Mark Fielding is chief executive of the Irish Small and Medium Enterprises Association (ISME).
To read a shortened version of this interview, please click here.
How has the recent supplementary budget in Ireland affected SMEs?
The budget did nothing to positively address competitiveness of employment maintenance. It has increased the level of uncertainty that already existed, which will have a negative impact on spending and will therefore contribute to further job losses and company closures. There was too much focus on taxation and not enough expenditure cuts.
What is your reaction to the Enterprise Stabilisation Fund announced by Irish Finance Minister Brian Lenihan?
It's too little, too late. Again, it is aimed primarily at export companies. While this policy has merits, it completely excludes other sectors that are in difficulties. The amount on offer is a pittance and will only benefit a select few companies.
There was also reference in the Irish 'emergency' budget to a new scheme for tax relief on intellectual property. Have more details of this emerged? What is your view of this idea?
No. It probably will be beneficial to those involved in the area, but we await details.
This, and R&D tax credits, are part of the 'Smart Economy' plan. Does this benefit SMEs in the real economy?
The majority of businesses are in survival mode and are cutting back their investments in R&D. It is too early to decide on efficacy.
The European Commission has updated its Late Payments Directive to encourage public authorities to pay contractors within 30 days. Do Irish SMEs have difficulty getting paid by public bodies?
Absolutely, and the problem is getting much worse. Small businesses in Ireland are waiting an average of 69 days for payment. This is the longest period on record. The main culprits are big business and the public sector. The number of companies experiencing delays in payment of more than three months is up 42%. The very survival of many SMEs is threatened by late payments and businesses face bankruptcy because of the changed bank lending policies.
Have you seen any loosening of credit from Irish banks?
No. ISME research and anecdotal evidence would indicate that the problem is still ongoing, with little sign of improvement. Half of Irish companies' credit requests have been declined by banks. There is evidence that many sound, profitable, long-standing businesses are finding it difficult to get access to bank credit because of the banks' perception that SMEs are a high-risk sector.
These businesses are experiencing increased cash flow problems, leading to many companies letting people go, reducing operations and in many cases closing down. We're calling on the government to guarantee up to 50% of loans to SMEs, up to an agreed maximum, in effect insuring the banks against the risk of business default.
This type of guarantee would show the government's intent to trade our way out of the current recession and assist the small and medium sector, the engine of the economy, while protecting jobs. This action will have a much greater positive affect on the economy than any recapitalisation of the banks.
There has been much talk in Brussels of the European Investment Bank providing loans and guarantees to get credit to SMEs. Are you seeing any signs of this money flowing to companies?
ISME has lobbied long and hard to ensure that this funding was made available to hard-pressed SMEs, who are still finding it extremely difficult to access bank finance. It is essential that this funding is made available immediately and is administered without unnecessary bureaucracy or charges. We will be monitoring the distribution of the funds to ensure it is available to those who require it.
What specific issues are Irish SMEs facing which do not affect other European companies?
Exports are down dramatically with the exchange rate between the euro and the British pound an obvious factor. Cost competitiveness is a major issue – our energy costs are still second highest in Europe; waste charges are among the highest; and businesses must also pay local charges.
There is a one-size-fits-all approach to legislation in all areas, from environment to labour law. The exchequer's finances are in the mire and this is putting upward pressure on labour and business taxes.
Does ISME have any events planned for European SME Week?
We are hosting network meetings on how to tackle the recession and providing advice on redundancy. The ISME Annual SME Lecture takes place on 15 May in Dublin with a keynote speech by Dan O'Brien of the Economist Intelligence Unit.
