Communist Yugoslavia, for years in the vanguard of openings to the West, intends to remodel its socialist economy along capitalist lines.
A reform project, bound to raise eyebrows in the communist bloc, will open the doors to Western investors, permit joint ventures, encourage private enterprise and allow profit-sharing and the export of gains by foreign investors.
Under the reform, share trading is envisioned along with the opening of a stock exchange. No other country in Eastern Europe has a stock exchange, although Hungary announced in July it would open a limited exchange on Jan. 1.
Ljubisha Jareditch, federal commissioner for economic reform, presented the project over the weekend. If it is approved by the Communist Party Central Committee and rubber-stamped by the Federal Assembly, it will go into effect on Jan. 1, Jareditch said.
Western economists see the reforms as a desperate effort by the party hierarchy to pluck the country out of an economic slump and quell dissent among workers, who took to the streets this month and shouted, ”We have the power but we are becoming poorer every day!”
The main points of the reform include a number of startling innovations in a socialist society, a society that until now has rejected capitalism and capitalist participation on ideological principles.
The main elements of the remodeled Yugoslav economy:
– Close all factories that are not making a profit. The government would guarantee laid-off workers a minimum income and would support initiatives to create private or cooperative ventures to absorb the unemployed.
– Encourage joint ventures in specific sectors of the economy, in which foreign companies would be permitted to operate along the same rules as in the West. They would be allowed to hold the majority of shares in a venture, participate in management and profit distribution, and repatriate their gains. There would be a $50,000 minimum on foreign investments but no maximum.
– Grant foreign partners the same legal rights as their Yugoslav associates. New legislation would be simplified ”so that any foreigner could understand it,” Jareditch said. The government would guarantee foreign investments.
– Abide by the principle that control of production passes from the workers to the management. Workers could be moved from one job to another and would be paid according to their skills and productivity. Unproductive workers could be fired. Nonstate companies would no longer be required to submit a three-year production plan.
– Give the private, state and cooperative sectors equal rights under the new industrial legislation. The main policy for all companies would be ”to make a profit,” Jareditch said.
– Allow workers to buy shares in their companies and participate in profit-sharing.
– Provide government support for medium- and small-size private industry. – Institute a fiscal policy to encourage Yugoslavs to invest their savings in new production enterprises.
– Abolish priority development projects. From Jan. 1, the government would financially support only those industrial ventures with good export prospects.
