PREPARATION FOR EU ENTRY BY DEVELOPING SUSTAINABLE SME IN BULGARIA

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PREPARATION FOR EU ENTRY BY DEVELOPING
SUSTAINABLE SME IN BULGARIA
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Promotion of SMEs in Bulgaria

• Encouragement of Start-ups
• Promotion of SME Development
• Increasing the SME Competitiveness

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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

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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
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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

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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.

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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.

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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.

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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.
• -

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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

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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.

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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).

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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.

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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).

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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.
  
•        

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