Recent legal & business developments in
1. On June 21 the first tranche of the loan provided by the Anticrisis Fund of the Eurasian Economic Commonwealth (EEC) amounting to $800 mio. was received onto the account of the Ministry of Finance opened with the National Bank of Belarus (NBB). The tranche was provided within the framework of a $3-billion three-years financing program approved by the EEC Anticrisis Fund aiming to stabilize the current account and maintain exchange rate of Belarusian ruble. Notably, receipt of the tranche did not relieve the adverse situation at the internal exchange market as tranche proceeds were included into NBB’s reserves and won’t be used for currency interventions. Thus, while the current exchange limitations are preserved by the NBB, it is still impossible to convert Belarussian rubles into hard currency at NBB’s official rate.
2. To resolve the current crisis at the domestic currency market and based on the roadmap agreed with the Anticrisis Fund Belarus is preparing for a privatization program. In particular, negotiations regarding sale of shareholding in “Belarusian Potash” – one of the world’s-leading potash fertilizers manufacturer. Most likely the stake will be acquired by structures connected to Russian entrepreneur Suleiman Kerimov who has an extensive expirience in cooperating with “Belarusian Potash”. Currently the parties are in the process of evaluating the company.
3. Apart from privatizing strategic companies, previously scheduled privatization auctions are underway, where state shareholding in various SME enterprises are offered. On 14 June the State Property Committee held the first auction in respect of the shareholding in companies listed in 2011-2013 Privatization Plan. Out of 9 stakes offered 3 state shareholdings in former state-owned furniture manufactures were sold to strategic investors – private furniture manufacturers “Laguna” and “Osta-mebel”.
4. Despite unfavorable economic footprint, investment are still in-flowing in Belarus, and Belarus is still capable of raising European direct investments.
The EBRD reported its interest in financing constructions of a new manufacturing facility of Austrian-based group Kronospan in rural Belarusian Smorgon city. In order to implement the project Kronospan earlier executed an investment agreement with the Republic of Belarus.
In turn, EBRD earlier financed major Belarusian producer of furniture “Pinskdrev” and construction of a new timber-processing plant by Lithuanian-based Vakaru medienos grupe (VMG) to produce orders from IKEA.
5. To facilitate cooperation between Belarus and its Baltic neighbors Prime Minister of Belarus has recently met representatives of Lithuanian business - Zabolis Partners group. Alvydas Žabolis named banking sector, insurance and agricultural products’ processing as priorities for this cooperation. Zabolis Partners earlier participated in the project for construction of DIY-hypermarket OMA in Minsk. From 2009 the company is a member of two working groups of the Advisory Council for Foreign Investments of the Government – the working group on facilitating favorable investment image and the working group on improving tax policies, customs procedures and accounting standards.
6. Belarus further aims to raise direct foreign investments. In June two practical steps were taken to facilitate that:
- First, legislative amendments adopted to simplify registration of business. Starting from September a company or individual entrepreneurship may be registered by submitting electronic documents via the Internet.
- Second, starting on 21st June import of premium-sector alcohol was liberalized. Certain alcoholic beverages may now be imported without the need to have a state-granted quota – by any company having 250 000 Eur share capital, import license from the Ministry of Trade and a contract with supplier.
