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Reform of state property management
What will change, why it is necessary
and why it is so important
Reform of state property management
What will change, why it is necessary and why it is so important
Reform of state property management
What will change, why it is necessary and why it is so important
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The state and local governments own the largest number of assets in Ukraine – 3,116 state-owned and 14,056 municipal enterprises. However, statistics show that they are not always effective owners. Over the past six years alone, the number of profitable state-owned enterprises among all operating ones has decreased by almost half. Last year alone, the accounts payable of state-owned companies reached UAH 912.8 billion, or more than $23 billion.
Ukraine is currently undergoing a reform of state and municipal property management. In general, it has two main goals:
01
REDUCING THE NUMBER OF MUNICIPAL AND STATE-OWNED ENTERPRISES
Through the privatization of non-strategic ones, which is implemented through online auctions in the state electronic trading system Prozorro.Sale.
02
IMPROVING MANAGEMENT IN ENTERPRISES
The state-owned enterprises will be improved by implementing the best international corporate governance practices.
An important milestone in the reform was the adoption in February of the draft law 5593-d, which aims to improve the corporate governance of state-owned enterprises, bringing it closer to the standards of the Organization for Economic Cooperation and Development (OECD), which includes the most developed economies.
State-owned enterprises that are not recognized as strategic will be privatized, leased through public online auctions, or liquidated. This will affect more than 1,200 state-owned enterprises.
In fact, these processes are already underway. Over the past six years, almost 5,800 state and municipal facilities have been sold throughout Ukraine through the Prozorro.Sale system, bringing UAH 16.5 billion ($424.1 million) to the budgets of all levels. Abandoned factories, dilapidated Soviet sanatoriums, and old workshops that had been burdening the state and communities for years have found new owners who are creating businesses, new jobs, and paying taxes.
In 2024, the reform will gain momentum. The process of triage, or categorization of state-owned enterprises, is underway. At the same time, state-owned enterprises are being transformed into joint-stock companies, and supervisory boards are being set up to ensure the efficiency of the company’s management. Communities will continue to sell municipal property through privatization or lease.
But society still has little awareness of how these processes work. Who and how determines what will be privatized or leased, or possibly liquidated? How will the management of enterprises that remain in the ownership of the state and communities be improved? And most importantly, where are the interests of people and what do they get from the reform?
With the support of the USAID/UKaid State-Owned Enterprises Reform Activity (SOERA), we have created a series of articles that will help you understand how the policy of managing state and municipal property is formed and implemented, and where the money from privatization and leasing goes. We will illustrate this with real cases of successful management.
This project was created thanks to the support of the American and British people through the United States Agency for International Development (USAID) and the United Kingdom’s Foreign, Commonwealth & Development Office (UKaid). The views of the authors expressed in these publications do not necessarily reflect the views of USAID, the U.S. Government, UKaid, or the UK Government.
Read the article:
ONLY 100 ENTERPRISES WILL REMAIN IN STATE OWNERSHIP
WHAT WILL HAPPEN TO THE OTHER THREE THOUSAND?
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