Commission Report 2002 (Hungary)

• 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, Hungary has made further progress with revising its SME policy and putting in place supportive mechanisms for business promotion. Efforts to improve the business environment have continued.

In April 2002, Hungary 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 Hungary started in May 2002.

The implementation of the Széchenyi Plan, launched in 2001 as Hungary`s main instrument for its SME policy, has started. Of the 21 tenders originally announced under the Plan, 20 were available to SMEs. In August 2002, the Government announced the freezing of a large part of the Széchenyi Plan programmes. The Széchenyi Plan will be revised to concentrate the funds on SME development and EU pre-accession projects.

The Ministry of Economic Affairs and Transport is the central body responsible for SME policy, and consults other ministries, chambers of commerce, interest representations and professional associations.

Access to finance remains the main obstacle to the development of Hungarian SMEs. However, good progress has been made in this area thanks to government support schemes for SMEs. In August 2002, the Ministry of Economy and Transport launched the Széchenyi Credit Card for small entrepreneurs, committing HUF 700 million (EUR 2.73 million) for subsidising the interest rate and providing guarantee support for 2002. The aim of the card is to provide short-term loans to SMEs in a simple and easy way. Commercial banks are also beginning to show interest in financing SMEs.

Hungary made further progress with the improvement of the business environment. Several specific measures to simplify the administrative environment have been introduced. These include the facilitation of the transfer of ownership for small companies, the streamlining of the procedures to close down companies and the simplification of certain bookkeeping rules. Changes to taxation rules include preferential measures for small enterprises allowing them to deduct money on their investment and R&D activities and to benefit from tax allowances on the interest on loans.

No further progress can be reported as regards the SME definition applied by Hungary.

Overall assessment

At national and local level, the basic infrastructure for the implementation of SME policy is in place and many networks and business services are available. However, a large proportion of enterprises in Hungary lack information about acquis requirements, available support services and the means of accessing them. The various SME support services should be made more visible to the SME community in both developed and less advanced regions, as currently information services are scattered between different contact points and as most services are located in the capital and in county seats or bigger towns. Also, the services available are not sufficiently co-ordinated and there is a certain degree of overlap between instruments. The Secretariat for the co-ordination of Enterprise Assistance for EU Integration, established at the Ministry of Economic Affairs in March 2001, has been reviewing the current programmes in favour of SMEs and the available funds in order to streamline assistance and advise the various bodies on the information needs of SMEs.

Efforts should be strengthened to prepare for the full use of the structural funds in the area of enterprise development. Some final adjustments to the SME definition are needed in order to bring it fully in line with the EC Recommendation.

Conclusion

In its 1997 Opinion, the Commission concluded that the on-going efforts to strengthen SMEs during the pre-accession period would need to be continued. However, no specific problems were foreseen in Hungary`s integration in this sector.

Since the Opinion, Hungary has made steady progress. In the last two years, Hungary has targeted SME development as one of its strategic development objectives under the Széchenyi Plan. Today, Hungary`s policy towards SMEs is generally in line with the principles and objectives of EU enterprise policy.

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

In order to complete preparations for membership, Hungary`s efforts now need to focus on the swift and client-friendly implementation of the SME support programmes and their improved co-ordination and on the elimination of overlaps. Increasing the visibility of the various services and programmes for SMEs and improving access to finance, especially micro-credit, remain crucial tasks.

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