“NEW PRODUCT AND TECHNOLOGY DEVELOPMENT IN SME S ” (till 24.September 2010 ”NEW PRODUCT AND TECHNOLOGY DEVELOPMENT - AID FOR PROTECTING INDUSTRIAL PROPERTY RIGHTS ”)

Existing support for research and development  “Competence Center’s”  Small number of companies involved  Support not available to protect intellectual property rights  “New product and technology development”  After 1st round 50% from all projects were rejected due to unjustified costs  Impossible to ensure regular project admission  “Aid for protecting industrial property rights”  Limited number of eligible activities – support only for protection of industrial property rights  “Business incubators”  Small number of companies involved  Not sufficient funding for new product development  “Contact points for the transfer of technologies”  Not available funding for idea development to commercially attractive proposal, for example, development and testing of prototypes. (was planned in currently stopped activity “centre for the transfer of technologies”)  Seed / start-up capital  Small number of companies involved

Necessary support for research and development  Ministry of Economics propositions for new support program:  Continuous project admission; assessment of projects in one month  Transparent external costs  Support available for every SME  Support also available for scientific institutions to develop new ideas up to commercially interesting proposals, for example, development and testing of a prototype  Latvian Chamber of Commerce and Industry propositions from “Entrepreneur plan 2010”:  Simplify „New product and technology development programme”, increase number of supported companies and re-establish pre-seed financing  Provide support for research and development activities which are conducted in the applicant’s company – not taken into account as it would significantly increase demand for funding – not enough funds; would not be possible to ensure continuous project admission and assessment of projects in one month

Financing for research and development  Required financing to start the program  To start the program at least 2,4 milj.LVL are necessary – financing for first 12 months, monthly LVL  Expected demand – 5-15 projects per month  “Access to international trade markets” 6. and next calls 9-19 projects per month. December 2009 – 34 projects  SME in Specially Assisted Area 2. and next calls projects per month  Next steps  Criteria to be approved on 24th of September in ERAF subcommittee  Cabinet of Ministers regulations will be approved, when necessary funds 2,4 milj.LVL will be available.  II quarter

General questions  Goal  Facilitate new product and technology development, technology transfer and to increase competiveness of SMEs  Project selection procedure – Open project selection procedure  Beneficiaries – Micro, small, medium enterprises and scientific institutions  Within the program financing will be given to SMEs, that has  Assessed demand for new product and technology  Created well grounded development plan for new product or technology  Available production capacity to implement new product or technology  Within the program, support for one SME can be awarded only once a year.  Support to SME is given according to De minimis support  Project execution is till 2013  New program substitutes “Aid for protecting industrial property rights” program  New program supplements “Contact points for the transfer of technologies”, “Competence Center”, “Business incubator”, “Seed and start-up” programs

Description of program  Maximum amount of financing available for one SME LVL  Aid intensity - 40%  Financing is provided for SMEs for new product and technology laboratory research, testing and prototype development.  Service provider Ltd “Standardization, accreditation and metrology center’s” accredited institutions, except quality system certification institutions and human resource certification institutions Scientific laboratory Science and research products Patent office Patent library Patent Attorney  Services for companies Product prototyping Product and technology laboratory research and development services Product design development services Patenting services Standardization, certification and metrology services  Project realization – max., 1.year

CRITERIA OF QUALITY ACCEPTANCE  1.quality criteria - commercialization potential of new product or technology;  2. quality criteria – well grounded development plan for new product or technology;  quality criteria – in which stage after project completion will be the new product : research -> publication -> patent -> prototype -> prototype testing;  Meanwhile quality criteria are also research and development characterizing indicators according to Frascati manual  7.-8.quality criteria – Horizontal priorities;

Proposed ammendments in activity “Improvement of heat insulation of multi- apartment residential buildings” 8

Cost efficiency Current criterion: Proposed ammendments: 9 1.The ratio of saved energy (MWh per year) over eligible investments made in the project (thousand LVL) 0-75 (min – 11) 1.1. Less than From 1 to 1, From 1,5 to 1, From 2 to 2, From 2,5 to 2, From 3 to 3, From 3,5 to 3, and more75 1.The ratio of saved energy (MWh per year) to requested ERDF funding (thousand LVL) 0-75 (min- 15) 1.1. if the residential building in which heat insulation will be improved in the frame of this activity has been put into operation after year 1944 (included): Less than From 2 to 2, From 3 to 3, From 4 to 4, From 5 to 5, From 6 and more75

Number of apartments Number of apartments in multi-apartment residential building 0-15 (min - 0) 2.1. Less than From 10 to From 25 to From 50 to From 75 to and more15 Number of apartments in multi-apartment residential building 0-15 (min - 0) 2.1. Less than From 10 to From 25 to From 50 to From 75 to and more15 10 Proposed ammendments to increase availability of the aid programme for buildings with fewer apartments.

Territory development index 3.The development index of the territory (municipality) where the project is implemented (at the closing time of the open call): 0-10 (min - 0) 3.1.Higher than From 0 to -0, From -0,500 to -0, Less than -0, The development index of the territory (municipality) where the project is implemented (at the closing time of the open call): 0-10 (min - 0) or higher0 3.2.From 0,001 to 0, From 0 to -0, From -1 to -1, or less10 11 Ammendments requested by Ministry of Regional Development and Local Government

Aid for buildings built before 1944  Residential building that will improve heat insulation in the frame of this activity has been put into operation from year 1944 to 1993 (included)  The construction of the residential building that will improve heat insulation in the frame of this activity has been started before year 1993 (included) and it has been put into operation before year 2002 (included) 12

Additional criteria for buildings built before 1944  If the residential building in which heat insulation will be improved in the frame of this activity has been put into operation before year 1943 (included), at least 10% of the apartment owners are low-income persons or they receive the social benefits stated in the Law On Social Services and Social Assistance  If the residential building in which heat insulation will be improved in the frame of this activity has been put into operation before year 1943 (included), the energy consumption for heating after renovation will not exceed 100 kWh/m 2, if the building has one or two storeys, or 80 kWh/m 2, if the building has three or more storeys. 13

Additional criteria for buildings built before 1944 – cost efficiency 14 1.The ratio of saved energy (MWh per year) to requested ERDF funding (thousand LVL) 0-75 (min- 15) 1.2. if the residential building in which heat insulation will be improved in the frame of this activity has been put into operation before year 1943 (included): Less than From 4 to 4, From 5 to 5, From 6 and more75

Ownership of the apartments  The residential building is divided in apartment properties and one owner owns not more than 20% of the total number of apartments. The restriction on the division of ownership percentage is not applied to apartment properties that are owned by state and municipalities.  The residential building is divided in apartment properties and one owner owns not more than 20% of the total number of apartments. The restriction on the division of ownership percentage is not applied to apartment properties that are owned by state and municipalities and apartments that were privatised in accordance to laws “On privatisation of cooperative union apartments” and “On privatisation of agriculture and fishery collective farms” 15

Energy-audit  An energy audit is carried out for the multi-apartment residential building and energy-audit report according to the Regulations of Cabinet of Ministers No. 138 “Regulations about operational programme “Infrastructure and services” complement’s activity “Improvement of heat insulation of residential buildings” is added to the project application  Proposal – to change this criterion to approvable with condition (if the energy audit does not comply with the regulations, it can be adjusted according to conditions and re- submitted) 16

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