Last week, Māris Vainovskis, FICIL board member and leader of the Investment Protection work group, participated in the Latvian Television programme De facto, where the topic of listing state and municipal enterprises on the stock exchange was discussed. Although this initiative was included in the government’s declaration in the fall of 2023 and addressed during the Cabinet meeting last spring, significant progress has yet to be made.
Māris argued that the delay in moving forward may stem from concerns about privatization, which persist among the politicians and some members of the public. “There is a stigma around privatization. But listing a company on the stock exchange is not the old-fashioned privatization! It differs fundamentally in several ways,” Māris emphasized.
He explained that the listing of state enterprises on the stock exchange is vastly different from past privatization efforts. First, the value of companies is determined by the market, ensuring a transparent and fair price. Second, this process excludes deferred payments, as investors are required to commit funds upfront. Third, stock exchange listing improves corporate governance by imposing high standards of transparency and information disclosure.
FICIL has long advocated for more decisive action in this area. It is evident that Latvia lags behind neighboring countries, such as Estonia and Lithuania, where the listing of state enterprises on the stock exchange has proven to positively impact economic growth and governance transparency.
Listing companies on the stock exchange is not just an economic tool – it is a strategic opportunity to enhance the management of state-owned enterprises and ensure stable growth in the long term. This approach has the potential to attract not only foreign investors, but also to strengthen the country’s position in both regional and global markets.