Development-oriented measures

The development-oriented measures for competitiveness support, implemented in Poland so far, relate to the creation of the best possible conditions for conducting and developing the business activity through, amongst others, establishment of a legal and institutional framework conducive to entrepreneurs and a support to the initiatives and programmes of crucial importance for the economy.

In accordance with The Programme of Economic Promotion until the Year 2005, which was adopted by the Council of Ministers on 2nd September 2003, various forms of promotional activities are utilised. The main aim of these activities is creation of positive image of Polish economy, and growth of export and foreign investment. The main areas of promotion include, among others:

- co-financing of costs of participation in foreign trade fairs and exhibitions, - co-financing of costs of participation in trade missions to trade fairs and

exhibitions abroad,

- implementation of Selective Promotion Programme (promotion of specific products and product groups of high export potential),

- promotional activities of economic and commercial sections of Polish embassies and consulates,

- support of Polish Houses abroad,

- training programme - Foreign Trade Academy,

- a system of refunding of part of the costs related to obtaining certificates required on foreign markets (excluding ISO certificates),

- implementation of Export Promotion Portal (www.exporter.gov.pl; www.polishproducts.gov.pl)

- promotion of foreign direct investment in Poland.

Measures designed for SMEs were of particular importance. In recent years a nation- wide system of SMEs support was created. A uniform policy programme for SMEs was approved for the first time in 1995 and covered the years 1995-1997. At that time new laws important for conducting business activity were introduced: the Tax Law of 29th August 1997 (Journal of Laws No 137, item 92613), the Banking Law of 29th August 1997 (Journal of Laws 2002, No 72 item 66514), the Law of 8th May 1997

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Amendments of the Act: Journal of laws 1997 No 160 item 1083, 1998 No 106 item 668, 1999 No 11 item 95, 2000 No 94 item 1037, No 116 item 1216, No 120 item 1268 and No 122 item 1315, 2001 No 16 item 166, No 39 item 459, No 42 item 475, No 110 item 1189, No 125 item 1368 and No 130 item 1452, 2002 No 89 item 804, No 113 item 984, No 153 item 1271, and No 169 item 1387, 2003: No 130 item 1188, No 137 item 1302, No 170 item 1660, No 228 item 2255 and No 228 item 2256, and 2004: No 29 item 257, No 64 item 593, No 68 item 623 and No 91 item 868.

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Amendments of the Act: Journal of Laws 2000: No 116 item 1216, 2001: No 111 item 1195 and No 130 item 1450, 2002: No 126 item 1070, No 153 item 1271, No 141 item 1178, No 169 item 1385, No 144 item 1208, No 169 item 1387 and No 241 item 2074, 2003: No 50 item 424, No 60 item 535, No 65 item 594, No 228 item 2260 and No 229 item 2276, and 2004: No 64 item 594, No 68 item 623, No 91 item 870 and No 96 item 959.

on the warranties and guaranties of the Treasury and certain legal persons (Journal of Laws 2003: No 174 item 1689), the Law of 20th August 1997 on the National Court Register (KRS) (Journal of Laws 2001: No 17 item 20915, the law of 6th December 1996 on pledge by registration and the law on the registry of pledges (Journal of Laws No 149, item 70316).

Regarding the financial instruments, of importance to enterprises was an establishment of the National Credit Guarantee Fund in December 1994, which was transformed into the National Credit Guarantee Fund at the Bank Gospodarstwa Krajowego in 1997. This fund operates nationwide and offers warranties through a network of co-operating banks. In terms of capital and the range of operations it is currently the largest fund in Poland. Additionally, starting from 1995 onwards first local and regional funds started to have been created, granting credit warranties to the SMEs sector.

Implementation of the programme adopted in 1995 contributed to an improvement of the conditions of functioning of the SMEs sector and confirmed the necessity to further implement and continue such a support.

For this reason, another governmental policy programme was prepared: "Government policy guidelines for small and medium-sized enterprises until 2002" (adopted by the Council of Ministers in May 1999). The document had became a base for all governmental actions towards SMEs and allocations of the budgetary funds (about PLN 140 mln) for direct support to entrepreneurs. The assistance covered inter alia:

- refunding to small entrepreneurs part of costs incurred for participation in training;

- provision to SMEs and persons undertaking business activity free consulting services in the basic scope of the conducted activity;

- refunding to entrepreneurs part of costs incurred for the process of obtaining ISO certificates;

- financing part of costs of preparation of an enterprise to participation in the regulated securities market;

Subsidies were granted for increasing capital of the loan funds or guarantee funds for SMEs, run by entities supporting entrepreneurship development.

Continuing the activities under policy towards SMEs, on 4th February 2003 the Council of Ministers adopted the next document – "Government policy guidelines for small and medium-sized enterprises for the years 2003-2006 ”.

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Amendments of the Act: Journal of Laws 2001: No 110, item 118, 2002: No 1 item 2 and No 113 item 984, 2003: No 49 item 408, No 60 item 535, No 96 item 874, No 217 item 2125, No 228 item 2256 and No 229 item 2276, and 2004: No 96 item 959.

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Journal of Laws 1997: No 121 item 769 and No 121 item 796, 1998: No 106 item 668, 2000: No 48 item 554 and No 60 item 702, and 2003: No 228 item 2256.

The objective of the Government policy towards SMEs is to stimulate the business activity of the sector, providing the growth of employment, enhancement of the competitiveness and ability to operate on the Single European Market.

The horizontal policy of the Government towards the SMEs will be realised through legal, organisational, information, training and financial instruments, in the following areas:

- assistance for undertakings supporting the development of enterprises,

- improvement of the legal and administrative environment for the SMEs and development of entrepreneurial attitudes in the society,

- development of the institutional environment for the SMEs,

- support for the integration of companies and their international activities

Priority shall be given to projects undertaken by entrepreneurs to support sustainable development and the related changes in the model of production, tourism, services and commerce.

The measures supporting development of SMEs were financed also from the Phare funds. Until 1999 the support had not been integrated. Its scope of objectives was different in particular programmes and was related amongst others to measures aimed at establishment of the National System of Services for SMEs (Phare-Step I and II), promotion of export in enterprises (Phare – Exprom II) or co-financing of investment (Phare-Struder). Also restructuring and privatisation programmes, especially in large enterprises, were co-financed from the EU assistance funds.

In 2000-2003 the EU programmes for SMEs support in Poland have been implemented on a much broader scale. The EU assistance under the Phare programme the Economic and Social Cohesion is of integrated nature and covers the package of advisory, financial, information and training services for SMEs. Support under these programmes includes amongst others advice in the area of conducting business activity, introduction of quality systems, implementation of new technologies and technology transfer, establishment of innovative firms, developing export and investment support. A characteristic feature of the new EU programmes for entrepreneurship support is utilisation of horizontal (national) and regional assistance instruments. The Phare support has gained a wide interest among entrepreneurs and has a significant impact on the condition of enterprises, which were granted such a support. Polish enterprises also participate in the EC commune programmes. The most important one is the "Long term Programme for Enterprises and Entrepreneurship". Additionally, Polish enterprises may participate in other Community programmes, such as I-TECH, Joint European Venture or ETF start-up facility.

The Law of 20th March 2002 on financial support to investment (Journal of Laws No 41 item 36317), which entered into force in May 2002, is a special instrument of the Government, aimed at imposition of the provisions facilitating undertaking and conducting the business activity (by initial support of investments). Due to limitations

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of the budgetary funds, till 15 November 2003, 28 financial agreements of total value of PLN 121.9 mln have been concluded with enterprises.

In order to improve the level of innovation in Polish enterprises in 1997 the Technology Agency (TA) was established (in 2002 the TA tasks were taken over by the Polish Agency for Enterprise Development). The Technology Agency organised annual competition "Polish Product of the Future" (in two categories: "The Product of the Future" and "Technology of the Future"), aimed at promotion of technical and technological innovations oriented towards fast launch of production, especially by SMEs. Since 2002 this competition has been carried out by the PAED.

An important element of the policy towards Polish SMEs is range of activities integrating Poland's economy with the EU economy, thus providing a chance to participate in joint R&D projects, in the creation of the European Research and Industrial Network and to utilise the best practise and best R&D centres. Such an opportunity is provided through participation in the Framework Programmes of the European Community for Research, Technological Development and Demonstration. From 1999 (initiation of 5th Framework Programme) Polish entities may participate in framework programmes on the same basis as entities from the EU-15 Member States. Poland’s participation in the 5th Framework Programme is significant. According to information at the end of July 2002, in 836 projects opened for implementation, 1056 domestic entities were involved. Among these entities, besides research teams, there were also entrepreneurs, including SMEs. As a result of these projects implementation, co-financing on the part of the European Commission amounted to EUR 123 mln. Poland also participates in the 6th Framework Programme.

In Poland, a number of solutions have been introduced, facilitating entrepreneurs' (especially SMEs), access to budgetary funds, to meet their R&D needs. An important and still requiring improvement, instrument of the state assistance for entrepreneurs are goal-oriented projects, co-financed by the Ministry of Science and Higher Education18 (former Ministry of Education and Science19, Ministry of Science and Information Technology, and before 1st April 2003 the Committee for Scientific Research20 ‘KBN’). The goal-oriented projects support innovation processes in enterprises through financing of 50% (in the case of SMEs even up to 70%) of the research works undertaken upon their initiative. The results of the research were then implemented at the enterprise's cost. The following table contains information about projects in the years 1994-2001.

Table 2 The goal-oriented projects financed by former KBN in the years 1994 – 2001

18

Established by the Council of Ministers’ Regulation of 5th May 2006 on establishment of the Ministry of Science and Higher Education (Journal of Laws N0 76 item 533).

19

Established by the Council of Ministers’ Regulation of 31st October 2005 on establishment of the Ministry of Education and Science and abrogation of the Ministry of National Education and the Ministry of Science and Information Technology (Journal of Laws 220 item 1879).

20

On 1st April 2003 the Committee for Scientific Research was transformed into the Ministry of Science and Information Technology (Council of Ministers’ Regulation of 18th March 2003 the establishment of the Ministry of Science and Information Technology, and abrogation of the Committee for Scientific Research, Journal of Laws No 51, item 443).

The goal-oriented projects financed by former KBN 1994 1995 1996 1997 1998 1999 2000 2001 Number of projects 796 732 772 756 777 834 1292 1239 Projects value (PLN mln) 147.3 149.7 191.5 196.9 181.6 203.6 230.8 232.3

Measures aiming at the reform of Poland's sector of science and technological progress were also supported from the Phare funds. Programmes aimed at development and implementation of the domestic policy for science and technology, structuring of R&D institutes, and supporting the State and self-governmental administration in the area of implementation of the science and technological progress policy were implemented. One of the major projects was related to elaboration of the detailed rules of operation of the national programme for establishing and financing of the Centres of Excellence in Poland. They are the scientific and industrial consortia consisting of research teams, leaders in a given discipline and final recipients (beneficiaries) of the research (enterprises, public and self-government institutions), which have coherent, medium- and long-term research programmes and independent management structures. Under the Phare programmes five pilot Centres of Excellence were established.

Increasing share of SMEs participation in the 5th Framework Programme is the evidence of their needs in the R&D sphere. On the other hand, the successful participation of Polish research teams in implementing the 5th Framework Programme in the section of establishing of the Centres of Excellence in Associated Countries in priority fields (medical and food technologies, information technologies, new industrial technologies, energy and environmental protection) indicates a high level of applied research of many polish scientific centres. Such potential should be adequately applied in the economy.

In recent years steps have also been taken to create the conditions for development of the e-economy. In this respect, an important step is the law of 18th September 2001 on electronic signature (Journal of Laws No 130, item 145021), enacted in 2002. Organisational arrangement have already been undertaken and implemented to develop a technical infrastructure necessary for implementation of the tasks arising from the law mentioned above. Other major legal regulations include: the law of 18th July 2002 on rendering services via electronic means (Journal of Laws 144 item 1204 and 2004: No 96 item 959), the law of 5th July 2002 on the protection of certain services rendered via electronic means, based or consisting in the conditional access (Journal of Laws No 126 item 1068 and 2004: No 96 item 959) and the law of 12th September 2002 on electronic payment instruments (Journal of Laws No 169 item 1385, Journal of Laws 2004 No 91 item 870 and No 96 item 959), which regulates the issue and use of such instruments, including in particular electronic money, taking into account the supervision rules.

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