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Challenges facing SMEs in Central and Eastern Europe
ACCA and SME Union hold high-level Brussels event on the challenges facing SMEs
05 Apr 2007
The joint ACCA/SME UNION event took place in Brussels on 27 March 2007 and was attended by 85 business and political representatives.
The event was introduced by Mr Richard Aitken-Davies, Vice-President of ACCA who referred to the research survey ACCA had recently conducted among its members in Central and Eastern Europe (CEE). This report found widespread support for EU entry and had found that national regulations, particularly tax regulations, were the main source of SMEs' concern rather than EC directives.
Peter Jungen, Co-President of the SME UNION said that CEE countries are a great boost to the EU calling them "not the last hope, but the best hope" for a continent which has been left behind by the US in terms of R&D and innovation. He pointed particularly to Estonia as a good benchmark of growth and progress.
Maive Rute, the Director Promotion of SMEs competitiveness, EC/DG Enterprise also praised Estonia comparing its four separate procedures to set up a business with Germany’s 31. She accepted that SMEs lacked information concerning accessing EU funding, but listed various initiatives the Commission had launched to solve the problem including the Jeremie initiative. Zuzana Roithova MEP referred to the "huge potential" for SMEs to play an active role Europe in an enlarged Europe.
Panel I Access to SME Growth Finance
Introducing this session, Professor Robin Jarvis, Head of Small Business ACCA and Chairman of the FIN-USE Forum of financial services experts stressed that accountants were the number one source of advice for SMEs.
Gay Mitchell MEP referred to the Irish economic success story of the last 20 years explaining that tax cuts and domestic political stability allied to EU grants had allowed that country's transformation from an agricultural to a diverse business economy.
George Noel of the European Venture Capital Association was very positive about CEE saying it had good fund managers and was an excellent environment for raising equity finance. He agreed with Peter Jungen that CEE had been the "booster" that Europe had needed in the light of strong economic challenge from India and China.
Mr Jungen compared Europe's record on job creation negatively with other regions of the world. "Europe likes to win, but does not like competition", he said, adding that the US had enjoyed many more start-ups supported by Business angels' investment. While an entrepreneur in Singapore could start a business online in 15 minutes the same process in Europe would take weeks or even months, he said. Mr Jungen said the problem was not a lack of capital, it was a lack of entrepreneurs.
Panel II - Less and Better regulation to Central and Eastern European SMEs
Jürgen Tiedje, Head of Unit Auditing, EC/Internal Market addressed the EC's simplification project for audit and accounting for SMEs. He said the Commission wanted to update the fourth and seventh directives which were old, but was unsure of the merits of "limited review" instead of full audit. He also floated the idea that the EC would use a risk-based approach to audits of Medium seized enterprises rather than a set turnover figure.
His colleague Piotr Madziar, Head of Unit Accounting, accepted that IFRS was not suitable for non listed companies and said the Commission had consulted with member states on the simplification process. Initial analysis suggested that many states found full accounts for micro enterprises burdensome.
Christian Weinberger, Head of Unit Entrepreneurship, EC/DG Enterprise said the Commission understood that SMEs were affected disproportionately by regulation and said the EC was working on models of good practice to reduce this burden which will be ready by May or June.
Hans-Werner Müller, Secretary General of UEAPME, said the main compliance burdens for SMEs came not from EC regulations but from fragmented and uneven national implementation. He stressed the importance of law makers "thinking small first". Alexander Radwan MEP questioned the democratic legitimacy of the IFRS project claiming it needed more oversight.
Panel III Access to EU funding
Jerzy Buzek MEP and former Polish Prime minister said that CEE SMEs suffered from a lack of information on how to access EU grants and said that those countries must be fully involved in the EU Business summit which currently lacked any representation from the region.
Valdis Dombrovskis MEP and former Latvian Finance Minister reviewed the structure of EU funding and questioned whether the priorities for distribution sufficiently considered entrepreneurs.
Jan Brezina MEP, welcomed the progress made by the Czech Republic over the past ten years and hoped this would act as an inspiration to the newer EU members. Patrice Liauzu, Brussels Representative from the European Investment Fund, summarized the work of the EIF explaining how it could work for the benefit of SMEs.
Jan Tombinski, Polish ambassador of the Permanent Representation to the European Community, addressed the problem of the SME sector rivalling big business for the attention of governments. He also stressed the importance of SMEs to European economies and of their maintaining their independence from bigger companies.
Closing the event, Allen Blewitt, Chief Executive ACCA said that accountants must be regarded by businesses as consultants and business advisors rather in a compliance capacity. He also referred to Hans-Werner Müller’s speech and said the far quicker compliance procedures in Singapore should act as a benchmark for Europe.