June 23 – June 29, 2014

State monopoly on imports might be introduced in Belarus

The situation has not changed
State monopoly on imports might be introduced in Belarus

As an experiment, the Industry Ministry plans to limit the penetration of imports on the domestic market for a six-month period. It is unlikely that the Ministry will implement its plans as proposed. However, most likely, import rules will be somewhat tightened, retail chains will be prompted to show more Belarusian goods on display, and, accordingly, the powers of public officials as regards import and trade regulations, will expand.

A draft decree has been designed which envisages the state having the exclusive right to import goods whose analogues are produced in Belarus.

According to the draft decree, as of July 1st the state might become a monopolist for a six-month period in importing goods whose analogues are produced by domestic enterprises. The list of goods subject to restrictions includes household appliances, bearings, trucks, and tyres. The government came up with this initiative as it was unable to stop industrial enterprises’ stocks from building up. As of June 1st, enterprises’ stocks totalled USD 3.6 billion – an increase by 22% since early 2014.

In addition, Minsk City Executive Committee management ordered retail traders to increase the share of Belarusian goods on the shelves from 75% to 85%. These initiatives are presented as measures counteracting the growing amount of imports to Belarus.

Previously, in order to protect Belarusian producers on the domestic market, mandatory certification of building materials was introduced, as well as licensing of imported pastry, pasta, and beer. However, amid the Ukrainian hryvnia and the Russian rouble devaluation, these measures failed to improve Belarusian-made goods competitiveness on the domestic market.

From a technical viewpoint, the Trade Ministry and Minsk City Executive Committee’s initiatives are extremely difficult to implement. The state-owned enterprises, which were supposed to be empowered with a ‘special importer’s’ status, have strict regulations as regards import purchases. Moreover, if all proposed measures are implemented, the assortment of goods in Belarus will reduce considerably, several intermediary companies will close down, grey imports will soar, and the banking system will face problems with servicing previously taken loans. In addition, as proposed, these measures will jeopardise social stability and the economy as a whole.

Most likely, industry and trade retailers will agree to a compromise. Retailers will agree to have more Belarusian goods on display in exchange for preserving the existing import mechanism.

All in all, the state-owned industrial enterprises have once again attempted to shift the responsibility for their own mistakes onto commercial retail-traders. Most likely, administrative measures will be expanded, and some mandatory export indicators for domestically produced goods might be introduced in order to preserve imports of consumer and industrial products.

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Once a week, in coordination with a group of prominent Belarusian analysts, we provide analytical commentaries on the most topical and relevant issues, including the behind-the-scenes processes occurring in Belarus. These commentaries are available in Belarusian, Russian, and English.

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