May 31 2005

Belarusian Policymakers Seek IFC's Advice on Small and Medium Enterprises


Press Release - International Finance Corporation

Minsk - The International Finance Corporation, the private sector arm of the World Bank Group, released the results of a survey entitled "Business Environment in Belarus" at a presentation attended by high-level state officials.

The survey polled owners and top managers of 1,200 enterprises in six regions of Belarus and the capital city of Minsk on a number of core issues regarding the business enabling environment. The survey participants commented on such points as business registration, permits, licensing, certification, and government inspections of businesses.

Belarusian entrepreneurs had identified several positive changes that occurred in 2004: the average number of licenses held by a company dropped from three to two, the share of enterprises obliged to secure licenses declined from 88 percent to 73 percent, and the portion of companies subjected to inspections fell from 90 percent to 66 percent in the course of the year.

More than half of the survey participants stated that the business environment considerably deteriorated in 2004. About 70 percent of the sampled small and medium enterprises (SMEs) encountered difficulties while going through administrative procedures.

Top obstacles entrepreneurs faced to register a business included that the large number of state agencies involved in the process, a large amount of mandatory paperwork, and a slow processing time. It took an average entrepreneur 66 days and $746 to finalize a business registration in Belarus during 2004. The procedure for securing permits also proved to be time-consuming and costly. An average company among those sampled held about six permits and spent 52 days and $230 to obtain one of them.

In the course of the discussion, the government invited IFC to develop recommendations and provide assistance in improving the business environment. A.Y. Likhachevskiy, director of the Private Entrepreneurship Department of the Belarusian Ministry of Economy, said, "The survey results are of interest to our ministry and the government, and they will be incorporated in the development of a state policy on development of entrepreneurship."

Ivan Ivanov, a manager of IFC's Business Enabling Environment Project, stressed that current Belarusian legislation contains a great number of provisions hindering the development of SMEs. "We realize that all these problems cannot be resolved overnight. IFC is prepared to contribute its experience and knowledge to support the government's efforts aimed at improving the business environment," he said.

The survey is a key component of IFC's efforts to improve the climate for SME development climate in Belarus. The project conducts annual surveys of regulatory and administrative barriers to SME development and offers recommendations on ways to ease the business settings for SMEs in Belarus. The results of the yearly studies are presented to the government to spur a constructive discussion of the factors inhibiting development of small business in the country.