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Declaration

 DECLARATION
ON
SMALL AND MEDIUM-SIZED ENTERPRISES
AT THE DAWN OF THE 21st CENTURY

JOINT MINISTERIAL STATEMENT
OF THE
ORGANIZATION OF THE
BLACK SEA ECONOMIC COOPERATION

 27 September 2001
Istanbul

 

 
Preface

On 25 June 1992, the Heads of State or Government of Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Republic of Moldova, Romania, Russian Federation, Turkey and Ukraine signed a Summit Declaration heralding the coming of the Black Sea Economic Cooperation (BSEC). From the very outset of their co-operation the Member States of the BSEC have paid particular attention to the development of small and medium-sized enterprises (SMEs) and entrepreneurship.

Since 1989, the BSEC region has been undergoing a process of transformation of its political, economic and social systems. It was the time of significant change in the whole region.  After ten years, some economies boast good results, while in many of them much remains to be done.

 The core element of the political and economic transformation of any country in transition is the creation of a sound private sector and further development of SME & entrepreneurship. These are considered as the principal driving forces in economic development. SMEs promote private ownership, stimulate innovations and develop entrepreneurial skills. Their flexibility enables them to match quick changes in market demands. They generate the majority of jobs, promote diversification of economic activities, support sustainable development and make a significant contribution to exports and trade.

3 million of SMEs in 11 BSEC Member States employ approximately 20 million employees in total, while the number of unemployed amounts to more than 10 million. With a purpose to create still more SMEs, facilitate the transition process, increase the competitiveness of the economies and reduce unemployment, a more supportive environment should be created for SMEs.
 
Recently, a comprehensive program was set for the stabilization and development of the South-Eastern European region. Aiming at fostering democracy, economic development and security it will, on an individual basis, also facilitate the integration into European structures. This should give a stimulus to the remaining BSEC countries to follow and catch up their neighbors.

The Permanent Secretariat of BSEC (BSEC PERMIS), the Konrad Adenauer Foundation and the United Nations Economic Commission for Europe (UN/ECE), together with the Small and Medium Industry Development Organization of Turkey (KOSGEB) organized 17 seminars and workshops concerning the SMEs in the BSEC countries.
 
The joint UN/ECE-CEI (Central European Initiative) Informal Meeting held in Geneva on 3-6 March 2000 suggested that a Declaration on Small and Medium-sized Enterprises should be elaborated and then adopted on the occasion of the 3rd Economic Forum to be held on 22-25 November 2000 in Budapest. The CEI Declaration on “Small and Medium-sized Enterprises at the Dawn of the 21st Century” was adopted on 24 November 2000 with the participation of six Ministers for Economies from the BSEC Member States.

The conclusions of the International Ministerial Conference on “Enhancing the Competitiveness of SMEs in Global Economy” organized by the OECD and the Italian Ministry of Industry on 13-15 June 2000 in Bologna, Italy and summarized in the “Bologna Charter”, have emphasized a significant contribution of a dynamic SME sector and entrepreneurship to restructuring of economies and alleviation of poverty. The Ministers agreed that globalization, technological change and the need for innovation create new challenges for SMEs and may also contribute to increased costs of transition. Globalization should be considered as an important process impacting on the development of individual economies thus contributing to a higher standard of living for all actors involved. To this end, globalization, opportunities and benefits should be accessible to everyone. The Ministers have also recognized the role of international institutions in fostering the development of SMEs and have, therefore, recommended further multilateral exchange of experience and good practice in order to strengthen partnerships and co-operation between countries.

 While convening seminars and workshops on SMEs within the BSEC region, some Member States suggested that following the CEI Declaration on “Small and Medium-sized Enterprises at the Dawn of the 21st Century” similar one should be elaborated and adopted by the BSEC countries highlighting the achievements in the field of entrepreneurship and SME-sector and paving the way to foster the acceleration of the transition to a market economies and creating a better enabling environment for the private sector and SME-development. This idea was also put forward by the representative of UN/ECE during the “Workshop on Technology Transfer and SMEs” held in Thessaloniki on 30 November-1 December 2000 and approved and recommended by the participants.

Recommendations
for the Development of the SME Sector and Entrepreneurship
in BSEC Countries in Transition

The Ministers in charge of SME policies in the Member States of the Organization of the Black Sea Economic Cooperation, having regard to:

- The recommendations of the Summit Declaration on the creation of the Black Sea Economic Cooperation, held on 25 June 1992 in Istanbul,

-  The BSEC Economic Agenda for the Future: Towards a More Consolidated, Effective and Viable BSEC Partnership, adopted by the Council of Ministers of Foreign Affairs in Moscow on 27 April 2001,

- The conclusions and recommendations of the 17 SME related seminars and workshops held in the Member States of the BSEC between 1997 and 2001,

-  The Recommendation 42/2000 of the Parliamentary Assembly of the BSEC on “Promotion of Small and Medium Enterprises in the Black Sea Region” adopted on 7 June 2000 in Tirana,

- The recommendations of the Bologna Charter on SME Policies adopted in June 2000 in Bologna,

- The Statement of the 7th APEC Ministerial Meeting on SMEs, held on 22/23 June 2000 in Bandar Seri Begawan in Brunei Darussalam,

- The European Charter for Small Enterprises adopted by the General Affairs Council in June 2000,

- The exchange of views of Heads of Government of the CEI Member States, recognition of the issues of further development of SMEs, and adaptation of Declaration on “Small and Medium-sized Enterprises at the Dawn of the 21st Century” in November 2000 in Budapest,

-  The Relationship Agreement between the United Nations Industrial Development Organization (UNIDO) and the BSEC signed in 1997 with particular focus on SMEs and Investment Promotion,

- The efforts of the BSEC, the Konrad Adenauer Foundation and the Regional Advisory Services Programme of the United Nations Economic Commission for Europe with the purpose of enhancing the development of SME and entrepreneurship in the region,

and bearing in mind that:

A. The SME sector forms the backbone of a market economy and provides a very significant share of the overall employment,

B. A vibrant and competitive SME sector is a precondition for sustainable development and higher standard of living for all involved in the process of globalization, accelerated technological change and innovation,

C. Support and promotion of SMEs is one of the key elements for achieving criteria for the integration into the EU,

D. SMEs contribute significantly to the regional and local development,

E. By taking an important part in the cross-border co-operation, SMEs facilitate the development of remote and border areas and ease understanding of cultural differences in the region,

F. In the BSEC Member States, SMEs comprise 75 % of total number of enterprises and provide 30 % of the total employment. In transition countries, SMEs have already replaced numerous jobs lost during the restructuring and downsizing of former large state-owned enterprises,

G. SMEs contribute to a democratization and decentralization of the society in transition countries, increase flexibility in the provision of goods and services, help to increase the competitiveness of national economies and contribute to spreading of business risks,

H. Through the creation of new jobs, SMEs can successfully contribute to alleviation of poverty and social exclusion of the unemployed population (also by self-employment), especially in economically disadvantaged or rural districts and crisis affected areas,

I. The European Union has already for several times presented its supportive policy on SMEs and plays a distinctive role in strengthening the SME and craft sector,

J. National SME policies require internal co-ordination with provincial and local authorities as well as adequate supervision, while co-operation between BSEC Member States can positively contribute to the European integration process, inter alia in accordance with individual Agreements with the European Union,

agreed on the following principles for the development of the SME sector and entrepreneurship in the BSEC countries in transition:

1. The development of a favorable political and economic environment – policies and measures – aiming at the creation of a strong SME sector in the countries in transition and emerging economies should be considered one of the major tasks of the Governments in these countries. Joint efforts in acceleration of the (private) SME sector and strengthening of the co-operation among SMEs and between them and large enterprises will significantly contribute to the welfare of the society and stability of the BSEC Member States;

2. Specific characteristics and needs of the SME sector have to be taken into account in the elaboration of the development policies; specific support measures and instruments aiming at the promotion of the SME sector should be adopted;

3. The establishment of a BSEC Working Group on SMEs could contribute to the improvement of efficiency of the SME support policies and instruments of the BSEC Member States in transition as well as the assistance to the less developed transition and post-conflict economies should be emphasized;

4. The definition on SMEs in BSEC Member States in transition should be oriented to the relevant EU recommendation. The definition should contribute to the consistency, transparency and efficiency of national support measures relating to SME sector promotion;

5. The Governments of the BSEC Member States are encouraged to introduce relevant measures to improve legislation and simplify the procedures related to the formation of enterprises, development of SMEs and creation of jobs, as well as simplification of tax regulations, accountancy and reporting for SMEs;

6. In order to remove disincentives for local business people and for foreign investors alike the Government of the BSEC Member States are invited to express support for a BSEC Investment Initiative. By this initiative the countries will strive to make specific reforms toward combating phenomena adversely affecting the business environment. It is recommended that mechanisms be also established to monitor and report on the progress of these reforms. The BSEC Business Council should play an active role in the creation and implementation of this Investment Initiative. The OECD Center for Private Sector Development in Istanbul is invited to support the activities under this process.;

7. Services provided for SME and entrepreneurs by business support and SME development institutions should be continuously improved, especially at the local level. In order to facilitate SMEs access to relevant information and business advice, stronger co-operation among support institutions and relevant authorities should be promoted. It is also necessary to address and incorporate the different needs of pre-starters, start-ups, growing businesses, micro, and small and medium sized enterprises into the support programs when appropriate. The national and local authorities of the BSEC Member States are also invited to introduce innovative approaches in SME support institutions, to exchange experience and co-operate on international basis in order to develop, adjust and implement relevant solutions;

8. Innovative and higher value-added businesses and the development of new products and services in the SME sector should be promoted by all relevant means of support, including improvement of intellectual property protection, assistance in adoption of the EU technical and quality standards, support for introduction of sustainable development, increased investment in human resources and skills in information and communication technologies, R & D, technology and information technology, measures on reduction of business risks, etc. The BSEC countries are advised to adopt national programs on the promotion of competitiveness that would facilitate and increase the participation of SMEs in R&D and technology and information technology programs;

9. Joint ventures, clusters, supply chains, sub-contracting and other forms of formal and informal networking among SMEs and entrepreneurs as well as large enterprises should be promoted and Governments are invited to develop measures and instruments to support them.

10. The importance of human resources development should be reorganized. In order to improve entrepreneurial and managerial skills the authorities are invited to take care of further improvement and adoption of the relevant curricula for educational and training programs for students, start-ups, entrepreneurs and employees. The SME dimension should be appropriately incorporated into all training and educational programs. Involvement of financial institutions. SME support institutions and government representatives in the training activities is essential in order to increase the efficiency of such training courses / programs.

11. Governments, chambers of commerce, industry and crafts, employers and professional associations are invited to improve access of SMEs to quality advice and consulting services that would match the needs and capacities, in particular during the most risky start-up phase. To raise awareness towards quality and strengthen the internationalization of SMEs, Governments are invited to create National Quality Award Schemes similar to the European Quality Award;

12. Based on the crucial role of NGOs in sustainable development, they should be invited to take a more active role in the creation and development of SMEs, in particular by their participation in campaigns for raising general awareness on the role of SMEs in national economies, local development initiatives and social economy. In order to raising awareness on the role of SMEs in national economies, Governments are invited to create National Award on Best Entrepreneurs of the Year and organize national concourse to obtain this award;

13. Raising awareness of the word constituency about women’s entrepreneurship, BSEC Member States welcome the initiative of UN/ECE to create a Virtual Photo Album and Portrait Gallery of Excellent Women Entrepreneurship. Governments will pay a special attention to family-based, rural, disable, minority and young women entrepreneurship within the framework of their national SME support programs;

14. The BSEC Business Council is expected to play a special role in creating a forum for public-private dialogue between the business communities of Member States especially SMEs on one hand, and Government authorities on the other in order to stimulate debate and promote better mutual understanding of the different standpoints. This will contribute to the elaboration of supportive measures toward an economic environment conducive to business growth;

15. In order to pursue an effective SME policy, specific SME representative organizations, such as chambers of commerce and industry, chambers of crafts, employers’ trade unions and other associations should be involved in all phases of a social dialogue;

16. A diversification of financial support schemes for different stages of the SME life cycle should be assured. It will contribute significantly to a faster creation and growth of the SME sector and entrepreneurship. It is also necessary to address the different needs of micro, small and medium sized enterprises in financial support programs when appropriate. Special emphasis should be devoted to creation of credit guarantee schemes to start-ups and micro finance schemes aimed at eliminating poverty and growing number of unemployed in rural areas through creation of self/employment;

17. Governments should recognize the importance of problems with collateral and create appropriate mechanism for SME access to credit resources. It is necessary to create a system of providing loan for individual farmers for land ownership.

18. Dialogue with financial institutions should be fostered in order to improve their awareness of the role of SMEs in national economies. They should be encouraged to educate their personnel on issues relating to SMEs in particular on their needs and capacities. Financial institutions are invited to simplify and raise transparency of procedures and reduce costs for obtaining finance;

19. Financial institutions should be invited to provide customized forms of finance for SMEs, (special credit facilities, micro-credit schemes, seed capital, guarantee schemes, leasing, venture capital, concepts on business angels, etc.), and other suitable forms. They should also be encouraged to develop innovative financial solutions that would match the needs and capacities of SMEs;

20. Authorities should be invited to seek possibilities of further development of public financial schemes at local, regional and national levels. Such programs should aim at fostering innovation, competitiveness, a faster growth of research and development, information and communication technology and technology activities and sustainability in the SME sector;

21. In view of the rapidly changing business environment as result of economic globalization and ICT development, Ministers decided to improve national policies in order to elaborate innovative and creative approaches to enhance efficiency and competitiveness of SMEs;

22. The Black Sea Trade and Development Bank, the European Bank for Reconstruction and Development, through its expertise in financial instruments tailored to reach SMEs and micro enterprises, can help reduce the financial constraints to the sector. Through their ongoing dialogue with Governments they can also help improve the business environment for the sector;

23. Member Governments are invited to consider possibilities of improving access of SMEs to public procurement by adopting the appropriate measures for fair competition among SME applicants, as well as by supporting clustering for joint applications;

24. Member Governments are suggested to draw attention to the importance of sharing adequate information on the national SME sectors. Governmental institutions, especially the national SME focal points and statistic offices of the BSEC Member States, should be invited to take active role in collecting and analyzing internationally comparable data by using UN/ECE;

25. Conferences/seminars/workshops should be organized by BSEC Member States to identify and disseminate “good practices” in promoting entrepreneurship.

26. Governments are invited to spend every effort to encourage SMEs to take part in the electronic commerce, promote e-business and training and support to e-business, as well as develop ways and means to support their investments concerning hardware, software and human resources for this purpose.  

Conclusion

The Ministers in charge of SME policies in the BSEC Member States

27. Invite the Organization of the BSEC to take the “Declaration on Small and Medium-sized Enterprises at the Dawn of the 21st Century” into account in implementing the BSEC Economic Agenda.

28. Invite the BSEC PERMIS with the assistance of the BSEC Business Council to review regularly the implementation of this Declaration and the development of entrepreneurship and the (private) SME sector in BSEC Member States in co-operation with UN/ECE based on annual reports to be submitted beginning in 2002 and disseminate the information collected to all BSEC Member States.

29. Forward this Declaration to the BSEC Council of Ministers of Foreign Affairs and to the Governments of the BSEC Member States.

30. Invite the BSEC Council of Ministers of Foreign Affairs to consider the issue of establishment of a BSEC Working Group on SMEs. In this respect, the BSEC PERMIS may be requested to elaborate the Terms of Reference of such Working Group.

31. Thank the UN/ECE, Konrad Adenauer Foundation and other international institutions for their continuing support on SMEs.

32. Urge BSEC and UNIDO to accelerate implementation of the Relationship Agreement through formulation and execution of concrete projects for the development of SMEs and investment promotion.

33.   Agree to meet regularly to consider matters related to SMEs. The date and venue of the next meeting will be decided in cooperation with the BSEC PERMIS.

Istanbul, 27 September 2001