Commission Report (2002): Czech Republic

• 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, further progress has been made by the Czech Republic with regard to SMEs.

As regards SME policy, a new Act on support to SMEs was adopted in 2002 and will come into force in January 2003. On this basis, the responsibility for regional support will be transferred from the Ministry of Regional Development to the SME Department of the Ministry for Industry and Trade.

In April 2002, the Czech Republic 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 the Czech Republic started in May 2002.

The implementation of the 2001 -- 2004 Long- and Medium-term Policy for SMEs has continued. It consists of 10 nation-wide and 7 regional programmes for structurally affected and economically weak regions, aimed at facilitating business plans, improving competitiveness, assisting entrepreneurs, creating new jobs, and giving SME clusters a better position on the market. In 2002, the total amount of public support to SMEs will amount to EUR 39 million, with 83% spent for nation-wide programmes and 17% for regional programmes.

No particular progress has been achieved in improving the business environment. No particular progress can be noted in the area of bankruptcy legislation and business registration.

The National Discussion Group, appointed by the Minister of Industry and Trade and composed of representatives from the business sector and from the State administration, is monitoring the SME business environment, with special attention to access to finance.

The new Act on Support to small and medium-sized enterprises, due to come into force in January 2003, also provides for compliance with the EC Recommendation on the SME definition.

Overall assessment

Further efforts are required to improve the business environment, especially the enforcement of legislation, the efficiency of the judiciary, the protection of creditors, business registration, and access to finance, in particular non-banking finance.

As regards administrative capacity, the central body responsible for the formulation and co-ordination of enterprise and SME policy is the SME Department of the Ministry of Industry and Trade, while the Business Development Agency takes part in the implementation of SME policy. Further strengthening of the administrative capacity of the SME Department of the Ministry will be needed as it takes on the responsibilities transferred from the Ministry of Regional Development.

Rationalisation of different business support services should be further continued and the establishment of an ``SME one-stop-shop'' should be envisaged.

The National Discussion Group should further ensure that business organisations are heard as regards SME policy. The involvement of business organisations in the preparation of legislation should be continued. The results of consultations should be reflected in the final versions of the laws, while businesses should be better informed about changes in legislation.

With more than 10 different SME business organisations besides the Economic Chamber, the Czech Republic has one of the highest numbers of business representations. These representations should either enhance their co-operation or merge in order to put their case better to the authorities. In early 2002, the merger of two associations into a stronger Association of Small and Medium-sized Enterprises and Crafts of the Czech Republic is a positive development in this respect.

Conclusion

In its 1997 Opinion, the Commission concluded that the basic structures for SMEs were in place in the Czech Republic, but that there was a need for further refinement and increased coherence in policy for SMEs.

Since the Opinion, the Czech Republic has made good progress in formulating SME policy and in developing support programmes. Its policy towards SMEs is generally in line with the approach promoted at EU level.

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

In order to complete preparations for membership, the Czech Republic`s efforts now need to focus on improving the business environment, and in particular strengthening the legal framework and facilitating access to finance.

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