Vladimir Artyugin, chief-editor of the “ Currency control and FEA” magazine

There is no ground to expect any specific improvements in the business climate next year. The peculiarity of the Belarusian economy is in the fact that the Government acts not only as an agent to regulate the market but also as its main player who controls a number of enterprises. Thus we should expect that in the line of priorities the solution of the government’s problems will take the first place and then they will try to minimize the negative consequences of the decisions made.

Without foreign currency earnings artificial control of the Belarusian national currency from the fall sooner or later should have resulted in the devaluation.  Tangible reduction of the Belarusian economy subsidization by Russian in 2010 through the prices on the energy and completely unreasonable emission of the Belarussian ruble has provoked the currency crisis. The Government’s attempts to limit itself to half measures gave the opportunity to postpone the crisis for a couple of months but this delay had only reduced the gold reserves that were already low.

The main goal for the Belarusian Government became bargaining for cheaper prices on energy in 2012. Without this condition to offset the foreign trade balance will be possible only by foreign borrowings. But after the infamous events of December 2010 it’s better to forget about foreign credits for some time and Russia is not rushing to offer help.

Russia’s attempt to separate “Beltransgaz” sale from the prices on energy were categorically rejected just like the attempts to separate the destiny of the Belarusian Oil Refineries and the prices on oil. Russia wasn’t putting too much pressure, apparently, hoping that the crisis would force the Belarusian side to accept Russian conditions. Indeed, in March-April the currency outflow amounted to $1 bln, in May  fall of the Belarusian ruble against the U.S. dollar  exceeded 100%

The situation reached its boiling point. The population and business community suffered losses from the devaluation but it did not provoke any protests. Apparently at this time agreement with the Russian conditions was seriously considered (it was officially announced about unification of the exchange rate and willingness to take the Russian loans). Help came from the informal devaluation that occurred. The Belarusian goods significantly increased their competiveness and as a result currency earnings increased as well. In May foreign exchange earnings exceeded import payments and compensated losses in other segments. Under these circumstances it became possible not too rush to agree to the Russian conditions.

Unification of the exchange rate was one of the EurAsEC credit program conditions and made it possible to approach the IMF for a new credit program. Alongside it gave an opportunity to raise prices on goods and utilities which in turn decreased government spending.

Now the Russian Government, that is entering the presidential elections phase under the slogan of creating EaP as one of the pluses in the modern world, is forced to make some concessions to Belarus. It announced that the gas price for Belarus in 2012 would be $165, and it’s expected that the premium for Russian oil suppliers would be reduced. Overall gain on energy for Belarus in comparison with 2011 can equal $ 2,4–2,7 bln (2,0 on gas and 0,4–0,7 on oil).

At the exchange rate Br 9 000 it will equal to Br 22–25 trln, but even this amount of money will not impact the foreign exchange balance of the country. Inflation rate will be the kley issue of the Belarusian economy in 2012, because even  20-30% inflation ( and corresponding interest rate on loans) at more or less real exchange rate will be a heavy burden on economic entities and the population’s standard of living will lower even further.

According to the Ministry of Economy of the Republic of Belarus forecast in case the increase in GDP is 1,5%, emission will be in Br 7 trln, inflation will be 19% and the exchange rate will be Br 9 000 – 10 000. But if the increase in GDP  equals 7%, emission will be Br 30 trln, inflation will reach 200% and the exchange rate will be Br 20 000

The Belarusian Government must insure the GDP growth by 5,0–5,5%, which corresponds to the emission somewhere at the level of Br 23–25 trln (this number coincides with the gain from the prices on oil and gas). In this case the exchange rate will reach  Br 15 000–17 000 for US dollar and the inflation rate will repeat the “achievement” of 2011, that is to exceed 100%

It will be hardly possible to get a new loan from the IMF without indexation of the refinancing rate to the inflation rate. In 2012 $ 0,5 bln will be required to pay off the IMF debt. This figure is quite realistic, but in 2013 it will be much harder to do that – for this purpose $ 1,7 will be required. At the same time one should not exclude various options for the SES development scenario. Now Russia has started pursuing a coherent foreign policy, where economic losses are necessarily linked to a certain benefit. Current acquiescence of the Russian leadership can be explained by the pre-election circumstances and the attempt to include the Ukraine into the TU and the EEC. If the Ukraine refuses the “invitation” then in 2013 changes in the “rules of the game” in the EEC may occur and this might be dangerous, especially in the conjunction with IMF debt. Besides, being dependent on only one lender is always risky by itself.

Therefore, most likely, the plan of 5% GDP growth in 2012 will not be carried out, and the events will develop with an eye on the overall external situation. Recent events demonstrate that the economy can have an impact on politics. For example, despite the obvious desire to see the exchange rate lower than the current one, real steps to lower it at the present time are not being taken.

The Government of Belarus failed to defend its position on the macroeconomic projections for 2012 before the Presidential Administration. The last meeting chaired by the head of the state adopted a new macroeconomic forecast that provides for a fairly high economic growth. However, the authorities of the country are lacking financial resources to shore this growth up.

Privatization earnings could become one of the resources to fight our way through the crisis. Yet, judging by the new forecast, these processes will be practically put on hold in 2012.

Will the Government give up on the privatization targets?

Under the new draft forecast that must be approved by mid-December, the target to attract foreign direct investment through the sale of state-owned property will not be set forth for the ministries and departments of the country in 2012. Previously the target was to raise $2.5 billion from selling state-run assets in 2012. According to unofficial information, the Presidential Administration strongly objects this target.

Giving up on the plans to attract FDI via the sale of state-owned assets may only indicate that the Belarusian authorities intend to curtail the “big privatization program”, i.e. the sale of “blue chips” of the Belarusian economy. Fortunately, this signifies nothing for private business (neither bad nor good).This is about the re-distribution of state property.

“In fact, all landmark deals should be closed this year: the sale of the state-owned shares in MTS, the Beltransgaz deal. Terms of MAZ privatization  are not clear even to the Government. A decision was taken to refrain from the sale of Belaruskali’s assets. Belarusian oil assets are interesting to no major investor, yet the Government wants to retain the ownership of the oil pipelines. Other lucrative assets are just not ready for privatization,” BEL.BIZ learnt from a source in the government familiar with the situation.

Meanwhile, he noted that at this point the macro-economic draft forecast provides for the net monetary financing of the economy at the level of Br7 trillion in 2012, as it was previously planned.

“Instead of supporting the economy through more efficient management of state property, they decided to continue to rely on monetary resources,” said the source.

At the same time, he drew attention to the fact that giving up on the “big program of state property privatization” is in full compliance with the provisions adopted by the last All-Belarus People’s Congress. Today President Alexander Lukashenko earnestly urges to fulfil these parameters.

Nomenclature Privatisation Already in Progress

It is worth remembering that the Government’s plan to implement Directive No. 4 on entrepreneurship included, among other things, an opportunity to transfer (sell) some part of shares to the heads of state-run companies.

Belneftekhim Concern was the first to start materializing this idea. At the beginning of July, head of the concern Igor Zhilin said that it would be right to transfer some part of shares of Belaruskali to its personnel. Currently 100% of shares of the company belong to the state.

The concern sent the corresponding proposal to the Council of Ministers. It is yet to be known what decision was made on the document.

This week, the CEO of Belaruskali, when talking about his vision of the use of the $1bn syndicated loan from Sberbank of Russia and the Eurasian Development Bank, said that the company hopes to use these funds “for corporate purposes and purchase of our shares from the state.”

In fact this implies a possibility to acquire state shares through the loan issued under the guarantees of the government and the pledge of the controlling stake in the Naftan oil refinery. This is nothing more than nomenclature privatization.

Meanwhile, as BEL.BIZ has learnt, this mechanism is warmly welcomed by other government bodies governing the real production sector. In particular, Mr Zhilin’s proposal was supported in the Industry Ministry and partially in the Energy Ministry and the Agriculture and Food Ministry.

“Nomenclature does exist and it has resources. It does not really matter if functionaries and business close to the government will buy these assets). What is most important here is to find an efficient owner who will be better than the previous one,” says Head of the Belarusian Science and Industry Association (BSIA) Alexander Shvets.

In his words, de-facto “nomenclature privatization” is already in progress in Belarus. At the same time, he believes, “there is no need to be afraid of it, particularity in our country”.

Pave the Way for Russian Business

The recent agreements between Minsk and Moscow as well as Belarus’ soft position in the negotiations on the Single Economic Space and the Eurasian Economic Union, including concessions in gas talks, which many consider to be highly questionable, pave the way for the Russian business to the Belarusian market of commodities, capital and property.

These processes have already started and will continue, but from the strategic viewpoint, it would be wrong to include such privatization deals into the draft forecast. Such apparent sell-out of the state property would damage the image of the authorities.

Alexander Shvets believes that Belarus, in its search for strategic partners to upgrade its GDP-forming companies, should rely on foreign, Western, rather than Russian capital. “Russian capital is oligarchic. It invests ready cash in the economy and it is good on the one hand. On the other hand, such investors pursue their own objectives, and they are not always about a company’s efficient operation. It is common that competition is eliminated in such a way. The Western investor brings not only his capital but also technologies which remain in the national economy afterwards,” he says.

Therefore, the clash of opinions around the privatization program for 2012 is natural. On the one hand, the government advocates the need to attract resources for the economic growth. On the other, the Presidential Administration intends to retain control over the state property and maintain the social dimension of the economy (including its “creditworthiness”). Simply put, to fill up the pockets without any serious damage to the country’s economy.

What’s Next?

According to the recent decisions made by the government, a number of large companies are set to be incorporated as open joint stock companies by the end of the year. Among them are Belarusian Steel Works (BMZ trademark), the Belarusian and Svetlogorsk cement plants, Belvtorchermet, and the Baranovichi cotton factory. Previously the incorporation of these companies had been planned for 2013.

The privatization was rescheduled to prepare these companies for sale as soon as possible. However, it is still unclear if this sale will ever happen. This may depend on whether Belarus gets the loans it expects.

The Big Four, a group of the world’s biggest auditing firms, is about to declare hyperinflation in Belarus. The reasons are the following: the aggregate inflation has made up 100% and more over the three years, households keep their savings and make payments in foreign currency, salaries and prices are pegged to inflation, sales transactions are also pegged to foreign currency.

Indeed, this shows that something is wrong in the Belarusian economy. However, hyperinflation could have been declared back in August-September, and dollarization became a steady trend in the Belarusian economy a long time ago. It was enough to go to a clothing market, not to mention real estate transactions. Besides, the Belarusian government evaluated household incomes in U.S. dollars, too. Therefore, these hyperinflation statements are meant to deliver some other message.

Parties are now discussing loan terms. Various instruments are used here – the IMF insists on ratings of the international agencies, Russia insists on energy prices, Belarus on the scale of economic reforms.

If you look from this perspective, many things become clear. Nobody talked about hyperinflation in August-September, because they waited for the single currency exchange rate to be established. They said nothing about it in October, because they tried to prevent the government from interfering in the exchange rate formation. Simultaneously they were downgrading the ratings of Belarus and the leading banks, which means that the pressure on Belarus mounted gradually, not to frustrate the talks.

Now the refinancing rate is next in line. The auditors of the Big Four are likely to demand that Belarus index all non-monetary balance sheet items to the rate of inflation at the end of the year. The result of the indexation will be included in the profit and loss account, and, of course, will have an impact on the investment appeal.

The refinancing rate is mainly about guarantees of reforms in Belarus, because the high refinancing rate is a more or less sufficient guarantee of changes (the scope of government subsidies will shrink considerably, the composition of expenses will change). When it comes to the single currency exchange rate and the refinancing rate, the positions of the IMF and Russia coincide. For the IMF it means a greater likelihood of economic reforms and credit repayment. For Russia it means a possibility to introduce equal operation terms for Russian companies in the run-up to the launch of the Single Economic Space.

High inflation is not as bad as it might look. In the 1990s, the inflation made several hundred percents, but business was thriving (taking into consideration local specifics). Investors did not care as long as they knew the rules of the game and could predict possible developments. This is what they cannot do now. Even the Economy Ministry is now considering several scenarios that differ drastically when it comes to certain targets: the scope of government financing from Br12 trillion to Br30 trillion, inflation from 10% to 200% and more, the U.S. dollar exchange rate from Br9,000 to Br22,000. It is clear now that investors are waiting for the government to settle down with the economic strategy.

Rating agencies have turned into tools of big game. They not only evaluate the situation (something they were established for), but also shape it. Suffice it to remember the recent problems of some major banks and Italy that accused the rating agencies of a biased and politically charged stance. In the modern world, ends are met by different means. Rating agencies are among them. The best way to avoid dependence on somebody else’s evaluations is not to bring the situation to the point when external borrowing is the only option. Such issues are facing many European countries, including Greece, Portugal, Ireland, Spain, and Italy.

Of course, there is no plot against Belarus here. If the economic situation in Belarus were ok, we could use sovereign credits, without conditions. However, the current sovereign debt rate (about 15%) makes such credits pointless. Therefore, Belarus has to make concessions that are sometimes detrimental to the country. However, there is no one to blame for it, but our own selves

The opening ceremony of the Global Entrepreneurship Week in Belarus was held on November 15 in Minsk in the Crowne Plaza Hotel and the event was attended by representatives of diplomatic missions, business associations, business people and university students.

As the British Ambassador to Belarus, Mrs. Rosemary Thomas said, she was particularly happy to see Belarus joining this years’s countries that hosting the Global Entrepreneurship Week, the focus of which was the private business’ role in economic development.

She believes  now that Belarus is focusing more attention on developing it’s private sector; though a lot still has to be done. Simplifiying access to financing, SME tax benefits, as well as other areas,  would serve as a great impetus for private business development in the country. “I believe this is exactly the reason why we are here, opening the Entrepreneurship Week in Belarus, so that we can learn from one another, exchange ideas and seek inspiration.  In the modern world, success is associated with permanent innovations and intellectual initiative.

According to Mrs. Thomas, 2011 was not an easy year for the Belarusian economy.   However the country has potential in this difficult climate, and if properly used, the economy of Belarus can make a breakthrough.  She appealed to the GEW participants and all Belarusians: “Think big, be creative, take risks, look for options that are not obvious, and you will certainly make your contribution to the development of your country.  In fact, it is your patriotic duty.”

The International Entrepreneurship Forum was held on the next day of the GEW agenda.  Its opening     discussions were attended by Belarusian and international experts, specialists in business,  in economic policy and       in education. Also in attendance were representatives of diplomatic missions, Ministry of economy and  the general public. Among the items discussed were the private sector development in Belarus, international best practices of entrepreneurship support,  and instruments to enhance business efficiency.

According to Michael Scanlan, the U.S. Chargé d’Affaires, “such a forum is a great platform for discussing the challenges and possibilities that will help Belarus rise to the maximum of it’s business activity, develop its entrepreneurship and create an open business environment.  The joint USAID/IFC (Belarus) programs, which is aimed at entrepreneurship assistance and training, can provide support in this area”.

As Max Yacoub, Head of the IFC Office in Belarus said, “In 2011 the IFC invested about $125 mln into eight projects in Belarus, with the IFC investments into the Belarusian private sector totaling to about $320 mln in the last eight years”.

“This year, the key problems for Belarusian business was inflation, currency market regulation issues and access to finances”, said Mrs. Tatiana Marynich, Head of the BELBIZ Center for Business Communication (the GEW coordinator in Belarus).  Speaking about the next year possibilities, she raised the issue of Belarus’ destiny, shall it be a wave of bankruptcies and business outflow from the country?   Or shall it regress several years back –  events such as foreign government loans, lower  income  earnings of low-income people and stiffened monetary policy?  Is it possible to have an alternative scenario – a system of reforms based on dialog between business and authorities, transparent privatization and improvement in business environment?

“The Government has recognized by now that private business shows more efficiency.  This relates both to the productivity and the acquisition of foreign direct investments”, – noted Mrs. Marynich, – “Private business has a relatively small share in Belarus, as compared to the developed countries, where private business is responsible for up to 90% of the GDP (circa 30% in Belarus).

According to Mr. Petr Arushanyants representing the Ministry of Economy, about one third of economically active people in Belarus are employed in small and medium business, which provides for about 20% of the GDP (with a 1% gain per annum).  He believes that this level is low, and the SME share should make up about 50%.  Belarus has a goal to increase that volume by 30% by the year 2015.

“The reason lies not in the private business’ fears alone, it is more because Belarus has placed it’s  stake on the development of large business, industrial and other production, while the small and medium business  sector has been neglected”, said Mr. Arushanyants, “Now we recognized that Belarus is behind in this area, while our neighbors have been developing.  Now we have to catch up.  SME development is a very powerful economic driver by itself.  Now, in the Year of Entrepreneurship and implementation of Directive No. 4, we will place an emphasis on small and medium business development.

Speaking about entrepreneurship support in an interview to the BEL.BIZ portal, Mr. Dmitry Burnashev, Director of the Startup Support Department of Enterprise Estonia under the auspices of the Estonian Ministry of Economy, stressed certain aspects of the issue:

“In Estonia, there is a discussion about why we spend money on entrepreneurship support; they say, ” we should rather provide tax benefits, and that should suffice”.  The mechanism to be developed and applied depends to a large degree on the current situation.  And we should clearly see the needs of those whose problems we are trying to solve.  When you understand why a person needs money, what he is going to do with it, and whether he will be able to manage it properly, then you will be able to make the right decision”.

Answering a question about his assessment of the Entrepreneurship Forum in Belarus, Dmitry said:

“It was a great forum, I liked it. Bringing in the Estonian experience, I would like to say, that it is crucial to make sure that the Entrepreneurship Week does not become a one-time-only event.  In the long run, the Entrepreneurship Week should turn into a public forum raising key issues for the Belarusian public in the area of entrepreneurship.  In a broader sense, it is the issue of entrepreneurship of the people.  It is crucial to have it developed in a systematic manner.  It is great that the week was held in Belarus for the first time, it is great to have such events, it is great to have such attendants.  Now you need to move on.  In Estonia, for example, about 200 various events will be arranged within the framework of the GEW this year.   Belarus is larger than Estonia, so you could achieve much more here.”

A lot of events were held during the GEW.  One of the most outstanding events was a round table for the discussion of entrepreneurship and entrepreneur’s image in Belarus.

The round table participants discussed definitions of an entrepreneur and entrepreneurship in Belarus in view of      it’s historical background, present-day adjustments, foreign influence and patriotic priorities.  They expressed their opinions on the degree of entrepreneurship in the national character and the factors required for its development and also for attracting educated, dedicated youth to business.

Mrs. Natalia Shappo, the Chairperson of the Public Association “Center for Youth Entrepreneurship Support and Development” mentioned that a “businessman” and an “entrepreneur” are two different words.  Who is more important for the development of our country?  According to her, we need entrepreneurs – the people who would bring along innovations, who would create new jobs and lead the way for others.

Mrs. Harriet Russell, a private business advisor from the Cleveland Growth Association, USA, said, that “an entrepreneur can create something new and useful, when he is occupied with things he is passionate about, not when he has to get busy with them.  I would personally never have become a business person just to get rich.  I am a business woman, first of all because I am passionate about it.  Therefore, I believe, it is crucial to attain a certain balance between your passion and dreams.  You, certainly also need education and a practical approach to business, as well as personal professional experience.  Then a business person can be proud of what he is doing, he can engage his own resources, as well as the resources that belong to his colleagues in business”.

Mr. Andrey Zhishkevich, Head of the Board of MTBank CJSC, has his own opinion: “You can say, that it is everyone’s obligation to do something to help the entrepreneurial spirit win in Belarus.  Personally, I would want my two sons, who are small now, to become entrepreneurs in the future.  They do not have to become businessmen, but, for certain – people who change the world.  I definitely hope that, when they grow up, they would live in Belarus and they will not wish to leave it.  So, I see my objective as raising them with this spirit.  That will be my contribution to the victory of the entrepreneurial spirit in this country.

“No matter, how critical we get in assessing our environment, it is very possible to be an entrepreneur in the country, and there are plenty of examples of that”, – said Mr. Anatoly Trukhanovich, Chairman of the Belarusian Union of Taxpayers, “I believe, that business is an intellectual activity, first of all.  And I am very happy to see the higher school representatives discussing this issue.  According to the statistics, successful researchers are generally successful in business.  They are active, self-motivated, they put their assets at stake and make profits – primarily for themselves (which is nothing to be ashamed about it), and for the nation as well.  I would also want our country to recognize people who create added value as the most important people.  Then all our problems will be solved.  I am often asked how one can become a big business person.  I tell them that you have to learn to be compassionate about the big things – about your country, your children, and school.  Once you allow everything going on in the country go through you – you are sure to become an entrepreneur and be successful in business”.

For more details please visit GEW Belarus web-site http://week.bel.biz/en/

More photos from International Entrepreneurship Forum 2011 in Belarus

In 2011 Latvian export in Belarus increased by almost 27%, the same indicator for Belarus looks even more optimistic. It is equal to 76%.

However a detailed study of the trade turnover structure between the two countries suggests that the picture is not that optimistic.

Michael Popkov, Ambassador Extraordinary and Plenipotentiary of the Republic of Latvia to Belarus, shares his view of the issue with the Belarusian business portal www.bel.biz

-In the first six months of 2011 cars were the main object of export from Latvia to Belarus. In monetary terms the quantity of cars exported is amounted to € 20 million. So, significant increase in the turnover in this category is a short-lived trend, which can be observed not only in Belarusian-Latvian cooperation, but also in Belarusian trade with the other bordering countries – Lithuania and Poland.

At the same time, after having held detailed study of the structure of the Belarusian import to Latvia, we have noticed that significant increase in monetary terms doesn’t always suggest positive changes in our trade and economic relations. For this reason it can not be considered as the basis for improvement of the strategic economic relations and further mutual trade policy.

For example increase in the number of position of the Belarusian import to Latvia (it is especially noticeable in some types of raw material and fuel) occurred not due to the increase in the volume of supply but due to the price growth.  Thus, in gross terms, for the last six months  export of Belarusian fuel to Latvia has risen by 2.5% only, but due to the changes in world prices in monetary terms this indicator has reached 41%. Or, let’s say, situation with the export of Belarusian metal products. This is the second largest export item to Latvia. The major consumer of these goods is LIEPĀJAS METALURGS.  This factory has been under large-scale construction for more than a year and is expected to reach the most advanced production level of wide range of metal goods in the nearest future.  During the period when the factory closed down some of its open hearth furnace, metal-roll was purchased in Belarus in large amount. It’s evident that the growth in volume of sale doesn’t’ have long-term trend and its share in the structure of bilateral trade will decline.

Thus when commenting on the situation with the trade turnover I would refrain from excessive optimism.  Figures should not lead you astray. Both we and our Belarusian partners have a lot of work ahead before we can reach more serious level of foreign economic cooperation.  So far Belarus takes 11^th place in the export list of our major trade partners and 6^th in the import list. Latvia’s trade turnover with the other neighboring countries (Lithuania, Estonia, and Russia) is much higher than with Belarus.  According to the Latvian statistics, export and import with our major trade partner- Lithuania – is equal to € 1.5 billion only for the first six months of this year, which is five times greater than the trade turnover with Belarus.

But I should admit that the level of economic, trade and investment relations between our countries has a great potential of further mutual beneficial cooperation. Latvia is interested and ready to undertake necessary efforts to promote more rapid growth of economic relations and the benefits of this cooperation.

At the Embassy of Latvia in Minsk we have organized the Latvian business club and it has been working for more than a year. It brings together representatives of over a hundred latvian companies that operate in Belarus. I should note that the scope of Latvian businessmen and investors’ interest in Belarus is quite wide. Construction, IT, logistic companies, joint ventures in the sphere of trade and public catering with Latvian capital –these are our key players on the Belarusian market. Creation and development of joint ventures on the territory of both countries in order to provide export within the EU and on the markets of the Custom Union would be a prospective direction of cooperation.

Such a promising area of partnership as development of innovative technologies is also significant.

Frequent communication with Latvian entrepreneurs gives us a fairly clear idea of how their business develops in Belarus and the challenges they face.

It should be noted that the atmosphere of instability, which occurred in the Belarusian foreign exchange market, has complicated activities of our entrepreneurs this year.  However, majority of our businessmen positively evaluate the measures taken by the Government to stabilize the foreign exchange market, liberalize the economy and improve the business climate.  I’m confident that these measures will encourage and increase investment and will expand the existing cooperation between businessmen of our countries.

We realize that the work on the issues raised above is a painstaking and time-consuming process, so we rely on the interest of our Belarusian partners in further continuation of mutual work aimed at the improvement of the economic cooperation environment. It’s significant that the issue becomes the subject of discussion not only during meetings at business forums but at government level as well. In particular, during the meetings of the Latvian-Belarusian Intergovernmental Commission for Economic, Scientific, Technological and Cultural Cooperation.

The next regular session of the Intergovernmental Commission will take place in the end of this year. Like last year, we expect to attract for participation and preparation for the event recently organized Latvian- Belarusian Business Cooperation Council. The Council has already proved itself as an efficient tool to improve interaction between our businesses.

It is important that Council is comprised of leading entrepreneurs with extensive experience of partnership between Belarusian-Latvian companies, and, therefore, well versed in this area, its potential and vacant niches, still unresolved questions, etc.

This is upon the recommendation and participation of the Latvian side of the Business Cooperation Council some relevant and practical issues of Belarusian-Latvian business partnership were included in the agenda of the previous Intergovernmental Commission meeting.

Belarus has finally managed to balance off the exchange rate of the ruble. But this instills little optimism as the introduction of the market exchange rate means that the financial woes have turned into a full-blown economic crisis. Actually, in August-September, the economic crisis entered a new phase: Belarus showed a poorer economic performance not only compared with the previous month, but also compared with the previous year.

According to the National Statistics Committee, several industries posted a decline in GDP in annual terms in January-September. In August 2011, the employment rate, capital investments and average salary dropped below last year’s level.

Highest jobless rate since June 2010

Let us start with GDP. According to the National Statistics Committee, in January-September 2011 GDP rose by 7.9% over the same period last year (in comparable prices) to Br186.7 trillion. In January-August GDP expanded by 9.1%, which means that just in one month the growth rate dropped by 1.2 percentage points.

More than that, several sections like “other types of economic activity” and “net taxes on products” (taxes minus subsidies) also posted a 0.4% and a 0.1% decline respectively.

August marked an increase in the unemployment rate: in January-August the number of employees in the Belarusian economy shrank by 0.1% from the same period of 2010 to 4,657.8 people. It is not so impressive in absolute numbers, but the jobless rate that started to rise in April 2011 has never been so high since June 2010. The construction industry announced biggest job cuts – 11,800 employees.

The crisis delivered a severe blow to the industry as capital investments shrank considerably. In August 2011 already, they decreased by 8.5% from the same period in 2010. In September when the investments made Br9.1 trillion, the capital investment in the industry dropped by 8.4%, which means that the situation did not get any better.

In August the financial performance of Belarusian companies grew poorer. The net profit that soared to Br4.8 trillion in June (on the back of the May devaluation), soon started to fall and made only Br4.1 trillion in August (down by 12.2% from July). However, the overall profit indicators are not that bad. In January-August 2011 the profits expanded 2.4 times from the same period last year (in nominal terms) to Br22.4 trillion.

In August 2011, loss-making companies descended into a deeper crisis after a short recovery in July. In January-August 2011 the net losses made Br1.53 trillion, up 1.6 times from the same period of 2010. In January-July 2011 the net losses were estimated at Br1.39 trillion.

Wages are lagging behind

Wages keep falling. In August, the average wage stood at Br1.992 million, while consumer prices rose by 60.7% in annual terms. This means that the real wage was Br1.239 million, the same as in June 2010. However in September 2011 prices grew by another 13.6% in monthly terms (or 79.6% in annual terms), outstripping the wage growth. In other words, the real wage is falling to the level of the early 2010.

This trend is expected to persist, otherwise, we are going to have another round of inflation and devaluation, the outcome the government is trying so hard to avoid.

At a session of the National Council for Labor and Social Matters on 20 October, Deputy Prime Minister of Belarus Sergei Rumas said that the increase in wages will encourage consumer and foreign currency demand, and this might make the whole situation much worse. This again will trigger price growth, and again wages will need to be raised.

It can therefore be expected that the wage growth will slow down while prices will continue to grow for some time until they match the nearly thrice devalued ruble as compared with the beginning of the year.

However, during a meeting with Chairperson of the Board of the National Bank Nadezhda Yermakova and Prime Minister of Belarus Mikhail Myasnikovich on 21 October, President of Belarus Alexander Lukashenko instructed them to make sure that real incomes of people should provide for the living standards at the level of 2010. But this is a very vague task: in early 2010, the average salary was only Br1 million, and at the end slightly more than Br1.6 million. Which level will the National Bank and the Council of Ministers be aiming for is not clear.

It can be expected that given the current growth of prices and wages, in January 2012 we will see the average real wage somewhere at the level of January 2011. This is probably because the Government is unlikely to put a cap on prices this year letting them rise to their maximum in order to be able to restrain them in 2012 at a level not higher than 20%. This is understandable – the more they rise now, the less they will increase in the future (of course, if wages are not raised). This means that prices will probably rise more than two times this year.

January will make the drop apparent

The depth of the economic crisis that Belarus is gradually getting bogged down will become apparent in February 2012 after the National Statistics Committee compares GDP in January 2012 with that in January 2011. Fall in GDP in monthly terms started apparently back in June, but the statistics does not provide data on a monthly basis, while the integrated data since the beginning of the year do not make the monthly fall in GDP so obvious.

Therefore, only in January we will get the data which will allow us to understand what is happening in the country. You can assess the depth of the crisis by the expected fall in the value of real wages. Relying on the above estimates, in January 2012 wages may fall approximately down to the level of January 2010. This means that in real terms they would shrink by approximately 27% as against the payroll in January 2011.

Of course, GDP will not collapse by 27%. According to the National Statistics Committee, in Q2 2011 wages contributed 46.8% to GDP, which was clearly below the 50.6% in Q2 2010. Profits of enterprises increased and, consequently, their share in GDP.

Thus, if the share of wages of employees did not decrease, a fall in GDP in January 2012 would be equal to 13% as against January 2011. Yet, gross profit of Belarusian enterprises increased significantly, which would partly compensate for the loss of wages. However, judging by the decline in GDP in the period from the beginning of the year, GDP losses from reducing wages exceed GDP growth from increased profits. Therefore, in January we are likely to see a decline in GDP by several percentage points in annual terms. Inflation will do its part.

Business can be compared to a river that chooses the most convenient way to flow. This metaphor can fully apply to Belarus-Latvia cooperation, says Ambassador Extraordinary and Plenipotentiary of Belarus to Latvia Alexander Gerasimenko. Despite his busy schedule, Mr Alexander Gerasimenko found time for an exclusive interview to BEL.BIZ.

- Mr Ambassador, how can you describe the economic cooperation between Belarus and Latvia?

- Latvia is our most important trading and economic partner; the bilateral trade is quite robust. Over the eight months this year, it exceeded $1.795 billion. By the end of the year it is expected to approach $3 billion. This target is quite feasible as this year the trade has grown by 3.4% compared with the same period last year. Belarus’ export to Latvia also rose contributing to the overall bilateral trade and Belarus’ trade surplus. Belarus supplies 403 commodity items to Latvia, of which 109 are new ones.

Over 50% of all Belarus’ merchandise exported by sea goes through Latvian ports. In the pre-crisis period, Belarus shipped 19 million tonnes of cargo. The year 2009 was a major setback for Belarus’ exports. However, this year the export soared by 54% compared to 2009. The cargo transit via Latvia is expected to follow suit.

Belarus views Latvia as the most important partner in the transit of goods by rail and by sea.

-What is the share of private business in Belarus-Latvia cooperation?

I believe we have established good business links. Joint ventures with Latvian capital make up 5.8% (or 418 companies in absolute numbers) of all joint ventures in Belarus. In 2010 we registered 74 new Belarus-Latvia joint ventures. Latvia is home to 615 joint ventures with Belarusian capital. Over 100 joint ventures were registered last year. Businessmen say that the registration procedure in Belarus is easy. Besides, many appreciate our legislation that offers preferences for doing business in small towns. It is also noteworthy that workforce in Belarus is highly qualified and disciplined.

-What do you think the advantages of joint Belarusian-Latvian companies are?

Actually, there is no language barrier between our countries. Latvian business could greatly benefit from entering the huge market of the Customs Union of Belarus, Russia and Kazakhstan. This means that no restrictions are applied to the products manufactured by Belarusian-Latvian joint ventures in the Customs Union member states (170 million consumers!). The situation is similar with Latvian-Belarusian joint ventures. No barriers for their products in EU markets.

- The second regional Belarusian-Latvian business forum in Grodno was colocated with the international investment forum “Grodno is the City at the Intersection of the Borders”. How would you assess the investment cooperation between Belarus and Latvia?

Latvia is in the top ten most important investor countries. Since 2005 the volume of Latvian investment has amounted to more than $700 million. In H1 2011 Latvian investment reached approximately $50 million, of which $40 million was direct investment. Western mindset guarantees effective investing, and our legislation ensures safety of investments. Therefore, no one gets ever disappointed in cooperation. Latvians invest in wood processing, food, textile and light industry. Business can be compared with a river which chooses the most convenient way to flow. For example, Latvian businessmen studied the Customs Union market and concluded that there is a shortage of labels, tags. Therefore, they have recently re-deployed the Liepaepapirs factory to Gomel, which has proved beneficial for the two sides.

- How does the Embassy of Belarus in Latvia facilitate the development of trade and economic ties between our countries?

The Embassy has established the Business Cooperation Council. The council is composed of Belarusian and Latvian delegations. We cooperate closely. In the near future we are planning to open the Council Office in Minsk. The society for the promotion of economic relations with Belarus is headed by former Speaker of the Seimas of the Republic of Latvia Mr. Ceponis, and this suggests that the cooperation with our country is one of Latvia’s foreign economic priorities. Traditionally, the Chambers of Commerce and Industry cooperate closely. In Latvia regional chambers of commerce and industry are very active. Confederations of employers and entrepreneurs maintain close contacts too. All these organizations are focused on their business, but at the same time they coordinate their actions.

- How are things with the sci-tech cooperation?

Scientific facilities of the two countries have preserved the long-standing contacts. In line with the agreement between the State Committee for Science and Technology of the Republic of Belarus and the Education and Science Ministry of the Republic of Latvia, the two countries hold regular contests of sci-tech projects (about 10 of them are running now). Belarusian and Latvian universities have set up the Belarus-Latvia Center for Technology Transfer and the Belarus-Latvia Scientific and Innovative Center for Reinforcing Technologies.

- What about the regional cooperation? According to the information posted on the website of the Grodno Oblast Executive Committee, the trade between Latvia and Grodno Oblast is very modest.

This is not true. This statistics has nothing to do with reality. For example, Grodno Khimvolokno accounts for a bulk of exports to Latvia, however, its parent company, Belneftekhim, is headquartered in Minsk, and therefore the statistics is misplaced. A year ago, Grodno Oblast was home to six joint ventures with Latvia. Their number has grown to 16 over a year, which means that the regional cooperation is gaining momentum.

Many Latvian regions work directly with Belarusian partners. The regions are not as politicized as the center. The government of Latvia, naturally, has to stick to the common EU policy on Belarus, there is no escaping that. But regions are closer to people, their needs. No one in the regions talks or thinks about politics, they are looking for mutually beneficial cooperation opportunities. People want to cooperate and work to the common benefit. This is why we are investing a lot of effort into promoting regional cooperation, twin-town relations between towns and districts.

- Do fairs and forums bring any practical benefits?

Absolutely. Usually at least two or three agreements are signed during a forum. Such events give an opportunity to meet with government officials, businessmen, get information, and upgrade relations. As I have already said, ten new Belarus-Latvia joint ventures were registered in Grodno Oblast over a year – this happened due to the First Regional Belarus-Latvia Business Forum held last year. Our business is trying to expand its presence in Latvia by means of the national exhibition of the Republic of Belarus that is very popular in Riga and regular business forums.

On 21 October Vitebsk will host the Regional Belarus-Latvia Business Forum. As Vitebsk Oblast borders on Daugavpils District, the forum will prove extremely useful for the both parties.

- I wonder when the recently adopted agreement on local border traffic will come into effect. This will stimulate local businessmen to expand ties with Latvian partners.

At present we are compiling lists of residents of the border areas. These lists will be distributed among all the parties. I believe the agreement will be enforced by the end of the year.

]]> http://belarus.bel.biz/?feed=rss2&p=1399 0 http://belarus.bel.biz/?p=1394 http://belarus.bel.biz/?p=1394#comments Wed, 09 Nov 2011 12:28:43 +0000 admin http://belarus.bel.biz/?p=1394 Georgy Plashchinsky, BEL.BIZ

The government of Belarus is trying to pursue a multi-vector policy to take advantage of cooperation with various regional players. The two biggest regional cooperation projects involving Belarus are the Eastern Partnership Initiative and the Customs Union with Kazakhstan and Russia. How can they benefit Belarus?

The Eastern Partnership (EaP) is meant for six countries, including Ukraine, Belarus, Moldova, Georgia, Azerbaijan and Armenia. It was officially launched at the Prague Summit on 7 May 2009 after the Joint Declaration was signed by the partner states and the European Union.

The Customs Union represents another attempt to integrate a number of former Soviet republics within the EurAsEC. It was established by Belarus, Kazakhstan, Russia, Tajikistan, and Kyrgyzstan in 2000. On 6 July 2010, Belarus, Kazakhstan and Russia introduced a new single customs code. The transport and customs control had been relocated to the external border of the Customs Union by 1 July 2011. On 9 December 2010 Moscow hosted a high-level summit where the leaders of Belarus, Kazakhstan and Russia signed a package of agreements to found the Common Economic Space (CES) which is to become operational on 1 January 2012.

While deciding in favor of the Customs Union, Belarus was most interested in the market of the Russian Federation and an opportunity to import hydrocarbons at Russia’s domestic prices. Despite its initial promises, Russia insisted on equal prices for the member states only after the CES becomes fully operational. The misunderstanding grew into yet another gas conflict between Russia and Belarus from 1 to 25 January 2011.

Generally speaking, the Customs Union is an alliance of three transition economies, not WTO members. This fuels fears that the union will foster nothing but protectionism and slow down technological progress in these countries. For example, Belarus’ decision to increase customs duties on cars in a bid to support the Russian car industry triggered a spike in car prices in Belarus and was an indirect cause for an outflow of more than $1 billion from the country in April-June 2011.

The issue of technological weakness becomes even more apparent in the light of benefits Belarus loses. Unlike Russia, Belarus has not concluded multilateral and bilateral agreements on Partnership for Modernization with European countries and, hence, cannot take advantage of their technological advances. This summer Belarus encountered another big disadvantage of its membership in the Customs Union. The country could not impose additional protective measures to block a large-scale export of consumer goods to Russia. It led to a shortage of meat, sugar and other products on the domestic market Belarus. On the other hand, the Customs Union with its 170-million-strong consumer market opens up great opportunities to Belarus.

Moreover, business was granted a 50-day grace on payment of import excises and VAT. The cost of freight customs declarations was reduced by €70. Agreements were signed on coordinated foreign currency policy, operation of financial markets, and macroeconomic policy. For example, the budget deficit must not exceed 3%, inflation must not be above 50% of its lowest in the Customs Union. The question here is how these criteria would be met by the member states, which sanctions would be imposed in case they are not fulfilled and who would impose these sanctions if there are no supranational bodies in the Customs Union.

According to the official data, as of late 2010 Kazakhstan’s export to Russia increased by 38%, to Belarus 2.5 times. Russia’s export to Kazakhstan went up by 25%. The trade between Belarus and Russia rose almost 50%. At the same time, in H1 2011 the EU’s trade with the six EaP countries ran into its record high deficit of €1.3 billion. This means that the EaP countries now export more to the EU than import. Today Ukraine accounts for about 50% of the total EU-EaP trade. Belarus has a trade deficit with the European Union of €2.1 billion. It is obvious that for Belarus the free trade agreement with the EU is not that important as it is for Ukraine who exports more to the European Union.

The European Union wants to use the EaP to create a \”zone of stability, security and prosperity\” along its borders. The goal of the Customs Union is \”to ensure the free movement of goods and promote economic integration\”. Yet, both of these projects have an obvious political agenda. They can be described as \”loyalty programs\” of the European Union and Russia for the post-Soviet Union states. No one has said officially that to participate in one you need to pull off from the other. However, Belarus remains the only country in the region, which is involved in both. When negotiations touch upon serious issues, there is always a question of geopolitical loyalty. This is something we saw when Russia invited Ukraine to join the Customs Union. Back then, in April 2011, the head of the European Commission, Jose Manuel Barroso, stated that Ukraine could not be part of the Customs Union and simultaneously have a free trade zone with the EU. In May, a similar statement was made by President of Russia Dmitry Medvedev.

Unlike Russia, the EaP is not a priority for the European Union at present, and the funds earmarked for the initiative are relatively small. In particular, until 2013, a total of €350 million was allocated for multilateral cooperation projects within the framework of the Eastern Partnership. The money is not enough to implement even those 16 projects put forward jointly by Belarus, Ukraine and Lithuania. Among them is the development of infrastructure of pan-European transport corridors on the territory of Belarus, investment in rail routes, construction of new transboundary power grids and others.

The European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) are ready to support investment projects in the EaP participating countries: the EIB has established a special fund of more than €1.5 billion, and the EBRD plans to allocate about €3.7 billion for energy, telecommunications and infrastructure projects. In addition, on 4 April 2011, Brussels launched the project \”East Invest\” targeting small and medium-sized enterprises. The European Commission and the European Association of Chambers of Commerce and Industry signed a contract worth €8.75 million to implement the project. It brings together 85 trading partners and consulting organizations, most of whom are potential investors from the EU member countries.

In addition, the European Union has a great influence on the IMF and could help the EaP member countries with loans. In particular, on 3 October Deputy Minister of Finance of Belarus Vladimir Amarin made a statement that Belarus seeks up to $7 billion of the new IMF loan. Belarus already received the loan from the Eurasian Economic Community Anticrisis Fund to the amount of $2 billion and signed an agreement with Russia on the long-term loan to the tune of $9 billion for the construction of the nuclear power plant.

The downside of the EaP for Belarus, in the light of its domestic political situation, is political conditionality and weak emphasis on business and economic contacts (a proposal to establish the Eastern Development Forum made by Foreign Minister of Belarus Sergei Martynov has gained no support so far).

Thus, the Customs Union remains a good alternative for Belarus. After all, Belarus has yet not reached the initial objective of joining the Customs Union first thing. This is equal energy prices. But here we should be aware that the Customs Union may remain technologically backward. The development of integration with Russia and Kazakhstan should not contradict the policy of diversification and should not damage the relations with the European Union, including within the framework of the Eastern Partnership. However, the greatest obstacle to the multilateral cooperation in the Eastern Partnership is the political situation in Belarus, which severely limits its maneuverability on the European arena and makes the EaP project not so appealing.

“The Fund can start making carbon copies of its recommendations made many years ago”, said Tatiana Marinich, Director of BEL.BIZ Center for Business Communications and a Belarusian economist, commenting on possible outcomes of the IMF Expert Mission held in Belarus on October 5-17.

The Belarusian authorities call for financial aid from the IMF – a relevant  request, though submitted in spring of 2011, is still not  in the works; along with that,  even the expected loan amount has not been agreed upon.  According to Belarusian independent experts, the official  Minsk application will not be considered untill the Fund’s management       gets a positive report from the mission about compliance by the Belarusian authorities  on the IMF recommendations.

The IMF expects Belarus to carry out structural reforms, which they have layed out many years ago and against which numerous  stand-by program tranches (2009-2010) were basically provided, totaling USD 3.46 bin.

Privatization, monetary policy tightening including reduction of the inflation rate, drop in public expenses, higher level of utility cost recovery by households, etc.” Were among those recommendations needing to be implemented – said Tatyana Marinich – “Instead Belarus consumed all allotments”.

The expert believes that the Belarusian authorities cannot expect to acquire the Fund’s means in a roundabout way, without meeting relevant recommendations. ”Have you ever seen an institutional lender that would finance a non-compliant borrower?” – noted the economist.

“Can anyone be satisfied with the Fund’s reserved comments on Belarus’ awkward attempts to dig itself out of the  hole it has made for itself?  Belarus is certainly right to make a stab at eliminating multiple exchange rates,  but  who had established them?  Especially with Belarus’ record of multiple exchange rates in its economic history.  It is certainly nice to have kerb trading at the Belarusian Currency and Stock Exchange, but why was it done so late?  What is going on at the stock exchange is more of a hoax.  Why is the stock market undeveloped?  Why don’t we have a developed private capital market?  Why do we have to move backward all the time?” – explained Tatyana Marinich.

“The Fund can start making carbon copies of its recommendations made years ago”, – continued Ms. Marinich.  In her opinion, the Belarusian authorities clearly see the essence of the IMF recommendations, but they are not in a hurry to implement them, pursuing objectives other than securing financial aid from the Fund.

“The Belarusian leaders do realize all that.  So, behind the Government’s rhetoric emphasizing billion-dollar IMF loans,  there is a hope for negotiations with other possible donors  for the “flourishing” Belarusian economic model, rather than the idea of gaining loans from the IMF”,  stated Tatyana Marinich.

The Belarusian expert believes that the socio-economic problems suffered by the country,  apparently raise the question of the quality of previous decisions and current actions.  “The fewer the external sponsors, the more often we hear muffled voices in the Government about potential privatization.   We can only hope that common sense will win in the Government.  That will put Belarus in an admittedly strong position in its negotiations with the IMF or any other creditor”, summarized the expert.

As reported by the REGNUM News Agency, on October 17 Chris Jarvis, head of the IMF mission in Belarus (October 5-17),   said based on the mission outcomes, that the Fund did not discuss the specific loan amount with the officials in      Minsk, and the amounts of financial aid to Belarus from the IMF, as declared before, represents only  an assessment of the national economy needs.   Before  May 31, the Belarusian authorities applied to the IMF for a $3.5-8 bin stabilization loan, but no positive answer has been received.

We would like to remind you that Belarus has been undergoing a currency crisis.  The national authorities limited corporate and private foreign currency trade.  At the end of August Alexander Lukashenka had declared  his  intention to eliminate multiple exchange rates of the Belarusian Ruble within one month.  Shortly after that, on September 14, the BCSE kerb session unveiled an exchange rate of the Belarusian Ruble different to the exchange rate of the Belarus National Bank.   At present Belarus maintains multiple rates with the key indicators of the BYR value still being pegged at  the BCSE main session, where foreign currency is traded  for oil, gas, electricity and medicine importers, as well as the kerb exchange session, where banks acquire foreign currency for the majority of market operators.

We would also like to remind you that Nadezhda Ermakova, Chairperson of the Board of the Belarus National Bank, made a statement on October 3 that “we need another month, possibly, month and a half, to see an equilibrium exchange rate” of the belarusian rubble, after which the BCSE kerb session will be terminated “.

In the USA, being a business person is prestigious.  The overwhelming majority of American students would like to start their own business and they would not prefer to work for the Government.  Working for the Government provides for a steady income and high living standards. However, you cannot really become a millionaire by working for the Government.

In the USA, a young person starting a business has a very good chance to become a millionaire, provided that he or she would work 24 hours 7 days a week.  It is a mandatory rule for all who manage their business and do not work for hire.

Besides, confidence in one’s abilities helps one bravely take risks that any business requires.  The mentality of success underlines everything.  They don’t teach it – it has, probably, turned into a hereditary genetic code of the American people.

However, it does not mean that all and any businesses in the USA will be successful.  This would be far from the truth.  In the first two years, one half of startups will go bankrupt.  This is exactly why the bankruptcy process is so well designed there.  It is a natural process related with a certain stages of the least strongest businesses.  What does it mean to be a bankrupt in the USA?  Absolutely nothing unless you do not get up again! You failed once; therefore, you had chosen a wrong business development strategy or had not fully examined the market.  No problem, and at times it’s even useful. One can learn from lessons and failure is sometimes the best teacher!  An American business would grasp that principle, relying on experience gained through trial and error.

What is the root of such an urge to succeed?

The entire educational system in the USA, which is exposed to vehement criticism these days, is built so that it allows a person to discover his or her gifts and then focus them to attaining their goals.  The American e-Bay company even incorporated this idea in its corporate logo “Everyone Can Change the World”!

In the US there are unique examples of educational methods, when young people are immediately immerced into a business environment since school age: once a week they would work in offices of the local companies.  In the USA one can work for a certain number of days a week from the age of 14, this privilege is enjoyed by many teenagers, turning an honest penny at McDonald’s or Starbucks.  It enables them to see, since their earliest days how companies operate. They learn how to deal with clients, get along with colleagues and develop their business sense.

I was privileged to speak with teachers of one of such school and I realized that it meant something more than just a job for them.  It was a mission to which they dedicated their lives.  Such a commitment and sincere desire to nurture the very best in the students was surprising to me…

Students of such an educational institution are taught how to shake a colleague’s hand, what to say during the first meeting and how to sell oneself.  These are not trifling things.  The school has no uniform or tardy bells.  The headmaster explains: “It’s because we are raising future businesspeople, not factory workers!”

Each country has its own competitive edge.  Brazil has the best soccer players because they teach this sport since infancy, the entire country is focused on developing the children’s talents. It is obvious for me that the USA is the nation of entrepreneurs.

The entrepreneurial spirit is characterized by people having a creative set of mind, capable of developing something new.   However, unlike innovators, entrepreneurs both dare to express an idea and know how to turn it into reality.

When you wake up to an understanding that in the USA, where everything is focused on raising the entrepreneurial spirit, and where only 7% of those people will go into business, you start understanding, what a great break-through in mindset is needed here so that at least 5% of Belarusians would  have their own business; then having the entire nation honor them as the most successful people in the country.