Hungarian SME policy – Development after EU accession

Tamás Leskó, Hungary

SMEs in Hungary

• The SMEs influence significantly the competitiveness of the Hungarian economy:– 99,9% of the total number of enterprises are SMEs– 872 000 SMEs operating (December 2004) – SMEs employ more than 74% of employees employed in the

private sector– The contribution to the Gross Added Value of the SME

sector is approximately 50%– Their share of export is 36%

SME development policy before EU accession

• Act on small and medium-sized enterprises and the promotion of their development

• Phare programmes– Micro Credit Programme– Promoting the co-operation among SMEs– Introducing e-business to SMEs

• National grant programmes– Investments– EU preparation– Interest subsidies

Grants for SMEsNumber of assisted

SMEsThe amount of subsidy

(EUR million)

2001 2 404 106,1

2002 1 012 43,4

2003 4 851 48,0

Total 8 267 197,5

SME development policy before EU accession

• „The EU at your doorstep”– 473 presentations– In 118 sub-regions (NUTS IV) of 14 counties– 13 500 SMEs took part

• Industrial parks– 179 business parks from 1996 to 2005 – 2 500 enterprises

SME development policy before EU accession

• New SME definition• Reducing administrative burdens

− Simplified Tax for Entrepreneurs− Simplified business registration − Contract samples

• Introducing tax allowances and reducing tax rate− Tax rate of personal income tax and corporation tax was

reduced from 18% to 16%− Tax allowances to encourage investments by SMEs

SME development policy after EU accession

EU Structural Funds in SME development

Number of assisted SMEs

The amount of subsidy (EUR million)

2004 4 010 94,1

2005 2 504 41,1

Total 6 514 135,2

Economic Competitiveness Operational Programme

Financial programmes• Credit programmes

– Financing investment– Financing working capital

• Factoring programme– Subsidised interest to spread factoring among SMEs

• Credit guarantees– 67 thousand SMEs, EUR 2150 million (2003-2005)

• Venture capital

Credit programmes

Name of Construction

Amount of credit (EUR)

Duration (year)

Micro Credit max 25.000 max 8 Midi Credit max 100.000 generally 6

SME Credit for a Successful Hungary 20.000- 4.000.000 max 15

Széchenyi Card max 40.000 1

Promoting entrepreneurial culture

• Calls for application for gipsy (roma) entrepreneurs– Special consultancy – State aid for purchasing machinery

• Providing information – On EU requirements– Specific publications

• Student programmes

Education of entrepreneurship• Student enterprises• Education for primary and secondary school pupils• Fairs of student enterprises• Competition of students on entrepreneurial skills• „Job Shadow” programme• Conferences for students• Conferences for teachers

New Directions in the Hungarian Enterprise Development Policy

• New principles in enterprise development policy– Functional Approach– Sustainability– Institutional Development, Capacity Building– Co-ordination Based on Market Mechanisms

• For the period of 2007–2013 a new micro-financing system to be set up through EIF’s JEREMIE mechanism

Thank you for your kind attention!

Mr. Tamás LESKÓDeputy Head of Department

Department for SME DevelopmentMinistry of Economy and Transport, Hungary

lesko.tamas@gkm.gov.hu