Most Romanian SMEs Believe Crisis Will Reach Peak This Year – Poll

The National Council of Small and Medium Private Enterprises launched on Friday the eight edition of the White Book of SMEs, which includes a poll of almost 1,500 entrepreneurs. More than half (57%) said they believe the economic crisis will reach its peak in 2010, while 25% believe this will happen in 2011.

Asked how their companies have progressed since the crisis began in October 2008, nearly half of the entrepreneurs said they have reduced their activity, 43% said nothing has changed, while 7.3% said their business has grown. Also, in 2009, more than 60% of the companies performed worse than in 2008, while 22.23% reported the same results and 17% did better than the previous year.

In this context, most SMEs (60%) kept salaries constant; 22.13% of the entrepreneurs questioned reduced their staff’s wages, while 20% even increased the average salary. „The fact that 4 in 5 SMEs kept salaries constant or increased them is a sign of social stability in Romania,” said council resident Ovidiu Nicolescu.

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The poll also tracked entrepreneurs’ take on the business environment, revealing that nearly 80% believe it hinders business. Low internal demand, taxation and red tape are the main issues troubling SMEs, although the internal market remains their main prospect. Foreign markets come second, followed by new products.

With a view to improve the situation of SMEs, the council repeated its call for the immediate adoption of a measure package. This must include the elimination of the minimum tax, which forced numerous companies to close their doors, resulting in 2.8 billion lei (EUR1=RON4.2628) in losses to the state budget.

Another measure requested by CNIPMMR is the introduction of a system to evaluate and motivate employees who approve European financing applications. The Council also suggests allotting RON100 million each year to encourage young people to set up their own companies. CNIPMMR’s forecasts say the measure could help create around 20,000 firms by 2011.

On the other hand, the Council suggests changing the state aid scheme targeting investments of EUR10 million which create 100 new jobs, by reducing the required investment to EUR10,000 and 10 new jobs.

Prime Minister Emil Boc, present at the event, announced the minimum tax will be eliminated as of this fall and said the Governemnt is looking to lower requirements for investors seeking state aid.