Economy

Ukroboronprom may be incorporated into state holding system proposed PM – Abromavicius

Director General of state-owned Concern Ukroboronprom Aivaras Abromavicius supports the creation of a state holding that would unite large strategic state-owned companies, and considers it possible to integrate Ukroboronprom into its structural system.

"The process is right. I will support both the prime minister and the economy minister if they continue to push this idea. We should create such a holding," Abromavicius, who was the Minister of Economic Development and Trade of Ukraine in 2014-2016, and he himself proposed creating such a holding, told Interfax-Ukraine.

He noted that this practice is widely used in the countries of Scandinavia, Southeast Asia and as a whole is a global trend.

"The main idea of the state holding is that state-owned companies should be managed in a centralized way: more professionally, with the employment of people from the private sector. But, unfortunately, there was no political will then. As always, we could not agree on how many companies would be integrated, what way the leader would be elected," the ex-minister said.

Abromavicius stressed that the issue of choosing the leadership of such a state holding, which will be more important than individual ministers, is crucial: "In the wrong political situation, there is a big risk that we immediately hand over all the property to the hands of some not very good people."

Commenting on the discussion whether it is worth creating one holding or several industry ones, Abromavicius expressed the view that there should be one holding on top, and there may be some industry clusters put under its control, including Ukroboronprom. He added that the state concern lacks some specifics, according to which it could not become part of such a state holding.

Ukroboronprom should be managed in a professional and transparent way. We must work to modernize, supply high-quality weapons to our armed forces. Therefore, there should not be any special approaches," said Abromavicius.

According to him, of the 150 largest arms manufacturers in the world, almost all companies are public.

Commenting on the discussion on the feasibility of privatizing certain large state-owned enterprises or shares in a state holding, for example, through an IPO, the ex-minister spoke in favor of selling individual enterprises.

"The conditions for the domestic capital market have not been created yet. I believe that we need to focus on the privatization of facilities," Abromavicius explained his position.

In his opinion, it is also not worth creating a separate holding for minority stakes in state-owned companies, and a separate one for majority stakes. "Since the whole point of this approach is to improve corporate governance. Therefore, if we create professional management of a holding company of majority shares, then, in principle, there is no sense in transferring the management of minority stakes to some foreign company," he said.

As reported, Prime Minister Oleksiy Honcharuk in his first interview with reporters in late August announced plans for a new Cabinet to remove all state-run and municipally owned enterprises from the ministries' control.

"We are now thinking of creating a public holding company that would remove all these SOE and municipal enterprises from coordination of the ministries. So that each minister does not have these bunches hanging on his balance sheet. This needs to be taken away from the Cabinet of Ministers. Politicians should not do this at all. It should be a separate management. And we have a preliminary agreement with a strong manager who will lead the process of creating this holding," Honcharuk said. He also said that he considered it necessary to carry out the so-called "large-scale privatization."

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