Minister of the Treasury
The processes of ownership transformation are closely connected with a period of transformation in the Polish economy. So far their implementation has led to the creation of various forms, methods and procedures of privatisation. This is especially typical for the Polish model of privatisation and is a great accomplishment compared to other countries of Central and Eastern Europe.
Approximately two-thirds of the total number of state-owned enterprises operating in the year 1990 were covered by the processes of ownership transformation by late 1998. The development of the private sector resulted in important changes in the ownership structure of the whole economy. At present, it employs about 65 per cent of the labour force and generates over 66 per cent of Gross Domestic Product (GDP). (In comparison with the year 1990 when the private sector generated not more than 31 per cent of GDP, this is remarkable progress. But the Polish believe that this proportion is still insufficient and they want to increase it to about 80 per cent - as is the case with highly developed economies in European Community (EC) member countries).
The national economy's total restructure aimed at creating effective and competitive economic structures is the basic objective of ownership transformation. This is to ensure that Poland will continue its rapid and long term economic growth which is the basis for the improvement of the living standards of Polish people and also for a simultaneous acceleration of the creation of new jobs.
According to the adopted goals which are attained throughout the whole period of transformation, privatisation processes are aimed at:
The two basic ways of establishing the private sector in Poland are as follows:
As regards the second item, the role of state bodies is of a creative nature and it consists of working out the strategies of ownership transformation in entire branches and in carrying out specific privatisation projects. This is virtually put into practice with the following two methods: through indirect (capital) privatisation and through direct privatisation.
Indirect privatisation mainly covers all large enterprises due to the size of revenues from privatisation and developments in the capital markets. Good economic performance is the basis for inclusion of a given enterprise into this method of privatisation. The capital privatisation process consists of two stages. During the first stage, state-owned enterprises are transformed into State Treasury Corporations (their commercialisation takes place) and that is the prerequisite for seeking additional capital which is necessary for the development of a firm.
Commercialisation is an important step towards privatisation of a firm because it increasingly allows for the possibility of talks and negotiations with representatives of domestic and foreign investors. During the second stage, shares or stakes in commercialised companies are sold to investors through a public offer, an invitation to negotiations, or a tender.
Indirect privatisation is aimed at providing a firm with a long term strategy of development. The easiest way of attaining this goal is to find a strategic investor. This is why, recently, a public offer was combined with a simultaneous sale of a block of shares through talks based on a public invitation to negotiations. On the one hand, a selective choice of the strategic investor made in conformity with a certain number of criteria (which in addition to the negotiated price and payment conditions also cover an investment package, a social package and an environmental package) guarantees optimising the interests of a company and its employees. On the other hand, a block of shares in a given company is verified by its introduction into the capital market.
Indirect privatisation in the form of a public offer is aimed at developing capital markets and increasing capitalisation of the stock exchange, as well as making it possible for Polish and foreign financial institutions, as well as for natural persons, to participate in privatisation processes. The pace of this path of privatisation is to be adjusted to present market conditions, lest an excessive supply of shares influence the decrease of their price and of the quality of agreements.
One thousand three hundred and twenty-four state-owned enterprises were covered by indirect (capital) privatisation by the end of November 1998. This number constituted nearly 30 per cent of the enterprises covered by ownership transformation. (Of all commercialised ones, 243 were privatised. They were mainly from the sectors covering food, mineral, engineering, construction, chemical, timber and paper and light industries). As a result of capital privatisation, foreign strategic investors bought shares or stakes in 87 companies, and mixed investors bought them in 16. The largest number of foreign investors engaged in capital privatisation are from Germany (16 per cent), the United States (US) (nine per cent), The Netherlands (five per cent), Sweden (three per cent), and France (three per cent). The firms which bought Polish enterprises using this method of privatisation also include such multinationals as Unilever, Pepsico, Henkel, Gillette, Cussons, Alkatel, Nestlé, Michelin, Glaxo Wellcome, International Paper, Siemens, Philip Morris and Framondi.
According to the amended Law on Commercialisation and Privatisation of State Enterprises, some actions aimed at further improvement of the methods and techniques of capital privatisation are taken in an effort to accelerate privatisation processes. These actions also include work on the possible acceleration of privatisation procedures of selecting an adviser, more efficient opinion-giving and acceptance of pre-privatisation analyses, as well as sensible shortening of the negotiation period.
In addition to capital privatisation, so-called direct privatisation is also applied. It consists of administering all the elements of the assets of a state enterprise through the sale of an enterprise, its contribution to a company, and giving of an enterprise to be used for consideration. This method is usually applied in the case of minor economic entities, the majority of which are under the supervision of voivods. (According to the Law on Commercialisation and Privatisation of State Enterprises, the enterprises which are to be privatised by way of direct privatisation have to meet the following specified requirements: employment at the end of the year preceding privatisation should not exceed 500 persons, the value of sold goods and services should not exceed six million euros and the size of own funds should not be higher than the equivalent of two million euros in Polish zlotys). The Ministry of the Treasury is involved in activities which stimulate the implementation of direct privatisation-related projects. These actions are taken by voivods as founding bodies.
This method is an effective path of privatisation and by late November 1998 it covered 1670 enterprises. This number constitutes around 37 per cent of all the entities included into transformations. Of the initiated privatisation processes, 93 per cent were completed and 1552 firms were removed from the register of state enterprises. As regards direct privatisation, foreign capital was engaged in 86 subjects in the privatisation process.
In July 1998 the Government approved the Programme of Privatisation until 2001 prepared by the Ministry of the Treasury. The Programme provides for privatisation of those sectors of the economy which, with some exceptions, have not been covered by privatisation so far. The sectors are: production, transmission and distribution of electrical energy, the iron and steel industry, defence industry, heavy chemistry, fuel industry, liquor industry, sugar industry and hard coalmining.