As a press report points out, it was after a long process of consultations with different stakeholders that the Small and Medium Enterprises Development Authority (SMEDA) had prepared a new SMEs policy, and presented it for Prime Minister Shaukat Aziz's approval nearly three months ago.
He granted the approval, though asking for a minor revision in the proposed policy so as to make it more specific to the needs and demands of the SME sector, which has been done.
Ideally, the policy should have been announced before the annual budget so that the proposed changes could have been incorporated in the finance bill. Unfortunately, that did not happen. In fact, there seems to be no sense of urgency to unveil the new policy and the changes it seeks to bring about to make the SME sector a more valuable part of our economic growth plan.
How important it is for the government to improve the business environment as it affects the SMEs, is obvious from the following statistics: SMEs' share in the GDP is over 30 percent and they account for 25 percent of the country's total export earnings.
The Federal Bureau of Statistics has made a particularly interesting disclosure regarding the role of small (having an employment base of up to 99 people) as opposed to medium enterprises, in generating economic activity and job opportunities. It says they constitute about 90 percent of some 3.2 million private enterprises in the industrial, services and trade sectors, and provide employment to nearly 80 percent of the industrial sector workforce.
This is a pretty impressive performance given the difficult circumstances under which such enterprises have to operate. But things can and must be improved further through fresh measures.
These must include better SME access to credit, revised collateral requirements, and an effective dispute resolution mechanism. But first and foremost the government must make amendments to the Industrial Relations Ordinance and Standing Orders Ordinance in order to fix workforce threshold at around 100 for the purposes of applicability of the labour laws.
The existing state of affairs puts so much pressure on the resources of small new companies that many of them find it impossible to meet their obligations. They have to worry constantly about the unsavoury prospect of premature business closure or to keep the workforce at a minimal level. The less conscientious types prefer to operate in the informal sector. Either way, the situation is unhelpful for the small enterprises' growth.
That though does not mean the worker rights do not deserve to be accorded due recognition. But that the issue needs to be seen in a different perspective: that of viability. If the businesses flourish so would the job prospects for workers.
Robust activity in the small enterprises sector, the biggest employer in the non-agricultural field, of course, will open up new and more attractive opportunities for the employees as well. Also, the SMEs will feel encouraged to move from the unorganised sector to the organised one, enabling them to realise their full potential by benefiting from various incentives that the proposed SME policy is likely to offer.
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