Ways of improvement of investment climate in Belarus

Evaluation of the territory investment attraction is the main aspect of any investment decision making. The more complicated the situation in the country is, the greater experience and intuition of the investor needed to consider the investment proposals. Investment climate - generalized characteristics of social, economic, organizational, legal, politic prerequisites, predetermining advisability of investing in this or that managing system.

The history of comparative evaluations of investment attraction or investment climate numbers more than 30 years. Japan and some other countries use descriptive methods. US publish" annual statistic card", which includes 4 generalized index of investment climate: economic investment effectiveness, business vitality, potential of territory development and the main constituents of taxation policy.

As a rule, foreign countries evaluate investment climate regarding macroeconomic sphere.

The position of the Republic of Belarus and other CIS countries in foreign rating lists is comparatively low. Unlike the former USSR that occupied 17th place after Italy and Taiwan according to the economic journal "Euromoney" of 1988, no former Soviet republic could occupy the list of 50 countries with most favorable investment climate.

This is the main reason for the foreign investment deficit and flight of private capital abroad into more favorable regions.

There are several characteristic approaches to evaluate investment climate. The most acceptable approach is the factorial one, based on the evaluation of a number of factors:

• Economic potential characteristics;

• General levels of management (development of productive industry branches, coefficient of depreciation of the basic funds, unfinished construction);

• Maturity of market environment (infrastructure, privatization , inflation, the degree of population's involvement in the investment process, domestic market capacity, export conditions, foreign capital actual presence);

• Political situation;

• Social factors (living standard, real salary levels, population's attitude to local and foreign entrepreneurs, working conditions for foreign specialists);

• Financial factors (budget incomes, budget accessibility, credits in foreign currency, bank interest rate, amount of holding per capita, long term credits ratio).

It should be noted that the methodology of the investment climate evaluation is far from being perfect. A considerable part of climate assessments are mainly subjective. It is also important that investment climate as any management system is characterized by dynamism and is constantly changing for the better or for the worst.

Economic development of Belarus in 1996-2002 had 2 stages: relatively high rate of growth at the beginning and slowing down of rate of growth in the second half of the period.

This tendency is caused by many factors. At the beginning economic growth was stimulates by putting into operation unused manufacturing and technological potential, due to the policy of expense expansion and regulation of prices. At later stages this possibilities ceased to offer further improvement. Inflation processes accelerated. The main reason of high inflation was monetary and credit policy of 1998-1999, connected with state programmes' advanced emission crediting in the spheres of house-building, and also economic crisis in Russia in August of 1998.

Since 2000 hard monetary and credit policy has been introduced. It provided lowering of inflation rates and created the conditions for financial recovery. The provision of positive level of the real interests rates and relative stabilization of the Belarussian rouble market exchange rate promote the balance of demand and supply on monetary market. In comparison with the inflation advanced devaluation of the official exchange rate of the Belarussian rubble to US Dollars led to the uniform Belarussian rubble exchange rate in the currency market in September, 2000. Financial problems still block the investment growth and main funds renovation. It didn't happen to provide , in full scale, the intensification of investment processes due to a higher levels of domestic savings.

After the Investment Code was adopted in 2001 in the Republic of Belarus, the legal situation for investment activity was greatly improved. Yet some draw-backs remain - inconsistency of normative legal acts, inconsistency and controversial character of some legal norms.

It is necessary to finish up the formation of normative-legal base in the field of tax, credit, currency, custom regulation of investments and provide foreign investors with stable, favorable conditions for business.

The annual monitoring of investment climate in Republic of Belarus becomes a very actual task. The most suitable variant is to track the condition of investment climate in the country's economy without pointing out the separate management systems( branches, regions, economic zones).

For this purpose Ministry of Economy and other ministries are to work out the methology of evaluation of investment climate criteria and the methods of its monitoring as well as to organize cooperation with one of the leading specialized international agencies to define the investment rating of Belarus.

In accordance with economic assessments, the demand for investments within the period 2000-2010 may constitute 39 billion US dollars. The total amount of investments into the fixed capital in 2010 is to increase by 2,2-2,5 times in comparison with 2000 (in 2005 it is to increase by 1,6-1,7 times in comparison with 2000). The investment share into gross domestic product will be 26-28% in 2010 (19,8- in 2000). It will make possible to ensure the development of industrial sector, increase of competitiveness of ready-made products in the home and foreign markets and as a result.