RIGA – The Parliament has extended the term of privatization vouchers that expire on Dec. 31 for one more year, but some fear the decision was made a little too early.
The state has issued 110.3 million vouchers, each worth 28 lats ($47) so that Latvian residents could acquire land, apartments or company shares. But seven months before they were due to expire, residents and companies still held 37.9 percent, or 41.8 million unused vouchers.
The Cabinet was scheduled to review the problem of redeeming vouchers in September, but MPs did not want to wait until autumn.
"I think that this decision is premature because the major problem of land and apartment privatization is changing very quickly. Besides, a number of regulations have been submitted to the Cabinet of Ministers that would have considerably speeded up usage of vouchers," said Aivars Bernans, head of the Economics Ministry's privatization department.
Bernans predicted that the Parliament's decision would slow down privatization of apartments and land, and consequently the development of the real estate market.
Janis Naglis, director general of the Latvian Privatization Agency, admitted that it was necessary to give people another year to use up their vouchers. But he also mentioned bad timing.
"This decision should have been made later, sometime in September, because privatization of apartments may now slow down," he said.
But Bernans also sees positive trends.
"On the other hand, there are positive aspects. Residents will be able to use their vouchers not only in the Latvian Shipping Company's privatization, but also in Lattelekom and Latvenergo privatization," he said.
Although the Latvian Shipping Company's privatization was scheduled to start this year, the failure to find a strategic investor by the June 15 deadline will probably slow that process down.
The government decided earlier in June not to sell the state energy company Latvenergo until September 2000, when the first round of privatization is slated to start.
Naglis has also stated that privatization of the telephone monopoly Lattelekom may not start earlier than 2000.
Bernans predicted that a possibility to use vouchers in privatization of state companies will stop the fall of voucher price, which are bought from residents for an average of 1 lat.
Now that Latvians will have another year to use their vouchers, will all of them be redeemed?
"There is enough state property to use all privatization vouchers," Bernans said.
But Naglis was not as optimistic.
"Next year, a large number of vouchers will be redeemed, but I doubt all will be," he said. "Some percentage will simply be written off."
