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Putin pledges to reduce government stake in big corporations by 2016

January 30, 2012, 11:40 UTC+3
Russian Prime Minister Vladimir Putin pledges to bring down the government's stake in big companies in the next four years
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MOSCOW, January 30 (Itar-Tass) —— Russian Prime Minister Vladimir Putin pledged to bring down the government stake in big companies in the next four years, although, he said, the government would not bargain them away.

“I think by 2016 it is possible to bring down the government's stake in a number of companies active in the primary good sector and to completely withdraw from the capital of big companies active in other sectors that are not linked with natural monopolies and the defence sector,” Putin said in an article published in Monday’s issue of the Vedomosti daily.

“I would like to note that privatization will be of structural rather than fiscal character. It means that we sell not only with the aim to derive extra money to the budget but, first and foremost, to encourage competitiveness in the economy, to clear the way for private initiative,” he wrote. “But it is unwise to bargain anything away – no one would do that.”

According to the prime minister, it is necessary to stint cravings of state corporations in buying assets in Russia. “It is necessary to reduce the presence of the biggest companies and banks with prevailing state share, and of natural monopolies, including Gazprom, in the capital of other economic entities, as well as  to separate non-core businesses, including media holdings,” Putin wrote. “It is necessary to put limits for state corporations that buy new assets in Russia. Giants must not hinder smooth development of private businesses in their sectors, push aside private entrepreneurs from most promising projects.”

He also recalled that several years ago a number of state corporations and vertically integrated holding companies were set up. “The aim was to keep intellectual industries from falling apart, to preserve scientific and production potential through consolidation of resources and centralized management,” Putin noted and added that “this aim can be considered achieved.”

But, in his words, “the strategy of creating sectoral holding companies is to be crowned by the establishment of the globally competitive corporations, highly capitalized and seeking to expand their presence on the global market.” “It is such corporations of the complete cycle, starting from prospective research and development to production, sales and post-sale servicing of hi-tech products that dominate the present-day global market of aircraft-building, ship-building, computer technologies, pharmaceuticals and medical equipment. It is these corporations that place orders with small innovation companies, buy promising startups,” he explained.

So far, he noted, “the bulk of integrated structures have become neither globally competitive, nor highly capitalized, nor even profit-making.”

“We are not going to stop halfway. In some sectors, such as aircraft-building, the uneasy consolidation process has been completed only now,” Putin noted.

“It is high time to check the vitality of each such project,” he stressed. “Nowadays, such projects need top managers highly qualified in innovation businesses.”

“Today, we have a reorganization plan for each company to bring it to the market. Some of them will be reorganized as public companies with a subsequent sale of packages of shares. These companies are Russian Technologies, Rosavtodor, Rosatom as concerns its civil activities, and a number of other state corporations. This works cannot be done overnight but we should not drag it out for years,” Putin stressed.

According to Putin, when creating state corporations, the government’s goal was to regain Russia’s positions in those sectors of the global market where there were just a few players. In his words, the government never sought to kill private initiative since there was none in these sectors. “It is wrong to interpret our efforts to gather, restructure and make presale preparations of assets as expansion of state capitalism,” Putin stressed.

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