Most attractive investment industries in Belarus
1
Most attractive investment industries The structure of Belarusian economy has changed significantly during the past year. These changes highlighted industries that may be considered as attractive in the short term.
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IT and Telecommunications industry
2
Export-oriented industries
3
Greenfield projects: China-Belarus Industrial Park
IT-industry
3
Most attractive investment industries WHY?
IT-industry
Đ?) IT services industry is one of the fastest growing industries in the Belarusian economy 1500
Belarusian IT services exports amounted to USD 818 mn in 2015. 1000 IT-services output in Belarus amounted to USD 990 mn in 2014. IT-services output has increased with a CAGR of 30 % in the past 5 500 years. 11 software development companies in Belarus are among 0 500 world’s largest software developers.
Exports
Domestic market
175
276
330
300
160
218
274
408
552
690
2009
2010
2011
2012
2013
2014
159
199
B) The Belarusian IT-industry is becoming increasingly involved in M&A transactions Company
MSQRD Apalon Studio Softeq Developmen SoftClub Viber Maps.me Day 1 Studios Viaden Big World Thoughtcorp
Buy-side
Facebook Mindspark Interactive Network, Inc. SK Hynix Inc. Zubr Capital Rakuten Inc. Mail.Ru Group Wargaming.net Playtech Wargaming.net EPAM Systems
INVESTMENT AREA OF INTEREST FOR: Investment funds (Russian and Western), international financial institutions (IFC, etc.), strategic investors, large transnational companies, venture funds, business angels.
Telecommunications industry
5
Most attractive investment industries
TELECOMMUNICATIONS INDUSTRY WHY?
А) Revolutionary changes on a global scale and positive trends in the future development According to the ITU Report, Belarus was ranked 38th retaining the leadership position among the CIS countries. Belarus is also characterized as a country with high level of Internet access and ranked 25th in the list of countries ranked by the number of high-speed Internet connections.
B) New technology investment growth and development of new segments in Telecom industry Construction and organization of the modern DATA CENTR in Belarus: 4 DATA CENTR have been already put into operation or will be put in the near future, while investments amounted to USD 50-60 mn.
Major infrastructure projects: › Deployment of new telecommunications infrastructure (communications, data processing centers, etc.) – BeCloud (more than USD 100 mn) › xPON technology infrastructure development (Beltelecom, more than USD 100 mn), LTE (BeCloud, more than USD 20 mn)
INVESTMENT AREA OF INTEREST FOR: International financial institutions (IFC, etc.), strategic foreign investors (Russian and Western) that extend tied credit to state and private enterprises
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Export-oriented industries
7
Most attractive investment industries
EXPORT-ORIENTED INDUSTRIES › Furniture and woodwork
› Linen and goods made from linen
› Leather and goods made from leather
› Medical equipment
› Packaging made from wood and other materials
› Some other “export-oriented” industries
WHY? › Some export goods and services stood out from the pack in a difficult time for foreign trade. › To a large extent, exports were made up of the production of industries based on local resources and country’s potential. Major products exported from Belarus to non-CIS countries, mn USD
The fastest growing export goods from Belarus to nonCIS countries, thou USA
2012 2013 2014 Timber (unprocessed, sawn and splitted)
164,1 195,6 249,8
Crude rapeseed oil and rapeseed meal and other rapeseed waste products
90,8 137,4 135,0
Chip board, OSB and similar boards**
Fuel wood; wood in chips or particles
43,5
56,0
76,7
Medium-density fibreboards
Alcoholature, liquer and other alcoholic beverages
17,7
21,0
44,5
Plywood
26,1
31,7
42,8
Tannage and leather treated after tanning
24,9
35,9
41,0
Packaging made from wood and other woodworks
38,4
34,1
40,4
Unspun linen and linen cloth
29,7
34,5
37,4
Chip board, OSB and similar boards
0,0
6,7
27,5
GOODS AND SERVICES
Cooked or canned cucumbers Quartz watches Multilayer floor boards Sanitary products Turning and metal-cutting machines Projected signs, panels and similar products Plastic construction parts (fittings)
2012
2013
2014
2014/2012 %
0,0
6,7
27,5
>1000%
0,0
0,0
8,1
>1000%
0,0
4,5
4,5
>1000%
0,0
0,1
1,0
>1000%
0,0
0,4
1,0
>1000%
0,0
0,6
1,5
>1000%
0,0
3,3
1,5
>1000%
0,1
0,5
4,4
>1000%
0,1
1,0
1,2
х10,2
Agriculture
9
Most attractive investment industries
AGRICULTURE
WHY?
› A significant portion of mineral fertilizers is produced in Belarus, and supplied to agricultural enterprises at subsidized prices. › Agricultural machinery is also produced in Belarus and supplied on credit on easy terms in line with the Programme for State Support of Machine-Building Enterprises.
Share in exports, %
13% of the labor force working in agriculture
1,30%
1,40% 1,20%
0,90%
1,00% 0,80% 0,60%
0,60%
0,50%
0,40% 0,20% 0,00% 2011
Share in the GDP, % 10,00%
8,30%
14 000
8,50% 7%
8,00%
7,70%
6,70%
12 000 10 000
9 925,7
2012
2013
Output value, mn USD 11 553,1
11 790,1
2014
12 787,7 8 409,3
8 000
6,00%
6 000
4,00%
4 000
2,00%
2 000 0
0,00% 2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
The establishment of the Customs Union and the Common Economic Space between Belarus, Russia and Kazakhstan, according to which Belarus should follow the rules of the WTO while providing agricultural subsidies, may serve as an external factor for more rapid and fundamental agricultural reforms.
Food industry
11
Most attractive investment industries
FOOD INDUSTRY
WHY? › 1,4 % of world milk production and 5 % of world exports of dairy products is accounted for Belarus. › According to the International Dairy Federation (IDF), Belarus is among the major world’s dairy exporters (excluding intra-EU trade). The country was ranked 5th in the hard cheese segment (5,5 % of the global exports), 5th in the skim milk powder segment (3,2 %), 6th in whole milk powder segment (1,2 %). › The main and the more important investment projects, which had begun in 2005 and ended in 2015, promoted almost complete modernization of this industry.
1112
5,5% of the labor
enterprises
force working in the food industry
Share in exports, % 13,3%
14,0% 12,0% 10,0%
8,9%
Output value, bn USD 13,1%
9,3%
20 15
8,0%
13,6
15,1
15,6
10,9
10,8
10
6,0% 4,0%
5
2,0% 0,0%
0 2011
2012
2013
2014
2011
2012
2013
2014
2015
Woodworking industry
13
Most attractive investment industries
WOODWORKING INDUSTRY
WHY? › Belarus is rich in wood resources, which is the basis for the woodworking industry development. › An ambitious renewal programme, that began in 2007 and focuses on the largest woodworking enterprises, was almost completed in 2015. The Programme, which was to cost a total of EUR 1 bn, had been funded by Belarusian banks and supported by the government.
2207
1,2% of the labor
enterprises
force working in the woodworking industry
Share in exports, % 4,0% 3,0%
3,2% 2,3%
Output value, mn USD 3,6%
1400,0
1165,4
1200,0 1000,0
2,2%
800,0
2,0%
818,4
1291,4
945,7
893,0
600,0 400,0
1,0%
200,0
0,0% 2011
2012
2013
2014
0,0 2011
2012
2013
2014
2015
Petroleum refining industry
15
Most attractive investment industries
PETROLEUM REFINING INDUSTRY WHY?
› Petroleum refining represents Belarusian major exports, which is accounted for USD 10,6 bn of the total export revenues. › The refining depth in Belarus accounts for 75 %. › Production facilities of Belarusian petroleum refining enterprises need to be constantly upgraded in order to maintain competitiveness in global markets. › Production capacity of petroleum refining enterprises amounts to 23 mn tons.
Share in exports, % 33,0% 32,0%
Output value, mn USD 20 000,0
32,1% 31,2%
15 000,0
31,0% 29,3%
30,0% 29,0%
28,1%
28,0%
13 121,5
15 120,6 10 681,0
10 679,6
10 000,0
7 386,1
5 000,0
27,0% 26,0%
0,0 2011
2012
2013
2014
2011
2012
2013
2014
2015
Chemical industry
17
Most attractive investment industries
CHEMICAL INDUSTRY
WHY?
› The chemical industry is one of the largest industries in Belarus, which accounts for more than 10 % of industrial production (USD 6,5 bn in 2014). › JSC “Belaruskali” is one of world’s leading producers of potash fertilizers accounting for more than 1/7 of the world’s potash production. › Chemical fiber and yarn production is well-developed in Belarus. The country is a monopolistic producer of some chemical products (polyester fibers and yarns, acrylic fibers and viscose cord) in CIS markets.
538 enterprises
2% of the labor
force working in the chemical industry
Share in exports, % 20,0% 15,9%
Output value, mn USD 10 000,00
16,5%
8 000,00
15,0%
11,8% 9,0%
10,0%
8 709,62 7 119,90
6 483,61 5 186,57
6 000,00
5159,2
4 000,00
5,0%
2 000,00
0,0%
0,00 2011
2012
2013
2014
2011
2012
2013
2014
2015
Construction materials industry
19
Most attractive investment industries
CONSTRUCTION MATERIALS INDUSTRY WHY? › The construction materials industry offers to invest in the adoption of energy efficiency technologies, waste utilization, more high value-added products manufacturing, and establishment of vertically integrated business models in order to lower costs and make cost management more effective.
1284
2% of the labor
enterprises
force working in the construction materials industry
Share in exports, % 2,5% 2,0% 1,5%
2,2% 1,5%
Output value, bn USD 4
2,2%
3
1,6%
3,25
3,72
3,65
2,62 1,96
2
1,0%
1
0,5% 0,0%
0 2011
2012
2013
2014
2011
2012
2013
2014
2015
Main enterprises in the industry:
OJSC “Krasnoselskstroymaterialy” – concrete producer OJSC “Krichevcementnoshifer”– concrete producer OJSC “Belarusian Cement Plant”– concrete producer
RUME “Granit” – the largest crushed stone producer OJSC “Keramin”- the largest ceramic tiles and ceramics producer OJSC “Beryozastroymaterialy” – ceramic tiles producer OJSC “Gomelsteklo"- window glass producer
Machinery and equipment industry
21
Most attractive investment industries
MACHINERY AND EQUIPMENT INDUSTRY WHY? › Belarus has a world-leading market position within specialized machinery. Belarus accounts for 30 % of the global dump truck market (OJSC “BELAZ”) and 17 % of the global tractor market (OJSC “MTW”). › Belarusian machinery and equipment industry is presented mainly by state-owned enterprises such as MTW (tractor manufacturer), MAZ (autotractor machinery, bus, trolleybus manufacturer), Gomselmash, Lidselmash (combine harvester, reaping machine, threshing machine manufacturers), as well as specialized machinery manufacturers such as BELAZ (mining dump truck manufacturer), AMKODOR (construction and forestry machinery manufacturer), MAZ (truck, bus and tow truck manufacturer), MZKT (truck, truck chassis frame, truck-trailer, semi-trailer truck, specialized machinery manufacturer).
1329
4,9% of the labor
enterprises
force working in the machinery and equipment industry
Share in exports, % 5,6%
6,0% 5,0%
Output value, mn USD
4,5%
8000 4,6%
4,3%
4,0%
6000
6880
6555 4966
4887
4000
3,0% 2,0%
2937
2000
1,0%
0
0,0% 2011
2012
2013
2014
2011
2012
2013
2014
2015
Rubber and plastics industry
23
Most attractive investment industries
RUBBER AND PLASTICS INDUSTRY WHY? › The rubber and plastics industry of Belarus is based on the well-established petroleum refining industry of the country and in particular on oil refineries. › OJSC “Belshina”, a truck and car tire manufacturer, is the largest company generating about 25-30 % of the total revenue of this industry.
1428
1,4% of the labor
enterprises
force working in the rubber and plastics industry
Share in exports, % 6,0% 5,0% 4,0%
4,9% 3,8%
4,0%
Output value, mn USD 4,3%
2 500,0 1 500,0
2,0%
1 000,0
1,0%
500,0
0,0% 2012
2 727,2 2 277,6
2 237,8
2 000,0
3,0%
2011
2 702,8
3 000,0
2013
2014
1 424,1
0,0 2011
2012
2013
2014
2015
Electrical and optical equipment industry
25
Most attractive investment industries
ELECTRICAL AND OPTICAL EQUIPMENT INDUSTRY WHY? › Belarus is among top 20 countries in the world ranked by Science Citation Index Expanded in photonics, and the country is the second highest after Canada by Citation Index in these articles. › A considerable body of knowledge and know-how has been accumulated in this industry. The launching of Belarusian Earth remote sensing satellite, the establishment of the independent Belarusian Earth remote sensing system, the development of the supercomputer program “SKIF-GRID” and next-generation laser technologies are among the biggest achievements in recent years.
1305
2,3% of the labor
enterprises
force working in the electrical and optical equipment industry industry
Share in exports, % 3,8%
3
3,7%
2,5
3,6%
3,4%
3,4% 3,2%
Output value, bn USD
3,1%
2,59
2,64
2,19
2,3
2
1,55
1,5
3,1%
1
3,0%
0,5 0
2,8% 2011
2012
2013
2014
2011
2012
2013
2014
2015
Textile and apparel industry
27
Most attractive investment industries
TEXTILE AND APPAREL INDUSTRY WHY? › The largest companies were not privatized and are now operating under state supervision. › State-owned enterprises have created favorable conditions in textile and apparel industry for the development of small and medium private enterprises, which benefit from existing skilled workforce, established traditions and access to essential infrastructure and resources.
3,2% of the labor
1938
force working in the textile and apparel industry
enterprises
Share in exports, % 4,0%
3,8%
3,5%
Output value, mn USD 3,6%
3,0%
3,0%
2 500,0 2 000,0
1 898,2
2 142,4
2 184,3
1 984,2 1 270,1
1 500,0
2,0%
1 000,0
1,0%
500,0
0,0% 2011
2012
2013
2014
0,0 2011
2012
2013
2014
2015
Transportation and logistics industry
29
Most attractive investment industries
TRANSPORTATION AND LOGISTICS INDUSTRY WHY? › Several lending projects have been initiated in collaboration with the World Bank and a number of other Chinese banks. › The most promising projects are the construction of high speed railway and high-quality arterial road, the development of air transport infrastructure elements and logistics as well as the construction of the second ring road in Minsk. › Over the past few years, the authorities have launched several public-private partnership (PPP) projects promoting foreign investment. The growing number of PPP projects in transportation industry is expected in the future. › The Silk Road project will become a growth engine for the transportation industry.
14057
9,5% of the labor
enterprises
force working in the transportation and logistics industry
Share in exports, % 8,5
8,3 7,9
8 7,5
7,3
7,5
7,7
7 6,5 2011
2012
2013
2014
2015
Ecology, natural resource management and energy efficiency
31
Most attractive investment industries
ECOLOGY, NATURAL RESOURCE MANAGEMENT AND ENERGY EFFICIENCY WHY? А) Government support ›
The development of Belarusian energy system (Comprehensive programs including investment component)
›
Promotion of RES development (incentive power tariffs, connection to electricity grid)
B) Own resources ›
Modern technologies, which produce energy or other resources, are mainly based on local resources.
C) International grants and programs ›
Such international organizations as IBRD, EDP, EBRD, NIB, and NEFCO are funding the ecology, natural resource management, and energetics and energy efficiency projects. Total investments of these organizations amounted to more than USD 1 bn over the past 10 years. The existing experience and successful projects are beneficial for decision-making in the future.
›
International grants and programs are focused on projects differentiated according to types and budget sizes.
INVESTMENT AREA OF INTEREST FOR: › Organizations funding the projects of state-owned enterprises that encourage long-term economic and social stability (IBRD, EDP, EFSD) › Organizations extending untied credit to state and private enterprises (NIB, BELSEFF, NEFCO) › Organizations providing grants (Global Environment Fund, NDEP (Northern Dimension Environmental Partnership), SIDA (Swedish International Development Cooperation Agency))
China-Belarus industrial park
CHINA-BELARUS INDUSTRIAL PARK WHY? 1) Government support for the project › Monitoring project implementation at the summit level of the governments of both countries; › Park residents are provided with a wide range of tax and custom preferences › Park residents receive plots of land on a 99-year lease or in private ownership › The infrastructure is funded by the government.
2)
Favorable location of the Park
› Favorable geographical location of Belarus on the crossroads of the most important trade routes and proximity to the EU market; › Close proximity to the country’s capital and Minsk National Airport, well-developed transport infrastructure, a 500-km distance to the sea (Lithuania).
3) Access to a huge EAEU market › Duty-free Importation of manufactured goods to the EAEU market; › Free movement of goods, services, capital and labor within the EAEU; › Single market with population of over 180 mn people.
China-Belarus industrial park INVESTMENT AREA OF INTEREST FOR: Companies planning to implement investment project in one of the priority Park industries with the total amount of the project no less than USD 5 mn
PRIORITY INDUSTRIES: › machinery
› electronics and electrical equipment
› medical equipment and materials
› new technologies
› biotechnologies, pharmaceutics, fine chemistry
› Optics and other industries
PARK RESIDENTS:
China-Belarus industrial park. Major tax and custom preferences: › Exemption from all corporate taxes for 10 years by formula 10+10 and reduction of the effective tax rate by 50 % for the next 10 years of activity in the Park: › Income tax; › property tax; › land tax. › Exemption from customs duties and VAT on goods imported to Belarus for use in investment projects implementation in the Park › Regime of a free customs zone › Reduction in individual income tax rate › Benefits for attracted foreign labor force › In full VAT deduction paid at acquisition of goods (works, services) used for design, building and equipping of buildings and facilities in the Park › Exemption from tax on dividend income accrued for the founders for 5 years.
Welcome to Belarus!
UNITER Investment Company www.uniter.by
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