| Minsk expects increased investment The Belarusian economy's need for investment over the next ten years is estimated at $35-37 billion. This was stated by Prime Minister Gennady Novitsky at a meeting of the Advisory Council on Foreign Investment.
Through domestic investment, the government expects to provide two-thirds of the planned volume - by reducing the tax burden on the real sector, as well as providing greater freedom for enterprises to dispose of profits. The rest must be provided by foreign capital. The government expects to attract $1.5 billion, some of which, according to Mr. Novitsky, “is supported by agreements for almost $1 billion.” Last year, foreign investment amounted to $476 million, which significantly exceeds the 2001 level. According to Mr. Novitsky, this is a “positive shift.”
Official Minsk is very interested in attracting foreign investment and is ready to undergo some liberalization of legislation. The government has identified a number of priority areas in which benefits for investors will be greatest (one of them is petrochemicals).
However, the business climate in the country leaves much to be desired. The inflation rate in Belarus remains the highest among the states of the former USSR - last year it amounted to 34.7%. This year, inflation is planned to be reduced to 18-22%, which is necessary for the transition to a strict peg of the Belarusian ruble to the Russian one. And in 2004 the inflation rate should be 15-17%.
The pace of privatization in Belarus remains slow. For example, petrochemical enterprises were corporatized with the transfer of 100% of shares to the state, but competitions for the sale of shares have not yet been announced. Apparently, this process should not be expected to accelerate. Gennady Novitsky believes: “The privatization process should not be an end in itself. A prerequisite is the preservation of social guarantees.”
Investment legislation is also a problem. Valery Fadeev, a consultant for the International Finance Corporation, notes its instability and excessive interference of government bodies in the activities of business entities. In particular, he believes that the “golden share” rule should be abolished, according to which the state, having any number of shares, can block the adoption of vital decisions of an enterprise. “The golden share is used infrequently. But the very existence of this institution is a deterrent,” Mr. Fadeev emphasized. He also called the fact that, based on the results of inspections carried out last year by various regulatory authorities, 90% of business entities were found to be violators and penalties were applied to them, it is also an abnormal phenomenon. A critically important point for attracting foreign capital, according to Mr. Fadeev, is allowing foreigners to acquire land ownership. Natalya VIKTOROVA, Minsk |
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