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ECONOMY OF BELARUS No. 3, 2011
www.belarus-economy.by
State and PRIVATE Business
Significant Contribution
SMEs are expected to generate up to 30% of Belarus’ GDP by 2015
Alexander GRUZDOV,
Director of the Entrepreneurship Department,
Economy Ministry of the Republic of Belarus
The creation of an environment conducive to business growth has always
been and remains one of Belarus’ priorities. The economic liberalization
policy adopted by the head of state and the government is a strategic
vector of our efforts to improve business climate and enhance the
investment appeal of our country.
Positive Development
Trends
The economic liberalization has
encouraged the expansion of small
and medium-sized enterprises and
helped increase their contribution
to the country’s economic growth.
Over 2007-2010, small and medium-sized enterprises (legal entities) came to play a greater role in
Belarus’ social and economic devel-
opment. Their share has increased
in:
•
gross domestic product, from
17.9% to 20%;
•
production of goods and services, from 18.3% to 20.7%;
•
retail trade, including public
catering, from 35.9% to 40.6%;
•
average number of employees,
from 26.7% to 28%;
•
capital investments, from 34.7%
to 39.7%;
Contribution of SMEs to socioeconomic development
of the Republic of Belarus (%)
GDP
Retail
Capital investment
Output (goods, services)
Average number of employees
Foreign trade
46
•
foreign trade, from 35.3% to
39.7%;
•
commodity export, from 26%
to 42.9%.
The import by SMEs (legal
entities) has shrank from 43.2%
to 37.4%.
I would like to note that over
recent years the number of people
working for SMEs kept growing. In
2010, SMEs employed about 1.5 million people, which is about one third
of the country’s workforce. The
share of people involved in SMEs,
including self-employed businessmen and their employees, rose from
28.6% in 2007 to 32.2% in 2010 of
the total number of people involved
in economic activities. As of
1 January 2011, the number of small
and medium-sized enterprises of all
forms of ownership increased by
54.8% over 2007 to 86,917, including
84,164 small businesses (up 58.3%),
and 2,753 medium-sized enterprises
(down by 8%).
Over the last few years, the
sectoral structure of micro- and
small enterprises remained virtually unchanged. In 2010, 40.9% of
small enterprises (legal entities)
were involved in trade and public
catering, 20.2% in the manufactur-
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State and PRIVATE Business
Avgust-Bel
Company,
Pukhovichy
District, will
increase the
production of
plant protection
means to 6
million liters
in 2012. The
product range
will be extended
to 24 product
names. AvgustBel is a modern
technologically
advanced
producer of
eco-friendly
formulations
of herbicides
in the form of
water soluble
preparations,
emulsifiable
concentrates
and water
concentrates
and also
fungicides, seed
disinfectants and
insecticides in the
form of emulsified
preparations.
ing industry, 10.5% in construction,
8.6% in transport and communication, 3% in agriculture.
In 2008-2010 the share of products (works, services) manufactured
by small privately-held businesses
was up by 5.3%, while the share of
products (works, services) made by
medium-sized privately-held enterprises was down by 0.2%.
In 2010 the amount of goods
(works and services) per one
employee of small enterprises
increased all over the country
compared with the previous year.
Minsk boasted the most efficient
production of goods (works and
services) per one employee (Br71.7
million), while Vitebsk Oblast was
at the bottom of the list (Br37.8
million).
In 2010 foreign trade in goods
by SMEs amounted to $23.8689 billion, the commodity export by small
enterprises (legal entities) being
$9.82 billion (33.7% of Belarus’ total
commodity export), that of mediumsized enterprise being $1.009 billion
(6%). The foreign trade deficit was
$2.21 billion.
In 2010 the export by SMEs
shrank by $456.3 million or 4.0%
over 2008.
The import decreased by $849.7
million or 6.1%.
State Support
The state is interested in further development of the competitive
entrepreneurial sector and therefore carries out in-depth economic
reforms to encourage and provide
comprehensive support to business
initiatives.
Directive No. 4 of the President
of the Republic of Belarus of 31
December 2010 “On the Promotion
of Entrepreneurial Initiative and
Stimulation of Business Activity in
the Republic of Belarus” is a strategic document that identifies, at the
conceptual level, the basic areas of
economic liberalization.
Share of people employed by SMEs
(including sole traders and their employees) (%)
47
ECONOMY OF BELARUS No. 3, 2011
www.belarus-economy.by
A plant producing
elements of
permanent
formwork for
building and civil
engineering was
inaugurated
in Brest. The plant
includes two wall
panels workshops
and a slabs and
reinforced frames
division. Modern
technology
allows reducing
construction time
and offers a good
quality/price ratio.
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A number of legal acts have been
passed to:
• liberalize pricing, reduce the
list of goods (works, services) in
respect of which the state regulation of prices (tariffs) is applied,
and ease pricing procedures for
business entities;
• protect private property.
Legal entities and sole traders who
have been renting their business
premises for at least three years
have the right to buy the property
out in installments within five
years unless otherwise stated by
the President of the Republic of
Belarus. At the same time the price
for the property offered for sale
should be reduced by the amount of
money the business owner spent on
renovating or improving the property when renting it;
• reduce the list of financial
statements and the amount of
required information in order to
expand the use of international
financial reporting standards in
Belarus, and reduce the list of mandatory primary accounting documents;
• streamline the introduction of
new reporting documents and inquiries for all types of information;
State and PRIVATE Business
Growth of SMEs - legal entities in 2007-2010
(in units and in percent as against 2007)
Number of SMEs
Increase in the number of SMEs
• establish a uniform procedure
for cash transactions, cash payments, etc.;
• liberalize the labor market,
abolish the mandatory use of the
unified wage rate for workers who
are in the employ of commercial
entities and individual entrepreneurs;
• improve public procurement
procedures entitling the customer
to purchase a number of goods produced by certain organizations in
the Republic of Belarus under the
www.belarus-economy.by
State and PRIVATE Business
procurement from one source (without a competitive selection);
• enhance the financial literacy
of individuals and businesses;
• promote innovative entrepreneurship and streamline the formation and use of innovation funds;
• upgrade the system of
state support to small businesses,
expand the list of organizations
eligible for state financial support
and the grounds for providing this
support;
• reduce the financial burden on
investors in roadside service industry, provide them with tax benefits
not only for the period of design and
construction, but within two years
after the construction of roadside
service facilities is complete, and
develop the mechanisms for state
financing of road infrastructure
projects;
• promote efficient manufacturing and innovation activities,
offer tax benefits to organizations
that carry out business development plans and meet the 2011 – 2013
targets for returns on sales and for
the share of innovative products in
the total shipping volume set out
in the social and economic development forecast. Legal entities
Vitebsk Fruit and
Vegetable Plant
produces more than
50 types of canned
baby food. Since
the beginning
of the year,
the plant has
started the
production
of 15 new
products
implementing investment projects
included in the list approved by the
government in consultation with
the head of state can qualify for the
reimbursement of interest rates
on bank loans which they have
taken to implement these projects.
Amendments have been introduced
Small business by economic sector
(in percent as against their total number in the country)
2010
2009
2008
0
20
40
60
80
Industry
прочие
Transport and Communications
Trade,
Public Catering
торговля
и общественное питание
Agriculture, Forestry
Construction
строительство
Others
транспорт и связь
сельское и лесное хозяйство
100
to the regulations governing the
formation of innovation funds and
the frequency of transferring payments to them;
• optimize technical regulation
and standardization.
In order to prevent the emergence of interregional restrictions
on certain goods (works, services),
antimonopoly authorities continuously monitor the decisions of local
executive and administrative bodies. By the way, no violations in this
area have been revealed so far.
On 1 September 2011, an e-registration system will be launched.
Applicants will be able to submit
their application forms on-line
at the website of the Single State
Register of Juridical Entities and
Individual Entrepreneurs (SSR)
coordinated by the Justice Ministry.
A number of administrative acts
have been submitted to the government. Their major goal is to
further the liberalization of insurance activities, land and rental relations; streamline administrative
procedures; reduce and optimize
taxes; guarantee preferential quotas to small businesses when buying
public goods and services; improve
labor market regulations; simplify
accounting and accountability procedures; streamline tax legislation
and mechanisms for registration
and management of holding companies; improve human potential
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ECONOMY OF BELARUS No. 3, 2011
www.belarus-economy.by
State and PRIVATE Business
Share of manufactured goods (works, services) by small and medium-sized enterprises and by ownership
Small enterprises
Medium-sized enterprises
Year
State-owned
Private
Foreign
of small and medium businesses;
extend the list of measures fostering business activities.
To encourage public discussion
of draft legal acts regulating business activities, various state agencies have been setting up public
advisory groups and councils of
experts that include business representatives (alliances, associations,
unions).
The national plan of action for
the Year of Enterprise in 2011 also
envisages a number of measures
promoting small and medium-sized
enterprises.
The oblast executive committees
and Minsk City Hall have been setting up databanks of business initiatives and suggestions based on
Year
the analysis of demand from individuals and companies.
State agencies are introducing electronic document management for business registration, liquidation (cessation of activities),
removal from the Single State
Register of Juridical Entities and
Individual Entrepreneurs, opening
and closing bank accounts, application of electronic tax and customs
declaration.
Measures on extending the
application of voluntary certification of products, works, services,
and management systems have been
developed at the request of juridical entities and individual entrepreneurs with a view to raising their
competitiveness.
In order to facilitate technological transformation and foster cohesion between science and manufacturing sector, a number of suggestions have been prepared to revive
innovation and rationalization.
Universities and organizations subordinate to the Education Ministry
regularly present their sci-tech
projects at various international
exhibitions and contests.
The network of small business
incubators set up at vacant public
production facilities has been growing. Thus, in H1 2011 Minsk-based
Elektronika, Minsk Machine Tool
Works and Etanol were registered
as small business incubators.
In order to stabilize the situation on the consumer market,
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Output (works, services) of small businesses per employee (Br, million)
www.belarus-economy.by
State and PRIVATE Business
MADE IN BELARUS
Export and import of goods by small and medium-sized enterprises
(USD, million)
Export
European-Class
Engines
Import
Minsk Motor Plant will start
manufacturing the entire lineup of
engines for MAZ by the end
of 2015.
At present vehicles of Minsk
Automobile Plant (MAZ) are powered
by engines made in the Russian city
of Yaroslavl, however, the best foreign
practices indicate that nearly all leading
automobile manufacturers use engines
of their own make.
This is why Minsk Motor Plant plans
to start manufacturing small, medium,
and large diesel engines that will be
compliant with Euro-4 and Euro-5
standards and will fully satisfy MAZ’s
demand. Specifically for the new MAZ6440 vehicle the company has designed
a 600hp V engine D-283.4E4 that is
compliant with the ecological standard
Euro-4.
Modul Goes
International
The Modul company (Gantsevichi,
Brest Oblast) is exploring new
markets.
The company has signed a contract with Russia to supply cross-linked
polyethylene pipes, polypropylene pipes
and polypropylene-based heat shrinkable sleeves. The company already
shipped RUB4 million worth of products
to Russia. The 2011 export plan is worth
RUB15 million.
This is a new line of business for the
company. In 2008-2010 over Br19 billion was invested into the upgrade of the
company and building up its production
capacities. Over this period the company started producing polyethy­lene pipes,
cross-linked polyethy­lene pipes, pipes
from plastic-coated metal and special
pieces.
In January-July this year Modul
manufactured Br20.8 billion worth of
products, up 40% over the same period
in 2010. The company used to supply
its products only to the domestic market,
but has recently discovered that it has a
considerable export potential.
optimize imports of consumer
goods, reduce consumer goods deficit, boost retail turnover (preferably
by raising sales of domestic products), the Trade Ministry has compiled a list of goods that are not produced or produced in small quantities in Belarus in order to start
their domestic production. The 2011
list of import-substitution products includes 312 items, of them 289
are non-foods. It also details their
description, estimated cost and production volumes. The oblast executive committees and the Minsk City
Council offer master-classes conducted by best Belarusian businessmen with extensive experience in
goods manufacture and sales.
Government officials have
drafted amendments and addenda
to Provision No. 342 on encouraging the unemployed to get involved
in business activities or those who
wish to become an agro tourism
service provider or an artisan.
The document was adopted by the
Council of Ministers’ Resolution
of 7 March 2008. In particular, it
suggests increasing financial support for startups involving scientific
research and development.
Directive No. 4 and other programs are expected to foster sustainable economic environment, improve
business climate in the country, boost
business opportunities for small and
medium companies, which in turn
will promote competitive environment, new production and management technologies, innovation activities, investments, new jobs, goods
and services, tax revenues, hence
raising the well-being and quality
of life of Belarusians and ensuring sustainable development of the
national economy.
By the end of 2015, the number of
small and medium-sized companies
will reach 400,000 at the minimum
with the number of employees going
up to 1.8 million people and their
share accounting for 30% of GDP.
Rechitsa Textile
held talks with
U.S. Armani,
which resulted in
an agreement to
sign a contract for
sewing terry robes
designed by the
customer for hotels
in the United States.
In 2011 Rechitsa
Textile also signed
a supply contract
with Estonia’s
Mindrentrans
to deliver terry
towels and bed
sheets. Russia
and Kazakhstan
are traditional
sales markets for
Rechitsa Textile. In
January-May 2011
the company signed
ten contracts with
Russia. Rechitsa
Textile delivered
$152,700 worth
of products (15%
of exports) to new
customers.
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