Session 5

1. Session 5 Policy Issues for Promoting and Facilitating International Trade by SMEs ECLAC/IDE(JETRO) Joint Project UNDP Thematic Trust Fund: Information and Communication Technology (ICT) for Development

2. Basis Basis Measures applied inArgentina. A good sample of policies existing in other countries.

3. Opinion of the privat sector Role of the Government according to CCT (a cluster) Policies coordination among different levels Generation of proper conditions for the cluster development >promoting the competitiveness thru improvement >creating programs to develop firms and human resources >favoring exports programs and promoting the cluster in foreign countries >granting equal conditions to local and foreign companies >easier access to credit >eliminating distortions and asimetries in the region Specialized investment in infrastructure and projects development Stimulate foreign investment to specific projects Play an active role to foster integrations, common business and alliances among local and non local firms.

4. General Idea of IT Policies Policies related to IT are included within the Science Technology and Productive Innovation national Plan Project, 2004 made up by the State Secretariat of the area. The general objectives of the Plan Project are: The sustainable socioeconomic development of the country. The worldwide expansion of a competitive and productive sector. The improvement of life quality and the solutions to the population needs. The possibility to take advantage both of the opportunities that come out from in the Society of Knowledge and the generation of new opportunities. The construction of a solid, conducting, promoting, and protecting State, The substantial reduction of the regional differences and the inequity in the income distribution.

5. Policies to support SME´s – Export Promotion Export Groups Program: This program (SME Subsecretariat) is aimed to guide and encourage the development of sector associative patterns to reach a more efficient internationalization of the SMEs, providing technical assistance for the design and implementation of export strategies. This program was put into practice in September 2000 and has at present, 30 export groups that gather about 250 companies belonging to different sectors: Food, Auto parts, Construction, Cotillion, Household goods, Hardware, Forestation Industries, iron work, Lighting, Garment, Agrarian Machinery, Leather, Metal-mechanic, Furniture, Furs, Paints and Lining. During 2002 the joint exports of the companies involved in the program grew 58% compared with the previous year, being a fall of 5% the gobal result for the same period. For 2003 the increase was 34%, compared withh the general average of 14%. Furthermore, it was observed an increase of 20% of new export companies on the total of the involved companies, and the market diversification, etc.

6. Export groups - 2 Associative Strategy should allow: ·To complement the export offer of the companies having scale problems. ·To improve the capacity of the companies taking part to negotiate with customers or suppliers. ·To facilitate the joint learning sharing high costs when getting into other markets. ·To develop activities which would be impossible to be carried out by small companies individually.

7. Some available material • Methodologic proposal to set up a group • Keys for success • Role of the coordinator • How to evaluate the feasibility • Guide of procedures • Guide for Internal Rulings • Guide of support´s instruments • Workshops

8. Policies to support SME´s – Export promotion • First export support • By means of the Program “First Export Support” the SME Subsecretariat provides advice to SMEs from all over the country to begin exports via a schedule in which it is implemented the diagnosis, the training, and the tutorial for the design and carrying out of an export strategic plan. • The system operates by means of assistants controlled by agreements with the national universities, who are in charge of guiding the process of the SME that wishes to export. The mentioned assistants receive training on: •   Exports costs and prices. • Development of the Business Plan. • Development and Evaluation of the Exports Plan. • Techniques and useful tools to search information on the Internet. • Interaction schedule with the program tutors.

9. The working schedule comprises: • Definition of the company’s export offer. • Economy-Financing Evaluation for the Company. • Identification of prospective markets. • Determination of a working schedule to solve problems. • Definition of objective market. • Schedule to carry out publicity tasks. • Setting up of a permanent information system on markets and relevant commercial opportunities for the company. • Identification and getting in touch with contacts between the company and public and private institutions which may be important for the export activity of the mentioned company. • Development of a Web Site and institutional flyers in at least two different languages.

10. Foreign Trade Area Information System: The Foreign Trade area of the SMEs and Regional Development Subsecretariat provides the companies with both, databases offered by different national and international institutions and information applied to different Web sites. The objective is to ease the SME business sector to the search commercial information to help him take a decision later. Information related to the following topics is available: · Lists of prospective importers. · Statistic information. · Import regulations in the destination countries. · Fee and side-fee barriers. · Fairs and exhibitions abroad. · General information on the destination country.

11. Policies to support SME´s – Export Promotion • Articulation between Big Companies and SMEs: • Articulation: defined as the cooperation and complementation between production agents of different size, in order to get learning effects and the improvement in the competitiveness obtained by the companies • The interaction with big companies may generate synergic results of great advantage for the SMEs, especially by the time they start business, the export culture or tobroaden the present scope of their foreign business • The SSEPyME takes part in: • The selection of the SMEs taking part and the necessary technical or feasibility evaluations. • To ease the access to available support tools in the SSEPyME and other National State offices; it provides its own technology equipment and the methodology that it has developed to creation and operation of associative projects. • To carry out the supervision of the activities while the project is being run.

12. Articulation - 2 • The role of the big company is: • To ease access to the logistic, legal, tax, and other service - Expertise. • To transfer management know-how; it may grant convenient prices for supplies aimed for exports. • To ease the access of SMEs to the financing of operations related to the foreign market. • To ease the access of its SMEs (commercially related) to the Fiscal Credit Program.

13. Policies to support SME´s - Trade facilitation • Assistance Program to set up Productive Collaboration Associations. • This program is aimed to complement the operative expenses of the Productive Collaboration Associations that may be set up with a minimum of 4 members, under the characteristics of SME and that certify 3 years´ operations in the activity, subsiding them with a 50% for the first two years without exceeding $ 60,000 (about US$ 21,000) per annum by means of three-monthly accounts checking. Possible uses might be: • Incorporation of technology. • Growing of the foreign trade. • Exploitation of tourist resources. • Improvement in the purchasing trade conditions. • Implementation of quality systems. • Productivity specialization. • Growth in competitiveness. • Production complementation.

14. Policies to support SME´s - Trade facilitation Legal Assistance: The State Secretariat has implemented a sector for Legal Assistance to SMEs. It is aimed to clear out enquiries made regarding the relationship between the SME and the National State. FDI promotion The Investment Promotion Agency (ADI) is a work unit within the Secretariat of Industry, Commerce and of Small & Medium Enterprises of the Ministry of Economy and Production of Argentina. Basically, ADI works on: Institutional Promotion: identification of business opportunities in different sectors and regions of the country; distribution of the information. Investor Support: reference center, specialized in suppling up-dated information on different aspects, such as: economic, financial, legal, education, technical, taxes, or other relevant aspects which are necessary when taking a decision of investing in Argentina.

15. Policies to support SME´s - Trade facilitation FONAPyME (National Development Fund for the Micro, Small and Medium Enterprise) The regional Development, Medium and Small Enterprise Secretariat called for bids by $ 80,000,000 (about US$ 27 million) to hand in projects by existing or to be set up SMEs, or by any other association exclusively set up by them that wish to obtain financing to carry out investments that create or broaden the productive capacity of the company and/or bring in new products, services or processes that improve considerably the development, expansion and growing of such companies and that consider the high impact in the regional development and employment generation. National Fund for the creation and consolidation of Microbusiness: (FoMicro) This fund is aimed to create productive units of goods and/or services on the hands of unemployed and sub-employed workers groups, and to consolidate of existing companies dealing with micro-business. This program is coordinated by the Argentine National Bank (BNA) and the SME Subsecretariat of the Economy and Production National Ministry.

16. Policies to support SME´s - Trade facilitation Bonus rate loans: The SMEs Subsecretariat implemented a system so that SMEs may have access to low rate loans. When it was originally created, a bonus of 3 percentage points was considered. As regards Resolution No 7/2003 it was increased to 8 percentage points. Global Program of Credit to the SMEs: (MyPEs II) It is a trustee’s program made up by 100 million dollars supplied by the IADB and 100 million dollars supported by the National Government. The original SMEs program had been made out of use by the economy events of the year 2001. Italian Credit for the supporting of SME. Microcompanies and SMEs can apply – included the cooperatives – legally located and set up in the Argentine Republic, with at least 3 year` trading activity. As regards Italian-argentine companies, they will have to be set up by mother companies operating for at least 3 years in Italy and Argentina. The minority society participation, Italian or Argentine, might no be less than 15%.

17. Policies to support SME´s - Trade facilitation Reciprocal Guarantee Societies Program As regards the argentine legislation on Reciprocal Guarantee Societies (SGR), they are referred to as commercial societies whose aim is to ease SMEs the access to credits by granting guaranties to fulfil their duties. It is part of the associative strategy between big companies and SMEs that is present in other items of the official policy. Hands on Workshops: They are scheduled, and in some cases they are currently being held: “Export Samples” Workshop, with the purpose of allowing the SME dispatch without any inconveniencies. · Workshops on the proceedings to collect refunds and to get the CBU (unified fiscal number) · Workshop on the filling-out and analysis of export documents. · Workshop on the filling-out and analysis of Certificates of Origin.

18. Policies to support SME´s - Trade facilitation • Reciprocal Guarantee Societies Program • As regards the argentine legislation on Reciprocal Guarantee Societies (SGR), they are referred to as commercial societies whose aim is to ease SMEs the access to credits by granting guaranties to fulfil their duties. It is part of the associative strategy between big companies and SMEs that is present in other items of the official policy. • Hands on Workshops: • They are scheduled, and in some cases they are currently being held: • “Export Samples” Workshop, with the purpose of allowing the SME dispatch without any inconveniencies. • Workshops on the proceedings to collect refunds and to get the CBU (unified fiscal number) • Workshop on the filling-out and analysis of export documents. • Workshop on the filling-out and analysis of Certificates of Origin.

19. Policies to support SME´s - Trade facilitation Business Reconversion Support Program. The PRE grants SMEs subsidies up to 50% of technical assistance projects that include services such as: External and Internal Market Studies, Development of New Products and Services, Production Frame Engineering, Commercial Plans, Quality Regulation Certification, etc., and that may be oriented to strengthen their competitiveness in areas such as: exports projects, imports substitution and integration of the value chain with customers and suppliers, promoting the business association,highlighting the competitiveness and increasing their presence in the market. Agencies Network: The principles that rule the operating of the Network are based on institutional collaboration and cooperation, the association between the public and private sectors, and the co-financing amongst the Nation, the provinces, and the municipalities.

20. Policies to support SME´s - IT related FONTAR The Fontar (Technological Argentine Fund) get funds from several sources (mostly multilateral organizations) and finance private and public projects intended to promote innovation and technological modernization. Permanent systems and periodic calls are used to carry out this program. The last annual call for non reimbursable funds (2003) amounted aprox. US$ 100 millions, limited to US$ 100,000 per company and oriented to technological innovation. More than 300 projects were admitted (passed the first stage) but the technical and financial evaluation are not finished 7 months after the closing.

21. Why the measures are not successful? • Most SMES have unpaid taxes and social charges • Most SMES are qualifief Category 3,4 and 5 at the consolidated database of the Central Bank . Acceptable categories are 1 and 2 • Lack of confidence about the procedures • Publicity failures • Lack of managerial skills (concept of business plan, strategic matrix, market research)