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PREPARATION FOR EU ENTRY BY DEVELOPING SUSTAINABLE SME IN BULGARIA

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Title: PREPARATION FOR EU ENTRY BY DEVELOPING SUSTAINABLE SME IN BULGARIA


1
PREPARATION FOR EU ENTRY BY DEVELOPING
SUSTAINABLE SME IN BULGARIA
2
Promotion of SMEs in Bulgaria
  • Encouragement of Start-ups
  • Promotion of SME Development
  • Increasing the SME Competitiveness

3
SIGNIFICANCE OF THE SME SECTOR IN BULGARIA
  • Total number of SMEs in 2003 220 000
  • Share of SMEs in Number of Enterprises 99,1
  • Share in private sector employment 60.3
  • Share in gross value added (GVA) 34
  • Share in foreign trade 29
  • SME Direct Foreign Investment 31
  • SME Share in total volume of commodity exchange
    39

4
SMEs by SECTORS
1. Agriculture, fishery, forestry- 3.45 2.
Mining industry- 0.08 3. Processing industry-
11.73 4. Electricity, gas and water supply and
distribution - 0.07 5. Construction
-3.87 6. Trade, car repairing and home
appliances - 50.64 7. Hotels, boarding and
catering - 9.42 8. Transport, communications,
travel agencies - 7.59 9. Financing,
loans and insurance- 0.71 10. Real estate
operations, renting- 9.02 11. Education-
0.67 12. Health care and veterinary- 0.59 13.
Other operations and services- 2.06
5
NATIONAL STRATEGY ON SME PROMOTION 2002-2006
  • Simplification of administrative and legislative
    environment
  • Financial environment improvement
  • Innovations and technological development support
  • Global market integration of SMEs
  • Improvement of the access to information and
    services
  • Provision of conditions for SME development in
    regional aspect
  • Encouragement of the entrepreneur spirit and
    skills

6
New Legislation on SME
  • Law on the amendment of the Law on Small and
    Medium Enterprises
  • was adopted by the National Assembly and came
    into force on 24 August 2004
  • Main objectives
  • Improvement of the co-ordination of the SME
    policy
  • Full harmonisation of the definition for SME with
    96/280/EU recommendation except for the ceilings
    for the annual turnover and the balance sheet
    value with the SME Law the SME definition is
    completely aligned with the EC Recommendation
  • Creation of a mecanism to ensure the provision of
    a full package of public services as close as
    possible to the enterpreneur in compliance with
    the Law a merger of SME Agency with the Trade
    Promotion Agency into an Executive Agency for
    Small and Medium Enterprises Promotion with the
    Minister of Economy.

7
The Law provides for two major groups of measures
for SME promotion
  • First major group encouraging the creation of
    SME, under the conditions and criteria of the law
    on State Aid when the latter is applicable,
    through creation of appropriate conditions for
    access to capital, incl. provision of financing
    for SME, providing loan guarantees for SME,
    development of projects
  • Second major group promotion of development and
    increase of competitiveness of SME through
    development of projects, directed towards
    promotion the distribution of technologies and
    innovations, realization of projects for increase
    in competitiveness of enterprises by increase in
    their productivity.

8
Simplification of the legislative and
administrative environment
  • Improvement of the business environment through
    streamlining of the existing regulatory regimes
    (licensing, permission and registration) under
    the implementation of recommendations approved by
    the government to alleviate and eliminate some
    192 regimes where 160 regimes are already in
    process of elimination or alleviation
  • The Law on Reduction of Administrative Regulation
    and Administrative Control (adopted on 4 June
    2003). The law stimulates general systematized
    rules for implementation and reduction to a
    realistic extent of the administrative regulation
    and control of economic activities by introducing
    unified definitions for the types of regimes and
    setting up clear limits of administration
    competences
  • Adoption of Conception (Decree 878/2002) for
    Improvement of Administrative Service in the
    context of one-desk service principle and
    basic model of the same principle.

9
Access to finance
  • The Project Guarantee fund for microcrediting of
    investment projects, credits for small companies
    starting family business and economic activities
    of self-employed individuals is implemented by
    the Ministry of Labour and Social Policy. The
    maximum loan lended to SME is increased from
    7500 up to 10000 in the year 2004.
  • Encouragement bank was incorporated as a fully
    state-owned institution with the special purpose
    of providing in priority medium- and long-term
    financing to the Bulgarian small and medium-sized
    enterprises (SMEs) and of promoting Bulgarian
    export. The Banks loan portfolio is formed
    entirely by loans granted to SMEs.
  • An agreement for a guarantee line amounting to 7
    million was signed between the European
    Investment Fund (EIF) and the Encouragement Bank.
    The credit line aim is to lend credits to SME on
    relieved conditions. The amount has been
    increased to 21 million in 2004. It should be
    pointed out that Encouragement Bank is the first
    financial intermediary among all candidate
    countries for accession to the EU, which was
    approved by the European Commission and EIF.
  • -

10
Access to finance (2)
  • In 2004 the Ministry of Economy started the
    project Competitive Start-up Business Creation
    (Project 100) with the support of UNDP as a
    component of Project Employment through business
    support JOBS. The project has been implemented
    in four districts Shumen, Vidin, Silistra and
    Dobrich, which were determined by particular
    criteria for unemployment level and standard of
    living. In 2005 the project except in the above
    four districts Shumen, Vidin, Silistra and
    Dobrich will be also implementing in four new
    districts - Montana, Pazardjik, Sliven and
    Yambol

11
European Charter for Small Enterprises
  • In June 2002 the European Council has adopted the
    European Charter for Small Enterprises, which
    defines ten areas of actions in order to
    establish a favourable environment for small and
    medium-sized enterprises as access to finance,
    getting more out of the single market,
    enterprises technical capacity improvement etc.
  • In April 2002 in Maribor, Slovenia, Bulgaria
    together with the rest of the candidate countries
    has joined the Charter and expressed its interest
    to participate in the reporting process. The
    process of reporting is a tool for evaluation of
    the progress achieved according to the Charter
    and dissemination of the good practices. The
    Agency for Small and Medium-sized Enterprises was
    the coordinator of the Bulgarian Charter reports
    preparation. The final report 2005 shall be
    presented to the European Commission in September
    2005.

12
Multiannual Programme for Enterprise and
Entrepreneurship, in particular for SMEs
(2001-2005)
  • The Council of Ministers of Bulgaria adopted a
    Decision (?185/1 April 2002) for the
    participation of Bulgaria in the Multiannual
    Programme and appointed the Agency for Small and
    Medium-sized Enterprises as a National
    coordinator for the Multiannual Programme since
    the main programmes objectives continues to be
    the SMEs support
  • Bulgaria takes part in EC Multiannual Programme
    through BEST initiative (Business Environment
    Simplification Task Force), which aims to compare
    the business environments of the member-countries
    and candidate-countries in order to outline the
    best practices
  • Providing better and faster access of business to
    services, programmes and nets of EU and improving
    their coordination is realized through the net of
    8 Bulgarian Euro-Info Centres Network, financed
    by the Multiannual programme. ( Bulgarian Euro
    Info Centres in Sofia, Plovdiv, Stara Zagora,
    Yambol, Sandanski, Rousse, Dobrich and Vratsa).

13
Global market integration of SME
  • Bulgarian SMEs Competitiveness PHARE Project
    started its implementation by the beginning of
    2005. Projects purpose is the promotion of
    sustainable development of the Bulgarian
    enterprises and improvement of their
    competitiveness
  • The projects objectives, i.e. improvement of the
    competitiveness of the Bulgarian enterprises from
    the production sector and preparing them to
    resist the competitive pressure of EU will be
    achieved through purposeful support to areas of
    their activities related to the future EU
    integration of Bulgaria (achievement of
    harmonization of the production processes with
    the European ecological standards, requirements
    for labour and job safety, implementation of
    systems for quality management, good laboratory
    practices, good production practices, increase of
    the energy efficiency, stimulation of
    sustainable development of enterprises in
    priority sectors and in slow regions.

14
Global market integration of SME
  • Within the framework of Working Program on the
    implementation of National Strategy for
    encouragement of SME development (2002-2006)
    started the project Providing assistance to SME
    in meat producing and meat processing industry
    for the Hazard Analysis and Control of Critical
    Points (HACCP) introduction pilot project,
    funded through the Ministry of Economy budget
  • The Project Providing assistance to SME in milk
    processing industry for the Hazard Analysis and
    Control of Critical Points (HACCP)
    introduction started in May 2005 through the
    same scheme (as the previous one).

15
Innovations and Technological Development
  • On the ground of understanding that competitive
    advantage in industry is achieved through
    creation, introduction and dissemination of
    innovation and in order to pursue purposeful
    policy for innovation and RD promotion, The
    Council of Ministers adopted in September, 2004,
    Innovation strategy of Republic of Bulgaria and
    measures for its implementation
  • Funds amounting to BGN 5 million are available
    for the implementation of the first measure in
    the Innovation strategy Establishment of
    National Innovation Fund (NIF).The operational
    goals of the fund are to subsidize part of the
    costs for market-oriented applied research, RD
    projects intended to be implemented in the
    industry fulfill the measurements stated in the
    Innovation strategy to make use of the
    opportunities which are provided in the Bulgarian
    Law on State Aid to support the innovative
    companies.
  •        - Encouragement of the researches
    designed to the industry as well as the
    cooperation between the research organizations,
    the universities and the companies
  •  - Improvement of the financing of innovations,
    by setting up mechanisms for attraction of
    private capitals
  • - Promotion of the companies innovative
    activities and the introduction of technologies
  •  - Stimulation of the creation of
    clusters in traditional sectors for Bulgaria etc.
  •        

16
Sofia 1000, 1, Sveta Nedelya Sq. tel (359 2)
9329 273 fax (359 2) 980 5869 e-mail
office_at_sme.government.bg web-site
http//www.sme.government.bg
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