Commission Report 2002 (Slovakia)

• Progress since the last Regular Report
• Overall assessment
• Conclusion

Chapter 16: Small and medium-sized enterprises

Progress since the last Regular Report

Since the last Regular Report, Slovakia has made further progress with revising its SME policy and reforming the state support system for business promotion. The institutional and administrative framework for support to the SME sector has been strengthened. Some further steps to improve the business environment have been taken.

As regards SME policy, on 15 May 2002 the Government adopted a document analysing the development of the SME sector in Slovakia, and proposing modifications to the system of SME Support Schemes. This is a preliminary step opening the way to an updated global SME policy strategy 2002-2005, to be finalised shortly.

In April 2002, Slovakia endorsed the European Charter for Small Enterprises as the basis for its action to support and develop small enterprises. The European Charter, adopted by the European Council in June 2000, is the reference document in the field of enterprise policy within the socio-economic strategy set up at the Lisbon European Council. The reporting process on the implementation of the European Charter in Slovakia started in May 2002.

The Ministry of Economy was partially reorganised in 2002, and departments for business environment and for support programmes were set up. Restructuring also took place within the state-controlled agencies co-ordinated by the Ministry of Economy active in the SME sector, NADSME, the National Agency for the Development of Small and Medium-sized Enterprises, and SARIO, the Slovak Investment and Trade Development Agency (with regard to SARIO, see Chapter 15 - Industrial policy). The Expert Advisory Body, set up to replace the Council for Competitiveness in Industry (see Chapter 15- Industrial policy) will also be competent on SME policy, in particular as regards support schemes and overall SME development policy.

During the reporting period the government passed several laws affecting the business environment for SMEs, including an amendment to the Income Tax Law, which entered into force in January 2002. This amendment introduced a flat-rate tax for self-employed entrepreneurs. Another law positively affecting the business environment for SMEs is the Investment Incentives Law (see Chapter 15 - Industrial policy). The company registration process has become more transparent, and the Commercial Register is now accessible via the Internet. Finally, as of July 2002, the Slovak Chamber of Independent Entrepreneurs was allowed by the Law to extend its activities to non-member individual entrepreneurs and to be co-financed from the state budget.

As regards support to SMEs, the Regional Advisory and Information Centres (RAIC) and the Business Information Centre (BIC) network was extended to nine additional first contact points, thereby reaching almost full regional coverage. The introduction of support services to start-ups and companies in the early developmental phase made some steps forward, with the first two business incubators to due to be opened in 2002. An accreditation system for professional SME trainers and consultants was also developed.

Access to finance remains an obstacle to the development of Slovak SMEs. The Ministry of Economy provides funding through six broadly defined programmes with a substantial number of sub-programmes, each managed separately. They include a support loan programme, micro-credits and seed capital. Increased funding has been made available this year compared to 2001.

No further development can be reported concerning SME definition, which is fully aligned with the EC Recommendation.

Overall assessment

The most important issues affecting the Slovak business environment have been identified and addressed, and the business environment has improved overall as a result of measures introduced mainly in 2000 and 2001.

The new SME strategy currently being developed should pay particular attention to ensuring effective implementation and follow-up of measures taken, reducing the administrative burdens and simplifying bureaucratic procedures and strengthening law enforcement. In addition, the large number of SME support schemes should be streamlined in order for them to reach critical mass and become more user-friendly. This is also recommended in the Government's evaluation of the projects' effectiveness and efficiency.

Recently, measures have been taken to streamline the institutional framework, which cannot yet be fully assessed. The sustainability of NADSME should be ensured and due consideration should be given to the role of specialised agencies such as NADSME and SARIO, also with regard to the future implementation of structural funds. Duplication and overlapping should be avoided between the RAICs and BICs network - co-ordinated by NADSME - and the Regional Development Agencies under the Ministry of Construction and Regional Development. As regards business associations, some of them represent the interests of smaller enterprises and are involved in the national tripartite social dialogue. Slovakia should further encourage the development of an active role of business associations.

Efforts should be strengthened to prepare for full use of the structural funds in the area of enterprise development.

Conclusion

In its 1997 Opinion, the Commission concluded that the conditions for sustainable SME growth were basically in place in Slovakia. However, there was room for further improvement in several fields, including simplification of legislation, strengthening support infrastructure, improvement of the tax environment and development of SMEs' access to financing.

Since the Opinion, Slovakia has made further progress in formulating SME policy and in improving the business environment. Its policy towards SMEs is generally in line with the approach promoted at EU level.

Negotiations on this chapter have been provisionally closed. Slovakia has not requested any transitional arrangements in this area. Slovakia is generally meeting the commitments it has made in the accession negotiations in this field.

In order to complete preparations for membership, Slovakia's efforts now needs to focus on consolidating and streamlining the institutional framework in order to prevent fragmentation and lack of co-ordination.

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