REZZO SCHLAUCH

Parl. Staatssekretär a.D.

Rede des Parlamentarischen Staatssekretärs Rezzo Schlauch bei der OECD Konferenz zu Kleinen und Mittelständischen Unternehmen
Istanbul, 4.Juni 2004

Mr Tamihere,
Ladies and Gentlemen,

The great Nelson Mandela once said: "our global neighbourhood is a timely work deserving our full attention".

That is very true indeed. Full attention to all aspects of globalisation is needed, not only to raise awareness for the risks of globalisation, but also in order to reap the full benefits of it, in other words, to make the promise of globalisation come true.

The sheer fact of an international conference on SMEs, like the one we are attending, shows, that we live in a globalised world. We are now beginning to pay attention to a field, that has not taken center stage yet. Very often, globalisation of trade is perceived as the business of huge multinational corporations. But that is only one side of the issue.

Small and medium-size enterprises are concerned with globalisation just as much. They feel the pressure of competition and they see the vast opportunities of growing markets. They are already players in a globalising economy and they should become so even more. Small and medium size enterprises, in particular, must cope with increasing international interdependence, with all the risks and opportunities this entails.
For my country, this is an especially significant fact, since in Germany, small and medium-sized firms are the mainstay of the economy.
SMEs account for over 99 percent of all businesses. They are the real innovative driving force in our economy.A large number of them, more than 200,000, market innovative products and services every year.
35,000 small businesses are persistently involved in research and development.
For the German economy, the thriving and creative SME sector is one of our greatest assets in the future competition on global markets.

Therefore, I appreciate it very much that the OECD and Turkey have convened an international conference on SMEs. This conference will offer policy makers and business representatives an opportunity to discuss the key issues for small and medium-sized enterprises. I am confident that the exchange of experience during the next few days will foster future activities. Most certainly, it will benefit small and medium-
sized enterprises around the world.

Some of the issues we will discuss, are:
- the financing of innovative SMEs;
- the promotion of a business-friendly environment for international industry partnerships;
- facilitating the access of SMEs' to global markets.

On one of these issues, I would like to go into a little more detail. It has become one of the major obstacles for a more dynamic development of the SME sector in Germany. It is the issue of liquidity, the financing issue:
In most industrialised countries, including Germany, it has recently become more and more difficult for the small business sector to get access to financial resources. For several reasons, banks have become more and more restrictive in the loan business. (korrekt?)
It is above all new and innovative SMEs, who suffer from setbacks on the venture capital markets.
The German government has responded to these problems in the following way:
First of all, we have been successful at the international level in achieving tangible relief for the SME credit business in the context of the Basle II negotiations.

For instance, loans of up to one million euro are treated like retail loans.
Rating rules have been simplified; we successfully achieved that SMEs do not need an external rating.
And we achieved that the requirements for equity securitisation are now less stringent.
Secondly, we have re-designed the support programmes for small and medium-sized enterprises. The Federal SME Bank (“KfW-Mittelstandsbank”), which was newly established last year, offers an attractive range of products for business start-ups as well as for established SMEs. This includes quasi-equity mezzanine funding.

Another important element of our financing scheme is the introduction of so-called micro loans of up to € 25,000.
Most start-up entrepreneurs opt for smaller loans. To the on-lending bank, we have made them attractive through possibilities for exemption from liability.

Thirdly, we focus on supporting especially innovative SMEs. They, more than established firms, depend on the availability of an adequate amount of equity.

Activities here mainly involve a fund approach to mobilise private venture capital:
- One fund is designed as a fund-of-funds investing in venture capital funds.
We appreciate the European Investment Fund investing 250 million Euro along with us through the fund-of-funds structure. This will match the 250 million Germany will provide for this approach.
- The second fund invests directly in small technology-oriented companies.
Both schemes will co-invest with private investors on purely commercial terms. Partial loss guarantees for investors are no longer included.
Our new venture capital fund-of-funds alone will generate a financing volume totalling € 1.7 billion in the next five years.
In addition, we will establish a high-tech start-up fund to cope with current shortages in the so called “seed phase”, in other words in the very first phase of starting a business.

For this purpose, another € 240 million will be made available in the five years ahead.
All in all, the small and midsize technology enterprises may look forward to more than € 2.2 billion of fresh venture capital. Therefore, I think it is safe to say that the German government has met the challenge of the financing problems in our SME sector Ladies and Gentlemen,
as you have seen, Germany counts on the small business sector.

In times of difficult economic conditions our motto once again is "back to the roots": SMEs are the centre of our attention.
This conference clearly reflects that this is true not only for Germany but for many other countries, industrialised as well as developing.
In my capacity as the German government's Small Business Commissioner, I am obviously very pleased by these developments.
That is why I would like to take up Nelson Mandela's statement that I mentioned at the beginning of my remarks and express my hope that the extension and maintenance of "our global neighbourhood" will deserve our full attention not only today.

Thank you for your attention!

 

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