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Structuring government companies .. Where to?

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Structuring government companies .. Where to? Empty Structuring government companies .. Where to?

Post by RamblerNash Tue Jul 06, 2021 9:56 pm

Structuring government companies .. Where to? 28208
Shukran Khader

Shukran Khader

There are many factors that play an important role in the Iraqi economic arena, but the political decision-making factors remain, and oil production are the two main factors that were and still effectively influence the Iraqi economic policy.

By the year (2003) everyone was convinced that Iraq, after leaving a harsh period during which it left bad effects on its economic map, will accept a new stage in which it is based on the market economy, and the adoption of new foundations was initiated, as horizons expanded and programs were prepared, Dozens of reconstruction conferences were held in the capitals of many countries, some of which showed willingness to drop old debts, and the other part offered grants and facilities, and international companies made attractive offers, and Iraq gradually began to regain its position among countries as an effective economic power.

But despite the correct diagnosis, good planning, the programs announced in (2005), the optimism of all economic institutions internally, and the fruitful cooperation provided externally, the results were not constructive and did not achieve anything on the ground, due to the multiple and successive crises, which made the economic file a victim other files.

While most developed countries deal with the economic file among their most important priorities, and dedicate most of their efforts to support economic activity, and consider it necessary that the economic decision in the country be dependent on economic activity and its variables, and away from the ideology of the political system and its reactions as a result of external and internal pressures, and that The intervention of the state shall be within the scope of determining the type and size of restrictions and obstacles to development, in order to provide full support for the events of changes in the economic structure, and prepare them to enter into competition in the local markets.

And that the transformation measures from development by central planning led by the public sector to development by privatization and the market economy (as planned), must take into account the success factors, and in a thoughtful manner, to reach the desired path, especially since all the previous and current time stages were governed by an unfavorable climate. stable.

The National Development Strategy Program was prepared, which was issued by the Ministry of Planning for the period specified in the years (2007 - 2005), through which it adopted the structure of the national economy and the expansion of its production base quantitatively and qualitatively depending on market mechanisms, and liberating prices and trade from quantitative and qualitative restrictions, provided that the sector undertakes The private leadership in achieving this by strengthening its financial and technical capabilities, as well as reforming (158) government companies that were destroyed and sabotaged out of (192) companies owned by the Iraqi government, in which there are approximately (700) thousand employees.

Despite all these measures that were declared, nothing was achieved on the ground and at the level of both sectors. The percentage of the private sector’s contribution to the GDP remained at the same rates (30%) and the reform measures for government companies were not implemented, despite the preparation of an integrated plan consisting of: Several stages (between liquidation, restructuring and privatization) after classifying and identifying companies according to their economic status.

Rather, the state was burdened with an additional burden by returning the dismissed politicians to service to work in companies, and their accumulated salaries were paid, as well as the continuation of new appointments.

By the year 2010, the study prepared for the reform of government companies was expanded by the advisory body of the General Secretariat of the Council of Ministers, and representatives from the relevant ministries and the Ministry of Finance were involved, and a road map was prepared, approved by the Council of Ministers by Resolution No. the previous implementation of its recommendations.

Recommendations were made for the necessity of contracting with international consulting companies to study the situation of each company in terms of stabilizing its capital and assets, fixing its debts and obligations, and how to deal with the surplus cadre, and creating special programs for each company to transform into a profitable company, provided that this is done within a maximum period of time (4) years from Date of completion of the study.

After contracting with these consulting companies in (2012) and completing accurate studies on the companies’ situation in the middle of (2015), there was no significant change in the companies’ situation, except for the reduction of a part of the cadres (from those over the age of fifty years and with more than 15 years of service ), benefiting from the unified retirement law that gave legitimacy to these procedures, while continuing to make appointments as contracts or daily wages.

Today, after fifteen years of declaring the transformation and correcting the path, the announced programs remained fragmented, devoid of interconnected strategy, repeating and repeating themselves, and we did not witness the benefit from the information and studies that were prepared by the consulting companies and which were preserved in the archives of companies, and we have a map Fragmented economics is useless, because we lack the compass that enables us to determine the right directions.

The study prepared by the team of advisors in the Prime Ministry was subjected to a set of jurisprudence and intersections as a result of the multiplicity of decision sources in it, which emptied it of its true content and neutralized it from its prescribed course, and was not taken seriously commensurate with the size of the problem and the suffering of companies, and the study did not estimate that we are facing a turning point It is real in economic policy, and that we are dealing with the largest number of institutions that constitute important joints in the administration of the state, and constitute vital joints in its economy, and include hundreds of thousands of affiliates and possess assets and assets that cost the state tens of trillions of dinars, so the team dealt with the topics of the study and its contributions in Develop solutions selectively, because the trends were loaded with preconceived ideas and conclusions before commencing the study, in addition to the study's inability to get rid of the effects of the World Bank's directions.

Although the team’s vision of the problem of companies, was full of hope and looking forward to real planning for change, and as stated in the introduction to the study ((making public companies economic units that work according to economic principles and commercial standards, profit and loss, and their products enjoy regional and global competitiveness, depend on excellence and creativity, and contribute to In the growth and development of the national economy towards its diversification, creating job opportunities and using resources effectively, economically and responsibly)) as well as ((there is no specific model for restructuring and transformation, but companies are studied case by case and each of them takes the appropriate action)).

However, the treatments were limited to two main axes, namely how to get rid of surplus labor, and how to reduce the state’s contribution to bearing the financial burdens of companies, and even the evaluation that was adopted to classify companies into (profitable or losing), (feasible, unfeasible) was based on two axes. Only, they are the numbers of its employees and the extent of the state's contribution to covering their salaries.

Other economic criteria such as (financial performance, profitability, evaluation of products and services, marketing and sales, development of production and services, human resources) were not adopted, and this evaluation does not reflect the true picture of the companies' situation and the success of the transformation.

The study considered a profitable part of the companies, although the state had borne all the funds allocated for the development, rehabilitation and maintenance of its facilities from the general budget. Rather, the study criticized the mechanism of adopting the principle of (profit - loss) in evaluating companies, and considered the method used in the calculation to be unreal and distorted.

The study relied on prior assumptions such as ((even if energy is provided for (24) hours a day, and redundant workers are disposed of, this will not contribute to achieving profit and companies will not be feasible!!!!)), but went to further conclusions such as ((It is not possible to keep companies under the general management of the state, even if they are profitable, operate according to market mechanisms, and their products are competitive and efficient!!!)) The study tried to present the transformation project avoiding putting up the title (privatization), or it presented the title with explanation and justification in order to mitigate its shock and effects, since the word (privatization) carries sensitive concepts in Iraqi society, because it means the state abandons its members and leaves them in front of the jaws of predators. The private sector, which bears a historically distorted image, and as stated in the texts of the study ((privatization does not take place for the sake of privatization, but according to comparative criteria that make the performance of companies outside the framework of the state more economically feasible than staying within the state, and privatization does not mean selling in full because entering the sector For any percentage in (management) or in (management and ownership) together for companies is in itself (privatization) to varying degrees, as companies can privatize some of their activities without others according to multiple contracts and different from one company to another)).

The conclusion of the study was as follows:-

1) The study included the case of (157) companies out of (176) government companies, the number of their affiliates is about (500) thousand.

2) Liquidation of (17) losing and useless companies.

3) Maintaining (44) profitable or feasible companies with the implementation of reform.

4) Presentation of (96) companies for (reform, restructuring, investment, privatization, transformation).

5) Transferring (181) thousand affiliates, i.e. within (36%) of the total number, to the (Business Development Center), which is established at the headquarters of ministries for the purpose of rehabilitating them or referring them to retirement, and laying off or reducing (22) thousand daily wage employees.

Thus, the study receded with liquidation, for losing companies, restructuring and reform of feasible companies, and privatization for the rest of the companies, and the Business Development Center was not established, but the unified retirement law was taken advantage of and a large number of affiliates were referred to retirement, in addition to allowing the affiliates to provide a long vacation for a period of ( 5) years while retaining the nominal salary and the right to work in the private sector while they are on vacation.

We can summarize the real reasons for the failure of transformation programs, especially the restructuring of public sector companies, as follows:

1. The ambiguity of the roles of the public and private sectors in the economic map, and the absence of well-studied and clear economic programs, especially for the proposed transformation programs.

2. The deterioration of the general climate of the economic situation as a result of improvised and sudden decisions due to political fluctuations, which created an environment repelling local and foreign investment.

3. Legislation defects (lack and intersection) confuse departments when making decisions, as well as the multiplicity of decision sources.

4. The lack of financial and economic institutions in the principles of rational management, which made them lose the confidence of investors.

5. Corruption is rampant, especially in the joints of the public sector.

6. Most of the studies that were prepared were theoretical, ideal (especially in terms of how to get rid of surplus staff, how to increase revenues and reduce expenses, how to develop and qualify, how to increase the productivity of production units, how to get new job opportunities) because most of the treatments offered are within a map The way of structuring companies, outside the capacity and powers of public companies, belongs to various other parties in which companies constitute the weakest links.

7. Surplus workers terrify investors, and the absence of clear policies in the public sector on how to dispose of the surplus or how to qualify them to benefit from them in new activities.

8. The absence of a real diagnosis of profit and loss criteria in public sector companies, and the failure to determine the minimum line and the line of initiation in the joints of their work.

9. The mentality of workers in the public sector is dependent, non-competitive, and far from the market culture, and there is resistance to the transition to privatization measures, because it will lose them many of the privileges they enjoy, especially the higher administrations.

10. The Ministry's dominance over most of the decisions of public sector companies, and there is the adherence of the ministries not to separate companies from them or not to allow them to have independent decisions.

11. The impossibility of estimating the fixed and current capital, whether at the book value or the current value of the companies, as the estimation of assets was limited by the consulting company in charge of preparing the study and based on consultations with the public company and local commercial offices, with the Ministry of Finance not approving the estimation, and this ambiguity in establishing the status of The companies did not serve the announced programs and prepared studies.

12. The study did not address how to deal with old debts and previous obligations of companies.

13. The study did not provide real solutions for government factories and factories, as the state of the productive factories affiliated with public companies is similar and does not herald new hope, as most of them have old facilities, which have been subjected to destruction and sabotage as a result of wars, sabotage and looting, and most of them have turned into abandoned sites as a result of the   collapse of infrastructure. It, and the rest of it currently suffers from mismanagement, as a result of the dominant mentality of the operators, since their returns are fixed as a result of their commitment to presence and permanence only (like any other administrative affiliate  within other state institutions), with no correlation between the employee’s financial return and productivity  in the absence of a system Incentives, and most of these factories suffer from obsolescence and depreciation as a result of importing them since the eighties of the last century (old technologies), and suffer from low productivity due to lack of energy, An increase in productivity costs, and that the goods produced are unable to compete in the market.


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