Strategies of the Development of Entrepreneurship and SME

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The following data represents some indicators of SME sector in Albanian economy,according to data of Albanian Institute of Statistics:• The share of SMEs sector in total number of enterprises was more than 99%, both for2004 and 2005.• Until the end of 2004. the number of the enterprises reached the figure ofapproximately 55.000 enterprises (micro 93%, small 4%, medium-sized 2%, accordingto the criteria for SME classification above).• The business natality rate for 2005 was 19%, so in 2005 number of SMEs exceeded65,000.• SME sector contribution to GDP is 64% (2005).• SME sector contribution to employment is 60% (2005).• The most important sectors for SME activities are trade and services, which contributeto total number of enterprises and private sector employees with 73.5% and 45.2%,respectively, and generate 74% of total turnover.3.1.2. LEGISLATION AND STEPS OF DOING BUSINESSThe Albanian government has applied a set of liberal fiscal policies during the last fewyears, drastically reducing fiscal burden, social security, and health contributions. These policymeasures consist of:• Reduction of corporate and personal income taxes, implementing a “Flat tax” of 10% bythe end of 2007.• Unification of the simplified profit tax and the tax on small business as defined in thenew Law No. 9632, “On local taxes in the Republic of Albania”, dated as of 30 October2006. According to this law, local authorities are now responsible for the collection ofthe new tax.• Reduction of the fiscal burden of social security paid by employers from 29% to 20%.• A 30% reduction of electricity rates for businesses.• A tax exemption of dividends designated for investments.On 28 July 2003, the law No.9121 “On the Protection of Competition” was approved by theAlbanian Parliament. This law entered into force by 1 December 2003 abrogating the law No.8044 dated as of 7 December 1995. The Competition Law No. 8044 dated as of 7 December1995 applies to all investors, domestic or foreign, private or state-owned, who supply ordemand goods, the acquisition or consumption of which is subject to their own free will andinitiative. On the basis of this law, every business, consumer or association has the right tocomplain to the Competition Department regarding any violation of the law. This law representsa deep reform in the field of competition in Albania. Differently from the former law, „the Lawon the Protection of Competition”, is a pure antitrust law, dealing with the abuse of dominance,the control of concentrations and illegal agreements, such as cartel agreements. The approachin dealing with these issues is the same with the one pursued in European Legislation.Incentives are regulated by the „Law on State Aid” approved by Albanian governmentand parliament with the primary aims of promoting the implementation of important projects,facilitating the development of certain economic activities, and promoting culture and theheritage conservation. Law No. 9374, dated on 21 April 2005. “On State Aid” applies to allsectors of manufacturing and services and all measures undertaken by central and localgovernments, as well as other entities acting on behalf of the State, that confer benefits toparticular enterprises, except those acting in the sectors of agriculture and fisheries. The StateAid may take the form of subsidies or grants; exemptions, reductions, deferrals or tax creditand other fiscal contributions; writing off of overdue fees and penalties; debts write offs oroffsetting of losses; loan guarantees or loans at reduced rates; reduction in the price of goodssupplied and services provided, including sales/leases of public property below market price or16
uying products or services at higher than the market price; increase of state–owned equity atenterprises or increase of its value.The law No. 8636, dated on 6 July 2001. “the Law on Free Zones” regulates theestablishment, functioning, supervision and control of free zones. The National entity of FreeZones is established for the purposes of licensing, establishment and administration of freezones, as the sole authority in Albania, responsible for the pursuance of development andfunctioning of free zones.Table 3 contents list of some measures of business regulations and their enforcement related toAlbanian economy:Table 3.Economy YearEase ofDoingBusinessRankRankProcedures (number)Starting a BusinessTime (days)Cost (% of incomeper capita)Min. capital (% ofincome per capita)Dealing with LicensesRankProcedures (number)Time (days)Cost (% of incomeper capita)Albania 2007 136 123 10 36 20.9 34.3 168 24 331 461RankDifficulty ofHiring IndexRigidity of HoursIndexEmploying WorkersDifficulty ofFiring IndexRigidity ofEmploymentIndexNonwage laborcost (% of salary)Firing costs(weeks of wages)RankRegistering PropertyProcedures(number)Time (days)Cost (% ofproperty value)109 44 40 20 35 22 56 82 7 47 3.5Getting Credit Protecting Investors Paying TaxesRankLegal Rights IndexCredit Information IndexPublic registry coverage(% adults)Private bureau coverage(% adults)RankDisclosure IndexDirector Liability IndexShareholderSuits IndexInvestor Protection IndexRankPayments (number)Time (hours)Profit tax (%)Labor tax andcontributions (%)Other taxes (%)Total tax rate (% profit)48 9 0 0 0 165 0 5 3 2.7 118 44 240 18 24.5 4.6 46.817
Page 4 and 5: 1. SME DECLARATION AND WORKING GROU
Page 6 and 7: While comparing the BSEC and EU doc
Page 8 and 9: cooperation with the United Nations
Page 10 and 11: GENERAL ASSESSMENT OF THE BSEC WG O
Page 12 and 13: “Armenia's new law introduces a n
Page 14 and 15: (iii)Share of the labor force of SM
Page 18 and 19: RankDocuments for export(number)Tra
Page 20 and 21: • Industrial zones/Business incub
Page 22 and 23: 3.1.4. FINANCING SMEsProf. Dr. Sela
Page 24 and 25: • the loan is secured with movabl
Page 26 and 27: 3.1.4.3. Mutual and loan guarantee
Page 28 and 29: introduction of e-signatures, only
Page 30 and 31: The Code of Conduct for Civil Serva
Page 32 and 33: Trading Across Borders Enforcing Co
Page 34 and 35: as with all non-governmental organi
Page 36 and 37: Bulgarian SMEs obtain additional ca
Page 38 and 39: • Project BG 2004/016-711.11.04 -
Page 40 and 41: usiness is not approaching them oft
Page 42 and 43: • Romanian citizens are recognize
Page 44 and 45: The preparatory project of the NDP
Page 46 and 47: • To support participation in eco
Page 48 and 49: In 2004, the National Institute of
Page 50 and 51: Incubators host on average 11 SME,
Page 52 and 53: Programs. The program is implemente
Page 54 and 55: development instrument is extremely
Page 56 and 57: accounting standards, including med
Page 58 and 59: corporations and open held corporat
Page 60 and 61: promoting SME sector, cooperation w
Page 62 and 63: • for unemployed (micro credit)
Page 64 and 65: are private pension funds, broker h
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very early steps of its democratic
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Another negative factor that is mor
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economy. The so called in the organ
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Federal funds, private capital, esp
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4.3. MOLDOVATable 14.Dimensions Neg
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Related andsupportingindustriesDome
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Technological:Internetaccessibility
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Domesticdemand• Still not many pe
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international investments• Govern
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3. Hamel, G., Prahalad, C.K. (1994)
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5.2 DEVELOPMENT OF THE SME SECTOR I
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General Characteristic of SME Devel
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Index of SME Development in Armenia
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The same problem exists in getting
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SME support infrastructure in Armen
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5 million was provided by UNDP and
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5.3 DEVELOPMENT OF THE SME SECTOR I
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Diagram 1. The number of small ente
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The privatization process of object
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13.Cabinet Provision on “Distribu
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5.3.3. SME support infrastructure i
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The role of the state in technical
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General situation of credit marketT
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After creation and starting impleme
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At the meantime, small enterprise s
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Table. 32.Ease of businessDoingBusi
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people who start small businesses t
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are salaried and the medium - sized
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Technology Foresight in Greece 2001
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Greek VC market started to develop
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In the area of bankruptcy and restr
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enterprises. According to TURKSTAT,
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small size enterprise or micro ente
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industrial enterprises. Undersecret
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individuals, rather than well struc
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7. SUGGESTIONS FOR THE SME DEVELOPM
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Annex 1.MAP OF THE BLACK SEA COUNTR
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17-18 June 2005 1 st Moscow Interna
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ARMENIASTRENGTHS• Application of
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BULGARIASTRENGHT• Flexibility and
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GREECESTRENGHT• They have a vital
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ROMANIASTRENGHTWEAKNESS• Stabilis
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REPUBLIC OF SERBIASTRENGHT• Longe
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UKRAINESTRENGTHS• Well educated l
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In compliance with the Resolution m
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1. Please provide definition of SME
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7. Did you establish a dedicated bo
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11. Do you have any suggestions for
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Strategies of the Development of Entrepreneurship and SME

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