Ben Aris in New York -

"Where is Belarus heading? What will be the nature of the structural and institutional reforms we are carrying out? The answer to these questions is both simple and complex: simple as we know what we need to do, but complex as this requires knowledge, resources and energy."

Belarusian Prime Minister Mikhail Myasnikovich opened the first Belarusian Investment Forum on September 22 with a pragmatic, rhetorical question and called on US investors to take advantage of a "reset" that the Republic is enjoying in its relations with the West.

About a 100 US investors turned out to listen to a high-powered panel that as well as the PM included the minister of the economy, the deputy finance minster and the head of the Republic's development bank, expound on the progress the country has made in recent years. "Our intention is to create a productive environment for companies that want to come and work with us," Myasnikovich told the assembled delegates.

Myasnikovich admitted frankly that despite the recent progress and recovery, Belarus needs help if it is to fulfil its potential. "So we came here to build a solid future together with our American partners, and we want our partners to benefit from our success together," said Myasnikovich. "Our economy is based on knowledge and innovation, and we are committed to opening up on these lines.

Buffing up image

The conference was the first step in addressing the country's poor image and low profile amongst the international investment community. And obviously investors' curiosity was piqued, as there was barely an empty seat in the hall of the Grand Hyatt's ballroom in the heart of New York.

But the PM has a good story to tell. While this year's economic growth is expected to come in at just 1.7%, that is still a lot better than most of its peers. And the country boasts a long tradition of manufacturing excellence it has managed to capitalise on post-independence; not only does Belarus have a reasonably diversified economy, it is also the only country to have significant exports to both Russia (50%) and the EU (20%). "Industrial production has increased and surpassed the levels of in the Soviet Union, while per-capita GDP has increased three-fold since 2000," Myasnikovich told delegates. "Poverty is amongst the lowest in the region and indeed is lower than in most of the developed countries of Europe. We have a balance budget and low state debt, while our trade has grown consistently each year. However, we need to look for new sources of growth and a key will be improving the productivity of the existing capacity."

That was the core of the pitch to the US investors: we need your help to continue the progress we have already made. The government has been investing heavily into its capital – both fixed and human – and is already reaping rewards in several sectors, with IT standing out as the most prominent amongst them. Capital expenditure is running at about 30% of GDP, with a third of this going into heavy industry, according to the Ministry of Economy.

The upshot is that Belarus has one of the most diversified economies in the former Soviet Union. Minister of Economy Nikolai Snopkov rattles off a long list of the republic's achievements that are unique in Eastern Europe: the republic produces 16% of the world's Potash, 30% of its dump trucks, 6% of its tractors and 16% of its linen. It is the sixth largest cheese producer in the world, the third largest butter producer and the number one IT services producer in per-capita terms.

But this positive side of the Belarusian story is not well known, which was the point of the conference. The National Investment Agency has recently been beefed up and the state has introduced a raft of incentives to appeal to potential investors. The republic already offers attractive tax conditions: profit tax have been slashed to 18%, which is one of the lowest levels in the CIS; and workers pay a flat 12% income tax, slightly lower than even Russia's 13% flat tax.

But the main focus has been, as in other countries, on creating industrial parks and special economic zones that have been used to such great effect by the Chinese. Today, there are six special economic zones and several specialist industrial parks, with a new large Sino-Belarusian industrial park in the works. In these business havens, companies enjoy a 10-year tax holiday and a 50% discount on profit for the next decade. For the high-tech park, profit tax is also 0% and VAT is 0%, although companies have to pay their workers social taxes.

For Belarus, it will be a hard sell to attract the kind of share of FDI the government needs, but it seems committed to making the effort. “I sincerely believe that this forum and a series of other major political events initiated by Belarus, including the Ukraine peace process, will result in the restart of the relations between Belarus and the United States," the PM noted. “We are open for a dialogue – so is our country."