Vladimir Karyagin

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1

Vladimir Karyagin

Chairman of the Presidium of the Republican Confederation of Entrepreneurship

Chairman of Minsk Capital Association of Entrepreneurs and Employers

www. allminsk.biz, www.rce-ale.org E-mail: lider@allminsk.biz

Tel./fax+375(17)2982438

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BUSINESS IN BELARUS

Opportunities for investment, industrial

and trade cooperation

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Belarus: economy’s profile in 2011

GDP - $54,6 bln. (70

^th

in the world) Industrial production- $67 bln.

Agricultural production- $11 bln.

Fixed capital investment - $18 bln.

Retail turnover - $22 bln.

Export ~$46 bln.

Import ~$48 bln.

Government spending~39% GDP (~$21 bln.), budget surplus in 2011

Belarusian banks’ assets ~$24 bln. (in foreign currency -

$14.7 bln.)

Foreign debt (as of 01.01.12) - $34,3 bln. (62,3% GDP),

government debt - $12,4 bln. (22,5% GDP)

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On January 1st, 2012

the Common Economic Space was created

(Belarus, Kazakhstan, Russia)

4

Belarus can become a solid

ground for European companies

seeking to get access to the vast

market of the Common

Economic Space.

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Free Movement of:

Capital Products Services

Workforce

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Belarusian Export

Product 2006,

$ mln 2007,

$ mln 2008,

$ mln 2009,

$ mln 2010,

$ mln 2011,

$ mln Spread 2011 to 2010, %

The product’s share in export in 2011, %

The product’s share in export in 2010 , %

The product’s share in export in 2009 , %

Gross export 19734 24275 32571 21304 25283 40294 59,4 100 100 100

Mineral

products ⁷⁶⁶¹ ⁸⁶⁴⁵ 12207 8082 7131 14492 103,2 36,0 28,2 37,9

Chemical industry products

1590 2106 4580 2634 3283 6592 100,8 16,4 13,0 12,4

Transport ²⁰⁵⁴ ²⁸⁸⁷ ³²²² ¹⁴⁴⁵ ²³³⁸ ⁴²¹² ^80,1 ^10,5 ^9,2 ^6,8

Fertilizers ¹¹³¹ ¹⁵²⁷ ³⁵⁸⁹ ¹⁵⁷⁰ ²⁴⁴⁶ ³⁷⁸⁴ ^54,7 ^9,4 ^9,7 ^7,4 Machinery and

equipment ¹⁷¹⁷ ²³¹⁷ ²⁶⁶⁶ ¹⁷⁰² ²²²² ²⁷⁸⁷ ^25,5 ^6,9 ^8,8 ^8,0

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Belarusian Import

Product 2006,

$ mln 2007,

$ mln 2008,

$ mln 2009,

$ mln 2010,

$ mln 2011,

$ mln Spread 2011 to 2010, %

The product’s share in import in 2011, %

The product’s share in import in 2010 , %

The product’s share in import in 2009 , %

Gross import 22351 28693 39381 28569 34884 45747 31,1 100 100 100 Mineral products 7444 10259 14339 11511 12346 19086 54,6 41,7 35,4 40,3

Machinery and

equipment 3592 4664 6277 4424 5796 6212 7,2 13,6 16,6 15,5

Metals and metal products

2621 3427 4860 2504 3897 4592 17,8 10,0 11,2 8,8

Chemical industry

products 1581 1807 2543 2054 2574 2894 12,5 6,3 7,4 7,2 Transport 1452 1962 2724 1650 2197 3827 74,2 8,4 6,3 5,8

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Geographic structure of export

Country Share in the gross export, %

2006 2007 2008 2009 2010 2011

Total, mln. $ 19734 24339 32571 21282 25226 40294

Russia 34,7 36,5 32,2 31,5 38,9 34,0

The Netherlands 17,7 17,8 16,9 17,3 11,0 15,3

Ukraine 6,3 6 8,5 8,0 10,2 10,3

Latvia 2,3 4,1 6,6 7,8 3,7 7,8

Germany 3,8 3 2,5 4,6 1,8 4,5

Poland 5,2 5,0 5,5 3,9 3,5 2,8

Lithuania 2,2 2,3 1,9 1,7 1,8 2,1

China 2 2 1,9 0,8 1,9 1,6

Sweden 0,01 0,003 0,002 0,003 0,003 0,002

CIS 43,6 46,1 43,8 43,8 53,5 48,4

EU 45,5 43,8 43,9 43,6 30,1 39,0

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Geographic structure of import

Country Share in the gross import, %

2006 2007 2008 2009 2010 2011

Total, mln. $ 22351 28764 38381 28564 34868 45747

Russia 58,6 59,9 59,8 58,5 51,8 54,5

Germany 7,5 7,6 7,1 7,8 6,8 5,6

China 2,5 2,8 3,6 3,8 4,8 4,8

Ukraine 5,5 5,4 5,4 4,5 5,4 4,4

Poland 3,4 2,9 2,9 2,8 3,1 2,8

Sweden

^0,005 ^0,004 ^0,004 ^0,005 ^0,005 ^0,004

CIS 64,9 66,2 66,0 63,8 58,8 61,4

EU 22,3 21,8 21,6 22,9 21,6 19,0

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Trade turnover between

Belarus and Sweden, mln. $

96,95$ 72,70$ 77,60$ 91,50$

165,50$

150,60$ 175,20$

217,50$

0 50 100 150 200 250 300 350

2008 2009 2010 2011

Belarus' export Sweden's export

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Trade Structure

From Belarus

Potash Peat Tyres Timber

From Sweden

Electricity generators

Trucks Cars

Communication equipment

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Private

Entrepreneurship

in Belarus

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Belarusian business, as of 01.04.2012

125 652 legal entities

• Agriculture- 4723,

• Food industry – 1039,

• Textile industry – 1917,

• Timber industry – 1993,

• Rubber and plastic products production – 1310,

• Machinery and equipment production– 1178,

• Trade – 42371,

• Building – 9977,

• Hotels and restaurants– 2447,

• Transport and communications– 8885,

• Public utilities– 9546

246 155 individual entrepreneurs

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Number of small and medium-sized private enterprises

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Share of small and medium-sized enterprises in GDP, %

(1-250 employees)

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Division of small and medium-sized private enterprises according to the

spheres of activity

Building 11%

Agriculture 3%

Trade 41%

Industry 20%

Transport 8%

Other 17%

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Belarus in Doing Business report, 2012

106

129

110

85

58 68 69

175 175 178 181 183 183

153 148 156

119

97

8 7 9

0 20 40 60 80 100 120 140 160 180 200

2006 2007 2008 2009 2010 2011 2012

Doing Business Rank Paying Taxes Starting a Business

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Republican Confederation of Entrepreneurship

The main priorities:

1. Creation and promotion of the Belarusian National Business Platform.

2. Development of public-private partnership in Belarus.

3. Protection of rights and representing interests of the business community.

4. Creation of the republican business network.

5. Consolidation of the business community through the dialogue between business and government.

6. Development of social partnership.

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Since 2006 the business community has created the National Business Platform, which is updated annually. It is presented to the government, civil society and international organizations.

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Areas of the business climate improvement (as in the National Business Platform of

Belarus - 2012):

I. Macroeconomic environment improvement.

II. De-monopolization, fair competition within the Common Economic Area.

III. Expansion of private initiative and responsibility sphere.

IV. Regulating and tax burden optimization.

V. Improvement of corporate and public management quality.

VI. Partnership of business, society and government.

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President’s Directive #4 December 31, 2010

“On the development of the entrepreneurial initiative and incentives for business activity

in the Republic of Belarus”

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575

Administrative procedures

Three times less than in 2010

Taxation

• Profit tax – 18%

• Income tax – 12%

• Value-Added tax – 20%

• Dividend tax – 12%

• Social Security tax – 35%

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Decree №6 of May 7, 2012.

“On incentives for

entrepreneurship in medium and small towns, and rural areas”

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For 7 years newly created enterprises are exempt from:

Profit tax Income tax Real estate tax

License duty

Payments to innovation funds

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Enterprises get the right:

To independently choose types and amount of raw materials purchased, terms of products sale, suppliers and buyers.

To insure property rights with foreign insurance companies

To be exempt from import duties and VAT on products imported as investment into the statutory fund of the enterprise

To possess incompleted buildings and constructions, on condition that they will be finished in 5 years.

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Privatization

“All enterprises can be privatized. It is a matter of price and conditions”

А. Lukashenka, April 2012 Price

Volume of purchase (control stock or not) Maintenance of jobs

Investment into the privatized enterprise Preservation of company’s profile

Product delivery to the domestic market

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Investment environment:

advantages

Common market with Russia and Kazakhstan Capacious domestic market for SME’s

Security

Developed infrastructure (roads, energy, water supply, telecommunications), healthcare and education

High quality of human capital

Relatively low competition at the domestic market Special conditions of business in Free Economic

Zones

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Investment environment:

disadvantages

Different market conditions for private and public sectors (taxation, licenses, access to lending, lease)

Unstable legislation High inflation

Expensive credit resources

Complicated tax legislation

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Trade deals (import/export) Greenfield projects

Privatization, acquisition of public assets

Joint ventures

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The possibility of success is higher in cooperation with Belarusian private companies

All privatization offers should be profoundly analyzed

High prospects of orientation towards Russia’s market

High potential of modernization and recapitalization of many enterprises

Usage of the European market’s credit means

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Business web-pages

• www.rce-ale.org – Republican Confederation of Entrepreneurship

• www.allminsk.biz – Minsk Capital Association of Entrepreneurs and Employers

• www.liberty-belarus.info – “Strategy”

Analytical Centre

• www.mfa.gov.by – Foreign Ministry

• www.bel.biz – Belarusian business-portal

• www.ifc.org – International Finance Corporation

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www.investar.by

 Investment legislation

 Weekly overviews of investment events

 Monthly overviews of auction results

 Investment news

 Plans of privatization

 Handbook for investors

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11-115 Serafimovicha 220033 Minsk Belarus

Tel./fax:

+375(17)2982438/41

e-mail: souz@allminsk.biz

s.u.l.business@gmail.com lider@allminsk.biz

www.rce-ale.org

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