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07 April 2021, 13:46

Opinion: The business environment in Belarus is rather comfortable

Vitaly Demirov. Photo courtesy of the BISR
Vitaly Demirov. Photo courtesy of the BISR

MINSK, 7 April (BelTA) – The international business community has developed an established opinion that the environment for life and work in Belarus is rather comfortable. The opinion by Vitaly Demirov, an analyst with the Belarusian Institute of Strategic Research (BISR), has been published on the BISR website, BelTA has learned.

In his words, biased experts often talk about the matter of denationalization from the ideological point of view. “They labor under the belief that private companies are more effective and the change of the owner per se can provide a positive impact on economic growth. But modern science demonstrates that there is no universally acceptable form of ownership. The performance of an enterprise depends primarily on the level of competition, the market structure, and the business model it pursues. Apart from that, the ability to concentrate resources to pursue innovative activities, upgrade the basic assets, and create a product with unique consumer qualities is extremely important. The nascent state corporations will help with that,” the expert believes. “The international business has developed an established opinion that the environment for life and work in Belarus is rather comfortable. It is safe here and there are many unoccupied market niches. Certainly, the Belarusian consumer market is insufficiently large for major investors but Belarus can be used to penetrate the Eurasian Economic Union market of about 180 million people.”

According to Vitaly Demirov, today purely market-based mechanisms are only partially effective at communicating and equalizing the private interest and the public one. Global value creation chains are transforming more and more due to digitization, which stimulates protectionism in transboundary trade and capital movement to a larger degree instead of liberalism.

“Looking from the point of view of free competition it is no longer possible to understand the operation of not only digital platforms, media and telecommunications but conventional sectors such as pharmaceutics, agriculture, and manufacturing sector. Oligopoly is becoming the prevailing form of organization of commodity flows in these sectors. The economic advisability of investing considerable amounts of money in new technologies in these conditions is becoming foggier and foggier for small and medium businesses. Private SMEs do not think strategically and don't set out to raise the nation's welfare as the ultimate goal. This is why private SMEs will not risk considerable sums to invest in modernization with a long recoupment period even on acceptable lending terms,” the BISR analyst thinks.

In his opinion, in order to become gigantic, a small or medium private company needs a permanent source of liquidity, which is accumulated via well-developed tools of exchange trade, innovation funds, and open mutual investment funds.

“The latter represent infrastructure components of the obsolescent liberal capitalism, which is moving into a new digital reality. Today one does not need complicated market institutions in order to know precisely and in real time who needs money, when, and how much, and most importantly how the money can be used to create added value and public value. Whether we should go into the past is a rhetorical question because our country is actively building a digital future,” Vitaly Demirov concluded.

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