Five days of visa-free regime are not enough to attract foreign capital to the dictatorial country.
The introduction of a visa-free regime for citizens of 80 countries including the European Union greatly facilitates life of investors and business partners. Now they can freely spend 5 days in Belarus to hold negotiations and do business, Zautra Tvaye Krainy writes.
What other decisions should interdepartmental working group on investment climate improvement take to attract new foreign funds to the economy?
Deterioration of financial state of companies including those with foreign capital, decline in productivity, unstable game rules for business, a great number of criminal cases against big businessmen are the factors that negatively affect the attractiveness of Belarus for foreign investors, who are not so keen on investing money in the Belarusian economy.
Last year the decline in investment activity continued. According to the National Statistics Committee, for the first nine months foreign direct investments to the economy decreased by 6.4% compared with the same period 2015 year.
The Government's plans and forecasts of the World Bank for 2017 on possible volume of foreign direct investment on a net basis match at 1.4-1.5 billion dollars.
Interdepartmental working group aims to develop steps to improve the investment climate and attract foreign capital. Before February organizations under the rule of the government have to provide the Economy Ministry with proposals for the investment climate improvement. Before February 20 the office will provide the working group with plan of measures in this direction.
Focus on private property and safety assurance
The volume of direct foreign investments in Belarus, as a rule, is low - $2 1.5 billion per year. The rate of foreign direct investments per capita has almost been unchanged for six years and amounted to $180 per capita.
It is not the first year when this tendency is observed: $2.1 billion in 2013, $1.8 - in 2014, $1.6 - in 2015. Therewith, about 80% of annual investments are reinvested assets.
To increase the number of new investments the government will have to work hard to improve the business climate in the country, expert of the Liberal Club Anton Boltochko believes. First of all, an investor draws attention to the business climate.
- An investor counting on a long-term cooperation will not believe that he will be treated better than the national business. To attract foreign investor there is one principle should be taken into account - what is done for the national business will be done for investors, economist explains.
Insurance of property rights the expert calls one of specific steps. For an investor was not afraid of property expropriation.
- No guarantees bring lack of investments, Anton Boltochko stresses.
Refusal of authoritative economy and return of domestic capital
-To create a favourable business climate, it is worth refusing of the manual management of the economy, changing the legal judicial system and attitude to private property, former head of the National Bank Stanislau Bahdankevich says.
The expert says that foreign capital will come to the country as soon as it launches structural reforms that will promote an improvement of the business climate. First of all, it will impact the return of capital of domestic businesses derived from the country.
- Even small investors from, for example, the Baltic States, Poland, Slovakia, the Czech Republic should be attracted along with large ones. Foreign direct investment along with positive trade balance would promote accumulation of gold reserves at least to $10 billion, expert says.
The business itself could attract investments, if it has conditions to regain its feet.
- Reduced taxation will assist the business to revive. Value added tax should be reduced at least to the level of Russia and Kazakhstan, Stanislau Bahdankevich thinks. - It would be better to refrain from excessive control of the tax authorities and the State Control.
Global changes, according to financial expert, will occur only after core shifts in macroeconomics.
- This is a direct dependence between economic development and political system. The history has a lot of evidence that those countries adhered to laissez-faire economics, and where the law was liberal to business took a fast development, and those authoritarian had recession, stagnation, imbalances in the economy, the former head of the National Bank said.