November 23, 2017 / 2:34 PM / a year ago

UPDATE 1-Belarus cuts red tape to boost business climate

(Releads on Lukashenko decree, adds quote, background)

By Andrei Makhovsky

KIEV, Nov 23 (Reuters) - Belarus gave a twin boost to the private sector on Thursday as President Alexander Lukashenko signed a decree to reduce red tape for businesses and parliament passed a draft law cutting the number of corporate fines and other penalties.

As financial aid from Soviet-era overlord Russia declines and after protests about unemployment and low living standards, strongman Lukashenko is rolling out a series of business-friendly measures to foster private sector growth.

The new decree means would-be business owners do not need to seek permission to launch a commercial operation but must only notify the authorities.

“The decree is designed to give the necessary impetus to the development of entrepreneurial initiatives, to stimulate the business activity of citizens, and to improve the country’s investment climate in general,” Lukashenko’s press service said in a statement.

The directive also simplifies regulations governing company operations, including safety and sanitary requirements.

Earlier on Thursday parliament passed a bill at the first reading allowing firms who fall foul of regulations to be warned rather than fined in the first instance. It also virtually eliminates the state’s ability to confiscate companies’ property.

At present, companies complain their goods shipments can be seized for trivial reasons such as small errors in paperwork.

“Practice shows that the penalties for a number of regulations are disproportionate,” said Vadim Ipatov, director of the National Centre for Legislation and the bill’s sponsor.

“These are the very regulations that raised most concerns for the business community.”

The law will enter into force after it is approved by the parliament at the second reading.

Street protests earlier this year against a “parasite tax” levied on the unemployed to compensate the state for lost taxes, were the biggest anti-government protests for years.

Lukashenko has increased support for private companies to help boost growth and potentially avert more unrest but has not reformed state firms that dominate the economy.

Wedged between Russia and the European Union, Belarus was long reliant on money from Moscow but that help has diminished as Russia faced its own economic problems.

The Belarussian economy was in recession in 2015 and 2016, pushing up unemployment and hurting earnings and fuelling public discontent with Lukashenko, who has been in power since 1994.

Another decree he has signed makes it easier to start a small business such as a hair salon or a bakery. He has also tightened regulations for the inspection of companies and made it illegal to halt a company’s operations without a court order.

Further decrees in the works will cut the number of licences firms need and put a moratorium on the introduction of any new taxes or increase of current taxes until 2020. (Editing by Matthias Williams and Catherine Evans)

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