Investment Appeal

Belarus is favorably situated from an economic, geographical and geopolitical viewpoint in the eastern part of Europe. The Republic is located at the junction of rail and road routes, oil, gas and commodity pipelines, and communications systems linking Western Europe with Russia and Asia. To the west, Belarus borders Poland, to the north-west, Lithuania, to the north, Latvia, to the north-east and east, Russia, and to the south, Ukraine. Minsk is situated 215km from Vilnius, 470km from Riga, 550km from Warsaw, 580km from Kiev, 700km from Moscow, and 1060km from Berlin. In that regard, Belarus has the capacity to become a bridgehead for foreign investors seeking to conquer new and promising markets throughout the CIS.

Belarus boasts a highly qualified and relatively cheap labor force, with sound technical skills and experience working at modern enterprises. For every 1000 people employed in the real sector, some 400 hold third level and special secondary qualifications; in the services sector, this figure rises to 580-690 people depending on the segment. The high level of education in the country and its highly qualified workforce are the fruits of Belarus' strong professional training system, particularly in such sectors as the automotive industry, tractor and agricultural machinery engineering, optics, radioelectronics, precision instruments, and others.

Belarus boasts a developed science and technology infrastructure for R&D work in various branches of theoretical and applied science. The Republic hosts around 300 scientific research organizations, with more than 30,000 people employed in the sector, including more than 830 doctors of science and 3,690 PhDs. Belarussian scientists have won international acclaim for their breakthroughs in the areas of laser and nuclear physics, nuclear energy, powder metallurgy, optics, software, biotechnology, and others. Belarus recognizes the importance of mobilizing its information resources in the interests of developing the national economy, and plans to pay particular attention to furthering biotechnology and biomedical research with a view to establishing a modern and profitable agricultural sector, a competitive food industry, and a pharmaceuticals and health industry capable of meeting the challenges of the twenty-first century.

In recent years, Belarus has enjoyed macroeconomic stability. GDP growth has been steady at 4.7% in 2001, 5% in 2002, and 6.8% in 2003. A single exchange rate was established in 2000 for all segments of the currency market. Administrative barriers to the currency market were torn down. These included the restrictions on foreign currency cash acquisition by private individuals, maximum volumes of currency exchange transactions by legal entities on the OTC market, and access for non-residents to the national currency market. Inflation fell more than fourfold between 2000 and 2003.

Belarus maintains active relations with international financial organizations. The International Monetary Fund's Monitoring Program was put in place in 2001. 2002 saw the approval of a new cooperation strategy between Belarus and the World Bank for the financial years 2002-2004. An energy conservation program in the social sphere was successfully implemented as part of that strategy. The Republic has been working with the IMF since 2002 on the implementation of a project for the development of small and medium enterprise. The granting of a syndicated loan in 2003 to finance private enterprise offers an example of successful collaboration with the EBRD.

Furthermore, the Belarussian Government has accorded priority status to the task of securing WTO access. Several rounds of multilateral talks with WTO member countries have been completed, and an inter-governmental consultation mechanism has been created to address all issues related to WTO access within the framework of the Customs Union, the Eurasian Economic Community, and on a bilateral basis with Russia.

Belarus produces and sells competitive products for the domestic and international markets. The Republic's specialized sectors include machine engineering, chemicals and petrochemicals, consumer goods industry, food, livestock rearing, flax cultivation, and potato growing. Belarus exports more than 90% of its car and tractor output, 83% of its machine tool output, 88% of its refrigerator and freezer output, and around 90% of its television and potash fertilizer output. Belarus is a member of the unified customs territory with Russia. For potential investors this means that an investment in Belarus offers access not only to Belarus' market, but also to Belarus' giant neighbor to the east.

Belarus has established some six free economic zones where more liberal tax and customs rules apply. Profit tax and value added tax rates are have the national level for residents of the free economic zones. Profit earned by free economic zone residents through the sale of products of own manufacture is exempted from taxation for a period of five years following its declaration. Customs duty and economic policy measures do not apply to goods imported into the free economic zones from abroad. Residents of free economic zones exporting products of own manufacture outside Belarus are exempt from customs duty and are not subject to licensing or quota requirements. Following the expansion of the European Union, FEZ Brest will be located directly on the frontier with the EU.

Belarus is the only CIS state to have adopted an Investment Code. This fundamental instrument governs both national and international investment in the country. The Investment Code protects the ownership rights of foreign investors, guarantees them equality with national investors, and offers them incentives in the tax, customs and currency spheres. Foreign investors are entitled to establish legal entities with any volume of foreign investment and any organizational and legal form, in addition to branch and representative offices.

Belarus also hosts the Foreign Investment Advisory Council, which is headed by the Prime Minister of Belarus. The Advisory Council helps formulate and implement comprehensive measures aimed at attracting foreign investment and improving business conditions in the Republic, and helps provide rapid solutions to problems faced by foreign investors in connection with their operations in Belarus. The Advisory Council's standing committee and working groups focus on such areas as improving the investment legislation, developing the free economic zones, improving Belarus' tax and customs systems, and improving the country's investment image. Then Advisory Council's membership includes ministers and heads of major foreign and international organizations operating in the Republic.

Belarus can boast of the success stories of foreign companies carrying out major and medium-sized investment projects in the country. Belarus has a good working relationship with the major transnational corporations. Joint and foreign enterprises have been established with Germany's MAN (production of trucks), the Netherlands' Coca-Cola, and U.S. corporation McDonald's (non-alcoholic beverages and catering), Denmark's Maersk Medical (medical equipment and products), and Germany's Fresenius (medical equipment).

Belarus is a country with an ancient and rich history and unique culture. Its towns and cities are peppered with ancient cathedrals and monasteries, the mansions and castles of the Rzeczpospolita and the Russian Empire, and architectural, historical and cultural monuments. The towns of Kamenets, Minsk, Zaslavl, Mogilev, Vitebsk, Krevo, Krichev, Gomel, Pinsk, Slutsk, Nesvizh, among others, are steeped in history. Thanks to its cultural and historical heritage and the natural beauty of its countryside, including vast expanses of land, thick forests, and fresh water resources, Belarus has strong potential as a destination for tourism and curative spa business.

Thus, Belarus is an attractive, safe, and, most importantly, promising and profitable destination for foreign investment. For people who already know Belarus and for those who are planning to do business here, we wish you success, profitable contacts, and contracts. Collaboration in the investment sphere in Belarus will be based on civilized precepts with due regard to the interests of both the Belarussian people and foreign investors.