National and Regional Small and Medium-Sized Enterprise Policy Linkage in Serbia Alessandra Proto

1. Financial support provided by the Government of Ireland National and Regional Small and Medium-Sized Enterprise Policy Linkage in Serbia Alessandra Proto OECD LEED Trento Centre for Local Development Belgrade, Serbia 26 November 2010

2. Basic assumption • Importance of entrepreneurship, SMEs and innovation is recognised by all OECD members. • OECD works closely with members and non-members both at national and local level to develop policies aimed at strengthening entrepreneurship, SMEs and innovation. • Importance of local component in such policies in order to make the intervention often more effective.

3. The project The OECD IC and LEED programme undertook the “National and Regional Small and Medium-sized Enterprise (SME) Policy Linkage in Serbia” project to examine policies supporting SMEs at the national and sub-national level in Serbia

4. The project team OECD Investment Compact for South East Europe: Mr. Antonio Fanelli Deputy Head of Private Sector Development Division Antonio.Fanelli@oecd.org Mr. Milan Konopek Policy Analyst Milan.Konopek@oecd.org OECD LEED Trento Centre Ms. Alessandra Proto Policy Analyst Alessandra.Proto@oecd.org

5. Agenda Objectives Process Key Findings Recommendations Other Considerations

6. 1. Objectives Compare national-level policies supporting SMEs with subnational actions and programmes

7. Agenda Objectives Process Key Findings Recommendations Other Considerations

8. 2. Process Coverage: North Banat district Central Banat district South Banat district Zlatibor district 19 municipalities Ada Senta Kanjiza Coka Novi Knezevac Kikinda Novi Becej Zitiste Zrenjanin Secanj Nova Crnja Alibunar Bela Crkva Opovo Plandiste Kovacica Kovin Pancevo Vrsac Called “Banat” 10 municipalities Arilje, Bajina Bašta, Čajetina, Ivanjica, Kosjerić, Nova Varoš, Požega, Priboj, Prijepolje Užice

9. 2. Process Summarised statistical data on SME activity and performance in Banat and Zlatibor Stocktaking of national, sub-national and international donor-supported schemes to support SMEs Applied a modified version of the SME Policy Index 2009 and Investment Reform Index 2010 in Banat and Zlatibor

10. 2. Process SME Index 2009 OECD Core Team IRI 2010

11. 2. Process Country Team: MoERD RDA Banat RDA Zlatibor • Country Team MoERD completed national level assessment as part of SME Index 2009. RDAs in Banat and Zlatibor completed their own self-assessments. • Local consultants collected primary data in regions and conducted focus group interviews with private sector and local authorities. Provided individual assessment for each region. • Private Sector and Local Authorities participated in focus group work and interviews. Most local authorities completed an assessment. • OECD Core Team – OECD Investment Compact and LEED plus international consultant evaluated all assessments and gave final scores. OECD Core Team Private Sector and Local Authorities Local Consultant

12. Agenda Objectives Process Key Findings Recommendations Other Considerations

13. 3. Key Findings

14. 3. Key Findings Small variation between national and regional situation in Serbia.

15. 3. Key Findings SME policy coordination and strategy development and implementation is in the process of being established in both regions, with the active support of RDAs.

16. 3. Key Findings Neither Banat nor Zlatibor perform particularly well in relation to improving on-line access. Quantity, quality, relevance of information and portals need to be made more timely and relevant to needs of the SMEs.

17. 3. Key Findings Programmes to support export competitiveness and SME promotion performed best at the national level but not so well at the regional level.

18. 3. Key Findings Access to finance dimension shows little variation. As a result of being within Vojvodina, Banat region attains a slightly better rating than the national level and Zlatibor.

19. 3. Key Findings Neither region supports technological training; much more could be done to promote networking, R&D and innovation.

20. 3. Key Findings Banat has three business incubators and Zlatibor recently inaugurated one. There is a notable lack of business development service (BDS) providers and the quality of provision is low.

21. 3. Key Findings One of the weakest areas identified by the SSPI. At the national level, the situation is improving, however lack of awareness of existing tools at regional level.

22. 3. Key Findings Vocational educational training (VET) and continuing education training (CET) systems are at a relatively early stage of development in both Serbia and the two regions in question. The process is relatively new and improvements are anticipated.

23. 3. Key Findings Local authorities recognise the importance of investment promotion and some have developed promotional material, however, this function is ad hoc and under-resourced compared with national level.

24. Agenda Objectives Process Key Findings Recommendations Other Considerations

25. 4. Recommendations

26. 4. Recommendations Dimension 2: Better legislation and regulations Existing RDAs should have mandate and capacity to implement SME-related aspects of such strategies. Many local authorities simply do not have the resources or expertise to implement SME activities. The importance of this role will grow once the future RDAs are created as foreseen by the new Law on Regional Development. . It will be necessary for the existing RDAs in Banat and Zlatibor to act as coordinators and catalysts for projects in support of SME development in their respective regions

27. 4. Recommendations RDAs should consider collecting information on business consultants and consultancies and the services they provide (both in the region and nationally, especially in cities like Belgrade, Novi Sad, Kragujevac, etc.) and make them available to interested local enterprises. National and regional cooperation to prepare programmes and activities designed to raise standards of existing business consultants (such as the Certified Management Consultants (CMC) certification).

28. 4. Recommendations Promote awareness of SME Forum operated by Chamber of Commerce and on-line consultation tool. Ensure balanced geographical representation by including RDA representatives and local authorities in national consultative bodies. SME representatives should be included in any new bodies at NUTS-II or NUTS-III level. Local authorities consider establishing mechanisms for regular public private consultations (PPC) with SMEs.

29. 4. Recommendations Consider mandate for RDAs in Banat and Zlatibor to perform IP function on behalf of local authorities. Focus on capacity building, investment promotion plans, client relationship management systems, policy advocacy and aftercare services. Foster close linkages with SIEPA and develop up-to-date databases of land, building and infrastructure (“greenfield” and “brownfield”) of interest to potential domestic and foreign investors.

30. Agenda Objectives Process Key Findings Recommendations Other Considerations

31. 5. Other considerations • Serbia has a large number of SME support programmes at national, provincial, and local authority levels. • Carefully monitor and evaluate systems of SME support, especially state aid. to ensure SMEs and entrepreneurs are getting sufficient and effective support. Evaluation is critical to assessing whether SME programmes are having their intended effect. • Existing national SME support programmes distribute resources based on national priorities. this system may also contribute to reinforcing national and regional differences. Consider: • How regional differences can be incorporated in order to support SMEs in less-developed areas in Serbia. • Whether national system of SME support should introduce corrective measures to help poorer regions or elements of regionalisation policy

32. 5. Other considerations Serbia’s national SME Strategy and Annual Plans represent the overall framework for state support. However, Serbian SMEs could benefit from clear and consistent targeting of subsidies, consistent with the new regional development law with a two-fold focus. The OECD (IC-LEED) suggests that this be based on: Geographical development: certain regions, sub-regions, municipalities. Improving SME functional capabilities: innovation, R&D, export development, technology absorption

33. 5. Other considerations Banat and Zlatibor regions under-perform in terms of drawing SME financial support compared to national average. Performance of the three districts in the Banat region is uneven, both in terms of number of applications made for support and the success rate (i.e., South Banat is much more active and successful that Central and North Banat). Consider why SMEs from those areas are underperforming and develop strategies for securing higher levels of financial support for their local SMEs and entrepreneurs. To better coordinate donor activities. Local authorities, via the RDAs, could develop databases of project activities, including their impact, strengths and weaknesses. This would enable these authorities to be better positioned to maximise the benefits arising from future financial support.

34. Thank you for your attention!alessandra.proto@oecd.org