OREANDA-NEWS. July 22, 2011. As part of the Customs Union Belarus has lost nothing and has won nothing yet, Prime Minister of Belarus Mikhail Myasnikovich told in an interview.

Summing up intermediate achievements of the Customs Union, the Belarusian head of government said that Belarus had lost nothing by being part of the union. “So far we have lost nothing but we don’t see any particular gains either. We expect that once equal conditions for the operation of economic entities in our countries are in place, benefits will be unquestionable,” said the Prime Minister. “We will not only compete: relations between our enterprises will become partnerships”.

So far G3 manufacturers operate under different economic conditions, stressed Mikhail Myasnikovich. “For instance, companies that will directly compete with Belarusian ones are set up in Russia. The same is going on in Belarus,” he said. “I believe that it would be better to unite efforts to work on the domestic market of our countries. We have reached an agreement with Vladimir Putin that these competition terms will be leveled”.

The Prime Minister pointed out that, for instance, the automobile industry of Belarus and Russia will only benefit if automobile holding companies are marged. “It will reduce the dependence on import,” he stressed. “Economic unions like the Customs Union are set up exactly for us to get benefits from working together in foreign and domestic markets”. The Prime Minister believes that creating some pretence of integration would be the simplest thing to do but the most dangerous one. “I am very pleased with the fact that we have got down to practical implementation of the Customs Union. The work goes on not only at the level of the governments. A conference of representatives of the business circles of our countries took place in Moscow. The businessmen have heard each other. Businessmen already come up with real projects,” he said.

The head of government also remarked that at present the difference in the prices that Belarusian and Russian companies pay for energy resources is the most sensitive issue for Belarus. “Natural gas prices in Belarus are almost three times as high as those in Russia. It is difficult to compete on the common market under these conditions,” he said. “There are issues as far as support for agricultural manufacturers is concerned. We have already signed relevant papers based on WTO principles, dividing state support measures into yellow and green baskets and limiting the size of direct subsidies”.

Negotiations are underway to reduce subsidies in other industries, too. The Belarusian government has already put together a new state support model. “If, for instance, the state is interested in developing automobile industry, we will give tax benefits or other kinds of benefits to enterprises. But it will be done via a tender. The one who can offer the most advantageous terms of the project implementation and prices for the products will get support,” explained Mikhail Myasnikovich. He added that at present the ability to provide state budget subsidies in Belarus are very limited. “We are forced to reduce spending in order to balance the currency market,” said the Prime Minister.

Foreign currency sales by households keep growing in Belarus, Mikhail Myasnikovich said.

According to the Belarusian head of government, the demand for foreign currency by households still exceeds the supply and is not fully satisfied. “As our gold and foreign currency reserves are rather small, we think it would be inefficient to use them for this purpose. Of course, we want foreign currency to be bought and sold freely, however, foreign currency sales by households keep increasing today. At present the sales approximate \\$250 million per month,” Mikhail Myasnikovich said.

The head of government emphasized that there is no systemic crisis in Belarus. “We do not have any systemic crisis. It is not just my opinion; those are the conclusions of the IMF and the World Bank. Our GDP has grown by 11% over the six months. For the first time in many years, the export is growing faster than import – about six percentage points,” he said. As of 1 January 2011, the gap between export and import was about 43%. By the middle of the year, the current account deficit has shrunk drastically. In May the foreign trade deficit was reversed, the trade surplus made USD 120 million. “This is expected to help stabilize the currency market. We have some issues there, but companies keep working, even new jobs are created – 16,000 over the five months,” Mikhail Myasnikovich said. Companies that were involved solely in import encountered some issues. “However, many of them have started exporting,” the Premier concluded.

Mikhail Myasnikovich added that Belarus badly needs external borrowing. “We applied to the IMF and EurAsEC, but these loans are not as big as foreign currency revenues that we get now. Over the five months, the foreign currency revenues made up USD 16 billion, while the EurAsEC Anticrisis Fund provided us with USD 800 million,” the Prime Minister said.

“This year we are going to sell about 250 industrial enterprises. These are building materials production facilities and house-building companies, enterprises of the light industry. If the Russians have no desire to buy these assets, we will sell them to someone else. But we provide the first opportunity to Russian business. And please do not think that because of the problems that we are having now our companies can be bought for a pittance. This is not so,” the Prime Minister said.

According to Mikhail Myasnikovich, companies from Russia show much less interest in the privatization in Belarus than investors from other countries. “I think there are elements either of ignorance or of certain economic policy. Why do companies from the EU, China, are showing great interest not only to our raw materials and infrastructure companies but also to the processing sector. We have sold several furniture factories. No one from Russia has invested!” IKEA is building its business in Belarus, which will create competition later to Russian companies.

The same happens in the glass industry. "The Japanese show interest, Russians do not. We offer to sell the companies producing cement, gypsum and so on. Germans are already interested in them. Your countrymen probably think that this is not a very profitable business,” Mikhail Myasnikovich said. The Prime Minister stressed that these are “well-performing Belarusian companies that are actively expanding. For example, Moscow is the main sale market for crushed granite producers.”

Mikhail Myasnikovich pointed to other issues in Belarus-Russia economic relations. “Our business would like to expand into your construction market; we repeatedly suggested constructing houses for your military. It takes a very long time to coordinate things. We could have a greater presence on your foodstuffs market. This applies to food processing, too. We are very much concerned over overdue receivables to Belarusian enterprises by a number of Russian companies,” he said. According to the Premier, this has approximated \\$200 million. It would require a lot of efforts to pay them back. “Therefore, we want new structures set up within the framework of the single economic space to eliminate these unseemly trends. We would like to have civilized relations like those in the European Union, for example,” the head of government added.

According to the Belarusian Premier, Belarus and Russia should cooperate, first of all, in the “smart” industries. The establishment of the Customs Union will contribute to that. However, this does not mean that the parties will produce low-quality goods and say that everything is ok. Nobody will be able to make Belarusian or Russian customers buy low-quality things.

Mikhail Myasnikovich reminded that the government of Belarus identified economic upgrade priorities: microelectronics, defense industry, precision engineering, optics, energy efficiency, biotechnologies, IT. “For example, last year we installed capacities to produce 0.35 micron chips. In this respect, our production does not lag behind the Russian one. We have dramatically advanced in designing integrated circuits and developing software. Beginning next year, we plan to offer tax preferences to these producers”. The two countries have a great cooperation potential in the pharmaceutical industry. “I have recently talked to Vladimir Putin on a possibility to integrate our pharmaceutical industry with the Russian one, in order to unite the existing enterprises and jointly set up brand new companies,” the Premier said.