Privatization in Czechoslovakia
The Voucher System in Action
By Lynda L. Maillet

The Czechoslovak privatization program may prove to be a model (or a disastrous object lesson) for similar programs throughout Eastern Europe and the former Soviet Union. This winter and spring, around 8.5 million people bought and registered booklets of vouchers which entitle them to shares in the more than 3,000 enterprises being privatized through the sale of shares.

Each enterprise had the opportunity to find a foreign buyer by a deadline set by the government (Volkswagen, Air France, and Kmart are among those Western firms which acquired companies during this period); those which could not had to hand over their shares for sale in the voucher program. Most participating enterprises are offering about 60% of their equity through the voucher program, although they are allowed to offer up to 97%. The remaining 3% must be set aside for a restitution fund which will compensate former owners who had their property expropriated when the Communists took control in 1948. Under the program, 292.6 billion crowns (or $9.7 billion) in equity will be distributed (of this, 185.3 billion crowns are equity in Czech companies, 93.5 billion in Slovak companies, and 13.8 billion in federal property). Each voucher book, bought and registered for 1,035 crowns, should therefore be worth more than 30,000 crowns. Every adult citizen was eligible to buy one book.

A voucher book represents 1,000 "points" which are used to bid on shares. All shares will initially be offered at a price of three shares per 100 points, and individuals use their points to bid on the shares of specific enterprises. Throughout the summer, a computer (provided by the Digital Equipment Corp.) will allocate the enterprise shares by matching the bids of subscribers with the offer of shares. If the demand for some shares exceeds supply, those shares will be offered again for higher bids. Those that are not sold off will be offered, to new buyers only, at a lower price. Once the shares are purchased, their owners are free to sell them as they wish

The main problem facing citizens wishing to purchase shares is a lack of information about the enterprises....

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