The objective, priorities and measures of the Sectoral Operational Programme

Enterprises and their reference to the Community Support

Framework

Competitiveness of Poland's economy conceived as an ability to adapt to the changing international environment is relatively poor, which is reflected in the level of the majority of indicators presented in the analysis of its condition. To improve the situation it is necessary not only to continue the activities conducted so far and included in governmental programmes for selected sectors, but also to intensify the activities allowing for increasing the capacity of enterprises to operate in a market economy. The activities undertaken so far in this area have not brought about satisfactory results. The reason for this was both a shortage of financial resources, which created a barrier to the acquisition of investment funds, and a lack of knowledge necessary to effectively operate on the market. The possibility of utilising the Structural Funds by Poland shall add more dynamics to the development processes both on the regional level and in individual enterprises.

Identified factors, which are detrimental for competitive position of Polish enterprises and being a reason for relatively low competitiveness of Poland’s economy include among others:

- excessive scattering of enterprises with a shortage of their own capital and still very expensive and inaccessible credit, makes them unable to finance investment and innovation and thus reduces competitiveness improvement, - decreasing profitability of enterprises, limiting their investment capacities, - a decrease of investment expenditures and high level of tear and wear of the

production assets,

- delays in Poland regarding the building up of an information society, especially lack of adopting of the governmental and local administration to support the e- economy,

- barriers in the sphere of capital and know-how of SMEs in the service sector, - a steady drop in production and employment in the high-tech industry,

- low percentage of R&D work in industry and a drop in employment and regression in the R&D activity in industry,

- poor co-operation between research centres and industry resulting in low innovation level,

- lack of mechanisms encouraging the private sector to support R&D activity, - high foreign trade deficit.

Factors pointed below, which will decide about competitive position of enterprises and their products in the next few years, include:

- the technological level of products and services, depending to a large extent on the modernity of fixed assets as well as organizational efficiency and skills of the personnel in economic entities,

- flexibility in adaptation of the production structure to the structure of demand, - the way of functioning of broadly understood business environment affecting

effectiveness and efficiency of the economy, and close links between industry and R&D sphere,

- macroeconomic factors, including interest rates on credits necessary for modernisation and development of enterprises and the PLN rate of exchange against other currencies,

- the factors arising from implementation of the Community policy and principles of the sustainable development and environment protection.

Meeting these requirements call from public authorities for not only creation of a macroeconomic background conducive to improvement of competitiveness of enterprises, but also for a direct support to enterprises activities in this field. This requires reallocation of the State aid structure for horizontal and regional objectives (environment, employment, R&D) with a focus on enterprises with viable business development perspectives, especially SMEs, which are seen an engine of growth and employment in the economy.

The strategic objective of this SOP-ICE takes into account all mentioned-above factors of Poland's economy competitiveness and is defined as follows:

Improvement of competitiveness of enterprises established

in Poland, operating in the European Single Market

Implementation of this objective shall contribute to achieve the overall objective of the CSF for 2004-2006, formulated as development of a competitive economy based on knowledge and entrepreneurship ensuring employment, growth and the improvement of social, economic and spatial cohesion.

Following two pillars of the CSF strategy - high and sustainable economic growth and increase in employment – have constituted the main criteria for selecting the priorities and measures of the SOP–ICE. The selected development axes for the Structural Funds, which are inter-linked and mutually supportive, are:

I. Developing the growth of, and employment in, the enterprise sector, II. Human resources development,

III. Improving infrastructure endowments related to economic growth and the quality of life,

IV. Improving the conditions for regional development including rural development.

The first axis of the CSF, concerning enhancement of the competitiveness of enterprises and consequently their potential to create workplaces, will be realised among others by measures undertaken by the SOP–ICE, especially in the field of:

- financial and advisory support offered to advanced technologies start-ups and SMEs, as they are the fastest growing part of the economy and the main providers of new jobs,

- improvement of business environment institutions, which will help to increase employment and the share of high added value sectors, which foster the creation of a knowledge based economy.

This Operational Programme objective is in line with the CSF partial objectives, defined as:

- assistance in achieving and maintaining of high GDP growth in long-term, - increase in employment and education levels,

- incorporation of Poland into European infrastructure networks,

- intensification of the process of increase of the share of high added value sectors in Poland’s economic structure,

- assistance in the participation of all regions and social groups in Poland in the development and modernization processes.

The fields of intervention of the SOP–ICE will contribute to achievement of the fourth partial objective of the CSF, which is aimed inter alia at:

- increasing productivity and profitability of the industrial sector by attracting new investment, increasing innovation level and investing in human capital, - increased effort to link the investments in Research and Development sphere with the private sector, making enterprises more dynamic, innovative, and developing the foundations for a knowledge-based economy,

- increasing investment in the Information Society by enhancing access to public services, thus in the long-term perspective contributing to the development of the Polish economy.

The SOP-ICE objectives, priorities and measures have been defined in such a way that by referring to the identified development problems and development potential of Poland's economy, it would be possible in most effective manner to provide implementation of the CSF objectives.

What is required in pursuing the objective set out in the SOP-ICE, is a fast development of production of modern high-quality goods, which are research- intensive and based on new and quickly adapting technologies, building in particular on ICT and increasing the share of high-value added sectors.

Actions proposed in the SOP-ICE framework will be targeted above all towards enterprises which are dynamic and ready to compete on the European and global market. In line with the objectives of the CSF, the overall goal of a knowledge-based economy will be reflected in selection criteria, and the importance of stimulating advanced technologies start-ups. However, there will be no preference nor privileges to any particular technologies or sectors.

Support will be given to activities targeting innovation and stimulating growth in investment outlays relating to introducing of innovative solutions. The requested industry development directions will contribute to the growth of product and technological competitiveness, and thus to the sustainable development.

The Complement to the SOP-ICE shall determine the preference criteria, that will focus first of all on the projects enhancing the competitiveness of enterprises and presaging success.

Upon Poland's accession to the European Union and thus inclusion into the Single European Market, Polish enterprises, regardless of their size or fields of operation, will face serious challenges. The first will be confrontation with the Single European Market, which involves eliminating a number of barriers, and raising new ones. The second challenge will be to withstand the competitive pressure of the Single European Market. The third challenge involves transforming Poland's economy into a knowledge-based economy and the resulting imperative for enterprises to adjust to it. Poland's inclusion into the Single European Market is connected with a necessity to adopt rules and instruments regulating to trade with the third partners, which are included in the EU common trade policy. It is also connected with the need to adopt the mutual trade rules between the Member States, as regulated by the Community Single European Market rules.

Apart from lifting the border barriers, also technical barriers will be eliminated. Most of the problems which may potentially hamper the functioning of Polish enterprises, whatever their size, on the Single European Market, may arise from different technical requirements. These requirements in the first place relate to product safety and the environmental protection issues. Upon Poland's accession to the EU, Polish enterprises will be obliged to comply with the directives on the so-called “new approach to technical harmonization” (Council Resolution of 7th May 1995 on a New

Approach to the technical harmonisation and standardisation). The products will be

marketable only if they meet specific criteria. It means entrepreneurs need to obtain appropriate certificates for their products.

One of the most important tasks in this area (relating to the environmental protection) will be to implement the Best Available Techniques (BAT). Permissible pollution norms in EU are being established on the basis of the results from applying the BAT Enterprises failing to abide by these conditions will have to terminate their activities. The first period of programming the assistance from the Structural Funds, under which Poland shall receive a support, will be utilised for development and

strengthening of the existing institutional structures, designed to act to improve the competitive position of Poland's enterprises, as well as in assisting the enterprises’ activities in this area. At the same time, the public services sphere will be strengthened, in view of facilitating business activity by optimal utilisation of ICT. To attain the strategic goal of the SOP-ICE and detailed objectives of the CSF, implementation of two Priorities has been proposed:

- enhancement of a knowledge-based economy business environment ,

- direct support to enterprises.

In addition, implementation of "Technical assistance" is planned, as a support to the above mentioned priorities.

Such a definition of the SOP-ICE Priorities means that support will be focused on and directed to two types of Final Recipients (beneficiaries):

- business environment institutions,

- enterprises registered on the territory of the Republic of Poland.