Privatization via auctions
The government stakes on the sale of assets at auctions: in December 51% of the shares of a mobile phone operator MTS will be auctioned. However, such privatization model will not secure significant foreign currency influx to Belarus.
On 6 September the State Property Committee of Belarus held auctions and sold shares of 3 of 20 enterprises put for sale. In particular, 100% of shares in the OJSC "Proton-M" (Zhitkovichi) have been sold. The new owner of the company became the “Gruzavtomarket” Ltd, which was the only bidder and agreed to pay the initial price plus 5%, accounting for nearly Br 1,314 million. Also, 99.3% of the shares of the JSC "Polymer" (Luninets region, VillageSinkevich) have been sold for Br2, 037 billion to a joint Belarusian-Lithuanian company “Torimeks”. The latter was the only bidder too, as well as the sale conditions: the initial price plus 5%. On similar terms, the initial price plus 5% have been sold 13.4% of the shares of the JSC “Zhitkovichles” for Br 556.1 million to the JSC “Univestsistem”.
On 1st December 2011 an auction to sell the state-owned shares (51%) of the largest Belarusian-Russian mobile operator “Mobile Telesystems” (MTS-Belarus) will take place. The co-founder, Russian JSC “Mobile Telesystems” has previously expressed interest in the controlling stake of MTS-Belarus however parties failed to reach an agreement. The initial price of 51% of the shares of MTS Belarus is USD 1 billion.
Belarus is trying to sell its assets at auctions hoping to get the maximum price and to avoid accusations of the lack of transparency and backroom agreements. However the main issue is that potential investors have little interest in the majority of auctioned enterprises. Moreover, the initial price is often inflated. With regard to the sale of 51% of shares of MTS at an auction, the announced starting price is exactly as indicated by Lukashenko. Russian co-owner refused to pay the price and it is unlikely anyone else would. Belarusian privatization model will not be able to secure significant foreign currency influx to Belarus. It should either start a genuine large-scale privatization (threatening with decline in output, unemployment, etc.), or continue a policy ofad hoc sales of strategic assets at a reduced (compared with the announced) price.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.