Turkey's Ozal forges ahead with privatization
The conservative government of Turkey appears determined to carry through with a privatization program despite criticism from opponents. Prime Minister Turgut Ozal's government recently took the first major step in a four-year program to hand over to the private sector some large ``state economic enterprises'' by ordering the privatization of two giant public corporations.Skip to next paragraph
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One of them is Sumerbank, a large concern that manufactures and sells a variety of commodities, from textiles to shoes. The other is Petkim, a petrochemical corporation. The nominal value of the shares of Sumerbank - all owned by the state treasury - amounts to $200 million, and those of Petkim to $150 million. The total value of the assets of Sumerbank is about $10 billion and that of Petkim is $8 billion.
The privatization of these two corporations was decided, virtually on the eve of national elections, in accordance with a law that allows for placing certain state enterprises under a ``public participation fund'' attached to the prime minister's office. Mr. Ozal's party is widely expected to win the elections scheduled for Nov. 29.
The decision to start the privatization program with Sumerbank and Petkim, however, has surprised businessmen, because both corporations reportedly have been making profits. Some observers speculate that Ozal and his advisers wanted to start off by presenting an ``attractive'' investment to the public.
In announcing his plans for privatization, Ozal said that the aim was to provide shares to as many people as possible. The purchasing power of the average Turkish citizen will be taken into account when fixing the value of shares, he said. The program's aim is to ``denationalize'' some 30 enterprises, which include cement and newsprint manufacturing, as well as the national airline.
``This is a democratization of the economy, by expanding property to the grass roots of the society,'' Ozal said. ``This is not a move to hand over the shares of the state enterprises to large private companies. ... We do not want to sell to our workers shares of state enterprises that are losing money. We want those enterprises to get on their feet first, before they are sold to the public.''
Ozal has long planned to reshape Turkey's economy on a ``Thatcherist'' model. In his four years in office, he has been turning Turkey into a free-market economy by lifting restrictions on foreign trade and foreign-exchange dealings, introducing tax reforms, and loosening controls on prices and interest rates.
Ozal's political opponents have expressed strong disapproval of selling healthy state enterprises to the private sector. The economic editor of the influential daily Cumhuriyet claimed that Ozal saw privatization as a ``magic formula.'' But other economists and businessmen see Ozal's program as a major reform that will benefit the economy and raise living standards. Government officials say selling shares to the public will strengthen what Ozal calls ``the center pillar'' - the middle class.