PROGRAMME OF MEASURES FOR PROMOTING ENTREPRENEURSHIP AND COMPETITIVENESS

Transcription

1 REPUBLIKA SLOVENIJA MINISTRSTVO ZA GOSPODARSTVO REPUBLIC OF SLOVENIA MINISTRY OF THE ECONOMY PROGRAMME OF MEASURES FOR PROMOTING ENTREPRENEURSHIP AND COMPETITIVENESS Ljubljana, 6. March

2 TABLE OF CONTENTS FOREWORD... 4 BASIC PROGRAMMING DOCUMENTS... 5 SUMMARY OF THE PROGRAMME OF MEASURES... 6 GENERAL PRINCIPLES FOR GRANTING STATE AID PROMOTING ENTREPRENEURSHIP AND ENTREPRENEUR-FRIENDLY ENVIRONMENT PROMOTING ENTREPRENEURSHIP AND EDUCATION FOR ENTREPRENEURSHIP SUPPORT TO VEM ENTRY POINTS VOUCHER CONSULTING AND TRAINING Voucher consulting Voucher training PROMOTING ENTREPRENEURSHIP IN SPECIFIC TARGET GROUPS KNOWLEDGE FOR BUSINESS VOCATIONAL EDUCATION R&D FOR BUSINESS Junior basic researchers in enterprises Improved mobility of highly-skilled people in the business sector Research & development activities of interdisciplinary R&D groups in enterprises R&D AND INNOVATIONS IN COMPANIES ECONOMIC DEVELOPMENT LOGISTICS PLATFORMS (INFRASTRUCTURE) Promoting investments in business-development-logistics platforms Start-up capital for technology parks, business incubators and university incubators R&D IN BUSINESS Promoting research & development activities in enterprises Promoting technological investments Promoting process and organisational innovations INNOVATIONS Slovene Competitiveness and Innovations Centre Promoting establishing and work of innovative groups Incentives to SMEs for acquisition of industrial property rights Start-up capital for new innovative companies Special incentives for early-stage innovative companies PROMOTING SMALL AND MEDIUM-SIZED ENTERPRISES WITH EQUITY AND DEBT INSTRUMENTS PROMOTING FAST-GROWING AND INNOVATIVE SMALL AND MEDIUM- SIZED COMPANIES WITH EQUITY INSTRUMENTS

3 4.2. PROMOTING INVESTMENTS OF SMALL AND MEDIUM-SIZED ENTERPRISES WITH DEBT INSTRUMENTS ENCLOSURES

4 Foreword Slovenia is at an exceptional turning point of economic development. It is also envisaged in a number of strategic documents (aligned with the national documents and the renewed Lisbon strategy) adopted by the Government of the Republic of Slovenia, for implementation of which the Government firmly stands. These documents are a great challenge not only to the Government but to the entire Slovene economy as well as to all citizens of the Republic of Slovenia. "Bringing Slovenia in the group of the most advanced member states of the European Union" is not the only motto for survival on global markets. A number of other economic superpowers also dictate conditions for survival on global markets. Therefore certain measures from other most advanced nations of the world, adapted to Slovene specifics of course, were included in the Programme for Promoting Entrepreneurship and Competitiveness in addition to Slovene ideas and European good practices. Lack of entrepreneurial culture, inefficient and deficient supporting environment, inadequate and incomplete infrastructure, not enough investments in R&D and related activities, poor links between business and science, shortage of highly-skilled human resources in companies, lack of support and undeveloped market in innovations and, last but not least, too few favourable and special financial sources, make the four basic pillars of the Programme necessary, namely: - Promoting entrepreneurship and entrepreneur-friendly environment; - Knowledge for business; - R&D and innovations in companies; - Promoting small and medium-sized enterprises with equity and debt instruments. The numerous measures stemming from individual strategic documents specify what should be done to enhance competitiveness of the Slovene economy and entrepreneurship as its integral part. The Programme for Promoting Entrepreneurship and Competitiveness speaks on how to do it, following clearly defined objectives and guidelines. Time to turn words into action! Andrej Vizjak, MSc Minister of the Economy 4

5 Basic programming documents The contents of the Programme of Measures for Promoting Entrepreneurship and Competitiveness (hereinafter: the Programme of Measures) are derived from four strategic documents in the field of economic policy: Slovenia s Development Strategy, adopted by the Government on 23 June 2005, Reform Programme for achieving the Lisbon Strategy Goals (National Action Plan), prepared in 2005, the Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia, adopted by the Government on 3 November 2005, and the National Research & Development Programme The latter was approved by the Government on 15 September The Programme of Measures thus represents the action document for implementation of measures required by superior documents in which it is also based on international comparisons and research on entrepreneurial and innovative activities. Presentation of implementation of individual measures from the listed strategic documents is shown in the table below. Table U - 1: Connection between measures for promoting entrepreneurship and competitiveness and economic policy strategic documents of Slovenia SDS 1 NRDP 2 Reforms 3 NAP 4 Promoting entrepreneurship and education for entrepreneurship X X X Support to VEM entry points X X X Voucher consulting and training X Support to Euro info centres network X X X Promoting entrepreneurship in specific target groups X X Vocational training and education X X R&D for business X X X X Economic development logistics platforms X X X X R&D in business X X X X Innovations X X X X Promoting small and medium-sized enterprises with equity instruments X X X X Promoting small and medium-sized enterprises with debt instruments X X 1 Slovenia s Development Strategy 2 National Research & Development Programme Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia 4 National Action Plan for the Lisbon Strategy As evident from the table above, the measures are on average based on three documents simultaneously, which is understandable as these documents are somewhat similar and even include direct cross-references. However, the measures are not only based on these documents, each one of them also stems directly from issues at hand. The Programme of Measures will be constantly monitored and evaluated, which will due to measuring of effectiveness of individual measures provide for flexibility in terms of appropriate improvements should they be deemed necessary. 5

6 Summary of the Programme of Measures The Programme of Measures is based on four basic pillars (sections) interconnected to form the whole document: 1. Promoting entrepreneurship and entrepreneur-friendly environment; 2. Knowledge for business; 3. R&D and innovations in companies; 4. Promoting small and medium-sized enterprises with equity and debt instruments. Measures included in the first section are aimed at promoting entrepreneurship and education for entrepreneurship for the purpose of improving the entrepreneurial culture in Slovenia and enhance knowledge and use of support services for potential entrepreneurs and already established companies. An important element of measures is development of an efficient and transparent supporting environment. Measures within the framework of promoting the supporting environment for development of entrepreneurship will be linked by an integrated information system enabling preparation of a database for all measures and thus for follow-up and development of individual participants in the programmes/projects. This will provide for synergy between individual measures and follow-up of all programmes for the purpose of achieving common goals. Measures concerning the supporting environment are divided into support to the "One-Stop-Shop" system (hereinafter: VEM), voucher consulting and training and specific target groups (women, entrepreneurs in rural areas, social entrepreneurship). The second section is aimed at strengthening of internal capability of companies for more intensive, knowledge-based development, notably in the technological sector, which will enable the Slovene economy, and SMEs in particular, to manage increasingly rapid technological progress as the main element for improving competitiveness at the global level. Measures of the second section are aimed at strengthening human resources for needs of the economy by stimulating the share of highly educated people in the economy, priority given to development of knowledge in natural sciences and mathematics, by encouraging international mobility of human resources as well as promoting mobility of R&D staff from knowledge institutions to businesses and from big companies to small and medium-sized enterprises. Effective implementation of these measures depends on joint activities and co-operation with other competent ministries and implementing institutions. The third section is aimed at enhanced investments in research & development and economic infrastructure of the private as well as the public sector. Measures supporting R&D and innovations in the commercial sector are aimed at establishing an efficient supporting environment, providing for adequate infrastructure at the local and the national level, and strengthening financial resources for R&D and innovations in the Slovene economy. Measures for planned improvement in quality of operations of Slovene enterprises are aimed at promotion and introduction of the European model of excellence in Slovene enterprises (increased number of companies using self-evaluation in line with the model and increased number of top Slovene companies receiving the national and European quality awards). The fourth section is aimed at financial support to small and medium-sized enterprises with equity and debt instruments. Venture capital will be provided through venture capital funds as a form of equity financing within the framework of public-private partnership. Measures of the fourth section are also aimed at assistance by warranties and debt instruments, such as guarantees, loans and leasing. 6

7 General principles for granting state aid State aid includes direct financing from the government budget granted to companies for eliminating the established structural imbalances and represents urgent state aid for implementing the set long-term economic development goals. It is intended for financing and co-financing programmes of enterprises engaged in production of goods and services for the market as specified in Article 87 of the Treaty establishing the European Community (Official Gazette of the RS, international treaties 03/04). Enterprises in the entire territory of the Republic of Slovenia are entitled to regional aid (pursuant to Article 3 of the Decree on the Allocation of Regional State Aid). The first criteria in assessing granting of state aid is the criteria of urgency. Aid can be granted if it represents encouragement for project implementation or is urgently necessary for implementation. The applicant must prove that the measure or investment cannot be implemented without state aid. State aid can only be granted if the applicant submitted the application before the project implementation began. The aid from this programme cannot be granted to companies, which are: In voluntary settlement, bankruptcy or liquidation proceedings; Companies in trouble receiving state aid under a special programme for assistance and restructuring. In accordance with Articles 1 and 4 of the Commission Regulation (EC) No 70/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises, the programme is not used for activities related to production, processing and marketing of products specified in Annex I to the Treaty. In accordance with the guidelines on regional state aid (2006/C 54/08) of 4 March 2006, the programme is not applicable to the following sectors: fishery, shipbuilding, coalmining, agricultural production except processing and marketing of agricultural products however only to the extent set by guidelines for state aid in the agricultural sector, steel industry, and synthetic fibres industry. The programme takes into account the rule on cumulation of state aid meaning that the total amount of all development incentives received by individual companies from all public sources including aid in line with the de minimis rule cannot exceed the permitted total amount of aid by purpose for which control instruments and monitoring of compliance with the cumulation rule have been established. Group exceptions within the Programme of Measures are as follows: - State aid to small and medium sized enterprises (Commission Regulations (EC) No 70/2001 of 12 January 2001 and No 364/2004 of 25 February 2004 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises); - State aid for training (Commission regulation (EC) No 68/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to training aid); 7

8 - National regional investment aid (Commission regulation (EC) No 1628/2006 of 24 October 2006 on the application of Articles 87 and 88 of the Treaty to national regional investment aid). The enterprise beneficiary for the purpose of the Regulation shall be enterprises registered under the Companies Act, such as: Partnerships (unlimited liability companies, limited partnerships and silent partnerships); Equity companies (limited liability companies, public limited companies and a limited partnerships with share capital); Sole proprietorships (natural persons) independently performing a gainful employment as their exclusive business activity. Beneficiaries for individual purposes can also be other legal entities if so specifically set forth in individual measures. Criteria from Commission Regulations (EC) No 70/2001 of 12 January 2001 and No 364/2004 of 25 February 2004 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises shall be used for definition of micro, small and medium-sized enterprises. Detailed criteria and conditions will be set forth in individual calls for proposal or in a different manner in accordance with the applicable legislation. The programme implementation will start on 1 January 2007 (except for measures Junior basic researchers in enterprises, Research & development activities of interdisciplinary R&D groups in enterprises, Promoting research & development activities in enterprises, 3.2.3a Process and organisational innovations, Promoting establishment and work of innovative groups, Encouraging SMEs to obtain industrial property rights, 4.1 Promoting fast-growing and innovative SMEs with equity instruments applicable after approval of schemes by the European Commission) and shall apply until 31 December

9 1. Promoting entrepreneurship and entrepreneur-friendly environment Defining the challenge According to survey of the Global Entrepreneurship Monitor (GEM) Slovenia 2005, early entrepreneurial activities included 4.4% of adult population (2.6% in 2004 the lowest number in Europe), resulting in 17 th place among 20 European countries. Slovenia is ranked 31 st by entrepreneurial activity among 35 GEM countries. Every 26 th adult decides to enter entrepreneurship because of an opportunity, and each 204 th because of necessity so that the share of those becoming entrepreneurs because of an opportunity and not because of necessity has increased compared to According to the GEM estimate, 55,000 emerging and new entrepreneurs were in Slovenia in 2005 (the respective number in 2004 was ). 1 Slovenia has a satisfactory share of entrepreneurs with secondary school education but lacks those with higher education. The most active in entrepreneurship are men and women between 25 and 34 years old. Less than a tenth of men and 5.6% of women enter into entrepreneurship at that age. Established companies are found in larger proportion in older age groups. In the age group an average of 3.75% of adults in Slovenia are active owners or co-owners of an enterprise, while the respective number in the age group reaches 10.58%. Thus, an average of every 9 th Slovene in this age group has an enterprise older than three and a half years. 2 According to the Strategy of Economic Development of Slovenia , the main factors of international competitiveness today are created factors and not natural resources, and entrepreneurship is at the top of created factors. Entrepreneurship is not a value in Slovenia as is the case in certain other countries (e.g. the USA) and therefore the Slovenia's challenge is to improve the entrepreneurial culture and ensure that entrepreneurship gets its place among important values. 3 In 2004, the proportion of adults in Slovenia planning to establish a new company or having one less than three and a half years was a low 2.6%, however the share rose to 4.4% in An important indicator is also the organisational mortality index specifying how many newly established enterprises are required for survival of a single enterprise. The organisational mortality index for Slovene companies was 2.72 in 2004 and improved to 2.14 in The supporting environment for development of entrepreneurship has only started to develop during the transition in the nineties of the previous century. Establishment of a market banking system, opening of the economy to international competition and entry in the European Union increased the need of enterprises for information, however the existing support institutions were unable to cater to all needs of businesses. Among others, the Small Business Development Centre (PCMG), the Small Business Development Fund of the Republic of Slovenia and the promoting network for small business were established in Global Entrepreneurship Monitor 2005, Entrepreneurship between wishes and reality 2 Global Entrepreneurship Monitor 2005, Entrepreneurship between wishes and reality 3 Strategy of Economic Development of Slovenia

10 Globalisation and the need for acquiring funds from the EU require a different, more in-depth approach to offering of information, advice and other support services to enterprises. Obstacles standing in the way of faster development of entrepreneurship should be eliminated for providing an effective supporting environment. The time burden and costs for entrepreneurs, resulting from administrative burdens of the state for establishing and for operation of enterprises should be reduced. Requirements of the state represent an administrative obstacle for entrepreneurs as well as for entrepreneurial ideas. According to the Slovene Entrepreneurial Observatory, administrative procedures represent one of the main obstacles to entrepreneurship. 4 Attempts are made within the EU to improve legislation in order to reduce the negative consequences of administration for the economy while at the same time trying to replace regulation with self-regulation. Cost reduction means lower costs for enterprises as well as the government. The Ministry of the Economy puts efforts, in line with guidelines of the European Union and the study on employment opportunities of the young, women and rural population, also to improve the environment for entrepreneurship of young families. According to the GEM data for 2005 Slovenia is in the 20 th place among 33 countries as regards attitude of women towards entrepreneurship (the value for Slovenia and the average value are 3.2 and 3.3, respectively). 5 According to data and methodology of the World Bank 6, it took 60 days to establish a company in Slovenia in 2005, and the registration cost was 10.1% of GNI (Gross National Income) per capita. The OECD average for establishing a company was 19.5 days and the cost was 6.8% of GNI per capita. The number of steps was also smaller in OECD countries: it took 9 steps for an entrepreneur to establish a company in Slovenia while the number of steps in OECD countries was Figure 1-1: Entrepreneurial activity by gender 9 % of population between 18 and 64 years of age Men W omen Start-up companies New companies Established companies Early-stage entrepreneurial activity Early-stage entrepreneurial activity - opportunity Early-stage entrepreneurial activity - necessity Source: GEM Slovene Entrepreneurial Observatory Global Entrepreneurship Monitor 2005, Entrepreneurship between wishes and reality 6 The calculation methodology is available at the World Bank's website: 7 Source: World Bank, Doing Business,

11 Data from the GEM research for 2005 show that men are prevalent in all categories of Slovene entrepreneurs, except in the category of entrepreneurs selecting entrepreneurship because of necessity. Men are also prevalent among owners of established companies (the men/women ratio equals 2.2:1). On average, nearly a tenth of men between 18 and 64 years old are owners or co-owners of an established enterprise, while the respective number for women is only 4%. Men also show greater early-stage entrepreneurial activity (measured with the TEA Total Early-stage Entrepreneurial Activity index) with the men/women ratio of 2:1. In comparison to previous years, inclusion of women in entrepreneurship has increased the ratio equalled 3.8:1 in Attitude towards women entrepreneurs is encouraging, however their number is too small. The biggest number of start-up and new entrepreneurs is in the age group slightly lees than 10% of men and 5.6% of women becomes entrepreneurs. Established companies are more common in the older age groups than start-up and new ones as much as 10.58% in the age group 9. Figure 1-2: TEA index by gender and age years years Age years years W omen Men years Early-stage Entrepreneurial Activity index Source: GEM 2005 Measures taken Measures of the Ministry of the Economy related to promoting entrepreneurship and education for entrepreneurship have been implemented on the basis of the Programme of Measures for Promoting Entrepreneurship and Competitiveness Permanent promotion of entrepreneurship aimed at improving the entrepreneurial culture in Slovenia has been implemented via the Small Business Development Centre and the Ministry of the Economy. In the period, the Ministry of the Economy promoted the Programme for Developing Entrepreneurship and Creativity of the Young implemented by the Small Business Development Centre (the present JAPTI). 8 Global Entrepreneurship Monitor 2005, Entrepreneurship between wishes and reality 9 Global Entrepreneurship Monitor 2005, Entrepreneurship between wishes and reality 11

12 Activities for establishing the VEM system (one-stop-shop) providing information and consulting services and the possibility of registration and other communications with the authorities have been initiated in While information and consulting services have been provided by the implementer PCMG (now JAPTI) since 2002, VEM started to operate in The result of operation of the entire VEM system is shorter time needed to register a sole proprietorship with all activities completed within a day or two. The VEM network, which provides services to entrepreneurs with qualified advisers at VEM points, was formally established in 2006 for the purpose of recognisability and promotion. Figure 1-3: Number of established, wound up and surviving companies established between 2000 and Number of companies Established Wound up within three years from establishing Number of companies surviving the first three years Source: Agency of the Republic of Slovenia for Public Legal Records and Services, 2005 Figure 1-4: Number of companies established between 2000 and 2002 which were wound up, presentation by the year of winding up 12

13 Number of companies W ound up in the first year from establishing W ound up in the second year from establishingn W ound up in the third year from establishing Source: Agency of the Republic of Slovenia for Public Legal Records and Services, 2005 The voucher consulting system was initiated as a pilot project in two regions in 2000 aimed at potential entrepreneurs and the established companies. The system was extended throughout Slovenia in The Public Agency for Entrepreneurship and Foreign Investment of the Republic of Slovenia (hereinafter: JAPTI) provides as the national co-ordinator of the programme for implementation of more than 37 programme implementers (entrepreneurship centres) at the local level. There were 2466 voucher consultancies to established companies in JAPTI (previously PCMG) has promoted, together with entrepreneurship centres at the local and regional level, entrepreneurship and self-employment of the young and women in urban and rural areas with programmes of consulting, education and promotion, and by financial aid. Figure 1-5: Number of SMEs included in the voucher consulting programme No. of SMEs Year Source: Ministry of the Economy 13

14 The programme of Women Entrepreneurs started via PCMG (now JAPTI) in Until 2005, more than 4,600 consulting services were provided through free-of-charge telephone consulting, and hits on the website offering information exceeded 44,000. Promotional activities included implementation or co-organisation of more than 140 international events (international meetings, conferences, presentations of the programme at the international level, meetings of female entrepreneurs, roundtables, etc.), organisation or co-organisation of presentation or participation of female entrepreneurs at the national and international level (fairs, conferences, roundtables and workshops), and implementation of a number of motivational workshops. They have also organised numerous local and regional meetings, attended by 2705 women, and training and consulting meetings with various topics resulting in 39 forms of self-employment (21 registrations of complementary activities on farms and 18 self-employments). Another programme implemented in the past years is the programme Entrepreneurship in Rural Areas being implemented since Ten rural development cores (hereinafter: the RDC) were established during that period. The RDC are non-profit institutions performing activities related to animation, consulting and training of people for entrepreneurship in rural areas. The animation programmes involved 4860 participants, training and consulting programmes included 3292 people, and 205 self-employments and other forms of employment were the result of this programme between 2003 and Future measures Activities of future measures are aimed at promoting entrepreneurship and education for entrepreneurship for the purpose of improving the entrepreneurial culture in Slovenia and enhancing the knowledge and use of support services for potential entrepreneurs and already established companies, and developing and efficient and transparent supporting environment. Measures within the framework of promoting the supporting environment for development of entrepreneurship will be linked by an integrated information system enabling preparation of a database for all measures and thus for follow-up and development of individual participants in the programmes/projects. This will provide for synergy between individual measures and follow-up of all programmes for the purpose of achieving common goals. Measures concerning the supporting environment are divided into support to the "One-Stop-Shop" system (hereinafter: VEM), voucher consulting and training and specific target groups (women, entrepreneurs in rural areas, social entrepreneurship). 14

15 1.1. Promoting entrepreneurship and education for entrepreneurship Past activities related to promoting entrepreneurship, both internal and individual, were foremost implemented partially and not at the national level. This also dictates the measures by which we will include the largest possible proportion of people in Slovenia, in the sense of promoting innovations, entrepreneurial spirit and internal entrepreneurship as well as sole proprietorship. Measures for promoting entrepreneurship are therefore aimed at all citizens of the Republic of Slovenia. An important element is also promotion of the supporting environment within the framework of offering miscellaneous services and financial resources. Activities related to education of the young regarding entrepreneurship as well as introduction of methods of entrepreneurial culture are implemented on certain university schools and secondary schools, however they are not aimed at solving the issue at the national level with inclusion of the entire potential of young people. As a part of this measure, the Ministry of the Economy will co-operate with the Ministry of Education and Sport and the Ministry of Higher Education, Science and Technology as well as with other institutions at the national and local level. Education is one of the key areas in promoting entrepreneurship and is as such an essential development task. Both the European Charter for Small Enterprises and the European Agenda for Entrepreneurship emphasise the role of schools and universities in promoting entrepreneurial attitude among young people and providing the appropriate skills. Primary school pupils and children in pre-school education will be familiarised with the basics of entrepreneurial culture in a manner tailored to them. The following activities will be implemented as a part of the measure of promoting entrepreneurship and education for entrepreneurship: Promotion of entrepreneurship, entrepreneurial culture and the supporting environment via the media (television, radio, printed media, the Internet, etc.). The activities will include presentations of good practice (of successful entrepreneurs) in entrepreneurship in Slovenia and abroad, presentations of interesting market niches, presentations of the supporting environment for entrepreneurship, monitoring and promotion of tenders, promotion of government services and institutions for entrepreneurship, etc. Preparation and printing of brochures and other promotional material. Organising and participating in events, tenders, business meetings and fairs related to entrepreneurship and crafts, and promotion of professions. Linking and joint promotion of activities of the entire supporting environment for entrepreneurship and crafts. Inclusion of entrepreneurial topics in all levels of formal education with the emphasis on linking theory with practice. Inclusion of successful entrepreneurs in promotion of entrepreneurship in schools. Training of teachers for introduction of pedagogic methods promoting entrepreneurial skills and discovering initiatives for entrepreneurship (in co-operation with the competent ministries). Enable flexible forming of study programmes for several courses and for education of students also on foreign universities. The measure will strengthen the confidence of young people in their own abilities and knowledge, inform them of the basic principles of an entrepreneurial society and the basic entrepreneurial skills, but foremost help them to get to know their potentials and further plan 15

16 their path. This will encourage faster transfer of ideas to the market and raise the level of respect given to entrepreneurship and the entrepreneurial spirit. Aid scheme: Not state aid Aid form: Selection of implementers through call for proposals or in a different manner (in accordance with the Public Finance Act and the Public Procurement Act). Eligible cost: Set forth in a call for proposals or in a different manner (in accordance with the Public Finance Act and the Public Procurement Act). Implementers and conditions: Implementers of the measure for the Ministry of the Economy will be JAPTI, the Slovene Enterprise Fund and the Chamber of Craft of Slovenia as well as other institutions at the national and local level, selected by JAPTI through call for proposals or in a different manner (in accordance with the Public Finance Act and the Public Procurement Act). Selection criteria: Set forth in a call for proposals or in a different manner (in accordance with the Public Finance Act and the Public Procurement Act). Aid intensity: Up to 100% Final beneficiary: All citizens of Slovenia, potential and existing entrepreneurs. Primary school pupils, secondary school and university students and teachers at all levels of formal education. Objectives and indicators of Measure 1.1: Promoting entrepreneurship and education for entrepreneurship Measure Indicator Starting point in Promoting entrepreneurs hip and education for entrepreneurs hip Entrepreneurship is an appropriate career choice (GEM) Successful entrepreneurs are respected (GEM) Stories about successful entrepreneurs frequently appear in the media (GEM) Established the entire system of education for entrepreneurship at all levels Establish new companies in the target group of the young % 45.5% 32.72% - 0 Planned result as at the end of % 80% 70% until Support to VEM entry points The existing network of one-stop-shops at the local level will be upgraded as a part of the support to VEM entry points. JAPTI shall be in charge of development, improving support services and co-ordination of VEM one-stop-shops. 16

17 Support services of VEM one-stop-shops will be available and intended for all interested. VEM one-stop-shops will offer an integrated service for the entire supporting environment (as specified in the Manual on the Supporting environment Entities). VEM one-stop-shops will provide the following support services at a single point: General and specific information for all target groups (e.g. the possibility for acquiring funding, the possibilities of establishing a company, on other support institutions for entrepreneurship, other information on entrepreneurship, etc.); Advice regarding development of business ideas, use of various support instruments, directing to state incentives available for promoting entrepreneurship, and similar; Promotion of services of one-stop-shops and promotion of development of entrepreneurial culture at the local level; The option of registration of an enterprise and the related changes. Simultaneously with the activities for provision of the aforementioned support services, activities aimed at improving the quality of the applicable and forthcoming legislation will be implemented for the purpose of simplifying the administrative procedures regarding establishment and development of enterprises. Preparation of proposals for system changes will include the existing networks of advisers at the local level as well as any other interest groups and institutions representing an important information source on economic, social and environmental impacts related to implementation of new or amended legislation. Activities will be implemented within ministries (co-operation with the Ministry of Public Administration, and within VEM) and implementers at the local and national level. Implementers at the local level will be selected through call for proposals implemented by JAPTI. Evaluation of each VEM one-stop-shop will be performed annually, on which financing of services of VEM will depend (the criteria for evaluation of one-stop-shops will be the area they cover, the number of established companies in the area, unemployment rate in the area, the regional development index, support of the local environment, linking with institutions at the local level, personnel qualification, etc.), and, most importantly, work effectiveness. This will ensure more transparent financing within contracts with individual VEM one-stop-shops. VEM one-stop-shops will be specified in the Act Regulating Supportive Environment for Entrepreneurship and the secondary legislation adopted in relation thereto as the entities of the supporting environment at the local level. Aid scheme: Not state aid Aid form: Implementers will be selected through individual call for proposals or in a different manner in accordance with the applicable legislation. Eligible cost: Costs of VEM one-stop-shops incurred in implementation of support services specified above. Support services and eligible costs will be set forth in individual call for proposals or in a different manner in accordance with the applicable legislation. Implementers and conditions: The Ministry of the Economy will implement the measure through JAPTI. JAPTI will select implementers (VEM one-stop-shops) through call for proposals or in a different manner pursuant to the applicable legislation. (in accordance with the Public Finance Act and the Public Procurement Act). 17

18 Selection criteria: Set forth in individual call for proposals or in a different manner in accordance with the applicable legislation. Aid intensity: Up to 100% Final beneficiary: All interested (e.g. young people, students, other support institutions, potential entrepreneurs, companies, entrepreneurs, etc.). Objectives and indicators of Measure 1.2: Support to VEM entry points Measure Indicator Starting point in Support to VEM entry points Number of days needed to register a company Cost of incorporating a company % of GNI Planned result as at the end of % of GNI Number of users of support services by companies at the local level Coverage with information and consulting services of all final beneficiaries at an annual level 25,000-35,500 30% 1.3. Voucher consulting and training Voucher consulting By the voucher consulting programme, the government wants to provide accessible consulting services in terms of location and price to entrepreneurs. The programme is intended for small and medium-sized enterprises and potential entrepreneurs deciding on the entrepreneurial path. The core service is entrepreneurial consulting and directing in implementation of business ideas, projects, growth plans or in solving of business problems. Access to the voucher consulting programme will be provided by JAPTI in co-operation with partners at the local level being the programme's implementers and representing points where potential users of services can be included in the voucher consulting programme. Direct consulting services of the programme will be offered by qualified consultants entered in the entrepreneurial consultants register. Voucher consulting will be directed in the future towards improving the quality of service within the programme, adjustment of contents to the needs of companies, intensified promotion of the programme, and evaluation of the system and consultants included in voucher consulting. Voucher consulting includes consulting related to business functions of enterprises, consulting in preparation of development-oriented programmes and projects, and consulting regarding the appropriateness of the selected organisational form. Voucher consulting for potential entrepreneurs also includes consulting in verification of business ideas, preparing business plans, and other consulting needed to start a company. Particular attention will be given to consulting to small and medium-sized enterprises with regard to internationalisation, EU projects and preparation for EU projects. 18

19 Scheme type: Small and medium-sized enterprises, and de minimis Aid scheme: Grant Eligible cost: Costs of consulting services of external consultants, except for costs of consulting services provided on an ongoing or periodical bases or connected to the usual operating costs of an enterprise such as for usual tax consultancy, legal advice and advertising services. Implementers and conditions: The Ministry of the Economy will implement the measure through JAPTI. JAPTI will select implementers at the local level through call for proposals or invitation or in a different manner pursuant to the applicable legislation. (in accordance with the Public Finance Act and the Public Procurement Act). Selection criteria: The condition for inclusion in the voucher consulting programme is expressed interest of a potential entrepreneur or an existing enterprise. The subsidy for costs of consulting will be utilised by using the referral/voucher received by the entrepreneur from the programme implementers at the local level. The entrepreneur will decide by him or herself on inclusion in the programme on the basis of presentation of the programme's services by local implementers. Entrepreneurs will receive initial information on the offer of voucher consulting, and they will be able to select the consultant of their own choice from the entrepreneurial consultants register. Aid intensity: - Potential entrepreneurs: 100% of consulting costs (de minimis) - Established companies: up to 50% of consulting costs (SMEs scheme) In accordance with Articles 1 and 4 of the Commission Regulation (EC) No 70/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises, the Measure (for established companies) is not used for activities related to production, processing and marketing of products specified in Annex I to the Treaty. Final beneficiary: Established small and medium-sized enterprises, potential entrepreneurs For other target groups (the unemployed, farmers, etc.), the voucher consulting programme will be implemented in co-operation with the competent ministries. Objectives and indicators of Measure 1.3.1: Voucher consulting Measure Indicator * Starting point in Voucher consulting Increase in the number of SMEs receiving the grant Increase in the number of potential entrepreneurs receiving the grant Planned result as at the end of % annually 3% annually Number of new jobs created Successful applications of Slovene companies to EU programmes/projects % annually (100 companies) Number of companies expanding their operations (internationalisation and international co-operation) * There were 2466 voucher consultancies to established companies in

20 Voucher training The purpose of the voucher training programme is to ensure to potential entrepreneurs and employees of SMEs facilitated adjustment of the level of knowledge and skills needed for operation, preservation and growth of an enterprise by way of access to miscellaneous training schemes at subsidised price. Training will be provided by qualified institutions at the national and local level. The obtained knowledge will facilitate to enterprises the day-to-day operations, provide for easier entry on foreign markets and acquiring of specific know-how related to individual areas of the company's business. The voucher training programme will include training in business functions of enterprises (especially ICT), intellectual property rights, taxes, law, accounting, training of entrepreneurs -managers with the emphasis on internationalisation of the economy, training for international operations, and training in production and technological processes. Aid scheme: Training Aid form: Grant Eligible cost: Costs of general and specific training: a) Cost of lecturers external contractor b) Travel expenses of persons included in the training c) Costs of consulting related to the training d) Other costs of training (e.g. rent of premises, projector, etc.) Specific training means training used by employees on their current or future posts in the company receiving aid, providing knowledge not transferable to other enterprises or fields of work. General training means training used by employees not only on their current or future posts in the company receiving aid, but providing to the employees knowledge transferable to other enterprises or fields of work. Implementers and conditions: The Ministry of the Economy will implement the measure through JAPTI. JAPTI will select implementers through call for proposals or invitation or in a different manner pursuant to the applicable legislation. (in accordance with the Public Finance Act and the Public Procurement Act). Selection criteria: The manner of inclusion in the programme is identical to that used for voucher consulting. Aid intensity: - Up to 45% of costs of specific training - Up to 80% of costs of general training Final beneficiary: Employees of SMEs and potential entrepreneurs 20

21 Objectives and indicators of Measure 1.3.2: Voucher training: Measure Indicator Starting point in Voucher training Increase in the number of SMEs receiving the grant Increase in the number of potential entrepreneurs receiving the grant Planned result as at the end of % annually 3% annually 1.4. Promoting entrepreneurship in specific target groups The programme's aim is to prepare the model for supporting specific target groups and the proposal for inclusion in other support measures for entrepreneurship in co-operation with the Ministry of Agriculture, Forestry and Food, the Ministry of Education and Sport, and the Ministry of Labour, Family and Social Affairs. These groups need special support as they are faced with the lack of information, contacts, access to networks, sex discrimination, stereotypes, problems in combining professional and family obligations, and meet specific issues with regard to types of companies and industries. The activities of informing, raising entrepreneurial culture, animating and motivating target groups will be implemented within the measure for the following purposes: Creating the supporting environment tailored to the needs of specific target groups Promoting networking within the specific target groups Obtaining information on business opportunities Exchange of good practices Aid scheme: Not state aid Aid form: Selection of implementers through call for proposals or in a different manner (in accordance with the Public Finance Act and the Public Procurement Act). Eligible cost: - Costs of preparing the model for supporting specific target groups with regard to entrepreneurship - Costs of animation and motivational workshops Activities will be implemented at the local level through institutions of the supporting environment for entrepreneurship. Implementers and conditions: The measure will be implemented through JAPTI, which will select implementers at the national/local level through call for proposals or in a different manner (in accordance with the Public Finance Act and the Public Procurement Act). Selection criteria: Set forth in a call for proposals or in a different manner in accordance with the applicable legislation. Aid intensity: Up to 100% Final beneficiary: Women (in co-operation with the Ministry of Agriculture, Forestry and Food and the Ministry of Labour, Family and Social Affairs) Young (in co-operation with the Ministry of Education and Sport, the Ministry of Agriculture, Forestry and Food and the Ministry of Labour, Family and Social Affairs) 21

22 People from less developed and rural areas (in co-operation with the Ministry of Agriculture, Forestry and Food) Vulnerable groups (Italian and Hungarian national communities and Roma, disabled persons, persons released after served prison sentence, persons released after completed treatment in institutions for treating alcoholism and other psychological problems, single mothers, etc.) Objectives and indicators of Measure 1.6: Promoting entrepreneurship in specific target groups: Measure Indicator Starting point in 2005 Promoting entrepreneurs hip in specific target groups Number of new companies (target groups of the young, women, people from rural areas) Number of jobs created Planned result as at the end of

23 2. Knowledge for business Defining the challenge Knowledge is one of the key factors for competitiveness of a modern economy. Slovenia has roughly 5 registered researchers per 1000 people, while the respective numbers in EU15 and EU25 are 6.1 and Slovenia deviates the most from developed European countries in low share of researchers in the business sector. Only around 38% of all researchers (roughly 1,900) were employed in the business sector in 2004, compared to 53% and 49% in EU15 and EU25, respectively. 11 If we focus on manufacturing (see chart below), then the data on education level are alarming. Manufacturing companies in Slovenia have on average 11.5% of employees with at least college degree, 21.7% of employees with secondary school education and 66.8% of those with less than secondary school education. 12 Of 11,639 top staff being at least masters of science, only 9.3% (1,090) were employed in manufacturing (i.e. mostly in R&D) at the end of The share of people with MSc or PhD employed in manufacturing is extremely low: only around 7 in large corporations and as little as 4 and 3 in medium and small enterprises, respectively. 13 Figure 2-1: Share of employees in manufacturing by level of education for different sizes of enterprises Delež zaposlenih (%) Velikost podjetja veliko srednje malo 0 Doktorat Magisterij Visoka izobrazba Višja Srednja Nižja VKV KV Stopnja izobrazbe PKV NKV Neznano Source: SORS, 31 December Source: Eurostat Yearbook Source: Eurostat Yearbook Source: Statistični letopis 2005 (Statistical Yearbook) 13 Source: Statistični letopis 2005 (Statistical Yearbook) 23

24 Share of employees (in %) Delež zaposlenih (%) Size of the enterprise Velikost podjetja Large Veliko Medium Srednje Small Malo PhD Doktorat Masters degree Magisterij University degree Visoka izobrazba College degree Višja Secondary school degree Srednja Lower Nižje HQ VKV Q KV SQ PKV NQ NKV Unknown Neznano Level of education Stopnja izobrazbe Strengthening know-how in the business sector is of course closely linked to investments in R&D and those related thereto (see Section 3). It is also linked to the productivity level and the level of innovations in the economy (see Section 3). Innovativeness is of course not necessarily linked to knowledge. However, the use of knowledge in innovations is one of the key sources of value added for products and services, which is the basis for a competitive, knowledge-based economy. Measures taken The key measure implemented by the Ministry of the Economy between 2001 and 2004 was promoting junior researchers for the business sector. The purpose of the measure was to encourage the inflow of R&D staff in the business sector thereby strengthening the development cores of enterprises by co-financing a part of costs related to junior researchers employed by enterprises and technological or other R&D centres. The Ministry of the Economy co-financed 124 trainings of junior researcher in co-operation with the Ministry of Education, Science and Sport. Studies of researchers were quite dispersed with technical courses prevailing. In 2005, programme implementation was taken over by the Ministry of Higher Education, Science and Technology, which co-financed 56 researchers for the business sector. The number of co-financed junior researcher is relatively small compared to their number on universities and institutes with the reasons among other being lack of interest by enterprises, too few appropriate mentors and relatively strict criteria for obtaining the junior researcher status. The second important measure is the dual education programme in which 11,304 secondary school students were included between 2001 and The dual education system included annual regional promotion of professions and vocational training co-ordinated by the Chamber of Craft of Slovenia. The National Institute for Vocational Education and Training 14 Source: Chamber of Craft of Slovenia,

25 will assume the co-ordinating role in the future. Until 2005, the Ministry of the Economy cofinanced the regional promotion of professions and vocational training, the activity was implemented in five regions with a joint presentation of occupations in shortage in individual regions attended by roughly 5000 pupils. The last generation of pupils (apprentices) will enter the dual education system in the school year 2006/2007, after this period this function will be assumed by the school education as vocational education with an increased amount of practical training included in the curriculum. The vocational education included the options of the school or dual system. A pilot model of joint programme implementation was carried out for certain professions (civil engineering and mechanical engineering) with the quantity of practical training remaining the same. The pilot model was introduced in the school year 2003/2004 which resulted in the decrease in the number of youngsters in the school and dual education system. Bringing together of the two systems was due to reduced interest of youngsters for vocational education on the one hand and increased needs for personnel with vocational training on the other. Connection of employers with the school environment, direct acquiring of practical knowledge and better employment chances are the key reasons for transferring the link between work and school from the dual to the entire vocational education. Table 2-1: : Entry of pupils and apprentices by secondary school programme, School year School model Dual model Joint implementation pilot model (machinery engineering and civil engineering) Number % Number % Number % 2003/ , , , / , , , / , , , Source: Ministry of Education and Sport: Data on secondary schools and dormitories for secondary school students, 2005 The table shows that interest in the education model combing the school and dual organisation into the so-called vocational education is increasing. The vocational education increases the amount of practical knowledge, and the employer can decide on 53 weeks of practical training in the work process. The vocational education is primarily about close linking of businesses and schools, and acquiring a wide range of practical skills in a real working environment. Low number of highly-educated staff in industry is the result of various factors, ranging from low technological level of the Slovene economy to high costs of employing such people. An important factor worth noting is lack of students in natural sciences and mathematics courses reflected in low number of such people on the labour market. 25

26 Future measures As regards human resources for the business sector, the Ministry of Education and Sport, the Ministry of Higher Education, Science and Technology and the Ministry of Labour, Family and Social Affairs play an important role in addition to the Ministry of the Economy. As regards the Ministry of the Economy, the objective of measures included in the Knowledge for business sub-programme is to strengthen internal capability of companies for more intensive, knowledge-based development, notably in the technological sector, which will enable the Slovene economy, and SMEs in particular, to manage increasingly rapid technological progress as the main element for improving competitiveness at the global level. The future measures of the programme are aimed at strengthening human resources for needs of the economy by stimulating the share of highly educated and highly skilled people in the business sector, priority given to development of knowledge in natural sciences and mathematics, by encouraging international mobility of highly skilled human resources as well as promoting mobility of R&D staff from knowledge institutions to businesses and mobility of highly skilled human resources from big companies to small and medium-sized enterprises. Effective implementation of these measures depends on joint activities and co-operation with other competent ministries and implementing institutions. Implementation of the entire measure and sub-measures is possible primarily through calls for proposals carried out by competent ministries or implementers, in the form of establishing a fund for developing human resources in the business sector, which can be a part of the existing funds or a new form of an implementing institution, or by using any other appropriate method. The proposal for a fund for developing human resources in the business sector is also a part of the National Projects Resolution co-ordinated by the Government Office for Development and involving all competent ministries. Establishing of such fund would enable continuity of drawing of tendered funds whereby the use would not be linked to the financial year of the government's budget, which could reduce time and administrative barriers. Such fund would also enable centralised and more transparent implementation of policies of various ministries. 26

27 2.1. Vocational education 15 By co-financing the costs of employers (having concluded individual teaching contracts with pupils, or apprentices until the expiry of the dual education system) for practical training of people in secondary vocational education, the Ministry of the Economy encourages the business sector to adopt such methods for acquiring new human resources. The measure is available to all enterprises regardless of their activity, region or size. The measure will be awarded without any discretionary right of the aid provider in selection of beneficiaries. The beneficiaries (employers) will receive an identical amount of funds. The quota specified in the national budget will be allocated with regard to the number of individual contracts between the employer and apprentices. The Ministry of Education and Sport will finance the school work part of the measure implementation (teaching costs, salaries, interim and final exams, co-ordination, etc.). Aid scheme: Not state aid Aid form: Grant Eligible cost: Costs of employers (craftsmen, entrepreneurs) for practical training of pupils (remuneration, pension and disability insurance contributions, flat fee for the period of practical training, meal allowance for the period of practical training, transportation costs allowance, medical examination, work and protective clothing, and costs of the teaching point) having concluded individual teaching contracts with pupils, or apprentices until expiry of the dual education system. Implementers and conditions: Implementers for co-financing employers can be institutions keeping the teaching points register. Eligible beneficiaries are enterprises implementing practical training of pupils as employers. Selection criteria: Concluded teaching contracts between the employer and the apprentice. Aid intensity: The annual quota is allocated in accordance with the number of eligible beneficiaries. Final beneficiary: All companies in Slovenia Objectives and indicators of Measure 2.1: Vocational education: Measure Indicator Starting point in 2005/06 Planned result as at the end of 2013 Vocational education (or the dual education system until Support 3,000 practical trainings annually of pupils at employees in enterprises (craftsmen, entrepreneurs) 1921 supported teaching points 21,000 practical trainings 15 The title stems from the Vocational Education Act adopted in

28 expiry) Reduce human resources deficit of employers The share of those included in vocational education 2.2. R&D for business The Ministry of the Economy (or the implementer JAPTI) will implement the measure "R&D for business" for the purpose of improving the quality and usability of scientific and R&D work, transfer of knowledge between scientific research and business and promoting cooperation between research institutes, universities and the business sector. Technological development requires a much greater degree of interdisciplinarity and mobility of human resources, hence the measure has been adapted accordingly. The competent ministries will select an implementer to set up the database (of supply and demand) of highly-skilled staff for the business sector (researchers, engineers, etc. with at least university degree and adequate work experience). The database will have to include the selection of appropriate human resources from the EU Member States and other countries in addition to top Slovene experts by individual area. The "R&D for business" sub-programme is divided into three basic measures: Junior basic researchers in enterprises; Improved mobility of highly-skilled people in the business sector: o Promoting transfer of researchers from knowledge institutions to the business sector, and o Promoting flow of highly-skilled people from large corporations to small and medium-sized enterprises; Research & development activities of interdisciplinary R&D groups in enterprises. Objectives and indicators of Sub-programme 2.2: R&D for business Measure Indicator Starting point in R&D for business Enable education at universities to at least 100 top R&D staff (researchers) from enterprises annually Planned result as at the 2005 end of Support at least 50 transfers of researchers from science to business annually Support at least 50 transfers of highlyskilled staff from large corporations to SMEs annually Support creation of at least 10 R&D teams for industrial research in enterprises annually Change the Proportion of distribution of researchers researchers between employed in the the business and nonbusiness business sector sector % (1,900) 60% 28

29 Increase the number of highly-educated people in the nonbusiness sector Proportion of people with MSc and PhD employed in manufacturing (9.3% ) 1, Junior basic researchers in enterprises The Ministry of the Economy finances basic research projects of junior researchers from enterprises. The purpose of the measure is to establish a bridge between research institutions and enterprises. Doctoral studies on topics relevant for enterprises will strengthen ties with the knowledge institutions, and enterprises will acquire new basic and general scientific and technical knowledge related to their activity through research, which will at the same time enable junior researchers to meet the conditions for obtaining a PhD. The project will encourage enterprises to become permanently oriented to R&D. As regards doctoral studies, the programme will enable the candidate and the employer to jointly specify the curriculum, which will best fit the R&D work of the candidate with the employer. Research will be conducted in co-operation with mentors, which may come from higher education institutions or the business sector, thus promoting permanent co-operation between enterprises and higher education institutions. Mentors not employed in the business sector must prove their applicative knowledge on the basis of industrial projects they have managed. By implementing this measure, the Ministry will try to increase the share of staff in enterprises with the highest level of education. The basic research project 16 with junior researchers is entered by enterprises or technological and R&D centres in agreement with the higher education institutions participating in the candidate's obtaining of a PhD. Results of the work of junior researchers will be published. Priority will be given to projects, which are interdisciplinary, and to programmes of researchers including topics from economics and management (e.g. marketing and finance, management of technology, entrepreneurship, etc.). As regards fields in which Slovene knowledge institutions lack excellence, employers and their staff will have the option of postgraduate studies on foreign top-of-the-notch knowledge institutions. The mentor, enterprise or another organisation should ensure the researcher at least three-month work on a reputable foreign university or institute, or R&D department of a foreign company. The average grade of the candidate's postgraduate studies will not be a condition as it does not necessarily reflect the abilities such as innovativeness and knowledge application. Aid scheme: The programme of technological development, measure Junior basic researchers in enterprises, N472/2006 Slovenia Aid form: Grant Eligible cost: Eligible costs include costs of basic research projects of junior researchers in enterprises for industrial research and technical feasibility studies as preparation for industrial research. Eligible costs are as follows: 16 Basic research shall mean activities aimed at expanding the general scientific and technical knowledge linked with the purpose of utilisation on the market. 29

30 - Cost of staff, researchers, technicians and other support staff employed exclusively for research activities; - Cost of instruments, equipment, and land and buildings utilised exclusively and permanently for research activities; - Cost of consulting and other services used exclusively for research activities, including research, technical know-how and patents bought from external sources; - Overheads incurred directly as a result of research activities; - Other operating costs (e.g. cost of material, energy, etc.) incurred directly as a result of research activities. Implementers: The measure will be implemented by the Ministry of the Economy or JAPTI. Project selection criteria: Assessment of the submitted research project of a junior researcher Appropriateness of the mentor and the research team participating in the research project Aid intensity: Up to 100% of eligible cost Final beneficiaries and conditions: Enterprises and technological centres if they comprise an appropriate R&D team or are co-operating with an R&D team of a higher education or research institution, which will implement the study and R&D training of the candidate; The candidates must have a bachelor's degree in the appropriate field and must be entered in postgraduate studies or must give a statement that they will enter postgraduate studies in the academic year Improved mobility of highly-skilled people in the business sector The measure is aimed at strengthening the appropriate human resources for the needs of businesses by stimulating the proportion of highly-educated and skilled personnel in the business sector with the priority given to natural and technical sciences. The measure promotes mobility of highly-skilled personnel and thereby the flow and placement of knowledge in the business sector in Slovenia. Low number of highly-educated staff in industry is the result of various factors including high cost of employing such people. The government will co-finance the cost of research work of researchers with MSc or PhD coming from universities and non-profit research organisation to enterprises, and the cost of research work of highly-skilled staff coming from large corporations to small and mediumsized enterprises. In addition to potentials in Slovenia, we should also mention Slovene researchers who study or have studied at foreign knowledge institutions. The measure enables Slovene companies to acquire top human resources also from abroad, notably in the areas where Slovenia has shortage of such knowledge or human resources. 30

31 a) Promoting transfer of researchers from knowledge institutions to the business sector Practice in the recent years has shown that scientific researchers mostly remained at research & development institutions after obtaining a master's degree or PhD. That has prevented direct placement of their knowledge in the business sector as well as obtaining appropriate applicative knowledge. Promoting the transfer of researchers from knowledge institutions to the business sector therefore has positive impacts as regards acquiring applicative knowledge by the researcher as well as strengthening the appropriate know-how in enterprises. It also indirectly results in increased flow of researchers through knowledge institutions. The Ministry will co-finance enterprises costs of employment of researchers, masters of science and doctors coming from the scientific institutions (universities or non-profit research organisations) to the business sector. The new staff shall not replace the existing staff but must be employed at newly created jobs within the enterprise and must be involved in R&D and innovations in the enterprise. Aid scheme: De minimis and/or Research, development and innovations (when approved) Aid form: Grant Eligible cost All costs for transfer and employment of highly-skilled staff including the equipment of the work post and costs of the employment agency as well as the mobility compensation for the personnel in question. Implementer: Ministry of the Economy or JAPTI. Project selection criteria: Quality of the researcher Quality of the beneficiary Quality of the R&D project and expected results Aid intensity: No more than 75% of eligible cost for the period not exceeding 3 years per enterprise and per person Final beneficiaries and conditions: Enterprises employing persons from scientific institutions; Staff must have MSc or PhD b) Promoting flow of highly-skilled people from large corporations to small and medium-sized enterprises Practice in recent years has shown that large corporations find it easier to employ highlyskilled personnel than SMEs as highly-skilled experts usually believe that large corporations offer better working conditions and safer and more attractive career choices. However, small 31

32 and medium-sized enterprises have significant benefits from transfer of know-how and better abilities to innovate because of influx of highly-skilled staff for implementing activities in R&D and innovations. The aim of the measure is to improve the educational structure in SMEs by promoting transfer of highly-skilled staff from large corporations to small and medium-sized enterprises. Transfer of highly-skilled staff from large corporations represents an important transfer of know-how and improved ability to innovate for SMEs. Highly-skilled staff for the purpose of this measure shall be researchers, engineers and heads of marketing with at least bachelor's degree and adequate work experience. The new staff must be employed by a large corporation for at least two years before transfer, they must be employed on newly created jobs within the enterprise (not replacing other staff), and must work in R&D and innovations within the enterprise. Aid scheme: De minimis or Research, development and innovations (when approved) Aid form: Grant Eligible cost: All costs for transfer and employment of highly-skilled staff as specified above including costs of the employment agency as well as the mobility compensation for the personnel in question. Implementer: Ministry of the Economy or JAPTI. Project selection criteria: Quality of the researcher Quality of the beneficiary Quality of the R&D project and expected results Aid intensity: Up to 50% of eligible cost for the period not exceeding 3 years per enterprise and per person Final beneficiaries and conditions: SMEs employing persons from a large corporation; Staff must have a bachelor's degree Research & development activities of interdisciplinary R&D groups in enterprises The measure is aimed at encouraging companies to embark on a more intensive, knowledgebased development, which will enable the Slovene economy to manage the increasingly rapid technological progress as the main element for improving competitiveness at the global level. Eligible activities are technical preliminary studies and industrial research aimed at acquiring new knowledge and skills for developing new products, processes or services or for significant improvement of the existing products, processes or services. They also include 32

33 creating parts of elements for complex systems required for industrial research and experimental development. The Ministry encourages enterprises to use mobility of highly-skilled staff to create or expand multidisciplinary R&D teams (interdisciplinary with regard to expertise or educational structure) in order to prepare feasibility studies and carry out industrial research. Highlyskilled personnel will participate in such teams: researchers, engineers, sales persons, etc. having at least bachelor's degree and adequate work experience (primarily from scientific institutions but adequately also from the business sector), as well as highly-educated people having just completed at least graduate studies ("fresh" graduates or postgraduates), from Slovenia and abroad. Enterprises will be able to ask for participation highly-qualified experts from appropriate fields to work on technological R&D projects (including marketing of products of the project) also by using the database provided by the competent implementer (JAPTI). The government will co-finance costs of preliminary studies and industrial research and experimental development carried out by the team refereed to above (not more than five members) for the duration of the project, however not exceeding 3 years. Aid scheme: The programme of technological development, measure R&D in enterprises, N472/2006 Slovenia Aid form: Grant Eligible cost: The Ministry will provide co-financing of R&D projects in enterprises for acquiring of new knowledge, and for new, changed or improved products, processes or services, for example, by using ICT, and co-financing costs of industrial research, precompetitive R&D and technical feasibility studies. Eligible costs are as follows: - Cost of staff, researchers, technicians and other support staff employed exclusively for research activities and experimental development; - Cost of instruments, equipment, and land and buildings utilised exclusively and permanently for research activities; - Cost of consulting and other services used exclusively for research activities, including research, technical know-how and patents bought from external sources; - Overheads incurred directly as a result of research activities; - Other operating costs (e.g. cost of material, energy, etc.) incurred directly as a result of research activities. Implementer: Ministry of the Economy or JAPTI or the Slovene Enterprise Fund. Project selection criteria: R&D quality of the proposed project References and qualifications of the implementing team, organisation of R&D activities, and project implementation timeline Financial plan Aid intensity: 33

34 Aid of up to 50% of eligible cost of the project can be granted for industrial research 17. Aid of up to 25% of eligible cost of the project can be granted for precompetitive R&D 18. Aid granted for technical feasibility studies can equal up to 75% and 50% of eligible cost of the project if such studies are, respectively, a precondition for industrial research and precompetitive R&D. Final beneficiaries and conditions: SMEs and large corporations 3. R&D and innovations in companies Defining the challenge Innovations and technological development are among the key competitiveness factors of a modern economy. The fastest growing OECD countries in the last decade were those focusing on development and marketing of new products on the basis of new technologies and innovations. It is important that new knowledge is utilised and transferred, which means the ability to innovate, and not just ending at individual technical discoveries, which means the ability to invent. The countries deemed to be based on knowledge and innovations have a close interconnection between public research, education and the business sector, are intensively investing in R&D, have high level of innovations, highly-skilled labour force, and adequate information infrastructure with supporting institutions. Slovenia is lagging behind EU average on labour productivity, as the average value added per employee in the EU and Slovenia equals 75,000 and 24,180, respectively. The difference widens as the company size increases. The ratio for micro companies is slightly above 1:2, while it rises to more than 1:4 for large corporations. Nevertheless, micro companies are the least productive ones, as they stood only at 73.6% of Slovene average as regards productivity 19. Slovenia is not far behind EU-25 in the share of total R&D expenditure in 2003 (1.53% of GDP, the EU 1.95% of GDP), however the annual growth rates in R&D expenditure for the period are lower than in most technologically advanced European economies such as Finland, Sweden and Ireland. This is also reflected in the share of R&D expenditure in the business sector (Slovenia 0.90% and the EU 1.26% of GDP). Budget expenditure on R&D in Slovenia and EU-25 equalled 0.63% and 0.69% of GDP in 2003, respectively. Budgetary funding of R&D increased in 2004 and 2005 leading to meeting of the Barcelona objective, i.e. 1% of GDP for public R&D expenditure. The objective of 2% of GDP for business investments in 17 Industrial research means planned research or critical testing aimed at acquiring new knowledge for the purpose of utilising such knowledge in the development of new products, processes or services or for introducing significant improvements in the existing products, processes or services. 18 Precompetitive R&D means activities for processing results of (industrial) research into a plan, setting or form for new, changed or improved products, processes or services if these are intended for sale or utilisation, including the production of the initial prototype, which would not be suitable for sale. This can also include basic description and forming of other products, processes or services, and initial demonstration projects or pilot projects if such projects cannot be transformed or utilised for industrial use or market exploitation. 19 Slovene Entrepreneurial Observatory 2004, Part 2 34

35 R&D is harder to achieve. As regards R&D expenditure in the business sector, the average annual growth rate was 7.2%, which is only slightly above the average growth in the EU of 5.6% 20. The biggest problem is low investments in small and medium-sized enterprises. Ineffective R&D investments are also reflected in low share of innovative companies. The total share of innovative companies in Slovenia is only around 21% (the EU average: 44%). While 55% of large corporations are innovative (the EU average: 77%), the proportion falls sharply as the company size decreases, so that the respective share is only 28% of mediumsized enterprises in Slovenia (the EU average: 60%), and very modest 13% of small companies (the EU average: 39%). The Summary Innovation Index representing the average of all innovation indicators equals 0.42 in EU-25, 0.6 in the USA, 0.65 in Japan and 0.71 in Switzerland. The index in Slovenia is below EU average, namely Slovenia can also not boast with patents. The number of submitted European patents (EPO) per one million people in 2002 (most recent data from the Innovation Scoreboard 2005) was for EU-25, and the USA and Japan submitted and EPO patent applications per one million people, respectively. In addition to EPO patents, US patent applications (USPTO) are also extremely important. EU-25 submitted only 71.3 USPTO patents per one million people, while the USA and Japan submitted and 279.9, respectively. Slovenia submitted only 32.8 European patents (EPO) and modest 8.4 USPTO patents per one million people in (Finland: EPO: 311, USPTO: 159; Estonia; EPO: 8.9, USPTO: 2.7) An extremely important criteria is also export of high technology products as a share of the entire national exports. The USA are the global leader with 26.9%, Japan has the share of 22.7%, the EU-25 average equals 17.8%, while Slovenia has meagre 5.8% 23 Measures taken The basis for implementation of previous measures was the Programme of measures for promoting entrepreneurship and competitiveness aimed at strengthening the key factors for a competitive edge of companies in global competition. During implementation of the aforementioned programme, the Ministry of the Economy implemented the following sets of measures regarding the technological development: (1) Promoting entrepreneurial investments in technological development and innovations; (2) Promoting internationalisation of enterprises; (3) Introducing strategies for increasing productivity; and (4) Connecting enterprises and developing clusters. Future measures Meeting objectives of the national strategic documents; namely the Slovenia s Development Strategy, the National R&D Programme, the Framework of economic and social reforms, and the National Action Plan as a part of the Lisbon strategy, requires enhanced investments in 20 Source: Mrkaić et al.: Časovna konvergenca kazalnikov NRRP, 2005 (Time Convergence of Indicators National R&D Programme, 2005) 21 Source: Innovation Scoreboard Source: Innovation Scoreboard Source: Innovation Scoreboard

36 R&D in the private and the public sector. Measures supporting R&D and innovations in the commercial sector will be aimed at establishing an efficient supporting environment, providing for adequate infrastructure at the local and the national level, and strengthening financial resources for R&D and innovations in the Slovene economy. A key issue for implementation of development measures for the economy is establishing of an appropriate expert evaluation system as well as specifying of priority areas in the Slovene economy where technological breakthrough and the related high value added of products and services can be expected. Priority areas do not mean specific industries and do not exclude traditional industries where products with high value added can be developed by innovations and knowledge. Establishing of a transparent and publicly available information source regarding special groups in the economy, such as fast-growing companies, innovative companies and high technology companies, is equally important. 36

37 3.1. Economic development logistics platforms (infrastructure) The measure relates to establishing of appropriate infrastructure in geographic areas in Slovenia where there is a critical mass of know-how or knowledge institutions, economic development and concentration of enterprises per person. Creation of such platforms is linked to crucial co-operation between the government institutions, regional and municipal public institutions as well as, of course, enterprises and knowledge institutions. Economic development logistics platforms in the form of infrastructure include a very wide range of various entities, networked in a specific area (region) into an integrated whole. An important element of such platforms is also the so-called excellence centres and technological centres promoted by the Ministry of Higher Education, Science and Technology. The incubated companies must have growth potentials. The measure is also related to the National Programmes Resolution. The economic development logistics platforms as an infrastructure of national significance in addition to the aforementioned excellence centres and technological centres also include the following: a) Business-industrial-logistics areas of national significance b) Technology parks c) Regional business incubators d) University (college) incubators with offices for technology transfer All forms of incentives within the Measure 3.1 should represent public-private partnership, both in terms of co-financing and participation in development of the underlying infrastructure. As regards this measure, the Ministry of the Economy or the implementer (JAPTI) will provide funding for co-financing of investments in particular infrastructure. Ad a) As regards the business-industrial-logistics areas, the significant strategic placement of such areas with regard to logistics, transport links, proximity of borders as well as the size of the land, which must be sufficient for promotion of domestic and foreign investment, will be taken into account. Such areas must have national as well as local importance. Planning of infrastructure where there is a possibility of using land and abandoned buildings owned by the government is a very important part of strategic development of business logistics platforms. Ad b) Technology parks provide for space concentration of activities of new high technology companies and R&D departments of large corporations entering into technology parks because of specific beneficial environment, facilitated exchange of information and knowhow, and specifically set up infrastructure as well as concentration of development and knowledge at a single point. Technology parks offer high technology companies adequate spatial capacity with all pertaining infrastructure and links with the knowledge institutions. An important part of technology parks is also the incubator enabling incubation of early-stage high technology companies. Such companies come as incubated companies via university incubators or as individual entrepreneurial initiatives of residents of the Republic of Slovenia, or spin-offs from individual enterprises and other institutions. The incubation period of incubated companies in technology parks is generally four years. An important criterion for establishing technology parks is, due to their specifics regarding high technology and needs of companies, interconnection of parks with geographically close universities and higher education institutions providing adequate number of such institutes and institutions in the field of technology. Two further important criteria are critical mass of population and enterprises. Aid for operation of technology parks themselves and implementation of activities will be available to technology parks via incubated companies from the Measure 37

38 3.3.4 Start-up capital for newly established innovative companies and the Measure Startup capital for technology parks, business incubators and university incubators. Aid for consulting and support services for innovations will be available via marketing of infrastructure and services to incubated companies. Incubated companies can move from a technology park location to a location of another entity of such supporting environment. This will ensure competitive price of services and more efficient supporting environment. Ad c) Business incubators offer the environment with favourable conditions to start a new company and provide appropriate infrastructure and joint services. In general, business incubators represent the regional supporting environment, intended primarily for medium technology and non-technological enterprises in the region. Because of specifics of business incubators it is advisable that they be placed in business industrial or crafts zones as they will thereby combine the newly established entrepreneurial (including crafts) initiatives with the existing ones. Similarly to technology parks, business incubators also offer the environment with favourable conditions to start a new company and provide appropriate infrastructure and joint services. The incubation period is generally three years. Similarly to technology parks, incubated companies have for the purpose of ensuring system efficiency the option of transfer from the location of an existing business incubator to a location of another entity of such supporting environment. Ad d) University (college) incubators together with the office for technology transfer represent the environment for implementation of entrepreneurial initiatives within universities thereby assisting in transfer of innovative potentials, technologies and inventions as innovations to the market. The task of university incubators is therefore to assist in generation of innovative ideas and the fastest possible transfer of research into new products and services. They are focused on the target group of professors on universities, higher education institutions and institutes, researchers, assistants and graduate and postgraduate students. The task of such environment is also informing, consulting and encouraging by promotion related to entrepreneurship and innovations. The incubation stage for individuals or groups of entrepreneurs, which can be realised in newly established companies lasts up to 4 years. The tasks of the office for technology transfer on universities is to link research teams with businesses, transfer technology to the business sector, search for partners in scientific institutions and businesses for joint projects, international co-operation, assistance and intermediation in protection of intellectual property, etc. It must therefore act in complete synergy with the incubator. An important task of universities (higher education institutions) is also to include and implement the so-called "design thinking" concept in their pedagogical and other processes, university incubators and offices for technology transfer. Such concept as an example of good practice can be seen at the Stanford University (D-School) including activities of pedagogic programmes, interdisciplinary approach, co-operation with businesses, and active inclusion of offices for technology transfer and university incubators. Such concept can result in strong involvement of universities (higher education institutions) in the business sector and the related acquiring of funding (not being state aid) or creation of spin-off companies. Universities can obtain additional funds with effective operation of offices for technology transfer, notably in marketing of inventions within the university (higher education institution) and in intermediation as a part of business projects. Therefore, the government's task regarding entrepreneurship is to direct universities (higher education institutions) in such activities, assist in setting up of appropriate infrastructure, which can also be implemented within the infrastructure of university (college) incubators within the framework of the D-School concept, offices for technology transfer and incubation, for the purpose of rationality and one-stop-shop concept. 38

39 Figure 3.1-1: Example of arrangement of university incubators, incubators in technology parks and business incubators Universities and higher education institutions Students, researchers, professors, assistants University and college incubators (incubation of up to 1 year) Office for technology transfer Business incubator (incubation up to 3 years) Incubator of a technology park (incubation up to 4 years) Non-technological companies and companies with lower levels of technological development Citizens of the Republic of Slovenia, Early-stage innovative and high-technology companies Spin-off companies from various forms (clusters, High-technology companies 39

40 Target areas: a) Regions and municipalities with distinct economic growth potential located on important road or railroad crossroads or near airports and representing an economic-developmentlogistics area of national importance. b) Municipalities with a university or a significant number of natural science and technical institutes or schools located within 10 km. c) Regions with critical concentration of population in a particular radius or municipalities being the regional centre. d) Locations of universities and higher education institutions (the latter only if three of them are located within 10 km radius). Objectives and indicators of Measure 3.1: Business development logistics platforms (infrastructure) Measure Indicator Starting point in 2005/06 Planned result as at the end of Business development logistics platforms (infrastructure) Projects for which state aid will be granted The number of business-developmentlogistics areas of national importance The number of fully established technology parks in Slovenia The number of fully established university (college) incubators with offices for technology transfer The number of fully established regional business incubators Number of jobs created Promoting investments in business-development-logistics platforms The Ministry of the Economy will directly or through the implementer JAPTI provide for setting up of the appropriate infrastructure for development of entrepreneurship. The principle of urgency and the principle of cumulation are required in accordance with the Guidelines on national regional aid In order to ensure that regional aid truly promotes investments, which would otherwise not be implemented in areas receiving aid, beneficiaries must submit an aid application, which is then approved in writing by the authority in charge of managing the scheme before start of the project implementation, stating that the project, subject to exact verification, generally meets the conditions for eligibility set forth in the scheme. In the case of ad hoc aid, the competent authority must before start of the project implementation issue a letter of intention on granting aid, subject to the approval by the Commission. Should the work commence before conditions set forth hereunder have been met, the project shall not be entitled to receive aid. The upper limit of aid intensity for small, medium-sized and large companies applies to the entire aid: 40

41 When aid is granted by several regional schemes simultaneously or in combination with ad hoc aid; When aid comes from local, regional, national or Community sources. In the case costs eligible for regional aid are also eligible, in full or in part, for aid for other purposes, the most favourable upper limit from applicable provisions will be used for the common part. Regional aid for investments cannot be combined with de minimis support for the same eligible costs in order to avoid the maximum aid intensity specified in this measure. Aid scheme: Regional scheme Aid form: Grant Eligible cost: Initial investment costs: Purchase of land Construction and/or purchase of facilities Purchase of machinery and equipment Investments in intangible assets (in the case of large corporations only up to 50% of eligible cost of the investment) As regards companies operating in transport, the cost of purchase of transport equipment (movable property) shall be excluded from eligible cost. The initial investment means investment in fixed and intangible assets related to establishing of a new plant, expanding an existing plant, diversification of a production plant with new additional products and significant change in the entire production process of an existing plant: Fixed assets mean assets related to land, buildings, and equipment/machinery. In the case of acquisition of a plant, only the cost of purchase of assets from a third party shall be eligible, subject to the condition that the transaction was performed under market conditions. Intangible assets are assets related to technology transfer for acquiring patent rights, licences, knowledge or non-patented technical know-how. Replacement investments not meeting any of the above criteria shall also be excluded from the definition. Acquisition of assets directly linked to the institution can also be deemed an initial investment, if such plant was closed or would have been closed unless it was bought, and if purchased by an independent investor. As regards SMEs, the entire cost of investments in intangible assets by technology transfer for acquiring patent rights, licences, knowledge or non-patented technical know-how can be taken into account. The limit on the amount of aid of 50% regarding investments in intangible assets only applies to large corporations, namely the limit is 50% of eligible cost of the investment. In any case, eligible intangible assets will be subject to conditions necessary for ensuring that assets remain in the receiving region eligible for regional aid, and not benefit other regions, particularly those not eligible for such aid. Eligible intangible assets will therefore have to comply in particular with the following conditions: - They must be exclusively utilised at the plant receiving regional aid; 41

42 - They must be posted as assets being amortised; - They must be purchased from a third party under market conditions; and - They must be included in the company's assets and must remain at the plant receiving regional aid for at least five years (three years for SMEs). The amount of eligible cost shall not exceed 50,000,000. In the case the amount of eligible cost exceeds 50,000,000, the Ministry of the Economy will submit an individual state aid scheme. The project will be approved by the Government of the Republic of Slovenia. Implementer: Ministry of the Economy or JAPTI. Criteria: Project contents (design, action plan, clearness and feasibility, project results) Sustainability (environmental impact, multiplicative effects) Ability to implement the project (technical know-how and experience, financial resources) Financial plan (cost/benefit ratio of the project) Aid intensity: Up to 30% of eligible cost for large corporations Up to 40% of eligible cost for medium-sized enterprises Up to 50% of eligible cost for small enterprises For small and medium-sized enterprises from the transport industry, the aid intensity equals up to 30% of eligible cost. Final beneficiaries and conditions: Companies implementing projects Companies engaged in fishery, shipbuilding, coalmining, agricultural production except processing and marketing of agricultural products, however only to the extent set by the Community guidelines for state aid in the agricultural sector, steel industry, and synthetic fibres industry shall not be eligible for aid under this measure. The beneficiary shall, in order to provide for profitability and viability of the investment and by taking into account the applicable upper limits of aid, ensure funds amounting to at least 25% of eligible cost with their own funding or external finance in a form not related to any kind of public aid whatsoever. Aid shall be conditioned with maintaining the given investment in the region in question for at least five years (three years for SMEs) after its completion, which can be provided by aidrelated conditions or by payment method. As regards projects to be implemented as public investments (the infrastructure remaining in the ownership of the government or the municipality or transferred to them immediately after completion), the following rules shall apply: Aid scheme: Not state aid 42

43 Aid form: Grant Eligible cost: Purchase of land Construction and/or purchase of facilities Purchase of machinery and equipment Investments in intangible assets and preparing preliminary studies Costs related to preparing and acquiring the necessary documentation Reconstruction and construction of public utility infrastructure Technical and financial know-how required for project implementation Cost of employing an expert for the duration of the project (salary and other expenses) Implementer: Ministry of the Economy or JAPTI. Criteria: Project contents (design, action plan, clearness and feasibility, project results) Sustainability (environmental impact, multiplicative effects) Ability to implement the project (technical know-how and experience, financial resources) Financial plan (cost/benefit ratio of the project) Aid intensity: Up to 100% of eligible cost Final beneficiaries: Municipalities Public R&D institutions Other entities not engaged in activity for profit or with not-for-profit projects Start-up capital for technology parks, business incubators and university incubators Start-up capital for operation of entities of innovative environment will be used to co-finance activities implemented by those entities, namely: - Promotion and establishing conditions for start-up operations; - Training of employees; - Operating costs. Aid scheme: De minimis Aid form: Grant Eligible cost: - Costs of material and services required for operation (in the part for which costs are not charged to incubated companies) - Labour costs (wages and salaries, costs of material, training) Implementers and conditions: 43

44 The Ministry of the Economy will implement the measure through JAPTI. JAPTI will select entities of the innovative environment by a call for proposals or in a different manner in accordance with the applicable legislation. Criteria: - Project contents (design, action plan, clearness and feasibility, project results) - Sustainability (environmental impact, multiplicative effects) - Ability to implement the project (technical know-how and experience, financial resources) - Financial plan (cost/benefit ratio of the project) Aid intensity: - Up to 100%, and a maximum of 200,000 in the period of three years Final beneficiaries: Technology parks, business incubators, university incubators 3.2. R&D in business The needs of the Slovene economy for enhanced investments in knowledge and development dictate measures aimed at promoting such investments as well as enabling the Slovene economy to strengthen its ability to achieve business excellence. Introduction of the European model of excellence in Slovene companies ensures a common platform for comparison with other enterprises, be it in Europe or elsewhere. A crucial element of economic development is linking enterprises with knowledge institutions in joint R&D projects, enabling development of new knowledge-based technologies and the related products and services with high value added. The Slovenia s Development Strategy and the National Research & Development Programme specify the priority technological areas in which the Slovene economy has special potentials for a breakthrough. Following such priorities is naturally directed to specific target groups within the economy, which requires a kind of vertical policy. With regard to that aspect, we must pay particular attention to preventing that the definition of individual priority areas excludes entire industries, in particular the traditional ones, which have on average low value added of products. Practice in certain Slovene companies has shown that companies from traditional industries can also achieve excellent technological and business results. This means that such companies can utilise R&D to create new market niches, which enable them, in part or in full, not only survival but also a breakthrough on global markets. The latter leads to the conclusion that providing the business sector with the elements of development providing for sustainable growth of enterprises, high value added of products and services, and the ability to compete on global markets is more important than the definition of priority technological areas. However, the priority technological areas include the bulk of potential in the sense of technological breakthrough, hence the policy in this area will require constant monitoring of developments and trends, both in Slovenia and globally. The measure will be implemented by the Ministry of the Economy directly or through the implementer JAPTI and the Slovene Enterprise Fund. 44

45 Within the framework of this measure, the competent ministries and implementers will perform measures for promoting R&D and investment activities in the business sector, aimed at: Direction in key development areas, such as: Development of new products, services and technologies with high value added; Modernisation, automation and introduction of ICT in production processes, including development of new production processes; Setting up new R&D centres departments of companies achieving the critical mass of know-how and R&D; Industrial design; Obtaining appropriate internationally-recognised quality certificates for products and services; Market analyses. Priority given to individual target groups (large corporations will not be excluded from the measure, the difference will be in the co-financing rate as specified for aid within the R&D and innovations scheme of the European Commission), such as: Small and medium-sized enterprises (SMEs) and within those in particular fast-growing companies and innovative (high technology and non-technological) companies. Priority given to technological areas 24, in particular the following: Energy and the environment o Obtaining, production, storage, distribution and utilisation, notably in the field of renewable and alternative energy sources and energy efficiency; o Protection of the environment; Information and communication technologies o Hardware and software and applications; o Telecommunications, networks and interoperability; o Security and protection; Advanced new materials and nanotechnologies o Ceramics and composite materials; o Polymers; o Special fluids; o Multimaterial systems; o Materials with special characteristics (e.g. memorabilia, etc.); o Foils and layering; o Nanotechnologies. As well as other important technological areas: Biotechnology; Pharmaceutical industry; Process technologies; 24 Determining technological priority areas is based on guidelines from the Development Strategy of Slovenia, the National R&D Programme, guidelines from 7 OP, and data of the Chamber of Commerce and Industry of Slovenia. Technological priority areas will have to be constantly monitored and modified, if need be. 45

46 Chemical technologies; Processing technologies; Medicine-related technologies; Complex systems, cybernetics, and innovative technologies for process management; Electrical equipment (excluding ICT); Industrial design as a specific segment; Logistics as a specific segment. Promoting transfer of know-how between knowledge institutions and companies, and between enterprises themselves: Linking of knowledge institutions and enterprises, and inclusion of top experts in the project; Linking of enterprises in joint ventures; Interdisciplinary nature of development projects. Similarly to the definition of individual aims of the measure, it is also important to establish transparent and publicly accessible information source regarding innovations, staff structure and R&D investments of individual enterprises, which will together with business data offer an integrated range of information enabling clearer defining of target groups. Establishing the appropriate expert evaluation system enabling high quality of supported projects in the business sector is also crucial in implementation of the measure. Objectives and indicators of Measure 3.2: R&D in business Measure Indicator Starting point in R&D in business 2005 Increase the share of innovative companies Large (55%), medium-sized (28), small (13) Planned result as at the end of 2013 Large (75%), medium-sized (60) small (40) Increase the share of high technology products in the total national exports 5.8% 15% New quality jobs in supported companies Higher growth of gross value added in supported companies compared to average in the industry - 3% Annual number of European patents per million people in Slovenia (joint objective with Section 3.3) Increase the number of companies performing selfevaluation in accordance with the EFQM European Excellence Model (in co-operation with the Ministry of Higher Education, Science and Technology) Increase the number of small and medium-sized enterprises entering the national quality award award of the Republic of Slovenia for business excellence, and the European Quality Award in Brussels (in co-operation with the Ministry of Higher Education, Science and Technology) Slovenia 10 European award Promoting research & development activities in enterprises 46

47 The measure is aimed at promoting applicative R&D projects in enterprises for acquiring new knowledge, and for new, changed or improved products, processes or services. The Ministry will directly or through implementers JAPTI and the Slovene Enterprise Fund support projects, which will completely fit one or several of the following categories: industrial research and experimental development. As regards SMEs projects, support will also be given with regard to costs of acquiring industrial property if these are submitted on the basis of prepared projects. Aid scheme: The programme of technological development, measure R&D in enterprises, N472/2006 Slovenia Aid form: Grant Eligible cost: The Ministry will provide co-financing of R&D projects in enterprises for acquiring of new knowledge, and for new, changed or improved products, processes or services, for example, by using ICT, and co-financing costs of industrial research, precompetitive R&D and technical feasibility studies. Eligible costs are as follows: - Cost of staff, researchers, technicians and other support staff employed exclusively for research activities; - Cost of instruments, equipment, and land and buildings utilised exclusively and permanently for research activities; - Cost of consulting and other services used exclusively for research activities, including research, technical know-how and patents bought from external sources; - Overheads incurred directly as a result of research activities; - Other operating costs (e.g. cost of material, energy, etc.) incurred directly as a result of research activities. The new R&D and innovations scheme is in the draft stage, when it is adopted, the new rules, which currently specify the following aid intensities will be taken into account: Small enterprises Medium-sized enterprises Large enterprises Basic research 100% 100% 100% Industrial research 65% 60% 50% 47

48 Industrial research being the subject of: - co-operation between enterprises for large enterprises: crossborder co-operation or cooperation with at least one SME or - co-operation with a public research institution (PRI) or - dissemination of results 80% 75% 65% Experimental development [35]% [30]% [20]% Experimental development being the subject of: - co-operation between enterprises for large enterprises: crossborder co-operation or cooperation with at least one SME or - co-operation with a public research institution [50]% [45]% [35]% Implementer: Ministry of the Economy or JAPTI and the Slovene Enterprise Fund Selection criteria: Competitiveness of the company on the domestic and foreign markets Impact of the project on improved competitiveness of the company Partnership between companies and between enterprises and R&D institutions (for large projects) Relevance, quality and complexity of the project in terms of innovations and technology Qualifications of the implementing team Organisation of R&D activities, and project implementation timeline Financial plan (cost/benefit ratio of the project) Aid intensity: Aid of up to 50% of eligible cost of the project can be granted for industrial research. Aid of up to 25% of eligible cost of the project can be granted for precompetitive R&D. Aid granted for technical feasibility studies can equal up to 75% and 50% of eligible cost of the project if such studies are, respectively, a precondition for industrial research and precompetitive R&D. Final beneficiaries and conditions: SMEs and large corporations 48

49 Promoting technological investments The measure will be implemented by the Ministry of the Economy directly or through the implementers JAPTI and the Slovene Enterprise Fund. The aim of the measure is to encourage enterprises to make investments in production of high-technology and innovative products or to provide high-technology services, which will be reflected in higher growth and productivity as well as more competitive activity on the global market with subsidies. Technological investments must be related to new products/services with higher value added. The subject of co-financing is initial investments in fixed tangible 25 and intangible 26 assets in: Establishing of a new plant; Expanding of an existing plant; Diversification of products manufactured at the plant with newly added products; Significant change of the production process in an existing plant. The principle of urgency and the principle of cumulation must be taken into account in accordance with the Guidelines on national regional aid In order to ensure that regional aid truly promotes investments, which would otherwise not be implemented in areas receiving aid, beneficiaries must submit an aid application, which is then approved in writing by the authority in charge of managing the scheme before start of the project implementation, stating that the project, subject to exact verification, generally meets the conditions for eligibility set forth in the scheme. In the case of ad hoc aid, the competent authority must before start of the project implementation issue a letter of intention on granting aid, subject to the approval by the Commission. Should the work commence before conditions set forth hereunder have been met, the project shall not be entitled to receive aid. The upper limit of aid intensity for small, medium-sized and large companies apply to the entire aid: When aid is granted by several schemes simultaneously or in combination with ad hoc aid; When aid comes from local, regional, national or Community sources. In the case costs eligible for regional aid are also eligible, in full or in part, for aid for other purposes, the most favourable upper limit from applicable provisions will be used for the common part. Regional aid for investments cannot be combined with de minimis support for the same eligible costs in order to avoid the maximum aid intensity specified in this measure. Aid scheme: Regional scheme of state aid Aid form: Grant Eligible cost: Cost of purchase of land 25 Tangible fixed assets include land, buildings, equipment and machinery. 26 Intangible fixed assets include technology transfer by purchase of patents, licences, know-how or non-patented technical knowledge. They must be used exclusively in the company receiving national regional aid, and must be amortised. 49

50 Construction and/or purchase of facilities Purchase of machinery and equipment Costs of intangible assets meaning technology transfer by purchase of patent rights, licences, know-how and non-patented technical knowledge. In the case of large corporations, eligible cost of investments in intangible assets can only equal up to 50% of eligible cost of the investment. As regards companies operating in transport, the cost of purchase of transport equipment (movable property) shall be excluded from eligible cost. As regards SMEs, the entire cost of investments in intangible assets by technology transfer for acquiring patent rights, licences, knowledge or non-patented technical know-how can be taken into account. The limit on the amount of aid of 50% regarding investments in intangible assets only applies to large corporations, namely the limit is 50% of eligible cost of the investment. In any case, eligible intangible assets will be subject to conditions necessary for ensuring that assets remain in the receiving region eligible for regional aid, and not benefit other regions, particularly those not eligible for such aid. Eligible intangible assets will therefore have to comply in particular with the following conditions: They must be exclusively utilised at the entity receiving regional aid; They must be posted as assets being amortised; They must be purchased from a third party under market conditions; and They must be included in the company's assets and must remain at the entity receiving regional aid for at least five years (three years for SMEs). The amount of eligible cost shall not exceed 50,000,000. Implementers: Ministry of the Economy or JAPTI and the Slovene Enterprise Fund Selection criteria: Quality investment and/or business plan; Financial plan (cost structure and transparency of the financial plan, and compliance of costs with the project implementation plan); Competitiveness of the company on the domestic and foreign markets Impact of the project on improved competitiveness of the company Relevance of the project in terms of innovations and technology Investment must have a positive impact on the environment Intensity of national regional aid: The eligible area for granting state regional aid shall be the entire territory of the Republic of Slovenia, in line with the Regional Map applicable until 31 December Maximum permitted rates of state regional aid in the eligible area shall be: Up to 30% of eligible cost for large corporations The maximum specified for large corporations can be topped by 10 percentage points for medium-sized enterprises The maximum specified for large corporations can be topped by 20 percentage points for small enterprises 50

51 For small and medium-sized enterprises from the transport industry, the aid intensity equals up to 30% of eligible cost. Final beneficiaries and conditions: Beneficiaries shall be small and medium-sized enterprises and large corporations implementing technological investments related to new products/services with higher value added. Companies involved in fishery, coalmining and processing of agricultural products specified in Annex I to the EC Treaty, except for production and marketing of agricultural products imitating or replacing milk and milk products as specified in Article 3(2) of Regulation (EEC) no. 1898/87, shall not be eligible to receive state aid under this measure. Beneficiaries shall contribute their own funds equalling at least 25% of eligible cost, which shall not contain any public funding. The investment must remain in the region at least five years after completion in the case of large corporations, and at least three years after completion in the case of small and mediumsized enterprises Promoting process and organisational innovations The Ministry of the Economy will directly or through implementers JAPTI and the Slovene Enterprise Fund by way of co-financing support enterprises to introduce process and organisational innovations in their business systems. Process innovations mean implementation of new or significantly improved production or supply methods (including significant changes in techniques, equipment and/or software). Organisational innovations shall mean implementing new organisational methods in business practice of the enterprise, organisation of work posts or external relations. The managerial approaches to business excellence of enterprises are approaches improving efficiency of business processes, changing corporate organisation, changing organisational culture, and having a positive impact on the climate within the enterprise. Such approaches result in improved performance of the company a) Process and organisational innovations: The following conditions must be met: In order to change the organisation, organisational innovations must always be linked with use and utilisation of information & communication technologies (ICT); Innovations shall be implemented as a project with appointed and qualified project manager and quantified project cost; Results of the project receiving aid shall be development of a standard, business model, methodology or concept, which can be systematically reproduced, and, if possible, granted a licence and patented; Process and organisational innovations shall be new or significantly improved in comparison with state-of-the-art within the EU; Projects of process and organisational innovations include a high degree of risk, for example in the form of project costs in relation to revenue of the company, time 51

52 needed to develop a new process, envisaged cost/benefit ratio of the process innovation and the probability of failure. Aid scheme: Research, development and innovations (when approved) Aid form: Grant Eligible cost: Cost of staff (researchers, technicians and other support staff within the scope of their involvement in the project); Costs of instruments and equipment within the scope and for the period envisaged in the project (in the case of organisational innovations, the costs of instruments and equipment cover only costs of ICT instruments and equipment); Costs of buildings and land within the scope and for the period of use for the research project; Costs of contracted research, technical know-how and patents purchased or for which authorisation was obtained from external sources at the market price, where the transaction was performed between unrelated parties and was not based on a secret agreement, as well as costs of consulting and other appropriate services used exclusively for research activities only up to 70% of total eligible cost of the project; Additional overheads incurred directly as a result of the research project in the amount equalling up to 20% of total project costs; Other operating costs, including cost of material, inventories and similar products incurred directly as a result of research activities. Implementers: Ministry of the Economy or JAPTI and the Slovene Enterprise Fund Selection criteria: Project contents (design, action plan, clearness and feasibility, project results) Sustainability (environmental impact, multiplicative effects) Ability to implement the project (technical know-how and experience, financial resources) Financial plan (cost/benefit ratio of the project) Aid intensity: Up to 25% for SMEs Up to 15% for large corporations Final beneficiaries and conditions: SMEs Large corporations only if co-operating with SMEs in the activity receiving aid where the participating SME must have at least 30% of total eligible costs b) Managerial approaches to business excellence of enterprises Aid scheme: Training Aid form: Grant Eligible cost: Cost of lecturers external contractor 52

53 Travel expenses of persons included in the training Costs of consulting related to the training Other costs (e.g. rent of premises, projector, etc.) ) Implementers: Ministry of the Economy or JAPTI and the Slovene Enterprise Fund Project selection criteria: Project contents (design, action plan, clearness and feasibility, project results) Sustainability (environmental impact, multiplicative effects) Ability to implement the project (technical know-how and experience, financial resources) Financial plan (cost/benefit ratio of the project) Aid intensity: Up to 25% for large corporations Up to 45% for small and medium-sized enterprises Final beneficiaries and conditions: SMEs and large corporations 3.3. Innovations Slovenia achieved stable economic growth during the transition period, however one of the deficiencies in the development thus far was low level of innovations in the economy, which are crucial not only for survival but also for breakthrough on the global market. The analysis of economic growth rates in OECD members has shown that the fastest growth was achieved by countries, which were the fastest in developing new products, processes and services on the basis of new technologies, and not necessarily by those countries where new technologies have been developed. It is therefore emphasised that the ability to innovate of a country is more important than any individual technological discovery; the ability to innovate the ability of transfer and market utilisation of new knowledge is therefore crucial in addition to the ability to invent. Measures from this item of the programme are aimed at improving the ability to innovate of enterprises and for general support to innovations. The importance of non-technological innovations must be emphasised in addition to technological ones. The sub-programme includes measures related to the innovation environment as well as direct incentives to enterprises to increase innovations in their operations. The measures are aimed at establishing and operation of an innovation environment and culture, promoting creativity and innovativeness of enterprises in all business areas, supporting growth of early-stage innovative (technological and non-technological) companies, and promoting various forms of linking. The following measures are envisaged as a part of this sub-programme: Slovene Competitiveness and Innovations Centre Promoting establishing and work of innovative groups Start-up capital for new innovative companies Special incentives for early-stage innovative companies Incentives to SMEs for acquisition of industrial property rights Aid for consulting services and support services for innovations 53

54 Objectives and indicators of Measure 3.3 Innovations: Measure Indicator Starting point in Innovations Fully established market with innovations Planned result by the end of 2010 Annual number of European patents per million people in Slovenia (joint objective with Measure 3.2) The number of newly established innovative companies with at least 3% higher value added than the industry average Number of new quality jobs created The number of inventions, which enable successful marketing and/or application in the business sector via intermediation of the supporting environment The number of companies included in processes of clustering, networking and technological platforms Slovene Competitiveness and Innovations Centre In the last five years, Slovenia established and supported the development of a number of entities of the supporting environment, which are fully or partly engaged in the field of innovation. Overview of activities of those entities as well as other institutions of the supporting environment reveals inefficiency notably as regards their interconnection and coordinated activities, which prevents synergies and therefore an integrated supporting environment in the field of innovation. Also, activities of various entities of the supporting environment in the field of innovation are overlapping in terms of programme while some are not being implemented resulting in a non-transparent and inefficient supporting environment system. The new programme of measures will together with the amended Act Regulating Supportive Environment for Entrepreneurship and the secondary legislation adopted on the basis thereof clearly specify the guidelines for activities of individual entities of the supporting environment. Nevertheless, an integrated supporting environment system in the field of innovation in accordance with the "one-stop-shop" principle should be established. The need is particularly acute in the specific area of protection, marketing and intermediation with regard to both inventions and innovations as well as in linking with potential partners and investors in placement of technological and non-technological innovations on the market. These issues, and on the other hand the needs of the business sector, research institutions and individuals for an efficient supporting environment in the field of innovation are the reason and requirement for establishing the Slovene Competitiveness and Innovations Centre. Users of services of the presented supporting environment in the field of innovation are the following: Enterprises, and micro companies and SMEs in particular Individuals (e.g. independent researchers innovators, potential entrepreneurs, students, young people and other citizens of the Republic of Slovenia) R&D institutions (higher education institutions, institutes, university schools and technological centres) 54

55 Miscellaneous organisational and substantive forms (technological networks, clusters, technological platforms and excellence centres) In order to ensure efficient operation of the supporting environment for entrepreneurship and innovations, the Slovene Competitiveness and Innovations Centre will not cover contents or provide services being already efficiently implemented by various institutions of the supporting environment. The Slovene Competitiveness and Innovations Centre will have the task of linking individual elements of the supporting environment to form an efficient entity where they will be connected into an efficient and integrated supporting environment in the field of innovation with their key competences by offering assistance in accordance with the "one-stop-shop for innovativeness, inventions and innovations" principle. The Centre's work will be supplemented by additional activities for establishing concrete services on the market related to protection and marketing of innovations. The Slovene Competitiveness and Innovations Centre will not be a new institution but will implement its tasks within an existing institution (JAPTI is envisaged). JAPTI will be able to hire outsourced contractors for individual areas of operation in accordance with the applicable legislation. Areas of operation The main task of the Centre will be to co-ordinate integrated activities of entities of the supporting environment, notably technology parks, business and university incubators and VEM, as well as to implement activities for establishing concrete services on the market related to protection and marketing of inventions and innovations. The Centre will also offer support to enterprises and innovations, primarily by appropriate and efficient flow of information between entities of the supporting environment and their users: 1. Connecting and promoting entities and initiatives of the supporting environment a. Organising events related to the supporting environment as a whole b. Identifying initiatives related to innovations and their linking with the appropriate entities of the supporting environment 2. Services related to marketing and protection of intellectual property a. Organising the Slovene innovations market (active intermediation, interactive and in the form of a fair) for linking innovators, enterprises and investors 3. Searching for potential partners including the assistance for application to the national and EU projects a. Responsibility for adequate flow of information on EU-related issues b. Networking of the supporting environment for innovations at the international level 4. Establishing a database linking supply and demand with regard to innovations (all activities implemented by linking the existing databases): a. Establishing and managing a database of existing ideas and inventions b. Establishing and managing the central register of innovators c. Establishing and managing a database of researchers and groups of researchers in scientific institutions and enterprises d. Establishing and managing a database of supporting institutions at the national and international level e. Establishing the central register of knowledge mediators institutions f. Establishing and managing a database of innovative and high technology companies 55

56 5. Informing and support related to obtaining funding a. Informing on information providers, which includes preparation and updating of the database of all providers of such information and any specialisations (EIC, CCIS, consulting companies, EUGA, IRC, etc.) Aid scheme: Not state aid Aid form: Grant Eligible cost: Cost of establishing the Centre and implementing its tasks Implementer: Ministry of the Economy through JAPTI Selection criteria: Quality and references of the service provider with regard to the Centre's tasks (to be specified in detail in the call for proposals) Aid intensity: 100% Final beneficiaries: All users of the supporting environment for entrepreneurship and innovations, such as companies, independent innovators, R&D institutions and miscellaneous organisational forms, as well as other citizens of the Republic of Slovenia Promoting establishing and work of innovative groups The Ministry of the Economy will directly or through the implementer JAPTI provide for establishing, expansion and promoting the work of groups. Innovative groups represent groups of independent companies innovative companies in the early stage of operation of small, medium-sized and large enterprises and public research organisations operating in a particular industry or region and formed for promoting innovative activities by encouraging the intensity of mutual impacts, sharing of premises and exchange of know-how and expertise, and efficient contribution to technology transfer, establishing of networks and dissemination of information between enterprises in the group as well as to creating of new business opportunities. Aid can be granted for establishing,. expanding and promoting innovative groups exclusively to the legal entity managing the innovative group. This entity will provide for managing participation and access to the premises, institutions and activities of the group. Access to premises, institutions and activities of the group shall not be restricted, and fees charged for using institutions of the group and for participation in its activities must reflect the actual cost. The Ministry will endeavour to create the correct balance between SMEs and large companies in the group and to achieve critical mass, notably through specialisation in a particular area of R&D and innovations, by taking into account the existing groups in the Member State and at the EU level. An example of innovative groups is activities and work in the field of clustering, technological platforms, technological networks, etc. Aid scheme: Research, development and innovations (when approved) 56

57 Aid form: Grant Aid will be granted as: a) Aid for investments to those legal entities, which will establish or expand an innovative group for the following purposes: Institutions for training and R&D centres; Research institutions with free access; Laboratories, testing institutions; Broadband network infrastructure; and b) Aid for efficient management of the group with clear objectives and the purpose of increasing the innovative ability of the group to those legal entities, which will manage the innovative group; for covering promotion of the group, including setting up of networks, technology transfer and training, for a period not exceeding five years. Such aid will be temporary and generally disconnected in time so that it will promote pricing, which will reflect costs, in appropriate time. Eligible cost: Ad a) Eligible cost is cost related to investments in land, buildings, machinery and equipment; Ad b) Cost of staff and administrative costs related to the following activities: - Promotion of the innovative group for the purpose of inclusion of new companies in group participation; - Managing of the innovative group with an open structure form; - Organising training programmes, workshops and conferences for the purpose of supporting dissemination of knowledge and links between group members. Implementer: Ministry of the Economy or JAPTI. Project selection criteria: Quality of the partnership Specific contributions (regional development, achieving environmental objectives, development of the information society, etc.) Feasibility of activities. Aid intensity: Ad a) The highest aid intensity is 15%. In the case aid is granted to SME, the upper limit can be increased: By 15 percentage points for aid granted to a small enterprise; and By 10 percentage points for aid granted to a medium-sized enterprise. Ad b) In the case aid is decreasing, the intensity can equal 100% in the first year, however it must be linearly decreased to nought by the end of the fifth year. In the case of non-decreasing aid, intensity shall not exceed 50% of eligible cost and the duration will be limited to five years. Final beneficiaries and conditions: Ad a) Aid for investments can be granted to legal entities establishing or expanding an innovative group for the following institutions: institutions for training and R&D centres, research institutions with free access: laboratories, testing institutions, broadband network infrastructure; 57

58 Ad b) Aid for promoting groups can be granted to legal entities managing an innovative group, for a limited period of five years Incentives to SMEs for acquisition of industrial property rights The Ministry of the Economy will directly or through the implementer JAPTI (possibly also the Slovene Enterprise Fund) and in co-operation with other entities of the supporting environment for innovations by co-financing costs assist SMEs in acquiring and approving patents and other industrial property rights. Aid scheme: Research, development and innovations (when approved) Aid form: Grant Eligible cost: All costs incurred before granting of the right at the original level of competence, including costs related to preparation, submitting and processing of the application and costs incurred in renewal of application prior to granting of the right; Cost of translation and other costs incurred as a result of obtaining or approval of the right at other levels of competence; Costs incurred in protection of the validity of the right during the official processing of the application and any appeals even if such costs were incurred after granting of the right. Implementer: Ministry of the Economy or JAPTI. Criteria: Marketable potential of intellectual property Aid intensity: Equal level of aid applicable as aid for R&D in relation to R&D activities resulting in the underlying intellectual property rights (basic research and industrial research). Indicators: The number of patent applications within the supporting environment, 30 annually. Objectives: The number of European patents per one million people significantly increased by 2010, from 35 in 2002 to 100 in 2013 (joint objective of Measures 3.2 and 3.3.3). Final beneficiaries and conditions: SMEs and potential entrepreneurs Start-up capital for new innovative companies The Ministry of the Economy will directly or through the implementer the Slovene Enterprise Fund (or JAPTI) grant start-up and growth of new innovative companies. The form of grants, criteria and conditions will be set forth in individual call for proposals in accordance with the business plan of the implementer at the national level. New innovative companies will be able to receive grant for the first time during the stage of developing the idea for a product/service. 58

59 Grants will be given for three development stages at most, subject to the condition that the preceding stage has been successfully completed and that the expected results have been obtained. Aid scheme: De minimis scheme Aid form: Grant Eligible cost: Cost of incorporating a company Legal and administrative cost directly linked to incorporation of a new company Financial services costs Services for innovations: databanks, technical libraries, market research, quality labelling, verification and certification Costs incurred in the first five years from incorporation: o Interest related to external financial sources and dividend on the company's equity used for incorporating a new company if exceeding the reference interest rates o Reimbursement of costs of rental of production and business premises, machinery and/or equipment o Other operating costs including costs of material, inventories and similar products o Reimbursement of depreciation and costs of lease of production premises, machinery and/or equipment and o Reimbursement of costs of wages and salaries including reimbursement of compulsory social security contributions if not included in other forms or sources of state regional aid Implementer: Ministry of the Economy through JAPTI or the Slovene Enterprise Fund. Criteria: Innovativeness or high technology activity Growth potential Quality investment and/or business plan; Value added per employee and the number of jobs created Financial plan (cost structure and transparency of the financial plan, and compliance of costs with the project implementation plan) Aid intensity: Up to 100% Final beneficiaries and conditions: New innovative SMEs and potential entrepreneurs Special incentives for early-stage innovative companies The Ministry of the Economy will directly or through the implementer Slovene Enterprise Fund (or JAPTI) through a call for proposals or invitation grant special aid to early-stage innovative companies, which especially stand out either by their high technology orientation, 59

60 innovations or high growth. Aid will be granted for operation, growth and development of companies. Aid scheme: De minimis (until the R&D and innovations scheme is approved) and Research, development and innovations (when approved) Aid form: Grant Eligible cost: Costs of investments in tangible assets meaning the cost of purchase of machinery, equipment and instruments; Costs of investments in intangible assets meaning technology transfer, costs of contracted research, technical know-how and patents purchased or for which authorisation was obtained from external sources at the market price, where the transaction was performed between unrelated parties and was not based on a secret agreement, as well as costs of consulting and other appropriate services used exclusively for research activities only up to 70% of total eligible cost of the project; Costs of wages and salaries of existing or new employees working in R&D and on the project; Additional overheads incurred directly as the result of the R&D project. Implementer: Ministry of the Economy through the Slovene Enterprise Fund or JAPTI. Project selection criteria: Innovativeness and/or high-technology orientation High value added Growth and growth potential of the company Substantiation, feasibility and quality of the project Intensity and amount of aid: Up to 100% up to 1 million The beneficiary can only receive aid once in the period when they meet the conditions for an early-stage innovative company. After receiving such aid, the beneficiary can only receive other state aid, as follows: a) [3] years after granting of aid for early-stage innovative companies; or b) As soon as the beneficiary can prove that their costs eligible for aid for an R&D and innovations project totalled at least double amount of aid received on the basis of the decision. This aid can be combined with other aid from this framework, aid for research & development and innovations being subject to a group exception under the Regulation 364/2004 (OJ L 63, 28 February 2004, p. 22) or any replacement regulation, and aid under guidelines on venture capital. The beneficiary can receive state aid not being aid for R&D and innovations and aid for venture capital only three years after receiving aid for early-stage innovative companies. Final beneficiaries must meet the following conditions: Small enterprise existing less than 5 years at the time of granting of aid; Proof that they will develop in near future products, services or processes, which are technologically new or significantly improved in comparison with state-of-the-art in the industry in the EU (the assessment must be made by an independent expert, notably on the basis of a business plan); and 60

61 Bearing the risk of technological or industrial failure; or For which R&D costs represent at least [15%] of total operating expenses. 61

62 4. Promoting small and medium-sized enterprises with equity and debt instruments Defining the challenge International comparisons have shown that R&D investments and innovations for faster replacement of existing products with new products with higher value added and lower production cost are the key force behind development of small and medium-sized enterprises (SMEs). SMEs represent the backbone of a successful national economy and are the key factor of a competitive edge in the global economy. But these are exactly the areas in which Slovenia significantly lags behind economically more successful countries. Table 4-1: Selected indicators of the Slovene economy in comparison with Europe (data for 2003) in Number of companies Share of the number of companies (in %) Number of employees Share of the number of employees (in %) Number of employees per company Operating revenues per company (in thousand) SLO Size class Micro Small Mediumsized Total SMEs Large enterprise s ,360 4,420 1,110 89, , ,410 4,540 1,100 91, ,350 TOTAL COMPANIES ,732 4,987 1,144 94, ,145 Europe ,040,000 1,200, ,000 20,415,000 40,000 20,455, ,820,000 1,260, ,000 19,270,000 40,000 19,310, SLO Europe ,250 91, , , , ,940 SLO ,830 91, , , , , ,009 96, , , , ,895 Europe ,750,000 23,080,000 15,960,000 80,790,000 40,960, ,750, ,040,000 24,280,000 18,100,000 97,420,000 42,300, ,720,000 SLO Europe SLO Europe , , SLO ,030 9, , ,110 10, , ,138 11, , Because of comparability with the European Observatory for SMEs, the following activities were excluded for Slovenia: A agriculture, hunting and forestry, B fishery, L public administration, defence and social insurance, M education 62

63 Value added per employee (in ) Share of labour costs in value added (in %) Europe 19 SLO ,000 24, ,000 1, ,610 25, ,020 1, ,720 23,070 22,230 20,670 26,900 23, ,710 24,250 23,730 21,500 28,700 24, ,862 26,194 25,970 22,229 29,856 24,898 Europe ,000 75, ,000 65, ,000 80, ,000 60,000 90,000 55, ,000 75,000 SLO Europe Source: For Slovenia IPMMP - EPF UM, From data for Agency of the Republic of Slovenia for Public Legal Records and Related Services prepared by the company Bisnode d.o.o. (data for 2004), for Europe 19 European Observatory for SMEs 6 th Report (data for 2000) and 7 th report (data for 2003). Under the methodology of the European Observatory only the non-primary sector of the economy is taken into account, not including the following activities, A agriculture, hunting and forestry, B fishery, L public administration, defence and social insurance, and M education 1 = SIT (average exchange rate of the Bank of Slovenia as at 31 December 2004). Source: the Bank of Slovenia. Operating revenues for companies: (net sales revenues + value of capitalised own products, services, goods and material + other operating revenues). Operating revenues for taxable persons: sales revenues. EU-19 are all members of the European Union until 1 May Liechtenstein, Iceland, Switzerland and Norway. As data on which the analysis is based relate to 2003, the term EU and the term "European company" should be understood in this context. Slovenia was still far behind the EU average on labour productivity in 2004, as the average value added per employee in the EU and Slovenia equals 75,000 and 24,180, respectively. The difference widens as the company size increases. The ratio for micro companies is slightly above 1:2, while it rises to more than 1:4 for large corporations. Nevertheless, micro companies are the least productive ones, as they stood only at 67.7% of Slovene average as regards productivity 28. According to data of EVCE (the European Venture Capital Association), the volume of venture capital investments in Slovenia in 2003 as the share in gross domestic product was 0.009% (the European average was 0.288%), total investments in 2003 were billion, while in Sweden., for example, they were 2.15 billion 29. The needs of the entrepreneurial environment show demand for riskier sources of finance (guarantees, favourable loans for emerging and new companies) and for direct incentives for incorporation, start-up and growth of companies and for increasing value added per employee in SMEs. The European Commission found in its Green paper Entrepreneurship in Europe, 2003 that around 20% of small enterprises in EU Member States still claims problems in acquiring long-term finance. It therefore proposes that public financial institutions in EU Member States act as catalysts for private investors, increase the offer of guarantees for small and medium-sized enterprises and develop various supporting instruments from microloans to venture capital 30. According to data from the Global Entrepreneurship Monitor 2005, Slovenia lacks financial resources for financing establishing and growth of companies. The reasons are undeveloped capital market, lack of venture capital funds, not enough direct foreign investment, banking 28 Source: Slovene Entrepreneurial Observatory Source: EVCA Green paper-entrepreneurship in Europe,

64 instruments not adjusted to financing of establishing and growth of companies, and too few state grants 31. Because of the important impact of SMEs on the economy, the majority of developed countries pay great attention to lack of equity instruments for financing SMEs in their early stages of development. It is almost impossible to obtain debt financing in this stage, and therefore equity finance is the only source. However, recent results of EVCE show that venture capital funds in the EU Member States in the majority of cases (33.9% of all investments) decide to invest in companies in expansion and only 1.8% is intended for entrepreneurial activities during start-up 32. Measures taken Regional guarantee schemes are active in the environment as individual projects within entrepreneurial centres, which to a smaller extent cover smaller investments of SMEs in individual regions. Certain regional guarantee schemes are also linked with the Slovene Enterprise Fund. At the local level, municipalities provided favourable finance for companies primarily in the form of microloans and subsidised interest. At the national level, the implementer of measures of financial support was the Slovene Enterprise Fund (hereinafter: the Fund). Financial instruments offered by the Fund were direct loans, indirect loans through banks, guarantees and subsidised interest. Between 1996 and 2005, the Fund supported approximately 1510 investment projects of small and medium-sized enterprises and approved roughly SIT billion 33 of various favourable finance (indirect loans, direct loans, grants and bank loans guarantees). Measures of the Fund in the area of investment projects in tangible and intangible assets of SMEs approved by the Fund only by using purpose-allocated assets and the bulk being in the form of risk-free instruments enabled creation of a large number of new jobs and improved their competitive ability, because of quality investments in technological and other upgrades in all industries, and in the last two years in those not prohibited by the State Aid Control Act. The Fund used the existing capital in the period to support on average of around 151 projects amounting to SIT billion thereby enabling creation or preservation of an average of 640 jobs annually in the SMEs segment. Table 4-2: Implementation of tenders of the Fund in 2004 and 2005 and follow-up of impact Received applications Approved applications No. of applications received Amount of loans and grants applied for (in SIT million) Total investment amount (in SIT million) No. of applications approved Amount of loans approved (in SIT million) Amount of guarantees approved (in SIT million) Amount of grants approved (in SIT million) Total investment amount (in SIT million) Share of public funds Share of public grants (national, municipal) Amount of private funds of investors (in SIT million) Employees before the investment Average employees before the investment Planned employees 3 years after the investment Planned new jobs Average new jobs (per company) Calculated amount of state aid Average amount of state aid/application (in SIT million) 31 Global Entrepreneurship Monitor 2005, Entrepreneurship between wishes and reality 32 Source: EVCA ,64 SIT = 1 EUR 64

65 , , , , % 2.50% 2, , , , , , , , , % 22.00% 8, , ,528 1, , % change 2005/ , % , Source: Slovene Enterprise Fund 2006 An increase in favourable financial sources for supporting development investments of SMEs has been noted in recent years. The reason lies in increased funds from the national budget for promoting SMEs in Slovenia, notably the programmes of utilising funds from European structural funds intended for direct incentives to investments of SMEs. The development investments are also supported by consulting services as SMEs can use favourable entrepreneurial consulting supported by the voucher consulting programme to prepare investment studies. In Slovenia the Slovene Association of Venture Capital Funds is in function, which currently includes five companies linking their activities also with the function of venture capital funds. Future measures The measures for promoting entrepreneurship with equity and debt finance will be implemented by the Slovene Enterprise Fund providing financial instruments by taking into account in preparation of its products the trends stemming from the macroeconomic environment and market needs. The financial support provided by the Slovene Enterprise Fund is a part of the system, which must be linked to other forms of supporting development of entrepreneurship. The Slovene Enterprise Fund will connect with European financial institutions (the European Investment Fund, the European Investment Bank) in implementation of certain programmes, and draw EU structural policy funds. The programme of promoting SMEs with equity and debt instruments will act as support to other programmes and their contents. The Slovene Enterprise Fund will also connect with Slovene banks and other potential investors and obtain European structural policy funds. In addition to the existing forms of debt finance, guarantees supporting investments of small and medium-sized enterprises, microguarantees and microloans will be provided. Equity finance instruments will start to be developed. Additionally, educational, information and other activities will contribute to wider use of new financial instruments and quality inclusion of small and medium-sized companies in programmes. The activities will comply with the rules on state aid, which specify the methods for implementing instruments (the existing aid schemes for entrepreneurship, guarantee schemes and de minimis schemes as well as newly established state aid schemes). The Slovene Enterprise Fund will also co-operate with technology parks, incubators and other institutions for promoting entrepreneurship at the local/regional level for the purpose of achieving synergy effects in granting state aid. 65

66 4.1. Promoting fast-growing and innovative small and medium-sized companies with equity instruments The measure is aimed at providing favourable equity finance, i.e. venture capital. A venture capital fund will be established, which will operate in accordance with the public-private partnership principle. The Fund will be financed from public funds, and venture capital investments in SMEs with high-growth potential will be implemented in combination with other private funds and individual investors. The business and investment policies of the venture capital fund will be specified in the Articles of Association and By-laws of the fund. The government will be active through the venture capital fund in equity financing of SMEs aimed at promoting venture capital investments from private funds with the emphasis on new technologically-oriented and fastgrowing companies. The Slovene Enterprise Fund will acquire through foreign investors the know-how on management of venture capital funds. Simultaneously with the financial support though public-private partnership, investments of the venture capital fund will also be stimulated with the appropriate legislation. The legal basis for establishing and operation of venture capital funds will be prepared. Aid scheme: Venture capital, the measure will be implemented when the scheme is approved by the European Commission Aid form: Equity stakes Eligible cost: Providing equity stakes in the public venture capital fund Implementer and conditions: Venture capital fund Criteria: Value added per employee Jobs created New high technology companies Growth of revenue in supported companies Enhanced competitiveness of supported companies Aid intensity: In accordance with the EU guidelines on state aid and venture capital Final beneficiary: Small and medium-sized enterprises, and in particular newly established companies and those with the potential for growth and development (enterprises with products and services having high value added, which can be either technological or nontechnological). 66

67 Objectives and indicators of Measure 4.1: Promoting fast-growing small and mediumsized enterprises with equity instruments Measure Indicator Starting point in 2005 Promoting fastgrowing The number of venture capital funds 0 and innovative small Value added per employee 22,229 and mediumsized (2004)* enterprises with equity instruments Planned result as at the end of % higher value added per employee in supported companies compared to the industry average The number of fast-growing high technology companies Jobs created * Source: Slovene Entrepreneurial Observatory Promoting investments of small and medium-sized enterprises with debt instruments The Slovene Enterprise Fund will promote investments of SMEs with debt instruments (loans and guarantees). The aim of the measure is to promote investments in the stage of growth and further development of small and medium-sized companies on the basis of loans with lower interest rate than the market interest rate with favourable financial leasing and favourable terms and conditions for approving debt finance. The goal is to increase the number of small and medium-sized companies deciding on growth and development also in the second stage of existence and thus promote the transition from micro to small and medium-sized companies with enhanced competitiveness. The purpose of the measure is also to reduce the business risk with guarantees (establishing of a guarantee fund, technical assistance regarding guarantees, collateralisation of equity investments, assistance from public funds for collateralisation of bank investments in start-up enterprises, and sharing risk between commercial banks and other financial institutions and public institutions). The Slovene Enterprise Fund will provide guarantees for partial collateralisation of bank loans raised by SMEs in Slovenia for development investments. The guarantees issued by the implementer as loan collateral (up to 80% of the loan) enable enterprises reduced mortgage burden, lower cost of loan collateral and simpler raising of loans for development investments. A guarantee fund has already been set up for that purpose. Public sources of finance will be linked with private ones. The multiplication effect of public funds in establishing of the guarantee fund is also important as the implementer by one tolar in provisions for guarantee risk brings ten tolars of bank funds and 2.5 tolars of private sources. The Slovene Enterprise Fund will also implement the measure of granting reguarantees of the fund for assumed risks of guarantee schemes at the regional and local level whereby synergy effects and linking of funds at all levels would be achieved. 67

68 The Slovene Enterprise Fund will provide the following financial instruments (state aid forms): Indirect investment loans with banks (lower interest rate for long-term investment loans); Intermediation in forming of interest rates and subsidised interest rate and cost of bank financing; Direct loans to new companies, which cannot obtain bank finance because of short period of operation; Microloans for current assets for small companies and new companies which find it hard or impossible to obtain bank finance; Guarantees for early-stage companies not having sufficient guarantees for raising bank loans; Microguarantees for short-term liquidity loans; Guarantees for other forms of development investments (guarantees for equity finance, etc.); Guarantees to enterprises for reducing mortgage burden; Guarantees for financial leasing; Reducing interest rates and other costs in leasing for machinery and equipment. Scheme type: De minimis Aid form: Favourable loans, guarantees, grants (subsidised interest rate) Eligible cost: Cost of investments in tangible assets meaning the cost of purchase of machinery and equipment, purchase of land, cost of utility and infrastructure development of land, cost of construction and/or purchase of buildings; Costs of investments in intangible assets meaning technology transfer by purchase of patent rights, licences, know-how and non-patented technical knowledge; Costs of financing current assets. Implementers and conditions: Slovene Enterprise Fund Conditions: The potential beneficiary must be a small or medium-sized enterprise; The enterprise must provide for creation of new jobs (a minimum of 1 new job) or increase in value added per employee; Aid in the form of loans shall be deemed de minimis transparent aid. Transparent aid is aid for which the gross grant equivalent can be exactly calculated in advance without a risk assessment. In the case of loans, the gross grant equivalent is calculated on the basis of market interest rates applicable at the time of approval of the grant. Criteria: Number of new jobs created Value added per employee Quality investment and/or business plan; Financial plan (cost structure and transparency of the financial plan, and compliance of costs with the project implementation plan) Aid intensity: Up to 200,000 in three years 68

69 In the case of aid envisaged within the framework of a guarantee scheme for enterprises not being companies in trouble, it shall be deemed de minimis transparent aid when the guaranteed part of the loan envisaged as a part of such scheme does not exceed 1,500,000 per enterprise (or 750,000 per enterprise in the case of companies operating in road transport). The guarantee shall not exceed 80% of the underlying loan. In accordance with Item 3 of Article 2 of the draft Commission Regulation (EC) on application of Articles 87 and 88 of the EC Treaty, combining of aid for individual projects exceeding the upper limit of aid cannot be performed for de minimis aid. Final beneficiary: Small and medium sized enterprises Objectives: As regards indirect investment loans, at least 250 new jobs should be created in supported companies, and roughly 5% higher value added per employee in supported companies compared with the industry average should be achieved by As regards microloans and direct loans to new companies, at least 120 new jobs should be created in supported companies, and roughly 1% higher value added per employee in supported companies compared with the industry average should be achieved by The results expected by 2013 with regard to guarantees and reguarantees is creation of at least 250 new jobs in supported companies. The results expected with regard to guarantees is roughly 3% higher value added per employee in supported companies compared to the industry average. As regards reguarantees, the excepted result is roughly 2% higher value added in supported companies. Objectives and indicators of Measure 4.2: Promoting investments of small and mediumsized enterprises with debt instruments Measure Indicator Starting point in Promoting investments of SMEs with debt instruments Value added per employee ,229 (2004)* Planned result as at the end of % higher value added per employee in supported companies compared to the industry average Jobs created * Source: Slovene Entrepreneurial Observatory

70 Summary of major objectives and indicators of the Programme of Measures The programme for promoting entrepreneurship and competitiveness will on the basis of assorted objectives and indicators common to various measures within the programme ensure the following: Roughly 15,000 new quality jobs by 2013; Incorporation of at least 1200 new companies of which 20 high technology fast-growing companies; Doubling of the number of highly-educated people in the business sector by 2013; Increase the share of innovative large corporations, medium-sized enterprises and small enterprises to 75%, 60% and 40%, respectively, by 2013; Increase the share of high technology products in the total national exports from 5.8% to 15% by 2013; The annual number of European patents per one million people equalling 100 by 2013; Development and operation of at least 5 business-development-logistics platforms by 2013; On average, at least 3% higher value added per employee in supported companies compared to the industry average; Facilitate the issue of financing for companies with high potential of growth and development by

71 ENCLOSURES Objectives and indicators of Measure 1 Promoting entrepreneurship and entrepreneur-friendly environment; Sub-programme: 1. Promoting entrepreneurship and entrepreneur-friendly environment Descriptive objective: Raising entrepreneurial culture and enhancing the entrepreneur-friendly environment Indicators and values to be used for measuring results: Measure Indicator Starting point in 2005 Promoting entrepreneurship education entrepreneurship and for Entrepreneurship is an appropriate career choice (GEM) Successful entrepreneurs are respected (GEM) 32.07% 45.5% Planned result as at the end of % 90% Stories about successful entrepreneurs frequently appear in the media (GEM) 32.72% 70% Support to VEM entry points Established the entire system of education for entrepreneurship at all levels Establish new companies in the target group of the young Number of days needed to register a company until Cost of incorporating a company 10.1% of GNI 6.8% of GNI Number of users of support services at the local level 25,000 35,500 Voucher consulting Voucher training Coverage with information and consulting services of (potential) entrepreneurs at an annual level Increase in the number of SMEs receiving the grant Increase in the number of potential entrepreneurs receiving the grant Number of new jobs created Increase in the number of SMEs receiving the grant % 3% annually 3% annually 350 3% annually Increase in the number of potential entrepreneurs receiving the grant - 3% annually Successful applications of Slovene companies to EU programmes/projects - 10% annually (100 companies) 71

72 Promoting entrepreneurship specific target groups in Number of companies expanding their operations (internationalisation and international co-operation) Number of new companies (target groups of the young, women, people from rural areas) Number of jobs created Objectives following the basic strategic documents of the Republic of Slovenia Development Strategy of Slovenia Develop programmes for promoting entrepreneurial spirit; Develop entrepreneurial knowledge at all levels of education, notably in technical and natural science schools, promote entrepreneurial spirit in young people and establish the term of entrepreneurship as a positive category, develop special education programmes related to management of small enterprises and entrepreneurial knowledge for young people; Improve access to support services for small and medium-sized enterprises, improve the quality of these services and link all consulting and directing institutions in a network, including regional crafts chambers; Complete the "one-stop-shop" project and reduce administrative burden in incorporation of companies; Establish a uniform, rational information system of small enterprises, which will satisfy the needs of internal and external users of information and be based on internationally comparable accounting standards; Improve access to support services for small and medium-sized enterprises, improve the quality of these services and link all consulting and directing institutions in a network, including regional crafts chambers. National Action Plan for the Lisbon Strategy Promoting entrepreneurship and entrepreneur-friendly environment; Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia Ensure entrepreneurial-friendly civil service and strictly implement provisions of the decree on administrative procedures prescribing obligatory provision for customer satisfaction with administrative services and other quality standards for administrative services. (Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia); Promoting the supporting environment for entrepreneurship and entrepreneurial culture (via the media, national competitions for the best innovations or entrepreneurial ideas, presentation of good practices and successful entrepreneurial teams, market niches, preparation of topical brochures, organisation of days of entrepreneurship, organising conferences and other events) (Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia); Expand the "one-stop-shop" project implemented by the Ministry of Public Administration and the Ministry of the Economy for the purpose of providing all administrative services required for start-up of enterprises at single entry points and that an enterprise can start operating not later than within one week following the visit to the one-stop-shop. If strictly necessary for achieving this objective, the competence for registration shall be transferred from courts to the Agency of the Republic of 72

73 Slovenia for Public Legal Records and Related Services, and the company and business registers shall be joined; Establish an integrated system for supporting enterprises. National research & development programme Increase financial incentives and technical assistance to SMEs for applying to tenders within the EU programmes. Objectives and indicators of Measure 2: Knowledge for business Sub-programme: 2. Knowledge for business Descriptive objective: Increase the share of highly-skilled and highly-educated people in the business sector Indicators and values to be used for measuring results: Indicator Starting point in 2005 Vocational education (or the dual education system until expiry) Support 3,000 practical trainings annually of pupils at employees in enterprises (craftsmen, entrepreneurs) Reduce human resources deficit of employers The share of those included in vocational education 1921 supported teaching points Planned result as at the end of ,000 practical trainings R&D for business Enable education at universities to at least 100 top R&D staff (researchers) from enterprises annually Support at least 50 transfers of researchers from science to business annually Support at least 50 transfers of highlyskilled staff from large corporations to SMEs annually Support creation of at least 10 R&D teams for industrial research in enterprises annually Change the distribution of researchers between the business and nonbusiness sector Proportion of researchers employed in the business sector % (1,900) 60% Increase the number of highlyeducated people in the non-business sector Proportion of people with MSc and PhD employed in manufacturing (9.3% ) 1,090 2,000 73

74 Objectives following the basic strategic documents of the Republic of Slovenia Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia Promote employment of junior researchers from scientific institutions to the business sector and strongly increase the total number of researchers in the business sector, support specialisations, vocational and undergraduate education of employees in SMEs; Programmes for transfer and increasing knowledge in the economy "A thousand young experts"; System arrangement of education in the work process, which is a part of secondary education (vocational) or higher education programmes and takes place in enterprises, and provide adequate co-financing by the government; Use vouchers to enable education at top world universities to the best R&D staff (in fields of natural science) in enterprises. Development Strategy of Slovenia Increase investments in training of managers and new entrepreneurs; Introduce system measures for increasing mobility of researchers; Set up mechanisms for promoting co-operation between the research institutions and the business sector and promote employment of researchers in enterprises; Use scholarships, wage subsidies and financing of projects outside the public sector to stimulate transfer of experts in natural and technical sciences from public research institutions in the business sector; Change the method of financing and make regulatory changes to increase the mobility of researchers between university schools/institutes and the business sector and in general promote transfer of researchers in enterprises; Increase enrolment in natural and technical science studies. National research & development programme Make an important contribution to objectives set forth in the National R&D Programme, namely (1) increase the share of researchers in the business sector (in FTE) from 35% to 45% of all researchers; (2) at least 8 researchers (in FTE) per 1000 active people working in Slovenia by 2010, of which at least 80% of new researchers must be employed in the business sector; Establish instruments for promoting transfer of researchers in natural and technical sciences from public research institutions and from abroad to the business sector: scholarships, wage subsidies, tax exemptions and credits, financing of projects outside the public sector (post-doctoral projects); Reforming of the programme Junior researchers for the business sector by increasing its appeal and effectiveness by gradually increasing funds for its implementation. 74

75 Objectives and indicators of Measure 3: R&D and innovations in companies Sub-programme: 3. R&D and innovations in companies Descriptive objective: Enhancing competitiveness and innovativeness of the Slovene economy Indicators and values to be used for measuring results: Measure Indicator Starting point in 2005 business- Establishing development-logistics platforms The number of business-developmentlogistics areas of national importance The number of fully established technology parks in Slovenia 0 0 Planned result as at the end of The number of fully established university (college) incubators with offices for technology transfer The number of fully established regional business incubators Number of jobs created R&D in business Increase the share of innovative companies Increase the share of high technology products in the total national exports New quality jobs in supported companies Higher growth of gross value added in supported companies compared to average in the industry Annual number of European patents per million people in Slovenia (joint objective with Section 3.3) Innovations Fully established market with innovations Annual number of European patents per million people in Slovenia (joint objective with Measure 3.2) The number of newly established innovative companies with at least 3% higher value added than the industry average Number of new quality jobs created The number of inventions, which enable successful marketing and/or application in the business sector via intermediation of the supporting environment The number of companies included in processes of clustering, networking and Large (55%), medium-sized (28) small (13) 5.8% ,000 Large (75%), medium-sized (60) small (40) 15% 3% By the end of

76 technological platforms Objectives following the basic strategic documents of the Republic of Slovenia Development Strategy of Slovenia Promoting the favourable environment for innovations with financial aid to companies in the field of technological development: Preparing new technological programmes in partnership between companies, research institutions and the government for the next 3-5 years (the Development Strategy of Slovenia); Co-financing various R&D and innovation projects; System solution to the issue of promoting entrepreneurial investments in R&D and innovation activities; Establish mechanisms for enhanced investments of companies for co-operation with educational institutions and preparedness for promoting mobility; Promote the development of university entrepreneurial incubators; Establish the national innovation system (NIS) and implement the Slovene regional innovation strategy (SLORTIS) by linking universities, research institutes, support institutions, the government and enterprises (the Development Strategy of Slovenia, the National R&D Programme); Promote links between entrepreneurs; Develop new forms of links between entrepreneurs and technological restructuring (zones, parks, clusters, etc.); Higher education network, business incubators and technology parks in regional centres, link businesses in clusters and establish links with other institutions in the region for the purpose of strengthening regional innovation systems, establish regional partnerships for development of the information society and integrated regional strategies for the information society; Additional public funding for research, technological development and innovations should be directed to promotion of technological development and innovations; Systematically reform programmes to support enhanced creativity and innovativeness for the purpose of facilitated acceptance of technological and organisational novelties (transfer of know-how and widening the base of potential innovators); Gradually increase the share allocated to R&D in the government budget; Identify and promote the development of key areas of economic development by measures aimed at promoting technological development, education and science; Give priority to R&D activities in fields where the R&D potential can be linked to the economic activity thereby achieving higher value added (electronic communications and IT, biotechnology and pharmaceutical industry, nanotechnology, new materials, process technologies and environmental technologies); Planned increase in quality of operations of Slovene enterprises by promotion and introduction of the European excellence model EFQM in Slovene companies; Establishing of a business model for development and business excellence for Slovene companies; Promoting utilisation of the latest managerial techniques for managing changes; Establishing industrial & technological zones; Prepare measures, which will promote establishing of entrepreneurial and crafts zones also on locations not the most suitable at the moment; Technical assistance for preparing documentation, partly solve the issue of own participation, include production zones in regional and municipal plans; 76

77 Motivate municipalities and regions for development of entrepreneurship and establishing of crafts zones (the Development Strategy of Slovenia); Facilitate and lower the price of acquisition of land and abandoned production and other facilities; Promote investments of foreign and domestic companies and investments in economic zones and technology parks at the regional level, establish at least three new industrial & business zones with the priority given to regions lagging in development and at least two new technology parks. Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia Create high value added of companies and the resulting new jobs. (Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia); Enhance competitive ability of the Slovene economy: Improvement in the competitiveness ranking. (Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia); Increase public funding for R&D by roughly 0.1% of GDP annually (Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia); Enhance the impact of R&D in the domestic environment, notably by promoting greater R&D and innovations co-operation between enterprises and the public research institutions and mediators for transfer of R&D findings in enterprises (Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia); Increase the number of innovations and innovative companies as an important factor for assessment of competitiveness (Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia); Provide incentives for an annual number of 50 new companies with above-average valued added with regard to the industry or high technology (Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia); Changes in tax and industrial policy and in the system of financing research activities, which will encourage co-operation between research institutions and the business sector, establishing spin-off companies, and employment of researchers in enterprises (Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia); Development and establishing of entities of the innovative environment (incubators, technology parks, excellence centres, technological networks, technological platforms,. clusters, etc.); (Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia); Establish 3-5 big business zones along the motorway cross; (Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia); National research & development programme The global objective has been set forth in the measure of promoting joint applicative R&D projects of the business sector and scientific institutions as regards the National R&D Programme to be achieved with all envisaged activities including co-operation with the Ministry of Higher Education, Science and Technology, whereby by 2010 the share of value added created in activities with medium or high technology should increase from 11% to 15%; the increase of impact of R&D in the domestic environment, global objective increase in R&D investments to 1.8% of GDP in 2006, 2.5% of GDP in 2008 and 3% of GDP by 2010, of which R&D investments in the business sector should equal 2% by 2010; 77

78 Promote utilisation of the most important managerial techniques for managing changes and establish a business model for development and business excellence for Slovene enterprises, and development of human resources and knowledge management; Establish a network of technological centres linked with industrial clusters and technological networks (in particular for transfer of know-how in SMEs), and providing for its operation; Establish a programme for enhancing international co-operation and establishment of Slovenia in the field of R&D and innovations, including support to inclusion of good foreign researchers in Slovene companies and universities; Establish and provide for operation of patent offices and university offices for technology transfer; Establish at least two new technology parks, and development, restructuring and linking of existing ones; Establish and provide for operation of patent offices and university offices for technology transfer; Provide for operation of existing university incubators. Objectives and indicators of Measure 4 Promoting small and medium-sized enterprises with equity and debt instruments Sub-programme: 4. Promoting small and medium-sized companies with equity and debt instruments Descriptive objective: Improved access to favourable sources of finance for small and medium-sized companies Indicators and values to be used for measuring results: Measure Indicator Starting point Planned result as at in 2005 the end of 2013 Promoting fast-growing and innovative SMEs The number of venture capital funds 0 3 with equity instruments Value added per employee 22,229 10% higher value (2004)* added per employee Promoting SMEs with debt instruments The number of fast-growing high technology companies Jobs created Value added per employee Jobs created ,229 (2004)* - in supported companies compared to the industry average % higher value added per employee in supported companies compared to the industry average

79 Objectives following the basic strategic documents of the Republic of Slovenia Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia Establish mixed venture capital funds (the government + investors), which would be financed from the Enterprise Fund as well as from KAD, SOD and pension funds (Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia); Provide favourable loans, guarantees and leasing for companies via the Enterprise Fund (Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia); Provide start-up and seed capital for incubated companies in line with the de minimis principle (Framework of Economic and Social Reforms for Increasing the Welfare in Slovenia). Development Strategy of Slovenia Improve access to initial and venture capital, and simplify and reduce cost of bank loan procedures; Develop new models for financing development of small and medium-sized enterprises; Find system solution to the issue of initial financing of new high technology and innovative companies; Develop new models for financing development of small and medium-sized enterprises. National research & development programme Establish a venture capital fund for financing high technology small and mediumsized companies by combining the existing funds, revenues from privatisation and participation of the private sector; Improve access to initial and venture capital, and simplify and reduce cost of bank loan procedures. National Action Plan for the Lisbon Strategy Establish a venture capital fund for financing entrepreneurial projects; Facilitate access to funding for SMEs; Improve and upgrade the financial mechanisms system; Develop instruments for equity finance, such as venture capital instruments, project finance, taking into account of leasing in entrepreneurial funding; Establish public institutions and the support network enabling SMEs to utilise equity instruments. The envisaged measures should improve the offer of venture capital at the level of demand whereby the requested return should not exceed 20%; Facilitated access to funding for SMEs in the form of providing grants and refundable means for investment and development projects of SMEs; Provide initial and seed capital. 79