7th Investment Forum confirmed the foreign investment plan’s unenforceability
The Investment Forum, held in Minsk on November 15th – 16th did not result in a significant number of investment agreements. Investors are not interested in declarative statements and the situation with “Spartak” and “KOMMUNARKA” describes the private property situation in Belarus better than words.
On November 15th -16th, 2012 Minsk hosted 7th Belarusian Investment Forum.
There are supporters of foreign investments among the Belarusian officials. The National Agency for Investment and Development has been set up. Substantial benefits are provided to those who set business in small towns (decree No 6 of May 7th, 2012). Belarus has improved its rating in “Doingbusiness-2013”. Frameworks for the production activity in the Sino-Belarusian Industrial Park have been identified.
Some investment projects were presented during the Investment Forum. There were 600 Forum participants. However, only 12 agreements with insignificant amounts came as Forms’ results, which indicates business’ suspicion after “Spartak” and “KOMMUNARKA” were de facto nationalized. Even the attractive conditions in small towns have not made businesses excited about active investment in Belarusian economy.
Looking at a bigger picture, Belarus has not been successful in attracting investment: the 2012 plan, envisaging sales of state assets worth USD 2.5 billion, failed. Belarus’s attempts to sell MTS shares were unsuccessful. Establishment of a joint holding “Rosbelavto” is hampered for political reasons.
The reasons behind each failed ‘investment case’ vary, but in the end, Belarus’ very modest success with attracting investment is due to excessive control over commercial activity of enterprises, on the one hand, and leadership’s high expectations from investors, on the other hand. Indirect discussions between the President and the Prime Minister during the Forum demonstrated that in the end, it would be the President who would make the final investment decision regardless of the government’s position.
Thus, even if reduced to USD 2 billion, 2013 investment plan without high level support is yet another declaration of intent not supported by real projects. Potential large investors are well aware of peculiarities of investing in Belarus and prefer to invest in countries with a more predictable investment climate. Belarus therefore can only hope for investors willing to take risks, but they, as a rule, do not invest in long-term projects.
The country's leadership has instructed the local authorities to raise minimum wages at enterprises by the end of 2019 to BYN 1,000, which would lead to an increase in the average wage in the economy as a whole to BYN 1 500. The pace of wage growth in 2017 is insufficient to ensure payroll at BYN 1000 by late 2017 without manipulating statistical indicators. In order to fulfil the president’s order, the government would have to increase budgetary expenditures on wages in healthcare and education, enterprises – to carry out further layoffs and expand the practice of taking loans to pay wages and restrict investment in modernisation of fixed assets. In 2010, the artificial increase in wages led to a threefold devaluation in 2011, an increase in the average salary to BYN 1500 will not match the capabilities of the economy and would lead to yet another devaluation.