State Property Management Strategy in the Republic of Belarus

There are about 5,500 enterprises, shares in 1,000 joint-stock companies (with state-owned block of shares constituting more than 25% in 830 companies), sizable areas in non-residential fund on the state property list. Until recently the objectives of management for a particular property unit were not defined by the state. In August 2000, the Council of Ministers of the Republic of Belarus, by its Decree, approved the Concept of State Property Management for the period 2001-2005. The Concept has been elaborated with the purpose to increase efficiency of state property use on the systematic approach basis. Measures stipulated by the Concept are not only to regulate exercising powers of proprietor by the state. Their implementation will make it possible to improve state property reforming system and create a favourable investment climate. One of the major tasks is to optimize the number of state enterprises. Branch ministries together with the Ministry of Economy should define the enterprises to be left state-owned and those to change their status. In these case branch management schemes are to be worked out and the state will own only those enterprises whose functions cannot be performed by enterprises of any other organizational legal form. It is important to define management strategy for joint-stock companies which have been formed as a result of denationalization and privatization. The functions of state realized through participation in the capital of economic units will be optimized, vertically-integrated structures (holding companies, financial and industrial groups, etc.) will be formed, state-held shares will be sold in an effort to determine an effective proprietor and replenish the budget revenue. It is suggested that all possible forms of management should be widely used including transfer of shares to trust management by heads of unions and specialized companies having appropriate experience and qualified staff. The criterion of assessment of the state property management efficiency is the attainment of the goal of management with maximum resource saving. Privatization is considered to be a component part of the process of formation of effective system of state property management. It is obvious that the state is not in a position to regulate enormous amount of property it owns. The Concept formulates the following tasks connected with the transformation of state property. During 2001-2002, no less than 75% of unitary enterprises with workforce up to 200 will be denationalized and privatized. Till 2005 the reforming of state-owned unitary enterprises employing up to 500 people is supposed to be finalized. The preferential method of privatization of small enterprises is to sell them by auctions or on the basis of tender. In case large-scale enterprises of the republican ownership, ìpointî privatization by means of selling shares on the investment project basis predominates. To improve legal base of privatization the Ministry for Management of State Property and Privatization has elaborated a new version of the Law on Denationalization and Privatization of the State Property in the Republic of Belarus that stipulates the diversification of methods of privatization. But as of now various flexible approaches to transformation of state enterprises are employed. Thus, while selling a state property unit by an auction its starting price may be not only increased but also decreased 5 times, subject to the relation of supply and demand. Enterprises with a starting price equal to one minimum wage can be sold by auctions and tenders. In this case a buyer is to discharge debts of the enterprise. Equity market is being progressively developed. State-owned shares of 50 joint-stock companies are placed at the Belarusian Stock Exchange. Auctions and tenders for selling shares for foreign currency and for ìPropertyî vouchers are regularly held. Selling shares of state enterprises contributes to expansion of integration and attraction of investments both at the stage of reformation and in the process of future functioning of new economy entities. It should be noted that in accordance with the current legislation, foreign investors have equal rights with Belarusian legal entities and individuals.