Mariano Mayer, Secretary of Entrepreneurship and Small and Medium Enterprises : Interview

Interview : Mariano Mayer

What steps have been taken to make small and medium-sized enterprises (SMEs) competitive?

MARIANO MAYER: Argentina has competitiveness and productivity issues, and in response to that we propose not to be cheaper, but to be better. Beyond weak infrastructure and unstable macroeconomic conditions, SMEs are most concerned about taxes, financing, labour costs and bureaucracy. In that context, the newly issued SME Law lowered taxes for these companies for the first time in years, complemented by new lines of credit and the Productive Financing Law. The Occupational Risk Insurers Law was also modified in order to reduce labour costs.

In regards to bureaucracy, it is estimated that we can save up to 1% of GDP with the bureaucratic simplification process already initiated by the national government. We are applying the concept of “think small first”, taking steps on a smaller scale before implementing them at a general level. There are a number of other examples, such as the creation of the Secretariat of Productive Simplification, whose mission is to dismantle the layers of bureaucracy added in previous decades.

What are the reasons for low adherence to the SME Law, and how can this be improved?

MAYER: Today, SMEs that are taking advantage of all the benefits of the SME Law represent only a small percentage of the total. Many do not know about the law, and many believe it does not apply. There are also SMEs that simply do not want to join due to fear or scepticism. This is understandable, as many SMEs have been mistreated in the past.

Looking ahead, we aim to reach 1m SMEs in the next few years, up from the 6000 that had signed on as of July 2018, so we are targeting provinces where participation is especially low. Beyond this, we want more people to feel the possibility of opening a business in Argentina. Argentines have a great entrepreneurial spirit, but there are certain things that must be changed in order to exploit it.

What is being done to leverage the contribution of knowledge-based services (KBS)?

MAYER: KBS is an extremely important sector of the economy, and today it represents the second-largest export industry in Argentina, with the potential to create as many as 500,000 high-quality jobs, according to figures from the Argentina Software Industry Chamber. Technology clusters are therefore being developed throughout the country to boost its impact on the national economy and encourage better communication channels.

Although KBS is viewed as a vertical sector, we see potential not only in the vertical chain, but also in the horizontal line, improving the productivity of the rest of the Argentine economy, and to some extent following the case of Israel.

One of the most important segments in Argentina is agro-technology. In this area, we do not only want to be technology users, but also producers and generators of technological solutions.

How have companies in the SME sector changed their views on energy efficiency?

MAYER: The recent turbulence in the Argentine economy brought to light the need for working capital to be offered at lower rates for SMEs. For a long time, energy was not part of the cost structure for SMEs; in many cases, it did not reach 1% of their overall costs, so efficiency was neither sought nor encouraged. However, the gradual increase in energy tariffs spurred a change in companies’ approaches. Those that invested little resources in efficiency suddenly found themselves in desperate need of doing so. This is why we implemented specific programmes to help SMEs following the macroeconomic turbulence we saw in June 2018.