Saved themselves… That’s the conclusion one can make after analyzing the activity of small and medium business in the past year. If big export-oriented enterprises were actively subsidized by the state, the small ones mainly got “the hole of the budget donut.” What were the losses and gains of small and medium business under these conditions? How did it survive the crisis year, and what can be expected from 2010? Oleksandra KUZHEL, head of the State Committee of Ukraine for Regulatory Policy and Entrepreneurship answered these questions in her interview to The Day.
“I wouldn’t assert that the past year ended only in dark shades, since there is nothing completely positive or negative. In my opinion, the year of 2009 became the year of new possibilities realized by every entrepreneur in their own way, and the year of shifting accents, when the state business possibilities and priorities were reappraised.
“The positive news is that it was the crisis that made the government understand the necessity of a reappraisal of Ukraine’s export potential. It turned out that the exports of small and medium business are not less important than those of chemical or metallurgical giants. Maybe, if it hadn’t been for the crisis, details like these would have been further ignored. The crisis bared all nagging business issues, because entrepreneurs started counting every penny.
“The absence of loans was, in my opinion, the hardest problem for business in 2009. The lack of loans had an impact on precisely small and medium business, which borrowed money from banks to buy cars, pay rent, renovate offices, purchase equipment, etc.
“Regarding the risks in the coming year, political instability is the biggest threat to the successful operation of business. The absence of political certainty in 2010 can lead to a catastrophe for small and medium business. The rest of the problems can be solved. But without the political will the necessary decisions can’t be taken.”
What percentage of all enterprises are small or medium-sized?
“Let me remind you that in 2003 a World Bank study mentioned the figure of 70-80 percent. In my opinion, today in Ukraine 99.7 percent of all registered businesses are small or medium-sized. What does it mean? That the prospect of economic recovery owing to them is very high, but this requires political will and correct decisions.
“I can say that more individual entrepreneurs appeared in 2009 in Ukraine than in Russia. Thus, in 11 months of 2009 we registered 170,746 individual entrepreneurs, while Russia, 166,870. In Ukraine for the same period 130,172 individual entrepreneurs discontinued their work, while in Russia 339, 660 did the same. Generally, in 2009 there was a steady growth in the overall number of individual and corporate payers of the single tax. At the same time, they somewhat reduced the number of hired employees working for them.”
How did the specialization of small and medium business change during 2009?
“New kinds of businesses appeared, but I can’t speak of them because this is the entrepreneurs’ know-how. Regarding specialization, it didn’t change, although there were indeed such expectations at the beginning of 2009.
“I suppose that in order to change the structure of production specialization of small and middle businesses, a new state policy for this sector of business is required. We already prepared a draft presidential decree which lays the foundations for such a new policy. In particular, the first point there is the change of the educational system and state-sponsored specialties. Today we mass-produce employees for commerce, specialists in marketing, but there are no educated metallurgists, milling-machine operators, chemists, or technologists. We lost respect for industrial professions, and what small and medium businesses lack today are precisely specialists.
“The second point of this decree is support of the exports of small and medium business. Ukrainian furniture makers now have 30 percent of export without the slightest state support. And if our state provided at exhibitions, which are financed according to the budget, at least half of the area for their association, the export prospects for our furniture would grow considerably. In my opinion, it’s time to establish a state structure at the Ministry of Economy (a department) which would help promote Ukrainian products abroad.”
What practical implications for business will the bill “On Amending Some Laws of Ukraine on Facilitating Entrepreneurial Activity” (No. 4581), which was signed by the president, bring?
“This document will considerably simplify the procedure of launching a business. First, it introduced a permanent license (a limitation concerns only five kinds of business). I believe this is very good, because from now on an entrepreneur will not have to go to all bureaucratic institutions every three years, again collect all the documents, and hand out bribes to everyone.
“Second, the law introduces the principle of “silent consent” to reduce the procedure of issuing license-type documents down to 10 days. In other words, if during 10 days (since the entrepreneur brought all the required documents) the licensing body does send you either a rejection or a licensing document, on the 11th day you have the right to undertake economic activity and no punitive measures can be taken against you for doing so.
“Under the law, the statutory fund during business registration is reduced to the level of one minimum wage, and not a hundred as was the case before. I think this law will seriously raise ratings of Ukrainian business environment, and the number of businesses will increase by 30 to 50 percent.”
Is there a risk that a good law has been passed, but it is not working well, as is the case with the “single window” mechanism?
“This law will help launch many successful businesses. Regarding the efficiency of the ‘single window,’ I can give an assessment by independent experts from USAID, who said that it is the ‘single window’ that ensures a 50-percent reduction in corruption when entrepreneurs obtain the needed documentation. And the principle of ‘silent consent’ will further simplify the procedure for launching a new business.”
Today in Ukraine some politicians and political parties parasitize on the notion of small and medium business. How can a real political lobby for small entrepreneurs be formed in parliament, and can it be done under current conditions?
“Everyone is cashing in using the name of small and medium business today. It will be impossible to stop this practice even if a party claiming to be the only defender of entrepreneurs’ interest comes to parliament. This is because the interests of its voters will be too different.
“In my opinion, small and medium businesses need a law about lobbyism. In this case, on the one hand, associations will be able to openly cooperate with different political parties (like in other countries of the world) and defend the interests of its members on the legislative level. On the other hand, signatures of MPs under a certain law will mean concrete and clear responsibility of a specific political force for its actions in parliament. Based on fives years of parliamentary work, entrepreneurs as voters will determine which political forces really simplified life for them and which were simply talking about it.”
