Technical Assistance onsultant’s ReportSEAP SME Expert Advisory Panel SCORE SME Competitiveness Rating for Enhancement SEEP Small Enterprise Education and Promotion Network SBA Small

Technical Assistance Consultant’s Report

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and

the Government cannot be held liable for its contents.

Project Number: 44060-012

May 2013

Kazakhstan: Improving Capacity to Support SME

Development (Financed by the ADB)

DAMU’s Non-financial Services

Prepared by Ernest Koch

Kazakhstan

For the ADB


A Comparison with International SME Authorities

prepared by

Ernest Koch

June 2012


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List of Contents

Page

List of Contents 2 List of Tables and Figures 4 Acronyms 5 Executive Summary 6 Introduction 8

CHAPTER I: BDS: GENERAL 10 1. Rationale 10 2. Definition 10 3. Categories 10 4. Delivery Mode 13 CHAPTER II: BDS MARKETS 13 1. Functioning of BDS Markets 13 2. BDS Markets in Kazakhstan 15 CHAPTER III: BDS: DAMU’s PROGRAMS 18 1. Overview 18 2. Dissemination of Information 19 2.1. Websites 19 2.2. Call Center 22 2.3. Printed Materials 22 2.4. Business-Naskihat 22 3. Training and Technical Assistance 23 3.1. Business Roadmap 2020 23 3.2. Business Advisor Training Program 26 3.3. Entrepreneurship Support Centers 27 3.4. National Center for the Development of Franchising 28 4. Policy/Advocacy 29 4.1. SME Sector Analysis 30 4.2. Round Tables and Forums 30 5. Support to Entrepreneurs with Disabilities 31 CHAPTER IV: BDS: INTERNATIONAL EXPERIENCE 32 1. Overview 32 2. Dissemination of Information 33 2.1. SMEDA Pakistan 33 2.2. OSMEP Thailand 33 2.3. SME Corporation Malaysia 33 2.4. SPRING Singapore 34 2.5. SBC South Korea 35 2.6. PARP Poland 35


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Page 3. Access to Markets 35 3.1. SMEDA Pakistan 35 3.2. OSMEP Thailand 36 3.3. SME Corporation Malaysia 37 3.4. SPRING Singapore 38 3.5. SBC South Korea 39 3.6. PARP Poland 39 4. Training and Technical Assistance 40 4.1. SMEDA Pakistan 40 4.2. OSMEP Thailand 41 4.3. SME Corporation Malaysia 42 4.4. SPRING Singapore 42 4.5. SBC South Korea 43 4.6. PARP Poland 43 5. Technology and Product Development 44 5.1. SMEDA Pakistan 44 5.2. OSMEP Thailand 44 5.3. SME Corporation Malaysia 45 5.4. SPRING Singapore 46 5.5. SBC South Korea 47 5.6. PARP Poland 47 6. Input Supply 48 6.1. OSMEP Thailand 48 7. Access to Finance 48 7.1. SMEDA Pakistan 48 7.2. OSMEP Thailand 48 7.3. SME Corporation Malaysia 49 8. Policy/Advocacy 49 8.1. SMEDA Pakistan 49 8.2. OSMEP Thailand 49 8.3. SME Corporation Malaysia 49 8.4. SBC South Korea 50 8.5. PARP Poland 50 CHAPTER V: BDS: COMPARISON 50 1. Dissemination of Information 50 2. Access to Markets 51 3. Training and Technical Assistance 52 4. Technology and Product Development 54 5. Input Supply 55 6. Access to Finance 55 7. Policy/Advocacy 56 ANNEX: Assessment of BDS Markets by Using Market Research Tools 58


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List of Tables and Figures

Page List of Tables Table 1: BDS Categories 11 Table 2: Potential BDS Market Problems and Corrective Interventions 17 Table 3: DAMU’s BDS – Overview 19 Table 4:

BDS Market Assessment – Objectives and Key Questions 60

List of Figures Figure 1: Effectiveness of BDS Markets 13 Figure 2: BDS Transactions 14 Figure 3: Typical Information Flow from Using Market Research Tools 59


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Acronyms

ADB Asian Development Bank AEC Asian Economic Community B2B Business to Business BDS Business Development Services BSC Business Support Centre CCI Chamber of Commerce and Industry CDASED Committee of Donor Agencies for Small Enterprise Development EDC Enterprise Development Center ESC Enterprise Support Center EU European Union ESC Entrepreneurship Support Center FGD Focus Group Discussion FTA Free Trade Agreement GIS Geographical Information System HR Human Resources ILO International Labor Organization IP Intellectual Property IPR Intellectual Property Right ISO International Organization for Standardization IT Information Technology ICT Information and Communication Technology M&A Mergers & Acquisitions MEDT Ministry of Economic Development and Trade MBA Master of Business Administration MFI Micro-finance Organization MNC Multinational Corporations MoU Memorandum of Understanding NGO Non-government Organization NSDC National SME Development Council OSMEP Office of SME Promotion PARP Polish Agency for Enterprise Development R&D Research and Development RSS Reality Simple Synchronization SEAP SME Expert Advisory Panel SCORE SME Competitiveness Rating for Enhancement SEEP Small Enterprise Education and Promotion Network SBA Small Business Administration SBC Small Business Corporation SMART SME Management Action for Results SME Small and medium-sized Enterprise SMEDA Small Business Administration SPRING Standards, Productivity and Innovation Board R&D Research and Development UAI Usage, Attitudinal and Image (Survey) UNIDO United Nations Industrial Development Organization USA United States of America USAID U.S. Agency for International Development WIPO World Intellectual Property Organization


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Executive Summary

Any entrepreneur has to have a combination of technical, operational and strategic skills to be successful in his/her business venture. These can often pose a challenge and necessitate support. This is done by the provision of business development services (BDS). They commonly encompass the following categories: Dissemination of information, training and technical assistance, technology and product development, input supply, access to finance as well as policy and advocacy. BDS are provided through markets. In Kazakhstan markets appear not to work effectively due to problems on the demand/and or supply side with the consequence that SMEs are not served at all or not served well. These market failures justify state intervention to make markets work.

DAMU either facilitates service provision or provides services itself in some of the aforementioned BDS categories.

Dissemination of Information: DAMU circulates business information through its Geographic Information System (GIS), its websites, publications and the recently conceived Business-Nasikhat which seeks to increase outreach.

Training and Technical Assistance: This is provided through various projects under the 4th direction of the Business Road Map 2020. With its own Train-the-Trainers program DAMU arranges upgrading of local capacity to ensure quality BDS for SMEs. It directly provides services through its Entrepreneurship Support Centers (ESCs) while the planned project on franchising awaits implementation.

Policy and Advocacy: DAMU prepares and publishes analytical papers on the SME sector and organizes roundtables as well as forums to discuss SME issues.

The comparison of DAMU’s services with SME authorities from Pakistan, Thailand, Malaysia, Singapore, South Korea and Poland reveals the following:

Dissemination of Information: There are opportunities for broadening DAMU’s scope of informational services in regard to publications (e.g. on standardization, e-Commerce, Intellectual Property (IP), prefeasibility studies) and e-BDS (e.g. e-Marketplaces and e-Commerce).

Access to Markets: DAMU’s services are fairly limited to some form of market research and business matchmaking. Areas for service expansion may include online information on international markets and matchmaking, pre-feasibility studies, toolkits (e.g. for marketing and service excellence), branding, trade missions, trade fairs and product exhibitions.

Training and Technical Assistance: There is scope for expanding DAMU’s services in the following areas: E-Learning (including self-assessment tools and learning modules), pre-feasibility studies, special courses on technology and quality control, diagnostics and specialized mentoring, counseling and advisory services (e.g. standards, technical regulations, production processes,


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management systems, mergers and acquisitions - M&A), business accelerators and cluster development.

Technology and Product Development: DAMU is not active in the area of technology and product development leaving substantial room for upgrading the productivity and innovative capability of SMEs. Services might include: Publications on IP, IP Helpline to answer queries, expanding website content to include information on innovation and e-Business, access to research papers and matching with researchers, productivity, quality improvement and technology consultancy and advice, assistance in the commercialization of inventions, and innovation awards.

Input Supply: DAMU does not assist SMEs that are searching for input supply sources. Upgrading of services may include reviewing website content to include information on supply sources, online linkup of SMEs to input suppliers, posting of business details online for domestic and international markets.

Access to Finance: DAMU provides some non-financial services to enhance access to finance which may need to be expanded in the following areas: Collection and compilation of information from various banks about their SME-specific products and services (other than banks cooperating with DAMU) and display on the website, awareness seminars and trainings on SME financial services and products (other than those provided under the Road Map), preparation of financial projections for SMEs.

Since most of DAMU’s BDS are provided free of charge, account should be taken of best practice, which suggests that

Subsidies are justified only in the short-term as an investment in the development of BDS markets (e.g. through the development of new products and models). However, long-term subsidies to the demand or supply of BDS are likely to distort BDS markets and crowd out the commercial provision of services thus undermining the impact, outreach, cost effectiveness and sustainability of BDS market development.

Consistent with the temporary nature of subsidies, DAMU’s BDS interventions should have a clear exit strategy, linked to the achievement of the intervention’s market development objectives (e.g. the creation of sustainable BDS providers or the development of viable products tailored to the lower end of the market).


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Introduction The purpose of this interim report is to review DAMU’s BDS to SMEs and compare them to those of international institutions of similar mandate, considered good practices, with special focus on support for women entrepreneurs. Many developing and developed economies have established successful SME authorities that provide a variety of BDS. Comparing DAMU’s services against the best practitioners can provide first insights for improvements in terms of scope and structure. However, it should be stressed that these approaches would not necessarily succeed in Kazakhstan due to differences in the development stage and the structure of the economy, the business environment and cultural factors. Also, the offered BDS depend on the conceptual framework for SME development and the resulting policy approach pursued by the government. Therefore, it is possible that the replication of some of the approaches that have been successfully applied in the considered countries may not succeed in Kazakhstan. In other cases, the approaches may need to be adapted specifically to the Kazakh environment. Hence in a needs-based approach the BDS recommended as a result of the benchmarking exercise requires validation. This will be done by an assessment of the current status of BDS markets in Kazakhstan through the planned Usage, Attitudinal and Image (UAI) survey of BDS consumers and Focus Group Discussions (FGDs) with stakeholders, implemented under the auspices of the Asian Development Bank (ADB). The development stage of the economy can be used as a proxy for the development of the SME sector since SMEs are usually the backbone of an economy. Per capita Gross National Income is taken to classify economies into low income, middle income (lower middle and upper middle) and high income countries1 2. Low and middle income countries are considered developing economies, high income countries are taken as developed countries. Kazakhstan is an upper middle income country. To provide a broad spectrum of international institutions with a similar mandate, case studies have been chosen from other middle income countries (Pakistan, Thailand, Malaysia) but also from high income economies (Singapore, South Korea, and Poland) assuming that Kazakhstan’s economy continues progressing towards higher income categories. The analysis focuses on the following common BDS categories: access to markets, training and technical assistance, technology and product development, input supply, access to finance and policy/advocacy. Infrastructure services have not been taken into account as a separate BDS category since they are not offered by the considered SME authorities, except for incubators that are dealt with in the context of training and technical assistance. Provision of business information has been added into the analysis as another BDS category that is vitally important for SMEs. Since the analysis concentrates on formal service provision of SME authorities, informal services from family and friends and services that are embedded in other transactions (e.g. of suppliers) are not taken into account.

1 http//data.worldbank.org

2 Low income countries are those with per capita income of US$ 1.005 or less, lower middle income countries with income ranging from

US$ 1.006 to US$ 3.975, upper middle income countries with income from US$ 3.976 to US$ 12.275, and high income countries with income of US$ 12.275 or more.


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The report is structured into five chapters. The first chapter elaborates on the rational for BDS, their definition, categories and delivery mode. The second chapter provides a general insight on how BDS markets function, followed by a preliminary description of BDS markets in Kazakhstan. Annex I outlines the conceptual framework for the assessment of the current status of BDS markets in Kazakhstan. The third chapter analyses the BDS offered by DAMU. A fourth chapter reviews the BDS provided by foreign SME authorities while the following chapter draws conclusions from benchmarking with DAMU’s services.


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CHAPTER I: BDS: GENERAL 1. Rationale Any entrepreneur has to have a combination of technical, operational and strategic skills. While the technical skills come with the commitment, creativity, experience and knowledge they have within their field, the operational skills (including accounting and finance, business planning, quality control, marketing and human resource – HR - management) can often pose a challenge and necessitate support. Also, strategic skills, which take an entrepreneur through the life-cycle of an enterprise, frequently necessitate external guidance and support. Yet, entrepreneurs have different characteristics, problems, and needs depending on the stage of their business: the start-up stage3, the growth stage, the maturity stage, and the turnaround stage. Accordingly services to SMEs have to be specialized and adjusted. In any case, access and usage of quality BDS by SMEs can boost their competitiveness and growth. It can also increase the impact of financial services and improve the capacity to repay loans. 2. Definition There is no common agreement on the definition of BDS. According to the International Labor Organization (ILO)4 BDS are any non-financial services provided to businesses on a formal or informal basis. This broad definition characterizes BDS from a user perspective by referring to the benefits they deliver in managing different business functions: reducing fixed costs, providing skills and enhancing quality, improving operational efficiency, supplying market information, supporting financial management, and providing links to domestic and external markets. Many practitioners adhere to this definition. The Committee of Donor Agencies for Small Enterprise Development (CDASED)5 further clarifies BDS as services that improve the performance of an enterprise, its access to markets, and its ability to compete. While BDS are designed to serve individual businesses, as opposed to the larger business community, in practice lobbying and advocacy of SME interests are often included in BDS. 3. Categories SMEs need a range of BDS that contribute to the efficiency, profitability and expansion of their activities. The types of services in a functioning BDS system are determined by the demand articulated on the part of SMEs. Supply-driven services will often not meet the needs of business operators and therefore simply are not used or only if these are not connected to any costs. Demand-oriented BDS may include operational and strategic services. Operational services are needed for the day-to-day undertakings of enterprises, while strategic services are those needed for medium or longer term affairs, such as innovation. However, there is debate whether operational services should be called BDS or rather Business Services. Another distinction is between horizontal and vertical BDS. Horizontal refers to generic BDS,

3 Start-ups refer to businesses in operation for less than 2 years.

4 A. Miehlbradt/M. MacVay: Developing Commercial Markets for Business Development Services. Turin, September 2003. p. 3.

5 Business Development Services for Small Enterprises: Guiding Principles for Donor Intervention 2001 (known as the ‘Blue Book’)


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which applies across sectors and vertical BDS is BDS which is more specific to one sector. Both the BDS Primer 2003 of the ILO6 and the Small Enterprise Education and Promotion (SEEP) Network7 distinguish between the following main categories: Table 1: BDS Categories

Description Definition

Access to Markets

Marketing businesses

The service includes selecting target markets, analyzing and qualifying target markets, formulating marketing strategies for each target market and organizing the marketing program into field work

Market linkages The services facilitate the information of new (domestic/foreign) market or clients for the penetration by the enterprises

Trade fairs & product exhibitions

Logistic and advisory services delivered by outsourced professionals to arrange the presence of an enterprise at a trade fair or product exhibition to promote its product’s image, to seek partners or to sell products.

Market information

The services may be offered to two main subjects (i) enterprises who want to introduce their business/products/services to the market, and (ii) subjects who are potential buyers of the products/services. Main categories: - Announcement for selling and purchase - Linking sellers and buyers

Subcontracting & outsourcing

Marketing trips & meetings

The services in which suppliers organize chain of meetings or single one to specific subjects in order to launching/introducing particular products or business.

Market research The service in which outsourced professionals study factors such as demand, supply, customer behavior, the legal and administrative framework in the market to facilitate the presence of a new enterprise in the market and/or to promote product sales of an enterprise in the market.

Showrooms The service could be divided into two forms - Providing space where the enterprises exhibit their products - Providing designing servicers that facilitate the enterprises to organize their product’s exhibition

Advertising The service in which professionals conduct activities to publicize the image of an enterprise as well as advantages of its products/services in various media to ensure that more products/services are bought.

Infrastructure

Storage and warehousing

Leasing space for storing goods, equipment or material for enterprises

Transport and delivery

Leasing transport mean and deliver goods, equipment or material for enterprises

Business incubators

Dedicated to startup and early-stage companies, incubators provide different mixes of space, training, capital, human and computer networking, consulting, etc.

Telecommunications

Providing services such as telephone, fax

Internet access Accessing Internet to retrieve information for business purposes such as market information, legal documents, information on sellers, partners …

Computer access

This includes physical maintenance and repairs of computers, software adaptation, customization and development as well as training and advisory services

Secretarial services

Handling correspondence, keeping files, and doing clerical work

Training and Technical Assistance

Mentoring The service in which professionals provide advice relating to strategic development of the enterprise

Feasibility studies and business plans

The services in which outsourced professionals help enterprises make feasibility studies and business plans.

Exchange visits and business tours

The services delivered by outsourced professionals to arrange the presence of a certain enterprise inbound or outbound to seek business opportunities or learn experiences.

Franchising Assignment of trademark, technology, mode of management to other manufacturer

Management training

All types of training activities related to various aspects of business establishment and operation such as entrepreneurship, general management, marketing – including exports, production and financial.

Technical training

Any training activities delivered by outsourced professionals to (i) provide information on how to use and take full advantage of a machine, (ii) to improve the expertise of workers in a certain skill or trade.

Counseling/ advisory services

All types of advisory services related to various aspects of business establishment and operation such as entrepreneurship, general management, marketing – including exports, production and financial.

Legal services Advice and services related to laws, rules and regulations related to business establishment, operations, taxation and exports, litigation.

Financial and Advisory services in terms of finance and taxation.

6 ILO: BDS Primer 2003

7 SEEP: Guide to Business Development Services and Resources.


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taxation advice

Accountancy and bookkeeping

Outsourced services related to financial matters, bookkeeping, auditing and making financial reports for the enterprise owner. For example: engaging a company to review accounting books, develop an accounting system, or engaging an auditing company to prepare auditing reports.

Technology and Product Development

Technology transfer/commercialization

The service refers to the selection of the best technology for the enterprise, transferring technology procedure. It also includes instructing the enterprise how to use the new technology.

Linking SMEs and technology suppliers

Introducing SMEs with technology suppliers or vice versa.

Facilitating technology procurement

The service is related to advisory and arrangement activities for technology transfer such as execution of technology transfer agreement, technology transfer registration.

Quality assurance/environment programs

Training activities and advice delivered by professionals in order to improve the quality of the products and processes. These are usually related to productivity improvement and cost reduction. For example: Quality management ISO

Linking SMEs to input suppliers

Introducing SMEs with input suppliers or vice versa.

Facilitating the establishment of bulk buying groups

Information on input supply sources

Providing such information as name of suppliers, type of material, price quality, and origin for the selection of suppliers.

Access to Finance

Linking SMEs to banks and Microfinance Institution (MFIs)

Providing information on credit schemes & conditions

Facilitating supplier credit

Facilitating equipment leasing

Assisting in business planning for loan application

Policy/Advocacy

Training in policy advocacy

Entails capacity-building for advocacy organizations including advocacy training, advocacy goals and strategies, raising awareness of the various aspects of the challenge of effective policy advocacy, enhance the knowledge of public policy and network process and strengthen the ability to write and use evidence-based policy papers.

Analysis and communication of policy constraints and opportunities

Direct advocacy on behalf of SMEs

Sponsorship of conferences

Policy studies Includes policy analysis and evaluation, studying the nature, causes, and effects of alternative policies with particular emphasis on determining the policies that will achieve given goals


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4. Delivery Mode BDS may be supplied in three basic forms:

Informal (non-market) BDS are those that are not provided by service providers. They include information and advice offered by relatives, friends or employees of the enterprise, services provided in the context of normal commercial transactions with suppliers, clients or contractors, as well as information obtained from media programs (e.g. radio and television). No direct payment is involved.

Embedded (linked; bundled) formal BDS like training, advice, or market access are included in transactions with input suppliers, output purchasers, financial institutions, or suppliers of capital equipment. A single payment is made for all the goods and services involved including the BDS.

Free-standing formal BDS is provided by profit-seeking or not-for-profit organizations including firms, consultants, official agencies and non-government organizations (NGOs). An explicit fee is usually paid for these services. Unless it receives a subsidy, a free standing BDS provider must charge enough to cover its costs from fee payments, if it is to stay in business in the long run.

CHAPTER II: BDS: Markets 1. Functioning of BDS Markets

BDS are delivered through markets. BDS markets are not different from other markets. Markets are effective when transactions take place, i.e. when there is exchange between supply and demand at market prices. For this to happen SME customers must be ready to purchase something (effective demand) and providers must have something to sell (effective supply). BDS markets are not effective when there is no or weak demand and/or when there is no or weak supply. Figure 1: Effectiveness of BDS Markets

8

BDS Market

Level of Market Development

Non-existing market

Effective Market

No transactions between consumers and suppliers

Extensive transactions between consumers and suppliers

BDS Transaction

Provider has something to sell

AND

Consumer has something

to buy

Effective supply

Weak supply

No supply

No demand

Weak demand

Effective demand

8 M. Field et all: Designing BDS Interventions as if Markets matter, November 2000.


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The effective interaction (transaction) between a SME consumer and a service provider occurs when (i) the SME recognizes the causes for underperformance of his/her business, concludes that a solution is required, and is willing to pay for a problem-solving service and (ii) when the provider has the ability to present an attractive offer that the SME wants and has the technical know-how to solve the problem with a demonstrated positive impact on SME performance. Effective BDS transactions are described in Figure 2 below. Figure 2: BDS Transactions

The elements of an effective transaction, i.e. supply and demand, can help explain why BDS market mechanisms may fail to serve SMEs. For example, if both recognition of a need to solve a problem and willingness to pay are very low or absent, then demand is non-existent and market opportunities are negligible for BDS providers. Or if a BDS provider is able to make an attractive offer (convince an SME to purchase a service), but is unable to deliver a solution to the SME problem then supply is weak. In these cases of market failures interventions are required to make BDS markets work. BDS market development involves an increasing flow of formal BDS from a growing number of providers to a growing number of client enterprises (especially previously underserved enterprises such as micro and women-owned enterprises) and the payment of a growing share of the cost of these services by client enterprises, either as a fee for service or as an embedded cost in another transaction9.

9 Donald Snodgrass/J. Downing: BDS Market Development: From Causal Models to Monitoring and Evaluation of Intervention Programs, Arlington June 2002, p. 30.

SME UNDERPERFORMANCE

Low profits

High fixed costs

Low value-added

Stagnant sales

Zero growth

Excessive indebtedness

SME CONSTRAINTS & PROBLEMS

Skills deficiencies

Limited market information

Poor financial & inventory control

Inadequate processes, systems, equipment

Inefficient resource use

SOURCES OF SERVICES Market mechanisms that can make a service available

Friends & family

Informal networks

Other businesses

Fee-for-service providers

SOLUTIONS & REQUIREMENTS

Training

Advice

Information media

After-sales product support

Product distribution

Demand-side flow Supply side flow

Willingness to

purchase a service

Ability to present an

offer that SMEs

want

Solution is

required

Technical know how

to solve SME

problems

Impact on SME

performance

purchase a service

Causes of under-

performance are

recognized


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2. BDS Markets in Kazakhstan

The BDS markets in Kazakhstan are not yet well developed, missing the characteristics of mature markets such as multiple players, typically not a lot of new entrants, and no significant year-on-year growth. Part of Kazakhstan’s industrial development strategy aims at developing the business infrastructure. It comprises state and state-initiated organizations, NGO and commercial organizations. In line with the administrative division of the country, state support to SMEs is provided on a national, regional (oblast) and local (district) level10. The Supreme State body that is responsible for the development of private entrepreneurship and implementation of policies is the Ministry of Economic Development and Trade (MEDT). On the provincial level, the provincial akims (governors) and municipal akims of the cities of Astana and Almaty implement SME support measures through their Departments of Entrepreneurship and Industry. On the local level support is provided by the municipalities. There are also public companies that support SMEs including DAMU, the National Innovation Fund, the Investment Fund, the Corporation for Export Development and Export Promotion, the Development Bank of Kazakhstan, technology parks, business incubators, and industrial zones. There are 125 business support centers (BSC), 119 information-consulting centers, 43 technology parks and business-incubators11. BSCs are either private or state-supported BSCs established by DAMU – called Entrepreneurship Support Centers (ESCs). They provide nearly identical services, including information, training and consulting, legal advice, develop business plans, and promote access to finance. Only the price of services differs12. Even in large cities the market is not fully saturated. In particular in the outermost regions, especially at district (rayon) level, the provision of BDS is virtually non-existent. In 2010, for example, the largest number of BSCs was found in Karaganda (48), Almaty (30), East Kazakhstan (22) and in the Pavlodar region (16) whereas Kostanai, South Kazakhstan and the West Kazakhstan region have the lowest presence of BSCs (3). There are also a number of NGOs including industry associations, the National Union of Entrepreneurs and Employers, the Chamber of Commerce that provide non-financial services to SMEs in addition to the assistance offered by private consultants and consulting companies on a commercial basis. Yet the consulting market is self-administered; professional standards and a code of ethics are not in place. Overall, BDS markets fail to effectively serve SMEs which – pending the results of the UAI survey – may be because of one or several of the following reasons:

10

http://www.biznes.damu.kz/ru/support_structure/ 11 A. Toxanova/S. Zhakupova: Challenges and Development Prospects of SMEs in the Republic of Kazakhstan, Almaty 2011, p. 5. 12

BDS provision facilitated by DAMU is free of charge.


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Possible Failures of Kazakh BDS Markets

SMEs lack information about available services and their benefits,

SMEs are not aware of or do not understand services,

SMEs do not value the benefits of the services,

SMEs are risk averse and so do not want to try a new service,

Some consumer segments, such as women or microenterprises, do not have access to services,

Suppliers do not see the value in serving some consumer segments,

Free services are suppressing SMEs’ willingness to pay for services,

Suppliers are reluctant to compete with subsidized services,

Suppliers serve SMEs in urban, but not rural areas,

Suppliers serve medium-sized businesses, but not small or micro enterprises,

Suppliers offer inappropriate or undesirable services, i.e. services do not have the features that consumers want,

Suppliers are not able to innovate offering new products that consumers demand,

Suppliers lack the skills they need to offer quality services,

Suppliers provide appropriate services, but there are so few suppliers that prices are high and the wait is long,

Suppliers are not skilled in business management and marketing offering a limited service range using few, if any, promotion strategies,

Suppliers lack market information about the service characteristics that SMEs desire;

The number of suppliers is small (monopoly or cartel) resulting in high prices for services and often inappropriate service products.

Risk averse SMEs, combined with suppliers who are unable to convey the quality of their products, result in SME reluctance to try services; and

SMEs that are simply too poor to pay outright for services, or too limited in their business capacity to take advantage of existing BDS.

Many of these prospective market failures would point to opportunities for BDS providers and facilitators to act upon, including DAMU. The potential for intervention is greatest when there is some overlap – however weak – between demand and supply. The table below shows indicative intervention options that can be used to overcome consumer demand and/or supplier constraints to effective markets13.

13

A. Miehlbradt: Developing Commercial Markets for Business Development Services, Turin 2002, p. 42-43.


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Table 2: Potential BDS Market Problems and Corrective Interventions BDS Market Problem Possible Interventions

Demand-Side Problems

Consumers lack information about Services

Develop a BDS yellow pages

Open a BDS consumers’ bureau or information center

Help suppliers improve their marketing

Assist business associations to disseminate information

Consumers are unable to effectively identify their business problems

Develop an awareness raising campaign about typical business problems and BDS that can help

Assist suppliers to create marketing campaigns that help enterprises identify business problems

Consumers do not have the capacity to pay for services up front

Assist suppliers in developing payment options

Promote embedded services

Promote services financed by large firms

Help consumers form clusters to purchase services in groups

Consumers are risk averse to trying Services

Provide suppliers with technical assistance to improve trial inducing strategies

Implement a voucher scheme

Promote business linkages for embedded services

Consumers do not see the value of Services

Assist suppliers in improving advertising

Assist suppliers in developing customer referral programs

Conduct general advertising for the service

Help suppliers to test and demonstrate quality of services

Consumers want services packaged Together

Broker agreements among suppliers to develop packages of services

Provide venture capital and technical assistance for suppliers to diversify

Supply-Side Problems

Service products lack the benefits and features that consumers want

Assist suppliers in developing and commercializing new products

Bring in suppliers from other countries to adapt and franchise appropriate products

Suppliers are risk averse to targeting new consumer segments, such as women, micro enterprises or the service sector

Provide suppliers with information on the viability of a new consumer segment

Subsidize some of the costs in targeting new consumer segments, such as test marketing

Use market research to identify promising opportunities to serve new consumer segments

Suppliers lack market information Develop or improve marketing research services/suppliers

Provide suppliers with market information

Teach suppliers how to gather market information

Suppliers lack business or technical skills Provide training and technical assistance to suppliers

Assist training suppliers in developing and selling appropriate products to other BDS suppliers

There is insufficient supply in the market Provide venture capital to suppliers to expand

Design a program to assist start-up suppliers

Variable quality of services is harming suppliers’ reputations

Provide quality assurance services

Assist suppliers to improve consistency in service provision

Help suppliers form associations with certification processes

Market Environment Problems

Free services are distorting the BDS market

Advocate with government to rationalize BDS subsidies

Regulations adversely affect the BDS market

Advocate for changes in the regulations

Organize SME suppliers to advocate for changes in regulations affecting the BDS market


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CHAPTER III: BDS: DAMU’s PROGRAMS

1. Overview

While correcting market failures, best practice suggests to differentiate between the roles of BDS ‘facilitators’ and ‘providers’. Facilitators create the conditions under which private providers can provide BDS for a profit. The role of DAMU is seen mainly as a facilitator:

stimulating the development of BDS markets by addressing weaknesses of supply and/or demand so that they can provide solutions to the business service needs of SMEs while minimizing long-term distortions by planning clear exit strategies, and

filling the gaps in the market by involving private commercial BDS providers in the provision of services wherever possible.

DAMU’s Mission and Objectives in regard to BDS14

Mission:

Promotion of qualitative development of SMEs Overall objective:

Increased coverage of aspiring and existing entrepreneurs with non-financial support to strengthen the entrepreneurial potential of the population

Specific objectives:

Fulfillment of the duties as the operator of the 4th direction of the Business Road Map 2020

Provision of information, analytical and consulting services for aspiring and existing entrepreneurs

Development of the non-financial business support infrastructure in all regions by merging efforts of providers, standardizing their services and by adapting and adjusting international best practice.

In fact, the declared focus of the government’s SME support programs is the maximum use of market institutions for the provision of BDS thereby avoiding excessive state intervention in market relations. BDS under DAMU’s or DAMU administered programs are channeled through the existing support infrastructure of private providers15 16. However, the DAMU-funded BSCs complement direct service provision of private providers to fill a gap in the market. In addition, DAMU offers supplementary services such as SME sector analysis and business information. An overview of DAMU’s BDS is provided in Table 3 overleaf.

14

DAMU: Annual Report 2010, p. 12-13 15

http://kazworld.info/?p=16995 16

This is also the case for DAMU’s financial services which are provided through commercial banks


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Table 3: DAMU’s BDS – Overview Area Program Project Facilitator Provider

Dis

sem

inat

ion

of

Info

rmat

ion

Geographical Information System (GIS)

DAMU

Call Centre Almaty DAMU

Websites DAMU

‘My Business Kazakhstan’ magazine

DAMU

Trai

nin

g an

d T

ech

nic

al A

ssis

tan

ce

Business Road Map 2020

Business Start-up Training DAMU (train the trainers) BDS providers

Service Support for Existing Entrepreneurs

Local governments (Akimats)

BDS providers

n/a DAMU BSCs

Training of Top SME Managers

DAMU Nazarbayev University Astana

Business Connect DAMU Professional Academy ‘Turan Profi’ Astana

German/US placement companies

Train-the-Trainers DAMU

Entrepreneurship Support Centers

DAMU

National Center for the Development of

Franchising & Franchising Centers

DAMU

Po

licy/

Ad

voca

cy

Report on the Status of SMEs in Kazakhstan and the Regions Analytical Papers on SME Development in the Regions Analysis of international SME support (e.g. Germany, France, Turkey, China)

DAMU

SME Round Tables and Forums n/a DAMU

Sup

po

rt t

o

Entr

epre

ne

urs

wit

h

Dis

abili

tie

s

Komek Program n/a DAMU

Television Broadcast ‘Together’ (the program is completed)

n/a DAMU

2. Dissemination of Information

2.1. Websites DAMU makes wide use of Information and Communication Technology (ICT) for remote provision of services. It operates four websites with varying, but also overlapping content: www.damu.kz DAMU’s business portal is structured into six sections:

http://www.damu.kz/


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The About Us section provides information on the main stages of DAMU’s development, its strategic direction, its organizational structure and shareholder, its head office and branches, the structure of the public council, reporting (financial statements and the annual report), its international relations and projects, contacts and partners, corporate governance and social responsibility, the internal audit service and careers in DAMU.

The Fund DAMU section informs about all the programs that DAMU either implements or administers.

The Business Road Map 2020 section informs about relevant legal acts, priority sectors, projects, banks involved, weekly and monthly data on the implementation status while allowing for downloading of some manuals.

In the section ‘The Trick’ users get information and tools in areas such as start options, business plan, company name, legal form of business, registration and licensing, founding documents, opening a bank account, cost estimates, choosing a niche, taxes and how to run a business.

The Information Section provides access to various analytical reports, news, classified advertisements, questions and answers, foreign suppliers, press coverage of DAMU, presentations and statements, helplines in DAMU’s regional offices while users also can link to the Geographic Information System – GIS (see below).

The Purchase Section informs about rules for procurement of goods, works and services, DAMU’s procurement plan 2012, links to the public procurement portal, and sale of pledged property,

DAMU is in the process of gradually adding website content (including video courses) to stimulate entrepreneurial initiative by integrating all necessary and up-to date information on how to start a business and how to further develop an existing business. www.biznes.damu.kz This informative website, which is the same as the www.dkb2020.kz website, is structured into five sections:

The Business Road Map 2020 section provides a detailed description of the Road Map, its components (projects) and the support that SMEs can obtain.

The DAMU Komek17 section provides a shortcut to www.damu-komek.kz (see below).

The ‘A Women in Business’ section includes information on financial support programs for women, on associations of women (with shortcuts) and on success stories of women entrepreneurship.

The First Help section informs about business ideas and partner search, sources of funding, potential entrepreneur, success stories, business documentation and provides a glossary of terms and definitions.

The Business Development section offers articles/tools for an entrepreneur, small enterprise, medium-sized enterprise (including sources of funding, business planning, strategic planning, taxes and laws, marketing, personnel management)

17

For details see chapter ‘Support to Entrepreneurs with Disabilities’.

http://www.biznes.damu.kz/

http://www.dkb2020.kz/

http://www.damu-komek.kz/


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and on franchising while also providing a directory of companies and their products and services (with search facility by company name, region and industry), and a business directory with links to banks and banking products, mutual funds, a list of exhibitions in 2012, a list of taxes and the associations of entrepreneurs.

Apart from this main structure, the homepage offers shortcuts to national and international news, articles and materials, a virtual library, laws and regulations, SME support programs, and an online question/answer section on the Business Road Map 2020. In addition, there is the facility to subscribe to DAMU’s e-newsletter. Information is also provided on classified advertisements, available jobs, a catalogue of companies, procurement and tenders. Users can register on this website. www.gis.damu.kz This website provides access to DAMU’s GIS. The system was developed in four stages. Under phase one a sub-system for the analysis of the external environment was developed based on data from the National Bank, the Statistics Agency and the Financial Market Regulatory Agency. Under phase two another sub-system for the external environment was added with information on all financial programs implemented by DAMU with a breakdown by banks, regions, purpose and cost of financing. Meanwhile external users have access to GIS, which was foreseen under phase three. The creation of a sub-system for monitoring SME performance at the enterprise level (output, sales volume, profits, outstanding loans, investments, etc.) under phase four is in progress. Originally conceived as an internal system to support managerial decision-making, today DAMU’s GIS has evolved into a public interactive on-line system to provide data on the activities of the Fund as well as statistical indicators, related not only to SMEs, but also to key economic processes in the country. It automates the collection and analysis of internal reporting and external statistical information into a single database, allowing for time and cost savings for users. www.damu-komek.kz The homepage of this website provides a brief introduction into DAMU’s Komek program Support to Entrepreneurs with Disabilities and enables viewers to link to various sections. These include:

About us: Presentation of DAMU’s Board of Trustees,

About the Program: Description of the program with the possibility to download the concept paper,

Thanks: Acknowledging persons or organizations that want to help business people with disabilities,

News: Information relevant for disabled persons,

Training: Information on the Business Advisor program, schedule of training courses, video express training course,

http://www.gis.damu.kz/

http://www.damu-komek.kz/


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Useful Tips: Information on tax benefits, measures to ensure competitiveness of entrepreneurs with disabilities, social protection of persons with disabilities, useful links,

Telecast Together: Case studies of successful entrepreneurs with disabilities,

Look at the Stars: Information on the promotion of entrepreneurs with disabilities and support measures.

R97WJA9N4MG The ‘feedback’ link allows for posting questions in regard to the Komek program. 2.2. Call Center

DAMU maintains a Call Center in its head office in Almaty employing 10 operators. Toll-free calls can be made from all over the country. The plan is that the center will provide consulting on tax issues, banking and lending operations, information on how to start a business and what to do to apply for a loan. Currently, the center provides general information and for specific requests transmits inquiries to DAMU’s different departments. Most consultation requests concern the Business Road Map 2020 followed by other DAMU programs. 2.3. Printed Materials While DAMU makes intensive use to disseminate information through the Internet, it also provides printed materials including the following:

SME periodicals: Publication of the monthly SME magazine My Business Kazakhstan started in 2009 providing information under eight permanent headlines.

Express Course in Entrepreneurship: The manual includes the following chapters: the state and problems of entrepreneurship, the program for the development and support of entrepreneurship, and how to get a bank loan.

The Future Starts Now, Path to Prosperity: A beginner’s guide for entrepreneurs including the following chapters: what you need to know to start, the plan to profit that will help you to be successful and how to organize your business.

100 Questions - 100 Answers: Answers to 100 common questions structured into five chapters: business planning, marketing, finance, taxes, and personnel.

2.4. Business-Naskihat

‘Business-Nasikhat’ has been recently introduced by DAMU for the effective implementation of the Business Road Map 2020 and the promotion of entrepreneurship. It aims at informing and explaining the government’s support measures to the general public through the organization of outreach work, dissemination of success stories and successful projects under the program as well as explaining SME-relevant laws and regulations.


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3. Training and Technical Assistance

3.1. Business Road Map 2020

DAMU plays a key role as financial agent and program coordinator of the program Business Road Map 2020. This program is an implementation mechanism of the State Program for Accelerated Industrial-Innovative Development 2010-2014. The Road Map’s main objectives are ensuring sustainable and balanced growth of businesses in the non-oil sectors of the economy as well as sustaining existing and creating new employment. The focus is on businesses in remote areas where entrepreneurship is still nascent. Enterprises that operate in or are being established in priority sectors18 19 can claim state support under the program.

The program consists of four directions. BDS are provided under the 4th direction: Enhancing Entrepreneurial Capabilities20. The focus is on the introduction of new business models, the development of skills for effective management of existing businesses and on ways to address strategic and tactical business challenges. Support is provided by the following projects:

Training support for business start-ups

Service and consulting support for existing entrepreneurs

Training of top management of SMEs

Establishing business relations with foreign partners (‘Business Connect’)

(i) Training Support for Business Start-ups

The ‘Business Advisor’ project21 is a component of the standardized package of services that is offered by DAMU under ‘Training Support of Start-ups’. It covers all regions and cities of Kazakhstan and consists of express training courses (16 hours) for aspiring entrepreneurs22, complemented by handouts23. It is planned to include an additional document Ideas for Small Business into the standard package. Training and handouts are free of charge.

18 Agricultural sector, light industry and furniture production, production of construction materials and other not metal mineral products, metallurgy, metal working, engineering building, other sectors of industry, transport and storing, agricultural sector, tourism, information and communication, professional, scientific and technical work, education, public health and social services, art and entertainment. 19 In April 2012, the list of activities supported within the program has been extended to include companies involved in maintenance and repair, postal and courier activities, provision with computer software, as well as those working in the field of accountancy and audit services, architectural and engineering research, and whose work is related to cultural services, sports, libraries and archives as well as film screening. 20 Under the other three program directions (Support to New Business Initiatives, Revitalizing Existing SMEs, and Support of export-oriented Enterprises) financial support is provided in the form of interest rate subsidies and in addition - under the 1st program direction - partial loan guarantees. 21 For details see Chapter III, 2.2 22 The express training course includes the following modules: introduction to entrepreneurship, psychology of entrepreneurship, legal aspects of entrepreneurship, marketing, business plan, HR management, finance and franchising. 23 The documents include: electronic version of the manual Express Training Course in Entrepreneurship, a booklet How to Get a Loan and a standard package of documents that comprises relevant laws, model business plans, sample forms of founding documents (charter for various legal forms, constituent agreements, decision of a sole founder), feasibility studies (description, requirements, model calculation), documents required for obtaining loans and market research reports on specific sectors like meat and meat products, milk and dairy products.


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(ii) Service and Consulting Support for Existing Entrepreneurs

Support services are made available to small businesses through private BDS providers. The rationale for this project is that not every entrepreneur can be an expert in legal matters, accountancy, marketing, customs procedures or other areas, but through this project can draw on advice. Services comprise seven areas24: Services related to accounting and tax accounting, as well as the compilation of

statistical reports, Services on customs procedures, Counseling and support throughout the process of implementation of

management systems, Legal services, Marketing services, Consultations in the sphere of maintenance of information technologies, and Services related to government procurement, procurement of state-owned

enterprises and subsoil users. Providers also conduct training-consultative workshops in most of these areas offering entrepreneurs complementary know-how and consultations. Service support has been extended recently to cover medium-sized enterprises and it is planned to render all services in one place according to the ‘single window’ principle. Moreover, it is envisaged to extend the list of consultative services to include cooperation of SMEs with large strategic enterprises in support of subcontracting. The entrepreneur applies to the local executive body, i.e. the governors’ offices in the regions or the mayor’s offices (Akimats) in Astana and Almaty. They refer the entrepreneur to the service provider that has been chosen by the local executive bodies through tender. Services are free of charge for an SME while the provider is paid from budget resources. (iii) Training of Top Management of SMEs

This project is intended to introduce the latest models of building and running a successful business in order to improve doing business and to increase the competitiveness, viability and growth of companies. The total number of participants in the project is 210 persons.

For this purpose, a five-month executive education program was developed by the Business High School of the Nazarbayev University in Astana jointly with the Duke Corporate Education, an affiliate of the American Duke University. To ensure efficient implementation, an assessment of entrepreneurial needs was undertaken by interviewing successful Kazakh entrepreneurs to learn about prevailing business practices.

The trainees are senior and middle SME managers, chosen by Regional Coordination Councils. Training is done in three stages: Stage 1 comprises three-day classroom sessions in groups of 30 participants with the main topics being

24

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assessment of business/commercial opportunities, resource management and interaction between shareholders/stakeholders. Stage 2 is a 3-day online seminar and stage 3 is about writing and evaluating a business plan. At the end of the program, the trainees present their own business plan and the best business plan is selected during a competition. (iv) Business Connect

The aim of this project is to increase the capacity of entrepreneurs through networking and collaboration with foreign companies. The project consists of a 2-step process25, involving training and internship in foreign enterprises. Since 2011, it has been implemented by DAMU jointly with the MEDT. To qualify for participation, the applicant must at least be a deputy manager (senior and middle manager), the enterprise where he/she is employed must have the legal status of an SME, and the current (or planned) activities of the enterprise must fall within the priority sectors of the Business Road Map 2020. Trainings are held in two stages: During the first stage trainees are provided over two weeks (full-time) with theoretical and practical training in two courses in Astana and Almaty, undertaken by the International Professional Academy ‘Turan Profi’. The first course is a general course on the fundamentals of entrepreneurship (business planning, time management, technology, business plan development). The second one is an industry course and includes business orientation in the host country, the search for business partners abroad, and the legal framework of international business. Once these trainings are finalized, the participants return to their companies and for two weeks continue to learn on-line, taking part in virtual conferences and webinars organized by the Academy. This includes methodological support in regard to best practices in business planning and orientation towards identifying constraints as well as the completion, execution and presentation of business projects. Participants are required to draft and present a business plan for their project and comply with a design task for internship. In a competition, those with the best business projects (plans) are selected for participation in the second stage. The second stage involves thematic internship at enterprises of a similar profile, either in Germany or in the United States of America (USA) for a period of one month. In the case of internship in Germany - the first contest of the project -, a joint Kazakh-German Commission selects participants. DAMU cooperates with the German Ministry of Economy. Participants undertake a two-week theoretical course and a two-week practical course at the selected German enterprise at the expense of budget funds and the funds provided by Germany. They get acquainted with the personnel management, technological process, and marketing strategy of the hosting enterprise. In addition, they have the opportunity to evaluate partnership opportunities in regard to (i) technology transfer and procurement of equipment, (ii) mutual provision of goods, works and services, (iii) the implementation of franchises, (iv) receipt of grants from international and foreign organizations, and (v) setting up joint ventures. After the internship all participants return to their domestic enterprise

25

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and implement the planned business projects while applying the management experience gained in Germany26. The second contest for selecting candidates for internship in the USA took place in March 2012. All participants of the first stage of the Business Connect project and the Training of SME Top Management project could apply, except for those who had already travelled to Germany for training in 2011 or 2012. Applications of SMEs that operate in agriculture and the food industry as well as transport and logistics are accepted. The business trainings and internships are free of charge and paid from the state budget. 3.2. Business Advisor Training Program

In 2009, DAMU developed its own Business Advisor (train-the-trainer) program with the overall objective of improving the know-how of SMEs27. Specific objectives are (i) even coverage of aspiring and existing entrepreneurs in the districts with professional skills enhancement services, (ii) expanding the share of the economically active population engaged in the SME sector; (iii) building effective dialogue between the government and entrepreneurs in the districts; and (iv) promoting the role of entrepreneurship and shaping a positive image on the government’s SME support.

In a first stage, trainers and lecturers from private consulting companies are selected by DAMU’s regional representatives based on predefined selection criteria

28

interfacing with the Nur Otan People’s Democratic Party, the Ministry of Education and Science as well as oblast and rayon executive bodies. Those selected are trained and grouped together. Depending on the number of districts in an oblast, certain oblasts may have several groups of lecturers and trainers.

During a second stage, SMEs in each of the 209 districts receive free training. The costs are subsidized by the state budget. All aspiring entrepreneurs but also entrepreneurs that have already started their business but lack knowledge can participate. Training courses are delivered by two trainers: a banker/economist and a lawyer. They are provided in the form of a two to three day crash course covering the following topics:

Starting a business: Selection of the start-up option, sector, development of a business plan, selection of the legal form of business, taxation regime, company name, preparation of constituent documents, company registration, search for funding, opening of a bank account, procedure for acquiring permits and licenses.

Operating a business efficiently: Contract basics, process organization, quality management systems, business training, accounting, preparation of statistical reports, customs procedures, information technology (IT), business promotion (advertising and marketing), reorganization and winding-up, sale of the business.

26

http://www.pm.kz/program/event/view/944 27 Business Advisor Program of DAMU Entrepreneurship Development Fund JSC (http://www.damu.kz/1146) 28 Selection criteria include: A degree in business administration (economics, management, finance, accounting, or marketing); experience in a private business; knowledge of Kazakh and Russian; commitment to entrepreneurship, no negative civil record.


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SME support measures: Explanation of support under the government’s anti-crisis program.

Hand-out materials are provided including manuals on doing business, research materials, and a list of standard business plans. Training results are subject to quality control and assessment. It is planned to train aspiring entrepreneurs in future separately from existing entrepreneurs.

3.3. Entrepreneurship Support Centers

After implementing the Business Adviser training program, a network of ESCs has been created pursuant to the Law on Entrepreneurship and following Kazakhstan’s industrial development strategy, which includes developing the enterprise support infrastructure29. The overall objective of the program is to enhance SME development through the provision of informational and advisory services as well as analytical support to entrepreneurs and the economically active population. Specific objectives are: (i) to create a regional network of ESCs, providing standardized non-financial services, (ii) to contribute to improving the organization and conduct of businesses and reducing the associated operational costs, and (iii) to increase the outreach of information on all instruments of state support for entrepreneurship. The program is based on the following core principles: (i) public-private partnerships, (ii) co-financing of the project participants and the ESCs; (iii) standardization of the services, (iv) not-for-profit orientation of ESCs, and (v) continuous performance monitoring by DAMU. The establishment and operation of ESCs is financed from DAMU’s own funds, received as income from financial support programs for enterprise development.

International, Regional and District ESCs30

International ESC: The ESC is created by DAMU in partnership with an international organization

31. The international organization provides the methodical and technological basis for

the provision of consulting services while DAMU provides infrastructure support (premises, human resources) and also pays for public services, communication services and the Internet.

Regional ESCs: These ESCs are created in partnership with regional organizations that have the ability and capacity to provide advice, information and training services to existing and potential entrepreneurs. The partners may be universities, regional and/or sectoral business associations or consulting firms. The partners provide office, furniture, equipment and staff while DAMU carries out consultancy for services rendered. The payment of DAMU’s advisory services is defined by agreement between DAMU and the partners.

District ESCs: These ESCs are created with the participation of local companies that can provide premises for the ESCs while DAMU provides human resources.

DAMU creates the conditions for the establishment of three types of ESCs, depending on the level of regional representation and the partners involved: an international ESC, regional ESCs, and district ESCs.

29 DAMU also cooperates with the United Nations Industrial Development Organization (UNIDO) to set up a Center of Industrial

Enterprises by the end of 2012. 30

http://www.biznes.damu.kz/ru/non_financial_support/business-support-center.php 31

On an international level DAMU cooperates with the Entrepreneurship Development Institute of India, the South Korean Small Business

Corporation (SBC), the USAID, and the United Nations Industrial Development Organization.


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Meanwhile in 2011 the establishment of regional ESCs has been completed in all the fourteen regions and the cities of Astana and Almaty. They are based in the regional branches of DAMU and staffed with two consultants that are contracted by DAMU for one year. In addition two district ESCs were established in the Aktyubinsk oblast. The geographical expansion of district ESCs is planned to be completed by 2016. According to the programing document32, it is envisaged that ESCs will provide a standardized package of services for SMEs and the public. These services are provided free of charge. Additional services are offered for a fee on the basis of contracts concluded with the clients. Planned standard services include those outlined below.

Standard Non-financial Services of ESCs

Consultancy in the field of taxation, including preparing and filling out forms taxes ND reporting;

Consultancy on the development of business plans and application for funding;

Consultancy on business registration;

Consultancy in the field of marketing;

Provision of information on state support programs for SMEs;

Provision of educational support by organizing training courses, trainings, seminars, aimed at increasing the knowledge and skills of existing and potential entrepreneurs

In addition, it is intended that ESCs provide supplementary services as outlined below.

Supplementary Non-Financial Services of ESCs

Maintaining a database of all clients, including the name of the output products and services.

Facilitating partnerships between clients,

Research at the regional level for the provision of basic information on the economic situation in the region and on the status of the SME sector,

Informing financial institutions and associations of entrepreneurs about the needs of SMEs,

Establishment of libraries for SMEs,

holding seminars and conferences,

Informing entrepreneurs and the economically active population about the services provided by ESCs,

Participating in national and regional events aimed at informing and stimulating entrepreneurship (exhibitions, fairs, etc.).

Since the establishment of regional ESCs has only recently been completed, not all planned services are available as yet.

3.4. National Center for the Development of Franchising

DAMU’s latest initiative is the program National Center for the Development of Franchising awaiting implementation33. The overall objective is to create and develop franchise relations of aspiring and existing entrepreneurs by providing specific data and a set of standardized knowledge on franchising. The specific objectives are: (i) promoting the development of franchising, (ii) providing information and consulting

32

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services on franchising, and (iii) elaborating proposals to stimulate the development of franchising at the national level. The program is financed by DAMU’s equity fund (including state subsidies), the partner organizations and attracted resources. DAMU partners with the "Nur Otan" Party, the MEDT and the Kazakhstan Franchise Association.

DAMU is planning to open Franchising Centers in all regions and the cities of Astana and Almaty in partnership with regional organizations that have the ability and capacity to provide advice, information and training services in this area. These can be regional and/or sectoral business associations and consulting firms. Partner

Planned Activities of the National Center for the Development of Franchising

Promoting innovative development of Kazakhstan, introducing new business technologies, standards, business organization, as well as improving the business culture of SMEs;

Providing information and consulting support in franchising in all regions and the cities of Astana and Almaty;

Undertaking marketing research and market surveys on franchising in Kazakhstan;

Establishing a specialized database of current and potential participants in the franchise systems;

Evaluating international forums, exhibitions, conferences and seminars on the development of franchising;

Developing and presenting proposals to public authorities to encourage the development of franchising and to improve the legal framework;

Developing recommendations for the application of experience in successfully operating franchising systems.

organizations will provide office premises, furniture, equipment and staff while DAMU carries out consultancy services. Partner organizations will be selected on a competitive basis.

Proposed implementation mechanisms include (i) providing information and consulting support in franchising, (ii) providing consulting services to franchise relations, and (iii) interacting with its partners and the local executive bodies of oblasts and districts. Expected results are to increase the level and number of franchise relations in the country, to raise the awareness of SMEs in franchising, and to create the necessary preconditions for Franchise Centers. Services are planned to be provided as a standardized set of free services, a standardized package of additional paid services. The Centers will be financed by the equity of partner organizations, DAMU’s own funds received as income from financial business support programs, grants from the state budget and by raising funds from the private sector.

4. Policy/Advocacy This BDS category commonly includes training in policy advocacy, analysis and communication of policy constraints and opportunities, direct advocacy on behalf of SMEs, sponsorship of conferences and policy studies. DAMU undertakes policy studies and sponsors and organizes round tables and forums while the policy itself is developed by the MEDT.


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4.1. SME Sector Analysis

DAMU prepares and publishes a number of analytical materials concerning SME development in Kazakhstan. It also disseminates information on SME support practices of other countries, which may serve as reference. Both types of information are available on its website (www.biznes.damu.kz). Examples include: Results of the Implementation of the Programs of the Fund DAMU 2010 Score Adjustment Programs of the Fund DAMU International Experience of the State Support of SMEs Analytical Materials prepared by Experts of the Partner University Small and medium-sized Enterprises in Astana SMEs in the South Kazakhstan Region SMEs in the North Kazakhstan Region Support system for SMEs in Turkey The System for Financial Support in China Support System for SMEs in Italy The German Experience in Developing and Supporting SMEs On an annual basis DAMU publishes the Report on the Status of Small and Medium Entrepreneurship in Kazakhstan and the Regions. An electronic version is planned to be available on its website with quarterly updates. 4.2. Round Tables and Forums To facilitate communication between SMEs and the government and between SMEs, DAMU plans conducting roundtables in all districts and one annual forum with the participation of representatives from the business community, society, public authorities and mass media. Meanwhile DAMU has organized several round tables and forums in cooperation with stakeholders to disseminate information on the Business Roadmap 2020 and the Business Adviser Program and to address specific topics related to SMEs. Examples:

In January 2010, with DAMU’s assistance the city of Karaganda hosted the first seminar on the Business Advisory Program under the topics: best practices, outcomes and prospects.

In March 2010, DAMU and the Kazakhstan Association of Entrepreneurs organized a series of round tables in Karaganda, Shymkent and Kzyzlorda on issues related to the implementation the Business Roadmap 2020.

Moreover, DAMU regularly organizes events to develop international relations and exchange experience with leading international SME experts. It signed Memoranda of Understanding (MoU) with SME organizations from Poland, Korea, France, Germany, Turkey, Italy and the Netherlands. Examples:

In May 2011, the Kazakh-Korean Business Forum was organized by DAMU with the participation of Kazakh and Korean entrepreneurs providing networking opportunities and enhancing further cooperation.

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In March 2012, in the framework of a delegation from the Turkish Small and Medium Enterprise Development Organization the Kazakh-Turkish Business Forum took place providing similar opportunities.

Annually, under the Astana Economic Forum, DAMU organizes a panel session on SME development with the participation of its partners, leading politicians, well-known scientists and representatives of business organizations.

5. Support to Entrepreneurs with Disabilities The aim of DAMU’s Komek program34 is to create an enabling environment for people with disabilities to engage in business activities as the basis for their material well-being and professional development as well as assisting them in raising their qualification through distance business learning. DAMU cooperates with the Union of Organizations of Persons with Disabilities and the National Economic Chamber Soyus Atameken. It raises the awareness of the problems of people with disabilities and mobilizes the resources they need to start a business including property, equipment, consulting support and financial assistance. DAMU mainly acts as a liaison between these entrepreneurs and potential sponsors while not providing direct funding.

Major Activities under the Komek Program

Involving people with disabilities in training on the basics of entrepreneurship within the framework of the Business Adviser program;

Posting specially designed training courses (including video course with sign language) on DAMU’s website to establish and develop a business;

Strengthening the market position of disabled entrepreneurs through the coordination of the activities of the co-sponsors to provide equipment and auxiliary materials needed for doing business;

Raising awareness about the problems of the disabled population and creating a positive image of sponsorship;

Introducing new forms of financial and non-financial support to disabled entrepreneurs and promoting the employment of people with disabilities;

Establishing a centralized data base of aspiring and existing entrepreneurs with disabilities, and their property requirements;

Creating and posting relevant legal information on DAMU’s website based on a study of normative and legislative acts concerning privileges and preferences for disabled entrepreneurs.

The program is implemented by introducing a special section on non-financial support for disabled persons-entrepreneurs into DAMU’s website, consisting of the following sub keys:

Training courses on the basics of entrepreneurship;

Information about job opportunities for persons with disabilities;

Excerpts from legislation related to privileges and preferences for disabled persons-entrepreneurs;

A centralized data base of persons with disabilities.

34

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Sources of program financing include financial support of DAMU under the organizational and technical program component as well as involvement of the private sector in the form of sponsorship of people with disabilities. Expected program results are:

The involvement of people with disabilities in business;

Provision of advisory services through distance learning on entrepreneurship;

Online awareness raising of disabled entrepreneurs on specific legislation;

Improvement of employment and self-employment for people with disabilities;

Attraction of public attention to the most acute problems of people with disabilities.

CHAPTER IV: BDS: INTERNATIONAL EXPERIENCE 1. Overview Many aspects of the business environment in which enterprises are set up and operate are affected by institutions and structures. SME support authorities are the focal point in this institutional setting. They are found generally in government departments under the Ministries of Trade, Commerce or Industry, or as a central SME agency. Basically they fulfill three roles:

Policy functions: They are a focal point for SME issues in government acting as the steward of SME interests by advocating policy matters or developing enabling policies and regulatory frameworks.

Intelligence functions: They collect data on the sector, monitor its development, draft annual SME sector reports to provide evidence on SME development and the impact of SME policy and they interact with entrepreneurs to develop critical insights for lobbying their interests in government or drafting SME policies and programs.

Service functions: They act as ‘traffic control’ in a multi-stakeholder SME setting overseeing, coordinating and synchronizing the implementation of targeted programs. These programs leverage existing services in the public and private sectors and package them for SMEs in response to their needs (indirect provision or facilitation of provision). At times they fill the gaps in the BDS markets by engaging private service providers.

The BDS of the following institutions have been chosen for comparison with DAMU’s BDS:


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Best Practitioners in BDS Provision to SMEs

SMEDA Pakistan: The Small and Medium Enterprise Development Agency (SMEDA), functioning under the Ministry of Industries, is the premier institution to develop SMEs.

OSMEP Thailand: The Office of SME Promotion (OSMEP) is a semi-government agency for the promotion of SMEs. For the provision of BDS it partners with the local Chamber of Commerce and Industry (CCI), universities, industry associations and other service providers. It only takes charge of SME promotional activities left unimplemented by others and those yet to be implemented or implemented but not yet effectively serving SMEs.

SME Corporation Malaysia: The SME Corp. is the single dedicated agency to develop SMEs.

SPRING Singapore: The Standards, Productivity and Innovation Board, a statutory board under the Ministry of Trade and Industry, is the main agency for enterprise development aiming at enhancing their competitiveness in cooperation with partners.

SBC South Korea: The Small & Medium Business Corporation is a non-profit, government-funded organization established to implement government policies and programs for the growth and development of SMEs.

PARP Poland: The Polish Agency for Enterprise Development (PARP) is a state agency with the primary objective of developing the SME sector.

2. Dissemination of Information

2.1. SMEDA Pakistan

SMEDA uses various tools to disseminate business information to SMEs among them quarterly newsletters, websites, and publications made available by its Information Resource Centre. Sample publications include: Compliance and International Standards Organization (ISO) Certification, Trade in Services, Trade Secrets, Secrets of e-Commerce, How to Approach Banks35.

2.2. OSMEP Thailand

OSMEP serves as SME information center coordinating and providing information for SMEs and related agencies. On its website it answers to the questions of SMEs.

SME@click: The e-Project stores and distributes knowledge and information to SMEs in all stages of their lifecycle. The system components are distributed via OSMEP’s SME portal and include the following components: VirtualCoach, e-Mentor, e-University, e-BizNet, e-MarketPlace and e-Innomarket, which address specific issues.

2.3. SME Corporation Malaysia

e-Resources Center: The center provides SME with online access to local and international agencies and organizations that offer financial assistance and development programs as well as access to information on suitable technologies for capacity and productivity improvement. It also provides links to SME-related

35 More specifically the Center provides the following: list of importers, exporters and traders, pre-feasibility studies and regulatory

procedures, custom tariffs for imports & exports, know-how guides for new business start-ups, contact details of business establishments in selected fields, statistical data on various sectors and trade related statistics.

http://www.smeda.org/pre-feasibility.php

http://www.smeda.org/reg-procedure.php

http://www.smeda.org/reg-procedure.php


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publications while enabling SMEs to search for researchers by name, organization, address, knowledge domain and research and development (R&D) classification.

Entrepre-News: Is a regularly published online magazine providing information on SME-related issues.

Publications: SME Corp. publishes SME-related reports such as the financial guide for SMEs, handbook on SME policies, incentives and programs, the SME Annual Report as well as statistical information. All can be downloaded via the e-Resources Centre.

Database: SME Corp. manages the National SME Database.

2.4. SPRING Singapore

EnterpriseOne Portal: The portal36 offers a single point of access to a whole range of information on government assistance programs, regulations and e-Services for businesses from over fifty partners. Key features are:

Rich And Deep Content: Covers a comprehensive range of topics such as venturing abroad, hiring people, government tenders, loans, taxes and regulations.

Industry Guides: Provide information on topics grouped by industries and organized in sections.

Quick Find: The online interactive tools disseminate information on funding options, government assistance, market statistics, business-related government e-services, licenses and permits.

Frequently Asked Questions: The online database is made up of questions and answers compiled from call centers and e-mail inquiries

How-To Guides: This section includes more than 150 how-to guides, checklists and flowcharts to apply for government assistance schemes, licenses, permits, approvals and other registrations.

Case Studies: The section provides first-hand accounts of how some businesses started out, financed their businesses, secured grants, and made their mark in global markets

RSS Feed: Subscription to free Really Simple Synchronization (RSS) feed to get news, updates and government announcements.

Productivity@Work: The website37 provides SMEs with information and resources that help them understand the basics of productivity, learn about tools, select productivity seminars or courses, find a productivity consultant, access case studies and government assistance programs as well as assess their productivity using SPRING’s IMPACT Assessment Tool38.

36

http://www.enterpriseone.gov.sg 37 www.enterpriseone.gov.sg 38 The tool helps SMEs to compare their productivity performance against the industry average and to assess how effective they are in managing productivity, identifying key productivity levers to focus on and recommending areas for improvement.


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2.5. SBC South Korea

SBC disseminates information through

Magazines: SBC regularly publishes magazines like GIOIPNARA and Tech Times.

Newsletter: SBC publishes the monthly online newsletter GobizKorea helping global buyers find suitable domestic products and business.

SME Databank: SBC maintains a databank for knowledge sharing.

Website: Through its website39 SBC provides information on its services and those of affiliated organizations.

2.6. PARP Poland

Websites40: PARP maintains the following websites:

Website "We support e-Business": PARP implements a system project to inform SMEs about the benefits resulting from grants for e-Services and business-to-business (B2B) technology, providing an Internet platform that facilitates communication.

Innovation Portal: PARP administrates the portal41 which promotes information and knowledge about pro-innovative activities, including technology transfer information on the availability of new technologies, sources of financing for innovations as well as on institutions and programs supporting innovation.

E-Business Portal: Through the portal PARP disseminates information on the concept of information society and e-Economy including rules of running an e-Business, grants for e-Services and B2B technologies.

Publications: PARP prepares and publishes analysis of the SMEs sector including the annual Report on SMEs in Poland, disseminates the results of its research and of its program evaluations while also preparing and issuing guidebooks for entrepreneurs. National SME Services Network: PARP initiated the creation of the network (see below) which includes National Innovation Centers and Consultation Centers that provide information in all areas essential for setting up and operating an SME42. 3. Access to Markets

3.1. SMEDA Pakistan

Pre-feasibility Studies: SMEDA provides due diligence reports that facilitate potential entrepreneurs in project identification for investment including different business areas like marketing, technical or industrial information while covering

39 http://www.sbc.or.kr/sbc/eng 40 http://en.parp.gov.pl/ 41 www.pi.gov.pl 42 This includes information on administrative and legal aspects of starting, operating and suspending a business, on public funding and other sources of financing, the scope and the principles of network services, trade fairs, exhibitions and other business events, on rules for preparing applications for public assistance and for financing from other sources, inclusion of product information into database to facilitate business cooperation, for finding domestic and international business partners.


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several sectors and subsectors. Business Opportunities/Matchmaking Services: SMEDA provides services for SMEs to take advantage of national and international business opportunities using its databases and website including buying an existing business, forming equity partnerships, looking for agents or distributors, franchises and other business investment opportunities.

Cluster Development: SMEDA partners with the CCI and with industry/trade associations to establish Common Facility Centers. They work in diagnostic studies and in cluster profiling, marketing support to cluster stakeholders and training for skills enhancement of participating SMEs.

International Fairs and Exhibitions: Through its website SMEDA informs on upcoming fairs and exhibitions. At times it partners with international organizations to facilitate B2B meetings for delegations of entrepreneurs to favor the establishment of joint-ventures, technology transfer, market access and trade relations.

Women Business Incubation Centre: Initiated by SMEDA and funded by the government, the center provides support to women entrepreneurs offering office space, exhibition/display facilities, access to professional services of experts and consultants, a B2B linkup and business matchmaking desk, seminars and workshops as well as training courses. 3.2. OSMEP Thailand

Preparation for the Asian Economic Community (AEC)43: OSMEP encourages SMEs to prepare strategies for taking advantage of the regional market opening in 2015 by:

AEC Connect: OSMEP coordinates with different industry associations to make sure their members have roadmaps, potential partners and material sources for the new economic landscape.

AEC Ready: OSMEP targets SMEs that are not members of any associations working with them in specific clusters such as furniture, construction and materials or software.

e-BizNet: As part of the e-Project the system collects and provides international market information including on prospective business partners for SMEs who want to export.

Warning Systems: The Early Warning System forecasts the sectoral SME development over the next year. The Warning System for Investment supports SMEs with sectorial data including the number of SMEs, SME characteristics such as liabilities, assets, revenues, profits, return on investment and financial ratios. Both provide for a sectorial SME positioning.

43 In 2015, the ten member countries of the Association of Southeast Asian Nations are scheduled to form the AEC single market.


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Support for SMEs’ Overseas Business Operation: The support includes:

International Cooperation on SME Promotion: OSMEP partners with foreign countries. For example, under the Thai-Malaysia Cooperation, information on SME development policies is exchanged, a joint business portal is established, joint trade and investment missions are organized, a training program for entrepreneurs in food processing is provided and exhibition and business matching activities are organized.

Overseas Thai SME Agency Cooperation: OSMEP collaborates with foreign SME Agencies in regard to the exchange of business data, know-how, in-depths information on trading partners for facilitating the investment decisions of domestic SMEs and supports both inbound and outbound promotional activities.

Internationalization Project: OSMEP’s support to overseas business expansion includes (i) the manufacturing dimension (sourcing, subcontracting, green field investment), and (ii) the non-manufacturing dimension (sales representatives, franchising, licensing). Through the Internationalization Fund it provides subsidies to SME for participation in domestic and foreign trade fairs, business matching, market research and export promotion activities.

Cluster Development: OSMEP’s action plan for SME networking is divided according to groups of provinces and defined target clusters in each area. Example tourism: OSMEP in collaboration with the Tourism Council developed themes or ‘conceptual products’ for chosen province clusters to match the attractions of each cluster. Local tourism interests, including hotels and restaurants, are encouraged to promote the conceptual products. Thai Franchise and SME Expo: Organized by OSMEP, the exhibition is a regular venue for SMEs to showcase their products and services and to foster professional networking.

Business Fair on ‘Strong Thailand National Scheme for SMEs’: OSMEP organizes a series of nationwide events targeting businesses of cultural and biodiversity heritage, media, arts and functional creation.

Business Matching: Co-organized with the Ministry of Industry, OSMEP hosts road shows in business centers nationwide to broaden the market channels for SMEs and provide opportunities for business matching with local and international investors.

3.3. SME Corporation Malaysia Business Matching: The SME Corp. maintains the Business Matching Secretariat and the online Business Matching Session assisting SMEs forge strategic business partnerships and network with large enterprises and Multinational Corporations (MNCs). The Business Matching Session also acts as a platform for SMEs to learn from the participating large enterprises and MNCs on what it takes to be their suppliers.


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Exhibitions: The SME Corp. organizes annual showcases, SME Innovation Showcases, exhibitions that include participation from domestic and international markets. 3.4. SPRING Singapore

Export Technical Assistance Center: The center helps SMEs understand and comply with the standards, technical regulations and compliance requirements for food and electrical/electronics exports. It links SMEs with professionals to guide and assist with the interpretation of standards and technical regulations.

SME Marketing Toolkit: Jointly developed by SPRING and the Marketing Institute, the toolkit offers guides to help SMEs develop, implement and manage their marketing efforts including market assessment, marketing plan, branding, public relations and advertising, digital marketing and promotions. Introductory workshops are conducted regularly.

Brandpact: SPRING partners with business associations and brand experts to offer branding forums and workshops, brand assessment and consultancy as well as online resources to inform and equip SMEs on their branding journey for enhanced competitiveness. SMEs are required to first undergo the SMART initiative (see below).

Customer Centric Initiative: The initiative encourages SMEs to be committed to service excellence offering an assistance package that provides guidelines on service strategies and blueprints, redesign of service processes, customer service, training, customer satisfaction measurement and service audits.

Customer Service Toolkit: The toolkit provides a framework to develop service excellence in SMEs by identifying and addressing key pillars of service excellence. Jointly with consultants SPRING provides familiarization training workshops.

Local Enterprise and Association Development Program: Managed by SPRING and International Enterprise Singapore the program aims at enhancing industry and enterprise competitiveness by assisting industry associations, business associations and CCIs. SPRING provides training grants to SMEs to enhance their abilities to execute their respective projects under the scheme.

Business Excellence Certification and Awards: SPRING grants certifications and awards for companies with outstanding performance: (i) the Singapore Quality Award for achieving all-round business excellence, (ii) the Service Excellence Award for achieving all-round service excellence, (iii) the People Excellence Award for excelling in people development, and (iv) the I-Award for innovative management systems and processes.


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SBC supports the internationalization of SMEs through: Roundtable Meetings: Frequently SBC organizes roundtable meetings. For example, in line with the government's promotion of the Korea-India Free trade Agreement (FTA) and Korea-European Union (EU) FTA, SBC arranges meetings with leading export and import-related organizations to support SMEs in FTA utilization. Exhibitions: SBC organizes and participates in international exhibitions, and hosts national exhibitions in overseas markets to provide marketing support for SMEs. Trade Missions: In collaboration with local governments and the local office of the Korea Trade-Investment Promotion Agency, SBC organizes and dispatches trade delegations for competitively selected SMEs to participate in market briefings and B2B matchmaking sessions abroad while also providing post-mission support. Business Matching Services: SBC operates a B2B portal44 that helps global buyers find suitable products and business. Sourcing professionals help find pre-screened SMEs and support buyer business trips under the visitor assistance program. The e-Trade Video Meeting allows online face-to-face meeting among buyers, interpreter and qualified domestic suppliers.

Business Trips: Through its overseas branch offices SBC provides administrative support to SMEs travelling overseas to do market research. Export Incubators: SBC operates export incubators in overseas markets for domestic SMEs providing marketing and accounting services and services to improve their brand power.

3.6. PARP Poland

Enterprise Europe Network: Operated under PARP, the network enables entrepreneurs seeking foreign business partners to publish their company profiles in the Business Cooperation Database, provides information mainly pertaining to EU laws, policy and programs, domestic and foreign business activity, access to sources of financing, internationalization and technology transfer. Export Promotion: PARP supports exports offering SMEs an opportunity to participate in economic missions abroad, networking events and fairs which it either organizes or co-hosts. Co-financing is provided for advisory services including analysis of the company’s competitive position, targeting export markets and preparing export development plans.

44 www.GoBizKorea.com


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4. Training and Technical Assistance

4.1. SMEDA Pakistan

Business Plan Development Services: SMEDA provides these services to enable potential as well as existing investors to make well researched and informed investment decisions. Industry Support Program: SMEDA initiated the program to transfer technical expertise and knowledge to local industry through the involvement of national and international experts in collaboration with international development organizations.

Productivity Initiative: SMEDA provides productivity and quality improvement expertise on a short-term as well as on a long-term basis. The situation of the selected enterprise is evaluated and different industrial engineering tools and techniques are deployed in order to achieve enhanced productivity.

Training Program: Training is provided through different modules structured to generate awareness among the participants related to a specific topic.

Training of Trainers: SMEDA builds the capacity of indigenous resources entailing the collaboration of academia and industry to ensure quality training for SMEs.

Best Practices Manuals: SMEDA prepares generic best practices reports and manuals for subsectors (e.g. spinning, garments) to ensure the effective documentation of best practices learned from foreign experts.

Legal and Contracting Services: SMEDA facilitates resolving legal problems through service providers, creates awareness of legal rights and responsibilities by disseminating information on existing regulatory and contractual requirements through sample contract templates, business guides, seminars, trainings and legal opinions to business queries.

Regulatory Procedures: These are guides disseminating information on laws and regulations including processes required for compliance covering areas such as export and import, getting finance, business and utilities registration, labor laws, and taxation procedures.

Commercial Contracts Templates: SMEDA developed sample contract forms for B2B activities to provide SMEs, other enterprises and service providers with guidance pertaining to requisite format and content of a B2B commercial contract.

Accounting Package: SMEDA developed an accounting package45. To maximize usage, networks have been established engaging service providers for provision of training as well as accounting and bookkeeping services.

45 The package has the following salient features: inventory control, financial accounting, cash/bank management, receivables and sales, payables and purchases.


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Consultants’ Database: SMEDA maintains a database where SMEs can search for consultants (either individual or company) according to their specialization, the sector or the location. 4.2. OSMEP Thailand

SME Coordination and Service Center: OSMEP’s center provides consultations on methods of establishing an enterprise, finance and investment, product design and improvement, franchising, marketing, business laws and export marketing. A Call Center operates within the service center. Financial Support to Service Provision: OSMEP provides financial support through the:

Capacity Building Fund: The Fund supports the development of businesses in areas such as intellectual property (IP), marketing opportunities, managerial and business solutions, meeting international standards, and increasing value creation.

Consultancy Fund: The Fund supports the engagement of consultants to SMEs with barriers in business operation and to those that would like to extend and develop their businesses through market expansion, product and service development.

Business Incubator: OSMEP has joined universities to set up business incubators. Some universities serve as in-wall incubators providing workspace, laboratory services, consulting services and accelerating SMEs to the market while others serve as an out-wall incubator providing mostly the same services, except for workspace. e-SMEs University: This component of the e-Project has a SME Competitiveness Rating for Enhancement (SCORE)-based e-Learning system consisting of twelve training modules for self-learning46. They aim at equipping business owners with information and views to manage business more effectively and providing experience in business operation through seminars, workshops and field visits. VirtualCoach: This e-Project component is a knowledge distribution tool to setup a business including information on the process and downloadable documents and forms required for company formation. The system also contains self-assessment tools, which provide recommendations on the type of business best suited for an SME.

e-Mentor: This part of the e-Project provides solutions from OSMEP’s mentors and consultants in reply to questions SMEs post on the web board or in the chat room.

46

Examples: Courses are on entrepreneurship concept for start-up SMEs, introduction into marketing, introduction for SME finance,

management for sustainable SME, business creativity and innovation for SMEs, ICT and e-Commerce for SMEs, production management and service businesses for SMEs, business strategy and trend/opportunity for SMEs, advanced marketing for SMEs, accounting and financial management for SMEs, corporate governance and, business plans.


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Under the National Consultancy System SMEs can search, compare and select registered consultants as e-Mentors.


SME@University: The online university provides a structured learning that lasts three months and encompasses seven common modules plus a specialization module.

Enrichment and Enhancement Program: The program assists micro enterprises through an integrated approach that includes strengthening their core business, building capacity and capability, and facilitating access to financing. It has the same components as the Business Accelerator Program (see below).

4.4. SPRING Singapore

Enterprise Development Centers (EDCs): As part of the EnterpriseOne network, SPRING supported the setup of the centers by the Association of Small and Medium Enterprises which provide assistance to entrepreneurs in the areas of entrepreneurship development and branding. Business Advisors Program: SPRING has appointed the Institute of Management to administer this program which matches business advisors to SME projects lasting up to six months. SPRING finances 70% of the fees. Advanced Management Programs: The Executive Master of Business Administration offers an 18-months part-time program to mid-career professionals and business leaders while the Executive Development Program offers modular management programs customized to specific industries or themes spanning from a few days to a few weeks. Eligible SMEs receive funding support of up to 70%. Productivity Management Program: The program provides face-to-face assistance to raise SME awareness of productivity concepts and overcome their lack of know-how. Offered at EDCs, SMEs receive training, diagnosis and advice while they can attend productivity seminars and workshops, join productivity clinics for diagnosis using the IMPACT assessment tool, get recommendations on government schemes, and referrals to certified consultants.

SME Management Action for Results (SMART) Initiative: The initiative helps SMEs develop business management capabilities using the Business Excellence framework. Consultants work with the SME to develop and implement a roadmap for building capabilities while SMEs receive financial support of up to 70% of the costs.

HR Capability Package: The package offers key guidelines, tips and pointers, tools and templates to help SMEs in manpower planning, recruitment and selection, compensation and benefits, performance management, learning and development as well as career management. HR Capability Program: SPRING provides consultancy through its certified in-house or affiliate consultants to implement and customize the HR practices


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embedded in the modules of the HR Capability Package. It partners with the Singapore National Employers Federation to jointly set up the HR Advisory and Information Service for SMEs. SMEs who need advice can call a hotline. 4.5. SBC South Korea

Training Programs: SBC provides training programs on technology such as machinery, electronics, plastic molding, metalwork and surface processing. SMEs can receive support of their training costs through the government’s unemployment insurance rebate program. Small and Medium Business Training Institute: SBC has a chain of four training institutes that provide training courses on technology, quality control, and management47. Corporate Analysis: SBC offers diagnostic and custom-tailored support service dispatching specialized consulting and guidance officers to check production processes and management systems and to provide tailored improvement plans. SBC’s coupon-system allows for cost-sharing. International Engineer Placement Program: SBC searches and links highly skilled international engineers with promising domestic SMEs in need of their skills and experience.

4.6. PARP Poland

Development of HR for Modern Economy: Aimed at supporting the adaptability of entrepreneurs and employees, PARP provides thematic training in (i) company management (strategic planning, instrument of quick response, environmental management), (ii) HR management (HR investment, age plus – training for enterprises, nationwide training and advisory for entrepreneurs - Telework II, improving competences of employees with low qualifications), and (iii) educational development (PARP Academy, cooperative relations of enterprises, new approach to public procurement).

Strategic Planning: PARP organizes training and advisory activities addressed to SME business owners, managers and employees.

Age plus – Trainings for Enterprises: SMEs gain practical knowledge in strategic personnel management with consideration of age differences among employees demonstrating how to manage personnel with a varied age.

Instrument of Quick Response: PARP provides training and advisory support to SMEs and their employees coping with the impact of the economic downturn, commensurate with a development plan that includes marketing and sales, production, techniques and technology, HR as well as material and financial resources.

47 Training courses include executive training, technology training, quality management training, administrative management, information technology (IT)/atomization training, post-education training and internet cyber training.

http://www.sgemployers.com/public/industry/[email protected]

http://www.sgemployers.com/public/industry/[email protected]


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PARP Academy: PARP administrates an education portal48 to facilitate the access to business knowledge in the form of free e-Learning modules that comprise strategic management, negotiations, management skills, marketing and sales.

National SME Services Network: The network, set up by PARP, consists of approximately 200 organizations which need to ensure the provision of information, training and advisory services to SMEs according to a system of standardized services that was developed and is monitored by PARP through external audits. Train-the-Trainers: PARP offers trainers working with enterprises the possibility to obtain and/or develop knowledge and training skills. They are recruited from two groups: (i) people that have no or little training experience, but have predispositions to be a trainer and have specialist knowledge in a given field, and (ii) people with training experience of at least 80 training hours conducted for entrepreneurs and their employees. PARP co-finances training projects selected under competitions. 5. Technology and Product Development

5.1. SMEDA Pakistan

IPs for Business Success: SMEDA encourages SMEs to effectively use IP systems for their business success through:

IP Helpline: The Helpline assists SMEs on all forms of IPs by solving their queries.

IP Training Programs: SMEDA conducts IP awareness programs in collaboration with the local CCI, the trade associations and the IP Organization Pakistan as well as workshops on franchising in collaboration with the CCI and World Intellectual Property Organization (WIPO).

IP for Business Series Publication: With WIPO’s assistance SMEDA drafted the national adapted version of books published under the IP for Business Series explaining basic IP issues in relation to the practical business concerns of SMEs.

5.2. OSMEP Thailand

Network for Promoting Innovation to Commercialization Projects: To promote SME competitiveness through product and service development, OSMEP’s one stop services help SMEs commercialize their innovations, create alliances and networks with local and international innovation agencies, enhance and promote innovation awareness of the public and develop HR resources to upgrade the innovative capabilities of SMEs. Through its B2B website49 it provides information and knowledge on innovation to encourage SMEs to innovate their business while also encouraging innovators to commercialize their innovations.

e-Innomarket: This component of the e-Project collects research papers and works from universities and the Ministry of Science and Technology enabling SMEs who

48 www.akademiaparp.gov.pl 49 www.innovationsme.com


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seek technology to use this system as a source of knowledge and a channel for technology matching with researchers. Development of Intellectual Infrastructure for SMEs: OSMEP acts as an alliance between the public and private sector to create linkages between academic institutions and industrial sectors, motivating innovation development in the private

sector, and providing support for the commercialization of SME innovation. Example: Cooperation between the Federation of Thai Industries and OSMEP, which focuses on enhancing skills (industrial standard upgrading, establishment of SME incubation center) and improving competitiveness of SMEs (business matching, logistics networking, development of provincial and regional industry by sector).

IP Fund: The Fund provides financial support for SMEs to take their properties including products, services, innovation technology, and related things to apply for IP in order to protect their rights. The support is provided to SMEs that want to apply IP both locally and abroad, to buy licenses or IP rights from local IP owners.

SMEs National Awards: OSMEP grants this award to enterprises that have excellent production standards and management systems to serve as role models. It coordinates with the Ministry of Commerce, the SME Development Bank and private banks to ensure that the scheme has a more concrete impact than simply picking up the award by facilitating access to bank loans, and by providing the opportunity to participate in road shows abroad and reach out to overseas markets. 5.3. SME Corporation Malaysia

SCORE Diagnostic Tool: The SME Corp. uses the SME Competitiveness Rating for Enhancement (SCORE)50 diagnostic tool to rate and enhance the competitiveness of SMEs based on their performance and capabilities51, which serve as a basis for providing tailored consultancy (see below). Business Accelerator Program: Four program components assist SMEs: (i) diagnostics: SCORE rating of SMEs according to performance and capabilities, (ii) capacity building: Skills upgrading through short-term courses by training centers appointed by the SME Corp. and brand awareness raising, (iii) advisory & technical supportOne referral Centre: Advisory services for start-ups as well as established businesses by counselors and the Expert Advisory Panel (SEAP) in diverse areas (see below)52, and (iv) facilitating access to financing: Advisory services by various financial institutions. SME Expert Advisory Panel53: SMEs operating in manufacturing, manufacturing related services and other services (except insurance and financial services) are given on-site assistance by retired experts from industries and specific

50 SCORE functions are (i) to identify strengths and weaknesses of SMEs in order to recommend improvement measures; (ii) to facilitate linkages of potential SMEs with large companies/MNCs; and (iii) to link export-ready companies to Malaysia External Trade Development Corporation. 51

Performance and capabilities are measured based on seven score parameters that vary across sectors. Examples for manufacturing are: business performance; financial capability; management capability; production capacity; technical capability, quality system and innovation. 52 such as technology improvement, production capacity, engineering, automation, machinery equipment, materials technology 53 http://www.smecorp.gov.my/v4/node/87


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government agencies to transfer their technology know-how and experience to SMEs. InnoCERT: The Innovation Certification for Enterprise Rating and Transformation initiative recognizes and certifies innovative enterprises encouraging entrepreneurs to venture into high technology and innovation-driven industries. Companies are guided through coaching and business advisory to implement innovation systems, processes and business models to comply with innovation standards. Certified enterprises are given fast track access to incentives, including funding for their project. Branding Innovation Center: Established by SME Corp. in collaboration with Limkokwing University of Creative Technology the center assists SMEs build and develop their own brands of products and services as well as enhance product packaging. The Branding and Packaging Mobile Gallery, operated by a bus, reaches out to rural SMEs. SME Innovation Award: The SME Corp. organizes this annual award to acknowledge and recognize the most innovative SMEs from six categories: manufacturing, services, ICT/electrical/electronics, engineering and industrial design, biotechnology and agro-technology as well as green technology. Enterprise 50 Award: This award recognizes the achievements of those SMEs that are well positioned for the future based on their financial capabilities, operations and management skills. The award encourages entrepreneurial spirits in local companies, establishes a platform for companies to gain recognition and greater visibility, and promotes a greater pursuit of excellence amongst enterprises. 5.4. SPRING Singapore

Technology Innovation Program: The program is implemented by setting up Centers of Innovation in cooperation with polytechnics and research institutes offering technology consultancy and advice to help SMEs identify practical, downstream technology platforms. They can engage an expert to identify critical technologies and build in-house R&D capabilities. Design Engage Program: A design facilitator helps SMEs understand the role of design in business and value creation while learning about tools to develop an actionable design strategy road map for the creation of new or improved products, services and processes. IP Management for SMEs Program: Consultancy is provided by assessing the strengths and weaknesses of the existing IP management, recommending strategic IP options and implementing the choice IP option to develop the SME’s capability. SMEs can receive up to 70% funding support of the consultancy fees. Innovation and Capability Voucher: The voucher aims at encouraging SMEs to take their first step towards capability upgrading in innovation, productivity, HR development and financial management. It can be redeemed at participating service


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providers for services like initial assessment, customized training and upgrading of the SME’s capability.


Youth Entrepreneurship Program: To shorten the commercialization lead time, SBC’s start-up accelerator provides training, coaching and office space in its regional training centers to young aspiring entrepreneurs wishing to commercialize technology intensive new businesses. APEC SME Innovation Center: Jointly run by SBC and the Small Business Administration (SBA), the center acts as an innovation hub for SMEs providing workshops and seminars for innovation capacity-building, developing and disseminating innovation models and establishing cooperative networks. SBC operates the center’s website, releases publications, conducts innovation research, and hosts business matchmaking events. Productivity Enhancement: SBC links technology-oriented consulting and various support programs inviting technology experts from developed countries when domestic experts fail in developing new products or solving technology problems. Idea Commercialization: SBC offers assistance to SMEs in commercializing ideas and IP, providing services such as consumer feedback surveys, business planning, marketing and fund support to prospective entrepreneurs. Business Innovation: SBC selects companies with strong growth potential as world-class companies providing them through its in-house national and international technology experts with customized means to grow into global leaders. M&A Support Center: SBC operates a support center that provides financing, consulting services and market information to domestic SMEs that are pursuing mergers and acquisitions (M&A). Global Cooperation: SBC collaborates with over 70 organizations worldwide on the basis of MOUs to support bilateral networking of SMEs in the area of technology cooperation, foreign direct investment and joint ventures.

5.6. PARP Poland

Polish Product of the Future Competition: PARP organizes an annual competition in order to promote and disseminate the achievements of creators of innovative technologies that can be applied on the market. Innovative Enterprises' Club: The club, initiated by PARP, is a discussion and information forum for improving the conditions for creating and developing innovative SMEs with focus on user-driven innovation, innovation in services, eco-innovations and a new approach to public procurement.

2012 Year of Good Management: To foster strategic thinking for sustainable development in enterprises, PARP designated 2012 as the year of good


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management. Entrepreneurs and persons planning to undertake business activities in 2012 receive special support in the implementation of all important management functions (planning, organizing, motivating, and monitoring) through trainings, consultancy and co-financing.

6. Input Supply

6.1. OSMEP Thailand

e-MarketPlace: This component of the e-Project provides an opportunity for SMEs to post their business details in the cyberspace for domestic and international markets. Supplier Portal: OSMEP maintains a supplier portal54 where SMEs can search for suppliers by type of product.

7. Access to Finance

7.1. SMEDA Pakistan

SME Banking Products and Services: SMEDA creates awareness of SME-specific bank products and services. This includes:

Database: SMEDA collects and compiles information from various banks about their products and services designed for SMEs, assimilating the information as per SME understanding and displaying it on its website.

Trainings and Seminars: SMEDA conducts awareness seminars and trainings on SME financial services and products, ways to bridge the gap between SMEs and banks, accounting and bookkeeping issues.

SME Financing Helpdesk: In collaboration with banks SMEDA periodically conducts Helpdesks where bank representatives evaluate SME loan requests and SMEDA staff handholds eligible SMEs through the loan process.

Publications: SMEDA published two practical guides for SMEs: How to approach banks? and an Accounting Handbook for SMEs.

Advisory Services: SMEDA provides recommendations and guidance to other institutions prior to developing SME facilitating schemes based on information related to financial conditions of the industry.

Supportive Services: SMEDA prepares financial analysis including the historical performance of the sector in terms of its financial viability, cost structures and value addition processes. To ascertain financial feasibility of individual SMEs, it also prepares financial projections using comprehensive models. 7.2. OSMEP Thailand

Accounting Software for SMEs: OSMEP designed the software to facilitate business operations of SMEs, to strengthen their management system and to

54 www.sme.go.th/supplier

http://www.sme.go.th/supplier


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enhance their competitiveness by conforming to international standards. 7.3. SME Corporation Malaysia

The SME Corp. published the Financial Guide to SMEs.

8. Policy/Advocacy

8.1. SMEDA Pakistan

SME Policy Development: SMEDA carries out research, communicates with stakeholders and advocates policies with different tiers of the government.

Sector Briefs: SMEDA analyses sector developments for providing SME policy guidelines to the government covering technology, finance, marketing, HR development and the regulatory framework.

SME-specific Inputs into Policies: SMEDA provides inputs into SME policy development and implementation, fiscal and trade policy.

Generating Strategic Ideas and Transformation into Projects: SMEDA generates ideas for SME development and converts them into viable projects.

Liaison with different Tiers of Government: SMEDA coordinates with the federal, provincial and local governments in its efforts to promote SME development.

8.2. OSMEP Thailand SME-related Research: OSMEP is the central organization in conducting research and studies on SME-related issues. For example, it prepares the annual review of the current state of SMEs and SME promotion (the white paper) and undertakes research for the national version of the Global Entrepreneurship Monitor. SME Policy: OSMEP develops the five-year SME promotion master plan and action plans and propels, supports, monitors and evaluates their implementation.


SME Annual Reports: SME Corp. provides research inputs into the SME Annual Reports which assesses the performance of the SME sector and the SME development programs. The reports are prepared by the National SME Development Council (NSDC).

SME Policy: SME Corp. formulates broad SME policies across all sectors, coordinates, monitors and evaluates effective implementation across relevant ministries and agencies.

Secretariat to NSDC: The SME Corp. acts as Secretariat to NSDC ensuring that decisions on proposed SME policies are effectively implemented while also providing administrative support.


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8.4. SBC South Korea SBC takes the leading role for implementing SME policies, while the SMBA and the Korea Federation of Small and Medium Business are formulating and evaluating SME policies. 8.5. PARP Poland

Research: PARP conducts research activity within the areas of enterprise, innovation, HR, business environment institutions and enterprise support services to prepare motions and recommendations for SME policy development. Conferences: Each year, PARP participates in conferences on entrepreneurship, innovation, state aid and financing of SMEs. It also hosts and co-hosts regular conferences aiming at educating SMEs on its operational program, promotion and dissemination of the outcomes of innovative products and facilitating SME contacts with implementing authorities of EU programs. CHAPTER V: BDS: COMPARISON While the range of BDS varies, the SME authorities that were analyzed have in common that they support both aspiring entrepreneurs in setting up a business and existing enterprises in managing and advancing their businesses, focusing on technology and innovation and venturing into export markets. It is also common that SME authorities partner with other BDS providers and refer clients to them for services rather than being a single provider themselves. Nonetheless, they often supplement external service provision by disseminating business information, providing training and advisory services (either through in-house experts or through the engagement of external consultants); they undertake research on SME-related topics as well as advocate SME interests or even draft SME policies themselves. Widespread use is made of ICT for informing, educating and mentoring SMEs. BDS tailored to the specific needs of women entrepreneurs are the exception and only provided by SMEDA Pakistan. Cost sharing is frequently used due to BDS being new to SMEs and their low willingness to pay. This is done either by overtaking part of the consultancy fees or by providing vouchers which SMEs can redeem with the consultants of their choice. The main aim of running subsidised BDS programs is not to encourage SME support institutions to engage in direct service provision, but rather to develop a market for BDS by facilitating B2B linkages between the demand side represented by SMEs and the supply side represented by BDS providers. 1. Dissemination of Information Similar to other SME authorities, DAMU disseminates business information through publications, its websites and TV channels. Publications include a magazine, a manual on How to Get a Loan, manuals for local government offices, the annual SME sector report, feasibility studies and market research reports on a limited number of sectors, provided during the express courses under the Business Start Up program. A number of documents are not available online. While the majority of DAMU’s websites are quite informative covering a wide range of information that is


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important for SMEs, its main website www.damu.kz is limited in scope and prone to being upgraded and expanded. The envisaged e-Learning modules are not available as yet. In addition, there are opportunities for widening the range of its printed materials for those SME that do not have access to Internet. The following examples from the considered international SME authorities may serve as an indication for further developing DAMU’s services:

Publications: Manuals on ISO certification, e-Commerce, accounting, laws and regulations, IP, pre-feasibility studies, sector briefs to guide SME policy making (SMEDA), handbook on SME policies, incentives and programs (SME Corp.), reports on research results of specific topics like business environment, HR, innovation, BDS and guidebooks for entrepreneurs (PARP).

Web Portal: e-BDS are widely used as e-Marketplaces and e-Commerce platforms and online business networks formation helping SMEs reach markets (OSMEP, SME Corp.). They also include ICT manuals, toolkits, e-Learning (OSMEP, SME Corp.) and e-Consulting (OSMEP, SPRING).

2. Access to Markets The range of services that foster the market access of SMEs may also be expanded. Currently, these services are limited to some form of market research and business matchmaking. For example, under the Business Start-up program DAMU provides market research reports on a limited number of sectors. Under the Business Connect project training as well as internships provides the opportunity to evaluate partnership opportunities abroad. In addition, DAMU cooperates with similar SME authorities jointly organizing events that provide further matchmaking opportunities. However, its web portal does not offer these business linkup opportunities. Yet through its website www.damu.kz DAMU informs about public procurement opportunities. DAMU neither organizes nor facilitates the participation of SMEs in trade fairs, exhibitions and trade missions to promote their internationalization. The summary of the following market access services provided by the considered SME authorities may indicate areas for upgrading and expanding DAMU’s services:

Market Information: An online system (e-BizNet) collects and provides international market information including on prospective business partners (OSMEP).

Market Research: Pre-feasibility studies identify investment opportunities and sector developments (SMEDA); sectoral SME development is forecasted while sectoral data are provided (OSMEP).

Toolkits: The marketing toolkit helps SMEs develop, implement and manage their marketing efforts; the customer service toolkit provides a framework for developing service excellence; the customer centric initiative offers SMEs

http://www.damu.kz/

http://www.damu.kz/


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assistance in regard to service strategies, processes, and measurement (SPRING).

Branding: SMEs receive assistance in building and developing their own brands of products and services (SME Corp.); they are informed and equipped through forums and workshops, brand assessment, consultancy and online resources on branding (SPRING).

Matchmaking: Through databases and a web portal services are provided to B2B linkup and business matchmaking (SMEDA); online information is provided on sub-contracting opportunities with large enterprises and MNCs (OSMEP, SME Corp.); national roadshows broaden the market channels for SMEs (OSMEP); the business matching secretariat (SME Corp); the B2B portal helps global buyers find suitable SME products (SBC); the opportunity for SMEs to publish their profiles in the Business Cooperation Database of the Enterprise Europe Network helps establishing business linkages (PARP).

Trade Missions and Business Trips: SMEs can participate in trade delegations, market briefings and B2B matchmaking sessions abroad (SBC, PARP); individual SMEs receive administrative support when traveling overseas for market research (SBC).

Trade Fairs and Product Exhibitions: A website provides information on fairs

and exhibitions (SMEDA); national business fairs are organized (OSMEP, SME

Corp., SBC, PARP), participation in international exhibitions is organized while

national exhibitions in overseas markets are arranged (SBC).

3. Training and Technical Assistance DAMU supports training of aspiring entrepreneurs under the Business Start-up Program, training on the fundamentals of entrepreneurship under the Business Connect program and the provision of specific management training under the Training of Top SME Managers. Trainers are trained under the Train-the-Trainer program. Online training modules (e-University) are not available on DAMU’s web portals. E-Training is only offered by an external provider under the Business Connect program. Free consultancy support is available under the Services and Consultancy Support for existing Entrepreneurs while DAMU’s recently established regional ESCs provide some assistance. DAMU assists in developing business plans and offers a limited range of feasibility studies during the express courses under the Business Start-up Training. It does not maintain a national database of service providers but tasked the ESCs to do so on a regional level. DAMU’s legal services include the provision of SME-relevant laws and sample forms for company formation during the express training courses of the Business Advisor project. Also, laws and regulations related to the Business Road Map 2020 as well as templates for business registration are available online. There is scope for expanding DAMU’s services in the following areas as informed by the experience of the considered international SME authorities:


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E-Learning: Self-assessment tools are available online (OSMEP, SPRING); e-Learning opportunities are offered via various modules (OSMEP, SME Corp, PARP).

Feasibility Studies and Business Plans: Pre-feasibility studies are prepared to facilitate potential entrepreneurs in project identification for investment (SMEDA).

Basic Training: Training institutes provide training courses on technology, quality control and management (SBC); training is provided to SMEs and their employees to cope with the impact of the economic downturn (PARP).

Management Training: An Executive MBA for mid-career professionals and an Executive Development Program through a modular management program enhances the capabilities of managers; SMEs receive productivity management assistance through diagnosis, training and advice; business management capabilities are enhanced though consultancy support (SPRING); SMEs are trained to gain practical knowledge in personnel management with consideration of age differences among employees (PARP).

Technical Training: An HR capability package assists SMEs in manpower planning, recruitment, selection, compensation, performance and career management while consultancy is provided to customize and implement the package (SPRING); SMEs benefit from training programs on technology (SBC).

Association Development: Industry associations, business associations and CCIs are assisted to enhance industry and enterprise competitiveness (SPRING).

Mentoring/Counseling/Advisory Services: Mentors and consultants provide online solutions in reply to SME queries (OSMEP); Export TA Centers help SMEs comply with standards, technical regulations and compliance requirements for exports (SPRING); consultants offer diagnostic and custom-tailored support services to enhance production processes and management systems; international engineers are engaged for SMEs; SMEs pursuing M&As receive consulting support (SBC);

Business Accelerator: The Women Business Incubation Center offers training courses, seminars and workshops (SMEDA); business incubators provide consulting services and accelerate SMEs to the market (OSMEP, SME Corp., SBC).

Legal Services: Guides on laws and regulations are provided complemented by trainings and seminars (SMEDA); the online VirtualCoach system disseminates information on company formation including documents and forms (OSMEP).

Networking Support: Common Facilities Centers foster cluster development (SMEDA); assistance is provided to regional clusters (OSMEP).


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Capability Voucher: The coupon-system provides cost-sharing of consultancy fees (SBC); the voucher system enables SMEs to co-finance consultancies of their choice (SPRING).

4. Technology and Product Development DAMU’s services in the area of technology and product development are fairly limited leaving substantial room for expansion. Internships under the Business Connect project provide experience in foreign technological processes and cooperation opportunities for technology transfer and procurement. Quality management systems are the focus of the Training of Top SME Managers project. Yet upgrading the productivity and innovative capability of SMEs is a focus of service provision elsewhere using the following instruments:

Publications: Publication of the national version of WIPO’s IP for Business Series on basic IP issues (SMEDA).

Web Portal: Provision of information and knowledge to encourage SMEs to innovate and to encourage innovators to commercialize inventions; SMEs can access research papers online and can match with researchers via e-InnoMarket (OSMEP); the innovation portal promotes information and knowledge about pro-innovative activities; an e-Business Portal disseminates information on the concept of information society and e-Economy (PARP).

IP Helpline: An IP Helpline assists SMEs in all forms of IPs by solving their queries (SMEDA).

HR Development: HR resources are developed to upgrade the innovative capacity of SMEs (OSMEP).

Consultancy and Advice: Productivity and quality improvement consultancy is provided employing industrial engineering tools and techniques (SMEDA), specific capacity building programs for competitiveness enhancement are implemented; through SEAP retired experts transfer their technology know-how (SME Corp.); Innovation Centers provide technology consultancy and advice helping SMEs identify technology platforms and build in-house R&D capabilities; design facilitators provide tools to develop new or improved products, services and processes; SMEs receive advice on strategic IP options and implementation (SPRING); foreign technology experts develop new products or solve technology problems; high growth companies are supported by in-house technology experts (SBC).

Commercialization of Innovations: One-stop services are offered to help commercialize innovation, create alliances and networks with innovation agencies (OSMEP).

Certification: Innovative enterprises are certified to encourage entrepreneurs to venture into high technology and innovation-driven industries (SME Corp., SPRING).


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Innovative Enterprises Club: The club seeks to improve the conditions for creating and developing innovative SMEs (PARP).

Exhibitions: Annual SME innovation showcases are organized for national and international participation (SME Corp.).

Awards: The SME National Award honors enterprises with outstanding production standards and management systems (OSMEP); the SME Innovation Award recognizes innovative SMEs from six categories (SME Corp.), the Product of the Future competition awards creators of innovative technologies (PARP).

International Cooperation: Collaboration with international organizations to support bilateral networking of SMEs in the area of technology (SBC).

5. Input Supply

DAMU does not assist SMEs that are searching for input supply sources. These services are not frequently offered elsewhere. In fact, of the considered SME authorities only OSMEP offers them through its supplier portal providing information on supply sources and online linkup of SMEs to input suppliers while under the e-MarketPlace SMEs can post their business details online for domestic and international markets. 6. Access to Finance DAMU provides some non-financial services to enhance access to finance. Through awareness raising events it disseminates information on the financial assistance available under the Business Road Map 2020, recently introducing the Business-Naskihat to increase outreach. Furthermore, it disseminates information on available credit schemes which are channeled through commercial banks. Through the GIS information on all financial programs implemented by DAMU can be obtained with a breakdown by banks, regions, purpose and cost of financing. In direct support of SMEs, a booklet on How to Get a Loan and documents required for obtaining loans are distributed during the express courses under the Business Start-up project. There are some measures undertaken by similar SME authorities, which could be considered for broadening the range of services in this area:

Database: Collection and compilation of information from various banks about their SME-specific products and services, assimilation to SME understanding and display on the website (SMEDA).

Helpdesk: In collaboration with banks Helpdesks are periodically conducted where bank representatives evaluate SME loan requests and SMEs are assisted through the loan processes (SMEDA).

Publications: Elaboration and publication of an Accounting Handbook for SMEs (SMEDA).


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Trainings and Seminars: Conducting of awareness seminars and trainings on SME financial services and products, ways to bridge the gap between SMEs and banks, accounting and bookkeeping issues (SMEDA).

Advisory Services: Providing recommendations and guidance to other institutions (including financial) prior to developing SME facilitating schemes (SMEDA).

Supportive Services: Preparation of financial projections for SMEs to ascertain their financial feasibility and development of accounting software for SMEs (OSMEP).

7. Policy/Advocacy DAMU conducts the annual SME sector review for assessing the sector status and the impact of policy. It organizes roundtables and forums to disseminate information on government support programs and to facilitate the discussion of SME issues. DAMU generates ideas and transforms them into viable programs as is the case with the Train-the-Trainer program and recently the National Center for the Development of Franchising program. It also provides opinions on SME policy and legal issues while SME policy is drafted by the MEDT. Furthermore, DAMU cooperates with a number of foreign SME authorities on SME issues. All the considered SME authorities analyze the SME sector and communicate policy constraints and opportunities. They also either organize or sponsor events on issues related to SME development. However, in policymaking their role differs. Either they provide inputs into the drafting of policy by another government organization or they develop SME policy themselves. Some of the considered SME authorities partner with foreign counterparts to inter alia exchange information on SME development. None of the considered SME authorities provides training on policy advocacy.

SME Sector Analysis: Analyzing sector developments (sector briefs) as a basis for policy formulation; inputs into macroeconomic policies and generating strategic ideas for program/project development (SMEDA), preparation of the annual review of the current state of the SME sector and policy and conducting research/studies on SME-related issues (OSMEP); providing research inputs into the SME Annual Reports (SME Corp.), conducting research to prepare motions and recommendations for SME policy (PARP).

Conferences: Hosting and co-hosting of conferences which aim at educating SMEs on support programs, promotion and dissemination of outcomes of innovate products and facilitating SME contacts with implementing authorities of European programs (PARP).

SME Policy Making: Developing the five-year SME promotion master plans and action plans and supporting, monitoring and evaluating their implementation (OSMEP); drafting of SME policies, coordinating, monitoring and evaluating their implementation (SME Corp.).


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Advocacy: Provision of inputs into SME policy development and implementation as well as into fiscal and trade policy (SMEDA).

International Cooperation: Partnering with foreign countries to exchange information on SME development policies (OSMEP).

In the area of policy/advocacy no gaps in the services provided by DAMU and the

analyzed foreign SME authorities have been identified.


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ANNEX

Assessment of BDS Markets

by Using Market Research Tools


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The UAI survey and FGDs are used to reveal the current status of BDS markets in Kazakhstan (the ‘as is’ situation) and the factors that prevent markets from working effectively. However, for drafting interventions to develop BDS markets it is equally important for DAMU to have a clear vision of how BDS markets might work more effectively in the longer term, i.e. the capacity of the supply-side to ensure that relevant, differentiated BDS are offered to and consumed by SMEs beyond the period of DAMU’s intervention (the ‘to be’ situation). Market research tools provide the typical information flow as outlined in Figure 4. Figure 3: Typical Information Flow from Using Market Research Tools

Gather information from SME consumers on: Awareness of services

How they learn about services Their use of purchased services

Why they don’t use/purchase services Service features important to them Satisfaction with service features

Form picture of overall market: Overall consumption by market segment

Estimate market size and segments Estimate market penetration

Identify competing suppliers, their products and offers

Analyze market problems: Is it low awareness?

Is it low trial? Is it low repeat use?

Identify demand side weaknesses:

Poor understanding Low expenditure

Use of substitutes

Identify supply side weaknesses: Service providers are not available

Services are inappropriate for SMEs Services don’t offer features SMEs

want

Analyze supply side: Know how to offer services

Ability to package ‘offer’ Awareness of new product

information


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Such an assessment is useful for providers of BDS, who need to find out where there are market opportunities, and for facilitators like DAMU, who need to know where there are constraints preventing the market from working effectively. The UAI survey permits a broad look at the current Kazakh BDS markets for many services from known suppliers offering a picture of the market from the perspective of SME consumers and helping DAMU to know about: overall market size and segments; service features consumers want; and satisfaction with services from suppliers. It also offers a consumer’s perspective on supply by looking at the sources of services, satisfaction by different provides, and the use of substitutes. By gathering information from users (and non-users) of a service, DAMU can identify services in most/least demand, market problems that could constraint demand and select the best intervention that stimulates demand and/or removes supply constraints. Table 5 summarizes the learning objectives and the key questions to get information against each objective. Table 4: BDS Market Assessment – Objectives and Key Questions

55 Objectives Key Questions

Profile of Users To define a profile of users of services. This data permits segmentation of users by different characteristics.

Who (what type of SMEs) are using the service? (sector, size, gender of owner, geographical location, registered/not registered, etc.)

Awareness/Understanding To determine how aware SMEs are of the service(s). SMEs may have heard of but may not understand the service and its benefits. Lack of understanding inhibits trial and use and can be overcome with better market information.

How aware are SMEs of the service? (awareness)

Do SMEs understand the business benefits of the service and how the service delivers those benefits?

How do SMEs find out about suppliers?

Use (non-use) of services To understand users’ current purchase and use habits and future intent. The data helps quantify market size, segments and penetration and evaluate supplier’s success in reaching SMEs. Purchase habits can explain why SMEs turn to markets for a service and what other alternatives are used.

What is the market penetration for the service? (i.e. what per cent of SMEs have ever tried the service?)

What are consumers’ purchase habits? frequency? volume? amount spent?

Is use increasing or decreasing? (trends, adoption rates)

Why do SMEs use the service? (e.g. my business is growing, colleague recommended it, etc.)

Why don’t SMEs use the service? (e.g. don’t need it, do it in house, don’t know of any suppliers etc.)

Perceived Value and Satisfaction of Services To gain a broad understanding of how users of services perceive their value in solving business problems. It provides customer feedback to suppliers on the strengths and weaknesses of their offers in meeting customer demand. Mismatches between expectations and offers can provide an indication as to why the market is not working.

What benefits do SMEs expect to get from the service? What benefits are they actually getting from the service?

Are SMEs satisfied with the services they are getting?

What features are they satisfied/dissatisfied with?

Availability of Suppliers and Offers To gain an understanding of the universe of the suppliers that serves or could serve the market. It provides a supplier’s perspective on market problems and possible responses. Mismatches between customer expectations and supplier offers may provide indications of unrealistic customer expectations of how the market can address demand.

Where do SMEs go to use the service? (where are suppliers?)

What type of suppliers do SMEs use? What type of suppliers exists?

How are offers delivered? To what extent is the market fee for service? embedded services? Free or subsidized from the state (via DAMU) or non-profits? or other mechanisms?

What is the market orientation of suppliers? (e.g. turnover from private sector)

What are substitutes for the service? (e.g. informal or other mechanisms for getting the same business benefit (e.g. from media, from friends/family/ colleagues, from business)

Who are new suppliers?

55

A. Gibson/M. Bear: BDS Market Development: A Guide for Agencies, July 2002, p. 25.


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The FGDs will be used to better understand how consumers experience the use of services by exploring with ‘qualified respondents’ how they perceive, choose, evaluate and value BDS. They also help to understand how providers perceive the demand of SMEs and how they tailor their products. In particular FGDs with either group (consumer/supplier) provide insight on: how consumers differentiate among and make their choice of service providers (including DAMU); what motivates repeat purchase of business service; how to improve services to make them more appealing to SME consumers; why SMEs who recognize the importance of services do not actually acquire/buy them; and what needs to be done to convince non-purchasers that they will get value for money if they become future users/ purchasers.

Documents

Technical Assistance onsultant’s ReportSEAP SME Expert Advisory Panel SCORE SME Competitiveness Rating for Enhancement SEEP Small Enterprise Education and Promotion Network SBA Small