There are 51 thousand of small enterprises in Belarus of various ownership forms and 217 thousand registered private entrepreneurs. The majority of small enterprises operate in the area of sales and foodstuffs (40.2%), 20.9% in the productions sector, 10.3% in the construction, 8.2% in transport sphere, 4.3 % in the agricultural sector. The majority of SME is concentrated in Minsk (44.1%) and Minsk Oblast (12.8%).

The number of small and medium enterprises per 1000 people in Belarus still remains very low, i.e. 3.3. For comparison, in Ukraine the figure is 5 per 1000 people, 6 in Russia, 22 in Poland, 74 in the USA, 45 in the European Union.

0.05 % of SME and private entrepreneurs received state support

The share of small enterprises and private entrepreneurs that received state support in 2006 – 2007 constituted less than 0.05% of their total number. The provided financial and credit support to the SME in Belarus is not corresponding the contemporary demands of the economy. The problem is with the lack of the available resources, lengthy procedures and insufficient awareness of the potential borrowers. These conclusions were made by experts involved in a joint project of the SME development Council and UNDP “Creation of favourable administrative, legal and economic conditions for SME development through facilitation of a dialogue between the state and the private sector”.

The Government is prepared to finance small business through innovation funds

In the beginning of August the Prime Minister of Belarus, Sergey Sidorsky, in the course of a meeting regarding issues of taxation policy announced that the government was prepared to finance small business through innovation funds, “if SME actively contribute into the implementation of state programmes we are prepared to provide financial assistance via innovation funds”. He also stressed that “the government should ensure equal access to tenders for enterprises of all ownership forms and in all fields of activity”.

Numerous Laws, yet more Decrees and Edicts

Both the state and the entrepreneurial community periodically introduce measures related to development of small and medium enterprises and elaborate relevant documents.  

Yet in 1991 a Law on Entrepreneurship was adopted in the Republic of Belarus, which has been amended and changed eight times since then. Every year the Council of Ministers adopts a Programme of State support for small and medium enterprises. In 2006 the Belarusian government approved a Complex of measures related to small and medium enterprise development. It is stipulated in this document that the share of small and medium enterprises would increase up to 22% by 2010 and the number of employed in this sphere would increase up to 25% of the economically active population.

Approximately at the same time the business community elaborated a parallel document the “National Platform for Business in Belarus”, where the ‘sharp corners’ of the relations between the state and SME were identified and an alternative programme of transition of these relations into partner relations was proposed.

Yaroslav Romanchuk: “What happens in Belarus with small business is infinity and incompetence of the authorities”

In December 2007 activists of the United Civic Party proposed a draft law “On small and medium entrepreneurship”. It was elaborated by economist, the Head of the Mises Centre, Yaroslav Romanchuk, former Chairman of the National Bank, Stanislav Bogdankevich, former Deputy Chairman of the Constitutional Court, Valery Fadeev and activists of the “Movement for free development of entrepreneurship”.

“The government regards entrepreneurship as a milch cow. First of all, small business is not a source of income from taxation but a form of self occupation for population, these people are taking care of themselves and do not become hanger-ons for the state”, says the head of the working group on draft law elaboration, Lev Margolin.

“What happens with the SME in Belarus is an infinity and incompetence of the authorities, total misunderstanding of the role of private business in the economy”, believes the Head of the Analytical Centre Mises, economist Yaroslav Romanchuk.

In the end of 2006 “in order to improve public administration in the area of individual entrepreneurship”, Aleksandr Lukashenko signed Decree No 760 “On amendments and changes to the Decree No 285”. It obliged private entrepreneurs to re-register as private unitary enterprises. In accordance with the Decree No 760, starting from the 1^st January 2008 private entrepreneurs are prohibited to hire employees apart from family members and relatives if their number surpassed three individuals.

Entrepreneurs and society protest…

The Edict No 760 provoked a wave of protests in the society. In January and February 2008 entrepreneurs and civil activists tried to receive a permission of the authorities for sanctioned meetings and went out in the streets. Dozens of civil activists and entrepreneurs were detained, many were sentenced to 10-15 days of arrest (Viktor Kryval from Uzda, Anatoly Shumchenko, Viktor Gorbachev, Aleksandr Makeyev, Vladimir Shilo, Viktor Kaley, Leonid Nevar, Aleksandr Tolstik and others). The Leader of UCP, Anatoly Lebedko and the Deputy Chairman of the BPF Viktor Ivashkevich have also spent days in gaol for taking part in the meetings. Criminal cases were initiated (famous “Case of the 14”). An entrepreneur Sergey Parsiukevich and a civil activist Andrey Kim are serving prison term within a criminal case (Parsiukevich sentenced to 2.5 years, Kim for 1.5 years of imprisonment).

Professor Aleksandr Potupa: “The number of unjustified economic legislative acts is outrageous”

The Chairman of the Belarusian Union of Entrepreneurs, professor Aleksandr Potupa, believes that the state conducts anti-market policy with regard to private entrepreneurs. He recalled a specific moment when the ‘attack’ on entrepreneurs started, i.e. 1996. “Overall achievements are modest. Anti-market moods are prevailing at the top level. It is hard for authorities to humble with the relatively high level of freedom for entrepreneurs. The number of unjustified legislative acts in the area of economy is outrageous, for instance, well-known Presidential Edict No 760, which shook private entrepreneurs in the end of last year. There are quite a few legislative documents of the kind that are not well thought through. Very modest opportunities of attracting serious investment due to low level of guarantees for business development in the country”.

Professor Aleksandr Potupa proposed concrete strategic approaches which could change the current situation. First of all, to increase state guarantees, to adopt protective laws. Legislation in the area of economy should be well analyzed and justified and discussed with business associations. State officials should address to the philosophy of competitiveness. Mr. Potupa thinks, that while certain issues could be solved by the Parliament, the existence of “Presidential Edict-Decree” legislation (adopted in interests of certain groups that jungle with definitions) cancels out all rational proposals and ideas due to the fact that numerous decrees and edicts lead to mis-functioning mechanism of control.

Liudmila Korsak