Privatization: Reality & Ambitions ..! [Archives:2001/13/Business & Economy]
Abdulaziz M. Abdul Ellah
Privatization is one of the techniques included in the economic, social, financial, and administrative reform program which many countries have embarked upon due to foreign debt problems and chaos in their economic and development structures. These problems are associated with a permanent deficit in the budget of the state, deterioration in the level of performance in public establishments, an increase in the level of unemployment, inflation associated with a remarkable increase in population., deficit in the trade balance, etc. Yemen is one of these countries which has been suffering from such problems and has started implementing this program.
The privatization program is an important part of the economic reform package. The target of some changes by the authorities of the state will give more opportunities for the private sector to participate in the economic development process. This will give the authorities enough time to focus on the economic and financial policies necessary to buoy up the national economy in terms of increasing the resources, decreasing the permanent deficit in the budget, creating a proper and conducive atmosphere for national, investment. This also includes drawing out economic policies to encourage national exports, protecting the citizen from the trade and industrial counterfeiting, monitoring national products to abide by certain standards and specifications, drawing out plans and carrying them out to curb smuggling. Paying attention to the infrastructural development such as expansion in and building of main and sub roads, constructing airports and ports, drawing out maps for investment sites according to the priorities of the country, and so forth is also included.
There are other strategic objectives for the privatization program. They are indicated in the Privatization Law No. 45 from 1999, in which the role of the authorities is stressed in the market economies. The law also indicates the importance of reducing the heavy financial burdens that the authorities bear to support public economic units, of encouraging the possession and private investment on the condition that this should be based on competition and should not lead to monopolies. The law also stresses the establishment of a stock market and ways of ensuring the influx of capital for investment in state-of-the-art technology; increasing productivity and promoting efficiency of performance in marketing and standards in monitoring.
The privatization program, conducted in some European countries late in the 1970s and early 1980s led to contention and extensive discussions. This is actually a positive phenomenon in the sense that the more this field is focused upon, the more insight into its merits and detriments are revealed.
It is expected that the authorities have taken into consideration all the previous experiences, advantages and negative consequences in carrying out the privatization program now in effect in our country. The current privatization programs were formulated after many studies in the field of agricultural, health, tourist, industrial, fish, etc. so as to identify the priorities. The ground for these programs should be prepared by organizing seminars, workshops, discussions and media activities.
It is to be emphasized that if privatization is dealt with as one of many factors in the economic, financial and administrative reform program, it will have positive outcomes leading to the emergence of many prosperous private projects. However, if it is viewed as a way to liquidate distinguished and successful public establishments and companies, this will only lead to an adverse course with negative consequences.
The important fundamentals of privatization are that the governmental institutions should abide by principles of transparenc by, respecting the rights of employees working in establishments to be privatized and encouraging social societies and unions to take part in formulation of polices. The following techniques are crucial when conducting partial or complete privatization in any establishments:
1) Shares should be available for public subscription as it would encourage people to invest instead of using up their savings by buying consumer products.
2) Employees working in a company or economic sector should also participate in buying all or part of the shares of the unit.
3) Selling the ingredients of the economic unit of the permanent assets and those transferred from the private sector.
4) Selling shares of the authority in the joint or mixed companies of the private sector, while taking into consideration articles mentioned in the contracts of these companies in a way that does not contradict regulations and effective laws.
Worth mentioning is the fact that the privatization programs should be associated with a complete legal and legislative framework to ensure their success. This can be achieved through mechanisms to circulate shares and financial bank notes of the economic units which will be subject to privatization. A Civil Service Fund should also be established to enable the authorities to pay all the allowances of employees being laid off as a result of the privatizing of the economic unit. There should also be a mechanism to train the surplus of employees as well as making the necessary changes in laws with the objective of facilitating procedures and steps to establish new projects. This includes reviewing all the advantages and facilities to attract investors from the national, and foreign sectors to participate in the development process, making the privatization program a success.
To conclude, the privatization program is more than an economic process. It includes economic, social and political dimensions and should be based on transparency, objectivity, publicity and a careful analysis of the social and economic realities of the society.