Belarus is Becoming Europe’s Silicon Valley

The stereotype of Belarus as the heartland of manufacturing is being transformed to one of Europe’s centers for information technology outsourcing, and here are a few reasons why.

The population of Belarus, which was once under the thumb of Soviet domination, is home to 9.5 million people. They are generally well-educated, but also have lower labor costs. The total value of exports from its main IT center was $705.6 million last year. Global players are having their software development needs met in Belarus. Those top corps include Mitsubishi, British Petroleum, Reuters, British Telecom, London Stock Exchange, World Bank and Coca-Cola. Belarus offers great tax benefits for companies, such as corporate tax exemptions, no value-added tax, nor land, real estate or profit taxes are charged. Belarus’ exports of computer services surpass that of the US and India, at $60 per capita. The World Bank stated that it is easier to launch a business in Belarus than it is in the US.

“A faster pace of structural transformation in Belarus — in combination with the global and regional recovery — would improve enterprise performance, strengthen the financial sector and increase household income in the medium term,” Young Chul Kim, World Bank country manager for Belarus, said. “The ongoing challenges need to be overcome through strong policies in the enterprise sector. Improving the incentives system, factor utilization rates, streamlining and upgrading of product lines, and ultimately transparency and governance of state-owned enterprises will allow enterprises to move toward better profits and higher returns on investment. Activation of mechanisms of an orderly exit of inefficient companies has to be accompanied by commensurate safety net measures to protect living standards as well as support workers to acquire new skills.”

A report by Doing Business 2017 said that Belarus, for the past eight years, has rank within the top 10 countries for starting a business and for offering business-friendly rules.

“Creating a favorable environment for foreign direct investment (FDI) is an important task, as foreign investors can help Belarusian companies — both private and state-owned — to penetrate new markets, acquire new technologies and business processes and manufacture new products,” said Karlis Smits, a senior economist for World Bank. “The government has already made steps towards building a stable macroeconomic environment required to foster investment. The next steps require legislative and institutional changes to make the country’s economy a more attractive investment destination, building on its favorable geographic location, strong scientific and engineering capacities and strong labor skills.”

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