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2009

Stefan Ehrstedt & Peter Zashev
Belarus for Finnish investors
Electronic Publications of Pan-European Institute 1/2009

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Conclusions

Belarus is opening to the world and attempting to become more integrated into the world economy and more modern economy. The opening of the country is still in its initial steps but already offers interesting opportunities and possibilities for both investors and exporters alike. Belarus has several huge attractions. The country has 10 million inhabitants, which in terms of population makes it bigger market than the 3 Baltic States all together. It is in a Union State with Russia, which makes Belarusian manufacturers eligible to access the vast Russian market essentially without customs duties. It has truly good location as an inland transit hub between Russia and Western Europe, which offers opportunities to it to both logistics companies and manufacturers. The latter may also benefit from skilled and disciplined labour force – both accounts confirmed by the interviews made as a part of the study.

However there are several problem areas. The legislation and the general business climate remain burdensome. Too much governmental interference and bureaucracy make the business environment difficult to operate. One example is taxation – there seem to be too many taxes and too many tax procedures. However, perhaps as an attempt to attract investors faster number of tax incentives is offered. Particularly for companies in the high-tech sector and for companies registering ion one of the 6 Special Economic Zones established in the country. Not only are companies registering in the high technology park or a special economic zone subjected to more favourable taxation but also to some simplifications in various administrative procedures.

There is a lot of potential for Finnish companies in almost any market segment. Construction boom is still to come in Belarus. Infrastructure needs modernization. Consumer markets and retail are at the very beginning of their development. Still, according to the authors there are several economy sectors that have bigger potential. One is power generation and distribution. It is a big issue in Belarus as the very existence of its economy is in a way in the hands of Russian state-owned (mainly) energy suppliers. Thus the government is giving top priority to various projects and initiatives in energy conservation, alternative fuels, power & heat generation and distribution.

Finnish companies have strong competencies in this field and some of them already succeeded in getting sizeable contracts in Belarus.

Machine building in general and agricultural machinery (tractors, trucks, and harvesters) is another competitive bit of the Belarusian economy that has strong growth potential and constant needs of modernization be it in the form of machinery and equipment or in demand for quality components and accessories. Other areas of strong interests for Finnish companies could be forestry, agriculture and food processing.

Being a country in which the government (and the President) has the upper hand in almost all issues is no strange environment to many Finnish managers and especially those with some experience in the Soviet system. In this respect Belarus may appear not to be difficult environment in terms of its business culture. Especially that so many Finnish companies have current experience in Russia and often Russian speaking personnel.

Still in utilizing the business opportunities companies and their managers have to be carefully
considering and keeping in mind several import peculiarities. Firstly use of lawyers and legal
experts is strongly recommended. Second for successful business much more active interaction with state officials is needed. This interaction is advisable to be made prior to actual activities. Finally just as Russia Belarus is a country where market entry requires well done preliminary preparation and several business trips in order to create a credible picture about markets, partners and other business specifics.

For the purposes of this study, we interviewed three representatives of Finnish companies with experiences of the Belarusian business environment. Their views on the Belarusian business environment are summarized in a SWOT table below (Table 2). Features which were mentioned by more than one respondent are presented in bold font.

Machine building in general and agricultural machinery (tractors, trucks, and harvesters) is another competitive bit of the Belarusian economy that has strong growth potential and constant needs of modernization be it in the form of machinery and equipment or in demand for quality components and accessories. Other areas of strong interests for Finnish companies could be forestry, agriculture and food processing.

Being a country in which the government (and the President) has the upper hand in almost all issues is no strange environment to many Finnish managers and especially those with some experience in the Soviet system. In this respect Belarus may appear not to be difficult environment in terms of its business culture. Especially that so many Finnish companies have current experience in Russia and often Russian speaking personnel.

Still in utilizing the business opportunities companies and their managers have to be carefully
considering and keeping in mind several import peculiarities. Firstly use of lawyers and legal
experts is strongly recommended. Second for successful business much more active interaction with state officials is needed. This interaction is advisable to be made prior to actual activities. Finally just as Russia Belarus is a country where market entry requires well done preliminary preparation and several business trips in order to create a credible picture about markets, partners and other business specifics.

For the purposes of this study, we interviewed three representatives of Finnish companies with experiences of the Belarusian business environment. Their views on the Belarusian business environment are summarized in a SWOT table below (Table 2). Features which were mentioned by more than one respondent are presented in bold font.

Download the publication


More information:
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(02) 4814 560
http://www.tukkk.fi/pei

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