Sig­nif­i­cant Con­tri­bu­tion

SMEs are ex­pected to gen­er­ate up to 30% of Be­larus’ GDP by 2015

Economy of Belarus - - CONTENTS - Alexan­der GRUZDOV

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%.

State Sup­port

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.

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