In recent years, the Government of Belarus has been increasing its efforts to promote private-sector development, strengthen the position of SMEs and sustain growth, employment and resilience. Noteworthy achievements since the previous SBA assessment include the recent adoption of an SME Development Strategy 2030 and the elaboration of provisions for the establishment of an SME agency. In addition, the adoption of Presidential Decree No. 7 “On the Development of Entrepreneurship” substantially simplified regulations for doing business as it includes provisions for minimising state interference in business operations, presuming the good faith of enterprises, and banning the introduction of new taxes until 2020.

The country’s SME definition has remained unchanged since 2010: SMEs are exclusively defined by the number of employees and are divided into individual entrepreneurs, micro (up to 15 employees), small (16-100 employees) and medium enterprises (101-250 employees) . This definition is not used consistently in legislation; for example, turnover determines eligibility for some tax advantages.

The economic role of SMEs in Belarus remains limited. In 2018, the share of SMEs, including individual entrepreneurs, in the total business population was 99.5%. The number of individual entrepreneurs, micro, small and medium-sized enterprises has declined to 346 109 in 2017 from 363 160 in 2014, which can to some extent be attributed to the macroeconomic slowdown. In 2018, individual enterprises represented 68.1% of all business entities; microenterprises 27.5%; small enterprises 3.3%; medium enterprises 0.6% and large enterprises 0.5%. All size categories of business entities, including large ones, displayed a decrease of registered companies.

In 2018, SMEs accounted for 28.8% of gross value added , up from 27.6% three years earlier. Most of the growth stems from micro and medium-sized enterprises. The share of SMEs in Belarusian exports of goods has fluctuated over the last four years. The 2017 level of 47.2% remains clearly above the 42.1% observed in 2014. At the same time, the number of employees working for SMEs (including individual entrepreneurs) declined from 1 477 300 in 2014 to 1 278 011 in 2018. This corresponds to 46.7% of the total number of employees in Belarus, up from 43% in 2014. Most of this increase is due to the relative stability of employment in microenterprises and individual entrepreneurs while total employment declined.

Belarusian SMEs mostly operate on very small scales in non-innovative, low-productivity industries, which explains their limited contribution to value added. In 2018, 36% of SMEs operated in manufacturing and trade, as well as repair of motor vehicles (Figure 9.4). Only 3.5% of SMEs introduced product or process innovation in 2018 compared to 34% in the EU (Belstat, 2018[8]; EU, 2019[9]). However, the rapid expansion of the IT sector is worth mentioning, with exports of ICT services having nearly doubled from 2010 to 2018, reaching 21% of all service exports in 2018.

Despite the limited participation in innovative and high-productivity industries, according to the World Bank’s Enterprise Surveys, 36.8% of small and 46.1% of medium enterprises introduced a new product and/or service (compared to the considerably lower Europe and Central Asia averages of 25.7% and 30.8%). For 61.1% of small and 68.2% of medium enterprises, the product/service introduced was also new in the main market (Europe and Central Asia averages are in this case higher, namely 66.5% and 70%). Finally, the percentages of firms that introduced a process innovation are also higher than average, accounting for 21.7% for small enterprises and 32.2% for medium enterprises (Europe and Central Asia averages are 19.2% and 25.3%).

Source: https://www.oecd-ilibrary.org/sites/67adad61-en/index.html?itemId=/content/component/67adad61-en