Speed-up the privatization of state-owned enterprises – An urgent requirement

Abstract

Privatization of state-owned enterprises and transformation of state-owned enterprises to joint stock ones not only help to mobilize more capital to expand and develop but also change the organizational model and manage enterprises in a more public, democratic, transparent and efficient manner. Therefore, privatization is the principal and most important way to innovate and enhance the efficiency of the state-owned enterprises. The total number of state-owned enterprises that have been privatized since 1992 to date is about 4000, or 181,5 enterprises per year on average. This average number, especially in the period of 2001 – 2006, is by no means low. The number of state-owned enterprises have declined dramatically, from more than 12,000 in 1990 to only 3,265 in the early 2012 in which the fastest decline is observed in the enterprises controlled by local governments. However, there are noticeable problems in terms of the speed.

In order to meet the target of privatization of state-owned enterprises by 2020, it is necessary to: (i) Build a privatization plan for approval by authorities (ii) Build a progress plan on withdrawal of capital which was invested outside main business activities for approval by authorities.