Belarus

Belarus has seen little structural reform since 1995, when President LUKASHENKO launched the country on the path of "market socialism". In keeping with this policy, LUKASHENKO re-imposed administrative controls over prices and currency exchange rates and expanded the state's right to intervene in the management of private enterprise. This produced a climate hostile to private business, inhibiting domestic and foreign investment. The Government of Belarus has artificially revived economic output since mid-1996 by pursuing a policy of rapid credit expansion. In a vain attempt to keep the rapidly rising inflation in check, the government placed strict price controls on food and consumer products, which resulted in food shortages. Long lines for dairy products, chicken, and pork became common in the closing months of 1998. With the goal of slowing down the devaluation of the Belarusian ruble, LUKASHENKO in 1997 introduced a new, complex system of legal buying/selling hard currencies. The new "command" system proved to be totally unworkable and resulted in galloping devaluation. In addition to the burdens imposed on businesses by high inflation and an artificial currency regime, businesses have also been subject to pressure on the part of central and local governments, e.g., arbitrary changes in regulations, numerous rigorous inspections, and retroactive application of new business regulations prohibiting practices that had been legal. A further economic problem is the sizable trade deficit. SOURCE: CIA FACTBOOK

Comment:

Belarus represents a difficult region to conduct business in. With the exception of manufactured goods, which the country seeks to export, collaborative commercial projects are difficult to manage and are unpredictable in outcome. There are considerable opportunities at the market and manufacturing level, the agreement and financial aspects of these transactions tend to be time consuming labyrinths however. A country in these circumstances tends to have a weak currency and offers a commercial opportunity as a managed exporter in niche markets. Belarus deserves a watching brief at the very least as products generated in the country may be very attractive due to price, although they may be unattractive due to design. Part-finished products may be an alternative. It is often easier to address Belarus via an intermediary operation in one of the adjacent countries but it may be necessary to take an active interest in the finishing, packing, or processing aspects of products emanating from Belarus, as these areas are the weakest. The real opportunities in Belarus will occur when the controlled economy is finally recognised as unworkable. In the meantime, USSR type relationship approaches are indicated, also involving personal contacts. We wait.