Strate­gic Equi­lib­rium

In 2012 the out­put of im­port-sub­sti­tut­ing prod­ucts in Be­larus is sup­posed to in­crease by 20% to a to­tal of $3-3.5 bil­lion

Economy of Belarus - - CONTENTS - Olga BELYAVSKAYA

In 2012 the out­put of im­port-sub­sti­tut­ing prod­ucts in Be­larus

is sup­posed to in­crease by 20% to a to­tal of $3-3.5 bil­lion

Fru­gal­ity Les­son

For heads of min­istries, con­cerns and en­ter­prises the sem­i­nar was a brain­storm­ing ses­sion that helped de­ter­mine the key tasks and ways to im­prove the ef­fec­tive­ness of im­port-sub­sti­tu­tion ef­forts. The mat­ter is of vi­tal im­por­tance for Be­larus be­cause im­port sub­sti­tu­tion and the achieve­ment of a for­eign trade sur­plus are now be­com­ing po­lit­i­cal goals.

Pres­i­dent of Be­larus Alexan­der Lukashenko stressed: “In the cur­rent five-year term the gov­ern­ment and the en­tire power ver­ti­cal must fo­cus on achiev­ing a for­eign trade sur­plus. As a con­di­tion of sav­ing for­eign cur­rency and in­creas­ing ex­port, im­port sub­sti­tu­tion is an in­stru­ment to achieve the key goal and is a most im­por­tant el­e­ment of the eco­nomic pol­icy. Im­port sub­sti­tu­tion is par­tic­u­larly nec­es­sary for Be­larus be­cause our coun­try does not pos­sess rich nat­u­ral re­sources”.

2011 saw a record in­flow of for­eign cur­rency pro­ceeds – over $35 bil­lion, 50% up on 2010. Nev­er­the­less, the amount is still in­suf­fi­cient to pay for im­ports and causes dis­pro­por­tions in the econ­omy. It should be taken into ac­count that the 20062010 state im­port sub­sti­tu­tion pro­gram ended last year. The pro­gram was sup­posed to turn the sit­u­a­tion round but failed. In 2011 the ra­tio of im­port to GDP reached 75%, with nearly three fourths of what the coun­try earns spent on im­ports, in­clud­ing non-vi­tal ones.

Ev­ery year bil­lions of US dol­lars are spent on im­port­ing raw ma­teri-

Im­port sub­sti­tu­tion should be­come a pri­or­ity for the Be­laru­sian econ­omy. It will al­low re­duc­ing im­port, keep­ing con­sid­er­able for­eign cur­rency re­serves in the coun­try while mak­ing prod­ucts cheaper, sup­port­ing do­mes­tic man­u­fac­tur­ers and cre­at­ing new jobs. A lot has been done al­ready, how­ever, the re­sults are far from the de­sired ones. What im­pedes the fight against im­port, what can be done to stim­u­late im­port sub­sti­tu­tion, to in­crease ex­port and achieve a for­eign trade sur­plus was dis­cussed at the sem­i­nar held by Pres­i­dent of Be­larus Alexan­der Lukashenko at the end of 2011 for ex­ec­u­tives of cen­tral and lo­cal gov­ern­ment agen­cies.

als and en­ergy, a large choice of con­sumer goods, even those Be­larus can man­u­fac­ture do­mes­ti­cally. It is ridicu­lous that Be­larus has to im­port even rakes, tooth­picks and linen bas­kets. All these things re­sult in a for­eign trade deficit.

The Pres­i­dent of Be­larus re­marked: “Some may say that some coun­tries live with a for­eign trade deficit and their liv­ing stan­dards are much higher. But what is the se­cret be­hind the well­be­ing? Con­stant bor­row­ing? A larger and larger debt? What is the end re­sult? The coun­tries stand on the edge of an eco­nomic abyss. We see it hap­pen­ing to sev­eral Euro­pean economies, which look sta­ble and pros­per­ous from the out­side”.

Be­larus has also used for­eign loans. How­ever, the loans taken out in pre­vi­ous years have been used for in­no­va­tion-driven de­vel­op­ment. They have played a pos­i­tive role: new en­ter­prises have been set up, new jobs have been cre­ated. Be­larus no longer has to im­port as many buses, trucks, grain har­vesters, and agri­cul­tural equip­ment, var­i­ous kinds of con­sumer goods. It means that the money in­vested in the pro­duc­tion sec­tor has started to bring re­sults.

The Pres­i­dent in­structed the gov­ern­ment to con­tinue con­cen­trat­ing re­sources on cre­at­ing high­ly­ef­fec­tive im­port-sub­sti­tut­ing and ex­port-ori­ented en­ter­prises.

Alexan­der Lukashenko said: “By mo­bi­liz­ing the po­ten­tial of in­dus­tries and regions, we can reach a for­eign trade sur­plus of $1.5 bil­lion. The level guar­an­tees sta­ble re­sources avail­abil­ity for the econ­omy and is a ma­jor in­di­ca­tor of the eco­nomic se­cu­rity”.

In 2012 the gov­ern­ment is sup­posed to en­sure sta­ble and non­in­fla­tion­ary eco­nomic growth. The coun­try is well-po­si­tioned to make it hap­pen. The 5% ex­pected GDP growth is bal­anced with the nec­es­sary re­sources.

The tasks will be achieved pri­mar­ily through ubiq­ui­tous fru­gal­ity, fru­gal­ity for ev­ery tech­no­log­i­cal op­er­a­tion and ev­ery tonne of raw ma­te­ri­als. It is not an in­struc­tion but a re­quired style of life and econ­omy man­age­ment. Fru­gal­ity and hard ev­ery­day work of ev­ery Be­laru­sian can make Be­larus richer, will al­low reach­ing all the goals of the five-year term, will se­cure an ex­port level that will steadily ex­ceed im­port, beef­ing up the na­tional se­cu­rity in the end.

Cor­rec­tion of Mis­takes

Alexan­der Lukashenko urged heads of gov­ern­ment agen­cies and en­ter­prises to learn from the ex­pe­ri­ence of the past, to un­der­stand what hin­dered the ef­fec­tive­ness of im­port­sub­sti­tut­ing pro­grams, to un­der­stand why their prac­ti­cal re­sults are still in­suf­fi­cient and what slows down ex­port growth rates.

Over the last few years the com­mod­ity spec­trum of Be­laru­sian ex­port has had vir­tu­ally no changes: Be­larus still sells few ex­pen­sive high-tech prod­ucts. Prod­ucts with a low de­gree of pro­cess­ing are still ex­ported, for in­stance, round tim­ber and sawn wood. Be­larus ex­ports

those while im­port­ing fur­ni­ture, flake boards, fiber boards, paste­board, and pa­per made of these com­modi­ties. As a re­sult, for­eign com­pa­nies in­stead of Be­larus get the bulk of the added value in rev­enues. The high share of im­ported com­po­nents in the pro­duc­tion of im­port-sub­sti­tut­ing ex­ports is an­other prob­lem.

To re­solve it, the head of state urged to ad­vance man­u­fac­tur­ing projects that in­volve a high share of lo­cally avail­able re­sources and a higher de­gree of their pro­cess­ing. Those are con­struc­tion ma­te­ri­als pro­duc­tion, tim­ber pro­cess­ing, food in­dus­try, agribusi­ness, phar­ma­ceu­tics, chem­i­cal and biotech in­dus­tries, man­u­fac­tur­ing of tech­ni­cally complicated com­po­nents.

To hit the tar­gets in 2012 and se­cure a bal­anced for­eign trade, ev­ery ex­ec­u­tive must be aware of his or her con­tri­bu­tion to the to­tal out­put and how much jus­ti­fied im­port is re­quired to ac­com­plish the over­all goal. Such ef­forts should pro­duce bal­anced ex­port growth that should ex­ceed im­port growth by at least 10%. The Econ­omy Min­istry has de­ter­mined the point of eco­nomic bal­ance. Be­larus has to ex­port at least 60-65% of the in­dus­trial out­put. It is the task the head of state set for the en­tire power ver­ti­cal and the ad­min­is­tra­tion of staterun en­ter­prises. The State Con­trol Com­mit­tee will keep an eye on the ful­fill­ment of the in­struc­tion.

Suc­cess­ful de­vel­op­ment of the in­fra­struc­ture of Be­laru­sian ex­port is of­ten hin­dered by the poor per­for­mance of dis­tri­bu­tion chains of Be­laru­sian en­ter­prises and the mar­ket­ing pol­icy that lacks en­ergy. Ad­ver­tis­ing and lo­gis­tics of Be­laru­sian pro­duc­ers are still be­hind world stan­dards.

The prob­lems out­lined by the Pres­i­dent of Be­larus in­clude high cost of in­vest­ment im­ports and high costs of man­u­fac­tur­ing. Ef­forts of gov­ern­ment agen­cies to sell im­port­sub­sti­tut­ing prod­ucts lack co­or­di­na­tion. There­fore, the prod­ucts sell poorly on the home mar­ket, with im­ports given pref­er­ence.

Alexan­der Lukashenko said: “More­over, im­port has be­come a kind of a feed­ing bowl for some ex­ec­u­tives and spe­cial­ists. Although there is a sys­tem of ten­ders in place, some cun­ning peo­ple are on the look­out for loop­holes. I would like to warn them that any un­jus­ti­fied im­port will be con­sid­ered a se­ri­ous vi­o­la­tion en­tail­ing all the en­su­ing con­se­quences”.

Fo­cus on Lo­cal Re­sources

The ad­vance­ment of en­ter­prises re­ly­ing on lo­cal re­sources should be­come a pri­or­ity av­enue for the de­vel­op­ment of the Be­laru­sian econ­omy, Prime Min­is­ter of Be­larus Mikhail Myas­nikovich is con­vinced.

“Cal­cu­la­tions in­di­cate that the de­vel­op­ment of en­ter­prises re­ly­ing on lo­cal re­sources is the most ad­van­ta­geous vari­ant for the Be­laru­sian econ­omy. It is the key re­serve of im­port sub­sti­tu­tion, im­prove­ment of la­bor pro­duc­tiv­ity, bet­ter lo­cal stock pro­cess­ing,” the head of gov­ern­ment said at a sem­i­nar.

This is why three strate­gic in­dus­tries – wood­work­ing, ex­trac­tion and pro­cess­ing of po­tas­sium, pro­duc­tion of con­struc­tion ma­te­ri­als –

should be vig­or­ously de­vel­oped in Be­larus. In­dus­tries that rely on lo­cal re­sources and boast min­i­mal im­port con­sump­tion, in­clud­ing agri­cul­ture, should ad­vance the econ­omy and ac­count for over 35% of the to­tal ex­port growth in the five-year term. The pro­gram for the so­cial and eco­nomic de­vel­op­ment of the coun­try in the five-year term has been dis­cussed via this an­gle.

Work­ing on ex­port de­vel­op­ment, Be­laru­sian en­ter­prises and in­dus­tries should fully ex­plore the op­por­tu­ni­ties granted by the Sin­gle Eco­nomic Space.

The Prime Min­is­ter said: “At the same time we en­joy the syn­ergy of three unique fac­tors: an in­crease in sol­vent de­mand of our part­ners in the Cus­toms Union, an ex­change rate of the Be­laru­sian ru­ble that fa­vors ex­port, a com­mon mar­ket with high tar­iff pro­tec­tion”.

Yet the ef­fect of these fac­tors is not limited. “The win­dow of op­por­tu­nity” may be closed fast so lo­cal man­u­fac­tur­ers have no time to waste. Sev­eral com­modi­ties are now sub­ject to tar­iffs lower than those Be­larus had be­fore join­ing the Cus­toms Union, with their com­pet­i­tive abil­ity re­duced. There­fore, only stronger com­pet­i­tive abil­ity, lower prices and bet­ter qual­ity of prod­ucts can stand against im­port. Rus­sia’s ac­ces­sion to the WTO will re­duce tar­iff pro­tec­tion for sev­eral com­modi­ties on the com­mon mar­ket in the medium term.

In view of these cir­cum­stances Be­larus put for­ward the ini­tia­tive to in­tro­duce pro­tec­tive tar­iffs on the im­port of tablets and note­books to the Cus­toms Union. It is not prof­itable to start lo­cally man­u­fac­tur­ing these prod­ucts be­cause im­ports are in­ex­pen­sive. Be­larus in­tends to con­vince Rus­sian and Kazakh coun­ter­parts that eco­nomic con­di­tions should be en­abled to lo­cal­ize the pro­duc­tion of tablets and note­books in the Sin­gle Eco­nomic Space.

In his speech Mikhail Myas­nikovich pointed out the need to re­duce Be­larus’ GDP en­ergy in­ten­sity. In 2012 the fig­ure should be re­duced by at least 3-4%. At the same time ma­te­ri­als con­sump­tion of man­u­fac­tur­ing pro­cesses should be re­duced by 3-4%. It will make a di­rect con­tri­bu­tion to the ef­forts to sub­sti­tute im­ports and re­duce for­eign trade deficit. The gov­ern­ment plans to in­tro­duce se­vere sanc­tions for en­ter­prises that fail to hit en­ergy sav­ing tar­gets.

An­a­lyz­ing the mea­sures taken to re­duce im­port, the Prime Min­is­ter re­marked the power ver­ti­cal, par­tic­u­larly town and dis­trict lev­els, heads and spe­cial­ists of en­ter­prises over­look the prob­lem for now.

In line with the scheme of im­port­sub­sti­tu­tion ef­forts, all com­modi­ties are di­vided into three groups. The first one in­cludes im­ports, which ana­logues are made in Be­larus but lack qual­ity or are made in in­suf­fi­cient amounts. Min­istries and re­gional ad­min­is­tra­tions will have to im­prove their com­pet­i­tive abil­ity and boost the ex­ist­ing man­u­fac­tur­ing ca­pac­ity. 2011 saw this group of com­modi­ties achieve a for­eign trade sur­plus for the first time. How­ever, the re­sult was achieved by mon­e­tary fac­tors in­stead of struc­tural changes in the econ­omy.

The sec­ond group in­cludes prod­ucts, which have not been man­u­fac­tured do­mes­ti­cally yet and have not been cov­ered by gov­ern­ment pro­grams. New en­ter­prises are be­ing set up to make them. It is a clas­sic ex­am­ple of di­rect im­port sub­sti­tu­tion. Im­ports and ex­ports of these com­modi­ties can­celed each other out in 2011.

The third group in­cludes im­ports, which man­u­fac­tur­ing in Be­larus is in­ad­vis­able. Their share makes 16%. The group in­cludes mo­bile phones and tablet com­put­ers among other things.

The gov­ern­ment be­lieves it is nec­es­sary to re­think the en­tire list of new prod­ucts to man­u­fac­ture and their man­u­fac­tur­ing con­di­tions. In­vest­ments of pri­vate busi­nesses and transna­tional cor­po­ra­tions should be wel­comed. As an ex­am­ple Mikhail Myas­nikovich re­ferred to co­op­er­a­tion be­tween the Be­laru­sian elec­tron­ics man­u­fac­turer Hor­i­zont and the Chi­nese cor­po­ra­tion Midea. Thanks to the part­ner­ship the Be­laru­sian

com­pany man­aged to triple its ex­port in 2011.

Con­nec­tion Be­tween Sci­ence and Man­u­fac­tur­ing

Mat­ters of im­port sub­sti­tu­tion and ways to in­crease ex­port should be han­dled as part of an over­all pro­duc­tion sec­tor pol­icy. This is why the Academy of Sci­ences has put forth the pro­posal to put to­gether a law on in­dus­trial pol­icy.

Chair­man of the Pre­sid­ium of the Na­tional Academy of Sci­ences of Be­larus Ana­toly Ruset­sky said at the sem­i­nar, to achieve bal­anced de­vel­op­ment, ex­ist­ing en­ter­prises have to in­crease their out­put and ex­port while new en­ter­prises have to be set up, pri­mar­ily in in­dus­tries with a high added value, a high share of lo­cal com­po­nents, and a good ex­port po­ten­tial. This is why the Academy is ea­ger to ac­com­plish a se­ries of ad­vanced tech­no­log­i­cal projects. In or­der to in­crease ex­port and the out­put of im­port sub­sti­tutes, coun­try­wide strate­gies have been put to­gether to bol­ster ex­port of sci­ence-in­ten­sive prod­ucts by or­ga­ni­za­tions run by the Academy of Sci­ences and a pro­gram to make im­port sub­sti­tutes in 2011-2015 has been com­piled. By 2015 im­port sub­sti­tu­tion of the biotech in­dus­try alone is ex­pected to reach $300 mil­lion.

Since in­no­va­tions are im­por­tant for the na­tional econ­omy, Alexan­der Lukashenko urged sci­en­tists to work out and ad­vance the re­search prod­ucts the mar­ket needs. Suc­cess­ful im­port sub­sti­tu­tion is im­pos­si­ble with­out sci­en­tific achieve­ments. For in­stance, Be­larus im­ports about $0.5 bil­lion worth of med­i­ca­tions while it can pro­duce a con­sid­er­able part of them. There are sim­i­lar prob­lems in other in­dus­tries. This is why the pro­duc­tiv­ity of re­search projects has to im­prove.

Be­laru­sian In­dus­try Min­is­ter Dmitry Ka­terinich has come up with an ex­port de­vel­op­ment strat­egy of his own. At present the In­dus­try Min­istry is im­ple­ment­ing 19 in­no­va­tion projects that will spur the growth of the for­eign trade sur­plus of cer­tain kinds of prod­ucts in the fu­ture. With a view to ex­pand­ing man­u­fac­tur­ing co­op­er­a­tion in­side the in­dus­try, lo­cal pro­grams are com­piled to re­duce the im­port com­po­nent in Be­larus-made prod­ucts. Im­prov­ing the ef­fec­tive­ness of im­port sub­sti­tu­tion, the In­dus­try Min­istry fo­cuses ef­forts on set­ting up hold­ing com­pa­nies, ful­fill­ing medium-term re­tool­ing pro­grams, in­clud­ing in as­so­ci­a­tion with other min­istries.

Dmitry Ka­terinich has sug­gested set­ting up an ex­port bank to im­prove the coun­try’s ex­port po­ten­tial.

The In­dus­try Min­is­ter re­marked: “In in­ter­na­tional prac­tice in­vest­ment goods are as a rule sold us­ing ex­port loans via a spe­cial­ized fi­nan­cial body. There­fore, it is time for Be­larus to set up an au­tho­rized ex­port bank that will spe­cial­ize in ex­port­ing ad­vanced tech­ni­cal prod­ucts to for­eign mar­kets”.

Be­larus has cre­ated a suf­fi­cient le­gal base to en­cour­age ex­port sales. It has been proven ef­fec­tive in past years. The sys­tem in­cludes ex­port loans, the cre­ation of a state leas­ing com­pany, a sys­tem to in­sure ex­ports. Pres­i­den­tial De­cree No. 466 was signed in 2009 to sup­port Be­laru­sian ex­ports shipped to the Cus­toms Union by com­pen­sat­ing part of the in­ter­est rate for the loans is­sued by non-res­i­dent banks to buy Be­larus-made ma­chines. The de­cree ex­pired in 2011. Tak­ing into ac­count the pos­i­tive re­sults, the In­dus­try Min­istry sug­gests the de­cree’s ef­fect should be pro­longed onto 2012.

Be­laru­sian Trade Min­is­ter Valentin Chekanov told par­tic­i­pants of the sem­i­nar, in 2011 the share of im­ports shrank con­sid­er­ably thanks to im­port sub­sti­tu­tion. The share of im­ported mac­a­roni prod­ucts dropped 1.5 times in com­par­i­son with 2006, re­frig­er­a­tors and freez­ers – 2.1 times down, wash­ing ma­chines – 2.5 times down, to­bacco prod­ucts – 7.5 times down.

Along with im­port sub­sti­tu­tion the Trade Min­istry works hard to bol­ster Be­laru­sian ex­port. New ap­proaches to Be­laru­sian dis­tri­bu­tion chains abroad are in­tro­duced. Com­pa­nies with ver­sa­tile busi­ness in­ter­ests are set up at the in­dus­try level and the na­tional level to dis­trib­ute prod­ucts. The Be­laru­sianAr­me­nian trad­ing house is an ex­am­ple. Its share in the to­tal Be­laru­sian ex­port to Ar­me­nia has reached 16%.

Valentin Chekanov said: “The cre­ation of such fa­cil­i­ties op­ti­mizes lo­gis­tics costs and ad­vances Be­laru­sian prod­ucts abroad”.

Eco­nomic Pri­or­i­ties

Re­sults of the sem­i­nar were sum­ma­rized by Pres­i­dent of Be­larus

Alexan­der Lukashenko. First of all, it is nec­es­sary to en­force all-round fru­gal­ity prac­tices.

The head of state stressed: “Ev­ery­one must econ­o­mize. The gov­ern­ment, min­istries, con­cerns, oblast, dis­trict, and town ad­min­is­tra­tions must en­able all-round strictest fru­gal­ity as a po­lit­i­cal goal. Fru­gal­ity should be the main in­di­ca­tor to as­sess per­for­mance of em­ploy­ees and en­ter­prises”.

It will be also nec­es­sary to ra­tio­nal­ize the im­port of in­ter­me­di­ate goods, to re­duce im­port con­sump­tion of the na­tional econ­omy, ma­te­ri­als con­sump­tion and en­ergy con­sump­tion of man­u­fac­tur­ing pro­cesses. Both eco­nomic and ad­min­is­tra­tive meth­ods will be used to stim­u­late these pro­cesses.

Eco­nomic meth­ods should be used to reg­u­late the cost of en­ergy re­sources for the cor­po­ra­tions that use them in­ef­fec­tively. It is nec­es­sary to in­tro­duce con­sump­tion lim­its for nat­u­ral gas and electricity. Those who ex­ceed them should pay for them many times more. Not at the ex­pense of state en­ter­prises.

Ad­min­is­tra­tive mea­sures will be used to toughen ex­pen­di­ture of fuel and en­ergy re­sources per prod­uct and the state stan­dards for tech­no­log­i­cal equip­ment. World stan­dards will be in­tro­duced step by step. The rel­e­vant mech­a­nisms should be launched as early as in 2012. In the near fu­ture it is nec­es­sary for the power en­gi­neer­ing in­dus­try to gen­er­ate at least 25% of electricity and heat­ing en­ergy us­ing lo­cal fu­els, re­cy­clable and al­ter­na­tive en­ergy sources. The GDP en­ergy in­ten­sity has to be re­duced by a third in the cur­rent five-year term. The year 2013 should be­gin with a re­newed econ­omy with lower en­ergy and ma­te­ri­als con­sump­tion.

The Pres­i­dent in­structed the cen­tral and re­gional gov­ern­ment agen­cies to in­ven­tory all the en­ter­prises in 2012 and to take mea­sures against those that con­trib­ute to the mis­bal­ance of the for­eign trade.

The Pres­i­dent stressed: “Ev­ery­one knows the re­quire­ments: ef­fec­tive­ness of an or­ga­ni­za­tion is mea­sured by reg­is­tered profit and salaries of work­ers. I am con­vinced only large and well-equipped en­ter­prises can sur­vive com­pe­ti­tion and se­cure dy­namic eco­nomic de­vel­op­ment”.

Ex­port­ing more mer­chan­dise and ser­vices is task num­ber two. Be­larus’ ex­port is sup­posed to be in­creased by 120% in the cur­rent five-year term. The cen­tral gov­ern­ment and oblast ad­min­is­tra­tions will have to take rad­i­cal mea­sures to im­prove the ef­fec­tive­ness and the com­pet­i­tive abil­ity of the Be­laru­sian econ­omy, its branches and in­di­vid­ual en­ter­prises.

Per­for­mance of ex­ec­u­tives will be eval­u­ated tak­ing into ac­count the full im­port ob­tained via di­rect im­port and via me­di­a­tors on the home mar­ket. Ev­ery pur­chase via a me­di­a­tor will be an­a­lyzed. The gov­ern­ment and oblast ad­min­is­tra­tions will have to use lo­cal raw ma­te­ri­als to in­crease ex­port by more than a third with­out im­port­ing more raw ma­te­ri­als. Agribusi­ness has to in­crease ex­port up to $7 bil­lion by 2015. By the same time the Health­care Min­istry should pro­duce 50% of the med­i­ca­tions Be­larus needs and ex­port them to for­eign mar­kets, in­clud­ing Rus­sia and Kaza­khstan.

Us­ing all the ad­van­tages granted by the Sin­gle Eco­nomic Space is the third pri­or­ity. Alexan­der Lukashenko has in­structed to work out an in­dus­trial pol­icy pro­gram tak­ing into ac­count the Sin­gle Eco­nomic Space con­di­tions. The doc­u­ment should be ad­justed to the de­vel­op­ment of the in­dus­trial com­plex of Rus­sia and Kaza­khstan.

Alexan­der Lukashenko said: “We do not need thought­less com­pe­ti­tion in the com­mon eco­nomic space. Our economies should com­ple­ment each other. By cre­at­ing joint hold­ing com­pa­nies, we should act to­gether on for­eign mar­kets of raw ma­te­ri­als and for­eign sales mar­kets”.

Be­larus can and should be the in­no­va­tor in the Sin­gle Eco­nomic Space. To do it, the coun­try has to promptly adapt and de­velop the lat­est tech­nolo­gies. Be­sides, the po­ten­tial of Be­larus’ co­op­er­a­tion with South­east Asia, Africa, other promis­ing parts of the world where Be­laru­sian prod­ucts may sell is not fully ex­plored.

Be­larus can­not go for eco­nom­i­cally un­jus­ti­fied projects to sub­sti­tute in­di­vid­ual prod­ucts de­spite their mas­sive im­port fig­ures. It is the fourth task of the coun­try’s eco­nomic de­vel­op­ment. All in­vest­ment projects should be able to earn for­eign cur­rency in the new five-year term. Their re­coup­ment pe­riod can­not ex­ceed ten years. Min­i­miz­ing in­vest­ment costs is an­other re­quire­ment.

“Most of them should take care of equip­ment that we do not have and that we can­not make to­day or

to­mor­row. In­stal­la­tion costs should be re­duced to a wise min­i­mum,” ex­plained the head of state.

Alexan­der Lukashenko warned the gov­ern­ment that in­vest­ment im­port should not be re­duced but its ef­fec­tive­ness must be con­trolled.

In­creas­ing the out­put of im­port sub­sti­tutes is task num­ber five. Sub­sti­tu­tion mea­sures should cover at least 60-65% of non-crit­i­cal im­ports. In 2012 the out­put of im­port sub­sti­tutes should rise by 20% in com­par­i­son with 2011 to a to­tal of $3-3.5 bil­lion. There are plans to take care of the en­tire range of im­ports, which sub­sti­tu­tion is eco­nom­i­cally ef­fec­tive.

Re­duc­ing im­port con­sump­tion in civil en­gi­neer­ing is an­other task. The coun­try should start us­ing ra­tio­nal prac­tices to build homes, civil and in­dus­trial fa­cil­i­ties. The Pres­i­dent tasked the gov­ern­ment and the Na­tional Academy of Sci­ences of Be­larus with work­ing out mea­sures to tighten the stan­dards that con­trol the use of raw ma­te­ri­als.

Alexan­der Lukashenko said: “It is time to start us­ing new ma­te­ri­als with high tech­ni­cal pa­ram­e­ters that en­able the same ex­ploita­tion qual­i­ties and re­quire less raw ma­te­ri­als. I urge you to ra­tion ma­te­rial and en­ergy re­sources in the civil en­gi­neer­ing in­dus­try start­ing next year”.

Sub­sti­tut­ing con­sumer im­ports is task num­ber seven. Alexan­der Lukashenko re­marked, the mar­ket should be sat­u­rated with qual­ity com­pet­i­tive Be­larus-made con­sumer goods. Be­larus can make many of the im­ports on its own. The do­mes­tic raw ma­te­ri­als and the pro­cess­ing ca­pac­ity are suf­fi­cient for it. The Trade Min­istry should bring at least 3-5 in­ter­na­tion­ally rec­og­nized in­vestors into the coun­try for the sake of start­ing the pro­duc­tion of sell­able con­sumer goods.

De­vel­op­ment of mo­ti­va­tional mech­a­nisms of im­port sub­sti­tu­tion is task num­ber eight that has to be ad­dressed soon. All lev­els of state ad­min­is­tra­tion – from mem­bers of the cen­tral gov­ern­ment to heads of en­ter­prises – should work out an ef­fec­tive scheme to en­cour­age and re­ward la­bor de­pend­ing on re­sults of ex­port and im­port sub­sti­tu­tion. These spheres are the foun­da­tion for bal­anced and sus­tain­able de­vel­op­ment of the Be­laru­sian econ­omy.

Alexan­der Lukashenko re­marked: “I will keep an eye on re­sults all the time. I am not go­ing to sti­fle any­one’s ini­tia­tive but fail­ures will not be tol­er­ated. Re­mem­ber that se­cur­ing dy­namic bal­anced de­vel­op­ment of the econ­omy and bet­ter liv­ing stan­dards of Be­laru­sian cit­i­zens is a mat­ter of honor for each of us”.

Sum­ming re­sults of the two-day sem­i­nar, the Pres­i­dent is­sued key in­struc­tions to heads of gov­ern­ment agen­cies and called upon all par­tic­i­pants of the sem­i­nar to take con­crete steps to achieve the goals that had been set.

By mo­bi­liz­ing the po­ten­tial of in­dus­tries and regions, Be­larus can earn $1.5 bil­lion in trade sur­plus, Pres­i­dent Alexan­der Lukashenko said at the na­tion­wide sem­i­nar on im­port sub­sti­tu­tion. De­cem­ber 2011

Ex­port of prod­ucts

made by FEZ Minsk res­i­dents in 2011 rose by 85%. Prime Min­is­ter of Be­larus Mikhail

Myas­nikovich vis­its the en­ter­prises

in the town of Zaslavl that make part of the free eco­nomic zone

At the end of 2011, Kras­nosel­skstroi­ma­te­ri­aly com­mis­sioned the startup com­plex of the clinker pro­duc­tion line and a coal prepa­ra­tion shop

Osipovichi Car­riage Works has pro­duced Be­larus’ first tankwagon. By the end of 2012, the plant will pro­duce 400450 freight wag­ons per month, part of which will be

ex­ported

Com­pact school bus MAZ-241030 pow­ered by a Euro-4 en­gine has been de­signed at Minsk Au­to­mo­bile Plant. It meets all safety re­quire­ments for trans­porta­tion of chil­dren. The top de­signed speed of the bus is 60 km/h

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