Discriminatory attitude of banks, government departments main hurdle to SMEs uplift

The discriminatory attitude on the part of ministries, banks and other government organisations toward small entrepreneurs is one of the main hurdles in the development of small and medium enterprises (SMEs). Small and Medium Enterprises Development Authority (Smeda) Chief Executive Officer Shahid Rashid expressed these views in an interview with Business Recorder.
He said the bigger industrial units and businesses concern were getting loans at considerably low mark-up through bargaining and all the banks preferred to oblige them, but the small and medium entrepreneurs had to pay mark-up at the market rate. "The liquidity crunch is the most common problem of every entrepreneur and the government should ensure subsidised loans for this vital sector, considered backbone of any country's economy," he said.
He said the SMEs had to deal with the State Bank of Pakistan, Ministry of Finance, Ministry of Industries, Federal Board of Revenue (FBR) etc, while the big entrepreneurs, having an easy access to the bureaucracy of these departments, face no difficulty in getting their problems solved, he said.
He stressed the need for taking appropriate measures to provide all out facilities to the SMEs. He said there was no SME policy in the country and it was the Smeda that drafted the first ever SME policy in August 2007, which subsequently had been developed into an SME Act, pending the action of Cabinet Division.
Under the policy, industry-academia partnership by establishing Institutes of Small and Medium Enterprise and Entrepreneurship Development (INSMED) would be set up at a cost of Rs 400 million in select business schools and business incubation centers at Higher Education Commission (HEC), Smeda, Ministries of Industries, Production, and Special Initiatives, National Technical Education and Vocational Training Authority, Competitiveness Support Fund (CSF) Technology Upgradation and Skill Development Company (TUSDEC), Ministry of Science and Technology (MoST), and at universities' level, he said.
Similarly, with an amount of Rs 100 million, technology innovation centres had been planned at universities, Smeda, HEC, MoST, CSF and TUSDEC, he said. Besides, Rs 1,000 million would be spent on establishment of Technology Development Fund at Higher Education Commission and Ministry of Education, Shahid Rashid said. Under the policy, the SME Data Baseline would be collected from 18 districts of the country and the task had been assigned to Gallop on behalf of the Smeda.
Apart from this, the SME sub-contracting exchange would also be established in Gujranwala this year, which would be completed during 2009, he said. He disclosed that two provinces Punjab and Sindh had not established Provincial Committees on SMEs, while the governments of Balochistan and NWFP had constituted committees.
He said a Credit Guarantee Fund, amounting to rupees five billion, would be established and the State Bank of Pakistan was working on it so as enable to get fund from the United Kingdom. Responding to a query, Shahid Rashid said the Smeda was set up directly under the control of the Prime Minister so that the pace of the SMEs development could be expedited, but now it had to look toward Ministry of Finance for seeking funds for the projects.
"We received huge demand for support to develop small and medium enterprises because of lacking finance could not accommodate all of them," he added. To another question, he said that the country had not a full time Minister for Industries and Production for the last many months because of transition in the government.
Shahid Rashid said that at present the Smeda was working on 16 projects worth Rs 1.6 billion, and added that these had been approved through Public Sector Development Programme (PSDP) and situated in all the four provinces of the country. One of these projects, Women Business Incubation Centre (WBIC) in Lahore had been completed, while Gujranwala Business Centre was going to be completed in next two months.
"The WBIC is a facility providing furnished housing space with telephone, fax and internet services to the women intending to start their business. They don't have to run from pillar to the post to get these facilities and they just get space in the WBIC on turnkey basis with nominal rent. "Now this centre houses a large number of women entrepreneurs ranging from tourism operator to mushroom growers. There are few consultants as well," Shahid added.
"This centre also invites consultants and success stories of different trades to exchange their experience with these budding women entrepreneurs. "Gujranwala Business Centre is being constructed to facilitate the local manufacturers and businessmen. It will have facilities like exhibition place, display centres, while for marketing and matchmaking offices would also be provided in this building.
"Three floors of this building are allocated for exhibition and display centre, while one floor has been earmarked for offices. The land has been provided by the Punjab government, while the Smeda is constructing. "Similarly, an Agro Food Processing facility is being set up in Multan where B-Grade mango would be used to turn into pulp, which could be used for juices and other related items.
It would help the mango growers to turn their products in to value-added items. "Machinery from Italy has reached and it would be installed soon. This plant, when there would be no mango season, could be used to make potato paste while it would also provide the facilities like grading, polishing and washing.
"Guava juice, which is very popular world over, can also be produced at this plant," the Smeda chief remarked. He said two projects - Sports Industries Development Centre and Sialkot Business Centre - were being carried out in Sialkot. He said that Sports Industries Development Centre was being established to promote mechanised manufacturing of football.
He said machinery for it would be imported from Taiwan and it would take one-and-half years to complete. This facility would also provide training and demonstration facilities. Sialkot Business Centre would be set up with a cost of Rs 370 million, Shahid Rashid said, and added that 50 percent contribution was being made by the Sialkot Chamber of Commerce and Industry.
Construction of this eight-storey building was already in progress, which would have exhibition halls, display centre, business match making facilities and some rooms as well to provide stay to the foreign buyers. Other projects included glass product design and manufacturing centre, product development centre for composite materials, foundry service centre and three projects in Sindh.
He said that a Women Business Incubation Centre would also be established in Karachi, Women Business Development Centre in Charsadda and Chromite beneficiation Plant Muslim Bagh, Balochistan. He said that they had also plans in hand such as date processing plant, supporting red chillies production in Kunri, Olive growing project in Balochistan, improving shrimp farming and setting up of dehydrate plants.
Talking about "Aik Hunar Aik Nagar" (AHAN), he said that it was an experimental and difficult project. People had to go village to village and look for women busy in various works, identification of cluster and suggest improvement in their work. He said that under this project, 46 project were taken up out of which 26 had been completed and 20 were still under process.
People attached with various trades such as making "Ralli," blue pottery, stitching etc were not only provided training with those working on modern lines, but also sent on exhibitions. He said that Pakistan Industrial Development Corporation (PIDC) was funding the projects of AHAN and its Board of Director was being headed by Hina Rabbani Khar with Secretary Industries and the Smeda CEO as other board members.
He stated that overall objective was to alleviate poverty in rural/peri-urban areas and small towns of Pakistan through creation and diversification of sustainable income earning opportunities for poor producer groups, particularly for landless, wage earners and women. Method to implement this project was to support poor producer groups. Artisans through pilot interventions in making their products competitive in the local, national and international markets.