SMEs are expected to generate up to 30% of Belarus’ GDP by 2015
SMES are expected to generate up to 30% of Belarus’ GDP by 2015
Positive Development Trends
The economic liberalization has encouraged the expansion of small and medium-sized enterprises and helped increase their contribution to the country’s economic growth.
Over 2007-2010, small and medium-sized enterprises (legal entities) came to play a greater role in Belarus’ social and economic devel-
the creation of an environment conducive to business growth has always been and remains one of Belarus’ priorities. the economic liberalization policy adopted by the head of state and the government is a strategic vector of our efforts to improve business climate and enhance the investment appeal of our country.
opment. Their share has increased in: • gross domestic product, from 17.9% to 20%; • production of goods and services, from 18.3% to 20.7%; • retail trade, including public catering, from 35.9% to 40.6%; • average number of employees, from 26.7% to 28%; • capital investments, from 34.7% to 39.7%; • foreign trade, from 35.3% to 39.7%; • commodity export, from 26% to 42.9%.
The import by SMES (legal entities) has shrank from 43.2% to 37.4%.
I would like to note that over recent years the number of people working for SMES kept growing. In 2010, SMES employed about 1.5 million people, which is about one third of the country’s workforce. The share of people involved in SMES, including self-employed businessmen and their employees, rose from 28.6% in 2007 to 32.2% in 2010 of the total number of people involved in economic activities. As of 1 January 2011, the number of small and medium-sized enterprises of all forms of ownership increased by 54.8% over 2007 to 86,917, including 84,164 small businesses (up 58.3%), and 2,753 medium-sized enterprises (down by 8%).
Over the last few years, the sectoral structure of micro- and small enterprises remained virtually unchanged. In 2010, 40.9% of small enterprises (legal entities) were involved in trade and public catering, 20.2% in the manufactur-
ing industry, 10.5% in construction, 8.6% in transport and communication, 3% in agriculture.
In 2008-2010 the share of products (works, services) manufactured by small privately-held businesses was up by 5.3%, while the share of products (works, services) made by medium-sized privately-held enterprises was down by 0.2%.
In 2010 the amount of goods (works and services) per one employee of small enterprises increased all over the country compared with the previous year. Minsk boasted the most efficient production of goods (works and services) per one employee (Br71.7 million), while Vitebsk Oblast was at the bottom of the list (Br37.8 million).
In 2010 foreign trade in goods by SMES amounted to $23.8689 billion, the commodity export by small enterprises (legal entities) being $9.82 billion (33.7% of Belarus’ total commodity export), that of mediumsized enterprise being $1.009 billion (6%). The foreign trade deficit was $2.21 billion.
In 2010 the export by SMES shrank by $456.3 million or 4.0% over 2008.
The import decreased by $849.7 million or 6.1%.
The state is interested in further development of the competitive entrepreneurial sector and therefore carries out in-depth economic reforms to encourage and provide comprehensive support to business initiatives.
Directive No. 4 of the President of the Republic of Belarus of 31 December 2010 “On the Promotion of Entrepreneurial Initiative and Stimulation of Business Activity in the Republic of Belarus” is a strategic document that identifies, at the conceptual level, the basic areas of economic liberalization.
A number of legal acts have been passed to:
• liberalize pricing, reduce the list of goods (works, services) in respect of which the state regulation of prices (tariffs) is applied, and ease pricing procedures for business entities;
• protect private property. Legal entities and sole traders who have been renting their business premises for at least three years have the right to buy the property out in installments within five years unless otherwise stated by the President of the Republic of Belarus. At the same time the price for the property offered for sale should be reduced by the amount of money the business owner spent on renovating or improving the property when renting it;
• reduce the list of financial statements and the amount of required information in order to expand the use of international financial reporting standards in Belarus, and reduce the list of mandatory primary accounting documents;
• streamline the introduction of new reporting documents and inquiries for all types of information;
• establish a uniform procedure for cash transactions, cash payments, etc.;
• liberalize the labor market, abolish the mandatory use of the unified wage rate for workers who are in the employ of commercial entities and individual entrepreneurs;
• improve public procurement procedures entitling the customer to purchase a number of goods produced by certain organizations in the Republic of Belarus under the
procurement from one source (without a competitive selection);
• enhance the financial literacy of individuals and businesses;
• promote innovative entrepreneurship and streamline the formation and use of innovation funds;
• upgrade the system of state support to small businesses, expand the list of organizations eligible for state financial support and the grounds for providing this support;
• reduce the financial burden on investors in roadside service industry, provide them with tax benefits not only for the period of design and construction, but within two years after the construction of roadside service facilities is complete, and develop the mechanisms for state financing of road infrastructure projects;
• promote efficient manufacturing and innovation activities, offer tax benefits to organizations that carry out business development plans and meet the 2011 – 2013 targets for returns on sales and for the share of innovative products in the total shipping volume set out in the social and economic development forecast. Legal entities implementing investment projects included in the list approved by the government in consultation with the head of state can qualify for the reimbursement of interest rates on bank loans which they have taken to implement these projects. Amendments have been introduced to the regulations governing the formation of innovation funds and the frequency of transferring payments to them;
• optimize technical regulation and standardization.
In order to prevent the emergence of interregional restrictions on certain goods (works, services), antimonopoly authorities continuously monitor the decisions of local executive and administrative bodies. By the way, no violations in this area have been revealed so far.
On 1 September 2011, an e-registration system will be launched. Applicants will be able to submit their application forms on-line at the website of the Single State Register of Juridical Entities and Individual Entrepreneurs (SSR) coordinated by the Justice Ministry. A number of administrative acts have been submitted to the government. Their major goal is to further the liberalization of insurance activities, land and rental relations; streamline administrative procedures; reduce and optimize taxes; guarantee preferential quotas to small businesses when buying public goods and services; improve labor market regulations; simplify accounting and accountability procedures; streamline tax legislation and mechanisms for registration and management of holding companies; improve human potential
of small and medium businesses; extend the list of measures fostering business activities.
To encourage public discussion of draft legal acts regulating business activities, various state agencies have been setting up public advisory groups and councils of experts that include business representatives (alliances, associations, unions).
The national plan of action for the Year of Enterprise in 2011 also envisages a number of measures promoting small and medium-sized enterprises.
The oblast executive committees and Minsk City Hall have been setting up databanks of business initiatives and suggestions based on the analysis of demand from individuals and companies.
State agencies are introducing electronic document management for business registration, liquidation (cessation of activities), removal from the Single State Register of Juridical Entities and Individual Entrepreneurs, opening and closing bank accounts, application of electronic tax and customs declaration.
Measures on extending the application of voluntary certification of products, works, services, and management systems have been developed at the request of juridical entities and individual entrepreneurs with a view to raising their competitiveness.
In order to facilitate technological transformation and foster cohesion between science and manufacturing sector, a number of suggestions have been prepared to revive innovation and rationalization. Universities and organizations subordinate to the Education Ministry regularly present their sci-tech projects at various international exhibitions and contests.
The network of small business incubators set up at vacant public production facilities has been growing. Thus, in H1 2011 Minsk-based Elektronika, Minsk Machine Tool Works and Etanol were registered as small business incubators.
In order to stabilize the situation on the consumer market,
optimize imports of consumer goods, reduce consumer goods deficit, boost retail turnover (preferably by raising sales of domestic products), the Trade Ministry has compiled a list of goods that are not produced or produced in small quantities in Belarus in order to start their domestic production. The 2011 list of import-substitution products includes 312 items, of them 289 are non-foods. It also details their description, estimated cost and production volumes. The oblast executive committees and the Minsk City Council offer master-classes conducted by best Belarusian businessmen with extensive experience in goods manufacture and sales.
Government officials have drafted amendments and addenda to Provision No. 342 on encouraging the unemployed to get involved in business activities or those who wish to become an agro tourism service provider or an artisan. The document was adopted by the Council of Ministers’ Resolution of 7 March 2008. In particular, it suggests increasing financial support for startups involving scientific research and development.
Directive No. 4 and other programs are expected to foster sustainable economic environment, improve business climate in the country, boost business opportunities for small and medium companies, which in turn will promote competitive environment, new production and management technologies, innovation activities, investments, new jobs, goods and services, tax revenues, hence raising the well-being and quality of life of Belarusians and ensuring sustainable development of the national economy.
By the end of 2015, the number of small and medium-sized companies will reach 400,000 at the minimum with the number of employees going up to 1.8 million people and their share accounting for 30% of GDP.
Avgust-bel Company, Pukhovichy District, will increase the production of plant protection means to 6 million liters in 2012. The product range will be extended to 24 product names. AvgustBel is a modern technologically advanced producer of eco-friendly formulations of herbicides in the form of water soluble preparations, emulsifiable concentrates and water concentrates and also fungicides, seed disinfectants and insecticides in the form of emulsified preparations.
A plant producing elements of permanent formwork for building and civil engineering was
inaugurated in Brest. The plant includes two wall panels workshops
and a slabs and reinforced frames division. Modern
technology allows reducing construction time and offers a good quality/price ratio.
Vitebsk Fruit and Vegetable Plant produces more than 50 types of canned baby food. Since the beginning of the year, the plant has started the production of 15 new products
Rechitsa Textile held talks with U.S. Armani, which resulted in an agreement to sign a contract for sewing terry robes designed by the customer for hotels in the United States. In 2011 Rechitsa Textile also signed a supply contract with Estonia’s Mindrentrans to deliver terry towels and bed sheets. Russia and Kazakhstan are traditional sales markets for Rechitsa Textile. In January-may 2011 the company signed ten contracts with Russia. Rechitsa Textile delivered $152,700 worth of products (15% of exports) to new customers.