In Harmony: Federal Government’s Commission of Experts Calls for the Support of Innovative SMEs

At the end of February 2010, BIO Deutschland commented on the latest report by the Federal Government’s Commission of Experts for Research and Innovation, as the conclusions of this report make clear that the coalition government is risking the sustainability of Germany as an economic location. Viola Bronsema, Managing Director of BIO Deutschland, said, “The parameters must urgently be improved, especially for the high-tech sector such as biotechnology, in which innovative small and medium-sized enterprises (SMEs) in particular are working on the development and research of new types of products.

While the association welcomed the progress in the area of corporate taxation that has been made for innovative SMEs by the Law on Growth Acceleration, it also pointed out that the coalition government is neglecting important aspects in terms of promoting a sustainable policy for the economy and the future.

In its report this year, the Federal Government’s Commission recommended that the parameters for innovative SMEs be supported in a more targeted way. BIO Deutschland pointed out that it should be taken into account that equity capital is by far the most important source of finance for innovations, especially in this type of company. The association added that equity capital is treated unfavourably in tax terms in Germany in comparison with external capital. The removal of the resulting discrimination against innovative SMEs is therefore the first essential step towards mobilising private capital for research and innovation.

It is precisely these companies that are increasingly transforming knowledge from the universities and research institutes into the products of the future. Germany’s biotech sector is already working on medication with fewer side effects; cleaner, more CO2 neutral production processes; optimised agricultural products; and healthier foodstuffs. Moreover, the sector creates sustainable, highly qualified jobs, with strong links to their location. The conclusions of the Commission of Experts were that this advanced technology needs policies that favour a friendly investment climate and include tax incentives for research and development, particularly for SMEs.

If this does not occur, the Commission of Experts fears that there will be a significant lack of resources for strengthening Germany’s competitive position as a major actor in the knowledge economy.

The text of the report is available at www.e-fi.de/fileadmin/Gutachten/EFI_2010.pdf