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									                                                                                            NUmbeR ONe PRIORITY




                                                 System-Based and
ECONOMY OF BELARUS




                                                 Aggressive Policy
                                                            Foreign economic activity of Belarus in 2009
                                                                is carried out along the priority avenues

                                                                                      Sergei MARTYNOV,
                                                                     Minister of Foreign Affairs of the Republic of Belarus

                                                             the global economic crisis has radically changed the situation
                                                             in international markets, including Belarus’ traditional sales markets.
                                                             a serious fall in demand for our products, decline in our foreign
                                                             partners’ paying capacity, problems with mutual payments caused
                                                             by the volatility of the international financial system – the factors
                                                             that we will have to confront in the foreseeable future. But the world
                                                             economy has a sinusoid development pattern: each decline is
                                                             inevitably followed by growth which opens up new opportunities.
                                                             these opportunities will be available only for those who will manage to
                                                             survive the hard times, without getting into panic, but working hard to lay
                                                             the foundation for future development.

                                                             zation, giving more freedom to          and banking policy, stimulate the
                                                             private initiative and removing         labor market.
                                                             bureaucratic impediments were               Simultaneously with the liber-
                                                             planned anyway, regardless of the       alization measures, we are imple-
                                                             situation in the world economy.         menting a system of measures to
                                                             The need for taking these deci-         support the nation’s largest pro-
                     Goals                                   sions arose naturally from how          ducers, the GDP-forming compa-


                     T
                             he Belarusian Ministry          the country was developing. By          nies, taking into consideration the
                             of Foreign Affairs, other       creating the best possible condi-       record of anti-crisis measures in
                             ministries as well as all       tions for private business and for-     Russia, Kazakhstan and the other
                     Belarusian foreign economic             eign investors in Belarus we hope       CIS member states. These meas-
                     actors face a particularly difficult    to improve the national econo-          ures aim to stimulate sales, pro-
                     task: To feel the “pulse” of the        my’s overall resilience to negative     vide the nation’s real production
                     world economy, to monitor markets       influences, to make sure that ad-       sector with the sufficient amount
                     continuously in order to react          ditional prerequisites are in place     of credit resources, optimize pro-
                     promptly to any opportunities that      for successful economic develop-        duction and sale costs.
                     may arise. Only by re-channelling       ment in the future.                         In 2009, Belarus’ international
                     export flows, exploring new                 The Government has approved         trade will be aligned with the Plan
                     markets and perfecting methods          the plan of urgent measures to          of Measures Aimed at Implemen-
                     of work in our traditional              liberalize the conditions of eco-       tation of the National Export De-
                     markets we will manage not only         nomic activity in 2009. The plan        velopment Program. Financial
                     to preserve our export potential        is aimed at reducing the number         support mechanisms involving
                     but also to cement considerably         of and simplifying the adminis-         banks and insurance companies
                     our positions in international          trative procedures in transpor-         will be perfected further. The na-
                     markets.                                tation, transport oversight, for-       tional budget 2009 provides for
                         Of special importance are           eign trade, business registration.      offsetting the loss suffered by the
                     measures aimed at liberalization        There are plans to simplify the         banks that issue privileged loans
                     of the business climate in Belarus,     tax and customs legislation, im-        intended for production of export-
                     which are now being implement-          prove the price and anti-monop-         oriented goods.
                     ed. These are not purely anti-cri-      oly regulation, investment activ-           Certification and standardiza-
                     sis measures. Economic liberali-        ity, monetary and credit relations      tion of products in accordance
14
             NUmbeR ONe PRIORITY


with international standards will
be carried on, as well as the work
on confirming the compliance
of Belarusian goods with EU re-
quirements and directives; and
the work on implementing Eu-
ropean standards at Belarusian
companies.
   Given the instability in in-
ternational markets, we see an
increasing role of the commod-
ity distribution network of our
companies abroad. In 2009-2010,
we plan to establish 118 new com-
panies as part of the commodity
distribution network. We are now
considering the prospects of es-
tablishing thirty-five factories to
assemble our products abroad.
   Equally relevant is now substi-
tution of imports with analogous
domestic products. The share of
imported assembly parts at some
companies ranges from 40% to
70%. The Ministry of Foreign
Affairs supports the proposal of
the National Bank to develop a
set of measures to reduce by 10%
the share of import in the costs
of production of industrial goods            19.2% and surpassed $10.5 billion.      Naturally, it is an absolute       Successful
                                                                                                                        work of the joint
in Belarus. The Plan of Measures                At the same time, in Q4 2008      priority in this situation to de-     company “Midea-
Aimed at Implementation of the               there was a reduction in our ex-     velop Belarusian-Russian anti-        Horizont” –
                                             ports to Russia, which caused con-   crisis measures. On January 30,       a joint project
National Export Development Pro-                                                                                        of Belarusian
gram provides for specific steps in          cern. The supplies fell by $528.4    2009, in the course of a session of   OAO Horizont
this direction.                              million, accounting for 79% as       the Council of Ministers of the       and Chinese
                                                                                                                        Midea Holding Co.
                                             against the previous year.           Belarus-Russia Union State, the
Russia                                          The reasons behind the slow-      countries signed a Plan of Joint
                                                                                                                        Ltd. – in produc-
                                                                                                                        tion of household
                                             down of Belarusian exports to        Action of the Governments of          appliances is a
   Speaking about the geography                                                                                         good example of
of Belarus’ foreign economic                 Russia were the consequences of      Belarus and Russia to minimize        mutually beneficial
activity in 2009, we should first            the world crisis for the Russian     the consequences of the financial     cooperation
of all mention the Russian Fe-               economy: Russian banks’ morato-      crisis, improve payment balance,
deration, our most important                 rium on issuing loans, giving up     business conditions and mutual
trade and economic partner. In               on leasing schemes of supplies       trade. We have an adopted plan of
2008, Belarus-Russia trade was               against the backdrop of decreas-     measures to simplify transport of
more than $34 billion, up 31.1%              ing purchasing power in the wake     goods and vehicles in the territory
from 2007. Belarusian exports rose           of the growing crisis.               of the Union State. The plan pro-
                                                                                  vides for gradual shifting of con-
                                                                                  trol from the Belarusian-Russian
                                                                                  border to the outer border of the
                                                                                  Belarus-Russia Union State. The
                                                  INVeSTmeNT PROJeCT
                                                                                  implementation of this plan will
                                                                                  mark an important step towards
    Construction of a hotel and entertainment complex,                            forming a common customs terri-
    and a museum of beer in the territory of the unitary affiliate                tory of Belarus and Russia.
    enterprise “grodno Brewery”.                                                     Given the financial crisis,
                                                                                  our countries are jointly solv-
    The project initiated by the unitary affiliate enterprise “Grodno Brewery”.   ing the problem of non-payments
    2 Zavodskaya Str., Grodno, 230025, Republic of Belarus.                       by increasingly using the Rus-
    Tel. (+375-152) 77-04-03,                                                     sian ruble in transactions. The
    Fax (+375-152) 72-39-21.                                                      Belarusian Government signed
                                                                                                                                 15
                                                                                          NUmbeR ONe PRIORITY


                       memorandums of understanding          parts from more than 130 Russian       Russian cooperation. The relations
                       with the VTB Bank and the state       manufacturers. At the same time,       between Belarusian and Russian
  ECONOMY OF BELARUS


                       corporation “Bank for Develop-        MAZ supplies chassis to twenty         regions have been expanding fast
                       ment and Foreign Economic Af-         Russian manufacturers of special-      over the past years. In 2008, there
                       fairs (Vnesheconombank)” and,         purpose vehicles.                      was a steady growth in Belarusian
                       in the quadrilateral format with          Considering the significant        exports to all federal districts of
                       the bank “Société Générale”, “Ros-    share of the energy sector in the      Russia, to 68 out of 80 Russian re-
                       Bank” and “BelRosBank”. Con-          economies of Belarus and Russia,       gions.
                       centration of payments between        it makes sense to channel our ef-         Due to consistent efforts of
                       businesses via a group of banks       forts towards joint development        both sides, we have managed to
                       authorized by the two states will     of promising projects, construc-       expand the range and scale of co-
                       help make sure the resources are      tion of new and modernization of       operation, make it more effective,
                       used purposefully to support pro-     active refineries in order to derive   ensure stability and diversifica-
                       ducers, make the use of the re-       mutual benefits from trading in        tion of Belarusian exports to Rus-
                       sources more effective and ensure     competitive goods in third coun-       sian regions.
                       mutual payments between export-       tries.                                    The Belarusian Government
                       ers.                                      The measures taken by Russia       adopted a comprehensive system
                          It is especially important today   and Belarus to support their real      of measures to boost Belarusian
                       to maintain and expand the con-       production sectors, to unblock         exports to the regions of the Rus-
                       tacts that have been established      payments, expand cooperation           sian Federation in 2009-2010, and
                       between businesses of Belarus         ties and widen opportunities for       plans or urgent measures with
                       and Russia.                           mutual supplies of goods means         regard to federal districts. It is
                          Belarus and Russia have had        that there should be mutual guar-      planned to use the intergovern-
                       traditionally strong ties in auto-    antees that no discriminatory          mental mechanisms of interac-
                       making. For example, to produce       measures are imposed.                  tion with Russian regions that we
                       tractors, the Minsk Tractor Plant         Regional interaction is another    have, to take measures to fulfil the
                       purchases materials and assembly      important aspect of Belarusian-        agreements we have and develop
   Over 80% of
  seamless hot-
    rolled pipes
  manufactured
  by Belarusian
Steel Works are
        exported




16
            NUmbeR ONe PRIORITY


new agreements, to continue the
practice of visit exchanges.
Europe
    The European Union remains
another crucial trade and econom-
ic partner of Belarus. In 2008, the
trade between Brelarus and the
EU countries reached $23 billion,
up 36.3%, with Belarusian exports
amounting to $14.4 billion, having
risen by 36%. Belarusian had a
$5.9 billion surplus in trade with
the EU.
    Belarus and the EU are work-
ing jointly to expand mutually
beneficial cooperation in a range
of economically relevant areas.
We have Belarusian and EU ex-
perts collaborating closely on en-
ergy, transport, ecology, customs
affairs and agriculture. Similar       land 2 times. The work now in           the world financial and economic        Potash
consultations are expected in          progress to build on the results of     crisis on our economies will bring      fertilizers
                                                                                                                       are one of
economy and finance, standardi-        the Belarusian Investment Forum         positive results and ensure posi-       the essential
zation and healthcare.                 held in November 2008 in London         tive trends in mutual trade. Simi-      elements of
                                                                                                                       Belarusian
    We pin certain hopes on Be-        is aimed at increasing further the      lar work in planned to be carried       exports
larus involvement in the new           investment attractiveness of Be-        out with the other CIS member
initative “Eastern Partnership”.       larus.                                  states, too.
Participation in it could open ad-                                                We are still in the process of
ditional opportunities for Belarus     One More Priority                       searching for alternative ener-
in modernization of the national           The bilateral relations with        gy sources, ways of integrating
economy, providing access for Be-      the countries of the Common-            Belarus into new schemes of
larusian goods to the EU market,       wealth of Independent States oc-        their transportation, including by
implementing regional projects of      cupy their traditionally important      studying prospects of participa-
priority importance, building up       place in the system of foreign eco-     tion of Belarusian companies in
Belarus’ transport, logistical and     nomic priorities of the Republic        projects related to production and
energy-transit capacity.               of Belarus.                             transportation of energy from
    In 2009 we will do our best to         In 2008, trade between Belarus      Central Asia and the Caucasus.
cement the positive trends in          and the other CIS countries (Rus-
trade with the European Union.         sian Federation not included) hit       Across the Pond
We hope not just to expand the         $62 billion, up 1.5 times, with Bela-       When speaking about the re-
presence of traditional Belaru-        rusian exports amounting to $3.8        mote arc of Belarusian foreign
sian exports in the EU market (oil     billion.                                policy, Latin America, we should
products, metal products, timber),         At the same time, there has         note that main efforts here are
but to diversify our supplies with     been a change in the political and      aimed at expanding trade and eco-
an emphasis on technology-inten-       economic priorities of the CIS          nomic cooperation, building up
sive products.                         member states in recent years.          and diversifying Belarusian ex-
    The Europeans show interest        Certainly, it influences the multi-     ports and its geography.
in Belarus as in an optimal place      lateral and bilateral relationships         In 2008, trade between Belarus
for locating their export-oriented     in this region. The approaches          and Latin American countries rose
companies. Therefore special at-       within the CIS to bilateral rela-       3.5 times from 2007 to $1.8 billion,
tention should be paid to our par-     tions are becoming increasingly         with Belarusian exports increas-
ticipation in internationalization     pragmatic in their nature, being        ing threefold to $1.1 billion. One of
of foreign manufactures.               based on specific national inter-       the most important results of the
    System-based work on cement-       ests and objectives.                    work on cementing Belarus’ ener-
ing the positive trends is also nec-       We hope that specific bilateral     gy security was that Belarus start-
essary with regard to investment.      measures developed by Belarus           ed oil production in Venezuela.
In 2008, investment from Austria       together with the Russian Federa-           Giving     today’s      economic
increased 1.6 times, from the Czech    tion and Ukraine aimed at mini-         trends, Venezuela is one of the
Republic 1.8 times, from Switzer-      mizing the negative impact of           most promising markets in Latin
                                                                                                                                17
                                                                                        NUmbeR ONe PRIORITY


                     America to export a wide range of         Although trade with Brazil        other meeting of the Belarusian-
                     Belarusian-made vehicles, equip-      looks quite impressive, over $1       Cuban joint commission for trade
ECONOMY OF BELARUS


                     ment and fertilizers. Due to a high   billion, still 90% of is made up of   and economic cooperation. The
                     level of interstate relations, Be-    mineral fertilizers. And the ca-      plan of action adopted by the Be-
                     larus and Venezuela started joint     pacities of Brazilian agricultural    larusian Government for 2008-
                     large-scale investment projects in    producers purchasing Belarusian       2009 provides for expanding trade
                     oil production, petro-chemistry,      fertilizers are weakening. In this    with the Republic of Cuba to $100
                     seismic prospecting and seismic       situation, we should focus on di-     million.
                     equipment, extension of natural       versifying Belarusian exports to         The afore-mentioned measures
                     gas supply network, architecture      Brazil and creating our own com-      have had a positive effect on the
                     and construction, industrial man-     modity distribution network there,    bilateral trade with Cuba. In 2008,
                     ufacturing, agriculture and food.     first of all for the Belarusian me-   Belarus-Cuba trade increased 2.5
                         The work is now under way to      chanical engineering industry.        times and approached $50 million.
                     build in Venezuela factories to as-       The twofold growth in trade       Belarus had a $20 million trade
                     semble Belarusian quarry trucks,      with Argentina in 2008 ($192 mil-     surplus with Cuba.
                     heavy vehicles, tractors, house-      lion) made this country Belarus’         Considering today’s financial
                     hold appliances. A Belarusian-        third largest trade partner in Lat-   and economic challenges, the em-
                     Venezuelan joint company was          in America. The practical result      phasis should be placed on search-
                     started to produce construction       of the opening of the Gomselmash      ing for new schemes of financing
                     materials; another joint company      Production Association in Argen-      export and import transactions,
                     was set up to construct infrastruc-   tina was supplies of Gomselmash       using mechanisms capable of en-
                     ture and housing in Caracas.          machinery to the Argentinean          suring direct supplies and exclud-
                         The strategic 2009 and middle-    market.                               ing intermediaries.
                     term objective in cooperation             One of the major objectives          We also bear in mind Cuba’s
                     with Latin America is expansion       in 2009 is to open an office of the   interest in cooperation in science
                     of cooperation with Venezuela in      Belneftekhim concern in Buenos        and technology, which can bring
                     all areas. It is important that we    Aires with a view to cementing        economic benefits in the future.
                     strengthen the political dialogue     and expanding supplies of petro-         In 2008, for the first time in
                     at the top and high level, maintain   chemical products to this country.    the history of the bilateral rela-
                     the rates of economic cooperation         Cuba is another important         tions, a high-level delegation from
                     that we have achieved so far, and     trade and economic partner of         Mexico visited Belarus headed by
                     give additional impetus to joint      Belarus in this region. In March      the deputy economy minister of
                     projects.                             2008, Havana played host to an-       Mexico. Considering that Mexico
     S.M.Kirov
       Mogilev
   Automobile
  Works is the
   CIS largest
 manufacturer
  and supplier
of vehicles for
  construction
      of roads,
dams, tunnels
  and bridges,
    quarry and
 subterranean
          works




18
              NUmbeR ONe PRIORITY



               COOPeRATION

the companies under
the authority of the
Ministry of agriculture
and Food of Belarus plan
to expand the range of goods
exported to the United arab
emirates.

    Most promising are new export
items: butter, dried fat-free and whole
milk, tinned milk and technical casein.
The amounts are to be specified in
the near future.
    Belarus is well aware of the role
the UAE plays in the Persian Gulf
and is prepared to establish new
trade contacts. The trade between         has traditional partnership ties        the full, as we have not been pay-    ZAO Atlant
                                          with the United States, and 80%         ing enough attention to coopera-      household
the two countries in 2008 reached                                                                                       appliances are
$19.2 million, almost three time more     of all foreign economic contacts        tion with them until now.             ever popular
than in 2005. Supplies of Belarusian      are bound for the U.S., the signing         China remains a priority for      among foreign
                                                                                                                        consumers. The
food (mostly dried milk) accounted for    of Belarus-Mexico agreements on         us. Cooperation with China has        company exports
a small share of Belarusian exports to    mutual protection of investment         stepped up onto a higher level,       over 70% of its
                                          and cooperation between the econ-       with multi-million investment         output
the UAE. The bulk of the export was
made up of industrial products. Today     omy ministries can be viewed as a       projects emerging, which suc-
both states have common interest          crucial and far-reaching result.        cessful implementation will help
in expanding supplies of Belarusian          It is also noteworthy to mention     the Belarusian economy make a
food.                                     the singing in December 2008 of         breakthrough in quality. Today,
                                          an agreement on cooperation be-         jointly with our Chinese partners,
                                          tween the chambers of commerce          we are implementing projects on
               ***                        of Belarus and Columbia. In 2008,       modernisation of the cement and
                                          trade between Belarus and Colum-        energy industries of Belarus, a
the Carlsberg concern
                                          bia amounted to $85 million.            number of joint projects in the
aS (denmark) invested                                                             manufacturing industry. In 2008,
around €20 million                        Asia, Africa                            Belarus-China trade surpassed
in oao olivaria Brewery                       Asia and Africa are no less         the $2 billion mark. We hope the
                                          promising an area of diversifica-       growth trend will remain in place
over the past several years.              tion of Belarusian export. Many         in the future, as will the tendency
                                          markets of this region are still only   towards interpenetration of our
     The     Belarusian     company
                                          about to be explored by Belarusian      economies.
utilized these funds to modernize
                                          producers, including with strenu-           Some countries of this region
the production facilities and now is
                                          ous assistance on the part of the       are of great interest to Belarus
channelling them predominantly in
                                          Ministry of Foreign Affairs.            from the point of view of their
marketing to boost sales.
                                              In the near future, we will be      investment opportunities. Coop-
     The    Danish      company      is
                                          intensifying our work on practical      erating with the UAE, Oman and
responsible for staffing Olivaria with
                                          fulfillment of the top-level agree-     Libya, we are focusing on imple-
highly professional personnel. All the
                                          ments reached in the past years         menting joint projects, including
marketing tools now used at Olivaria
                                          with China, Vietnam, India, Lib-        in third countries. We are also
have proved their effectiveness earlier
                                          ya, United Arab Emirates. None          working on organizing supplies
when applied for Carlsberg.
                                          of the projects should be stopped,      of Belarusian products to the de-
     In 2008, OAO Olivaria Brewery
                                          we cannot silently wait for a initi-    veloping and less developed coun-
was Belarus’ second largest beer
                                          ative of a foreign partner or blame     tries as part of the state and gov-
producer with a 18.4% share of the
                                          the world financial crisis. We will     ernment programs of assistance
market, the first one being OAO
                                          be utilizing our potential with Ja-     on the part of donor states, like
Krinitsa (38.4%).
                                          pan, Indonesia and Australia to         Japan, for example.
                                                                                                                                19
                                                                             bUSINeSS SHOT




    Vityas has started batch production of 15'', 26'' and 32'' LCD TV sets. Bundled with excellent
technological characteristics and functional capabilities, the novelty boasts an environmentally
friendly and stylish case made of wood.
    In the photo: Yuri Batkhan, engineer of Vityas’ marketing division, demonstrates new products.

								
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