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The Investment Future of Belarus

Attracting foreign investment is one of the most important ongoing projects in Belarus. This topic dominates the agenda of officials, directors of enterprises, representatives of business community, diplomats and others. The efforts to encourage investment have already made an impact: investment in the real sector in Belarus grew by 12,6 billion from January to September 2011, twice the amount of growth as in the same period in 2010.

Despite optimistic signs of growth, however, continuing to attract investors remains a national priority.

The journalist of BELTA discussed this topic with Mr James Wilson, Director of Belarus EU Business Council. The Belarus EU Business Council, a non-profit organization founded in 2007 which promotes trade and investment between Belarus and the EU.

Mr Wilson has more than thirty years experience in the sphere of public relations and corporate communication.

QUESTION: Mr Wilson, how do you assess the current investment climate in Belarus?  Is Belarus attractive for investors from the EU?

There are a number of factors that have negatively influenced the investment climate in Belarus: worsening relations with neighbor states, an unstable currency, and a high level of inflation. However, to counterbalance these factors, there is a range of positive elements: the government of Belarus is keen to attract investment and continues the process of privatization of the state enterprises. Belarus has a developed infrastructure and highly educated workforce. The country moves towards the liberalization of the economy. I think that after the economic situation stabilizes, Belarus will become more attractive for foreign investors.

QUESTION: There is a lack of direct foreign investment in Belarus whereas indicators for other types of investment are high. What, in your opinion, is the reason for such a situation? What has to be done to increase FDI?

The problem is that the world markets are unsteady and insecure. In addition, there is fierce competition between developing countries to attract foreign investors.  It is not easy to win under these circumstances. I think, Belarus has to devote more efforts to informing potential investors about the advantages of doing business in Belarus. One should advertise actively those opportunities that your country offers. Belarus needs to show investors that it possesses a favorable business atmosphere.  To do so, it needs to invite investors to visit the country.

I would also recommend to tight cooperating with respected organizations such as fDi Magazine, issued by Financial Times Ltd. These relationships will help Belarus to learn which projects will interest investors, where investors want to invest, where big corporations want to invest etc.  With better understanding of investors’ preferences, Belarus can offer more attractive investment proposals.

Unfortunately, there is a lack of quality and reliable information about Belarus abroad. Foreign businessmen have no reliable sources of data about Belarus and are not aware of investment opportunities. As a result, a lot of potential investors have only vague knowledge about Belarus. The brand “Belarus” is not promoted in the world and therefore it is difficult to attract the attention of investors and convince them to bring their money to the country.  I am sure that when you start promoting Belarus as a destination for investment on the global scale and improve the image of the country as a place favorable for doing business, the businessmen abroad will learn more about Belarus and will have more confidence in Belarus. Thus they will be more likely to invest.

QUESTION: In 2011, Belarus will adopt a strategy on attracting investment which will identify the priorities of the state in this process. It will also identify certain areas that most require external financial resources. In your opinion, what areas of the economy should receive priority in the government’s strategy to attract FDI? Which sectors of the Belarusian economy are of most interest to European businesses? Are these businesses ready to invest in the spheres of alternative energy, biotechnology, electronic, high chemistry, and IT technology?

The IT sphere and the software field are certainly very attractive and profitable for investment and there have been a number of successful projects already. However, I think, that the government should not support only those areas which are attractive for investors now without also encouraging investment in other areas. It is important to concentrate on reforms that are necessary for a stable and comfortable investment climate, although this climate in Belarus is already generally favorable.

It is also important to continue working on creating a favorable environment for doing business in Belarus. Ambiguity in the ‘rules of the game’ is one of the biggest obstacles in attracting investment and laws and regulations must be transparent and stable.

The government in Belarus should fund projects which create an image of Belarus as an attractive destination for investment. The government must develop policies aimed at refreshing and re-inventing the image of Belarus to make the country competitive.

It is important to give foreign businessmen as much information about the country and its opportunities as possible, and then investors can determine themselves which spheres are interesting for them and in which projects they are ready to invest.

QUESTION: To what extent are Belarus and the EU cooperating in terms of investment opportunities? In what ways can Belarus and the EU cooperate further in the future?

Cooperation between Belarus and the EU is taking place on bilateral and multilateral levels. Some promising relationships have been established already such as the European Commission’s EastInvest program. (Eastinvest was launched in 2011 with the goal of supporting small and medium sized enterprises in Eastern Europe.  The budget for the project is 8,75 million Euros – notice of BELTA). Belarus EU Business Council is a part of the consortium involved with this project along with the Ministry of Economy and Industry of Belarus. 

At the same time, I would like to see more good projects set up in Belarus which would qualify for sponsorship from international financial institutions such as the EBRD.

QUESTION: What is the future of investment in Belarus?

From my point of view, it is optimistic. The main thing Belarus must do to attract investors is to tell people about the opportunities in the country. By the way, the BEUBC is working to increase awareness of these opportunities by holding our fourth annual conference on finance and investment in Minsk. The topic of the conference is “Privatization as the most important route to the market economy”. This event is planned for the beginning of 2012.