Rehmatullah Javed, convenor, Standing Committee of Lahore Chamber of Commerce & Industry (LCCI) on Small and Medium Enterprises (SMEs), has called for setting up separate ministries at the federal and the provincial levels for SMEs to give what he said 'policy backup' to their growth.
Such an arrangement would speed up the efforts being made by various organisations, he said while talking to Business Recorder here on Saturday.
Rehmatullah Javed said the Task Force, constituted by the industry ministry to work out first SME policy of the country, would be meeting on April 6 in Islamabad.
He suggested that the government while formulating this policy should keep our proposals in mind, saying that efforts to develop SMEs would yield no fruitful results, if the sector was not given the necessary fiscal and tariff cushion.
About the tax-related issues, he said that 'Oppressive' taxation regime and roughly worked out tariff structure could play havoc with the small-scale units, adding sectors like engineering, auto-parts and plastic etc, where the majority of SME units originate and operate should be given necessary tariff protection ensuring cheap availability of the basic raw materials.
Similarly, he said taxation measures should be a demonstrating room for the SMEs to operate and grow.
In other words, the taxation infrastructure should not choke the SMEs at their initial stages through oppressive taxation and rather foremost priority should be given to their initial growth and later gradually brought into tax net, he observed.
Rehmatullah Javed also said the government should take steps to make SME units cost-efficient, if this sector has to survive in the international competition and be an effective supply line for large manufacturing units.
He viewed that unified and concerted efforts were needed to develop SMEs in line with international requirements.
Javed said in his opinion the availability of the working capital at affordable rates was critical to the viability of the business operations by any small or medium-scale enterprise, adding the mark-up rates for SME units higher than those offered to the large-scale manufacturing concerns simply go against the spirit of helping out the SMEs.
He said: "Business community feels that the issue of working capital for SMEs needs to be decided on a more facilitating plane." He claimed that "the central bank directives do not clarify the issue of the level of mark-up offered to the SME units."
According to his information, he said the Asian Development Bank (ADB) has provided $12 million for SME cluster building, and these clusters, he pointed out, would be set up as Common Facility Centers (CFC) to provide important vendor-based linkages to SMEs.
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