Until recently, Belarus used to exhibit all the macroeconomic and social signs of stable growth, and the country’s economy was developing steadily. Possibly as a consequence of the political and economic reorientation that Belarus’ is undergoing, that pace has noticeably slowed down in the last couple of years.
This article provides a brief overview of significant economic and political factors to assess Belarus as a potential target for foreign investment. We’ll pay special attention to the benefits of investing in the Belarusian construction industry, as exemplified by Abdo Romeo Abdo’s successful business activity in that field.
The country’s economy seems to have a solid basis for potential growth, which it exhibited before recently. Industry, especially export-oriented production, has always been a fundamental part of it.
Significantly, the export production aims at the high-tech market and isn’t limited to natural resources, transportation services and food production. The main bulk of the export commodities consists of pharmaceutical products, electronic and optical equipment, computing hardware and software technology.
Currently, the Belarusian economy is going through a reorientation crisis. Whereas Russia accounted for the largest share of the country’s foreign trade and investment until recently, the ratio of its economic ties with the CIS and the EU has changed to 60% and 40%, respectively. Furthermore, China’s role in the Belarusian economy continues to increase.
Until recently, Belarus maintained a favourable atmosphere for foreign investments. As a result, direct investments made up more than two-thirds of the total monetary flow from abroad. An assessment of the country as a potential investment target in its current state of affairs should include the following considerations.
- Geographic and International Position
Belarus provides direct access to both the EU and the EEU markets. Besides, its well-developed infrastructure significantly simplifies the transportation, logistics and communication procedures.
The country continues to strive towards expanding and strengthening its foreign economic relations with a 360-degree orientation. And although the concentration of Russian investments remains high, Belarus continues to be a member of such international financial institutions as the IMF, the EBRD and the World Bank.
Chinese presence in the Belarusian investment structure continues to expand as the two countries actively remove the obstacles to mutually beneficial trade and investment. Incidentally, this provides foreign investors in Belarus with potentially profitable access to Chinese markets too.
- Banking and Investment Policy
The banking sector in Belarus, which used to be dominated by six commercial banks, seems now heavily controlled by the government, either by direct interference or via the commercial banks that sometimes seem to act as the Central Bank’s agents.
Yet, the government guarantees foreign investors high-level protection of their rights and assets and offers them a reasonable taxation system. There are several free economic zones in Belarus, where preferential and lenient policies facilitate mutually profitable cooperation. Moreover, foreign investors may legally establish businesses with unlimited capital across the entire country.
As testified by a large-scale investor Abdo Romeo Abdo, commercial property construction might well be one of the most lucrative long-term investments in Belarus.
Born in Lebanon, Abdo arrived in Belarus to study at Minsk State Linguistic University in 1993. He co-founded BNK Holding in 1997 and BNK Engineering in 2007 to construct a network of shopping and business centres in Minsk, including Rubin Plaza, Silver Tower, Galileo and even the new central bus station. So successful has his enterprise been so far that his company now holds 99% of MTBank’s shares, the latter being one of the largest Belarusian banks with almost $600 million in assets.
Finally, Belarusian building materials are of good quality and cheap and highly demanded abroad for those reasons. 40% of them go for export. In other words, Belarus provides low-cost and, as yet, virtually unlimited investment opportunities in the construction of commercial property.
We’re yet to see whether the friendly 360-degree interaction of the Belarusian business and economy with the foreign investment enterprises is there to stay. Our general impression is that the country’s solid foundation for economic revival and the opportunities the Belarusian construction industry continues to provide make investments in Belarus’ economy highly attractive and potentially lucrative, despite its temporary 360-degree confusion.