SBA Fact Sheet 2013 BELGIUM. Enterprise and Industry. In a nutshell. About the SBA Fact Sheets 1

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1 EN Enterprise and Industry SBA Fact Sheet 2013 BELGIUM In a nutshell Belgium s SMEs have weathered the crisis much better than those of most other Member States. Employment in Belgian SMEs increased by 4 % between 2008 and 2012, while in many other Member States this period was associated with considerable job losses in SMEs. While the outlook for 2013 and beyond still looks moderately optimistic, some risks have appeared, including due to the recent string of closures of large industrial plants. SMEoriented policies are therefore more important than ever. Therefore, Belgium s SBA policy profile is mixed. Belgium s performance is above the EU average in about as many policy areas as it is below. Innovation is the strength of Belgian SMEs, while the lack of dynamism in entrepreneurship is its weakness. Despite a number of prominent policy measures being introduced in the past few years, most notably in the areas of entrepreneurship, access to finance, internationalisation, environment and innovation, these measures appear to be insufficient to keep Belgium above the European average, as other EU Member States are moving forward in many SBA areas. In some, including public administration and internationalisation, elevated costs of doing business were identified as a problem. The measures in selected SBA areas implemented over the past 12 months are certainly positive, yet Belgium has to continue making decisive reforms in all policy areas.. About the SBA Fact Sheets 1 The Small Business Act for Europe (SBA) is the EU s flagship policy initiative to support small and medium-sized enterprises (SMEs). It comprises a set of policy measures organised around ten principles ranging from entrepreneurship and responsive administration to internationalisation. In order to improve the governance of the SBA, the 2011 review of the Act called for improved monitoring. The SBA Fact Sheets are produced annually and aim to improve understanding of recent trends and national policies affecting SMEs. Since 2011, each EU Member State has appointed a high-ranking government official as its national SME envoy. SME envoys spearhead the implementation of the SBA agenda in their countries.

2 1. SMEs in Belgium basic figures Number of enterprises Number of employees Value added Belgium EU27 Belgium EU27 Belgium EU27 Number Share Share Number Share Share Billion Share Share Micro 480, % 92.1% 841, % 28.7% % 21.1% Small 26, % 6.6% 523, % 20.4% % 18.3% Medium-sized 4, % 1.1% 415, % 17.3% % 18.3% SMEs 511, % 99.8% 1,780, % 66.5% % 57.6% Large % 0.2% 802, % 33.5% % 42.4% Total 512, % 100.0% 2,583, % 100.0% % 100.0% These are estimates for 2012 produced by London Economics, based on figures from the Structural Business Statistics Database (Eurostat). The data cover the 'business economy', which includes industry, construction, trade, and services (NACE Rev. 2 sections B to J, L, M and N), but not enterprises in agriculture, forestry and fisheries and the largely non-market service sectors such as education and health. The advantage of using Eurostat data is that the statistics are harmonised and comparable across countries. The disadvantage is that for some countries the data may be different from those published by national authorities. The structure of Belgium s SME sector closely resembles that of the EU as a whole. This is reflected in, for example, the similar distribution of SMEs and large companies in the business economy. About two-thirds of all jobs in the Belgian business economy are generated by SMEs, as in the EU overall. Their relative contribution to value added is lower, but still above the EU average. The breakdown of the Belgian SME sector in terms of sizes is broadly similar to that of the EU as a whole. Belgium, together with the Netherlands, is the logistical centre of Europe. The transport and wholesale and retail trade sectors are therefore of special interest. In both, SMEs have a significantly higher share than in the rest of the EU. In the wholesale and retail trade sector, they represent about three-quarters of value added and provide 75-80% of jobs, whereas the EU average is roughly two-thirds in both cases. SMEs also dominate the transport sector, generating around 60 % of value added, compared to about 45 % on average in the EU. Outside of these two sectors, however, the distribution of SMEs and large companies is relatively similar to the distribution in the rest of the EU. Belgian SMEs have so far weathered the crisis relatively well. They have even been outperforming their EU peers in many areas since Although they too experienced a decrease in the number of SMEs, employment and gross value-added, the surges before and after the downturn made Belgian SMEs better off now than they were before the crisis. For instance, SME employment levels were estimated to be 4 % higher in 2012 than in Very few other Member States have a similarly positive development. The economic crisis had a stronger negative impact on Large Enterprises (LEs) than on SMEs. Between 2008 and 2012, LEs just managed to hold their level of value added, while SMEs showed positive growth (more than 7%) over the entire period. The development in the real estate sector was particularly significant. The data show a high growth rate in the number of enterprises, number of employees and value added between 2008 and One reason for this positive trend is that the downward correction of residential real estate prices turned out less significant than in other European countries due to the economic crisis.. The outlook for Belgian SMEs in 2013 and beyond is still moderately optimistic. However, some risks have recently appeared, most notably due to the wave of closures or downsizing of larger plants (such as the Ford factory in Genk and Caterpillar in Charleroi), which may have an impact on smaller suppliers, especially at regional level. All three Belgian regions showed considerable resilience to the economic crisis. The net number of businesses continued to grow in Starting with almost businesses at the beginning of 2012 and ending with just over at the end of 2012, the Brussels Capital Region had the highest growth rate, of about 3 %. Flanders and Wallonia both had positive growth rates of 2 %. At the beginning of 2012, about businesses were registered in Flanders, reaching about at the end of the year. Wallonia accounted for slightly more than businesses at the beginning of 2012, and increased to about active businesses by the end of the year. The growth rate of businesses in Belgium was slightly above 2 % in The distribution of SMEs across regions is very heterogeneous. About 60 % of all SMEs are located in Flanders (which corresponds to its share of the population). Wallonia has 28 % SMEs and the Brussels Capital Region has 11 %. SBA Fact Sheet 2013 Belgium 2

3 SME trends in Belgium 2 SBA Fact Sheet 2013 Belgium 3

4 2. Belgium s SBA profile Belgium is a federal state and the federal government coordinates SBA development in policies related to market surveillance, competition, regulation, statistics and international competitiveness. In line with the federal structure, most other competences are transferred to the administrations of the Brussels Capital Region, Flanders and Wallonia. Belgium has adopted specific strategies for implementing the SBA at federal and regional levels. The federal and regional SME envoys are active and are achieving good results in implementing the SBA, especially in Wallonia. All regions are actively promoting SME support policies at all levels, and the administrations are engaged in SBA development. Belgium has a mixed SBA profile. Belgium performed well in a number of policy areas, including skills & innovation, environment, second chance and state aid & public procurement. Belgium figures below the EU average in three areas entrepreneurship, think small first and responsive administration. Its profile has worsened slightly compared to previous years due to more significant recent progress in other Member States than in Belgium, which affected the EU average. Belgium s relative performance deteriorated in several key areas, including access to finance, in which it was at the top end of the EU average last year, and responsive administration, in which it was within the average. Still, Belgium has some traditional strengths on which it can build, especially in skills & innovation, even though entrepreneurship remains problematic. Against this background, it is encouraging that entrepreneurship, environment, access to finance, skills & innovation and internationalisation are the areas in which a major effort has recently been made by the Belgian authorities. As concerns policy developments, in 2012 and the first trimester of 2013 Belgium announced or implemented policy measures in six out of ten SBA areas. 3 No measures were put in place in the areas of think small first, responsive administration, state aid & public procurement, or in the single market. This is especially significant since think small first and responsive administration are two areas in which Belgium s performance is rather weak compared to the EU s overall. SBA Fact Sheet 2013 Belgium 4

5 Belgium s SBA performance: Status quo and development ( ) 4 SBA Fact Sheet 2013 Belgium 5

6 I. Entrepreneurship Entrepreneurship remains a challenging policy area for Belgium. As in recent years, Belgium is still below the EU average. Six out of nine individual entrepreneurship indicators illustrate this disappointing performance. Only the proportion of opportunity-driven entrepreneurs remains above the EU average (54 % to 49 % for the EU). Also, Belgian schools support for entrepreneurial attitudes is slightly higher than in the rest of the EU, and the same holds true for the media attention given to entrepreneurship (54 % in Belgium, 50 % in the EU). While the overall situation remains challenging, there is progress, too. The trend for practically all indicators that measure entrepreneurial activity has been positive over the past 4-5 years. The entrepreneurship rate soared from 7 % in 2009 to 16 % in Likewise, the proportion of people who considered an entrepreneurial career as a feasible option doubled in the same period, to 24 %. Only the proportion of opportunitydriven entrepreneurs decreased, though to a level that remains high. Although this trend is natural in times of crisis, it may be interpreted as a positive signal heralding that entrepreneurial spirit can flourish in a large section of the population, if supported by various policy initiatives as in recent years.. On the policy side, significant initiatives were launched in 2012 and the first quarter of 2013 in each of the three regions. In the Brussels Capital Region, the Boost Your Talent project supports the development of an entrepreneurial spirit amongst pupils and students. Also, the new Entreprendre à Bruxelles website is the reference site for Brussels-based starters and entrepreneurs who are looking for information on setting up or developing a business in the Brussels Capital Region. In Flanders, the Action Plan Entrepreneurship Education aims to develop a more integrated policy, involving all related policy domains (economy, science and innovation; social economy; education and training). In the Walloon Region, the What has to be known about the World of Enterprise project raises awareness of the importance of developing entrepreneurship in schools among future teachers. Also, the Walloon SMEs Parliament is considered best practise at European level (see the example at the end of this document). SBA Fact Sheet 2013 Belgium 6

7 II. Second chance Belgium continues to rank above average in this area. It remains much easier, i.e. faster and cheaper, to close down a business in Belgium than it is in the average EU country. In Belgium, it is possible to wind down a bankrupt company within one year (the EU average is two years), and at only 4 % of the debtor s estate as compared to more than 10 % in the rest of the EU. Also, society s attitude towards honest but unsuccessful entrepreneurs has improved. Previously, only 72 % supported second-chance entrepreneurs. This year, this figure reached 81 %, almost the EU-average (82 %). As with the entrepreneurship performance described in the previous section, this may show that the general conditions for entrepreneurship are improving. There were only a limited number of new significant measures put in place in this area in 2012 and the first three months of In essence, Wallonia and Flanders both implemented a measure similar to one that was first developed in the Brussels Capital Region and already highlighted as best practice in last year s fact sheet. It is called Call for Projects for Bankruptcy prevention in Flanders and the Centre wallon pour enterprises en difficulté in the Wallonia. III. Think Small First Belgium s performance fell below the EU average in this area since last year. This is mainly due to one indicator: the burden of government regulation. Otherwise, Belgium s score remained more or less stable. However, as conditions improved in the rest of the EU, Belgium s relative position fell even further. Belgium performed on par with the EU average in the other two indicators in this section, the communication and simplification of rules and procedures and the licences and permits system. As for policy measures, in 2012 and the first quarter of 2013 the federal government launched the action plan on administrative simplification 2012/2015, aiming to reduce the administrative burden by 30 % by A progress report is issued every semester. SBA Fact Sheet 2013 Belgium 7

8 IV. Responsive administration In this area, Belgium s relative standing vis-à-vis its EU peers worsened, as Belgium is currently below the EUaverage. As in the previous section, this was not necessarily caused by conditions worsening in Belgium, but rather by improvement in other Member States. In fact, for many indicators in this section, the EU average has been improving over the past years, while the Belgian average stagnated. However, there are still a number of areas in which Belgium performs better than most of its EU peers. This is the case for the relatively short start-up time and for the relatively easy handling of taxes, expressed in the number of tax payments per year (11 in Belgium, an average of 12 in the rest of the EU) and the time required to comply with them (156 hours in Belgium, 193 hours in the EU). Also, the costs of enforcing contracts are still lower in Belgium than in the EU in general and licensing procedures are slightly less complex. These advantages are, however, outweighed by some considerable handicaps. The most serious issue is the cost and time it takes to transfer property in Belgium. The costs are almost three times higher than elsewhere in the EU (12.7 % of the property s value in Belgium, 4.6 % in the EU). This is the worst performance in the entire EU. Other costs, such as those related to starting a business and the required paid-in minimum capital, are also higher than average, but the difference isn t as high as for property transactions.. Given that in 2012 and the first three months of 2013 there were no new significant policy measures announced or implemented in this area, it remains unlikely that Belgium will be able to reverse these unfavourable trends anytime soon. SBA Fact Sheet 2013 Belgium 8

9 V. State aid & public procurement Belgium s performance in state aid & public procurement has improved and is now above the EU average. As in other SBA areas, this change is not mainly due to a change in Belgium s performance. By and large, the situation in Belgium has not changed much over the past years, it is the situation in the EU overall that has changed. There is one exception to this: the proportion of state aid targeting SMEs has increased further from an already high level of 12 % to 16 %. This is the third-highest share in the entire EU, after the UK (18 %) and Italy (17 %). The EU average is 4 %. Other indicators are in line with the EU average, with the exception of e-procurement. With only 9 out of 100 SMEs using e-procurement, Belgium trails behind the rest of the EU (at 13 %). A technical factor that might have worked in Belgium s favour here (but works to its disadvantage in access to finance) is the fact that the two indicators that measure the degree to which SMEs are considered in EU structural funds and in which Belgium has relatively low scores have moved to the access to finance section (VI). No new significant policy measures were announced or implemented in this area in 2012 and the first three months of SBA Fact Sheet 2013 Belgium 9

10 VI. Access to finance Belgium s ranking fell back to the EU-average this year, for several reasons. For one, there is the technical factor mentioned in the previous section including the indicators that measure the share of structural funds attributed to SMEs has weighed down Belgium s overall position in this section. But there is also the absolute deterioration in some areas of SME finance there are now significantly more SMEs that report rejected loan applications and loan offers at unacceptable conditions (10 % last year, 18 % now). There are also more SMEs that report greater difficulties in getting access to public support programmes (14 % last year, 17 % now). Venture capital investments halved as compared to last year and the proportion of lost payments increased slightly. Other indicators, such as banks willingness to provide loans and the amount of time it takes to get the funding, remained stable. Overall, the deterioration wasn t dramatic for any of the indicators, but financing has become generally more difficult for SMEs. The three regional administrations addressed this with a number of new measures in 2012 and the first three months of In Wallonia, the so-called SOCAMUT instrument which automatically provides a mix of bank guarantees and co-funding is among the measures designed to support start-ups and micro-enterprises.. The SOFI Fund in Flanders, with a budget of EUR 10 million, focuses specifically on spin-offs from research activities. In addition, a governmental guarantee for companies, part of the Flemish Bank sector plan, makes it easier to open credit lines with banks in Flanders. In the Brussels Capital Region, the Regional Innovation Plan puts in place a series of measures in favour of SMEs. SBA Fact Sheet 2013 Belgium 10

11 VII. Single market Evaluating Belgium s performance in this area is more difficult than for some of the other indicators, especially as data for the numbers of SMEs exporting and importing are missing. The remaining indicators show hardly any change as compared to last year. There is still a chronic delay in transposing EU directives in general, and an even longer delay for Single Market directives. However, none of them is overdue by more than 2 years. No new significant policy measures were announced or implemented in this area in 2012 and the first three months of VIII. Skills and innovation Overall, Belgium scores well above the EU average in this area. It is well ahead of the EU as a whole on practically all indicators linked to innovation, and is usually included in the five best-performing countries. The situation is different for training, for which Belgium is below the EU average. Only 15 % of Belgian SMEs provide training to their employees, while 24 % of SMEs in the EU as a whole do and in some countries, such as Germany, this figure reaches 62 %. The figures on using electronic means indicators are more favourable for Belgium. Belgian SMEs rank first in the EU in terms of online purchasing (50 % in Belgium, 16% in the EU). More than 1 in 5 SMEs (22 %) sell their products via the internet (13 % in the EU). This clearly demonstrates the strengths of the Belgian SME sector. The training deficiencies are a concern, however. SBA Fact Sheet 2013 Belgium 11

12 There were only a few new initiatives in this area in 2012 and the first quarter of In Flanders, a new association, the I-Cleantech Flanders, was launched and brings together enterprises and other stakeholders such as universities to work together on innovative clean technology solutions. In Wallonia, the focus was on supporting experimental development activities relating to new prototypes during the initial phases, before fully commercialising new technologies. The new measure is complementary to measures that already support innovation in Wallonia. The Brussels Capital Region reinforced the National Contact Point, and supported participation in EU programmes and development of international relationships through EU consortia. All measures focused on innovation. There were no measures that addressed training. IX. Environment Belgium scores above average in this area. Last year s results still hold true this year. The only indicator that exceeds the EU-average by a significant margin is the percentage of SMEs that have benefited from public support to increase their resource efficiency 14 % against an EU average of 9 %. The other indicators are all within the 0.5 standard deviation range, although one, the share of SMEs that generate at least half of their turnover through green products or services, is close to the limit (on the positive side). The three Regions are paying more and more attention to this area and are adopting, implementing and announcing many measures. The Brussels Capital Region has adopted several green measures, of which the most significant is the so-called Brussels Sustainable Economy Academy, which provides six months of intensive coaching to develop green and sustainable start-up projects while stimulating green/sustainable entrepreneurship. Wallonia launched two innovative programmes, both run by universities. One awards certificates in strategic management and one concerns re-used biomass. Through these, Wallonia is promoting optimal energy consumption and low-carbon techniques. Flanders has reformed its ecology subsidy, which now focuses on projects that develop innovative and integrated solutions for environmental and energy problems at company level (ecology subsidy-plus system). SBA Fact Sheet 2013 Belgium 12

13 X. Internationalisation Overall, Belgium ranks within the EU average. In terms of the time required for export and import, Belgium scores slightly above average. This is helped by its geographical location and well-developed infrastructure. The bureaucratic burden related to trade, expressed in the number of documents required for export and import, is more or less the same as in the rest of the EU. The main challenge in this area is the cost of trading. Export costs are approximately 20 % higher than the EU-average (USD 1230 in Belgium, USD 1004 in the EU). For imports, the difference is even higher, at 30 % (USD 1400 in Belgium, USD 1072 in the EU). These costs are surprisingly high given Belgium s coastal location and vicinity to many economic centres in north-west Europe. Belgium s trading costs have, however, decreased faster than they have in the rest of the EU over the past 12 months. While this is encouraging, the costs are still high and are a risk to Belgian SMEs, in particular to those with export potential. Despite these problems, there were relatively few new significant measures in 2012 and the first quarter of 2013 in this area. The Walloon region was most active and launched several new initiatives. These included the PORTAGE project, which is a piggyback programme that makes it easier for SMEs to establish themselves outside the EU by making it possible for them to benefit from the services of other Walloon companies. A number of awareness-raising measures were also put in place, including one directed specifically at Brazil as a target market for exports, as well as the Boost camps export programmes. In Flanders, at the beginning of 2012 Flanders Investment&Trade (FIT) modified its decree on subsidies for promoting international entrepreneurship to better respond to the needs of start-up exporters. Companies can now benefit from a higher subsidy percentage (60 % instead of 50 %) for their first three subsidy requests. SBA Fact Sheet 2013 Belgium 13

14 3. Good practice Some examples of good practice from Belgium are featured below in order to show what governments can do to support SMEs: BRUSSELS Exportbru Exportbru can provide risk capital (minority shareholding) or loan facilities in order to support an increase in export activity or to finance investment projects abroad. Exportbru s objectives are to create added value for the Brussels- Capital Region and to enable SMEs to access export markets. Exportbru s financial resources amount to EUR 15 million (EUR 10 million equity + a EUR 5 million loan facility). More information: WALLONIA The Walloon SMEs Parliament (European good practice) The goal of the Walloon SMEs Parliament is to directly consult entrepreneurs about their needs (finance, innovation, internationalisation, entrepreneurship) and SBA implementation in Wallonia. The project has been recognised as best practice at European level, for the monitoring, reporting and stakeholder consultation it has put in place. For monitoring, an SBA Steering Committee was created to foster cooperation between Ministerial representatives and public stakeholders on the ten SBA principles (civil servants, agencies, etc.). For reporting, the SME Envoy publishes an annual report about the implementation of the 10 SBA principles in the region. This report analyses all the relevant European Commission recommendations and compares them to what is already in place in Wallonia. Preparation of the report involves all Walloon stakeholders and is done through the SBA Steering Committee. The data gathered for the report are also used for the Commission s technical visit on industry and innovation, the National Reform Plan, and the SBA factsheet. The analysis is sent to the European Commission and to all Walloon stakeholders who take part in the process. Stakeholder consultation is an integral part of the process and includes: a. The Walloon Economic and Social Committee (CESW), which is the central body for dialogue and brings together employers delegates and unions. Once a year, the Walloon SME Envoy presents his report to the CESW. b. The Parliament, created in 2011 and composed of 4 committees, which holds one plenary session of 300 entrepreneurs, the minister in charge of SMEs and the European SME Envoy. c. The High-Level Group, composed of employers representatives, academics, civil servants, and union representatives through the CESW, and created by the minister in charge of the economy and SMEs to help identify potential areas for action. FLANDERS LED-netwerk 2012 saw the creation of the easy-entry networks of expertise ( LED-netwerk ) all over Flanders. These networks bring SMEs closer to the expertise available in higher education institutes. This is a win-win situation for SMEs and higher education, as knowledge is transferred to where it is needed in the economy. The concept of an easy-entry network of expertise was first tested in West Flanders (as a pilot project partly subsidised by the ERDF) and in 2012 Enterprise Flanders launched a call to introduce the concept across Flanders. FEDERAL ADMINISTRATION The action plan on administrative simplification 2012/2015 aims to reduce the administrative burden by 30 % by The plan consists of 303 projects, of which 87 (29 %) were implemented in 2012 and includes a half yearly progress report. Many business organisations recognise the federal administration s work in this area. Important remarks The Small Business Act (SBA) Fact Sheets are produced by DG Enterprise as part of the SME Performance Review (SPR), which is its main vehicle for economic analysis of SME issues. They combine the latest available statistical and policy information for the 28 EU Member States and nine non-eu countries which also contribute to the EU s Competitiveness and Innovation Framework Programme (CIP). Produced annually, the Fact Sheets help to organise the available information to facilitate SME policy assessments and monitor SBA implementation. They take stock and record SBA Fact Sheet 2013 Belgium 14

15 progress. They are not an assessment of Member States policies but should be regarded as an additional source of information designed to improve evidence-based policy-making. For example, the Fact Sheets cite only those policy measures deemed relevant by local SME policy experts. They do not, and cannot, reflect all measures taken by the government over the reference period. More policy information can be found on a database accessible from the SPR website. Please also see the end notes overleaf. For more information SME Performance Review: Small Business Act: The European Small Business Portal: [email protected] 1 The SBA Fact Sheets 2013 benefited substantially from input from the European Commission s Joint Research Centre (JRC) in Ispra, Italy. The JRC made major improvements to the methodological approach, statistical work on the dataset and the visual presentation of the data. 2 The quadrant chart combines two sets of information: first, it shows the status quo performance based on data for the latest available years. This information is plotted along the X-axis measured in standard deviations of the simple, nonweighted arithmetical average for EU-27. The vertical corridor marked by the dotted lines defines the EU average. Secondly, it reveals progress over time, i.e. the average annual growth rates for The growth rates are measured against the individual indicators which make up the SBA area averages. Hence, the location of a particular SBA area average in any of the four quadrants provides information not only about where the country is located in this SBA area relative to the rest of the EU at a given point in time, but also about the extent of progress made in The policy measures presented in this SBA Fact Sheet show only a selection of the measures taken by the government in 2012 and the first quarter of The selection was made by the SME policy country expert contracted by CARSA Spain (the Directorate-General for Enterprise and Industry lead contractor for the 2013 Fact Sheets). The experts were asked to only select the measures that, in their view, were the most important, i.e. were expected to have the highest impact in the specific SBA area. The complete range of measures that the experts compiled in the framework of producing this year s Fact Sheets will be published as a policy database on the DG ENTR website, alongside the Fact Sheets. 4 The quadrant chart combines two sets of information: first, it shows the status quo performance based on data for the latest available years. This information is plotted along the X-axis measured in standard deviations of the simple, nonweighted arithmetical average for EU-27. The vertical corridor marked by the dotted lines defines the EU average. Secondly, it reveals progress over time, i.e. the average annual growth rates for The growth rates are measured against the individual indicators which make up the SBA area averages. Hence, the location of a particular SBA area average in any of the four quadrants provides information not only about where the country is located in this SBA area relative to the rest of the EU at a given point in time, but also about the extent of progress made in SBA Fact Sheet 2013 Belgium 15

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