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Swot Analysis & Privatisation in Croatia

Legal framework for privatisation in Croatia was based on two key laws: the Transformation Act of 1991, and the Privatisation Act of 1993, amended in 1996. Early start of privatization process in 1990s in Croatia was marked by transformation of socially-owned companies into stock holding companies or limited liability companies. The first step (1991-1993) of this process of almost 2700 companies which entered privatization was their evaluation and transformation into private ownership entities. The second step (1994-1997) consists of privatization of CPF portfolio. The portfolios change constantly, not only as a result of privatization but also because companies themselves change, as does their position on the market. Third step (1998) in privatization process was voucher privatization. Privatisation of large infrastructure and utility companies designated as public enterprises began 1999 (Croatian telecom) and INA 2002 (public enterprises are privatised on the basis of separate laws). Overall weakness of restructuring process is concentrated in painfully slow emerge of sound business activity in market environment. The privatisation model applied in the Croatian economy, consisting of a combination of selling public property to privileged and unprivileged buyers, and the non-linear distribution of shares to targeted social groups in the final stage, proved to be socially unacceptable and economically inefficient. The Croatian model of privatisation, which amounted to the redistribution of public (common) property and its concentration in the hands of exclusive clients, has never been accepted, either by employees, or by the majority of the population. The economic inefficiency of this model is reflected in the substitution of modern entrepreneurial capitalism, which was hoped for, with retrograde rentier capitalism, typical of early capitalism in its transition from a feudal to an industrial environment two centuries ago. Instead of efficiency and development, it is characterised by the drain of liquid capital through inflated debts, false reserves and falsified claims, and the tunnelling of constant capital through “ soft” loans into tax havens outside the country Therefore, the solution is not to deal with the consequences, which are evident in various affairs that are treated as individual deviations of the more or less good model of privatisation. The problem lies in the model itself. It is necessary to convert rentier into managerial capitalism which, in modern societies, relies on widespread small-scale ownership of shares. It must begin with the restitution of ownership rights to those who are employed, to the retired and, of course, to managers, and with the stimulation and training of the management of development-oriented companies.

privatisation in croatia ; transformation

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