce import substitution dis- planning to implement five invest- US posable medical supplies. ment projects. Among them is the An estimated Br1.5 trillion project to set up a pasta factory AR worth of investment was put into with the capacity of 20,000 tonnes the economy of Lida District in per year. Lida Meat-Packing Plant 2012. Unfortunately, a downward will rebuild the prefabricated meat trend was registered in capital facility of the sausage workshop by investment, which was caused by a replacing packaging, smoking and number of objective reasons. Last cooking lineups. Lidskoye PIVO will year Lida District raised a total of launch the production of Sandels $19.7 million of net FDI. beer in glass bottles. OMY OF BEL A number of companies consid- This year we are going to give erably enhanced their technologi- a boost to small and medium-sized ON cal potential using both proprietary business. The district has favora-

EC funds and attracted resources. Thus, ble conditions to promote business Lakokraska continued technical re- initiatives and create competitive equipment of the phthalic anhy- environment. In 2013 small business dride production facility increas- will account for 28.5% of returns on ing its capacity to 48,000 tonnes per sales of goods, works and services. year. Lidskoye PIVO brewery has Practice shows that small busi- built a number of new facilities as nesses play a crucial role in raising part of its large-scale reconstruc- In 2012 investments into setting up modern tion effort. Lidselmash has built a production facilities and providing new painting section. Lida Meat- the export services. It is also important for the Packing Plant has upgraded its pre- promotion of export. fabricated unit of the sausage pro- of Lida District ducing shop, by building two meat Do you expect to raise more cooling rooms with the capacity of enterprises foreign investments? What indus- 30 and 60 tonnes. Lida Milk Plant tries will consume these invest- has opened a new milk powder pro- went up 16.8% ments? duction unit and installed gas power generating equipment at the whole to $406.6 Of course, we will step up efforts milk substitutes shop. ZAO Kaskad million to raise foreign investments. We has completed a makeover of its expect to get $30 million in foreign production base with the opening of direct investment on net basis. In powder painting and abrasive sand particular, there are plans to mod- recuperation units. An upgrade ernize and ramp up the capacity project is underway at Glassworks of the company to recycle animal Neman. wastes. We have already signed an investment agreement to the tune What are investment plans for of at least €5 million to implement 2013? What projects will local the project with the Lithuanian economic operators implement company Marijampoles ARVI. The this year? enterprise is also eager to take part in the project to build a turkey pro- Development of the invest- duction facility. ment and innovative potential is In fact, Lida District needs to in the spotlight of the Lida District raise investments in the industrial Executive Committee. sector to resolve the main task for Lakokraska will continue its the year 2013, which is to introduce technical retooling program. Lida new high-efficiency technologies Furniture Factory is planning to and equipment. As a result, local launch the construction of a fin- companies will ramp up the pro- ishing and assembly workshop. duction of goods complying with Optic Plant will continue revamp- international standards, raise labor ing a vacuum coating workshop. productivity and reduce expenses. Lidselmash will develop production of automated silage-type grain stor- Tamara MARKINA 96

www.belarus-economy.by BUSINESS ENVIRONMENT BUSINESS ENVIRONMENT 2013 , 1 o. N Protos Means US AR “First” in Greek Protos Group is investing about €20 million in the expansion of metal structures production OMY OF BEL ON Protos Group is a great success a fittings factory, Protos Avto Big Transporter

EC story of a private business in and Protos Tekhno,” said Nikolai Belarus. Over the last 20 years a Sysa. of Hazardous Cargo small metal structure workshop “The backbone of our policy As part of Protos Group, Protos grew into a respectable company is meeting the requirements and Avto specializes in international with products and services expectations of our customers by transportation, including delivery high in demand both in Belarus improving the physical infrastruc- of metal structures to the customer. and abroad. Today this modern ture, ensuring high quality and It boasts a modern fleet of vehicles, customer-oriented sales, fostering including special-purpose ones, that and rapidly growing enterprise a balan ced development of all the is constantly growing. The profes- channels the major part of its companies, and encouraging pro- sional qualifications of the drivers revenues into innovations to fessional development and team- employed by Protos Avto are equally create new jobs, produce import- building. Our motto is ‘Even small impressive with some of them substitution goods and win new things matter’ and we try to keep up being winners of line-haul train foreign customers. The company with the times,” the Protos Group drivers’ competitions. All this helps has been constantly searching for Director emphasized. meet most discerning requests. new ideas and exploring new areas Protos Avto employees have been of operation, increasing the number Reliable Partner conferred honorary diplomas by of staff and expanding physical and Supplier the International Road Transport infrastructure. Union (IRU). The company itself is Protos has earned a solid repu- one of the largest transporters of Even Small Things tation by delivering on its prom- liquefied gas and light oil products ises. The company is involved in in Belarus. Having started in 2004 as Matter the wholesale of pipes, rolled metal a supplier of liquefied hydrocarbon This motto was adopted by Mr products and technical equipment gas in Belarus, the company has Nikolai Sysa, Protos founder, when as well as in cargo and liquefied gas gradually extended its wholesale he started up his own business. transportation. In 2010, Protos was deliveries to the Czech Republic, Today the motto remains one of licensed to provide forwarding ser- Estonia, Lithuania, Latvia, Poland, the core principles of labor man- vices. It is noteworthy that virtually Russia and Ukraine. agement and secures a responsi- all the main production and man- ble attitude toward anything Protos agement assets are concentrated at European Level embarks on. Protos. This company also supplies of Service “We try to carefully verify every materials for metal structures to the step we make both in the market fittings factory. Protos Tekhno is a large service and in doing business in order to Thanks to a new Finnish weld- center responsible for diagnostics get a maximum return on labor ing line installed in 2011, Protos and repairs of heavy duty vehicles. and money invested. This allowed launched the production of plate Having grown from an extension to us to choose the right course, cal- girders that nobody else in Belarus the vehicle fleet, Protos Tekhno can culate our capacities, grow, mature makes. perform any type of repairs. and go forward overcoming dif- “As a result, we have a competi- The service center incorporates ficulties. We have grown from a tive product that sells well both at a 985 m2 maintenance shop with the small workshop producing metal home and abroad. For instance, we capacity to service eight vehicles at structures into a multifunctional supplied plate girders together with once and an 800 m2 shop for mainte- holding company uniting four metal structures to Belarusian Steel nance of semitrailers. It can service large enterprises, namely Protos, Works,” Nikolai Sysa said. a wide range of heavy duty vehi- 98 BUSINESS ENVIRONMENT www.belarus-economy.by 2013 , 1 o. N US AR OMY OF BEL ON EC

cles (DAF, Iveco, MAN, Mercedes, Innovations and panies in Belarus and abroad use Scania, Volvo, Renault, МАZ-MAN, rapidly erected metal structures МАZ, KamAZ, MZKT); semitrailers Modern Technologies of high reliability and durability,” of all types and models; combilifts The history of the fittings fac- Nikolai Sysa said. and excavators; reefer trucks and tory dates back to 1994 when it Employees of the fittings factory WABCO air compressors. was a small shop producing metal have been trained at representa- Among the services provided are structures. Over time the shop grew tive offices of the leading European computer diagnostics, ADR safety bigger, introduced innovative solu- firms and received corresponding shutoff system installation, assem- tions and launched production of certificates. All the materials for bly and disassembly of the power new competitive goods. Today it is production of metal structures are take-off equipment, discharge noz- a powerful manufacturing facility bought from renowned manufactur- zle repair and checkup, brake sys- producing up to 500 tonnes of metal ers of sheet and profile iron, which tem control, installation and diag- structures a month used in a wide ensures high quality and reduces nostics of automated tachograph range of buildings of various pur- prime cost of the end product. systems, tire fitting, wheel vulcan- poses and complexity. Nondestructive Control ization and balancing, aluminum “We have invested a lot in the Methods, an independent labora- welding, and others. development of this production tory of the Belarusian-Russian “Owing to the upscale techni- facility. We bought equipment and University, performs a check assem- cal facilities, quality spare parts technologies of the world’s leading bly of newly made metal structures from the world’s leading produc- producers from , Germany, and issues a final opinion on their ers, qualified personnel trained and Ireland, Italy, Portugal, Spain and welding quality. Delivery of the certified at European maintenance the United States. Surely, there was ready-made structures is available centers, Protos Tekhno provides a certain risk as we were invest- on request. services at the highest level meeting ing in the future technologies. But “Within a couple of years the European standards,” Nikolai Sysa it was a justified risk and today company managed to build a repu- explained. the majority of construction com- tation of a reliable partner. For 99 www.belarus-economy.by BUSINESS ENVIRONMENT

Ultramodern 2013

, Production Facilities 1 o. N This year Protos Group intends to implement another large-scale US investment project to build a cut- ting-edge metal structure produc- AR tion facility that will be second to none in Belarus. About four hec- tares of land has been allotted near the acting plant; preparation of the site and design documentation is underway. “We plan to buy equipment of the leading European producers OMY OF BEL with the production capacity of over 1,000 tonnes of metal struc- ON tures a month. The most advanced

EC technologies will be used and all the production processes will be automated to the maximum. This will allow us to maximize the output while minimizing the costs, extend the range of products and raise their quality,” Nikolai Sysa noted. The new equipment will make it possible to produce metal struc- tures for the construction of mod- ern road bridges and crossovers in addition to buildings. “Taking into consideration the projected market demand, we plan to invest about €20 million in the construction of the new metal struc- ture production facility,” Nikolai Sysa said. The increase in the metal struc- ture production has been necessi- tated by the growing demand for these products in the construction sector both at home and abroad. Today metal structures are used to build virtually all major buildings such as nuclear plants, bridges, instance, our metal structures were amphitheaters, hypermarkets, The used to build the main facilities sports complexes, etc. The use of of the Dazhynki Harvest Festival metal structures speeds up con- multifunctional 2012, namely the ice arena with struction, guarantees high quality a gym, Pogodino railway station, and reliability of buildings. holding company Gorki youth center with an amphi- The new production capacities theater. Our products are used in coupled with the 20 years of experi- unites four large construction of the Belarusian ence will allow the holding company nuclear power plant and a num- to boost production and sales, con- enterprises, ber of big commercial and indus- tinue market diversification efforts namely Protos, trial facilities both in Belarus and and increase the export potential. the neighboring countries. The “We also plan to raise the wages, a fittings factory, European Union also had a chance improve working conditions at the to get familiar with our products production facilities, and imple- Protos Avto during the construction of an ment various social projects. We are oil-loading terminal in Antwerp, very optimistic about the future,” and Protos Tekhno Belgium,” the Protos Director Nikolai Sysa stressed. said. TIN 700010872 100 BUSINESS ENVIRONMENT www.belarus-economy.by 2013 , 1 o. N US AR OMY OF BEL ON EC

101 www.belarus-economy.by INVESTMENTS INVESTMENTS 2013 , 1 o. N Stadler settles US AR in Belarus The Belarusian-Swiss electric transport factory in the town of Fanipol will start manufacturing OMY OF BEL

ON merchandise in late 2013 EC A while ago a new kind of railway transportation – urban commuter and performance. We see a large trains – was offered in Belarus. Belarusian Railways has bought ten potential for selling our products in trains in Europe. The move marked the beginning of the cooperation Belarus, Russia, and Kazakhstan,” with Stadler Company and the cooperation is now approaching a new he noted. level. The Swiss side is investing money to build a factory to make Peter Spuhler pointed out the electric transport in the industrial zone Fanipol, Minsk Oblast. The high technological standards and construction project was launched in October 2012 with assistance the education level in Belarus. Apart from that, he believes that the of Prime Minister of Belarus Mr Mikhail Myasnikovich. The factory is Belarusians and the Swiss fit each scheduled for commissioning by the end of the year. Once it is up and other well in terms of mentality. running, Belarus will have a modern European-level enterprise, while the At the ceremony to place a investor will be able to promote its products to the Customs Union and time capsule into the foundation the Commonwealth of Independent States. of the Belarusian-Swiss factory Prime Minister of Belarus Mikhail On Common Rails KISS-type trains as well as Myasnikovich underlined that the and . Apart from that, project opened a new page in the It is worth mentioning that the company has plans to make development of the Belarusian Stadler Rail Group is one of hybrid-drive buses and 18-meter- economy and the production sec- Europe’s top three manufacturers long trolleybuses with a diesel gen- tor in particular, with the intellec- of electric railway transport and erator. The Fanipol factory will per- tual force and the output capacities one of the world’s top ten manufac- form assembly, welding, painting, of the Belarusian and Swiss sides turers in this market. The group and commissioning of Swiss-design merged. The enterprise will allow designs, manufactures, and supplies commuter trains. The company is Belarus to secure the development railway transport solutions and expected to employ over 1,000 people of its railway transport and rather operates factories in Switzerland, as early as 2014. There are plans for effectively operate on the Customs Germany, Poland, Hungary, Czechia, increasing the workforce, organiz- Union market while export- Italy, Austria, Algeria, and the USA. ing re-training trips for workers and ing the make to non-CIS states, The industrial group boasts the specialists to Stadler enterprises in too. annual turnover of CHF2.3 billion Europe. This way Stadler Minsk will and nearly 5,000 personnel. become a major employer in Minsk First Orders In Belarus the Swiss company is Oblast. expanding its business in association “Apart from assembling com- Although the factory has to be with Belkommunmash. The share of muter trains we are interested in built yet, the demand for the mer- the Swiss company in the author- making individual components here chandise is being determined and ized fund of the joint venture is that will be shipped to our western several customers have been found 60%. Investments in the project will enterprises,” said Mr Peter Spuhler, already. exceed €35 million initially. Taking Director and the owner of Stadler First, efforts will be continued in out a loan from the European Bank Rail AG Company. “The invest- Belarus to electrify and introduce for Reconstruction and Development ments have been prompted by good a new format of passenger trans- is under consideration. opinions voiced about the first ship- portation. Urban railway commut- The Fanipol-based factory will ments to Belarusian Railways. We ing will be offered in Rudensk in make FLIRT-type electric trains for are impressed by the Belarusian 2013 and Smolevichi in 2015. Rolling the 1,520mm track and double-deck partner, its technical capabilities stock will have to be purchased for 102 INVESTMENTS www.belarus-economy.by

it. Now the regular urban commuter train service is available between the Minsk Passazhirsky station and the Zaslavl station. The Russian transport com- pany operates com- muter trains that connect Moscow, Sochi, and with the airports that service these cities. In February 2013 Stadler won the tender in Moscow and will supply the customer with 16 four-car trains and eight six-car trains by 2016. The delivery of 13 more trains or 60 railcars is possible. Part of the order will be fulfilled by the Fanipol factory. The contract is estimated at nearly €350 million. The commuter trains will be used on lines of all the three Moscow airports. The tender was announced in May 2012. In the final stage Stadler competed with such major mechanical engineering companies as Alstom (France) and Skoda (Czechia). The trains for Aeroexpress will be based on the existing Swiss KISS trains, but will have several techni- cal differences, which is required for operation in Russia. For instance, the train track gauge in Russia, the width of the rolling stock and its height differ from those used in Western Europe. Apart from that, there are tougher climate require- ments: the trains should be opera- tional at temperatures varying from 50°C below zero and 40°C above zero. Stadler had faced a similar situa- tion when it had to supply FLIRT trains to Finland, Norway, Estonia, and Belarus. The new trains will be able to travel at speeds of up to 160kmph. The light interior will be offered to passengers in business and economy class. The railcars will be made of light aluminum and Management Company, Director ban and intercity communication. therefore their weight will be con- General of OAO Electric Transport, Designed by Belarusians, a rapid siderably less in comparison with underlined that the capability of the has been presented in conventional steel railcars, result- future factory to make trains for the and Saint Petersburg. In associa- ing in lower operation costs. 1,520mm track, which is used in the tion with Stadler a prototype tram Stadler believes the contract is post-Soviet space, raises the inter- for Moscow is being prepared. The an important milestone in coop- est in the Belarusian-Swiss com- Russian city is eager to replace up eration with Russia. Such double- pany. Cooperation with Azerbaijan, to 900 trams within a short time. deck trains are already available in Ukraine, and the Baltic states is Once the Stadler Minsk project is Switzerland, Germany, Austria, and under consideration. Certainly, the implemented, Belarus will have one Luxembourg. A total of 133 KISS- market of Russia where large-scale more export-oriented manufacturer. type trains have been commissioned renovation of the rolling fleet is The project indicates that Belarus but it is the first time they will be underway looks promising. In par- has a high investment potential and offered in the CIS. ticular, the modernization of the is open to mutually beneficial coop- In turn, Mr Vladimir Korol, tram system is one of the coop- eration. Chairman of the Board of Directors eration avenues. Trams are now of OAO Belkommunmash Holding widely used in Europe for subur- Nadezhda RADIVON 103 www.belarus-economy.by EXHIBITIONS EXHIBITIONS 2013 , 1 o. N Latvia: US AR A View on

OMY OF BEL the Baltic Sea

ON The National Expo of the Republic of Belarus held in Riga EC in December 2012 marked an important milestone in the Belarusian-Latvian relations

First of all, the large-scale event showcased the opportunities of today’s Communications, State Committee Belarus, its trade, economic, sci-tech, investment, cultural, educational for Science and Technology, and tourism potential. The 6th Belarusian-Latvian Investment Forum Baltic National Academy of Sciences of Region 2012 in Kipsala became a significant event as well, bringing Belarus, and the Belneftekhim, together businessmen, manufacturers and financiers from the CIS Bellegprom and Bellesbumprom member states, Baltic and Scandinavian countries. concerns. Economic and invest- A Belarusian delegation visited Riga to take part in the national expo ment opportunities of Belarus were in focus at the stands of the and investment forum. Headed by Economy Minister Nikolai Snopkov, National Agency of Investment and the delegation comprised heads of ministries, state-run committees and Privatization and the Bela rusian concerns, representatives of regional authorities, free economic zones and Universal Commodity Exchange. business circles. Visitors examined with inter- est products of MTZ, MAZ, A Small Big Partner in the international transporta- Belkommunmash and other pro- tion market. The total share of the ducers of automobile, tractor and Latvia is almost three times Belarusian cargo in the overall agricultural equipment. Many peo- smaller than Belarus in terms of transit flow of Latvia was 24.2% ple visited booths showcasing pet- territory and almost five times in 2012. The close access to the sea rochemical products, commodities, smaller in terms of population. and cost-effective logistics make the food products and furniture, build- Nonetheless, it is the 5th biggest shipment of Belarus-made goods ing materials and household appli- economic partner of Belarus. Thus, through Latvia’s ports cheaper. ances, jewelry. in 2012 the bilateral trade reached a Presentations of innovative record high of $3,425.1 million. Products products, telecommunications It is noteworthy that the at Their Best and information technologies and Belarusian-Latvian cooperation is investment projects were held as not limited to the commodity trade The National Expo of the part of the expo. Transport and only. This small Baltic state is among Republic of Belarus BelEXPO 2012 transit projects were in the spot- the ten largest investment partners was one of the largest tradeshows light. New projects in science, edu- of Belarus. The total number of in Latvia. It showcased Belarus’ cation, healthcare and tourism companies with Belarusian and best products made by 252 compa- were presented as well. Latvian capital reached 1,500 in 2012, nies and organizations. The total The Chambers of Commerce of them over 1,100 were set up in area of the expo was 2,500 square and and Latvia Latvia. These companies mean new meters. The number of visitors held a business matchmaking ses- jobs, increased revenues and better exceeded 38,000. sion that was attended by about 90 living standards for those involved As always the biggest col- businessmen of the two countries. in the bilateral cooperation. lective booths were set up by the The chambers reached an impor- The two countries have estab- Ministries of Industry, Agriculture tant agreement to provide ser- lished good partnership relations and Food, Education, Transport and vices on precontractual checks of 104 EXHIBITIONS www.belarus-economy.by

business reputation and solvency tives of Belarus, Latvia, Lithuania, cargo capacities of the Ventspils of partners. the Czech Republic, Sweden and port. During BelEXPO 2012 over 1,200 Estonia. Businessmen took part in the negotiations were held, 36 mem- During the forum, three satellite workshop to discuss regulations of oranda of understanding were sessions were held on the following foreign economic activities under signed, agreements to set up 13 joint themes: credit and financing; fos- the Customs Union (CU) and Single ventures were reached. Over €3.6 tering investments and IT develop- Economic Space. The main topics million worth of contracts were ment; transport and logistics; grow- of the workshop were customs tar- concluded. ing interregional ties; trade and eco- iff and non-tariff regulations, the The meetings resulted in bilat- nomic cooperation. CU Single Customs Tariff taking eral documents, including a proto- Top on the agenda were the into consideration Russia’s commit- col on cooperation to reduce inter- investment climate and advantages ments to the WTO, customs con- national roaming rates between of doing business in Belarus and trol on the external border of the Belarus and Latvia as well as a Latvia, trends and prospects of busi- Customs Union, food safety control memorandum of cooperation in the ness development, scientific frame- and other issues. area of intellectual property protec- work of projects, regional coopera- Discussions of these important tion. tion as well as traditional areas topics were continued during the of the bilateral relations - banking workshop on information and com- Investment Realities… activities, transport and logistics. munication technologies aimed to A number of joint Belarusian- raise the efficiency of the transport The 6th Belarusian-Latvian Latvian transport and logistics pro- and logistics systems of the Baltic Investment Forum Baltic Region jects were discussed, including the states and Belarus. The participants 2012 was quite fruitful as well. It development of the Zubr container of the workshop discussed matters gathered more than 270 representa- train project and boosting liquid on electronic customs declaration, 105 www.belarus-economy.by EXHIBITIONS 2013 , 1 o. N US AR OMY OF BEL ON EC

Economy Minister of Belarus with President of the Latvian Employers Confederation Vitaly Gavrilov. Other Belarusian representatives at the meeting included Nikolai Pantelei, Minister of Communications and Information Technology; Alexander Guryanov, Deputy Foreign Minister, and Alexander Gerasimenko, Ambassador Extraordinary and Plenipotentiary of Belarus to Latvia. During the meeting the par- ties considered cooperation in the manufacturing industry; transit of Belarusian cargo via Latvian ports; fostering investments; application of Belarusian R&D projects in Latvia; cooperation between mobile network operators in the area of international roaming; knowl- use of electronic technologies to countries agreed that the poten- edge exchange in the area of busi- facilitate border crossing proce- tial of the bilateral cooperation ness personnel training; boosting dures, development of e-services has not been fully realized, and the regional and border cooperation. for vehicle and cargo monitoring, two states have great prospects to Implementation of agreements ensuring their security and safety. expand partnership and implement and new partnerships will pro- more mutually beneficial projects. mote further growth of the bilat- … and Prospects This opinion was voiced at the eral trade, Belarusian exports and talks between Economy Ministers of investments and intensify coopera- Reflecting on the results of Belarus and Latvia Nikolai Snopkov tion in all economic areas of the two BelEXPO 2012 and the investment and Daniels Pavluts respectively, as countries for the benefit of Belarus forum, participants from both the well as during the meeting of the and Latvia. 106

www.belarus-economy.by EXHIBITIONS EXHIBITIONS 2013 , 1 o. N Platform US AR for Pundits The 20th Healthcare in Belarus 2013 expo took place in Minsk on 26-29 March OMY OF BEL ON … Avicenna once said: “A care service. This is why more and and Drive, the producer of joint

EC doctor has three assistants: a more patients from abroad arrive implants Altimed, the manufacturer word, a plant and a knife”. In in Belarus to get high-tech medical of operation tables Medindustriya modern language this statement services such as coronary artery Service, the company offering anes- should be translated as follows: bypass graft, endoprothesis, heart thesia workstations and ventilators professional excellence, surgeries, organ transplantations. Respekt Plus, the producer of heart advanced pharmacopoeia and Of course, these surgeries would valves Electronmash and other modern technologies. The annual be impossible without cutting-edge companies. They produce modern technologies, modern equipment equipment for preventive medicine, Healthcare in Belarus expo and materials, pharmaceuticals, surgery, orthopedics, cardiac sur- makes a considerable input in the of which many are showcased at gery. development of these components. the Healthcare in Belarus expo and The Belarusian pharmaceuti- then used in . Every year cal industry is traditionally rep- Today Belarusian doctors per- major Belarusian and international resented by Belmedpreparaty, form unique transplant surgeries, medical and pharmaceutical com- Borimed, Pharmland, Minsk- successfully “repair” hearts and ves- panies, developers and producers of intercaps, Bel Aseptika, MALKUT sels, help patients once considered unique equipment, diagnostics and and DIALEK. By the way, the old- untreatable live their lives to the treatment methods gather in Minsk est pharmaceutical company fullest. There are excellent doctors to display their know-how. Belmedpreparaty manufactures in Minsk-based national research The expo has its regular par- about 200 medications today. The centers and regional hospitals. ticipants. These are the manufactur- company has its own innovative Belarus has a well-developed health- ers of medical X-ray systems Adani development department which

Valery SHEVCHUK, The forum also represents a communication plat- Deputy Healthcare Minister form to discuss the most urgent issues of the national of the Republic of Belarus: healthcare system. This is the place where one can get information about projects to reform the industry, Our industry needs new knowledge and latest tech- new managerial and financial solutions. nologies to keep moving forward. Lack of experience Belarusian manufacturers of equipment, drugs exchange might result in deterioration of the quality and medical products have the opportunity to show- of medical services, hence poorer health of people. case their achievements while medical practitioners The availability of a professional networking platform have a great chance to learn about the world’s cutting- for best producers and medical professionals, scien- edge healthcare technologies. tists, suppliers of medical equipment and pharmaceu- The main goal of the forum is to demonstrate the tical products is vital for healthcare. Such a platform achievements of international and domestic produc- is provided by the forum Healthcare in Belarus, which ers of medical goods, cosmetics, optics, medical sup- has been organized by the Healthcare Ministry of plies, laboratory and diagnostic equipment, dental Belarus for many years already. equipment, consumables as well as information on The event contributes to the modernization and the status and development trends in the healthcare reformation of the Belarusian healthcare system. It industry in Belarus and abroad. showcases the best results of fundamental and applied Both the expo and the forum give medical com- research that will translate into considerable medical, panies and healthcare personnel a great opportu- social and economic benefits in the future. nity to enhance professional ties. It is the place

108 EXHIBITIONS www.belarus-economy.by 2013 , 1 o. N US AR OMY OF BEL ON EC

designs new substances and tech- tificate of the World Intellectual The 20th Healthcare in Belar us nologies. The company has filed Property Organization. expo was co-located with Pharm- more than 200 applications for The list of regular participants Expo and Dentistry expos. The inventions, got 90 patents of the also includes Belmedtechnika, a event also included science to prac- Republic of Belarus, the Russian supplier of Belarus-made medical tice seminars, presentations, con- Federation and Ukraine. The prep- equipment and devices, Beloptomed ferences to discuss new methods aration Photolon used for photo- and Belmedsnab, the companies of diagnostics and treatment, recu- dynamic therapy of malignant offering comprehensive equipment peration technologies, and achieve- tumors has been awarded a cer- solutions for healthcare facilities. ments of the esthetic surgery. where Belarusian clinicians and their foreign coun- Implementation” and the national science to prac- terparts become equal partners and share good profes- tice conference “Pharmaceutical Products of the sional practices, get familiar with the recent achieve- Republic of Belarus”; the international conference ments of medical science, progressive methods of “Some Issues Regarding Surgery, Anesthesiology, treatment. and Critical Care Medicine in Infants”; the national The academic and research program of the forum clinical pharmacologist school “Generic Drugs and consists of conferences, seminars, presentations and Biosimilars. Target Therapy”. discussions on the current issues of modern medi- The international forum is a platform for sharing cine. It provides an unparalleled opportunity to share experience between scientists and healthcare profes- experience, establish new contacts and discuss prom- sionals, medical students and heads of healthcare ising plans. Healthcare professionals from around the companies; it allows medical professionals to broaden globe can learn and compare medical equipment for their horizons and enhance their knowledge. hospitals, pharmaceutical novelties, state-of-the-art The annual Healthcare in Belarus expo makes a laboratory equipment, and the world’s most recent huge contribution to the assimilation of new medi- healthcare achievements. cal technologies, state-of-the-art equipment, and A number of events were held as part of the consumables, modernization of the industry and Healthcare in Belarus 2013 expo. Among them was improvement of the country’s healthcare system the 12th international science to practice conference in general. In the long run, such events will help on dentistry; the symposium “Innovative Technology enhance Belarus’ image in the world’s healthcare in Healthcare: Harmonization of Requirements and community.

109 www.belarus-economy.by EXHIBITIONS EXHIBITIONS 2013 , 1 o. N Know How to US AR Change the World Belarus ranks sixth in the pace of advance of information and communication technologies OMY OF BEL ON Minsk will host the 20th forum position in the Digital Government that they would be able to pay for

EC TIBO on 23-26 April. Specialists, rating and is in the Top 10 Most utilities, book tickets and hotels, heads of government agencies, Dynamic Countries. send electronic declarations with- companies and organizations of Here are some illuminating fig- out leaving their homes? And all the various branches of the economy, ures. At the end of 2012 Belarus information is at your fingertips… managers of leading domestic and had 4,538 million Internet users. foreign companies, and a large About 2.5 million accessed the Web Seeing, Discussing, number of consumers will gather for via mobile devices. By the way, the Assimilating number of cellular communica- the display of the latest products tion subscribers is way ahead of The TIBO expo is often hailed as in communications, software and the number of Belarus residents. a mirror of the IT industry achieve- consumer electronics. All the According to the International ments. The comparison is only par- residents of Belarus, preschoolers Telecommunication Union and tially true. It would be fairer to call and pensioners alike, consume IT UNESCO, last year Belarus ranked it a window into the day of tomor- products even if they are not aware 21st in the availability of Internet row. As a rule, many exhibits such of it. access. as technologies, services, software The establishment of the Hi-Tech and hardware products make the Dynamic Belarus Park in 2006 made Belarus the CIS transition from being on display to top exporter of software products being used relatively fast. When the company ZAO per capita. Software export rises TIBO was the venue to present Technics and Communications, the year after year, convincingly dem- the system of banking transactions organizer of many international onstrating that the IT sector is one using plastic cards for the first expos, decided to display the lat- of the most stable, sought-after, and time, to open the first cyber cafe, to est products of the IT industry in attractive for investors. In 2012 the demonstrate abilities of the mobile Belarus in 1994, it realized it was export of software and services by communication standards GSM 900, quite a challenge. Well-known man- resident companies of the Hi-Tech 3G, WiMAX, the technologies Metro ufacturers viewed Belarus as a terra Park rose by 54%, with the net for- Ethernet and Wi-Fi. Showing off the incognita with unclear prospects. eign direct investments ahead of know-hows of domestic producers Twenty years later the situation forecasts at $62.5 million. and providers of information prod- changed considerably. At present Information technologies are ucts and services, the expo acceler- Belarus ranks 52nd in the develop- actively introduced in the produc- ates the development of the domes- ment of information and communi- tion sector, business, banking, tic IT industry market and raises cation technologies. The index meas- public administration, education, the awareness of many users of the ures 11 indicators, which among healthcare, and the sector of ser- new opportunities that information other things evaluate the access to vices. In addition to effectively help- and communication technologies information and communication ing resolve complicated manufac- offer. technologies, utilization and usage turing, economic, and managerial Events held as part of skills. Among the CIS states only tasks, IT technologies make the life the Belarusian Congress for Russia is ahead of Belarus in the of every Belarusian more exciting Information Society Technologies ranking this year, while Argentina, and comfortable. attract crowds, too. Participants of Brazil, and China are behind. Belarusians would hardly believe research to practice and technol- As far as the development of 20 years ago that they would actively ogy seminars, roundtable sessions, the telecommunication infrastruc- use a mobile phone, a smartphone, discussions, presentations analyze ture is concerned, the Republic of a banking card, and Internet access the implementation of government Belarus ranks 48th, occupies the 61st at home. Who could have thought programs as well as other topical 110 EXHIBITIONS www.belarus-economy.by

Mr Sergei NESTEROVICH, Deputy Information Technologies and Communications Minister of the Republic of Belarus: The World Summit on the Information Society (WSIS) will take place in Geneva on 13-17 May 2013. The jubilee TIBO expo will be held prior to the Summit and will focus on the information society development in the Republic of Belarus, its problems and ways to address them, improvement of the cooperation mechanism between the state and business in the area of information and communication technologies for the sake of accelerated social and economic development of the Republic of Belarus. I would like to underline that in addition to displaying the lat- est technical solutions TIBO has unwaveringly drawn attention to the development of the information society where knowledge and information will dominate while information and communication will influence all the aspects of human life. TIBO was the first venue in Belarus to formulate and discuss topical problems facing the national information industry, to demonstrate technological novelties and new types of telecom- munication services that later found their way to Belarusian cus- tomers. Over the 20 years effective usage of national information resources has been discussed here in addition to the concept of the national information policy, security of information systems, digi- tal workflows and digital signatures, digital commerce, introduc- tion and effective usage of automated design and manufacturing solutions for the mechanical engineering industry, distant learn- ing, introduction and use of the state register of economic entities, transition to the information society. Since 2010 television and multimedia technologies have been part of the expo. The section is arranged in association with the Belarusian Information Ministry. It is meant to further advance the technological basis of Belarusian television and radio broadcasting, movie production, expand the national high- quality content, develop the market of media services and, in the end, raise the quality of information services available to Belarusians. It is also worth noting that following the global trends TIBO gradually shifted its focus from the available hardware and soft- ware to complex solutions and various services based on infor- mation technologies and resources. It was at TIBO that Internet access services were first offered as well as mobile services, matters relevant for the development of engineering and consulting services, mobile and online banking, the industry. In particular, in 2012 the outsourcing, digital government services, and other ones. Congress reviewed the progress in fulfill- In 2012 the expo featured products by 250 companies from 15 ing the government program for introduc- countries. The number included Belarus’ largest companies and ing digital television and radio broadcast- foreign companies interested in promoting their products onto the ing in Belarus till 2015, problems of ena- Belarusian market. bling transboundary digital interaction The seminar Availability of Digital Government Services within the Single Economic Space frame- focused on the interaction of government agencies in using infor- work, prospects of entrepreneurship and mation resources. Digital government products made available via public-private partnership in digital busi- the national program for the accelerated development of services ness, the development of gaming technolo- in the area of information and communication technologies in gies. 2011-2015 were displayed on a dedicated stand. What will TIBO 2013 focus on? In 2013 In particular, the nationwide automated information system the jubilee forum is supposed to follow the was showcased in action as well as a system for interagency digital motto Virtual Technologies for the Real document workflow – a common protected environment for data Economy. sharing between central and regional government agencies, the As part of the expo the Belarusian computerized information system for local councils of deputies, Congress for Information Society and the national computerized system for electronic declarations. Technologies will be held to sum up the The latter is designed to provide digital customs services to inter- development of the information society in national trade participants. the Republic of Belarus over the 20 years, analyze global trends for the effective use 111 www.belarus-economy.by EXHIBITIONS

of information and communication tech- nologies for the sake of social and eco- This year’s TIBO offers an opportunity to analyze the effective- 2013

, nomic development, determine priorities ness of national and industry-wide IT development programs and 1

o. and prospects in shaping the information effectiveness of public administration via information and com- N society in the Republic of Belarus. munication technologies. Each area will be discussed at seminars The Congress will feature science to with representatives of government agencies, research and educa- US practice conferences that will be held tion institutions. to analyze the effectiveness of the state, The expo will feature components (segments) of telecommu- AR industry-wide and regional informatiza- nication networks that allow providing a wide range of telecom tion programs, the use of information and services. The introduction of digital television broadcasting in communication technologies to upgrade Belarus will be highlighted separately. the national economy and enhance its Following the established tradition, the national telecom opera- innovation potential, geo-information, tor Beltelecom and the national postal service operator Belpochta navigation, and aerospace technologies, will take part in this year’s expo. The former’s presentation will the state and prospects of the national use the concept of new quality of familiar services. It will strive telecommunication infrastructure, and to present Beltelecom as the leader of telecom services, which OMY OF BEL the digital culture. The 2nd Belarusian- provides freedom of communication and information acquisi- Azerbaijani business forum in the area tion through cutting-edge technologies and services. Beltelecom ON of information and communication tech- will demonstrate new abilities of traditional Internet access,

EC nologies will be held as well. television, and telephony services, namely the video portal ser- More than 20 themed sections of the vice, antivirus protection, mobile Internet access (3G) available expo will feature the latest products in tel- for byfly users, and new TV channels, themed packages, and the ecommunication equipment and commu- opportunities offered by xPON and IMS technologies available for nication systems, television and multime- ZALA subscribers. dia technologies, power-supply and power- The national postal service operator Belpochta will demon- saving systems, smart home solutions, strate a wide range of new postal, digital, and payment services. education and entertainment software. Visitors will be able to see a computerized mobile operator work- Products by companies residing in the station, which allows providing the full range of services available Hi-Tech Park will be displayed separately. from a fixed urban postal office. The ability to get postal communi- During the expo roundtable sessions cation services via self-service kiosks and the Internet will be dem- will be held to discuss IT education and onstrated as well as the ability to remotely subscribe to printed the development of the IT industry in mass media. A project dealing with the automated processing of Belarus. The contest of websites TIBO posted items will be presented. Internet Award will be held along with the As the prime idea TIBO is meant to provide a hands-on experi- contest of IT projects Belarus Startup 2013 ence of the fact that information and communication technologies and a cyber gaming tournament. are commonly and effectively used in all the spheres of modern By the way, the IT forum will be once life. Respected international research organizations state that again co-located with the 17th interna- investments in IT industry are considerably more effective than tional expo . The investments in materials and equipment. organizers went ahead with the co-loca- At the current stage of the society development, information tion idea last year for the first time and it and communication technologies are the main motive power turned out a success. propelling economy growth and better living standards. Their A national program for the acceler- influence on the economy is versatile: better labor productiv- ated development of information and ity, higher employment, more effective markets, higher quality communication services is in progress of products and services, encouragement of innovations and in Belarus. Creating the infrastructure the emergence of new products and services. The advance of for higher speed data transfer is the key information technologies fundamentally change living standards, purpose of the program. The technologies the quality of healthcare, education, providing consumers with Metro Ethernet and xPON will be further convenient ways to interact with businesses and government developed. Close attention will be paid to agencies. the improvement of Wi-Fi access, particu- In Belarus the development of the information sphere is a larly in public places, like cafes, hotels, national priority. A council for the development of the information shops, and entertainment centers. society has been set up under the aegis of the Belarus President. The decision to build a fourth-gen- A national strategy has been adopted to guide the development of eration cellular communication network the information society till 2015 as well as several other national in Belarus has been made for the sake and industry-wide programs. Unlike many countries, in addition of wide assimilation of cloud computing to consuming information technologies the Republic of Belarus technologies. The creation of the infor- has its own well-developed IT industry. mation society in Belarus along with One can rest assured that prerequisites have been created in the knowledge-driven economy that will Belarus to form the foundation of the information society and replace the industry-driven paradigm enable the effective usage of information and communication depends on the rapid advance of informa- technologies in all spheres of life of the Belarusian society. tion and communication technologies. 112 EXHIBITIONS www.belarus-economy.by 2013 , 1 o. N US AR OMY OF BEL ON EC

113 www.belarus-economy.by TRADE TRADE 2013 , 1 o. N Demand US AR Creates Supply Belarusians see benefits in bringing big supermarket chains to the regions OMY OF BEL ON One of the fundamental freedoms people have always wanted to enjoy Korma (64%), Pruzhany (59%) and

EC is, of course, the freedom of choice. This applies to any life situation Maryina Gorka (54%). and to any type of activity. Speaking about the retail sphere which we The survey shows that the lower deal with on a daily basis, the freedom of choice means, first of all, the satisfaction with local stores is, right to choose where to do our shopping. A survey recently conducted the higher is the demand for chain by the Sociology Institute of the National Academy of Sciences together stores in small towns of Belarus. with Nielsen, an international analytical firm, showed that rural residents The more people know about chain stores, the more they want to have want to have modern supermarkets offering a wide range of goods at them near. affordable prices. According to the survey, resi- dents of small towns pin their hopes Improving Shopping Mr Igor Kotlyarov, Director of the on Euroopt stores to improve their Sociology Institute of the National shopping experience. Experience Academy of Sciences of Belarus. It comes as no surprise that the By the way, the results of the survey Chain Store Price purpose of the survey was to learn are very indicative. Thus, the fol- Indicator people’s opinion on grocery stores lowing main shortcomings of the in rural areas as well as to find local trade system were cited (in It goes without saying that for out where supermarket chains are addition to high prices): impossibil- a Belarusian family, like for any needed most. Today 21.3% of house- ity to buy all products in one store other family in the world, prices holds in small towns and villages (47.7% of respondents); low quality for food and basic necessities mat- spend 70% to 90 % of their budget on of products (45% of respondents); ter. This is why many people name food, 38.4% of households spend 50% poor offering range (39.3%); poor high prices as one of the most frus- to 70% of their budget and only 5% customer service (28.5%), inconven- trating things about their grocery spend less than 30% of their budget ient work hours (20.7%). stores. Researchers have conducted on food according to the global At the same time, according to a comparative analysis of consumer standards of household food spend- sociologists, 96.4% of the Belarusian goods sold in Belarusian groceries ing. At the same time, only 17.5% population knows what Euroopt and found retail operators with the of rural residents are satisfied with is. Moreover, 75.5% of residents of most affordable prices. their local food stores and many peo- towns where Euroopt stores are not The price monitoring was con- ple believe that only supermarket available went to other regions to ducted in 18 different grocery stores. chains can improve the situation. shop there. In particular, 65.4% of Researchers compared two grocer- The survey was conducted the respondents noted that Euroopt ies from each oblast center and the in two towns of every oblast: is a one-stop shop for them, which is capital and one grocery from each Ivatsevichi and Pruzhany (Brest particularly important for those who regional center. They compared Oblast), Lepel and Postavy (Vitebsk are pressed for time. Convenience of prices for more than 300 items, both Oblast), Korma and Dobrush (Gomel shopping (logical arrangement of food and non-food products, as well Oblast), Ostrovets and Shchuchin goods in the store, good customer as alcoholic beverages. If there were (Grodno Oblast), Smolevichi and service, etc) and long work hours is no identical products of the same Maryina Gorka (Minsk Oblast), important for one third of respond- brand, prices for similar products Belynichi and Kostyukovichi ents. Besides, virtually every sec- were compared. (Mogilev Oblast). Since they all are ond respondent (45.5%) believes that The survey showed that Euroopt typical Belarusian small towns, Euroopt will create new jobs in their has the lowest prices. In other gro- the results of the survey can be town. It is particularly important cery stores the prices were 28.2% applied to all similar towns, said for the residents of Lepel (88%), higher on average. The biggest diver- 114 TRADE www.belarus-economy.by 2013 , 1 o. N US AR OMY OF BEL ON EC

gence between prices was detected The reliability of the survey Development in the following product groups: findings is confirmed by Nielsen muesli, nuts and dry fruit (54.4%), experts who were involved in the Priorities spices, coffee and tea (51%), but- preparation for the price monitor- About two million people live ter, vinegar, ketchup, sauces (44.2%), ing, including the development of in small towns and surrounding mushrooms, vegetables and fruits the questionnaires and selecting villages. A total of 30% of the (41.4%), canned food (39.5%), water, the articles that correctly reflect Belarusian population live in rural juice, beverages (27.5%), sweets the current price difference. They areas. Yet, their demand for proper (25.3%), sausages and smoked meat also checked the reliability of the retail outlets has not been fully met (24.2%), frozen ready-to-eat food information collected. “Our survey as the survey shows. The retailer (22.3%), seafood (22.2%), cereals, showed that the information col- takes it into consideration and pasta and flour (17.2%). At the same lected by the Sociology Institute is develops its chain growth strategy time the researchers stated that the reliable, the data is accurate and correspondently. price differences for staple foods, the findings are trustworthy. We One of the priorities is boost- which usually have the highest sell- conducted a parallel survey which ing presence in the regions. By ing prices, are insignificant. The gave similar results,” said Mr the way, as of early 2013, there average difference in prices for alco- Valentin Sokolovsky, head of the were 123 Euroopt stores in Belarus holic beverages was 28%. retail department of the Nielsen employing over 14,000 people. As for non-food products (house- representative office in Belarus. Euroopt supermarkets opened first hold and personal hygiene articles, Today before going shopping in Krichev, Gorki, Myadel, Slutsk, etc), their prices varied by 59.6%. the majority of people try to find Smorgon, Nesvizh, Zhitkovichi and Particularly high differences were out where it is cheaper to shop. Braslav. This year according to Mr recorded in several product groups, Especially, if they are shopping for Andrei Zubkov, Euroopt Director such as laundry conditioners food or convenience goods, as these General, at least 100 more super- and rinsers (110.5%), shower gels are the basic necessities of our markets will be opened and 10,000 (97.1%), detergents (71.7%) and some everyday life, unlike computers or new jobs will be created. other goods. The lowest price differ- microwaves. Therefore it comes as Another priority of Euroopt ences were recorded in the following no surprise that the survey findings is diversification, i.e. opening not goods: pet food and accessories (8.8% indicate that the majority of people only hypermarkets and supermar- and 11.7% respectively), windshield see grocery chains as a way to save kets, but also small groceries for washers (18.4%), diapers (18.7%). money. more convenient shopping. 115 www.belarus-economy.by TRADE

25% to 35% of the market. By the way, today the share of the major Belarusian retailer is under 10%, while in Russia the share of the Magnit supermarket chain, leader of the Russian food market, exceeds 20% in some regions. It is also note- worthy that Russia adopted a law in February 2010 that sets a 25% cap on the market share of large supermar- ket chains. Moreover, the Russian Ministry of Economic Development announced last year that the ratio would be revised upward to 35%. At the same time, the unions of entrepreneurs of Belarus insist on a 10% cap for supermarket chains. They give the following rationale to this demand. First of all, big retail- ers will destroy small business, particularly in the regions. Second, they will become a monopoly in the food market and will end fair com- petition. Finally, all these factors together will eventually contribute to price rises. These are some strong arguments. Their opponents provide coun- terarguments that are quite strong as well. In particular, they give an example of the Maxima supermar- ket chain in Lithuania. With the And finally, the company plans Bank issued a $100 million loan. 38% share of the retail market, to launch mobile stores in all vil- A bit later the retail chain signed Maxima remains one of the most lages even in those with just one a €10 million agreement with the affordable chains providing great resident. “All the settlements that European Bank for Reconstruction customer service. Maxima does not lack our groceries will be serviced and Development. These key invest- affect the development of small by stores-on-wheels. They will come ments will foster a speedy growth of commercial businesses and is not to big villages two or three times the chain. interested in raising prices as it will a week and at least once a week to lose its competitive advantage. small villages,” Andrei Zubkov said. To Play “Our neighbors believe that the According to him, Euroopt is ready by Global Rules artificial restriction of the retailer to immediately start the mobile ser- presence in the market reduces vice in small towns which have no In sum, all conditions are in stimuli for a healthy competition. Euroopt supermarkets given the place: a popular demand, economic This leads to an increase in prices. consent of the local authorities. To interests of the regions, and the Chains need to develop in order to implement this project the company company’s desire to grow and get better prices from producers plans to purchase about 1,000 sales develop. However this year can and offer products at lower prices to vans this year. They will sell not bring a big game changer in the the public”, Andrei Zubkov believes. only food products but also techni- retail sector. Currently, MPs are According to him, the proposal of cal appliances. debating a bill related to the regu- the Trade Ministry of Belarus to On the whole, achieving all lation of the Belarusian consumer introduce a 30% cap per chain is these goals will improve shopping market. In particular, it envisages economically justified and is in line opportunities for all the residents setting a cap on the market share with the international practice. of Belarus regardless of where they of large grocery chains. In this con- This practice shows that large live. nection I would like to note that in private supermarket chains can By the way, the company has all Europe ten major grocery chains breathe a new life into regions. the necessary financial resources. account for 70% to 90% of food- Together with low prices and wide Thus, last year investments totaled stuffs sales, while in Belarus ten assortment range, they bring a new $200 million. In 2012, Euroopt major suppliers hold only 26% of level of customer care, hence rais- was the first private company in the food market. The state has to ing people’s living standards. Belarus to attract major invest- ensure that the share of one par- ments from foreign sources. Alfa ticular company will not exceed Vladimir VISHNEV 116

www.belarus-economy.by PLACE ON THE MAP PLACE ON THE MAP 2013 , 1 o. N Capital of the US AR Land of Castles

…It is nearly impossible for in the spring”. By the end of the 12th hill, which up to these days is called tourists coming to Novogrudok to century, Novogrudok had achieved “Mindaugas Mountain”… believe that this town once was a the status of a prosperous trade The newly formed state and its center, which was ready to welcome capital did not have much time OMY OF BEL metropolis in the great sovereignty. Now it looks nothing more than visitors and defend itself in the time for validation. The desirable tar- of trouble. get for many as the capital of the ON a little town of 30,000, a dozen factories, a handful of hotels and It would seem that no other Lithuanian territories, Novogrudok EC cafes with a neat downtown... And town could be better suited to be the was frequently invaded by the only after the bus reaches the capital of a country bordering on Galician-Volynian Dukes, by the the hostile neighbors: the Mongol Crusaders and the Tatars until the ancient castle hill, the words of a Horda fiercely breathing in the time when the legendary Vytautas tour guide describing the greatness East, and the Crusaders in the West. ordered to build a stone fortress on of the second Belarusian capital The start of the 13th century was not the castle hill with all necessary stop sounding like exaggeration. a quiet one. According to histori- defense features such as solid walls, ans, it was these external threats towers and the arsenals. Being one All doubts vanish the minute that promulgated the unification of of the greatest rulers of the Grand you walk up the rampart and all the Belarusian territories around , Vytautas man- the words materialize distinctly and the new center which in 1253 was aged to expand the Duchy, rein- clearly into the town nestled in the chosen to be Novogrudok, the newly forced its cities and prepared it valley with domes of ancient tem- declared capital of the Grand Duchy for the most crucial battle with ples and a sophisticated ornament of Lithuania. the Order of Crusaders which took of streets and pathways disappear- The local Lithuanian Duke place in 1410 near Grunwald. ing into infinity… The panoramic Mindaugas was elected to be the Novogrudok Castle would be view from the Novogrudok hill first ruler of the Grand Duchy of rebuilt and expanded during sev- which is 343 meters above the sea Lithuania. The history is full of eral centuries to become one of level is nothing short of striking contradicting facts and unproven the greatest unconquerable cita- and breathtaking. legends about Mindaugas, a coura- dels of the Grand Duchy, one of The locale of the town was chosen geous commander and politician. hundreds of the castles which still primarily for the defense reasons. According to one of the legends, the remain in the territory of the mod- The town was founded in 1044 when king was assassinated by his rivals ern Belarus. It was only when Yaroslav the Wise “marched into and secretly buried with his throne heavy artillery was introduced Lithuania and founded Novogrudok in Novogrudok, at the bottom of the into warfare, that the citadel fell...

118 PLACE ON THE MAP www.belarus-economy.by 2013 , 1 o. N US AR OMY OF BEL ON EC

It fell defeated by the artillery and whom the Polish King had been another powerful enemy called rivaling for power all his life. time. Unfortunately nowadays the The church rebuilt in stone greatness of the citadel can only hosted the baptism of the son of be assumed and gathered from the the Novogrudok jurist Nikolai remains of two (among what used Mickiewicz. The house where Adam to be seven) towers – Shchitovka Mickiewicz, the future Romantic and Kostelnaya. poet and the national pride of The town itself does not have Poland, grew up did not survive and OAO Ivatsevichidrev is one of Belarus’ many traces of the glorious past was rebuilt after World War II, and largest woodworking either. Nevertheless, every archi- later reconstructed in the late 1980s. enterprises. The advanced tectural artifact which survived in Unlike the Mickiewicz house, the physical the town can be directly linked church of Saint Archangel Michael infrastructure to the pivotal events and power- which used to be the Dominican enables the company ful historical figures. For example, temple survived. This church to make a wide modern researchers and historians was the place where young Adam choice of high- point out that Sts. Boris and Gleb Mickiewicz attended school – the quality products and export them Church built on the money given fact that is remembered through to 20 countries by Hetman Konstanty Ostrogski the monument to the great poet and across the globe in 1519 was erected on the place the eternity hill. of the old Russian temple where Adam Mickiewicz lived in his supposedly Mindaugas and his son motherland for 25 years and that received baptism. was where he wrote his first poems The Church of the Trans- and met his first love. Novogrudok, figuration was first built in wood Neman, Svityaz, Valevka are the during the ruling of Vytautas. places where the great poet lived It was in this church where the and derived his inspiration and 74-year-old Polish King Jogaila wed- which he later described in the ded the 17-year-old Duchess Sophia poems written far away from his of Halshany. As the King did not motherland. have heirs from the three previous Late in life, Adam Mickiewicz marriages, this marriage was the said about his native Novogrudok beginning of the Jagiellon dynasty “If I could be reborn one thousand whose representatives ruled in a times, it is the place where I would number of European states during choose to be born. If I could die 200 years. They say that the Polish one thousand times, it is the place I King chose Novogrudok and not would choose to die...” Krakow or Wilno for his wedding as The poet’s words need neither the sign of respect to Vytautas with comment nor explanation... 119