Over the past few weeks, the government has shown a determination to privatize more than 20 state-owned companies. At the forefront of these companies are the Kuwait Flour Mills & Bakeries Co and poultry companies. These key companies are categorized as food security sources, providing daily sustenance to the population of Kuwait. The government has prepared a list of some very successful and failed companies to be privatized. This process would mean a complete transformation from public to private ownership and a handover to a few merchants in an effort by the government to bridge the budget deficit, which has increased with the continuing decline in oil prices.
This decision is proof beyond any reasonable doubt that the country will put its properties in the hands of some traders through the privatization process of many state-owned companies, under the claim of supporting and securing the economic policy of the country. The existence of a list of about 20 government-owned companies or companies in which the government owns large stakes to be sold under the name of privatization is a dangerous precedent and a strike against national, social and food security due to their significant role in fulfilling the needs of citizens and providing social security to them.
I really wonder if the government is fully aware of the seriousness of privatizing a successful company such as the Kuwait Flour Mills. It’s a profitable company that was established shortly after the country’s independence in the ‘60s and regardless of the financial crises plaguing companies in Kuwait and abroad, this company has achieved profits of millions of dinars – profit at the end of the fiscal year in 2015 was about KD 30 million! Why would the government want to sell it?
It is unfortunate that privatization has proved a failure in Kuwait. An example of this was the petrol stations’ project years ago, and the result is the absence of Kuwaitization in employment, to the benefit of expatriates. The fear of repercussions of privatization is logical as we are living in an awkward political situation. I wonder if this government is aware of the risks of what they are calling for.
Another major point here is the talk about the privatization of cooperative societies, with possible loss of the rights of shareholders, in addition to the expected price hikes without real control. Most reports and statements by lawyers on the subject of privatization of cooperative societies is that privatization is illegal, as co-ops’ money is of the shareholders, and not money of the state, since cooperative societies were established with the funds of the shareholders. The ministry of social affairs and labor has no right to privatize these co-ops. Why does the government want to privatize something that it doesn’t own and has no share in it in the first place? This is risky indeed.
The government is making the excuse of the existence of corruption in their demand for the privatization of cooperative societies, which is not an acceptable excuse. Only those who are involved in corruption must be punished and not everyone. The government’s insistence on privatization will be subjected to criticism and rejection by most political activists and the opposition because food security should not be touched in order to satisfy a minority of merchants.
By Muna Al-Fuzai