Privatization of state owned enterprises in russia

Kremlin to finalize list of state-owned firms for privatization Published time: State-owned shares in Rostelecom, Transneft, Aeroflot, Rosneft, Sovcomflot and several other companies are among the possible assets for sale. However, the government is ready for a bigger sale as a result of problems with the budget, which could be reduced by 10 percent due to falling oil prices. The president instructed the government to finalize the list after the criteria was set, so that there would be an opportunity to once again meet with him in more substantive terms in some format," said Kremlin spokesman Dmitry Peskov.

Privatization of state owned enterprises in russia

References will also be made to similar countries of the world where privatization has been instrumentalised to improve their economies. Definition of Privatization This is a process of transferring the control of an enterprise from the government sector to the private sector.

Generally, but not always, this also means transferring ownership of the Public Sector Enterprise as well as control. By privatization, I mean that a service that is being provided by government is sold, partly or wholly to the public who then become the shareholders or stakeholders.

Privatization is the most common forms of alternative service delivery for-profits and non-profits-oriented enterprises. Privatization can be accomplished by sale or lease. Without transferring control to the private sector, the government can raise revenue by selling a smaller share, but that is not privatization as such.

It is hard to find a country without a privatization programme or a sector of activity not susceptible to private management if not ownership. Ownership matters Why privatize? Because ownership is a significant determinant of enterprise performance.

In both developed and developing countries, good State-Owned Enterprises SOEs performance has been very difficult to bring about--and even harder to sustain. Governments facing financial crisis often try to improve performance by bringing in new and dynamic managers, and paying them incentive salaries, granting managers autonomy to set prices, hire and fire.

These measures often have a positive effect, but as the crisis dissipates, so does political resolve. Political interference, a common and deadly disease of SOEs, tends to re-emerge--and painfully-achieved SOE reforms tend to backslide. SOEs thought to be well on the road to recovery have either stopped improving performance or suffered deterioration.

In Russia, where reform short of ownership change ended losses in a group of SOEs for yearslarge deficits have since reappeared.

Recognition that SOE reforms are limited and unsustainable, coupled with the fiscal burden of subsidizing loss-makers, has led financially hard-pressed governments to opt for privatization. The Evidence Privatization, if properly structured, yields substantial and enduring benefits.

A detailed and rigorous Bank examination of privatizations in Vietnam and China, found that divestiture was good for the economy as a whole and had led to higher productivity and faster growth in all.

Privatization of state owned enterprises in russia

The Chilean telephone company doubled its capacity in the four years after sale. The privatized telephone company in Mexico reduced its per-unit labour costs sharply. Another study found that firms privatized by public offerings in 15 countries: Vietnam, China, Jamaica, Chile, Singapore, and Mexico amongst others, increased returns on sales, assets, and equity, raised internal efficiency, improved their capital structure, and increased capital expenditures.

They also expanded their workforces by small margins. Privatization often is accompanied by layoffs, but this is not always so-jobs increased after privatization in divested firms in the Philippines, Vietnam, Tunisia, Mexico, Chile and China. Most privatization success stories come from high-income and middle-income countries.

Privatization is easier to launch and more likely to produce positive results when the company operates in a competitive market, and when the country has a market-friendly policy environment and a good capacity to regulate. The poorer the country, the longer the odds against privatization producing its anticipated benefits, and the more difficult the process of preparing the terrain for sale.

Nonetheless, successes can be found in low-income countries, too. Privatization turned around an almost moribund textile firm in Niger, helped revive a defunct development finance corporation in Swaziland, and revitalized an agro-industrial firm in Mozambique.

The Mozambiquan firm diversified into new products, began servicing its debts, and increased production fivefold. In the case of Russia, it can be evaluated, however, that privatization policies systematically discriminated against outside investors, resulting in a very high rate of inside ownership, and a continuing powerful role for the state.

Had these policies been different, many more firms could have improved their performance. Moreover, corporate governance institutions in Russia function very poorly.

Kremlin to finalize list of state-owned firms for privatization — RT Business News

The difficulty of establishing such institutions underlines the importance of concentrated outside ownership in the Russian environment, since only a determined and powerful owner with an interest in maximizing the value of the firm—has a chance of overcoming the many obstacles to effective restructuring.

How Privatization Works There are eight key ways about how privatization works: Privatization works best when it is a part of a larger programme of reforms promoting efficiency. Vietnam, New Zealand, the U.Fraction of firms with % state and mixed (state and private), domestic ownership (): among all firms and organizations: 11% in employment 39% Carsten Sprenger State-Owned Enterprises in Russia.

Introduction The extent of state ownership in Russia Corporate governance in Russian SOEs Conclusion. At the start of June , a large number of documents detailing surveillance by intelligence agencies such as the US’s NSA and UK’s GCHQ started to be revealed, based on information supplied by NSA whistle blower, Edward Snowden.

Privatizing Russia WHEN ANATOLY B. CHUBAIS was put in charge of the State Committee rights of some firms from the state to private parties. Real changes in the operations of enterprises have barely begun.

We cannot, therefore, Russian state enterprises. This article analyzes the ownership structure of state-owned companies and their role in the Russian economy.

Using a sample of of the largest Russian companies, we estimated direct and indirect state participation as a percentage of shareholdings for direct and indirect federal property during the time period of – Getty Images Everyone's been talking about Russia's super rich oligarchs lately — first because of the banking crisis in Cyprus, and now because of the mysterious death of one oligarch, Boris.

Feb 22,  · The face of state-owned companies in Russia, China, and other countries has changed dramatically over the last several decades, says professor Aldo Musacchio.

THE PROS AND CONS OF PRIVATIZATION: THE PROS AND CONS OF PRIVATIZATION