Sino-Belarusian Industrial Park received significant benefits

April 22, 2016 18:11

On June 5, Alexander Lukashenko signed a Decree № 253 “On Sino-Belarusian Industrial Park”, which provides a number of preferences to a specially created economic zone until 2050. At the same time, in compliance with the Customs Union treaty, Belarus is obliged to abolish the majority of such preferences by 2017.

In particular, the Decree envisages a number of tax benefits for the park’s future residents and the managing company. For instance, the managing joint venture company is exempt from income tax, property tax, land tax for land in the Industrial Park until January 1st, 2032, and park’s residents for 10 years from the registration date as a resident.

Personal incomes (remunerations) received under labor contracts between the managing company and (or) industrial park residents will be subject to reduced income tax rate - 9% instead of 12% until January 1st, 2027.

Sino-Belarusian industrial park will be located in the Smolevichi district of the Minsk region and will occupy 8.048 hectares. Special preferences will expire in 50 years.

The managing Sino-Belarusian joint venture will have 40% Belarusian shares and 60% Chinese. The supreme governing authority of the industrial park will be an Interstate Coordinating Council; Administration of the industrial park - a public agency subordinated to the Belarusian government - will be responsible for the operations management.

The park will specialize on electronics, biomedical, fine chemical and mechanical engineering. Residents of the industrial park will be leading companies from Belarus, China and other Asian countries.

All in all, the creation of the industrial park implies strengthening of China’s economic influence on Belarus. However, at the same time, one should understand that Russia is not interested in increased competition from Asian producers within the Common Economic Space, and can put restrictions on the economic benefits generated for the Park’s residents.

In the meanwhile, the volume of foreign investments to Belarus from Asia is negligible (see Table 1). In particular, in the Q1 2012 a total of only USD 3.981 million has been received from China.

Table 1

Volume of foreign investment to Belarus from Asia in Q1 2012, USD thousands

Country

Total

Including

Direct

Portfolio

Other

Hong Kong

1160.5

446.3

714.2

India

4148.0

64.6

4083.4

Jordan

150.1

150.1

Iran

5809.3

4194.5

1614.8

Qtar

6314.0

23.6

6290.4

China

398.6

3935.6

45.0

Lebanon

2758.8

2626.5

132.3

United Arab Emirates

3686.5

67.7

3618.8

Singapore

410.6

410.6

Japan

1087.1

527.0

560.1

International organizations

9099.5

9099.5

At the same time, the Belarusian authorities intend to expand foreign economic cooperation with other countries in Asia, Africa and South America.

Thus, in the end of June Alexander Lukashenko will be on the official visit to Venezuela and Ecuador, and Foreign Minister Sergei Martynov will visit Indonesia and Laos on June 11-13.

During the visit Foreign Minister, most likely, will discuss Belarus’ participation in the creation of a transnational corporation for the production of potash fertilizers jointly with Vietnam and Laos. Belarus is also ready to build a phosphate fertilizers factory in Vietnam.