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Newsletter No. 38 November 06, 2017

Public Private Dialogue

Newsletter Signed Memorandum

Memorandum

We, representatives of the business communities of the Eastern Partnership countries, business associations,

unions, organizations supporting small and medium-sized businesses, and other interested (hereinafter

referred to as the "Parties") intend to contribute:

strengthening of interregional relations at the level of small and medium-sized enterprises in the

countries of the Eastern Partnership,

further development of public-private dialogue in their countries,

implementation of major targeted programs and projects to create a favorable economic environment and

support for small and medium-sized enterprises.

To implement the tasks set, the Parties plan to establish an international consortium within the established

competence.

The purpose of creating a consortium is: establishment of partnership relations and development of long-term,

effective and mutually beneficial cooperation of the Consortium participants aimed at implementation and

promotion of the Regional position paper "Strengthening Change and Growth".

The parties intend to carry out cooperation on the basis of equality and partnership and sign an agreement on

the creation of an international consortium. This Memorandum is a framework and does not impose financial and

legal obligations on the Parties.

SME Assembly

Tallinn Creative Hub (Kultuurikatel)

Pohja pst, 27a, 10415 Tallinn, Estonia

22-24.11.2017

Global Entrepreneurship Week

13-19.11.2017

Armenia, Yerevan

Azerbaijan, Baku

Belarus, Minsk

Georgia, Tbilisi

Moldova, Kishinev


KEF-2017

The KEF-2017 conference "Fundamentals of the Future" was held in Minsk on

November 2 -3, 2017 in the framework of the October Economic Forum (KEF-

2017).

The conference was organized by the IPM Research Center with the participation of

BEROC, CASE Belarus with the support of the European Union, the US Agency for

International Development and Pact, Inc., the International Monetary Fund, the

World Bank, UNICEF in Belarus and the United Nations Development Program in

Belarus.

From the Belarusian side representatives of government, the academic community,

think tanks participate in the professional dialogue on the sustainable development

of Belarus in the context of developing the global economy.

The main topics of the forum KEF-2017 are business liberalization and new rules for

interaction between business and government. Belarus has developed a package of

documents on eliminating unnecessary requirements for enterprises and

companies. Eight of the ten basic documents have already been signed.

As the First Deputy Prime Minister of the Republic of Belarus Vasily Matyushevsky

noted, the remaining two documents from the liberal package will be signed in the

near future. According to experts, the reforms will create favorable conditions for

self-employment of the population, and will also reduce the threshold of entry to

any business.


"In Search of Reforms: 25 Years of the IMF Mission in Belarus" - this event was

dedicated to the reports of Dr. Bas Bakker, the IMF Senior Regional Resident

Representative for the Central Eastern Europe Region, and Dr. Peter Dolman, head

of the IMF mission in Belarus.

Representatives of the IMF, the World Bank and other international organizations

participate in the discussion. They underlined, that changes are noticeable. For

example, Belarus today ranks high on the 38th place in the Doping Business rating

among 190 countries. Also, they noted the key changes in the legal field aimed at

the emancipation of the business initiative. The effect of this we will see in the near

future. The most experts agree: the reforms are necessary and will have a

beneficial effect on the development of the economy. But the speed and depth of

economic transformations provoked a discussion between liberals and

conservatives. It is also important to enhance the image of the Republic of Belarus

at the world level, which affects the attractiveness of the country for foreign

investors. KEF-2017 also discussed the problems of modern education, as the

foundation for the economic development of countries.

Contact: [email protected]

https://e.mail.ru/compose/?mailto=mailto%[email protected]


European SME Policy for Ukraine

Small and medium Enterprises, SMEs are

the engine of the European growth model.

SMEs are the driver of innovation, fast in

adopting new technologies and market and

consumer demand. SMEs are committed to

their region, employees and customers.

Germany and Austria, especially during

their reconstruction economic miracle,

have cultivated and focused on SME and

SME friendly policies and entrepreneurs

and their SME Central European and South

Eastern Europe has followed this growth

model in the last 20 years very successful.

Now we recommend this SME growth

model for Ukraine. It has worked in Central

Europe and then in South Eastern Europe

and will work in Eastern Europe as well.

Ukraine is a major country but so is Poland

and Romania and their SMEs have now

grown to European dimension.

This is the very idea. Allow companies to start small, support them and do not choice and pick and decide who will succeed but liberate them and let them grow and turn into global market leaders in particular sectors and niches. The aim is not to protect SMEs and not simple subsidizing small self-employed but to give them freedom for growth, freedom for innovation, freedom to adopt to technology change and digitalization and freedom from excessive and arbitrary taxation or overregulation and freedom from government intervention for friends and family close to power and state authorities.

Yes – SMEs need clear rules, based on European guidelines, implemented evenly and fairly for all. Central to European SME policy is European competition regulation, providing equal access to procurement and public information and avoiding nepotism, clientelism and collusion. The success of European SME policy in the new Central European EU member states has proven its relevance and capacity to initiate growth, jobs and prosperity fostering an emergent middle class of consumer, citizens and voters. And this matters for Ukraine now. Sadly, Ukraine is focusing on industrial revival. Ukraine has inherited major industrial assets, some are useful for defense, some might be capable to survive global competition under market conditions but most might not. Focusing on an industrial revival means keeping people, resources, land and capital hostage of unrealistic dreams of a long gone totalitarian past.

Ukraine needs European SME policy and not old fashioned industrial policy, Ukraine needs open and efficient, labor and capital markets and the freedom for entrepreneurs to be able to successful compete on the European and world markets with the great capacities Ukraine has and will be successful with.

Again, SMEs do not mean small start ups and trade outlets forever. Google and Amazon have started small and so have Hipp and Bosch. But to create such an environment SMEs need an efficient state and an economy policy based on attention for SMEs. And once SMEs can be successful in Ukraine foreign investors will notice and seize the opportunity to bring the investment capital and technology required for a European level of prosperity for Ukraine. But if domestic Small and Medium Enterprises can not prosper and the reputation of Ukraine as highly corrupt state is not changed why should international investor risk their capital in Ukraine if it can be safely invested in Poland or Romania under EU conditions? To counter such consideration and to stay competitive Ukraine needs to convince the world that SME can prosper there. Treating all investors fair and evenhanded – from SME to FDI - will foster a capital market culture financing innovation and entrepreneurship and leading to lower interest rates as the success of these reforms in South Eastern Europe has proven.


Again competition, competition and competition is the basic principle of SME Policy. Therefore EU competition policies with ruling out state subsidies is to be firmly implemented in Ukraine to avoid unfair state intervention and the oligopoly domination of markets by few major political connected bullies.

It means a tax system fair and EU compatible with low rates and fair implementation, which fosters compliance and reduces corruption by increasing use of balance sheets and formalization of the economy.

Jointly with the overdue and long awaiting opening of the Ukraine land, labor and capital market for European investors this will be the signal for the international investors community that Ukraine is ready for business. As long as there are no free capital movements who will invest in Ukraine?

Such a coordinated approach for European SME Policy in Ukraine will as well increase the standing of Ukraine in the international ranking from Transparency to Competitiveness to Doing Business which will reflect the success of Ukraine in this effort to join the level of other European states in this ranking.

We recommend as well for Ukraine to join

the SEECEL – the South Eastern European

Center for Entrepreneurship Learning – to

change the culture of entrepreneurship

learning in Ukraine from Schools to

University to the media to foster a new

public consensus on SME policy and

entrepreneurs and entrepreneurship in

Ukraine and leave the post Soviet

mentality of state industrialism and civil

service style life long employment in large

companies and foster a start up and

entrepreneurship culture with all its

benefits and risks.

The Center for Entrepreneurship learning is

based for instance in Croatia in the

Ministry of Economy to promote

entrepreneurship and SME policy in SEE.

We are confident Ukraine could benefit

from the SEE SME reform experience.

http://www.seecel.hr

Finally we recommend Ukraine to follow

the European SME policy closely and

appoint a Ukrainian SME envoy, roll out

Ukrainian European SME Week and adopt

a Ukrainian Small Business Act based on

the SBA of the EU and streamline of

Government policy on its effects for SMEs

and what can be done to allow SME to

grow and provide the jobs, growth and

property for Ukraine to reach the

prosperity Poland and Romania and many

more have achieved based on European

SME policy.

Jobs, Growth, Prosperity with SME focus for Ukraine

Peter Jungen, Cologne and Gunther Fehlinger, Kyiv

PUBLIC PRIVATE DIALOGUE Newsletter

Compiled by: Alexey Muzichenko

E-mail: [email protected]

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