Renewing confidence

Javier Gómez-Navarro has been President of the Higher Council of Spanish Chambers of Commerce since 2005. The 63 year-old entrepreneur is calling for political action to support Spanish companies.

Commerce International: What impact is the crisis having on Spanish SMEs?
Javier Gómez-Navarro: “All companies, but in particular SMEs, have to face major obstacles to their development. They are experiencing problems, in many cases serious ones, of cash-flow. Arrears on the part of both public and private clients have increased significantly in recent months so access to funding is a condition of business viability. Some hitherto profitable businesses have ceased to be so through lack of circulating capital. The crisis in Spain had its origin in the property sector, then spread to all the players. Even anti-cyclical activities have been affected by the effects of the recession. It is not a question of one sector, business category or country slowing down, but a real general recession covering all countries and sectors.”

The Spanish government has launched a vast economic recovery plan. Has this reassured entrepreneurs?
J. G.-N.: “Business confidence indicators are at their lowest for several months, both for consumers and companies. The latest index published by the Chambers of Commerce recorded a new drop in January: it stands at 25.2 points, that is 6 points less since October 2008. The measures taken by the government are a step in the right direction, but we still have to see how they will be applied. Our first concern is to ensure money received by the banks is passed on to businesses, in order to solve our economy’s problems.”

What action does the Higher Council of Chambers intend to take to remedy these problems?
J. G.-N.: “The list is interminable because you must remember that the 87 Chambers of Commerce, the regional councils and the Higher Council represent 400 centres of attention. All these entities are working in the field, remaining attentive to the needs of companies in every part of the country and permanently adapting their services to meet the demands. Several months before the economic and financial crisis was really felt, we were already working on specific action to support SMEs. This includes drawing up economic studies and publishing surveys and information on the real condition of the entrepreneurial fabric. We are also organising specific training linked to what to do in times of crisis. We are preparing courses explaining how to reduce fixed costs and face up to the problem of late payments, and classes on new forms of funding and the opening up of new markets. In addition, we are lobbying the public authorities, and informing administrative bodies and the public of the problems encountered by entrepreneurs.”

Some experts say that SMEs are the solution to the crisis…
J. G.-N.: “SMEs are part of the solution because their influence on the economy
is important. They play a significant role in terms of job creation and growth. Their capacity for adapting to economic changes and everyday problems with flexibility and creativity will determine future growth. Moreover, SMEs contribute considerably to social and regional cohesion which are vital elements in the current context.”

Does not the survival of SMEs depend on their capacity to innovate?
J. G.-N.: “The survival of a company depends on many factors, but above all on its capacity to be competitive in a global market. The capacity for innovation, taken in its widest sense, is another. Although Spain has made real progress in this field in recent years, in particular with regard to the share of  I+D+I (1) investments in relation to GDP, we remain below the European average.”

Is the creation of a stock market for SMEs a good alternative for solving their financing problems?
J. G.-N.: “I repeat. Businesses are encountering serious financing problems. In the last quarter, 80% of SMEs who appealed to banks admitted having problems obtaining a loan. Conditions have worsened considerably in terms of the amounts granted, repayment times and costs.  This is not an ideal time for a stock exchange to absorb new corporate issues from SMEs, who have few liquid assets, moreover. This alternative cannot therefore solve the financing problem. Political action must be taken to re-establish the normality of the financial markets and we should facilitate loans granted by banks to SMEs and families.”

How is your network collaborating with the Spanish regions who are not affected in the same way by the crisis?
J. G.-N.: “Through the exchange of experiences and knowledge and the setting up of projects and services that favour the competitiveness of companies. The Chambers are developing their role as consultant to the government and other administrative organs. The network is pointing the finger at the cost of social security contributions and business tax. We should be thinking seriously about the financing of the social security system. Priority should be given to the question of VAT and indirect taxation. In addition, Spain has the most expensive bureaucracy of all the OECD countries, which damages competitiveness. Our Chambers are also promoting business creation - via an entrepreneurial one-stop program – the internationalisation of SMEs, innovation and the use of new technologies.” •

(1) A national term designating scientific research and the development of new technologies: Investigación científica, Desarrollo y Innovación tecnológica.