Outflow of foreign investment from Belarus
Last week Oman refused to implement an investment project worth USD 150 million in Minsk. Belarusian authorities are looking for new investors to implement a number of investment projects.
Omman’s State Reserve Fund refused to implement an investment project. The investor believes the project is unprofitable due to significant changes in the economic conditions resulting from the devaluation of the Belarusian ruble in 2011.
In March 2010 the Fund, in face of “Eagle Properties four”, Ltd, received a land plot in the centre of Minsk (2.6 hectares) in private ownership for USD 10 million (no auction was held) for the construction of a residential complex, business center and a five star hotel. The overall investment was estimated at USD 150 million and the project should have been finished by 2016.
Quoting similar reasons an investment agreement with a Cypriot company IteraVnukovo Ltd (part of the group \"Itera\") was terminated. The contract envisaged construction of an aircraft maintenance and repair and business aviation centre at the Minsk National Airport.
Among other reasons that hinder the implementation of investment projects in Belarus are corruption and inefficiency of government agencies.
Nevertheless, the government continues looking for investors. For example, the Swiss Stadler Rail AG and JSC “Belkommunmash Holding Management Company” will build a plant to produce urban electric passenger transport in Dzerzhinsk district, Minsk region. For this, a JSC “Electric vehicles” has already been registered as a FEZ “Minsk”. Project implementation is envisaged between 2012 and 2016.
Lithuanian Norfa will build a vegetable processing plant in Belarus. Retailer Norfa Norfos mažmena has already acquired land plot in Belarus (in Vilejka). Currently design works are carried out, project cost is around Euro 5 million.
For reference. According to the National Statistics Committee, the net inflow of foreign direct investment in January-May 2012 decreased compared with the same period in 2011 by 18.5% to USD 605.7 million with the forecast for 2012 USD 1.2 billion.
According to Belstat, in August 7,600 people were dismissed, including 4,800 civil servants. Dismissals of civil servants were due to the optimisation in the public administration by up to 30%. Some civil servants would retain their job however would lose the status of a civil servant. Vacancies on the labour market are likely to reduce in number, thanks to the optimisation, the state administration would increase wages for public servants. The payroll fund for retained employees is likely to increase and some former state employees are likely to get jobs in affiliated organizations. The optimisation of the state apparatus should complete by January 1st, 2018, and some former civil servants are likely to join the ranks of the unemployed.