Attitude toward Foreign Direct Investment
The Government of Belarus (GOB) claims attracting FDI is one of the priorities of the country’s foreign policy, and net inflows of FDI have been included in the list of government performance targets since December 2015. The GOB claims there are no specific requirements for foreigners wishing to establish a business in Belarus. Investors, whether Belarusian or foreign, allegedly benefit from equal legal treatment and have the same right to conduct business operations in Belarus by incorporating separate legal entities. However, the existing laws and practices often discriminate against the private sector, including foreign investors regardless of the country of their origin.
Other Investment Policy Reviews
According to the GOB, the UNCTAD reviewed Belarus’s investment policy in 2009 and made recommendations regarding the improvement of its investment climate. http://unctad.org/en/Docs/diaepcb200910_en.pdf
Laws/Regulations on Foreign Direct Investment
Foreign investment in Belarus is governed by the July 12, 2013 law “On Investments,” legal acts of the President of Belarus, and other legislation as well as international and investment agreements signed and ratified by Belarus.
The GOB claims there is no executive or any other interference in the court system that could affect foreign investors. In reality, however, there have been instances of executive interference in the judiciary that have harmed foreign investors’ operations in Belarus.
The GOB regularly updates the following websites with the latest in laws, rules, procedures and reporting requirements for foreign investors: http://www.investinbelarus.by/en/
Belarus has a regime allowing for a simplified taxation system for small and medium-sized, and foreign-owned businesses.
Belarus has an investment promotion agency, named the National Agency of Investment and Privatization (NAIP), which was established in May 2010 for the purpose of facilitating foreign investment. NAIP is tasked with representing the interests of Belarus as it seeks to attract FDI into the country. The Agency claims it is a “one-stop shop” for
organizing fact-finding missions to Belarus, including assisting with visa formalities;
providing information on investment opportunities, special regimes and benefits, state programs, and procedures necessary for making investment decisions;
selecting investment projects;
providing solutions and post-project support (aftercare).
The services are available to all investors.
Belarus defines enterprises as follows:
Micro-enterprises – less than 15 employees;
Small enterprises – from 16 to 100 employees;
Medium-sized enterprises – from 101 to 250 employees.
According to the GOB’s Strategy for Attracting FDI, the priority sectors, which need FDI include pharmaceutics, biotechnology, nanotechnology, production of new materials, and information and communication technologies. The NAIP maintains a database of investment proposals at http://www.investinbelarus.by/en/invest/base/.
Limits on Foreign Control and Right to Private Ownership and Establishment
The GOB claims foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity.
The GOB also claims there are no general (statutory, de facto, or otherwise) limits on foreign ownership or control. In reality, however, the GOB establishes such limits on a case-by-case basis.
The limits on foreign equity participation in Belarus are above the average for the 20 countries covered by the Investing Across Sectors indicators in Eastern Europe and the Central Asia region. Belarus, in particular, limits foreign equity ownership in service industries.
Sectors such as fixed-line telecommunications services, electricity transmission and distribution, and railway freight transportation are closed to foreign equity ownership. In several other sectors, including media and insurance, foreign ownership is limited to a less-than-50% stake. In addition, a comparatively large number of sectors are dominated by government monopolies, including, but not limited to, those mentioned above. Those monopolies, together with a high perceived difficulty of obtaining required operating licenses, make it difficult for foreign companies to invest in Belarus.
Belarus has no privatization program. The president of Belarus noted on several occasions that any state-owned enterprise in the country could be privatized partially or completely provided an investor offers a good price. It is believed, however, that what the government would assess as a “good price” and what a potential investor would assess as a “good price” would be quite different. The country does have a list of open-joint stock companies which stocks are available for privatization. The list www.gki.gov.by/auction/auinf/auishares includes basic information on privatization conditions, and sometimes a brief description of assets listed for privatization.
Interested investors are encouraged to forward a brief letter of interest to the State Property Committee. Letters are reviewed by a special commission that decides on the feasibility of preparing a decision of the President on privatization of shares via tender, auction, or direct sale. The investor may also send a letter of interest regarding assets that are not on the State Property Committee list and the government will examine such offers.
The State Property Committee occasionally organizes and holds privatization auctions. Many of the auctions organized by the State Property Committee have low demand as the government conditions privatizations with strict requirements, including preserving or creating jobs, launching a successful business project within a limited period of time, etc.
Screening of FDI
Although the GOB claims that it does not screen, review, or approve FDI, the above practices prove the opposite. Belarus is still very much a soviet-style command economy, which prescreens and approves all significant foreign investment.
Belarus’s Economy Ministry is responsible for reviewing transactions for competition-related concerns (whether domestic or international in nature).