The share of SMEs in Hungarian export sales has increased by three percent over the course of just three years, primarily thanks to medium-sized companies. This was just one of the findings of the report on the state of small and medium-sized enterprises for the year 2011-2012, which the cabinet approved at its meeting yesterday.

SMEs play an important role within the Hungarian economy in view of the fact that they provide jobs to some 2 million people, meaning they employ over 73 percent of the Hungarian workforce. The document showcases the various measures that have been introduced in the interests of enterprise development and the results of stat funding provided to small and medium-sized enterprises.

In comparison to other member states of the European Union, Hungary shows the greatest potential for increasing the performance of the sector, as is clearly illustrated by the fact that while in 2011 they generated 54.9% of the gross domestic product, this ratio increased to 55.2% in 2012. This also draws attention to the fact that SMEs generate a greater ratio of GDP than large corporations. The increase in their weight is especially noticeable within the field of export sales: the sector’s share increased from 25.2% in 2010 to 26.8% in 2011 and still further to 28-1% in 2012, mainly thanks to the activities of medium-sized enterprises.

The Government’s measures aimed at reinforcing both the domestic and international role of SMEs have had a clear effect on this growth. In addition to retaining the strong positions attained on EU markets, strengthening economic ties with developing regions within the framework of the strategy of “Opening to the East” was also one of the Government’s objectives. Having recognised the opportunities inherent in regional economic cooperation, the administration also continued to reinforce partnership relations with neighbouring countries (the Wekerle Plan). The expansion of cross-border trade and investment relations between small and medium-sized enterprises is also clearly indicated by the fact that Hungarian exports to all neighbouring countries increased in 2011-2012.

To counterbalance diminished loan opportunities, the Government renewed several SME financing programmes. The Széchényi Card Programme was expanded, thanks to which enterprises are now able to apply for state-subsidised funding of up to 100 million forints. The distribution of development funding provided according to the JEREMIE procedure quadrupled from HUF 37.5 million at the end of 2010 to 138.8 billion forints by November 2012. The Eximbank and Mehib credit facility increased from HUF 320bn to HUF 1200bn, parallel to which the ratio of EU funding also increased from 38% in 2010 to 58-5% in 2011 and then 61-5% in 2012.

Since coming to office in 2010, the Government has always viewed the reduction of the administrative burdens of enterprises as a priority objective. The flat rate tax for small-scale entrepreneurs (KATA) and the tax for small enterprises (KIVA), introduce from 1 January 2013 as part of the Job Protection Action Plan, have also significantly reduced tax-related administrative burdens for the enterprises involved. The administrative cost reduction measures adopted at the beginning of the new term have resulted in significant savings for enterprises.

The Government will continue to pay special attention to supporting SMEs in future, and the Small and Medium-Sized Enterprise Development Strategy for the period 2014-2020 was formulated in harmony with this intention. The fact that 60 percent of EU development funding will be spent directly on economic development during the 2014-2020 programming period (in comparison to 16 percent during the 2007-2013 period) indicates that a further improvement in the performance of the SME sector is to be expected.

Parliament will discuss the report on the state of small and medium-sized enterprises for 2011-2012 during its autumn session.

(Ministry of National Economy)