State Support and Prospects for Development of Small and Medium Businesses

Development of small businesses was started in the Republic of Belarus about 12 years ago. During this period, the state policy in the field of small businesses has been formed as well as respective regulatory and legal frames regulating activities of small and medium businesses (SMB). Significant changes have taken place in the quantitative and qualitative compositions of entrepreneurial structures.

At the current stage of the economic development in the country, entrepreneurship helps fill the market with goods and services, creates prerequisites for the development of the competitive environment, and is a source of budgetary funds, employment and self-employment of population, thereby helping decrease social tension and giving opportunity to people to apply their own physical and intellectual capacities.

At present, more than 28,000 small enterprises operate in the Republic of Belarus (including 26,000 private enterprises) as well as over 180,000 individual entrepreneurs. Totally, the small entrepreneurship sector employs over 900,000 persons (including individual entrepreneurs and their employees), which makes about 20 percent of economically active population of the country. The trade and public catering and the industrial and construction sectors include about two-thirds of all small enterprises. Gradual changes take place in the sectoral structure of the entrepreneurial sector of the economy. There is a trend towards an increase in the number of small private businesses in the real sector.

The state policy for support and development of entrepreneurship is an integral part of the national economic policy and is aimed at creation of advantageous conditions for successful development of small businesses and practical implementation of entrepreneurship initiatives of the people.

Today, the country has an integrated system of entrepreneurship support. Its structural elements include the Department on Entrepreneurship of the Ministry of Economy (the state body responsible for the state policy in the field of entrepreneurship support), the Council on Development of Entrepreneurship in the Republic of Belarus, the Inter-departmental Commission on Support and Development of Small Businesses, Regional Councils (commission) for the development of entrepreneurship, entities of the entrepreneurship support units (entrepreneurship support centres and small entrepreneurship incubators), and nongovernmental associations of entrepreneurs.

To develop advantageous conditions for sustainable development of small entrepreneurship units based on the improvement of forms and methods of State support provided to this sector of the national economy, since 1997 annual programmes of State support of small entrepreneurship and respective regional programmes funded from the national and regional budgets have been adopted and implemented in the country.

In February 2005, the Government approved a new Programme of state support of small entrepreneurship in the Republic of Belarus for 2005. Implementation of the programme activities will help eliminate the factors and trends restraining the development of small entrepreneurship, enhance state support, and activate the process of organisation of small entrepreneurship units. The main lines of the programme include: the creation of advantageous climate for the development of entrepreneurship; the development of a system of credit and financial support of small entrepreneurship; the improvement of activities of units included into the infrastructure of development and support of small entrepreneurship; the improvement of information support of small entrepreneurship; development of international cooperation in this field; and the improvement of the system for training and retraining of personnel for small entrepreneurship.

The country has the infrastructure for support of small entrepreneurship, which includes 38 entrepreneurship support centres and 9 small entrepreneurship incubators. The main task of this infrastructure is to assist small entrepreneurship units in their organisation and improvement of business skills.

The centres provide information and consulting services for small entrepreneurship units, develop business plans, make marketing surveys, organise seminars on issues of organisation and implementation of entrepreneurial activities, provide assistance to receive financial resources, and promote products (work or services) to foreign markets through participation in national and international exhibitions and fairs.

The incubators stimulate the organisation of new small entrepreneurship units by providing them, for a definite period of time, with specially equipped premises for offices and production, opportunities for collective use of office equipment, and help them find partners and develop and introduce new types of products.

Small entrepreneurship is not well developed in small towns and in rural areas. However, these areas most often lack goods and services and have problems of employment and cultural leisure.

To involve rural population into the entrepreneurship activities, the Centre for the development of rural entrepreneurship has been organised, whose main lines of activities include: training of new entrepreneurs how to organise their own production; supporting registration and operation of small enterprises and consulting on issues of commercial activities and management; activities in the field of accountancy; research of the market conjuncture and study of public opinion; publicity and advertising; activities of tourist operators, tourist agencies and guides.

Besides, the work is under way to set in the regions non-profit organisations whose activities should be aimed at the development and supporting of small entrepreneurship units, also by providing security for loans and credits provided to such units.

At the same time, the development of small entrepreneurship faces today a lot of problems that restrain the process of development. To reduce negative impacts of these problems, a range of measures was implemented in 2004 to simplify the procedure of State registration of business entities, reduce the number of licensed types of activities, minimise administrative and other restrictions hindering the development of entrepreneurship, regulate the taxation system and customs procedures, improve access to small entrepreneurship units to financial and credit resources, etc.

The draft Law of the Republic of Belarus “On State Support of Small and Medium Entrepreneurship in the Republic of Belarus” has been prepared, which includes criteria for inclusion of economic units into small and medium entrepreneurship units, defines the objectives, lines and reforms of state support of small and medium entrepreneurship units, and regulates the rights, duties and responsibilities of small and medium entrepreneurship units.

The future state policy in the field of small and medium entrepreneurship will be aimed at improvement of legal and economic conditions for the development of small and medium businesses; development of credit and financial mechanisms and property support of small and medium entrepreneurship units; development and increasing of efficiency of the infrastructure for the support of small entrepreneurship; and development of international cooperation in the field of small and medium entrepreneurship.