Attention has been distracted by a widespread corruption scandal. The government's go-slow approach is due to its fear that privatizing SOEs can lead to a bearish stock market, a spike in unemployment and greater control of industries by Korean conglomerates. Yet the chaebol are the only investors able to handle large privatized firms, and the stock market is currently weak. The corruption scandal also will slow down privatization efforts. In a unique situation, most SOEs to be sold, such as the Telecommunications Authority, are both public providers of services and regulators of their particular sector.
Greenfield investments are likely to be attracted in order to expand essential infrastructure.
Private companies are building a major expressway and will share the toll revenues with the government. The government also is negotiating management contracts with investors to improve the inadequate telephone system. In mid-1994 lawmakers' moratorium on sales of state assets effectively halted partnerships with Western investors as well as sales to local nationals. Leonid Kuchma, Ukraine's reform-minded president, has been chiefly responsible for the few privatizations that have taken place. Further sales will occur only after the expiration of the parliament's moratorium sometime in 1996.