ABOVE:
Uljanik shipyard located in Pula received USAID assistance in preparing their plans for privatization.
Implementer: IBM Business Consultants
Partners: Croatian Privatization Fund; Ministry of Agriculture, Forestry and Water Management; Ministry of Economy, Labor and Entrepreneurship
Privatization
Project completed March 2006
In 2006, 19 government-owned companies were sold, producing approximately $70 million in sales proceeds and over $460 million in investment commitments.
Croatia's economy continues to be burdened by large subsidies to state-owned enterprises. USAID assisted the Croatian Privatization Fund (CPF) to implement the Government's privatization program to divest state ownership in companies and assets in a transparent and competitive manner. Rapid privatization of state owned assets reduced significant government subsidies; increased investment; improved human capital and marketing capabilities of privatized enterprises; and contributed to the overall competitiveness of the Croatian economy.
USAID assisted the CPF with developing company profiles and price estimations; communicating investment opportunities to a wide number of potential investors; improving tendering procedures for the sale of enterprises, including the introduction of bid evaluation criteria emphasizing investment and enhanced transparency; and working with the management of enterprises majority-owned by the Government in the divestiture of non-core assets or subsidiaries. USAID advised the CPF on hotels, shipyards such as Uljanik, Brodotrogir and 3. Maj, industrial companies such as Duro Djakovic, TLM and Split Steel and major agro-kombinats such as Djakovistina, Kutjevo, IPK Osijek, Belje, Orahovica, Vupik and Ilocki Podrumi.
Given the social and political sensitivity of privatization, USAID advisors also assisted the CPF, Ministry of Agriculture and enterprise managers to develop and implement public communication strategies and work with stakeholders to raise the understanding of privatization concerns and issues.
Results
USAID assisted the Croatian Privatization Fund to tender a total of 200 majority owned companies, of which 49 have been sold. These sales generated approximately 1.0 billion kuna in proceeds for the Croatian Treasury, and buyers made commitments to invest 4.6 billion kuna in the newly-privatized enterprises.
USAID also assisted in the development of transparent Government of Croatia procedures for the sale of minority share packages in government owned companies over Croatia's two stock exchanges. Over 250 enterprises were sold in this manner since the start of the project.
Perhaps the most important impact of USAID assistance for privatization was in the agricultural sector. The five largest agrocombinats in the country were privatized through USAID assistance, and the sixth largest is in the process of major restructuring and asset sales. The successful privatization of these agrocombinats, large integrated farm production and food processing conglomerates in dairy, cereals, meat, and wine, brought new ownership with strong positions in regional markets and preserved thousands of jobs in disadvantaged rural areas.
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