Strong and innovative business location

Strong business location and innovative investments

Economic growth and digitisation cost a lot of money, particularly during a crisis unlike anything seen before. But a crisis also offers opportunities. To make sure Austria doesn’t miss them the BMDW has set up numerous initiatives and provides a lot of monies.

Further increasing the appeal of Austria as a business location is an important part of Austria’s economic policy, says the Federal Ministry for Digital and Economic Affairs (BMDW). It is of utmost importance to create a pro-business environment with structural improvements, to create conditions that favour the development and growth of businesses, that make business establishments easier and that ensure open market access. The international competition among business locations is becoming stiffer and stiffer. Therefore, the Austrian location factors need to be strengthened constantly and promoted internationally. Austria also needs to adapt to new challenges, one of which is the development of a sustainable and digital economy. This year, everyone has faced and is still facing new challenges.

Bonus for investments

In order to stimulate business investments, entrepreneurs have the opportunity to apply for an investment bonus until February 2021. “The investment bonus creates great conditions for new business investments with the focus on digitisation, sustainability, life sciences and health. The non-repayable grant helps secure business sites, create jobs and trainee positions and improve Austria’s international competitiveness,” says Margarete Schramböck, Minister for Digital and Economic Affairs.

The investment bonus is handled by Austria Wirtschaftsservice Gesellschaft (AWS), which is the economic development bank of the Republic of Austria, its sole owner. Applications can be made through the AWS Subsidy Manager for investments after 1 August 2020. Due to the legal nature of the investment bonus as general Covid relief measure, all successful applications made

Photo: ÖVP/Glaser

between 1 September 2020 and 28 February 2021 will receive their monies. If needed, the one-billion-euro fund provided for the investment bonus will be increased by an amendment to the law. The AWS investment bonus is available to all sectors and all business sizes. The only requirement is that a business has its headquarters or a business site in Austria and is legally operated in its own name and for its own account.

What, when and how much?

The funding amount is 7 percent for investments of more than 5,000 euros with a cap of 50 million euros. It is important that businesses take the first steps for the start of their investment between 1 August 2020 and 28 February 2021. Such first steps could be orders, deliveries, the start of services, down payments, payments, invoices, conclusion of a purchase contract or the start of construction of the eligible investments.

For investment amounts of up to 20 million euros, businesses have one year to carry out the investment. If the amount exceeds 20 million euros, the investment has to be implemented by 28 February 2024.

“We want to strengthen our business location with the investment bonus in the long run. It is important to create incentives for business investments. This is the only way to counteract the current restraint to invest among businesses and the investment bonus tackles this issue head on,” says Minister Schramböck.

Material and immaterial new investments in depreciable assets that are subject to capitalisation are eligible for funding. Exempt from the investment bonus are climate-damaging investments, financial investments, investments into activated own work, into undeveloped real estate and business takeovers. The grant will be payed upon settlement and audit, and can be combined with other programmes of AWS. This applies in particular to the AWS Guarantee and the AWS ERP Loan.

Monies from AWS

The AWS Guarantee offers securities/collateral that your bank requires from you when granting a loan – and thus increase your chance of obtaining the loan. With the AWS ERP Loan, the bank enables growth, investments and innovation through low-cost soft loans with flexible loan periods and fixed interest rates. The

tasks of AWS are – broadly speaking - awarding and executing business related funding by the state and providing financing and consulting services that are in the public interest and support the economy. In particular, these tasks include c awarding and executing grants and other means of financing in line with the Guarantees Act and the SME Subsidies Act c fostering innovation and innovation consulting for the benefit of the Austrian economy c executing aid according to the Federal Law on Promoting the

Labour Market (AMFG) c procuring tasks and businesses of the ERP Fund according to the ERP Fund Law c providing and executing funding grants and other means of financing as well as acquiring business services that are passed to the company by law or winding-up agreement c providing consultancy services, especially to the state c participation in small and medium-sized enterprises

Continuation of the successful project SME.DIGITAL

The initiative SME.DIGITAL of the BMDW and the Austrian Economic Chamber was a success among Austria’s small and medium-sized enterprises right from the start. The programme has supported more than 10,000 consulting and implementation initiatives. The renewed programme also saw great demand over the past twelve months. More than 3,000 entrepreneurs received support for their digitisation measures since October 2019. “The current developments have highlighted the necessity for digitisation,” says Minister Schramböck. “The Ministry for Digital and Economic Affairs has therefore provided another three million euros for the second half of 2020 to continue SME.DIGITAL and meet the demand for digitisation of Austria’s small and medium-sized companies.”

There are about 340,000 small and medium-sized businesses in Austria and almost half – 41.7 percent, to be exact, have a low level of digitisation. “Austria’s SMEs secure about seven out of ten jobs in Austria,” says Harald Mahrer, President of the Austrian Economic Chamber. “If these companies miss the digital train it has far-reaching consequences for our economy and our jobs, and curbs our ambition to become a leader in innovation. Digitisation is an opportunity for Austria, we need to allay worries and point out opportunities. The programme SME.DIGITAL strengthens the backbone of the Austrian economy and the skills of entrepreneurs and staff because digital know-how is a crucial factor across all sectors.”

There is particular need to catch-up for Austrian SMEs when it comes to e-commerce, social media marketing and using cloud services. Only 20 percent of dealers are operating with e-commerce and the Covid crisis has increased this need to catch up. And this is where the subsidy programme SME.DIGITAL comes in: It supports SMEs with a consulting subsidy when analysing digital trends and developing respective digitisation projects. The practical consultation looks at technological and social developments in e-commerce, digitising everyday business and increased online security. The nine provincial departments of the Economic Chamber and their district organisations serve as a sales network for SME.DIGITAL.

Photo: WKÖ Marek Knopp

It’s in the name

One of the core tasks of the Federal Ministry for Digital and Economic Affairs is – nomen est omen – to further the digitisation in Austria. The overarching goals are to improve the existing conditions to make society ready for digital change, to facilitate digital innovation and technology transfer among businesses, and to coordinate and implement e-government solutions for businesses and citizens.

“Our businesses need our support right now to take their first steps towards digitisation,” says Minister Schramböck. “SME. DIGITAL offers individual consultation and support to do this. This combination of consultation and implementation and the individual servicing of SMEs has led to the successful application of digital tools in businesses. Digitisation is a great opportunity for SMEs and it is in the best interest of our economy to take it.”

Digitisation and AI

Digitisation is the driver of the economy during a crisis. According to the Accenture study “Digitisation – Driver of the economy during crises”, ordered by the BMDW, increasing the level of digitisation can lead to a GDP growth of up to 1.9 percent per year. The use of artificial intelligence alone has a potential to create seven billion euros of added value per year until 2035.

Artificial intelligence

Systems based on artificial intelligence analyse their environment and autonomously act to achieve certain goals. They work through expert-generated rule knowledge or based on data-derived statistical models (machine learning or deep learning). AI includes both pure software systems that set actions in virtual environments and hardware such as robots.

Examples for AI from Austria

c Search in radiological image databases c Media monitoring through automatic speech recognition c Automatic summary of documents and message texts c Automatic detection of skin and retinal diseases c Self-learning software for accounting and billing management c Automatic audit systems to improve compliance c Intelligent sales platforms c Expert systems for automated telephone customer service c AI and language comprehension as an intelligent automatic teacher for foreign languages c Automatic translation c Intelligent scheduling c Logistics planning & optimisation c Electronic passport control c Fraud detection c Automatic music classification and music recommendation c Robots for textile design

Photo: Pixabay

Austria needs excellent AI research in order to benefit from international technological development and to create a broad domestic knowledge base, which is the foundation for later applications.

Despite the advances, AI technologies continue to require a great deal of research, from basic research to many interface topics, such as in enterprise AI applications. AI research at Austrian universities and in companies is therefore an important field of action. Research also plays an important role in education. Austria needs to be able to innovate using AI technologies.

This requires trained experts who have ideally come to know the state of research in AI through their own projects at universities and universities of applied science. In addition to technical knowledge, these professionals should ideally also have knowledge of the economic application fields.

The application areas of AI are manifold. They range from systems that understand human language (such as automatic translators) to programmes that analyse visual information (for example, in autonomous driving), search engines, to systems that derive conclusions from data. This also includes assistance and consulting programmes or autonomous robots and vehicles. Frequently, AI systems are an integral part of other technical systems, e.g. in vehicles. AI technologies offer a variety of applications in a variety of industries. In addition to the development of new products based on AI, their application will make a significant contribution to the economic dynamics of Austria.

Austria’s companies start from a solid basis for the successful development and innovative use of AI. Manufacturing companies, in particular, can benefit from the flexibility of AI systems and integrate them into Industry 4.0 systems (e.g., in the automotive supply industry).

In addition, the increasing digitisation also offers a wide range of application possibilities outside of production – from marketing and customer care to bookkeeping. AI in the services sector is one of the most promising growth areas, such as in banks, insurances or consulting services. AI will create new opportunities for product and process innovation in almost every branch of the corporate sector. But new technologies are also often associated with high investment and knowledge costs, which can be challenging for the use of AI in small and medium-sized businesses. Which takes us back to the grants, subsidies and loans offered by AWS.

Strategies

The BMDW develops, promotes and supports state-of-the-art e-government to provide citizens and businesses with simple, secure and quick administrative procedures. Using existing data at authorities, streamlining processes and promoting mobility are only some of the principles that future administrative actions will be based on.

Supporting businesses with best practices when it comes to digital transformation, creating pro-digitisation legal frameworks and providing corresponding financial subsidy programmes are pre-requisites to establish Austria as an attractive and digital business location of the future.

These are key points of digitisation in Austria:

c supporting the economy with digital services (e.g. electronic business establishment) c creating a pro-digitisation environment to promote innovations c expanding digital services for citizens (e.g. at oesterreich.gv.at) c coordinating the digitisation measures of the entire federal government by establishing a digitisation task force

Benefitting from digitisation

The BMDW’s initiative “Digital Plan of Action” wants to ensure that everyone – individuals and businesses – can benefit from the opportunities that arise from digitisation. The digital transformation will be a crucial factor for competitiveness, growth and wealth in all of Austria.

The project “Once Only”, for example, aims to improve data processing and to streamline administration. “Once Only” means that data needs to be provided and gathered only once. Public authorities can re-use and exchange it in accordance with the regulations and data privacy laws. The advantage is obvious: Individuals and businesses do not have to enter the same data over and over again; online forms are pre-filled in and therefore quicker to process. This also increases the competitiveness and benefits the Austrian economy indirectly.

The scope of relief is tremendous, a study from 2007 shows: Every year, businesses have to send information to public authorities 230,000,000 times. This amounts to extra costs of 4.3 billion euros. The creation of the Business Service Portal USP (usp.gv.at) is a first step in the right direction and helps save several hundred million euros per year – and there is still room for improvement. The “Once Only” principle is also being implemented on a European level to reduce bureaucracy. The Single Digital Gateway regulation (article 14) sees the creation of technological systems for the automated cross-border exchange of certificates in Austria. Thus, the principle of gathering data only once also applies across Europe.

Additional value for businesses

In order to simplify official channels for businesses and in particular start-ups, the USP will in future not only include all necessary steps for digitally founding a company but also all registrations for administrative procedures in tune with the “Once Only” principle (e.g. registering for services of the Economic Chamber, services of the tax and revenue office, social security services).

Businesses can enter all necessary data in one place (the USP) and do not have to send somebody in person. Authorities automatically get the data, save time entering this data and have more time for other tasks e.g. consultation. In addition to everyone saving time, the quality of the data will also go up.

Digital Austria

Creating growth, jobs and wealth, improving the quality of life for people in all regions and of all age groups, offering secure, modern and accessible administrative services for businesses and citizens – these are the goals of the “Digital Plan of Action Austria”, which is being carved out in collaboration with numerous experts in various fields. The aim is to make the Austrian economic system crisis-proof, to increase competitiveness and to use data specifically for innovations. Other key points are the promotion of qualification and education programmes and cutting-edge digital research. The “Digital Plan of Action Austria” unifies specific measures for Austria to get the best out of the opportunities that arise from digitisation. ◆