Source: Vinnytsia Information Portal
According to Vinnytsia City Council, the “Programme for Business Competitiveness of Vinnytsia’s Small and Medium Enterprises 2017−2020”, which has been adopted this year, is bound to become a major breakthrough among similar business programs nationwide.
Vitaliy Pogosyan, Director of Vinnytsia City Council’s Department of Economics and Investments, assessed groundbreaking and innovative ideas proposed by the Program’s developers, namely the City Council’s Department of Economics and Investments as well as experts of Canadian PLEDDG Project.
“It is the first program in Ukraine with such a name”, comments Vitaliy Pogosyan on the Program for Business Competitiveness. “Vinnytsia is the first city to approve the Program in line with the principles of the Small Business Act for Europe. In developing the Program, we have researched and dived into the local businesses, as well as surveyed entrepreneurs as to what challenges they face, what they expect from government and how government can be of help to them.”
Trust + dialogue = relationship between business and government institutions
A SME Support Program was developed to keep abreast with modern realities, trends and development perspectives. The core idea is that businesses should have access to information to make informed and sound decisions.
Small and medium-sized businesses successfully operate in Vinnytsia today. Therefore, the underlying concept of our Program is fostering a dialogue between government and the business community, enabling equal access of various categories of entrepreneurs to local resources and opportunities, improving access to finance, enhancing business development services market, facilitating product certification, raising small businesses’ professional capacity and cutting red tape in administrative services.
The Program correlates with the “Vinnytsia 2020” City Development Strategy, Vinnytsia Oblast Sustainable Regional Development Strategy 2020, and national SME development priorities, and is based on the European business principles: supporting SMEs, including start-ups, setting in place a mechanism to drive demand for local products.
Our strategic goal is to set up a SME business service center. Following advice from the City Mayor Serhiy Morhunov, we have already embarked upon writing the concept, for the world is changing fast and many solutions lie with the IT sector. This center is more than just a business center. It is more of a business hub that brings together young researchers, entrepreneurs and creative people to gain essential knowledge, grasp opportunities and generate business ideas. The concept is soon to be laid before the City Mayor, and then we will work towards a full implementation of the idea.
The program is based on a comparative study of Vinnytsia’s strengths and weaknesses with those of other cities in both Canada and Ukraine, anonymous surveys of sole proprietors, focus groups, etc. The following seven entrepreneurship priority areas have been determined as a result:
- Tourism (hospitality sector)
- Food industry
- Clothing industry
- Service sector
- Social entrepreneurship
Municipal government sees Vinnytsia as the center for innovations
Vinnytsia was analysed based on the indicators that will matter in the near future. For example, there are 750 IT-companies in the Polish city of Lublin, while as many as 2,150 IT companies can be found in Vinnytsia. IT-professionals are in high demand in Ukraine. It is the set-up of a business hub that will enable creative young people and researchers, including those in the IT sector, to stay in Vinnytsia and fulfil their potential. We strive to create opportunities for all Vinnytsia residents. Moreover, we offer opportunities on a nationwide scale: we say, come to us if you cannot make your idea fly. Vinnytsia has all the potential to turn into a city of innovations. Today the majority of Ukrainian IT-professionals leave Ukraine. There are a good many of those wishing to work for large corporations and more than five thousand freelancers. Walking down the street and seeing a well-dressed young man in a fancy car, you might think of him as a silver spooner. But, when you start a conversation with him, you realize that the guy is an IT pro earning 3 to 5 thousand US dollars a month. It is hard to believe but such people exist and I know them personally. These young people under 25 do amazing things. The aim of the municipality is to ensure that these people stay in Vinnytsia.
By the way, there are plans to implement a “City within a City” concept in Vinnytsia in line with European best practices. A good example is a “UNIT.City” in Kyiv where 25 hectares of a former plant were allocated to build a smart city for IT-professionals. Vinnytsia Business Service Center (a business hub) will also have house laboratories, workshops, creative offices for representatives of large corporations, representative offices of investment companies and small offices for young, creative start-ups.
Today, a young team with a potential to develop an innovative product is unable to buy expensive equipment. A “breakthrough” should remain in the city so that Vinnytsia enjoys the end product. Why not set up a properly equipped laboratory for this team and render free access thereto? What I mean is that if an idea strikes your mind – you are welcome to come and implement it. You can come and work two or three hours if you do not need to work the whole day: a laboratory has definite operating hours. We want to create a unified structure because ideas generated in these laboratories will be used not only by Vinnytsia’s businesses.
New markets and opportunities in the not too distant future
Each of the seven entrepreneurship priority areas has its local specifics on which experts place a premium thereby accumulating Vinnytsia’s strengths for its own development.
Let us take healthcare services as an example. On the one hand, you have a large number of professionals annually graduating from Pyrogov Medical University; on the other hand, a number of private clinics and hospitals keeps gaining momentum. A city with such a number of professionals and such a research base is capable of launching a medical cluster and work towards medical tourism. In Europe, such services are much more expensive,” – explains Vitaliy Pogosyan, citing high prices for dental services abroad to illustrate the case.
In support of his idea about medical tourism, Mr. Pogosyan mentioned the local airport, which is in need of investment. Tenders are underway to renovate a runway for А330, А360, А380 and В747 jumbo jets with 247- to 555-seat capacity. The airport is then to be repaired or an airline investor is to be found.
“People in the West fly low cost airlines in the same way we ride our city buses”, says Vitaliy Pogosyan. He added that considering that Ukrainians had been recently granted visa-free travel to the EU, it would take just a couple of hours to get to most European countries.
“Many tourists visit Vinnytsia today, and we must be well-prepared to provide them with high quality services,”– says Mr. Pogosyan about the priority areas. “That is why the Program focuses, among other things, on the hospitality industry.” In addition, with its powerful enterprises, Vinnytsia Oblast is traditionally among the leaders in Ukraine’s food industry. Today the situation is as follows: harvest is gathered; one part of it is processed, while the other is exported to countries where it is processed and then returned to us as a finished product. We are a sizeable source of raw materials, although we are quite capable ourselves of setting up an enabling environment to facilitate and encourage processing enterprises. Spurring this process is among the municipal government’s priorities.
According to Vitaliy Pogosyan, an extensive network of administrative service centers and the fact that large companies have been moving their call centers and back offices to Vinnytsia have already made the city a leader in the service sector. This niche is vacant and can be further developed as rental prices and wages levels in Vinnytsia and in Kyiv differ considerably.
Another important aspect is also social entrepreneurship. What the society needs to do today is to enable an environment for disabled people, pensioners, ATO combatants and internally displaced persons. The Program envisages an inclusive development of social entrepreneurship and meetings with the operating initiatives to build communication and draft cooperation plans.
One might ask why these seven priorities have been selected and why they form a circle. The answer is that we plan to use a cluster model,” says Vitaliy Pogosyan. “All entrepreneurs and enterprises within each area where business and people are tightly concentrated compete with one another, whereby everyone loses the game. Let us expand opportunities. Let us unite into clusters and compete together for external customers, as there will be no internal customers anymore. Let us take a look at the foreign markets and the neighbouring cities, regions and countries where our products could be in demand. And now it’s time to talk about competitiveness. How can our entrepreneurs compete in foreign markets? The answer is simple: a business has to comply with applicable standards and regulations. We manufacture high quality products, but often SMEs do not have a clear picture of how to sell to Poland, Canada or other countries. Where could an entrepreneur go to obtain detailed information about certification procedures, receive marketing or legal services, or, perhaps, study English or find professional English tutors?
Propose an alternative if you criticize – feedback from SMEs
Generally, the Program for Business Competitiveness sets forth three strategic objectives: 1) improving a basic business environment; 2) promoting local businesses more vigorously; 3) building SMEs capacity. There are projects in place in relation to each of the said objectives. For example, a “Propose an Alternative if you Criticize” Project in the form of an online survey, whereby one may anonymously provide information on the existing challenges and propose ways for their elimination, was launched a few weeks ago as part of the first objective – improving a basic business environment. This was done because local government wants to get to know the business community better and build a trusting relationship with it.
We have been building up a database of Vinnytsia’s entrepreneurs and getting a series of trainings and actions going. Negotiations are currently underway with the Ministry of Economic Development and Trade and the Export Promotion Office about holding a pilot Export Day Vinnytsia meeting. Deputy Minister of Economic Development and Trade as well as economic development experts and trainers will communicate face-to-face with Vinnytsia exporters and those planning to engage in export activities. Plans are to invite SME representatives and hold a free-form face-to-face discussion of the current problems, gaps and actions required on our part.
However, Mr. Pogosyan thinks that in order to increase efficiency of the programs seeking to promote business competitiveness, an effective communication channel should be established so that people realize that municipal authorities do want to hear about their problems and be of help.
That said, it is important to understand what exactly is expected from municipal authorities, as you have to speak to be heard”, – concluded Vitaliy Pogosyan.