Money for Innovation under New Rules

Interview | February 25, 2019, Monday // 12:52|  views

- Mr. Takov, for three months you are the Executive Agency for Promotion of Small and Medium-Sized Enterprises (BSMEPA). What are your priorities for improving its activity?

- Leading priority is to build a longer-term concept and vision for the agency. Of course, this must be done with the support of the Ministry of Economy, our principal, because we are implementing state policy to promote small and medium-sized enterprises (SMEs). We will strive for the agency to be even more open to business and to participate in the process of relieving the administrative burdens on businesses. We will participate more actively in the communication with the business as a consultant because the agency passes financial projects that support SMEs, are connected with national voucher schemes, internationalization etc., there is also the National Innovation Fund (NIF). These are all financial tools that need to be made more accessible - businesses are more informed about them and look for their application. Few entrepreneurs know what the agency offers, there is a kind of vacuum that I hope will be filled. Mentioning that we need to be a consultant I mean specific situations - for example, to show companies where preferential financial instruments exist, how they can start a market, how they can improve their performance.

- Speaking of financial instruments, the agency manages the voucher scheme for securities issuance by small and medium-sized companies. Are there any results already, what are the benefits for the business from it?

- The scheme actually started on October 15, 2010. Unfortunately, there is currently no business interest in this tool. We have information that some companies are already working with investment firms but the scale is not satisfactory. Therefore, one of the measures we take is to make this procedure more public. Together with the Bulgarian Stock Exchange and the Association of Investment Intermediaries we will make several joint events. This program is not to be underestimated because it basically represents financial assistance from the agency as a voucher of BGN 50,000 per company. It is estimated that these are the costs a company would have to pay to the investment broker to produce a prospectus to go out on the stock exchange and raise capital through it. The allocated resource is BGN 1.5 million, with the aim to support 30 enterprises through this scheme. The program is for 36 months and the first 24 will be for applications. A listed company will have an obligation to raise capital of BGN 500,000 within 9 months.

- What happens if it does not raise this capital? Should it return the voucher funds?

- In such a situation the idea of ​​the voucher scheme will not be fulfilled and the candidate who has received the voucher will not be able to realize it.

- The Agency will also manage a voucher scheme for providing information and communication technology (ICT) services. When do you expect it to start and what are the benefits for business? Can apps be made?

- The voucher scheme is already in progress, with the first steps being its organization and selection of the agency's pledged partners, whether as consultants or ICT service providers. The companies' application for the chosen voucher is scheduled to start in the next 6 months, the total value of the scheme is 9 180 000 BGN.

The digitization of the services of a small or medium-sized firm is of increasing importance for their successful implementation on the market, and that is why the agency decided to initiate this procedure. Expectations are to support 450 enterprises, with the following options: vouchers for web-based ICT services - platforms, web sites and / or mobile applications worth 5,000 leva excluding VAT and vouchers for ICT digital marketing services, optimizing processes and / or providing cyber- and information security at a cost of BGN 20,000 excluding VAT.

In order to succeed in the process and to ensure its quality and timeliness, the Agency has put in place a number of measures - selection of an external specialized team of scheme consultants with the necessary capacity and experience to be responsible for the successful management of the project processes together with the internal team of BSMEPA; criteria to the providers of these ICT services; criteria for small and medium-sized businesses that will be users.

- And why an outside team?

- Given the indicator of a minimum of 450 vouchers, which implies the application of an even larger number of companies, given the short deadlines set for the evaluation and verification of costs and the variety of eligible activities, the existing team in the agency to be complemented by the experience of an external, specialized in the activities of the project.

- Part of the Agency is the National Innovation Fund, which supports the innovations of Bulgarian companies. In previous years there were several scandals around it. Will you change your business rules and will there be a 10th Project Session?

- Yes, we will hold the 10th session and I'm glad to say that we are working on analyzes of previous sessions and setting new rules based on them, given the widespread view of the shortcomings and controversies in these sessions.

We will make a public discussion, which has not happened so far, on the rules, as is the case with the guidelines for applying for the procedures under other operational programs.

- What new rules will bring a more decisive change?

- The devil is in the details. The little things do not sound very spectacular, but when they are improved, they will change the picture a lot. We will make a public procurement contract with a framework agreement for evaluators, which will be a clear regulation for their choice. Ie. more transparent selection of these appraisers. There will also be more transparent application rules. You will be able to apply online as well. At the moment, for example, when someone is removed, this is only reported to him at the final standings. Our idea is to notify it as soon as we find it does not meet criteria on a technical or administrative basis. Thus, the candidate will have time to object and consider whether a mistake has been made. We will also seek to reduce administrative burdens wherever possible by requiring different documents from the BSMEPA on their own, instead of being provided by the candidates. We will look for options for shorter deadlines for evaluating proposals.

- Will there be a change in innovation requirements?

- The Agency is aware of the complexity of creating innovation and putting it into practice. Without a doubt science needs to make attempts to make progress, but the end product or service is rarely available after a number of scientific studies / experiments, and that is why it is the NIF that there is no requirement for an end product or result to be introduced in practice after the implementation of a project supported by the Fund. Not every scientific idea can have real application.

We need innovation, but we do not see if it will actually work. It is good for companies that have benefited from the fund to present the good practices and innovations they have introduced to the market. Otherwise, there is a darkness around the fund - there is money to be given, but what are the results, hardly anyone can say. Results are undeniable, and very good, my idea is to show them and to be clear what is being done with this resource.

The upcoming session will apply for four priority axes: Mechatronics and Clean Technology; Information and Communication Technologies and Informatics; Industry for Healthy Life and Biotechnology; New technologies in creative and recreational industries. The budget will be about 5.5 million leva. We have conversations and the assurance of the Ministry of Economy to increase this budget because I think it is extremely insufficient.

- Which are the major international exhibitions for which the agency will support the participation of the Bulgarian business?

- The Agency has already completed its two major projects - organizing trade missions and organizing fairs and exhibitions. In March, we will sign a contract with the Managing Authority of the OP "Innovation and Competitiveness" to re-finance the same two projects, and then launch a new program. I already have many meetings, with a variety of associations from different sectors of the Bulgarian industry, where they offer their suggestions for events that we support. Ie. we will still have resources, unfortunately, a bit more limited than the previous one. We will be given BGN 4 mln. Of these, BGN 2.5 mln will be for exhibitions, fairs, etc., and BGN 1.5 mln for trade missions. These funds are granted for 36 months.

- Bulgarian businesses are increasingly looking to the East, to China. Will the agency help smaller companies to get there faster?

- We will do everything possible. I have already held several meetings with China's trade attache. We discussed the possibilities of organizing business delegations. Usually they are part of the visits of President, Prime Minister, Minister - I rather want to make a pure B2B business delegation in a smaller format. For example, 10 to 15 companies, but ones that we have beforehand found their partners. And when they come to Bulgaria, take them to the field, to the businesses to see who produces. Ie. we look for much more operational strategy.

We have held talks on cooperation with the Center for the Promotion of Agricultural Cooperation between China and the CEE countries, which is at the Ministry of Agriculture, Food and Forestry. We discussed with them the opportunities for partnership in organizing the Bulgarian participation at the exhibition from 8th to 12th June in Ningbo. The idea of ​​colleagues is to unite our efforts to popularize the event in order to enlist more businesses. Our goal is also to assist exhibitors in transporting their produce - the state to bear the cost of up to 50 kg for each company. The logistics itself will take place in a hub in Plovdiv, which is also under the control of the Bulgarian Food Safety Agency, so when the products enter it, they will also receive safety certificates and save time for companies.

- Food industry companies are looking forward to the exhibitions you moderate in Dubai and Cologne. When and what will be the support of the agency?

-Thanks to Minister Emil Karanikolov, we managed to reserve areas last year for, as our colleagues say, "the two Olympiads" - GULFOOD in Dubai and "Anuga" in Cologne. Both are among the top three in the world food industry. From 17 to 22 February, together with 31 Bulgarian companies, the country presented its food in Dubai. We covered all the costs of the companies for this exhibition. We have yet to open our application for "Anuga". We also work at an exhibition in Qatar and others. Our idea is for businesses to dictate the rules in the future and to say where do they expect a collaboration.

- There was scandal, even a referral to the prosecutor's office, had to do with the digital system of the agency that was supposed to make an online business connection with the trade attaches ...

- I found a case that had been neglected for a long time. From the very first day of my appointment with the help of internal and external experts and with the assistance of the Prosecutor's Office we take steps to resolve the issue in a way that fully protects the state interest. As there is still a risk for a trial phase, more details will be provided at the time the case is over.

Before joining the agency to promote small and medium-sized businesses, Dr. Boyko Takov has more than 12 years of experience in business management. From 2008 to 2012 he was executive director and member of the Board of Directors of the Bulgarian representation of a leading South Korean energy company. Part of his biography is management of investments, projects and finance in the field of agriculture, energy and infrastructure. He has experience as an expert in state institutions. Тhe Ph.D. degree he acquires in Economics, Industrial Engineering and Management at the Technical University in Sofia. His Masters degree is "Marketing and Economics" at the University of National and World Economy.

*The text is published in issue 8/2019 of Economist magazine

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