Benefits of Leasing
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