HomeReportsBureau of Economic and Business Affairs2017 Investment Climate Statements…Belarus

# 					2017 Investment Climate Statements: Belarus			

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													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

The Government of Belarus (GOB) officially welcomes foreign investment, which is seen as a source of new technology, job creation, and foreign currency growth. The Investment Code of the Republic of Belarus (passed on June 22, 2001) is the regulatory framework governing all forms of investment activities in Belarus. Several presidential edicts and decrees have been issued that also regulate investment activities.

Belarusian authorities stress the geographic location of Belarus, its inclusion in the Eurasian Economic Union (which also includes Russia, Kazakhstan, Armenia, and Kyrgyzstan), a robust infrastructure, a highly-skilled workforce, its six free economic zones and the “Great Stone” industrial park as major reasons to invest in Belarus.

According to a May 12, 2016 GOB resolution, a priority is placed 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.

Regulations on investment provide for the following forms of investment activities in Belarus:

Green field: establishing a legal entity (joint ventures and foreign enterprises);

Brown field: property or property rights acquisition, i.e.: a share in charter capital, real estate, securities, intellectual property rights, concessions, equipment or other permanent assets.

The GOB has, for the most part, not undertaken large-scale privatization. Investments in sectors dominated by state-owned enterprises (SOEs) have, at times, come under threat from regulatory bodies. The government 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. However, according to numerous informal sources in the local business community and independent media, the existing laws and practices can sometimes discriminate against the private sector, including foreign investors, regardless of their country of origin. It is also important to note that stemming from 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’s democratic processes. The U.S. Department of Treasury, in consultation and coordination with the Department of State, has provided temporary sanctions relief in 6-month intervals since October 30, 2015. The current 6-month period of temporary sanctions relief ends on October 30, 2017. For additional information click here: https://www.treasury.gov/resource-center/sanctions/Programs/pages/belarus.aspx.

In April 2011, Belarus established the National Agency of Investments and Privatization (NAIP), which was tasked with facilitating and expediting foreign investment and privatization in the economy. NAIP has focused on organizing fact-finding missions to Belarus, attracting joint investment and business forums abroad, and packaging investment proposals for potential investors. In particular, NAIP provides information about the country’s investment opportunities, special regimes and benefits, state programs for support and development of industries, and the procedure of making investment decisions. NAIP assists in selecting investment objects (investment projects, land lots, buildings); collecting and analyzing the necessary information about investment projects; organizing meetings, including with market regulators, government agencies, local authorities, key market players and potential partners; and addressing issues arising during implementation of an investment project. NAIP also created and runs the Investment Proposal Database http://www.investinbelarus.by/en/invest/base/. Finally, NAIP can also provide post-project support, so called ‘aftercare.’

To maintain an ongoing dialog with investors, Belarus has the Foreign Investment Advisory Council (FIAC). Its activities include, but are not limited to:

– developing proposals to improve investment legislation;

– participating in examining corresponding regulatory and legal acts;

– approaching government agencies for the purpose of adopting, repealing or modifying the regulatory and legal acts which restrict the rights of investors.

The FIAC is chaired by the Prime Minister of Belarus and also includes the heads of government agencies and other state organizations subordinate to the GOB, heads of international organizations, foreign companies and corporations.

Despite GOB organizations which 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 and many of the most profitable Belarusian sectors is limited, in particular, in the petrochemical, agricultural and alcohol production industries. FDI is prohibited in the following areas:

– defense and security; and

– production and distribution of narcotic, dangerous and toxic substances.

*Table 1*