Kosova Steel showing positive signs after privatization:
Only a few of Kosovo’s Socially Owned Enterprises (SOEs) which have been privatized are fully functioning and successfully coping with market conditions and competition. Most ex SOEs are in private hands now, as a result of the privatization process headed by UNMIK Pillar IV, managed by the European Union and implemented by Kosovo Trust Agency (KTA).
KTA has managed to privatize more than 60% of Kosovo’s SOEs up to now, with another 200 or so to go. As of June 2007, the KTA had tendered around 200 SOEs. KTA sometimes use to split these SOEs into more than one new company and this has created around 300 NewCos.
Spin offs from ex SOEs are registered as NewCo's and 100% of shares are sold to private investors. In this way the companies take on new management and new ownership structures. Owing to scrupulous due diligence being conducted by both sides in privatization negotiations, red tape and other difficult transactions of this nature, the KTA has not finalized all contracts. Some NewCo contracts are still pending and I hope they will be signed shortly for the sake of the investors and Kosovo’s economy.
The SOEs of Kosovo were not large in number (less than 600) but they played, and continue to play, a critical role in the Kosovar economy. SOEs comprised 90% of Kosovo's industrial assets and prime agricultural real estate - including massive parcels of land suitable for large scale agriculture – as well as 60% of Kosovo's forests.
Are NewCos derived from SOEs able to cope with local and international competition? Are they going to stick to their core business or are they shifting their activities in other new directions?
Some of the ex SOEs were positioned at suburbs of Kosovo’s main towns. They were located there some two or three decades ago. Due to the growth of towns, they are now surrounded by residential and commercial areas. What will happen now? Will they be moved to make room for new residential and commercial buildings? Of course, this is up to the owners, the central government and local governments where they are located and licensed. They have to decide based on current legislation and the interests of the owners and society.
Do NewCos need to be restructured? If so, are they able to do that by themselves? To whom do they really belong? To the private investors, workers, society, state, municipality? To all of the above? In reality they are owned by private owners but practically they belong to Kosovar society.
Who should be providing support for restructuring, diversification, training and soft loans to finance these businesses? The Central government should be responsible through the Ministry of Trade and Industry (MTI), or through specialized agencies like the Small and Medium size Enterprises Support Agency or Investment and Export Promotion Agency (IPA).
Kosova Steel - a NewCo in Peja, (ex SOE Zastava - Ramiz Sadiku) – is an example of a successful NewCo.
Established in 1965, the company matured into one of the biggest automotive parts producers in South East Europe. Manufacturing of automotive parts for the Serbian Zastava program of passenger cars and Iveco-Zastava trucks chassis was the company’s core business. In addition, the factory produced payload long beams for Slovenian FAP-Mercedes vehicles and rear axle housings for Polish passenger cars.
In April 2006 the company was privatized and is now is owned by Albanian-American Florin Krasniqi and managed by Mark Culaj.
The company has a 150.000 sqm surface plot in Peja, including a 56.000 sqm covered area with all utilities functioning and in good condition.
Nowadays Kosova Steel is undergoing a total restructuring, headed by Culaj, which strives to revitalize the factory with technological updates while simultaneously overhauling the company’s human resources development. The company is in the process of establishing reliable railway contracts for the transportation of the goods it manufactures in Peja for customers in northern Italy.
A large warehouse will be built for the raw materials needed by Kosova Steel. This is going to be a new business utilizing existing facilities that are equipped with a direct railway connection and loading/unloading equipment.
A business incubator for a number of new small enterprises is about to start. A technology transfer and training center are two other new initiatives which have emerged in Kosova Steel’s metamorphosis.
The company has started an ambitious program to become an industry leader in metalworking in Kosovo and the whole neighbouring region. Since the domestic market accounts for but a small share of the company’s revenues, Kosova Steel is hungrily eying export markets. Exporting to regional markets and EU member countries is something new for the company and its early success in landing customers in northern Italy bodes well for future forays into the open markets. Opening of a permanent marketing office in Pristina with experienced staff is the next step.
Import of new technologies, such as smart electronic circuits for the revitalization of existing equipment like metal presses, are considered qualitative imports by the management of Kosova steel. They are right because there is no effective and efficient production and export if we do not continually import new technologies, modern equipment and up to date know-how.
No company can grow without well trained workers and Kosova Steel plans to open its own centre where employees and prospective employees will be trained.
If other NewCos can become as successful as Kosova Steel the county will be well on its way to enjoying the fruits of the free markets of Europe and beyond.
Ejup Qerimi is a former Secretary General of the Kosovo Chamber of Commerce
KTA has managed to privatize more than 60% of Kosovo’s SOEs up to now, with another 200 or so to go. As of June 2007, the KTA had tendered around 200 SOEs. KTA sometimes use to split these SOEs into more than one new company and this has created around 300 NewCos.
Spin offs from ex SOEs are registered as NewCo's and 100% of shares are sold to private investors. In this way the companies take on new management and new ownership structures. Owing to scrupulous due diligence being conducted by both sides in privatization negotiations, red tape and other difficult transactions of this nature, the KTA has not finalized all contracts. Some NewCo contracts are still pending and I hope they will be signed shortly for the sake of the investors and Kosovo’s economy.
The SOEs of Kosovo were not large in number (less than 600) but they played, and continue to play, a critical role in the Kosovar economy. SOEs comprised 90% of Kosovo's industrial assets and prime agricultural real estate - including massive parcels of land suitable for large scale agriculture – as well as 60% of Kosovo's forests.
Are NewCos derived from SOEs able to cope with local and international competition? Are they going to stick to their core business or are they shifting their activities in other new directions?
Some of the ex SOEs were positioned at suburbs of Kosovo’s main towns. They were located there some two or three decades ago. Due to the growth of towns, they are now surrounded by residential and commercial areas. What will happen now? Will they be moved to make room for new residential and commercial buildings? Of course, this is up to the owners, the central government and local governments where they are located and licensed. They have to decide based on current legislation and the interests of the owners and society.
Do NewCos need to be restructured? If so, are they able to do that by themselves? To whom do they really belong? To the private investors, workers, society, state, municipality? To all of the above? In reality they are owned by private owners but practically they belong to Kosovar society.
Who should be providing support for restructuring, diversification, training and soft loans to finance these businesses? The Central government should be responsible through the Ministry of Trade and Industry (MTI), or through specialized agencies like the Small and Medium size Enterprises Support Agency or Investment and Export Promotion Agency (IPA).
Kosova Steel - a NewCo in Peja, (ex SOE Zastava - Ramiz Sadiku) – is an example of a successful NewCo.
Established in 1965, the company matured into one of the biggest automotive parts producers in South East Europe. Manufacturing of automotive parts for the Serbian Zastava program of passenger cars and Iveco-Zastava trucks chassis was the company’s core business. In addition, the factory produced payload long beams for Slovenian FAP-Mercedes vehicles and rear axle housings for Polish passenger cars.
In April 2006 the company was privatized and is now is owned by Albanian-American Florin Krasniqi and managed by Mark Culaj.
The company has a 150.000 sqm surface plot in Peja, including a 56.000 sqm covered area with all utilities functioning and in good condition.
Nowadays Kosova Steel is undergoing a total restructuring, headed by Culaj, which strives to revitalize the factory with technological updates while simultaneously overhauling the company’s human resources development. The company is in the process of establishing reliable railway contracts for the transportation of the goods it manufactures in Peja for customers in northern Italy.
A large warehouse will be built for the raw materials needed by Kosova Steel. This is going to be a new business utilizing existing facilities that are equipped with a direct railway connection and loading/unloading equipment.
A business incubator for a number of new small enterprises is about to start. A technology transfer and training center are two other new initiatives which have emerged in Kosova Steel’s metamorphosis.
The company has started an ambitious program to become an industry leader in metalworking in Kosovo and the whole neighbouring region. Since the domestic market accounts for but a small share of the company’s revenues, Kosova Steel is hungrily eying export markets. Exporting to regional markets and EU member countries is something new for the company and its early success in landing customers in northern Italy bodes well for future forays into the open markets. Opening of a permanent marketing office in Pristina with experienced staff is the next step.
Import of new technologies, such as smart electronic circuits for the revitalization of existing equipment like metal presses, are considered qualitative imports by the management of Kosova steel. They are right because there is no effective and efficient production and export if we do not continually import new technologies, modern equipment and up to date know-how.
No company can grow without well trained workers and Kosova Steel plans to open its own centre where employees and prospective employees will be trained.
If other NewCos can become as successful as Kosova Steel the county will be well on its way to enjoying the fruits of the free markets of Europe and beyond.
Ejup Qerimi is a former Secretary General of the Kosovo Chamber of Commerce
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