“The country is still in recession” says Sergei Makarchuk, Partner at CHSH in Belarus, pointing to an approximately 3% decrease in GDP recorded in Belarus in 2016. Bankruptcy in the corporate sector is on the increase, he reports, with the economic courts’ docket “overflowing” with such cases. The purchasing power in the economy has slowly decreased as a result of lower income and decreased spending power for the middle class.
IT is currently the only prospering sector of the economy, Makarchuk reports, though not sufficient to overcome the greater geopolitical and structural trends. Makarchuk believes that the situation will likely remain the same in Belarus for the next few years, at least – though he hopes for new structural reforms to be introduced opening up the economy and loosening trade regulations to allow for more free and open competition.
Makarchuk confirms that recent tension between Belarus and Russia has adversely affected the economy, following the “small conflicts … taking place in previous years at the local level” between the two states. He also points to the lack of free movement of goods to Russia as a result of the restrictions systematically imposed on a number of Belarusian manufacturing companies by the Russian consumer protection authority Rospotrebnadzor, which he says have discouraged foreign investors who would under different circumstances prefer to establish a production site in Belarus for this very purpose.
On the issue of legislative developments, Makarchuk says that the recent protests in Belarus had motivated the government to usher in a new economic agenda, including an amendment to Presidential Decree No. 1, which regulates company registration and liquidation procedures. This amendment, according to Makarchuk, “introduced a limitation period of three years for the state authorities to bring claims on invalidation of a company registration.” The new amendment, set to come into force on September 3, 2017, also simplifies procedures for setting-up and liquidating companies.
Despite the struggling economy, Makarchuk says he has seen no obvious decrease in law firm profits, at least at the top level – but he says many law firms have had to shift their focuses from transactional and corporate work to bankruptcy and litigation in order to maintain a standard level of income for lawyers. Indeed, to maintain the same level of income as before, Makarchuk reports, the competition between law firms has become “very fierce and aggressive,” and firms are investing more heavily than before in business development and marketing.