Pri­vate Busi­ness Re­lies on State Foun­da­tion

It is the vec­tor Buda-Koshelevo District has cho­sen to de­velop its eco­nomic po­ten­tial

Economy of Belarus - - CONTENTS - Valery SI­DORCHIK

It is the vec­tor Buda-koshelevo District has cho­sen

to de­velop its eco­nomic po­ten­tial

Re­li­able Core

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.

Р.S.

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

com­pany

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

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