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Proceedings Presentation
of Country Reports Country:
Belarus Reducing
State Involvement and Privatization in Belarus: Mechanisms
of Interaction Between Public and Private Sectors by Ms Irina
Petrovna Saltanovich Senior
Lecturer Sociology
Department Belarussian State University
The reducing state involvement and privatization of
state ownership are the basic ways for Belarus to go to the market economy. The transition to the market economy and effective functioning of the
market autonomy mechanism are possible only if most of commodity producers
and enterprises possess a freedom in carrying out their economic activity,
i.e. if they work out themselves the production program, choose suppliers
and consumers, fix prices, dispose of their profits, decide to develop their
production etc. The regulations on freedom in choosing the form of ownership by means of
reducing state involvement and privatization. The market economy contributes to development of freedom in choosing a
form of ownership by means of privatization. The Supreme Body of the Republic of Belarus passed the resolution “On
basic conceptual conditions of reducing state involvement and privatization
in the republic of Belarus” in 1991. Small
enterprises for the most part were privatized during the first stage. The
second stage started in 1993 after the law “On reducing state involvement
and privatization” and some other legislative documents were adopted.
Hence the state ownership have been reforming for 10 years. Some results
have been achieved recently, the tendencies have been outlined . Principles of reducing state involvement:
voluntarism, economic interest of work collectives and individuals,
publicity, observance of interests of the state and the population. Criteria of reducing state economic involvement: reducing compulsory state orders, expansion of free sales of goods and
services, liberalization of prices, competition between commodity producers
and economic responsibility. Nevertheless the state regulates public
production by economic and legal norms.
Mechanisms of reducing state
involvement: creating new private and collective enterprises,
privatization of existing public enterprises. Legal
basic of privatization: The Law “On the
Ownership in the Republic of Belarus” The Law fixes three forms of ownership: private ownership, ownership in
common and state ownership. The creation of mixed ownership by joining
property of natural/juridical persons and the state property (e.g. joint
ventures) The
Law “On reducing state involvement and privatization in the Republic of
Belarus” (1993) Principles: o
combination of onerous and gratuitous privatization; o
every individual have the right to get onerous privatized
property; o
differentiation of methods, forms and procedures of
privatization; o
distribution of powers between state run public authorities
of different levels to implement the privatization; o
accordance of guarantee to members of work collectives of
enterprises under privatization; o
state control of privatization; o
publicity of privatization; o
partial and gradual execution; The Law on joint-stock
companies, limited societies and societies with the additional
responsibility (1992) The Resolution of the
Council of Ministers of the Republic of Belarus on holding companies created
by privatization (1993) The Decree of the President of the
Republic of Belarus №3 on
reducing state involvement and privatization
of state ownership in the Republic of Belarus (1998). It has given
concrete expression to the document “Basic directions of socio-economic
development of the republic of Belarus in 1996-2000”. Programs of reducing state
involvement and privatization State program of reducing state
involvement and privatization (1993) Objectives: ·
forming of an economy based on variety of privatization
forms; ·
arrangement of conditions for economic independence and
corresponding responsibility (right up to bankruptcy); ·
guaranteeing of competition; ·
creation of foundations for economic freedom of individuals; ·
separation of duty of state institutions and immediate
leadership of industrial and economic activity; ·
reducing public expenses to support low-profitable and
unprofitable enterprises. Directions of reducing state
involvement and privatization: ·
expansion of small privatization which is technically
supported by the International Financial Corporation; ·
perfection of the mechanism of privatization of major and
medium-sized establishments ·
creation of public corporation by privatizing
state ownership. Republican
program of privatization approved by Supreme Body of the Republic of Belarus There are two stages of
privatization during transactional period. The first stage is the one of
formal privatization. State policy plays an active role and results to the
rational system of ownership. The second stage is a stage of real
privatization - mass forming of real private property. The process of
privatization in the Republic of Belarus is carried evolutionally throw the
orderly concept withdrawing shock therapy. The conceptual bases of
privatization are following: The process of privatization in
transactional period is carried out via realization of the concept: a)
leading the economy up to the way of stable growth, b)
forming the model of mixed economy, the system of state measures: - wide usage of a
leasehold with state property callable, commercialization of state
enterprises, their organizational restriction, creation of the
project of administrative
entrepreneurship’s device; - differential
approach to privatization depending the liquidity of objects
privatized. Tools
of privatization: ●
Capital issue of state collateral, making available to attract finances from
the world capital market; ●
Doing selling and buying operations at the stock-exchange and non-stock-
exchange markets with the aim to optimize state involvement in economic
associations; ●
Conducting sales by means of direct negotiations with investors; ●
Conducting sales by installment under state guarantee. Requirements and conditions of
privatization. Model agreement between privatization governing bodies
and new owner of the enterprise. State control: minimizing
the risk concerning public property, unconditional realization of investment
and social engagements by new owners, guaranteeing of payment privatization
gains. Stages
of state control: ·
Preparation of public property for privatization ·
Direct realization of privatization; ·
Fulfillment of engagements assumed by owners. Methods
of privatization in Belarus: ·
redemption of leasehold by enterprises; ·
selling of state shares; ·
selling of state establishments on auctions; ·
selling of state establishments on competition; ·
gratuitous transfer of a part of state ownership; Arrangement of favourable
conditions for effective business development and competitive relations: ·
Public associations of entrepreneurs; ·
Council on business development at the President of the
Republic of Belarus; ·
Update Law of resistance to monopolistic activity and
competition development ·
Joint project “Stirring up of business activity by
developing partnership of between public and private sectors” signed by
the Belarussian Government and the UNDP Representation. The project allows the creation of business-incubator
that can provide material and consulting support for those who work for the
own business establishment, as well as for small enterprises that were
formed in the result of privatization. The project supposes the creation of a Center for
agriculture development, working out of business plan for microenterprises,
adapting of foreign experience of creating Guarantee Funds to the
Belarussian environment, etc. The Project of International Finance Corporation (IFC)
“Small privatization in Belarus” was concluded by 2000 (the Project was
started in Belarus in 1993) with the financial support of US Agency for
International Development. The project has become an obvious example of
IFC’s activity in the field of private sector development in transition
economies. The Project assisted in privatization within three
sectors: commerce, catering and consumer services. The
ICF’s specialists when working together with the Ministry State Ownership
Management and Privatization and executive committees improved national and
local legislations on privatization. The members of the Project made great
efforts to carry out privatization in most regions of Belarus and to train
specialists qualified in the field of privatization for municipal and regional executive committees. Many towns were helped to
solve several problems connected with privatization of municipal ownership
(legal advices, support in paper work). The project members made common efforts in carrying
out privatization in Belarus and in preparing qualified workers in the field
of privatization. Small privatization contributed to the development of
hundreds private businesses, to the creation of new private enterprises that
provide a wide variety of goods and services at the competitive price, pay
taxes, etc. 2300 new workplaces were created in the enterprises privatized
within IFC Project. The following equity market attributes can be mentioned as important
privatization conditions: equity market (exchange market and
stock exchange, depositary system for securities registration, professional
participants of the equity market, issuers of securities. However, the
absence of secondary equity market that is closely connected with
privatization as well as with definition of market prices for securities in
circulation adversely affects the stock market activity. Creation of mechanisms
non-inflationary crediting of organizations and Government on the security
of valuable assets. Statistical information on
privatization in Belarus
The
reducing state involvement and privatization of state ownership began in
Belarus in 1991. That year 42 public enterprises and 19 municipal
enterprises were privatized. 3474
establishments (republican – 857, municipal – 2617) were privatized
during 1991-2001. Work
collectives repurchased 721 establishments, 1334 establishments were sold on
auctions, 1418 establishments were reorganized in public corporations. The
State don’t have any share (0%) only in 100 public corporations (25% - in
68% of enterprises). Small establishments are more reformed. In
1999 62% of enterprises suggested to be privatized were reorganized, in 2000
– 44%, in 2001 – 17%. Basic tendencies of 2001
The
privatization in 2001 was carried out to fulfill the following main tasks:
increase of activity effectiveness of economic agents, guaranteeing receipt
of privatization funds by the Budget and realization of registered
privatization cheques “Imuschectvo”(property). 1,6 mlrd
roubles were collected by local and national budgets in result of state
ownership privatization, 9,6 mlrd roubles – in the result of communal
ownership. 22
establishments of communal ownership were privatized on auctions and
competitions in 2001. 39 public corporations were created. The main
cause of slow reform rates is the state ownership reformation containment by
public administration bodies. The
results of quarterly monitoring of financial performance and paying capacity
of state enterprises are evidence of aggravation of negative tendencies. The
number of money-losing companies is rising. At the same time branch
ministries don’t carry out analysis of paying capacity of enterprises. The
money-losing companies are not sold to investors. Main
reasons for containment of privatization: ·
Lack of strong political power; ·
Imperfection and instability of legislation regulating
business activity; ·
Imperfection of legislation regulating privatization; ·
Containment of reorganizing dependent organizations. Some
leaders of state bodies are afraid of reformation and are not able to work
out new management schemes. Improvement
of forming joint-stock companies: ·
Reorganization of public enterprises into joint-stock
companies; ·
Creating holding companies. Advantages
of creation joint-stock companies:
New approaches to the role of state in the economy
It
is known from the experience of Eastern-European countries that under the
reforms the stress was laid on the private sector, whereas large-scale
industry stayed out of attention. Under
the given conditions when economy suffers from shortage of investments for
all-round expansion and economic stabilization the selective approach
(“state patronage”, “selective action”) can cause the most effect,
the accurate choice of the “growth points” that is to match the
interests and expectations of the industry, the State and the society.
The overriding problem of the selective management is to increase the
efficiency of the industrial capability of the country. The methods of selective management are guarantied lending, development of leasing, insurance of
investment credits, preferential taxation, state protectionism of foreign
economic activity and other economic and administrative measures.
Agriculture, small and medium business as well as innovation sphere are
meant to be the most important objects of the selective management. State and society
It is
important to say about social difficulties that are caused by active
privatization. But the enterprise won’t become better if they are
controlled by the state. The privatization needs to be carries out with
support of private sector and population protection. Material
resources and analytic basis of enterprises should be reinforced. The micro
financing, mutual financing, property insurance, banking need to be
developed. The Guarantee
Funds for small enterprises should be established, as a result the
possibilities of primary accumulation and micro financing would be enhanced.
The development of unions and association of entrepreneurs will contribute
to the private business development and Belarussian business as a whole. Reducing
barriers to market entry of new enterprises (encouragement strategy)
needs to be accompanied by toughening of budget limitations for ancient and
new enterprises (discipline establishment strategy). The private
sector development will entail decrease of ancient enterprises number. State
structure of state ownership and privatization control The
Ministry of State Ownership and Privatization Control has been liquidated in
view of reorganization of public administration system. The responsibility
to control state ownership and privatization is imposed on the Ministry of
Economy of the Republic of Belarus where a Department for state ownership
control. A Fund of state ownership has been established. The
reformation of ownership becomes a system. Bureaucratic reformation
procedures are reducing. Privatization:
new approaches Current
situation requires increasing the efficiency of state ownership use. At
present new approaches to the privatization are working out, they include a
wide range of methods to sale the state ownership. A widespread practice to
reform state enterprises by the initiative of work collectives only
shouldn’t dominate when the methods of privatization and forms of further
activity are chosen. The
Conception of state ownership control adopted by the Council of Ministries
of the Republic of Belarus in 2000 fixes as priority the reformation of
enterprises with no more than 200 workers. According to the Conception about
75% of unitary enterprises should be privatized during 2002. The end of 2005
should complete the privatization of unitary enterprises with up to 500
workers. The 2002 National Budget expects to get 100 BYR as a result of
privatization. The
Belarussian Government supposed to reform 258 unitary enterprises with up to
500 workers (that is about 16% of registered enterprises with the
abovementioned quantity of workers). But the Ministry of Industry supposed
to reform only 35 from 217 unitary enterprises with up to 500 workers, the
Ministry of Agriculture – 155 from 549, the Ministry of Transportation –
14 from 66. The Ministry of Trade considers worthwhile to reform only 8
enterprises, which are under its jurisdiction. Thus, the instruction of the
Government are not observed n full measure. But the privatization is still
necessary for economic development in Belarus. The
privatization in Belarus has become irreversible. It doesn’t matter to
argue about its advisability. The market economy is impossible without
reducing state involvement. Forms and methods of privatization differ in object and subject of privatization. With all this going on the problem of efficacy of decisions in the field of state ownership reformation should be determinative. When coming to the desired result we cannot forget that the privatization is useful once it concern the production relations on the whole, but not only their exterior side. |