Things in Armenia’s SME sector distressing - study
YEREVAN, September 18. /ARKA/. The results of 'The Situational and Comprehensive Monitoring of Small and Medium Businesses' study conducted by the Republican Union of Employers of Armenia with support from Friederich Ebert Foundation from May to July 2015 were unveiled Thursday in Yerevan.
Development of SMEs throughout the last five years is considered in the study. The study targeted 107 SMEs, including the companies operating more than ten year (55%) and organizations with six-to-nine year experience (13.4%).
Gagik Makaryan, the chairman of the union, said that about 30 reports of these organizations, questionnaires were comprehensive and complicated and many experts, including those from the state organizations, were involved in the study.
Distressing Data
The study showed that the share of SMEs in Armenia's GDP was 30%, according to the 2014 figures.
However, the study revealed many problems in the SME sector which actually were far graver than expected, Makaryan said.
«Our analyses was very interesting, and some conclusions were unexpected,» he added.
Despite some reforms and governmental support programs, about 50% of respondents find the government's support insufficient.
Some 21% of the respondents pointed out the population's low purchasing ability as key factor hobbling development of businesses and other 23.5% singled out the volatile economic situation among obstacles and 51.9% indicated the inaccessibility of financial resources and high interest rates on loans as major obstacles.
The survey showed that 33.4% of the surveyed small and medium business entities were unhappy about inaccuracies in the tax law, 27.5% found amendments in the law too frequent, 21% pointed out too high taxes and 18% imperfection of legislation.
About 68.8% of small and medium entrepreneurs said they were in need of available financial resources to develop their businesses.
According to the results of the survey, 45.5% of SMEs pointed out new technologies as second factor necessary for developing their businesses, 28.6% singled out modernization of their businesses, 27.7% indicated training of the personnel, 25.9% renewal of the personnel and 21.4% certification.
As for business climate, about 67% find it necessary to maintain economic stability for development of small and mid-scale businesses in Armenia, 58.9% think low interest rates on loans would help them and 48.2% are convinced that favorable business environment would propel small and medium businesses development.
The respondents pointed out the necessity of ridding the market of unequal business competition (45.5%). They also say the SMEs are in want of qualified and professional labor force (13.8%) and substantial reforms (42%).
Joint Efforts Needed
Makaryan stressed that the revealing faults in this area was not the only aim of the study – the authors of the study also wanted to hear constructive ideas for forming more productive strategy in the SME sector.
Garegin Melkonyan, the first deputy economy minister, said on his side that the government and the economy ministry welcome such initiatives.
«We consider such programs as a step toward discussion with the expert community of problems and development trends in the private sector, particularly the support policy and mechanisms,» he said.
However, the deputy minister also voiced some criticism on the fact of the conducted study. In his opinion, it is insufficient to survey 107 entities to get a real and full picture of things.
Melkonyan proposed to involve more respondents in future surveys.
At the same time, he agreed that it is necessary to make financial resources more available, to simplify lending procedures and to consider ways for extending loans to SMEs at lower interest rates.
Vardan Bostanjyan, an economist, addressing to Melkonyan, said the situation shown by the study was not a secret to anybody.
«Small and medium businesses are on the verge of catastrophe in Armenia, and it is necessary to find a way out of the situation,» he said. «In development economies, 60-70 percent of GDP is formed thanks to small and medium businesses.»
Noting that the economy ministry is fully aware of the problems, the economist proposed to unite efforts to find ways out of the deadlock. ---0----
Development of SMEs throughout the last five years is considered in the study. The study targeted 107 SMEs, including the companies operating more than ten year (55%) and organizations with six-to-nine year experience (13.4%).
Gagik Makaryan, the chairman of the union, said that about 30 reports of these organizations, questionnaires were comprehensive and complicated and many experts, including those from the state organizations, were involved in the study.
Distressing Data
The study showed that the share of SMEs in Armenia's GDP was 30%, according to the 2014 figures.
However, the study revealed many problems in the SME sector which actually were far graver than expected, Makaryan said.
«Our analyses was very interesting, and some conclusions were unexpected,» he added.
Despite some reforms and governmental support programs, about 50% of respondents find the government's support insufficient.
Some 21% of the respondents pointed out the population's low purchasing ability as key factor hobbling development of businesses and other 23.5% singled out the volatile economic situation among obstacles and 51.9% indicated the inaccessibility of financial resources and high interest rates on loans as major obstacles.
The survey showed that 33.4% of the surveyed small and medium business entities were unhappy about inaccuracies in the tax law, 27.5% found amendments in the law too frequent, 21% pointed out too high taxes and 18% imperfection of legislation.
About 68.8% of small and medium entrepreneurs said they were in need of available financial resources to develop their businesses.
According to the results of the survey, 45.5% of SMEs pointed out new technologies as second factor necessary for developing their businesses, 28.6% singled out modernization of their businesses, 27.7% indicated training of the personnel, 25.9% renewal of the personnel and 21.4% certification.
As for business climate, about 67% find it necessary to maintain economic stability for development of small and mid-scale businesses in Armenia, 58.9% think low interest rates on loans would help them and 48.2% are convinced that favorable business environment would propel small and medium businesses development.
The respondents pointed out the necessity of ridding the market of unequal business competition (45.5%). They also say the SMEs are in want of qualified and professional labor force (13.8%) and substantial reforms (42%).
Joint Efforts Needed
Makaryan stressed that the revealing faults in this area was not the only aim of the study – the authors of the study also wanted to hear constructive ideas for forming more productive strategy in the SME sector.
Garegin Melkonyan, the first deputy economy minister, said on his side that the government and the economy ministry welcome such initiatives.
«We consider such programs as a step toward discussion with the expert community of problems and development trends in the private sector, particularly the support policy and mechanisms,» he said.
However, the deputy minister also voiced some criticism on the fact of the conducted study. In his opinion, it is insufficient to survey 107 entities to get a real and full picture of things.
Melkonyan proposed to involve more respondents in future surveys.
At the same time, he agreed that it is necessary to make financial resources more available, to simplify lending procedures and to consider ways for extending loans to SMEs at lower interest rates.
Vardan Bostanjyan, an economist, addressing to Melkonyan, said the situation shown by the study was not a secret to anybody.
«Small and medium businesses are on the verge of catastrophe in Armenia, and it is necessary to find a way out of the situation,» he said. «In development economies, 60-70 percent of GDP is formed thanks to small and medium businesses.»
Noting that the economy ministry is fully aware of the problems, the economist proposed to unite efforts to find ways out of the deadlock. ---0----