The road to privatization: Too fast, too slow or just right? [Archives:2002/14/Business & Economy]

BY YEMEN TIMES STAFF
As the government studies plans to privatize a sweeping range of public services, including public telecommunication, post services and some banks, it remains caught between critics who say such changes will bring disaster to Yemens economy, and the World Bank, which wants faster action.
Sources say the World Bank has not been satisfied with the work achieved by the governments plan to date.
Critics, however, maintain that in an underdeveloped country like Yemen, where unemployment and lack of appropriate production policies are absent, it sounds that the privatization wont help.
The privatization trend is sweeping the Developed World under the recommendations of the World Bank and the International Monetary Fund.
Critics say they are seeking to sell public enterprises, regardless of productivity.
They add that governments will evolve into management tools simply for protecting brokers, catastrophic in a country that has a very weak infrastructure like Yemen.
Like other developing countries, Yemen is a victim of financial and administrative corruption, something further aggregated by the difficult economic circumstances and the lack of qualified human resources.
So its important to look at other ways it can improve, in addition to privatizing its public sector.
Some other suggestions
The status of public sectors enterprises show that the majority of production institutions are being run by unqualified managers who have no expertise in running industrial and agricultural production facilities. This has led to the bankruptcy of some and the bad performance of some others.
Thus, many of these enterprise have failed and usually ask for government help. Accordingly, government should think of taking the following measures.
Change the key staff of these institutions;
Provide training courses for the staff of these enterprises;
Give them financial incentives for increasing production;
Pay attention to market research relating to increasing exports;
Introduce new technologies to boost production at these institutions;
Involve the private sector in the management of these institutions.
The government has been very occupied since the beginning of 1990s with restructuring the economy of the newly unified Yemen. That has taken time and resources. This has forced the government to ask help of the World Bank and the International Monetary Fund.
World Bank experts have advised the government to go ahead with implementing the privatization program in a drive to cover the budget deficit. Thus, the government has embarked upon on its implementation despite its negative social and economic consequences.
Critics of government privatization plan say that private sector problems can be solved without selling these productive enterprises because Yemen is still an underdeveloped country and lacks manufacturing infrastructure.
However, the government says that it can’t bear additional burdens and its best to sell unproductive organizations.
The Executive Office for Privatization, a body directly supervised by the cabinet, has on its list of organizations to sell the Nashtoon Port on the Arab Sea (to lease) and the Shuqra fish-canning plant (to sell).
Its desired that such enterprises can keep their workers, upgrade their products and services and increase their production.

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