Small and medium-sized enterprises (SMEs) make a major contribution to growth and job creation in the European Union as they represent 99 per cent of all enterprises in the EU, provide around 65 million jobs, and contribute to entrepreneurship and innovation.
These types of businesses are diverse, and consequently have different needs. Some of them are start-ups, while others are rapidly growing gazelles. SMEs could be active in vast markets - local or regional - and promoting entrepreneurship and developing a favourable environment will allow them to become more competitive.
The EU's new definition of SMEs introduces three different categories of enterprises. Each category corresponds to a type of relationship which an enterprise might have with another. The first step to qualify as an SME is to be considered as an enterprise. According to the new definition, an enterprise is "any entity engaged in an economic activity, irrespective of its legal form". The wording reflects the terminology used by the European Court of Justice in its decisions. Thus self-employed, family firms, partnerships and associations regularly engaged in an economic activity may be considered as enterprises.
The new Community policy facilitates SMEs' access to international markets. It also creates a more coherent, pragmatic and horizontal framework for these enterprises. Promoting entrepreneurship, reducing the burden of risk linked to setting up and running a business, eliminating the negative effects linked to business failure, and providing support for the successful transfer of businesses are all elements that contribute to a better exploitation of Europe's entrepreneurial potential.
Furthermore, better access to tenders on the public market, greater participation in the standardisation process, increased awareness of intellectual property rights, and support for inter-enterprise co-operation, particularly in border regions, will help SMEs take full advantage of the opportunities provided by the internal market.
One of the European Commission's priorities is to support SMEs with regards to the problems they frequently face in obtaining capital or credit, particularly in the early start-up phase. Malta and Gozo are no exception, as SMEs represent the backbone of the Maltese economy.
The last Budget presented by the Nationalist government offers incentives to generate work and therefore leads to the creation of jobs. Lm1.4 million will be directly invested in locations where most of these businesses operate. This investment includes the development of the Artisan Village in Ta' Qali, including an incubation centre for students following their studies in artisan crafts; further development in industrial zones of Tal-Handaq, Mriehel, Zebbug, Mosta, Attard and Luqa; and the development of an artisan incubation centre in Ghajnsielem, Gozo.
Another initiative which will support SMEs is the reduction of business licensing. The outcome of this measure will result in fewer expenses for those in the sector. The processing of licences will also be developed into a system to provide a faster service so that a definite date for licensing issue could be given. Another incentive proposed through the Budget is the creation of a tax review commission which will present recommendations on tax reforms directed to provide an incentive to small enterprises.
One of the benefits of joining the European Union was that SMEs may benefit from a loan guarantee scheme. This scheme is issued by the European Investment Fund under the European Community's Multiannual Programme for Enterprise and Entrepreneurship. In Malta this scheme is being offered through Malta Enterprise. Support under this scheme may cover up to half the bank loan required and will be provided to SMEs that employ up to 100 persons and that are undertaking capital expenditure with a view to achieve growth, innovate or internationalise their products.
The assistance given for the development of business has also been enhanced by Malta's accession into the EU. Since 2004, the European Information Centre has provided local companies with information on European matters. The Euro Info Centre's Website www.eic.maltaenterprise.com provides information relating to various EU policies and programmes of interest to Malta's SMEs. It also presents a good overview of the numerous services the EIC offers to local companies. Through this Website, entrepreneurs are updated on what business activities the Euro Info Centre organises from time to time, such as business co-operation missions abroad, practical seminars, workshops, and information meetings.
Other programmes such as Equal, Qualitheme, Medpride and Nissos are assisting and encouraging SME owners to further develop their enterprise. Locally, SMEs may also benefit from training to further their know-how on the subject as MCAST, Malta Enterprise and ETC assist entrepreneurs to develop their skills and also their workers' skills via specified courses.
All these measures taken both on an EU and local level will empower local SMEs to contribute further to the local economy. With the introduction of patents' registration, SMEs are also encouraged to innovate and invent machinery that may assist them through their business. The principle of giving priority to small enterprises - Think Small First - will be integrated across all EU policies and the interests of SMEs will systematically be taken into consideration when assessing the impact of Community legislation and when preparing forthcoming legislation.
The Nationalist administration is already empowering this entrepreneur force to solidify its market and empower it through the measures that were taken through this year's budget.
Mr Casa is a Nationalist Member of the European Parliament
david.casa@europarl.europa.eu