Tranzicija javnih preduzeća u Mađarskoj: Pravno – finansijski aspekti
Transition of Legal Enterprises in Hungary, Legal and Financial Aspects

Summary/Abstract: Ex-socialist governments created an unselective scale of public enterprises that were controlled and bureaucratically managed by ideological coordinates. They preferred big enterprises with all economic activities organized in huge systems based on market emulation or illusion. Pre-1989 socialist states had small numbers of private enterprises like small craft workshops but no small businesses as we understand them employing 10 to 100 workers. This paper covers the organization of public enterprises in the former socialist state Hungary. Former socialist states underwent a painful but inevitable transition process after the Berlin Wall came down in 1989 and the massive Communist illusion was lifted and brought the collapse of former regimes as the domino effect swathed through the states of Eastern Europe. In these countries the economies collapsed too, along with the public enterprises that were the causes and consequences of major upheaval after several unsuccessful decades of experimentation. There is a whole spectrum of different kinds of public enterprises organized according to historical epochs, ideologies, geographic areas, economic systems or specific states. The current era is characterized by the presence of many kinds of public enterprises that vary from state to state or from case to case. In order to gain a better understanding of the various types of public enterprises we have to organize them into two general groups of states and political systems: the developing states, including former socialist economies and states in transition, and developed industrial states with market economies. Of course this paper covers only the main represents of public enterprises in Hungary. Looking at patterns of economic reform in ex-socialist state in the last decade of the Second Millennium, we see the public sector of the economy being defined on the basis of a narrower meaning of the general public interest of the citizens and the abandonment of the socialist delusion that the whole economy was of public interest. At the passage between two millenniums, the public sector of the economy is generally being understood and defined to reflect the parameters of the market economy. The Hungarian legislation places public enterprises under the authority of the local or national government, so the departments of that government are responsible for establishing these enterprises. The legislators have retained the main public businesses and services under government control, with public ownership at no less than 50+1% or in exceptional cases no less than 25+1%: in some cases government retains a priority vote or “golden share.” In former socialist state the concept of public enterprise began to take shape with the process of ownership transformation in the early 1990s: previous decades had espoused an ideological non-selective system that made whole countries into single quasi-public economies. As the privatization process matured, governments began to see the public economy clearly as a very important and special economic sector. A review of legislation in the former socialist state reveals the lawmakers’ goal of attracting private and mainly foreign capital into their public economies. Foreign investment as well as new technologies and equipment are prerequisites for transforming the old state firms into efficient businesses and services. Concession is a transparent and recognizably market institution that provides investors with security compared to short or long-term loans in transitional countries. The final word on the effectiveness of concessions in the campaign for foreign investment, however, has yet to be pronounced. The main Hungarian public energy and communications companies are the Power Plant Company or MVM Rt., the Telecommunications Company or MATAV Rt. and the national railroad or MAV Rt. These companies became assets of APV Rt. when this state agency was established as the engine of privatization in 1995. According to a December 19, 2000 statement by Prime Minister Victor Orban, the privatization process has been completed in Hungary and ownership structures now parallel those of the states of Western Europe. About 80% of public enterprises have been privatized in the last decade and the plan is to retain the rest as state properties.

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