New Economy Minister: $I'm a Supporter of Privatisation$ (interview)
Ljubljana, 29 July (STA) - New Economy Minister Darja Radic has declared
herself a supporter of privatisation, which $needs to be completed
once and for all$. $The withdrawal of the state from the economy
has been absolutely too slow,$ she said in an interview with the
STA.
Radic believes this has contributed to a lack of timely restructuring in
the Slovenian economy, which has in turn worsened the challenges faced by
business in time of crisis.
$When you look at companies with
private ownership and those which emerged from common ownership, there is a
clear distinction. The former have a vision for 20 years, while the latter
have a fairly short-term outlook, mostly for the term of the current
management,$ Radic told the STA.
She thinks that, in this
respect, there will be $nothing wrong if a Slovenian corporation or
two were to be acquired by foreigners$. $The important thing is
that...these companies are headed by good managers with a long-term vision
of development.$
$After all, the ministry has been
supporting foreign direct investment. Why? Because FDI injects new know-how
and business models into the economy.$
She warned that Slovenia
stood to gain nothing by closing its borders to foreign ownership.
$More than dealing with the question of whether Slovenian companies
pass into foreign ownership, Slovenia should be dealing with the question
of what to do to make its business environment attractive to domestic and
foreign companies.$
Moreover, she does not think the current
troubles of Slovenian companies will result in mass acquisitions by
foreigners. $Solutions will have to be found in Slovenia, among
domestic investors, banks and other financial institutions...We're talking
about a process of restructuring that will not be completed
overnight.$
Asked about the Economy Ministry's efforts to help
business with new projects, Radic, who has been in office for two weeks,
said that the state will have to find new sources for development
incentives.
$This is why the ministerial crisis group is
discussing the creation of a Slovenian Development Platform through which
we would acquire favourable repayable funds from international development
institutions such as the European Investment Bank (EIB),$ she
said.
$I support the switch from...grants to repayable
instruments, such as guarantees, loans and venture capital, because this
forces those managing projects to be more selective about the projects they
enter. For the ministry this means that it will get the funds back and be
able to use them for new projects. This provides a sustainable instrument
for financing development projects.$
Meanwhile, she said the
state should focus on providing grants for research and development.
$Here it makes sense for the state to assume some of the risk to
increase the likelihood of the development of a new product or
service.$
Radic admitted that the Economy Ministry does not yet
know where it will obtain funds for such grants in 2011 and 2012.
$We'll do our best to find these funds. I must point out here that the
EUR 185m that will be put up this year is intended for such
projects.$
Asked about the ministry's budgets for the next two
years, the minister said that $the priorities are covered$.
$All we're lacking is provisions for export loans and insurance. We
need around EUR 100m.$
Asked about the outlook for Slovenian
companies, she warned that many were dealing with high indebtedness.
Suggesting that there were no companies too big to fail, she stressed that
a $development breakthrough will have to be achieved with healthy and
newly-emerging companies.$
Meanwhile, she promised to work
against new tax burdens on companies. Asked about the increase in excise on
electricity, which will increase costs for companies, she said that her
first task will be to carry out an analysis of the effects of the
increase.
$Given the state of public finances I understand that
new budgetary sources need to be found. But in times of crisis one must be
careful not to additionally burden business. Now is the time to let
business breathe so that it can emerge from the crisis.$
She
pointed to real estate tax as a possible solution for filling the state
purse. $I'm a support of higher tax on non-essential real estate. I
also support higher rates of tax on non-reinvested profit if the state in
turn drops the plan for an increase in taxes that would increase costs for
companies.$
Quizzed about the state of Slovenian banks, she said
the main question was $how to go about clearing toxic
investments$ from their balance sheets. $The banks must clear out
their bad investments to create room for supporting the healthy part of
business.$
The same is true for the construction sector, which
Radic believes has found itself in a bubble. $There will be a
contraction. I see a solution in deals abroad, where success will depend on
the ability of Slovenian companies to work together in acquiring
business.$
Radic rejected the possibility of her ministry
tightening criteria for the establishment of companies due to abuses
stemming from shell companies. $We have been working to simplify the
procedures for establishing companies. To take a step back due to few cases
of abuse would not be the right approach in my mind.$
$The
right approach would be to punish those who break the law. The companies
act sets down in no uncertain terms the punishment for fraud and false
bankruptcy.$
Asked about the future of the TES 6 project of
constructing a new coal-fired generator in Termoelektrarna Sostanj (TES),
Radic said that she saw no alternatives to pushing ahead with the EUR
1bn-plus investment.
$Given that TES generates 33% of all
electricity in Slovenia and that nobody has presented an alternative to
obtaining this 33% in a realistic period of time, there is no other
possibility. Giving up on 33% of electricity production in Slovenia would
be a very risk decision.$
She said that the priority now will be
to study the audit report on the management of the project so far.
$This is such a large and demanding project that mistakes are bound to
occur. The important thing is for us to uncover them, admit they exist and
then start fixing them.$
$But an important question also is
whether these mistakes happened because of a lack of know-how and
incompetence or whether they happened intentionally.$
Radic said
that for now the government had no clear information warranting the
replacement of managers at power utility HSE and its subsidiary TES.
$Then again, it is not the government which decides to sack the
management - this is the role of the supervisory boards.$
