investment and establishment in belarus

Belarus – The heart of Europe!

Investment and Establishment in Belarus

2. May 2014

Morten Munk, CEO & Consul

MAFCON - More than 100 projects in the CIS.

Belarus – The heart of Europe!

The next 15 min. will be about “Why and How” regarding investment and establishment in Belarus!

• Shortly about Belarus and Mafcon! • The key issues! • Why to get a foothold in Belarus! • Tips and tricks! • Experience and lessons learned!

Business in Belarus

• The East Region – when there are no more easy picks!

Business in Belarus • Belarus - a democratic and presidential

governed social state. • The country that is a bit easier than

Russia and Ukraine. • Both a market and a manufacturing hub! • Market economy – on state conditions! • Easy accessable from the West! • The Customs Union paves the way further

east!

Hard facts at: http://www.belarus.by/en/about-belarus/key-facts

The current crises!

• Changes are coming, and the East Region as a whole will be reformatted over time!

• The expected massive capital inflow to Ukraine will be a game changer!

• Business conditions will be upgraded! • Corruption and safety issues will ease!

In the meantime – Business as usual!

Russia

• Russia will remain on a distance to the West for quite a while.

• CIS will remain CIS for a long time. • Russia, Ukraine and Belarus were already

in 2013 facing lower growthrates. • The Customs Union will increase its

importance for Russia.

Mafcon – why are we here?

Just about to complete a € 3 mio. investment for a Danish company in Orscha. • Salling Plast manufactors a full range of plastic fittings for a range of business sectors • Buildings, management, equipment & machinery, approvals and permits. • Targeting the Belarussian market and via

the Customs Union to explore Russia.

MAFCON - More than 100 projects in the CIS.

Mafcon’s CIS competencies

Planning & Execution

”End-to-End” establishments, production as well as sales companies– buildings, management, equipment and machinery, approvals & permits

Upgrading of CIS business struktures - Mafcon’s Business Alignment Model Business Excellence – concrete knowledge about CIS business standards and conditions Market intelligence – analytical bodies covering all CIS

MAFCON - More than 100 projects in the CIS.

MAFCON in Belarus!

Maria Golovko, Legal counsel +375 29 681 4631 mg@mafcon.com

MAFCON - More than 100 projects in the CIS.

MAFCON in Belarus!

• Interesting potential.

• Excellent platform in the Customs Union.

• The rules of engagement calls for

professional guidance.

MAFCON - More than 100 projects in the CIS.

The key issues!

When talking about the East Region there is always 3 questions coming forward: -Corruption -Safety -Why is it so difficult to become successful there?

Corruption

• Transparency International puts Belarus

on a 132 place. • The experienced presure for corruption

is definitely lower than average in the East Region.

Safety

• The physical safety (crime, etc.)

• The business safety (court system, etc.)

• High degree of predictability provided that the rules of the game are followed.

Why is it so difficult?

• A complex set of rules, but with an built

in logic and good cohesion, which again creates a high degree of predictability! Thus, if you understand the rules.

• The precondition is a professional approach – thoroughness and many details.

The Customs Union

-Transition problems and unclearness -Winners and looser’s. -General growth in custom tariff’s -One common set of rules -Common industrial standards -Increasing internal competition inside the Union. -Economic growth factor. -Russian will prevail as business language.

The Customs Union

• Registration as local producer. • Buy local clauses. • Labor market legislation. • Etc., etc., etc. • A learning process for Danish companies. • The short and long term perspective.

For a long time to come

Cultural and structural the region is not in line with international business standards,

but can be characterized by what might be called institutional voids and contexts.

Why to get a foothold in Belarus!

Motivation: • Explore the potential in Belarus

• A cost efficient platform in the Customs

Union

Belarus - Market economy on governmental level!

• Economic activity in Belarus: 30% private and 70% state.

• The goal is to regain economic growth by privatisation, that can add dynamics, capital and technology.

• Key areas are agriculture, food processing and energy transformation.

• The B – B sector is by far the most interesting.

A few words about the potential

Agriculture: Cultivated land: 3,5 times Denmark Efficiency potential: 75 – 100% increase Yet to be privatized: More than 80% Reforms announced!

Belarus – an untapped potential

A few words about the potential

Energy: Energy consumption, DK 36,2 TWH/mio. 24,5% from renewable sources (wind and wood) Energy consumption, BEL 37,5 TWH/mio. 0,5% from renewable sources

Energy plan 2020 in place.

A cost efficient platform

For those of you who want to get established…

• To get established in the CIS is primary an administrative exercise, and Belarus is very similar to other CIS countries.

• A complex set of rules, but with a built in logic and a good cohesion!

• The authorities in Belarus are thorough and professional; clear line of command that works.

• To understand and accept norms and set of rules in the CIS!

For those of you who want to get established…

A successful investor must possess: Deep and comprehensive knowledge and understanding of the CIS in general and Belarus in particular in order to be able to:

• ID of attractive targets and locations. • Define conditions for the investment. • Define the future outlines for his business

activities in order to ensure room for manoeuvring.

Tips & Tricks!

• Professional approach - thoroughness

and many levels • Own knowledge and competence a

precondition for success. • Top down decision processes. • Contracts and agreements are the back

bone of any business relation and creates predictability.

Tips & Tricks!

• Norms & standards need attention. • Supply and distribution channels are

often exclusive. • The administrative landscape must be

mapped. • The political dimension must be

considered in the overall business process!

Lessons learned

• The political dimension! Administrative practise often overtake the role as legislation.

• The investment agreement is the backbone in any investment or establishment, not only for the transaction, but even more seen in the forward perspective.

• When the home work is done well! Relations last for a long time.

If you want to know more?

• www.mafcon.com

• Hvad kan vi danskere i Hviderusland, LinkedIn

Selected references

Giract

Thank you for your attention!

Questions are welcome!

Aarhus, Denmark +45 70 22 84 55 mm@mafcon.com www.mafcon.com/dk