Zsolt Gál: The Three Ways and Lessons of Privatisation in the Czech Republic, Hungary and Slovakia

From the aspect of dominant privatisation in the examined time period thethree countries followed three different ways. The main goal of the coupon privatisation in the Czech Republic was a fást and fair division of the major partof state property, making wide social masses to become owners, in Slovakiait was an ideological and political target setting, privatisation took place inorder to create the national capitalistic class, while in Hungary the mainemphasis was on maximising incomes and finding reál owners who ensure thefuture of the company. The Czech and the Slovak example confirm: privatisingone company does not lead automatically to the improvement of companymanagement and effectiveness, to observing laws.

The Czech and the Slovak dominant privatisation strategy brought no substantial profits, it neither directed sufficient capital to the business sector, andnor it raised the effectiveness and the levél of company management substantially. Eventually, in many cases company debts increased visibly and manycompanies bankrupted or became close to it. Evén the declared goals werenot succeeded to be achieved, wide layers of the Czech Republic’s populationdid not become owners, having the first occasion they tried to change their company coupons for cash money. In Slovakia – despite of the fact that company ownership parts were distributed almost for free – no strong class of national owners was created (or it existed to the time till it bankrupted the companies or got rid of them by giving to a foreign owner, or due to law violation,they had to give back property to the National Property Fund). In both countries short-term property acquirement was the most frequent strategy.

The Hungárián strategy seemed to be a good way, opposite the Czech or Slovak techniques. It is not accidental that after 1997/1998 the new Czech andthe Slovak governments followed privatisation according to the Hungáriánmodel. Announcing tenders had become the main method of privatisation, allthe big companies were bought by foreign strategic investors.

At the beginning of the changes, the banking system of all the three countries had substantial, problematic credit supply inherited from the socialistic system. Remaining banks in state property, prolonging bank consolidation and privatisation evén increased the rate of qualified claims.In all the three countries the majority of big companies had become of foreignproperty, evén where (liké in Slovakia) the political leaders wanted to achievethe opposite. From this aspect it is a more favourable solution if the countrysells the companies directly through tenders, because the incomes flow directly to the state treasury and the country can influence the privatisation’s conditions. Selling property by this method the Czech Republic and Slovakia couldhave achieved substantial incomes, re-structuralisation acceleration, andsubstantial increase of attractiveness of the country from the capital’s pointof view. Although the arguments on domestic and foreign ownership was verysharp, basically in the case of big companies foreign owners had no alternative. Only they had the sufficient knowledge, international background, andmainly the sufficient capital needed for the investment. Without them makingcompanies competitive was untinkable.