Government states that the New Small Business Strategy is determined by the economy in transition, but the representatives of this field reject it. IPN economic analysis

The specialists of the Ministry of Economy and Commerce (MEC) explain the small 3-year term, foreseen for the implementation of the Small and Medium-Sized Enterprise Development Supporting Strategy 2006-2008, by the specifics of the transition economy, which does not allow drafting long-term strategies in this field. At the same time, the leaders of the representative organizations are dissatisfied with the fact that the Strategy made public few days ago does not provide further perspectives. The head of the Small and Medium Business Development Department within MEC, Iulia Iabandji, mentioned that all previous programs supporting small business worked for 2-3 years, and the measures stipulated in the previous program were implemented at about 85%. She considers that all the changes operated until now within the legislative-normative framework contributed to improving the activity conditions of the enterprise and created new opportunities for the development of business. She also noted that the creation of micro-financing and guarantee organizations made possible solving priority problems of the businessmen activating in small business area, problems related to the impossibility to attract resources because of mortgage lack. „Of the limited resources of the budget, with great efforts, was created a state guarantee fund, concomitantly it was created a guarantee non-governmental organization, although now on the micro-financing market of Moldova 3 guarantee organizations activate, fact that is a serious step forward”. Iulia Iabandji mentioned that efforts for improving the fiscal policy as well were made, being changed the provisions of the Fiscal Code stipulating tax exemptions for businessmen. Therefore, before benefiting of income tax exemption for 3-year term, reduction of the income tax with 35% for 2-year term, the economic agents with up to 19 employees and with a turnover up to 3 million lei had to conclude an agreement-memorandum with the Fiscal Inspectorate, setting „many conditions and preconditions”, including the obligation to re-invest 80% of the facility, and to create new work places. Now this facility is provided through a simple application submitted by the businessmen, assuming the responsibility for complying with the conditions mentioned-above. At the same time, she says that in the future, in order to improve the business activity it is necessary the prolongation of the regulatory reform, having a serious effect on entrepreneurship activity by reducing the state involvement, optimizing the legal and institutional framework, inclusively the procedures for starting and performing businesses related activities, as well as by decreasing the number of authorizations and permits, and the number of licensed activities etc. Reduction of the share of the small business of the total number of jobs and turnover in the real economy from 30%, in 2004, to 29% - in 2005 does not show, according to Iuliei Iabandji, sector’s decrease, as in 2004 the turnover of small enterprises amounted to19 billion lei, in 2005 – 24 billion lei. According to Iulia Iabanji, the decrease of the small business share, noted lately, can be explained inclusively by the increase of big enterprises’ turnover. Concomitantly, she underlined that the number of enterprises of the small business has increased from 22 000 in 2002 to 30 000 in 2005. In the same period, the employees’ number increased from 130,000 to 179,000. On the other hand, in the context of the current situation of the enterprises of small business, the manager of the Small Business Association, Eugen Roscovan, is dissatisfied with the fact that the Small and Medium-Sized Development Supporting Strategy is planned for a short-term and does not stipulate „strategic development directions for the next ten years”. He underscored that the Strategy is „has deficiencies and shows a formal action of the governance for the problems of the area, which are serious”, as „it decreases the number of jobs and the selling volumes”. At the same time, he mistrusts that the state will comply with its commitments regarding the financial assistance of the State Small Business Support Fund, as „you cannot plan how donors will behave within a year or two”. Roscovan also was dissatisfied with the fact that the governance does not take into account the proposals of the non-governmental that defend businessmen’s rights. „We must not wonder why people run from this country and why we do not have labor force in agriculture and constructions,” said Roscovan, mentioning that the state does not create proper investment condition, and that is the reason why it is impossible to develop a business in Moldova. He also highlighted that the fiscal policy is still aggressive and even if some income tax exemptions were made, it does not have a direct impact on enterprises’ development. In the same context, the manager of the Agriculture Cooperation Allinace, Valentina Catanoi, welcomes the mentioned strategy. She says that, even if the strategic directions do not cover sufficiently the existent problems; drafting of this Strategy shows the interest of the government for creating normal conditions for business development. Small business is family business, mentioned Catanoi, and businessmen have to be aware that business development includes not only earning money, but as well „doing something for economic growth in general”. She notes that even if the Moldovan businessmen are still at the stage of ensuring family needs; a positive difference compared to situation in 2000 is shaping. She highlighted that the main problems of this area are related to the lack of exports, conditioned, by the lack of competitive goods. Valentina Catanoi appreciated the creation of the unique desk, through which are ensured conditions for a easier registering of a business activity and starting the activity guarantee funds in order to ensure businessmen’s access to bank credits. She noted that the regulatory reform should be directed as well toward the procedures of providing tax exemptions, stipulated by the legislation, which have to be applied as in the case of unique desk, now the entrepreneurs being dissatisfied with existent bureaucratic system. At the same time, she considers that for „reviving the sector”, the government should introduce certain economic mechanisms for stimulating businessmen, in order to determine them to reach high performances.