Belarus’ woodwork industry could be modernized, but only by private investors
Following Lukashenko’s visit to the Borisov woodworks last week, the company’s management and regional administration head have resigned.
The government has chosen the woodwork industry as a promising avenue for modernization. Although additional funds have failed to improve the industry’s financial performance, woodwork remains a promising industry for modernization which could be carried out by private investors. However Belarus’ government wants to remain the key player.
About 39% of Belarus is covered with forests, i.e. it has enough natural resources for woodworking. Exports of wood and products made of wood in 2012 exceeded USD 500 million and Belarus has a good potential for import substitution at circa USD 200 million per year (calculation is based on 2012 data). Belarus imported circa USD 100 million worth of woodchip boards in 2012 and in the future it aims to replace these imports entirely with domestic products.
The exact amounts allocated for the woodworking industry modernization are difficult to calculate, but Belarus has imported woodwork equipment worth at least USD 500 million. Some modernization loans date back to 2008-2009 and have not been repaid in full until now. The industry’s financial situation is critical: woodworking has been making profits only in May 2013. Compared with 2012, industry’s loss-making in 2013 increased by 2.4 times. New production lines have been launched, but imports of woodchip boards have not reduced.
In addition, there is a huge difference between how private and state woodworks develop. In Smorgon region, the privately-owned Kronospan woodworks is expanding according to a development plan, it produces goods for exports and for domestic consumption, and does not require constant monitoring by the head of state. State-owned woodworks companies are not developing so well. In general, state-owned woodworks have failed to implement modernization: imported technical equipment does not meet the technical requirements and is often stored outdoors. The only positive exception is Ivatsevichi woodworks, which has strengthened its exports on the Russian market.
Recent practices show that the state is unable to carry out effective modernization at state-owned woodworks due to the lack of incentives. Private enterprises can be successful, but that only shows the inefficiency of state ownership in this industry, which is unacceptable for the authorities.
The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.
Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.
Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.
In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.