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 Oct. 30, 2015. The current 6-month period of temporary sanctions relief ends on Oct. 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
1. Openness To, and Restrictions Upon, Foreign Investment
Attitude toward Foreign Direct Investment
The GOB states attracting FDI is one of the priorities of the country’s foreign policy, and net inflows of FDI have been included in the list of government performance targets since December 2015. The GOB also does not have any specific requirements for foreigners wishing to establish a business in Belarus. Investors, whether Belarusian or foreign, reportedly benefit from equal legal treatment and have the same right to conduct business operations in Belarus by incorporating separate legal entities. However, the existing laws and practices often discriminate against the private sector, including foreign investors regardless of the country of their origin.
Limits on Foreign Control and Right to Private Ownership and Establishment
The GOB asserts foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity. The GOB also states there are no general limits (statutory, de facto, or otherwise) on foreign ownership or control. In reality, however, the GOB establishes such limits on a case-by-case basis. The limits on foreign equity participation in Belarus are above the average for the 20 countries covered by the World Bank Group’s Investing Across Borders indicators for Eastern Europe and the Central Asia region. Belarus, in particular, limits foreign equity ownership in service industries. Sectors such as fixed-line telecommunications services, electricity transmission and distribution, and railway freight transportation are closed to foreign equity ownership. In addition, a comparatively large number of sectors are dominated by government monopolies, including, but not limited to, those mentioned above. Those monopolies, together with a high perceived difficulty of obtaining required operating licenses, make it difficult for foreign companies to invest in Belarus. In addition, under Belarusian law, the government may restrict investments in the interests of national security (including environmental protection, historical and cultural values), public order, morality protection, public health, as well as rights and freedoms of people.
Screening of FDI
Although the GOB claims that it does not screen, review, or approve FDI, the above practices suggest the opposite. Belarus retains elements of a Soviet-style command economy, which prescreens and approves all significant foreign investment.
Competition Law
Belarus’s Ministry of Antimonopoly Regulation and Trade is responsible for reviewing transactions for competition-related concerns (whether domestic or international).
Other Investment Policy Reviews
According to the GOB, the UNCTAD reviewed Belarus’s investment policy in 2009 and made recommendations regarding the improvement of its investment climate. http://unctad.org/en/Docs/diaepcb200910_en.pdf
Business Facilitation
Business Registration
Individuals and legal persons can apply for business registration via the web portal of the Single State Register ) - a resource which includes all relevant information on establishing a business.
Belarus has a regime allowing for a simplified taxation system for small and medium-sized, and foreign-owned businesses.
* Belarus’s investment promotion agency, NAIP, is tasked with representing the interests of Belarus as it seeks to attract FDI into the country. The Agency states it is a “one-stop shop" for
* organizing fact-finding missions to Belarus, including assisting with visa formalities;
* providing information on investment opportunities, special regimes and benefits, state programs, and procedures necessary for making investment decisions;
* selecting investment projects; and
* providing solutions and post-project support, i.e. aftercare.
The services are available to all investors.
Belarus defines enterprises as follows:
* Micro enterprises - less than 15 employees;
* Small enterprises - from 16 to 100 employees;
* Medium-sized enterprises - from 101 to 250 employees.
Outward Investment
The government does not promote or incentivize outward investment, nor does it restrict domestic investors from investing abroad. According to government statistics, Belarusian businesses’ outward investments in 2016 totaled $3.55 billion.
2. Bilateral Investment Agreements and Taxation Treaties
The GOB maintains foreign entities have the same investment opportunities as Belarusian ones.
Belarus has signed 66 bilateral investment agreements (BITs) with the following states:
Armenia
Austria
Azerbaijan
Bahrein
Bangladesh
Belgium
Bosnia and Herzegovina
Bulgaria
Cambodia
China
Croatia
Cuba
Cyprus
Czech Republic
Denmark
Egypt
Estonia
Finland
France
Georgia
Germany
Great Britain
India (terminated 24 March, 2017)
Iran
Iraq
Israel
Italy
Jordan
Korea, Democratic People’s Republic of
Korea, Republic of
Kuwait
Kyrgyzstan
Laos
Latvia
Lebanon
Libya
Lithuania
Luxemburg
Macedonia
Mexico
Moldova
Mongolia
Netherlands
Oman
Pakistan
Poland
Qatar
Romania
Saudi Arabia
Serbia
Singapore
Slovakia
Slovenia
Sudan
Sweden
Switzerland
Syria
Tajikistan
Turkey
Turkmenistan
Ukraine
United Arab Emirates
United States
Venezuela
Vietnam
Yemen
Such agreements routinely provide for:
* national or most-favored treatment;
* minimum standards; and
* no expropriation for reasons other than for the public benefit on a nondiscriminatory basis and according to the appropriate legal procedure and on conditions of fair compensation.
Currently Belarus is negotiating or renegotiating BITs with several countries, including the Czech Republic, Hungary, India, Slovenia and Sri Lanka.
Belarus is a party to two regional investment agreements within the framework of the Commonwealth of Independent States (CIS): the Agreement on Cooperation in the Field of Investment Activities of Dec. 24, 1993 and the Convention on Protection of the Rights of the Investor of March 28, 1997. Belarus is also a party to the Agreement on Promotion and Reciprocal Protection of Investments in the Member States of the Eurasian Economic Community of Dec. 12, 2008 (other parties are Kazakhstan, Kyrgyzstan, Russia and Tajikistan). Foreign investments among the members of the Eurasian Economic Union (Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia) are governed by the Annex 16 to the Treaty on the Eurasian Economic Union signed on May 29, 2014.
According to the GOB, Belarus is also a party to the following agreements:
* Free Trade Agreement between the Eurasian Economic Union and its Member States, and the Socialist Republic of Vietnam;
* Treaty on Eurasian Economic Union;
* Agreement on Trade in Services and Investment in the Member States of the Common Economic Space of Belarus-Kazakhstan-Russia;
* Agreement on Promotion and Reciprocal Protection of Investments in the Member States of the Eurasian Economic Community;
* Convention on Protection of Investor Rights;
* Partnership and Cooperation Agreement Establishing a Partnership between the European Communities and Their Member States, of the One Part, and Belarus, of the Other Part; and
* The Energy Charter Treaty.
Belarus is a party to the Agreement between the Government of Republic of Belarus and the Government of the United States of America on Promotion of Capital Investment (24 June 1992). Belarus and the United States also signed the Agreement between the Republic of Belarus and the United States of America on Stimulation and Protection of Investments (Minsk, 15 January, 1994). That agreement, however, did not enter into force.
Belarus has been a member of the Multilateral Investment Guarantee Agency (MIGA) of the World Bank since December 1992. In July 2011, Belarus ratified amendments to the Convention on Establishing MIGA and concluded agreements on the legal protection of guaranteed foreign investment and the use of local currency. According to Belarus’s Economy Ministry, these agreements finalized procedures for Belarus to become a full member of MIGA.
Bilateral Taxation Treaties
Belarus is the successor of the USSR in the Convention between the Union of Soviet Socialist Republics and the United States of America on Matters of Taxation (Washington, June 20, 1973). In addition, Belarus has 65 such agreements with other countries.
3. Legal Regime
Transparency of the Regulatory System
The government states that its policies are transparent and the implementation of laws is consistent with international norms to foster competition and establish “clear rules of the game." However, independent economic experts note that private sector businesses are often discriminated against in relation to public sector businesses. In particular, SOEs often receive government subsidies, benefits and exemptions, including cheaper loans and debt forgiveness. Such beneficial treatment is generally unavailable to private sector companies.
According to Belarusian legislation, drafts of laws and regulations pertaining to investment and doing business are subject to public discussion. Draft legislation is published on government agencies’ websites.
Seeking to become more competitive globally, many large Belarusian companies adopted or are in the process of adopting international financial reporting standards (IFRS).
Belarus has no informal regulatory processes managed by nongovernmental organizations or private sector associations.
International Regulatory Considerations
Belarus is not a WTO member but announced in April 2016 it will step up efforts to join the organization. Belarus has previously committed to hasten efforts to join the WTO without taking corresponding decisions to speed up its possible entry into the WTO. After a 12-year break between meetings of the Working Party on Belarus’s Accession to the WTO, the group met for the eighth time in Washington in January 2017.
Legal System and Judicial Independence
The Belarusian legal system is a civil law system with a legal separation of branches and institutions and with the main source of law being legal act, not precedent. Presidential edicts and decrees, however, often carry more force than legal acts adopted by the legislature, which could weaken investor protections and incentives previously passed into law. There is sometimes a public comment process during drafting of presidential decrees, but the process is often not sufficiently transparent or inclusive of investors’ concerns. There are also questions about the judiciary’s independence, which could limit investors’ recourse against the government and state-owned enterprises. Article 44 of Belarus’s Constitution guarantees the inviolability of property. Article 11 of the Civil Code safeguards property rights. Belarus has a written and consistently applied commercial law, which is broadly codified. The law, however, contains many inconsistencies and is not always considered to be business friendly.
Each of Belarus’s six regions and the capital city of Minsk has economic courts to address commercial and economic issues. In addition, the Supreme Court has a judicial panel on economic issues. In 2000, Belarus established a judicial panel on intellectual property rights (IPR) protection. Under the Labor Code any claims of unfair labor practices are heard by regular civil courts or commissions on labor issues. However, the judiciary’s lack of complete independence from the executive branch impedes on its role as a reliable and impartial mechanism for resolving disputes.
Laws/Regulations on Foreign Direct Investment
Foreign investment in Belarus is governed by the July 12, 2013 law “On Investments," legal acts of the President of Belarus, and other legislation as well as international and investment agreements signed and ratified by Belarus. The GOB declares there is no executive or any other interference in the court system that could affect foreign investors. In reality, however, there have been instances of executive interference in the judiciary that have harmed foreign investors’ operations in Belarus.
The GOB regularly updates the following websites with the latest in laws, rules, procedures and reporting requirements for foreign investors: http://www.investinbelarus.by/en/
http://www.economy.gov.by/
Competition and Anti-Trust Laws
The June 3, 2016 presidential edict #188 authorized the Ministry of Antimonopoly Regulation and Trade to counteract monopolistic activities and promote competition in Belarus’s markets.
Expropriation and Compensation
According to Article 12 of the Investment Code, nationalization and requisition shall only be possible if it is subject to the timely and full compensation of the cost of the nationalized or requisitioned investment assets and other damages caused as a result of nationalization or requisition.
Belarus has signed 66 bilateral agreements on the mutual protection and encouragement of investments. According to such agreements, neither party may expropriate or nationalize investments either directly or indirectly by means or measures similar to expropriation or nationalization, for purposes other than public benefit or according to the appropriate legal procedure.
Expropriation of private property sometimes occurs in Belarus in the form of de-privatization. That is, the government sometimes seeks to secure majority share in some joint stock companies under various pretexts, e.g. securing the interests of workers, long record of profit-loss, etc. Some successful local businessmen have been forced out of business through bureaucratic methods. In the recent past there have been instances of confiscation of business property as a penalty for violations of law. Although under the Investment Code, fair compensation for the expropriated property should be offered, the government usually refers to breaches of domestic laws and offers no compensation.
Confiscations are not usually related to any particular industry and are not targeted exclusively at international firms. Both foreign and domestic assets sometimes become subject to expropriation.
Dispute Settlement
There were no known investment disputes with American investors in 2016.
Belarus is a party of the Conventions on the Settlement of Investment Disputes between States and Nationals of Other States of March 18, 1965 (ICSID Convention) and of July 10, 1992, and Conventions on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 and Dec. 29, 1958.
The GOB states that local courts recognize and enforce foreign arbitral awards in compliance with the above conventions, national laws and regulations. The enforcement of arbitral awards in Belarus is governed by Chapter 28 of the Code of Commercial Procedure.
Most of the BITs concluded by Belarus include a provision on international investment arbitration as a mechanism for settling investor-state disputes and recognize the binding force of the awards issued in investment arbitrations.
Under Belarusian law, if an international treaty signed by Belarus establishes rules other than those established by local law, the rules of the international treaty shall prevail.
International Commercial Arbitration and Foreign Courts
Judgments of foreign courts are accepted and enforced if there is a relevant international agreement signed by Belarus. Courts recognize and enforce foreign arbitral awards. International arbitration is accepted as a means for settling investment disputes between private parties. In principle, the GOB accepts binding international arbitration of investment disputes between foreign investors and the state, although the Embassy is not aware of any cases where this has been put to the test.
The Belarusian Chamber of Commerce and Industry has an International Arbitration Court.
The July 12, 2013 law on mediation, as well as codes of civil and economic procedures, established various alternative ways of addressing investment disputes.
Duration of Dispute Resolution - Local Courts
Local economic court proceedings normally do not exceed two months. The term of such proceedings with the participation of foreign persons is normally no longer than seven months, unless established otherwise by the international agreement signed by Belarus.
Bankruptcy Regulations
Belarus has a written bankruptcy law adopted on July 13, 2012 and several additional presidential edicts, which are not always consistently applied, especially with regard to SOEs. Some other legal acts, such as the Civil Code, also include certain regulations on bankruptcy-related issues.
Under the bankruptcy law, foreign creditors have the same rights as Belarusian creditors.
Belarusian law criminalizes false and intentional insolvency as well as concealing insolvency. According to the World Bank’s 2017 Doing Business Report, Belarus was ranked 69 in Resolving Insolvency, up from 95 in 2016 (rankings available at: http://www.doingbusiness.org/data/exploreeconomies/belarus ).
4. Industrial Policies
According to the GOB’s Strategy for Attracting FDI, the priority sectors, which need FDI include 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. NAIP maintains a database of investment proposals at http://www.investinbelarus.by/en/invest/base/.
Investment Incentives
Free Economic Zones
Each of Belarus’s six regions has its own free economic zone (FEZ): Minsk, Brest, Gomel-Raton, Mogilev, Grodno Invest, and Vitebsk. The tax and regulatory pattern applicable to businesses in these zones is simpler and lower than elsewhere in Belarus. To become a FEZ resident, an investor needs to meet the following criteria:
* minimal investment of EUR 500,000;
* production of import-substituting products or goods for export.
In October 2005, the President of Belarus signed the edict that established uniform rules for all FEZs. The list of main tax benefits for FEZ residents was revised in December 2016 to include:
* exemption from profit tax within five years from the date of first declaration of profit, after which the rate of profit tax decreases by 50% (i.e. currently 9%), provided that the goods (work, services) produced are either exported from Belarus or recognized as import-substituting goods, or sold to other FEZ residents. FEZ residents registered before Jan. 1, 2012 enjoy exemption from profit tax till Dec. 31, 2021;
* exemption from land tax for five years;
* buildings located within the FEZ are exempt from real estate tax;
* other benefits.
Tax benefits apply if a FEZ resident provides the tax office with a certificate of goods of own production issued by the Belarusian Chamber of Commerce and Industry.
The special legal regime does not apply to businesses in the area of catering, gambling, interactive electronic games, trade, and securities.
Great Stone Industrial Park
The Great Stone Industrial park is a territorial entity with a special legal status of approximately 91.5 sq. km. The industrial park neighbors the International Airport Minsk and international highway M1 which extends north to Moscow and south to Berlin. Also Great Stone has access to Klaipeda seaport in the Baltic Sea. According to the GOB’s master plan approved in June 2013, the Park will include production and living areas, offices and shopping malls, financial and research centers.
Any company - regardless of the company’s country of origin - can apply for residence in the industrial park. To apply, a company has to submit a business project worth at least $500,000 that need to be invested within three years from the moment of business’ registration; or submit a business project worth at least $5 million without any time limit for investment; or submit a business project worth at least $500,000 for research and development business projects.
According to the presidential edict dated June 5, 2012, which was updated in 2014 as well as the edict dated May 12, 2017, residents are granted with the following preferences for being part of Great Stone:
* exemption from income tax during the first 10 years from the moment of receiving first income and reduction of current income tax rate by 50% until 2062;
* exemption from real estate and land taxes for a period until 2062;
* regime of a free customs zone that gives the right to import goods (raw materials) without payment of customs duties (import tariffs, VAT, excise duties) subject to further processing and export outside the countries of the Eurasian Economic Union; VAT exemption also stays for any exports outside the Eurasian Economic Union;
* benefits for employees of companies operating in the Industrial Park: flat personal income tax rates of 9%;
* full VAT deduction paid for acquisition of goods (works, services, property rights) used for design, building and equipping buildings and facilities in the Park;
* exemption from tax on dividend income accrued during 5 years starting from the year a Park resident receives its first gross income;
* permission to use foreign currency, securities and/or foreign-currency payment instruments while settling accounts between the Park residents and residents of the Republic of Belarus in terms of currency transactions aimed at the design and construction of Park buildings;
* exemption from recovery of agricultural and/or forestry production losses caused by withdrawal or permanent use of agricultural land and forest land in the Park borders; from compensatory planting and compensation payment for extraction and transfer of flora resources, compensation payment for negative impact on fauna resources and/or its habitat;
* foreign citizens can be employed by the Park residents and can come and stay the Republic of Belarus without entry visa for a period of up to 180 days;
* other preferences.
When new taxes and fees are established in Belarus, the obligation to pay such taxes and fees for Great Stone Park residents will not be applied. Also investors can rent plots of land on the territory of the Park for a period of 99 years or can purchase land plots on the territory of the Park.
High Technology Park (HTP)
The HTP was created in 2005 to foster development of the IT and software development industry. The HTP is an area in the eastern part of Minsk with a special legal regime lasting until 2020, but the HTP administrators have already applied to prolong the regime until 2030.
The status of HTP resident can be granted to a Belarusian company (including those with foreign investments) whose business is:
* analysis, design, and software support for information systems;
* data processing;
* fundamental and applied research, exploratory developments in the field of natural and engineering sciences;
* technical protection of information;
* IT consulting and a range of other activities.
HTP residents enjoy the following tax benefits:
* exemption from profit tax and VAT;
* land plots within the HTP necessary for construction of buildings are exempt from land tax throughout the period of construction but no longer than three years;
* real estate on the HTP territory (except leased real estate) is exempt from real estate tax; and
* dividends paid to shareholders registered in offshore zones are not subject to offshore duties.
Furthermore, certain exemptions exist concerning personal income tax paid by employees in HTP, and social security payments. Foreign legal entities also enjoy benefits with regard to taxation of dividends, interest and royalties from HTP residents. These types of income are taxed at the rate of 5%, unless more favorable conditions are set by international agreements.
Investment activities in small towns
Since July 1, 2012, companies and individual entrepreneurs operating in all rural areas and towns enjoy the following main benefits during the seven years after registration:
* exemption from profit tax on the sale of goods, work, and services of a company’s own production;
* exemption from other taxes and duties, except for VAT, excise tax, offshore duty, land tax, ecological tax, natural resources tax, customs duties and fees, state duties, patent duties, and stamp duty;
* exemption from mandatory sale of foreign currency received from sale of goods, work, and services of a company’s own production, and from leasing property; and
* no restrictions on insuring risks with foreign insurers.
The special legal regime does not apply to banks, insurance companies, investment funds, professional participants in the securities market, businesses operating under other preferential legal regimes (e.g. free economic zone, the High Technology Park) and certain other businesses.
Performance and Data Localization Requirements
The host government does not mandate local employment. Foreign investors have the right to invite foreign citizens and stateless persons, including those without permanent residence permit, to work in Belarus provided their labor contracts comply with Belarusian law. The GOB often imposes various conditions on permission to invest, and pursues “forced localization" policies on a case-by-case basis. Other performance requirements are often applied uniformly to both domestic and foreign investors.
Data Storage
According to official Belarusian information, data storage is not subject to licensing. Law enforcement regulations governing electronic communications do not include any requirements with regard to foreign IT providers. Beginning in 2016, IT providers are required, by law, to maintain all electronic communications for a one-year period.
5. Protection of Property Rights
Real Property
Property rights are enforced by the Civil Code. Mortgages and liens are available, and the property registry system is reliable. Investors and/or duly established commercial organizations with the participation of a foreign investor (investors) have the right to rent plots of land for up to 99 years. According to the Belarusian Land Code, foreign legal persons and individuals are denied land ownership.
For information on the ease of “registering property" see the World Bank’s Doing Business Report rankings available at: http://www.doingbusiness.org/rankings ).
Intellectual Property Rights
Belarus continued to work to improve IPR rights, including through enforcement of its legislation, in 2016. There have been some improvements in the overall situation compared to years past. Certain trade organizations and software development companies noticed positive developments regarding software piracy, including increased enforcement efforts by the Ministry of Interior. There continues to be inflows, however, of counterfeit consumer goods, largely from Russia. The GOB took steps in 2016 to amend the administrative and procedural executive codes as well as other legal acts to increase the punishment for violations of IPR infringements and violations; these amendments will take effect in 2017.
Information provided by the GOB on the IPR situation in 2016 indicates a continued commitment to protecting IPR and erecting an appropriate legal framework. For example, in early 2016, the government approved a set of measures to harmonize Belarusian IPR legislation with that of other member states of the Eurasian Economic Union (Russia, Armenia, Kazakhstan and Kyrgyzstan). The measures also develop IPR infrastructure and collective management of property rights and implement a set of regulations with the purpose of preventing IPR violations.
While Belarus does not have a separate law that obliges public authorities and organizations to use only licensed software, under Belarusian law, public procurement of intellectual property is only allowed from a holder of exclusive rights of the property.
In 2015, Belarus completed its three-year presidency of the regional group of countries of Central Asia, the Caucasus, and Eastern Europe of the World Intellectual Property Organization (WIPO). According to the GOB, during its presidency, Belarus took an active part in drafting international agreements and other WIPO documents. With assistance from WIPO and the Eurasian Patent Office, Belarus continued to implement a comprehensive upgrade of the National Center of Intellectual Property’s automated systems, which should better address the needs of users of the national patent system.
In 2015, the U.S. government recognized Belarus’s commitment to protecting intellectual property rights through the passage of amendments that increased fines for IP violations under the Administrative Code and added criminal liability for repeat IP offenders. These improvements led to the determination that Belarus should no longer be on USTR’s Special 301 Report Watch List. The U.S. remains concerned, however, about the prevalence of counterfeits and continued obstacles to effective enforcement of IPR and expects Belarus to continue improving its IPR regime as part of its WTO accession negotiations. The United States will continue to assist Belarus with technical consultations to that end.
The World Intellectual Property Organization (WIPO) provides 186 Country Profiles. These are available at: http://www.wipo.int/directory/en
For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.
Resources for Rights Holders
Mr. Peter Sloan
Economic Officer
tel.+375 (17) 210-1283, ext. 4592
e-mail: usembassyminsk@state.gov
6. Financial Sector
Capital Markets and Portfolio Investment
The Belarusian government welcomes portfolio investment and has taken steps to safeguard such investment and ensure a free flow of financial instruments. The Belarusian Currency and Stock Exchange is open to foreign investors, but it is still largely undeveloped because the government only allows companies to trade stocks if they meet certain criteria, which are often burdensome for many companies, especially private ones. Private companies must be profitable and have net assets of at least 1 million Euro. In addition, any income from resulting operations is taxed at 24%. Finally, the state owns more than 70% of all stocks in the country, and the government appears hesitant and unwilling to trade in them freely. Bonds are the predominant financial instrument on Belarus’s corporate securities market.
In 2001, Belarus joined Article VIII of the IMF’s Articles of Agreement, undertaking to refrain from restrictions on payments and transfers under current international transactions. Loans are allocated on market terms and foreign investors are able to get them. However, the discount rate of 14% (as of April 19, 2017) makes it too expensive for many private businesses, which, unlike many SOEs, do not receive subsidized, reduced interest loans.
Starting in March 2016, Belarus’s National Bank allowed businesses to buy and sell foreign exchange at the Belarusian Currency and Stock Exchange through their banks. Previously they could only buy or sell foreign currencies from or to banks.
Money and Banking System
Belarus has a central banking system. The country’s main bank, the National Bank of the Republic of Belarus, represents the interest of the state. It is the main regulator of the country’s banking system. The President of Belarus appoints the Chairperson and Members of the Board of the National Bank, designates auditing organizations to examine its activities, and approves its annual report.
As of Jan. 1, 2017, the banking system of Belarus included 24 commercial banks and three non-banking credit and finance organizations. According to the National Bank, the share of troubled loans in the banking sector was 13.7% as of April 1, 2017. Three of the country’s four largest commercial banks are fully state-owned and account for 70-75 percent of the total assets of the country’s banking sector. Some economic experts, including from international financial institutions, have noted growing concern regarding the share of troubled loans in the banking sector. To the best of the Embassy’s knowledge, rules on hostile take-overs are clear, and applied on a non-discriminatory basis.
Foreign Exchange and Remittances
Foreign Exchange
According to the GOB, Belarus’s foreign exchange regulations do not include any restrictions or limitations regarding converting, transferring, or repatriating funds associated with investment. Foreign exchange transactions related to FDI, portfolio investments, real estate purchasing, and opening bank accounts are carried out without any restrictions. Foreign exchange is freely traded in the domestic foreign exchange market. Foreign investors can purchase foreign exchange from their Belarusian accounts in Belarusian banks for repaying investments and transferring it outside Belarus without any restrictions.
Since June 1, 2015, the JSC Belarusian Currency and Stock Exchange has traded the U.S. dollar, the euro, and the Russian ruble in a continuous double auction regime. Local banks submit their bids for buying and selling foreign currency into the trading system during the entire period of the trading session. During the trades the bids are honored if and when the specified exchange rates are met. The average weighted exchange rate of the U.S. dollar, the euro, and the Russian ruble set during the trading session is used by the National Bank as the official exchange rate of the Belarusian ruble versus the above-mentioned currencies from the day on which the trades are made. The cross rates versus other foreign currencies are calculated based on the data provided by other countries’ central banks or information from Reuters and Bloomberg. The stated quotation becomes effective on the next calendar day and is valid till the new official exchange rate of the Belarusian ruble versus these foreign currencies comes into force. The IMF has listed Belarus’s exchange rate regime in the “floating exchange rate" category.
Remittance Policies
There have not been reports of problems exchanging currency and/or remitting revenues abroad.
Sovereign Wealth Funds
Belarus has the State Budget Fund of National Development, which is used for implementing major economic and social projects in the country.
7. State-Owned Enterprises
Although the number of SOEs is smaller than that of private businesses, SOEs dominate the economy in terms of assets. According to independent economic experts, the share of Belarus’s GDP derived from SOEs is at least 75%. Belarus does not consider joint stock companies, even those with 100 % government ownership of the stocks, to be state-owned and generally refers to them as part of the non-state sector, rendering official statistics regarding the role of SOEs in the economy misleading.
According to independent economic media reports, private businesses are often discriminated against compared to SOEs in terms of access to government contracts, subsidized credits, and debt forgiveness. SOEs are allowed to purchase from or supply goods or services to private sector/foreign firms. SOEs are also generally subject to the same tax burden and tax rebate policies as their private sector competitors. Private enterprises are generally disadvantaged against SOEs in terms of preferential access to land and raw materials. Since Belarus is not a WTO member, it is not a party to the Government Procurement Agreement (GPA).
Privatization Program
Belarus has no privatization program. The president of Belarus has noted on several occasions that any SOE in the country could be privatized partially or completely, provided an investor offers a good price. It is believed, however, that what the government would assess as a “good price" and what a potential investor would assess as a “good price" would be quite different. The country does have a list of open-joint stock companies which stocks are available for privatization. The list http://www.gki.gov.by/ru/auction-auinf-auishares/ includes basic information on privatization conditions, and sometimes a brief description of assets listed for privatization.
Interested investors are encouraged to forward a brief letter of interest to the State Property Committee. Letters are reviewed by a special commission that decides on the feasibility of preparing a decision of the President on privatization of shares via tender, auction, or direct sale. The investor may also send a letter of interest regarding assets that are not on the State Property Committee list and the government will examine such offers.
The State Property Committee occasionally organizes and holds privatization auctions. Many of the auctions organized by the State Property Committee have low demand as the government conditions privatizations with strict requirements, including preserving or creating jobs, launching a successful business project within a limited period of time, etc.
In 2016, Belarusian joint stocks were allowed trans-border placement of their stocks via issuing depositary receipts. However, to the Embassy’s knowledge, as of May 2017, this instrument of attracting investments has not been put to test in Belarus.
8. Responsible Business Conduct
Information unavailable.
9. Corruption
Belarus has effective and non-discriminatory anti-corruption legislation, which includes certain provisions of the Criminal Code and Administrative Code as well as the Law on Public Service and the Law on Combating Corruption. The latter is the country’s main anti-corruption document and was adopted in July 2015. Government organizations directly engaged in anti-corruption efforts are prosecutors’ offices, internal affairs and state security agencies.
Belarusian anti-corruption law covers family members of government officials and political figures. The country’s regulations require addressing any potential conflict of interests of parties seeking to win a government procurement contract. The list of such regulations include the July 13, 2012 law “On public procurement of goods (works, services)," the Dec. 31, 2013 presidential decree “On conducting procurement procedures," and the March 15, 2012 GOB resolution on the procurement of goods (works, services).
Bribery is considered a form of corruption and is punishable with a maximum punishment of ten years in jail and confiscation of property.
Belarus is a party to a number of international anti-corruption conventions and agreements. The Republic of Belarus has consistently ratified and complied with requirements of main international anti-corruption acts, such as the Convention of the Council of Europe 173 “On criminal liability for corruption (S 173)" (concluded in Strasbourg on 27 January, 1999); The United Nations Convention “Against Transnational Organized Crime," signed by Belarus in Palermo on 24 December, 2000, and the United Nations Convention “Against Corruption" (concluded in New York on 31 October, 2003); the Civil Law Convention on Corruption (concluded in Strasbourg on 4 November, 1999) (ratified in 2005). Belarus also signed a number of the intergovernmental agreements to address this problem.
According to the GOB, Belarus provides protection to NGOs involved in investigations of corruption crimes.
According to Belarus’s General Prosecutor’s Office, the greatest number of corruption crimes in 2016 was accounted for among government officials as well as in healthcare, trade, industry, agriculture and construction. The Office claims the share of corruption crimes among all registered crimes did not exceed 1.5-2%.
UN Anticorruption Convention, OECD Convention on Combatting Bribery
Belarus signed and ratified in November 2004 the United Nations Convention against Corruption. Belarus has not joined the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions but is currently considering joining the Convention.
10. Political and Security Environment
In the Embassy’s estimation, the potential for widespread, politically-inspired violence that would adversely affect foreign property interests is low.
11. Labor Policies and Practices
Belarus has a highly skilled and well-educated work force, due to its advanced system of higher and specialized education. Wages are much lower than in Western Europe, the United States, and even Russia.
Belarus has been a member of the International Labor Organisation (ILO) since 1954 and is a party to almost 50 ILO conventions. In 2004, the ILO made several recommendations regarding workers’ rights to organize and freedom of association. Belarus has not adequately responded to those recommendations by the 2004 ILO Commission of Inquiry.
Belarus’s Labor Code regulates all labor issues. Businesses are allowed to offer unlimited short-term contracts. Dismissals of redundant workers are legally allowed without notice to the government. Severance pay in the case of reduction in force is 13 weeks of salary, and 8 weeks’ notice is required for dismissal. Normal work hours in Belarus are 8 hours per day and 40 hours per week. Belarusian law is stringent in limiting overtime hours. Nevertheless, it is allowed to establish a non-standard work hour regime without fixing the number of work hours. In that case an employee must be provided with up to 7 days of additional annual leave. In general, employees must be granted at least 24 calendar days of paid leave a year.
There are special provisions on employing foreign citizens who have no permanent residence permit. Such citizens have to secure a work permit, which can be usually granted only if an unemployed Belarusian citizen cannot perform the required work. To date, the Embassy has not heard of discriminatory or excessively onerous visa, residence or work permit requirements inhibiting foreign investors, nor of restrictions placed on the numbers or duration of employment of foreign managers brought in to supervise foreign investment projects. In practice, however, few firms employ significant numbers of foreigners, apart from Russian citizens, who benefit from Russia’s and Belarus’s common employment regulations streamlined under the Eurasian Economic Union arrangement of Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan.
In July 2000, President Clinton signed a proclamation withdrawing benefits under the Generalized System of Preferences (GSP) for Belarus. This decision was based on a 1997 American Federation of Labor-Congress of Industrial Organizations (AFL-CIO) petition to the United States Trade Representative (USTR). The petition alleged that Belarus was not acting in accordance with the Trade Act of 1974, as amended, regarding internationally recognized worker rights. These include the freedom to form independent trade unions and the right to organize and bargain collectively. The rights of independent trade unions are often subject to government attack, as documented in the Department of State’s Report on Human Rights Practices for 2016. According to the Report, authorities harassed and at times dismissed from their jobs members of independent unions in SOEs, severely limiting the ability of workers to form and join independent trade unions and to organize and bargain collectively. According to the Report, “the law prohibits all forms of forced or compulsory labor, but the government did not effectively enforce its provisions… State-sponsored forced labor, remained a problem, although victim identification and protection slightly improved."
According to the same report, “The government did not take any action during the year to prevent or eliminate employment discrimination. Employment discrimination happened across most economic sectors and in both private and public workplaces… [Belarus’s] law establishes minimum conditions for workplace safety and worker health, but employers often ignored these standards. Workers at many heavy machinery plants did not wear minimal safety gear. The state labor inspectorate lacked authority to enforce employer compliance and often ignored violations. The Ministry of Labor and Social Security was responsible for enforcement of these laws."
12. OPIC and Other Investment Insurance Programs
Under Section 5 (Sense of Congress Relating to Sanctions Against Belarus), paragraph C (Prohibition on Loans and Investment) of the Belarus Democracy Act signed by the president on Oct. 20, 2004, “No loan, credit guarantee, insurance, financing, or other similar financial assistance should be extended by any agency of the United States Government (including the Export-Import Bank and the Overseas Private Investment Corporation) to the Government of Belarus, except with respect to the provision of humanitarian goods and agricultural or medical products."
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
According to official statistics, Belarus received $1.3 billion in FDI in 2016. According to Belarus’s Economy Ministry, the top eight foreign investors in Belarus included Russia (33%), Cyprus (25.6%), Netherlands (6.5%), Lithuania (6%), China (3%), Austria (2.5%), Estonia (2.1%), and Latvia (1.9%) which represent almost 81% of the total FDI.
For detailed statistics on foreign direct investments in Belarus for 2010-2014 see the website of Belarus’s National Bank: http://www.nbrb.by/engl/statistics/ForeignDirectInvestments/
For the latest available statistics on foreign portfolio investments in Belarus see the website of Belarus’s National Bank: http://www.nbrb.by/engl/statistics/PortfolioInvestment
14. Contact for More Information
Mr. Peter Sloan
Economic Officer
46, Starovilenskaya St., Minsk, 220002, Belarus
tel. +375 (17) 210-1283, ext. 4592
email: usembassyminsk@state.gov
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Belarus Bureau of Economic and Business Affairs Bureau of European and Eurasian Affairs
Source: U.S Department of State, Bureau of European and Eurasian Affairs
