EBRD long-term loans totalling EUR 26 million will help a Lithuanian-owned wood-processing company build a large plant in Belarus for what is planned as the first stage of a furniture-making cluster whose output is ear-marked for large retailers in the region.
The borrower is IOOO VMG Industry, part of Lithuania’s Vakaru Medienos Grupe. The EBRD loan agreements were signed in Vilnius on May 13.
The cross-border investment will be the lynchpin of a new wood processing industrial hub. The plant will be the first large-scale Greenfield project involving foreign direct investment in this key sector of the Belarus economy.
An eight-year EBRD senior loan of EUR 19.5 million and an eight-year subordinated one of EUR 6.5 million will support the construction of a EUR 76 million integrated plant in a free enterprise zone created outside Belarus’ third-largest city, Mogilev, in the east of the country.
In addition to its proximity to the Russian border, the Mogilev free enterprise zone grants firms significant tax and tariff breaks. Additional advantages are access to supplies of wood, good logistics for exports to Russia and western Europe, as well as an absence of trade barriers thanks to Belarus’ Customs Union with Russia and Kazakhstan.
In addition to the new jobs created while the plant is being built, the project will boost local employment by hiring nearly 900 staff.
The plant will set best international energy efficiency standards by recycling its own wood waste, both to manufacture particle boards and to produce its own heat.