Private Business Relies on State Foundation
It is the vector Buda-Koshelevo District has chosen to develop its economic potential
It is the vector Buda-koshelevo District has chosen
to develop its economic potential
Two populated localities of Buda-koshelevo District are represented in the program. Those are the district capital and the town of Uvarovichi. Several years ago the district was deemed to be purely agrarian in the economy of Gomel Oblast, with industry represented only by several small enterprises that catered to agribusiness.
the state complex program for developing regions, small and medium urban communities of the republic of Belarus covers 31 populated localities in Gomel oblast. of them 16 are administrative centers of districts. those are virtually all the urban populated localities of the oblast except for the city of Gomel, the towns of Mozyr, Svetlogorsk, rechitsa and Zhlobin. as many as 250,000 people or 24% of the oblast’s urban dwellers live in the small towns.
The structure of the economy virtually froze the development of such populated localities as Buda-koshelevo and Uvarovichi. They were focused on supplying the workforce to the oblast capital, which is located several dozens of kilometers away. Seeing no prospects here, young people used to leave for Gomel. After evaluating the opportunities the program for developing regions, small and medium urban communities pro- vides the local authorities decided to bet heavily on enhancing the production sector, primarily commercial production.
According to Alexander Sidorenko, Deputy Chairman of the Buda-koshelevo Executive Committee, they had to start nearly from scratch. They had no extensive experience of working with private businessmen, particularly foreign ones. In these conditions the local authorities built their efforts around comprehensive support for and encouragement of the establishment of new enterprises, primarily those set up in spare state-owned premises, and the launch of new manufacturing projects at exis ting enterprises. Since the district lacked major state-run industrial enterprises that could build up their production capacity, it was decided to focus attention on attracting private capital, including foreign capital. “We understood that every businessman was bent on earning profits. However, profits can be earned only after certain spending. Naturally profits can be earned faster by using the existing manufacturing space, communications and other kinds of infrastructure than by starting from scratch.
This is why efforts were focused on using as many spare properties owned by local government agencies as possible,” explained Alexander Sidorenko.
The expectations that private business can be developed by handing over or selling spare municipal properties have been totally justified. Since Belarus president decree “Measures to put spare state property into economic circulation” came into force in 2007, as many as 24 properties have been sold to small businesses while nine properties have been handed over for the sake of implementing investment projects. Relying on these properties, investors started developing their businesses. The number of small enterprises registered in Buda-koshelevo District went up by 67. The number includes 14 manufacturing enterprises.
It is remarkable that the share of private enterprises stands at 70% in the district’s production sphere (without agricultural output). The private enterprises have been created using capital from Russia, Germany, Poland, Italy, and the Netherlands. The scale of operation of the enterprises varies but each one of them plays a considerable role in keeping local people employed. Now mature, some of them are well-recognized in Belarus and abroad.
A Niche of Its Own
Over the last few years the joint venture Amipak OAO has emerged as the leading industrial enterprise in Buda-koshelevo. It is the town-forming enterprise for Buda-koshelevo. Steadily advancing, the company with versatile business interests now offers a wide choice of packaging materials for agriculture, medicine, food and other industries, for retail trade, and service industry. Amipak is Belarus’ and the CIS’ main supplier of polymercoated paper and pasteboard, foil pasteboard for refrigerators, polyethylene terephthalate (PET) film, PET containers for food, ice cream containers and other plastic products.
The local authorities pay close attention to making sure the enterprise works smoothly. The social and economic development of the town and the district hinges a lot on the enterprise. The company employs up to 60% of the district’s industrial sector workforce. Amipak’s share in the district’s industrial output stands at 70%, with its share in earnings at 15%. The company exports over half of the turnout. The fig- ure is supposed to reach 60-70% by the end of the year. It is worth noting Amipak’s share in the district’s export stands at 90%. Amipak products are shipped, in particular, to Russia, Kazakhstan, Moldova, and Ukraine. There are plans to expand the market in Russia, Moldova, Lithuania and Latvia. The sales secure the district’s foreign trade surplus.
By the way, last year Amipak took out a foreign loan to buy modern equipment worth over $2 million to coextrude five-layer tubular film. The equipment enabled the company to make a wide choice of multilayer film that meets requirements of various industries. Operating at full
capacity, the equipment can turn out up to 250 tonnes of marketable film worth $1.5 million per month.
Located in the small Belarusian town, Amipak is a major player on the Russian market of confectionery containers. By the way, the market boasts a rather high level of production concentration, with 11 companies manufacturing up to 85% of the total. Supplies from Belarus are formed by two major suppliers of thermoformed packaging – Amipak and the Gomel-based company Kashtan. Belarusian confectionery packaging plastics accounts for 10-15% of the Russian market in natural terms. On the one hand, it testifies to the high quality of the manufactured products. On the other hand, it confirms that serious investment projects can be successful not only in the capital city or oblast capitals but also in small towns.
In the near future Amipak plans to acquire equipment to make more up-to-date barrier film. It boasts high transparency, good weldability, and sturdiness. About $3.8 million will be spent on it, with 12 high-performance jobs created.
Small Business Lineup
It has been mentioned earlier that 14 small industrial production businesses have been registered in the district over the last few years. The private enterprise Mirgrival manufactures plastic doors and windows, OOO Profizol makes metal structures for civil engineering, OOO Poisk-90 manufactures sawn lumber, OOO Makovye makes bricks. SOOO Vakhavyak grows pigs, SOOO Biooil plans to make untreated oil and fat, OOO Elgambra specializes in paper products for household and hygienic needs. Most of the new enterprises are now located in previously owned municipal premises that had not been used for a long time.
By the way, in the near future the number of small business entities is expected to rise in the district. In January-july 2011 private investors bought seven spare municipal properties through auctions, the highest figure registered in Gomel Oblast.
Created in 2009, the Belarusian-polish joint venture Vakhavyak specializes in breeding pedigree pigs. At the start the company imported equipment, pigs and boars of Polish pedigree. The foreign investments exceeded $300,000. Livestock housing and warehouses were rebuilt and repaired, with over Br2 billion spent. At present the company has 6,000 pigs, with meat products output at 70 tonnes per month.
To avoid competition with local manufacturers, Vakhavyak has been focused on the Russian mar-
ket from the start. The company’s monthly export exceeds $100,000, or 70% of the total output in natural terms.
The business is developing well. There are plans to repair and remodel five more unused agricultural premises in 20112012, spending over Br2 billion on it. Once the new manufacturing premises are commissioned, the company’s export will double to reach 80% of the output.
No Plans to Stop
Certainly, Buda-koshelevo keeps in mind the development of retail trade and the service sector. Retail trade in Buda-koshelevo District went up 250% in five years. The retail and public catering chain now has 54 more outlets. There are plans to open proprietary shops of Belorusneft-osobino, the Zhlobin meatpacking factory, OAO Gomelmilk for the sake of improving trade services for the town’s residents. There are plans to build several outlets in rural areas, too.
Several investment opportunities are available as well. In particular, there are projects to start manufacturing non-alcoholic beverages, detergents, newsprint and offset paper, footwear and garments, a project to build a car service station and other projects.
The plans to sell spare municipal properties in H2 2011 testify to the adherence of the local authorities to keep fostering private initiative. As many as 16 properties will be sold, with some of them to be sold for one base amount.
There are no plans to stop, said Alexander Sidorenko. “The promotion of private economy is a priority avenue for our district. Without a great industrial potential, we just have to offer only favorable conditions for business operation,” stressed the Deputy Chairman of the Buda-koshelevo District Executive Committee.
H1 2011 performance figures confirm the local authorities did the right thing when they chose the policy. In January-june 2011 industrial output totaled Br54.5 billion, up 55.4% from the same period of last year in comparable prices. Export increased by $1.6 million. Nominal salaries went up nearly 30%.
One can now say with confidence that the successful implementation of accelerated development of small and medium urban communities as part of the country’s social and economic development has brought many positive changes to Buda-koshelevo District.
It is understandable that the bulk of the projects envisaged by the state program for developing regions, small and medium urban communities have been funded by the state budget. First of all, those are projects in healthcare, education and culture.
The Belarusian petrochemical company Belorusneft, which wholly owned subsidiary Belrosuneft-osobino is located in the district and manufactures agricultural products, in particular, poultry meat and eggs, makes a huge contribution to the development of the district’s economy.
Nevertheless, the local authorities understand well that it is impossible to address all issues using only finance of the state budget and state-run enterprises. One has to learn to earn money on their own. This is why the policy focusing on developing the production sector and private initiative will be continued in the years to come.
The excavation of a burial mound near the town of Uvarovichi has unearthed an Arabic coin dating back to 930 AD. It is certainly puzzling how one can be found in this area. But it is apparent that foreign trade operations took place here even back then. There may have been joint ventures even.
Recalling comparatively recent past, it is worth noting that wood samples from BudaKoshelevo were displayed at the World Industrial Expo in Paris in 1910 and a UK subject Y. Mcdonald owned a haybaling factory in the village of Krivoi Rog.
At the Profizol
The joint venture Amipack has started producing a variety of packaging films
The unused building of the former department store in the town of Uvarovichi was
bought by the Mirgrival company
to produce plastic windows. Specialist
of the company Valery Chuyeshov
A cafe and store in the town of Uvarovichi, BudaKoshelev District, was opened by a family business Mirgrival