KredEx excludes several areas from crisis assistance funding ({{contentCtrl.commentsTotal}})

KredEx sign.
KredEx sign. Source: ERR

Companies operating in some sectors and certain export-related activities will not receive state aid, according to the initial terms of the crisis measures announced by the KredEx Foundation on Friday.

The manager of KredEx, Lehar Kutt, said the main restrictions in the initial conditions of the crisis measures stem from the conditions of KredEx's existing services, which take into account both the principles of the European Union's single market and the rules of the World Trade Organization (WTO), which govern international trade. Under EU state aid rules, prohibited aid must be repaid and such a claim only expires in 10 years.

"From the state's point of view, it is important to ensure compliance with the current requirements concerning international trade in order to ensure equal opportunities for companies from all countries. It is especially important to avoid discrimination from the point of view of Estonian companies, as the Estonian economy is very open and largely based on exports. In addition, a number of conditions arise from the requirements of different contributors," Kutt said in a statement.

"For example, the restrictions imposed on the primary sector -- agriculture, fisheries, aquaculture and forestry - are due, among other things, to the fact that similar support measures as those of KredEx are offered to them by the Rural Development Foundation, to which the government allocated €200 million to implement crisis measures," Kutt said.

In order to exclude the granting of prohibited state aid, the terms and conditions of KredEx include an exclusion for export-related activities that are directly related to the quantities exported, the establishment and operation of the distribution network or other running expenses arising from exports. The prohibition applies, in particular, to export aid financing the establishment and operation of a distribution network in other member states of the European Union or in third countries.

Aid towards the cost of participating in trade fairs, or of studies or consultancy services needed for the launch of a new or existing product on a new market shall not be considered to be export aid.

Investment aid to exporting companies shall also not be considered export aid if the granting of such aid is not linked to the quantities exported. Additionally, aid granted on the condition that domestic products are used instead of imported products is considered similarly to export aid, the foundation said.

Thus, even if at first sight the conditions seem too restrictive, then according to Kutt, it is definitely worth for the company to contact the foundation to find out the suitability of the purpose of the loan. It is not that the supporting of exporting companies is ruled out, but only the financing of some of their activities.

"To give more prominent examples of exclusions, it is not sensible from the point of view of public health for the state to support the manufacture, processing and marketing of tobacco and related products. Also excluded are areas related to gambling, illegal downloading of data and enabling illegal access to data networks," Kutt said.

"These rules were in place before the crisis and are undoubtedly important for the state in today's perspective, but we acknowledge that reviewing and adjusting conditions is an ongoing process," he added.

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Editor: Helen Wright

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