Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

The further policy of Latvia The further policy of Latvia ensuring effective management ensuring effective management

of public assetsof public assets

J.Pūce,State Secretary

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

Legal frameworkLegal framework

State can be engaged in business in the subsequent cases:

If the market is unable to protect collective interests of a community

In sectors with a natural monopoly

In strategically important sectors

In new sectors

In capital intensive sectors

In sectors, where is need to achieve the highest standard of quality

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

StatisticStatistics

Latvia is a shareholder in 142 enterprises which includes 74 enterprises where state holds 100% shares

At the end of 2009 total asset value of enterprises amounted to LVL 7,15 billions - however the total turnover was LVL 2,26 billions

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

StatisticStatisticss

More than 52 thousand people were employed in state-owned enterprises; the average profit and turnover ratio was 5.9%in 2009

Total return on equity of state-owned enterprises was 7% in 2009 (financial sector is not included)

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

GovernanceGovernance

State-owned enterprises:

Governance is decentralized

Managed by the correspondent line ministries

Managed in accordance with the state established sector policy and social needs

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

DisadvantagesDisadvantages

Low capital return

Non-transparent supervision

Unprofessional supervision

Political aspects of operative decisions

State-enterprises which acts as state administrations

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

ReformsReforms Strategy setting principles for

engagement of public person in business activities – aims to reassess the public person (state, local) business:

State-owned companies which are based on performing public administrative functions are going to be re-organized into national regulatory authorities

The objects whose activities affect public safety and provide important public services are going to be maintained as state-owned companies (Latvenergo, Post of Latvia, International airport, Railway of Latvia, Air Traffic State Forests of Latvia)

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

ReformsReforms To offer CoM to support for one of the following

solutions for public person’s business:

Public person is not subject to restrictions for commercial activities

Reduce the public person's rights to behave as entrepreneur meanwhile to determine that a public person is able to do a commercial activity if major national (public) interest is required

Determine that public person is entitled to do a commercial activity if market failure is identified

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

ReformsReforms Strategy of state asset management –

aims to centralize and improve governance of state-owned enterprises:

Developing business apart of sectoral policy issues

Centralized public asset management

Defined in state capital investment goals

Measures for return on assets and value enhancement

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

ReformsReforms Constantly available data on state assets, a

detailed study provided, transparent information ensured, annual reports prepared;

Establishment of professional Councils with independent members

Reform of Board members salary, linking salary levels to the results achieved

Differential applicable dividend policy;

Regulary analyzed the state co-partnership in the capital companies

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

ScheduleSchedule Strategy setting principles for engagement of

public person in business activities : To submit the strategy to the CoM before the end of March,

2011 To submit draft laws and regulations to the CoM for

consideration till July, 2011

Strategy of state asset management :

A public consultation - April, 2011 To submit the strategy to the CoM before the end of July,

2011 To submit draft laws and regulations to the CoM till the end

of 2011

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

Thank you!

Brīvības street 55, Rīga, LV 1519Phone: 67013101Fax: 67280882E-mail: pasts@em.gov.lvWeb page: www.em.gov.lv