On a Regional Scale
In 2011 over $1.8 billion in foreign investments was channeled into the real economic sector of Minsk Oblast
In 2011 over $1.8 billion in foreign investments was channeled into the real economic sector of Minsk Oblast
Mutually Beneficial Partnership
The capital region is the second biggest contributor to the national economy. It boasts a favorable geographical position, developed transport infrastructure, sufficient land resources, highly qualified personnel, proximity to Minsk. However, the latter is to blame for uneven distribution of investments. Businessmen are mostly interested in the territories closest to the capital city, while we would prefer investments into remote areas that need diverse and high-tech produc-
The amount of inward investments can be viewed as an indicator of business appeal of a country or a region, the level of trust of foreign partners in financial and economic environment of a particular place. Local authorities play an important role here: they should present and sell a peculiar commodity called investment opportunities. Deputy Chairman of the Economy Committee of the Minsk Oblast Executive Committee Yelena Sushkevich talks to the Economy of Belarus Magazine about the state of efforts to raise foreign investments in Minsk Oblast, the centermost and biggest region of Belarus.
tion facilities. In the end, this will help create new jobs and raise salaries. It is particularly relevant for the Krupki, Berezino, Uzda, Kopyl, Vileika and some other districts of the oblast.
“Naturally, Minsk District is of greatest interest for investors; however, we believe other districts also have many things to offer. On our part we are ready to assist them in many ways and consider their proposals. Today the most promising areas include Dzerzhinsk District part of which was included in the Minsk free economic zone, as well as Smolevichi District and Logoisk District where satellite towns are to be constructed. Borisov District has a great potential, too. Major projects financed by foreign capital are being implemented or will soon be launched here,” Yelena Sushkevich says.
I would like to say that in 2011 Minsk Oblast made some progress in raising foreign investments, although not all plans came to fruition. Last year, over $1.8 billion in foreign investments was channeled into the real economic sector (up 9.4 times compared with 2010), including $363.8 million in foreign direct investments.
Foreign direct investments are the most desirable form of foreign capital. It allows materializing largescale projects and is an alternative to increasingly expensive loans, an additional source of foreign currency revenues, an instrument of introducing innovative technologies that guarantee access to foreign markets.
Simply speaking, the term “foreign investment” embraces credits and loans, the money that would need to be paid back. Meanwhile foreign direct investment remains in the country. Last year Minsk Oblast raised investments from 59 countries around the world. More than a third came from Russia. Cyprus was second with $44.4 million (or 12.2%), Lithuania $26.9 million (7.4%), China $24.9 million (6.8%), Germany $21.2 million (5.8%).
In terms of foreign investment, the year 2011 was the best one for the past seven years. In terms of direct investment there were better times. But we see a positive trend here: they increased 3.7 times as against 2010, said Yelena Sushkevich.
Net FDI (excluding debt for goods, works, and services) for the year increased 2.3 times up to $104 million. About 54% of this sum was invested in the manufacturing industry. The investments were also put into trade, repair of motor vehicles, production of household goods, personal items (15.2%), transport and communications (13.1%).
The bulk of the investments was raised by organizations without departmental affiliation through reinvestment of profits, construction projects, contributions to the authorized fund. In 2012, Minsk Oblast intends to raise $187 million of investment on a net basis. Major investment projects involving foreign companies are to be launched in many districts.
Examples of successful cooperation with foreign investors include Henkel Bautechnik, Coswick, Coca Cola Beverages, Lekpharm. They have been working on the Belarusian market for years and have earned a high reputation. German investments were used to create the Guering Bel company to produce high-precision tools in Logoisk. The same town is home to the foreign company Minavto that produces metal and plastic parts for automobile industry on the giveand-take basis and also produces components for assembly automotive equipment conveyors of leading European firms. More than 96% of products are exported.
Priority to Production
Of course, the inflow of investments depends on the favorable business climate, which has been created in Belarus for foreign business. Extensive preferences are provided by Decree No. 10 “Concerning the creation of additional conditions for investment activity in the Republic of Belarus”. According to the document, customs duties and VAT are not levied on the import of equipment, tenders, and the choice of a general contractor.
Foreign companies can use their design and estimate documentation adjusted to the Belarusian conditions. They are entitled to VAT deductions on the products purchased in the course of the project. Since the decree was enforced in 2009 Minsk Oblast has concluded over 400 investment contracts worth Br9.5 trillion, of which about 50 involve foreign investment.
It is worth saying that when signing investment agreements,
companies take into consideration not only benefits for the whole region, but also for a concrete district. Thus, some towns need projects with a small volume of investments as they help solve the problem of employment. However, the assistance of foreign companies in setting up various production facilities is more important.
Foreign investors are expected to help open new high-tech enterprises in the region in the near future. For instance, DI Juice of Cyprus will invest $15 million in the construction of a complex which will comprise a plant to produce alcoholic beverages and a logistics center. Lithuanian Morozproduct will funnel $6 million into the project to set up an ice cream plant in Pukhovichy District. The project will be completed in two years. We are also eager to cooperate with foreign companies in woodworking. Particularly, Austrian Egger will launch the production of flake boards in Borisov District.
A plant to manufacture Swiss commuter trains will be built near Fanipol, Dzerzhinsk District. An important project to set up the Belarusian-chinese industrial park will be implemented in Smolevichi District.
A joint venture to assemble agricultural equipment will be established at Minskoblagroservice. Convex International and WM Kartoffeltechnik Gmbh signed the relevant letter of intent at the Belarus Investment Forum in Frankfurt am Main in November 2010. The forum was held as part of the European Finance Week.
Investors are also interested in the Belarusian agricultural industry. We receive proposals from Israeli, Russian, Iranian businessmen. Thus, Iran’s Eastern Sheep will inject almost $12 million in the construction of a sheep breeding complex for 10,000 sheep in Logoisk District. Foreign investors bought shares of the Velyatichi and Vishnevka 2010 agricultural plants. They are eager to build turkey breeding farms. TDF Technology Holding AG of Switzerland partakes in the project to build a biogas complex in the Lan-nesvizh agricultural company. By the way, the first biogas complex with the capacity of 2MW was built at the agricultural company Snov.
Transit Plus Tourism
Minsk Oblast has a huge potential to promote tourism, first of all, ecological, health-improving, agricultural, sport, and transit tourism. The centuries-old cultural and historical heritage is of international interest; ecological systems and natural landscapes of the region are unique. The clean environment attracts tourists, too. Minsk Oblast has a broad network of health resorts that provide popular treatment and recreation services.
It is true that recreation and tourism infrastructure is still underdeveloped in the region. Foreign businessmen can be offered a number of interesting projects here. Work in this area has already been launched. Thus, an agreement has been reached with an Iranian
investor to construct a sports and recreation center and a tourist village near the Zaslavl reservoir.
Golf Club (the Russian Federation) plans to invest $18 million in a golf center in Minsk District. The facility will open in 2012. A residential compound will be built nearby by 2014.
The Naroch Lake area has a great development potential. A special program has been adopted to provide investors with preferences to run projects. Unfortunately, foreign businessmen do not rush to invest their money in this Belarusian resort area yet. But we think the key word here is “yet”. We believe that local authorities should be more flexible and mobile.
The logistics sector is another promising investment field, as main international transport corridors pass through the oblast. Out of 22 sites determined for the construction of transport and logistics centers, 17 are located in Minsk District. Investors from Lithuania, the UK, Iran and Azerbaijan come to do business in the region. Azerbaijan is investing in the construction of a trade and logistics center Interstroiportalplus ($18 million of investment). Iran is partaking in the construction of a transport and logistics center Prilesie ($145 million).
On the whole, about $70 million was injected into the development of the Minsk District logistics in 2011. First start-up facilities were put into operation at eight logistics complexes: Beltamozhservice, Blt-logistic, Ozertso-logistic, Belvingeslogistic, SHATE-M Plus, Twentyfour,belmagistralavtotrans, Krafttrans.
Construction works at six more sites are underway. It is worth mentioning that the major goal of logistics centers is to provide a full range of transport and logistics services for industrial and trading companies in cargo transportation and delivery, rationalization of routes and transportation mode.
In a bid to encourage investment in the region, local authorities meet with foreign investors, organize presentations of promising projects. The economic potential of the region was presented at large international forums, including in Germany, Kazakhstan, and Lithuania, which has a positive impact on the inflow of foreign investment in the local economy.
company established with the
help of Canadian investors produces wood block flooring
Since 2000 the company MINAVTO of the German holding company G-tec has been making component parts for car producers of Western Europe, Belarus and Russia
Transport and logistics center Belvingeslogistik operates near the village of Rakov. Warehouses and
chilling rooms, a parking lot for heavy-duty trucks, offices and cafes are located on the area of 10 hectares
About Br22 billion was invested in the upgrade of the Naroch hotel that now offers comfortable twoand one-bed rooms for 99 people