October 13, 2017 Print

The creation and expansion of inefficient municipal enterprises in Lithuania puts economic strain on the taxpayers who have to support them, and hinders the development of innovations that could improve upon the services they offer. That’s why the Lithuanian Free Market Institute (LFMI) worked diligently to champion a policy requiring that any proposed establishment or expansion of a municipal enterprise be presented to a Lithuanian Competition Council. Now, before a proposal is confirmed, the Council must determine if the new enterprise is already provided by the market or could be more efficiently delivered by the private sector.

“[State Owned Enterprises] are very capable of convincing decision makers that they are in business not to earn profit, but for some ‘higher purpose,’” said Žilvinas Šilėnas, president of LFMI. “Therefore, preferential treatment vis-à-vis private enterprises is natural, unavoidable, and justifiable.”

LFMI held a briefing of more than 200 opinion leaders and key decision makers to outline the main arguments in favor of the competitive assessment procedure. The testimony was presented to the Lithuanian Competition Council, various Parliamentary committees, as well as state administration and local authorities. Its actions generated 268 media mentions of the project, helping to win over public support. This new policy takes a tremendous step in the right direction in terms of limiting unnecessary government inference of the market.

"The adoption of a competition assessment procedure for municipal companies will directly benefit private business companies by improving the competitive environment and conditions for private enterprise,” said Aneta Vaine, LFMI’s director of development and programs. “This will indirectly benefit consumers. Moreover, a competitive procedure will ensure a more effective use of taxpayers' money as competitive forces are expected to bring more quality and cost-effectiveness in the provision of services by state and municipal enterprises."

LFMI president Žilvinas Šilėnas (center) appearing on a Lithuanian talk show discussing the competitive assessment procedure.

The Lithuanian Free Market Institute (LFMI) is a recipient of Atlas Network’s Liberating Enterprise to Advance Prosperity Grant, awarded to think tanks outside of North America with ambitious and achievable plans to improve the public policy and regulatory environment in their countries, particularly in relation to limits on enterprise and entrepreneurship as measured in the Doing Business Index.