Belarus Newsflash, June 2018
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  Maksim Salahub
  Maksim Salahub
  Aliaksei Vashkevich
  Aliaksei Vashkevich
Dear clients and cooperation partners,

We are glad to update you on some recent business and legal news in Belarus.

The period from February – May 2018 was mostly optimistic for the Belarusian economy. During the first quarter of the year, GDP grew by 4.8% compared to the same period in 2017. Annual expectations for GDP growth are 3.5%. At the same time, the inflation rate reached 5%, while the annual target is 6%.

Reflecting the economic upturn, experts from the World Bank and the International Monetary Fund improved their forecasts for Belarus up to 2.9% and 2.8% of GDP growth respectively.

Making use of favourable conditions, the Belarusian government raised USD 600 million by issuing eurobonds with a maturity period of 12 years and a coupon rate of 6.20% per annum. Most of the eurobonds were bought by US and UK investors.

High-Technology Park (HTP) Flourishes under Enhanced Regulations

Following adoption of the ground-breaking Decree No. 8, which entered into force on 28 March 2018, the HTP experienced a noticeable increase in the volume of residency applications. The HTP Administration has already approved 46 of these, expanding the number of residents by 25% up to 238 companies. Most of the newcomers have been established recently and with infusion of foreign capital investment: they mostly specialise in the spheres of AI software development, augmented reality, Big Data, and the like.

We expect to see several other rounds of applications during the year and further expansion of the HTP. In addition, new opportunities will be available for HTP residents due to recent agreements between the HTP Administration and Google and General Electric. Google intends to assist with promotion of products developed by HTP residents, while General Electric will cooperate with the HTP on implementing technologies related to machine learning and the Internet of Things.

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Great Stone Industrial Park (Park) Attracts New Residents

Since the start of 2018, 11 companies have become residents of the Park. They implement projects in the spheres of electronics, precision equipment, unmanned vehicles and transportation, medical technologies, new materials, and packing. Most of the companies originate from Belarus and China, with several investors from Western Europe and Israel.

In total, the current number of Park residents amounts to 34 companies. The Park Administration intends to double this number during 2018-2019. Meanwhile, 3 residents have already commissioned their Park facilities, and 7 more are expected to complete construction by the end of this year. The Park Administration will soon be ready to start the second stage of the Park development project. The area to be developed during the second stage is 2,200 ha.

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Changes to Activities of Representative Offices

On 30 May 2018 the Council of Ministers came up with revisions to the regulations on representative offices of foreign organisations in Belarus. Starting from 3 September 2018, local executive committees will be responsible for all registration, prolongation, closing, and other similar procedures related to the representative offices. Previously, all these issues were in the competence of the Ministry of Foreign Affairs.

The amended regulations also extend the term for the executive committee to decide on registration or prolongation of activities of the representative office up to 30 days (previously 10 days). The new provisions clarify the procedure for prolongation of the permit for operations of the representative office, as well as the closing procedure.

In general, the amendments will make the administrative procedures slightly more cumbersome. The change of the responsible authority may also affect the established practices in this sphere, which were mostly business oriented until this moment.

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Improvements to Construction Regulations

The government continued work on issuing regulations in the construction sphere which started with adoption of Decree No. 7 in 2017. The most important of the recent changes relate to the certification procedure. Certification is a mandatory requirement for performing certain types of construction-related works such as preparing design documentation and general contracting. On 27 February 2018 the list of works requiring certification was significantly reduced and revised.

In addition, in March the Ministry of Architecture and Construction adopted amendments to the requirements for awarding certification. Generally, the amendments abolished or materially decreased the requirements as to the amount of staff, work experience of key employees, and amount of assets. As a result, it is now easier to obtain a certificate, especially for larger projects.

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Privatization Projects

The European Bank for Reconstruction and Development (EBRD) continues its series of projects in Belarus. Currently the EBRD is focusing on privatisation of Krinitsa OJSC (beer and beverages), Baranovichi Cotton Production Amalgamation (Blakit trade mark – textiles), and Krasnoselskstrojmaterialy OJSC (construction materials).

The government is also considering sale of the state share in BeST CJSC, provider of mobile telecommunication services under life:) trademark. Currently the state holds 20% of the shares in the company. The other 80% were disposed of to the Turkcell Group in 2008.

At the beginning of this year, the State Property Committee prepared formal proposals for privatization of 43 companies. In addition, the state holds shares in 435 joint-stock companies and owns numerous unitary enterprises.

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Duisburger Hafen acquires shareholding in the management company of the China-Belarus Industrial Park “Great Stone”

The world’s largest inland port, Duisburger Hafen, located in Duisburg, Germany, became a shareholder in the Industrial Park Development Company (the management company of the China-Belarus Industrial Park Great Stone).

Sorainen Belarus advised Duisburger Hafen in connection with the acquisition. Our assistance included representing the client in negotiations with the Great Stone Administration, over share purchase agreements with the state-owned Horizont holding company and the City of Minsk, drafting transactional documents, advising on antimonopoly aspects of the transaction, and administering the signing and closing process. The deal involved two parties on the side of the Belarusian State – Minsk City government with its privatization authority, and the Horizont holding company.  This was the first transaction with state-owned shares under non-Belarusian law.  It was also a gateway transaction for Duisburger Hafen AG to commence large scale investments that are to change the landscape of the country’s transport and logistics infrastructure.

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