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Large-Scale Privatization To Start Next Year

August 15, 1991

PRAGUE, Czechoslovakia (AP) _ State property worth an estimated $80 billion will be sold to foreign and local investors when large-scale privatization starts in Czechoslovakia next Jan. 1, officials said Thursday.

Following the demise of communism in this Central European country in 1989, the new government began implementing the painful transformation of the state- run command economy into a Western-style market system.

Small-scale privatization, in which shops and restaurants are sold to the highest bidder at auctions, began last January. So far, facilities worth over $33 million have been sold.

The plans for large-scale privatization mark ″a one-time opportunity, unprecedented in this country,″ Miloslav Zamecnik, economic adviser to President Vaclav Havel, said in a telephone interview.

According to Zamecnik, property worth some $80 billion will change hands over a period of several years, starting Jan 1. He did not say how the property was evaluated.

Leading managers of all state-owned enterprises are to submit privatization projects to the country’s Finance Ministry by the end of October, outlining ideas for privatization.

Such proposals should determine the proportion of different kinds of ownership in the enterprises.

State ownership will be dominant in companies of strategic importance, such as energy and transportation. Foreign and Czechoslovak investors will be invited to invest in or take over other companies.

The government also plans to hand out nearly one-third of its industrial assets to the population in the form of shares.

Every Czechoslovak over 18 years of age can buy 1,000 coupons for a symbolic price of $33 and invest these in a company of his choice. About nine months after the first round of investments, the acquired shares can be freely traded.

For $33, the average citizen is likely to acquire shares worth $2,500, the Rude Pravo daily said Thursday.

″The principle of coupon privatization is to sell off state property to people who have no money,″ the daily quoted Jaroslav Lizner, one of the project’s coordinators, as saying.

After 40 years of Communist rule, the average worker in Czechoslovakia, once among the top 10 industrial countries of the world, earns about $120 monthly.

Following price deregulation this year, inflation has reached 50 percent since January. Unemployment also has steadily risen, reaching 4.6 percent at the end of June.

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