Two Prominent Figures Speak Their Mind about the Latest Privatization Measures [Archives:1999/45/Business & Economy]

November 8 1999

1. Dr. Ahmed Abdullah Bin Al-Sheik Abu Baker,
Manager of the Main Bureau of Rabitat Abnaa Al-Yemen (RAY)
We in Rabitat Abnaa Al-Yemen (RAY) believe that the dissociation of solutions is not a good enough measure. Hence, the embarkation on introducing economic, social and judicial reform in our country will be inoperative and lacking the factors of success in absence of a real and comprehensive political reform. Also, under implementation of a law by force it in turn loses its power to achieve its purposes. Law of privatization will turn to be as a legal cover to take hold of state institutions and companies under pretext of privatization.
In this case, the victim will be the country and the people because all properties of the country belong in fact to the people. The process of selling or privatizing must be according to accurate and honest criteria and impartial fair studies. It must pass through careful stages starting from conducting comprehensive surveys of productive and public services utilities intended to be sold along with studying the local market and the economic and social impact of this process. Information and data derived from the surveys should be analyzed in order to define priority of the projects to be privatized taking into account significance of the project, its financial value and its performance in the former period. This process should take enough time to be done fully. We must seek advice from private corporations such as the stock market.
This corporation is the specialist corporation which can do an accurate and fair evaluation according to the standards and systems adopted in the countries which adopted privatization ahead of us. The stocks of these corporations and factories will then be offered for sale to the people in order to get better prices and to prevent monopoly. The opportunity should also be given to the employees and workers of these institutions. There should also be a guarantee on how to use the huge amounts of money procured from the selling process to accommodate the surplus workforce and create new jobs for those liable to lose their jobs because of the privatization.
The government did not seek the opinion of the parties and other specialists before issuing the law, moreover it has not been published yet. So, I will put forth some of the brief points presented by the Study and Research Department of the Rabitat Abnaa Al-Yemen (RAY) to study the project of privatization in general, befitting from privatization experiments of some developing and European countries such as Italy, Britain and Sweden:
1- One of the main obstacles in the implementation of privatization is the big cost. In the process of privatization we must employ thousands of laborers from the private sector, taking in consideration the calculation of the average cost of compensation and re-training of those employees which could amount to thousands riyals for training each worker.
2- In spite of the expected big gains of high efficiency, there are dangers of mismanagement of these operations.
3- Efficiency of the privatized institutions will depend mainly on effective monitoring and supervision of their performance, especially in the sectors where public projects could become private monopolies.
4- If it was necessary for someone, or a group, to get the opportunity to control a certain institution, it should be transparent and small shareholders must get their shares according to the same conditions obtained by those selling to those demanding to buy.
5- Generally, the law of privatization must include clear and definite rules preventing control of influential groups and protecting small shareholders and encouraging small investors. Also, law of privatization must provide an opportunity for the authorities to diminish the degree of centralization and guarantee a chance for a bigger number of stock owners.
Therefore, the programs of privatization must not be done in haste. It must follow a careful and accurate study based on scientific and just criteria. The issue is not that the state relinquishes its property of an institution or a company, because if the objective is so it would then be at the expense of the citizen whose suffering has been unprecedentally aggravated when the majority of the society are already living under the line of poverty. A certain sector of the society has got its control over most of the riches and privileges.
2. Faruq Nasser Ali
Privatization has been basically suggested by multi-national companies, which considered that the whole world must be as a market of their own. Therefore, they called for “capitalism without a limitation”. At the same time, they requested the World Bank to exert its pressure on the third world countries through loans, interests, etc. They aimed at disturbing the process of economic activity of the developing countries, which means that poor countries must not play any roles, and cannot achieve economic and social development in this field.

The intention of those countries was to control the main productive sectors in the third world countries. In addition to this, they want to control markets of the developing countries. In spite of the important role which was played by third world countries in the development of capitalism, the capitalist countries played as the spinal in the development of capitalism. At the same time they aim at removing third world countries from economic activity, claiming that these countries are an obstacle in the face of the economic development.
Those who are calling for privatization in our country are talking about the ability of the private and capitalist sectors to achieve social and economic development. They indicated that the economic and financial failure was due to the interference of the state in the economic activity, and also because of the heavy financial burdens borne by the state budget. They forget that the taxes levied by the state from the employees amount to 90% of total tax revenues, while the private sector pays 10%. During the last five years, we discovered the position of local capitalism in the social and economic development. Why did the government sell public companies and factories in the Southern governorates? What happened then?
We have not heard about any economic or social plan of the private sector. We have just seen them running after lands and investment in the easy activities through which they can earn money. Of what economic and social development are they are talking about? How can they make economic and social development according to the capitalist concept? In such a developing country, and in such a private sector which does not have the ability of realizing the economic development? The private sector works to be a successful agent for public sector corporations or to buy these corporations.
Now, which economic and social development are they talking about? Those people have excluded the developing countries from participation in reconstruction of the national economy. What positive results could be gained out of privatizing all of the majority of state institutions in the Southern governorates? So, about which social and economic development are they talking about? In this case, the country will not witness any development in this field because the development will be confined to a small group of people. This is what we are witnessing nowadays!!
Deterioration, corruption and absence of law in the country have turned the private sector into a sector which puts property of the public sector under its control, which means that it does not aim at contributing to its development.
Now, we come to the perplexing question! How does a government complaining of the permanent deficit in the public budget, and complains of the increase in expenditure and low revenues decide to sell its corporations which provide large revenues covering an important percentage of its spending? Indeed, this contradiction arouses questioning about the meaning of privatization? Why didn’t they make solutions of the ill-performing corporations?
How can we talk about law in which most of the corporations in the Southern governorates are privatized in spite of the fact they are rated among the most productive corporations in the country? Why weren’t the Northern institutions put on the list of privatization.
The country has abandoned its successful corporations and did not develop new projects. It has also surrendered to the World Bank and International Monetary Fund Conditions. This process is not the process which we have seen in all sectors. The participation of the country according to economic, social, national and democratic policy will improve national economy and help those people who suffer from poverty. Now, what will remain for those people after the government has sold the companies to the private sector? What will be the fate of the coming generations in this developing country? This country which aims only at developing the private sector.
After the events of July 7, 1994, the extent of organized plunder of public sector institutions in the South has become very clearly seen. It has become clear how certain groups benefited by plunder under the banner of privatization when they controlled over some institutions even without any law or even a decision being issued.
The actual problem lies in the absence of the state of law and order, an institutional state, a state where the judiciary is not independent. Under such circumstances a comprehensive economic and social development would not be achieved. Unless the institutional state, the state of order and law is founded, long-range change of our society cannot be realized.