FW: Serbian privatisation

Barry Stoller bstoller at utopia2000.org
Tue Apr 10 13:11:21 MDT 2001

Finacial Times. 9 April 2001. Serbian privatisation to commence.

Serbia is preparing to launch a comprehensive privatisation programme as
part of economic reforms introduced following the overthrow of former
president Slobodan Milosevic.

Later this month ministers will present to parliament a privatisation
law, which could pave the way for the sale of some 4,500 companies by
tender and auction to strategic investors. Controlling stakes of up to
70 per cent of a company's equity will be on offer, to Serb and foreign
investors. The remainder will go to workers or be distributed through
vouchers to citizens.

Ministers hope that selling a majority stake will help solve a perennial
problem of companies in Serbia - the lack of a clear ownership
structure. Under communism, Yugoslavia prided itself on a system of
"social ownership" under which equity was shared by different owners,
including the workers and the state.  Most companies are now controlled
by employee and management committees, which have spawned myriad
competing sub-committees.

The new law will encourage employees to opt for early privatisation
because workers will be eligible for a larger percentage of equity the
sooner a business is sold. Money raised from the sales will be used to
help repay companies' foreign debts, and fund development of smaller
businesses. Some will go towards compensating former owners of companies
before nationalisation, shortly after 1945.

First to go are two cement plants, Novi Popovac and Kosjeric, Serbia's
second- and third-largest cement factories, producing 1.2m and 500,000
tonnes of cement per year respectively. The government will launch their
tender early next week and hopes to complete the sales by the end of
June. Ministers hope the prospect of internationally-financed
reconstruction will generate interest. Serbia's largest cement producer,
Beocin, in the north-east, has already been promised to Lafarge, after
the French producer of construction materials signed an agreement with
the previous government in September, shortly before Mr Milosevic's
regime fell.

The greatest challenge will be to establish what to do with Serbia's
industrial complexes, such as Zastava, the car and weapons factory.
Ministers hope to sell off potentially profitable parts.

The European Bank for Reconstruction and Development (EBRD) on Monday
opened its office in Belgrade, from where it has agreed to help fund the
Microfinance Bank Yugoslavia, an institution which aims to kick-start
the economy by lending to small businesses. The bank is similar to
EBRD-backed banks in Bosnia, Kosovo and former Soviet states.


Barry Stoller


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