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SLOWER PACED BELARUS
by Tanya Shuster

Highly-industrialized Belarus offers U.S. companies specialized opportunities in
several areas, including machine building, electronics, and light manufacturing. A
number of U.S. and other foreign companies are already taking advantage of such
opportunities there.  The country's full economic potential, however, will only be
realized once major reforms get underway.

Belarus' high level of industrialization, diversified economy, and well-educated
work force made it one of the most prosperous parts of the former Soviet Union. 
Belarus flourished importing cheap raw materials and components from other
republics and producing relatively high-value goods for shipment elsewhere. Since
1991, the country's access to low-cost raw materials and to guaranteed markets
has largely disappeared. Today, Belarus enterprises are struggling to modernize
their technologies and update their product lines. 

ECONOMIC DIVERSITY

Belarus is heavily industrialized, and has a particularly large and diverse machine-
building sector. The country is a major producer of heavy trucks, industrial stitch
machines, tractors, agricultural harvester combines, and machine cutting tools. 
Western companies with manufacturing operations in Belarus include Summit
Systems and Computerland (both U.S.), which assemble personal computers in
Minsk,  Amerex Intercontinental (U.S.) which is engaged in food processing, and
Kawasaki (Japan), which has licensed a Belarus company to manufacture
motorcycles.

Belarus produces a wide range of other manufactured goods as well, which it has
exported to Russia and other NIS states.  Local enterprises produce a variety of
chemicals, synthetic fibers, and fertilizers, especially potash fertilizers.  Consumer
durables and consumer electronics, including radio receivers, television sets,
refrigerators, and freezers are also important local products.  

In addition to Belarus' traditional strengths, opportunities exist for U.S. companies
in less-developed segments of the economy.  Like other NIS countries, Belarus
needs to modernize its telecommunications infrastructure, and will require foreign
capital and technology to do so.  Processing of wood products from domestic
timber reserves may offer investment opportunities for U.S. companies. 
Pharmaceuticals, medical equipment, and consumer goods all must be imported in
significant quantities to meet local demand, as well. 

Belarus has a well-developed research and development infrastructure.  Not
surprisingly, this infrastructure is concentrated in disciplines that were important
during the Soviet era, including electrical, power, and agricultural engineering, as
well as  biotechnology.  In a country with limited natural resources, development
and application of energy- and resource-efficient technologies are particularly
important scientific and technical challenges. 

Belarus' agricultural sector contributes significantly to the national economy.  The
country is a net exporter of potatoes, flour, eggs, meat, and milk--despite recent
drought, lack of investment capital, and the fact that the Chernobyl disaster
rendered 20 percent of Belarus' arable land unusable.  U.S. companies will find
commercial and investment opportunities in Belarus for children's foods, and food
processing and packaging. 

SLOW GOING

Despite Belarus' commercial potential, the slow and unsteady pace of reform has
so far inhibited economic development and foreign investment. Last fall President
Alexander Lukashenko introduced an "anti-crisis" reform package that contained
elements similar to reforms underway in other Western NIS countries.  Since then,
however, the implementation of reform has been irregular.  Price reform, although
pushed forward in December with liberalizations on several items, including meat,
bread, milk, and energy, has not yet been extended to housing, utilities, and other
communal services.  Finally, there are still many obstacles to foreign investment in
Belarus. 

The country's 1995 reform package and budget call for limiting the budget deficit
to 4 percent of GDP and for reaching an ambitious inflation rate of 1 percent by
the end of the year.  Belarus' progress in meeting these goals so far has not met
the stabilization guidelines set for the country by the International Monetary Fund.
Despite some positive steps, the business climate in this otherwise attractive
country remains problematic for U.S. companies.  For a complete Economic and
Commercial Overview for Belarus, please call the BISNIS Flashfax at (202) 482-
3145 and request document #6375.
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