Page 22 - bne magazine September 2020 russia melting

22 I Companies & Markets bne September 2020
Indeed, the HTP has been so successful that there are plans to build a series of similar parks in various Belarusian regional cities.
Thanks to the traditional emphasis on hard sciences in higher education, and especially mathematics, Belarus has a wealth of highly talented and hard-working software engineers. Moreover, its geographic location allows it to cater to clients in the US, all of Europe and in Asia, as the working day in Minsk overlaps with all these markets. But 90% of the exports go to the EU and the US markets.
IT exports have become a serious business for the Belarusian economy. The HTP exported $1.4bn worth of software in 2018, up by 38% from the year before, BelTA reported in March –
a target the park was only expected to hit in 2020.
“The export growth surpassed all our expectations. The projections made by leading agencies were also beaten. Naturally, this is a direct consequence and an obvious success of the ordinance passed by our head of state. This success belongs not only to the Hi-Tech Park, but also the entire country. Belarus is indeed turning into one of the most powerful IT clusters of the whole of Eastern Europe,” Vsevolod Yanchevsky, director of the state institution
Hi-Tech Park Administration, said.
Today the HTP is home to 267 companies and over 45,700 people were working there in 2019.
EPAM has also been doing well. It just reported its second- quarter financial that were well above consensus, as if anything, its business has been boosted by the coronacrisis.
“EPAM’s 2Q20 revenues increased 15% year on year to $632mn and came in 6% above consensus and 5% above
our forecast. The number also significantly exceeded the company's guidance of $590-605mn,” BCS Global Markets said in a note on August 7. The growth was primarily driven by the strong performance of the Business Information & Media vertical (+43% y/y), Life Sciences & Healthcare (+16% y/y) and Software & Hi-Tech (+13% y/y).
However, most investment banks have marked its stock to hold or sell after the share prices rallied strongly this year and are now trading at just short of its 52-week high of $314; it shares are valued at a price-to-earnings ratio (p/e) well over 40.
EPAM is not the only company that makes use of the country's deep pool of IT talent. Minsk is one of the strongest players in the business and holds its own against rival IT hot hubs such as Bucharest, Kyiv and St Petersburg, along with several Russian regional cities.
The companies are annoyed, as Lukashenko has been blithely shutting off the internet every day at around 7pm as the street protests start to prevent the crowds from co-ordinating via social media.
The internet outages during the protest are costing the IT businesses $56.4mn per day, according to netblocks.org, and these costs are likely to soar if the protests drag on.
Already increasingly short of cash after Russia began to reduce its energy subsidies as part of its so-called tax manoeuvre, Lukashenko can ill afford to wreck one of the country’s best, and fastest growing, export orientated industries.
Estonia’s e-residency starts making money
Linas Jegelevicius in Vilnius
Estonia’s Minister of Foreign Trade and Information Technology Raul Siem said on July 29 that the audit of the e-residency programme carried out by the National Audit Office (NAO) confirms the benefits of electronic residence.
By the end of the first five years of the e-residency programme the revenues of the programme launched in December 2014 have started to exceed the expenses,
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NAO accentuated. However, the current ex-ante and ex-post controls do not ensure that the participants of the programme are law-abiding, the chief auditor observed.
The minister noted that the National Audit Office did not identify any risks related to the programme that were not known already.
Estonia's e-residency programme, which continued its strong growth even during the coronavirus (COVID-19) emergency