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Joint progect with "DELO (East + West) magazine
Editor-in-Chief: Victor Zhuk; Executive
Editors: Alexander Kokcharov, Alexandr Togulev
Editorial office: Belarus & Business - Delo (East+West),
11 Masherova Ave., 220600 Minsk, Republic of Belarus, CIS. Tel.:(0375)
017 , , Fax.: (0375) 017 ,
BELARUS & BUSINESS (32 p.) is published quarterly.
Subscription at the editorial office of Belarus & Business.
Distribution: by subscription, at the embassies and trade representations
of Belarus abroad, on the boards of Belavia, Lufthansa, Transaero (from
(From The magazine BELARUS&BUSINESS,
economic, social and political review)
B & B Contents:
INVITATIONS of B & B FOUNDERS:
Mikhail Marinich, Minister of Foreign Economic Affairs
"Belarus is the Right Place for Doing Business"
Pavel Dzik, Minister of Finance "An Invitation to
Victor Zhuk Editor-in-Chief "On the Crossroads of
Europe - Belarusian House. What is inside?"
POLITICS & ECONOMY
"Green Light to Investment." An interview with
leonid Sinitsyn, Belarus' Deputy Prime Minister
Mikhail Marinich, Minister of Foreign Economic Affairs
"The Invesment 'Climate' is Normal, and the 'Weather' is Going to
BUSINESS & LAW
Aspects of Belarusian Tax Legislation: Taxation of Foreign
SOCIETY & ECONOMY
The Belarusian Economy Is in the Starting Gate
INVESTMENTS & BUSINESS
Chronicle of Interstate Agreements Signed by the republic
of Belarus on Assistance and the Protection of Investments
Foreign Investors Open Their Accounts
Conditions of Investments in the Economy of the Republic
Required: Robinson Crusoes for the Blessed Isle of Capitalism
Are Passing. An interview with Mr Riches
BUSINESS & MARKETS
Belarus Bank to be a Reliable Partner for Cooperation.
by Vladimir Novic, Deputy Chairman of the Management Board of the Joint-Stock
Saving Bank Belarus Bank
Timber Sales Liberalized
For All Your Banking Needs in Belarus
Belarusian Power Engineering Requires Renovation
EAST & WEST
Ford in Belarus
Belarus's Foreing Trade in 1995: Moderate Success
DOCUMENTS & COMMENTS
Destatization and Privatization program 1996
Regulation of Foreign Economic Activities
Free Economic Zones
REAL ESTATE & BUSINESS
Investment into Real Estate: The Time Has Come
COUNTRY IN TRHE HEART OF
Belarus is a landlocked country in the center of Europe. It covers
an area of 207.600 square kilometres. Belarus is bounded in the north and
east by Russian Federation, in the south by Ukraine, in the west by Poland
and in the north-west by Lithuania and Latvia.
Measured by its territory Belarus ranks thirteeth in Europe and its
roughly the size of great Britain or Rumania. It stretches from south to
north for 560 kilometres (350 miles) and from east to west for 650 kilometres
The larger part of Belarus is a lowland, drained by the Dnepr, the
Western Dvina, the Pripyat and the Nieman. The country lies in the zone
of mixed forest which covers a third of the of its territory. The climate
is moderately continental and humid with temperature averaging -6 grad
C (20 grad F) in January and +18 grad C.
The total population in 1995 was estimated at 10.3 million. Major ethnic
groups: 78% - Belarusians; 13% - Russians; 4% - Poles; 3% - Ukrainians;
1% - Jews and 1% - others. Approximately 69% of the total population was
urban. The average family is 3,2 persons, the life expectancy is 71 years.
The territory of Belarus is divided into six oblasts or regions. Each
oblast is subdivided into districts, cities and other territorial and administrative
units. The cities of minsk, Gomel, Brest, Vitebsk, Grodno and Moghilev
are oblast centres of of the Republic. Six other cities have their population
above 100 thousand inhabitants: Bobruysk, Baranovichi, Borisov, Pinsk,
Orsha, Mozyr. The capital of the Republic of Belarus is the city of Minsk
with the population of about 1,7 mln.
Belarus is a presidential republic. The state authority in the Republic
of Belarus is formed and administered in three structures of power - legislative,
executive and judicial.
Under the existing constitution (1994) the Supreme Soviet of the Republic
of Belarus is the highest permanently acting representative and the unique
legislative body of the state authority. President of the Republic of Belarus
is Head of State and the Executive. The current President (since July 10th,
1994) is Alexander Lukashenko.
The Belarusian language is the language of the native population of
the of Belarus. The Belarusian language uses Cyrillic letters. Over 14th
to 17th centuries the language of Belarusians was the state language of
the Great Duchy of Lithuania. Following the three divisions of the Rzech
Pospolita (Poland) in 1772, 1793 and 1795 and the inclusion of the territory
of belarus into the Russian empire the Russian language began to spread
in Belarus. Until now the Belarusian language fails overcome a powerful
influence of the Russian. The state languages of the Republic of Belarus
are these both ones.
The industry's share in the total volum of production of the Republic
of Belarus constitutes about one half. In 1995 the industrial sector included
1937 enterprises, 194 rented enterprises, 174 stock companies, 96 collective
enterprises, 50 public organisations.
The major branches of industry in Belarus are following: the machine-building
industry (mechanical endineering, machine-building, automobile production,
metallurgy, tractor and agricultural machinery production), electronic
industry ( electronic, radiotechnical, electrotechnical, optico-mechanicle
and instrument-construction branches ), fuel, chemical and petrochemical
industries. Also very important role play wood, wood-pupl and paper industry,
construction materials production, light and food industries.
The area of agricultural land occupies more than half of the territory
of the Republic of belarus. The number of workers employed in the agricultural
sector was 877 thousand persons in January 1996 (20 per cent of total employment
in national economy). The main directions of agricultural production in
Belarus are diary farming, growing of potato, grains, flax, sugar beet,
vegetaqbles, orchading is also spread.
(By Yevgeny Medvedev)
In March of 1996 The Belarusian Goverment made one more step in the
reformation of the national economy - the President signed Decree No114
titled " On Free Economic Zones on the Territory of Belarus".
The structuring of this document was strongly influenced by Presisident
Alexandr Lukashenko's deep impressions about China's successes in the construction
of " socialism with Chinese specifics". It was the Chinese model
of economic reform by the creation of a dynamical "points of growth"
in free economic zones (FEZs) that helped the authors of the decree formulate
the methods and means for the establishment of a "Belarusian market-oriented
The issuance of this document is said to create favourable conditions
the economic development of regions in the Republic of Belarus;
the development of trade and economic cooperation with other countries;
the attraction of foreing invesments;
the creation of new jobs and, of cours,
the speeding-up of scientific and technical progress in the country.
The Decree stipulates that in the country a FEZ is a part its territory
with strictly indicated administrative borders and and a special legal
system, including privileges with regard to economic and other activites.
it is stressed that in FEZs the state secures the protection of investments
and incomes to investors and guarantees the unimpeded exercising of rights
and liberties stipulated by legislation.
What specifically does the legal regime of a FEZ include?
First, certain favorable conditions for economic activities by Belarusian
and foreing economic entities, in particular tax privileges, are established
for each FEZ separately. This is backed by the fact that decisions on the
establishment and liquidation of FEZs are to be made by the President (though
the confirmation of the Statute of a FEZ has been entrusted to the Cabinet
Second, these are provisions in labour relations:
the minimum monthly wage in FEZs is fixed on the level of 120 percent
of that in the contry (as of May 1996 approximately USD10);
employement allowance on level of an average monthly wage (approximately
the employment of workers from other regions and from abroad is to
be carried out only on the consert of the FEZ's administration.
Third, a FEZ has the status of a free customs zone. This means that
cargo shipment through its border requires compulsory customs registration.
the government promises that in FEZs there will be simplified procedures
of entrance and stay for foreign citizens and persons without citizenship.
Let us leave aside questions concerning the procedure and reasons for the
establishment of free economic zones: he who wants to address this has
to consult with, as regards the expediency of such a step, first the Ministry
of Foreign Economic Affairs and the Ministry of Economy, then the Cabinet
of Ministers and finally the President. Let's better see with whom enterpreneus
will have to deal with in the FEZs. The most authoritative body in a FEZ
is its administration which is formed by Cabinet of Ministers. The FEZ
administration above all carriers out all manner of state registrations
of Belarusian and foreign economic entities, and as well registers economic
entities and residents of the FEZ and the offices of non-residents. It
is a great comfort that this omnipotent administration has no right to
suspend or stop the activities of any economic entity which is a resident
of the zone. To do this it will have to apply to court. It has no right
to establish (to found or to be a co-owner of), legal entiteies. But the
FEZ administration is the only lessor of land and other natural resources
and property under republican and municipal owner-ship. It can be the initiator
of advanced privatization and denationalization, though the final word
here will rest with the Ministry for State Property Control and Privatization
and, of course, the President. The FEZ administration as an organ of government
implements the budget of the zone, including the organization of tax collection.
In short the FEZ administrati8on is formed in addition to the existing
local authorities and given part of its power both from them and frome
some central government bodies.
The monetary and credit sphere of a FEZ is somewhate different. As
was mentioned abouve, a zone has its own budget and currency fund though
on the territory of the zone the national monetary unit of the Republic
of Belarus will circulate. Banks and other financial and credit organization
that want to act in FEZs are at first to be registered outside the zone
according to the established procedure and as well, licensed by the National
Bank for operations in foreign currency. They are then to be registered
by the zone's administration as a resident.
This the general content of the presidential decree on FEZs. It is
quite natural than one may ask where this decree is able to assist in the
solution of the issues related dealing with free economic zones and answer
many questions, in particular whether it will intensify the influx of foreign
investments in the Republic. Unfortunately it is impossible to give any
substantiated prognosis on the basis of the document itself. This is impossible
above all becouse the decree provides a general outline of the legal status
of FEZs; the specific mechanisms, specific legal rules regulating the process
of economic activities in each zone were left to the discretion of the
Cabinet of Ministers and the President himself. That is why the efficency
of FEZs will depend to an important degree both on the local authorities
and on the would-be residents of the zone, more precisely on their lobbying
potential. The chief thing is so that the principle of equal opportunity
and favourable conditions for all will not be violated, and that conditions
in in the arena of market competition will not be adversely affected by
protectionism, connections, go-ahead faculties and other non-economic factors
in the solution of economic problems.
Problems Are Passing
AID FOR THE ORGANIZATION OF THE BELARUS - BASED INTERNATIONAL
CONFERENCE ON INVESTMENTS IS RENDERED BY THE BRITISH KNOW-HOW FUND. ITS
REPRESENTATIVE, MR. GEORGE RICHES, CHAIRMAN OF KURA TRADE & DEVELOPMENT
LTD. GAVE AN INTERVIEW TO BELARUS & BUSINESS WHILE STAYING IN MINSK.
- mr Riches, what are the guidelines of the Fund's activities?
- The fund is part of the structure of Kura Trade & Development
Ltd where we have a department for assistance to embassies. this department
renders aid to developing regions all over the world. At the present time
we provide help in the countries of the former Soviet Union. For this purpose
a special section named the Know-How Fund was established. It does not
deal with financial aid, but with the introduction of new technoloies and
an experience exchange in order to help the countries of the former USSR
to a market one. I stress that we are dealing with consulting only, though
we have funds and departments which also render financial aid.
- What is your impression of Belarus?
- Minsk seems to have a more lived-in look that other cities in the
CIS. it is obvious however that Belarus is experiencing difficultties provoked
by transition to a market economy. Your country is very painfully going
through this period. But, taking into consideration its great potential
one can have no doubt that transition to a market economy will be carried
out quickly enough. Belarus is taking successful steps to come to a democratic
market economy as soon as possible. I am sure that the conference on investment,
which will take place in June, will contribute much to this - it will attract
capital to Belarus.
- Do you think that Belarus cannot do without foreign invesments?
- In my opinion, foreign invesments will play the key role/ Without
them it is impossible to carry out systemyc transfomations in the economy.
the forthcoming confernce will allow Belarus to show business people in
the West the investment potential of the country. This will be a very important
forum, as capital will not come in without direct contacts. I hope that
the conference will become a kind of prologue to close contacts between
Belarus and the international financial community and international financial
- What specific aid is being rendered by the Know- how Fund in the
organization of the conference?
- We were asked to draw up the schedule of the conference, to structure
it if Imay say so. The Fund has experience in the organization of such
forums. we know what questions may be posed by foreign investors. We are
compiling necessary information for them. We are doing everything possible
so that nobody will waste time in Minsk.
- Does the Fund intend to continue cooperation with Belarus?
- Certainly yeas. we have already had some projects that have begun
to work here thanks to the Fund's assistance. I am sure that it will be
helpful as an "economic engine" in the future as well.
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