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The decision issued a few days ago to liquidate the Iron and Steel Complex in Helwan caused confusion among the people and objection between the commentators and independent parties and part of the public opinion. The issue is important and the government deserves to wait, not only with regard to this complex alone, but also for the questions it raises regarding economic policy.
I begin by explaining that I try not to have a prior position on the issue of selling or keeping public sector assets, because I do not see that there is a strict principle that should be adhered to in this issue, nor is there a single sound policy, but rather it is an issue that should be governed by economic, development and practical conditions for each case. Separately. That is why the position of the privatization seekers does not convince me on every occasion, and I am not inclined to those who see that state ownership is sacred and it is not permissible to touch it in all cases.
From this perspective, the decision to liquidate the complex would have seemed logical and acceptable had it not been that we are about a major and influential industry in the rest of the economic sectors, and that the government had previously announced its intention to develop public companies, and most importantly, looking at the “current snapshot” alone is not sufficient. .
What I mean by the expression “current shot”, is that the subject is presented from the perspective that the iron and steel complex achieves annual losses of one billion pounds, that it is unable to compete, and that the number of its employees is more than seven thousand and five hundred, while the activity needs only half of this number .. all This leads to one logical conclusion, which is the necessity to liquidate this losing activity instead of continuing to deplete the state’s resources.
But relying on the “current shot” only is similar to the case of the contractor who looks at an old building with crumbling walls, old iron and ruined ceilings, and ends with the necessity of dumping it and selling it for scrap and rubble, and in this he is right .. But what our contractor friend does not tell us is: Was the degradation inevitable? From the beginning, or was the architecture capable of salvation with some maintenance and renewal? And did not leaving it to the factors of erosion prevent it from this inevitable fate? And was there a hope of salvaging it if its defects were addressed, or is waste and selling of rubble the only alternative ?!
Likewise, I have no doubt that continuing losses in the iron and steel complex as it is today is not an acceptable situation and requires some action. But before reaching the liquidation decision and convincing the public of it, the government must answer a number of important questions:
Was it inevitable for the compound to reach the current state in which it annually incurs such heavy losses, or was the situation could be remedied?
What are the causes of the large and accumulated losses that necessitate liquidation, are they structural causes with no hope of reform, or mismanagement that can be remedied, or lack of funding that can be managed, or an excessive increase in workers that can be dealt with by an early retirement program that preserves their rights and the continuation of the complex?
Why is the privately owned iron and steel industry making profits while it only makes losses for the public sector?
What are the other alternatives that were considered and studied before reaching the liquidation decision, and what are their indicators and expectations that made them not applicable?
What is the method of liquidation to be implemented (beyond what was announced briefly), and does it include the sale of “scrap” assets or produced machinery? Is the vast land belonging to him used to pay off debts only or to sell to other investors?
What is the effect of liquidating the complex on industrial and construction activity in Egypt? Is the only effect of stopping the bleeding of the compound’s losses, or are there structural effects resulting from the exit of this production capacity from the market and the state’s withdrawal from activity?
The government must deal with this issue in a way that goes beyond just describing the economic situation that the Iron and Steel Complex has become today, and realizes that it is a matter of concern to public opinion beyond the previous privatizations or liquidations of commercial stores, tourist hotels and ordinary activities, and that public opinion deserves this clear and detailed statement , Because anxiety and reservation will not disappear once the implementation proceeds.
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