This article appears in Forbes Finland.
“Belarus? Where exactly is that—and why are you going there!?” That’s what my U.S. friends asked when I told them I was spending a few days in Minsk.
If they had even a vague sense of where Belarus is, they wondered why anyone would travel to such a cold place in winter—especially to a dreary, Soviet leftover, a closed society run by a dictator.
Reality is more nuanced than stereotypes. Minsk is chilly, but its people are warm and open. The city has Stalin-era architecture—most of Minsk was leveled by the Nazis—but also handsome plazas, as well as government buildings and retail chains.
And, yes, Belarus is an autocracy. Alexander Lukashenko is, in effect, president for life. He calls all the shots, and tolerates no political opposition.
But he has boldly challenged himself and spurred the private economy—without suffocating oversight. Says Ivan Shumsky, director and cofounder of Regula, which makes devices to authenticate documents, securities, and banknotes, “The main thing we ask of the state is not to interfere.”
Lukashenko has also encouraged entrepreneurship. In 2005, he established an economic safe haven in High-Tech Park (HTP). Today the roughly 200 companies, 80% of them IT concerns, generate revenue of €887 million and are shielded from corporate income taxes. Its 32 500 employees earn, on average, €1 623 a month (five times the normal salary for Belarusians), pay 30% less in income taxes; 5% on dividends, interest, and royalties; and no VAT. Most of their work is outsourced to European and American corporations. By necessity, Belarus is a very outward looking nation.
Recently, Lukashenko signed another decree that legalizes smart contracts, crypto-currencies, and initial coin offerings. HTP expects to be flooded with applicants and will likely have 300 companies by year-end. Thanks to ICOs, entrepreneurs will get a new source of funding.
Visitors look at a scale model of the Great Stone China-Belarus industrial park near the village Bykacheno, some 25 kms east of Minsk, on May 12, 2015. AFP PHOTO / SERGEI GAPON (Photo credit should read SERGEI GAPON/AFP/Getty Images)Will these efforts alone have a material impact on Belarus’ economy? Not for a while. The IT sector contributes only 5% of total GDP and 3.25% to total exports. HTP Director Alexander Martinkevich likes to talk up HTP alumni that have made good: EPAM Systems, a software maker and the first Belarusian company listed on the New York Stock Exchange; Viber Media, an instant messaging and VoIP app acquired by Japanese retailer Rakutan; MSQRD, a social app bought by Facebook; and AIMatter, a mobile photo neural network snapped up by Google. But most startups are small.
Still, they are impressive—companies like Juno, which is taking on ridesharing giants Uber and Lyft with a unique strategy in New York City, and Synesis, with its breakthrough facial recognition platform and unusual games. The biggest engines of the economy are still smokestack businesses: food, beverages, tobacco, coal, petroleum, chemicals, metals, plastic, and rubber.
In fact, basic industry led us to our most remarkable example of entrepreneurship: Great Stone Industrial Park.
Few Belarusians, much less westerners, have heard of this mammoth, multi-billion-dollar joint venture between Belarus and China, which owns 68%. At 91 square km, Great Stone is the nation’s largest economic free zone; resident companies in electronics, chemicals, biomedicine, new materials, and engineering don’t pay income, property, and land taxes or customs duty on equipment imports.
Phase I has brought new roads, railways, and power stations; construction cranes and new buildings are everywhere. By 2020, the Park will have 100 major companies from China, Belarus, Germany, Russia, Australia, the U.S., and elsewhere, producing billions of dollars in goods and services every year. The first probable tenant: IPG Photonics, the Oxford, Massachusetts maker of fiber lasers and amplifiers. The Park aims not just to extend China’s Silk Road as far as Germany; it hopes to reinvent industrial production using state-of-the-art technologies.
Great Stone is the brainchild of the most understated entrepreneur I’ve ever met. Slight, soft-spoken Kirill Koroteev is First Deputy General Director, a title reminiscent of his career as a government apparatchik. But this guy has guts as well as visionary imagination: Back in 2010 he made his case to a skeptical Lukashenko.
Will Belarus grow into a thriving entrepreneurial ecosystem? It has some of the right stuff: a solid educational system, a strong IT base, and a culture of thrill-seekers willing to risk everything and fail.
It may not have multiple sources of capital or a mentorship network. But Belarus does have something else going for it—something I saw in every entrepreneur, waitress, opera singer, and our guide Yuri in the National Library: heart.
