BELARUS NEWS AND ANALYSIS

DATE:

30/05/2008

Belarus PM vows change to attract foreign investors

By Andrei Makhovsky

MINSK, May 30 (Reuters) - Belarus' prime minister on Friday pledged quick reforms to attact investment into the ex-Soviet state, accused by the West of clinging to Soviet economic practices.

The economy, which relies on oil refining, chemicals industry and machine-building, is currently ranked 110th in World Bank ratings gauging investment climate. Authorities have vowed quick action to propel the state into the top 30.

"We make no secret of our ambitious programme for a comprehensive reform of our economy over three years," Prime Minister Sergei Sidorsky told an investment forum.

"Statistics for economic development confirm that our plans to get into the top 30 countries in terms of investment climate are completely realistic."

Belarus, whose economy is almost totally controlled by the state, is also accused of violating human rights.

Authorities have in recent months repealed a "golden share" rule that allowed the government to control key enterprises, introduced tax breaks in small cities and simplified business registration procedures to attract investors.

Official statistics show that foreign direct investment into Belarus in the first quarter of this year totalled $1.3 billion compared with $700 million in the same period last year.

Government statistics project that domestic and foreign investment will rise to $17 billion this year from $12 billion last year.

The government has pledged to reduce the tax burden on businesses, introduce a single income tax rate of 12 percent and repeal restrictions on business practices.

"Our plan is to reduce the tax burden in the economy by 1.2 percent in 2009," Sidorsky said. "We believe reducing the tax burden is a good signal to investors."

Since quarrelling with Russia last year over energy prices, Belarus has sought improved ties with the West, especially the European Union and called for an inflow of foreign investment to maintain high growth rates.

Growth in 2007 stood at 8.5 percent of gross domestic product and forecasts for this year call for 11 percent.

The authorities have pledged to proceed with selective privatisation and foreign borrowing, though Sidorsky said this month a planned maiden Eurobond had been put on hold.

Upcoming privatisations include those of state bank Belinvestbank in which it will cede control to Germany's Commerzbank AG within four months, and giving up control of a second bank, Belpromstroibank.

Belarus also hopes to net at least $500 million in selling state mobile phone operator BeST, with Turkish company Turkcell considered the most likely buyer.

It also plans to sell half of its Naftan oil refinery and the Polimir petrochemical company.

The economy of 10 million people has in the past year attracted several foreign investors, including Russian banks VTB and Vneshekonombank.

Deputy Prime Minister Andrei Kobyakov told the forum that 30 percent of state companies would have share issues in 2008. (Writing by Ron Popeski) (Editing by George Obulutsa)

Source:

http://www.guardian.co.uk/business/feedarticle/7551032

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