Be­larus Needs Re­newed Econ­omy by 2013

Con­cep­tual re­marks made by Pres­i­dent of Be­larus Alexan­der Lukashenko at a sem­i­nar for ex­ec­u­tives of cen­tral and re­gional gov­ern­ment agen­cies on 15–16 De­cem­ber 2011

Economy of Belarus - - CONTENTS -

Con­cep­tual re­marks made by Pres­i­dent of Be­larus Alexan­der Lukashenko at a sem­i­nar for ex­ec­u­tives of cen­tral

and re­gional gov­ern­ment agen­cies

Im­port sub­sti­tu­tion is the most im­por­tant el­e­ment of the eco­nomic pol­icy and a tool to reach the key goal – a for­eign trade sur­plus, Pres­i­dent of Be­larus Alexan­der Lukashenko said at a ses­sion of the per­ma­nent sem­i­nar held by the head of state for ex­ec­u­tives of cen­tral and lo­cal gov­ern­ment agen­cies to dis­cuss im­port sub­sti­tu­tion as a vi­tal fac­tor for bal­anced de­vel­op­ment of the na­tional econ­omy.

Speak­ing about the role of sci­ence in the na­tional econ­omy, Alexan­der Lukashenko re­marked that Be­laru­sian re­search prod­ucts should be in de­mand in the coun­try and abroad. He also stressed the im­por­tance of sci­ence con­tri­bu­tion to im­port sub­sti­tu­tion projects. The Pres­i­dent de­manded that sci­en­tific projects should be­come more ef­fi­cient. “Sci­en­tists should stop fuss­ing about their ti­tles only. Give us re­sults. We will pay for con­crete work,” he said.

“Mem­bers of par­lia­ment are present here. They will soon have to pass the bud­get bill. The 2012 bud­get of the Academy of Sci­ences should be re­duced in com­par­i­son with 2011. Keep an eye on it,” said the head of state. “They work on their own, earn­ing good money. It is time to grad­u­ally pull them away from the feed­ing trough,” Alexan­der Lukashenko noted.

“The bud­get of the Academy of Sci­ences should be re­duced by 25-30%. Sci­en­tists and man­u­fac­tur­ers will keep do­ing noth­ing as long as we give them money from the state bud­get. I have not said any­thing new. Such is life,” stressed Alexan­der Lukashenko.

The Pres­i­dent gave in­struc­tions to con­sider struc­tural changes in the Trade Min­istry. Ac­cord­ing to the head of state, the place and re­spon­si­bil­i­ties of the min­istry are not yet clearly de­ter­mined. “The Trade Min­istry per­son­nel should work hard, look­ing for op­por­tu­ni­ties in­stead of shuf­fling pa­per,” said Alexan­der Lukashenko and en­cour­aged the min­istry to get on with ac­tive prac­ti­cal ac­tions.

“Maybe, it is time to set up a larger trade min­istry by unit­ing do­mes­tic trade and for­eign trade agen­cies,” the Pres­i­dent con­tem­plated.

He urged to work out con­crete tasks for the Trade Min­istry. The ma­jor task is to trade, re­marked Alexan­der Lukashenko.

He re­minded that re­gional gov­ern­ment agen­cies had taken on some of the func­tions of the Trade Min­istry. They have set up rel­e­vant bod­ies, pur­sue an an­ti­monopoly pol­icy and main­tain con­trol over the do­mes­tic mar­ket. “It is the right thing to do but the Trade Min­istry has to have tasks to ac­com­plish,” be­lieves the head of state. “For the do­mes­tic mar­ket it will not be a vol­u­met­ric task but over­seas trade is our pri­or­ity and the rel­e­vant task should be de­ter­mined”.

Alexan­der Lukashenko sum­ma­rized re­sults achieved by the two­day sem­i­nar.

“In the cur­rent five-year term the gov­ern­ment and the en­tire power ver­ti­cal should fo­cus on achiev­ing a for­eign trade sur­plus,” stressed the Pres­i­dent. “As a con­di­tion for sav­ing for­eign cur­rency and in­creas­ing ex­port, im­port sub­sti­tu­tion is a tool to achieve the key goal and the most im­por­tant com­po­nent of the eco­nomic pol­icy. It is cru­cial for our coun­try that has in­suf­fi­cient nat­u­ral re­sources,” the Pres­i­dent added.

The de­pen­dence on im­ported raw ma­te­ri­als and en­ergy re­sources re­quires fru­gal spend­ing of for­eign cur­rency.

The head of state un­der­scored that ev­ery year bil­lions of US dol­lars are spent to buy raw ma­te­ri­als and en­ergy re­sources, im­port a wide range of con­sumer goods, even

those that can be pro­duced lo­cally. “Some may say that many coun­tries have a trade deficit and they are more pros­per­ous than Be­larus. How­ever, what is the se­cret be­hind the pros­per­ity? Con­stant bor­row­ing? Debts? What is the end re­sult? The coun­tries are on the edge of an eco­nomic abyss. We see it hap­pen­ing to sev­eral seem­ingly sta­ble and flour­ish­ing Euro­pean coun­tries,” re­marked Alexan­der Lukashenko.

He said: “Of course, we used for­eign loans. How­ever, the loans we took in pre­vi­ous years were chan­neled into in­no­va­tive de­vel­op­ment. They helped us set up new pro­duc­tion fa­cil­i­ties”. Be­larus man­aged to re­duce the im­port of buses, trucks, grain har­vesters and other farm ma­chines, gro­cery prod­ucts (mac­a­roni, cig­a­rettes, juices, etc.) and house­hold ap­pli­ances (mi­crowave ovens, au­to­matic wash­ing ma­chines, re­frig­er­a­tors). This means that in­vest­ments into new pro­duc­tion fa­cil­i­ties are pay­ing back.

There­fore, the Pres­i­dent in­structed the gov­ern­ment to keep chan­nel­ing re­sources into highly ef­fi­cient im­port sub­sti­tut­ing and ex­port ori­ented pro­duc­tion fa­cil­i­ties.

“By mo­bi­liz­ing the po­ten­tial of in­dus­tries and regions we are ca­pa­ble of get­ting a trade sur­plus of $1.5 bil­lion. It will guar­an­tee a sta­ble sup­ply of re­sources and is a ma­jor in­di­ca­tor of eco­nomic se­cu­rity,” Alexan­der Lukashenko is con­vinced.

Ac­cord­ing to the head of state, we need to an­a­lyze the mis­takes we made in the past five-year pe­ri­ods and iden­tify the ob­sta­cles pre­vent­ing ef­fi­cient im­ple­men­ta­tion of im­port sub­sti­tut­ing pro­grams. The rea­sons why less than ex­pected progress was made.

Ac­cord­ing to Alexan­der Lukashenko, a num­ber of fail­ures were re­vealed. The first one is in­ad­e­quate elab­o­ra­tion and prepa­ra­tion of im­port sub­sti­tut­ing projects, which re­sulted in greater ex­penses and lower com­pet­i­tive­ness of new prod­ucts. The sec­ond one deals with heavy spend­ing on in­vest­ment im­ports and con­sid­er­able pro­duc­tion costs. The third one is in­ad­e­quate co­or­di­na­tion be­tween gov­ern­ment agen­cies while sell­ing im­port sub­sti­tut­ing prod­ucts. As a re­sult, the do­mes­tic mar­ket gives pref­er­ence to im­ported prod­ucts rather than sim­i­lar do­mes­ti­cally pro­duced goods.

“More than that, im­port has be­come a gravy train for sev­eral top ex­ec­u­tives and of­fi­cials. Although the sys­tem of ten­ders and con­tests still ex­ists, some trick­sters are try­ing to find loop­holes. I want to warn you: un­jus­ti­fied im­port will be viewed as a grave vi­o­la­tion and a due pun­ish­ment will fol­low,” the Pres­i­dent said.

The in­ad­e­quate in­fra­struc­ture of the Be­laru­sian ex­port and low ef­fi­ciency of com­mod­ity dis­tri­bu­tion net­works of Be­laru­sian com­pa­nies are some of the ma­jor rea­sons for neg­a­tive trends, the head of state said.

Alexan­der Lukashenko stated that sales in­stru­ments, like mar­ket­ing, ad­ver­tis­ing and lo­gis­tics still lag be­hind the in­ter­na­tional stan­dards. A lot will have to be done to rec­tify the sit­u­a­tion.

“Im­port sub­sti­tu­tion is a mul­ti­fac­eted is­sue. It is part of the work to en­sure ra­tio­nal use of re­sources and dy­namic and bal­anced eco­nomic growth. This year has showed how bad for­eign eco­nomic dis­pro­por­tions can be for the coun­try’s de­vel­op­ment. Their dam­age can be big­ger if these dis­pro­por­tions per- sist over a long pe­riod. I am talk­ing about the cur­rency mar­ket, sta­bil­ity of the na­tional cur­rency, fi­nan­cial sys­tem and the over­all fi­nan­cial sol­vency of the coun­try,” the head of state said.

There­fore, im­port sub­sti­tu­tion and for­eign trade sur­plus have trans­formed from merely eco­nomic goals into po­lit­i­cal ones. “We have an open econ­omy. Our task is to en­sure its sta­bil­ity and sus­tain­able growth. This goal was set at the Fourth All-be­larus Peo­ple’s Congress,” Alexan­der Lukashenko said.

He in­structed the gov­ern­ment to se­cure sus­tain­able and non-in­fla­tion­ary eco­nomic growth in 2012. In his view, the coun­try is well-po­si­tioned to achieve this goal. “We have reached strate­gic agree­ments with part­ners from the CIS and non-cis coun­tries,” the Pres­i­dent said.

Upon the in­struc­tion of the Pres­i­dent, a so­cioe­co­nomic de­vel­op­ment fore­cast was pre­pared by the gov­ern­ment and the Na­tional Bank of Be­larus. The pro­jected 5% GDP growth in 2012 is sup­ported by the avail­able re­sources. “This is our re­sponse to do­mes­tic and for­eign crit­ics of our eco­nomic pol­icy,” the Pres­i­dent un­der­lined.

Af­ter the most im­por­tant tar­gets are ap­proved, they should be sub­mit­ted to all in­dus­tries and regions.

“The of­fi­cials re­spon­si­ble for the ful­fill­ment of the tar­gets will have to sub­mit quar­terly re­ports,” the head of state said.

“Please, keep in mind that the pun­ish­ment will be tough, be­cause it is a mat­ter of sur­vival. I would like to em­pha­size that the sources of eco­nomic growth do not de­stroy the es­tab­lished bal­ance in the na­tional econ­omy. Ev­ery­one un­der­stands that,” Alexan­der Lukashenko said.

He noted that the sem­i­nar con­cludes the or­ga­ni­za­tional and leg­isla­tive part of the sys­temic work to form clear and com­pre­hen­si­ble ap­proaches to ef­fi­cient and ra­tio­nal im­port sub­sti­tu­tion.

This is the final step fol­low­ing the ex­am­i­na­tion of the prob­lem by min­istries, con­cerns, oblast ex­ec­u­tive com­mit­tees, the spe­cial ses­sion of the Pre­sid­ium of the Na­tional Academy of Sci­ences, and the ex­tended ses­sion of the Coun­cil of Min­is­ters.

The ma­jor points of im­port sub­sti­tu­tion were thor­oughly dis­cussed at all lev­els, from the macroe­co­nomic to the mi­croe­co­nomic level. Ev­ery par­tic­i­pant of the sem­i­nar came up with con­crete pro­pos­als and ideas that will be put into prac­tice start­ing from the next day.

Ac­cord­ing to the Pres­i­dent, the first task is to en­sure all-round sav­ing.

“Ev­ery­body has to econ­o­mize. The po­lit­i­cal ob­jec­tive for the gov­ern­ment, min­istries, con­cerns, and oblast, town and dis­trict ex­ec­u­tive com­mit­tees is to im­ple­ment an all­round and se­vere aus­ter­ity pol­icy. This will serve as the most im­por­tant cri­te­rion in as­sess­ing the per­for­mance of per­son­nel and com­pa­nies,” the head of state said.

The Pres­i­dent finds it nec­es­sary to ra­tio­nal­ize im­ports of in­ter­me­di­ate goods, re­duce im­port in­ten­sity of the na­tional econ­omy. He noted that the gov­ern­ment and re­gional au­thor­i­ties have not yet ad­dressed the is­sue. “Our econ­omy is one of the most im­port-in­ten­sive economies in Europe,” said the head of state.

The Pres­i­dent in­structed the gov­ern­ment jointly with oblast gov­er­nors and the Minsk mayor to re­duce im­port in­ten­sity of the man­u­fac­tur­ing in­dus­try by 1.5-2% an­nu­ally.

Alexan­der Lukashenko be­lieves that the tech­no­log­i­cal qual­ity of the pro­duc­tion fa­cil­i­ties is good and the coun­try has the right to ex­pect lower ma­te­rial in­ten­sity. Con­sump­tion of raw ma­te­ri­als and en­ergy should be sig­nif­i­cantly low­ered. Ev­ery par­tic­i­pant of the sem­i­nar must work on this task,” the Pres­i­dent stressed. He be­lieves that in or­der to dras­ti­cally re­duce the en­ergy in­ten­sity both eco­nomic and ad­min­is­tra­tive stim­uli have to be used.

Eco­nomic meth­ods in­clude reg­u­la­tion of en­ergy prices for the or­ga­ni­za­tions that use en­ergy re­sources ir­ra­tionally. “You are wel­come to in­tro­duce con­sump­tion lim­its for nat­u­ral gas and electricity. If some­one fails to stay within the lim­its he will pay sev­eral times more,” said the Pres­i­dent. He stressed that spe­cific peo­ple should be made re­spon­si­ble. Con­versely, those work­ers who econ­o­mize should be awarded bonuses on a reg­u­lar ba­sis.

We will use ad­min­is­tra­tive meth­ods to con­tin­u­ously toughen the stan­dards re­gard­ing con­sump­tion of fuel and en­ergy per unit of out­put and also the state stan­dards on man­u­fac­tur­ing equip­ment. The Pres­i­dent stressed that ap­pro­pri­ate mech­a­nisms should be launched as early as 2012.

“The gov­ern­ment should keep most en­ergy-in­ten­sive en­ter­prises un­der spe­cial con­trol, in­clud­ing en­ergy-gen­er­at­ing fa­cil­i­ties. We have con­sid­er­able re­serves there,” said the head of state.

The Pres­i­dent noted that at least one quar­ter of elec­tric and heat en­ergy should be pro­duced from lo­cal fu­els, sec­ondary en­ergy re­sources and al­ter­na­tive en­ergy. “Dur­ing this five-year term we need to re­duce the en­ergy in­ten­sity of GDP by one third. Thus we will meet the goal set by Di­rec­tive No. 3 to re­duce the GDP en­ergy in­ten­sity,” said the head of state. Sim­i­lar work should be done by the Coun­cil of Min­is­ters and lo­cal au­thor­i­ties to op­ti­mize ma­te­rial in­ten­sity. Ac­cord­ing to the head of state, this is a di­rect GDP growth op­por­tu­nity. We can achieve this goal by de­vel­op­ing in­dus­trial co­op­er­a­tion and cre­at­ing aux­il­iary pro­duc­tion fa­cil­i­ties to in­crease the level of pro­duc­tion lo­cal­iza­tion.

“We need to be­gin 2013 with up­graded, less en­ergy- and re­sour­cein­ten­sive econ­omy,” Alexan­der Lukashenko stressed.

“I am in­struct­ing the gov­ern­ment and re­gional au­thor­i­ties to take stock of all com­pa­nies and

en­ter­prises in 2012, to de­velop and im­ple­ment mea­sures re­gard­ing the in­dus­tries ag­gra­vat­ing the for­eign trade im­bal­ance,” the Pres­i­dent said.

“We should not in­ter­fere with com­pa­nies that con­trib­ute to the trade sur­plus and make prof­its. We need to let them grow fur­ther. Ef­fec­tive mea­sures need to be worked out re­gard­ing com­pa­nies that do not con­trib­ute to a for­eign trade sur­plus,” the Pres­i­dent said.

He noted that his re­quire­ments are well known: the ef­fi­ciency of an or­ga­ni­za­tion should be mea­sured by the amount of profit it makes and salaries of its work­ers.

“I am con­vinced that only large, well-equipped com­pa­nies are able to fight off com­pe­ti­tion and en­sure dy­namic eco­nomic growth,” the head of state said.

“We did not use the rec­om­men­da­tions of Western con­sul­tants who sug­gested split­ting our in­dus­trial and agri­cul­tural flag­ship com­pa­nies. That road would bring us to col­lapse. To­day our MAZ, MTZ, At­lant, Gom­sel­mash, BMZ, BELAZ and oth­ers are, in fact, the lead­ing Euro­pean-level en­ter­prises,” the Pres­i­dent noted. He added that work is un­der­way to bring them to­gether into hold­ing com­pa­nies.

Ac­cord­ing to Alexan­der Lukashenko, in some ar­eas Be­laru­sian com­pa­nies are in­ter­na­tional lead­ers. Their tech­no­log­i­cal level is a far cry from the one they had in the Soviet pe­riod. They have be­come much more tech­no­log­i­cally ad­vanced.

The sec­ond most im­por­tant task set forth by Pres­i­dent Alexan­der Lukashenko is to build up ex­port.

The Pres­i­dent de­manded that ex­port dur­ing this five-year term should in­crease by 2.2 times. To this end, the head of state in­structed the gov­ern­ment and gov­er­nors to take dras­tic mea­sures to im­prove the ef­fi­ciency and com­pet­i­tive­ness of the Be­laru­sian econ­omy, spe­cific sec­tors and en­ter­prises.

The Pres­i­dent stressed: “To achieve the 2012 year tar­gets and to en­sure bal­anced for­eign trade ev­ery ex­ec­u­tive should seek to in­crease ex­port and ex­port share in the to­tal out­put and min­i­mize the im­port needed to per­form the first two tasks.

Ac­cord­ing to the head of state, the work of ex­ec­u­tives will be eval­u­ated tak­ing into ac­count the amount of for­eign prod­ucts im­ported di­rectly from abroad and via me­di­a­tors on the do­mes­tic mar­ket. “But to­day we have agreed that there should be no me­di­a­tors. Ev­ery me­di­ated pur­chase will be an­a­lyzed,” the Pres­i­dent stressed.

Alexan­der­lukashenko­re­marked that this work should re­sult in bal­anced ex­port growth, which should ex­ceed im­port growth by at least 10%.

“The Econ­omy Min­istry has cal­cu­lated the for­mula of for­eign eco­nomic bal­ance. At least 60-65% of the in­dus­trial out­put should be ex­ported. This is the task for the gov­ern­ment and heads of en­ter­prises,” the Pres­i­dent said. The State Con­trol Com­mit­tee will mon­i­tor the ful­fill­ment of this tar­get.

In or­der to hit this tar­get, it is es­sen­tial to de­velop in­dus­tries with a big share of lo­cal raw ma­te­ri­als and bet­ter pro­cess­ing tech­nolo­gies. These are pro­duc­tion of con­struc­tion ma­te­ri­als, wood­work­ing, food in­dus­try, agri­cul­ture, phar­ma­ceu­ti­cal in­dus­try, chem­i­cal in­dus­try and biotech­nolo­gies, pro­duc­tion of hi-tech com­po­nents. “The main re­serve here is the use of bet­ter tech­nolo­gies and ad­vanced pro­cess­ing of raw ma­te­ri­als,” the head of state be­lieves.

“The coun­try im­ports a lot of goods that can be man­u­fac­tured us­ing do­mes­tic raw ma­te­ri­als, namely milk, meat, veg­eta­bles, tim­ber, chem­i­cal prod­ucts, etc. We, in turn, ex­port these raw ma­te­ri­als with­out proper pro­cess­ing. And most of value added and rev­enue goes to for­eign com­pa­nies,” the Pres­i­dent said.

As an ex­am­ple, he cited the ex­port of round tim­ber and sawn tim­ber which will make up over $230 mil­lion in 2011. At the same time, the im­port of flake board, fiber­board, card­board, and pa­per ex­ceeds $800 mil­lion. Hav­ing such re­serves, it is eas­ier to ad­vance us­ing bet­ter pro­cess­ing meth­ods, rather than in­creas­ing tra­di­tional ex­port, the Pres­i­dent be­lieves. Alexan­der Lukashenko in­structed the gov­ern­ment and oblast gov­er­nors to boost ex­port by at least one third us­ing lo­cal raw ma­te­ri­als with- out in­creas­ing the im­port of raw ma­te­ri­als.

As for the agri­cul­tural in­dus­try, the task to boost ex­port to $7 bil­lion by 2015 re­mains un­changed. The Pres­i­dent noted that a step-by-step ac­tion plan needs to be elab­o­rated for 2012 and 2013. “We have en­sured food se­cu­rity of the coun­try. And now we should seek to dy­nam­i­cally raise the ex­port po­ten­tial of all sec­tors of agri­cul­ture and other in­dus­tries,” the head of state stressed.

Alexan­der Lukashenko also re­minded par­tic­i­pants of the ses­sion about the task that was pre­vi­ously set for the Health­care Min­istry. Do­mes­tic medicines should cover 50% of the coun­try’s phar­ma­ceu­ti­cal needs in 2015. More­over, Be­larus’ phar­ma­ceu­ti­cal in­dus­try should ad­vance into for­eign mar­kets. The Pres­i­dent said that the progress in this area will be strictly mon­i­tored. “With God’s help, it will be good enough if our prod­ucts be­come pop­u­lar in Rus­sia and Kaza­khstan. You are wel­come to sell prod­ucts on this huge mar­ket. No­body im­pedes trade to­day,” the head of state said.

The third task is to make most of the op­por­tu­ni­ties of­fered by the Sin­gle Eco­nomic Space (SES).

He re­minded that for al­most two years Be­larus has been work­ing

in the com­mon cus­toms area with Rus­sia and Kaza­khstan. The ca­pac­ity of the mar­ket is es­ti­mated at about 180 mil­lion peo­ple. The Sin­gle Eco­nomic Space be­came op­er­a­tional on 1 Jan­uary 2012.

Alexan­der Lukashenko gave or­ders to de­velop an in­dus­trial pol­icy pro­gram tak­ing into ac­count the re­al­i­ties of the SES.

“I will not ap­prove the doc­u­ment if it is not co­or­di­nated with the in­dus­trial de­vel­op­ment pro­grams of Rus­sia and Kaza­khstan. We need no thought­less com­pe­ti­tion in the com­mon eco­nomic area. Our economies should be com­ple­men­tary. We need to de­velop joint hold­ing com­pa­nies and ex­pand into for­eign mar­kets of raw ma­te­ri­als and sales to­gether,” the Pres­i­dent said.

Alexan­der Lukashenko noted with re­gret that the gov­ern­ment is mak­ing no head­way here. No con­crete steps have been made yet. In this con­nec­tion Alexan­der Lukashenko or­dered to step up co­op­er­a­tion with Be­larus’ clos­est part­ners.

Be­sides, the Pres­i­dent pointed out that the po­ten­tial of co­op­er­a­tion with South­east Asia, Africa and other promis­ing regions where Be­laru­sian prod­ucts can be sold had not been ex­plored.

More ef­forts should be put into es­tab­lish­ment of joint ven­tures to­gether with lead­ing Euro­pean com­pa­nies us­ing ad­van­tages of the Sin­gle Eco­nomic Space. In his words, there are good of­fers from Aus­trian, Ital­ian, Slo­vak, and other lead­ing for­eign com­pa­nies.

Alexan­der Lukashenko is con­vinced that Be­larus can and should play the role of an in­no­va­tor in the Sin­gle Eco­nomic Space. For this pur­pose, the coun­try needs to adapt and de­velop cut­ting-edge tech­nolo­gies as soon as pos­si­ble.

The head of state noted that we should make am­ple use of Be­larus’ sci­en­tific po­ten­tial. The Pres­i­dent re­minded that at a re­cent meet­ing with the Be­laru­sian sci­en­tific com­mu­nity he em­pha­sized that it is nec­es­sary to max­i­mize the con­tri­bu­tion of sci­en­tists to the im­ple­men­ta­tion of rel­e­vant pro­grams. “I hope that to­day’s talk will have a pos­i­tive im­pact,” the Pres­i­dent noted.

“The fourth task. I warn ev­ery­one we must not run im­port sub- sti­tu­tion projects that make no eco­nomic sense even though we have to im­port a lot of these prod­ucts. “We should not pull wool over the eyes of oth­ers”, the head of state stressed.

At the same time, Alexan­der Lukashenko noted that if a man­ager is ready to do some­thing new, if he is bold and con­fi­dent enough to try un­con­ven­tional so­lu­tions, the risk then pays off. The Pres­i­dent urged ev­ery­one to show en­ter­prise and creativ­ity. “You will be un­der­stood and sup­ported,” he said.

“In the new five-year pe­riod all in­vest­ment projects should earn for­eign cur­rency. The pay­back pe­riod should not ex­ceed 10 years,” Alexan­der Lukashenko said.

One more re­quire­ment is to min­i­mize in­vest­ment ex­pen­di­tures. “The bulk of in­vest­ment should be put in the pur­chase of nec­es­sary equip­ment. Ex­pen­di­ture on as­sem­bling works should be re­duced to a wise min­i­mum,” the head of state said.

The Pres­i­dent warned the gov­ern­ment to re­frain from lim­it­ing in­vest­ment im­ports but ex­er­cise a tough con­trol on its ef­fi­ciency. “The main re­quire­ment is you should earn twice as much and even more if you spend for­eign cur­rency,” the Pres­i­dent said.

He also noted that it is high time the coun­try stopped con­struct­ing new build­ings since there are a lot of idle and in­ef­fi­ciently used pro­duc­tion fa­cil­i­ties. “If you are un­able to do any­thing with it, give it away to pri­vate traders,” Alexan­der Lukashenko de­manded.

The Pres­i­dent stressed that the gov­ern­ment jointly with the oblast ex­ec­u­tive com­mit­tees and Minsk City Hall had been in­structed to sim­plify pro­ce­dures of hand­ing over idle build­ings and fa­cil­i­ties un­der con­struc­tion to small and medi­um­sized busi­nesses; con­duct a com­pre­hen­sive in­ven­tory of the above­men­tioned fa­cil­i­ties; take mea­sures to stim­u­late and toughen re­spon­si­bil­ity for fail­ing to ad­dress these is­sues and re­spon­si­bil­ity of en­trepreneurs for com­pul­sory in­volve­ment of fa­cil­i­ties in the man­u­fac­tur­ing process. “Start­ing 1 Jan­uary 2012 these mech­a­nisms must be up and run­ning at full ca­pac­ity so that we will be able to en­ter the year 2013 with­out this pile of aban­doned and in­ef­fi­ciently used prop­erty. Ev­ery­thing should work for ex­pand­ing the Be­laru­sian econ­omy and im­prov­ing peo­ple’s well­be­ing,” the head of state said.

The fifth task is to ramp up im­port sub­sti­tu­tion pro­duc­tion.

“Sub­sti­tu­tion mea­sures should cover at least 60-65% of non-crit­i­cal im­ports. For this pur­pose, next year im­port sub­sti­tu­tion pro­duc­tion should in­crease by 20% as against 2012 and make up $3-3.5 bil­lion. Thus, we will be able to em­brace all prod­ucts which im­port sub­sti­tu­tion is eco­nom­i­cally sound,” the Pres­i­dent said.

In his words, the complicated eco­nomic con­di­tions that have evolved in the coun­try re­cently re­quire new non­tra­di­tional ap­proaches, es­pe­cially in the de­vel­op­ment and pro­duc­tion of high-tech­nol­ogy goods. Alexan­der Lukashenko set three pri­or­i­ties here. “First of all, close co­op­er­a­tion with transna­tional cor­po­ra­tions within the SES as well as with Rus­sian and Kazakh com­pa­nies. The use of the ad­van­tages of the huge com­mon eco­nomic mar­ket for set­ting up new busi­nesses,” the Pres­i­dent said not­ing that this would help reach the Euro­pean ef­fi­ciency level.

Se­condly, Alexan­der Lukashenko be­lieves it is nec­es­sary to co­or­di­nate man­u­fac­tur­ing on a na­tional scale. “It of­ten hap­pens that com­pa­nies are un­aware that the ma­te­ri­als and equip­ment they im­port are pro­duced nearby,” Alexan­der Lukashenko said. Some­times it needs a slight ef­fort and mod­est re­sources to launch the pro­duc­tion of nec­es­sary feed­stock, ma­te­ri­als and com­po­nent parts. This task should be per­formed by the gov­ern­ment jointly with the Na­tional Academy of Sci­ences of Be­larus as part of the in­dus­trial pol­icy pro­gram.

Thirdly, ac­cord­ing to the Pres­i­dent, the lo­cal­iza­tion level of im­port sub­sti­tu­tion prod­ucts should be en­hanced. “The In­dus­try Min­istry should grad­u­ally raise the lo­cal­iza­tion level of equip­ment pro­duc­tion up to 60-65%. It can be achieved via in­ter and in­tra-in­dus­try col­lab­o­ra­tion,” the Pres­i­dent said.

The sixth task is to re­duce im­port in­ten­sity in con­struc­tion.

“We should aim for ra­tio­nal con­struc­tion of hous­ing, civil and in­dus­trial fa­cil­i­ties,” the Pres­i­dent said.

The head of state in­structed the gov­ern­ment and the Na­tional Academy of Sci­ences of Be­larus to elab­o­rate mea­sures to toughen con­trol over con­sump­tion of feed­stock and ma­te­ri­als. “The bulk of them is im­ported or has an im­port con­stituent,” Alexan­der Lukashenko said.

The head of state gave an ex­am­ple: steel con­sump­tion in con­struc­tion has soared seven times over a decade at a time when the vol­ume of con­struc­tion work has only tripled. “And no one seems to care about the mis­match. How shall I call this? It is noth­ing but spendthrift­ing,” the Pres­i­dent is con­fi­dent.

“There is a need to make a wider use of new ma­te­ri­als with high tech­ni­cal pa­ram­e­ters, ex­cel­lent per­for­mance char­ac­ter­is­tics and low con­sump­tion of raw ma­te­ri­als. I want con­sump­tion of ma­te­ri­als and en­ergy re­sources in civil en­gi­neer­ing to be un­der a strict con­trol. I hope this is­sue will be set­tled in the first quar­ter,” the head of state said.

The sev­enth task is to pro­mote im­port sub­sti­tu­tion on the con­sumer mar­ket.

The Pres­i­dent noted that high­qual­ity com­pet­i­tive con­sumer goods that are made in Be­larus should dom­i­nate the na­tional mar­ket. “This is the di­rect re­spon­si­bil­ity of the oblast ex­ec­u­tive com­mit­tees and Minsk City Hall as well as rel­e­vant min­istries and de­part­ments,” he said. Ac­cord­ing to Alexan­der Lukashenko, im­ports ac­count for about 17% of the to­tal re­tail trade in Be­larus. At the same time Be­larus is per­fectly ca­pa­ble of man­u­fac­tur­ing many of im­ported prod­ucts. It has enough raw ma­te­ri­als and pro­cess­ing ca­pac­i­ties for that. “This is true for non-foods as well, i.e. clean­ing and wash­ing agents, footwear, re­frig­er­a­tors, freez­ers, cos­met­ics,” the Pres­i­dent noted.

“In 2012, it is nec­es­sary to min­i­mize the im­port of con­sumer goods that we have al­ready been pro­duc­ing or which pro­duc­tion can be launched with the help of for­eign di­rect in­vest­ments,” Alexan­der Lukashenko said.

“To put it lit­er­ally, the Trade Min­istry has to take three to five glob­ally-known in­vestors by the hand and bring them to the coun­try, if our pro­duc­ers fail to do so, in or­der to launch pro­duc­tion of con­sumer goods that are in high de­mand”, the head of state con­cluded.

The eighth task is to de­velop im­port-sub­sti­tu­tion in­cen­tives

“We should stim­u­late im­port sub­sti­tu­tion and ex­port, pro­vide in­cen­tives for man­agers of state de­part­ments and or­ga­ni­za­tions”, Alexan­der Lukashenko be­lieves.

“It is nec­es­sary to de­velop an ef­fec­tive sys­tem of la­bor in­cen­tives and bonuses based on re­sults of ex­ports and im­port-sub­sti­tu­tion at all lev­els of the state man­age­ment sys­tem - from mem­bers of the gov­ern­ment to com­pany ex­ec­u­tives”, the head of state said.

“In the present cir­cum­stances these fields con­sti­tute the ba­sis for the bal­anced and sus­tain­able de­vel­op­ment of the Be­laru­sian econ­omy. It is im­por­tant not only to launch pro­duc­tion of im­port-sub­sti­tu­tion goods and boost ex­port, but also bring about a qual­ity trans­for­ma­tion of the ex­port-im­port struc­ture in or­der to elim­i­nate the trade deficit”, the Pres­i­dent em­pha­sized.

“We have reached a very complicated and im­por­tant stage of the state de­vel­op­ment. The jour­ney we have to make will not be easy, but we know what we have to do dur­ing this jour­ney. We have to act im­me­di­ately; ev­ery­body has to get in­volved in this work. The ac­count­abil­ity for the re­sults will be rig­or­ous and con­tin­u­ous. I will not stomp on any­body’s ini­tia­tive, but I will not al­low fail­ure. Re­mem­ber that en­sur­ing the dy­namic and bal­anced eco­nomic de­vel­op­ment and rais­ing liv­ing stan­dards of Be­laru­sian cit­i­zens is a mat­ter of honor for each of us”, Alexan­der Lukashenko stated.

In con­clu­sion the head of state voiced his po­si­tion on a num­ber of top­ics raised dur­ing the sem­i­nar.

Ac­cord­ing to the Pres­i­dent, ex­pe­ri­ence of Minsk City Hall in sup­port­ing and de­vel­op­ing ini­tia­tives of young peo­ple (suc­cess­ful busi­ness­men shared their knowl­edge with high school stu­dents) is worth pay­ing at­ten­tion to. “I know that the oblast ex­ec­u­tive com­mit­tee will con­tinue sup­port­ing healthy and creative ideas of school and univer­sity stu­dents. This ex­pe­ri­ence has to be shared with other regions of the coun­try and what I said at the BRSM congress should be

added to it”, Alexan­der Lukashenko in­structed.

Se­condly, the head of state noted that it was ur­gent to con­sol­i­date pro­vi­sions of de­crees No. 1 and No. 9 into one le­gal act. These doc­u­ments spell out the or­der and con­di­tions of set­ting up new com­pa­nies and pro­duc­tion fa­cil­i­ties in ru­ral ar­eas and small set­tle­ments. “Let us put ev­ery­thing in one doc­u­ment, it will be sim­pler and eas­ier to un­der­stand for po­ten­tial in­vestors and eas­ier to ap­ply in prac­tice”, the Pres­i­dent said.

He in­structed the gov­ern­ment to­gether with the oblast ex­ec­u­tive com­mit­tees to draft this com­pres­sive le­gal act within a month. “Based on the gained ex­pe­ri­ence you should op­ti­mize other reg­u­la­tions, too”, Alexan­der Lukashenko noted.

Thirdly, the head of state in­structed to at­tract as many in­vestors of­fer­ing im­port-sub­sti­tu­tion and ex­port-ori­ented projects as pos­si­ble to the free eco­nomic zones by the end of the year. “A list of im­port-sub­sti­tu­tion prod­ucts has to be ap­proved for at least five years by Jan­uary 1. The gov­ern­ment, oblast ex­ec­u­tive com­mit­tees, Minsk City Hall and the Be­larus Pres­i­dent Ad­min­is­tra­tion have to sub­mit their pro­pos­als as soon as pos­si­ble”.

“Fourthly, ex­pe­ri­ence shows that we should re­view right away the de­sign rules used in con­struc­tion and tech­ni­cal pro­duc­tion stan­dards in or­der to re­duce ma­te­rial- and im­port-in­ten­sity. The gov­ern­ment’s task is to fi­nal­ize this work in the short­est pos­si­ble time”, Alexan­der Lukashenko said.

“Fifthly, a regime of fierce re­source sav­ing should be put in place im­me­di­ately”, the Pres­i­dent de­manded and noted that it should ap­ply to ev­ery­thing from use of ve­hi­cles for gov­ern­ment busi­ness and gov­ern­ment ex­penses to the amount of fuel used by ev­ery ma­chine op­er­a­tor. “We have to pay at­ten­tion to that. We will be re­turn­ing to this is­sue con­stantly in or­der to make it a norm”.

“These are just some sug­ges­tions of par­tic­i­pants of the sem­i­nar which have to be im­ple­mented to­day. We will sum­ma­rize the rest of them and in­clude them in a cor­re­spond­ing pro­to­col of pres­i­den­tial in­struc­tions which means that they will be manda­tory for all gov­ern­ment lev­els”, the head of state con­cluded.

Con­struc­tion of a new dairy fac­tory in Turov is cur­rently in progress. The project in­volves the Lithua­nian cap­i­tal. This will be the first and so far the only en­ter­prise in Be­larus to pro­duce soft cheeses us­ing Ital­ian tech­nol­ogy

Belkom­mun­mash low-floor tram­car Model 843 cor­re­sponds to the best world ana­logues. The new tram­cars

are be­com­ing in­creas­ingly po­plar in the CIS coun­tries

Fruit and vegetable juices pro­duced by the Kuptsov com­pany (the town of Glubokoye) from Be­laru­sian raw ma­te­ri­als are of high qual­ity and do not con­tain ar­ti­fi­cial ad­di­tives

In 2012 Mogilev-based Strom­mashina will man­u­fac­ture 52 bot­tom-hole pumps for the oil in­dus­try. This prod­uct has a good sales po­ten­tial in for­eign mar­kets

At­lant has been on the mar­ket for more

than 40 years. House­hold ap­pli­ances from Minsk are pop­u­lar in the

CIS coun­tries, Europe and even in the dis­tant Australia

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