There is one constant element at the Kyiv train station – an almost never operational escalator. This device turned out to be stronger than any reformers who tried to take on Ukrzaliznytsia, regardless of how strong they might have been, and instead became a symbol of disorder and indifference of the state to the feelings and emotions of its citizens.
How many state enterprises are in Ukraine? According to data in January from the Ministry of Economic Development, 3 364 state-owned enterprises are registered, of which only 1 594 are actually operational. The total of their assets is about 93.3% of the total value of all state-owned enterprises in Ukraine. I would be ready to come to terms with this reality if these 1 594 enterprises consistently brought in profit, which is only on the increase.
But the recent report of the Ministry of Economic Development does not give me reason for much optimism. According to the Ministry, the operating activities of the 100 largest state-owned enterprises in the first six months are disappointing, with a profit of only 21.5 billion hryvnia. This is almost half as much as the same period for 2017, which, in digital terms, means nearly 15.5 billion hryvnias lost.
The same report indicates that to a large extent only one “mastodon” – the JSC Naftogaz Ukraine, and its financial failure of a subsidiary – Ukrtransgaz, is guilty of the financial collapse of the entire state-owned “dinosaur” cluster. In general, for the above period, the holding received UAH 17.7 billion less.
But what am I trying to get at with all of this? The overdue issue regarding the inefficiency of public management and the urgency of privatisation and/or closure of state-owned enterprises. And here a couple of comments need to be made. First, we need to take out the topic of natural monopolies. The debate about their necessity or redundancy is not for this brief column. Second, there are many state-owned enterprises that, even if they wanted, will never be profitable.
I now raise the question of those structures that act as parasites year after year in areas where the market should have functioned a long time ago. Structures that, for decades, have monopolised the purchase of raw materials, made materials and products, as well as their sale, for example, abroad.
But even if these “dinosaurs” were profitable, the harm just due to their existence (from the point of view of the market, business, and citizens) overlaps corresponding state revenues by several times. How, for example, can the private banking sector develop if the percentage of state-owned banks is “covered up” by the Deposit Guarantee Fund as with Privatbank which took up 55% of the space? What can a business do with Ukrspirit and the State Food Grain Corporation of Ukraine?
For normal businessmen, these are not rhetorical questions, but points that make up the business climate in Ukraine.