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5. Institutional Changes of Economic OrganisationsUntil the end of the 1980s, state-owned firms and different co-operatives (agricultural, industrial, commercial, etc.) were the dominant forms of economic organisations. They were dominant not only in respect of their large number, but also their output. Laws promoting the transformation of the structure and ownership were passed at the end of the last decade. The most important of these is the Act on Economic Associations, and the so-called Act on Transformation. The former allowed the establishment of the type of economic associations that are well-known and used all over the world, (limited liability companies, joint-stock companies, partnerships, etc.) and the latter regulated the procedure leading to the transformation of the state-owned enterprises. At the same time the State Property Agency was also established and made responsible for the transformation of the sate-owned enterprises, and later, when the laws governing the privatisation process had passed, also for the privatisation of state property. Following several transformations, the same organisation is still in function, today under the name: State Privatisation and Trustee Plc. The rules and regulations required for the proper operation of a modern economy were created gradually. They include regulations related to the following:
Parallel with the work of legislation, the transformation of structures and ownership also started. Since 1990, the number of state-owned enterprises has decreased to one third of the original number, while the number of business associations showed a sixfold increase. The number of businesses in the form of sole proprietorship has also grown significantly. On the whole, more than 10 000 new private businesses were established in a period of three years. 5.1. Privatisation of Large State-owned EnterprisesThe majority of the large state-owned enterprises was first transformed into an economic association in accordance with the provisions of the law, and then sold by the State Property Agency. In some cases - typically, when the company in question had serious operational difficulties - first the parts that could survive, were united in a company and privatised only then. In March 1994, the portfolio of the State Property Agency contained 56 companies operating in Baranya county. In addition to those, 19 other enterprises were also under control by the State Property Agency, these, however, were under liquidation or ready to close down. This group included some enterprises that used to be key components in the county's economy, e.g. Mecsek Coal Mines, BÁZIS Construction Works, the Furniture Factory of Pécs, Sopiana Machine Factory. 5.2. The Development of the Local Government's Property and the Non-profit OrganisationsThe local governments (settlement level) were established following the enactment of the 1990 Act on Local Governments. Then they were allotted the property needed for their proper operation. The range of this property was also regulated by the Hungarian parliament in the law and each county set up a so-called Property Transfer Commission to implement the changes. The transfer of institutional property (health services, social, educational and cultural institutions) was a relatively simple process. More complications were involved in the transfer of public utilities and public services. Most of these operated in several settlements and came to be owned by several local governments. In some cases the parties involved have been unable to settle property rights even during the four years that have elapsed. (e.g. the Spa and Swimming pool of Harkány) After the transfer of utilities the local governments transformed the enterprises into economic organisations in compliance with the law. Most of the property remained with the local governments; employees acquired not more than 10% of the shares and only in a few cases. Foreign investors also showed interest, e.g. the French Lyonnaise des Eaux Sa became the majority owner of the Waterworks of Pécs Plc. Some firms, important both for their size and their sales incomes, are still waiting to be transformed, e.g. the Waterworks of Baranya county, and PANNONMEDICINA, a firm supplying medicines. The former will be owned by 288, and the latter by 302 local governments. Another typical development of the period was the establishment of new companies on the basis of the old ones. Most of these are owned exclusively by one local government (e.g. Property Management Ltd., of Pécs, or Mecsek Tours Ltd). After a few years of operation, these organisations are also expected to be privatised soon, either in whole or in part. Later last year the chambers of industry, commerce, etc. were also established as forms of economic self-government, in addition to the local governments. Every county has now its own chamber of industry and trade, chamber of craftsmen, and chamber of agriculture. A pre-requisite of the transformation of the Hungarian national economy into a modern market economy was the creation of autonomous bodies by the actors of the economy, that can operate independently from the government agencies. These bodies have their competencies defined in the law, and their main function is to promote the development, and interests of the local economy, with full respect to the freedom of economic competition. One of these bodies is the Court Elect, which starts working on January 1, 1996. 5.3. The Development of Private BusinessesIn an economy that is in the process of a thorough transformation, it is very hard to assess how well the individual actors of the economy, like the private businesses develop. The statistical data available do not facilitate this judgement. There is, however, one statement that can be made without doubt, namely that the dramatic increase in the number of business associations and private ventures went together with an equally rapid decrease in the number of the employed. Experiences have shown that most of the private businesses are successful and enjoy stability. This is primarily true for those that manufacture good quality products, have secure markets with solvent demand and are, therefore, capable of managing without credits from the bank. The extremely high interest rates on credits (sometimes exceeding 30%) greatly contribute to the difficulties that businesses have to cope with. Some of the stable, well-established businesses were even capable of achieving a certain degree of development. The only way to do this was to invest all their revenues into production, or to attract external sources (development funds for technological improvement, support given to the creation of new jobs, etc.). 5.4. Joint VenturesIn the past five years the business organisations were forced to establish new relations in order to compensate for the lack of capital and demand, as well as the collapse of the East-European markets. As a result, foreign investors were also invited to participate in their operations. Earlier, in the course of privatisation, several foreign businessmen had chosen Hungary and within it Baranya county to find new opportunities. The number of businesses with foreign participation was 505 at the end of 1993, 920 at the end of 1998,and 685 in 2001. 60 percent of the businesses were operated in trade and services sector, and 28 percent in industry in 2001. The issued capital of joint ventures in 1995 was 53 876 Mio HUF, of which foreign investment amounted to 33 626 Mio HUF (62.4 %). In 1995, the issued capital per company was 95.2 Mio HUF, foreign participation amounting to 59.4 Mio HUF. In 2001, the issued capital of joint ventures reached 34 183 Mio HUF, of which 28 707 Mio HUF (83.98 %)was foreign capital. The above data show that multinational corporations made considerable investments into the newly established companies before 1996. The main industries which benefited from these investments are the following:
* taken over by Nokia in the mid 1990's ** Nokia Plc has withdrawn its monitor manufacturing capacities from the region in the late 1990's The most important foreign investors include:
5.5. Prospects of the Privatisation ProcessThe privatisation of companies created from the former state-owned enterprises is about to finish in Baranya county. The process is still unfinished in the energy industry, where the Gas Supplying and the Electricity Supplying companies of South- Transdanubia are still under privatisation, and the Power Plant of Pécs is expected to be privatised in 1996. Further changes in the ownership is likely only in cases when the property belongs to the local governments or their agencies. New business opportunities are to be expected not so much from privatisation, but from new investments. These will not necessarily be brand new developments - although the sites and infrastructure are available - but the utilisation of the existing capacities and premises. |
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