The Government of Belarus (GOB) officially welcomes foreign investment, which is seen as a source of new production technologies, jobs, and hard currency. Belarusian authorities stress the country’s geographic location, its inclusion in the Eurasian Economic Union (which also includes Russia, Kazakhstan, Armenia, and Kyrgyzstan), extensive transport infrastructure, and a highly-skilled workforce as structural advantages for investment. Belarus also highlights the preferential tax benefits and special investor incentives it provides for its six export-oriented and regionally-located free economic zones, the IT sector-centric High Tech Park (HTP), and the joint Belarus-China Great Stone Industrial Park.
Various laws and decrees provide the legal and regulatory framework governing investment activities in Belarus that allows for investment agreements and the following forms of investment activities in Belarus:
- Greenfield: establishing a legal entity (joint ventures and foreign enterprises);
- Brownfield: property or property rights acquisition, i.e., a share in charter capital, real estate, securities, intellectual property rights, concessions, public-private partnerships, equipment, or other permanent assets.
Belarus places a priority on investments in pharmaceuticals; biotechnology; nanotechnologies and nanomaterials; metallurgy; mechanical engineering industry; production of machines, electrical equipment, home appliances and electronics; transport and related infrastructure; agriculture and food industry; information and communication technologies; creation and development of logistics systems; and tourism.
Despite its official openness to foreign investment, Belarus has not undertaken large-scale privatization of the large majority of its state-owned enterprises (SOEs) or state-owned properties. Investments in sectors dominated by SOEs have been known to come under threat from regulatory bodies. Investors, whether Belarusian or foreign, purportedly benefit from equal legal treatment and have the same right to conduct business operations or establish new business in Belarus. However, according to numerous sources in the local business community and independent media, the enforcement of existing laws and unwritten practices can discriminate against the private sector, including foreign investors, regardless of their country of origin. Serious concerns remain about the independence of the judicial system and its ability to objectively adjudicate cases rather than favor the powerful central government.
When considering investing in Belarus, it is also important to note that pursuant to a June 2006 Executive Order, the United States maintains targeted sanctions against nine Belarusian SOEs and 16 individuals in relation to concerns about undermining Belarus’ democratic processes. Since October 2015, however, the U.S. Department of Treasury, in consultation and coordination with the Department of State, has provided temporary sanctions relief for the nine SOEs in consecutive six-month intervals, and in October 2018, expanded the length of temporary sanctions relief to 12 months. The current 12-month period of temporary sanctions relief ends on October 25, 2019. For additional information click here: https://www.treasury.gov/resource-center/sanctions/Programs/pages/belarus.aspx.
Despite GOB organizations that promote foreign direct investment (FDI), both the central and local governments’ policies often reflect an old-fashioned, Soviet-style distrust of private enterprise – whether local or foreign. Technically the legal regime for foreign investments should be no less advantageous than the domestic one, yet FDI in many key sectors is limited, particularly in the petrochemical, agricultural, and alcohol production industries. FDI is prohibited in defense and security as well as production and distribution of narcotics, dangerous and toxic substances. FDI can also be restricted, as is the case in the following areas:
- Investments in businesses that have a dominant position in the commodity markets of Belarus may not be allowed unless such investments are approved by the Ministry of Trade and Antimonopoly Regulation.
- Investments in activities and operations prohibited by law in the interests of national security (including environmental protection, historical, and cultural values), public order, morality protection, public health, and rights and freedoms of individuals.
|TI Corruption Perceptions Index||20178||70 of 180||https://www.transparency.org/cpi2018|
|World Bank’s Doing Business Report “Ease of Doing Business”||20198||37 of 190||www.doingbusiness.org/data/exploreeconomies/belarus/|
|Global Innovation Index||20187||86 of 127126||https://www.globalinnovationindex.org/gii-2018-report#|
|U.S. FDI in partner country ($M USD, stock positions)||2017||N/A||https://apps.bea.gov/international/factsheet/factsheet.cfm?Area=336|
|World Bank GNI per capita capita||2017||$5,2980||https://data.worldbank.org/country/belarus?view=chart|