The government fails to elaborate an effective privatization strategy
The government proposes to reduce the statue of limitations for privatization deals, which is an important achievement of the bureaucracy at the current development stage.
The auditing company Ernst & Young, which assessed the Minsk Automobile Plant (MAZ) in the framework of creation of a joint venture with Russia’s largest truck manufacturer Kamaz, has estimated the costs of MAZ assets to $ 800 million. The Belarusian government is unhappy with the results and intends to hire another appraiser.
The Ministry of Economy of Belarus proposes reduce significantly the statute of limitations for privatization deals. The bill is currently pending in the Council of Ministers and will provide for the reduction of the limitation period to challenge privatization deals from 10 to 3 years. The Ministry of Economy believes that three years should be enough for the state authorities to discover the grounds for nullification of a transaction.
From the investor’s perspective and for the business climate the reduction of statute of limitation is a definite benefit, as it increases guarantees for investors, i.e. that after three years, no one will seize the company, that the privatization results will not be reviewed, etc.
Last week, only 2 out of 17 auctions concerning the sale of state-owned assets have been validated. At the two auctions were sold: 52.7% of the capital shares of the enterprise “Spetsmontazhstroy” to Minsk LLC “Deyland” and 99% of the “Pukhovichi food plant” to JV “Morozprodukt”.
According to the State Property Committee the auctions scheduled for 11 November 2011 have been invalidated due to the absence of bidders to buy the shares of: Belenergosvyaz (Minsk),Grodnogazstroyizolyatsiya (Gomel), Belpromkultura (Vitebsk), Grodnoteamontazh (Grodno), Tekhnopribor (Mogilev), Polotskles (Polotsk).
On 15 November the deadline for potential investors to bid for the purchase of the 51% of the government’s stakes in a mobile operator MTS expired, the auction was announced following the refusal of the Russian co-owner - OJSC “MTS” – to buy shares at the proposed price of USD 1 billion. The auction is scheduled to take place on 1st December with a starting price of $ 1 billion, however today it is already clear that the auction will not take place because the State Property Committee of Belarus received no bids from potential investors.
The government is trying to maximize the selling price of the Belarusian assets, but these attempts always fail.
From the investor’s perspective and for the business climate the reduction of statute of limitation is a definite benefit, as it increases guarantees for investors, i.e. that after three years, no one will seize the company, that the privatization results will not be reviewed, etc. However, this will significantly increase the risk of corruption and shady transactions. Therefore the reduction of the limitation period is an important achievement of the bureaucracy at the current development stage.
The disagreement with the assessment of MAZ and the lack of bids for 51% of shares in MTS with the starting price of 1 billion are links in one chain. The government is trying to maximize the selling price of the Belarusian assets, but these attempts always fail.
The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.
Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.
Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.
In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.