Policy lacks basic fundamentals

The private sector on Wednesday disagreed with the government that small and medium enterprises (SMEs) policy 2007, carries all basic fundamentals to promote the industrial culture in Pakistan.
Sources said the private sector representatives listed a number of SMEs areas which were not covered in the policy and demanded amendments for improvement during the National Committee on Small and Medium Enterprises (NCSME) meeting.
The private sector showed concern over missing of small enterprises' definition, labour laws and the procedure adopted by the federal and provincial governments for collecting labour levies from SMEs. Other issues, which remained hot topic of the committee was missing link between SMEs and large scale industry, absence of the culture of industrial clusters in Pakistan to promote a particular area to some specific kind of small and medium industry, labour laws.
The private sector representatives were of the view that the SME policy lacks basic fundamentals to become a driving force in promoting the culture of small and medium industries in Pakistan.
They sought change in the basic theme of the definition of SMEs to make them instrumental in providing employment at the grass root level and reduce poverty.
They also demanded amendment in federal and provincial labour laws to make them simple and easy for the industrial sector.
They suggested that the government should work out any mechanism to collect all federal and provincial labour levies at one point. Their argument for a change in labour laws was that small industrialists sometime become victim of harassment of different government labour departments.
The private sector also suggested amendment in the minimum limit of annual turnover and workforce for financing the SMEs to make sure that banks do not ignore the small industry in lending.
State Bank of Pakistan's (SBP) Governor Dr Shamshad Akhtar's observation about transparency and corporatisation of SMEs received sharp reaction from the private sector. Its representatives rejected Shamshad Akhtar's views that commercial banks were reluctant to finance SMEs due to the lack of transparency and documentation.
The SBP governor also did not agree with the private sector on its demand that like agriculture some percentage of lending to SMEs should be made mandatory for the commercial banks. Dr Shamshad Akhtar said the majority of the commercial banks were running in private sector and they can not be dictated for targeted financing.