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The Széchenyi Enterprise Development Program

The Euroatlantic Integration Process of East-Central Europe and the Flow of Capital
The international symposium entitled "The Euroatlantic Integration Process of East-Central Europe and the Flow of Capital" was organized by Hungarian Atlantic Council in Budapest, October 8-11 2003.
The conference discussed the economic perspective to the traditional foreign policy-security policy scope of the Hungarian Atlantic Council. The participants believe that this exciting segment of Central European region's Euroatlantic integration may count on the interest of not only the professional circles, but the general public as well.
Among the discussed subjects such as: "The Major Tendencies and Characteristics of the Capital Flow in East-Central European Region", "The Role of an Investment Promotion Agency in the Hungarian Capital Export and the Countries of the Region", "Investment in East-Central Europe. A Global Perspective", "To What Extent and How Does the Euroatlantic Integration Process of East-Central Europe Motivate the Regional Investments of Hungarian Firms". It was also presented "The Széchenyi Enterprise Development Program" within which the Hungarian government established the guiding principles of enterprise development for the next few year and the new focus points of the aid scheme. Here are the main lines of this interesting program:

The outstanding role small and medium-sized enterprises play in the economy in general and, more particularly, in employment, justifies a dedicated program to be set up for the identification of measures and tools aimed at supporting their development. To this end, at the end of 2002, the Government approved the so-called Széchenyi Enterprise Development Program. Within the program, the Government set out the guiding principles of enterprise development for the next few years and the new focus points of the aid scheme.
The idea behind the Széchenyi Enterprise Development Program is to create an environment in which a high number of stable, competitive enterprises, which are capable of sustaining their operation for decades, exist, with satisfied owners, and happy employees, increasing in numbers. One of the identified objectives is to gradually shift the focus from non-repayable grants to concession schemes promoting the more efficient utilisation of taxpayers' money and available to a wider scope of enterprises (tax concessions, favourable loan and guarantee schemes).
In line with the above ideas, tools supporting the implementation of the Széchenyi Program include tax concessions promoting investment, tenders supporting modernisation and development, loan and guarantee schemes promoting better access to financial services and EU preparation programs.

Tenders issued for 2003

As part of the program aimed at supporting small and medium-sized enterprises, the following tender schemes were announced for 2003:
Multi-Stage Lending Program
For microand small enterprises, financing is made available through a multi-stage system. There are various stages available in terms of the amount borrowed, the tenor and the extent of tax subsidies, thus meeting the demands of various enterprise groups.
This multi-stage system is built up as follows:
Stage 1: Micro Credit
As part of the Micro Credit Program, initiated in the early 1990s thanks to grants from the PHARE Program, a financing package of up to 3 million HUF (approximately 11,600 Euros) is available to micro enterprises, which are not capable of accessing funds on the financial market, either due to their business history or the size of the project.
Stage 2: Széchenyi Card
The Széchenyi Card Program, aimed at improving the working capital financing of small and medium-sized enterprises, commenced in the autumn of 2002. In July 2003, we adjusted the size of the credit line available to fit the various business requirements; i.e. cards up to the value of 2, 3, 4, and 5 million HUF were issued. As part of this scheme, an enterprise may have access to funds of up to nearly 20 thousand Euros. The rate of interest subsidy is 5% for 500 thousand and 1 million HUF, while for cards offering higher credit lines it is 3.5%. In 2004, the subsidy will be a uniform 3%.
Stage 3: Medium-Size Loan (Midi-Loan)
This product provides microand small enterprises with long-term development loans of up to 10 million HUF (38,500 Euros). In order to make these medium-size loans offered by financial institutions more accessible to enterprises, the Ministry of Economy and Transport provides an interest subsidy of 4%.
Stage 4: Europe Loan
The Hungarian Development Bank and its partner banks offer micro, small and medium-sized enterprises a loan facility with favourable interest rates in the amount of up to 80 billion HUF (over 300 million Euros). The loan facility comes with an interest rate guarantee, with the maximum rate fixed at 6.5%. The scheme offers enterprises loans of between 10-500 million HUF (i.e. up to nearly 2 million Euros) to support the implementation of their development concepts.
In line with the philosophy of the Széchenyi Enterprise Development Program, the individual components of the system shall work together in a unified and synchronised manner.
Guarantee Products
The provision of guarantees helps enterprises in acquiring loan facilities more easily for their employment generating projects. In 2003, the Ministry of Economy and Transport allocated funds of 340 million HUF (1.3 million Euros) to subsidise guarantee fees. Against these funds, enterprises may obtain a fee subsidy of up to 50%, as security required for the bank loans or bank guarantees taken out by them in the amount of up to 40 million HUF.
Increasing the EU knowledge of small enterprises
We put high emphasis on the preparation of micro, small and medium-sized enterprises for EU accession, as part of which enterprises can familiarise themselves with the operational conditions of the unified EU market and its options and constraints, and get prepared for the management of transient difficulties. The timing of these programs covers the period up to 2004, but also extends beyond the time of accession, as small and medium-sized enterprises will still need and seek information and consulting with regard to the operation of the internal EU market beyond May 1st, 2004.
In February 2003, a national program was initiated under the name of "Small Region Based Preparation of Small and medium-sized Enterprises for EU Integration" (slogan: "EU comes to your home"), within the framework of which we organise the EU preparation of small and medium-sized enterprises in all of the 150 small regions of Hungary. The program is expected to attract 20-22 thousand business representatives.

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