The Minsk-based Institute of Privatization and Management conducted a survey in the end of 2005 to investigate the situation of business development in Belarus. Representatives of 400 companies were asked 59 questions to that end. Their answers can be used to draw a credible picture of Belarusian business.
As many as 39 percent of those interviewed represent trade and public catering, 22.5 percent - industrial production, 12 percent - construction, and the rest - other sectors of the economy in proportion to their share in the structure of production. Minskers account for 52 percent of all interviewed business people. The average age of respondents is 40 years. Nearly 40 percent of them have higher economic education and 35 percent are graduates of non-economic universities. Thus, entrepreneurs are certainly one of the most progressive and advanced groups in Belarus.
With such a high educational level, they could have had an adequate appraisal of the function and role of the state in the economy. However, their answers reveal that ideological stereotypes that many of them received in their universities are still a rather strong determinant in their thinking. The quality of economic and university education in the country does not allow for building up powerful systemic support for market reforms.
The survey has found out that Belarusian business is still predominantly small (just 5.5 percent of companies gives employ more than 200 people). It could of course develop on its own, but it would be much better if such small enterprises were involved in production and service chains of large companies. Large Belarusian factories show little demands for goods and services offered by small businesses or sole proprietors. Thus, dynamic development of this sector is unlikely unless foreign investment is attracted and radical reform of business climate is conducted.
Despite all the difficulties, Belarusian business shows unrestrained optimism and the wonderful ability to adapt to conditions. When asked about changes in the financial situation of their companies in the end of 2005, 52.8 percent said it "improved." (For comparison: the respective figure was 45 percent in 2004 and 35.8 percent in 2003.) Just 10 percent said that it got worse, and 35.8 percent said it did not change.
Indeed, a flow of petrodollars and stimulation of domestic demand under the tough protection of Belarusian market from foreign competitors has made temporary improvements in the condition of the real sector. Almost 30 percent believe that increased sales are a result of changes in the market offer of goods and services, while 20 percent think that they sell more because the customer's purchasing capacity improved.
Belarusian business is optimistic about the future. As many as 59.5 percent forecast improvements in the financial condition of their companies. Just 6.3 percent say that it can get worse. One can be really surprised at how Belarusian entrepreneurs can survive under difficult circumstances. Experts say that business climate is extremely unfavorable in the country and point to the lack of economic freedom and serious problems linked with property rights. But entrepreneurs themselves seem to be quite confident in their future.
There can be several explanations for such a situation. Firstly, the poll naturally fails to cover those companies that had to leave the market for various reasons. Secondly, the interviewed enterprises have been in the market for quite a long time and managed to adapt to the conditions and optimize their relations with the state. The average business experience of those interviewed is 9.4 years. It would be reasonable to assume that these entrepreneurs have their connections in any government agency. Such informal connections help them reduce costs of state regulation. Moreover, businesses with such an experience and "their" civil servants are not really interested in creating easier conditions for market entry. Who needs additional competition?
Thirdly, Belarusian business is infected with fear. It is distrustful not only to journalists but also to sociologists and tries to keep its mouth shut on some issues to avoid trouble. The above-mentioned assumption can be proved by answers to two questions: "How often private company managers have to give bribes, in any form, to representatives of government?" and "Is the use of kickbacks widespread in Belarus?"
As many as 18.8 percent of those interviewed said that bribes did not exist at all and four percent refused to answer the question. But even kids know that bribes exist everywhere, even in rich countries. However, one in five Belarusian businessmen cannot even say the word "bribe" aloud. As for kickbacks, 25.5 percent said it did not exist in Belarus and seven percent refused to give any answer. At the same time, 24.3 percent admitted that kickbacks took place with the frequency of even more than once per every three deals.
These figures correlate with estimations of shadow operations, that is, the amount of commercial operations that are not reflected in accounting records. About 20 percent say that such a phenomenon does not exist. To check this assumption, I made an informal poll among more than 30 leaders of companies and business associations. Neither they nor their friends nor friends of their friends have ever met a businessman who would not face with things such as bribes, kickbacks or shadow operations. Therefore, one can conclude that a factor of fear amounts to 20-25 percent when businessmen answer such sensitive questions.
The most painful problem for private Belarusian business is large fines for mistakes (3.21 points on a five-point scale, with one as "no problem at all" and five as "most serious problem"). Among other problems are numerous inspections by auditing and tax agencies (3.18), lack of guarantees for private property rights (3.15) and certification procedures (3.15).
Least important problems for entrepreneurs are relations with local authorities (2.66) and lack of managerial and economic skills in managers (2.24). The average of 3.65 people per company deal with making reports for government agencies. Company managers spend 5.32 hours per day on communication with representatives of government. Such investments can hardly improve their competitive advantages.

Main competitive advantages of Belarusian business
as seen by Belarusian businesses