Industrialists and entrepreneurs support effective privatization, bearing in mind that its main goal is not the complete sale of all available facilities to fill the budget, but the correct and substantiated transfer of state-owned property to private hands to attract investment for modernization, to boost the competitiveness of the national product, and accumulate funds for structural reforms. These were the subjects highlighted by President of the Ukrainian League of Industrialists and Entrepreneurs (ULIE) Anatoliy Kinakh at a roundtable talk entitled “Privatization of State Enterprises: What the Budget and Economy of Ukraine Will Get.”
“First of all, the process has to begin to draw up and endorse a state property privatization program. There should be no hurry in the privatization process. After all, these are in fact the least recent assets that the state has got for sale in general. And a risk is high here to quickly slip into raw economy and become the supplier of cheap labor to developed countries,” he said.
The state program on whose basis public facilities will be privatized shall include a feasibility study for each enterprise; a list of strategic enterprises that are not subject to privatization (defense, transport, energy and food security). The program should also provide thorough pre-privatization preparations to increase the value of state-owned assets. If this hasn’t been done, it’s not worth conducting large-scale privatization.
ULIE experts believe that there is an alternative to the privatization of state property, namely strategically important companies – this is to make management of such assets by the state more efficient. The statements that the state cannot be an effective owner are not true. Today, many leading countries demonstrate examples when the state acts as an effective owner, in some cases, with state stakes of between 20% and 40%.
“We are confident that inefficient enterprises, which are not of strategic importance and are not bound by state-related and social liabilities, rather than strategic ones should be sold first. An effective owner should come there, invest funds and make the enterprise succeed. However, strategic companies that are connected with national security have to remain in state ownership,” Kinakh said.
Participants in the roundtable talk at the ULIE stressed that one should not forget about the main strategic goal of privatization – the formation of the effective structure of the Ukrainian economy itself. We should focus on the development of high-tech and technically sophisticated production, identify it as a priority sector for state legislative and financial support; concentrate on raising investment in that area. We cannot accept the tendencies of becoming a third world nation with a resource-based economy and cheap labor.
Transparency, open process and the ability of the public to control how officials manage state property must become an integral part of the privatization, as this is the most effective barrier against corruption and possible abuse and provides the ability of mending previous mistakes in the privatization process, the ULIE said.
