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IPM: Business in Belarus Losing Optimism

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IPM: Business in Belarus Losing Optimism

Belarusian entrepreneurs stop believing that the abolition of barriers to business development is possible.

A new study of the IPM Research Center states. This study is based on results of a survey of small and medium-sized businesses held in April and May 2016 for the IPM Research Center by NOVAK laboratory.

The authors - Daria Urban and Alena Hrushetskaya - drove to the conclusion that despite the constant activity aimed at liberalization of business environment and improvement of indicators studied by the World Bank (the rating of Doing Business, the indicator of "the distance to the leading edge"), the quantitative statistical indicators describing the state of small and medium business in Belarus show the almost a full absence of changes. In some cases, there is the negative dynamics - the number of medium-sized enterprises is going low, as well as the employment, the contribution of small and medium-sized enterprises does not correspond to the potential one, Thinktanks.by informs.

Assessments also show negative tendency. More than a half of respondents noted the drop in sales. Most of businessmen choose extensive goals as priorities, which most clearly shows the state of affairs at enterprises. The business environment as a whole is also negatively evaluated. Inquiries about challenges with loans showed connection between the economic situation and the success of a loan. The worse the economic situation, the more the representatives of SMEs need credit granting and the more often they are denied in that eventually only aggravates the situation in their companies.

According to the study, these and other issues are regularly being developed at the legislative level. For example, last year it developed a new draft directive on development of small and medium-sized enterprises, which was almost entirely consistent with the previous version, and left room for a state regulation of rental issues, leaving acquisition of ownership barely possible. Respondents note that the task on removing administrative barriers in this context is the most troublesome for the government.

However, experts note, there are some positive changes in opinions regarding tax and legal legislation. It tells of the need not only to declare, but also to effectively implement steps on liberalization of the business environment, precluding the possibility of such government intervention and regulation like in the case with long-term lease and purchase of ownership.

But only 10.5% of respondents feel equal conditions of doing business compared to the state-owned enterprises. First of all it concerns the relation of controlling bodies, rent issues and process relating to obtaining permits and licenses. Compared with the previous assessment unequal business conditions have deteriorated significantly. As before, external barriers associated with fluctuations of the national currency, high interest rates on rent and borrowings, as well as the changing legislation are the most relevant.

The comparison of overcoming of external barriers is one of the most important results of the study. Representatives of SMEs (small and medium-sized enterprises) star losing their optimism and less and less believe in passing barriers in the business environment that reduces the potential of this development. The more pessimistic assessments of the future situation are, the more real changes are required. The gradual decline in the level of credibility to actions and initiatives of the government in times of crisis can only aggravate the situation of small and medium-sized enterprises, which are the most important resource for economic recovery.

"Thus, the majority of SMEs in the questionnaire note the negative dynamics of enterprise development and the deterioration of the business environment over the past year. It is partially can be explained by unfavourable external economic factors. It is important for government to treat carefully needs and problems of small and medium businesses to effectively improve the regulatory framework and simplify administrative procedures as much as possible", the authors of the study believe.

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