RSS

Development of small and medium-sized enterprises (hereinafter referred to as “SMEs” is a major decisive factor determining competitiveness and growth of the market economy in Europe and other countries of the world.

         The Government of the Republic of Lithuania approved the Strategic Guidelines for Small and Medium-sized Business (hereinafter referred as “SMB”) Development for the period up to 2008 and measures for SMB Development   (hereinafter referred to as “Strategic Guidelines for SMB Development”)  by its Resolution No. 1104 dated 19 October 2005.

         The Strategic Guidelines for SMB Development sets out medium-term SMB development priorities and their implementation measures.

         The following medium-term SMB development trends were defined in the Strategic Guidelines for SMB Development: 1) to improve the legal and economic environment for SMB; 2) to improve financial assistance for SMB; 3) to encourage entrepreneurship in regions; 4) to promote competitiveness of SMB entities (more information under the heading Programmes, strategies).

         The definition of the concept of SMB entities is provided by the Republic of Lithuania Law on Small and Medium-sized Business Development (hereinafter referred to as the “Law”), the new version of which came into force on 1 January 2008. The Law defines SMB entities, state aid forms applied to these entities and other provisions relevant to SMB. Pursuant to the said Law, the SMB entity shall be a micro, small or medium-sized enterprise within the meaning of the provisions laid down in Article 3 of the Law or a businessman meeting the provision laid down in Article 4 of the Law.

Concept of SMEs

 The provision that prohibits restricting or limiting possibilities of SMB entities to get state aid based on the activity character of an entity was eliminated from the Law. A new body, the Small and Medium-sized Business Council, that is comprised of representatives of associations, members of which are business entities, has been made statutory with a view to ensure cooperation between SMB representatives and state authorities. You can find more about the Republic of Lithuania Law on Small and Medium-sized Business Development and other legal acts under the heading Legal environment.

SMEs play a pivotal role in implementation of goals set in the Lisbon Strategy that promote innovation, partnership, competitiveness development and growth of jobs. In Lithuania, like in other EU Member States, SMEs account for more than 99 percent of the total number of active enterprises. SMEs generate about 60 percent of the gross value added generated by all Lithuania’s enterprises and provide jobs for more than 70 percent of all the employed.  

 In Lithuania, not only SMEs but also self-employed natural persons make great impact on the development of the national economy. By 1 January 2007, 17.6  SMEs per 1000 inhabitants were active in Lithuania, while this indicator represented as including the number of self-employed natural persons was much larger – 50.3. You can find more detailed information on SMEs statistic data under the heading Statistical data.

The significance and contribution by SMEs to the national economy increases yearly, however, this business sector still faces outstanding challenges. With changing economic conditions, impediments for business development named by businessmen also do change. While in 2001, business entities most often indicated low purchasing power, high taxes and the lack of working capital as the main hindrances for business development, in 2005 they pointed out at high taxes and severe competition, in 2007 one of the main problems mentioned was the lack of high-skilled specialists. You can find more information about business environment survey under the heading Business survey updates.  

Due to their small size and limited resources SMEs cannot on equal terms compete with large enterprises. Therefore, the key priorities at EU and national level include not only establishment of new enterprises, but also creation of the best possible conditions for the already operating ones. New financial support  forms are introduced and considerable attention is paid to guarantee the quality of public business services with a view to encourage SMEs development and their vitality. You can find more information about support provided to business development under the heading Support for business development.

Impact of SMEs on Lithuania’s economy is growing. An increasing number of employees, rising value added lead to positive presumptions in assessing SMEs future possibilities. The survey conducted by Statistics Lithuania in 2007 yielded rather optimistic forecasts regarding the changes relating to SMEs. More than 90 percent of polled businessmen expected stable or even higher performance indicators in the main economic-financial activities in 2008.