Securities portfolio

How it helps to manage enterprises with regard to national interests
How it helps to manage enterprises with regard to national interests.

It is the stock market that becomes the main moving force for both investments and cooperation between different enterprises. In many countries unitary enterprises are retained only in small and, in rare cases, in middle business. Transnational corporations are mainly presented by stock capital. The on-going globalization makes it almost impossible for a company limited in financial means to become competitive on the world market and to avoid the multiple risks in connection with competition.

One can discuss advantages and disadvantages of globalization endlessly or till one gets hoarse. Both the opponents and supporters of this process have a number of facts and arguments in favor of their position. Though, zealots on both sides of this discussion are to some extent idealistic. It is hardly possible for more than 200 states of the planet Earth to ever join into a single state, at least, in the foreseeable future. However, the reverse process when most states would move away from the rest of the world and become exclusively interested in their internal matters is just impossible as well. Economies of different continents are too closely interconnected. And this does not only refer to the developed countries but can be equally attributed to the so-called “third-world” representatives. Of course, industrially developed members of the “G 8” can look down on them, especially in what concerns politics. But as for economic matters, they are in this or that way dependant on each other.

Of course, the previous century revealed close interconnection between politics and economy. But the last one has finally overpowered. Let’s take, for example, the USA and Venezuela. The USA is not at all “willing” to cooperate with Venezuela although would gladly buy another barrel of oil there. Germany, usually very cautious about Eastern European countries, is gradually removing some of its industries onto the territory of Romania and Hungary. Poland that was so eager to join the European Community is outraged by the Russian project to build a gas pipeline crossing the bottom of the Baltic Sea: in this way the blue-sky fuel will be delivered directly to Western vendors without having to use the territory of Poland. By the way, the US sanctions imposed on Belarusian Belneftekhim Concern were rather selective as well. They tried to “switch off the air” for the oil-refining industry but greenlighted potassium fertilizers. And it is quite understandable: this product is of special interest to American farmers. To deprive plants of their “food” with America experiencing food crisis would be, to put it mildly, a silly thing to do. As for car fuel and petrochemicals, the USA imported from Belarus only insignificant qualities. In other words, if French people said “Look for a woman” then in modern geopolitics we could use another axiom — “Look for a commercial interest”.

Our country is gradually integrated into global economic processes as well. Of course, it is hard to name today’s world peaceful. And it is not overcome with excessive remorse. Perhaps, it is a purely psychological phenomenon that one wants to insulate themselves from all the intercontinental fussing, fighting for leadership on world markets and strives to be independent of various crises… But well, in this case you will have to choose between the quiet tranquility of natural economy that fails to provide sufficient prosperity as it is understood by most people today and a developed national economy integrated into the world industrial and financial flows. There is no third choice to make. Our republic is not fabulously rich with ground resources. In fact, there are some mineral resources but they are obviously not enough to satisfy the country’s requirements. These do not have much in common with oil deposits of the Persian Gulf where all one has to do is to pump the “black gold” from under the ground and monitor price environment not to find oneself out of pocket. And then one could use the petrodollars to buy industrial and intellectual products in Europe, Japan or the USA.

Belarusian hopes for prosperity are in developed industry which even today makes the greatest part of our gross national product. But the import capacity index for our domestic products is too high and amounts to 60 percents. This means that goods manufactured in the republic are half foreign because they use foreign raw materials and components. However, the situation is quite common for developed countries as well. If you dismantle, say, a German passenger car, you will find a French fuel supply system, Japanese electronics and Turkish upholstery on seats… The concept “manufacturing country” itself is virtually non-existent in the segment of technological equipment. Spare parts for production lines can be manufactured in a dozen countries on different continents. Even usual household utilities are becoming international. I have personally recently bought a costume which was supposed to be of German make but, in fact, it was sewn in China by French patterns. At least, the label said so.

Global industrial cooperation has determined entirely different principles in the investment policy as well. Severe competition on the world market makes enterprises look for more reliable counteragents. And simple contractual relations have, to some extent, lost their due effect. To join two entities you could not find a better means than a common commercial interest and sharing property rights. That is why stock capital is so popular today. It is a wide-spread situation for long chains of enterprises to be interconnected not on the basis of contracts provisions but by the right to a share in the assets. That can be called the main principle of international cooperation. And, therefore, capital as itself has lost its national component.

For example, “RusAl” which takes the leading position in aluminium production, holds shares in different enterprises (mining, producing alum earth and etc.) in 19 countries. The motor car “Skoda” is of Czech origin though the main assets of the plant are controlled by German “Volkswagen”. Some similar instances but on a lesser scale can be found in Belarus as well. For example, last year one of our domestic paint and varnish plants was acquired by group companies which have their basic manufacturing facilities in Estonia while the company’s owner and incorporator is a citizen of Russia and a permanent resident of Finland. So, in this situation it would be hardly possible to define the national pertain of the capital. In fact, the most important thing here is something different: the above enterprise is successfully working in Belarus manufacturing its products both for export and for domestic markets and regularly paying duties in favor of the state treasury…

Foreign capital as a kind of portfolio investment is the most civilized means of attracting investments and consolidating economic relations with foreign counteragents. In this respect corporization of large enterprises contributing much to the national gross product was just in time to initialize. This might be the only way to ensure further dynamic development. Of course, some hot heads would try to make much ado about nothing asserting the alleged buying out of the assets of Belarusian industrial giants by Russian corporations. Well, I can see nothing bad about it. If the companies of our Eastern neighbor held a certain share in Belarusian industries then, being their owners, they would certainly provide for most effective organization of raw materials supply, lobby product sales and perhaps, share their technologies. Indeed, it is a stable tendency today to make economically essential enterprises public and such a process is a bit strange from a psychological point of view. But this is it. By the way, a joint stock company does not presuppose complete independence of the state; it is just a means to attract investments and a production development strategy.

Vladimir Veliaminov
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