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Belarus: Market Profile

Picture: Belarus factsheet
Graph: Belarus factsheet

1. Overview

Belarus's gradual transition has been characterised by limited structural reforms and a modest expansion of the private sector. Economic growth has been accompanied by a substantial decrease in the number of households below the poverty line and an increase in household income among the bottom 40%. However, factors that enabled Belarus’s past achievements are no longer in play. The capacity of capital accumulation to drive economic growth is exhausted, energy subsidies stemming from bilateral agreements with Russia are smaller, and public debt ratios to GDP are rising. Unlike regional peers such as Poland and Ukraine, Belarus has underperformed in terms of its openness to foreign direct investment (FDI). Non-Russian foreign investors face significant barriers to entry and operation in Belarus, where the economy is dominated by large SOEs, which limited private sector competition and warped the business landscape. A sustainable improvement in living standards will, therefore, require economic, social, and institutional transformation, with an enhanced role for private enterprise among others.

Sources: World Bank, Fitch Solutions

2. Major Economic/Political Events and Upcoming Elections

September 28-30, 2016
President Alexander Lukashenko made a state visit to China during which the two countries agreed to advance the Belt and Road Initiative as well as to strengthen the synergy between Belt and Road development and the development of Belarus.

April 2018
The World Bank's Country Partnership Framework for 2018-2022 for Belarus, with a lending programme until 2022 estimated at USD570 million, was endorsed. Assistance will focus on creating opportunities to expand the private sector and promote more efficient public investment.

August 2018
President Lukashenko dismissed Prime Minister Andrey Kabyakow and several key ministers. Sergei (Syarhei) Rumas, the former head of the Development Bank, took over.

August 30, 2020
The presidential election will be held no later than the end of August and parliamentary elections are due on September 10.

Sources: BBC Country Profile - Timeline, Fitch Solutions, World Bank

3. Major Economic Indicators

Graph: Belarus real GDP and inflation
Graph: Belarus real GDP and inflation
Graph: Belarus GDP by sector (2017)
Graph: Belarus GDP by sector (2017)
Graph: Belarus unemployment rate
Graph: Belarus unemployment rate
Graph: Belarus current account balance
Graph: Belarus current account balance

e = estimate, f = forecast
Sources: International Monetary Fund, World Economic Outlook Database, World Bank, Fitch Solutions
Date last reviewed: October 16, 2018

4. External Trade

4.1 Merchandise Trade

Graph: Belarus merchandise trade
Graph: Belarus merchandise trade

Source: WTO
Date last reviewed: October 16, 2018

Graph: Belarus major export commodities (2017)
Date last reviewed: October 19, 2018
Graph: Belarus major export commodities (2017)
Date last reviewed: October 19, 2018
Graph: Belarus major export markets (2017)
Date last reviewed: October 19, 2018
Graph: Belarus major export markets (2017)
Date last reviewed: October 19, 2018
Graph: Belarus major import commodities (2017)
Date last reviewed: October 19, 2018
Graph: Belarus major import commodities (2017)
Date last reviewed: October 19, 2018
Graph: Belarus major import markets (2017)
Date last reviewed: October 16, 2018
Graph: Belarus major import markets (2017)
Date last reviewed: October 16, 2018

Sources: Trade Map, Fitch Solutions

4.2 Trade in Services

Graph: Belarus trade in services
Graph: Belarus trade in services

Source: WTO
Date last reviewed: October 19, 2018

5. Trade Policies

  • Belarus, a founding member of the Eurasian Economic Union (EAEU), serves not only as a gateway to the EAEU's other signatories – namely Russia, Kazakhstan, Armenia and Kyrgyzstan – but also to the whole regional market. Every year more than 100 million tonnes of European cargo crosses Belarus, of which 90% is bound for either Russia or the European Union (EU). Of course, Belarus' strategic location and role as a transport gateway at the crossroads of east-west and north-south trade routes also makes the country of current and future interest to those wanting to develop transportation initiatives to connect Asia with markets in central and western Europe.

  • Under Belarus’s membership of the EAEU or EEU, products made in Belarus can be treated, subject to the country of origin rules, as Belarusian-made and exportable tariff-free to the other EAEU markets. This, coupled with the country’s geographical proximity to most of the markets in Europe and well-connected road and rail transportation networks–helps to make Belarus an attractive destination for foreign manufacturing companies.

  • Belarus has been fulfilling all the World Trade Organisation (WTO) obligations since 2012. As these obligations, as well as the Russian Federation's obligations in the WTO are the basis of the EAEU legislation.

  • In 2016, a new composition of the Interministerial Commission on Belarus’s accession to the WTO was set up. It is headed by the First Deputy Prime-Minister of the Republic of Belarus. Apart from the Government authorities, the composition of the Commission includes representatives of business associations and non-governmental organisations.

  • Ambassador-at-Large of the Ministry of Foreign Affairs was appointed as a Chief Negotiator on Belarus's accession to the WTO. 'As of 2017, there have been clear signals that Belarus sees WTO accession as one of the priorities for the Government. This renewed high-level political engagement from Minsk has injected new impetus in the process and is very much supported by the WTO members', said Ambassador Kemal Madenoğlu (Turkey), Chairperson of the Working Party. In May 2018, the Working Party on the accession of Belarus to the WTO met for the 10th time.

  • Belarus has few mineral resources of its own and, therefore, is striving to stimulate foreign investment to promote privatisation, economic restructuring and innovative development. Priority areas include pharmaceuticals, food, transport and logistics, chemistry and petro-chemistry, mechanical engineering, renewable energy and IT.

Sources: WTO - Trade Policy Review, Fitch Solutions

6. Trade Agreement

6.1 Trade Updates

  • The dairy exports ban between Belarus and Russia in March 2018 highlighted a pitfall of the EAEU. The EAEU also underpins Moscow's assertiveness when it comes to keeping Minsk within its sphere of influence and preventing its neighbour from drifting towards the EU. According to official data, in 2016 Belarus exported over USD4 billion of food and agricultural products in total, making it the third-largest export industry in Belarus behind refined oil products. On top of this, Russia is Belarus' largest export market, with the Russian market representing around 70% of food exports.

  • In August 2017 President Trump signed into law a bill imposing increased sanctions on Russia. This stance had meant that, in June 2017, the United States sanctions against Belarus were extended for another year. Some relief to these sanctions was first granted to Belarus in 2015 by the then-President Obama in an effort to better engage with the country.

6.2 Multinational Trade Agreements


  1. EAEU - The EAEU allows for the free movement of goods, services, capital and labour, pursues coordinated, harmonised and single policy in the sectors determined by the treaty and international agreements within the union. The member states of the EAEU are Armenia, Belarus, Kazakhstan, the Kyrgyzstan and the Russian Federation. The launch of EAEU in January 2015 marked a step forward in the formation of a common market based on the norms and principles of WTO. Firms benefit from a large population and high industrial, scientific and technological potential. Firms within member states already trade extensively with each other and this will boost mutual growth in the medium term. However, they remain removed from the EU and other major trade blocs.

  2. The Commonwealth of Independent States Free Trade Area (CISFTA): This Free Trade Agreement (FTA) is in force between Russia, Ukraine, Belarus, Uzbekistan, Moldova, Armenia, Kyrgyzstan and Kazakhstan. The free trade zone (FTZ) was designed to reduce all trade fees on a number of goods between participating countries. Overall, the move will induce investments in Belarus' economy, ease trade and stimulate employment. In 2014, the turnover with the CIS countries (excluding Russia) was USD8.2 billion. Ukraine, Kazakhstan, Azerbaijan, Turkmenistan and Moldova are Belarus' major trade partners, accounting for more than 95% of the country's exports to the CIS region (excluding Russia). Member states are, thus, aiming for more intense scientific and technical cooperation and further development in agriculture, transport, science, culture, education, sport and tourism. In 2014, trade turnover with Ukraine amounted to USD5.8 billion, with exports exceeding USD4 billion.

  3. The Agreement on the Establishment of the Union State of Belarus and Russia: The strategic partnership with Russia is a result of geographical proximity, close historic and cultural links, and longstanding economic ties and cooperation between Belarusian and Russian businesses. The Agreement (signed in 1999) sets up a legal basis for integration between the two countries. Russia is both a key trade partner and a major export market for Belarusian manufacturers. In 2016, the mutual trade amounted to USD25.9 billion, with exports to Russia reaching USD10.9 billion and imports from Russia reaching USD15 billion. Russia accounts for 50.3% of Belarusian foreign trade. In 2017, Belarus was Russia's fourth major trading partner, behind China, the Netherlands and Germany. Belarus and Russia cooperate in the area of energy resources. Belarus contributes significantly to regional energy security by fulfilling its obligations in terms of the transit of Russian energy resources to other European countries. Along with cooperation in the framework of the Union State, the two countries support strengthening of multilateral cooperation and participate actively in other integration projects in the post-Soviet area. Businesses in Belarus benefit from subsidised raw materials from Russia, and economic integration with a considerably larger nation provides some financial support in times of crises.

  4. EAEU-Vietnam: On May 29, 2015, after three years of negotiations, an FTA and Economic Integration Agreement between the EAEU and its member states on the one part, and Vietnam on the other part, was signed. The agreement provides for significant tariff reduction for Belarusian exports to Vietnam (potash fertilisers, meat and dairy products, tractors, combines, trucks, refrigerators, medicines and food products). At the same time, the agreement provides for an efficient level of market protection for Belarusian producers. This agreement came into effect from October 2016.

Under Negotiation

The Association of Southeast Asian Nations (ASEAN)-EAEU: ASEAN and the EAEU are negotiating to strengthen trade ties. As the ASEAN Economic Community (AEC) moves closer to completion, it is likely that the EAEU's efforts to liberalise trade with ASEAN will intensify. Firms in the EAEU can take advantage of the opportunities that this presents to boost trade with the many more advanced economies in ASEAN. Companies will have the opportunity to expand these markets and service into a large consumer base. Asian fuel demand remains high and this will be of great benefit to Belarus.

Sources: WTO Regional Trade Agreements database, Fitch Solutions

7. Investment Policy

7.1 Foreign Direct Investment

Graph: Belarus FDI stock
Graph: Belarus FDI stock
Graph: Belarus FDI flow
Graph: Belarus FDI flow

Source: UNCTAD
Date last reviewed: October 5, 2018

7.2 Foreign Direct Investment Policy

  1. In policy, the Belarusian government maintains that it is highly welcoming of FDI. Other incentives include the country's favourable geographical location, qualified workforce and various infrastructural endowments. To date, FDI has predominantly focused on the transportation, construction and industrial sectors, as well as the banking sector, mobile communications, commercial real estate development, food and beverage and retail.

  2. Belarus has bilateral investment treaties (BITs) in force with more than 50 countries and has signed BITs that are not yet in force, including one with the United States and a dozen others. Belarus has concluded double taxation agreements (DTAs) with 54 states, including one with Hong Kong that came into force on November 30, 2017.

  3. The Investment Code of Belarus provides for general rights and obligations for investors, though it has been described as fairly ineffective. Through the National Agency of Investment and Privatization (NAIP), there is a system of preferential taxation regimes for investment within Free Economic Zones (FEZs), the High-Tech Park (HTP) and the Great Stone China-Belarus Industrial Park (CBIP), as well as significant tax benefits for companies willing to locate in small towns and rural areas.

  4. Belarus has six FEZs established until December 31, 2049. Each is a customs-free zone and has its own administrative officers to help members. Joining an FEZ confers a 40% reduction in the tax burden compared to non-membership. So far, almost 270 foreign businesses have taken advantage of the opportunity. The first FEZ was set up in 1996 in Brest, in the south west of Belarus, near the Polish border, and the six which now exist are strategically located around the country – in Minsk, Gomel, Vitebsk, Grodno, Brest and Mogilev. These zones were set up to create strong private sector enterprise and investment in Belarus and offer a wide array of incentives to both foreign and domestic investors. Businesses wanting to register within an FEZ must make a minimum investment of EUR1 million, but they will receive tax incentives and streamlined bureaucratic procedures.

  5. The HTP was established in Minsk in 2005 to promote IT in Belarus by offering IT firms a special regime. The regime has been extended, effective from March 2018, until 2049 and the list of activities in which HTP residents can engage has been expanded.

  6. CBIP was created in 2012 with support from China as a hub for firms at the cutting edge of innovation and technology. The CBIP is located in Smolevichi near Minsk, and any company wanting resident status there must be involved in an industry such as telecommunications, pharmaceuticals, biotechnology or big data storage and processing, and must make a minimum investment of either USD5 million, or USD500,000 if pursuing a research project.
Sources: WTO – Trade Policy Review, ITA, US Department of Commerce, PwC, EY

7.3 Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive ProgrammeMain Incentives Available
FEZ in Brest, Gomel, Grodno, Minsk, Mogilev and Vitebsk- An FEZ resident is exempt from profits tax for five years beginning on the date on which profits are declared for the first time. After the end of the five-year period, the FEZ resident pays corporate profits tax at 50% of the standard rate, but the tax rate may not exceed 12%.

- FEZ residents may apply a reduced value-added tax (VAT) rate of 10% with respect to:

* Profits received from goods (works and services) manufactured by an FEZ resident and sold to other FEZ residents, foreign legal entities or foreign individuals. 

* Profits from goods manufactured by a resident of an FEZ and realized in Belarus if the goods are defined as substitutes for imported goods on the list specified by the government and approved by the President of Belarus.

- 50% discount on VAT on import substitution goods manufactured within an FEZ;

- No taxes on real estate owned or leased in the area;

- Exempt from payments to National Agriculture Support Fund;

- No tax on purchasing vehicles;

- No customs duty on raw materials and equipment imported from outside Belarus;

- A guarantee that legislation governing firms will not change for seven years;

- Each FEZ has its own administrative officers to help members and joining an FEZ confers a 40% reduction in the tax burden compared non-membership. Firms enjoy streamlined bureaucratic procedures.
HTP- Companies resident are exempted from income tax, property tax, VAT on goods produced in Belarus, customs duties and land tax for the construction period.

- Employees at the companies located there benefit from a reduced income tax rate.
CBIPCompanies resident benefit from a variety of incentives, including being exempted from income tax for 10 years and a reduced rate of 50% until 2062, no property tax until 2062, no income tax on dividends for five years after the income is declared, no land tax for the first 10 years and a reduced rate for the next 10 years.

Sources: US Department of Commerce, Fitch Solutions, National Agency of Investment and Privatization, PwC, EY

8. Taxation – 2018


9. Foreign Worker Requirements

9.1 Foreign Worker Permits

If an employer wants to employ 10 foreign workers or more (excluding, for example, the CEO of a foreign company or highly skilled workers), they must apply for a special type of work permit to the Belarusian Ministry of Labour. The Belarusian government does not apply any strict caps on the amount of foreign workers that can be hired, and does not impose any strict hiring quotas (in terms of employing Belarusian citizens) that must be met. Only EAEU citizens and citizens of certain CIS member states may work in Belarus without having to obtain a work permit. Citizens of all other states require an offer of employment beforehand, and there are various processes that must be completed before the work permit can be granted, which can be time consuming. The employer must first apply for a permit to be able to engage in hiring foreign manpower from the Belarusian Ministry of Labour. Once this is obtained, various documents must be submitted to the Ministry of Labour for approval for the work permit to be granted.

9.2 Localisation Requirements

Foreigners temporarily staying in Belarus must register with the local unit of the Ministry of Internal Affairs within five days from the date of arrival.

9.3 Visa/Travel Restrictions

A presidential decree effective from July 27, 2018 introduced visa-free travel to Belarus for citizens of 74 countries for stays of up to 30 days when entering and exiting through Minsk National Airport. Key markets include all EU-member states, Australia, Brazil, Indonesia, the United States and Japan. As an important step in accommodating greater synergies between Hong Kong and Belarus, from February 13, 2018 onwards, Hong Kong citizens have been allowed to visit Belarus visa-free for 14 days, following the entry into force of the Comprehensive Agreement for the Avoidance of Double Taxation (CDTA) between Hong Kong and Belarus on November 30, 2017.

Sources: Ministry of Foreign Affairs of the Republic of Belarus, Fitch Solutions

10. Risks

10.1 Sovereign Credit Ratings

Rating (Outlook)Rating Date
B3 (Stable) 16/03/2018
Standard & Poor'sB (Stable) 06/10/2017
Fitch Ratings
B (Stable) 02/07/2018

Sources: Moody's, Standard & Poor's, Fitch Ratings

10.2 Competitiveness and Efficiency Indicators

World Ranking
Ease of Doing Business Index
Ease of Paying Taxes Index
Logistics Performance Index
Corruption Perception Index
IMD World CompetitivenessN/AN/AN/A

Sources: World Bank, IMD, Transparency International, PwC

10.3 Fitch Solutions Risk Indices

World Ranking
Economic Risk Index Rank169/202
Short-Term Economic Risk Score
 29.2 34.246.0
Long-Term Economic Risk Score 32.233.7
Political Risk Index Rank130/202
Short-Term Political Risk Score
 62.5 62.562.5
Long-Term Political Risk Score 50.3 56.2 56.2
Operational Risk Index Rank63/201
Operational Risk Score 57.2 56.557.2

Source: Fitch Solutions
Date last reviewed: October 16, 2018

10.4 Fitch Solutions Risk Summary

The largest economic risk to Belarus comes from the overarching reliance on Russia for concessional loans and hydrocarbons exports. The state-dominated economy leaves Belarus at the mercy of external support in order to provide it with much-needed foreign exchange reserves. The build-up of debt at the country's state-owned enterprises and the continued misallocation of resources as a result of policy-driven lending practices will ensure that growth remains weak over the coming years. The lack of meaningful structural reform, essential for long-term growth, also poses a near-term risk to economic stability.

The dominance of the Belarusian state across all sectors of the economy, and its dependence on Russia for trade and economic assistance, are major deterrents to investors. Businesses currently benefiting from inexpensive utility costs, due to cheap Russian oil and gas, are at risk of experiencing a cut to supplies in the event of any deterioration in relations with Moscow. Trade and economic diversification remains poor and reliant on Russia and the hydrocarbons sector, where both elements bear significant downside risks in the medium term. Companies also face high costs to trade due to a heavy bureaucratic burden, along with elevated labour taxes to employ workers. These risks are partly offset by Belarus' stable security environment and highly educated labour force, which somewhat improve the country's operating environment.

Source: Fitch Solutions
Date last reviewed: October 21, 2018

10.5 Fitch Solutions Political and Economic Risk Indices

Graph: Belarus short term political risk index
Graph: Belarus short term political risk index
Graph: Belarus long term political risk index
Graph: Belarus long term political risk index
Graph: Belarus short term economic risk index
Graph: Belarus short term economic risk index
Graph: Belarus long term economic risk index
Graph: Belarus long term economic risk index

10.6 Fitch Solutions Operational Risk Index

Operational RiskLabour Market RiskTrade and Investment RiskLogistics RiskCrime and Security Risk
Belarus Score57.256.559.2
Central and Eastern Europe Average61.855.063.466.262.5
Central and Eastern Europe Position (out of 11)8588
Emerging Europe Average56.954.158.458.556.8
Emerging Europe Position (out of 31)16
Global Average49.649.749.9
Global Position (out of 201)6351

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index

Graph: Belarus vs global and regional averages
Graph: Belarus vs global and regional averages
Operational Risk IndexLabour Market Risk Index
Trade and Investment Risk IndexLogistics Risk IndexCrime and Security Risk Index
Czech Republic71.4
Regional Averages61.8
Emerging Markets Averages46.8
Global Markets Averages49.6

Source: Fitch Solutions Operational Risk Index
Date last reviewed: October 16, 2018

11. Hong Kong Connection

11.1 Hong Kong’s Trade with Belarus

Graph: Major export commodities to Belarus (2017)
Graph: Major export commodities to Belarus (2017)
Graph: Major import commodities from Belarus (2017)
Graph: Major import commodities from Belarus (2017)

Note: Graph shows the main Hong Kong exports to/import from Belarus (by consignment)

Graph: Merchandise exports to Belarus
Graph: Merchandise exports to Belarus
Graph: Merchandise imports from Belarus
Graph: Merchandise imports from Belarus

Note: Graph shows Hong Kong exports to/import from Belarus (by consignment)
Exchange Rate HK$/US$, average
7.76 (2013)
7.75 (2014)
7.75 (2015)
7.76 (2016)
7.79 (2017)
Sources: Hong Kong Census and Statistics Department, Fitch Solutions
Date last reviewed: October 16, 2018

Growth rate (%)
Number of Belarusian residents visiting Hong Kong1,345
Number of Belarusians residing in Hong KongN/AN/A

Source: Hong Kong Tourism Board

Growth rate (%)
Number of European residents visiting Hong Kong1,929,824-0.2

Sources: Hong Kong Tourism Board, Fitch Solutions
Date last reviewed: October 16, 2018

11.2 Commercial Presence in Hong Kong

Growth rate (%)
Number of Belarus companies in Hong KongN/A
- Regional headquarters
- Regional offices
- Local offices

11.3 Treaties and agreements between Hong Kong and Belarus

  • As an important step in accommodating greater synergies between Hong Kong and Belarus, HKSAR passport holders have been allowed to visit Belarus visa-free for 14 days from February 13, 2018, following the entry into force of the CDTA between Hong Kong and Belarus on November 30, 2017.

  • Belarus has a DTA with mainland China.

  • Belarus has BIT with mainland China that entered into force on January 14, 1995.

Sources: Hong Kong Department of Justice, Fitch Solutions

11.4 Visa Requirements for Hong Kong Residents

No visa required for short-stays (14 days).

Source: Hong Kong Immigration Department
Date last reviewed: October 16, 2018

Content provided by Picture: Fitch Solutions – BMI Research
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