Implementation of the recommendations of the Business Environment Simplification Task Force (BEST)
Report
Republic of Poland
Warsaw 2001
The document was prepared on the basis of the contribution of following institutions:
- Patent Office of the Republic of Poland
- Polish Agency for Enterprise Development
- Polish Securities and Exchange Commission
- Ministry of Economy
- Ministry of Education
- Ministry of Finance
- Ministry of Justice
- Ministry of Labour and Social Policy
- Ministry of Regional Development and Construction
- State Committee for Scientific Research
- Technology Agency
- National Association of Guarantee Funds
- Chief Council of the Associations of Private Trade and Services
INFORMATION ON POLICIES REGARDING COMPANIES IN POLAND
I/ A Short general description of governmental policies and strategy with regard to companies. What are the main priorities? What instruments are used to implement them? Is implementation of these policies monitored and evaluated? If so, in what way?
The source for governmental polices towards the small and medium enterprise sector are found in art. 53 of the Commercial Activities Law dated November 19, 1999. This article states that government, respecting the ideas of equality and competition, will create favourable conditions for the development and functioning of small and medium enterprises.
A detailed elaboration on this is contained in the document entitled “Government Policy Guidelines for Small and Medium-Sized Enterprises until 2002” approved by the Council of Ministers on May 11, 1999.
The main goal of governmental policies towards SMEs up to the year 2002 is creating conditions for full development of the potential of the small and medium size enterprise sector. An indirect goal is increasing the competitiveness of SMEs, increasing export and increasing investments in this sector. Legal, financial, organisational and informational-educational tools are being used to achieve these goals.
The execution of policies regarding small and medium size enterprises is being monitored and checked. Reports are prepared each year on the basis of information gathered by the Fund and other institutions involved in the execution of assignments defined by the aforementioned document. These reports are then presented to both the Council of Ministers as well as the Parliamentary Committee on Small and Medium Size Enterprises.
II/ What amount of the State budget is targeted towards promotion of SMEs? How has it been allocated towards execution of goals between the various priorities?
In total, about 20 million PLN of funds from the State Budget in the year 2000 were targeted towards activities associated with entrepreneurial development as defined in “Government Policy Guidelines for Small and Medium-Sized Enterprises until 2002”Among various tasks, the most important completed ones were:
- partial refunding of participation in training courses – 6,103,994 PLN,
- free of charge or payable in part advisory services – 4,263,400 PLN,
- creation of a database containing legal acts presently in force in the European Union[1]. This database gives entrepreneurs access to Polish language versions of synopsis’ of legal acts presently in force in the European Union and vital for commercial activities – 777,140 PLN,
- publishing free of charge leaflets and publications for entrepreneurs – 180,800 PLN,
- development of the National System of Services for SMEs – 463,300 PLN.
Other activities were associated with promoting quality. In order to assist entrepreneurs in this field, part of the expenditures borne by entrepreneurs in association with obtaining ISO certificates was refunded for a total of 1,582,300 PLN.
The improvement in access to external financing by entrepreneurs was the result of:
- organising free of charge conferences for business related organisations regarding available sources for financing business activities – 799,200 PLN,
- execution of a countrywide informational and educational campaign aimed at small and medium sized enterprises regarding the regulated and non-regulated securities market[2] - 652,049 PLN.
Activities associated with supporting the development of entrepreneurship will be continued on a much larger scale in the year 2001 – the State budget foresees a total of 71 million PLN being targeted for this purpose. The most important undertakings that will be executed in the year 2001 are:
- partial refunding of participation in training courses for entrepreneurs – 11,895,000 PLN,
- free of charge advisory services – 10,379,000 PLN,
- partial refunding of costs associated with obtaining ISO certificates – 4,700,000 PLN,
- continuation of the national educational and information campaign regarding the regulated and non-regulated securities market and aimed at small and medium size companies and regional institutions supporting this sector – 550,000 PLN,
- partial financing of costs associated with preparing companies to participate on the regulated securities market – 7,490,000 PLN,
- development of the database containing legal acts presently in force in the European Union. This database gives entrepreneurs access to Polish language versions of synopsis’ of legal acts presently in force in the European Union and vital for commercial activities (this amount cannot be given due to a tender being presently prepared),
- capital increases in small and medium size enterprise loan and credit guarantee funds – 19,260,000 PLN,
- development of the National SME Services Network – 1,200,000 PLN.
III/ In what ways are policies regarding companies connected to other governmental priorities?
The development of entrepreneurship is one of the key priorities and this is easily evidenced in numerous governmental documents, e.g.:
- “The National Strategy for Increasing Employment and Human Resources Development” – document approved by the Council of Ministers on January 4, 2000,
- “Medium-term Concept for Development of the National Economy up to the year 2002” – document approved by the Council of Ministers on June 15, 2000[3],
- “Increasing Economic Innovation in Poland up to the year 2006” – document approved by the Council of Ministers on July 11, 2000,
- “Unified Structural Policies regarding Development of Rural and Agricultural Regions” – document approved by the Council of Ministers on July 13, 2000 together with the “Rural and Agricultural Regions Pact”[4],
- “Poland 2025 – Long-term Strategy for Stable Development” – document approved by the Council of Ministers on July 26, 2000,
- “National Strategy for Regional Development in the years 2001 - 2006”[5] – document approved by the Council of Ministers on December 28, 2000.
Policies towards companies and regional policies
The relationship between policies towards companies and regional policies can be seen in three different aspects:
1. Regional policies support the development of entrepreneurship and company investments in certain regions.
In the document entitled “National Strategy for Regional Development in the years 2001 - 2006” and approved by the Council of Ministers on December 28, 2000, three of the five regional development priorities are directly or indirectly associated with entrepreneurship and include:
- development and modernisation of infrastructure used to increase the competitiveness of the regions,
- restructuring of the economic base in the regions and creation of conditions for its diversification,
- support for regions requiring activation and threatened with becoming marginal.
Activities in the first priority (in all regions) include development of the physical infrastructure, development of social infrastructure related to information and assistance in developing metropolitan functions in cities. The indirect goal of these activities is increasing the attractiveness of the various regions for investments in economic activities. As far as the second priority is concerned (for all regions), the target of governmental support is the production company sector (including SMEs) and its surroundings (business infrastructure). These activities will consist of supporting the development of new companies in key sectors for the given regions, supporting the transfer of technology and innovative in-flow as well as development of tourist, recreational and cultural preservation activities. The third priority is associated with certain regions that are best categorised by their low production activity and a need for development of alternatives to agriculture as well as towns and cities dependent on singular industrial companies. The activities in this group will be concentrated on infrastructure development and creation of new places of employment outside of agriculture as well as stimulation of SME development.
The aforementioned priorities and activities directed towards companies resulting from them will be financially supported by the State in the form of so called “support contracts” between the local governmental authorities and Central Administration.
2. State assistance, in the form of regional policies, and addressed towards entrepreneurs is based on competitive polices.
Assistance and support is directed to those regions whose per capita GNP is less than 75% of the European Union index. State assistance must also take into consideration various other conditions. State assistance must result from regional policies, must be differentiated in its form, size and period, take into consideration sector assistance programmes and not exceed maximum allowed levels (investment costs or costs associated with creating new places of employment). Taking into consideration that the main purpose of regional assistance programmes is supporting development of regions that are underdeveloped economically and socially, State assistance for entrepreneurs investing in new companies, development of existing production capabilities, acquisition of companies threatened with liquidation and creation of new places of employment is permitted. Another principle that must be abided by is that economic activities arising from such State assistance must be maintained for a minimum of five years and that intangible costs and assets can be considered to be justified costs. In general – on the basis of statistical data – most regions in Poland qualify for the maximum permitted level of 50%. In the case of SMEs, this level may be increased by 15%.
3. New instruments helping in creating new places of employment and increasing employee qualifications will be used in those regions requiring such assistance within the framework of policies aimed at supporting investments.
On April 11, 2001 the Council of Ministers approved the draft “Law on Investment Support” which foresees new instruments that will help in creating new places of employment and increasing employee qualifications. The purpose of this law is to introduce a system of subsidies for entrepreneurs that will be executing major investments or creating a substantial number of new places of employment. This programme will also take into consideration investments in innovative technology. In addition, subsidies will be given to entrepreneurs to use for training of new personnel employed as a result of the new investments. The law also foresees investment incentives in the form of subsidies to the local governments for preparing infrastructure to attract investments. This law will lead Poland to be a more attractive location to invest in. It will also be a means of supporting the creation of new places of employment and attracting investments (including foreign investments) in those regions requiring such assistance. The general guidelines for separating out regions that will obtain this type of assistance is contained in the Law on Regional Development and set out in the “National Strategy for Regional Development”. This law also ensures equal treatment of domestic and foreign investors, which in accord with European Union laws.
Policies towards companies and employment policies.
Government policies towards companies are closely associated with employment problems and decreasing unemployment. This is confirmed in all government documents prepared by the Ministry of Economy that are associated with national and sector economic development strategies.
In the document entitled “Medium-term Concept for Development of the National Economy up to the year 2002” approved by the Council of Ministers on June 15, 1999 and associated with preparation of the Polish economy to membership in the European Union by the end of 2002, one of the goals set out is creating conditions for new places of employment. This concept will require the completion of a number of tasks, including accelerating development of the private sector with particular emphasis on small and medium size enterprises. This will require the creation of a much more favourable work code by limiting the social liabilities imposed on employers by the employment laws as well as reducing administrative loads associated with employment.
In the document entitled “Activities Aimed At Creating Conditions For Creation Of New Places Of Employment”[6] approved by the Council of Ministers on November 3, 1999, actions undertaken by government associated with accelerating restructuring and reformation of social sectors that will on the one hand help in improving the economic efficiency of individual sectors of the national economy and their better adaptation to free market conditions, at the same time having a possible negative impact on the employment market, were presented. Employees being laid-off as the result of restructuring processes are under special protection programmes including systems for increasing qualifications that will allow these employees to undertake work in other companies or on their own accord. At the same time, a programme aimed at helping to create new places of employment as a result of various activities undertaken towards development of small and medium size enterprises, development of the housing construction sector, an increase in entrepreneurship and innovation, promotion of export and strengthening regional of development through support of technical and business development infrastructure was approved.
New places in the services sector will have an influence on increasing the level of employment. In particular services associated with insurance, marketing, market research, logistics, hotel activities, tourism and food services will develop as well as all service associated advisory services like legal, tax, finance, accounting and bookkeeping. Development of the services sector will be the result of work becoming more specialised in its nature, e.g., narrow specialisation of insurance services, forwarding and shipping being separated out from transport services, IT services. Therefore specialised service companies will be formed and develop. It must be stated though that the most important element for creating new places of employment is economic growth supported by appropriate macroeconomic polices aimed at reducing inflation and capital costs, which has a direct influence on overall development of companies.
On March 6, 2001 the Council of Ministers approved a document entitled “Agenda for Activities Aimed at Supporting Entrepreneurship and Creation of New Places of Employment”. This document contains a new action plan that will assist entrepreneurs in increasing the number of places of employment.