The Ministry of Industries and Production has submitted the flawed Small and Medium Enterprises (SME) Development Bill 2009 to the Cabinet for approval, in principle, as other Ministries have expressed disagreement with some of the recommendations of the draft, sources told Business Recorder.
After approval, in principle, by the Cabinet, the proposed Bill can be further fine-tuned, if directed by the Cabinet," sources quoted the Ministry as suggesting to the Cabinet, which is scheduled to meet on November 18, 2009. Sources said that in January 2004, the Minister for Industries and Production had constituted a task force on Small and Medium Enterprises (SME) Development Policy.
The Small and Medium Enterprises Development Authority (Smeda) drafted the policy on the recommendations of the four committees which had been constituted in the fields of (i) business environment; (ii) access to finance, (iii) access to resources and services and (iv) SME definition, feedback, monitoring and evaluation mechanism.
Meanwhile, the Prime Minister during a meeting on Smeda's performance, held on October 27, 2006, directed to finalise formalities for submission of SME Policy 2006 to the Cabinet within a week which should be followed by the enactment of SME law. In pursuance of Prime Minister's directives, Industries Ministry submitted the draft of SME Policy to the Cabinet. The Cabinet, in its meeting on January 17, 2007, approved, in principle, the draft policy, subject to review of the proposed fiscal and tariff measures by Secretary, Industries and Secretary-General, Revenue Division.
Consequently, the fiscal and tariff measures proposed in the draft SME Policy were discussed at a meeting between Secretary Industries and Secretary-General Revenue Division on June 22, 2007 and the agreed measures were incorporated in the 2007-08 budget. The SME Policy 2007 was notified on June 22, 2007.
Earlier, Industries Minister, through a summary, submitted the draft SME development Bill to the Cabinet Division in April 2006 for consideration of the Cabinet. However, the Bill was returned by Prime Minister's secretariat, with no comments. The suggestions made in the draft Bill on concessions and rebate, new Ombudsman framework, provision of preferential opportunities to SMEs and obligatory periodic review of the labour legislation were not endorsed by the Cabinet Division and Law Division.
In the opinion of Law Division, Smeda's functions authorise it to take appropriate action for the development of SMEs without any legislation. The observations of both Divisions were that it would be more appropriate if the contents of the proposed legislation were notified as a policy framework. However, later, the Cabinet Division agreed with position stated by the Industries Ministry under the Prime Minister's directions, SME law is required to be formulated, sources added.
Industries Ministry feels that commitment to development of SMEs in Pakistan can best be expressed in the form of a proposed Bill. Other nations like Japan, India, Sri Lanka, etc have similar legislation to support government policies. The proposed Bill may be fined-tuned, if directed by the Cabinet, sources said.
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