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Government Should Have Nothing
to Do with Privatization
Dr. Mousa
Ghaninejad, economist and university professor, does not consider the
privatization drive which has been in force in the past few years a true
instance of privatization because he says major decisions are made by the
government and privatization is not based on the principles of a liberal
economy and competition.
In an
interview with Fars news agency on the impact of privatization on the economy,
Ghaninejad noted that privatization in its current form has had no effect on
the economy because in most cases, company stocks have been transferred to
quasi-governmental entities. “The main goal of privatization is privatization
of management of companies, but the current trend of privatization which has
thus far covered banks and steel companies has not changed their management
and managers are appointed by the government.”
The
economic expert further stated that the government emphasizes on change of
ownership in privatization, saying, “This is not very important. Ownership can
be totally nongovernmental. A law should be passed to prevent state control on
such companies, which is currently the case. Therefore, past problems are
still in place and if we wanted policies of Article 44 of the Constitution to
enter into force, we should have first started with liberalization which has
been underlined by the first paragraph of the aforesaid constitutional article
and should precede privatization.”
He
maintained that if true privatization did not happen in the economy,
implementation of the next paragraphs of the said law would take place just on
the surface.
As for liberalization conforming to policies related to Article 44 of the
Constitution, Ghaninejad stated that this could be only realized if government
and state-run institutions played no part in setting market prices, but the
government is currently setting prices in all markets including labor, capital
and goods markets.
“In this
state, the private sector cannot work freely and if the government decided to
transfer stocks of companies, the private sector would not be willing to buy.
Therefore, quasi-governmental entities and cooperatives will buy those
stocks,” he added.
The
economist stated that when a private consortium is not willing to buy stocks,
there is certainly a major problem and, in this case, producing figures about
privatization will not solve any problem.
The
expert noted that privatization is grappling with liberalization problems,
adding, “Quasi-governmental entities are not considered private sector because
the government is making decisions for them and they are not based on an open
and competitive market.”
Ghaninejad also pointed to threats posed by quasi-governmental entities in the
economy because he said such entities are controlled, inspected and supervised
in line with the government policies. “They can be considered private when
they act under and according to trade law. In that state, the government
cannot supervise their actions and trade law covers private sector’s
activities and has nothing to do with quasi-governmental entities. In the
above state, quasi-governmental entities will lie outside state controls, but
do not act in line with trade law; therefore, that law does not restrict their
activities. According to free trade law, competition should be the sole factor
controlling prices. At present, there is no competition in economy and
although carmakers are outwardly private, but they are running monopolies
which make the power even greater than the government.”
Ghaninejad further stated that the only advantage of quasi-governmental
entities is when they acquire companies and then transfer them to private
entities.
Asked
whether presence of quasi-governmental entities is due to unwillingness of the
private sector to buy company stocks, the economist noted that there are two
problems.
“Firstly,
the private sector is short of money and cannot pay huge price of state-run
companies. Secondly, foreign investment should be encouraged when transferring
state-run companies,” he added.
Ghaninejad stated that although foreign investment exists on paper, but in
reality, the business climate is so unfavorable that foreign investors are
discouraged. |
