25 September 2017, Monday, 12:36

How Investors Are Duped in Belarus

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The Ministry of Industry "slips" deliberately unprofitable projects to potential investors.

The Ministry of Industry website presents a list of the projects of 12 Belarusian enterprises that need investments. Myfin.by decided to see how much money they want to attract for the development of companies and whether promise enough bonuses for it to investors.

The largest sums, without taking into account own participation, are required for three large Belarusian enterprises: 86.5 million dollars for the OJSC Homselmash project, 53.2 and 31.8 million for two OJSC BelAZ projects, and 34 million for each of the OAO Barysau Auto-Hydraulic Amplifier Plant.

The list was published at the beginning of the year, however, as the Ministry of Industry informs, investors have not been found yet.

– All these projects are relevant, we are very interested in finding investors for them. Not only to us, they will also be useful to them," – head of the Department of Investments and Energy Resources of the Main Directorate for Innovation and Investment Dzmitry Rukshyn says. – The conditions for each investor will be discussed individually, the Ministry of Industry is not a closed structure, we are ready to conduct a dialogue.

As noted by Rukshyn, the introduction of modern technology at the enterprises will shorten the period of implementation of projects, for example, from 4-5 years to six months.

For now, the necessary investments have not been found, the companies on the list are implementing these projects at their own expense, he says.

As Myfin.by has learnt from the consulting company Uniter, the Ministry of Industry publishes similar lists of projects annually.

"However, they still show the effect that the enterprises themselves will get from implementing the projects, and not the investors," – company director Raman Osipau says.

According to him, a large number of projects in the list of projects have a low rate of return.

– To show the project to the investor, it should be 15-20%. And here, in some places, this indicator is below 10% with a sufficiently long period of implementation. That is, they are obviously unprofitable projects, – the expert emphasizes.

According to Osipau, the funding for the listed projects of the Ministry of Industry can be found, for example, with banks. Only banks, as a rule, do not appear to be investors.

By the way

The internal rate of return shows how much the investor will earn on each dollar invested for a certain period of time.

Let us give an example. The investments amount to one million dollars, a year later the investor receives a profit of 150 thousand. The percentage of profit to the original costs is the rate of return. In this example, it is equal to 15%.