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Coronavirus-related support worldwide: the individual among the masses

Column Arjen van Klink

A team of students from the International Business study programme examined the global support in light of the coronavirus to SME's. Arjen van Klink, professor Next Strategy, shares the most important conclusions in this column.

By Arjen van Klink. Published on 30-11-2021. 

While we must prepare for a third 'corona winter', we can already learn a lot from the previous period. For example, regarding the effectiveness of the support measures for the business community. We can cautiously conclude that business support in the Netherlands has worked well, but what are the experiences abroad? We can answer that question by means of graduation studies carried out by a team of students from the International Business programme. They each looked at a country to see how SMEs were supported and how that support was perceived. The students studied the policy and interviewed several entrepreneurs and directors of business associations via Skype or Teams. This column does not do justice to the students' work, as it is no more than an anthology.

Great Britain

Christine Engelmoer has studied the fitness industry in Great Britain. After strong growth in the years before 2020, the sector ground to a halt due to the coronavirus. The entrepreneurs received the generic support measures, which were developed centrally and implemented decentrally. The measures have helped many entrepreneurs to survive. The respondents were quite satisfied. However, there was a lack of follow-up communication from the government. For example, 'what is the status of my application for support?' Furthermore, all communication was exclusively digital and there was no possibility to speak to someone in person.

Indonesia

Ferdi Versluijs investigated how the tourism sector was supported in Indonesia. It stands out that the government has given priority to Bali, because the island is very important for the country's foreign exchange earnings. The population on the island has received priority vaccinations, and businesses have received more support than elsewhere. However, it proved difficult to reach the large number of very small businesses. These entrepreneurs mainly must make do with generic poverty reduction measures, such as food parcels and vouchers.

Japan

Eric van Capellen analysed Japan. The country has offered a very generous support package to the business community. Many measures were taken, both directly and indirectly through banks (additional financing and interest rebates). The support was available quickly and relatively easily. Companies in the services sector have benefited particularly, as that is where the impact of the lockdowns was naturally greatest. For tourism, there was even a policy to stimulate domestic tourism last summer. The number of bankruptcies in 2020 was below the level of 2019.

Germany

The situation in Germany was reviewed by Larisa Härter. The country has set aside EUR 600 billion for SME support. Measures include a reduction in VAT, Corona-kredite, Kurzarbeitergeld and Finanzspritze. Entrepreneurs interviewed by Larisa are satisfied with the support offered. Some respondents indicated that they missed support for installing ventilation systems and investing in digitalisation. Entrepreneurs do not always feel heard by the government. Insufficient status information about their applications leads to uncertainty. A better online platform would be desirable here.

Curaçao

Business support on Curaçao island was recorded by Michelin Padmore. The country has largely followed the Dutch government's support package, such as TVL (Reimbursement of Fixed Costs) and NOW (Emergency Measure for the Preservation of Jobs). The support has been made available relatively promptly and has reached companies in difficulty. The government also offered business coaching. The entrepreneurs interviewed by the student were positive about that initiative. It offered them a listening ear and concrete tools for transferring their activities from offline to online. 

Bonaire and St Maarten

Daftony van Bossé reviewed Bonaire and Sint Maarten. The support for SMEs has started up well, and reasonably quickly. This was badly needed, because the islands have been hit hard by the disappearance of tourism. Attention is needed for better 'e-government' to reduce bureaucracy and to speed up contact with entrepreneurs. Digitalisation can also contribute to the desired enhancement of mutual economic relations between the islands and to the promotion of sustainable development.

United States

Rodney van Rielen investigated the support of SMEs in the United States. The federal government supported the business community with four major programmes: the Paycheck Protection Program, the Economic Injury Disaster Loan, the Restaurant Revitalisation Fund, and the Employee Retention Tax Credit. The support was substantial, but relatively slow in coming. While aid was regulated federally, coronavirus measures were regulated state by state. While restaurants had to be closed in some states, they could stay open elsewhere. This created unfair competition, especially in state border areas.

Vietnam

Tourism in Vietnam has been hard hit by COVID-19. Nguyen Duyen conducted research. The central government has taken various measures. But there is insufficient direction. Various ministries did not coordinate their efforts sufficiently and by leaving the implementation to local authorities, the support varied from location to location. Without good relations with officials, it was difficult to get support. Small entrepreneurs in remote areas received no support or much less support than was intended centrally.

Aid measures per country can be compared on the main points

The aid measures in the countries investigated are broadly comparable: direct subsidies, tax deferrals, interest rebates and soft bank loans. The extent of the support varies, as does the manner of implementation. The students made suggestions for improvement for their countries. The key word is always communication: as government, let entrepreneurs know about the schemes, how they can be used and inform them about the status of their application. The aspect of personal communication is salient: in some countries there seems not enough personal contact, in other countries there is sometimes too much personal contact between entrepreneurs and civil servants resulting in unfair favours.  The graduation projects clearly show that governments in all kinds of countries have worked in unorthodox ways to cushion the negative effects of the Coronavirus measures on the economy. It is particularly impressive to look past the massiveness of billions of dollars in support, see the millions of entrepreneurs who, with that help, have somewhat managed to maintain their income, from the beach bar in Vietnam to the fitness centre in the United Kingdom.

Graduation group

We worked with a graduating group of students who researched topical and interesting subjects. Somewhat out of necessity, as the same pandemic prevented the students from graduating in-company. Each student had his or her own research, the coordination and exchange was done in groups via Teams. With, as a bonus, attention for the human being among all the masses. 

This column is written by professor Next Strategy Arjen van Klink

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