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1 Investment Environment of the Republic of Belarus A. Tur N. The Deputy Minister of Economy of the Republic of Belarus © Ministry of Economy of the Republic of Belarus 2008 2 Selected Economic Indicators 23,3 2007, % 15,1 8,2 8,5 4,1 72,3 January – march, 2008, % 9 10,5 GDP 9 17 13,6 Industrial production 8 20 17 Forecast, year In fact 6,8 Agricultural Capital production investments Export (february, 2008) © Ministry of Economy of the Republic of Belarus 2008 3 Investments in the Capital Assets 132,2 120,8 120,2 120 115,1 106 2002 2003 2004 2005 2006 2007 years © Ministry of Economy of the Republic of Belarus 2008 Structure of Foreign Investments in Belarus, 2002-2007, mln. USA 4 5422 4036 1816 1306 1517 722 299 2002 675 860 2003 2004 451 749 2005 2006 1314 2007 foreign direct investment © Ministry of Economy of the Republic of Belarus 2008 The main countries-investors in Belarus, 2007 (%) Netherland 2,3% 5 Others 11,7% Russia 33,5% Switzerland 11,2% Austria 11,0% Germany 5,7% Cyprus 7,0% Great Britain 15,9% USA 1,2% Latvia 2,7% © Ministry of Economy of the Republic of Belarus 2008 6 Organizations with foreign capital, 2002 – 2008 at the beginning of the year 4218 3818 3457 3545 2957 2667 2321 2082 2091 1140 942 2002 1396 1271 2003 1575 1382 2004 1841 1616 2005 1903 1642 2006 1727 2007 1897 Total JV FE 2008 © Ministry of economy of the Republic of Belarus 2008 8 The reasons to invest in Belarus • • • • • • • • • • • Political and economic stability High dynamics of economic growth Favorable economic and geopolitical location Access to the market of the Russian Federation and the EU Highly qualified labour, scientific and technical potential Export oriented economy (export more than 60% of GDP) Credit raiting of the Republic of Belarus: “B+” (Moody’s Investors Service, Standart&Poors) Low crime and corruption level Free Economic Zones and High Technologies Park National Investment Agency (“One Stop Shop”) Dialog between Government and Investors through Foreign Investment Advisory Council © Ministry of Economy of the Republic of Belarus 2008 9 Free economic zones (FEZ) Minsk Vitebsk Grodnoinvest Mogilev Brest Gomel-Raton © Ministry of Economy of the Republic of Belarus 2008 10 Advantages for residents of Free Economic Zones (FEZ) •Exemption from profit tax on products of own manufacture for the period of 5 years •Exemption from customs duties for import and export goods (own manufactured) From 1st of April 2008: - ground-rent is payed on preferential terms during realization of the investment projects - guarantees for taxes are unchangeable for 7 years for residents of FEZ © Ministry of Economy of the Republic of Belarus 2008 11 High Technologies Park activities Activities: •Analysis, design and software development of information systems and technologies •Software-based data processing •Fundamental and applied research and development (R&D), experimental R&D in the field of natural and technical sciences (scientific, research, experimental and engineering works). Residents of High Technologies Park are exempted from: • . • • • • Profit Tax Real Estate Tax Value Added Tax (VAT) Customs Duties & VAT imposed by custom bodies Individual income tax has a fixed rate - 9% Offshore fee © Ministry of Economy of the Republic of Belarus 2008 12 Preferences for enterprises setting up in the territories with number of people up to 50 000 • profit is exempted from the tax for 5 years • free prices are set and appllied by organizations •conditions of carrying out commercial activity are unchangeable for 5 years For foreign enterprises: • technological equipment for formation Capital charter of organizations is exempted from Customs Duties and Value Added Tax (VAT) © Ministry of Economy of the Republic of Belarus 2008 13 Preferences and privileges for small and middle enterprises •Unified tax on gross revenues from the sale of goods (works, services) for organizations under 100 people in number is twice reduced Local authorities have the right to provide preferences for all business entities regardless the form of ownership, including bank loan guarantees at the expense of Local Budgets, preferences on the tax on immovable property, on land tax, ecological tax on the volume of used mineral resources • •Organizations under 15 employees in average number are exempted from accounting. © Ministry of Economy of the Republic of Belarus 2008 14 Preferences to corporate entities – residents of the Republic of Belarus that implement investment projects at the expense of external government loans (credits) Corporate entities –residents of the Republic of Belarus that implement investment projects at the expense of external government loans (credits) in accordance with the list, approved by the Government of the Republic of Belarus: • have the right not to hold competitions (other forms of the procedures of purchases); •are freed from the customs duties and the value added tax at importation into the customs territory of the Republic of Belarus of technological equipment and spare parts to it (with exception of those imported from the Russian Federation), intended for implementation of the indicated investment projects; •have the right to the compensation of cash resources in the size of 50 percent of the sum of interest payments on external government loans (credits); •are freed from pay for the state guarantee of the Republic of Belarus, and also from the need of submission of guarantee of the guarantor bank on external government loans (credits) in favor of the Republic of Belarus. © Ministry of economy of the Republic of Belarus 2008 15 Measures taken to improve business environment in Belarus • The declaration principle of state registration and liquidation of companies has been fixed; • The granting procedure of special permissions (licences) to exercise of definite kinds of activity has been simplified; • The authority of local executive committees in their decision to withdraw and to parcel lands has been extended; • The auction sale of unused and ineffectively used state ownership objects by fixing of initial price equal to a basic value has been provided; • The customs procedure for companies, which are given the status of bona fide participant of foreign economic activity, have been simplified. © Ministry of economy of the Republic of Belarus 2008 16 List of objects, offering for transfer in concession Mineral deposits of: • • • • Gypsum “Brinevskoye”, Petrikovski region, Gomel oblast; Iron-ore “Okolovskoye”, Stolbcovski region, Minsk oblast; Iron-ore “Novoselkovskoye”, Korelichi region, Grodno oblast; Bentonite clay “Ostrozanskoye”, Lelchinski region, Gomel oblast. © Ministry of economy of the Republic of Belarus 2008 17 Foreign Investment Advisory Council (FIAC) Prime-Minister of the Republic of Belarus FIAC Working groups for: Tax policy, Customs & Accounting Standing Committee of the FIAC Investment legislation Development of financial markets Investment image © Ministry of Economy of the Republic of Belarus 2008 18 National Investment Agency www.invest.belarus.by Purposes: 1. Improvement of the investment climate in Belarus 2. Development of the economic potential of Belarus by attracting of foreign and domestic investments. Activity directions: 1. International co-operation. 2. Provision informational and analytic services. 3. Investment projects maintenance. 4. Provision consulting services. 5. Organization of conferences, forums, seminars and business meetings. 6. Co-operation with state bodies and state officials. © Ministry of Economy of the Republic of Belarus 2008 19 Ministry of Economy of the Republic of Belarus www.economy.gov.by National investment site www.invest.belarus.by Welcome to co-operation! © Ministry of Economy of the Republic of Belarus 2008