• for unemployed (micro credit)• for entrepreneurs• for those who start a business (start-up loans)• for business promotion <strong>and</strong> development in <strong>the</strong> undeveloped regions• Financing <strong>of</strong> <strong>SME</strong>s through <strong>the</strong> <strong>Development</strong> Fund in 2006:• Long term credits for <strong>SME</strong> <strong>and</strong> entrepreneurs – Euro 99.6 million• Short term credits for craft <strong>and</strong> service businesses <strong>and</strong> entrepreneurs Euro 8.6 million s• Start –up credits Euro 25.8 million• Special programs for regional development Euro 42.1 million.Although <strong>the</strong>re is a noticeable increase <strong>of</strong> interest <strong>of</strong> business banks for <strong>SME</strong>s, terms <strong>of</strong>approval <strong>of</strong> credits for small <strong>and</strong> medium companies <strong>and</strong> entrepreneurs are substantiallyunfavourable. According to <strong>the</strong> adopted strategy <strong>of</strong> development <strong>of</strong> small <strong>and</strong> middle sizedcompanies <strong>and</strong> enterprises in <strong>the</strong> Republic <strong>of</strong> Serbia, Guarantee fund was established (by <strong>the</strong>Low on Guarantee fund, Official Gazette, No 55/03) to support <strong>the</strong> access <strong>of</strong> domestic small<strong>and</strong> medium sized enterprises, entrepreneurs <strong>and</strong> agriculture producers by guarantying aportion <strong>of</strong> <strong>the</strong> loan that is extended by banks to <strong>SME</strong>s, <strong>and</strong> entrepreneurs. The goal <strong>of</strong> <strong>the</strong>Guarantee fund is to influence a significant increase in <strong>the</strong> accessibility <strong>of</strong> credit, as well aslowering <strong>of</strong> <strong>the</strong> interest rate due to <strong>the</strong> lessening <strong>of</strong> <strong>the</strong> financial <strong>and</strong> commercial risk. Thebusiness <strong>and</strong> private entrepreneurs qualifying as small <strong>and</strong> medium sized enterprises inaccordance with <strong>the</strong> Republic legal provision (<strong>the</strong> Law on accounting <strong>and</strong> auditing, OfficialGazette, No 71/02), entrepreneurs <strong>and</strong> agriculture producers are eligible to apply. Theextended cover <strong>of</strong> <strong>the</strong> guarantee can reach up to 90% <strong>of</strong> <strong>the</strong> issued bank loan. Enterprises canapply for guarantees in respect to <strong>the</strong> following different types <strong>of</strong> loans:• Working capital loans• Complementary working capital loans• Investment <strong>and</strong> development loans• Entrepreneur's credit lines• Start-up projects etc.In 2006, Dinar credits for economy increased by 20%. The share <strong>of</strong> short term funds indeadline fund structure <strong>of</strong> private sector economy is decreasing. Credits to <strong>the</strong> economy <strong>of</strong> <strong>the</strong>private sector in GNP for 2006 were 28%.According to National Investment Plan 2006-2011, financial resources for <strong>the</strong>development <strong>of</strong> entrepreneurship, employment <strong>and</strong> economic growth are provided for:• Industrial zones development <strong>and</strong> industrial parks (cca 46 million euros for 49programs);• Attracting direct foreign investments (Euro 20 million);• Instigating export (Euro 15 million);• Investments to underdeveloped regions for a balanced regional development (Euro 15million);• Start-up credits for beginners (Euro 7 million);• Self-employment micro credits (Euro 10 million);• Founding <strong>of</strong> business incubators for entrepreneurial instigation (Euro 3 million for 14programs);• <strong>Development</strong> <strong>of</strong> basic infrastructure (Euro 35 million for 33 programs).Within <strong>the</strong> ENTRANCE – <strong>the</strong> Program for entrepreneurship, training <strong>and</strong> services,financed by <strong>the</strong> Government <strong>of</strong> Norway, <strong>the</strong> business incubators are founded in Serbia. Thefirst business incubator was founded in Nis in September 2005. Based on <strong>the</strong> experiences <strong>of</strong>this pilot business incubator, <strong>the</strong> incubators were founded in Zrenjanin, Subotica, Rakovica <strong>and</strong><strong>the</strong> plan is to form ano<strong>the</strong>r 14 to 16 incubators in Serbia. Founding <strong>of</strong> business incubators forentrepreneurial instigation Euro 3 million are provided by National Investment Plan 2006-2011.62
In August 2006, <strong>the</strong> Republic Agency for <strong>Development</strong>, toge<strong>the</strong>r with ENTRANCE team,establishes <strong>the</strong> Center for support to foundation <strong>of</strong> business incubators (BusinessIncubator Support Center-BISC), defining in more details, <strong>the</strong> forms <strong>of</strong> support for both,already established incubators <strong>and</strong> incubators in development phase.The goals <strong>of</strong> BISC services:• BI functioning stabilization according to ENTRANSE methodology• Active role <strong>of</strong> BISC in achieving <strong>the</strong> stability <strong>of</strong> existing <strong>and</strong> activities <strong>of</strong> new BI• Offering all necessary forms <strong>of</strong> support to implementation teams• Creating <strong>of</strong> stronger connections <strong>and</strong> common activities <strong>of</strong> existing BI• Involving all relevant institutions in support activities, both to existing <strong>and</strong> new BI• Creating <strong>of</strong> new commercial services for existing BI• BI, included in relevant support programs, carried out by RA<strong>SME</strong> (internationalization,B2B, fair Business Base etc.).3.4.5. FINANCING <strong>SME</strong>s IN SERBIAIn general, <strong>the</strong> infrastructure <strong>of</strong> financing <strong>the</strong> <strong>SME</strong>’s sector in Serbia is still ra<strong>the</strong>rundeveloped. Predominating is two <strong>the</strong> most important source groups:I – Governmental institutional channels including:• Direct governmental support <strong>of</strong> financing <strong>the</strong> <strong>SME</strong>’s sector financing through acceptablecredits provided by <strong>the</strong> <strong>Development</strong> Fund <strong>of</strong> <strong>the</strong> Republic <strong>of</strong> Serbia. These kind <strong>of</strong>credits are granted, <strong>and</strong> <strong>the</strong> interest rate is ra<strong>the</strong>r low (in some cases only 1% onannual level), accompanied by <strong>the</strong> significant grace period. The problem is that <strong>the</strong>sesources are limited.• Indirect governmental support, through o<strong>the</strong>r institutions, such as <strong>the</strong> Agency for <strong>the</strong><strong>Development</strong> <strong>of</strong> Small <strong>and</strong> Medium Enterprises <strong>and</strong> Guarantee Fund. The Agencyprovides linking services with international financing sources, while <strong>the</strong> Guarantee Fundprocure <strong>the</strong> credit guarantee services that <strong>SME</strong>’s take from commercial banks, reducingto great extend <strong>the</strong> risks level, <strong>and</strong> consequently, <strong>the</strong> interest rates.II - Banking channels - comprise a number <strong>of</strong> credit types granted to <strong>SME</strong>’s sector.Because <strong>of</strong> <strong>the</strong> adopted restrictive monetary policy directed towards inflation restraining (inSerbia, in <strong>the</strong> year 2007, <strong>the</strong> expected inflation shall be between 8-9%) <strong>the</strong> credits are veryexpensive <strong>and</strong> <strong>the</strong> interest rate is fluctuating between 10-12%, sometimes even higher, at <strong>the</strong>annual level). The high interest rate is <strong>the</strong> consequence <strong>of</strong> <strong>the</strong> high credit risk level, <strong>and</strong> thathas a great influence on <strong>the</strong> small <strong>and</strong> medium enterprises sector.The <strong>SME</strong>’s sector is considerably limited on <strong>the</strong> capital market. The Belgrade StockMarket every year exhibits <strong>the</strong> turnover growth, in <strong>the</strong> transaction volume, as well as <strong>the</strong>value, but that is a place that mostly deals with privatization process shares. There was no onereal initial public <strong>of</strong>fering (IPO). Many entrepreneurs show <strong>the</strong> interest, but still, it has to pass along period till <strong>the</strong> conditions will be created that <strong>the</strong> capital shall be relatively easilyaccumulated by share issuing. The situation with <strong>the</strong> issuing <strong>of</strong> corporate bonds is even moreadverse, because <strong>the</strong> market for <strong>the</strong>se kinds <strong>of</strong> securities hardly exists.The venture capital firms <strong>and</strong> its legislative forms are not present. Certain investmentfunds, started by <strong>the</strong> end <strong>of</strong> 2006, when <strong>the</strong> Law on Investment Funds has been adopted,initiate to analyze <strong>the</strong> situation <strong>and</strong> to inaugurate such kind <strong>of</strong> operations. The similar situationis with <strong>the</strong> private equity funds <strong>and</strong> business angels. The good notice is that in Serbia isdeveloping <strong>the</strong> significant group <strong>of</strong> institutional investors. Besides <strong>the</strong> investment funds, <strong>the</strong>re63
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1. SME DECLARATION AND WORKING GROU
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While comparing the BSEC and EU doc
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cooperation with the United Nations
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GENERAL ASSESSMENT OF THE BSEC WG O
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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