9 December 2022, Friday, 1:54
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‘It's Like Under USSR With Planned Economy, But Time Has Changed’

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‘It's Like Under USSR With Planned Economy, But Time Has Changed’

The Lukashists are doing everything to make the Belarusians close their business.

Since October 6, officials have banned individual entrepreneurs and legal entities from raising prices for goods and services in Belarus. This applies to both manufacturers and importers, as well as trade, writes zerkalo.io.

Ryhor works as a commercial director in a company that installs security and video surveillance systems. The company works with imported components that it used to import from Europe, and after the introduction of EU sanctions — from China. The news about the “freezing” of prices of the head greatly outraged him, his first reaction to it was: “This goes beyond all limits!”

“Nothing good will come of this decision. It's like it was under the USSR, with its planned economy. But now is not the time, everyone is used to working on a different pricing model. And we are making some kind of hybrid, keeping prices down. So then it is necessary to freeze the dollar exchange rate — we are tied to it, buying goods in other countries,” the entrepreneur believes.

The man says that now, while the dollar exchange rate against the Belarusian ruble stands still, there is no critical situation, because nothing affects the final cost of goods and services. He assumes that even if the dollar “jumps” to 10-11%, then nothing bad will happen either.

“When setting a price, a merchant always includes risks in the form of a margin, which can range from 30 to 80%. This margin allows the business to stay afloat. But if the jump is greater, then there is no point in working for entrepreneurs — this is the path to bankruptcy and liquidation of the enterprise.

Ryhor gives an example of the cost of one video camera supplied from China. The average purchase price of such a product is $30, and when it arrives in Belarus, its price increases by about five times and amounts to $150 without installation, and $250 with installation. This difference includes transportation costs, logistics and, of course, the risks and profits of the Belarusian company, and this part will have to be reduced.”

If we assume a bad scenario: prices are “frozen”, and the dollar exchange rate is growing, then, according to the interlocutor, there are two options for the development of events: legal and “economical”.

“In the first case, when following the order of the authorities, the business will reduce its profitability, more and more reduce sales, decrease the number of employees, reduce rental costs and so on. As a result, this will lead to financial turnover falling so that the company will no longer exist. With the second option (it seems more realistic to me), companies will also save money, including on taxes and deductions, and this will affect budget revenues. The nature of the services provided will also change.”

At the same time, Ryhor is convinced that the authorities will not be able to fully control the execution of the order to “freeze” prices at firms, because “this is not always a product on store shelves”.