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New Beginnings in Belarus

Jonathan Ortmans, President, Public Forum Institute

As a lead up to the March 2012 Global Entrepreneurship Congress, I will spotlight here a handful of the 120 nations gathering in Liverpool to develop the best entrepreneurial ecosystems. Today we look at Belarus.

According to a recent private research survey, 54% of entrepreneurs answered yes to the question “Have you ever thought about leaving Belarus?” It is not hard to imagine the reasons. Belarus suffers from systemic weaknesses, such as financial instability and corruption targeted toward business in the forms of threats of fines and confiscations.

In an effort to avoid losing the next generation of entrepreneurs, authorities have been discussing some important policy steps. The Belarus Government started by declaring a “2011 a Year of Entrepreneurship.”

“We are indeed interested in developing entrepreneurship, increasing the share of private property in our economy,” said Belarusian President Alexander Lukashenko in an address to the parliament and nation. “The recognition of the unconditional value and immunity of private property and solicitous attitude to it as a source of national welfare must become an essential component of the modern economic policy of our country”.

Lukashenko was referring to the significant state monopoly on the markets, but the intent seems to be there to change the situation. In December 2010, the President signed Directive No. 4, which set an ambitious goal—make Belarus one of 30 top countries for entrepreneurs.

The Directive, titled “On the Development of Entrepreneurial Initiative and Encouraging Business Activity in the Republic of Belarus,” is in essence a roadmap of measures aimed to liberalize entrepreneurial initiatives. It includes nine sections, each of them comprising a set of requirements:
  1. Ensure the continued development of fair competition among businesses, regardless of ownership.
  2. Create conditions for unimpeded entrepreneurship.
  3. Eliminate excessive administrative barriers as governmental bodies and legal entities and citizens interact.
  4. Complete the harmonization of the Belarus taxation system with those operating in European countries. Pass tax legislation to encourage the bona fide exercise of tax obligations and entrepreneurial initiative.
  5. Focus controls (supervisory activities) on preventive measures to reduce crime in business activities.
  6. Improve infrastructure and funding of small businesses to enhance entrepreneurship and provide efficient business support (legal, logistical and financial).
  7. Eliminate excessive regulations in the labor market.
  8. Create a legal base encouraging the development of public-private partnerships in the Republic of Belarus.
  9. Ensure unambiguous legal regulations and stable legislation regulating entrepreneurship.
  10. The Directive also provides safeguards for private property, such that an entrepreneur’s property cannot be impounded by any means. Of course, for all these measures, the devil will be in the details.

    As delegates to the GEC in March know, economies around the world are increasingly firing up their entrepreneurs not from such top-down reforms but rather from bottom-up efforts at seeding informal startup communities. Indeed, Belarus understands this too and is one of 123 countries participating in Global Entrepreneurship Week (GEW) and offering locally initiated contests, mentor activities, startup events, trainings and conferences.

    “It is time for Belarus to join the world’s leading communities of entrepreneurs,” stated Tatyana Marinich, who runs GEW / Belarus. Through GEW events and coverage, Marinich is focused on increasing awareness of an entrepreneurial culture and mindset in an effort to contribute toward real results and initiatives.

    One encouraging step is the announcement by Minister of Economy Nikolai Snopkov of an initiative to include "Entrepreneurship Fundamentals" as a subject in schools hoping to develop the enterprising spirit and thrift among the young. The government has also formed a Council for Entrepreneurship to create a forum for the business community to communicate with authorities on improving the business environment. I am told Council activity has already resulted in several changes including some tax simplification reducing 18 business taxes to four and an improved value-added tax (VAT) regime.

    Such steps are welcome and we hope Belarus will come to Liverpool with an open mind for more ideas. It will be the informal networks and ideas that in their messy way will help Belarus adopt the right legal reforms and emerge into a more innovative and entrepreneurial society.

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