From ebice at falcon.lhup.edu Thu Feb 4 19:49:43 1999 From: ebice at falcon.lhup.edu (Edi Bice) Date: Thu, 4 Feb 1999 19:49:43 -0500 (EST) Subject: [abe-forum] Privatisation Message-ID: *** Albanian Business and Economics Forum *** Good evening everybody. There are quite a few issues I would like get your opinion about, but that of the privatisation process has been for a long time and still remains very puzzling to me. We all remember the terms 'shock therapy' and 'gradual transition'. This is where it all boils down to. In the case of Poland, shock therapy proved itself successfully, whereas in Russia there were many 'shocks, but without the therapy', as a Russian economist said. As I was adding some more info to the ABE page (there is now a small privatisation section), I read about the process of privatising or giving concessions in the mining sector. We all know how inefficient our enterprises (generally all enterprises in the centralized system) became, how bloated and ineffective the administration remains, and how a normal corporate restructuring even by Western standards involves many layoffs. But in Albania's case, these employees can't just jump to another company and the whole thing is forgotten in a few months. Plus it's not a private enterprise that decides that for the best of its shareholders it should get rid of some employees. It's the government, and its shareholders are the people, including the ones it is firing. What would you do if you were in the position of Mr. Ylli Bufi, Minister of Privatisation? sincerely, edi bice From ecala at american.edu Fri Feb 5 17:42:53 1999 From: ecala at american.edu (ecala at american.edu) Date: Fri, 5 Feb 1999 17:42:53 -0500 Subject: [abe-forum] privatization Message-ID: <8525670F.0079AEAB.00@aunotes1-gw.american.edu> *** Albanian Business and Economics Forum *** Dear all; My name is Etta, I am from Albania and I am doing an MBA at American University in Washington DC. Before that I have worked for two years in one of the GTZ-Projects in Albania that assists the Albanian Government in the privatization and legislation fields. Considering that I would say that I know the privatization process in Albania (in principle and the real life process). I have been myself in some 20 enterprises that were privatized between 1995-1997. First let me say that the "shock therapy" was an early option presented by Gramoz Pashko but was never supported from any government ever since. Instead what happened was that the small businesses were sold to the owners (usually no more than 10) who either sold their part to each other or sold the total business to third parts that change the destination of these businesses. The second part were medium enterprises (here are included some potential good companies like small mines or chemical plants or mechanical plants). Unfortunately all these companies have old technology and no clue about how to compete in the market economy. Add the same old staff and no protection from the government for Albanian products they are almost bankcrupted. Some of these companies were bought from people with money that destroyed everything and used the land to build apartment complexes. (Please note that according to the law all the selling is done by vouchers and due to their ridiculously low value it is very easy for people with money to become owners of these enterprises) The third phase called "the strategic" one that is going on now is the privatization of Telekom, CASH and mines (copper, oil etc) Because of the strategic nature of these businesses there is a big corruption in actual Ministry Staff (mostly regarding the procedures that will favor certain groups or individuals). I don't know what will happen. As for the general policy of privatization people who work in that Ministry will say "Albania is a case study for IMF" but I will say it is more a case study because everybody who is in power changes the policy of privatization in favor of groups beneficial to him. As for everything else right now in Albania it will take a long time even for the potential businesses to give results due to three main factors: 1- Old mentality in running a business 2-Old technology 3-Nonexistent financial ability to invest for improving the two first factors. To be realistic we should add the political instability in Albania and the total absence of laws in the respective fields. As for what would I do if I were Mr. Bufi I don't know. I have seen a lot of people changing totally as soon as they are in that Chair so I would presume that there is a bad chemistry of power and money. But a beginning would have been a clear law on privatization and protection of the Albanian products (for the enterprises that are still running). I hope this was not too general, etta From ebice at falcon.lhup.edu Tue Feb 9 01:03:35 1999 From: ebice at falcon.lhup.edu (Edi Bice) Date: Tue, 9 Feb 1999 01:03:35 -0500 (EST) Subject: [abe-forum] privatization In-Reply-To: <8525670F.0079AEAB.00@aunotes1-gw.american.edu> Message-ID: *** Albanian Business and Economics Forum *** On Fri, 5 Feb 1999 ecala at american.edu wrote: > University in Washington DC. Before that I have worked for two years in one > of the GTZ-Projects in Albania that assists the Albanian Government in the > privatization and legislation fields. I am personally very happy that you have joined our forum (it doesn't seem like a forum so far does it? ;-) ) We could all use your working experience in Albania, as most of us have either never worked in Albania or have been away for so long that whatever experience we have is not relevant anymore. > Instead what happened was that the small businesses were sold to the owners > (usually no more than 10) who either sold their part to each other or sold > the total business to third parts that change the destination of these > businesses. >From what I have been reading these were concerns of the Polish government a few years before the reform started in Albania. Not that I thought about it at that time but it is now clear that the vouchers would depreciate rapidly given the bad need for cash most of the Albanians experienced. > The second part were medium enterprises (here are included some potential > good companies like small mines or chemical plants or mechanical plants). > Unfortunately all these companies have old technology and no clue about how > to compete in the market economy. Add the same old staff and no protection > from the government for Albanian products they are almost bankcrupted. I believe it was more a slow death caused by the 'gradual transition' approach. There was no competition at all in the Albanian market. The stores were empty and there was a severe lack of raw materials. This is what caused the boom in imports. Had our medium enterprises been privatised quicker they would have had a decent chance given: cheap labor, home market, inexpensive transportation. Even today most of the foreign products compete indirectly; Albanian trading firms being the link. Local companies have control over their products (cost, pricing, features etc.) and can be more flexible. > of these companies were bought from people with money that destroyed > everything and used the land to build apartment complexes. (Please note > that according to the law all the selling is done by vouchers and due to > their ridiculously low value it is very easy for people with money to > become owners of these enterprises) There were hardly any other alternatives. Leaving the ineffectiveness of the government in attracting investors aside, not many foreign investors were willing to invest in enterprises of that sort (legal, social, political issues). On the other side everybody wanted to get his share of the privatisation benefits. Even economic propaganda wouldn't have worked convincing people they better hold the vouchers. I guess they will just have to deal with it, if sb. proceeded otherwise and is more successful today. > The third phase called "the strategic" one that is going on now is the > privatization of Telekom, CASH and mines (copper, oil etc) Because of the > strategic nature of these businesses there is a big corruption in actual > Ministry Staff (mostly regarding the procedures that will favor certain > groups or individuals). I don't know what will happen. I know corruption would be enough to shut my mouth in this topic. It simply botches every privatisation scheme one designs. BTW, is there a parliamentary commission supervising the privatisation process at all? Or is it left to whoever jumps the chair of the Ministry of Privatisation? If they had a position+oposition team supervising things would be a bit slower but then again it's 'strategic' stuff, right? > As for the general policy of privatization people who work in that Ministry > will say "Albania is a case study for IMF" but I will say it is more a case > study because everybody who is in power changes the policy of privatization > in favor of groups beneficial to him. As for everything else right now in > Albania it will take a long time even for the potential businesses to give > results due to three main factors: > 1- Old mentality in running a business I don't know but somehow Albanians manage to run their private businesses decently. Maybe it's still a matter of incentives. > 2-Old technology > 3-Nonexistent financial ability to invest for improving the two first > factors. I have read different opinions about this. The Bank of Albania says that it's the businesses that can't absorb the amount of credit it assigns to each bank. I heard the private banks (foreign and local) have been offering loans but only to certain businesses (quick return ones such as trade). On the other side the Savings Bank has locked in 150 billions of lek. > To be realistic we should add the political instability in Albania and the > total absence of laws in the respective fields. What happens to all those laws that are passed everyday? (apart from not being used ;-) ) I agree that as long as the State Dept. issues travel advisories for Albania, Moody's need not bother issuing grades for investment risks in Albania. But then again we're not talking about the average risk-averse investor. > presume that there is a bad chemistry of power and money. But a beginning > would have been a clear law on privatization and protection of the Albanian > products (for the enterprises that are still running). Protectionism! That's a topic. I have been arguing this with my professor for some time now. The concept definitely introduces inefficiencies, and it shouldn't be played much with. There's definitely enough lobbying for that. Look at Germany's Deutsche Telekom, and the rest of Europe for that matter, and compare the market there with that in the US. Liberalisation and Deregulation seems to be the key. Maybe we Albanians should deal with the fact that we don't have the money or the market experience to run our 'strategic' sector, so instead of slowing down the rest of the industry that depends on this sectors, we should let others run it. Concessions seem to be getting popular again (now we understand better why King Zog did that earlier this century ... this word had such a bad sounding in my mind for such a long time :-) ) > I hope this was not too general, etta No, thank you for your spur. Hope others join soon. edi From ebice at falcon.lhup.edu Tue Feb 9 10:57:01 1999 From: ebice at falcon.lhup.edu (Edi Bice) Date: Tue, 9 Feb 1999 10:57:01 -0500 (EST) Subject: [abe-forum] Forwarded mail.... Message-ID: ---------- Forwarded message ---------- Date: Mon, 8 Feb 1999 23:31:12 -0700 From: "Joseph E. Giles" To: ebice at falcon.lhup.edu Hello, I am sending this to you as I was not sure of the address to submit this to the forum. Thank you for your time. MESSAGE Greetings. I just wanted to say a brief "Hello" to the members, and declare my interest in discussing the pertinent topics. Although I have no official or familial link to Albania, it is a country I am fascinated by. My undergraduate degree was in Economics, and I am hopeful that Albania can develop an economy that will enable it to flourish. I am open to discussing the varied issues, and hope we can utilitze the forum for positive means. Cordially yours, Joseph E. Giles Phoenix, AZ USA END -------------- next part -------------- HTML attachment scrubbed and removed From ecala at american.edu Tue Feb 9 12:04:17 1999 From: ecala at american.edu (ecala at american.edu) Date: Tue, 9 Feb 1999 12:04:17 -0500 Subject: [abe-forum] privatization Message-ID: <85256713.005CB4A4.00@aunotes1-gw.american.edu> *** Albanian Business and Economics Forum *** Dear Edi, We all know what the benefits Liberalization and Open Economy. IIn the case of Albania though I think we have un unprecedent case where we are importing all the vegetables and fruits from Macedonia as well as light industry products from Bulgaria while our farmers can't get to the Albanian Markets for lack of infrastructure. So we have this situation: The government does not give credit to farmers and what they produce they can't sell unless they live close to the big cities. As a consequence qe import all and evey food. I think this is unacceptable. And just to remind you countries as U.S and France have heavy protectionist laws for agriculture. We all know the theories that a country should produce what he is most efficient in and import the rest. What happens if a country is not efficient in producing anything? And if we do not produce anything how are these people suppose to live? As for the laws, it true the parliament keeps passing them everyday but that's how far it goes. I did read that news from the BA regarding the credits. It is simply not true. Just the usual propaganda. Since the last year of the DP ruling all the credits are frozen and as far as I know only foreign foundations like FEFAD and FSHZH and some others give credits 9but not the banks unless you are sb with STRONG links) I've got to go now, Etta From ebice at falcon.lhup.edu Tue Feb 23 14:13:48 1999 From: ebice at falcon.lhup.edu (Edi Bice) Date: Tue, 23 Feb 1999 14:13:48 -0500 (EST) Subject: [abe-forum] privatization In-Reply-To: <85256713.005CB4A4.00@aunotes1-gw.american.edu> Message-ID: *** Albanian Business and Economics Forum *** Dear Etta: > We all know what the benefits Liberalization and Open Economy. IIn the case > of Albania though I think we have un unprecedent case where we are > importing all the vegetables and fruits from Macedonia as well as light > industry products from Bulgaria while our farmers can't get to the Albanian > Markets for lack of infrastructure. I don't think that enacting protectionist laws will improve the infrastructure. While infrastructure is crucial, that is not what is holding the farmers back right now. I believe it is the low productivity, small lot size, lack of business skills and organization. It's been a few years now, but I remember clearly that there were enough transportation facilities which due to lack of skills were underutilized. I used to go to school in Tirana from Pogradec, and I remember how the taxi drivers fought for passengers. I have worked with a Dutch organization that started a semi-cooperative in the mountainous villages of Pogradec. Once there was some kind of management in place, it was so much easier to get the seeds, and other needed things, and then eventually bring the produce to the market. > So we have this situation: The government does not give credit to farmers I understand how much this affects their ability to grow, but on the other side it is a much needed period for both sides. The state banks need to restructure before they squander any more of the people's money in bad loans, and the small businesses need to understand how precious those loans are. Albania needs more business owners who build their businesses through their frugality. It's a valuable lesson from the 'Asian Tigers' crisis. > As a consequence qe import all and evey food. I think this is unacceptable. > And just to remind you countries as U.S and France have heavy protectionist > laws for agriculture. That is simply due to the strong lobbying from the farmers. It doesn't mean that it is the right thing. > We all know the theories that a country should produce what he is most > efficient in and import the rest. What happens if a country is not > efficient in producing anything? And if we do not produce anything how are > these people suppose to live? As I mentioned above Albanians do not lack the ability to become efficient in what they do. There are many obstacles to overcome but protectionism will do more harm especially in the long term. Look at how entrenched protectionism is in America and how hard it is for the current administration to do away with it (NAFTA etc.) > I did read that news from the BA regarding the credits. It is simply not > true. Just the usual propaganda. Since the last year of the DP ruling all > the credits are frozen and as far as I know only foreign foundations like > FEFAD and FSHZH and some others give credits 9but not the banks unless you > are sb with STRONG links) I have also read about the applications without accompanying business plans and other basic neccessities. Maybe some of these businesses shouldn't be financed. It takes two. Banks should learn to be less rigid (can't apply Western standards in Albania yet), but business owners should take bankruptcy and default more seriously, consider carefully how they will pay the loan back and prove it to the banks. I have also read that the banks grant loans mostly to businesses that pay back quickly -- basically trade transactions -- which supports their riskiness concern. Anyways, I wrote the last part rather hastily, so no real 'thought processes' were at work. I could be completely wrong about all this, which is the best thing about this discussion: learn. It's been very interesting. I wish I had more time. regards, edi From mentor at alb-net.com Wed Feb 24 10:22:05 1999 From: mentor at alb-net.com (Mentor Cana) Date: Wed, 24 Feb 1999 10:22:05 -0500 (EST) Subject: [abe-forum] Center for Albanian Studies (University of Nebraska-Lincoln) Message-ID: *** Albanian Business and Economics Forum *** http://www.cba.unl.edu/additional/mgtalbanian.html "Welcome to the Center for Albanian Studies. Our goal is to assist Albania in the transition to a productive and successful market-driven economy consistent with the United States Seed Act Assistance Strategy Update for Albania, 1994-1996, as submitted by American Embassy Tirana and approved June 20, 1994. The specific goals of this continuation program are to reinforce the new academic infrastructure that will train Albania's future business leaders and managers through the first ever MBA program at the University of Tirana, to establish the role of the university as a continuing source of business planning and development expertise through their adjunct business assistance centers, and to respond to the special training needs of Albania's business and academic institutions with focused seminars and workshops". From mentor at alb-net.com Sun Feb 28 09:20:17 1999 From: mentor at alb-net.com (Mentor Cana) Date: Sun, 28 Feb 1999 09:20:17 -0500 (EST) Subject: [abe-forum] Info: "Economic Activities and Democratic Development of Kosova" (fwd) Message-ID: *** Albanian Business and Economics Forum *** For the full report please visit: http://www.kosova.com/RIINVEST/indexa.htm INTRODUCTION The project "Economic Activities and Democratic Development of Kosova" by its complexity and dimensions represents an important event not only for Riinvest Institute but also for the development of research activities in the field of transition, market economy and entrepreneurship in Kosova. This project fulfills a vacuum of studies regarding the economic and social aspects in Kosova on the light of the unsettled problem of Kosova. The development of an open market economy and other democratic structures of the society in Kosova are considered a necessity in order to stimulate economic activities. The project aims to improve the information of the relevant both domestic and international factors on the economic aspects of the problem of Kosova, which are very important, but sometimes neglected. The objective of the project is also to recommend and suggest an institutional and new substantial structure of an open market economy system - the economic system of Kosova, which will meet the main aims of the people of Kosova to build a free democratic society. Taking into consideration the human resources, natural and other resources, this system should stimulate the creative potential for free initiative development and affirmation of entrepreneurship as a development philosophy. Therefore, the project recommends an independent development strategy within the regional and other integrations, based on the private initiative and development of small and medium-size private enterprises. The human resources and their quality represent the most important development factor, under the conditions of a contemporary training on entrepreneurship. In order to meet this need, a Program of Business Education has been suggested. The economic aspects of Kosova issue by its complexity and reflections request strong involving of international factors. The current situation is in contradiction not only with the will of the people of Kosova but also with relevant international acts and order. This situation represents a real hindrance for changing conditions in the Balkans. A troubled Balkan lacking deep economic and social transformations will be faced with internal tensions and continuation of tectonic processes. Besides the analysis of the situation, and future development concepts, some appropriate recommendations have also been given, addressed to the appropriate bodies in Kosova, and to other relevant factors involved in finding a solution for the problem of Kosova in order to overcome the existing situation. The project has reached its position in Kosova?s business community and it is expected to generate new initiatives and activities for increasing public understanding and appreciation of the role of entrepreneurship in the economic growth and future developments of Kosova?s economy. For the full report please visit: http://www.kosova.com/RIINVEST/indexa.htm