Ben­e­fits of Leas­ing

Economy of Belarus - - FRONT PAGE -

From Pri­vate Ini­tia­tive to State Sup­port

Leas­ing was brought to Be­larus on the back of the first mar­ket re­forms. At first, it had no sup­port from the state. The first leas­ing com­pa­nies were es­tab­lished by banks while their clien­tele was limited to these very banks and a very small num­ber of other or­ga­ni­za­tions that were smart enough to ap­pre­ci­ate the op­por­tu­ni­ties of­fered by leas­ing and take ad­van­tage of them. How­ever, by 1993 leas­ing could no longer be ig­nored or over­looked. It be­came clear that this busi­ness should be reg­u­lated. In April 1994 the Fi­nance Min­istry of Be­larus passed pro­ce­dural guide­lines on keep­ing records The Na­tional Bank will as­sume con­trol

over the leas­ing mar­ket of Be­larus Econ­o­mists are split over when leas­ing first ap­peared. Some say that leas­ing emerged in 1877, when the term “leas­ing” was of­fi­cially men­tioned for the first time. Back then the U.S. com­pany Bell de­cided to lease their phones in­stead of sell­ing them. Other ex­perts be­lieve that the first people to use leas­ing were an­cient Sume­ri­ans. The clay plates found in the an­cient his­tor­i­cal re­gion of Sumer in 2000 BC con­tain the in­for­ma­tion about the leas­ing of agri­cul­tural tools, land and cat­tle. How­ever, one thing is clear – leas­ing has a long-stand­ing his­tory. Aris­to­tle once wrote: “On the whole, you find wealth much more in use than in own­er­ship.” In fact, the his­tory has many in­ter­est­ing ex­am­ples of leas­ing. How­ever, the first com­pany to make leas­ing its core busi­ness (United States Leas­ing Cor­po­ra­tion) was set up in San Fran­cisco in 1952 by Henry Schoen­feld who came to be known as the grand­fa­ther of the leas­ing busi­ness. The sys­temic ap­proach gave a pow­er­ful im­pe­tus to this busi­ness and by the mid-1960s lease agree­ments in the United States were es­ti­mated at $1 bil­lion. By the end of the 1980s the mar­ket ex­panded to ex­ceed $110 bil­lion, up more than 100 times over a 25-year pe­riod. The Con­ven­tion on In­ter­na­tional Fi­nan­cial Leas­ing was adopted in 1988 thus of­fi­cially rec­og­niz­ing leas­ing as an in­de­pen­dent fi­nan­cial in­sti­tu­tion. At present leas­ing trans­ac­tions in de­vel­oped coun­tries ac­count for 25-30% of in­vest­ments. of leas­ing trans­ac­tions. Be­larus was the first CIS mem­ber state to de­velop a le­gal frame­work of leas­ing op­er­a­tions.

Be­sides, in 1993 com­pa­nies like Pri­or­leas­ing, Ducat-Leas­ing, Lo­tos and other pi­o­neers of the leas­ing busi­ness in Be­larus es­tab­lished the Be­laru­sian Union of Leas­ing Com­pa­nies. In Oc­to­ber 1996 the Be­laru­sian Union of Leas­ing Com­pa­nies joined LEASEUROPA. At the end of 1997 it part­nered with the Rus­sian and Ukrainian as­so­ci­a­tions to es­tab­lish the con­fed­er­a­tion called CIS Leas­ing. In 2011 the union be­came one of the found­ing mem­bers of the As­so­ci­a­tion of Leas­ing Com­pa­nies of Be­larus. The as­so­ci­a­tion in­cor­po­rates 17 leas­ing com­pa­nies that ac­count for about 80% of the new busi­ness on the do­mes­tic leas­ing mar­ket ev­ery year.

At present the leas­ing busi­ness is reg­u­lated by the Civil Code. The Fi­nance Lease (Leas­ing) sec­tion of the Civil Code con­tains fun­da­men­tal def­i­ni­tions and is the ba­sic doc­u­ment reg­u­lat­ing this busi­ness. Other documents es­tab­lish­ing the rules of the game in the in­dus­try are sev­eral pro­vi­sions of the Tax Code, a num­ber of decrees and by­laws. In Be­larus the leas­ing busi­ness is sup­ported by the state and en­joys a num­ber of tax ben­e­fits that al­low lessees to min­i­mize ex­penses as­so­ci­ated with leased property.

Be­larus’ in­ter­ests on the leas­ing mar­ket are rep­re­sented by sev­eral leas­ing com­pa­nies op­er­ated by state-owned banks and Pro­ma­groleas­ing. The na­tional leas­ing op­er­a­tor Pro­ma­groleas­ing was set up in 2001 to help agri­cul­tural com­pa­nies up­grade their phys­i­cal in­fra­struc­ture. Later Pro­ma­groleas­ing was au­tho­rized to pro­mote Be­laru­sian prod­ucts on over­seas mar­kets.

The use of leas­ing be­came wide­spread in Be­larus in 2013 when the coun­try was search­ing for ef­fi­cient mech­a­nisms to re­duce the back­log of in­ven­tory at en­ter­prises. Sev­eral decrees were drafted and passed all at once with a view to boost­ing the sales of Be­laru­sian ma­chin­ery on the do­mes­tic and for­eign mar­kets. In a bid to help the sit­u­a­tion, in March 2013 the Be­laru­sian govern­ment trans­ferred 62.5% of Pro­ma­groleas­ing’s shares into the own­er­ship of the De­vel­op­ment Bank of the Repub­lic of Be­larus. This year leas­ing is still rel­e­vant for the

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