The Baltic Course  

The Lake District – a Euro-region

Olga Pavuk

The Vitebsk oblast Belarus has been selected as the main Belarus region responsible for implementation of an agreement on principles of cross-border cooperation between the Belarus Republic and the Republic of Latvia. Vitebsk оblast executive committee chairman Vladimir Andreychenko told The BC about some agreements with the Baltic states

Vladimir Andreychenko.

Photo: Vitebsk administration


The total length of the Vitebsk oblast borderline with neighboring countries adds up to 933.8 km, including 578.8 km of borders with Russia (341.8 km with the Pskov oblast, 234 km with the Smolensk oblast), 192.2 km with Lithuania and 165.8 km with Latvia. 


Mr. Andreychenko, what form has the current inter-regional cooperation between the Vitebsk oblast and Latvia taken?

Today the Lake District Euro-region comprises of six border districts in Belarus, three in Latvia and four in Lithuania. In 2001 this Euro-region was admitted to the European Association of Euro-regions.  

Latvia remains one of our key economic partners, accounting for some 15% of the Vitebsk oblast foreign trade turnover or 26 percent of exports by local companies. Among non CIS countries, Latvia has been a leading foreign trade partner for the past 5 years, taking about half of all non-CIS-bound exports. This is more than total exports to the CIS, not counting the Russian Federation. For most part this is due to shipment of oil products through the Latvian port of Ventspils which makes up almost 90% of exports to Latvia. All in all, over 80 items are exported to Latvia, mostly polyethylene, nitroacrylic acid, acrylic fibers, flaxen fabric, footwear, chipboard.

How effective is the performance of the Vitebsk special economic zone (SEZ)? What exemptions are available to a foreign investors?


Vitebsk SEZ was set up under decree of the Belarus President in August 1999, for a period of 30 years and takes up an area of  902.7 hectares, including 872 hectares of former air base premises and 30 hectares that formerly belonged to a radio equipment plant.


Attention is focused mainly on increasing exports and developing production to substitute import goods. Under the Belarus presidential decree and the law about free economic zones foreign investors are guaranteed a 50 percent discount on income tax and VAT levied in the Belarus Republic for a period of 30 years, duty-free imports of raw materials, equipment and components for saw mills. Residents are exempt from income tax during the first five years of operation. This exemption to residents will continue to apply also afterwards, provided that income is used for investment within Belarus.

Currently there are 16 residents operating in the SEZ territory alongside a servicing bank, customs agents, warehousing facilities for storing products. Investments made are estimated at 11.2 million US dollars contributed by investors from Germany, the US, Bulgaria, the Czech Republic and the Russian Federation. Over 1,000 people are employed there, and nearly 80% of the output is exported.  

Attractiveness of the SEZ is evidenced by the fact that it houses businesses of world-known German companies such as Triumf Internazional producing brassieres and swimsuits and Schwartau Internazional making pastry products.

Products by Vitebsk footwear companies Marko and Belvest are well-known in Latvia.

The Belvest representation in Riga was opened two years ago, and interests by Marko are represented in Latvia by a number of major distributors. In recent years footwear made by these two companies has remained a competitive product in the Baltic states even considering that quite large amounts have to be paid in taxes upon importing them from Belarus. Our footwear is competitive both by quality and price, although it becomes increasingly difficult to maintain this balance.

What other products made by businesses in Vitebsk city and oblast could be of interest to their Baltic neighbors?  

First of all, they may be interested in products of the oil-chemical complex. Also, traditional interest in flaxen fabric persists. The matter of technologies for processing short flax fiber  has come to the fore currently and we will be pleased to receive proposals from Baltic business people. There’s also a demand in fiberboard further shipped to Scandinavian countries.

It is very important that all the above products are certified, reliable and simple to use, well-known to Latvian consumers and have been used in production by Latvian manufacturers for years.  

We remain traditionally interested in cooperation with the textile industry, first of all in expanding the package of contracts for production of garments and knitwear items. This industry is very advanced  in the Baltic states and could see successful growth with us in view of the huge potential of textile companies in the oblast, which have experience in working with German, Italian, Dutch and American customers.

In the last two years the Novolukomlsky ceramsite gravel plant has stepped up shipments of its ceramsite to Scandianvian countries via Latvia. The product passed laboratory tests in Germany and its range of application keeps expanding (in road maintenance, production of construction materials, in hot-house farming).  

In turn we are interested in investments in the meat-and-dairy and food industry that has already been modernized in the Baltic states, and we would be pleased to have such cooperation.

What Baltic products would Vitebsk oblast be interested in importing?

Imports from Latvia are insignificant for now at some 4 million US dollars a year or 0.7 percent of total imports by the Vitebsk oblast. We also import USD 7-8 mln worth of Lithuanian products and no more than one million US dollars worth of Estonian-made products.  

Fish products prevail among imports from Latvia as they are used to make canned fish, various salads and snacks. This is the business done by an absolute majority of companies set up with participation of Latvian capital. There are also transit imports of TV-tubes, transformers as well as manual tools, glass beads used in fiberglass production, and hides.

These products have to withstand competition from goods supplied from the CIS states, first of all Russia, with which Belarus has a common customs zone.  

I believe these are some of the issues that have to be taken into account initially by Baltic businessmen interested in taking up both Belarus and Russian markets.