By 2015 Belarus’ high-tech exports are expected to approach $8 billion
By 2015 Belarus’ high-tech exports are expected to approach $8 billion
Intellect and innovations should become the major driving force behind Belarus’ economic development to counterbalance the lack of natural resources. The innovation potential can generate dozens of billions of dollars every year, but so far it is not used in full. Will Belarus be able to become an innovative country, will domestic innovations be efficient, what breakthrough sci-tech projects will be implemented in the near future and will Belarusian scientists and businessmen be able to make money from innovative solutions? These and other questions have been addressed to Chairman of the State Committee for Science and Technology Igor VOITOV.
Mr Voitov, last year Belarus launched a new innovative development program to cover the next five years. What would you say about the first results of the program?
In 2011, the implementation of the 24 key projects resulted in the commissioning of new innovative and import-substituting companies and production facilities. Most of these projects deal with production and sale of high quality import substituting products on the domestic and foreign market. This is designed to reduce import and improve the foreign trade balance. In a bid to enhance the competitiveness of domestic products we introduced cutting-edge technologies and equipment and used our own resources.
For example, the Energy Ministry commissioned a CCGT at Minsk CHPP No. 5. This is expected to save about 200,000 tonnes of fuel equivalent per year and halve the deficit of energy resources in the region. Bellesbumprom Concern completed the technical upgrade and renovation of the Spartak paper mill increasing the raw materials conversion rate to 100%. The Architecture and Construction Ministry upgraded the Svetlogorsk house-building factory. The factory commissioned a new batching plant and a technological line producing floor slabs, exterior and interior wall panels. In line with the space engineering program, the State Defense Industries Committee finished the construction of a unit to produce and test special devices used in spacecraft and ground tracking stations.
Belneftekhim Concern implemented a series of innovative projects, including projects to produce a high-octane number component to improve the quality of gasoline and bring it in compliance with European environmental standards. Other projects of Belneftekhim Concern included the construction of a diesel hydrotreater, production of diesel fuel with low sulphur content and other properties required by the Euro-5 standard.
I would like to mention some remarkable projects in the hightech field. A Belarus-india training center has opened at the High-
Tech Park. The center will train highly qualified IT specialists and enhance qualifications of the staff of IT departments. The infrastructure of the center includes a laboratory in the High-tech Park and four regional training centers at the universities of Gomel, Vitebsk, Grodno and Brest. All the five centers make a single educational complex and communicate via videoconferencing. The center boasts leading teachers from Belarus, India and other countries, specialists of major IT companies, educational institutions and research centers.
We have done a lot to improve the legal framework for research and innovations. Last year, the House of Representatives of the National Assembly of Belarus passed draft laws “Concerning the state innovative policy and innovative activity of the Republic of Belarus” and “Concerning amendments and additions to some laws of the Republic of Belarus dealing with the state innovative policy and innovative activity”, a new version of the law “Concerning copyright and related rights”. The President has passed a decree “Concerning measures to enhance the efficiency of using intellectual property items”.
Amendments and additions have been introduced to the Tax Code to provide exemptions from income tax, land tax and real estate tax for innovators, innovative and hightech products. The State Committee for Science and Technology is currently working on the decree “Concerning the formation of the list of innovative products”, resolution of the Council of Ministers on the measures to enforce this decree and resolution of the Council of Ministers “Concerning the approval of the list of high-tech products of the Republic of Belarus.”
These are only the first steps towards the implementation of the new innovative development program. It is expected to help put the national economy on the tracks of intensive development. By the end of 2015, the share of innovation-active organizations is projected to make up at least 40%. Domestic spending on research and development will increase to 2.5-2.9% of GDP. Exports of knowledge-intensive and high-tech products are to reach $7.9 billion. Our country could be among the most competitive countries of the world.
It seems that we are off to a good start in innovation development.whatproportion of the world market of hightechnology products and services Belarus may take up in the future? What needs to be done to enhance the interest of foreign customers in Belarus-made high-tech and knowledge-intensive products?
This interest can be promoted on the basis of a strategy of regional orientation. It is aimed at searching for consumers in developing countries, South-east Asia, the markets of the European Union,
including through cooperation with the Baltic countries, and in Latin America. We also need to maintain and strengthen our presence in the traditional markets. The main thing for domestic manufacturers is to improve consumer qualities of products, science and technology indicators, to get them on par with world-class products.
To be more attractive to consumers, we need to pursue a flexible price policy, make a greater use of modern forms of payment (credit, leasing), make sure that products comply with declared quality and technical characteristics, and meet individual requirements of foreign clients. To promote our products abroad we need to have a well-developed commodity distribution network and service centers, provide companies with financial incentives to boost exports and employ highly professional and driven marketing specialists to search for foreign partners, prepare presentation materials and commercial proposals, design websites, especially in foreign languages, and run promo campaigns.
When working with foreign companies we should not forget about the principles of a competitive environment. This means that Belarusian producers need to be prompt in replacing poor quality products and providing spare parts, meeting contractual terms and conditions of supply, responding to commercial requests, addressing counter proposals from foreign partners.
If all of these conditions are met, Belarus will be able to maximize its share on the world market of hightech products and services.
Belarus aims to create a knowledge-based economy, emphasizing an important role of business in innovative activities. Can we expect the emergence of new incentives for that in the near future?
Business will step up its innovative activities, first of all through the development of public-private partnership, innovative infrastructure, small and medium-sized enterprises. Equal opportunities will be provided for the public and private sectors.
Serious steps to stimulate innovation have already been taken in Belarus. New incentives will be provided in the near future. To encourage innovative projects of small business, in 2012 the State Committee for Science and Technology) will appro- priate finance to be allocated by the Belarusian Innovation Fund to support projects of private companies. In 2012, it should be at least 25% of the total project funding.
The Belarusian Innovation Fund is expected to transform into a joint stock company with the functions of venture funding. This will allow the Fund to support venture capital projects, primarily of private enterprises, raise the money of private investors for these projects and funds from venture capital organizations for co-financing.
Business angels and venture investors network BAVIN will be involved in the development of innovative projects, including the preparation of legal framework on venture financing. We expect that a number of projects supported by BAVIN at the initial level will be co-financed or financed by the Belarusian Innovation Fund when they are introduced in the production cycle. We also keep promoting innovative business infrastructure.
In order to encourage private companies to partake in sci-tech programs, the Council of Ministers will consider the draft decree of the President which envisages the possibility to privatize results of scientific and technical programs
(technologies, patents, production samples, and other intellectual property), while the private company involved in the program recoups budget funds from the prime cost of products within three years. This document was hailed by innovative private companies.
Private business is expected to play a more active part in interstate innovative programs of the Union State, the EURASEC, the CIS, joint programs with Ukraine and other countries. Private companies will take part in the interstate programs to manufacture equipment for oil and gas companies, commuter transport, road-building, construction, municipal, snow-cleaning equipment, etc.
Proposals on these programs have been discussed with the Permanent Committee of the Union State, the EURASEC, the Ministry of Education and Science of Russia, the State Agency for Science, Innovation and Informatization of Ukraine, heads of Belarusian enterprises.
As for the State Committee for Science and Technology, the composition of the SSTC public advisory board is being revised. There are plans to raise the number of private businessmen in the organization. The committee and its branches are vigorously cooperating with public associations of entrepreneurs. Special attention is drawn to the participation of private companies and businessmen in the national contest of innovative projects. Winners of the contest will not only get prizes but will also have an opportunity to attract potential investors to implement projects. Innovations are impossible without investments, including foreign investments. Are you planning to encourage more foreign companies to partake in Belarusian sci-tech projects?
In line with the national innovative development program, big innovative projects will be implemented in Belarusian information and communication technologies sector, space exploration, pharmaceutical industry, medicine, chemical and petrochemical industry, energy and energy saving, machine-building and metallurgy, construction industry.
Of course, we are planning to implement innovative projects using technologies and foreign investments of huge transnational companies Huawei, Basf, Siemens, LTE, Nokia, Leica Geosystems AG, Federal Signal, Navistar, Jotun, Coomi, and others.
There are plans to set up joint ventures in Belarus and abroad, including in Venezuela, China, Saudi Arabia, and other countries. Belarus has a number of companies which will ensure the transition to new technological platforms and launch the manufacture of new goods. The Belarus-china industrial park will open up new possibilities for Belarus in implementation of large-scale innovation projects. Has its development strategy been formulated already? What scientific areas will be in focus?
The park will operate in such sectors as engineering, fine chemistry, biomedicine, appliances and electronics, and a number of others. The CIS and Europe will be the main sales markets for the park’s innovative products. The project is provisionally estimated at $30 billion. The park will occupy the area of more than 80 square kilometers. The project will provide new jobs, necessary infrastructure both for the manufacturing process and accommodation of the personnel. Chinese as well as European business is expected to be present in the park.
A joint management company will be set up to develop the industrial park. Its cofounders will be China CAMC Engineering Company and the management company of the Horizont holding company. The latter will support the implementation of investment projects, provide consulting, legal, marketing services to investors and will also help develop the documents necessary for the implementation of projects.
Any company keen on setting up and developing businesses in the Customs Union might join the park. Residents get preferences and starting privileges. The relevant presidential decree has been prepared and coordinated with all governmental stakeholders. Under the document, such companies enjoy a 10-year preferential regime. Up to 2017 they will be exempted from all taxes. After that they pay taxes at a 50% discount for five more years. At the end of a ten-year period, newly registered residents are exempted from taxes within three years. They pay taxes at a 50% discount for three
more years. So, the whole preferential regime makes up 30 years.
I would like to tell you about another advantage of working in the park in what regards administrative procedures. The administration of the industrial park will be operating as a “one stop shop” where all necessary permits for doing business, for designing and construction works and other expert analyses can be received.
Today the pharmaceutical industry expects higher efficiency from the Belarusian science. There are plans to set up Belbiograd in order to bring the national industry onto a new level. What is your outlook for such a company? Does the project envisage involvement of large foreign investors?
In line with the strategy, Belbiograd is a multifunctional scitech park specializing in pharmacy, nano and biotechnologies, securing high competitive ability for Belarusian products on the foreign and domestic market of nanobiopharmaceutical goods.
The project is aimed, in particular, at creation of favorable institutional environment and attraction of strategic investors from the EU, Russia, China, India, Cuba and other countries to implement innovation projects, provide large-scale transfer of knowledge and technologies in pharmaceutics, nano and biotechnologies, micro and nano equipment from overseas. The project will help strengthen Belarus’ export potential, promote a well-developed innovative infrastructure in nano and biotechnologies, develop and expand Belarus’ nanotechnology network.
The project is also expected to encourage national research in pharmaceutics, nano and biotechnologies, micro and nano equipment, boost production network cooperation between educational, scientific, healthcare institutions and the real economy in transfer and commercialization of innovations in the abovementioned fields.
It would be difficult to imagine present-day science without risks. Venture capital financing which gives scientists an opportunity to implement unique yet risky projects might be seen as a safety net in this case. Is the country going to change its approach to venture activities?
In its recommendations the UNECE examines Belarus’ innovative development issues. It also offers the definition of “risk” in government-sponsored scientific research. Foreign practices show that introduction of a venture capital financing mechanism is an efficient way to address many of the relevant issues. The use of the mechanism in Belarus is regulated by President’s Decree No.252 of 25 March 2010 as well as by the draft law “Concerning the government innovative policy and innovation activity in the Republic of Belarus”.
Special normative and educational materials are developed for venture projects financed by the Belarusian Innovation Fund. Ties are established with private venture NGOS inside the country and abroad.
By the way, in February 2011 the Belarusian Innovation Fund signed an agreement with KBTEM-OMO to develop maintenance equipment for maskworks EM-5131. This product belongs to the fifth technological paradigm. The parity of prices for domestic and foreign goods of the kind lets the company reach profitability of 30% and more. The product has already attracted interest of 10 foreign companies including in Russia, Korea, China and Germany.
Last year the Belarusian Innovation Fund received application papers for a number of other venture projects. For instance, Intercaps was looking into the production of pharmaceutics under the Equator trademark at the Minskintercaps company. This should be a joint project with Hungarian and Slovak partners. The project, however, was postponed due to the reorganization of the Belbiopharm concern. Today the project has been resumed in the field of cell technologies together with a Russian partner.
In 2011 a decree was drafted to further develop the venture capital financing mechanism. The President supported a proposal to set up a joint Russian-kazakhstaniBelarusian venture fund in the EURASEC. The fund will focus on innovative projects for the benefit of the three countries.
Are there any plans to polish the legislation to encourage design and production of innovative solutions?
Of course. The State Committee for Science and Technology has prepared a big package of proposals for draft regulatory acts aimed at creation of favorable conditions for business initiative and investment activity in Belarus in 2012-2015. Among them are amendments and additions into the law “Concerning the state sci-tech policy” to provide additional tax concessions for organizations engaged in innovative activities; amendments and additions into the Civil Code to regulate customer-performer relations regarding the use of the results of R&D, design, experimental and technological works; amendments into the Customs Code of Belarus of 4 January 2007 to provide preferences in customs duties in the import of technological equipment to Belarus for organization and development of the innovative infrastructure.
We have also initiated amendments and additions to presidential decree No.1 of 3 January 2007 “Concerning innovative infrastructure development” in a bid to broaden options for acquiring the status of the resident of the technopark, grant the subjects of the innovative infrastructure the right to lease the floor space to nonresidents providing they ensure uninterrupted operation of the residents, exempt subjects of innovative infrastructure from the property and land taxes for three years.
Apart from that, we have come forward with a draft enactment to amend presidential decree No. 631 of 23 October 2006 “Concerning the structure, functions and the number of local executive and regulatory personnel”. The document will envisage independent structural subdivisions responsible for innovative development within local executive and regulatory bodies.
Additional measures will be adopted to streamline intellectual property legislation. It will be harmonized with the legislations of Belarus’ main geopolitical and economic partners including within the relevant regional unions, in par- ticular, the WTO intellectual property agreement.
What opportunities does the Single Economic Space open up for Belarusian scientists?
Here I can use the slogan “SESUnion State: Together, Not Instead”. However, Eurasian integration fasttrack development raises concerns on the Union State of Belarus and Russia blending into the SES. The President gave a very convictive answer: the Single Economic Space and the Customs Union is far below the integration level in the Union State.
Suffice it to say that Union State practices were made use of as the legal frameworks of the Customs Union and then of the Single Economic Space were developed. Yet, the Union State project might melt into the SES if it loses momentum.
The Customs Union and SES member states are harmonizing their legislations in intellectual property protection, copyright and trademarks laws. The effort will open up new prospects for coop- eration in the SES. The Single Economic Space member states will unite intellectual efforts, scientific and production potential under joint sci-tech, innovative and investment projects. This no doubt meets the interests of Belarus, Russia, and Kazakhstan. Implementation of joint projects will help address both research, social and economic issues of the three states.
Today innovative products may move freely across the Customs Union within the framework of different projects. The development of the common high technology market in the Single Economic Space and later on in the Eurasian Economic Union will help reduce transaction costs and will offer new opportunities for technological development.
Removal of customs barriers will considerably expand prospects for cooperation based on common trade regulations and single principles in competition. Smooth beneficial operation of the Customs Union will also depend on additional technological upgrade in order to increase the share of high-technology goods in the mutual trade.
of raw materials has doubled at the Spartak paper mill
after the upgrade
By late 2015 the share of innovationactive organizations in the national economy will be at least 40%. Prime Minister of Belarus Mikhail Myasnikovich gets familiar with promising research products of Belarusian scientists during the Belarusian Innovation Week
A Belarus-india training center was opened at the High-tech Park.
It consists of a laboratory at the High-tech Park and four regional offices linked by videoconferencing
Belorusneft opened Belarus’ first gas station that employs energysaving technologies in Gomel
Minskintercaps produces a wide range of drugs and
vitamin-mineral complexes in hard and soft gelatin
capsules. The company sells into
the CIS, the EU, and the Republic of
The Yalina subcritical facility to examine newgeneration nuclear power installations has been created at the Energy and Nuclear Research Institute Sosny. Specialists from 18 countries were involved in the project