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Long established as a hub of manufacturing excellence among central and eastern European countries, For one-off copyright licences for reproduction of fDi magazine articles telephone 0207 873 4871. 02 Belarus is now targeting Western companies, writes Andrew Wrobel, as it looks to demonstrate its Alternatively, for both services e-mail [email protected] openness and business credentials on a global scale. q&a The Belarusian president’s economic advisor, Kiryl Rudy; the minister of the economy, Nikolai Snopkov; 05and deputy foreign minister Aleksandr E Guryanov explain to Andrew Wrobel the advantages foreign companies will gain from investing in Belarus. iCT Belarus’s Hi-Tech Park is attracting a growing number of domestic and international software and IT 07companies thanks to economic incentives and a highly skilled workforce. Andrew Wrobel reports. October/November 2014 www.fDiIntelligence.com 1 OVERVIEW An open invitation Long estabLished as a hub of manufacturing exceLLence among centraL and eastern european countries, beLarus is now targeting western companies, writes Andrew wrobel, as it Looks to demonstrate its openness and business credentiaLs on a gLobaL scaLe hen the International Ice Hockey autocratic government under long-standing Federation World Championship president Alexander Lukashenko. Last October, W was held in Minsk earlier this year, EU sanctions against Belarus were extended for Belarus was not only competing on the ice, but another year, with Brussels expressing its dis- also hoping to score points for its hospitality. appointment in the lack of progress in instill- The event was a chance to show a friendlier ing human rights, rule of law and democratic face to the world and to counter its image principles in the country. The annual review as a closed, Soviet-style outpost. updated the list of those targeted with a travel “It was a great event for Belarus and for the ban and a freezing of their assets within the Belarusian people,” says the chief manager at EU. More than 200 Belarusian individuals and the Minsk Arena, which hosted the final match, 25 entities remain subject to EU sanctions. The in which Russia prevailed over Finland. “And it US has also extended its sanctions against vari- showed how open and hospitable we are.” ous Belarusian officials. The championship saw a new attendance Against this backdrop, a push to increase record set, with almost 650,000 people attend- international trade and investment links ing over the course of the tournament and goes on. with sports fans visiting the country from “Belarus has always been open to foreign Europe and America. This was helped by a markets,” says deputy foreign minister free-visa entry for anyone with a match ticket. Aleksandr E Guryanov. “Even being part of However, Belarus’s efforts to improve its the Soviet Union, the country was like a pro- openness and hospitality are not restricted duction facility for the whole USSR and most to the sports domain, and the country is now of the union’s exports came from Belarus. In focusing on bringing in business from abroad. recent years, the figures [have gone] up and down but exports have always constituted Doors wide open more than 60% of our GDP.” The openness to business is at odds with At the end of the 2000s, the government Belarus’s political isolation from much of the decided to diversify its trade markets, but Russia Western world, due to its lack of democratic remains Belarus’s most important trading part- credentials and the heavy-handed nature of its ner, absorbing almost half of the country’s Belarus has always Been open to foreign markets 2 www.fdiintelligence.com october/november 2014 obel wr photo: andrew Building blocks: Belarus is working on modernising its economy, which will involve privatising state-owned companies international trade. According to the European the Americans, Germans and Japanese,” says Commission, however, the EU-Belarus bilateral Aleh Stsiapuk, first deputy director at BelAZ. trade in goods has been growing steadily in “For our consumers it is not important where recent years and the EU is now Belarus’s second the product is manufactured.” main trade partner, with almost a one-third Vladimir Rybakov, deputy general director share in the country’s overall trade. at Belarusian roller shutter systems producer “In order to be able to sell more to foreign Alutech, understands that for his company to markets, Belarus’s companies need to be more be competitive, it is important to work to global competitive,” says Pavel Laschenko, country market principles and follow the best global managing partner for Belarus at Ernst & Young. practices. The company has recently acquired a “We need to finish modernising the economy factory in Germany, has another one in Austria first. Now only the oil industry is competitive and a logistics centre in the Czech Republic. It enough as it was modernised first.” sells its products to some 40 countries. “Sometimes we still invite our partners to The private model show what we can produce in Belarus, and it Such modernisation could be done through usually takes about four years to convince our privatisation, given that private investors typi- clients to work with us, even though we have cally bring new technologies, know-how and modern equipment and machines and all the access to new markets, but it has taken Belarus necessary quality certificates, and sometimes almost two decades to start privatising state- even additional ones,” says Mr Rybakov. owned companies. “We are working on a joint privatisation Educated workforce project with the World Bank. Its goal is to create But such examples of state-of-the-art produc- a model example,” says Natalia Nikandrava, tion facilities are not Belarus’s only assets. director of Belarus’s National Agency of According to the European Commission, Investment and Privatisation. “One investment there are about 500,000 students enrolled is at its final stage and all the documents will at Belarus’s 55 higher education institutions soon be submitted to the president’s adminis- each year, an impressive number bearing in tration, who makes the ultimate decision about mind the country’s relatively small population privatisation. Four state-owned companies have of about 10 million. passed the pre-sale stage and are ready for sale.” Although getting credit, paying taxes and Some companies are already competitive. trading across borders can still be an obstacle BelAZ, a state-owned automotive company, for companies operating in Belarus, according exports 95% of its production and owns 48% the World Bank’s Doing Business 2014 rank- of the global market in 130-tonne mine trucks. ing, the country was placed 63rd in the rank- For BelAZ, its success can be largely attributed ing and is therefore more business friendly to it finding a lucrative niche. than some EU economies, such as Greece or “Only five companies produce similar the Czech Republic. equipment and we successfully compete with Currently, the government is working on october/november 2014 www.fdiintelligence.com 3 beLarus OVERVIEW ber of registered companies with foreign capi- tal doubled to reach 7000 last year. Within the past five years, foreign companies have invested almost $10.5bn. In 2012, Stadler, a Swiss producer of light railway vehicles, set up a joint venture with a local partner in the Minsk Free Economic Zone, all photos: andrew one of the six such zones in Belarus, which hosts almost 140 companies from the UK, the US, Germany and even as far as New Zealand.