In the fall of 2005, the President of Belarus Alexander Lukashenko signed decree no. 12 entitled “On the creation of a high technologies park”. The document is a comprehensive standard act designed to set up an IT research center in Belarus. In preparing the project, administrators analyzed many similar techno-parks all around the world. The project in Belarus attempts to synthesize the very best achievements in the field.

The park of high technologies will be located on the territory of Belarus and occupy a total area of 50 hectares. A special legal regime will be in operation within its boundaries for the next 15 years. The decree provides for a number of preferential treatments towards IT-Park residents, making it quite appealing to foreign investors. For instance, the decree exempts the residents of the IT-Park from profit taxes and dues on revenues and sales of commodities, on work and services, as well as on intellectual property rights.

Plans for the High Tech Park have been compared to the historic American Silicon Valley experience. We asked Presidential Aid and High Tech Park project leader, Valery Tsepkalo, to comment on the new undertaking.

- Where did the idea for launching the Belarusian High Tech Park come from?

- The President of Belarus first spoke of creating a unique business environment to develop the latest technology in his spring 2004 address to the Belarusian Parliament and people. The environment will be unique, as it will provide favorable conditions for employees engaged in high-tech production. The proposal was touched upon for the second time at a meeting dedicated to problems relating to the operation of the Belarusian free economic zones (FEZ). There are positive and negative aspects to any situation. FEZ are conducive to developing production, encouraging new companies, creating new jobs and increasing revenue. However, they generate competition in the domestic market between residents and non-residents. This comes from the existence of preferential conditions for companies located in the FEZ territories.

We began to study the support of high-tech industry internationally. The experience of the economically developed countries was of less interest to us than that of Korea, India, China, Malaysia, Singapore, and other states, which have managed to catch up with the industry leaders over several decades.

At present, we are developing the legal basis for the Park’s operation. We intend to give preference to companies dealing with information and communication technology. We think this will bring more profits and higher salaries for workers.

Salaries paid to employees in the microelectronics industry are low throughout the world, as operating a conveyor belt is believed to be unskilled. The skills needed in the microelectronics industry are similar to those for the light industry. For a microelectronics production line to meet modern requirements, a large investment of perhaps $500 million to $1 billion is necessary. Salaries paid to conveyor operators, however, would not exceed $130. In South East Asia, college students often take these jobs to earn pocket money.

Setting up a modern laboratory would cost hundreds of millions dollars. Should, for example, the University of Manheim decide to launch such a lab in Belarus, we would provide preferential conditions for construction and the hiring of personnel. What would be important would be the lab’s further operation. The world has been confronted by the problem of the “brain drain.” Many research staff working in Germany are scientists from the former USSR and Central and Eastern Europe.

Germany uses budgetary finances to establish scientific laboratories and invites foreign scholars to work in them. This compensates for the costs related to the purchase of equipment. At the same time, German scholars leave to seek work in the USA, where large corporations and the military sector finance research and development.

The information and communication industry has unique potential as developing software and IT is very cost-effective. It does not require state or corporate underwriting, unlike microelectronics. Software is created by simple human initiative and determination; its production does not rely on expensive equipment. 95 percent of the final product costs come from labor. It would also be easy for Belarus to comply with the legislation governing ICT production, as laid down by the WTO.

- What preferential treatment will park residents enjoy?

- There are four aspects. First of all, there are preferential rates of income tax (and other social taxes) for staff. Programmers would be entitled to patent their ideas according to Belarusian legislation. Secondly, corporate tax is reduced. We intend to impose a minimum income tax, which, in our opinion, would stimulate domestic and foreign companies to set up businesses in Belarus. Thirdly, we plan to introduce a special customs regime for the ICT industry. We would like to extend this to the import of IT related products. We also wish to make the process of certification and licensing simpler for those applying. At present, entities issuing licenses sometimes give ungrounded denials or take up to six months to finish the paperwork. The simplest solution is to recognize international certificates.

The fourth aspect is a financial one. We would like to give financial preferences to foreign banks and venture capital allocated for innovative projects. Capital should be able to be taken out of Belarus, back to the investor’s home country in such a way that earnings would still be tax-free. We can’t predict any figures but these conditions would certainly create a favorable business environment.

- So far Belarusians perceive the notion of a High Tech Park as something abstract. Will it be an enclosed area with office premises?

- Yes, we are going to develop a special area with premises. In fact, we are planning to launch a high-tech city within Minsk. It is likely that the Park will be state-run, while companies within its territory would be companies of various types.

- A Belarusian delegation visited Sweden to learn from the Swedish experience of techno-park building…

- Sweden is facing a huge problem regarding the loss of intellectual labor. The country has a high income tax, although corporate tax is quite low. As a result, some financially successful people leave Sweden. Many companies, such as Ericsson, transfer their laboratories out of Sweden in order to find labor.

Finland’s experience is more interesting to us. It is useful from the point of view of science financing. In Finland, foreigners distribute funds to new projects. That way, those involved in the projects don’t have to decide where to allot finances. Any country faces the problem of clashing interests. If two research institutes are launched and compete for state funding (as was the situation in the USSR), problems will arise. India is also of interest to Belarus. It is called the “awakened tiger.” Following a period of decline, it has at last found its path and has chosen to develop information and communication technology. Indian programmers are usually reluctant to emigrate outside of India to seek work, as they are offered such good conditions in the home market.

Chancellor Schroeder wanted to attract 70 000 programmers to work in Germany, but only 10 000 arrived, mostly from Central and Eastern Europe. Germany was hoping to welcome Indians, who are recognized as gifted organizers, programmers and mathematicians. In terms of software development, India is second only to the USA, while exports of Indian software are three times greater than those of Russian armaments.

- Can Belarus handle the implementation of the project or will it be relying on attracting overseas expertise?

- The country has excellent scientific potential. According to the Trestle Group Research, Belarus’ share of the world software market is comparable to that of Russia. We use the latest software and equipment. Products manufactured in Belarus are in demand on the world market.

- Is foreign capital needed to set up the project?

- We’ll focus on this issue within the framework of plans for the park’s creation. I don’t think there’ll be any difficulty in attracting investment for ICT. However, it may be more difficult to find funding for other traditional industries, as many of these lag behind the progressive Western ones.

- Is it true that one of the objectives in creating the park is to deter Belarusian specialists from leaving the country?

- The objective is wider than that. IT is used universally, in all spheres of life. It is not like nanotechnology. Every tenth household has a PC and all businesses rely on computers now. IT development is vital to the country’s economic advancement. Throughout the world, the IT sector has long outstripped the military industry. The IT market accounts for $1.3 trillion [its rate of growth is impressive], while armaments have become quite static, accounting for only $800 billion. Making weapons is a specific business and, although it does extensively employ high technology, it has narrow applications. We believe our country’s IT potential will lead the way into the future.