WRITTEN QUESTION E-3898/02

by Ilda Figueiredo (GUE/NGL) to the Commission

(14 January 2003)

Subject: Community support for small and medium-sized enterprises

Small and medium-sized enterprises (SMEs) make up 99 % of the 18 million firms in the EU, not counting the agricultural sector, where small businesses predominate. These enterprises employ about 66 % of the whole workforce and account for about 55 % of total turnover. Their socio-economic importance and also their contribution towards making the business world dynamic, promoting innovation and creating new jobs are obvious. SMEs have problems and weaknesses inherent in their size, especially as far as financing is concerned, which will be aggravated by the reduction in economic activity and the increasing intensification of competition. These problems are greater in the most disadvantaged areas of the EU.

According to Commission data, the financial arrangements for 1994-1999 benefited 800 000 SMEs in the EU, granting them 18 % of Structural Fund assistance. Between 1994 and 1998 the R & D framework programme benefited around 15 000 SMEs, giving them 20 % of the total allocation. In 1999 the SME mechanism benefited 4 336 SMEs in the EU and 53 879 jobs were created, with a total investment of approximately EUR 3 800 million. There are two important instruments managed by the European Investment Fund: the SME Guarantee Facility, with around EUR 168 million between 1998 and 2000, and the European Technology Facility.

In this context, can the Commission answer the following questions:

1. How is the total of Community aid for SMEs allocated and what was the total number of beneficiary SMEs in each Member State in the periods 1994-1999 and 2000-2001?

2. How many Portuguese SMEs have so far benefited from the SME Guarantee Facility and the European Technology Facility? What was the volume of aid involved and what is the Commission's opinion of these facilities in Portugal?

3. What instruments and forms of Community aid exist to support associations of SMEs and to promote the formation of such associations?

Answer given by Mr Liikanen on behalf of the Commission

(4 March 2003)

1. Two summary tables of Community aid for small and medium-sized enterprises (SMEs) are given in Annex I, which is sent direct to the Honourable Member and to Parliament's Secretariat. These provide an overview of various types of Community action (grants, loans, guarantees, etc.) covering different periods. The amounts cannot, therefore, be added together. They include major instruments and programmes, but are not intended to be exhaustive. The figures are estimates.

For the SME Guarantee Facility, more detailed information is given in Annex II, which is sent direct to the Honourable Member and to Parliament's Secretariat. For this Facility, it is not relevant to provide figures on investments, as this is a guarantee scheme. The figures, therefore, refer to the aggregate guarantee volume currently included in its portfolio.

Regarding the Structural Funds' assistance, according to the thematic evaluation Structural Funds Impact on SMEs published in July 1999, SME measures amounted to ECU 13,5 billion of total Structural Fund expenditure in Objective 1 regions (14,5 %) under the 1994-1999 programmes. SMEs are likely to have benefited significantly from a further ECU 11,8 billion (12,6 %) Structural Funds outlays in Objective 1 regions, although this was not targeted directly to them. A breakdown of the number of beneficiary SMEs by Member State and region (objective) is given in Annex III a, which is sent direct to the Honourable Member and to Parliament's Secretariat.

Concerning the data requested for the period 2000-2001, the available data represent the amounts of the programmed actions and the latest accepted amounts of the actions that were programmed, rather than any data indicating output, since the programming period 2000-2006 is still ongoing. These accepted amounts are shown in Annex III b. Therefore, while it would be possible to provide a breakdown by Member State for the assistance foreseen by the Structural Funds for the programmed actions, such a document would end up being very long and difficult to use. Instead, it might be useful to know that for Portugal, in November 2002, an amount of EUR 2 657 million had already been accepted as foreseen Structural Funds' assistance to SMEs.

It is not possible to provide a breakdown by Member State for all the instruments and programmes included in the summary tables.

2. Concerning data on Portuguese SMEs benefiting from the SME Guarantee Facility, see point 1.

Concerning the European Technology Facility (ETF), it has been assumed that it is the ETF Start-up Facility that is meant.

Based on the European Investment Fund (EIF) reporting to the Commission, as at 30 September 2002 under the SME Guarantee Facility, 58 SMEs had received 61 loans guaranteed by the Portuguese intermediary SPGM. The average loan size was EUR 545 576.

No Portuguese SMEs have benefited yet under ETF Start-up. However, on 28 November 2001, the Commission approved an investment of up to EUR 10 million in a Portuguese generalist venture capital fund (VCF). This fund is focusing on innovative SMEs with high growth potential in Portugal (80 %) and Galicia (20 %). Due to legal problems in setting-up the VCF, including finalisation of its legal structure, the closing of the fund was delayed. The legal issues were solved with the help of the EIF and the Community and the closing finally took place in December 2002. The fund will target a broad range of sectors and focus on SMEs in the development stage, taking into consideration both the small size of the Portuguese market and the need for risk diversification in an environment where deal flow for high-tech investments is limited. The VCF is now in a position to start investing in final beneficiary SMEs in accordance with its planned five-year investment period.

The Commission has just completed an overall evaluation of the Growth & Employment Initiative (1998-2000), which includes the SME Guarantee Facility and ETF Start-up Facility. This concluded that both instruments are working well and thus supports the decision to continue them within the framework of the Multiannual programme for enterprise and entrepreneurship, and in particular for SMEs (2001-2005). It should be remembered that the allocation of funds in different Member States under these instruments depends on the number and quality of the proposals received by the EIF and on the subsequent capacity of the selected national financial intermediaries to use the funds. The reality is that there has been relatively low demand for both instruments from Portugal.

3. No Community aid is given to support business organisations as such and their operating costs.

However, SME organisations are increasingly sought after as interlocutors and multipliers regarding Community policies. This stronger interest of the Commission gives them indirectly better arguments towards their members (companies or business organisations) to get more core funding or staff for their activities.

The Commission SME Envoy, nominated in December 2001, aims to establish an active interface with the SME Business Community, including improvement of the regular dialogue with SME associations.

As a general rule, Community programmes aim to stimulate the establishment of groupings of SME, by requiring the participation of SMEs from different countries in project applications. An example is the Collective Research scheme, which is a new scheme under the Sixth RTD Framework Programme, set up in the context of the horizontal research activities involving SMEs. It is explicitly addressed to SME associations or groupings. The objective is to expand the knowledge base of larger communities of SMEs that face common challenges. In addition, SME associations or groupings represent an alternative route for SMEs to participate in the Priority Thematic Areas of the Integrating & Strengthening Specific Programme of the Sixth Framework Programme.

As to the Structural Funds, the Portuguese operational programme for the economy, in the framework of the Community Support Framework III (2000-2006), foresees specific measures to support SME associations. These measures support projects presented by enterprise associations, aiming to strengthen their capacity in the areas of cooperation and internationalisation. They also foresee support to the development of dynamic strategic partnerships between the various SME associations as well as between these and the public institutions.

Indirect support to SME associations is also given through the Multiannual programme for enterprise and entrepreneurship, and in particular for small and medium-sized enterprises (SMEs) (2001-2005). For example, the Commission has, in this framework, launched a project to increase SMEs' participation and support their interests within the European standardisation process.