1180 small industrial enterprises in one year

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April 22, 2016 18:16

Presidential Decree No 6 has created considerably favourable legal frameworks for the development of small and medium enterprises and provided significant benefits for new businesses. However the Government concluded that these measures failed to make a difference to the regional development. It is a mistake to plan the number of enterprises to be set up and as a consequence, results are neutralized by sabotaging the implementation of such plan.

At a Council of Ministers’ meeting called to discuss the country’s socio-economic development Prime Minister Myasnikovich tasked to create at least 10 enterprises in each region employing at least 50 persons each.

Belarus is divided into 118 districts. To fulfill the order, by 2013 1180 enterprises need to be set up. Moreover, they have to be industrial enterprises. In the beginning of 2012 there were 11667 SMEs (employing 15 to 100 people) in Belarus, 3453 of them were industrial.

Prime Minister has not clarified why there was a need in such a huge number of enterprises. Also there is no indication of funding origin, while setting up one work place is assessed at USD 20-25 thousand. Therefore, in order to implement this task, about USD 1 billion is needed. The task ignores availability of labour force issue and the feasibility of having 10 enterprises in a region.

Private business always calculates its activities’ cost-effectiveness. Therefore the lack of initiative in setting up new enterprise should have been an indication to the government about existence of certain problems with creating new businesses. Instead, the government makes an administrative decision to set up the required number of enterprises.

While trying to fulfill the task, medium and large businesses might face fragmentation into smaller enterprises. Also there is a risk of creation ineffective enterprises, due to the lack of proper business plans and inefficient use of government funds by governmental agencies as local authorities will try to solve the task by seeking funds primarily in the local budget, and focus on quantity parameters rather than effective performance. The best solution would be to repeal this absurd decision or sabotage its implementation.

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