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 Armenia, Kazakhstan, Kyrgyzstan, and Russia), extensive transport infrastructure, and a highly skilled workforce as competitive 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.
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.
In early 2019, Belarus’ State Property Committee approved a list of 23 joint stock companies for full or partial privatization. Also in 2019, the World Bank concluded a pilot project that identified and helped prepare 12 Belarusian SOEs for privatization. However, the GOB allowed sale of the government share in these companies on the condition that the purchasing investors preserve existing jobs and production lines. The State Property Committee reported that the government sold its minority share (under 25 percent) in only two enterprises in 2019.
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, selective law enforcement 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. The current 18-month period of temporary sanctions relief ends on April 26, 2021. 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 for national security reasons in defense as well as production and distribution of narcotics, dangerous and toxic substances. FDI can also be restricted in activities and operations prohibited by law or in the interests of environmental protection, historical, and cultural values, public order, morality protection, public health, and rights and freedoms of individuals. Investments in businesses that have a dominant position in the commodity markets of Belarus are not allowed without approved by the Ministry of Trade and Antimonopoly Regulation.
In 2019 the Council of Europe’s (COE) Group of States against Corruption (GRECO) publicly declared Belarus non-compliant with GRECO’s anti-corruption standards. This was GRECO’s first ever declaration of non-compliance. According to the COE, Belarus failed to address 20 out of 24 recommendations made in 2012; had not authorized the publication of the 2012 report or related compliance reports; and was non-responsive since 2017 to requests from GRECO to organize a high-level mission to Belarus. In the first half of 2020, Belarusian courts convicted 463 individuals “on corruption-related charges.” However, the absence of independent judicial and law enforcement systems, the lack of separation of powers, and an independent press largely barred from interaction with a nontransparent state bureaucracy make it virtually impossible to gauge the true scale of corruption challenging the country.
|TI Corruption Perceptions Index||2019||66 of 180||https://www.transparency.org/country/BLR|
|World Bank’s Doing Business Index||2020||49 of 190||https://www.doingbusiness.org/
|Global Innovation Index||2018||72 of 129||https://www.globalinnovationindex.org/
|U.S. FDI in partner country ($M USD, historical stock positions)||2018||N/A||https://apps.bea.gov/international/
|World Bank GNI per capita||2018||$5,670||https://data.worldbank.org/country/