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Number of State-run Enterprises in Georgia Decreased 4.6 Times in 3 Years

Profits of state enterprises are reducing  from year to year as well as  their  number – if in 2012-2013 their number reached  1 129, in 2014 – already 340, now – only 243. The process of privatization continues.

Of the remaining companies, 24  are bankrupt and only 68 are engaged in an active state activities. As for the professionalism of the management, the Agency for the State Property Management says that in most cases directors were selected on a competitive basis. The Agency acknowledges the existence of problems with the transparency of state-owned enterprises and talks about the need to ensure an  access to  information about their activities.

“We have implemented a number of measures in this regard. In particular, the process of optimization, liquidation and bankruptcy of enterprises that do not work,  do not conduct economic activity or are in dire financial straits is underway, “- say in the Agency. According to the NGO Georgian Young Lawyers’ Association, from year to year the profits of enterprises controlled by the agency, are reducing.

“Therefore, the government  should, on the one hand, introduce a very clear and specific regulation, on the other –  try as much as possible either  to abolish these companies, or privatize them, or transfer them to private business. Moreover, in general, we are talking about assets of approximately GEL 1 billion. At present, the country does not have the legislative framework that would ensure the transparency of these companies, there is no established system of financial and other reports of public companies and  information about their activities is not published. The  problem recognized by the government  is reflected in the government’s anti-corruption strategy. The fact is that most enterprises are  loss-making and their maintenance is costly to the state. At the same time, there is no information about how much the state spends on them, and how many people work in these companies, “- says in the NGO.

According to the findings of the audit service, 76 public enterprises are not listed in the register of Agency for the State Property Management. “Our main recommendation is  to enact a system of accountability of public enterprises as soon as possible. Currently, there are companies that are accountable to the Ministry of Economy, but there are some who are not. That’s the problem. Information on the activities of state-owned enterprises should be  concentrated in the  Ministry of Economy. There are many other problems, but  it’s necessary to begin with this, “- Young Lawyers Association’s statement  reads.

In the words of George Gudadze,  head of the Agency for the State Property Management,  the government intends to minimize the number of such businesses, especially those that either do not work on  their profile or whose profitability depends on the rent of  premises owned by them. According to the expert Emzar Jgerenaia, privatization of public enterprises is reqiured, but it is not an end in itself.

“It makes no sense to privatize objects without clear ideas about what to do with them afterwards. It is necessary to attract investors and turn these companies into a successful business. There are also accounting problems – in particular, the company is registered in the paper, and its property is estimated, for example, at one million, though it really it is not worth more than 100 000. Therefore, a real estimation of a value of the object is needed. The problem also is that in recent years it has become more difficult to find investors, “- the expert notes.