The government will restore dominance in retail
Retail chain trade has been developing rapidly in recent years, resulting in the state gradually losing its grip over the industry. In order to restore some control , the government has introduced amendments which aim to increase the state’s ability to influence retailers. As a result, investors’ interest in the retail market may reduce, the range of goods will narrow, and prices will go up.
On January 21st, 2014 the Law ‘On state regulation of trade and catering in Belarus’ took effect.
In 2013, retail turnover in Belarus was USD 27.2 billion, and the share of state-owned enterprises was 9.4%. In some regions, commercial retail chains dominate. To overcome the antitrust law limitations, affiliated trade structures were created to demonstrate artificial competition. Some trading companies, including state-owned ones, are controlled by the private sector. Retailers either ignore or treat the existing trade regulations formally.
The new law introduces the obligation for any commercial enterprise to stock all products on the assortment list. Each store will have a required number of product types that must be constantly available. This will increase the number of products made in Belarus on the shelves. Violation of the assortment list envisages penalties. Retailers, including their affiliated trading partners, cannot have more than 20% of the market share.
As a result, small retail stores might face some problems in complying with the assortment lists, which may lead to problems for the entire industry since they are the most widespread. Derailed sales plans may result in cascading defaults and disruptions in the commodities supply by manufacturers and importers. Retail networks will only be able to expand in the largest cities, since regional penetration will be limited by not surpassing the 20% margin of regional turnover, and so will be unattractive in terms of financial results.
The law does not envisage liability for failures by suppliers of ‘socially-important products’, which may lead to additional penalties for retailers (regardless if they are to blame). Restrictions on retailers will also work against price-reductions on Belarusian goods.
The state plans to extract additional revenue through fines and tighter control over private commercial structures. In addition, the state plans to use this law to limit the expansion of Russian capital in order to prevent its interference in the 2015 election campaign. Consumers will suffer the most from these changes, as they will pay higher prices for the retailers’ additional costs.
President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.
President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.
The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.
The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.
The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.