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ECONOMIC RESTORATION FOR BELARUS

A market socialist economy, Belarus’ real estate market is young and undersupplied, offering plenty of opportunities for investment.

August 2015

Belarus is one of the most economically developed countries amongst the nine member states of the Commonwealth of Independent States (CIS). After the fall of the Soviet Union, it has found its own way to overcome the economic crisis that hit all of the former Soviet republics. Elected in 1994 as the President of the Republic, Alexander Lukashenko led Belarus on the path of the so-called “market socialism.” As a result, until today, most of the Belarusian economy remains state-controlled.

Belarus has a well-developed industrial base and a broad agricultural base. The country’s economy continues to depend mostly on energy- and resource-intensive exports. According to the International Monetary Fund (IMF), Belarus’ real GDP grew by about 1.5 percent in 2014, primarily driven by the recovery of potash exports, while inflation hovered around 18 percent. The Republic continues to be highly vulnerable to economic shocks. However, the World Bank says that clear and consistent structural transformation policies would allow the Belarusian economy to adjust more quickly to the changing environment and restore its growth.

This year, Belarus might advance its position among Eastern European countries. While the political turbulence between Russia and the Ukraine has created instability in the region and is hugely affecting markets in Moscow and Kiev, the unrest made relatively-neutral Minsk, the Belarusian capital, a rising centre for international diplomacy.

DOING BUSINESS IN BELARUS

The “Doing Business 2015” report issued by the World Bank Group ranked Belarus on 57th place among the survey’s 189 states-participants.

Belarus attracts foreign investors by its strategic geographical location, well-developed industrial sector and infrastructure (telecommunications, network of roads and railways), and high-skilled workforce.

Priority areas and sectors for foreign direct investments in the Republic include pharmaceutical and biotechnology industry, high technologies, petrochemical and chemical industries, mechanical and civil engineering, transport and infrastructure, construction, agriculture, and food industry.

The Belarusian government offers investors support and incentives mainly in small towns and villages, in the High-Technology Park, in the China-Belarus industrial park ‘Great Stone,’ and in free economic zones, as per Colliers. It also supports those investors who conclude an investment agreement with the Republic of Belarus to carry out investment projects.

“When entering into an investment agreement with the government, investors get a number of advantages and legal guarantees, such as simplification of obtaining land, exemption from payment of import duties and a value-added tax on importation of equipment, and other tax benefits,” comments Denis Chetverikov, Associate Director, Consultancy & Valuation Department, Colliers International in Belarus.

Doing business in Belarus may be accompanied by certain risks, such as administrative regulation of some business activities and a state intervention in price regulation in some business sectors. Besides, facts of re-nationalisation of a number of private companies in recent years should be noticed as a possible risk for foreign investors, warns Colliers. Lately the government began tightening controls over non-compliance with the terms and conditions of investment agreements and has more frequently revoked such agreements.

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