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According to official figures, by the end of 1997, private enterprise accounted for nearly eighty per cent of GDP, and almost three-quarters of capital was privately owned. Hungarian individuals, companies, corporations and ESOP organizations have a 38 per cent share in the latter, with foreigners owning roughly one third. (The survey regards all foreign investments as privately controlled, although it is clear that some of these—primarily in the energy sector, telecommunications and the engineering industry—are owned by foreign governments or municipalities, although often facing or undergoing privatization themselves.) Of the remaining twenty-eight per cent, eighteen per cent belong to the government, nearly eight per cent being owned by local governments, with the rest controlled by other communal organizations.
It must be added that these figures are not only the result of the privatization process. On the one hand, they include Hungarian private enterprises developing from their own resources along with greenfield investments by foreigners. On the other hand, they also reflect the loss of assets and the liquidation of state-owned enterprises. What seems certain, however, is that the sale of state-owned property, companies and shares played a major part in the declining stake of the government.
The most important result of privatization has been the increase in private ownership, or if you like the realization of privatization as a goal in itself. Within this, outstanding significance has to be assigned to the fact that the majority of the formerly state-owned enterprises were transferred to real private owners, rather than to some form of indirect governmental or communal control, highly impregnable to private investors. International experience has confirmed the view that the presence and control of private owners of this type—when complemented by the appropriate experience in management and sufficient capital—were the indispensable conditions for restructuring production, finances and market strategies, which all enterprises had to carry out after the end of the 1980s. This was what made possible deep changes, enabled the majority of firms to stabilize their positions, repay their debts and improve competitiveness.
On the other hand, the most vulnerable point of privatization is the social ambiguity surrounding the legitimization of the ownership status. A broad section of citizens look upon the fortunes made in privatization—or in some other ways—with a great deal of suspicion. Fuelled by evidence of limited public control, continuous and direct political influence and slight consequences in the unveiled cases, the public view of this matter seems unlikely to change in the near future. To effect such a change, people would have to be convinced by their everyday experience that prosperity is linked to performance. The initial acquisition of property is not a life-time guarantee for success—competition eliminates incompetent owners, and new entrepreneurs can appear on the market relatively easily.

The completion of the privatization campaign does not mean that the transfer of state-owned property to the private sphere should be stopped. According to figures published in March 1998, the State Privatization and Holding Company port-folio still contains the assets of 278 com-panies, worth nearly 500 billion forints. According to current legislation, long-term state-ownership should be maintained in 85 companies, worth 200 billion forints. Another 65 companies under ministerial control belong to this category, including such giants as the railway and postal services.
By revising the list of companies assigned to long-term state-ownership, and by modifying the percentage of share blocks to be retained, this group can be narrowed down further. But even as of today, property worth 160 billion forints now in the possession of these companies could be offered for sale. Assets to the value of 123 billion forints of another 193 companies await full privatization. This means that almost 300 billion forints worth of state-owned property could be put on the market in the near future, most of them majority shareholdings.
Even when these sales will have been completed, changes in the ownership structure will, naturally, continue. It is anticipated that those institutions to which property was assigned, primarily the social security and local governments, will continually sell off some of their shares and assets. (In 1997 the sale of assets was required by budgetary regulations of the social security. Even more significant was privatization carried out by local governments, the two largest items of which involved selling shares in the municipal utilities of Budapest and in the electricity and gas distribution companies.)
The main form of transactions in the future, however, will be the trading of shares between private investors. There have already been numerous signs of this secondary change of ownership. The two most important trends are increasing concentration in some industries and acquisition of financially weak companies by investors, often with the purpose of re- organizing them and then selling them off.
Most of the examples for company mergers are in the tinned food, sugar, meat and dairy products industries. A similar process is taking place in wholesale pharmaceuticals, an industry now concentrated in the hands of one financial and three pharmaceutical groups. Companies with Hungarian private owners are also active in this secondary trade.
A new phenomenon, that might have growing importance in the coming years, is capital export by Hungarian companies. A significant group of firms with new owners and well under way to stabilization, already show an interest in investments abroad. Many of their plans of this kind have been realized in recent years. As privatization is gathering speed in the neighbouring countries, oppor- tunities are growing. In such deals, Hungarian companies will be able to profit from experiences gained in their own privatization.