Belarus: Strategic Investment Opportunities For Global Investors

Belarus is a country that is open to foreign investment and offers favourable business conditions. The country boasts a strategic geographical location, direct access to the markets of the ЕЕU, a well-developed infrastructure, progressive investment legislation, an attractive investment climate, and a highly skilled workforce. All sectors of the Belarus economy are open to foreign investment, except for the production of weapons, narcotics, and toxic substances. The government provides support to investors in the form of guarantees, benefits, and preferences, and there are also privatisation opportunities. Belarus has six free economic zones, a simplified taxation system for foreign-owned businesses, and preferential investment regimes and terms of taxation. The country also has a decent quality of life and competitive taxation conditions.

Favourable business conditions

Belarus has a range of favourable business conditions that make it an attractive prospect for investors. Here are some of the key advantages:

• Strategic geographical location: Belarus is situated between the markets of the EU and the CIS, providing efficient access to high-capacity and fast-growing target markets.
• Direct market access: Belarus offers direct access to the ЕЕU markets (Belarus, Russia, Kazakhstan, Armenia, Kyrgyzstan) and the three Common Economic Space (CES) countries (Armenia, Russia, Kazakhstan, Kyrgyzstan).
• Well-developed infrastructure: The country boasts a robust transport, logistics, and communications network, including highways, railways, oil and gas pipelines.
• Progressive investment legislation: Belarus has progressive investment laws that protect investors' rights and provide an attractive investment climate and favourable taxation policies.
• Government support: The Belarusian government offers guarantees, benefits, and preferences to investors, including six free economic zones with preferential tax regimes.
• Privatisation opportunities: Belarus presents unique privatisation opportunities, with the government selectively privatising large national companies to increase efficiency and international competitiveness.
• Highly skilled workforce: 90% of the population has a higher, secondary, or basic education, and the country has a well-developed system of dedicated training.
• Good quality of life: Belarus ranks highly in terms of decent living standards, with a unique eco-environment and a well-developed social infrastructure.
• Ease of doing business: According to the World Bank's Doing Business 2014 research, Belarus ranked 63rd out of 189 countries for ease of doing business, 3rd for property registration, and 15th for starting a business.
• Free economic zones (FEZ): Investors in these zones benefit from simplified taxation, preferential investment regimes, and favourable terms of taxation, such as 0% profit tax for five years and 10% VAT in the free economic zones.
• High-Tech Park (HTP): The HTP offers a "virtual" legal regime with beneficial tax preferences, including exemptions from VAT and corporate profit tax, and extended preferences until 2049.
• Investment incentives: The Belarusian government offers various incentives and programs for foreign direct investment (FDI), including land allocation, VAT deductions, exemption from import tariffs, and support for employment of foreign nationals.

Progressive investment legislation

Belarus has a broad range of preferential investment regimes, from stimulating high-tech and export-oriented industries to regional development. The country's progressive investment legislation includes the following:

Free Economic Zones (FEZ)

Belarus has six free economic zones, which offer simplified taxation and regulatory systems for businesses. These zones have helped attract foreign investment, boost foreign economic activity, and create new jobs. The tax benefits for businesses in these zones include exemptions from corporate profit tax, real estate tax, land tax, and rent on government-owned land.

High-Tech Park (HTP)

The High-Tech Park is a "virtual" legal regime that covers the entire territory of Belarus. It offers residents beneficial tax preferences, including exemptions from VAT and corporate profit tax on the sale of goods or services. The HTP also provides exemptions from customs duties and VAT on certain equipment imported for investment projects.

Special Economic Zones

Special economic zones, such as the China-Belarus Industrial Park Great Stone, offer residents certain exemptions on income tax, real estate and land taxes, and dividend income. Residents also benefit from preferential entry/exit programs and the right to import goods under a preferential customs regime.

Investment Contracts and Agreements

Investors can sign investment agreements with the Republic of Belarus, which provide favorable conditions and preferences for construction and manufacturing in exchange for investing a certain amount of money within a specified timeframe. These agreements can offer additional incentives and benefits not expressly provided for in legislation.

Investor Rights and Protection

Belarusian law provides for the protection of investors' rights and interests in court and other bodies. Investors are equal before the law and enjoy their rights without discrimination. The country also has anti-corruption legislation and is a party to several international anti-corruption conventions.

Government Support and Guarantees

The Belarusian government actively supports investors through the National Agency of Investment and Privatization, which provides a range of services to foreign investors, including assistance with fact-finding trips, visa formalities, and information on investment opportunities. The government also offers guarantees, benefits, and preferences to investors.

Attractive investment climate

Belarus has an attractive investment climate, offering numerous benefits to investors. Here are some key factors that contribute to its favourable business environment:

Strategic Geographical Location:

Belarus is strategically located, providing efficient access to high-capacity and rapidly growing target markets. It serves as a link between the CIS countries, particularly Russia, and the EU countries, with over 100 million tons of European cargo crossing its territory annually. This advantageous position allows foreign companies to establish their manufacturing, logistics, and sales units within Belarus, leveraging its access to a vast consumer base.

Well-Developed Infrastructure:

Belarus boasts a well-developed transport, logistics, and communications infrastructure. It is crossed by two cross-European transportation corridors and has an extensive network of railways, highways, oil and gas pipelines. This robust infrastructure facilitates the smooth movement of goods and services, enhancing the country's attractiveness for investors.

Progressive Investment Legislation and Investor Rights Protection:

Belarus has progressive investment legislation and guarantees the protection of investors' rights. The country offers favourable business conditions, including government support in the form of guarantees, benefits, and preferences. The Foreign Investment Advisory Council, chaired by the Prime Minister, actively works to improve investment regulations and address regulatory issues, ensuring a stable and investor-friendly environment.

Attractive Taxation Policies:

Belarus offers competitive taxation conditions with preferential investment regimes. Free economic zones provide incentives such as 0% profit tax for 5 years and 10% VAT. The High-Tech Park also offers attractive tax benefits, including exemptions from VAT and profit tax. Additionally, the country has a simplified taxation system for foreign-owned businesses, making it a financially appealing destination for investors.

Highly Skilled Workforce:

Belarus has a highly qualified workforce, with 90% of the population having a higher, secondary, or basic education. The country's well-developed education system ensures a capable and competent talent pool for businesses. The workforce is versatile and capable of succeeding in various sectors, including agriculture, biotechnology, software development, and more.

Good Quality of Life and Decent Living Standards:

Belarus ranks highly in terms of decent living standards, placing 50th out of 186 countries in the UN Human Development Report 2013. The country offers a unique eco-environment and a high quality of life, making it an attractive location for investors and their employees.

Highly skilled workforce

Belarus has a highly skilled, well-educated workforce due to its advanced system of higher and specialised education. 90% of the population has a higher, secondary, or basic education. The country also has a well-developed system of dedicated training and a high level of industry and service development. This enables the Belarusian workforce to work successfully in any sector, be it sewing, agriculture, biotechnologies, or software development.

Belarus's workforce is also highly cost-effective. Wages are lower than in Western Europe, the United States, and Russia.

The official unemployment rate in Belarus has been steady at or just below 1% for many years. According to the ILO methodology, unemployment in Belarus was approximately 4%.

Belarus has been a member of the International Labour Organisation (ILO) since 1954 and is a party to almost 50 ILO conventions. However, Belarus has not adequately responded to the 2004 ILO Commission of Inquiry.

The Constitution, the Labour Code, and presidential decrees are the main documents regulating the labour market in Belarus. The law provides for the rights of workers, except for state security and military personnel, to form and join independent unions and strike, but it places serious restrictions on the exercise of these rights. The government severely restricts independent unions.

Labour Policies and Contracts

In 2020, more than 90% of employees in Belarus were working on term contracts. The term contract system generally favours the employer. The employer can choose not to renew a contract upon its expiration without giving the employee a cause for dismissal. The employer can also refuse an employee's proposed resignation before the contract term is up, which would then require the employee to argue their case in court. The employer, on the other hand, can terminate the contract at will.

There are several protected employee groups that are exempt from early termination: pregnant women, women with children up to 3 years old, and single parents with children under 14 years old. Additionally, the employer is obligated to renew contracts with women on maternity leave and those employees who are approaching retirement age at the end of their prior contract.

Retirement age in 2021 was 58 years for women and 63 years for men.

Severance pay in the case of reduction is prescribed in law as 13 weeks of salary, and eight weeks' notice is required for dismissal. However, severance pay only applies to workers on open-ended work agreements, which comprise less than 10% of all labour contracts in 2020. The law provides a standard workweek of 40 hours and at least one 24-hour rest period per week. Under the law, Belarusians receive mandatory overtime and nine days of holiday pay. Overtime is limited to 10 hours a week, with a maximum of 180 hours of overtime per year.

A non-standard work regime is allowed, provided that the employee is provided with up to seven days of additional annual leave. In general, employees must be granted at least 24 calendar days of paid leave per year.

There are special provisions for employing foreign citizens without a permanent residence permit. Such citizens must secure a work permit, which is usually only granted if an unemployed Belarusian citizen cannot perform the required work. This is verified by local Belarusian employment offices. In practice, however, few firms, excluding Belarus's IT sector, employ significant numbers of foreigners. Those that do tend to hire Russian citizens, benefiting from Belarus's and Russia's common employment regulations and Belarus's membership in the EAEU.

Good quality of life

Belarus has a high quality of life, with a well-developed infrastructure and a high level of safety. The country has a strong focus on education and healthcare, which are both easily accessible and of a high standard. The country's education system

Frequently asked questions