Privatization
The governmental policy objective in the privatization sphere is to cardinally improve performance of enterprises and the country’s economy complex in general. Attainment of this objective would include involvement of the maximum number of objects of the state property into the civil turnover, optimization of the state property structure; control over fulfillment of liabilities by owners of the property to be privatized; deductions of privatization-related revenues to the national and local budgets; and stronger social orientation of the process of the state-owned property privatization.
4.1 thousand enterprises were transformed over the reforming period (since 1991) in Belarus. Of theses enterprises – 543 (13.2%) in the industrial, 292 (7.1%) – construction, 81 (2%) – transport and communication, 1521 (37.1%) – trade and public catering, 459 (11.2%) – consumer services, 763 (18.6%) – agribusiness sectors and 441 (10.8%) in other sectors of the national economy. The reformed enterprises employ 958.9 ths people or over 22% of the total employed in the Belarusian economy. Over 70% of units were reformed in the trade, public catering, consumer services and agricultural produces processing industries, nearly 40% in the industry and over 30% in the construction sector.
At the stage of transition from the centralized planning system of managing the national economy to market relations, privatization contributed to emergence of the businesses of various categories of ownership and helped create prerequisites for business promotion. For the Republic of Belarus privatization was and remains the way of investing in state-owned enterprises from the private sector. However, now that the state acts as an entrepreneur within the framework of the mixed economy, there is a need to enhance its capacity through clear governmental structuring of the production sector in terms of degree, level and form of governmental influence on operation of enterprises, particularly those being of strategic significance for the country’s economy and security. This governs the need to thoroughly develop the projects of reforming local enterprises, consider their specific features and significance on a regional and national scale and set additional requirements to transparency and improve control over their privatization.
Belarus took actions to transform large-sized state-owned enterprises of the petrochemical sector and Beltransgas gas transportation/supply republican unitary enterprise, being of strategic importance for the state, into public joint-stock companies. Despite the fact that minimal size of funds required to implement most critical investment projects at the to-be-reformed enterprises of the petrochemical sector totaled about USD 1 billion, the main condition was to safeguard the country’s economic security. That is why establishment of public joint-stock companies with 100-percent government stake was opted for at the first stage.
Large-sized enterprises of the republican property in other sectors of the national economy were also transformed on the case-by-case bases. The required investments in the established joint-stock companies are to be attracted at the stage of sale of state-held blocks of shares for specific investment projects. The decision on privatization may be made, provided that proposals on investments in the production development promote the increase in financial and economic indicators of the enterprises’ performance, comply with the governmental strategy of the development of the region and country as a whole and are not a threat to social stability.
The Republic of Belarus is a holder of 7.3 billion shares of 634 public joint-stock companies established through privatization of the state-property units, or 68.5% of the total issued shares.
To attract investments in the Belarusian economy, the Republic of Belarus systematically sells blocks of shares of public joint-stock companies held by it. A “pinpoint” approach is also used within the framework of the effective legislation and state property sale mechanism for preparing offers for sale of the state-held shares. Offers for sale of the state-held shares are considered on a case-by-case basis with respect to each enterprise subject to specific offers of the investors including foreign ones, prospects of the enterprise and sector development, provided that the state maintains its positions to manage the economy.
The Law of the Republic of Belarus On Appraisal of Value of Objects of Civil Rights is likely to be passed in 2006. The regulatory framework of the market valuation of property is being improved. The draft document of the unified methodology for evaluating the real estate in the Republic of Belarus has been drawn up. Therefore, a package of measures to improve the process of valuation of the state-owned property would allow for appraising a real value of enterprises to be privatized, creating a better environment for attracting investments in development of enterprises through transparency and unambiguity of methods of appraising their business and creating prerequisites for development of the securities market.
To improve the state property management, the unused, inefficiently used or construction-in-progress production units are to be further alienated in 2006 – 2010. Selling them through bids or auctions, leasing unused premises with the right of buy-out and reprofiling are to be intensified.
The number of state-owned unitary enterprises established on the basis of economic control rights would be gradually reducing over that period by privatizing and transforming them into state enterprises and also establishing joint-stock companies, with the state holding a stake in their equity.
Transfer of shares into trust management through bidding, the main condition of which is obligation of a preferred bidder (trustee) to guarantee an efficient operation of the enterprise and increase quotation of its shares, may become one of the ways of reforming. This would also solve the problem of an efficient ownership participation of employees of the state-owned enterprises to be privatized and social consensus building at the primary business level.
