SUPPORT MEASURES FOR SME S IN CITY OF RIJEKA

SUPPORT MEASURES FOR SME’S IN CITY OF RIJEKA Bruxelles, 28. 05. 2009.

Rijeka is the main crossroad of adriatic tourist traffic coming from middle Europe towards middle and south Adriatic. It is an important crossroad of highways and roads joining the background through Gorski kotar region where mountain Dinara is only 40 -50 km long. Roads from Rijeka lead towards Istra and slovenian border in the North, to cities and country inland in the Northeast, as well as to the littoral and Dalmatia. The city is an important railways center and the airport Rijeka in situated on the island of Krk.

CITY OF RIJEKA Rijeka is seat of Primorsko-goranska county: § area: 3. 582 km 2 § population: 350. 000 To Rijeka also gravitates: § Rijeka’s ring (8 cities and counties) § population: 205. 000 § Urban area: 44 km 2 § Urban population: 144. 043

RIJEKA’S ECONOMY Period of comparation I-IX 2008 / I-IX 2007 , INDEX All Small Medium Big Number of entrepreneurs 107, 1 107, 3 93, 5 116, 7 Number of employees 106, 2 105, 9 97, 7 109, 7 Revenues 107, 9 114, 7 91, 4 107, 4 Expenses 110, 3 114, 2 92, 5 112, 9 Investments 109, 5 135, 4 126, 3 93, 0 Source: Statistical review FINA, January 2009 Number of entrepreneurs in 2008 : 4. 016 ( FINA ) Number of handcrafts in 2008 : 3. 468 ( Chamber of crafts ) Prevailing activities: trade, manufacturing, transport and warehousing

General program of support measures for small and medium entrepreneurs in City of Rijeka is a set of measures to create entrepreneurship environment with developed entrepreneurship climate and well designed pre-conditions for development of entrepreneurship skills General program has 5 areas 1. Strengthening of entrepreneurship competitiveness 2. New forms of education and information 3. Financing of entrepreneurship 4. Development of entrepreneurial infrastructure 5. Entrepreneurial culture promotion

PROGRAM AREAS 1. Strengthening of entrepreneurship competitiveness Funding of product certification - “de minimis” aid up to 15. 000 kuna or 30% of total cost for the introduction of Quality Management System, certify the conformity of products according to national and European standards Funding of strategic marketing plans creation - “de minimis” aid up to 15. 000 kuna or 30% of total cost for strategic marketing plan creation

Funding of joint promotions for products or services - “de minimis” aid up to 15. 000 kuna or 30% of total cost for a joint appearance on the market (eg. claster products and services and their promotion, as well as co-marketing and co-branding Funding the introduction of support systems in decision making, management and e-commerce - “de minimis” aid up to 20. 000 kuna or 50% of total cost system implementation

International fair of new technologies and products ( it was 5 th in 2009) – create link between economy and science, the development of communication between scientists and young entrepreneurs, the creation of links between the new technological achievements and entrepreneurs ready for their implementation, presentation of new scientific knowledge to young and the promotion of Rijeka as a “city of knowledge” ü In April 2009 in the University campus on Trsat officially opened the building Scientific and Technology Park, University of Rijeka - Step Ri is the first scientific-technology park in Croatia, whose services include three main programs: the protection and transfer of intellectual property, incubation of new companies and licensing Awards for innovation ready for commercial application - only entrepreneurs who have their own innovation or innovation bought from innovators implemented in the product or service, award represents incentive of entrepreneurs towards the commercialization of innovation

Using the services of the Croatian regions office in Brussels - information from office about funding possibilities, rules of functioning common european market and european institutions Building a system Rijeka quality (RQ) – long term project, in the future system of quality for SME’s in tourism

2. New forms of education and information Goal: better education and entrepreneurship skill improvement Project “Knowledge and experience“ – the goal is to make connection between entrepreneurs and student solving the problems in business Project “I know to work“ – the goal is to make connection between pupils and handkrafts with the lack of educated work force Program: "Development of entrepreneurial skills for young " – in September 2008 started School for young entrepreneurs measure will affect the development of personality and skills that are characterized by entrepreneurs - creativity, the ability to set up goals, decision-making, risk assessment, self-confidence, responsibility, ability to recognize influences from environment, all in order to prepare young people for the possible selection of entrepreneurial career Project: "Scholarships to students in scarce craftsmanship occupations " in 2007. the City of Rijeka and Chamber of crafts started with schoolarships to students for following occupation: bricklayer, carpenter, machinist, cook, waiter, confectioner, plumber, painter, fitter and turner - City is financing 40% of monthly amount of scholarship

Project: "SMS info-entrepreneur“ - SMS system delivers entrepreneurs timely information about loans, grants, education programs without compensation Thematic conferences - conferences are organized according to the current issues and interest of the city and entrepreneurs Improving the system of public procurement – presentation of annual city public procurement plan, intention is to inform entrepreneurs on public procurement rules and their procedures

3. Financing entrepreneurship Goal: improving access to finance Program: “Guarantees for financing projects of small economies “ - The goal of the Program is incentive to invest in research, development and application of modern technologies and innovations in order to increase the quality and competitiveness of entrepreneurial projects, the guarantees are issued for the uncovered part of the loan. City of Rijeka has provided the amount of 2. 000 kuna for potential guarantees and deposited them as the basis for issuing the guarantees for the loans Erste& Steiermarkische Bank in the amount of 10. 000 kuna. Amounts of guarantees and entrepreneurial projects - amounts of loans that are issued by guarantees can be of 35. 000 to 400. 000 kuna

- entrepreneurial projects are ranked according to priorities and cover the specific percentage of the loan: o Rank 1 / up to 70% loan amount on the introduction of innovation in business, start up a business based on innovation and research o Rank 2 / up to 60% loan amount for equipment, machines and technologies o Rank 3 / up to 50% loan amount for the improvement of business by introducing norms and standards (ISO, HACCP, etc. ) o Rank 4 / to 45% loan amount for permanent current assets for investment in production or preparation of tourist season o Rank 5 / to 40% loan amount for the purchase, construction, expansion or renovation of commercial / manufacturing facilities.

Program: “Loans with deposit” - the goal of the Program is to provide financial assistance to entrepreneurs, which intend to realize investment projects in function of urban tourism and encourage the production - in 2009 it will be provided the additional possibility of entrepreneurs in the production sector: they could realise loans for permanent current assets to survive the recession conditions in the market and maintain the existing number of employees - City ensured the amount of 1. 000 kuna which will be successively and with no interest deposited in the amount of one third of approved loans, BKS Bank is providing the loan fund in the amount of 3. 000 kuna with interest rate of 6. 3% fixed - City will make further subsidize the interest rate with 1. 5 percentage points, the interest rate for the end user of these loans will be 4. 8%, fixed, the highest amount of loan can be up to 300. 000 kuna, in exceptional cases even more.

Subsidies of interest rate and cost of credits from Program "Poduzetnik 2“ – measure represents a continuation of subsidizing the interest rate and cost of credits from earlier loan program New forms of financing promotion - measure is presentation of new forms of financing entrepreneurial projects through venture capital, business angels and the transfer of experiences and examples of good practice.

4. Development of entrepreneurial infrastructure Goal : using city spatial and information facilities for start up and entreprenurship ideas realisation "Entrepreneurial incubators " - City of Rijeka has 2 entrepreneurial incubators – incubator for manufacturing activities and incubator for services, contractors use commercial space total area of 5000 m 2 and consulting services (search for capital, education), incubator space is designed for beginners and entrepreneurs who are in the phase of growth and development, incubation period lasts until 5 years, when it is considered that the potential for survival in the market is achieved

"Enterprise Library " – long term project, as a part of new city library, intention is to have in one place everything about entrepreneurship Local rates examption– as a benefit for investment made through earlier programms

5. Entrepreneurial culture promotion Award for contribution in the field of economy - recognition for contributions in the fields of economy and promotion of the City of Rijeka Development of social responsibility for business - entrepreneurs take the activities of solving the needs of local communities, they conduct the project using their own resources for increasing the quality of citizens life (arrangement of children's playgrounds, schools, health clinics, etc. )

Media Corner - measure is following the positive examples of entrepreneurial projects and their work with the community. Through public information raises the overall level of entrepreneurial climate and culture. Organization of team-building joint entrepreneurial initiatives - measure will be directed to the organization of relations development workships in the group, under the expert guidance - measure will target group of entrepreneurs who show the initiative for common forms of performance on the market (eg. clusters, co-branding alliances, etc. )

COUNTRECESION MEASURES IN 2009. Measures : 1. reduction the monthly lease of business facilities owned by the City to all contractors 10% and further 10% more for production sector 2. reduction of monthly local rates for all 10% and further 10% for catering industry 3. reduction of monthly municipial rates for cultural monuments in zone I 4. loans for permanent current assets in production sector to survive the recession conditions in the market and maintain the existing number of employees – Program “Loans with deposit”

• The Global Entrepreneurship Monitor (GEM) research program is an annual assessment of the national level of entrepreneurial activity. GEM is the largest single study of entrepreneurial activity in the world. • Started as a partnership between London Business School and Babson College, it was initiated in 1999 with 10 countries, GEM 2008 conducted research in 43 countries (Angola, Bolivia, Bosnia and Herzegovina, Colombia, Ecuador, Egypt, India, Iran, Argentina, Brazil, Chile, Croatia, Dominican Republic, Hungary, Jamaica, Latvia, Macedonia, Mexico, Peru, Romania, Russia, Serbia, South Africa, Turkey, Uruguay, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, Japan, Republic of Korea, Netherlands, Norway, Slovenia, Spain, United Kingdom, United States • http: //www. gemconsortium. org/

The indicators For the purposes of GEM project, and based on the conceptual research framework and holistic approach to the definition of entrepreneurship, a set of indicators that measure different aspects of entrepreneurial activity has been identified: Indicators of total entrepreneurial activity in the life cycle of the entrepreneurial process, from startup to maturity of the business venture: • Nascent entrepreneurs (who decide to start a business venture) • New business owners (business owners whose entrepreneurial • activity is measured by having paid salaries for more than 3 months, but less than 42 months) Established business owners (business owners who are entrepreneurially active for more than 42 months)

Entrepreneurial activity of the nascent entrepreneurs and new business owners, measured by the ratio of the number of such entrepreneurs (start-up) in the sample of the adult population, aged 18 to 64, is expressed through Total Entrepreneurial Activity (TEA) Index. Indicators of motivation for entrepreneurial activity: • TEA Opportunity index: those who start entrepreneurial activity • because they have perceived a business opportunity TEA Necessity index: those who are pushed into entrepreneurship by the situation they found themselves in (they lost their job, could not find another job. )

GEM Croatia From the tail to the first half, but still below the average of GEM countries - which means that the various measures to support entrepreneurial activities, provided results TEA index (total entrepreneurial activity index) - % of entrepreneurially active persons among adult population of 18 -64 years Year Croatia GEM countries Range 2008. 7, 59 TEA 10, 49 TEA 24/43 2007. 7, 27 TEA 9, 07 TEA 21/42 2006. 8, 58 TEA 9, 43 TEA 18/42 2002. 3, 62 TEA 8, 00 TEA 32/37

Motivational index (ratio of opportunity based vs. necessity based entrepreneurs) - this index is preferable to be as large as possible, because it means that there a greater number of people who enter the entrepreneurial activity of their choice, not because it is a situation forced on it, Croatia still lags the average GEM countries. Year Croatia GEM countries Range 2008. 2, 51 4, 29 25/43 2007. 1, 43 5, 50 39/42 2005. 0, 90 5, 90 35/35

Regional differences in entrepreneurial activities (TEA index and Motivational index) • Regional differences were reduced – may interpret the influence of different programs, but differences in the motivation are still high 2005 Croatian regions TEA index 2008 Motivational index TEA index Motivational index Zagreb and surroundings 8, 43 1, 68 7, 07 6, 44 North Croatia 4, 40 0, 44 5, 57 2, 18 Lika and Banovina 5, 11 2, 23 8, 05 1, 34 Istra, Primorje i Gorski kotar 5, 74 2, 27 10, 00 4, 76 Dalmacija 6, 34 0, 37 11, 00 3, 31 Slavonija and Baranja 4, 91 0, 55 4, 55 0, 35 Source: Singer, S. Et al: What makes Croatia an entrepreneurial country, Results 2002 -2005, CEPOR, Zagreb, 2006. ; Singer, S. et al: What makes Croatia an entrepreneurial country, Results 2008, CEPOR, Zagreb, 2009 (in printing).

Thank You for attention ! Natasa Mandic City of Rijeka Department of Enterpreneurship HR 51000 Rijeka, Trg. Sv. Barbare 2, Hrvatska Croatia tel. ++38551209591, fax. ++38551209617 e-mail: natasa. mandic@rijeka. hr