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Home > Privatization Alert - October 2010
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Privatization Alert - October 2010
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Focus: Privatization in China
A recent paper that looks at the history of privatization in China estimates, on the basis of a large nationwide survey, that more than 90,000 firms were sold to the private sector between 1998 and 2005. In terms of value this translates into an estimated US$1.4 trillion worth of assets, which would make China’s privatization the largest in the world. Prior to the path of privatization, China introduced a “dual-track system”, creating markets in parallel to the state’s industrial sector. China also attempted to improve productivity in its state-owned enterprises by increasing their autonomy, offering incentives and specifying targets in terms of profits or taxes in managerial contracts.
Initially it was local authorities (provincial or city governments) who were the principal drivers of the privatization process, seeking to divest from loss-making state-owned enterprises which were a burden to them. With the approval of the central government in the mid 1990s the privatization process took off in the late 1990s. As of end-2008, there were 154,000 state-owned enterprises state-owned enterprises, which accounted for 3.1 percent of the total number of enterprises. Although small in terms of number, these companies controlled a substantial portion of enterprise assets in China.
According to the paper the impact of China’s privatization on firm performance has been mixed. Privatization has improved performance, but only when it took place through management buy-outs. Other privatization strategies were not found to have been as effective.
Status and upcoming transactions
Europe and Central Asia:
The Russian Federation is embarking on a previously announced privatization program aimed, among other things, at attracting foreign capital. Ukraine is moving forward with the sale of 92.79% of the Ukrtelecom shares that are publicly owned. Kosovo has announced another round of privatizations; the country is also proceeding with the sale of the state-owned telecom company PTK, which is expected to be concluded by the end of this year. Turkey's privatization agency has received 12 bids for the sale of operation rights for the port of Iskenderun; more companies have been slated for sale with a deadline for submitting bids in November 2010. Serbia is proceeding with the sale of a number of state-owned enterprises as part of its ongoing privatization process. Poland has announced new tenders for public companies with deadlines for submitting bids in October and November 2010.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
East and South East Asia: Mongolia is planning to embark on a new round of privatizations.
>> Complete list of regional project opportunities
>> Detailed country analysis by region
Latin America: Brazil has increased its ownership share in Petrobras in what has been called "reverse privatization".
>> Complete list of regional project opportunities
>> Detailed country analysis by region
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