European Union's Small Businesses Need More Time to Strengthen, Group Says.

Byline: Somporn Thapanachai

Jul. 28--The enlargement of the European Union to cover countries in the former Eastern Bloc will increase business opportunities, but it is more important that European companies become internationally competitive, according to the Association of German Chambers of Industry and Commerce.

European countries, particularly Germany, did not have a good policy to help innovative small and medium-scale companies establish themselves in the market, said Dagmar Boving, the head of the association's Europe and European Union Division.

The private sector wanted a bigger say in setting policy that would help small and medium-scale enterprises (SMEs) throughout Europe start their businesses, she said. About 70 percent of Germany's economy is based on SMEs.

Ms Boving said a system was needed that would make it easier for people to start companies, without running the risk of collapsing under the weight of taxes and customs regulations in the fledgling stage. They should have a chance for two to three years to become established in the market.

The association believed that the investment climate in Germany was not attractive enough. Although the government had revised its tax policy in order to restrain the tax burden, other regulations were too strict, especially those on labour. For example, one of Germany's biggest carmakers could not go ahead with a plan to build a factory that would produce a new model and create 5,000 jobs because the union had refused to accept the wages and working conditions sought by the company.

Ms Boving said that labour regulations were not only a domestic political issue but also had ramifications for negotiations ...